Let’s start with a superb essay by Lew Rockwell:

The Myth of Good Government

by Llewellyn H. Rockwell, Jr.

One of the great and most persistent errors of classical liberals is to believe in “good government,” a government that does “what it is supposed to do.”

There is nothing the state can do, which society needs done, that cannot be done far better by the market. Another point that is just as telling: no state empowered to do what is supposedly necessary will restrain itself to those things. It will expand as much as public opinion will tolerate.

Sometimes the point is easier to see when looking at foreign governments, such as the tragic case of China. The government is embarking on an explosive venture to dump $586 billion into “infrastructure” over two years. The reason is the classic Keynesian excuse: the spending is needed to stimulate investment. Never mind that this trick has never worked in all of human history. This is instead a grand plan to loot the private sector on behalf of the Communist Party, which will then spend the money bolstering its power.

No country knows more about the failures of this type of central planning than China. Every form of collectivism has been tried out on these poor souls, and tens of millions lost their lives in the course of Mao’s insane collectivist experiments. That this new plan is being enacted in the name of Lord Keynes rather than Karl Marx is irrelevant. The effects are the same: expand power and reduce liberty.

China’s recovery from communism is one of the most inspiring stories in the history of economic development. The country went from being a suffering and impoverished land of catastrophe to being modernized in just 15 years. The state shrunk in scope nearly by default as the private sector grew and grew. This wasn’t the plan. It was the de facto result of the new tolerance of free economic activity. The state went into protective mode to keep its power, and did nothing to stop the swell of private enterprise. The result was glorious.

Keep in mind this critical point. China’s restoration as a civilized society came about not due to some central plan, but by its absence. The fact that the state did not intervene led to prosperity. Again, it wasn’t a policy or a constitution or a law that made the difference. There was no switch from a communist-style government to a night-watchman state. Because the state abandoned its posts under public opposition and contempt, society could flourish.

But the state never went away. It’s just that its depredations have been spotty and unpredictable. Had history taken a better course, the central state would have melted away completely, and law would have devolved to the most local levels. Sadly for the Chinese, the state persisted in its old structure, even as the private sector grew and grew. The state still had its hand in the large industries such as steel and energy, and, of course, it controlled the banking sector.

The government never became good (an impossibility). It was and is bad. It was just less bad than in the past because it did less. But all states lie in wait for a crisis. The earthquake in the southwest provided one great excuse for intervention. But nothing except war compares with an economic crisis as a great excuse for state expansion. Chinese officials can count on support from Western “experts” here, and the thoroughly disgusting US response to our own economic downturn has provided an awful model for the world. Think of it: the Communist Party in China is now citing the US as the main reason for its plot to loot the private sector and bolster its own power at the expense of the country.

So much for being a beacon of liberty in a dark world! Instead, the US is helping to shut out the lights and bolster decrepit despotisms. This is surely one of the great ironies of the current political moment. Instead of teaching the world about liberty, the US’s newly empowered unitary executive is christening various forms of dictatorship.

There can be no question that China’s spending will not improve economic growth. It will instead extract $586 billion from the private sector and spend on political priorities. Never forget that no government has wealth of its own to spend. It must come from taxation, monetary inflation, or debt expansion that must be paid later. And government’s spending choices will always be uneconomic relative to how society would use that wealth. That is to say, it will be wasted.

But won’t the spending spur investment? It can create local boomlets, but they will be temporary. To the extent that the new spending causes a spending response from investors and consumers, this is more evidence of an uneconomic use of scarce resources. If the money is used to prop up failing companies, that’s particularly bad since it is an attempt to override market realities, an attempt that is about as successful as trying to repeal gravity by throwing things up in the air.

The nature of the state – and the core of its rationale for existence – is the conviction that it stands apart from and above society, to correct the failings of the market and individuals. A presumption of superiority is at the very claim of the state, whether it is minimal or totalitarian. Who is to say when and where it should intervene? Well, think about it. If the state is inherently wiser than and superior to society, standing in judgment over what is working and what is not working, the state alone is also in a position to decide when it should intervene.

No government is liberal by nature, said Ludwig von Mises. This is the great lesson that people who advocate “limited government” have never learned. If you give the government any jobs to do, it will presume the right to police its own conduct and then inevitably abuse its power. That is true in China and it is true in the US.

It was the science of economics that first discovered the radical incapacity of the state to make any improvements in the social order. It turns science on its head to invoke economics as a reason for the government to loot and pillage in the name of “stimulating investment.” Stimulation here, there, and everywhere amounts to a diminution of freedom, security of property, and prosperity.

Keynes famously praised Nazi economic policies in the introduction to the German edition of his worst book, the General Theory. After a century of horrors, free men and women, in China, the US, and the world surely deserve better.

[…]

Lew Rockwell

Fascinating and true.

If China can turn itself around in 15 years and the state shrink in scope nearly by default, and if banking is the last and most important bastion of state control, what could we expect if the resourceful Chinese adopt a private currency on a large scale?

There would be nothing that the state could do without destroying the economy if the currency was spread quickly and widely enough.

The question is how should such a currency be designed and rapidly deployed?

It would have to be some form of precious metal in denominations that made it practical for many types of transaction, from small groceries to buying a car.

In the past the wealthy of China used ingots:

and of course, the peasants used many different types of coin:

Chinese bronze coin from the Han Dynasty

and look at these coins, with their tamper evident edges:

And this is pretty…sorry, just had to throw it in:

Essentially, you need a mint, to think about the denominations and then to distribute the coins and bullion. It would be a good idea to get hundreds of millions of people to use vast amounts of low denomination gold coins; then by exchange, certain individuals, probably shop owners, would start to accumulate large numbers of coins.

Thinking about it, that is absolutely the way to seed a new economy that runs on a private currency; many small coins whose value goes up to, say the equivalent of a €500 note, spread to as many individuals as possible, so that daily exchange is made as easy as possible for everything from a bowl of noodles to a bicycle.

This brilliant piece by Lew Rockwell is well timed. Some people are organizing demonstrations outside every Federal Reserve building to ‘End The Fed’. These people haven’t got a hope in hell of ending the Federal Reserve system if all they have in their arsenal are the discredited tactics of the twentieth century.

They correctly identify the Federal Reserve as the cause of many ills and the recent crash; what they do not understand is the true nature of the force that should operate to control interest rates in absentia of central banks. The Market.

If they understood the true the power of the market, they would try and harness it directly to end the Fed, and not protest like beggars asking for oatmeal in the poor house. If they understood anything at all about problem solving they would never opt to demonstrate. Readers of BLOGDIAL know the truth about demonstrating.

If they want to solve this problem, they need to attack it directly. That means attacking the Federal Reserve Notes by issuing their own private currency, and then using it for all their transactions. There are difficulties in doing this, and one of them is Gresham’s Law:

Britannica Concise Encyclopedia: Gresham’s law

Observation that “bad money drives out good.” It is named for Sir Thomas Gresham (1519 – 1579), financial agent of Queen Elizabeth I, who was one of the first to elucidate it (he had been preceded by Copernicus). The meaning expressed is that, if two coins have the same face value but are made from metals of unequal value, the cheaper will tend to drive the other out of circulation; the more valuable coin will be hoarded or used for foreign exchange instead of for domestic transactions.

If that law is true, then issuing a private currency made of gold will have difficulty driving out Federal Reserve Notes. Hmmmmmm.

Small digression.

With the internet, it should be possible to distribute a private physical currency everywhere in a very short amount of time, and to spread information about it virally.

While we are at it, Obama wants to shut down internet payment systems that he does not like:

Develop a Cyber Crime Strategy to Minimize the Opportunities for Criminal Profit: Barack Obama will shut down the mechanisms used to transmit criminal profits by shutting down untraceable Internet payment schemes. Barack Obama will also initiate a grant and training program to provide federal, state, and local law enforcement agencies the tools they need to detect and prosecute cyber crime.

[…]

Barack Obama

“shutting down untraceable Internet payment schemes” means shutting down any payment system that does not allow back door automatic surveillance. Obviously. It means more laws to meddle in our internetz; laws that will inevitably have spill-over into things other than ‘payment systems’.

Another small digression.

Other private currency vendors (Mints) would no doubt spring up with their own coins, adding to the choices and flexibility.

Either way, you will not stop the bailouts, stop the war machine, or end the Federal Reserve if you do not have control of the money. A private currency is not going to appear from nowhere by magic; someone has to design it properly and release it, and according to this post on mises.org, the Liberty Dollar is not what it should look like:

Silver

As a student of Austrian Economics and supporter of commodity money, I regard the assault upon the American Liberty Dollar (ALD) with alarm and sadness, but not surprise.

While nothing the ALD firm did was clearly criminal, in that no force or overt fraud was used, their tactics could charitably be described as sleazy. They were designed to trade silver medallions to the ignorant and unwary at premiums that were many multiples of the market norm. In doing so, they created unnecessary complexity and confusion about hard money.

Consider:
1) Appropriating the face of Ron Paul without so much as asking his permission. Yes, he is a public figure so the appropriation will not be considered criminal, but it is feels sleazy.

2) Erecting a multilevel marketing scheme that provides profits that have at times exceeded 100% to insiders. The tale (face value) of the ALD was raised from $10 to $20 when the market price for an ounce of silver crossed $7.50. ALD dealers split the $12+ profit with the ALD firm. I am not against profits, I seek them. But I know where I can buy 1 ozt silver medallions, including ALDs, at less than $1 over spot silver. Only the ignorant pay such exorbitant prices for silver coins.

3) Creating confusion and needless complexity by marking their coins with a dollar-denominated tale. Unlike countless other silver coins with tales denominated in STU (silver trade unit), WTU, Sovereign, or simply weight, the ALD was denominated in dollars, a figure reserved to government-issued, primarily US and Canadian, currencies.

Mises himself taught, in The Theory of Money and Credit “…at all times and among all peoples the principal coins have been tendered and accepted, not by tale without consideration of their quantity and quality, but only as pieces of metal of specific degrees of weight and fineness. Where coins have been accepted by tale, this has always been in the definite belief that the stamp showed them to be of the usual fineness of their kind and of the correct weight. Where there were no grounds for this assumption, weighing and testing were resorted to again.
…
Nevertheless, in defiance of all official regulations and prohibitions and fixing of prices and threats of punishment, commercial practice has always insisted that what has to be considered in valuing coins is not their face value but their value as metal. The value of a coin has always been determined, not by the image and superscription it bears nor by the proclamation of the mint and market authorities, but by its metal content. Not every kind of money has been accepted at sight, but only those kinds with a good reputation for weight and fineness.”

4) Exploiting the self-made confusion of the tale by crowing about the “doubling” of the ALD when they changed the tale from 10 to 20 “dollars” per ozt. “Immediately all Liberty Dollars, in specie, paper and digital forms DOUBLED. If you had Liberty Dollars before the Move Up you profited because the underlying commodity increased in value. If you had digital, your eLD doubled the next day. If you had paper Silver Certificates, you could redeem them for the new $20 Silver Libertys. If you had Silver Liberty in specie form, you were offered a special re-minting rate to exchange them for new $20 Silver Libertys.” Liberty Dollar Doubles

Of course, nothing had changed, 1 ozt of silver remained 1 ozt of silver, and by marking their coins in “dollars” they were caught in the inflation of FRNs. Few “$10” ALDs were actually re-minted; they now circulate with all other silver medallions, currently at premiums of $0.60 to $1 over spot in small quantities (1 to 500 coins).

5) Slander of Walmart (big firm in Bentonville) and the implication that competing silver medallions are not pure in The Liberty Dollar Merchant Script.

6) Note also in that document the multiple referrals to “local business referral currency.” The appeal is to autarky rather than free commerce, with more slander to the effect that “big box retailers are in bed with the big bankers.”

The ultimate argument of the ALD firm boils down to this: A number stamped on an ounce of silver changes its value, and so determines whether it will or will not circulate. The explicit assumption is that “average” people are too stupid to know that a Liberty mint or A-mark 1 ozt silver coin with no dollar figure stamped on it and a norfed ALD with some fictional number of “dollars” stamped on it are really and truly the same thing: 1 ozt of fine silver with markings to prove that fact. Period.

The arrogant conceit that most people are too stupid to understand weight of metal without the assistance of a self-proclaimed “monetary architect” is breathtaking. History and present-day practice shows that always and everywhere precious metal coins are valued by weight and fineness (purity) with minor adjustments for being widely recognized, particularly beautiful, or other characteristics.

The aggressive tactics created by the ALD firm and taught to ALD dealers were designed to fool the unwary into believing that an ounce of silver was worth far more than the free market price. Indeed, some ALD dealers vehemently defend the large premiums attached to their products. In at least some cases, ALDs were passed to unsuspecting clerks with a casual “Oh, that’s the new twenty dollar coin.” Owners and managers discovered the deciet in the till only after the dealer was long gone. These tactics caused an increasing number in inquiries to government agencies, district attorneys, and police. It was not successful competition with FRNs that killed the ALD, it was attracting the attention of government agents with methods that had the look and feel of a scam.

The ALD firm did not deserve to be shut down, but if commodity money ever makes a return, it will do so in spite of ALD-created confusion and without multilevel marketing profit margins. In the happy future where silver and gold coins are used in daily commerce, the markups associated with minting and distributing the coins will fall to their historical norms of a few percent over melt value.

[…]

The Liberty Dollar Question – Mises Economics Blog

Clearly there are a substantial number of people with sufficient knowledge to design a optimal currency to replace Federal Reserve Notes, and there is a demand for this service that will only grow stronger as the value of everyone’s savings starts to evaporate at an ever greater pace thanks to the heat of inflation boiling away the value of the dollar.

We wrote before about the Totnes Pound; there is a demand for clean money not only in the USA but in Great Britain.

The question I have is, who is going to be the one to put their fortune into launching a private currency? What sort of person are we looking for? It seems to me that a Mark Shuttleworth type is the most likely candidate; someone who has been made aware of these problems and the solution and who will see in themselves a beneficial instrument of liberation:

This is not the end of capitalism

Some of the comments on my last post on the economic unwinding of 2008 suggested that people think we are witnessing the end of capitalism and the beginning of a new socialist era.

I certainly hope not.

I think a world without regulated capitalism would be a bleak one indeed. I had the great privilege to spend a year living in Russia in 2001/2002, and the visible evidence of the destruction wrought by central planning was still very much present. We are all ultimately human, with human failings, whether we work for a state planning agency or a private company, and those failings have consequences either way. To think that moving all private enterprise into state hands will somehow create a panacea of efficiency and sustainability is to ignore the stark lessons of the 20th century.

The leaders and decision makers in a centrally-planned economy are just as fallible as those in a capitalist one – they would probably be the same people! But state enterprises lack the forces of evolution that apply in a capitalist economy – state enterprises are rarely if ever allowed to fail. And hence bad ideas are perpetuated indefinitely, and an economy becomes dysfunctional to the point of systemic collapse. It is the fact that private enterprises fail which keeps industries vibrant. The tension between the imperative to innovate and the consequences of failure drives capitalist economies to evolve quickly. Despite all of the nasty consequences that we have seen, and those we have yet to see, of capitalism gone wrong, I am still firmly of the view that society must tap into its capitalist strengths if it wants to move forward.

[…]

http://www.markshuttleworth.com/archives/227

In fact, Mark Shuttleworth is a PERFECT candidate, as we can see. He just doesn’t know it yet.

In case you didn’t know, Mark Shuttleworth is a South African philanthropist genius billionaire who single handedly accelerated the adoption of Linux and put it into the hands of the masses with Ubuntu. I say single handedly because he financed it by himself; where other distributions were getting better and better slowly like Fedora, Mark Shuttleworth took the Debian distribution and turned it into something that anyone anywhere could use by pouring money, philosophy and hard work onto Debian. The result has been a complete success, and now Ubuntu is being sold on Dell laptops as standard.

There are not many capitalists who understand the Open Source business model and its associated philosophies. Just look at the irrational buggy whip thinking of the music and film industry to hear what ordinary, unintelligent business people think about making money from giving away something for free.

The right man for this job would understand scale. He would understand networks, both internet and real world. He would be driven by philosophy as much as the desire to make money. He would understand the philosophy behind the Free Software movement. He would also have a grasp of banking and how currencies work. He would be able to apply and to synthesize all of this into a project to spread debt free, central banking free currency that is owned by and for the benefit of the public…just like Ubuntu is.

I could not think of a better time to launch such a project; the dollar is collapsing, the headless chickens of the G20 are all jockeying around for a ‘solution’. What better time to checkmate them all with the release of a new, private currency that trumps them all, into which everyone can convert their savings and buy their bread with.

Now that would be something worth while!

by Paul Joseph Watson

The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions – all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente, the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

“We’re going to see the end of the retail Christmas….we’re going to see a fundamental shift take place….putting food on the table is going to be more important that putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression”.

“America’s going to go through a transition the likes of which no one is prepared for,” said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis.

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

Celente, who successfully predicted the 1997 Asian Currency Crisis, the subprime mortgage collapse and the massive devaluation of the U.S. dollar, told UPI in November last year that the following year would be known as “The Panic of 2008,” adding that “giants (would) tumble to their deaths,” which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others. He also said that the dollar would eventually be devalued by as much as 90 per cent.

The consequence of what we have seen unfold this year would lead to a lowering in living standards, Celente predicted a year ago, which is also being borne out by plummeting retail sales figures.

The prospect of revolution was a concept echoed by a British Ministry of Defence report last year, which predicted that within 30 years, the growing gap between the super rich and the middle class, along with an urban underclass threatening social order would mean, “The world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest,” and that, “The middle classes could become a revolutionary class.”

In a separate recent interview, Celente went further on the subject of revolution in America.

“There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.”

“The first thing to do is organize with tax revolts. That’s going to be the big one because people can’t afford to pay more school tax, property tax, any kind of tax. You’re going to start seeing those kinds of protests start to develop.”
“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.”

“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people’s minds weren’t wrecked on all these modern drugs – over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.”

The George Washington blog has compiled a list of quotes attesting to Celente’s accuracy as a trend forecaster.

“When CNN wants to know about the Top Trends, we ask Gerald Celente.” — CNN Headline News

“A network of 25 experts whose range of specialties would rival many university faculties.”
— The Economist

“Gerald Celente has a knack for getting the zeitgeist right.” — USA Today

“There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.”
– CNBC

“Those who take their predictions seriously … consider the Trends Research Institute.”
— The Wall Street Journal

“Gerald Celente is always ahead of the curve on trends and uncannily on the mark … he’s one of the most accurate forecasters around.”— The Atlanta Journal-Constitution

“Mr. Celente tracks the world’s social, economic and business trends for corporate clients.”
— The New York Times

“Mr. Celente is a very intelligent guy. We are able to learn about trends from an authority.”
— 48 Hours, CBS News

“Gerald Celente has a solid track record. He has predicted everything from the 1987 stock market crash and the demise of the Soviet Union to green marketing and corporate downsizing.”
— The Detroit News

“Gerald Celente forecast the 1987 stock market crash, ‘green marketing,’ and the boom in gourmet coffees.” — Chicago Tribune

“The Trends Research Institute is the Standard and Poors of Popular Culture.”
— The Los Angeles Times

“If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.”
— New York Post

So there you have it – hardly a nutjob conspiracy theorist blowhard now is he? The price of not heeding his warnings will be far greater than the cost of preparing for the future now. Storable food and gold are two good places to make a start.

http://www.infowars.com/?p=5938

The news media are in the process of creating a great new historical myth. This is the myth that our present financial crisis is the result of economic freedom and laissez-faire capitalism.

The attempt to place the blame on laissez faire is readily confirmed by a Google search under the terms “crisis + laissez faire.” On the first page of the results that come up, or in the web entries to which those results refer, statements of the following kind appear:

• “The mortgage crisis is laissez-faire gone wrong.”

• “Sarkozy [Nicolas Sarkozy, the President of France] said ‘laissez-faire’ economics, ‘self-regulation’ and the view that ‘the all-powerful market’ always knows best are finished.”
• “‘America’s laissez-faire ideology, as practiced during the subprime crisis, was as simplistic as it was dangerous,’ chipped in Peer Steinbrück, the German finance minister.”
• “Paulson brings laissez-faire approach on financial crisis….”
• “It’s au revoir to the days of laissez faire.”[1]

Recent articles in The New York Times provide further confirmation. Thus, one article declares, “The United States has a culture that celebrates laissez-faire capitalism as the economic ideal….”[2] Another article tells us, “For 30 years, the nation’s political system has been tilted in favor of business deregulation and against new rules.”[3] In a third article, a pair of reporters assert, “Since 1997, Mr. Brown [the British Prime Minister] has been a powerful voice behind the Labor Party’s embrace of an American-style economic philosophy that was light on regulation. The laissez-faire approach encouraged the country’s banks to expand internationally and chase returns in areas far afield of their core mission of attracting deposits.”[4] Thus even Great Britain is described as having a “laissez-faire approach.”

The mentality displayed in these statements is so completely and utterly at odds with the actual meaning of laissez faire that it would be capable of describing the economic policy of the old Soviet Union as one of laissez faire in its last decades. By its logic, that is how it would have to describe the policy of Brezhnev and his successors of allowing workers on collective farms to cultivate plots of land of up to one acre in size on their own account and sell the produce in farmers’ markets in Soviet cities. According to the logic of the media, that too would be “laissez faire” — at least compared to the time of Stalin.

Laissez-faire capitalism has a definite meaning, which is totally ignored, contradicted, and downright defiled by such statements as those quoted above. Laissez-faire capitalism is a politico-economic system based on private ownership of the means of production and in which the powers of the state are limited to the protection of the individual’s rights against the initiation of physical force. This protection applies to the initiation of physical force by other private individuals, by foreign governments, and, most importantly, by the individual’s own government. This last is accomplished by such means as a written constitution, a system of division of powers and checks and balances, an explicit bill of rights, and eternal vigilance on the part of a citizenry with the right to keep and bear arms. Under laissez-faire capitalism, the state consists essentially just of a police force, law courts, and a national defense establishment, which deter and combat those who initiate the use of physical force. And nothing more.

The utter absurdity of statements claiming that the present political-economic environment of the United States in some sense represents laissez-faire capitalism becomes as glaringly obvious as anything can be when one keeps in mind the extremely limited role of government under laissez-faire and then considers the following facts about the present-day United States:

1. Government spending in the United States currently equals more than forty percent of national income, i.e., the sum of all wages and salaries and profits and interest earned in the country. This is without counting any of the massive off-budget spending such as that on account of the government enterprises Fannie Mae and Freddie Mac. Nor does it count any of the recent spending on assorted “bailouts.” What this means is that substantially more than forty dollars of every one hundred dollars of output are appropriated by the government against the will of the individual citizens who produce that output. The money and the goods involved are turned over to the government only because the individual citizens wish to stay out of jail. Their freedom to dispose of their own incomes and output is thus violated on a colossal scale. In contrast, under laissez-faire capitalism, government spending would be on such a modest scale that a mere revenue tariff might be sufficient to support it. The corporate and individual income taxes, inheritance and capital gains taxes, and social security and Medicare taxes would not exist.
2. There are presently fifteen federal cabinet departments, nine of which exist for the very purpose of respectively interfering with housing, transportation, healthcare, education, energy, mining, agriculture, labor, and commerce, and virtually all of which nowadays routinely ride roughshod over one or more important aspects of the economic freedom of the individual. Under laissez-faire capitalism, eleven of the fifteen cabinet departments would cease to exist and only the departments of justice, defense, state, and treasury would remain. Within those departments, moreover, further reductions would be made, such as the abolition of the IRS in the Treasury Department and the Antitrust Division in the Department of Justice.
3. The economic interference of today’s cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA. Under laissez-faire capitalism, all such agencies and commissions would be done away with, with the exception of the FBI, which would be reduced to the legitimate functions of counterespionage and combating crimes against person or property that take place across state lines.
4. To complete this catalog of government interference and its trampling of any vestige of laissez faire, as of the end of 2007, the last full year for which data are available, the Federal Register contained fully seventy-three thousand pages of detailed government regulations. This is an increase of more than ten thousand pages since 1978, the very years during which our system, according to one of The New York Times articles quoted above, has been “tilted in favor of business deregulation and against new rules.” Under laissez-faire capitalism, there would be no Federal Register. The activities of the remaining government departments and their subdivisions would be controlled exclusively by duly enacted legislation, not the rule-making of unelected government officials.

5. And, of course, to all of this must be added the further massive apparatus of laws, departments, agencies, and regulations at the state and local level. Under laissez-faire capitalism, these too for the most part would be completely abolished and what remained would reflect the same kind of radical reductions in the size and scope of government activity as those carried out on the federal level.

What this brief account has shown is that the politico-economic system of the United States today is so far removed from laissez-faire capitalism that it is closer to the system of a police state. The ability of the media to ignore all of the massive government interference that exists today and to characterize our present economic system as one of laissez faire and economic freedom marks it as, if not profoundly dishonest, then as nothing less than delusional.

Government Intervention Actually Responsible for the Crisis

Beyond all this is the further fact that the actual responsibility for our financial crisis lies precisely with massive government intervention, above all the intervention of the Federal Reserve System in attempting to create capital out of thin air, in the belief that the mere creation of money and its being made available in the loan market is a substitute for capital created by producing and saving. This is a policy it has pursued since its founding, but with exceptional vigor since 2001, in its efforts to overcome the collapse of the stock market bubble whose creation it had previously inspired.

The Federal Reserve and other portions of the government pursue the policy of money and credit creation in everything they do that encourages and protects private banks in the attempt to cheat reality by making it appear that one can keep one’s money and lend it out too, both at the same time. This duplicity occurs when individuals or business firms deposit cash in banks, which they can continue to use to make purchases and pay bills by means of writing checks rather than using currency. To the extent that the banks are then enabled and encouraged to lend out the funds that have been deposited in this way (usually by the creation of new and additional checking deposits rather than the lending of currency), they are engaged in the creation of new and additional money. The depositors continue to have their money and borrowers now have the bulk of the funds deposited. In recent years, the Federal Reserve has so encouraged this process, that checking deposits have been created equal to fifty times the actual cash reserves of the banks, a situation more than ripe for implosion.

[…]

http://mises.org/story/3165

I have had some interesting conversations over the last few weeks, all centering around the current historic economic events. Two of them are notable.

The first was with a good friend to whom I gave Ron Paul’s ‘The Revolution: A Manifesto’. He said that he read it up to the point where the book supports the Second Amendment right to bear arms. “I just cannot support the right to bear arms and all of that sort of stuff”.

This man owns two shotguns.

I am telling this story because it demonstrates that there are many people out there who simply cannot think. I had to go through the reasoning behind the Second Amendment, why it applies today more than ever and how many people react in a knee-jerk fashion to it thanks to a constant stream of propaganda. At the end of the conversation, he said, “I have to get more ammo”.

Sadly, this unthinking reaction to the Second Amendment is not uncommon, and I have had the same reaction to Ron Paul from a software developer who had only heard a little about him, “he’s not one of those ‘Right to Bear Arms’ people is he?, because I’m not down with that”.

These people, if they are lucky, understand the importance of bearing arms only when it is spelled out to them very slowly. If they are unlucky, they understand it only when it is too late, and the state is stealing their property from them, or they are being slaughtered in ethnic cleansing operations.

Which brings us to the other of the two conversations.

I informed a friend with suitable dread that Nicolas Sarkozy called recently for a world currency controlled by a world bank. My good friend replied, “So? Whats wrong with that? It would mean that you can trade anywhere in the same currency”.

I then explained to him that a world currency would be controlled by a single group of people,  and a single bank, who would control its value by either printing or not printing it, they would also control the interest rates and there would be absolutely nothing anyone could do about it.

He gasped, “My God, that would be TERRIBLE.”

This person already has a limited (but growing) understanding of the problems with fiat currency thanks to the internet. It only took a little push to make him totally reject the idea of a world currency. That is a good thing; someone starting to wake up and who is able to see the problem with only a small amount of prompting.

We then went on to discuss why trans-national currencies ‘Currency Monocultures’ like the Euro are a bad thing.

Imagine that the Euro never happened, and each European country had kept its own currency. Each country would be able to formulate its own response to bank failures, and their currency would suffer or gain depending on their response. Each person with savings could hold a basket of currencies to protect themselves from being wiped out by inflation. The Italians might opt to let their banks fail so that the system is cleaned out of bad debt. The Lira, the Italian people and anyone holding Lira would benefit. The French might nationalize their banks and bail them out with taxpayer’s money. The Franc would suffer from inflation, the French would suffer separately from other states, and the FrenchCitoyen would have an opportunity to get out of the Franc and into a currency that was not inflating.

Monocultures make it easy for disease to spread. In computers, everyone running windows makes it easy for viruses and trojans to spread like wildfire. Flu spreads rapidly when many people are sharing the same space in a crowded city. If you want to make it impossible to have a world wide systemic monetary crash, you make sure that every economy, every country is insulated from the others by each having its own currency, its own independent financial policy and you reduce the importance to near zero of currencies like the Dollar, whose status as the world’s reserve currency exposes everyone to risk.

The absolute last thing you do is create a ‘world currency’. This would create an opportunity for a crash that would make this one look like a picnic with apple juice and marshmallows as the food. It would create a monoculture where any disease would be instantly caught by everyone everywhere, where there would be no place for anyone to run to protect their wealth, where a handful of naturally incompetent people would control the destiny of the whole world.

A world currency is the very definition of insanity.

Those in the know are heading for the Yen to get out of the way of the oncoming train. Gold is already in very short supply or sold out world-wide as people flee to it to protect the value of their money.

That last link was from The Guardian. The newspapers have demonstrated that they are no longer the place to get any sort of real information. There has been a rush for gold not because anyone in any newspaper has explained why inflation is coming, but everyone who knows about this has found out about it from the internet. Newspapers like The Guardian are still trying to sell the utter nonsense that mega salaried executives and lack of regulation are the cause of these problems. Everyone who takes the time to find out about the truth behind all of this (that it is regulation and interference by the state in the market, combined with central banks and fiat currencies, mostly the dollar, being printed to excess) knows that the Guardian, Gordon ‘Man of Clay’ Brown and all the other newspapers have got it totally wrong either because they are being told to print lies or they just do not know anything about economics.

Notice the words that are missing from every explanation of what is going on. There is no mention of ‘Fiat Currency‘, for example and never any reference to any of the people who predicted every element of all of this.

But I digress.

Anyone who calls for a bailout, anyone who calls for more regulation, anyone who calls for more centralization, anyone who calls for fewer currencies, or the worst possible scenario, a world-wide single currency, just doesn’t know what they are talking about.

They are not going to get away with this. Too many people are aware of what is really happening (as demonstrated by the rush to buy gold world-wide, without any prompting and a total lack of real information from any major news source). When they fail, we will return to local currencies on a national or even smaller basis, so that everyone will have built in protection for their wealth. The disease spreading central banks are now totally discredited. They do not have the ability to set interest rates correctly; no one can, in the same way that no one can predict the weather. The weather man always gets it wrong to some extent, but in the case of central bankers, they make the bad weather wheras the weather man merely reports it.

We will return to a state where no central control of money exists. The dynamic, chaotic yet stable, market will take control and everyone will understand that there is an underlying stability, (in the summer it is hot, and in the winter it is cold) and inside these variations there are flucituations that are understandable. Those with a background in maths know what this looks like as a picture; a Lorenz Attractor a shape that describes a chaotic system, yet which is self contained and understandable on the large scale. Students of dynamical systems will also know that chaotic systems can tolerate a small amount of parameter change without flipping into another stable state. When those parameter changes, i.e. tweaking of the economy, too much regulation insane taxation, are too great for the system to absorb, the market becomes distorted, and the attractor that describes it doesn’t stay in a shape that anyone can understand or predict, especially as the changes imposed by the state keep happening regularly.

On every level and by every measure state interference in markets is wrong. It is morally wrong because the state steals from people to do its dirty work. It is wrong objectively, and this can be demonstrated by mathematics.

It is high time that people everywhere cut the state out of their affairs and restricted them to the servant position where they belong.

The latest large business to leave the USA is Dell

http://gizmodo.com/5045901/dell-to-sell-most-or-all-of-its-factories-in-18-months

Why?

Because america is bad for business.

If america were good for business, companies would be moving TO there, and not FROM there to other countries.

Biden and that wannabe mass murderer Obomba keep talking about helping factories and jobs stay in america, but they know nothing about economics, every businessman knows it, and the people who own Dell are taking pre-emptive measures to escape the Socialist Homeland that is going to emerge when those two take power.