Environmentalism in a free society

One of the first reasons that people think of when talking about whether or not we need a large federal government (or global government for that matter) is the environment. Even self described libertarians often have trouble answering this question because much of the main stream libertarian publications and think tanks have avoided this for some time. Well, the Austro-libertarians have come to the rescue again and describe how we can have a much cleaner environment with absolutely no regulation at all. The case for this is actually pretty simple, that law, not regulation, protects people from aggressive action by others. Pollution is an aggressive action (it harms either you or your property). It therefore follows that the law should be used to protect people from such action.

If a company pollutes a river, people downstream have a right to claim damages. The reason that this was not often done in the past was because large corporations often used lobbyists to change liability laws to protect themselves against such damage suits from being filed. More regulation is just a very poor Band-Aid that tries to regulate away the damage causing chemicals in the water by making them less toxic but toxic is still toxic, even if it is a lesser degree. The real answer is to hold companies and individuals completely liable for any contamination in the water supply. The threat of lawsuits will ensure the river will stay much cleaner but regulation has the opposite effect, it simply lets the industrial company get away with a certain amount of pollution.

Walter Block explains (skip the add)

The philosophy underlining both the left and the right

 

Today in America, most people divide the political spectrum into two sides, liberals and conservatives.  Though both appear to be opposite philosophies on their face, they are in fact two sides of the same coin.  Both terms have changed over time and too truly understand their meaning; we have to look back in history to understand them. 

 

The easiest way I find in understanding what these terms mean is what they are not.  I would consider myself a liberal in the classical sense and also the true sense of the word.  The modern use for the term liberal is perversely warped.  I often use the term “politically liberal” or “progressive” to differentiate myself from the modern term.  I rarely use the term “liberal” to describe my opposition (the modern left) because this is a false use of the word.  Both in the United States and Britain people use the term “liberal” to define the progressive tradition that started in the beginning of the 20th century.  However the rest of Europe still uses the term liberal in the old sense, the true sense of the word.  In Germany, mainland Europe, and especially in Scandinavian countries liberal means a person that believes in maximum liberty for the individual in the tradition of the Enlightenment.  This is no longer true in the United States where political liberals believe in wide and expansive state power.  There are a number of reasons for this but in short, the progressive movement in theU.S. and Britain used the term liberal because it had such wide attraction in the minds of the masses, while the more statist peoples of Europe and especially Germany never cared much the classical liberal tradition in the first place. Germans were largely against the English Enlightenment, and openly desired state power.  Germans would openly claim titles of socialist, communist, and fascist because there was no stigma attached to these terms as there were in the U.S. and Britain.  Thus, in English speaking countries, progressives and other socialists co-opted the term liberal because only by twisting language and hiding their true ideology could they get there ideas put into place in freedom loving countries such as these United States.  The Fabian socialists and Council of Foreign Relations are two very important examples of how two groups are willing to openly deceive the public to push their statist ideology.  The true meaning of the word liberal means openness and freedom, this is why the term “liberal thinker” means an open minded thinker, a liberal economy means an open and free economy as opposed to the political “liberals” who want a regulated economy.  The only true liberals in theUnited States today are now called “libertarians” or “classical liberals” in popular culture but in academic writing they are often still referred to as just plain “liberals.”

 

Conservatives seem, at first glance, easier to define. Conservatives basically want to preserve the American way of life and the traditions that “make this country great”.  At closer examination this seems more than a little confusing considering there has been over 200 years of history with many conflicting ideologies.  Some would say it is an unfair analogy but almost all conservatives would reject slavery as a political philosophy and yet it is an early tradition of this country.  What about the rise of statism in the 20th century in the form of the progressive era and the New Deal?  These are certainly are not representative of economic freedom but most modern conservatives endorse the likes of Theodore Rosevelt and FDR.  Newt Gringrich even called FDR the greatest person of the 20th century.  Whether he is or is not, it is very revealing or at least should be very revealing when modern conservatives and modern political liberals idealize the same political figures.  Is conservatism a simple cultural reaction to the 1960’s or does it stand for some concrete ideals?  From their statements its seems like conservatives hold a grab bag of many different ideas without any philosophical underpinning at all except maybe for the vague idea of “American Greatness”.  Conservatives in the modern day generally accept massive amount of military spending and warfare around the world which originated in the progressive tradition of TR and Woodrow Wilson.  They also accept many ideas that at one time were considered socialist such as public schools, central banking, food/drug regulation, and tariffs along with other types of economic intervention.  It is more accurate to label today’s mainstream conservatives as Neo-conservatives to differentiate them from some of the old conservatives that opposed the New Deal and foreign interventionism.  The old conservatives are usually called paleo-conservatives or the “old right”.  The best examples of the right would be Robert Taft and Howard Buffet and to a lesser degree Pat Buchnan might be considered good example of the old right today (except for his economic policies). For most people today the term Neo-conservative and conservative are synonymous because the neo-conservatives are by the most dominant national media.  We will seek to differentiate between the Neo-conservatives and libertarians.

 

So what separates libertarians or “true liberals” from conservatives and political liberals/progressives?  Let’s start by defining libertarian philosophy in general.  Libertarians generally believe in natural law, that human beings have natural rights that are bestowed upon them by a creator or by nature itself.  Libertarians generally believe that men and women are sovereign beings and are entitled to the rights that this implies.  Libertarians also generally believe in the non-aggression principal, the idea that no other human being, or even a government, can initiate violence against an other human being, violence can only be used in self defense.  Libertarians believe that man is capable of reason and can use this tool to navigate the world effectively.  Libertarians believe that man’s own happiness is his own journey that requires the most freedom possible so that he can reach his goals.  In general, libertarians want people to be unshackled from institutions that keep people from reaching their ultimate potential and unleash them so they can achieve whatever they want in life.  In this way, libertarians could be considered humanists.  Libertarians believe that power should flow from the individual from the bottom up and power should not flow from the top down from the state.

 Conservatives and progressives have no such underlying philosophy.  If they have any philosophy at all it is the exact opposite; that power should flow from the top down.  Many readers that label themselves liberal or conservative would say no and think that such a statement is ridiculous. The political liberal would say that “I believe in democracy, and this is bottom up” and the conservative would say that they “believe in the constitution, so how could I believe in top down power?”   I will concede that many on the modern left and right sincerely believe that they are for bottom up sovereignty but when looking at their actually philosophy this simply is not true.  Furthermore, both progressive and neo-conservative ideologies have conflicts built into them that make each incapable of delivering the priorities that each ideology values the most. 

 

Progressives and Neo-conservatives are both for Top-down power

 Let’s start with the progressive.  They may believe that democracy is bottom up but this is not true.  Yes, a democracy can change who holds the reigns of power but it does not change the nature of power in relation it the individual, it is still top down.  Democracy can easily be just as evil or as diabolical as the most tyrannical government. In a complete democracy 51% can vote to murder the other 49% and this is completely legal. Democracy does not guarantee any sort of justice in society, as even Hitler was democratically elected.  Democracy is only bottom up for the majority voters (which usually is a minority of the population because of the large amount of people that are not allowed or choose not to vote.)  Jim Crow Laws for example were put in place in the South under democratically elected state legislators; racial minorities had no power whatsoever.  Obviously democracy can lead to some pretty ugly things and a strong case can be made that democracy is actually a regressionary state for a free society as stated here and here.

Only natural law has offered a bulwark against tyranny, democracy on the other hand is just tyranny of the majority.  To the extent that Western Society remains free and prosperous is because of the natural law tradition that is deeply rooted in Western culture. This truth directly contradicts mistaken belief that we owe our prosperity and freedom to democracy. Democracy is not the guarantee of rights at all and is often used for just the opposite.

 

The Neo-conservative

 

Now let us look at the neo-conservative, they certainly reference the American Constitution but modern conservatives/ neo-conservatives have little philosophically in common with the underlying philosophical principals the document.  When examining mainstream conservatives political positions, it becomes very hard to take most modern conservative’s references to the constitution as anything but empty and hollow.  This is because the modern conservatives are much closer to the 20th century nationalist/fascist state, best exemplified by fascistItaly.  

For some warning lights are going off and would strongly object to such phrasing of modern conservatives as fascists.  I agree that most people use this term to unfairly discredit their opposition but this is not the case here. In addition, most people use the term “fascist” as an empty attack against political enemies, especially the left in referring to the right, this is not my intention.  When I refer to the term fascist, I do not refer to death camps or the bloody evil side of fascism of WWII, I refer to the fascism as the economic system and the philosophical system that supports it.  Death camps can be a symptom of fascism but it is not a defining characteristic.    Many “conservatives” would strike back saying that “the fascists where socialists and we are for capitalism, so how can we be fascists?”  Well, most conservatives are socialists in some degree but the importance here is that fascism is not the traditional view of socialism where the state owns the means of production.  The fascist style of socialism is where all private property is owned by the citizens but the state retains power over all private property and can direct how citizens use it.  Most modern conservatives believe in a moderate level of government intervention that falls into this category of fascist but not to the level state ownership of property that would cross the line into outright socialism. 

 

Though the economic similarities are important, the true similarities to fascism and neo-conservatism are at philosophical level.  Both believe in “national greatness” and the warfare state as a means to achieving such greatness.  I would put these priorities at one and two on the neo-con list.  Nothing else comes close and if any other ideas come into conflict with the before listed two ideas, such as natural rights, capitalism, or rule of law, they must give way because, for the neo-conservative, national greatness is the only priority that truly matters.  When considering that this is the prism that conservatives use to look at the universe, it is much easier to understand how their praise of the American Constitution is empty and hallow.  The neo-conservative’s high regard for the Constitution is not about what the actual document states or the principals of natural law undergirding it, it is merely an extension of their national greatness philosophy that worships the founding of their “Great Power” that they just happened to be born into.  Similar to how the Romans venerated their founding by Romulus and Remus or how the Germans idealized Bismarck, or any other number of martial nations revere their founders, the Neo-conservative veneration of the Constitution and the founding fathers is the same type of national adoration.  This can be seen time and time again when supposed conservatives in congress and the executive branch trample all over the Constitution while supposed conservatives in the media give them a pass.  The best example of this is probably the Patriot Act.  This act completely shreds the fourth amendment and the most basic natural rights that human beings possess.  If modern conservatives cared at all about the constitution or our “founding”, they would realize that this kind of power, the ability for agents of the state to write their own search warrants, is the exactly the kind of power the King of England claimed for himself and his agents.  We fought a revolution against this kind of abuse of power but modern neo-conservatives prostate themselves before the executive branch as it tramples over their rights.  There is nothing American about letting an executive have such power whether he is a king across an ocean or our own commander and chief. Conversely, for the neo-conservative, any constitutional transgression in the name of the warfare state is not only acceptable but somehow bizarrely patriotic.  The founder of the National Review and probably the most well known neo-conservative thinker in the 20th century, William Buckley, expressly accepted totalitarian bureaucracy at home was necessary to fight communism abroad.  This idea goes squarely against Jefferson’s statement that “Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.”  The modern Neo-conservative thinkers do not fall far from Buckley’s ideological tree if one considers how neo-cons support things like warrantless wire-tapping, the Soviet style national ID card, drone strikes on American citizens and a host of other vile constitutional transgressions. Many Neo-conservatives claim that the left “hates America” and some might but blind love of America is actuality just love of the nation state.  Only libertarians understand the liberty has made us great and to the extent we lose sight of that, the less great we become.  Only libertarians truly understand the philosophical principles the constitution sets forth, whereas the neo-conservatives revere the constitution largely in an abstract way and only take it seriously when it is convenient for their political leaders.

 

 

Internal Contradictions in the Left

 

 

For the sake of brevity, let us look at just one other underlying problem with modern leftist thought. Many on the modern left sincerely want the betterment of their fellow man, but the tool they wish to achieve this, primarily the welfare state, not only harms the general welfare but also sets the stage for an authoritarian government.

 

There are six major problems with the welfare state.

 

1.  The federal government’s success with welfare has been almost a complete failure in the 20th century.  Not only have poverty rates have not gone down but it has created a huge amount of dependency.  This government created dependency is the worst kind of evil and those on the government dole are the victims. Government bureaucrats are sort of like drug pushers, the drug is government assistance.  The most important human spiritual need is to be able to be self-sufficient.   To take this away from a person is a huge blow against a human’s self esteem.  For a man or a woman to look at their children and encourage them to make the most of themselves while at the same time being on government assistance must be a very hard thing to do.  When a person is on such assistance, it is hard to break out of it.  The more time out of the work force, the harder it is to go back both from a self motivational point of view because the job market is competitive and looks suspiciously on long term unemployment.  There is no doubt that some people need a helping hand once in a while but this has been done very adequately by private charities throughout American history.  In the past, private charities have been much more effective at providing assistance to individuals without out creating dependence while the government has created even more inner city problems with such programs.  Government welfare programs create dependence while the free market actually gives the disadvantaged a leg up.

 

2.  Politicians do not create welfare programs because they care about people but because they want to secure voting blocks.  People may think this is cynical but politicians have routinely demonstrated that they only care about getting re-elected.  Ever legislative move they make is towards those ends.  Their may be a few exceptions but overall this is the case.  Just look at the insider trading that goes on in Congress and the bills that come out of that den of thieves.  The recent Health Care legislation is a good example.  Any true progressive knows that this bill hugely favors the health insurance industry because it forces people to buy health insurance.  The supposed “liberals” in Washington did not care, they would rather have lobbyists write the health care bill than push for the more progressive “single payer” plan.  The same is for welfare, politicians do not care if it actually helps people, they are simply trying to expand their voting blocks.  To think otherwise is naïve, for more on this from a honest historian and a true progressive that is not affraid to buck leftist taboo read “A Renegade History of the United States.”

 

3.  The biggest receiver of welfare is not the poor but the rich.  Any kind of government assistance that the poor receive is mere crumbs compared to what the rich receive.  This is because the rich always game the system, they have the money to lobby and affect legislation that benefits them.  Even during FDR’s New Deal, the rich became even wealthier, while the poor suffered.  There are many reasons for this but our monetary, economic, tax, and legal system have been created to benefit the rich.  Newly printed money goes to the rich first because they are invested in banks and Wall Street where the newly printed cash arrives first.  The economic system benefits the rich because the laws supposedly made to “benefit” society or protect people from unfair business practices are actually laws the rich lobby for to raise the compliance cost on small business competition  This leads to government protected private monopolies that rich benefit from because small business can no longer compete.  The tax system encourages huge corporations because transactions inside a company are not taxed while all transactions between companies are.  This means that larger companies can avoid much of the costs that smaller companies have because most of their transactions are internal.   “Taxing the rich” also fails because their capital is mobile and hard for IRS agents to track.  It is much easier and much more common for IRS agents to go after the moderately wealthy small business owner because he does not have the resources to protect himself.  The legal system benefits the rich because its complexity is very expensive to navigate leaving much of the middle class exposed but the rich safe because they have much more money to invest in legal services. The larger the government the more rich the rich become. 

 

4.  Welfare programs end in disaster for the very people they are trying to help while the rich get richer. The housing programs that were supposed to help the poor is a great example.  The home ownership program for the poor was designed to get everyone in a home.  What ended up happening was that much of the poor and middle class defaulted on their loans while the rich made tons of money investing in home loan industry.  The rich got bailed out while the poor were kicked out on the street.  Even programs designed to help the poor usually make the rich richer and the poor poorer.

 

5.  The nature of bureaucracies incentivizes the people that supposed to cure poverty to instead keep a high poverty rate.  Government bureaucrats need to keep the poverty rate high so that they remain employed. If nobody needed their services their own jobs would disappear.  Some government workers might sincerely want people to attain a higher station in life but the system itself encourages them to allow dependency to happen.   When good intentions and grinding bureaucratic systems have conflicting priorities it is usually the system that wins because the individual gets worn down. 

 

6.  What happens when the well-fair system truly collapses as it most assuredly will?  Well, Gary North has some input on that but for most on the left, this prospect is simply unimaginable so they will not even consider it.  Unfortunately for the welfare statists and especially the millions of people dependent on the immoral system they created, the end is coming in the next decade.

 

 

If the left truly wants the betterment of their fellow human beings, it is time they start considering new ways of achieving it.  It is time they look at what libertarians have been offering.

 

Internal Contradictions of the Right

 

Modern Neo-conservatives have just as many contradictions as the left, if not more.  Conservatives like Mark Levin rail against left statists but the modern right is just as statist in different ways.  For the Neo-conservatives, there is no such thing a military budget that is too large.  In their minds, America can never be too many divisions, too many alliances/military obligations, or boots in too many countries.  The American military establishment is to be revered without question.   There is no country to small that we should not invade. There is no threat that is too small to ignore.  Any third rate dictator is a potential Adolf Hitler that could cause a world war.  It is strange how the glorification of the warfare state originated with socialists like Theodore Roosevelt and Wilson but modern conservatives accept without question.  Roosevelt swelled with pride as he saw American battle ships sail out to sea just as neo-cons today swell with pride as B2 bombers drop their payload on whoever is the latest backwater enemy of America.  The socialist Wilson claimed to make the world “safe for democracy” and today the neo-cons under George Bush have picked up the progressive banner of have American men and women fighting and dying all around the world in the hopes that others can be so blessed with democracy.  True conservatives have been tricked by the neo-con establishment and should take a serious look at their priorities.  If we can’t centrally plan Detroit out of poverty, what makes people think that we can centrally plan a country with a culture that is a thousand years old like Afghanistan out of poverty?  Such contradictions seem to escape Neo-conservatives, they criticize political enemies for trying to nation build in the Balkans and Somalia but when they get into power they put a foreign policy of nation building into overdrive. 

Maybe the United States should engage in maneuver and Special Forces type warfare around the globe instead of getting bogged down in two backwards countries that don’t give a wit about “democracy” or a better life for their country?  Maybe such large scale occupations can cause blowback that will lead further American deaths?  These questions are not even allowed on the table, let alone debate for your patriotic Neo-conservative.  For your average conservative, America has used just the right amount of American power in our political conflicts not one battalion too many or too few and a good citizen should never question it.  Fortunately, many in the armed forces have done just that, to include Lt Col Davis, whose article in Armed forces journal and his full report that can be read on PDF should have made the neo-conservatives question the Afghan conflict.  Unfortunately, the modern intellectual leaders of the conservative movement are unfazed and are already looking to the next war in Iran.  

 

Conclusion

The modern conservative and liberal ideologies are two sides of the same coin.  Both wish to use the state to shape the world as they see fit.  Their goals may be somewhat different but their methods are the same.  Both never question the legitimacy of state power.  Both wish to use the leviathan state for their own ends.  Both fundamentally believe that power comes from the top down.  Both forget that true sovereignty rests in the individual not the collective. 

The modern intellectual class has kept the peoples’ minds imprisoned with this false left-right paradigm. They provide the intellectual cover for the welfare-warfare state that destroys the American middle class in more ways that can be named. They are like the priests of the middle ages guarding the feudal system with intellectual cover of the “Divine Right of Kings”.  The serfs believed that there fate was inevitable and that their misery and servitude were simply the nature of the universe.  Even worse, the priests said that God demanded such misery from them.  For them, there was no other way that they can imagine.  Let us not make the same mistake.  

 

Luke

 

 

Investing Austrian Style

 If Austrian economics adds valuable insight into the understanding of economics, can it be used to make money?  Hell yes it can!  With an understanding of Austrian economics you can navigate the markets more effectively than your average citizen, even your average investor.  Just imagine being able to see the housing bubble and the dotcom bubble before they collapsed.  You might have avoided buying that huge house with the adjustable rate mortgage or that silly website that was represented by that weird sock puppet on TV.  However, at the same time, it can be challenging to invest with an Austrian perspective because Austrian Economics does not really make predictions per se but people that use it can understand long term trends.  For example, an Austrian Economist investor would not say that the stock market is going to drop tomorrow or that a bubble is going to pop on a certain date.  The housing bubble lasted for years and most Austrians were not sure when it was going to pop. This makes investing challenging because if you stay out of a bubble all together you will miss much of the profits but you will also avoid the inevitable crash.  The key is to be able to identify where the next bubble is likely to happen and to put your cash there and pull it out before it pops.  This may seem pretty obvious but it can be challenging.

Austrian Economics describes how central banks create bubbles through inflation.  The Federal Reserve has had interest rates near zero for three years and has used two large quantitative easing programs (money printing) to goose the economy.  From the Austrian Perspective, this monetary stimulus is destined to fail because no amount money rushing into the economy can create new wealth or invigorate “idle resources” but instead leads to malinvestment and future bubbles.   This knowledge gives people with an understanding of Austrian Economics a distinct advantage.  Unlike most pundits and investors that think the economy is “turning around”, Austrian investors know that this is a false recovery.  The question now becomes what will happen next. 

Will the Federal Reserve be able to create another bubble on the scale of the housing bubble that will lead to another crash down the road or is the economy a “dead man walking” where no amount of monetary inflation will revive the economy due the last two decades of malinvestment?  Both of these scenarios will lead to a crash but for an investor, these two scenarios imply two dramatically different ways of investing. 

From my point of view it appears that the Federal Reserve will fail at inflating another big bubble, there might be a couple small ones, but it is unlikely that we will have anything like the housing boom before we have a very serious economic crash.  There are many different reasons for this but from what I can tell these are some of the most important.

  1. The economy is unresponsive.  The economy has barely budged even with a totally unprecedented amount of inflation from the Federal Reserve.  This is very unusual considering the steps taken dwarf anything in the history of theUnited States.  Greenspan was able to inflate another bubble rather quickly after the dotcom boom with a comparatively modest lowering of interest rates compared to the trillions in both monetary and fiscal stimulus and much lower interest rates for a much longer period of time that the Federal Reserve and the Government used after the housing crash.  It like a man that has had repeated heart attacks and each electrical shock by the doctors to revive him has to be larger and larger.  This latest round of electrical shock has kept the patient from dying but his heart is so damaged that he can no longer walk.  It is just a matter of time before his heart gives out.  This is what the Federal Reserve is doing with the economy, it can barely keep it alive but it can no longer bring it back to normal.  It can only watch as it slowly dies. It can either choose to let it die (stop inflating) or try a couple more times in what is a lost cause.    

 

  1. Inflation creep.  The Federal Reserve will likely reach a point where he it can no longer stimulate without a serious problem with inflation.  True inflation as measured by shadowstats.com is somewhere around ten percent (The government does not calculate inflation like it used too, it does not include Food or Fuel in the CPI and also uses what is called econometrics that understates real inflation.)  Bernanke will likely face two dire choices, stimulate and risk out of control inflation or let the economy fall into a major depression.  Politically, inflation is the easier route but it is not as easy as it used to be.  Today the public has a much better idea where inflation comes from as opposed to even a few decades ago when in the 1970s people wore Alan Greenspan inspired WIN (Whip Inflation Now) shirt buttons as if the public, by sheer determination, could end inflation themselves instead of demanding the Federal Reserve stop printing money.  In addition, the Ron Paul campaign has brought the Federal Reserve into the national political debate for the first time in 100 years, Federal Reserve chairmen simply don’t have the leeway that they used to.  When faced with another massive stock market drop will Bernanke blink and inflate?  The question is still out but in the near term I believe the answer is yes but eventually he will have to answer to the public for out of control inflation and likely put the brakes on.

 

  1. Public and private debt.  Simply put, the debt held by the American government, American business, and the American public is unimaginably huge.  Any recovery will have this black cloud hanging over it in the future.   Economists generally agree that when government debt reaches close to 100% of GDP, economic growth falters.  Add to this the debt held outside the government in private markets and we reach some really scary numbers.  Markets are built on confidence and this kind of debt is confidence shattering.  This debt creates further problems as well because our monetary system depends on ever increasing debt.  The public is desperately trying to deleverage but for government inflation to stimulate the economy, more debt is required.  Right now it looks almost impossible for the private sector to willingly accept more debt so the government will try to pick up the slack by running even larger deficits.  Eventually though, even governments can leverage themselves too far and default.  Whether this default happens through hyperinflation or by stiffing social security recipients and the Chinese is still unknown but default is inevitable. 

 

  1. Unstable global monetary system.  As predicted by Austrian Economists since the collapse of the Bretton Woods 1971, the global monetary system is starting too break down.  Actually, the fact that it has lasted so long is pretty amazing but the flaws of a world wide fiat dollar system are becoming exposed.  Under the Bretton woods system, central banks from around the world could exchange their dollars for gold.  This allowed every central bank in the world to hold dollars instead of gold because they could exchange these dollars for gold at the New York Federal Reserve bank.  Today, these dollar bills are sitting in central banks around the world and can no longer be exchanged for gold.  This leaves the whole reason to hold dollars in the first place irrelevant.  Foreign central banks have willing held these dollars for the last thirty years because the dollar has been relatively stable but this is changing.  The dollar is quickly loosing value and foreign central banks are going to start losing a lot of money because of the Federal Reserve’s inflationary policies.  For now, foreign governments that are large holders of dollars follow an export mercantilist model of economic planning.  Presently, exports to theUnited Statesare the most important priority for these mercantilist governments and therefore, they will keep buying upU.S.debt but once again, this has a limit.  Inevitably, importing so much newly printed money from theU.S.will have inflationary effects upon their own citizens and they will likely pull out of the dollar to protect their own domestic economies.  When this happens is uncertain but it is unlikely that the dollar will remain the world’s reserve currency for more than a ten years.

 

How to invest in a stagflation/depression scenario

Assuming no new large bubble is inflated what should an investor be looking at?

First it is always positive to diversify your assets to some extent but if you believe that an inflationary scenario is approaching (as I do) then I would advise investing to hedge against such a scenario and possibly making a lot of profit as well. 

Commodities and Safe Currencies

The key to investing in an inflationary environment is investing in commodities and companies in countries that have strong currencies. 

Gold- The most common commodity that is a hedge against inflation is gold.  This is because gold has a long history of retaining value, especially when currencies are being devalued.  Many people consider gold a “barbaric relic” and not a true investment vehicle because it does not earn dividends.  I would advise these people to consider that central banks all around the world hold ton upon ton of gold in their vaults.  This is not held without reason, especially when considering how many countries are so in debt that selling their gold could provide them with much needed revenue but they don’t do this.  Why?  The answer seems to me that central bankers know that paper currency backed by nothing has some risks.  Hyperinflation and loss of confidence in a national currency has happened repeatedly around the world over the last fifty years. Though the West has largely been spared from crises, it does not imply that it is immune.  Central banks hold gold for a reason, citizens should be mindful of what those reasons are.

Silver- Silver is a precious metal like gold but also has industrial properties as well.  It is the most efficient conductor of electricity in the world and is used in a variety of electronic products.  As the increased digitalization continues and the populations of developing countries likeChinaandIndiastart adopting modern technologies, the demand for silver will likely continue to rise.  Silver investing is not without risks, its industrial properties also incur the risk of a drop in price if another recession or depression hits, especially a deflationary one.  Any potential investors should research silver thoroughly before jumping all the way in.   

Oil- Like silver, oil has some advantages and disadvantages.  Oil is critical to the global economy and will always be in demand but a world wide economic slowdown could very likely take the down the price like it did in 2008.  Oil should do well in the next ten years but once again caution is advised.

Land-Land, more specifically farm land could be a potentially wise investment.  Already we are seeing a huge run up in farm land in the last five years and it is likely to be in bubble territory soon.  If you can get in and get out at the right time you should do fine but you can also invest in farm land for piece of mind in a worst case scenario economic collapse.

Agricultural Commodities- Agriculture will likely do very well in the future because the demand for food will continue to rise with population growth.  In addition, people in first world countries consume much more calories than people in third world countries, as more countries become industrialized, the same amount of people will demand more food.  There are other reasons as well such as an inflationary scenario.  This will drive up food prices because people will rush into tangible assets while fleeing investments that are vaguer, like the financial industry.

Currencies- Investing in currencies can mitigate the risk of further dollar devaluation as well.  Countries likeSwitzerland,Norway,Australia, andNew Zealandhave not devalued their currencies to near the extent that Fed and ECB have.  In addition, all these countries have large natural resource economies. Canadahas these qualities as well but its proximity and dependence onU.S.trade makes investment inCanadariskier in my Opinion. 

Foreign Companies- The foreign companies that should be invested in should be the same as the ones suggested under currencies. 

Cash- There is some debate about how practical it is to hold cash with the coming inflationary scenario but there will be many opportunities to invest where cash comes in handy.  We will likely see huge swings in the markets and for a wise investor that can buy low and sell high, cash may be a wise choice. 

Well, these are just my thoughts but here are some resources

Investment Companies with an Austrian Perspective

– Casey Research

– Euro pacific Capital

 

Precious Metals Web Sites

-Kitco.com

-321gold.com

 

Books

– Bull moves in Bear Markets

– Rich Dad’s Guide to Buying Gold and Silver

Bill O’Reilly is a Socialist

A long time ago I was thinking about watching the Bill O”Reilly show and pointing out all of the disinformation that he puts forth on a weekly basis. I tried this for a couple of days but it just became to depressing that this guy is actually taken seriously as a commentator from the right.  The show is a complete waste of time.  He rarely talks about real issues and it is mostly just “right wing” popular culture expressed as a news program.  He sends people to interviewHollywoodtypes and atheist rallies and has a whole discussion segment afterwards to talk about crazy and left wing they are.  Well Bill, surprise surprise, Hollywoodtypes, atheists, and all kinds of other left wingers have views that you and probably a lot of other people find pretty strange.  Big deal, what does this have to do with anything?  Well, the obvious answer it does not and constinatly pointing out the “crazies” does nothing to inform the public at all but merely distract them. 

When Papa Bear Bill actually talks about serious issues, he is about as socialist as they come.  It might be “right wing” socialism but is is socialism none the less.  Bill is all about “looking out for the folks”, basically code for George Bush style big government “compassionate conservatism”.  Not only is this tone statist and condescending to the millions of individualist Americans that just want to be left alone but it is also a way to get people to support massive warfare/welfare state, so long as it is not the Democrats running things.  When oil prices start creeping up, he blames everyone but the real culprit, the Federal Reserve.  He does not believe in free trade, eliminating government departments, reducing our global military footprint, or deregulation.  In fact, Mr. Bill calls for further regulation on a regular basis, especially in global trade, the oil market, andWall St.  He seems to blame “speculators” for every economic ill rather than the Federal Government and the Federal Reserve who’s regulatory and monetary policies have been completely disastrous.  I remember one interview with John Stossel, Bill did not even know who John Maynard Keynes was.  This is understandable for the average guy on the street but how can a man that claims to be a political commentator not know the most influential economist of the 20th century.  Everything that congress and the Federal Reserve have done in the last four years from stimulus and quantitative easing has been done because the ideas that Keynes has set forth. Bill O’reilly’s ignorance of almost every economic issue is hard beat but this does stop him from bloviating on every topic under the sun. 

Well, Tom Woods finally calls out Bill on his cluelessness on the Constitution.  Sorry Bill, the general welfare clause is not a blank check for the Federal Government to do whatever it wants.  This has been primarily the tool of the modern left but Bill either has no shame and is completely evil or is even dumber than I originally thought.   

http://www.youtube.com/watch?feature=player_embedded&v=tcyyIkvXv_o#!

Growing Secessionist Movements in Europe and their wider impact.

This is an interesting, though anti-liberty, this article about the secessionist movements in Europe.   

I think that the EU will eventually break up.  I have been thinking this since at least 2009. I think that the European central bank will continue to inflate to the very end to try to keep the system together but it will still break up in the end whether the it is from secessionist movements or economic reality.

 I think there will also eventually be a push from the grass roots level in many of the American States to break away as well if the Federal Reserve does not let off the monetary gas and leads the U.S. into a hyper inflation scenario.

Business Insider does an anti Federal Reserve article?

Here is the list of things people should know about the Fed from buisness insider.

#1 The Federal Reserve System Is A Privately Owned Banking Cartel
#2 The Federal Reserve System Is A Perpetual Debt Machine
#3 The Federal Reserve Has Destroyed More Than 96% Of The Value Of The U.S. Dollar
#4 The Federal Reserve Can Bail Out Whoever It Wants To With No Accountability
#5 The Federal Reserve Is Paying Banks Not To Lend Money
#6 The Federal Reserve Creates Artificial Economic Bubbles That Are Extremely Damaging
#7 The Federal Reserve System Is Dominated By The Big Wall Street Banks
#8 It Is Not An Accident That We Saw The Personal Income Tax And The Federal Reserve System Both Come Into Existence In 1913
#9 The Current Federal Reserve Chairman, Ben Bernanke, Has A Nightmarish Track Record Of Incompetence
#10 The Federal Reserve Has Become Way Too Powerful

 

Click here for the whole article.