Tuesday, September 30, 2008

Protecting the Poor and America's 401(k)s

A letter signed by 166 academic economists was sent to congressional leaders last week opposing the government bailout plan. One of the economists, described by CNN as "a Libertarian," is Jeffrey A. Miron, senior lecturer in economics at Harvard University, who earned his Ph.D. in economics at MIT. He says Bankruptcy, not bailout, is the right answer. He advocates

getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

OK, suppose we do that, and replace the current system with a completely revised process of creating money for mortgage lenders through the Federal Reserve's expansion of credit, a revised process that takes into account the borrower's ability to pay, and does not promise lenders government guarantees for bad loans.

Would that be the final answer to today's "crisis?"


The fundamental cancer in our economy is the ability of the Federal Reserve to inflate the money supply. Regardless of how the money is inflated, regardless of whether or how the bankers get paid on their loans, regardless of how much regulatory "oversight and supervision" there is of the process of credit expansion, the act of inflating the money supply is immoral and unconstitutional.

And inflation leads to depression.

Miron appears to be a Milton Friedman-type libertarian. His policies might help delay depression, but until the Federal Reserve is abolished, the economy will be whipsawed between "boom" and "bust," as consumers and investors perpetually look for honesty and equilibrium, only to be misdirected by the policies of the Fed.

In a previous post we discussed "Enslaving Blacks" through mortgage lending. Here's a couple of questions nobody else is asking:

Who had the greatest lobbying effort to get the Community Reinvestment Act passed, making it possible for low-income minorities to get mortgages? Was it low-income minorities, or was it the bankers who stood to gain a quarter of a million dollars for every $100,000 they lent out?

If the government really wants to protect the United Nations-created "right to housing," why does it give money to bankers to lend to the poor at interest, rather than simply giving the money directly to the poor?

To ask the question is to answer it. The government's purpose is to reward Wall Street, not to protect "Main Street." In the case of the Treasury and Federal Reserve, "the government" is Wall Street. Treasury Secretary Paulson, Deputy Secretary of State Robert Zoellick, and Clinton Treasury Secretary Robert Rubin illustrate the revolving door between Wall Street and Washington D.C.

UPI is carrying opinion to the effect that the reaction of Wall Street to the defeat of the Bush/Paulson/Pelosi Bailout (dropping 777 points)

guarantees that a huge amount of money has been wiped off the value of 401(k)s affecting retirement plans. Tens of millions of Americans will be retiring in poverty or will not be able to afford retirement at all because of the votes those 133 Republicans and 95 Democrats made on this fateful "Fools Monday." Perhaps they might want to e-mail their representatives and tell them what they now think of their votes.

The White House is telling America that the bailout effort is not to bailout the bankers on Wall Street, but it has Americans like you and me in mind:

this is about Americans in their communities; that's what this is about. It's about family finances; it's about 401(k) retirement plans; it's about small businesses; it's about even larger businesses that do a great deal of hiring and are a strength in our economy, and we want to keep them strong.

Again, if Bush is so concerned about your 401(k), why doesn't he push for a 401(k) bailout plan in which the Fed simply creates and injects $100,000 into every 401(k) plan in America? Why give that money to Wall Street intermediaries? Could it be because Fed loans to AIG make Paulson's previous employer rich?

To ask the question is to answer it.

If the federal government is so concerned about the ability of Americans on Main Street to secure loans and credit, why doesn't Bush stop the federal government from sucking up $2.42 Billion in available credit per day?

If the government's heart is really bleeding over the ability of small businesses to make payroll and stay afloat, why didn't the Republican Congress and White House keep the promises that got them elected, abolishing wasteful, unconstitutional, and harmful bureaucracies that seize over half of everything the average business owner earns, and force businesses to grovel before lenders who were bailed out with the business owner's own money?

The Fed has stolen 95% of the value of all dollar-based investments since it was formed in 1913. The government knows its policies are making your retirement funds and social security worthless. If Bush and his Wall Street friends were really concerned about your retirement funds, they know exactly what they should do.

"Coin Money"

Citing the words "coin money" in the Constitution, Federal Reserve Chairman Ben Bernanke said that the Constitution gives his private organization the right to counterfeit U.S. Currency.

In answer to questions put to him by Congressman Ron Paul, Bernanke supported trillions of dollars of theft, just as Social Security Commissioner James Cardwell misused the Constitution in the same way. In Hearings Before the Joint Economic Committee, Congress of the United States, 94th Cong., 2nd Session, May 26 and 27, 1976, we heard this exchange:


Senator William Proxmire: "...there are 37 million people, is that right, that get Social Security benefits?"

Social Security Commissioner James Cardwell: "Today between 32 and 34 million."

Proxmire: "I am a little high; 32 to 34 million people.

Almost all of them, or many of them, are voters. In my state, I figure there are 600,000 voters that receive Social Security. Can you imagine a senator or congressman under those circumstances saying, 'We are going to repudiate that high a proportion of the electorate?' No.

"Furthermore, we have the capacity under the Constitution, the Congress does, to coin money, as well as to regulate the value thereof. And therefore we have the power to provide that money. And we are going to do it. It may not be worth anything when the recipient gets it, but he is going to get his benefits paid."

Cardwell: "I tend to agree."


In other words, the government took money from taxpayers in the form of Social Security "contributions," and used that money for whatever government wanted. It's gone now. The government has no money. But the government promised to take care of all those old people. So the government simply prints up more money to send them their Social Security "benefits." Doing this causes everyone's money to be worth less. You thought you were going to have enough money to live in a nice house, but you're going to be sleeping in your car instead -- because the purchasing power of your money has been stolen by the government. It was given to Wall Street bankers who needed it because they made bad investments.

Americans don't understand this, so they will continue voting for politicians who promise them "money" when what Americans really want is purchasing power.

Back to current events. Here's Congressman Ron Paul explaining the laws of economics to Ben Bernanke, and Bernanke explaining to Ron Paul the laws of government theft.

To understand the Constitution's phrase "coin money," one needs to understand the meaning of the phrase, "not worth a continental." To pay the soldiers in the Continental Army, more money was printed up. The thinking was, "It may not be worth anything when the recipient gets it, but he is going to get his salary paid."

Soldiers were allowed to exchange these worthless pieces of paper for food and clothing, and merchants were required at gun point to give their goods to the bearers of these worthless pieces of paper. ("Gun point" here means a "legal tender" law enforced by the government's guns.)

In an introduction to his notes on the Constitutional Convention's deliberations in Philadelphia, James Madison, the "Father of the Constitution," noted that one of the defects the Convention was assembled to remedy was that

In the internal administration of the States, a violation of contracts had become familiar, in the form of depreciated paper made a legal tender.

If I make a contract with you to mow your lawn, and you promise to pay me a certain number of "Continentals" or "dollars" for my work, and at the time I mow your lawn I anticipate that I can buy a certain number of gallons of gas with that "money," but by the time you actually pay me, that "money" can only buy half the number of gallons of gas that it could when we made the contract, then the contract has been "impaired," and you have effectively stolen that number of gallons of gas from me, just as surely as if you drove off without paying at a gas station.

Madison said the new Constitution was going to fix this problem of depreciating paper money. Accordingly, Madison and the other delegates included a provision in the U.S. Constitution that prohibits paper money, or the emitting of "bills of credit." (Art. 1, § 10, ¶ 1) That provision reads:

No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver a legal tender in payment of debts; pass any bill of attainder, ex-post-facto law, or law impairing the obligation of contracts; or grant any title of nobility.

In Federalist Paper No. 44, possibly the most authoritative source for constitutional interpretation, Madison explained the provision with these words in an attempt to sell the proposed Constitution to the American people:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. ... No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

The "true springs of public prosperity" are not the "expansion of credit" (creating new money out of thin air) by the Federal Reserve.

Article 1, Section 8, clause 5 of the Constitution gives Congress (not the Federal Reserve) the power:

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

In the video, you can hear Congressman Paul emphasize the word "coin."

After the Constitution was ratified, THE COINAGE ACT OF 1792 was passed by Congress, specifically defining the "dollar" as a certain amount of gold or silver.

Is there even a plausible argument that this part of the Constitution gives Congress the right to have the Federal Reserve print up new dollars to bail out incompetent Wall Street investors? That the phrase "regulate the Value thereof" was intended by Madison and the Framers to mean "reduce the value to ZERO?" The Federal Reserve has already stolen 95% of the value of the dollar since the Fed was formed by bankers in 1913.

Every Congressman who voted for the "bailout" and who has not publicly opposed the creation of credit by the Federal Reserve has violated his oath to "support the Constitution." He has voted to steal from Americans for the benefit of special interests. As Madison said, this is a moral issue.

This issue is at the very heart of the current crisis. Most Americans are oblivious to what the Constitution says. They went to government schools and are victims of educational malpractice. That's why we consistently vote for politicians who promise us "money" and "easy credit," while stealing our purchasing power. Stealing it from "ourselves and our posterity."

Sunday, September 28, 2008

Enslaving Blacks

Proverbs 22:7
"The rich rule over the poor, and the borrower is a slave to the lender."

Give a black man a mortgage and you not only make him your slave, but a $100,000 note at 6.5% will put nearly a quarter of a million dollars in interest in your pocket, in addition to the $100,000 principal.

So it's not a big surprise that lenders wanted to tap a large market of potential slaves. What's surprising is how little it cost them. It only cost them $130,000 to buy Barack Obama's vote. It only took a few more votes to bring in maybe a million new minority borrowers, and that's $250 Billion dollars on the terms above. Investing in the Congressional Black Caucus certainly paid off for Fannie Mae's CEO and other leadership.

One is reminded of the disproportionate number of black babies exterminated by the abortion industry in America.

Although black women constitute only 6% of the population, they comprise 36% of the abortion industry’s clientele. The leading abortion providers have chosen to exploit blacks by locating 94% of their abortuaries in urban neighborhoods with high black populations.

This high rate of abortion has decimated the black family and destroyed black neighborhoods to the detriment of society at large.

Except the abortion industry, who, like the mortgage industry, has profited from the enslavement and destruction of black families.


I don't have statistics on how much the abortion industry had to pay Barack Obama to get his support for the destruction of black babies.

The federal government, friend of usurers and abortionists, has taken America very far from the original American Dream of everyone dwelling safely and undisturbed under his own Vine & Fig Tree.

Saturday, September 27, 2008

Global Monetary System

If the idea of our monetary system being destroyed by the federal government isn't bad enough, Jeffrey Garten, a Council on Foreign Relations member and former policy planner under prominent Bilderberger Henry Kissinger, has penned a piece in the Financial Times of London calling for a "new global monetary authority" that would have the power to monitor all national financial authorities and all large global financial companies.

Garten, now a professor of business at Yale, served on the policy planning staff of Kissinger during his time as Secretary of State. He also served on the White House Council on International Economic Policy under the Nixon administration and went on to become the Undersecretary of Commerce for International Trade under Bill Clinton, thus proving once again the interchangability of the two parties. He is also a former managing director of Lehman Brothers, and his proposal for a global monetary regime will doubtless be as successful as Lehman Bros.

There are two kinds of "globalism." A Christian Globalism is a decentralized world of "Liberty Under God," without political borders; a world where everyone dwells safely under his own Vine & Fig Tree.

The more popularly-used concept of "globalism" is the kind proposed by Garten and other statists (those who worship the state). Once you accept the idea that the Free Market (capitalism) has inherent limitations that can only be overcome by "the State," then logical consistency will lead you to global socialism.

The current mortgage bailout is supported by those who are ignorant of the superiority of capitalism over socialism, as well as by those who are not, but seek global power over others. ht

Friday, September 26, 2008

Golden Parachutes

I oppose "Golden Parachutes" (big severance packages for CEO's) if the money is extorted from taxpayers. If the money comes voluntarily from consumers who chose to buy the goods or services the CEO made possible by managing the corporation, I have no concern.

"But what if the CEO takes his severance package, amounting to tens of millions of dollars, and then the stock collapses and shareholders and investors lose everything and janitors lose their job? Why should the CEO get millions?"

Rick Raddatz has given a libertarian answer. Before I quote him, let me remind readers of a fact pointed out by George Will:

Exxon Mobil does make $1,400 a second in profits -- hear the sharp intakes of breath from liberals with pursed lips -- but pays $4,000 a second in taxes and $15,000 a second in operating costs.

That's a tad bigger than my corporation. And I have to admit, Exxon/Mobil is helping more people get where they want to go than I am.

OK, here's Rick's take on golden parachutes:

CEO Pay and Golden Parachutes are in the news and EVERYBODY seems to be getting this issue wrong. (Republicans and Democrats)

Look - I'm a successful, smart business owner with a 12-year history at Microsoft.

So I'm for real.

BUT -- if you put me in charge of a really big company -- like BOEING -- for example, what would happen?

Within 24 hours, the entire C-level executive team would QUIT because they would not respect me, nor the decision-making skills of their board of directors [for hiring me]. If the board stuck to their decision, the stock would instantly collapse and probably end below the cash-value of the company. UPS, Fed-Ex, and Airlines would all cancel their orders and probably sue. It would become the #1 news story on the PLANET... (in a bad way) -- and that's just the first day.


It means that there are only a handful of people in the world that BIG BIG companies can draw on to recruit when it comes time for a CEO transition.

And they're all busy running other companies.

And the good ones are running them well, enjoying life.

And God forbid your big-big company is in crisis when the transition-time comes -- nobody is going to want to take that job.

Unless.... unless you pay them VERY VERY well and eliminate risk by offering a golden-parachute regardless of performance.

So you see, everyone complains about golden parachutes when things go bad.

I say -- they're missing the point... golden-parachutes are HIRING BONUSES. The person deserves them because they were willing to leave a safe job, and take on risk in order to help a company in trouble.

You want to destroy some companies? Go ahead and limit CEO pay. What a great way to attract the 'not best' to run your company.


As a small business owner, you make money when you analyze situations correctly. If you're in with the crowd complaining about CEO Pay, I encourage you to re-think your position, and then re-think HOW YOU THINK.

I'm serious -- your ability to think through the dynamics of things like CEO Pay also determine your ability to think through the problems you face in your business.

Don't get me wrong... smart people can have reasons to disagree... but in the end, you'll know how good your thinking is overall by how successful you are, and by how many people you help. Usually the two go hand-in-hand, even in the world of non-profits.


- Rick


Of course I welcome comments on Rick's opinions.

Ron Paul’s Joint Economic Committee Statement

Although widely available elsewhere on the Internet, I want to go on record as supporting the position taken by Congressman Ron Paul on the mortgage bailout. He makes these points:

1. These are the same policies that created and prolonged the Great Depression.
2. The wealth of American workers is being used to reward those who should experience the consequences of their own mismanagement.
3. Not a single person who signed the Constitution would say that the power to purchase private sector companies was given to the federal government. None of the politicians supporting the bailout are keeping their oath to support the Constitution. They are repudiating the Free Market system in favor of socialism and fascism.
4. Like the war in Iraq, this is $700 billion that is being diverted from helping enrich America and raise our standard of living into a black hole of malinvestment.
5. At least the bailout isn't killing innocent men, women, and children outright, and turning hospitals, schools, and universities into rubble with "smart bombs." But it is lowering our standard of living in a more indirect way.
6. Every politician who supports this bailout is incompetent and/or untrustworthy as a "public servant" and steward of the "Liberty Under God" for which America's Founders fought.


Ron Paul’s Joint Economic Committee Statement
Mr. Chairman, I believe that our economy faces a bleak future, particularly if the latest $700 billion bailout plan ends up passing. We risk committing the same errors that prolonged the misery of the Great Depression, namely keeping prices from falling. Instead of allowing overvalued financial assets to take a hit and trade on the market at a more realistic value, the government seeks to purchase overvalued or worthless assets and hold them in the unrealistic hope that at some point in the next few decades, someone might be willing to purchase them.

One of the perverse effects of this bailout proposal is that the worst-performing firms, and those who interjected themselves most deeply into mortgage-backed securities, credit default swaps, and special investment vehicles will be those who benefit the most from this bailout. As with the bailout of airlines in the aftermath of 9/11, those businesses who were the least efficient, least productive, and least concerned with serving consumers are those who will be rewarded for their mismanagement with a government handout, rather than the failure of their company that is proper to the market. This creates a dangerous moral hazard, as the precedent of bailing out reckless lending will lead to even more reckless lending and irresponsible behavior on the part of financial firms in the future.

This bailout is a slipshod proposal, slapped together haphazardly and forced on an unwilling Congress with the threat that not passing it will lead to the collapse of the financial system. Some of the proposed alternatives are no better, for instance those which propose a government equity share in bailed-out companies. That we have come to a point where outright purchases of private sector companies is not only proposed but accepted by many who claim to be defenders of free markets bodes ill for the future of American society.

As with many other government proposals, the opportunity cost of this bailout goes unmentioned. $700 billion tied up in illiquid assets is $700 billion that is not put to productive use. That amount of money in the private sector could be used to research new technologies, start small business that create thousands of jobs, or upgrade vital infrastructure. Instead, that money will be siphoned off into unproductive assets which may burden the government for years to come. The great French economist Frederic Bastiat is famous for explaining the difference between what is seen and what is unseen. In this case the bailout’s proponents see the alleged benefits, while they fail to see the jobs, businesses, and technologies not created due to this utter waste of money.

The housing bubble has burst, unemployment is on the rise, and the dollar weakens every day. Unfortunately our leaders have failed to learn from the mistakes of previous generations and continue to lead us down the road toward economic ruin.

Ron Paul’s Campaign For Liberty » Blog Archive » Ron Paul’s Joint Economic Committee Statement

Wednesday, September 24, 2008

How Much is a Trillion?

By its own on-the-budget estimates, the Bush Administration has already spent over half a trillion dollars overthrowing Saddam Hussein's secular government and installing an Islamic theocracy in its place. The original cost of the transition was estimated to be $50 billion (Jan. 2, 2003). Political polls like to keep their margin of error down around 3%. Bush's margin of error was 1,000%

Now Bush wants to give Wall Street bankers nearly three-quarters of a trillion dollars. That will someday be referred to as "the original estimate."

Total mortgage debt in the U.S. is over ten trillion dollars.

Congressman Ron Paul says,

The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.

How Much Red Ink in a TRILLION? -- A Graphic Representation

New Nigerian Scam?









Mocking the Bailout as an E-Mail Spam Scam | The Trail | washingtonpost.com

Tuesday, September 23, 2008

Sex Education

Suppose an acquaintance of yours says he has discovered a way to transfer money from other people's bank accounts into his own using an ordinary laptop computer. As a way of thanking you for years of friendship, he says he's willing to transfer other people's money into your bank account. What should you say?

(a) "That's a terrible thing to do. God says 'Thou shalt not steal.' You shouldn't do that."
(b) "Wow, that's really a great idea! But I shorted Wall Street and recently got a raise at work, so I have all the money I need. Thanks anyway! Let me know if you need to borrow my laptop."
(c) "I won't say whether you should or shouldn't hack into other people's bank accounts, because I'm committed to upholding a policy of 'values-neutrality.'"

The response in (b) could possibly result in your arrest on a conspiracy charge. If another friend of yours has several thousand dollars stolen by this hacker, and finds out that you knew what the hacker was planning and responded with either (b) or (c), you would no longer be considered a friend.

Suppose now your 13-year old daughter tells you that her mature-beyond-his-years 17-year old boyfriend wants to have sex with her. Should you

(a) tell your daughter that God says to wait until you're married before having sex
(b) encourage your daughter to have sex, and have it more often, and give her practical, "age-appropriate" instruction on how to enhance her boyfriend's pleasure
(c) show her a film on "safe sex" but uphold a policy of "values-neutrality."

Scenario #3: You come home to find your adult child-care professional (baby-sitter) is using genitally-explicit hand-puppets to entertain your five-year old son or daughter and to create a home-environment "where queer sexualities are affirmed and celebrated." Should you

(a) call the police
(b) join the babysitter with some anatomically-correct hand-puppets of your own, in an effort to eliminate "prejudice aimed at homosexuals."
(c) remain silent and respectfully watch the babysitter's homosexual puppet show in an effort to uphold a policy of "values-neutrality" (but not allow a Christian pro-marriage puppet show [in order to avoid an "establishment" of religion]).

There is no such thing as "neutrality."
One man's "morality" is another man's "prejudice."
Government schools are always and inescapably undercutting, undermining, and destroying one moral system or another.
• It either destroys the moral system of "something for nothing by hacking" or it destroys the moral system of private property.
• It either destroys the moral system of "sexual pleasure on demand without consequences, responsibility, or accountability to God" or it destroys the moral system of "patriarchy," the life-long commitment to monogamous heterosexual marriage and family.
• It either promotes Christianity or destroys it.
Government-run schools cannot be "neutral."
Government-run schools are at war with your values.
You should only vote for someone who believes in the complete separation of school and state.

More on education.


Monday, September 22, 2008

Government is the Problem

“From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?
In this present crisis, government is not the solution to our problem; government is the problem.”
-- President Ronald Reagan, First Inaugural Address

Similarly, Jonah Goldberg says, Washington D.C. Officals, Not Wall Street, Are To Blame for Crisis After Turning Blind Eye - New York Post

The self-proclaimed angels in Washington will tell you they've been working tirelessly to expand the American dream of homeownership by making mortgages available to people unable to plunk down 20 percent on a house. Franklin Raines, the Clinton-appointed head of Fannie Mae from 1998 to 2004, made it his top priority to make mortgages easier to get for people with poor credit, few assets and little money for a down payment.

The fine print to this noble intent was an ill-conceived loosening of standards. For instance, the Clinton administration re- interpreted the Community Reinvestment Act to politicize lending practices. Under the CRA, the feds forced banks to prove they weren't "redlining" (i.e., discriminating against minorities) by approving loans to minorities and various left-wing "community groups," bad risks or not.

Sen. Phil Gramm called it a vast extortion scheme against America's banks. Still, the banks were perfectly happy to pass the risky loans to Raines' Fannie Mae, which was happy to buy them up.

That's because Raines was transforming Fannie from a boring but stable institution dedicated to making homes more affordable into a risky venture that abused its special status as a "government sponsored enterprise." Fannie bought the bad loans and bundled them together with good ones. Wall Street was glad to buy up these mortgage securities because Fannie was deemed a government-insured behemoth "too big to fail." And others followed Fannie's lead.

The current crisis stems in large part from the fact that people who shouldn't have been buying a home, or who bought more home than they could afford, now can't pay their bills. Their bad mortgages are mixed up with the good ones. And thanks in part to new post-Enron accounting rules, the bad mortgages have contaminated the whole pile.

Some people warned us. In 2005, Fannie Mae revealed it overstated earnings by $10.6 billion and that it didn't really know what was going on. The Bush administration pushed for reforms, but those efforts were rebuffed by Congress, with Democrats Barney Frank and Christopher Dodd taking point, because Fannie and Freddie have spent millions in campaign contributions.

Republicans, including House Leader John Boehner, R-Ohio, and House Minority Whip Roy Blunt, R-Mo., have accepted more contributions than Democrats from PACs connected to Fannie Mae. This might explain why

House GOP leader John Boehner, R-Ohio, and Republican Whip Roy Blunt, R-Mo., said they "stand ready to work with Secretary Paulson and congressional Democrats to take appropriate steps to ensure the soundness of our mortgage markets."

The government is guilty of more than just "turning a blind eye," as Goldberg says, to a problem that popped out of nowhere. Government is guilty of creating that problem through the Federal Reserve and the manipulation of the credit system.

Giving the government more power to take more money from us to bail out corrupt or incompetent lenders and investors is precisely the opposite direction that we should take.


Sunday, September 21, 2008

Thinking Biblically about the Banking Crisis

From the blog "Between Two Worlds" comes an interview with an MBA entitled "Thinking Biblically about the Banking Crisis." It has some helpful explanations. But this is not a time for "helpful explanations." This is a time for yelling and beating people over the head -- in the hopes that the guilty will not be rewarded and the innocent punished. My humble efforts toward this end.

Saturday, September 20, 2008

A Government Bailout Analogy

Suppose that a foreign automobile company announced that in 6 months they would begin selling competitively-priced cars that tap into the energy surrounding the earth that moves the needle on a compass, and would use that energy to move the wheels on a car at a relatively fast pace, with nice acceleration. No fuel needed at all. No need to build a new refueling infrastructure. Did I mention "competitively priced?"

Would you choose to buy one of these new cars, ceteris paribus, or would you choose to buy one of the old cars that required you to stop and buy gas every few hundred miles?

Q: What will this news do to other auto makers?
A: send their stocks plummeting. Raise the interest rates lenders will charge them. Cause them to lay off workers (who, presumably, will get new jobs at the new MagnetoCar plant).

Would you have any confidence in any auto maker who was determined to sell only gas-guzzlers and not the new cars?

As a consumer, you don't want to buy a car that requires you to gas up every few hundred miles. You don't want to buy the old cars, or the stock of the old car makers. Gasoline stocks also go down, in anticipation of their future uselessness in a day when drivers don't have to stop for fuel. Future job layoffs are announced.

Those whose retirement portfolios consist of stock in conventional automobile makers and conventional filling stations are seeing the value of their retirement accounts fall.

The company that created the process of converting earth's natural magnetic belts into usable energy has also announced the creation of a chain of universities to develop and teach techniques to tap into this global source of continuously replenished free energy. Many states announce they are closing their own university systems. Private giving for endowments for traditional universities plummet. Lenders are only accepting applications for student loans to the new universities -- but nobody needs such loans, because the magneto-industry is providing free and near-free tuition to expand their own development and production of free energy systems.

Early investors in these free energy processes are reaping tremendous profits.

So the President of the U.S. announces on his Saturday Morning Radio Address,

Further stress on our [conventional energy] markets would cause massive job losses, devastate retirement accounts, further erode housing values, and dry up new loans for homes, [conventional] cars, and [conventional] college tuitions.

The President announces that the federal government is going to bail out the old energy industries with your tax dollars. Even though you yourself would not invest in these old industries, the government is going to force you to invest in them anyway, by taking money out of your paycheck before you have a chance to invest it in the new energy.

This is intended to prevent investors from [profiting from wise economic forecasting] for their own personal gain.

How despicable, people being interested in "their own personal gain." How unlike our patriotic bankers who lobby for bailouts and government guarantees.

How is this future bailout of archaic industries different from this week's bailouts? Both reward special interests at the expense of the general welfare. Both reward failure and penalize sagacity. Both bailouts replace privite enterprise with socialist planning.

Interlocking Lies

In this morning's Saturday Radio Address, President Bush said,

Our free enterprise system rests on the conviction that the Federal government should intervene in the marketplace only when necessary.

Proof of this, of course, is seen in the fact that the Federal goverment did not bail out Lehman Brothers like it did Bear Stearns. Richard Adams, writing in the UK Guardian, shows that the big AIG bailout is simply taking care of all the other bailouts that didn't occur because the government was "exercising restraint."

the US investment bank Lehman Brothers leased a million square feet of office space in London, for which it paid about £40m-£50m a year. Lehmans paid its rent to a property company, the Canary Wharf Group - which in turn is controlled by another company, Songbird Estates.

Simple enough so far? Here's where it gets complicated. The rent that Lehman Brothers paid forms part of the income behind a
£2.5bn securitisation package (that is, corporate bonds sold to outside investors, mortgaged against a stream of future earnings) through a holding company named Canary Wharf Finance II PLC. The securitisation's income was insured by the US company AIG. So when Lehman Brothers filed for bankruptcy on Monday, that meant AIG will be in the hole for the £200m that Lehmans would have paid in rent for the next four years. But AIG itself would probably have gone under yesterday or today, except that the US government effectively nationalised AIG last night in loaning it the $85bn that it needed to keep going. HT

The concept of a "securitization package" was exposed in the video at the bottom of this previous blog post.

The government is bailing out an interconnected chain of special interests, not protecting the "general welfare."

Let's imagine another interconnected chain of special interests in the next post.

Friday, September 19, 2008

Biden: Patriotic to Pay More Taxes

No doubt you've heard that Vice Presidential aspirant Joe Biden has said "It's time to be patriotic," and pay more taxes. Biden said this on Thursday on ABC's 'Good Morning America' regarding the question of tax hikes for the wealthy

We've talked about "patriotism" before. And Biden has given us another example of confusing "America" and "the government." "Patriotism" is what's good for your country, not what's good for Joe Biden and the politicians in Washington D.C.

The most un-patriotic people in America are in Washington D.C. They think of themselves as "public servants," but they do not serve their country. They serve the government. They serve themselves.

We pay less money each year for faster, more powerful computers. We pay less each year for long distance phone calls. We pay less each year for food, housing, shelter, and even gasoline (when measured in terms of how many hours we have to work for them). In the Free Market, the quality goes up and the price goes down. Always.

But each year we have to pay more for government that only gets worse. Always.

Just who is it that needs lessons on "patriotism?" Just who is it that needs to learn better ways to serve our country?

"Taxation" is the moral equivalent of extortion. It is using a threat of violence (being raped in a cozy federal prison cell) to coerce a payment of money.

But here's a question you'll never, ever hear a politician answer. (You'll probably never even hear it asked.) Especially in light of the recent bailout of insurance giant AIG by the Federal Reserve, and in light of the fact that a complete and total repeal of the personal income tax would only reduce the size of the federal government to what it was under Bill Clinton: why have taxes at all?

This is not some kind of "tax protester" argument. This isn't "I don't want to pay my fair share."

This is a question about the Federal Reserve, an arm of the government found nowhere in the Constitution.

Why should we as Americans have to spend hours and hours and billions of dollars every year filling out invasive and humiliating tax forms, and why should churches have to worry about losing their tax-exempt status if they say something some politician doesn't like?

According to Bruce Bartlett, a 2005 report from the U.S. Government Accountability Office concluded we pay a very heavy price for the heavy taxation of saving, investment, corporations and estates. It found that the efficiency cost of the tax system—the output that is lost over and above the tax itself—is between two percent and five percent of the gross domestic product. In short, we lose between $240 billion and $600 billion every year just because of the way we raise taxes.

Why doesn't Washington D.C. simply ask the fed to bail out the entire country every year? Just print up the money "we" need?

I'm not advocating this, of course, because it represents massive theft, fraud, and the total collapse of government integrity. That is to say, it would create and expose a government that is 100% fraudulent, vs. today's government, which is a mix between extortion and fraud. The creation of money by the fed is fraudulent and unethical. Inflation is a sin. But if we're going to have a huge chunk of the government funded by "monetization of debt" by the Fed, why not eliminate the threats of violence inherent in IRS extortion and move from some-fraud-and-some-extortion to 100% pure fraud?

If we eliminate the IRS and have the Fed print up the total federal budget, then the purchasing power of the rich would decline at about the same rate as the purchasing power of the poor, would it not? Instead of the government transferring wealth from producers to bureaucrats by withholding "dollars" ("Federal Reserve Notes") from our paychecks, the Fed would simply transfer purchasing power from working Americans to the welfare-warfare caste in Washington. The "dollars" possessed by the rich would become worthless at about the same rate as the "dollars" possessed by the poor. What could be fairer? What could be more "patriotic?"

America: the next Zimbabwe!

Wednesday, September 17, 2008

Who's to Blame?

Yesterday Bill O'Reilly noted that the candidates have spent the last few months campaigning without "warning" the American people about the recent drop in the Stock Market. Of course, neither Presidential hopeful knew that Fanny Mae, Lehman Bros., and AIG would be experiencing problems. And only a fool (such as millions of voters) should think that if either candidate is elected to political office they will all of a sudden know what to do to prevent a repeat of this week's problems.

Palin Blames Corrupt Wall Street Culture for Financial Crisis (Wall St. Journal). But that's also misguided.

Then today O'Reilly said that he was ANGRY that the government didn't protect us from Wall Street's reaction to Lehman/AIG.

Point to the clause in the Constitution that gives the federal government power to tell someone who they can lend to, and how much of a down-payment they must require. Especially since it was the government that virtually mandated that the "poor" be allowed to go into debt so they wouldn't be victims of "discrimination."

But none of the original lending, nor the derivative packaging of bad loans that followed, would have taken place if the federal government had not created the money to be loaned in the first place. Nobody in the mainstream media wants to talk about the root cause.

Prof. George Reisman explained everything back in July of 2002:

Small and narrow as the focus on the dishonesty and fraud of some businessmen may be, it nevertheless does have a real object. Unfortunately, it is overwhelmingly misdirected and totally ignores the truly massive fraud that is going on, which exceeds many thousand times over, all the frauds of dishonest businessmen, and which, as we have seen, actually occasions many of those frauds. This, of course, is the government's systematic depreciation of the value of paper money and thus of each and every contract and security that is stated in terms of a fixed number of units of that money.

What greater accounting scandal and coverup could there be than that the monetary unit, in which all accounting is carried on, is itself a fraud, a fraud that has robbed tens of millions of old people of a considerable part of the buying power of their life's savings, that has destroyed the reliability of fixed-income investments as a vehicle for providing for the future, and threatens the value of all contracts. Where are the reporters and the congressional committees to investigate this horrendous situation?

The government has stolen 95 cents out of every American dollar.

Measuring Worth - Relative Value of US Dollars

CPI Inflation Calculator

The money you think you will have for retirement will only be able to buy a fraction of what you think it will buy, because the government is removing a great deal of its purchasing power through inflation. This level of theft and corruption involves trillions of dollars, and vastly outweighs the dip in your 401(k) this past week.

Inflation is Caused by the Government

Abolish the Federal Reserve System

In addition, as the value of the dollar diminishes, you creep into higher tax brackets, and the government takes more of your wealth.

Don't expect Sarah Palin to talk about competing currencies.

Abolish the Constitution

Constitution? What Constitution?

Every person who signed the Constitution on this day in 1787 would urge the abolition of that document and the government it created.

Every person who was delegated to represent the states in the state ratifying conventions would agree: we need to abolish the Constitution and the government it created.

Politicians take an oath to support the Constitution, almost as if sleep-walking. The oath means nothing. The Constitution means nothing.

If we were to sum up the social ideals which the Constitution was intended to protect, we could do so in three words: "Liberty Under God." If you strip away our cars, computers, cell phones, TV's, and iPods, you would see that the government created by the Constitution does not protect "Liberty Under God." The U.S. is the exact opposite: an atheistic dictatorship. We are well-kept slaves.

"Under God"
The government created by the Constitution refuses to acknowledge that it is "under God." The current government has deified itself, and claims to be our Savior. George Washington, "the Father of His Country" (but not ours), proclaimed,

it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favour

The current regime would say this constitutes an "establishment of religion." That is an outrageous lie. Not a single person who had a hand in demanding, formulating, or ratifying the First Amendment would say that the new nation does not have to obey God's will. But the current federal government makes it illegal for government schools here in southwest Missouri to even post a passive copy of the Ten Commandments on a classroom wall. It is illegal for Missouri students to be taught that the Declaration of Independence is really true. If Americans had known that the Constitution would give the federal government power to order local schools to remove copies of the Ten Commandments and deny the "self-evident truths" of the Declaration of Independence, the Constitution would not have been ratified. Period.

Liberty has also been abolished.
Not only are we not a nation under God, but we are not "the land of the free."

America demanded a Bill of Rights before the Constitution could go into effect. The Fourth of those Rights is:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Let's say you're an oriental grandmother. A government agent takes your suitcase, opens it up, unfolds your underwear, and confiscates your cell phone and shampoo. No probable cause, not even any improbable cause; no warrant, no testimony under oath by anyone who suspects you have, are, or will commit a crime, no description of what the government expects to find or how it could possibly benefit from this search. If this does not constitute an "unreasonable" search and seizure, nothing does. But the Fourth Amendment was intended to protect us against something. If not this, then what? But this happens every day in airports across America. It is "unreasonable" because no private business, accountable to the Free Market, would ever allow such conduct even once, much less make it a matter of routine corporate policy.

The denial of rights is routine government policy.

John Hancock and Samuel Adams tossed tea into the Boston Harbor rather than pay a tax of 3 pence per pound on the tea. A tax ten times greater is imposed on every gallon of gas we buy. Today's regime takes over half of everything we earn.

Years ago the Professor of Constitutional Law at the Harvard Law School boasted that he tells his con law students not to read the Constitution, holding that to do so would be apt to “confuse their minds.” Unquestionably, of the 6,000-odd words of the document, at least 39 out of every 40 are totally irrelevant to the vast majority, as well as to the most important, of the problems which the Supreme Court handles each term in the field of "constitutional interpretation." The Courts created by NAFTA and other trade agreements do not even pretend to be obligated to observe the Constitution. These foreign courts can overrule U.S. Supreme Court decisions and negate the laws of American legislatures.

Americans and people around the world give lip service to "the greatness of the Constitution," although no other nation operates in terms of a constitution
modeled after the U.S. Constitution. The conservative columnist Richard Grenier is correct:

It has never occurred to most Americans that their Republic – the first democratic state on a national scale – adopted a Constitution that has been taken seriously as an enduring model by nobody. I said, nobody.

Scholars in law and political science quietly admit that the U.S. is not really under the Constitution in any meaningful sense. The first step to restoring "Liberty Under God" is to admit that the U.S. is no longer a "Constitutional Republic," but an "Administrative State." The Constitution was abolished decades ago.

In the Washington Post article above, Chief Justice Roberts praises the Constitution, saying,

The Framers knew how bad it was to live under a powerful and unjust king, and so the Constitution split government power among the legislative, executive and judicial branches. That way no one of them could get too strong. That plan is more important than any one part.

In our day, the vast majority of government powers are exercised by administrative agencies with legislative, judicial, and executive powers all rolled into one bureaucracy. Tens of thousands of pages of laws are created by these agencies. Congress passes only a few hundred laws, including the renaming of post-offices and declaring the second week in October "National Pickle Week" (or some such thing). Meanwhile, James Madison declared the union of executive and legislative powers to be "the very essence of tyranny" (Quoted in A. Gulas, The American Administrative State: The New Leviathan, 28 DUQUESNE LAW REVIEW, 489, 490 [1990]). The total ignorance of the separation of powers is seen all around us, as Walter Williams points out:

Here's what the U.S. Constitution says: "All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills." How many times have we heard politicians, pundits and guardians of our news media say that President Bush cut taxes, or Obama is going to raise taxes? The fact of the matter is that presidents have no power to raise or lower taxes. They can propose tax measures or veto them but it is Congress that has the ultimate power to raise or lower taxes since they can, with a two-thirds vote, override a presidential veto. The same principle applies to spending. Presidents cannot be held responsible for budget deficits or surpluses. A president cannot spend a dime that Congress does not first appropriate. Given these plain facts, are politicians, pundits and media people — who persist in talking about a president cutting or raising taxes, or creating a budget deficit — ignorant, stupid or deceptive?

But I'm sure Williams would agree that the Executive does spend. We have just witnessed the Treasury Department spend billions of dollars to bailout an insurance company. To nationalize it, really. Actually, a private corporation has authorized itself to counterfeit the U.S. currency, putting the U.S. in debt, and taxpayers on the line. If anyone can, with a straight face, maintain that this is what the Constitution was intended to authorize, he is, as Williams put it, ignorant, stupid or so deceptive as to deserve an Oscar.® People who take the ideal of "Liberty Under God" seriously warned about the recent bailouts years ago.

Then there's the Bush doctrine of "the Unitary Executive," making the President a far more absolute monarch than George III in 1776.

Government's departure from the Constitution is so widespread, so severe, and so destructive of the ideals for which America's Founders fought, that there can be no rational belief that the Constitution is still in effect in any meaningful way. Or if the Constitution is indeed in effect, it deserves to be abolished. As Lysander Spooner put it,

[W]hether the Constitution really be one thing, or another, this much is certain --- that it has either authorized such a government as we [now] have ... or has been powerless to prevent it. In either case, it is unfit to exist. HT

The Republocrat Reign is Nigh!

"Just keep convincing folks that voting for a third party is 'wasting your vote' and we can keep on doin' business as usual."

Tuesday, September 16, 2008

"We have made lies our refuge."

Creation and Destruction.

George Will, following Russell Roberts, following Leonard Read, links Pencils and Politics in the latest Newsweek Magazine. Together they demonstrate that no single human being on earth knows how to manufacture a pencil and sell it at a profit for a dime. And this past weekend the world learned that the most powerful government in the world cannot prevent the destruction of a 150-year old financial institution with nearly $700 billion in assets; its greatness has been swept into the dustbin of financial history. Nearly 50,000 jobs were lost in two days. AIG, the trillion-dollar insurance giant, may be next to collapse. Jeffrey Tucker writes:

Hundreds and hundreds of billions of dollars are on the move, sweeping all before them. And yet take note: it is not war accomplishing this. It is not violence. It is not the result of a planning committee. No election is necessary. No terrorist act took place. There was no government edict.

No one person is in charge. Layers upon layers of decisions by millions and billions of people are the essential mechanism that makes the process move forward. All these decisions and choices and guesses come to be aggregated in a single number called the price, and that price can then be used in that simple calculation that indicates success or failure. Every instant of time all around the world that calculation is made, and it results in shifts and movement and progress.

The Price.

It orders millions of human beings to cooperate in the process of creating a pencil, and it destroys "The Masters of the Universe."

Prices cannot be determined by the government's central planners. They are determined by billions of human beings, making their own plans, enforcing their own decisions, acting on their own values. The price is essentially a reflection of confidence.

It is not healthy for people to have confidence in something illusory. It is good for our economy when bubbles burst. The sooner they burst, the better.

Hopefully, the biggest bubble of them all will soon go "Pffssssssssst...."

Antony Sutton, formerly of the prestigious Hoover Institution at Stanford University, has called attention to the relationship between confidence and the price of our unconstitutional and debased currency:

Our money system, and almost all money systems in the modern world, are based on debt. One person's paper money or book-entry credit is another person's obligation to pay. The system is predicated on the heroic assumption that people will continue to accept another person's debts as an acceptable recompense.

Nobel prize-winning economist Milton Friedman has described the mythical, circular reasoning surrounding "fiat money":

. . . each accepts them [the pieces of paper] because he is confident others will. The pieces of green paper have value because everybody thinks they have value, and everybody thinks they have value because in his experience they have had value.

Sutton answers the obvious question:

What then keeps the Federal Reserve System, which is based on paper debt, in operation? In a word, confidence. The confidence that someone else will accept a worthless piece of paper, created out of nothing and backed by nothing, in exchange for their real tangible objects.

In the final analysis, emphasizes Friedman, acceptance of false weights "is a social convention which owes its very existence to the mutual acceptance of what from one point of view is a fiction."

Lehman Bros. had value as long as enough people had enough wishful thinking.

The "Dollar" (Federal Reserve Notes) has value as long as enough people have enough wishful thinking; as long as they listen to the government's unethical cheerleaders. When morality and reality sink in, the Fed will join Lehman Bros. and Fanny Mae. The sooner the better.

Truly, as a nation of debtors, "we have made lies our refuge" (Isaiah 28:15).

The View from Down Unduh

Will Grigg links to an Aussie news show which gives us good insight into the nature of America's Economic woes:

Next question: "What is the Solution?"
Peter Schiff gives the correct answer.
Not one I've ever heard at any "Candidate Forum."

Sunday, September 14, 2008

Income Inequality: What's the Problem?

I certainly invite answers to this question in the "comments" section:

What's wrong with the rich getting richer?

Imagine that you and a few hundred others have fallen through a tear in the space-time continuum into the future: the 23rd century. You now work in a museum, doing what only you can do: keeping records and recreating the work you did when you lived in the 21st century, for the benefit and delight of historians and anthropologists who really appreciate the insights you bring from the past. (This scenario assumes that you loved the work you are doing now, and you're perfectly content doing that same work in the future.)

In fact, you're getting paid twice as much as you earned in 2008. And you're able to use the extra income to buy an extraordinary range of goods and services that were completely unavailable to you in the 21st century.
• You travel from place to place in a transporter beam like on Star Trek.
• The labor-saving devices in your kitchen boggle your imagination.
• 23rd century health-care will keep you alive an estimated 112 more years, in youthful vigor.

Here's the catch:

You and the others from the 21st century who slipped through the wrinkle in time are in something of a separate caste. Because human beings in the 23rd century are so much more highly educated, morally developed, and psychologically balanced than people of the 21st century, you are not allowed to vote.

Further, everyone else earns at least 100 times as much as you and others from the 21st century do. It's like earning $100,000 per year in a world where everyone else earns $10,000,000 per year.

Because everyone in the 23rd century has their act together, you are treated with respect, kindness, and genuine affection by everyone else. Every conversation you have with 23rd century human beings is rewarding and edifying. You are becoming wiser with each conversation, and you're building many good habits and admirable character traits the more you interact with people of the future. As a result, your very generous employers give you almost weekly raises. You still haven't figured out what 23rd-century inventions you want to buy with all the extra income you already receive.

But the "income gap" between the 21st century people like you and the 23rd century people is huge, and growing every day.

"The rich get richer, and the poor get relatively poorer."

Is this really a problem?

Is thus "fundamentally unfair?"

Many left-leaning economists say it is.

This blogger quotes the Center on Budget and Policy Priorities and the Economic Policy Institute, who say:

During the two decades before the early 2000's, the average income of this country's poorest families rose by 18.9%. During that same time the average income of our richest families rose . . . nay, exploded by 58.5%.

"Paul Krugman is very upset," writes George Reisman.

In his Monday New York Times Op-Ed column this week, he complains that while the real incomes of the great majority of Americans have essentially stagnated or declined over the last thirty-five years, "income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent."

Krugman calls it "a rising oligarchy." He also speaks of "a new Gilded Age," and says, "if the rich get more, that leaves less for everyone else."

But that just isn't true. Krugman admits that the rich of today are richer than the rich of the Gilded Age:

We are now living in a new Gilded Age, as extravagant as the original. Mansions have made a comeback. Back in 1999 this magazine profiled Thierry Despont, the ''eminence of excess,'' an architect who specializes in designing houses for the superrich. His creations typically range from 20,000 to 60,000 square feet; houses at the upper end of his range are not much smaller than the White House. Needless to say, the armies of servants are back, too. So are the yachts. Still, even J.P. Morgan didn't have a Gulfstream.

Yes, the rich are richer, but so are the middle class. And most dramatically, so are the poor. Only an intensely envious person would contend that the poor of 200 years ago were better off than the poor of today.

What is Wealth Inequality? - Art Carden - Mises Institute

The poor are not getting poorer, they are only getting relatively poorer.

And the reason why the poor are living better lives today than 200 years ago is precisely because the rich are getting richer.

For Society To Thrive, The Rich Must Be Left Alone - George Reisman - Mises Institute

There are several reasons why the "income gap" is such a boogeyman among socialists:



Krugman claims that when the heads of corporations (that are creating all the wealth that is being enjoyed by the poor and middle classes) become richer, the political landscape becomes more conservative; there is "a general shift to the right" he says.

This may explain why the socialist revolution always kills off the rich, leaving only democrats to be herded by The Party. (I assume that Krugman assumes that he'll still be around after the revolution as a "Party advisor.")

Liberalism is Aristocracy

The remedy is:

Libertarian Democracy

Laissez-faire capitalism is true democracy. Not the majority voting for the rulers who will initiate force against the minority, but the masses of consumers making their own voluntary choices in every area of life.

A truly laissez-faire capitalist society is one devoid of the initiation of force.

Under true laissez-faire capitalism, corporate CEO's do not use the government to extort multi-million dollar severence pay packages from taxpayers by force when their corporations go belly-up.

People are free to begin a business, hire the employees they want at the wages they want, sell the products they want at the prices they want, and consumers are free to reject the price or benefit from the product. If consumers choose to buy the product, it will be voluntarily, and it will signify an increase in their standard of living. The poor will get richer, and those who serve the poor by creating jobs for them and selling the goods and services that enrich their lives, will get even richer. _


Gary North has written an article entitled, "Usury, Interest, and Loans: A Brief Summary of Biblical Teaching, With Bibliography."

Here is my response: Gary North on Usury, Interest, and Loans.

Wednesday, September 10, 2008

A Secular Constitution?

Al Cronkrite sent me his latest article for Etherzone, "WHY THE COMING ELECTION IS MEANINGLESS AND WHAT CAN BE DONE ABOUT IT." He makes some good points about Sarah Palin and John Ashcroft. But he falls prey to the atheistic lies of the ACLU and the myth that the federal Constitution is "secular."

He says,

When our forefathers incorporated freedom of religion into the Constitution they tacitly created a secular government.
... it was a secular creation that shunned God's Law and championed human wisdom.

By saying this, Cronkrite is allowing himself to be a pawn of the ACLU. Not a single person who had anything to do with the creation of the Constitution would agree with Cronkrite's claim. None of them intended to create an atheistic government. They knew how this could be done, but they did not choose to do this. This is evident by comparing the American Revolution and the French Revolution.

Daniel Dreisbach, writing in the Baylor Law Review (48:927), notes:

     The framers resisted the temptation often encountered by architects of new orders and indeed, the course adopted in the French revolutionary constitution, which was to institute a wholly new calendar dated not from the birth of Christ but from the revolutionary moment. The new French calendar commenced with the "autumnal equinox, the day after their republic was proclaimed."[note omitted] The French, of course, went much further in stripping the public calendar of religious holy day; the Christian Sabbath, for example, was abolished and replaced by a festival every tenth day.[n.o.]
     The constitutional mention of the lordship of Jesus Christ . . . was ascribed great significance by selected nineteenth-century commentators. In this slight but solemn reference, [Jaspar] Adams . . . concluded, "the people of the United States professed themselves to be a Christian nation."[n.o] Elaborating on this point, Adams argued that the word "our" preceding "Lord" "refers back to the commencing words of the Constitution; to wit, 'We the people of the United States.'"
     [I]f the Constitution was deliberately secular or hostile to traditional religion, the reference to Jesus Christ could have been avoided. [The Framers] could have just as easily omitted the reference to Christ in the dating clause. It cannot be denied, therefore, that the date denotes that Christ was, perhaps subconsciously, a reference point for the architects of an ambitious new order. [note 183: In response to those who dismiss the assertion that this clause is a "persuasive argument for the Constitution's Christian character," one commentator has asked what would the "discerning scholar" say "if the clause had read: 'Done . . . in the year of Baal (or Astarte, or Buddha, or Reason, or any other false god) . . .'?" Such language, no doubt, would provoke a "commentary on the nature and implications of the religious-philosophy signified by the clause."]

To say that the Constitution is "secular" and mandates an atheistic government (one that will not publicly and officially acknowledge a duty to God, and will not endorse or promote belief in God) is like saying the Book of Esther in the Bible is an "atheistic" book, simply because the word "God" is not found even once, or because the Book itself doesn't say "This is a theistic book." One has to examine the context. The U.S. Supreme Court examined the context of the Constitution, and concluded that America is a Christian nation: Holy Trinity Church v. United States (1892).

Having said that the federal constitution is not secular, there can be no doubt that the men who created the Constitution would abolish it if they were here today. It is a meaningless relic. It has completely failed in its task of limiting, checking, balancing, and separating powers. It ought to be forthrightly abolished so we can squarely face the political reality before us. Based on how it was sold to the American people, and the promises made concerning it, the Constitution is a total failure. But that is not due to the fact that it is atheistic or was intended to impose atheism on the nation.

Cronkrite continues:

God's Law was not incorporated into our founding documents and as a result our nation is living under an evil legal system that allows sinful men to control the functions of government.

Every single founding document in the nation incorporated God's Law. See the recitation of founding documents in the U.S. Supreme Court's "Holy Trinity" decision.

For example, the Delaware Constitution, Article 22 (adopted Sept. 20, 1776), reads:

Every person who shall be chosen a member of either house, or appointed to any office or place of trust . . . shall . . . make and subscribe the following declaration, to wit: "I ________, do profess faith in God the Father, and in Jesus Christ His only Son, and in the Holy Ghost, one God, Blessed for evermore; and I do acknowledge the holy scripture of the Old and New Testaments to be given by divine inspiration."

Delaware would not have ratified the federal constitution if the Constitution had claimed the power to alter (especially to secularize!) Delaware's oath of office. None of the states would have. They demanded that the federal confederacy have no such power. The First Amendment was designed to preclude what the ACLU claims: federal power to secularize.

Further, the whole concept of "enumerated powers" meant, as Madison put it,

The powers delegated by the proposed Constitution to the federal government, are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State. (emphasis added)

In what way did the Framers of the federal constitution "shun God's Law" in the areas of war and foreign commerce? Those are the only areas where it COULD have shunned God's Law.

The entire myth of the federal constitution creating a "secular Republic" is based on a complete and total failure to understand the founding concept of federalism. The Tenth Amendment and this page need to be understood.

Some will say that the federal constitution doesn't make adultery and homosexuality a crime. This was completely outside its intended jurisdiction and authority. Such arguments are completely ignorant of the concept of federalism that governed the creation of the Constitution.

The ACLU has ignored the Tenth Amendment and the concept of federalism. It has made the federal government a centralized leviathan of atheistic power. Christians like Cronkrite cannot counter the ACLU's doctrine of atheistic leviathanism by pointing to a provision of the Constitution which makes it a Christian Leviathan, so they concede the claim of atheistic leviathanism to the ACLU.

Big mistake.

The Constitution did not create a leviathan, either Christian or atheistic. The Constitution is so extraordinarily limited in its power that it doesn't have an in-your-face Christian tone. That power was retained by the States. They exercised it.

Imagine that you and I join a bowling league with 100 other people. Everyone who wants to go bowling signs an agreement that says they will abide by the rules of the sport and return their rented bowling shoes to the desk before they leave. The agreement does not mention Jesus Christ. Now suppose years later someone tries to claim that the bowling agreement was intended to govern our schools, our employment, our family lives, our recreation, our churches, and our markets, and the obvious omission of Christ's name from the bowling league document is clear evidence that we all agreed to transform our entire culture from a Christian society to an atheistic one, by giving the teenager at the front desk who passes out the bowling shoes the power to remove all acknowledgement of God and Christ from public display, so that atheists will not be offended by our free speech.

This is about as ludicrous as the ACLU claim (accepted by the Supreme Court) that the federal Constitution was intended to give the federal government power to order local schools to remove the Ten Commandments from all classroom walls.

Christians must not concede these claims. The Founding Fathers would describe the doctrines of the ACLU and Supreme Court as "absolute lunacy."

And "wicked" to boot.

For further reading, see A Godless Constitution?: A Response to Kramnick and Moore.

Finally, Cronkrite warns:

There will be no progress against evil until Christians understand that immoral law is the problem and God's Law is the solution.

Very true. Nobody who had a hand in framing or ratifying the Constitution would disagree.

But also very false. We had good laws 200 years ago. They were based on the Bible. They did not and could not have saved us. The State and its laws will not save us. God's Law -- adopted by the State -- is not the solution to evil. If the State were completely obedient to God's Law, it would disappear. The solution to evil is regeneration.