Democratic Party Primary Politics

The presidential race is now in full swing, even though the actual general election is still well over a year away.  But the primaries are not that far away.

While I generally think presidential elections are overrated, I still find them interesting to watch.  I say they are overrated in the fact that the next president will generally continue the establishment policies of the previous one.  The president is somewhat of a figurehead and cannot stray too far from the establishment opinion.

The previous two presidential elections were extremely interesting for me because of the presence of Ron Paul.  He was giving a real libertarian message that many people had never heard before.

This election cycle is less interesting in that respect, but it is interesting that the less establishment candidates are doing so well.  It shows that public opinion really is fed up.  Between Donald Trump, Ben Carson, and Carly Fiorina – the Republicans who have never held political office – they are getting support from well over half of Republican voters right now.

Most of the focus has been on the Republican candidates.  Some of this has to do with Donald Trump, but it is also because there are about 17 major candidates.  Plus, there has already been a debate.

The race for the Democratic nomination has received less attention.  Some think it is a foregone conclusion that Hillary Clinton will get the nomination.  But as I have pointed out before, for some reason the establishment is nervous about Clinton.  Perhaps they fear that something worse will come out than just some hidden emails.

I am not downplaying the email scandal.  It reminds me of what the people are frequently told by proponents of spying: If you aren’t doing anything wrong, you should have nothing to worry about.  Of course, this is not at all true, but it is probably true that Hillary Clinton has things to hide.

It is just hard for me to take the email scandal seriously because I believe Hillary Clinton is a major criminal who should be locked up for life.  It is truly unbelievable how many people close to the Clintons either ended up dead or in jail.

But if the establishment wants to use an email scandal as their excuse to eliminate Hillary Clinton from the race, that is fine by me.

The socialist Bernie Sanders will probably not be the nominee.  The American people will not elect a self-avowed socialist.  They will put up with Keynesianism, fascism, corporatism, mercantilism, and a bunch of other things, but not outright socialism.

I think another candidate will emerge to challenge Clinton.  I don’t really see it being Joe Biden.  I wouldn’t be surprised if he throws his hat in the ring, but I doubt he would win the nomination.

Why?  As just one example, after he was creepily touching the wife of the new U.S. Defense Secretary, Jimmy Fallon had a field day with this for many days afterwards.

That leaves three other people to challenge Clinton: Lincoln Chafee, Martin O’Malley, and Jim Webb.

I just don’t think Chafee has any chance, which leaves O’Malley and Webb.  At this point, I believe that one of those two will end up seriously challenging Hillary Clinton for the nomination.  And if the email scandal gets out of hand, then one of them could end up getting it easily.

I can’t completely write off Sanders as the nominee, but I think most Democrats know he won’t win in a general election.  Remember Howard Dean.

It is too hard to say how everything will play out in the end.  There are too many variables.  At this point though, I would give a slight edge to the Republican Party.  With the way the economy is shaping up, it is going to be tough times for whoever takes office in January 2017.

Raising Rates and Monetary Inflation

The last 7 years have been quite unique in terms of the U.S. economy. It is almost like a new experiment, but unfortunately it isn’t going to end well.  Our optimism should lie in the fact that hopefully most people will recognize the failure of the experiment.

Since the fall of 2008, the Fed has quintupled the adjusted monetary base.  This alone is unprecedented for the modern-day United States.

But the massive monetary inflation has not translated into massive price inflation.  Part of it is due to the continued fear by Americans who are a little less anxious to spend money than in the past.  But the main reason is that banks have not lent out most of the new money.  It has piled up in excess reserves.

Due to the huge excess reserves, the federal funds rate has been virtually meaningless.  This is the overnight lending rate for banks.  When we hear about the Fed possibly raising interest rates, this is the rate that people are referring to.  It has been targeted between zero and a quarter percent since late 2008.

Since the banks have massive piles of excess reserves, there is little need for overnight borrowing.  Therefore, the rate stays low.

Historically, the federal funds rate was important because it dictated the Fed’s monetary policy.  To lower the rate, the Fed would generally have to buy U.S. Treasuries.  This would create money out of thin air.  To raise rates, the Fed would typically have to contract the money supply.

With the huge excess reserves, this no longer holds true.  The Fed can inflate or deflate the money supply and it isn’t going to have much effect on the federal funds rate, unless it massively deflated, which we know isn’t going to happen.  The only way for the Fed to realistically increase its key rate is by paying a higher interest rate on bank reserves.

Now that U.S. stocks are in turmoil, many analysts are questioning whether the Fed will raise rates in September, or even this year at all.  But there are some who think the Fed may go ahead with their plan so that they don’t look weak and indecisive.  It may look worse for the economy if the Fed doesn’t follow through.

Meanwhile, I have already seen a few calls for more quantitative easing (QE).  This simply means more monetary inflation.  It means increasing the money supply.

So while there are still some people saying the Fed could still raise rates, there are a few who are already calling for more digital money printing.  How do you reconcile these opposing views?

In the past, this would have been completely contradictory.  Higher rates meant a tighter monetary policy.  Lower rates meant a looser monetary policy.  But that is no longer the case today.

So I am asking the question that I have yet to see asked:  Is it possible that the Fed may raise the federal funds rate and start another round of quantitative easing at the same time?

With the huge excess reserves, this is quite doable.  The Fed could pay banks a slightly higher rate on reserves, thus increasing the overnight lending rate.  Meanwhile, it can resume its program of monetary inflation by buying more U.S. government debt or by bailing out the banks even more through purchases of mortgage-backed securities.

We could actually see a double bank bailout with barely anyone recognizing that it is happening.  The Fed can pay more to banks to keep excess reserves sitting with the Fed that they would have kept there anyway.  And the Fed can buy bad assets from the banks and relieve them of their bad loans.

While I think the economy is in trouble, simply because the Austrian Business Cycle Theory is playing itself out, at least we won’t see the same banking problems as we did in 2008.  How could we?

The Fed has been bailing out the banks for the last 7 years.  First it was direct, and nearly everyone was mad.  Then the Fed got smart about it and bailed out the banks through interest payments on reserves and by buying their bad assets.  The banks have to be far sounder today than they were 7 years ago.

I don’t think we are done seeing these crazy and unprecedented moves in monetary policy.  Let’s see if it is possible for the Fed to raise rates and create monetary inflation at the same time.

Turnaround Tuesday Lives Up to Its Name

Stocks have been plummeting.  Last week was brutal for stock investors and the damage has continued.  I saw some talk about a “turnaround Tuesday”.  And it looked for a while like the markets were turning around.

The Dow was up over 400 points at one time during the day.  But the people calling for a turnaround Tuesday got a bigger turnaround than they anticipated.  In the last hour of trading, all gains were wiped out, plus some.  The Dow ended up down over 200 points.

If the market had opened down 200 points and it finished that way at the end of the day, then it probably wouldn’t have seemed so bad.  But this was another 600 point swing in one day.

I don’t believe this is just a brief correction.  I wrote recently about how this is just a bubble bursting, as we should expect based on the Austrian Business Cycle Theory.

Many people, including some presidential candidates, are blaming China for the problem.  But if U.S. markets are reacting this dramatically because of China, then U.S. investors better watch out because things are going to get a whole lot worse in China too.

Of course, China is not to blame for the underlying problems.  China and the U.S. are similar.  They have both experienced artificial booms due to bad government policies and loose monetary policies from their respective central banks.  The problems in China are just worse and more magnified.

It is also interesting that most of the major world players are currently in a state of loose monetary policy.  The one exception is the United States.  The Fed ended QE3 back in October 2014.  It has been almost 10 months.

Since the stock market bubble was blown up as a result of the Fed’s easy money policies since late 2008, it should not be a surprise that the bubble is deflating.  This is what happens when the easy money dries up.

It should be more concerning for China, Japan, and much of Western Europe.  These places still have easy money flowing and yet still face recessionary conditions with falling markets.

For example, the Bank of Japan has been creating new money out of thin air on an unprecedented scale.  The debt keeps growing to huge levels there as well.  Yet the economy is basically in a recession, even with the easy money.  How bad will it get when the new money entering the economy slows down or stops?

Some U.S. investors are saying this is a healthy correction.  I say it is healthy only in the sense that it is revealing the prior malinvestment.  But I don’t take this as a signal to buy.

I advocate a permanent portfolio, but beyond this, I would be mostly out of stocks.  If I had to speculate right now, I would be betting on lower markets.

This isn’t to say it will be a free fall.  We will probably see some “up” days soon.  There might be some really big “up” days.  But the volatility will remain and overall we should be very bearish on stocks right now.

There is talk of the Fed delaying a rate hike in September, but the rate hike is mostly meaningless anyway.  I have already read predictions of a new round of quantitative easing (money creation).  This is what we really have to watch out for.

If the Fed does come up with any kind of new money creation scheme with any significance, then this could change the whole investing game quickly.  If it is significant enough, we will be watching gold closely.

Stay tuned for more roller coaster rides.

Falling Stocks and Austrian Economics

U.S. stocks fell hard last week.  The Dow finished off the week by plunging more than 500 points on Friday.  The Dow ended up below 16,500.  The S&P 500 finished below 2,000.  The Nasdaq finished well below 5,000.

This is after quite an extended period of stocks bouncing around in a fairly narrow range.  Some say this is a needed correction that can set the stage for another run.  Others worry that this may be a signal that an economic downturn is beginning.  So which is it?

We should turn to Austrian school economics.  This is basically free market economics.  It doesn’t matter what you call it, but it is important to understand how government interference and central bank interference in the marketplace affects the economy.

As a side note, it must be frustrating for someone trying to study the economy in Austria.  I can imagine someone “googling” the term Austrian economics and wondering why he keeps getting results for some guy named Mises who was born in 1881.

We have to distinguish between real and sustainable economic growth, versus false prosperity that is unsustainable.

Real and sustainable economic growth comes about because of savings and investment.  This leads to higher and more efficient production.  It leads to increasing technology.  This adds real wealth to our economy and increases our standard of living.

False prosperity comes about due to government intervention and central bank intervention.  These policies distort the marketplace and lead to resource misallocation.  Government taxes, spending, and regulation all contribute to this.  Even more, central bank tampering of the money supply and interest rates distorts the marketplace.

When the major economic downturn showed up in 2008, the government and Federal Reserve took unprecedented action in the form of increased spending, bailouts, increased debt, massive monetary inflation, and lower interest rates.

The Fed increased the monetary base approximately five-fold from late 2008 to late 2014.  Most of this newly created money went into bank reserves, which prevented the multiplication of the money supply via fractional reserve lending.

However, we must understand that the new money that went into excess reserves is not really the banks’ money.  It can help make them more stable, but they do not “own” this money.  It still represents deposits for individuals or companies.

Meanwhile, price inflation has stayed relatively low (not including health insurance premiums).  This is in reference to consumer prices as calculated by the CPI.  The price inflation has been low due to the huge increase in excess reserves, as well as a higher demand for money.  The sense of fear has never completely left, and many people still are not as anxious to spend as they were prior to 2008.

There has been asset price inflation, particularly in stocks, and to a much lesser extent in real estate.  In terms of housing prices, it depends on the location.  But in most places, it is still nothing like the previous housing bubble.

Interestingly, in the late 1920s, in a prelude to the beginning of the Great Depression, consumer prices were not rising rapidly then either.  It was asset prices – stocks in particular – that were going up.

The rush into U.S. stocks over the last 6 years is largely due to the easy money policies of the Fed.  In addition, the low interest rates have driven some investors into stocks in search of yield.  It is a situation where investors are virtually forced to engage in excessive risk just for the chance of a positive return above price inflation.

When there is bubble activity (false prosperity) due to an easy money policy, it is unsustainable.  Some people may feel like they are doing better for a while.  Think of a guy who gets a temporary raise at work, but he doesn’t know it is temporary.  He takes his family on a nice vacation.  But they don’t realize that their new lifestyle is unsustainable.

In the case of bubble activity, it eventually has to stop.  In order to continue the bubble activity, the economy requires an ever-increasing dose of monetary stimulus.  If it keeps coming in bigger doses, you will eventually get runaway inflation.  If the central bank does not keep increasing the dose of stimulus, you will eventually get a correction.

Note that you don’t even have to stop the money creation to get a downturn.  You just need for it not to keep increasing.  But in the case of the United States, the Fed actually stopped QE3 in late 2014.  It has kept the monetary base stable since that time.  Due to this reduction, we should expect to see a major correction, assuming the Fed does not intervene again in a significant way in the short term.

There is always a lag effect.  It takes time for the liquidity to dry up and expose the malinvestment.  Perhaps this is what is starting to take place now.  It is certainly taking place in China, where they are going to get a hard lesson in the Austrian Business Cycle Theory.  I don’t know if they will learn it, but they will certainly experience the major correction of the unsustainable boom in both stocks and real estate.

Not all of the growth of the past 7 years in the U.S. is false.  Technology continues to increase in the face of government intervention.  Computers and other electronics continue to advance.

But we can’t ignore that there has also been significant malinvestment in the U.S. over the last 7 years.  It may not be as bad as China, but it is still significant.

I don’t know if the stock market will rally again before the inevitable correction or if this will continue in the weeks ahead.

I advocate a permanent portfolio setup, which consists of 25% stocks.  You definitely don’t want any more than that right now.  In addition, your bond portion is quite important right now, as a downturn in the economy could lead to even lower interest rates than what we currently have.

The fall in stocks should not be surprising for anyone who understands Austrian economics and the artificial boom/ bust cycle that happens because of government and central bank intervention.

Be prepared for some rough times ahead.  Keeping your main source of income is the most important thing.  Your investments come after that.

Happy Birthday, Ron Paul!

Ron Paul just turned 80.

Ronald Ernest Paul was born on August 20, 1935 in the midst of the Great Depression.  He served as an obstetrician-gynecologist from the 1960s to the 1980s.  The term “serve” is used too loosely with government workers.  Ron Paul really did serve as a doctor and perhaps he is one of the few you could say served as a politician.

He was first elected to Congress in 1976 in a special election after first losing in 1974.  Later that year in 1976, he lost his election by just a couple of hundred votes.  He then went on to win a rematch in 1978, and then won again in 1980 and 1982.

Ron Paul won the Libertarian Party’s nomination for president in 1988.  He ended up receiving just over 430,000 votes – just under half a percent of the vote – at a time when libertarianism wasn’t all that popular, to say the least.

Paul returned to the House of Representatives after winning election in 1996.  He served from January 1997 until his retirement from Congress in January 2013.

His biggest claim to fame now is his run for president on the Republican Party ticket in 2008 and 2012.

In 2007, he surprised much of the nation with his libertarian message that motivated tens of thousands of people to get active for his campaign.  He went head-to-head with Rudy Giuliani in a debate where Paul said that the September 11 terrorist attacks were a result of blowback from decades of U.S. government intervention overseas.

All of a sudden, there were money bombs where Paul was raising millions of dollars in a day.  These were spontaneous events, not originally orchestrated by the Paul campaign.

Paul ended up making a big impact, but fell far short of beating the Republican establishment.  Amazingly, for the few states that counted his votes in the general election, he still received over 42,000 votes while not running.

He tried again in 2011/ 2012, but again came up short against the establishment.  When all of the votes were totaled for the primaries, Paul received over 2,000,000 votes.  This is quite an astounding number for just primaries.  He had come a long way from 1988.

I don’t think young libertarians today understand just how popular libertarianism is today compared to just a decade ago.  I started reading Ron Paul’s material around 2002 or 2003.  This was at a time when the only people who knew of Ron Paul were libertarians (which were few), or people who lived in his district, or the parents of the babies that he delivered.

As a libertarian today, I am far more optimistic than I was just 10 years ago.  The movement has grown by leaps and bounds.  We owe it to a variety of reasons.  Some of it is technology and the internet.  Some of it is general discontent with government.  Some of it is because of Ron Paul’s presidential runs, starting in 2007.

We also cannot ignore the vital importance of the groundwork that was laid.  Libertarians get frustrated because of a lack of progress.  Most libertarians feel like they are either speaking to the choir, or they are speaking to people who don’t care or just don’t get it.

Sometimes it is like pushing a big truck.  You push and push at the beginning and it barely moves an inch.  But as you push more, and more people join in, all of a sudden the wheels start turning and gaining momentum.

The groundwork was laid by Ron Paul in his earlier years.  It was laid by people like Lew Rockwell.  It was laid by some people who are no longer alive, such as Murray Rothbard, Ludwig von Mises, and Ayn Rand (who wasn’t a self-described libertarian).  There are many people who have contributed throughout the years.

Ron Paul will probably go down in history as the most influential person in the move towards liberty in the history of the world.  Most people don’t recognize this now, but I believe that will be the case.

He has retired from Congress, but he hasn’t slowed down.  He puts out almost-daily videos, he has a homeschool curriculum, he has a Peace and Prosperity Institute, and he continues to write books and articles.  He is probably working as hard now as ever.

Thank you Ron Paul for all you have done for the cause of liberty.  You stood up when most everyone else would not.  You refused to sell out to the special interests.  You stood on principle.  You used your political office, not as a way to pass laws, but as a platform to educate others.

Happy Birthday Ron!

The Surrender Experiment and Juries

I just finished a “book” called The Surrender Experiment by Michael Singer.  I say “book”, because I actually listened to the audio version.

Due to time constraints, I find it time effective to listen to audio books, among other things.  It can be done in the car or while doing certain mundane things around the house.

Overall, I enjoyed listening to the book.  If it were fiction, it wouldn’t make a good story because it would not be believable.  It is essentially an autobiography about a guy who let’s go.  He surrenders.  He does not try to control the things around him that he cannot control.

If you are interested in reading or listening to the book, then I am going to have a little bit of a spoiler here.

Near the end, his company gets raided by the FBI.  The company was previously investigating an employee for fraud.  In an attempt to avoid getting into too much trouble, the man under investigation went to the FBI and admitted some wrongdoing.  But then he said his actions were basically coming from up above.  He implicated all of the big players in the company.

The guy was completely lying, but he knew just enough details to make it sound as though things tied together and that the upper people knew what was going on.  The guy completely lied, but he got the government on his side.

It was a bit frustrating listening to the end of this book as a libertarian.  Singer, as usual, just surrendered to the situation.  And I think that is the important lesson from the book, as an episode like this would ruin most people’s lives.

But the frustrating part was that Singer was saying that the prosecution was just doing its job.  It is fine that he surrendered to the situation.  That doesn’t mean giving up, but just accepting the hand that you are dealt and dealing with it.  But I find it hard to accept that the prosecution and the people at the FBI were innocent.  Some of them were just as criminal as the original guy who made up all of the lies.

The case should have been dropped long before going to trial.  It was a witch hunt.  They weren’t looking for justice.  They were looking for a trial win.  And at the point of settling with the actual criminal guy who started the lies so that he could feed them more lies, it was no going back.  It would have been too embarrassing to admit they were wrong and got suckered by this con man.

It went to trial and the jury convicted the remaining defendants.  If I remember correctly from listening, they only deliberated for 4 or 5 hours.  The jury simply didn’t understand the facts of the case.  They naively thought that it must have been a strong case because the FBI spent so many resources on it and collected so much “evidence”.

As a libertarian, I frequently tout the jury system in the sense that it is an easy way for people to deny their consent to dumb laws.  But this doesn’t work well if you only have a tiny fraction who understand the idea of jury nullification.  It doesn’t work well if most people are easily duped into thinking that the FBI is a force for good in the world.

As a juror, you have the power to decide guilty or not guilty.  You don’t have to give a reason.  You might be better off not giving a reason.  If you just don’t understand the facts, then you shouldn’t convict.  If you think the law is immoral, then you shouldn’t convict if you don’t think the defendant did anything to harm someone else.

Most judges will not inform jurors of their right to judge not just the merits of the case, but also the law itself.  Worse is that jurors are told not to judge the merits of the law or laws.

I am a big advocate of spreading the teachings of having an informed jury.  Organizations that teach about jury nullification are doing a great service.

With all of that said, it is interesting how The Surrender Experiment ended.  There wasn’t really an issue of jury nullification.  If the accused had actually done what they were accused of, then it was fraud.  Libertarians can debate the merits of fraud laws, but that is not the topic at hand here.

The problem in this story is that the jury just simply didn’t understand the facts of the case.  They just assumed the FBI was right.  They just assumed the executives must have been a bunch of greedy crooks, conspiring to syphon off money that wasn’t theirs.  The jurors were completely wrong.

As the story is told, when the “guilty” verdict was read, the judge actually dropped his head into his hands.  He knew justice was not done.

In the end, the judge ended up freeing all of the charged individuals on technicalities.  But this was one judge.  The people accused were lucky that they had a competent and honest judge.  But it never should have come down to this.

This is a lesson for everyone, including libertarians.  First, juries cannot be relied upon for justice.  I would rather have a jury system than having a government panel deciding, but it is amazing how easily people can be swayed.

The second important point is that many judges are more on the side of liberty than we think.  Most of them do not really seek injustice.  They generally do want fairness.  There are some corrupt judges out there, just like in any profession.  It probably gets worse at the federal level.  But at least we have judges who can at least be somewhat impartial.  Most cases do not look like the political debates we see in the U.S. Supreme Court.

At the end of the book, Singer said that the American justice system prevailed.  But I view it exactly opposite.  It ended up turning out ok for the people accused, but even that is a long stretch.  This was after 6 long years and tens of millions of dollars in attorney fees later.  And for Singer, he resigned from the company, part of which he originally started.

It just shows how out of control the FBI and federal prosecutors are.  And unfortunately, in this instance, the jury system didn’t work.  They just happened to have a good judge who did the right thing.

The Surrender Experiment

Minimum Wage Laws Lead to More Than Unemployment

Government-mandated minimum wages are often a hot topic for debate.  Libertarians do not believe in a mandated minimum wage, as this is a violation of property rights and the freedom to associate.

Minimum wage laws prevent a contract between consenting parties.  It does not allow potential employees to work below a wage that the government has approved.  It also does not allow employers to hire employees below this wage.

Advocates of minimum wage laws or higher minimum wages will typically promote them with helping the poor as the main reason.  Whether this is actually their motivation probably varies.  But the typical reason we hear from proponents is that people cannot afford to live on such small wages.

The typical response by libertarians and some conservatives is that minimum wage laws actually end up hurting many poor people and those with fewer skills by making it more difficult to get a job.  They rightly point out that higher minimum wages typically lead to higher unemployment, with all else staying the same.

I also like to use the moral argument, as I mentioned above, that it is simply the use of government force to prevent a contract between consenting parties.

These are all valid arguments against minimum wage laws, but there is another argument that we rarely hear.  This is an argument on behalf of employers, but really it affects poorer people too.

When the government enacts a minimum wage or raises the minimum wage, it means there are fewer options for employers.  They either have to pay the higher wage, or find another way to do the work, or simply not do some of the work.

In some cases, employers turn to technology.  Maybe they can find machinery or hire robots that take the place of workers.  I have no problem with employers using technology to reduce costs when they can.  The problem is that, in some cases, the employer would have chosen to use human labor over machinery/ robots if the minimum wage hadn’t existed.  Therefore, the cost is higher than it otherwise should have been, or the performance of the machine is lower than it would have been with a human.

Sometimes an employer may just choose to forgo certain activities because of minimum wage laws.  Maybe a company wanted to expand a particular product or service, but it may not make sense if they can’t hire cheaper labor.  It could lead to products and services just not being offered in the marketplace because of the mandated minimum wage laws.

Regardless of what the employer chooses – and the employer doesn’t have to choose to hire people – it is going to lead to fewer products or increased costs.  This either makes the company less profitable, or it leads to higher prices than would have been the case.

It is impossible to detect this when you go shopping or go to a restaurant, but ultimately this hurts all consumers.  Even if all prices are just slightly higher because of this, it ultimately hurts everyone in some way.  So the unskilled worker may or may not have a job, but he is paying the higher price of certain goods.

The free market has a way to balance everything out.  When the government interferes with voluntary exchanges – including labor – it distorts markets.  We cannot always perceive the imbalances, but we can be sure they exist.

The way to raise real wages is through increased production and technology.  This means we need savings in the economy, along with capital investment.  The government can’t magically raise real wages without creating unintended consequences, most of which end up impacting the people who are supposedly being helped.

Minimum wage laws should be abolished.  It should be done for the benefit of employees, employers, and the principles of liberty.  If we want to become a richer society, which includes helping poorer people, then we need more wealth production.  This will only be done through voluntary exchanges.

Political Correctness Trumps Property Rights

A court in Colorado has confirmed a ruling that a bakery cannot refuse service to a same-sex couple wanting to buy a wedding cake.  In other words, the owner of the shop is not really the owner of the shop.  He is forced to submit to others, regardless of his reasons.

It is sad that the ACLU was part of the lawsuit against the dessert shop.  The ACLU has taken many principled stands in favor of civil liberties.  Unfortunately, the organization does not generally take a stand for property rights.  In this case, it took a stand against property rights.

The owner, Jack Phillips, is defending his decision on religious beliefs. But for me, this is not primarily a case of a violation of religious freedom.  That may be his reason for not wanting to bake a wedding cake for a gay couple, but that is not the reason he should be able to make this decision.  It should be based on the fact that he is supposed to be the owner.

Phillips has said that he would rather go to jail than sell a wedding cake to a gay couple.  I’m not sure if this is a principled stand or if he is just a fool.  Still, even if he is just a fool, it should be his right to be a fool.  A lot of people do stupid things with their own property.  But as long as they are not using force or threatening force on others, then it should be anyone’s right to be a fool with his own property.

Not only is defending property rights the only pro liberty position here, it is the only consistent position.

What if there is an owner of a bakery who happens to be black?  One day, in walks a member of the KKK.  He asks for a cake.  Does the owner have the right to refuse to sell a cake to the Klan member?  For all of the people who think a baker should be forced to sell a cake to a gay couple, they should also require a black baker to sell a cake to a KKK member, if they are to be consistent.

Of course, most people will be hypocritical and say that that situation is different.  But it isn’t different in principle.  It is just different because the bad guy in this case is the customer.  In the world of political correctness, in the Colorado case, the baker is the villain.

So how is this “law” going to be applied then?  Should we set up a panel to determine which customers are “good” and which customers are “bad”.  Then the government panel can make a determination on whether the owner has to sell to that person.

Who should we put on this committee of determining character?  What politicians would they recommend in determining good character?  And what happens if they end up with a panel that makes the “wrong” decision?

If I were a bakery owner, I would likely bake a cake for a gay couple’s wedding if asked, even if there were no threats of fine and imprisonment.  But that would be my decision, both personally and as a businessman.

You aren’t going to change people by threatening people with guns.  And let’s face it, that’s exactly what this is.  This baker is threatened with major fines and imprisonment.  If he continues his business and refuses the court order, he will go to jail.  If he refuses to go to jail, he will be shot.

So for all of the gay advocates out there, are you willing to pull the trigger?  Are you willing to kill this guy if he continues his business and refuses to bake cakes for gay couples?

By the way, I don’t think most conservatives are on the right side here either.  They may be on this particular case, but for the wrong reasons.  This should be applied across the board, even if someone wants to refuse business for other horrible reasons.  Nobody should be threatened to do business with anyone else, regardless of the reasons.

Ironically, using the force of government ends up just dividing people that much more.  I think a lot more people who are seemingly intolerant of gay people would be far more tolerant if it weren’t for cases like this.

This case was not a case about religion.  It was a case of political correctness vs. property rights.  More directly, it was a case of voluntarism vs. violence.  Unfortunately, violence won.

Rand Paul is Failing

After last week’s Republican debate, I gave my initial impressions from a libertarian perspective.  Looking back, I think I gauged it pretty well.

Despite the talking heads in the mainstream press, Donald Trump continues to poll well.  When the Fox News “moderators” were attacking him, it was actually good for Trump.  The few times he was answering normal policy questions are the times he didn’t look good.

I was right about Carson doing well.  He is up in the latest polls.  The one person I didn’t judge correctly is Ted Cruz.  More precisely, I did not judge some Republican’s views on Cruz correctly.

I thought Cruz was a dud.  He is one of the biggest war hawks in the race, which is really saying something.  Maybe that is why some Republicans like him so much.

Cruz’s poll numbers actually went up after the debate.  I think there are Tea Party conservatives who are looking for someone to support, and they are turning to Cruz.  He sounds like a fiscal conservative and he is pro war.  This mostly sums up a good portion of the Tea Party.

These same conservatives are definitely not flocking to Rand Paul.  The Paul campaign is a disaster.  It is a disaster from the perspective of social conservatives.  It is a disaster from my perspective as a libertarian.  It should be seen as a disaster by Rand Paul.

As I have said, Rand Paul is trying to play both sides of the fence.  He is trying to get supporters of his father, while also trying to gain supporters from more establishment Republicans.  He couldn’t have had a better strategy for driving away as many people as possible.

The guy just cannot take a principled stand on anything.  He had his opportunities during the debate and he ran away from principle like a scared kitten.  As I said, he had to justify not wanting to send foreign aid to Israel because “we” have to borrow the money from China.  I still can’t believe he actually said on the debate stage that it would be ok to send money to Israel during a time of surplus.

At least most of the war hawk candidates in the Republican race take a coherent stand on the issue, which is to continually send money to Israel.  It is a bad position, but they are consistent.  One could view it as principled.  Then there is Rand Paul just flapping in the wind.

Now it is Paul’s strategy to attack Donald Trump.  He started this immediately at the start of the debate when Trump wouldn’t pledge to support the eventual nominee.  Ironically, it was Ron Paul – Rand’s father – who refused to support the eventual nominee in his last two runs as a Republican.

If Rand Paul is going to attack Trump, it would be so easy to do so on policy.  Trump is talking a bunch of nonsense on trading with Mexico and China.  Trump is terrible on economics and it could be exploited by someone who does know economics.  But maybe there is nobody in this race who can challenge him.

Rand Paul’s campaign is pretty much done.  I don’t know that there is anything that could revive it at this point.  He tried to play the political game.  He tried to be different from his father by carefully calculating his political moves.  Meanwhile, he will likely end up getting far fewer votes than his father, if Rand even makes it to the voting at this point.

When Ron Paul ran for president in 2007/ 2008, and again in 2011/ 2012, he converted probably a million people or more to libertarianism.  Even for those that didn’t fully convert, they may have been brought a step closer.  Some people heard arguments that they had never really heard before.

Ron Paul has educated more people on the benefits of liberty than probably any other person in history.  He is certainly at the top when dealing with just this era.

Meanwhile, Rand Paul has done no such thing.  The best you can say about the debate is that he was not memorable.  Unfortunately, I do remember many of the weak things that he said.

I know he made a comment that he doesn’t want the federal government licensing his marriage or his guns.  It was a slogan.  He had it planned all along.  Worse, he delivered the line as if he had it planned all along.

If that is the most radical statement I am going to get out of Rand Paul, then he deserves to go down hard in this race.

While I did find Donald Trump to be entertaining, despite his terrible policy positions, I sure do miss the last 2 presidential cycles.  Ron Paul stood up there and told the truth.  He held to his principles.  Millions of people heard the truth whether they knew it or not.

Unfortunately, that will not happen this time around.

Scott Walker Can’t Even Pay Off His Credit Cards

As the current crop of presidential candidates release their personal financial data, I found one person particularly compelling.  It wasn’t Donald Trump worth several billions of dollars.

If Donald Trump is worth $4 billion, Scott Walker is worth approximately $4.0000725 billion less than Trump.  More precisely, according to the Boston Globe, Walker has an estimated net worth of -$72,500.

You would think he bought a house in the midst of the housing bubble and is currently upside down.  But that isn’t it.  His debt is credit card debt and student loan debt.  He supposedly owes about $50,000 on a Sears card according to one report and a bunch more on a Barclays card.

Walker also has a large amount of student loan debt that is attributed to his son, but we don’t know the exact amount.  It is somewhere in the six-figure range.

Walker earned over $222,000 as governor of Wisconsin last year, so it isn’t clear how he has managed to dig himself in this hole.  His salary was lower before that, and he claims to have returned some of it to the taxpayers, but it was still well into six figures.

Worse, one of his credit cards reportedly carries an interest rate over 27%.

From my own libertarian perspective, it makes me wonder how he could possibly balance the federal budget if he can’t even balance his own budget.  Of course, the answer is that he wouldn’t balance the federal budget.  I suppose the one thing Walker could claim over all of the other candidates is that he really is more in touch with the average American.  His salary is certainly higher, but his net worth is closer to the average American than any other candidate.

I’m not saying that anyone with credit card debt should automatically be disqualified as a presidential candidate.  But in most situations, this is probably the case.  If he had a middle class salary, I might be more sympathetic.  But someone earning over $200,000 per year, or even $100,000 per year, not living in New York or California, should not be in the position that he is in.  And it is even more pathetic that his interest rate is so high.

I believe that credit card debt is typically the worst kind of debt.  The only thing potentially worse is student loan debt, which Walker also has for his son.  He shouldn’t be forking over $100,000 or more for his son to go to college.  His son can take CLEP exams and attend a local college that is inexpensive if Scott Walker can’t afford it, which he apparently can’t.

Student loan debt is bad when it doesn’t lead to significantly higher income.  This is often the case in today’s world where people in their 20s (or older) have college degrees and are waiting tables or doing some other job that doesn’t really require a degree.

Student loan debt is also especially tough because it can be so big and cannot be discharged in most cases of bankruptcy.  It is really a massive burden on a lot of young people.  Apparently, in Walker’s case, it can be a major burden to older people too.

The credit card debt really gets me though because the rate is so high.  Unless he tries to aggressively pay it down, the problem just compounds on itself.  And it isn’t going to get any better as he campaigns for the presidency.  Although, after seeing the first debate, his campaign may not last as long as people originally thought it would.

Staying out of credit card debt is one of my major pieces of financial advice.  If you don’t pay off your cards every month, then you need to make a change.  You should not direct any money towards investment until they are paid off, unless that investment is a virtual guarantee to make huge returns.  In other words, the investment would have to be in a business, or something similar.

You get rich by collecting interest from others.  This doesn’t have to be from a bank or a mutual fund.  I am just referring to interest as any kind of return on your investments.  Compounding interest, if high enough and on enough initial investment, can make you rich.

You don’t get rich by paying interest to others.  That is how you get poor and stay poor.  Credit card debt that isn’t paid off every month is a ticket to the poor house.

Scott Walker’s financial decision making is not good.  Maybe he should look at a job in central banking instead of the presidency.  At least then he could attempt to print his way out of debt trouble.

But then again, as a big spender, he would be a good fit as a 21st century president of the United States.