As a libertarian, sometimes I like democracy and sometimes I really deplore it.  While it is a widely misunderstood subject, most libertarians understand the negatives of democracy.  It is majority rule, which violates the rights of the minority.

There is a television show on ABC called Shark Tank.  It started in 2009 and is still on the air now.  It provides some great lessons in business and entrepreneurship.  Inventors, business owners, and budding entrepreneurs get to pitch their business/ idea to the “sharks”.  There are usually 5 sharks, all of whom have had their own share of success.

The person(s) pitching their idea/ product will usually ask the sharks for money, typically in exchange for part ownership.  The people presenting their idea are usually looking for capital to develop and market their product, along with the expertise of the sharks.  The sharks will then give their own offers, which can often include not being interested.

While they are called “sharks”, and it can get a little hot under the collar, it is really a two-way street.  The parties are looking to come to a deal.  The sharks want to make money.  They are putting up their own money to take a risk.  They want the reward to be worth it.  If the person(s) presenting their idea doesn’t like any of the offers, they can just walk away.

I generally like the show.  I’m not sure how much of it is staged, but it is still good entertainment.  It also teaches valuable lessons about creativity, negotiations, marketing, entrepreneurship, and business in general.  It is a good real-life lesson on the free market.

I wonder how well the show would do in other countries.  I suppose it would depend on where.

Most people on this planet want to make money.  They understand that it represents wealth.  Most people desire a higher standard of living.  But it is interesting that entrepreneurship is not looked at with the same enthusiasm in other parts of the world.

While there is a lot of red tape and a major overabundance of obstructive government (at all levels) in the U.S., there still remains a strong spirit of entrepreneurship.  I know it seems like there is a lot of class warfare, particularly with all of the talk about taxing the rich.  However, most Americans really do not look down on people who are creative and looking to make it rich, as long as it is being done honestly.  Bailing out financial institutions on Wall Street does not represent free market capitalism, so there is some legitimacy in not liking the rich, at least for a certain class of the rich.

Americans take for granted that not all of the rest of the world is like this.  In some parts of the world, being successful and wealthy is not necessarily something to be proud of.  It is the culture.  While people look to make money, the poor people are always looking down on the rich people.  Perhaps it is because they know they have little shot of ever becoming rich themselves.  In America, it is possible for nearly anyone to go from rags to riches, even if it is made more difficult by big government.

The fact that Shark Tank is a successful show should tell us something.  Americans still like to see a good rags-to-riches story.  It is not something to be ashamed of.  It is something to be proud of.  The entrepreneur spirit is still alive and well in America.  That is why I think America will lead the way towards greater liberty in the 21st century.  Overbearing government has not killed the American spirit yet and I don’t believe it will.

It is common to hear the average Republican rail against Barack Obama and his big spending administration.  Of course, Congress actually controls spending to a greater degree than the president, but there is no question that the president does have some control.  The president can submit proposals, use the bully pulpit, and, of course, veto bills.  While Congress can override presidential vetoes, that has not been the case for spending bills during the current and previous administrations.

Republicans are right to attack Obama for his big spending.  The problem is that they try to avoid discussion about what happened during the administration of George W. Bush.  They can say that it ended 4 years ago and that the past is the past, but that is not acceptable to me.  I will take seriously any Republican who fully repudiates the Bush era.  If they are not willing to condemn Bush as much as Obama, particularly when it comes to spending, then the person cannot be taken seriously.

Let’s forget about taxes, since all government spending is using resources.  It doesn’t matter if it is obtained through taxes now, taxes later, or through the hidden tax of inflation.  All government spending consists of the consumption of resources.  For the sake of this discussion, we’ll also forget the fact that all spending originates in Congress.  We can forget that because it has not been a significant factor in the budgets because of the lack of presidential vetoes.

So who is the bigger spender?  Is it Bush or Obama?

In nominal terms, there is no question that Obama is the bigger spender on average.  Obama has also accumulated far more debt, but I don’t want to focus on that.  This is partially due to the slow economy producing less in terms of tax collections for the government.

But let’s look at this on a year-over-year basis.  Total federal spending in 2001, the year that Bush entered office, was $1.863 trillion.  Total federal spending in 2009, the year that Bush left office, was $3.518 trillion.  Perhaps it is unfair to judge Bush on the 2009 numbers.  He wasn’t in office for the whole thing and it was during a terrible recession (plus it included part of Obama’s stimulus).  Even in 2008, the total spending was $2.983 trillion.

No matter how you cut it, Bush increased spending by more than one trillion dollars in 7 years.  He took spending from under two trillion dollars to almost $3 trillion in 2008 and he set the stage for $3.5 trillion in spending in 2009.

Total federal spending for 2013 is estimated at $3.803 trillion.

So while total spending has increased under Obama, it is actually to a much lesser degree than Bush.  Of course, you could argue that he started out with a bigger number in the first place.  But you could also argue that he inherited a bad economy (more welfare expenditures) and has to devote more spending to baby boomers with Medicare and Social Security.

This isn’t a defense of Obama at all.  Obama is as bad as the critics say.  The problem is that most of the critics (mostly the non-libertarian ones) don’t recognize just how terrible Bush was.  And they should also recognize that a Mitt Romney administration wouldn’t have likely cut spending either.

So who is the bigger spender?  Bush is actually much worse in percentage terms.  But they are both terrible.  And Congress is terrible too.

The state of Illinois has an unfunded pension liability that is estimated at $96 billion.  While this seems to be a widespread problem, Illinois has the highest reported liability of any state in the U.S.

According to Wikipedia, the population of Illinois is about 12,875,000.  That means that the unfunded liabilities are approximately $7,500 per person.  If every person in the state of Illinois (including children and poor people) were to pony up $7,500 right now to the state government, then the problem would be solved, at least for now.

While $7,500 per person seems like a lot of money – and it is – we should take a look at the same figures for the overall United States.

It is hard to get a good estimate of the total unfunded liabilities of the federal government.  Laurence Kotlikoff has estimated that the number is well over $200 trillion.  This is made up of mostly Medicare and Social Security.  While I haven’t seen any good analysis to dispute Kotlikoff’s numbers, I have seen more conservative estimates at between $75 trillion to $100 trillion.

Let’s go with the $100 trillion figure, even though I think it is low.  The population of the U.S. is at about 315 million.  So let’s take 100,000,000,000,000 (yes that is trillion) and divide it by 315,000,000. Every person (including children) in the U.S. would owe over $317,000.  Using Kotlikoff’s figures, it would be well over half a million.

Do you have $317,000 laying around to donate to the cause?  Does your neighbor have $317,000 laying around?  Don’t forget that you have to pony up for your spouse and children too.

So while the Illinois unfunded pension liability is getting a little bit of attention in the press, it is practically nothing compared to the total unfunded liabilities of the U.S. government.

The Illinois government and the people there have a few options.  It can raise taxes.  It can drastically cut spending.  It can default.  It can do a combination of these things.  Perhaps it could raise a small sum of money from selling government assets.  It could borrow money, but that would be very limited and only a temporary solution.  Most investors would demand a high interest rate for taking on the risk of default, especially if the debt keeps getting larger.

The U.S. government has the same options.  It can raise taxes.  It can default.  It can drastically cut spending (even if it seems unrealistic).  It can do a combination of these things.  It could raise some money from selling assets.  But when it comes to borrowing money, it is a different story.

The key difference between the U.S. government and the Illinois state government is that the U.S. government has a central bank (the Federal Reserve).  It has a legal monopoly over the money supply.  The Fed can create money out of thin air.  It can buy government debt through monetization.  The only barrier stopping the central bank is hyperinflation.

This is the key difference between the federal government of the United States and the state governments.  State governments are forced to balance their budgets, or at least come close.  The federal government can keep running up debt for a longer period of time and to a much larger degree, because the Fed can simply create new money out of thin air.

This is why the fiscal/ budget situation with the U.S. government is so out of control.  There are virtually no limits.  The only limits are an irate populace and hyperinflation.  Until we get tens of millions of people who demand drastic cuts in spending or until we get much higher price inflation, then the debt will keep going up.  The game will end eventually, but it will be a painful ending when it does.

With the federal government pushed up against the debt ceiling again, get ready for more political drama.  Obama is perceived as the winner in the fiscal cliff ordeal (and it is the American people who are the losers, whether they know it or not).  In the upcoming debt ceiling debates, Congressional Republicans hold the stronger card.

There are now all of these different schemes being discussed to avoid this clash (which would make for another clash).  Some people are proposing this idea of creating a one trillion dollar platinum coin to fund the Treasury.  Of course, this is absolutely no different than simply monetizing government debt.  It is purely inflationary.  Luckily, it is being seen as the ridiculous idea that it is by most Americans.

There is also an idea that Obama could simply raise the debt ceiling by invoking a clause from the 14th Amendment.  I already disliked this amendment for many reasons.  This is just one more reason to not like it.  It has to be the most convoluted amendment ever written.  It is a perfect piece of government work.  Everything is vague and foggy.  Everything is left open to interpretation.  And of course we can always count on the Supreme Court and those enforcing the laws to interpret it in such a way as to expand the power of the central government.

Let’s just pretend for a minute that the Republican politicians in the House of Representatives actually did care about smaller government.  Let’s pretend that they aren’t really just lying to their constituents about less spending and lower taxes.  Let’s pretend that they really do want a balanced budget.

Even if Obama pulled one of these schemes to circumvent the debt ceiling, the Republicans in the House can still balance the budget.  All spending bills are supposed to originate in the House.  The Republicans control a majority in the House.  They can simply refuse to pass a budget.  Or they can appropriate just enough money (still well over $2 trillion per year) so that there are no more deficits.  It is really that simple.  But don’t worry.  It won’t happen.  The Republicans in Washington DC just like to talk and pretend about smaller government.

I frequently hear statements in the so-called mainstream media that the government will default on its obligations if the debt ceiling is not raised.  But this is completely false.  There will still be a couple of hundred billion dollars per month flowing in from various taxes.  This is more than enough to pay the interest on the debt.  It is even enough to fund Medicare and Social Security.  After that, it will get really tight.  Most everything else would need to be cut drastically or eliminated.  Perhaps this would be a default on promises made to Americans by politicians running for office.  But these promises always get broken anyway.

As always, the Republicans in the House will capitulate.  They will raise the debt ceiling for some bogus cuts that take place in the future and aren’t even actual cuts.  Both sides will continue to play this game until the Fed has to stop monetizing debt due to higher price inflation.  At that point, interest rates will go up and the federal government will be forced to cut spending.  The laws of economics are not limited to Greece.

James Altucher has written a piece titled “10 Reasons Why You Have to Quit Your Job This Year”.  He has written other similar pieces in the past.  I have discussed Altucher before.  I have both praise and criticism for him and his ideas.  Actually, I have more criticism for him and more praise for his ideas.

Altucher’s writing is very stimulating.  His personal stories are quite humorous, aside from being almost tragic some of the time.

I don’t recommend that you use him as a role model.  I recommend that you use part of his personality as a role model.  I recommend that you read his ideas to stimulate your own creativity.

He offers 10 reasons on why you should quit your job.  Some are much better than others.  I like his reason #9: “Its ok to take baby steps”.  It makes the whole piece a little less dramatic.  It brings you back to reality.  Some of the people making comments at the bottom may have skipped this one.  He is not necessarily recommending that you quit today or tomorrow.  He is recommending that you take steps so that you are able (financially and mentally) to quit in the future.

I really enjoyed reading some of the comments below the article.  There didn’t seem to be a lot of in-between comments.  There was a lot of praise.  There were also a few people that scolded him because they said they liked their jobs and did not want to become an entrepreneur.

One thing you can recognize from reading the comments is that everyone really is different.  You may hate your job, but it doesn’t mean that everyone else does.  Some people are completely satisfied working for a big company.  They like the daily routine, they like the benefits, and they like the lack of risk (aside from the possibility of losing their job).

There are some people who could never be happy working in an office or working for a big company.  This could be due to laziness or it could be due to a great entrepreneur spirit.  Again, everyone is different.

I think the point is, is that you can take what you want from reading articles like this.  Altucher offers a lot of things to think about.  He inspires many people, which I think is great.  Even if you disagree with him, you can still benefit from his writings.

But seriously, if you are going to quit your job, make sure that you have a good plan for yourself.

I have been wanting to write a post on this topic for a while.  I still haven’t put all of my thoughts together on this and perhaps I will write more in the future and try to articulate my thoughts better.  But since there is a lot of talk about gun control these days, I thought I would give a brief summary on this topic.

On the subject of the 2nd Amendment, I tend to differ with many libertarians.  I agree with most libertarians that peaceful people should not be prevented from owning guns.  But when it comes to the 2nd Amendment specifically, I have my own views.

First, I hold no high regard for the U.S. Constitution.  It is not a contract of any kind.  I didn’t sign it and neither did anyone who is alive today.  With that said, I think we would be much better off if the federal government were limited to the specific powers granted in the Constitution.

Second, I believe the 2nd Amendment would be completely unnecessary if the Constitution were actually followed.  Article I, Section 8 says nothing about granting Congress the power to regulate firearms or any kind of weapons in any way.  So even without a 2nd Amendment, there should be no federal laws regarding gun ownership.

Third, I don’t think the 2nd Amendment prevents state and local governments from regulating guns.  The 1st Amendment clearly says “Congress shall make no law…”.  It doesn’t say that everyone has a right to free speech.  While the 2nd doesn’t explicitly say this, I’m not sure why it would be any different.  I understand that many people argue that the 14th Amendment made the Bill of Rights apply to state and local governments.  I don’t really like the 14th Amendment for this reason.  It is extremely vague and open to interpretation.

I think to say that the 2nd Amendment is clear and that everyone has the right to own a gun is to misinterpret.  The federal government should have nothing to do with it.  Does that mean that someone in a jail cell should have the right to have a gun?  That’s the interpretation of the 2nd Amendment to many gun right advocates.  If everyone has the right to a gun, then are we going to start making exceptions for people in jail?  I thought the 2nd Amendment was absolute.

This is why I believe that state and local governments still have the authority to make laws regarding guns.  I don’t advocate that state and local governments take guns away from peaceful people.  But I do not think gun laws by state and local governments are unconstitutional (in regards to the U.S. Constitution).  I don’t think it is any of the U.S. Supreme Court’s business to strike down state or local laws regarding guns.  It would be appropriate for the U.S. Supreme Court to strike down ALL federal gun laws.

Fourth, I am just not that big of a fan of the word “rights”.  Again, I probably differ with many libertarians here.  I do recall Harry Browne talking about this subject many years ago on one of his radio shows.  While I much prefer the concept of rights as discussed by libertarians, I think the term can be subjective and misleading.  You can say you have the right to whatever, but it is only as good as your fellow human beings recognize.  You can say that you are born with natural rights, but we know that this isn’t really true.  If you are born in a place of tyranny, then your so-called natural rights won’t matter much.  You can tell the IRS that you have a natural right to keep the money that you earn as they throw you in jail.

The same goes for “2nd Amendment rights”.  In fact, this term is even worse.  If you are going to talk about rights, I would rather you talk about “gun ownership rights”.  Using the term “2nd Amendment rights” makes it sound like you are granted this right from the 2nd Amendment.  You don’t get your rights from the Constitution.  You don’t get your rights from the government.  The government is supposed to protect your rights.  The Constitution is supposed to protect you from government.  Beyond these things, they are violating your rights.  Your right to own a gun has more to do with the thoughts and opinions of your fellow citizens than it does with the 2nd Amendment.

I don’t mind having discussions about gun control and about the 2nd Amendment, but I really wish that libertarians would stop using the phrase “2nd Amendment rights”.  Also, if you are trying to advance gun ownership rights, then don’t advocate new laws.  We want to repeal as many laws as possible, starting at the federal level.

Given the current economic environment, I thought I would provide a summary of my investment recommendations for 2013.

I am a big advocate of the permanent portfolio, as described in Harry Browne’s book “Fail-Safe Investing“.  The quick summary is that you put 25% in stocks, 25% in long-term government bonds, 25% in gold (or equivalents), and 25% in cash (or equivalents).  You can also use the mutual fund PRPFX as a substitute.  While it is not a perfect substitute, it can be useful.

My recommendation is that you take 50% of your investment money and put it towards the permanent portfolio.  This can be done in a variety of ways and I recommend diversifying even here.  You can use PRPFX, you can use ETFs, and you can buy these investments directly.  The more money you have to invest, the more you should diversify, even in the types of instruments you buy.

For the other 50%, I think it will depend on your situation.  If you are in a good position to buy investment real estate, and you can get positive cash flow, then I recommend it.  You should be in a situation where you can afford some extra money for repairs or for a couple of months of vacancy.  You need a cushion.  I think most people will find that they can get a better return on their money in investment real estate than almost anywhere else.

Aside from this, I would put your additional money in gold, gold stocks, and cash.  I think shorting the stock market is risky at this point, especially with all of the Fed’s quantitative easing programs.  If you want to take a small risk and short the market, I would have at least 3 times the gold exposure as compared to exposure in shorting the market.  And this is outside of the permanent portfolio.

I really like the permanent portfolio, but I have to admit that the bond portion makes me really nervous at this point.  It is an important part of the portfolio as a hedge against deflation and depression, but it is tough to buy bonds at this point because of the historically low interest rates and the possible threat of higher price inflation.

One option is to replace your deflation hedge by buying less bonds and getting another deflation hedge.  If you have a mortgage for your house (or for an investment property), you could pay down some of the principal balance on your loan.  This locks in a guaranteed rate of return (the interest rate on your mortgage).  And with this return, you don’t pay taxes on it (other than perhaps a lower deduction).

So to sum it all up, let me take an example of a person with $100,000, who owns a house with a mortgage.

My suggestion is to take $50,000 and put it in the permanent portfolio.  Take $25,000 and buy investment real estate (assuming you can get positive cash flow and are in a good position and good location).  You could use $20,000 for the down payment and closing costs and use the other $5,000 as reserve money.  For the remaining $25,000, I would keep another $10,000 in cash (in a bank) and put another $10,000 towards gold and silver (or equivalents like GLD).  I would take the remaining $5,000 and gamble it on gold stocks (such as GDX or GDXJ).  For the $50,000 in the permanent portfolio, $12,500 of that would be going into government bonds.  If this makes you nervous, take about half (say $6,000), and redirect into paying down the principal balance on your home mortgage.

These are just my suggestions.  They are rough estimates and each individual has different needs, different risk tolerances, and different overall situations.  But I hope people find this helpful as at least a guide.

This economy is really tough right now.  Safety should be your number one goal in investing, especially now.  Any profits you can make in real terms should be considered icing on the cake.

Ron Paul is no longer part of Congress.  I can now say that ALL politicians in Washington DC are worthless.  I always had to make an exception in the past.  And believe me, Ron Paul is an exception.

It is not to say that they are all the same in DC.  They mostly are though.  They are not all evil.  Some people get into politics with good intentions.  But the power and prestige ultimately corrupts them.  Some are more evil than others.  Some may even have a good heart, but still lack principles and conviction.

Ron Paul is not passing the torch to anyone in Washington DC and this includes his son and Justin Amash.  I will send an apology along to any current politician in DC who proves me wrong.  If Ron Paul is passing the liberty torch to anyone, it is his devoted followers.

Am I too harsh on those politicians who supposedly lean in favor of liberty?  Am I really supposed to get excited when someone in Congress is principled enough to vote against budgets that are over 3.5 trillion dollars?  Am I supposed to get excited over a politician who doesn’t vote to increase taxes, when taxes at all levels are over 50% for some people?

So there are some politicians who are better than Joe Biden and John Boehner.  So what?  That isn’t saying much.

I want to see politicians who are willing to make the really tough votes.  For instance, Ron Paul voted against giving a medal to Mother Theresa.  It required funding from Congress.  There is no authorization in the Constitution.  The last president to do anything like this was Grover Cleveland.

As Ron Paul said in his farewell speech to Congress, we shouldn’t look primarily to politics for advancing liberty.  It must be done through example and through changing hearts and minds.  Ron Paul has done more to change hearts and minds than perhaps anyone in history.  There are millions of people who have a far better understanding of libertarianism due to the work of Ron Paul.

This was the low hanging fruit.  About 5 to 10 percent of the population are naturally inclined towards libertarianism.  Ron Paul spoke using his platform (the big one starting in 2007 with his presidential run) and some people found their home without having to do much research.  Now the really hard work comes.  We have to convince more people that liberty is far more beneficial and moral than big government.  There are people with these inclinations who need a better understanding.  This will be a matter of chipping away.

The future defaults that are coming by the federal government will probably help our cause in the long run.  When the politicians can’t keep the promises that were previously made, either by themselves or previous politicians, then the idea of voting for a free lunch will be up.  More Americans will be forced to deal with reality.  That will be the time when libertarians must close the deal.

In conclusion, I am happy for Ron Paul that he doesn’t have to deal with the slugs in DC any longer.  I hope he continues to work for liberty through education.  While it is possible that someone could replace him in Congress, it is doubtful.  Ron Paul is unique.

We don’t need a big advocate for liberty in Congress any longer.  He used his platform to promote his message.  We can carry on this message without needing a platform in the political arena.  We have the internet now.  The message can’t be stopped.