There was a recent article published on SchiffGold and reproduced on LewRockwell.com.  It asks the question if Americans could someday be using dollars as napkins?

The story is really about Venezuela.  The currency there is in hyperinflation.  Different people have different definitions of hyperinflation, but when estimates of the inflation rate range from 400% annually to over 800% annually, then most people will agree that is hyperinflation.

Venezuela is a great example of the “paradise” that the socialists seek.  The people chose Hugo Chavez to rule over them and his successor continues on with the same authoritarian policies.

The government will do everything in the name of helping the poor.  Meanwhile there are a greater percentage of poor people suffering in Venezuela than anywhere else in South America.  You can read stories about massive shortages of food, toilet paper, and other basic necessities.  This is the socialist paradise that Bernie Sanders wants to impose on us.

The government policies have been horrific in virtually every aspect, but the hyperinflation is probably the worst aspect.  When you can’t trade with a reliable currency, it leads to complete market chaos.  The whole pricing system is corrupt, if you can even call it a pricing system.  Until the hyperinflation stops or the currency is abandoned, the massive shortages will continue.

The article linked to above shows a picture of someone using a 2 bolivar note as a napkin to hold food.  It points out that the 2 bolivar note is somewhere around the equivalent of one-third of a U.S. cent.  This may be cheaper than using a napkin.  Unfortunately, paper money does not typically have a good texture for being used as toilet paper.  Toilet paper in Venezuela is more valuable at this point.

As to the question of whether the U.S. dollar will ultimately be used as a napkin, I still believe this is not going to happen.  Hyperinflation is not an impossible scenario in the U.S., but it is not a likely one.

This would mean a total loss of control of the currency by the Federal Reserve.  The Fed members would be destroying their own power and their own pensions.

We could certainly see double-digit price inflation as was seen in the 1970s, but it would be hard to imagine the Fed letting it go beyond that without calling in the likes of a Paul Volcker.

We also have to realize that the central bank’s actions are at least somewhat of a reflection of popular opinion.  If the public has little opinion, then they will try to get away with as much as they can.  I said above that the Venezuelans “chose” Hugo Chavez to rule over them.  This isn’t true of every individual in Venezuela, but it is true as a collective.  In order for a thug to rule as he did, there has to at least be tacit consent among a majority of the population.

It may not always feel this way, but there is a more independent and liberty-oriented streak in the hearts of the American people.  Just imagine if price inflation reaches 10% by the government’s own statistics.  What will happen?

My guess is that it won’t be like the 1970s.  There will be a strong minority who understand that the problem is central banking.  They will be posting articles and YouTube videos on Facebook.  They could do that now, but a lot of their friends probably ignore it.  If prices are going up at a significant pace and the American middle class is really feeling it, then some will start to pay attention.

I would say that 5 to 10 percent of the adult population in the U.S. have a decent understanding of the central bank.  They at least understand that the Fed is the primary culprit in rising prices.  If a good percentage of these people take to social media to tell their friends and relatives, I believe that a majority of Americans will come to at least a basic understanding that the central bank is the problem.

For this reason, I don’t think we will be using U.S. dollars as napkins.  They don’t soak up grease very well anyway.

The big story in the news today was the Kentucky clerk who is refusing to issue marriage licenses.  This comes after a Supreme Court decision that permits marriage licenses for gay couples.

This all reached an apex today when it was reported that the clerk – Kim Davis – was arrested after being found in contempt of court.  There is so much wrong with this, it is hard to know where to begin.

My immediate reaction was surprise.  I know the state does some crazy things, but are they really sending someone to jail for refusing to issue marriage licenses?  In the real world outside of government, you don’t go to jail for not doing your job.  Usually your boss will tell you to do your job or they will find someone else to do it.  In most cases, if you still refuse, you will be fired.

This is the stark contrast between the force of government and the voluntary society.  In the free marketplace, this situation would be handled peacefully.  Nobody would be sent to jail.  If someone refused to do their job, they would likely be fired and not allowed on the property any more.  They would receive their last paycheck.

With this outrage, I get to hear all of the ignorant comments from both sides of the debate.  I generally try to be optimistic for the future of liberty, but I have to admit it is a little harder to be optimistic on days like today.

I have heard both sides citing the First Amendment to the Constitution.  I actually heard some ignorant fool saying that she is violating the 1st Amendment by not issuing the licenses because she is denying people their rights.

Let’s all read the 1st Amendment together.  In fact, you really only need to read the first five words: “Congress shall make no law…”

In case you need a translation, it means that Congress shall make no law.  How can somebody not in Congress not doing something be a violation of the 1st Amendment?  She is in violation of not doing her job, but there is quite a difference.

I don’t really sympathize with this woman either.  I know everyone has issues they are passionate about, but get a life.  The woman is working for the government, so what does she expect?  And for all of those defending her in the name of religious freedom, it must be difficult knowing that the woman was reportedly divorced four times.  I think someone should have refused to issue her a marriage license at some point along the way.

Of course, when it comes down to it, the government shouldn’t be licensing marriage.  As a libertarian, I have to remind people that this shouldn’t even be a debate.  It should be settled between private parties.  This may or may not include a church, but it shouldn’t involve the state.

I wish gay couples would just get married without the government-approved license.  Just avoid the gatekeepers.

I am sympathetic to the fact that gay couples are not treated equally in terms of filing taxes and health benefits.  As usual, this is all a problem created by the state.  There should be no income tax, so that would solve that problem.

In terms of health benefits, it is only tied to employers because of government taxes and regulations that originally put us on that path. This would also become a non-issue if the income tax were eliminated and health regulations repealed.

In terms of marriage, if there is to be any involvement, it should just be the state recognizing what is basically a contract.  This would be useful in cases of divorce and a few other circumstances such as granting access to records.

Regardless though, this should be decentralized to at least the state level.  Washington DC should have nothing to do with this issue.  After all of the ignorant fools get done reading what the 1st Amendment actually says, maybe they can move on to the 10th Amendment.

I hope this latest case of Kim Davis being sent to jail at least illustrates for some Americans the brutality of the state and how it handles situations.  We must always push for voluntary solutions that do not involve the use of force.

There was a piece published on LewRockwell.com by Paul Craig Roberts regarding the “dying institutions of Western civilization”.

Paul Craig Roberts has been a great opponent of the surveillance state and the U.S. empire.  Considering he once worked for the Reagan administration, it is quite amazing how outspoken he is against U.S. government intervention.  We could probably say the same about David Stockman.

While Paul Craig Roberts is frequently read by libertarians, I do feel the need to warn libertarians that his economics are not sound.  In his most recent article, there is one particular part I want to address.

Roberts writes a section called “A Robot Will Take Your Job”.  He first attacks the notion of moving jobs overseas as being beneficial.  I don’t know what government schemes Roberts advocates to prevent this from happening, but it would be nice to know his “solution”.

Some jobs do get shifted out of the country due to government policies of regulation and taxation.  The answer to this of course is to dramatically reduce government regulation and taxation, including corporate taxes.  But these jobs going overseas is a result of big government, not because of a lack of government.  Unfortunately, I don’t think this is what Roberts has in mind.

A lot of jobs going overseas would still happen in a relatively free market though.  It makes sense in many circumstances for a company to hire people out of the country if the job can be done more efficiently or at a reduced cost.  But this is beneficial for most people, especially consumers, which is really everyone.

Roberts then specifically addresses the “problem” of having robots perform labor.  Roberts states:

“The unaddressed problem is: what happens to consumer demand, on which the economy depends, when humans are replaced by robots? Robots don’t need a paycheck in order to purchase food, clothes, shoes, entertainment, health care, go on vacations, or to make car, utility, credit card, rent or mortgage payments. The consumer economy has suffered from incomes lost to jobs offshoring. If robots replace yet more Americans, where does the income come from to purchase the products of the robots’ work? Any one firm’s owners and managers can benefit from lowering costs by replacing a human workforce with robots, but all firms cannot. If all firms replace their work forces with robots, the rate of unemployment becomes astronomical, and consumer demand collapses pulling down the economy.”

He is essentially answering his own question, yet he doesn’t even realize it.  This is a complete lack of understanding of free market economics.

In a free market, you would never get to the point of consumers not being able to afford the products being made by robots.  Some products may go out of fashion, as has always happened in modern history.  But companies aren’t going to continually make products and sell them for a price that most consumers can’t afford.

This is why we have prices.  Prices basically regulate the whole process and ensure clearance.  If a product isn’t selling, then the price will fall, or else the product will stop being sold.  Companies are only going to use robots if it is more cost-effective to use them.  Overall, this should mean reduced consumer prices, all else being equal.

There is another major fallacy that Roberts is falling for.  He is assuming a limited number of jobs in this world.  But just because robots replace people in some jobs, it doesn’t mean there aren’t other things to do.  We live in a world of scarcity where people continually demand goods and services.  If they were all available without requiring any work, then jobs wouldn’t be needed because everyone could just consume everything for free.

Human beings are quite versatile.  People can work in many different areas.  They can learn new skills.  If robots start doing the work of fast food restaurant workers, then these workers can do something else.

Again, prices – in this case wages – regulate everything.  I use the term “regulate” in a good way here.  There is very little unemployment in a true free market because someone is almost always willing to hire at some wage.  It may not be the wage that some workers want, but there is a clearing price at some level.

I would be willing to hire a personal assistant for $10 per day.  This sounds ridiculous, but it is true, as long as I can find someone who is honest and somewhat capable.  But probably nobody will work for that wage unless they deemed some other value in working for me, such as learning new skills.

The key is that there are richer people out there who have more of a need for a personal assistant who would be willing to pay a lot more than $10 per day to someone.  In a free society, there is always work to be done.

Will robots take jobs away?  In a sense, yes.  They will replace workers in particular jobs, but there will still be plenty of work to do.  Meanwhile, the presence of robots will make goods and services less expensive for consumers, which is beneficial to everyone.

If you have a job that could potentially be taken over by a robot, it is a good idea to have a backup plan.  You should seek other marketable skills.  But this isn’t just good advice because of robots.  This is good advice for anyone at any time.  You could be vulnerable in your job for any number of reasons.

Don’t worry about robots.  In the long run, they will make our lives better.  You should worry about your own marketable skills though.

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.

https://www.youtube.com/watch?v=LZDOWIxpBgg

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.

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.

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.

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.

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!

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

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.