Some fast food workers walked out of their job last week, demanding that their pay be increased to $15 per hour.  Currently, the minimum wage is $7.25.

I would like to ask these people why they settled on $15 per hour.  Why not $14?  Why not $16?  What is so special about $15 per hour?  I suppose they will say it represents a “living wage”.

As a libertarian, I abhor the idea of a minimum wage.  It is immoral, as it interferes between two voluntary parties – the employer and the employee.  The minimum wage outlaws jobs.  If an employer is willing to pay $6 per hour for a particular job and someone is willing to work at that price, then the government is telling both consenting parties that they are not allowed to make such a transaction.  The government is making this job illegal, even if that is the only employment opportunity that someone has.

I have seen a few different polls on this subject of fast workers.  They were not statistically valid, but the results were interesting anyway.  It is a very small percentage who actually think these fast food workers should be paid $15 per hour.  Unfortunately, a majority believe that there should be some kind of a minimum wage.  The good news is that it is not considered such a radical position to oppose any minimum wage requirement (not that I am against radical positions), at least as much as in the past.  The libertarian position is becoming more common, even if it is still far from a majority.

It is funny (in an interesting way) that most people sense that these workers should not be paid $15 per hour or anywhere close to it. (By the way, if the market determines such a wage, then certainly an employer can pay $15 per hour for a highly productive fast food worker if that is their choice.)  Most people understand just how ridiculous such a wage is for this type of work, particularly in this economy.  Yet most of these same people still favor some form of a minimum wage.  They cannot bring their initial logic to its proper conclusion.

The minimum wage issue is a great example of where you can use a reductio ad absurdum.  You can make an absurd statement that the minimum wage should be $50 per hour.  Most people understand that this would be bad policy.  They understand that there would be unintended consequences.  Most people can even figure out that mass unemployment would be the major consequence.  (Some people wrongly think that this would cause higher inflation.  While it might make things more expensive due to far less productivity, true inflation is a monetary phenomenon.)

Yet many of the same people who realize that a $50 per hour minimum wage is ridiculous cannot understand that a $7.25 minimum wage is a bad idea, even if less harmful.  They cannot think on the margin.  They cannot draw the proper conclusion from their quick analysis.  They cannot think through the fact that any minimum wage will lead to some kind of unemployment, unless it is below all market wages so as to be irrelevant anyway.  They cannot understand that the minimum wage laws distort the market.

In conclusion, I am mildly optimistic that more people are taking the position that there should be no minimum wage laws.  With that said, there is a lot more work to do on this.  There are some seriously economic illiterate people out there and I often wonder how they can get through life.  I guess their illiteracy must be confined mostly to economics.

Obama has announced that he will seek permission from Congress before launching military strikes on Syria for the alleged use of chemical weapons.  I think this is really good news.

Obama is not seeking permission because of his respect for the U.S. Constitution.  He is not seeking permission because he values the judgment of those in Congress.  He is not seeking permission because he has decided it is important to be cautious before entering another war.  He is not seeking permission in order to better understand the facts of what happened in Syria.

The only reason that Obama is seeking permission from Congress is because of public opinion.  Most Americans are against U.S. military action in Syria and most Americans believe that Congress should authorize such action if it is to be taken.  (The Constitution actually calls for a declaration of war.)

I have no idea whether Congress will authorize military force.  I know it won’t even vote on a declaration of war.  Perhaps Congress will grant approval and Obama will order a strike.  This would still be an atrocity.  Just because Congress authorizes a war, it doesn’t make it good or just.

Nonetheless, the idea that Obama has backed off and is now asking Congress for authorization is really good news.  It is not that Obama respects the opinions of the average American.  It is just that he understands that he needs the consent of the governed in order to “rule”.

Obama and his advisors realized that public opinion was overwhelmingly against Obama acting like a dictator and attacking Syria.  If Obama had gone ahead with his plans and the war unexpectedly escalated, it could have meant serious problems for Obama.  What if a large percentage of people started demanding impeachment?

In many ways, I think politicians have a better understanding that they rely on the tacit consent of the citizenry than the average person does.  This is why politicians rely on propaganda so much.  They can use threats of violence, but it will only carry them so far if a large percentage of people rebel or just refuse to grant their consent.

We live in a country with approximately 310 million people.  There is only one president and only 535 people in Congress.  Their power is nothing if the hundreds of millions of people do not grant it.  The only reason these few people can control hundreds of millions of people is because the people are not willing to challenge the system that exists.  They may disagree with specific policies, but overall, they consent to being governed in such a way.

The good news is that the tide is shifting.  I think more and more people are becoming skeptical of the system.  This partial reversal by Obama on Syria shows that there is some fear on his part not to overstep his bounds.  It shows that public opinion is changing for the better and that it is having a positive effect.  Just a few days ago, it looked like another U.S. war was inevitable.  Now it is being delayed and there is even the possibility that it could be stopped.  This is an important development.

While I continually write about how awful the government is, particularly the U.S. government, my focus on the U.S. is for a couple of reasons.  First, I live in the U.S., so that is what I am most familiar with.  I really can’t speak much about what the Canadian or Italian governments are doing these days.  Second, the U.S. is the richest and most powerful country on earth.  That also makes it the most dangerous because of its vast resources.

With that said, I do sometimes point out the great things about America.  While the welfare state has definitely had its deteriorating effects, I still find that Americans tend to be more individualistic than others around the world.  There is no question that Americans own more guns, even on a per capita basis, than any other country.

There was an article, linked via Drudge, about a German family who just had four of their children taken away by the state.  So what was the crime of the parents?  They were homeschooling their children.  They refused to ship them off to the state indoctrination camps known as public schools.  You can read the whole article.

The family was actually seeking asylum in the U.S., but unfortunately, Obama and his minions had them deported.  They returned to Germany, and now the parents are without four of their children.

I am not advocating that others do what they did.  I would probably ship my children off to government schools if given the choice of that or having them taken away entirely.  The parents likely should have chosen the principle of staying as a family over the principle of avoiding state schools.  Or perhaps they could have found somewhere else to live, even if in relative poverty.  But with that said, there is no question that the German state is the aggressor and this was a peaceful family trying live their own life according to their own beliefs.

This is another example of where America really is a beautiful place in comparison to many other parts of the world.  Homeschooling is flourishing in the U.S.  It is actually a somewhat common thing to do in some parts of the country.  It is still a very low percentage, but if you live in a place like Florida, it is likely you will at least meet someone who homeschools.

I enjoyed reading a few of the many comments at the end of the article.  Just about every one was busting on Obama, the German politicians, and the aggressive nature of the state.  I am guessing it is mostly Americans who are commenting, especially the ones pointing out that this is just a continuation of Hitler’s policies from the 1930’s.

While the blame obviously lies with the politicians and even the police officers who enforced this, there is no question that public opinion plays a role.  The reason that homeschooling is allowed in most parts of the U.S. is because the people demand it, even if it is a minority.  My only conclusion is that there is simply not the same strong feelings in a place like Germany (and many other places).  The German people do not see this as an outrage, at least not to the same extent that Americans see it.

In conclusion, if you are an American and you are frustrated with what is happening in your country, just look around the world and see how much worse things are in other places.  This doesn’t mean you should let your own government off the hook for all of its atrocities.  But it is good to be thankful for what you have once in a while.  In this case, be thankful that there is still a good portion of Americans who at least somewhat hold the principles of liberty dear to them.

Harry Browne ran for president twice under the Libertarian Party ticket.  His first run was in 1996.  His second came in 2000 against George W. Bush and Al Gore.  On October 25, 2000, just before the election, he wrote a piece entitled “Do You Want Smaller Government?”  It was published in the Wall Street Journal.

Take a couple of minutes and read Harry Browne’s message.  I really miss his wisdom and his principled character.  I think he is one of the few individuals in this world who could be trusted with power, in that he would give it up willingly.  Ron Paul is really the only major politician I have ever seen do this.

I wish that Harry were alive today to see how far the liberty movement has come.  He saw the beginning of the internet and even used it effectively in promoting his message.  He did not see the Ron Paul revolution start in 2007 and I think he would be pleased at just how far things have come.

Harry Browne always had a message of hope.  He believed that a yearning for liberty was part of human nature.  I think he will be proven more and more right as time goes on.

I think most Americans can sense that there is something wrong, particularly in economic affairs.  While high unemployment has certainly been a problem, even people with jobs are finding times to be tougher than normal.  This includes people who have been able to maintain their salary.

The Federal Reserve has been on a tear the last 5 years, more than quadrupling the adjusted monetary base.  But due to a lack of bank lending and a high demand for money (low velocity), consumer price inflation has stayed somewhat tame.

I think many libertarians, even followers of Austrian school economics, have been misled into thinking that the consequences of the Fed’s loose monetary policy has to proliferate in the form of the boom/ bust cycle and high price inflation.  But as we have seen, there hasn’t been really high price inflation yet.  It hasn’t come close to reaching levels like Americans saw in the late 1970s.

However, this doesn’t mean there aren’t immediate consequences.  I think a much better measure is looking at wages as compared to the cost of living.  In many ways, Americans are richer than ever with smartphones and flat panel televisions.  But when it comes to basic needs such as food, medical care, education, and housing, times are tough.

I was just at the grocery store where I usually shop.  I typically eat one avocado per day (they are healthy).  The price used to be $1.50 per avocado.  There would occasionally be a sale for $1.00, but you can’t stock up on too many avocados because they only last so long.  The price just went up.  They are now listed at $1.69 each.  These are non-organic from Mexico.  While a price hike of 19 cents doesn’t seem like a lot, this is a 13% hike in the price.  Maybe there are supply and demand issues I am unaware of with avocados.  But I’m guessing the likely hidden culprit is monetary inflation.

This all adds up over time.  Even if the price goes up 13% every two years, this is still quite a big percentage increase, especially if you consider it happening with all food items that you purchase.  This would still be a yearly increase of over 6%.  I know most people are not getting raises anywhere close to 6%.  In today’s economy, most people getting raises at all are lucky if it covers the increased premiums in their health insurance.

Our standard of living is getting better in terms of electronics.  It is actually shrinking if you measure it in terms of basic needs.  This is all happening subtly due to massive government spending and massive monetary inflation.  While consumer price inflation has not been nearly as bad as some predicted up to this point, it is still taking a toll.  If prices are going up faster than wages, then it means harder times for people.

That is why many libertarians refer to inflation as a hidden tax.  It really is hidden.  Most Americans are looking around, not understanding why they are struggling more than in the past.  This includes people with jobs.  This includes people who have gotten raises.

The problem is real wages.  If you are getting a 2% raise each year and your average expenses are going up 4% per year, then you have a major problem.  You are getting poorer.  And just as 2% growth really adds up in the longer term, a 2% decline each year will make you a lot poorer over the course of 5 years or more.

I don’t think most Americans understand what has happened.  They know that times are tougher, but they aren’t quite sure why.  They know that all is not good with the economy.  I can only hope that more and more people come to understand that the government and the Federal Reserve are continually making people poorer.

It looks as though Obama, the so-called peace president, is going to start dropping bombs on Syria soon.  Of course, there is no declaration of war, as there hasn’t been since World War II.  There isn’t even a pretend resolution by Congress this time.  Dictator Obama and his cronies in the military industrial complex have taken it upon themselves to order an attack.

The U.S. government is accusing Assad, the president of Syria, of using chemical weapons to kill people.  I’m not so sure what is so special about chemical weapons.  Is death any less bad when it happens from a nuke or drone bombing, both of which the U.S. government has used against innocent civilians?

So in order to get revenge on Assad for supposedly using chemical weapons, Obama and company are going to drop bombs and murder more innocent civilians.  That will teach those people.

Of course, the whole report is probably false.  How do we know that chemical weapons were really used?  How do we know it was Assad who did it?  How do we know that it wasn’t the rebels in Syria? How do we know it wasn’t a false-flag operation by the U.S. government?  Almost everything Obama and company say are lies, so why should we believe anything?  Most of what the mainstream media reports is simply a repeat of what the government told them.

The good thing is that I don’t think most Americans are going to get suckered in this time.  These are the same made up stories that Bush told about weapons of mass destruction in Iraq.  I suppose Chuck Hagel is playing the part of Colin Powell.

So what about investments?  In the big picture, this is just another minor war, at least to Americans.  Of course, there is always the possibility that it could blow into something bigger in the Middle East, particularly if some country starts lobbing missiles into Israel.  If things start to get out of control, then I expect gold and oil to do well.  With all of the prior monetary inflation, these two commodities are ripe for big gains, so a trigger event like war in the Middle East is the perfect excuse for investors to jump in.

The stock market has been down lately.  Some headlines were blaming the news in Syria on the fall of stocks.  I’m not so sure this is the case, but we can’t be certain.  I would not be shorting stocks because of what is happening in Syria.  Perhaps there are other good reasons to short stocks, but I don’t think a war in Syria is one of them.  In the past, wars have not necessarily hurt the stock market.

Some might speculate that this coming war with Syria is a distraction from the bad economy.  I actually don’t really think this is the case because the politicians in DC are clamoring for war even when the economy isn’t in really bad shape.  Obama is simply part of the establishment and they will always push for more war.  It is an exercise in power.

If Syria turns into something bigger, this will do more long-term damage to the economy.  Everything has to be paid for in some way, whether it is higher taxes, more borrowing, or more inflation.

In conclusion, intervening in Syria is a huge mistake, but we have to face the reality that it is likely to happen at this point.  I think defense stocks may do well, but I would stick with gold and oil.  I am already bullish on gold and oil and this could be a spark for the start of a new rally in both.  It might also be worth looking at gold stocks, as these have been really beaten down in the last couple of years.

If you follow Austrian school economics, then you probably understand that the boom and bust cycles that we see today are mostly a result of government policy and central bank policy.  An interesting topic for discussion is whether a boom and bust cycle can occur in a free market, but I think most Austrian followers would agree that booms and busts would be much more mild in a free market environment, if they happened at all.

I think more people are coming to accept the Austrian explanation of what has been happening in the economy.  The Keynesian explanations just haven’t worked out too well and they really don’t make much sense, even to the common man who doesn’t study much economics.

It can still be difficult in discussing the boom and bust cycle with people because Austrian school followers can come across as pessimistic, especially in times like today.  It is not that we want a bust or we’re hoping for a bust.  It is just that a bust is virtually inevitable at this point due to prior policies by the Federal Reserve and the government.

While talking about a “boom phase” indicates a positive notion, this is actually the negative aspect when we are talking about an artificial boom.  Meanwhile, the “bust phase” sounds negative, but this is actually the healing process from the bad things that happened during the so-called boom.  It is true that the bust phase is quite painful for a lot of people as they realize that the good times don’t last forever.

The interesting thing that many people don’t realize, even Austrian school followers, is that the boom phase is also a difficult time for many people, especially near the top of the boom.

One analogy I like to use is to think of a middle class person who is taking an extended vacation.  Imagine this person has $50,000 in life savings and he decides to take a leave of absence from work to spend in the Caribbean.  He spends a few months living in a resort, drinking fine wine, gambling, getting massages, and living the good life.  If an outsider looked at a snapshot of this guy’s life during this time, they would think he was wealthy.  They would think his lifestyle could be sustained.

Unfortunately for this guy, he is in nothing but consumption mode.  He had some prior savings that he was able to use, but not enough to sustain him for a long period of time without working.  Once he blows through his $50,000 in savings and perhaps the use of a few credit cards, he is forced to return to his previous lifestyle.  He will have to go back to work and he will have to save money if he ever hopes to have any kind of a vacation again.

But in this example, the guy had to realize that his lifestyle could not be sustained.  When he was down to his last few thousand dollars, he knew that his time was almost up.  Perhaps he even cut back on the fine wine a little bit, just so that he could stretch out his vacation a little bit longer.

I think of people in the boom phase, particularly near the top, and many are not doing well at all.  If there is a stock market bubble or real estate bubble, then the investors are probably doing well up until the end, or at least they think.  But I can’t help but think of someone who bought a house near the top of the housing bubble in 2005 or 2006.  I suppose this could even apply to some people who bought at lower prices before then.  Think of all of the foreclosures and short sales that ended up happening in the years after.  Many are still happening to this day.

When someone ends up having their house taken from them because they were unable to pay the mortgage, then there were problems building up to that point.  I suppose there are some foreclosures due to people walking away from their underwater house.  But a majority of foreclosures, particularly at the beginning of the bust, occurred simply because people didn’t have the income to sustain the lifestyle that they tried to buy.  They couldn’t keep up with the mortgage payments and all of the expenses that come with “owning” a home.

I can just imagine a family in 2005 struggling to meet the monthly mortgage payments.  They see a boom around them and think everyone else is doing well and is happy.  They wonder what is wrong with themselves.  The husband and wife probably get into fights, thinking they are the only ones in this world who are going to lose their house.  They never should have bought their house in the first place, but they felt they had to because prices would just keep going up.  They stretched themselves too far and simply couldn’t pay their bills.  This is what happens in a “boom” economy.  The boom phase is when all of the damage is occurring and many people will feel the pain before the official bust occurs.

In conclusion, we are in somewhat of a boom phase right now.  Yet, Americans as a whole are struggling now even more than they were 5 years ago.  There is an official bust coming at some point.  But most Americans are already in a bust phase in that they are struggling to pay their bills each month. It isn’t much comfort that the stock market has been doing well to most middle class Americans.

I recently saw an interview with Robert Kiyosaki.  He is an investor and most well-known for his Rich Dad Poor Dad books.  While the books are not highly specific in most areas, they are great motivational books and they give a general overview of his philosophy when it comes to investing.

One of the things Kiyosaki said in the interview is that a house is not an asset.  It is a liability.  This is coming from a man who has made a big portion of his wealth from investing in real estate.  But Kiyosaki is not really referring to investment real estate.  He is talking about someone buying their primary residence to live in.

I recently wrote a blog post on housing costs and I referred to a house as a consumer good.  This is really the same thing that Kiyosaki is saying in that a house is a liability.  From a financial perspective, he is correct.  Houses cost a lot of money and I’m not just referring to the mortgage.  There are a lot of costs that go into owning a house.  While I see nothing wrong with spending money on a house that you like (as a consumer good), I also don’t understand why so many people become house rich and cash poor.

This goes against conventional thinking that owning a house is an asset.  But that is why so many people are not rich.  In fact, most people barely have any savings at all.  They may own a nice looking house, but they are a few missed paychecks away from a near financial crisis.

I remember watching a special program one time with a panel of “experts”.  One of them was Robert Kiyosaki.  He had a different view of things from the rest of the panel.  Someone asked a question about real estate investing.  One person on the panel suggested that it was a good idea if you can get rent to cover 70 or 80 percent of your costs (I don’t remember the exact percentage that was given, but it was below 100 percent).

Kiyosaki scoffed at this idea.  He said that cash flow should be 130 percent or more (or some percentage close to that if my memory serves me correctly).  He believes it is foolish to buy an investment property that produces negative cash flow, even if there is a good chance of appreciation.  He believes in positive cash flow.

You don’t get rich when you are paying out more each month than you are taking in.  I suppose over a long period of time you could pay off the mortgage and eventually get positive cash flow.  But then how many years will it take just to break even with the previous negative cash flow?

I am a proponent of investment residential real estate if you are in a decent position to do so.  But one thing I make clear is that it should always be positive cash flow.  (Note – there could be exceptions if you already own the place and you are moving and you can’t get positive cash flow right away.  But if you are buying a place for investment purposes, then you should be able to produce positive cash flow quickly or else it is a bad idea.)

In conclusion, if you are buying a house to live in, it should be viewed as a consumer good.  You should not justify paying a lot because it is an “investment”.  It is not an investment.  It is a cost of living.  If you want to pay more for some luxury, then at least be honest with yourself that you are spending more for this and that it is not for investing.

If you are buying a house (or condo) for investment purposes, your primary focus should not be on appreciation.  Your primary focus should be on producing positive cash flow.  You will not get rich, or anywhere close to rich, if your property expenses are higher than the rent being collected.

I enjoy discussing the economy, and investments that could benefit from the economy.  I like to give advice on saving money, spending money, and protecting the money you have.  That is one of the main focuses of this blog, along with commentary on politics and libertarianism.

For this post, I just want to remind people not to forget about an important investment.  It is more important than your financial investments.  You must invest in yourself.

Perhaps this sounds cliche, but it really is something people forget about.  You would be amazed at how many people will risk thousands of dollars in the stock market, yet won’t pay a couple of hundred dollars to attend a seminar to advance their career or that might help them in a side business.

While I don’t think you should throw money away by just picking things at random, there are worthwhile things to invest your money in for yourself.  Maybe you need to get a couple of good marketing ideas that will provide the breakthrough you need in a side business.  Maybe attending a seminar will provide a contact for you that will help advance your career.  Maybe you are interested in real estate investing and should attend a real estate investing seminar.  Perhaps just attending will give you the motivation you need to buy your first property.

There are any number of examples that one could come up with.  But the point is that you shouldn’t be a cheapskate when it comes to investing in yourself.  Almost anything that gives you greater knowledge and better networking can be viewed as money well spent.

Most people will not get rich.  For the few that do get rich, most of them won’t do it by investing in financial instruments.  It will mostly be done through higher incomes from really good jobs or from running a business.  Of course, when you make a high income, you do have to be wise enough to not squander your money.

I don’t want to say that investing is like playing the lotto.  But unfortunately, some people actually view it this way, except they think they can win this one.  But most people will not get rich quickly, or really get rich at all, by just investing in financial instruments.

Compounding interest over time can certainly be a powerful tool and it shouldn’t be ignored.  But it is probably even more important that you have your own compounding interest for your knowledge and productivity.  For this, don’t forget to invest something in yourself.

There is an interesting article that was run on Market Watch.  The author discusses the fact that the 10-year yield has risen from 1.6% to over 2.8%.  He suggests that this is setting up bad news for the stock market, as investors can lock in better returns from U.S. Treasuries.  He runs some numbers with a scenario of where the 10-year yield hits 4.5%.

I think the author brings up an important point and he could end up being right.  However, at the same time, we do have to consider the different scenarios that could play out.

First, just because the 10-year yield has been going up as of late, it doesn’t mean it will continue.  There are several scenarios we could see where the yield stops going up, or even goes back down.

Second, we have to consider the reasons for higher rates.

If the Fed slows down its “quantitative easing”, then this could certainly force rates higher as other investors would not likely step in and buy government debt at the current rate.  If this is the case, then the author is probably correct that the stock market is in for trouble.  We have seen, just by words spoken by Fed officials, how the stock market can move up or down in anticipation of what the Fed is going to do.  The current stock market boom is living by the Fed’s monetary inflation and it will likely die by the Fed’s monetary inflation ending, or even slowing down.

Another scenario is that the Fed keeps up its monetary inflation (or even worse, steps it up) and we start to see higher price inflation.  Even with the Fed buying big amounts of government debt, we could still see rates rise due to a fear of future inflation.  So if the 10-year yield were to hit 4.5% in this case, then it may or may not spell the end of the stock market rally.  While stocks do not always do well in times of higher inflation (you can see some examples during the 1970s), stocks will generally benefit, at least in nominal terms, from a dollar that is being devalued.

The interesting thing is that if there is some kind of a major pullback in the stock market, we might see interest rates go back down lower from where they are now.  During times of recession, it is likely that investors will seek safety, assuming there is not a lot of fear about inflation.  We saw this in the fall of 2008, when bonds were the best investment around.  Whether you like it or not and whether you think it is rational or not, investors find safety in U.S. government debt.

So while the author may be correct that higher yields could pull some investors out of the stock market, it is also important to know that a lot of different scenarios could play out.  It is also hard to determine cause and effect.  Are investors leaving the stock market to get better yields in bonds, or are investors going to bonds simply because they want out of stocks?