While the election results may be depressing to conservatives and many libertarians, I want to give some “glass is half full” reasons to be optimistic.  The first couple of reasons to be optimistic will be more for libertarians and the last two will be for both.

The first reason is that we won’t have a President Romney.

The second reason is that Obama is less likely to bomb Iran.  This is actually the biggest issue that is out there.  If there is a major war with Iran, then that will affect everyone.  It will mean that many innocent people will die.  It will mean more hatred toward Americans.  It will mean higher gasoline prices.  It will mean far worse economic conditions.

While we can’t be sure of what Romney would have done and we can’t be sure of what Obama will do, it seems that there is less of a chance of a major war with Iran with Obama in office.  This is not a defense of Obama and it is not to let him off the hook for his continuing wars (some of which he started) and his drone attacks on innocent people and his continuing violations of basic civil liberties.

The third reason to be happy that Obama will get another 4 years is that he will take the blame for the horrible economic conditions that are still to come.  There has been massive malinvestment that is so big that we can’t even know what is about to hit us.  Obama is correct that he inherited a terrible economy.  We can fault Bush, Greenspan, other politicians, and even the American people to some degree for allowing it to happen.  But Obama has not improved the situation.  He has only made it worse with more regulations, more spending, and more debt.  And he certainly hasn’t criticized Bernanke for his huge monetary inflation.

Obama is known as a supporter of big government.  Romney is falsely portrayed as a supporter of the free market.  If we are going to have a terrible economy for the next four years, regardless of who is president, we may as well favor the guy who is known for his support of big government.  I would have been screaming and kicking if Romney had been elected and the media were trying to portray him as cutting government, when of course no such thing would have happened.

The fourth and final reason to be happy about Obama’s re-election is that the Democratic nominee in 2016 will have less of a chance of winning.  The Republican nominee in 2008 was doomed because of the disaster that was Bush.  The same will probably be true for the Democratic nominee in 2016, assuming the economy is really bad.  If Romney had won, then guess who would have been the immediate favorite in 2016 for the Democrats?  Yes, Hillary Clinton.  She still may run in 4 years, but her chances will be far less having to follow Obama and probably a bad economy.  So perhaps we can be thankful for Obama for another 4 years in saving us from having another President Clinton.

The election circus is finally over and Obama will get another four years.  I have to admit that it was a little fun listening to the Republican/ conservative Romney supporters who were so depressed.  Many conservative commentators were predicting a big Romney victory and their predictions were way off.

Intrade proved to be right again.  It is not infallible, but it seems to be the best “poll” that there is.  Intrade had the chances of Obama winning at about 67% just before the election.

One thing that hasn’t been mentioned much, if at all, in the mainstream media, is that Libertarian Party nominee Gary Johnson broke the one million vote barrier.  He looks like he will just miss breaking the one percent barrier though.  If his positions had been closer to Ron Paul, then I think he would have easily broken the one percent barrier.  I will have more commentary on this in a future post.

I didn’t vote because the lines at my precinct were astronomical.  I don’t have hours out of my day to waste for something where my vote will have no effect.  Perhaps I would have waited if Ron Paul were running in the general election, but that was not to be.

So with the long lines I saw, I thought that it was a big voter turnout.  But it turns out that it is just another thing where government is incompetent.  Why should a voting line take hours?  You can have hundreds of people filling out a ballot at the same time.  Do they not have enough workers at the polls or are they just run really inefficiently?  Anyway, it is so symbolic of bureaucratic idiocy.

Despite the long lines I saw, voter turnout was actually down.  While I’m sure not all of the votes have been counted yet, it still looks to be quite significant.  You can see the 2008 results vs. the 2012 results. According to this article, voter turnout was down by as much as 13 million people from 2008.  This is quite significant.  Now, certainly some of this can be attributed to Hurricane Sandy from the previous week.  However, it wasn’t just low turnout in New York and New Jersey.  It appears that turnout was down in most states.

I think this should be good news to libertarians.  It means more people did not feel obliged to vote for the lesser of two evils.  It means that more people did not want to endorse the status quo.

Let’s face it.  Obama just won re-election in the face of a terrible economy.  This just shows that the Republican Party put up a real dud.  Aside from the general economy, the issue that Obama was the most vulnerable on was Obamacare.  Yet, how could this be legitimately challenged by the inventor of Obamacare?  There are two Americans who have signed legislation to mandate the purchase of health insurance and those two people happened to be the main choices for president.

To be fair to Romney, I don’t think most of the other Republican candidates would have faired better.  Gingrich, Bachmann, Cain, and Santorum all would have lost, and probably even worse.  Perry might have had a shot if he had improved his debate skills.  Ron Paul would have had a chance at beating Obama too, but the Republican establishment would pick Obama over Paul any day.

So we will have four more years of Obama.  This may seem depressing, but I will give some good news about this in my next post.

1) I went to vote today and the line was astronomical (I live in Florida).  I probably would have waited at least an hour and I wasn’t going to be voting for Romney or Obama.  So I figured my time was better spent elsewhere.  One post on my blog is far more influential than any trip to the voting booth.

2) Can I still call it a voting booth?  You don’t actually go in and close a curtain anymore.  Or do they in some places?  Young adults today might not even know what I’m talking about.

3) H. L. Mencken said, “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”  While it is funny, I am not this cruel.  I don’t wish this government on most people.  I think most people are just ignorant about politics, history, economics, etc.  I think most people mean well.  They may not deserve the government they ask for, but they are going to get it.

4) What are the chances that your single vote would decide the presidential election?  It would have to be at least one in a billion.  And even if it were a one-vote margin in one particular state that would decide it all, then it would end up being decided by vote counters, lawyers, and judges.  Remember 2000?

5) When thinking about the above point, it really is amazing just how close Florida was in 2000.  To think that of millions of votes, it came down to just a few hundred in a state that decided it all.

6) I don’t think most people understand when I tell them that our solutions do not lie in politics.  They don’t understand that government relies on their consent.  Some people even say that they don’t consent, but then go on and tell me about the government programs that we do need.

7) There is a saying that if you get people asking the wrong question, then you don’t have to worry about the answer.  Isn’t this what this election is?  If you have establishment candidate A (Obama) vs. establishment candidate B (Romney), then the establishment doesn’t have to worry about who wins.

8) What would happen if there was an election and nobody showed up?  Not literally.  Of course the candidates and their families will show up.  There will always be some people who show up.  But what if voter turnout dropped by a huge percentage, say 50%.  This would scare the establishment more than anything.

9) As said above, the government relies on the consent of the people.  The government will always get away with whatever it can.  It will only be as good as the people are.  It is rare that a government is better.  Are there any examples of this?  Maybe the prime minister (essentially dictator) in Dubai and United Arab Emirates.  He is a relatively free market guy.  I think the same goes for the prince in Liechtenstein.  If these places were democracies or democratic republics, they would actually be worse off.

10) Why are people so passionate about politics?  It is because it means control.  The government has so much power over our lives, that there is a big stake in the game.  If we were allowed to choose our own government, then all of this fighting would not be necessary.  I don’t care if people want Obamacare, as long as individuals and companies are not forced to participate.  If all of the blue voters want to get together and have Obamacare, go at it.  The same goes for the red voters and all of their issues.  There won’t be fighting if people are not forced to participate in other people’s schemes.

My friends and family keep asking me for my predictions on what will happen in the elections, particularly with the presidential election.  So I thought I would share my predictions with everyone.

I predict that we will have more war and more foreign intervention.  I predict that drones will continue to fly overseas and even in America.  I predict that innocent people, including little children, will continue to be killed for no other reason than they lived in the wrong place where the U.S. government decided to drop bombs.  I predict that most foreigners will continue to hate and despise the U.S. government for trying to rule over them.

I predict that we will have another 1 trillion dollar deficit next year.  I predict that there will be no significant cuts in government spending.  I predict that the Federal Reserve will continue to resort to monetary inflation as long as the CPI is somewhat tame.

I predict that unemployment will continue to be a problem.  I predict that the minimum wage will stay where it is or go higher.  I predict that the government will continue to spend money with the excuse to create jobs.

I predict that the federal war on drugs will continue.  I also predict that the government will continue to spy on people, including Americans.  I predict that the Patriot Act will go on.  I predict that the TSA will continue to touch people in inappropriate places.

I predict that the FDA will continue to keep life-saving medications from getting to the market.  I predict that the government will continue to fund and oversee the majority of the medical care in the country.

I predict that we will continue to have big government.  I predict that the government will stay big until the people peacefully revolt or until the laws of economics force it to shrink.

I know I am really going out on a limb with these predictions, but that is just my guess.

There was an article recently on Bloomberg.  The title of the article is: “How to avoid the consequences of QE3”.  While it is nice to see this topic discussed on something other than a libertarian/ hard money website, I also have a problem with the premise.

Parts of the article really are good.  It points out that QE3 debases the dollar.  Then it points out that the low interest rates make it hard for senior citizens and others trying to live from their savings.

The article then goes on to discuss ways to invest.  This includes foreign stocks, foreign bonds, and certain individual sectors.  While the author warns of potential problems in China, he still basically recommends buying Chinese stocks.

Unfortunately, in an article about QE3 and investing, the author doesn’t come out and recommend investing in gold or gold related stocks.  He does mention gold, but only to compare it to foreign bonds.  He says that “Foreign bonds are like gold with yield.”  This is a ridiculous statement and I won’t waste the taps on my keyboard to refute it.

So the author identifies some of the problems with QE3 and is basically correct about them.  Unfortunately, I’m not a big fan of his remedies, especially in leaving out gold.  However, my major disagreement is with the premise of the whole article.  It is really in the title.

I don’t believe it is possible to avoid the consequences of QE3.  I think the best you can hope for is to minimize the consequences as best as possible.  QE3 will negatively impact virtually everyone.  It isn’t just a matter of inflation and low interest rates.

QE3 is massive monetary inflation.  It is a bank bailout.  It also allows the federal government to continue spending money it doesn’t have.  If the Fed would stop with all of its quantitative easing sessions, then interest rates would rise and Congress would have to cut spending.

Whenever there is monetary inflation, particularly on such a massive scale, it leads to a misallocation of resources.  This can be called malinvestment.  It is directing resources to uses that wouldn’t have been preferred by consumers in a free market.  Monetary inflation is a hindrance to our standard of living.  It makes the general population poorer (or less rich) than it would have otherwise been.

So, yes, you can and should invest to protect yourself from the harmful effects of massive monetary inflation.  This would include gold, silver, oil, some stocks, real estate, and many other hard assets.  You may or may not gain in real terms from these investments, but at least you will lose less than the guy who has his investments and savings denominated in dollars (such as bonds and savings accounts).

But while you can somewhat protect yourself with your investments, you will be worse off from QE3.  There is no way to avoid all of the consequences.  You may not ever directly see the consequences, but being a good economist means seeing the long-term unseen consequences.  There will be less production.  There will be less capital investment.  There will be less in the way of technological advances and new product development.  Just for example, if there were no QE3, maybe we would have seen an iPhone that could drive your car for you.  Maybe we would have seen a robot that could do your laundry and dishes for you, including putting them away.  But instead, resources were wasted or put to less productive uses as deemed by politicians in DC.

In conclusion, you should be aware of QE3 and the potential bad effects.  You should try to hedge against it with your investments in any way you can.  But don’t think that you can avoid the bad consequences of it.  We will all pay for these mistakes.

Since getting pounded by Hurricane Sandy just a few days ago, there are major shortages of gasoline in the northeast, particularly in New Jersey, which was hit the worst.  There are long lines at gas stations and many places are running out.  There are some reports of fights due to the problem.

As a libertarian, whenever I see a problem in the marketplace, I can inevitably find interference from government.  In a free market, a gasoline shortage would be quickly resolved, particularly in a place like New Jersey that is very populous.  Unfortunately, there is no completely free market in existence.

There is news that the governor of New Jersey, Chris Christie, is ordering officials to waive licensing requirements to import fuel form out of state.  Normally, merchants who are not licensed are not legally allowed to buy gasoline and diesel from out of state and import it.  I did not even know that such requirements existed, although I’m not surprised.  Government at all levels makes our lives more expensive and more difficult and most of these things we don’t even know about.  I wonder how many other states have similar requirements.

While these ridiculous licensing laws (probably another big tax) should be repealed, it is right of Christie to waive them, even if it is just temporary.  Anything that loosens the grip of government, even if just a little bit, can be helpful.

In addition to this, this article goes on to discuss how the EPA is temporarily waiving certain federal clean gasoline requirements under the Clean Air Act.  Again, more government garbage that makes our lives more expensive and more difficult.

However, probably the worst thing that is causing a gas shortage, are the so-called anti-price gouging laws.  Chris Christie, who somehow has a reputation of being conservative and pro free market, has shown that he is another big government hack.  Christie came out early on during the hurricane and announced that price gouging is illegal and that it will carry stiff penalties in New Jersey.

Not only are price gouging laws vague, they are terribly inhumane.  The media and establishment like to tout these laws as serving justice, but it is actually quite the opposite.  It is an interference in the marketplace and it is during a time of critical need.  These laws interfere with voluntary trade between individuals.

When you see a place like New Jersey with gasoline shortages, you can be almost certain that there is government interference with pricing.  Prices should be allowed to fluctuate to adjust to the supply and demand.  If prices are held artificially low, then there will be shortages.

Let’s say that there were no price gouging laws in New Jersey.  This means that gas stations could instantly start charging higher prices, possibly dramatically higher.  But this would be a good thing.  First, it would actually reduce demand.  If the price went to $10 per gallon, then some people might not be as anxious to fill up.  Someone with a big truck with a 20 gallon tank might only fill up halfway.  The higher price conserves gas and it would make it available to those who most desperately need it.

Second, the higher price will lead to more supply.  There is a saying that the solution to higher prices is higher prices.  If gas is selling at $10 per gallon, then there would be significant motivation for suppliers to get gas there quickly and divert it from other areas.  A tanker could load up gas a few states over (not affected by the hurricane as much).  It might be worth it for a company, or even an individual, to buy gas at $4 per gallon and drive it into New Jersey to sell it at $10 per gallon.  The profit would be $6 per gallon, less the expenses of transporting it there.

But it is important to know that these higher prices would be quite temporary.  As more supply found its way into the hard hit areas, the prices would quickly recede.  In today’s world, it probably wouldn’t take more than a few days for prices to get back at least fairly close to where they were before the hurricane hit.

Price gouging laws do not just affect gasoline prices.  They affect almost everything.  That is why there are shortages of so many supplies.  It is the same story for batteries, candles, hotel rooms, chainsaws, generators, lumber, bottled water, ice, and so many other supplies.  If prices would be allowed to rise, then goods would be distributed more efficiently towards those who really need them the most.  In addition, shortages would not be as pervasive and would not last long.

In conclusion, whenever you see that there is a shortage of something, it is a good clue that there is government interference with pricing.  In a free market, shortages are quickly resolved through higher prices.

Next week is the big election.  Thankfully, we only have to go through this every 4 years.  While I don’t see much of a difference between Romney and Obama, rhetoric aside, it can still be an interesting show to watch.

Part of me wants to see Obama win so that the economy can continue to collapse on his watch.  He is known as a supporter of big government and redistributionism and I want big government to get the complete blame when the economy gets even worse.

For this same reason, it might be bad if Romney wins, because then free market capitalism will be blamed (at least by the media and establishment) when the economy gets worse.  Even though Romney’s policies will be mostly the opposite of free market capitalism, that is the brush that both sides try to paint.

However, there is a part of me that wants to see Romney win.  I have been telling my Republican/ conservative friends that Romney is just as much pro big government as Obama.  He won’t cut spending, he won’t get rid of regulations, he won’t challenge the Fed, he won’t balance the budget or come even close, and he won’t challenge the status quo of big government.  I’m not even sure if Romney would actually repeal Obamacare, or perhaps he will come up with something that is even worse (dressed in semi-market rhetoric).

So if Romney wins, I will be more than happy to point out all of his big government initiatives along the way, just as I did in George W. Bush’s second term.  And I will laugh about the trillion dollar deficits under a Romney administration, even though it should be no laughing matter.

At this point, Obama still looks like the favorite.  Intrade has him back above 60%.  He had been up around 80%, but took a big fall after the debates.

The most interesting thing to look at on Intrade though is the electoral map.  Colorado and Virginia are up for grabs.  Florida is leaning Romney and Ohio is leaning Obama.  These four states will probably decide it all.  To narrow it down more, if Romney wins Ohio or Obama wins Florida, then that will decide it all right there.  If things hold and Romney wins Florida and Obama wins Ohio, then Obama probably wins.

It is interesting because Romney is actually leading in most national polls now.  There seems to be a good chance that Romney could win the popular vote and Obama could win the election with electoral votes.

Unfortunately, no third party candidate has a chance at anything.  The best Gary Johnson and the Libertarian Party have to hope for is to break 1%.  Unfortunately, this probably won’t even happen.  While Johnson seems like a decent guy, he is just not as radical or educated on libertarian principles as he should be.  He is no Ron Paul.  And for that, he won’t get a majority of the Ron Paul supporters.

In conclusion, it still looks like Obama is the favorite, but Romney may win the popular vote.  Even if you find both candidates disgusting as I do, it will still be interesting to watch.

There are stories all over the internet (at least for those visiting such sites) that Germany wants to audit its gold holdings, particularly gold held by foreign governments/ central banks.  Specifically, the Audit Court in Germany is recommending that the Bundesbank, Germany’s central bank, account for all of its supposed gold holdings.

A large percentage of the gold that is held by Germany is actually stored in New York with the Federal Reserve.  Germany also has holdings in London and France.

If some kind of audit does go through, I’m not sure if it will prove anything.  Perhaps the U.S. Fed will pretend to show the gold holdings and the Bundesbank will pretend to see it and that will be the end of it.

It would actually be very difficult for Germany to account for all of its gold at this point, unless it demands physical delivery.  Germany could decide to hold all of its own gold and that is really the only way to completely verify.

The only other possible way would be to have a full audit of the gold held by the United States.  Without this, there is no way to fully trust that all of the gold is there.  If five different people give me twenty dollars to hold onto for them and each one wants to audit my holdings, then I can just show each one the same twenty dollar bill, as long as they are not there at the same time.  So I really only need to hold twenty dollars to “prove” to the five individuals that I have their money, even though I should have one hundred dollars.

It would not be surprising if the U.S. central bank has lent out some of the gold it holds.  This is the organization that encourages fractional reserve lending on a wide scale.  Why wouldn’t it do the same with its gold?

Most likely, nothing will come of this right now.  But let’s just say that Germany does demand a full audit or else a delivery of all of its gold.  If the Fed could not deliver, or if it had to buy the gold to make good on its contract, then this could mean a real boost for the gold market.  This would be the best kind of price rise possible for gold investors.  You would be getting a higher price of gold and it would not be a direct result of inflation or fear in the market.

Estimates vary, but Germany’s total holdings of gold is only approximately $170 billion.  The New York Fed holds about $78 billion worth.  This is not a big amount when you consider that the U.S. government can spend that amount in about 8 days or so.  Still, on the margin, if it was discovered that the U.S. government and/or the central bank had lent out its gold or sold it, then the gold price would likely respond with a huge rise.

So while I don’t expect much to come of this right now, it is interesting just in the fact that it is being discussed.  More and more questions are being asked and more skepticism exists of the Fed than ever before.  I guess the skepticism isn’t just in America.  In the long run, this is good news.

As I write this, Hurricane Sandy is making its way on shore somewhere in the New Jersey area.  The stock market was closed in the U.S. on Monday and will be closed again on Tuesday.  We’ll have to wait and see if it is open on Wednesday.

Why is the stock market closed?  That is a question that I can’t really find a good answer for.  I can only speculate on the reasons.

I could completely understand this scenario if it were 20 years ago or more.  New York City was, and still is, the financial capital of the world, at least unofficially.  However, the world we live in today is vastly different.  It is a truly global economy.  It is also a digital economy, particularly when it comes to finance.

Most stock trades that take place today are done through computers.  The guys on the floor of the stock exchange, waving their hands in the air, just don’t matter that much anymore.  This is why you can execute most trades through a few clicks on your computer.  It is digital.  You don’t have to call a broker and get him to send an order to the floor.

It is kind of strange to me that the two major exchanges in the U.S., the biggest in the world in terms of value, would shut down for two days because of a storm coming.  This is not to minimize the power of the hurricane.  It is also not to say that workers should go to work on Wall Street in the middle of the hurricane.  The point is that the entire U.S. stock market should not have to close down just because a few people are going to be absent from the New York Stock Exchange and NASDAQ in New York City.

Most companies today, even smaller ones, have contingency plans.  They have committees that identify employees who are in key roles.  They often have branch offices that can fill in during an emergency.  They have backup employees who can shoulder the load in the short term so that business can go on, at least in the critical areas.

I can only think of a couple of reasons why the stock market would shut down due to a forecasted storm.  One reason is that the stock exchanges are simply unprepared.  The other reason is that the big shots on Wall Street have a massive ego and want to pretend like the world can’t function without them.

This may seem a little harsh, but I really can’t see any other reason.  I’m sure I can find many explanations that are offered about why the stock market can’t be open when Wall Street (the actual physical location) is shut down.  But for every excuse, I just go back to the fact that most companies have some sort of contingency plan, usually in a branch office.

If anyone has any other valid explanations of this, please let me know.  I would love to hear it.

While there weren’t many memorable moments in the debates between Romney and Obama, there are a couple of items that have received more attention than I expected.  Ironically, I have heard these brought up by conservative talk show hosts in order to criticize Obama.  But these are two of the few things that Obama said that were actually truthful and somewhat accurate.

The first incident happened while the two were discussing the economy in the second debate.  In particular, the high price of gas came up.  Romney was criticizing Obama because gas prices are so high now.

Obama responded, “He said when I took office, the price of gasoline was $1.80, $1.86.  Why is that?  Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney’s now promoting.  So, it’s conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess.”

Republicans and others in the media have criticized Obama immensely for this comment.  But, as much as I hate to say it, Obama was basically right here.  Gas prices were also extremely high under the Bush presidency.  The price of gas went way down, along with oil prices, right when it became evident that there was a major recession.  So gas prices came way down right before Obama was inaugurated, so it is an unfair benchmark to use gas prices on the first day Obama took the presidency.

While lower gas prices do not necessarily indicate a bad economy, it is true that a bad economy can cause gas prices to go down.  That is what recessions do.  The demand for goods and services go down, while the demand for money goes up.  This means that prices usually go down, including energy prices.

Gas prices were high during the Bush presidency when the artificial boom was still going on.  This was a time when there was a severe misallocation of resources.  In addition, the two major wars certainly added to the high prices of oil and gas.  The monetary inflation caused both the artificial boom and the high gas prices.  But when the bust came, the prices went down.  I guess you could say that Obama actually got a small piece of the business cycle correct.

Don’t get me wrong here.  Obama is still a fool when it comes to economics, but I guess the Republican criticism of his point on gas prices just makes many of the Republicans economic fools themselves.

The second incident was in the last debate on foreign policy.  Romney was accusing Obama of reducing the size of the Navy.  Obama responded, “You mention the Navy, for example, and that we have fewer ships than we did in 1916.  Well governor, we also have fewer horses and bayonets.  We have these things called aircraft carriers and planes land on them.  We have these ships that go underwater, nuclear submarines.”  He went on to say, “It’s not a game of battleship where we’re counting ships, it’s ‘What are our capabilities?'”

While some people may not have liked the sarcastic tone, Obama was absolutely right on this point.  Regardless of your opinion on foreign policy, we live in a different world than we did almost a hundred years ago.  Actually, it is completely different than it was just 25 years ago when there was a Cold War and the Soviet Union still existed.

Today, terrorism and guerilla warfare are the dominant threats, or at least portrayed that way by the U.S. government.  Of course, if the U.S. government stopped intervening around the world, then guerilla warfare would no longer be a factor and terrorism would probably be much less of a factor.  And there is no question that Obama has continued the interventionist policies of his predecessors.  But on this one point, Obama was actually correct that Romney’s criticisms were baseless.

What do ships do now?  They are used to transport goods, they are used as aircraft carriers, and they patrol the open waters.  But there isn’t an Iraqi Navy or an Afghan Navy, which are the two places where there have been major wars.

In conclusion, there are a lot of things that Obama could be criticized for and yet conservatives are picking on a couple of quotes from the debates where Obama actually had honest and valid points.  Since the conservatives can’t really attack Obama on major things (because Romney and Ryan supported many of those same things), they resort to these petty things to try to make it look like there is a difference between the two candidates.  Unfortunately, we are going to be stuck with one of them for another 4 years.