I like to go back in time on occasion and get a dose of Harry Browne.  He is perhaps the person who influenced me the most in my development towards libertarianism.  One article, in particular, that I would like to discuss today is a piece in which he comments on the slow growth of the economy.  This article was written over 8 years ago.

For anyone who follows this blog on a regular basis, you will know that I am an advocate of Harry Browne’s permanent portfolio plan as laid out in his book Fail Safe Investing.  In this 2003 article, he mentions this investment advice in his conclusion.

However, I would like to emphasize what he wrote at the beginning of this piece.  Harry Browne points out that “the economy was very strong for the 24 years from 1949 through 1973, but it has become more and more sluggish since then.”

He then goes on to say, “From 1949 through 1973, the median income rose an average of 3.1% per year.  Since then the increase has been only 0.2% per year – barely any gain at all.  If the earlier trend has continued, the typical American family’s income today would be more than twice as large as it is.”  Again, this was written in 2003.

Browne then asks, “What’s so special about the year 1973?”  He responds to his own question saying “nothing”.  There was no particular thing that happened in 1973 except that the burden of government had finally gotten to a point where the free market economy could not take it any more.  Again, this was written in 2003.

So where are we now?  The federal budget is near $4 trillion per year.  The annual federal deficit is running at about $1.5 trillion.  The overall national debt is close to $15 trillion dollars.  Just to add some perspective, the first trillion dollar budget did not happen until Reagan was in office.  And now we have yearly deficits bigger than the entire budget was in the 1980’s.

Since this article was written in 2003, we have seen the continuation of two major wars, plus other minor ones.  We have seen Bush’s Medicare prescription drug plan.  We have seen a housing boom and bust.  We have seen the financial meltdown from 2008.  We have seen massive stimulus bills.  We have seen massive bailouts of major corporations, including car companies and banks.  We now have Obamacare and more financial regulations.  We have seen a tripling of the adjusted monetary base in the last 3 years alone.  We currently have unemployment above 9%.

Reading what Harry Browne said in 2003, it is easy to see why the economy is struggling so much now.  In fact, it is almost surprising that it isn’t worse.  The government at all levels takes about half of the income from the free market economy.

As long as the government keeps spending and regulating us to such a large degree, this economy will keep struggling.  We might see growth again sometime, but it will be anemic.  Unless there is some new technology or invention that is absolutely life changing, then the only way we will see robust growth again is by drastically reducing government interference.

I think even Harry Browne would be shocked by how out of control the government in DC has become.

On one positive note, I think Harry Browne would be pleasantly surprised by the Ron Paul revolution.  While the government continues to make our lives difficult, people are starting to awaken.  Harry Browne always retained hope that human liberty would flourish, but I think even he would be surprised at how fast things have changed in just the last 5 years.

Ron Paul and his followers, along with the internet, have helped changed the dialogue.  So while the economy continues to look bleak, there is hope and Harry Browne could see that hope before it became more apparent to others.

We are currently experiencing the worst economy since the 1970’s or perhaps since the 1930’s and early 1940’s.  There are similarities and differences between our current mess and the mess during the Great Depression and the mess of the stagflation of the 1970’s.

I find the biggest similarity between now and the era of the Great Depression is in the presidencies.  Herbert Hoover is disliked by historians and they blame his laissez-faire policies for the Great Depression.  Of course, Hoover was in favor of big government and his policies reflected this.  Roosevelt simply continued the policies of Hoover and exacerbated the situation by instituting even more big government.

In much the same way, the media and the establishment refer to Bush as a conservative.  Even many Republicans go along with this.  It is assumed that Bush was pro-free market, as some of his rhetoric may have indicated.  Unfortunately, Bush was and is in favor of big government in almost every arena.  He started two major wars and occupations, he centralized education more, he destroyed civil liberties, he instituted more socialized medicine with his prescription drug plan and he oversaw numerous new regulations on business.  These things are just a few of his big government policies from a long list.  The only positive thing a libertarian could say about Bush is that he reduced the marginal income tax rates.

Despite Bush’s abysmal record, the media makes him out to be some kind of free market guy.  This is ridiculous, just the same as the claim for Hoover is ridiculous.  After Bush’s massive bailouts of banks and car companies right before he left office, Obama stepped in and upped the ante.  He passed a massive “stimulus” and instituted Obamacare.  He has also presided over more regulations on businesses, some of which haven’t even taken effect yet.  Basically, Obama has done the same thing as Roosevelt in that he inherited a mess and he has made things even worse.

One of the biggest differences between now and the Great Depression is that we now have the FDIC.  At the start of the Depression, there was no FDIC and there were a lot of bank runs.  This meant a lot of banks went under and this had a deflationary effect as it reversed the fractional reserve process.  One of the major mistakes that people make in economics today is that they think lower prices were a cause of the Great Depression.  Unfortunately, these people are confusing cause and effect.  The lower prices was probably the only blessing of the Depression as it allowed people to at least afford essential goods.

Bernanke claims to be a student of the Great Depression.  He thinks the Fed is to blame because they did not print enough money (seriously).  He is possibly half right.  The Fed is partly to blame, but only because there was too much money printing in the late 1920’s, which caused the artificial boom.  Not many people look at this, except of course for the Austrian economists.

One other thing to note about the Depression is that most people think it ended with the beginning of World War II.  While the war “solved” the unemployment problem, the economy was horrible until after the war ended.  There was major rationing and times were not fun.  It wasn’t until the war ended and government actually shrank (one of the few times in history) that the economy recovered and prospered.

As for the 1970’s, I think the biggest similarity (and one we will see more of) is that the Keynesians are being proven wrong.  In the world of a Keynesian, there is supposed to be a trade-off of inflation and unemployment.  The Fed can print more and this will reduce unemployment.  If the Fed pulls back, this will cure price inflation but may cause higher unemployment.  The Keynesian theory was proven wrong in the 1970’s as there was high unemployment, a stagnant economy, and high price inflation.

The Keynesians are being proven wrong again as all of the monetary inflation and government stimulus has not helped unemployment and the economy continues to struggle.  The only thing we are missing right now in comparison to the 70’s is the high price inflation and high interest rates.  Although the monetary inflation has been huge, interest rates and prices have not spiked due to fear.  This fear is with the bankers and with the general public.

As this economic crisis continues, I expect we will see a combination of both periods.  If anything, I think things will look a little more like the 1970’s, particularly if and when price inflation turns up.

It is hard to compare all of these eras beyond this because times change so much.  There aren’t soup lines like there were during the 30’s because now people get food stamps and government checks.  Today’s technology also complicates things (in a good way) as communication and the internet allow people to prosper more.  Some things are much cheaper now due to technology (and maybe Walmart), but some essential needs like healthcare are more expensive.

If the government and the Fed continue to be reckless, then things will be worse than the 1970’s.  If all of the monetary inflation and reckless spending get under control quickly, then things could get better a lot faster, particularly with today’s technology.  There is going to be pain no matter what.  It is just a question of when the American people demand that their government get out of the way.  The quicker that this happens, the less pain there will be.

I am not getting ahead of myself here.  I understand that a Ron Paul presidency is still a long shot, although not as much of a long shot as many in the media would suggest.  It will be difficult for Ron Paul to overcome the pro-war faction (the majority) of the Republican Party.  However, if he manages to break through, I think he has a really good chance at beating Obama.  As for this discussion, it doesn’t hurt to fantasize, speculate, and strategize.

Walter Block wrote a piece on this very subject the other day.  He suggested several names.  I would like to comment on some of his suggestions and add a few of my own.  If anyone wants to add any more names in the “comments” section, feel free.

Some of Walter Block’s names are not realistic and he admits this with many of them.  Bachmann, Daniels, Sowell, and even comedian Jon Stewart can’t be Ron Paul’s running mate because they are not anti-war.  Even Gary Johnson, who is better than most other Republicans, is still not anti-war enough.  While I like John Stossel, the same goes for him too.

Gary North suggested Walter Williams as a pick.  While I admire Williams for his great economic lessons, he is, again, too pro-war, or at least not strongly against war.

Unfortunately, the same can be said for Ron Paul’s son.  Rand Paul is easily the best senator in Washington DC, but he is just not radical like his dad.  I would not trust Rand Paul to end the wars like his dad would.  Not only would ending the wars save many lives and make us safer in the long run, it is also the easiest thing to cut out of the budget that would save a significant amount of money.

I don’t know enough about Jim Grant to comment extensively, except with the little I know about him, I get the feeling that he is not as radical as Ron Paul (but I could be wrong).

The only choices I like on Block’s list are Judge Andrew Napalitano, Lew Rockwell, and Doug French. I highly doubt that Lew Rockwell would consider this position and he is much more important in running his website.

If Ron Paul did get the Republican nomination, I think it would be very important for him to pick someone at least as radical as him.  This is actually a safety issue.  The establishment hates Ron Paul and I would not want to see anything happen to him.  The best way to protect himself is to have his running mate as someone that the establishment fears just as much or even more.  Plus, if Ron Paul is going to win the presidency, he should have someone as Vice President who would carry out his radical, pro-liberty agenda.  Plus, it would be nice to have someone who he could talk to for advice.

There are several names I could suggest, but who I don’t feel are quite radical enough in all areas to serve as his running mate.  For example, both Walter Williams and Peter Schiff are great in economics, but I question their foreign policy.  These guys should be economic advisors to a President Ron Paul or one of them could be in his cabinet as Treasury Secretary.  Again, there are also some who are great in foreign policy yet more questionable in economics.  These people could fill positions like the Secretary of State.

So who are my top choices as a running mate for Ron Paul?  I like radical people who are anti-war and also understand Austrian economics.  They also have to be well-mannered.  I am not saying that any of these people would accept the offer, but here are a few of my choices:

Tom Woods
Robert Murphy
Thomas DiLorenzo
Jeff Tucker

I am not sure about DiLorenzo, only because the media would obsess about his writings against Lincoln, although I’m sure the media would find distractions with anyone.  There are also some other names I could come up with like Anthony Gregory, but I’m not sure if he is old enough to qualify.

If Ron Paul received the nomination, he shouldn’t care at that point that the general public would have no idea who these people are.  Ron Paul doesn’t need to pick another politician, since there are no other well-known politicians who are anywhere near as good as Ron Paul.  If someone like Tom Woods were being interviewed on the major networks and he were debating Joe Biden, I would have the utmost confidence that he would present himself well and present the libertarian agenda well.

What are your thoughts on a Ron Paul running mate?

Numismatics is the study or collection of money, coins, and other related things.  When you hear gold advocates talk about numismatics, they are probably talking about rare gold coins.  You can buy coins that are worth more than their actual metal content.  You pay more because of rarity and the condition of the coin.

There are rating systems for rare gold coins.  For example, a gold coin could be rated MS 63, MS 64, etc.  The higher the number is, the better condition the coin is in.  These coins will actually come in a casing with the rating inside the casing.  The MS stands for “mint state”.  The numbers range from 60 to 70, with 70 being a perfect coin.

I am not a big advocate of buying rare coins.  It is purely speculative (although what isn’t?).  You are paying a premium for the rarity and condition of the coin.

I don’t have any specific recommendations as far as owning physical gold vs. other gold investments.  I think it is important to diversify, even here.  Overall, I think it is a good idea to have at least a few ounces of the physical metal, but be sure to store it in a safe place.

If you are going to buy physical gold, I would recommend gold eagles, particularly if you live in the U.S.  You can buy them in different denominations (one ounce, half ounce, quarter ounce, and one-tenth of an ounce).  Aside from physical gold, you can own an ETF such as GLD, you can buy gold certificates, and you can buy gold stocks (although stocks do not necessarily track the price of the metal).

There is one really attractive aspect in speculating in rare coins.  If we hit a gold bubble, you could easily see these coins rise to enormous levels and in multiples of the actual price.  There is, of course, no guarantee, but I feel that I should point out the great possible rewards for buying rare coins.

There are also some major disadvantages.  First, although all value is subjective, it seems to be even more the case with rare coins, if that is possible.  It is the equivalent of buying art, in hopes that the next sucker to come along will pay even more than you did.

Another downside of rare coins is the price spread.  I looked at one gold site and price spreads were in excess of $200 for something that costs just a little more than an ounce of gold.  The price spread on the American eagles were only about $50.  This is the difference between the buy price and the sell price.

If you are going to take a chance and speculate in numismatics, I would recommend you look at the American $20 St. Gaudens gold piece.  The thing I like most about this investment is that you limit your losses.  The actual gold content of this coin is just under an ounce of gold.  Therefore, the value of the coin will never drop below the metal content.  Right now, you should be able to buy one of these coins in MS63 or MS64 for just a few hundred dollars more than a one ounce gold eagle.

If you decide to take a chance and pick up a rare coin or two, don’t forget to unload these first if we go into a bubble stage.  You will not want to be holding these if there is a collapse in the gold price in the future.  You can always just convert them to regular American eagles and profit the difference.

There is an interesting piece today at Mises.org in which the author discusses the economic situation in Canada.  He points out that the economy is better there than in the U.S. and other wealthy nations.  He traces this to the fact that, in the last couple of decades, the Canadian government has actually reduced its debt by controlling spending.

I certainly think there is a lot to this.  As the U.S. government continues to pile up the national debt, we hear about how we are putting this burden on our grandchildren.  But the bottom line is that government spending and debt are burdening us right here and right now.  It is reducing savings and investment by individuals and businesses.  It is sucking capital out of the voluntary economy.  This is one of the reasons there is unemployment over 9%.

Property rights, in general, is typically what will determine how well an economy does in a given area.  More specifically, regulations, spending, and monetary policy are the major factors.  While taxation is important, I tend to lump this in with spending.  If spending is low and monetary policy is good, then taxation is most likely not a problem.

I generally agree with the author on his analysis of Canada.  He focuses primarily on spending.  I think monetary policy has also played a significant role as the Canadian central bank has been less inflationary than the Fed (which isn’t hard right now).

Unfortunately, and as the author admits, Canada is certainly no paradise.  It is another welfare state with high taxes and burdensome regulations.  There is free speech there, but less so than in the U.S.  The environmental regulations tend to be awful compared to most places in the U.S.  And of course we know about the healthcare system there.

The healthcare system in Canada is mostly socialist.  The system in the U.S. is mostly fascist, although there is still a tiny remnant of free markets left.  The quality of care in the U.S. tends to be much better.  I think one advantage of the Canadian system is that, because of the lack of quality and high wait times, people avoid doctors more.  This can actually be beneficial as people turn to healthier alternatives for problems instead of just getting a prescription and popping pills.

If you have a small illness, you might be just as well to be in Canada and avoiding the doctors.  If you have an emergency and you need surgery right away, I would much rather be in the U.S.

One other possible advantage of the Canadian healthcare system is that it is easier to start a small business because you don’t have to worry about getting health insurance.  In the U.S., health insurance is usually tied to your employer, so many people seek out regular jobs, particularly with bigger companies, just to have the health benefits.  It discourages entrepreneurship.

Of course, the best system is a free market healthcare system.  You could get high quality for low prices and you wouldn’t worry about health insurance because it would be so cheap.  Both the U.S. and Canada are very far from this.  The U.S. was a lot closer to this 50 or more years ago.

While it is great for Canada that its government debt has gone down, it is important to remember that spending is still high.  The taxes there are high.  They have to pay income taxes, plus they have a national sales tax (on top of the other sales taxes).

One other thing to note about Canada is that the housing market is out of control in some areas.  I have paid some attention to the housing market in big cities like Toronto and the prices are outrageous.  They might be experiencing a housing boom like the U.S. did, except Canada is five or more years behind.  If that is the case, we can expect a bust soon.

As far as money,  I think the Canadian dollar is a better place to be than the U.S. dollar.  However, we must remember that the Canadian dollar is also a fiat currency, so gold is better than either one.

Regardless of the problems facing Canada, the author of that article has made a great point.  Government spending is not what grows an economy.  The Canadian government has been less reckless, fiscally speaking, and the sky is not falling there.  In fact, things are better there.  The Keynesians should try to explain that.

The Prime Minister of Japan has announced his plans to resign.  One of the main reasons for his unpopularity is a view that there has been a lack of leadership in the face of the tsunami disaster.  While I’m sure this is correct, we cannot discount the fact that the Japanese economy is still not in great shape.  Obviously the tsunami was very harmful to the Japanese economy (despite what Paul Krugman might say), but it is also obvious that the economy would be in trouble anyway, even if there had never been a tsunami.

I expect politicians around the world to feel more and more heat as time goes on.  With the world economy in trouble, the welfare state is also in trouble.  Politicians are accustomed to being able to offer free lunches.  This buys them votes and keeps voting citizens content.  With tighter budgets coming, it is harder for politicians to offer free lunches as it is becoming more known that they are not actually free.

The areas where it is the most fun to watch are where citizens are demanding the impossible.  Think of Greece.  People there want these great benefits.  They want the government to provide for their retirement at an early age.  The Greek government is on the verge of bankruptcy.  They simply cannot fulfill these previous promises.  Some of the voters there are asking their government to do the impossible.  It doesn’t matter who they put in office.  No matter what, Greek citizens will see a cutback of the welfare state.  As Margaret Thatcher said, the problem with socialism is that you run out of other people’s money.

California is another place where it should be fun to watch (as long as you don’t live there).  If I were an advocate of one of the major political parties, I would not want to win political offices there.  For example, the Republicans should be happy that Jerry Brown (a Democrat) is now the governor there.  Brown is a big government guy.  He loves the welfare state.  And yet he will be the one that presides over a cut in the welfare state.  Who are the Democrats on welfare going to blame for an end to their supposedly free lunches?

The U.S. government can keep the game going longer.  They have a monopoly on the money supply.  The U.S. government can get the central bank to print money (digitally speaking).  This can keep the welfare state going on a little longer.  California has more limits.  They cannot run up their debts too big or they really will face a default.  They will be forced to default or cut back on their welfare state.  Perhaps it will be a combination of both.

The government in DC will eventually be forced to cut back.  There is a limit to how much the Fed can print before there are very serious repercussions.  I don’t think the Fed will go to hyperinflation.  They would destroy themselves.  There would be a serious breakdown in the division of labor.  There would be massive poverty and starvation in the U.S.

The more likely scenario is that we see high inflation and the Fed eventually tightens its monetary policy in order to save the dollar.  At that point, Congress will be forced to cut back.  The President will take a lot of blame unless he is very straightforward with the people.  Ron Paul is straightforward and none of the other candidates are.  Both major parties should be hoping that they don’t win the presidency in 2012.

Robert Murphy has a good piece today, appearing on the Mises Institute’s website.  I consider Murphy to be one of the best economists there is in Austrian economics and I consider Austrian economics to be the only major school of economics which gets things right.

Murphy concludes his article with this paragraph: “Austrian economists know to be wary of looking at financial data and drawing conclusions about what ‘must’ happen.  The future is always uncertain, the result of volitional human action.”

This is something that I harp on quite often.  The main theme of Austrian economics is that humans act.  Therefore, knowing this, we should know that it is impossible to accurately predict what the economy will do and what investments will do because it is impossible to predict how each individual on this planet will act.

With that said, it wouldn’t make for very exciting commentary if I just repeated that every day and did no more analysis.  What we can do is take the data that is known to us and try to guess at how humans are likely to react.  For example, if the government announces that it is passing a new marginal income tax rate of 99%, we can take a good guess that this is going to discourage people from working beyond a certain income.  We could be wrong, but we can take a good guess that most human beings will react negatively and will not work beyond a certain point just to keep 1% of their earnings.

Moving on from this subject, there is one other specific issue in Murphy’s article that I would like to examine.  He talks about the excess reserves held by banks and correctly points out that this has helped in keeping price inflation in check.

He then shows the Fed’s latest figures on excess reserves.  He suggests that the reserves might be leaking out and that big price inflation might be around the corner.  While he tempers his comments and says that this might just be a blip, I would like to address it a little further.

I actually see no reason to get excited (or perhaps panicked is a better word) at this point.  The excess reserves are almost the same as they were two months ago.  They are down less than $8 billion from June 15 to August 10, which seems like a lot, except that we are talking about a total of over $1.6 trillion.

This actually makes sense.  The excess reserves have had an almost perfect correlation with the adjusted monetary base, which is the monetary inflation that the Fed directly controls.  QE2 stopped around the end of June, so the monetary base has been basically flat for the last two months.  It would make sense that excess reserves are not increasing and we can always expect small fluctuations.

As Murphy says, we will have to continue to watch this data to see if the trend holds.  I will keep watching, but I am skeptical that these reserves will leak out.  It is slightly interesting to see that the required reserves have been increasing, but again, the amounts are too small at this point to get excited.

I expect more inflation (monetary and price), but I am skeptical that it will be huge any time soon.  People are afraid and the bankers are afraid to lend money out.  I don’t see this changing right now.  We will continue to monitor this data to see if there are any significant changes.  If excess reserves drop by a few hundred billion dollars without a drop in the monetary base, then I will start to sound the alarm of imminent price inflation.

Gold was down big today.  You will get different quotes depending on where you look, but some quotes show it was down over $100 today.  That is really incredible if you think about it.  The yellow metal was only trading at $300 a decade ago and now we are seeing 100 point swings in one day.  I won’t be surprised to see 100 point swings going the other way in the somewhat near future.

Today’s action is actually good news for gold investors.  I know that sounds crazy, but this is actually very bullish.  Gold is still up for the month and it needed a pullback.  A few months ago, silver went up huge in the matter of weeks and it came crashing back down in the matter of days.  It is still about 25% off of its high now.

I am expecting gold to go parabolic at some point.  This didn’t happen now.  It will go parabolic when it is in bubble territory and I think we are a long way off from that.  Right now, it is two steps forward and one step back for gold.  We shouldn’t be surprised at all to see a big retreat after the run we just had.  It is always impossible to accurately time the pullbacks and it is just as hard to predict how big of a drop there will be, but it shouldn’t surprise us.

While I am not making any short-term predictions on the price of gold, I do expect the price to continue its climb in the next several years.  The fundamentals are all there.  The economy is still struggling, unemployment is still high, the deficit and debt are huge, and price inflation is relatively low.  On this last point, you may think that that is bearish for gold, but I am not seeing it that way.  With price inflation still relatively low (especially as compared to the 1970’s), it might encourage the Fed to start QE3 (more digital money printing).  The Fed is more likely to continue its policy of monetary inflation if it doesn’t see price inflation as an immediate threat.

Expect more and bigger volatility in the gold market.  I would expect to see silver get in on the action soon.  Silver is usually the more volatile metal, but that hasn’t been the case in the last few months.  It is also a good time to eye some gold stocks for speculation purposes.  Just be prepared for a roller coaster ride.

Yesterday, I wrote about how the establishment controls things more than any particular individuals.  Today, I would like to discuss this topic as it relates to Congress.

There are 535 congressional seats.  There are 435 in the House of Representatives and 100 (2 for each state) in the Senate.  I have often heard that everyone should simply vote against the incumbent (the current office holder) and then we would have a whole new congress (although it would take 6 years to clean out the Senate).

I would certainly be happy to see everyone in congress fired, especially since Ron Paul is leaving anyway. This would certainly signal a change and it would tell the politicians that Americans are fed up.  It actually baffles me how some of these clowns keep getting re-elected, especially Republicans who supported all of the bailouts.

If all of the incumbents lost their seats, it would obviously show a change in public opinion.  However, it wouldn’t necessarily mean that public opinion had gone completely libertarian.  Perhaps we could see a scenario where the government is on the verge of bankruptcy (which it is) and it has to enact deep spending cuts in order to avoid hyperinflation or default.  Perhaps we could see the politicians practically being forced in to making severe cuts in Social Security and Medicare.  We could see a revolt that resembles Greece more than the Tea Party.

Here is my point.  If all of the members of Congress were to lose their job without a change in public opinion towards liberty, then it would do us no good.  This is why it is not important to get the “right” people elected.  It is far more important to change people’s opinions in favor of more liberty and less government.

As Hayek said, the worst rise to the top.  The federal government holds a lot of power over a lot of people.  It is this massive power that attracts the worst elements of society.  The only way to get rid of corrupt politicians is to dramatically reduce the power they have.  As long as there is power, it will attract some of the most evil people you can find who wear nice clothes.  If that power is taken away, then you don’t really have to worry too much about who is in office.

In conclusion, the reason that Congress has so many corrupt politicians is because of the power they wield.  If you take that power away, then it takes away the corruption.  As Harry Browne liked to quote Michael Cloud, “the problem isn’t the abuse of power, it is the power to abuse.”

Only the American people can take that power away by withdrawing their consent.  We don’t need to elect the right people.  We need to convince the American populace that their lives would be much better off with smaller government.

One of the biggest mistakes that people make in blaming government is thinking that things would be different if a particular individual weren’t involved.  Let me explain further.

There are many Republicans who think that things would be much better if only Obama weren’t in office.  But if you really look at it, Obama has carried on the policies of Bush.  He has continued the wars (and started new ones) and he has continued to bail out failed companies and he has continued to run huge deficits.  Even Obamacare is not much worse than Bush’s Medicare prescription drug program.

Even with other things, if you look at them close enough, it doesn’t really matter what individual is supposedly in charge.  I like to blame Bernanke when I’m talking about the Fed and monetary policy.  But the reality is that it wouldn’t matter if someone else were chairman of the Fed.  It matters far more what the general establishment’s position is on the issue.  If the big bankers and elite in government want the Fed to buy more government debt, then that is what will happen.

Bernanke is not really a decision maker.  He is a face for the establishment.  It is the same way with the presidency.  There are a few little differences between what Obama has done when compared to what Hillary Clinton or John McCain would have done.  But regardless, they were all vetted by the establishment and they were all acceptable to the establishment.

Sometimes the establishment does not favor a particular person, but they still may be acceptable.  Reagan is a good example.  They didn’t want him in office, but he was acceptable, particularly when he picked Bush as his VP.  Reagan did not shake things up that much.  He is not the hero that conservatives make him out to be.

If you look at the current group of Republican presidential candidates, most of them are acceptable.  The establishment’s first choice is Romney.  The establishment’s second choice (of the major contenders) is Rick Perry.  The third choice is Michele Bachmann.  They really don’t like Bachmann and they don’t want her to win, but she would still be acceptable, much like Reagan.

The establishment is afraid of Ron Paul.  He is completely unacceptable.  He would not be a face.  He is an individual that could actually make a difference and change things dramatically.  He is a major threat to the establishment and they know it.

This whole concept is important when viewing politics.  I believe that Kennedy was taken out because he was a threat to the establishment.  While he was certainly no libertarian, he was not playing along with the crowd.

We should even remember this when going back further into history.  I’ve heard people blame Keynes for the economic problems that we have today.  But Keynes was just a convenient excuse for the establishment during the 1930’s when the government wanted to vastly expand.  He is still used as an excuse today.  But if Keynes had never existed, the establishment would have found some other “economist” to promote their big spending policies.

I’m also not sure how much Paul Volcker was in charge of tightening monetary policy in the late 1970’s and early 1980’s when he was Fed chairman.  He may have been instructed to do so by the banking elites and foreign elites in order to save the dollar.

While I like to criticize Ben Bernanke and his Keynesian views, he is just a face of the establishment.  If the major players tell him to stop his digital money printing, then he will stop.  This is why there is hope for avoiding hyperinflation and a total destruction of the dollar.