The U.S. stock market has generally been a good investment since March 2009.  At that time, they had just been hammered by the recession and almost nobody wanted to touch stocks.

Since late 2008, the Federal Reserve quintupled the adjusted monetary base.  And while much of this new money went into bank reserves, thus not multiplying through fractional reserve lending, it is still monetary inflation nonetheless.

If this newly created money had been lent out to borrowers, then the monetary base never would have grown as much as it did because we would have already faced massive price inflation.

Still, despite the big buildup of excess reserves, the new money does represent spendable money in people’s (and business’) checking accounts.  And while consumer price inflation has stayed relatively tame in most areas, asset price inflation is a different story.

Real estate has been bid back up in some areas, but many areas are still far short from the peak of the last bubble.  The one big area where we have seen major asset price inflation is in stocks.

I am not a perma-bear when it comes to stocks, but stocks have not been a favorite of mine over the last decade or more.  I understand that there is money to be made in stocks, especially when the Fed is on a digital printing spree.

I also know that stocks are fragile because they have been bid up as a result of the monetary inflation.  When you live by the monetary inflation, you die by the tight money.

The Fed – despite low interest rates – has had a tight money policy since October 2014 when QE3 ended.  Tight money is not good for stocks when they have already boomed because of loose money.

January 2016 was a really tough one for stock investors.  It looked like it could be the beginning of something more devastating.  Since then, stocks have gone back up and recovered what was lost at the beginning of the calendar year.

While some will say that the pullback in January was a fake-out, how do we know that the current upswing is not a fake-out?

Unless the banks start getting rid of their excess reserves in a significant way, then we are in tight money mode.  And the Fed is not going to start adding to its balance sheet again until there is a major economic downturn, which would include a crash in stocks.

So regardless of whether the Fed raises its key interest rate again, we are in tight money mode, which will not be good for stocks.  But these things take some time to work out and filter through a massive economy.  There is a lag effect.

I do not recommend being heavy in stocks right now.  There may be more profits to come in the short term, but it is not worth the risk right now.

Owning stocks in the context of having a permanent portfolio (which I recommend) is fine.  It will only be 25%, and your other investments will likely offset any losses in a stock market crash.

Aside from the permanent portfolio, the only thing I like right now is gold stocks.  But even there, I am not too heavy.  If we hit a recession with a major downturn in stocks, gold mining stocks will likely take a hit too, unless gold goes completely the opposite way.

It was nice to see the gold price rise in January in the face of falling stocks.  I think there is so much uncertainty out there that gold could actually hold up decently well in a recession.

It is an interesting time to consider a short position in stocks for speculative purposes only.  It is a tough thing to do right now.  I don’t recommend a big short position, but if you are ever going to do it, a year and a half of tight money with near all-time highs in stocks is about as good of a time as any.

It took a lot of courage for the people who bought stocks in March 2009.  There is going to be a particular time that we look back at to say it would have been a good time to short stocks.  I don’t know if now is that time, but it seems plausible to me.

In some ways, Donald Trump is tearing apart the country.  It seems most people love him or hate him, but there is definitely a middle ground too.

Trump is even dividing many libertarians.  Some hate him.  Some are supporting him.  I am in the middle on this one.  I am not voting for Trump, but I am cheering him on in some aspects.

There is a group that formed called “Libertarians for Trump”.  They are supporting his bid for the Republican nomination because they consider him to be least bad.  Tom Woods had a debate about this subject on his podcast.

I understand the reasons for rooting for Trump.  He seems to be less interventionist in terms of foreign policy.  He does not bow down to political correctness.  He does not seem to take marching orders from the establishment.  Best of all, he is driving the establishment crazy.

Still, I think “Libertarians for Trump” is a bad idea as a formal group.  We already have to work hard enough in defending the libertarian name.  We don’t need people assuming that Trump somehow represents a form of libertarianism.  He is not even close.

On the other side, I don’t think libertarians should dismiss everything Trump says.  I listened to a video of Ron Paul the other day (that’s right, I listened to a video).  He was talking about the 2016 presidential election.  (Note – the audio quality is poor.)

It is funny because Ron Paul will often avoid saying Donald Trump’s name for some reason, but it is easy to know exactly when he is talking about him.  He cannot stand Trump.  Maybe it is a personality thing.  Maybe it is because Trump stole Rand Paul’s thunder in the campaign as the outsider candidate.  But that is Rand Paul’s fault for trying to play all sides and running such a terrible campaign.

My position is that we should praise Trump for the good things he says and criticize him for the bad things he says.

Trump seems like a decent guy.  Everything I have read from people that actually know him is generally positive.  His employees and former employees say he treated them well.

If Trump is generally honest and decent, that puts him way ahead of everyone else right away.  Maybe Bernie Sanders is decent, but even there I have my doubts.  I could be completely wrong on Trump, but at least there is a chance of decency with him.

Trump is a lot like Pat Buchanan in terms of the policies he promotes.  He is somewhat isolationist in the sense of foreign policy and economics.  I don’t agree with Buchanan or Trump when it comes to certain economic policies, particularly free trade.  Promoting or threatening tariffs is bad economically and morally.

But Pat Buchanan seems like a gentleman as well.  And at least they are somewhat sensible when it comes to issues of war.  Trump is certainly inconsistent, but inconsistency is better than being consistently belligerent.  Again, we don’t know what Trump would do as president, but at least there would be a chance for some peace.

Trump is also exposing the corruptness of the whole system.  Colorado handed all of the delegates to Cruz.  When I say Colorado, I  mean the Republican Party insiders.  The general populace registered Republican did not actually get to vote.

If Trump is denied the nomination, maybe this will be good in the sense that it wakes people up.  Maybe they will realize that the system is rigged against them.  But until they stop asking the government to do things for them, not a lot is going to change.

In conclusion, libertarians can cheer on Trump without endorsing him.

The latest consumer price index (CPI) numbers are out for March.  The CPI rose 0.1% in March 2016.

That is the number that gets the headline news.  The median CPI, which is far more stable (and probably reliable) was up 0.2% in March.  Year over year, the median CPI is up 2.4%.  It has been at 2.4% or 2.3% for at least the last 6 months.

The bottom line is that consumer price inflation is low, at least according to government statistics.  If we lived in a free market world without central banks and fiat currencies, then there would likely be no price inflation, or there would even be mild deflation.  This would reflect increased productivity.

But compared to the last 100 years with the existence of the Fed, the price inflation is relatively low.  I don’t think it properly accounts for the steep rise in health insurance and medical care costs.  And that is what most families are struggling with in terms of increasing expenses.  But that is as much or more a reflection of government policies than it is of monetary policy alone.

The Fed has been in tight money mode for a year and a half since QE3 ended in October 2014.  Interest rates have stayed low, but that is a market response to the fear in the economy and the Fed’s previous loose policy.  The massive excess reserves built up by the commercial banks mean they don’t have to borrow overnight funds to meet reserve requirements.  This keeps the federal funds rate low.

There is continued debate about whether interest rates will go up or down.  In the short run, I still see a greater probability of interest rates staying flat or going down further.  This is a reflection of a weakening economy.

I think interest rates will only spike significantly when price inflation becomes a problem, or at least a perceived problem.  It is not a perceived problem by most people right now.

Therefore, I continue to conclude that interest rates will not spike higher until we see higher price inflation.  I know the government statistics should be taken with a grain of salt.  But they are useful for a trend.  And right now, there is no sign of price inflation picking up with any significance.

At some point in the future, there will be a time where it will be very profitable to bet against bonds, or in other words, bet on higher interest rates.  It will be one of those great opportunities that does not come around very often for investors.  But that time is not now.  We are still not close to it.

We will probably have to see more so-called quantitative easing from the Fed before we see a significant increase in price inflation.

Therefore, I would bet on gold before I would bet on higher interest rates.  Rising interest rates will lag behind rising gold.  I can’t be certain of any of this, but that is how I see it playing out.

The likely order is: recession, then Fed money creation, then rising gold, and finally rising interest rates.

We can’t be sure of any of this because it all revolves around human decision making.  But the safest bet is on the Fed going back to money creation when times get tough.  You never know what could happen, but it is usually a safe bet when dealing with central planners at the Fed.

Mortgage rates recently hit a low for the year and they are near historic lows.  Right now, you can get a 30-year fixed rate mortgage for a rate of about 3.65%.  A 15-year fixed will only cost you a rate of about 2.75%, assuming good credit.

If you are buying a house or refinancing your house, then I generally recommend a fixed-rate loan, assuming you are planning to stay there a while.

(As an aside, if you aren’t planning to live somewhere for long, then you probably shouldn’t be refinancing or buying in the first place, unless you are planning to keep the property for investment purposes.  But if you are going to sell in the near future (within 5 years), you are going to get eaten up by closing costs, agent fees, and the other expenses of home ownership.  It is not worth it.)

If you had asked me 10 years ago, I would have said to get a fixed rate mortgage.  I would have been wrong in the sense that your payments would have been lower with a variable rate.  I wouldn’t regret recommending that though, because it is a little bit like insurance.  I don’t regret recommending that someone get insurance for something just because, looking back, nothing bad happened.

So it is not that I am betting on higher rates.  It is just more of an admission that we can’t predict the future.

Actually, if I had to guess, I think rates will probably go down in the near future.  I may be in the minority of libertarian opinion on this.  Some libertarians have been predicting much higher rates for many years and it has failed to come to fruition.  Rates will eventually go higher, but what if it is another decade or more?  I don’t think it will be this long, but it isn’t useful to say that rates will go higher without any time reference at all.

If you are taking out a 30-year mortgage, it is basically impossible to predict what rates will be in 20 or more years.  We could be like Japan for the last couple of decades where there have been really low (now negative in some cases) interest rates.  We could also be like the U.S. of the 1970s with double-digit interest rates.

So if you are buying or refinancing and plan to hold the mortgage for a long period of time, it just generally makes sense to go with a fixed rate mortgage.

There are still times when it makes sense to get a variable rate.  The rate will start out lower than a fixed rate because you are absorbing some of the risk.

But if you are getting a 15-year mortgage and the principal balance to start isn’t all that high, it might make sense to take a little extra risk and go with a variable rate, especially if you are in a good financial position.

Let’s say you only have a mortgage balance of $80,000 left on your house with about 15 years to go on the loan.  You can refinance with relatively low closing costs.  You can refinance to a 15-year loan, which is what you have left anyway.  You can get a lower rate with a fixed rate or a variable rate, but the variable rate will be lower to start.  There is no guarantee after that.

Since the balance is so low, there is not nearly as much risk in getting a variable rate.  As the balance is paid down, the risk gets less and less.  If rates spike in 5 years, you can always make the decision to pay down the principal balance more aggressively if you have the extra funds to do so.

When deciding on a mortgage, or really almost any financial decision, you really have to consider all of the factors in your life that will be unique from anyone else.  The key is to know what the important factors are and how much weight they carry.

This is why it is hard to make blanket statements such as “You should always get a fixed rate mortgage.”  There are some people who really should get a variable rate mortgage.  Even your personality may affect your decision.

I expect rates will stay low for a while longer because of recession fears.  But if you are buying a house for the long term, then it typically makes sense to get a fixed rate so that you can sleep at night and not worry about what your monthly payments will be next year.

The media are always going after Donald Trump these days, but one of the latest topics is an interesting one because it actually goes way beyond what is being discussed.

When Trump was being interviewed by Chris Matthews, he was pressed on what he would do to make abortion illegal.  Trump initially tried to dodge the question, but Matthews was relentless.

I don’t think abortion is on Trump’s agenda at all.  He is probably just playing the pro-life position so that he can somewhat fit in with the Republicans, even though he has deviated on other issues.  We can doubt whether anything would change with regards to abortion even if a hardcore social conservative (Cruz?) were to win the presidency.  With Trump, there is almost no chance that anything would change.

Still, Matthews kept pressing Trump to respond on what penalties there would be.  Trump finally said that a woman who gets an abortion would be punished in some way.  That is what Matthews wanted him to say.  It was his “gotcha” moment.

Trump was unprepared.  He should have been prepared for such a question.  He later backtracked after the interview and said that it would just be the doctors who would be penalized.

I don’t mind the “hardball” questions from Matthews except that he is a total hypocrite.  He wouldn’t ask these questions of Hillary Clinton, or anything remotely as hard.  Actually, Hillary Clinton probably doesn’t do any interviews where she doesn’t already know the questions, or at least where she doesn’t feel comfortable with the person interviewing.  You won’t ever catch Hillary Clinton in an interview on Fox News.

Trump is essentially forced to do many interviews.  The media is constantly lambasting him.  He has no other choice but to take his message directly to the people.  If he didn’t do interviews often, he would be a sitting duck.

With that said, Matthews’ question and Trump’s response really go way beyond abortion.  It actually reveals the total nature of the state.

Why doesn’t Chris Matthews ask Trump or any other candidate what they would do to punish someone who doesn’t pay their required taxes?  Why not ask what the penalty should be for not paying a parking ticket or a late fee for a library book?

For someone who doesn’t pay their taxes, they will eventually receive something telling them to pay, probably along with a penalty and interest.  If the person refuses to pay, then they will eventually get a notice to appear in court.  If the person doesn’t show up for court, then armed men with guns will go to the person’s house and break down the door.  They will take him to jail.  If he refuses to go to jail, he will likely be shot.

This could even happen with an unpaid parking ticket or a late fee for a library book.  That is the nature of the state.  It ultimately rests on the use of violence.

If Trump or anyone else is going to make abortion illegal, then force would have to be used at some point if the illegality of it meant anything.  This isn’t an argument for or against the legalization of abortion.  It is just the simple truth.  I understand that some people view abortion as the taking of a human life, therefore they believe it would be justified to use some kind of force as a form of defensive force.

At least with abortion, an argument can be made for defensive force, if you consider it defending the unborn fetus.  But with most other government laws, it is not defensive force.  Really, anything that requires forced taxation is the initiation of force by the state.

I wish Chris Matthews, or any other so-called journalist, would ask these candidates what they would do to punish someone who doesn’t pay their income tax, or who refuses to abide by Obamacare, or who quits their job with the military, or who buys certain drugs without a prescription.  I would like to see follow-up questions leading up to the ultimate conclusion, which is the use of guns.  At some point, the state will use guns to enforce the laws, or else the laws are meaningless.

Most people probably didn’t think through Trump’s comments on abortion this much.  But if you look deep enough, it is a great lesson on libertarianism.

There is an irrational fear of deflation that exists in our world.  Perhaps it is because of the Great Depression, where there was a deflationary effect due to bank failures.  It was a reversal of the fractional reserve lending process.

There is an association of deflation with a bad economy, but that is only because the so-called deflations we get now are associated with the central bank and the artificial business cycle.  If the Fed didn’t inflate in the first place, there would be no correction to deal with.

In much of the 19th century – ignoring the era of war in the 1860s – there was mild price deflation.  This was due to a relatively stable money supply with an increase in productivity.  It was a major benefit to people, as their earnings and savings had greater purchasing power.  It meant an increasing standard of living.

Although we do not currently have deflation in prices, or monetarily speaking, the Fed and other central bankers around the world are desperately trying to get higher price inflation.  The Fed has this ridiculous target of 2%, as if we are better off losing 2% of our purchasing power every year.

The main reason price inflation has stayed relatively low in Europe and Japan, despite easy money and low (even negative) interest rates, is because of fear.  People are holding on to some of their money due to a bad economy and perhaps expectations of continued trouble ahead.  People wisely don’t want to go into major debt or buy things they don’t need.

The U.S. is a little different.  The Fed has actually had a tight monetary policy over the last year and a half, despite the low interest rates.  So low price inflation right now actually makes sense in regards to the business cycle.  But price inflation was relatively low even during the several rounds of so-called quantitative easing.  Again, fear is a big reason.  It keeps velocity low.  Money changes hands less frequently.

There are some people who think that deflation is inevitable at this point.  We hear phrases such as “pushing on a string”.  And this isn’t a bad description of what is happening now.  But it is important to realize that the Fed (or any central bank) can create positive price inflation at any time, as long as it has a monopoly over the money supply.

Ben Bernanke said in 2002, prior to becoming Fed chair, the following:

” But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation .”

Bernanke has been wrong on many things, but on this point he is precisely correct.  The Fed could announce tomorrow that it will add $10,000 to every checking account per individual in the United States within the next month.  And if this didn’t do the trick, the Fed could say that it would continue this practice every month until it decides to stop.

This would ultimately bid up prices.  Upon such an announcement, certain commodities would likely jump dramatically almost instantaneously.  Gold would probably double in price in a short time frame, if not more.  Prices all over would be extremely volatile as the marketplace tries to figure things out.  But the general trend would definitely be up for prices.  Just the anticipation of massive price inflation would be enough to bid up prices.

The point here isn’t that the Fed would do something so dramatic.  It would probably lose a lot of credibility in an instant if it did such a thing.  Ironically, it might be less of a ripoff with this monetary inflation as compared to its past schemes of bailing out companies and funding government deficits.  Still, such a scheme of handing out money to everyone would redistribute wealth in a different way, and it would severely distort economic activity.

The main point here is that the Fed can produce positive price inflation at any time if it is really determined.  The Fed is not desperate right now.  It is content as long as the economy seems to be humming along.

The key is to figure out what the Fed will do if we hit a major economic downturn.  We can’t read minds, but we can look at incentives and past performances.  All indicators point to another round of money creation if things get bad enough.

And that is the number one case for owning some gold.

As I write this, the Wisconsin votes are still being counted.  But the big winners are Bernie Sanders and Ted Cruz, both of whom are projected to win.

Actually, Ted Cruz isn’t really the big winner, despite what the headlines may read.  Paul Ryan and the Republican establishment are the big winners.

Mathematically speaking, it is almost impossible for Ted Cruz to get a majority of the delegates secured going into the convention.  He is a tool of the establishment right now.  It is a long shot that he could overtake Trump in the delegate count too.

The reason Cruz is still in the race is because he is the only hope for the Republican establishment to prevent Trump from reaching a majority of delegates going into the convention.  And if Trump is just one delegate short, then we can be reasonably sure that the establishment will take the nomination away from him.

The favorite right now in a brokered convention is Paul Ryan, the current Speaker of the House.  Ryan was also part of the failed ticket with Mitt Romney in the last election.

Even though presidential elections are overrated in the sense that not much usually changes from one to the next, this race is particularly interesting.

The Republican primaries in 2012 were interesting only because of the presence of Ron Paul.  He was a major thorn in the side of the establishment, but they correctly believed at the time that he was a long shot to actually win the nomination.  He was just a threat in exposing some of their lies and bringing forth issues that otherwise wouldn’t have been discussed.

Trump on the other hand is a major threat to the establishment.  He has questioned some of the main establishment beliefs and he can’t easily be bought.  Trump has questioned U.S. foreign policy and its vast empire.  To be sure, Trump is inconsistent.  But the fact that he is the leader in the race up to this point while maintaining some of these positions is a major reversal of public opinion.

That is the main reason to be interested in presidential politics.  It can give us an indication of how public opinion is changing.  And the race itself can change public opinion as new ideas are accepted.

And if the entertainment on the Republican side weren’t enough, the Democratic race is still providing some entertainment.

I thought Hillary Clinton had it all wrapped up against Bernie Sanders.  But Sanders is like a bug in her ear that won’t go away.

The establishment doesn’t want Sanders either, although he would be more acceptable than Trump.  But I continue to say that Sanders is Clinton’s third biggest threat.  The top two threats against Clinton are the FBI and the economy.

I think Sanders is staying in the race for a few reasons.  He doesn’t have a lot to lose at this point.  Plus, if there is an indictment against Clinton for her email scandal, then Sanders would pretty much walk into the nomination at this point.  Then again, you still can’t count out the Clintons, even with an indictment by the FBI.

The delegate race between Clinton and Sanders would be close except most of the so-called super delegates are locked into Clinton at this point.

If the race does end up between Trump and Clinton, you have to wonder how many Sanders supporters will stay at home on Election Day, or maybe even vote for Trump.

Most people I know, even those who would vote for Trump, do not support everything he says or everything he stands for.  There probably are some people who believe everything he says, but I don’t think that is the majority of his supporters.  It probably isn’t any one issue in many cases either.  Many of Trump’s supporters are with him because it is a vote against the establishment and the status quo.  They know they are getting ripped off, so it is the voters extending their middle fingers in the direction of the establishment.

If Trump has the nomination taken away from him, it will just infuriate his supporters that much more.  That is actually good news for libertarians.  It will mean less consent for the federal government.

The state of California is set to raise the state minimum wage.  If the law goes as planned, it will be raised to $15 per hour by 2022.

A lot has been written about the minimum wage, so I don’t want to rehash all of the arguments against the minimum wage in detail here.

Minimum wage laws obviously increase unemployment, or at the very least distort the job market, if the minimum wage rate is above the market rate for certain jobs that would exist without minimum wage laws.

If the minimum wage were currently set at $1 per hour, it would have virtually no impact because almost nobody would accept a job for less than $1 per hour.

Actually, there are unpaid internships, but these only serve as an example of one reason why minimum wage laws are so destructive.  Some people actually work jobs in order to gain experience and get their foot in the door.

There is also the reductio ad absurdum argument against the minimum wage.  If a minimum wage of $15 per hour is so great, then why not set it at $100 per hour?

In addition, what is so magical about $15 per hour.  Why not $14.99 per hour or $15.01 per hour?  And if it is so important, why wait until 2022?  Why not implement it immediately?  Do the proponents actually admit there is a potential cost to raising the minimum wage?

Also, consider the personalized situations of families.  Maybe there is a family where the father/ husband works full-time while the mother stays home with the kids.  In order to make a little extra money, the mother/ wife works 15 hours per week (nights or weekends) to make a little extra.  She may just want something quiet and mindless to get away from the kids and she is willing to make just $7 per hour.

Consider a college student, or a grad student.  Maybe he could land a job for $20 per hour.  But he decides to take a night shift job sitting at a desk for $7 per hour.  He only has to help a few people during his entire shift.  He uses all of the quiet time to study.  This is the job that works well for him.  He wouldn’t be able to work a job that left little time to study.  So the $7 per hour wage is a good deal for him.

But that doesn’t matter to the proponents of a minimum wage.  They either want this guy to be out of a job, or they don’t understand the impacts of their own laws.  Maybe this guy will get lucky and get a bump in pay with the new minimum wage.  Or maybe the company will decide to abandon the night shift and close during this time and hire fewer people.

The bottom line is that minimum wage laws make certain jobs illegal for certain people.  If an employee and an employer agree to a  certain job at a certain wage, then the employer will end up being fined and taken to court.  If he refuses, then armed men will come and take him to prison.  If he refuses, then he will be shot.

That is the nature of law.  It is backed up by force.  If it isn’t, then it really isn’t a law.  Of course, most of the laws are arbitrary and use aggressive force (as opposed to defensive force).  These are not laws of nature or common law.

So California law will now criminalize more jobs than it already has.  It may or may not lead to higher unemployment in the future, but it probably will.  The only thing that may help them get away with it is the Federal Reserve creating money out of thin air.  If inflation is high enough over the next several years, it might make the effects of the new minimum wage obsolete.

Actually, it was the inflation of World War 2 that helped bring down the high unemployment rate (along with shipping off millions of young men).  Sometimes one bad government policy can help lessen the effects of another bad government policy.

Still, California is a booming place right now, but I don’t really mean that in a good sense.  A lot of the boom is artificial and unsustainable.  San Francisco is perhaps the biggest real estate bubble in the United States right now.

If there is a major recession, California could be hit really hard.  Then, all of a sudden, a high minimum wage rate could have a devastating impact.  I don’t wish for hard times for people, but it would be nice to see all of the proponents of the minimum wage to eat some crow on this one and have to repeal it or scale it back.

I understand that a lot of people like the culture and lifestyle of California.  There are also some beautiful places and things to see there.  Also, many people have their roots there, along with family.

In those aspects, I understand the attraction of living there.  But unless you are working for a Silicon Valley tech company or as a Hollywood star, I don’t see the appeal of having a career in California.

You will make less money living in most other places in the U.S., but your money will go so much further.  In some cases, you can get a place to live for nearly one-tenth of the cost as a similar sized place in San Francisco.  And even the other big cities in California are really expensive.

The leftists in California are taking one more step in criminalizing employment and making it harder to do business in the state.  It will also make it harder for the residents, whether they know it or not.

My suggestion for someone living there is to find somewhere more affordable to live, and somewhere that is more business friendly.  If you like warm weather, you can consider Texas or Florida.

This is a tough subject for me to address.  It is tough because I may sound contradictory if I am not precise with my language.

The middle class in the United States (not to speak of other first world countries) is struggling.  I understand that we have luxuries today that could have only been dreamed of a generation ago.  Still, a lot of middle class families are struggling with stress and money.  They work long hours and barely have enough to pay the bills each month, let alone actually save money for retirement or a rainy day.

When this issue comes up, I often hear conservatives talk about frugality and self-responsibility.  Even many libertarians go straight to this, and I often cringe.

I am all about frugality to a point, and being a libertarian, I am obviously in favor of self-responsibility.  But by addressing these issues first, I think it is letting the government off the hook to a certain degree.

The federal government spends nearly $4 trillion per year, with state and local governments spending at least another $2.5 trillion.  About 40% of our income goes to the government, and this isn’t even taking into account how much poorer we are because of regulations.

When you add up federal, state, and local government spending, it is about the equivalent of the median family income in the United States.  Figure that one out.

But I will read an article or listen to a talk show and hear about someone who makes a middle class income who is struggling with his finances.  Then I hear the horrible response that he could live in a small apartment and cut coupons and budget just a couple of hundred dollars or less per month for food.  I also hear that he doesn’t need a cell phone or cable television.

This is all like nails on a chalkboard to me, and let me tell you why.

The problem is that I am hearing this when the topic is mainly about politics or economics.  It is not coming from articles or talk shows that primarily deal with financial advice.  If I hear this from Dave Ramsey or Suze Orman, that’s fine.  It is probably good advice.  It is relevant advice.

The problem here is that the complaint is more general about how tough times are today.  The complaints are valid.  The middle class really is getting hosed, for lack of a better word.

Everybody knows they can live in a cheaper place and eat rice and beans for dinner every night.  They know they can get rid of all of their electronic gadgets and save some money.  But the point is that these people don’t want to do it, and I don’t blame them.

We are not talking about people with new $40,000 cars who take $10,000 vacations every year.  If they are complaining about their lack of money, then maybe I can understand this response.  But I am talking about people who are living a fairly modest lifestyle.  Maybe they have a new car and have their kids in some activities.  But are they supposed to drive a beat-up junker their whole lives and keep their kids fenced in at home?

There is a time and place for lecturing people on how to budget more wisely.  When you are talking politics and economics, that is not the time.

Conservatives and libertarians are missing a huge opportunity.  Maybe the conservatives don’t care because many of them really do love big government.

But for libertarians, we should be advocates for these people.  It is the state that is making their lives so difficult.  We should be able to have cell phones and cable television on a middle class income without feeling a major struggle.  We should expect an increasing standard of living where we have new luxuries that are affordable.

The problem is that our living standards are not increasing as they should because the state is holding us back.  The state in all its forms is hurting savings and productivity.  Libertarians should be defending the middle class, telling them that they would be able to have all of their gadgets and more without feeling the struggle if only the state would get off of our backs.

Sure, there are a lot of people who make unwise financial decisions, if we can even judge.  But there are also a lot of people who make good decisions.  And the middle class, even for those who have been relatively frugal, is struggling because the government is taxing and regulating us like crazy.

So let’s answer the initial question.  Is it your fault you don’t have enough money?

There is no clear-cut answer to that.  For some people, it really is largely their own fault.  For some people, it is primarily the state that has made them poor.  For most people, it is probably a mix.

I am not saying all of this as an excuse.  You shouldn’t just throw your hands up in the air and say, “the government is too big and there is nothing I can do about being poor.”  You still have to take control over your own life to the degree that you can.

The reason that Donald Trump and Bernie Sanders have done so well up until now in the presidential race is because they are acknowledging there is a major problem out there.  Most of their solutions may be bad, but at least they are recognizing the struggles out there.

Libertarians should be advocates for the struggling middle class, and the lower class too.  This isn’t to make excuses for anyone.  This isn’t to say that people shouldn’t take responsibility for their own lives.

If someone is looking for financial advice, you can give it to them, which might include budgeting techniques.  But if someone is looking for some sympathy because the government has made it tough to get by, you should provide some sympathy.  It is the perfect opportunity to let people know exactly why they are struggling so much.

Libertarians will argue over abortion and immigration, but there are general things we can agree on with these issues.  At least some of the solutions can be found in decentralization and property rights.

With immigration, if you end government welfare – which all libertarians should agree – then it automatically solves a major portion of the immigration issue.

I don’t know if there is a lot of disagreement, but one of the toughest issues for libertarians is the banking system.  We obviously share agreement that there should be a free market system, but how do we get there with our current system?

I know that most people opposed the bailouts in 2008.  And it is ridiculous that these companies received bailouts only to see the executives later receiving big bonuses.

Obviously the car bailouts were a case of protectionism and corporatism.  It’s not that the other bailouts weren’t, but just that they go deeper.

The public opposed the bailouts for the most part, but what if they had been given a choice between the bailouts and having the chance of losing deposits in their bank account?

The average American probably only has a few thousand dollars in a checking account, but it is still something.  And there is a general respect for property rights when it comes to “cash” in the bank.

We can’t be sure if this would have happened, but if there had been no bailouts, there is a good chance that the big banks would have gone under.  The FDIC was supposed to insure deposits up to $100,000 (now $250,000), but the FDIC barely has any money.  If the FDIC had covered all of the failed banks, then the FDIC would have needed a major bailout, which could only be feasibly done by the Fed.  Either way, it is a bailout.

In other words, unless you are prepared to say that the whole banking system should have been allowed to collapse, then the bailouts may have been necessary, at least to some extent.

The other option is that the government could have outright nationalized the major banks (or all banks), but what kind of libertarian would advocate that?  Actually, there are a few libertarians out there who did understand the depth of the situation and advocated nationalization as the least bad of the all of the options.

I still do not know what the answer was, other than the fact that the people should have never allowed the government to get into the mess in the first place.

I know some libertarians would say to let the whole thing collapse.  I myself say that with many issues.  But the banking system is everything.  Without a functioning banking system, all chaos really would break loose.  It might mean a severe breakdown of the division of labor.  Will the truckers deliver food to the stores if they can’t get paid?

In the U.S., there is basically no alternative money at this time.  In some foreign countries, the U.S. dollar functions as a secondary currency.  If the U.S. dollar broke down, something like gold would quickly replace it.  But without any other money currently in use in any significant way, the transition would be tough and not instantaneous.

Unlike some other libertarians, I am not an advocate of compelling banks to not engage in fractional reserve lending.  In a free market system, I believe it should be allowed as long as the parties are made aware of the situation.

But if 100% reserve banking were needed to get back to a free market banking system, it would be hard to oppose in the short run as a transition measure.

Over the last 8 years, banks have piled up a couple of trillion dollars in excess reserves.  It would be far easier to get to a 100% reserve system than it was a decade ago.  In this sense, the banking system is actually a little better off than it was in 2007/ 2008.

In a 100% reserve system, the banks would not be allowed to lend out money unless it were based on deposit money that is not instantly redeemable.  In other words, the money sitting in your checking account could not be loaned out.  It would mean that you would probably have to pay higher bank fees, but it would also likely mean a more stable banking system.

The banking system is one of the biggest and toughest issues we have to deal with.  It is so heavily controlled by the government, it is hard not to use some government solutions initially to get us out of this.

I hate writing and discussing this issue in a sense because I feel as though I am giving up my status as a hardcore libertarian by advocating interim measures and quasi-government solutions to get out of the current mess.  Still, it is a subject that is mostly avoided by libertarians (and everyone else) and I haven’t really heard a better solution that doesn’t involve total chaos.