Some time back, I wrote a lengthy post on why I am not a Republican. I stick by that account. Not only is the historical founding and growth of the party abhorant to me, it's modern leaders are as well. Admittedly, there is at least a part of me that has a soft spot of The Gipper. And Ron Paul, who holds a congressional seat as a Republican, and ran for President in the Republican primary is a man that I admire. But, on the other hand, going back through at least Eisenhower, the policies pursued by Republican Presidents or Presidential Nominees have been very poor. Think Eisenhower, Nixon, Ford, Bush, Dole, Bush, McCain. No real true solid consistent constitutionalist in the bunch. In fact, quite the opposite. (Reagan, I believe was a mixed bag - and while far from perfect, was the best of the bunch)
Basically, I am a man without a party. While I am not a Republican, I do not see how any knowledgeable Christian person could ever support any of the Democratic Presidential candidates of the last several decades. It is chilling to me that many Christians are openly supporters of our current leader, Barack Obama. While I can sympathize greatly with them if they do not like many of the Republican contenders, as neither do I, I can not even see a "hold your nose and vote for Obama as the lesser of the two evils" approach as acceptable. As I wrote elsewhere, I even think a 'wasted' third party vote or even a no vote at all are more respectable than a vote for a downright evil candidate.
But, I am aware of people who profess the name of Jesus Christ and who attend Evangelical Bible Believing churches who whole heartedly support Barack Obama. I honestly do not get it. I can give at least a couple of reasons for it, but I think they would fall apart with even a cursory examination.
1. GWB got us into a war that we do not need to be in and we need a change in that direction.
The whole current war situation is way beyond my understanding and I honestly do not know if it is a 'just war' on our part or not. I am not of a settled opinion, and can actually understand if someone is of the settled opinion of it being bad. That is, I can sympathize with someone who thinks this is the wrong war, at the wrong time, fought in the wrong way, for the wrong reasons. But, after all the hoopla in the election cycle, when all is said and done Obama's timeline for troop withdrawel is virtually identical to Bush's.
2. We have used torture methods and Obama is ending that practice and shutting down Gitmo
The torture method that seems to make all the headlines is waterboarding. This is a very controlled method which produces no injury and no long term harm. Obviously while going through waterboarding, the recipient must be under more than a minor discomfort, else it would not work. But, is it 'torture'? Is it inhumane? What if it produces results which prevent a major attack on the US (which it has) What if this method, which produces no injury results in imformation which saves thousands of lives?
This interrogation process does not even hold a candle to the methods used in the past and present by other nations - many of which either permanently maim, or even kill the victims. (I don't think anyone has ever survived a decapitation)
But, no, we just need to 'love our enemies' I am told. All the while, they not only hate us, but are bent on our very destruction.
Also, as some commentators are now pointing out, for all the grand oratory about closing Gitmo, our beloved leader has no workable plan on what to do with the detainees. Hey, Obama supporters, ya'll got any ideas? Why don't you 'love' them by taking them into your own homes???
Finally, though, if Barak wants to end the practice of waterboarding and even if he wants to close Gitmo, that still does not make it right for him to have released important classified documents to the world.
3. Barack (and of course all Democrats) care for the poor or otherwise underpriviledged, unlike those rich evil Republicans
This is the one that just kills me. Of course, every politician of any party if he or she is going to have any chance of getting elected, is going to claim to want to help the helpless, etc. and of course, virtually everyone falls into some sort of 'underpriviledged category. Women?? Underprivilidged. Minorities? Underpriviledged. Old People; children; overweight; addicts; The list goes on and on.
And of course every right thinking person, especially Christians, actually do want to truly help the truly underpriviledged. BUT, on what do we base the idea that the only way, or even the best way, to do so is through government coercion? I could go on and on, and won't, but I have yet to hear a single person argue effectively that government is good or successful at this. In fact, I have seen scholarly studies proving just the opposite. Also, on what do we base the very idea that this is even a legitimate function of government. Helping the needy IS a legitimate activity, and the Church should be behind it in every way. But before one more Christian ever attempts to tell me that he or she is for the 'liberal' candidate because said candidate 'cares about the poor' I insist that that person make the biblical case that this is a legitimate function of the civil government to carry out. I am also going to insist that they prove to me that if I don't share their love of government programs, that this means that I do not care about the plight of the unfortunate. I hate to harp so much on this, but I have read a few too many Christian writers state that they like Obama (or some other liberal) because he cares about the poor and of course Christians should care about the poor so why would any Christian not support Obama. Well, I care about the poor, and I think in the long run government programs to help the poor actually hurt the poor and everyone else, so why would I support a candidate that wants more and more programs?
Now, in addition to fact that the supposed reason for a Christian to be a supporter of Obama are quite weak, the reasons to not be are even stronger.
1. For over 20 years Obama attended a church that was so obviously racist and anti-American that absolutely no one can deny it. He finally dropped it when it became a politically hot issue and the media immediately dropped the issue as well. But, study up on this church and its preacher. Then exchange the black and white labels and ask yourself would a white person ever stand any chance of having any respectability at all if he attended such a place. You know the answer. It is beyond doubt. The white guy would be universally condemned and would never stand a chance in national politics. AND RIGHTLY SO. But, with Obama, we just act like it never happened. Apparently people even believe his preposterous story that even though he attended there twenty years, he never heard any of the inflamatory type remarks that were documented.
Moreover, Barack's 'religion' is not at all Orthodox Christianity. I base this not on conjecture, but on his own words that can easily be found on the internet. He believes all will go to heaven and there is no hell. He believes 'sin' is defined as 'not being true to yourself'. (Actually, we are all born sinners so sin is actually when we ARE true to ourselves!!) there are so many other things in which whatever his religious beliefs may be, they are definitely not Christian.
2. Obama has very little relavent experience
He has in his adult life been a left wing agitator (aka community organizer) a state repressentative (for a short period) and a US Senator for a short period before running for President.
3. He demonstrates on a daily basis that he does not understand (or is it does not care about?) our constitutional system of government.
The constitution spells out what the federal government as a whole can and can not do, and specifically spells out what the executive can and can not do. He daily acts as if these restraints do not exist.
4. He is driving the economy so far down the tubes that I fear it will never recover
I know I know George Bush did this. Well, he did have a lot to do with it. That is why I do not like W. He pushed the economy further and further toward the breaking point. But, here is what 98% of Americans do not understand. BO does not represent a change in direction from the Bush administration in the area of the economy. Instead, he is going in basically the same direction at a much much higher rate of speed. All this sype policy does is put off the inevitable crash that much longer, and make the inevitable crash that much more severe. Apparently Obama, like Keynes, has the opinion that it does not matter because "in the long run, we're all dead." How CHRISTIAN is it to place our kids and grandkids in the position of a nation in total economic collapse?
5. He radically supports gay 'rights' and the gay agenda
On an earlier post I put a link to a site documenting his beliefs and actions on this issue. You can go look it up
6. He is rabidly pro-abortion - more so than any President or contendor in the history of this nation
Again, that post refered to in #5 has info on this. Of course, many Christian Obama supporters will say that well, they are not 'one issue voters' but if there was ever a single issue that one could vote on, this would be it. Killing innocent unborn human life just should not be an option.
I also realize that some supporters will say that we should be more willing to help and to be understanding to women in the unfortunate position of having an unwanted pregnancy. I agree, that Christians should be on the front lines of this issue and where we are not it is to our shame. But even that is not as shameful as supporting a politician who wants no part of any limitations on abortions. And we do not need to let our care and concern about it remove us from the fact that quite often the woman is not exactly a 'victim' but was a willing accomplice. We are not showing Christian love to a person by telling them there are no consequences to their actions. Instead we show them there is forgiveness in the cross and strength in Christ to work through the situation without resorting to making a bad situation a million times worse by committing murder.
How anyone who considers themselves an evangelical Christian, who believes that humans have dignity and worth because they are created in the image of God, could turn the other way and support with great fanfare a leader who is not only complacent, but active in the destruction of millions of innocent lives, while at the same time decrying a previous leader because he allowed some people to poor water on the faces of terrorists bent on our destruction is totally beyond me.
Can anyone explain this to me please?
Wednesday, May 27, 2009
Tuesday, May 26, 2009
Been Awhile
I have not been able to blog anything for quite some time. New job with different hours, things going on, etc. When I do have the time, I just don't really fell like it. It takes a lot of energy to write all these brilliant analyses. Maybe one day soon I will get back into it. I hope so.
Monday, April 6, 2009
The God that Runs
The Westminster Shorter Catechism teaches us that God is "a Spirit, infinite, eternal, and unchangeable in his being, wisdom, power, holiness, justice, goodness and truth." As a Presbyterian, and really as a Christian, I believe every word of that is true. I believe each word used to describe God herein can easily be Biblically validated. I have no disagreements, major or minor, with this statement.
But, here is a question. Does this statement inspire you to really know this God? Yeah, maybe to a certain extent. But, does it really inspire you? While this is an absolutely accurate description, and a study of it has definite benefit for us as Christians, this is an abstract, somewhat academic, definition. I do not knock us having such a description, and think it has an important place to play in our study of theology - in a definite, systematic way.
However, when we actually get to the biblical text, we get a more solid, concrete, real, tangible, meaningful picture of God. We get this in a million places, and in a million different ways.
Just one example comes from the text our pastor used for his sermon on this past Lord's day. The passage is familiar to us all - the parable of the 'prodigal son.'
When we get to the heart of the matter in this parable, God is not just "a Spirit......." as stated here, but God is a Father who comes out to meet his wayward son while he is still afar off. He not only just comes out to see him, but he runs out to greet him. Out pastor indicated that the word means something along the lines of "races." When we repent and return to God, He races to come greet us.
Not only that, but he dresses us in the finest robes, puts sandles on our calloused feet, gives us his signet ring, hugs us, and then throws us the grandest of parties, killing the fatted calf, and also begs our troubled brother to join Him in the celebration.
This is the God I serve. I have been prodigal son and He has welcomed me back, many times, with a smile, a hug, and a party. I have been the grumpy elder (presbyterian!) brother, and he urged me to join the party. No matter my sin, he beckons me to the party.
God is "a Spirit, infinite, eternal, and unchangeable in His being, wisdom, power, holiness, justice, goodness, and truth" and I praise Him for it.
God is also the God who races to see me when I am still afar off.
I praise Him all the more for that.
But, here is a question. Does this statement inspire you to really know this God? Yeah, maybe to a certain extent. But, does it really inspire you? While this is an absolutely accurate description, and a study of it has definite benefit for us as Christians, this is an abstract, somewhat academic, definition. I do not knock us having such a description, and think it has an important place to play in our study of theology - in a definite, systematic way.
However, when we actually get to the biblical text, we get a more solid, concrete, real, tangible, meaningful picture of God. We get this in a million places, and in a million different ways.
Just one example comes from the text our pastor used for his sermon on this past Lord's day. The passage is familiar to us all - the parable of the 'prodigal son.'
When we get to the heart of the matter in this parable, God is not just "a Spirit......." as stated here, but God is a Father who comes out to meet his wayward son while he is still afar off. He not only just comes out to see him, but he runs out to greet him. Out pastor indicated that the word means something along the lines of "races." When we repent and return to God, He races to come greet us.
Not only that, but he dresses us in the finest robes, puts sandles on our calloused feet, gives us his signet ring, hugs us, and then throws us the grandest of parties, killing the fatted calf, and also begs our troubled brother to join Him in the celebration.
This is the God I serve. I have been prodigal son and He has welcomed me back, many times, with a smile, a hug, and a party. I have been the grumpy elder (presbyterian!) brother, and he urged me to join the party. No matter my sin, he beckons me to the party.
God is "a Spirit, infinite, eternal, and unchangeable in His being, wisdom, power, holiness, justice, goodness, and truth" and I praise Him for it.
God is also the God who races to see me when I am still afar off.
I praise Him all the more for that.
Thursday, February 19, 2009
Our Current Economic Crisis
I have been reading, studying, and thinking alot about the economy lately. My daughter is having to read a book entitled Whatever Happened to Penny Candy? for her high school economics course and the wife and I have been reading it also. Like all economics books, it is not perfect. But, especially the first several chapters are very good, and should be required reading for every single person in America (that is if I were the dictator type - but I guess the fairness doctrine would insist that everyone also read Keynes or Marx or something).
I have also been re-skimming Honest Money by Dr. Gary North, and What Has the Government Done to Our Money by the late Professor Murray Rothbard. If you get a chance, you need to read any or all of these.
Yesterday while out and about, I stumbled on a radio program which featured a guest named Thomas Woods. His insight into the situation was fascinating. A brief article about his book can be found here: http://www.pointofview.net/site/News2?page=NewsArticle&id=8531
Woods main argument, one that is echoed in the works of Rothbard and others, is that an unfettered free market is NOT the cause of the problems we are facing, and government intervention of one form or the other is NOT the solution. In fact, the exact inverse is true.
The current situation, like that of the Great Depression of the 1930s, has been caused by irresponsible governmental monetary policy.
The books mentioned above make this claim as well. In reading my version of Penny Candy which was dated 2005, I was fascinated by the relevance to the current situation. The author demonstrates how throughout history, governments have turned to the same currency devaluing schemes to try to continue to prop themselves up, ultimately leading to their inevitable downfall, and the downfall of the society they were suppose to be protecting. The same thing is happening now at a terribly alarming rate.
Money is simply a medium of exchange. Nothing more. Nothing less. The natural state of things has always led in civilized society to the use of precious metals ( hereafter referred to as PMs), specifically gold and silver, as this medium of exchange. The reasons for this are many. PMs have real value in and of themselves. They can be broken down into usable quantities (from large bullion to small coins). The amount of them available in society can not be quickly, nor infinitely increased. In short, they provide value, ease of use, and stability.
Monetary units (such as dollars) are simply known quantities of some precious metals. By definition, a dollar was the equivalent of one ounce of silver. (The British Pound Sterling was just that - a pound of sterling silver). At the time of the formation of the U. S. Constitution, gold was considered to have roughly twenty times the value of silver - hence a 'dollar' was also one twentieth an ounce of gold, or an ounce of gold was twenty dollars. That is, the value of gold or silver did not fluctuate in terms of dollars, but the value of a dollar would fluctuate if the value of gold or silver fluctuated. Things were essentially this way for the better part of 150 years. If you had a dollar, that meant you had an ounce of silver or a twentieth of an ounce of gold. If silver or gold for some reason increased or decreased in value, your purchasing power increased or decreased with it. However, due to the nature of things, rapid or large fluctations in the value of precious metals rarely occur.
In times past, such as during the late stages of the Roman Empire, governments would devalue the currency by 'clipping' the coins. That is, they would collect coins (through taxation or whatever means), shave off portions of the gold or silver, then mint new coins with the shavings. A coin that was say one ounce, may then be 0.9 ounce, but, have the same 'face value' even though the real value had diminished. Also, there were now more coins made from the same amount of PM.
Now suppose you were a Roman merchant who was selling an item for an amount equal to nine ounces of PM. Previously, you collected nine 1 ounce coins. Now, to obtain the same quantity, you needed ten 0.9 ounce coins. (Obviously, I am simplifying here). The result? There are more coins (therefore, supposedly more 'money' available for exchange) in the market, but prices have gone up. That is, the currency has been devalued. Prices have risen. People may seemingly have more 'money' in their pocket, but, their purchasing power has not improved. This is inflation.
Please note, inflation is not a rising of prices. The rising of prices is a result of inflation. Inflation is the devaluing of the currency.
Over the centuries other innovations have made this practice more convenient for the government devaluers (counterfeiters) to ply their trade. The most useful innovation has been the introduction of paper money.
Paper money began as what could be termed bank notes. Someone may not want to store their reserves of PM in their own home. Businesses which were essentially warehouses for PMs developed. One could deposit his PM in the warehouse, and the warehouse would issue him a paper receipt or receipts. Suppose I deposited 25 ounces of gold and 100 ounces of silver in the warehouse. I get receipts stating that I have this (maybe I get twenty five receipts each worth one ounce of gold, and 100 receipts each worth one ounce of silver). Now, I do not carry all this gold and silver around with me, but I can redeem any or all of my receipts whenever I desire. If I buy an item priced at one silver ounce, I could trade my receipt for it. Now, the merchant I traded with can redeem that receipt upon demand and receive the actual silver. (Likely, the warehouse (bank) would charge some type of holding and processing fee for this service.)
Now, these banks began to get creative. They determined that rarely if ever did they have a run on all deposits. At any time, they had the overwhelming majority of deposits on hand. Therefore, they began 'loaning' some of the reserves that they had. This is called Fractional Reserve Banking. So, just using my deposits for example. I may come in and out occasionally and deposit more, or withdraw some, but on the whole, my balance is staying somewhere near what I originally deposited. The bank may then write out another receipt against my deposit and give it to another individual as a loan that must be repaid. So, now for my one deposit, there are two sets of receipts in circulation. The borrower then goes and somehow invests this, trying to make a return. He may go turn his certificate over to a merchant who sells him some equipment that he uses to provide a good or service to make more money. If he makes a return, he pays back the borrowed credit, with interest. The bank has made money. As long as I, and the others who are now holding certificates against my deposits do not demand our PMs at the same time, the bank is safe. However, obviously, the larger the overlending verses the amount actually on reserve, the larger the risk the banker is taking. Also, the riskier the investment, the more risk of the bank failing.
Fractional reserve banking has caused some problems during economically troubled times in the past. In fact, it has actually caused some of the economic problems themselves. For one, this has inflated the currency (If the banker 'loans out' receipts equal to my original deposit, he has essentially doubled the currency in circulation, thereby lowering its value, much like the coin clippers of old)
During much of the 19th century, American politicians struggled with these issues. On the one hand were the bankers, licking their chops to use fractional reserve banking, along with the politicians they backed to help foster the system. On the other hand, were more economically conservative politicians who fought against this system.
Finally, in 1913, perhaps the greatest debacle in the history of American economics occured. The Federal Reserve system went into effect. Since that time, they have continued along a path that has gone further and further in the direction of currency devaluation.
The climax of this has been to utimately remove all ties from our paper money to any PM, along with the passage of 'legal tender' laws. Not too many years ago, your paper money had a noted on it saying it could be redeemed for 'real money' (i.e. silver or gold). That is no longer the case. Now, it is simply a note that we are forced by law to accept as legal tender for all debts. In reality it is nothing but a worthless piece of paper. (And nowadays, often it is not even that, but is simply an electronic blip on a computer program). You could have piles and piles of hundred dollar bills, and they are absolutely worthless in and of themselves (unlike silver or gold) and the ONLY reason they have value is because the government by law forces everyone to accept them as tender.
So, now the 'value' of a dollar is not tied to PMs. It therefore can fluctuate tremendously. As stated previously, one of the major reasons why PMs became used as a medium of exchange is because they could not be quickly and easily devalued by a sudden large influx. (It is not impossible that this could happen, as it happened in Spain when they obtained huge amounts of gold from the Americas during the 16th century - another story for another post at another time!) However, it can not easily and frequently happen.
However, when paper that is printed solely at the governments discretion and is forced to be used as legal tender is the only allowable legal tender, the government can inflate the currency at will. A huge influx of this so called money into the economy does not add one whitt of wealth to the economy, but only devalues the currency.
Our wealth as a nation is the sum total of all our productivity. In reality, money is only a medium of exchange for that productivity. If suddenly the government prints one trillion dollars and injects that into the economy, it has not increased our wealth one iota. All it has done is make the buying power of each unit (dollar) that much less. This can cause widespread destruction.
Suppose you are 70 years old, have worked hard all your life, have saved, invested, and smartly handled your money and you now have a net value of one million dollars. Sounds like a lot of money, doesn't it? However, if the government suddenly prints and circulates trillions of dollars into the economy, now your one million dollars is worth a fraction of what it once was. All your hard work and intelligence just went down the drain. This is happening to millions of Americans right now.
Well, in our current hard financial situation (which has been caused by the very monetary policies we are talking about) the Messiah's, uh, I mean the President's plan for fixing it is to inject tons of money into the economy. See how utterly senseless this is?
Not one person in a hundred understands this. The average Joe, while possibly thinking something might be amiss in what is going on, at least on some level thinks that injecting money to 'jump start' the economy is a good thing.
In actuality, it is a travesty - and one we will be suffering from for a long time to come.
This inflationary monetary policy is actually harmful in many many more ways than I can even begin to talk about here. This policy, and not the unfettered free market, causes the business 'boom and bust' cycles we have seen throughout our history. We have just come out of a long 'boom' and are now going into a huge 'bust.' The best that our current policy of stimulous can do is to continue to artifically lengthen the aritificial 'boom' and forestall the inevitable 'bust,' while making the eventual 'bust' just that much more severe. I fear we are near a breaking point where no matter what happens, soon the 'bust' will be irreversable - perhaps leading to a total cultural meltdown. The only way to fully and finally recover is to allow the 'bust' to run its course - as painful as that may be, then to restore a sound monetary policy in its wake.
Austrian economists (see the Woods link above, or that of the Mises Institute or Lew Rockwell Report to the right) have been saying this for years, only to be labeled lunatics. However, I think it is undeniable that the only solution to this situation is to somehow someway get back on some sort of Precious Metal ("honest money") monetary system with little or no government intervention.
I have also been re-skimming Honest Money by Dr. Gary North, and What Has the Government Done to Our Money by the late Professor Murray Rothbard. If you get a chance, you need to read any or all of these.
Yesterday while out and about, I stumbled on a radio program which featured a guest named Thomas Woods. His insight into the situation was fascinating. A brief article about his book can be found here: http://www.pointofview.net/site/News2?page=NewsArticle&id=8531
Woods main argument, one that is echoed in the works of Rothbard and others, is that an unfettered free market is NOT the cause of the problems we are facing, and government intervention of one form or the other is NOT the solution. In fact, the exact inverse is true.
The current situation, like that of the Great Depression of the 1930s, has been caused by irresponsible governmental monetary policy.
The books mentioned above make this claim as well. In reading my version of Penny Candy which was dated 2005, I was fascinated by the relevance to the current situation. The author demonstrates how throughout history, governments have turned to the same currency devaluing schemes to try to continue to prop themselves up, ultimately leading to their inevitable downfall, and the downfall of the society they were suppose to be protecting. The same thing is happening now at a terribly alarming rate.
Money is simply a medium of exchange. Nothing more. Nothing less. The natural state of things has always led in civilized society to the use of precious metals ( hereafter referred to as PMs), specifically gold and silver, as this medium of exchange. The reasons for this are many. PMs have real value in and of themselves. They can be broken down into usable quantities (from large bullion to small coins). The amount of them available in society can not be quickly, nor infinitely increased. In short, they provide value, ease of use, and stability.
Monetary units (such as dollars) are simply known quantities of some precious metals. By definition, a dollar was the equivalent of one ounce of silver. (The British Pound Sterling was just that - a pound of sterling silver). At the time of the formation of the U. S. Constitution, gold was considered to have roughly twenty times the value of silver - hence a 'dollar' was also one twentieth an ounce of gold, or an ounce of gold was twenty dollars. That is, the value of gold or silver did not fluctuate in terms of dollars, but the value of a dollar would fluctuate if the value of gold or silver fluctuated. Things were essentially this way for the better part of 150 years. If you had a dollar, that meant you had an ounce of silver or a twentieth of an ounce of gold. If silver or gold for some reason increased or decreased in value, your purchasing power increased or decreased with it. However, due to the nature of things, rapid or large fluctations in the value of precious metals rarely occur.
In times past, such as during the late stages of the Roman Empire, governments would devalue the currency by 'clipping' the coins. That is, they would collect coins (through taxation or whatever means), shave off portions of the gold or silver, then mint new coins with the shavings. A coin that was say one ounce, may then be 0.9 ounce, but, have the same 'face value' even though the real value had diminished. Also, there were now more coins made from the same amount of PM.
Now suppose you were a Roman merchant who was selling an item for an amount equal to nine ounces of PM. Previously, you collected nine 1 ounce coins. Now, to obtain the same quantity, you needed ten 0.9 ounce coins. (Obviously, I am simplifying here). The result? There are more coins (therefore, supposedly more 'money' available for exchange) in the market, but prices have gone up. That is, the currency has been devalued. Prices have risen. People may seemingly have more 'money' in their pocket, but, their purchasing power has not improved. This is inflation.
Please note, inflation is not a rising of prices. The rising of prices is a result of inflation. Inflation is the devaluing of the currency.
Over the centuries other innovations have made this practice more convenient for the government devaluers (counterfeiters) to ply their trade. The most useful innovation has been the introduction of paper money.
Paper money began as what could be termed bank notes. Someone may not want to store their reserves of PM in their own home. Businesses which were essentially warehouses for PMs developed. One could deposit his PM in the warehouse, and the warehouse would issue him a paper receipt or receipts. Suppose I deposited 25 ounces of gold and 100 ounces of silver in the warehouse. I get receipts stating that I have this (maybe I get twenty five receipts each worth one ounce of gold, and 100 receipts each worth one ounce of silver). Now, I do not carry all this gold and silver around with me, but I can redeem any or all of my receipts whenever I desire. If I buy an item priced at one silver ounce, I could trade my receipt for it. Now, the merchant I traded with can redeem that receipt upon demand and receive the actual silver. (Likely, the warehouse (bank) would charge some type of holding and processing fee for this service.)
Now, these banks began to get creative. They determined that rarely if ever did they have a run on all deposits. At any time, they had the overwhelming majority of deposits on hand. Therefore, they began 'loaning' some of the reserves that they had. This is called Fractional Reserve Banking. So, just using my deposits for example. I may come in and out occasionally and deposit more, or withdraw some, but on the whole, my balance is staying somewhere near what I originally deposited. The bank may then write out another receipt against my deposit and give it to another individual as a loan that must be repaid. So, now for my one deposit, there are two sets of receipts in circulation. The borrower then goes and somehow invests this, trying to make a return. He may go turn his certificate over to a merchant who sells him some equipment that he uses to provide a good or service to make more money. If he makes a return, he pays back the borrowed credit, with interest. The bank has made money. As long as I, and the others who are now holding certificates against my deposits do not demand our PMs at the same time, the bank is safe. However, obviously, the larger the overlending verses the amount actually on reserve, the larger the risk the banker is taking. Also, the riskier the investment, the more risk of the bank failing.
Fractional reserve banking has caused some problems during economically troubled times in the past. In fact, it has actually caused some of the economic problems themselves. For one, this has inflated the currency (If the banker 'loans out' receipts equal to my original deposit, he has essentially doubled the currency in circulation, thereby lowering its value, much like the coin clippers of old)
During much of the 19th century, American politicians struggled with these issues. On the one hand were the bankers, licking their chops to use fractional reserve banking, along with the politicians they backed to help foster the system. On the other hand, were more economically conservative politicians who fought against this system.
Finally, in 1913, perhaps the greatest debacle in the history of American economics occured. The Federal Reserve system went into effect. Since that time, they have continued along a path that has gone further and further in the direction of currency devaluation.
The climax of this has been to utimately remove all ties from our paper money to any PM, along with the passage of 'legal tender' laws. Not too many years ago, your paper money had a noted on it saying it could be redeemed for 'real money' (i.e. silver or gold). That is no longer the case. Now, it is simply a note that we are forced by law to accept as legal tender for all debts. In reality it is nothing but a worthless piece of paper. (And nowadays, often it is not even that, but is simply an electronic blip on a computer program). You could have piles and piles of hundred dollar bills, and they are absolutely worthless in and of themselves (unlike silver or gold) and the ONLY reason they have value is because the government by law forces everyone to accept them as tender.
So, now the 'value' of a dollar is not tied to PMs. It therefore can fluctuate tremendously. As stated previously, one of the major reasons why PMs became used as a medium of exchange is because they could not be quickly and easily devalued by a sudden large influx. (It is not impossible that this could happen, as it happened in Spain when they obtained huge amounts of gold from the Americas during the 16th century - another story for another post at another time!) However, it can not easily and frequently happen.
However, when paper that is printed solely at the governments discretion and is forced to be used as legal tender is the only allowable legal tender, the government can inflate the currency at will. A huge influx of this so called money into the economy does not add one whitt of wealth to the economy, but only devalues the currency.
Our wealth as a nation is the sum total of all our productivity. In reality, money is only a medium of exchange for that productivity. If suddenly the government prints one trillion dollars and injects that into the economy, it has not increased our wealth one iota. All it has done is make the buying power of each unit (dollar) that much less. This can cause widespread destruction.
Suppose you are 70 years old, have worked hard all your life, have saved, invested, and smartly handled your money and you now have a net value of one million dollars. Sounds like a lot of money, doesn't it? However, if the government suddenly prints and circulates trillions of dollars into the economy, now your one million dollars is worth a fraction of what it once was. All your hard work and intelligence just went down the drain. This is happening to millions of Americans right now.
Well, in our current hard financial situation (which has been caused by the very monetary policies we are talking about) the Messiah's, uh, I mean the President's plan for fixing it is to inject tons of money into the economy. See how utterly senseless this is?
Not one person in a hundred understands this. The average Joe, while possibly thinking something might be amiss in what is going on, at least on some level thinks that injecting money to 'jump start' the economy is a good thing.
In actuality, it is a travesty - and one we will be suffering from for a long time to come.
This inflationary monetary policy is actually harmful in many many more ways than I can even begin to talk about here. This policy, and not the unfettered free market, causes the business 'boom and bust' cycles we have seen throughout our history. We have just come out of a long 'boom' and are now going into a huge 'bust.' The best that our current policy of stimulous can do is to continue to artifically lengthen the aritificial 'boom' and forestall the inevitable 'bust,' while making the eventual 'bust' just that much more severe. I fear we are near a breaking point where no matter what happens, soon the 'bust' will be irreversable - perhaps leading to a total cultural meltdown. The only way to fully and finally recover is to allow the 'bust' to run its course - as painful as that may be, then to restore a sound monetary policy in its wake.
Austrian economists (see the Woods link above, or that of the Mises Institute or Lew Rockwell Report to the right) have been saying this for years, only to be labeled lunatics. However, I think it is undeniable that the only solution to this situation is to somehow someway get back on some sort of Precious Metal ("honest money") monetary system with little or no government intervention.
Thursday, February 12, 2009
An open letter to President Obama, and all people in power
Dear President Obama,
You may want to consider the following words from a 'Good Book' that I have:
Why do the nations rage and the peoples plot in vain? The kings of the earth set themselves, and the rulers take counsel together, against the Lord and against his anointed, saying, “Let us burst their bonds apart and cast away their cords from us.”
He who sits in the heavens laughs; the Lord holds them in derision. Then he will speak to them in his wrath, and terrify them in his fury, saying, “As for me, I have set my King on Zion, my holy hill.”
I will tell of the decree: The Lord said to me, “You are my Son; today I have begotten you. Ask of me and I will make the nations your heritage and the ends of the earth your possession. You shall break them with a rod of iron and dash them in pieces like a potter’s vessel.”
Now therefore, O kings, be wise; be warned, O rulers of the earth. Serve the Lord with fear and rejoice with trembling. Kiss the Son, lest he be angry, and you perish in the way, for his wrath is quickly kindled. Blessed are all who take refuge in him.
Thank you for your time.
You may want to consider the following words from a 'Good Book' that I have:
Why do the nations rage and the peoples plot in vain? The kings of the earth set themselves, and the rulers take counsel together, against the Lord and against his anointed, saying, “Let us burst their bonds apart and cast away their cords from us.”
He who sits in the heavens laughs; the Lord holds them in derision. Then he will speak to them in his wrath, and terrify them in his fury, saying, “As for me, I have set my King on Zion, my holy hill.”
I will tell of the decree: The Lord said to me, “You are my Son; today I have begotten you. Ask of me and I will make the nations your heritage and the ends of the earth your possession. You shall break them with a rod of iron and dash them in pieces like a potter’s vessel.”
Now therefore, O kings, be wise; be warned, O rulers of the earth. Serve the Lord with fear and rejoice with trembling. Kiss the Son, lest he be angry, and you perish in the way, for his wrath is quickly kindled. Blessed are all who take refuge in him.
Thank you for your time.
Saturday, February 7, 2009
Fooled Again?
A blogger friend of mine (The Sun Stands Still - linked at the right) posted the following quote from Mark Horne concerning Obama:
"Obama’s arrival is change from the Bush administration the way a baby is change from a pregnancy. He’s not a repudiation; he’s the ultimate end."
When I read that, I immediately thought of that classic hard rock anthem "Won't Get Fooled Again." by The Who. (I know - I'm kinda weird). The lyrics seem to speak of a 'revolutionary' change of power, which only results in more of the same.
Look up the lyrics on the internet - they're easy enough to find. I am sure The Who were not politically (or religiously, or in any ways) near any form of agreement with Evangelical Christianity, yet taken generically, the lyrics to this song are actually, for rock music, pretty profound.
The climactic final lines of that song demonstrate a similar thought to those of Mark Horne:
"Meet the new boss.......Same as the old boss!"
"Obama’s arrival is change from the Bush administration the way a baby is change from a pregnancy. He’s not a repudiation; he’s the ultimate end."
When I read that, I immediately thought of that classic hard rock anthem "Won't Get Fooled Again." by The Who. (I know - I'm kinda weird). The lyrics seem to speak of a 'revolutionary' change of power, which only results in more of the same.
Look up the lyrics on the internet - they're easy enough to find. I am sure The Who were not politically (or religiously, or in any ways) near any form of agreement with Evangelical Christianity, yet taken generically, the lyrics to this song are actually, for rock music, pretty profound.
The climactic final lines of that song demonstrate a similar thought to those of Mark Horne:
"Meet the new boss.......Same as the old boss!"
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