End the Fed: Cyprus vs. the Federal Reserve?

The government of Cyprus is dominating the headlines at the moment, thanks to an audacious scheme to seize the savings of bank depositors. Many Americans are aghast at the situation. But is it really all that different from what the Federal Reserve does to U.S. depositors on a daily basis?

The Cyprus Conspiracy?

Cyprus isn’t the first European Union government to find itself in financial straits. However, the approach to dealing with those straits is unique. Usually, the EU provides immediate bailout money to such countries. In exchange, those countries agree to cut costs, raise taxes, and restructure debts.

This time, the EU required Cyprus to raise 5.8 billion Euros in order to receive a 10 billion Euro bailout. In order to pay for part of the bailout, the Cyprus government is effectively confiscating money from bank accounts worth more than 100,000 Euros (roughly equivalent to $129,000). Losses on those excess deposits might be as high as 40%…or perhaps even higher.

The Federal Reserve Conspiracy: Revisted?

The Cyprus seizure is theft by government, plain and simple. Ordinary Americans may find it hard to imagine this sort of thing ever happening in the U.S. But is the Cyprus Conspiracy all that different from the Federal Reserve Conspiracy? Not at all. Here’s more from Thomas Sowell at The American Spectator:

The U.S. government is very unlikely to just seize money wholesale from people’s bank accounts, as is being done in Cyprus. But does that mean that your life savings are safe?

No. There are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever the politicians feel like using it for. If they do it slowly but steadily, they can take a big chunk of what you have sacrificed for years to save, before you are even aware, much less alarmed.

That is in fact already happening. When officials of the Federal Reserve System speak in vague and lofty terms about “quantitative easing,” what they are talking about is creating more money out of thin air, as the Federal Reserve is authorized to do — and has been doing in recent years, to the tune of tens of billions of dollars a month…

(See the rest at The American Spectator)

Did the U.S. Government kill Big Bands?

In 1935, Benny Goodman launched the Big Band era with a famous performance in Los Angeles. By 1946, the Big Band era was dead. Despite high popularity, it was replaced by the far less dance-friendly (and far less popular) BeBop era. What happened to the Big Band era?

The U.S. government holds a substantial part of the blame. In 1944, the U.S. government imposed the so-called “Cabaret Tax,” partly to raise funds for World War II. Essentially, it placed a 30% tax rate on all establishments that “contained dance floors, served alcohol and other refreshments, and/or provided musical entertainment.” The tax, like so many others, was supposed to be temporary. But when it was reinstated, dance halls closed across the nation. Thanks to the extra cost of doing business, few places could afford to hire big bands. Thus, many big bands were forced to break apart. Musicians formed smaller bands and started playing non-danceable music. Thus, the era of Bebop began. Here’s more on the government’s war on Big Bands by Eric Felten at The Wall Street Journal (paywall protected):

These are strange days, when we are told both that tax incentives can transform technologies yet higher taxes will not drag down the economy. So which is it? Do taxes change behavior or not? Of course they do, but often in ways that policy hands never anticipate, let alone intend. Consider, for example, how federal taxes hobbled Swing music and gave birth to bebop.

With millions of young men coming home from World War II—eager to trade their combat boots for dancing shoes—the postwar years should have been a boom time for the big bands that had been so wildly popular since the 1930s. Yet by 1946 many of the top orchestras—including those of Benny Goodman, Harry James and Tommy Dorsey—had disbanded. Some big names found ways to get going again, but the journeyman bands weren’t so lucky. By 1949, the hotel dine-and-dance-room trade was a third of what it had been three years earlier. The Swing Era was over.

Dramatic shifts in popular culture are usually assumed to result from naturally occurring forces such as changing tastes (did people get sick of hearing “In the Mood”?) or demographics (were all those new parents of the postwar baby boom at home with junior instead of out on a dance floor?). But the big bands didn’t just stumble and fall behind the times. They were pushed…

(See the rest at The Wall Street Journal)

Calvin Coolidge: Did he save the U.S. Economy?

Amity Shlaes is out with her latest book, Coolidge, a new take on the controversial presidency of Calvin Coolidge. Conservatives love Silent Cal, giving him full credit for the Roaring Twenties. Liberals hate him, believing his free market policies caused the Great Depression. Shlaes falls firmly in the former camp. Personally, I think he’s partly responsible for both. That’s because the Roaring Twenties and the Great Depression were caused by the same thing…rapid expansion of the money supply.

From mid-1921 to mid-1929, the money supply grew 61.8%, with much of that coming during Coolidge’s terms in office. All that money fueled a boom as businesses raced to invest it (aka the Roaring 20s). Eventually, too much money chased too few worthy investments. Poor businesses failed. The economy crashed and the money supply contracted. The Federal Reserve, just like today, mistakenly tried to reinflate the bubble in 1932 only to find itself unable to do so.

Still, Coolidge wasn’t a bad president. He cut the national debt and reduced tax rates. He avoided wars in Latin America. For more on Calvin Coolidge, see this interview with Amity Shlaes conducted by Ed Driscoll at PJ Media:

MR. DRISCOLL:  The Forgotten Man helped to place FDR into context by focusing on many personal histories of the 1930s, beyond the palace intrigue of Capitol Hill. These days, whatever collective history we have of the 1920s seems to come from The Great Gatsby, The Untouchables,and TV shows like HBO’s Boardwalk Empire.  How badly do people today misremember the decade of the 1920s ?

MS. SHLAES:  We really misremember it and then you want to ask why.  So Forgotten Man was about the misremembering of the 1930s.  Coolidge is about the misremembering of the 1920s.

So the cliches you describe, and they’re fun and amusing, are that it was all a lie or about guns and alcohol, something illegal and contraband, corruption resulting from prohibition.  Or it was all a lie; Gatsby wasn’t real wealth.  He was an illusion.  He was a shimmer in a champagne glass.  Right?

So when you go back and look at the ’20s — this is the era of Coolidge, you see a lot of real growth.  Things we would envy, we wish we could have, such as employment was often below five percent.  When you wanted a job you got one.  Wages rose in real terms.  Not a lot but consistently.  You can go back and look at that, even for unskilled workers.  Well, what else — interest rates were pretty low.  The budget was in surplus.  We didn’t have a deficit.  The federal debt was huge from World War I.  We were bringing it down reliably…

(See the rest at PJ Media)

Police State: Why are Feds Stockpiling Ammo?

While the U.S. government works to disarm its citizens, bureaucrats are stockpiling ammo. Lots and lots of ammo. But no worries. You can trust the police state. Here’s more from Andrew Malcolm at Investors.com:

In a puzzling, unexplained development, the Obama administration has been buying and storing vast amounts of ammunition in recent months, with the Department of Homeland Security just placing another order for an additional 21.6 million rounds…

…DHS has been silent about its need for numerous orders of bullets in the multiple millions. Indeed, Examiner writer Ryan Keller points out Janet Napolitano’s agency illegally redacted information from some ammunition solicitation forms following media inquiries.

According to one estimate, just since last spring DHS has stockpiled more than 1.6 billion bullets, mainly .40 caliber and 9mm. That’s sufficient firepower to shoot every American about five times. Including illegal immigrants. To provide some perspective, experts estimate that at the peak of the Iraq war American troops were firing around 5.5 million rounds per month. At that rate, DHS is armed now for a 24-year Iraq war.

(See the rest at Investors.com)

War on the Federal Reserve?

The Federal Reserve is no good. Its money monopoly has wrecked havoc for 100 years. So, I welcome currency competition from Virginia, although I’d prefer it came from the free market. That said, the Federal Reserve will continue to dominate as long as legal tender laws are in full effect. Here’s more on the war on the Federal Reserve from Fox News:

Virginia is one step closer to breaking ties with the country’s monetary system.

A proposal to study whether the state should adopt its own currency is gaining traction in the state legislature from a number of lawmakers as well as conservative economists. The state House voted 65-32 earlier this week to approve the measure, and it will now go to the Senate.

While it’s unlikely that Virginia will be printing its own money any time soon, the move sheds light on the growing distrust surrounding the nation’s central bank. Four other states are considering similar proposals. In 2011, Utah passed a law that recognizes gold and silver coins issued by the federal government as tender and requires a study on adopting other forms of legal currency.

Virginia Republican Del. Robert Marshall told FoxNews.com Tuesday that his bill calls for creation of a 10-member commission that would determine the “need, means and schedule for establishing a metallic-based monetary unit.” Essentially, he wants to spend $20,000 on a study that could call for the state to return to a gold standard…

(See the rest at Fox News)

How well does Congress reflect the People it “serves”?

How well does Congress reflect the people it “serves” (“rules” might be a better word)? Not very well, it turns out. How else could lawyers make up 37% of the U.S. Congress, both now and in 1789? Not to pick on lawyers either…out of the 209 “businesspeople” in Congress, how many do you think are clerks, bakers, entrepreneurs, electricians, etc.? I’m guessing the answer is a big fat zero. So much for James Madison’s dream of the House of Representatives being a lower house for “the people.” Here’s more from Constitution Daily:

With that in mind, the staff of Constitution Daily compiled a comparison between the First U.S. Congress and the current one, looking at the occupational breakdown between their members. The results were, in some ways, predictable, but there were still a few surprises. (Who knew there was a comedian among their ranks?)…

Although the First Congress had a limited variety of professions, the general make up of both are relatively similar. As you can see, from the time the First Congress met, law has been a top profession; in both bodies, about 37 percent of the members are lawyers. It makes sense–the people writing the laws need to have a deep understanding of how the legal system works. But do lawyers make the best politicians?

(See the rest including the breakdown at Constitution Daily)

The Statue of Liberty in 350 Pieces?

The Statue of Liberty, complete with pedestal, stands about 305 feet tall. It resides on Liberty Island in New York City. However, it wasn’t always that way. What did the Statue of Liberty look like before completion?

The Statue of Liberty?

The Statue of Liberty was conceived by Frédéric Bartholdi in 1867. Construction started in late 1875. Originally, it was supposed to be completed by 1876, in time for the 100th anniversary of the signing of the Declaration of Independence. However, funding was short and the project became somewhat of a boondoggle. As such, the statue’s completion was delayed until June 1884.

By 1885, funding for the pedestal had dried up as well. Governor Grover Cleveland (who would later serve as the 22nd and 24th President of the United States) vetoed a bill to contribute $50,000 of New York’s taxpayer dollars to the project. A similar bill, this time for $100,000, failed to pass Congress. Finally, Joseph Pulitzer, publisher of the New York World, initiated a fundraising project and ultimately raised $102,000 from 120,000 donors, 80% of whom sent less than a dollar apiece.

With these new funds, work was completed. Afterward, workers broke it down into 350 pieces and shipped it to America. It was officially dedicated on October 28, 1886 by newly elected President Grover Cleveland.

The Threat of Happiness Research?

Two days ago, the Organisation for Economic Co-Operation and Development (OECD) relaunched its “Better Life Index.” According to it, women are generally happier than men and Australia is the happiest country (assuming all categories are equally-weighted). But does happiness research pose a threat to society?

What is Happiness Research?

Happiness research has exploded over the last few decades. The idea is to quantitatively measure happiness as well as what makes people happy. This allows for all sorts of comparisons between groups as well as nations.

Happiness research tends to treat individuals with a broad brush. But happiness is entirely subjective. Different people have different preferences. Some people value money derived from work more than leisure time and vice versa. The Better Life Index attempts to deal with this fact. It allows users to personalize their indexes based on how much they value eleven separate categories: community, education, environment, civic engagement, health, housing, income, jobs, life satisfaction, safety, and work-life balance. So, this would appear to be a marked improvement.

Cardinal Utility – The Fatal Flaw of Happiness Research?

Unfortunately, the Better Life Index doesn’t deal with the underlying problem. Happiness research depends on something known as cardinal utility. Cardinal utility holds that personal preferences can be accurately measured by a third-party. However, cardinal utility is an outdated view. No one believes it…no one except happiness researchers that is.

Take the Better Life Index. It asks people to self-report how much they value various categories. However, a stated preference don’t necessarily equal a demonstrated preference. What’s the difference? A stated preference is saying you’d take a pay cut to have more leisure time. A demonstrated preference is actually following through on it.

“The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale.” ~ Murray Rothbard, Toward a Reconstruction of Utility and Welfare Economics

Actions speak louder – much louder – than words. There are several ways stated preferences can mess up happiness research. First, people alter their preferences all the time. So, even if a person creates an “accurate” Better Life Index, he might change his mind when it comes time to make an actual choice. Second, a person might think they prefer doing one thing. But when presented with a choice, that same person might do something else entirely.

“In vacuo, a few consumers are questioned at length on which abstract bundle of commodities they would prefer to another abstract bundle, and so on. Not only does this suffer from the constancy error, no assurance can be attached to the mere questioning of people when they are not confronted with the choices in actual practice. Not only will a person’s valuation differ when talking about them from when he is actually choosing, but there is also no guarantee that he is telling the truth.” ~ Murray Rothbard, Toward a Reconstruction of Utility and Welfare Economics

Guerrilla Explorer’s Analysis

So, maybe happiness research isn’t all that accurate. So what? It’s just for fun right? Well, maybe not. It might seem innocuous, but there’s a dark side to it. Politicians and bureaucrats from around the world are taking a page out of Jeremy Bentham’s book and claiming public policy can be used to engineer societal happiness.

“The most commonly cited statistic in happiness economics is the rule that somewhere between $40,000 and $110,000, a higher salary doesn’t buy much more joy or satisfaction. Many people draw the bright white line at $70,000. This provides a strong utilitarian impulse to raise taxes on the rich, who apparently can’t buy much happiness with their extra millions, and to funnel the money to the poor to bring them closer to $70,000. … But one reason why incomes differ is that some people care more about making money than others.” ~ Derek Thompson, The New Economics of Happiness

We barely understand happiness. And we certainly can’t measure it with any type of accuracy. So, the idea that politicians and bureaucrats can engineer it is an illusion. But that won’t stop them from trying. In the end, the research that is supposed to be improving lives might just end up ruining them.

“Apologists for Marxism have made myriad excuses for their ideology’s failure to provide the same standard of living and liberty as was enjoyed in capitalist nations. Until recently, few have been so brazen as to claim that lowering living standards and curtailing freedom were the intended consequences, let alone that people would be happier with less of either. … Limiting choice, reducing wealth and lowering aspirations are now openly advocated as desirable ends in themselves.” ~ Christopher Snowdon, The Spirit Level Delusion: Fact-Checking the Left’s New Theory of Everything

For Further Reading: The Trojan Horse of Happiness Research by Thomas J. DiLorenzo

The Hunt for Bin Laden’s Corpse: Part III

Did Osama Bin Laden die in Pakistan? Was his corpse stuffed into a rubber-lined canvas body bag, weighed down with lead, and then buried in the North Arabian Sea? Or was he secretly transported back to the United States?

Where is Osama Bin Laden’s Corpse?

Back in June 2011, treasure hunter Bill Warren was attempting to raise $400,000 to locate and excavate Bin Laden’s body, which the U.S. government claimed had been buried at sea. We’ve been skeptical about his chances…highly skeptical.

“Warren plans to use side-scanning radar to locate the body bag. The problem with his strategy is obvious. The Arabian Sea is gigantic and side-scanning sonar is a slow, tedious process. Finding a corpse in it is like finding a needle in a haystack…a haystack that measures 1.5 million square miles.

Perhaps even more problematic are the limitations of side-scanning sonar. Even shipwrecks, with their hard edges and solid structures, are difficult to discern from the natural underwater landscape. Distinguishing something as small and with as little acoustic resonance as a corpse is next to impossible, even when taking into account two-hundred pounds of lead in the body bag. And the deeper the corpse lies, the harder it will prove to find.” ~ David Meyer, The Hunt for Bin Laden’s Corpse

Warren recently resurfaced for an interview with the Spanish newspaper El Mundo. And he claims to have struck pay dirt.

Guerrilla Explorer’s Analysis

Unfortunately, we’re still skeptical. Warren has had little luck soliciting donations on his website, apparently raking in just $15 from a single donor. So, it seems probable he’s just trying to drum up some attention to fund his hunt.

We also find it hard to believe Bin Laden was buried at sea in the first place. That story never made much sense. It seems far more likely he was secretly transported back to the United States. But, we’re holding out hope for Warren. Maybe he really will find the body and put an end to all the crazy Bin Laden conspiracy theories…

But we wouldn’t count on it.

Garbology: The Archaeology of…Garbage?

Archaeology is, in many respects, the study of ancient human garbage. But in 1973, Professor William Rathje of the University of Arizona took this to a whole other level. Yes, he assigned his students to study garbage. But not ancient garbage. Instead, he asked them to study modern garbage from people living in Tucson, Arizona. What did The Garbage Project and garbology teach us about modern man?

The Birth of Modern Garbology?

The garbology project was led by the central tenant that “what people have owned — and thrown away — can speak more eloquently, informatively, and truthfully about the lives they lead than they themselves ever may.” It consisted of two parts. First, trash from various urban neighborhoods was examined, sorted by raw material, and recorded. Second, the contents were compared with anonymous questionnaires filled out by people living in those areas. The results were, to put it mildly, shocking.

For example, 10-15% of all garbage was food. The students discovered large amounts of edible food, with middle-income households “wasting” more food than either the poor or rich. Also, people underreported the amount of alcohol they drank, by as much as 60% in some neighborhoods. Middle-class folks consumed the cheapest alcohol. Rich and poor alike tended to drink more expensive stuff.

“Garbage doesn’t lie. The evidence of junk-food wrappers, liquor bottles and girlie magazines often flies in the face of what we tell ourselves — and what we tell others — about what we do.” ~ Witold Rybczynski, We Are What We Throw Away

Most people have little understanding of their own trash. And they have even less understanding of trash as a whole. Remember those fast food containers environmentalists hated so much in the 1980s? Well, from 1980-1989, they accounted for less than 0.1% of all landfill garbage. Disposable diapers – another product scorned by many environmentalists – were less than 1%.

Garbology: The Truth about our Garbage?

So, what kind of trash dominates landfills? Paper is the #1 contributor, making up 40-50% of landfills. Construction debris adds another 20-30%. The third largest category is yard waste (grass clippings, leaves, and the like). Much of this garbage has yet to biodegrade due to the fact that landfills tend to be “mummifiers” (this is the case with ancient landfills as well). Thus, newspapers from as far back as 1952 have been recovered in readable condition and food scraps “remain unchanged after 30 or 40 years.”

Interestingly enough, garbology studies show modern society produces far less trash per person than our predecessors. Much of this is due to technological advances. For example, individual homes no longer produce 1,200 lbs of coal ash per year. And modern packaged foods produce far less waste than the alternative.

Another interesting conclusion is that modern society recycles far less than you might expect. During the 1980s, 78% of people claimed to recycle. But only 26% actually did, irregardless of income level, political views, or even environmental views. And to be honest, recycling as a whole is somewhat of a sham. 40% of what we recycle actually ends up in landfills. For example, outside of PET soda containers, most plastic ends up being dumped in landfills, due to its low value and lack of usability. Paper and glass often suffer the same fate.

While there is plenty of physical space for all this trash, bureaucrats have made it increasingly difficult to open new landfills. So, is there a way to further reduce the amount of trash society creates? Recycling is one option but it only goes so far, especially since much of it ends up in landfills anyway.

Guerrilla Explorer’s Analysis

In their book, Rubbish! The Archaeology of Garbage, William Rathje and Cullen Murphy suggest charging individual families different prices for garbage removal, presumably based on volume or weight. I would take this one step further and suggest privatizing and deregulating the entire garbage industry.

Rather than bureaucrats hiring politically favored contractors, let trash collection companies compete against each other for business. If they saw fit, they could charge consumers based on individual trash, rather than the current one-size-fits-all strategy. Consumers would be incentivized to produce less trash. Landfill owners would be incentivized to make better use of their space as well as find profitable uses for materials already stored within their own landfills. And garbage firms would be incentivized to recycle trash in order to resell it. Let the free market work and who knows? Maybe the so-called trash problem will resolve itself.