Worthless US Dollar on Display

Congress has been engaged in a recent debate over whether or not to end production of the paper US dollar in favor of a $1 coin. This may get hard money proponents excited initially but a closer look shows that this debate offers no solutions to the crippled US dollar and simply displays how worthless it has become.

From Yahoo!:

"Congressional auditors say doing away with dollar bills entirely and replacing them with dollar coins could save taxpayers some $4.4 billion over the next 30 years."

The reader may be asking his or herself: How will replacing something that's supposedly worth $1 with something else that is supposedly worth $1 be any cheaper? Great question. The simple answer is that the US dollar is not backed by anything - it costs more money to make the money than the money is actually worth!

"Several lawmakers were more intrigued with the idea of using different metal combinations in producing coins.

Rep. Steve Stivers, R-Ohio, said a penny costs more than 2 cents to make and a nickel costs more than 11 cents to make. Moving to multiplated steel for coins would save the government nearly $200 million a year, he said."

When one thinks of money, they usually think of something that is actually worth something to someone else; historically, gold and silver has been used as money throughout the world. However, the US dollar is money because the government says so. The US uses a fiat currency system ("fiat" literally meaning "a decree"), printed at will by the Federal Reserve and US Treasury with  inflationary consequences. This argument in Washington over how to make fake money cheaper simply underscores the fact that the money we use today is not worth the paper or metal they are printed on.

Of course, no one in Washington has used the opportunity to talk about the value of the US dollar. Instead, those in Congress are debating the pros and cons of having paper or metal in one's pocket.

"Rep. Lacy Clay, D-Mo., said men don't like carrying a bunch of coins around in their pocket or in their suits. And Rep. Carolyn Maloney, D-N.Y., said the $1 coins have proved too hard to distinguish from quarters."

This aspect of the discussion would be hilarious if it was not so frustrating. Here is a novel idea: How about letting the market and the consumer decide what form of money is most preferable? To do this, competing currencies should be introduced to insure that the most effective and valuable medium of exchange is available.

In the end, it does not matter if the US dollar is made of paper or metal if it is going to be backed by nothing but a government decree and a Federal Reserve system that puts it in a constant state of inflation. Making US fiat money with different materials may save Washington a few bucks but this debate misses the larger point of why the US dollar is devalued to the detriment of the consumer and the ultimate risk of total collapse.

Closing Loopholes Tightens Their Grip

With the fiscal cliff fast approaching, all eyes are on Washington as the two major parties attempt to strike up a deal on taxes and spending. The fiscal cliff is the point in which the Bush-era tax rates and the spending mechanisms defined in the 2011 Budget Control Act expire, resulting in extensive across-the-board tax hikes and spending cuts. The nation is set to fall off this cliff on January 1, 2013 unless the Democrats and Republicans agree to a solution this December.

The problem of the fiscal cliff emerged out of the previous debt ceiling deal. Since the deal was not a long-term solution to the nation’s debt troubles, the fiscal cliff was put in place to secure a future solution to the debt problem and scare the public into accepting whatever Washington eventually decrees on the matter. Complaints against the partisanship and division on Capitol Hill have resonated loudly over the past few years but Democrats and Republicans seem to agree on one thing: you are not allowed to keep your own money.

Could anyone have guessed that Democrats and Republicans have found common ground in the face of the impending fiscal cliff? After rounds on the Sunday morning talk show circuit, it is becoming clear that ending “tax loopholes” is something Democrats and Republicans can both happily support. Closing “loopholes” for the wealthiest Americans alone does not even come close to fixing the deficit and it is only a matter of time before both parties attempt to close “loopholes” for the middle class and for all.

Since outright tax increases are unpopular across the political spectrum, Democrats and Republicans have found this nifty little political ploy of arguing for the closing of supposed “tax loopholes” to appear responsible but effectively raising taxes on everybody anyway. In this case, “loopholes” are any of the available exemptions and deductions the average American citizen and business can take advantage of on tax day; this includes deductions for things like charitable giving, credits for things like mortgages and exemptions for things like the money that goes to one’s 401(k). The many tax deductions/exemptions end up balancing out and sometimes even paying out for many American families, resulting in a percentage of the population who pay no tax on their income at all.

According to many within the Republican Party, tax loopholes should be closed to insure that every American has some “skin in the game.” Many GOP members have been quietly singing this song for years while simultaneously boasting to be the champions of limited government and individual rights. The inconsistency here is staggering. The Democrat Party also has a unique difficulty with this issue. Closing loopholes to raise taxes fits snuggly inside the Democratic docket of increasing power and resources to the central government. However, raising income taxes on those who currently do not pay would conflict with a chief Democratic tenet of providing services for the lower classes at the expense of the wealthy. Suddenly many would be required to chip into a system that they have been previously benefiting from at no cost. Such a change of events would not translate well politically.

This argument to close “loopholes” is based on the misconception that the government is the true owner of private property. Few would accept anything but the fact that they have the rightful claim to that which they earn. However, the income tax operates under a false assumption that the government is entitled to every paycheck in America, first taking what it deems fit through the income tax and then appropriating to the rest to the lowly citizenry. The view that tax exemptions and deductions are “loopholes” or another kind of sneaky doing is a fallacy since they merely provide a way for the average American to hold onto more of what they rightfully own. If anything, the very “loopholes” that the Democrats and Republicans wish to close should be expanded so people can keep more of their own property at no risk of retaliation from the State.

Nothing works better to bring both Republicans and Democrats together in a warm embrace like a good-old-fashioned crisis. Unfortunately, bipartisanship seems to hurt the nation more often than not – as is the case with the War on Drugs, No Child Left Behind, the Patriot Act and the National Defense Authorization Act to name a few – and broadening the tax burden to more Americans will likewise do nothing but make a bad situation worse. This two-party scheme to deprive Americans of the lawful ways to keep more of their own money is no answer in a free society.


Thanks to the Oakdale Patch for also running this piece.

Gridlock is Good

After the 2012 election, a familiar word has returned to the top of the pundit's list of talking points: Gridlock. Since the Democrats have control of the Senate and the Presidency but the Republicans have control of the House of Representatives, many fear that nothing will get done in Washington. One can only hope.

"Gridlock" has become a toxic word in political discourse - one that generates frustration and anger within many people. Although blamed for many of the nation's ills, specifically the downgrade in the US credit rating (which in reality had nothing to do with gridlock), gridlock is in fact good - great even!

The founders created a federal system of checks and balances which keeps politicians in both political parties busy attacking each other instead of the individual citizen, who the State usually targets. Problematic policies derive more often than not from bipartisanship rather than gridlock. Those in the media and whatever political party is being stood up against at the moment tell us differently over and over again and they hope we do not investigate the matter ourselves. However, a quick look back at recent history proves that bipartisanship has produced many terrible policies and pieces of legislation such as No Child Left Behind, the War on Drugs, the Patriot Act and the NDAA. The disastrous US foreign policy is bipartisan, government intervention in healthcare is bipartisan, the inflationary Federal Reserve was born out of bipartisanship - enough agreeing already!

Following the recent election, which generally resulted in no change at all, talks of trying to end gridlock in Washington have naturally been renewed. An immediate deal is seen as needed to avoid the upcoming fiscal cliff and some are getting desperate to shove their agenda down the throats of every American in the process. The newly elected Senator from Massachusetts, Elizabeth Warren, is wasting no time in proving her impeccable credentials as an enemy of liberty. Warren is promising to lead the charge on filibuster reform in the Senate. Why is filibuster reform needed in the Senate, you might ask, but not, say, three years ago? Reform is naturally needed now because the Republican minority can currently use the filibuster against the Democrats! Joe Biden was against filibuster reform when the Democrats sat in the minority in the Senate; now that the Democrats have the majority and are inconvenienced by the filibuster, he swings to the beat of a different drum.

Hopefully Warren's crusade fails. Gridlock can be a great tool for the defense of liberty. The other alternatives are bipartisan agreement, which has been more detrimental than beneficial to the cause of liberty, or one-party-rule, which has been an even worse course. The two parties have done enough agreeing to destroy the principles that this nation was founded on multiple times over. At least Washington cannot hurt the people for a while under gridlock.

The Progressive (Non)Solution

Last week, former Obama Administration Green Jobs Czar but perpetual communist Van Jones opened up to NPR about what he thinks is necessary to fix the problem of the approaching fiscal cliff:

"If we want to fix the economy, the first thing we've got to do is repeal the Bush tax cuts and pull back our military expenditures to Clinton level expenditures. .... Let’s take the money from Halliburton, and KBR and the big oil companies."

Leave it to Van Jones to expose the immorality and the lack of solutions of the progressive ideology.

Obviously, companies should not be stolen from to pay for the debt accumulated through the very Statist policies forced on the population that Jones himself endorses (1, 2 - for example). Jones is simply showing his communist colors with that statement, as if it is moral in the least to simply confiscate funds from private companies (no matter how big or supposedly evil) for any reason.

Jones' plan to "fix the economy" also includes (surprise, surprise) raising tax rates and is no solution either. To quote Murray Rothbard, "curing deficits by raising taxes is equivalent to curing someone's bronchitis by shooting him. The 'cure' is far worse than the disease." The idea that the people must have more of their property stolen because the government does not have funds is clearly immoral and does not address the fundamental problem that government spends too much in the first place.

However, if Jones is half-right about anything it is that the US militarism must be cut. Where he misses the mark is that militarism has to be actually cut: as in all of the troops in Iraq, Afghanistan, Europe, Asia and Africa need to come home and stop spending their paychecks on the economies of foreign nations; money needs to be spent frugally and wisely on defense/weapons; and all foreign aid must end. Many to most conservatives gasp at the thought of cuts in the military; in fact, "cutting the military" seems to be a rallying cry for the conservative base. However, cutting military spending is a necessary element to the actual limiting of the federal government. As Randolph Bourne wisely said, "war is the health of the State." A quick overview of history backs this claim. Anyone interested in limiting the size of the State will be interested in cutting the military - at the very least scaling back the military used in overseas intervention as opposed to what is used in the actual defense of the nation.

Naturally, Jones is not interested in actually cutting militarism; he simply wants to cut back military spending to Clinton-era levels while not actually limiting the government's military power. The military budget of the 1990s was much smaller than it is today but it still allowed Clinton to make the conflicts in the Balkans and East Timor worse and to kill half a million Iraqi children with his interventionist foreign policy. Cutting general military spending to that of the Clinton-era does nothing to prioritize national security over interventionism.

If the fiscal cliff is to be avoided, spending is to be kept under control and the federal government is to become limited in power and scope (which, of course, Van Jones could not care less about), the solution seems simple. The government could save much more money a lot faster and easier, therefore starting on a path to fiscal sanity, by cutting military spending (not to be confused with the defense of US borders), ending all foreign aid to every nation in the world, ending all subsidies to every industry and ending entire government programs. Perhaps the best place to start saving money is to slash Congressional paychecks! Of course, I doubt many leftists would agree to any of this.

 

Ron Paul's Farewell Address

After 36 years of on-and-off again terms in the House of Representatives, running for President three times, Congressman Ron Paul is saying goodbye to Washington. The United States has rarely seen a stronger defender of liberty.