Benjamin Montgomery

Senator McCain has suspended his campaign to return to Washington and save the country.

“I am calling on the president to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself,” McCain told reporters in New York. “It is time for both parties to come together to solve this problem.” McCain via CNN.com

Solve the problem?  We know what happens when the Federal Government solves problems.  We end up with levees made of Play-Doh (sorry I live in New Orleans).

The only way that the government could save us is if they all of a sudden produced an amount of goods that is equal to the national debt.   Then sell those goods at market rates and pay back all of the people they owe money to. However, this is not going to happen because it is far easier for them to take on more debt and pass that chore on to future generations.

The problem with the economy is that we are not producing the products that are needed in the world.  The reason this happened is because the government has artificially increased the price of goods like houses.  When the price gets high more people want to sell a given product and we end up with excess supply (think bubble).  This leaves less people out there producing what we actually need.

So if McCain really wants to save the day he would let the people that made bad investments swallow the medicine.  People would lose money and people would go broke.  The news would find plenty of devastating stories, but in the end this country would get back to producing.   We would produce like we never have before.

So Senator McCain don’t pull that “Straight Talk Express” into Washington.

Digg here

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress’ throat is not just economically foolish.  It is downright sinister.  It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect.  It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.  Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China!  “This is welfare for the rich,” he said. “This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters.”

That describes the current bailout package to a T.  And we’re being told it’s unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it.  But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences – predictable, that is, to those who understand sound, Austrian economics – are being let off the hook.  The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

Read the rest of this entry »

Top links for today are…

1. Bailouts Will Lead To Rough Economic Ride: (MUST READ) For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
2. The Most Important Point Ever Made By Bill Maher: Good points. I could have done with out the democrat plugging global warming.
3. Glenn Beck, Who Owns The Fed: Peter Schiff and Glenn Beck talk about the Federal Reserve.
4. Beautiful Images of the Scotish Highlands: As stated.
5. Buymyshitpile.com: Use the form below to submit bad assets you’d like the government to take off your hands. And remember, when estimating the value of your 1997 limited edition Hanson single CD “MMMbop”, it’s not what you can sell these items for that matters, it’s what you think they are worth. The fact that you think they are worth more than anyone will buy them for is what makes them bad assets.

Top links for today are…

1. Ron Paul On The Late Edition With Wolf Blitzer: (video) Ron Paul explains what is actually happening with our economy and the bad medicine we are eventually going to have to swallow.
2. Top 25 Blog Posts For Advertising, Marketing, Media and PR: This is very much a work-in-progress with lots of tweaking still to do, including additions to the list. But it’s a start and will, hopefully, turn out to be of interest and use to the general reader of advertising, marketing, media & PR (with some of the posts covering niche topics, as well).
3. Accomplishing More By Doing Less (But Thinking More): Zen teacher Marc Lesser offers some great advice on how to put more things on your “not to-do list” and accomplish your goals without getting caught up in meaningless busy-ness. This talk, which happened at the Google campus back in January, is lengthy at almost an hour, and some folks might find it a bit woo-woo.
4. Best Of The Best High Five Winners: Our Hive Five feature series answers the most frequently asked question we hear at Lifehacker: “What’s the best tool for the job?” In the past six months, we’ve covered the five best tools in a number of categories…
5. Incredible Rolling Bridge: Rather than a conventional opening bridge mechanism, consisting of a single rigid element that lifts to let boats pass, the Rolling Bridge gets out of the way by curling up until its two ends touch.

Top links for today are…

1. Ron Paul Saw This Financial Mess Coming: “[The line of credit] helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy,” Paul testified. “Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.”
2. Jonathan Haidt: The Real Difference Between Liberals And Conservatives: Psychologist Jonathan Haidt studies the five moral values that form the basis of our political choices, whether we’re left, right or center. In this eye-opening talk, he pinpoints the moral values that liberals and conservatives tend to honor most.
3. Warehouse Worker Beats Lebron James In Horse: David Kalb, a warehouse worker from La Habra, California, won a contest to compete against Lebron James in a game of H-O-R-S-E. Using some bizarre trick shots and benefiting from some lucky misses by Lebron, Kalb managed to win.
4. How To Live Life To The Max With Beginners Mind: I’m an expert at many things. And I’m sick of it. Being an expert, that is. Because being an expert is boring. That’s why I started kite surfing a few month ago. I wanted to be a beginner again. Kite surfing looks easy – until you try it. The challenge is to control both kite and board. A kite is unpredictable.
5. This Bail Out Won’t Be The Last: The people who had been making profits for all these years and dealing in all of this debt creation and derivatives—that now is becoming unwound—are claiming that it would be so painful if somebody went bankrupt and therefore we have to put so much burden on the taxpayer and on the dollar because the alternative is worse.

I have put together a version of American Pie.  My suggestion is to play the original and read the new words to it.  This is hopefully temporary until some one with actual musical talent can give us a recorded version.

PLAY THIS

READ THIS (some one record it please)

Miss American Empire

A long, long time ago…
I can still remember
How my country used to make me smile.
And they knew if they had their chance
They could make those people dance
And, maybe, they’d be sleepy for a while.

But September made me shiver
With the more paper they deliver.
Bad news on Wall Street;
I couldn’t take one more peep.

I can’t remember if I knew
When I read about their little brew,
But something touched me deep inside
The day the dollar died.

So, “bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

Did they write the book of law,
And do you have faith in those above,
If the pundits tells you so?
Do you believe in silver n’ gold,
Can credit save our financial soul,
And can you teach me how to buy real gold?

Well, I know that we’re in love with it
But the dollars gonna sink.
The feds kicked of its off its shoes.
Man, I digg those phony interviews.

I was a lonely spammin’ freedom fighter
With a Macintosh not old type writer,
But I knew I was getting righter
The day the dollar died.

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

Now for 30 years we’ve been off of gold
And the doctor picked up the ringin’ phone,
But that’s not how it had to be.
When the profit preached to you and me,
In a suit he borrowed from Jackie
And a voice that spoke with hope and change,

Oh, and while the people were feeling down,
The decider stole the thorny crown.
Congress was adjourned;
No vote was returned.
And while I read a book on choice,
The quartet spoke with one big voice,
The taxpayer had know other choice
The day the dollar died.

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

Helter skelter in a summer swelter.
The crooks flew off with a fallout shelter,
11,000 high and falling fast.
It landed foul on the mass.
The economy tried for a forward grasp,
With the truth on the sidelines in a mask.

In the cities there was certain doom
While the politicians spun our marching tune.
We all got up to dance,
And it might be our last chance!
`cause the players tried to take control;
And the liberty bell refused to toll
Do you recall what was revealed
The day the dollar died?

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

Oh, and there we were we won’t forget,
A generation lost in debt
Its now time to start again
So come on: jack be nimble, jack be quick!
Freedom waive that victory stick
Cause our will is the devil’s only friend.

Yeah I heard about him in a cage
But that does not change who’s on the stage
And no amount of hope and change
Can reverse what they’ve arranged
And as liberties faded into the night
It lit up the dogs inner fight,
Jefferson was laughing with delight
The day the dollar died

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

I met a man who sang the blues
And I asked him for the real news,
But he just smiled and showed the way.
And I went on to that Internet
To hear the news that I could not get
And the man there said there’s to much debt

And in the streets: the masses scream,
We began to listened, and began to dream.
The doctor’s words were now spoken;
The church bells were not all were broken.
And the man I admire most:
The doctor, Ron, deserves a toast,
Let’s show the world we are not just posts
The day the dollar died.

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

We started singing,
“bye-bye, Miss American Empire.”
Drove the nation to the station,
Now the station is dry.
Them good old boys were drinkin’ whiskey and rye
Singin’, “this will be the day the dollar dies.”
“This’ll be the day that it dies.”

Remember to Digg

The economy is the cars, houses, food, computers, steel, oil, energy etc… that the world produces.  It is not the stock market, mortgage market, credit market, Federal Reserve, or even the dollar.  These are all tools that make it possible for the market to efficiently allocate resources to produce the items listed in the first sentence.  So what would have happened it the financial markets collapsed?

What would have happened is all of those things that are over valued or have no value would have been corrected to their real value.  People would have lost money that had bought things that are worth nothing, but there would not be less goods and services in the world.  The people that would have really suffered were those that were holding the majority of the assets that had no real value.  How do we figure out who those people are?

Its very easy look at who is screaming the loudest that the government must do something.  These are the people that have been benefiting from the distorted and over valued assets that are starting to unwind.  They know that the gig is up.   The profits taken over the past decade on Wall Street by hedge funds and the like are not real they are a bubble filled with nothing but hot air.  They were not producing anything of real value or at least not of the value they were claiming.  So, what do they do now?

The same thing any person that owns something that is of little worth tries to do, sell it at the highest price possible.  However, the price that anyone would pay is way below what they would want to sell it for.  So, they spin the story to scare the general public into begging for and excepting government bailouts.  Then they sell them to us, The People of The United States of America.  So, now who holds these assets worth for less then what was paid for them?

We do.  If you have never been robbed before.  This past week was your lucky week.  However, don’t worry you won’t notice that anything is missing.  You will have the same amount of money in your bank account and wallet.  Your taxes will not increase and neither will your prices (in the short run).  So, how were you robbed?

You were robbed by deception.  The Federal Reserve, The Treasury and Congress will over the next couple years erode the true value of every dollar you own.  They will increase the deficit and the supply of dollars to the point that the paper you hold today will be worth only a small fraction in the future.  So, how does this effect the economy that I described in the first sentence?

It will erode the one thing that all of the market “tools” relied on to help the people efficiently allocate resources, trust.  When trust has disappeared the economy will then actually have lost something. The odd part is right now they claim everything they are doing is to build back confidence. Which makes me ask, since when is deceit the best way to build trust?

A speical thanks to a friend who reminded me of the only valuable thing our financial markets have (had?), TRUST.  It is to bad they are throwing it out with all of their other trash.

Top links for today are…

1. Video of A Congressman Explaining What Is Happening In The Financial Markets: Click the video in the top right corner to watch it.
2. American Ethnic Geography: These are a series of maps by ethnic group in the United States.  They are pretty interesting.
3. How We Got Into This Mess by Glenn Beck: You know the names by now: Countrywide Financial, Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG. And that’s not even counting companies like Citigroup, Merrill Lynch, and Goldman Sachs that, while still in existence, have lost untold billions in market value and have laid off thousands of employees.
4. Ten Point Manifesto On How To Work Better: While we’re not much for motivational posters or trite slogans, this ten-point manifesto by Swiss artists Peter Fischli and David Weiss on how to work better is worth a mention.
5. What’s Behind The Financial Crisis: The financial crisis is not over. Neither tax rebates nor low interest rates nor higher or lower exchange rates can do the job of reviving an economy that is burdened by debt loads that are too high. On the contrary: the policy measures that the US authorities have been applying will prolong the agony. Be prepared for the challenges of extended financial turmoil and economic stagnation.

In order to understand the events of the past week we must look at the forces that effect the market.  In this case we will look at demand.  Then split demand into two components “free demand” and “forced demand.” Free demand is the demand that exists for a good or service without the need to threaten violence and forced demand is the demand that is the result of the threat of violence.

There are different levels of influence that the threat of violence has on demand.  It can be said that the harsher and more direct the violence the greater influence it has on demand.  In addition to this, the more at odds with free demand the greater the violence needed.

It is often best to show the meaning of an abstract concept through an exaggerated and over simplified example.

A very common and example would be the school bully.  Imagine you are walking through school and the bully comes up to you and says “Give me your lunch money.”  Your “free demand” for having someone take your lunch money is basically none existent, so you answer “that’s okay, I am really craving a sloppy joe, I think I will pass on your service and keep my money.”  The bully then realizing that there does not exist enough free demand for his service (stealing lunch money) he threatens, “give me your money or I will hang you by your tighty whities in front of everyone in the school.”  This immediately increases your “forced demand” to have someone take your lunch money.  Thus the overall demand has increased significantly enough and the bully kindly provides you with the service he was offering, and takes your lunch money.

In the United States over the past century we have seen a continuous increase in the use of “forced demand” in certain areas of the market.  Some of the areas we have seen it are the market for houses, stocks, military security and foreign aid.  The overall demand for these services has been greatly influenced by “forced demand” via the Federal Government.

Most people will say, “I was not forced to by the stocks or house that I own.”  Is that really true?  The government gives significant tax credits for people to pay interest on a mortgage and put money into government “encouraged” investment accounts.   These accounts are then restricted on the types of assets that they can hold.

Now let’s look at this in terms of the lunch money analogy.  The IRS comes to you and says “give me your money.”  You say, “No thanks I would like to keep what I have earned.”  The IRS threatens, “give me your money or I will seize all of your assets and possibly lock you up.”  While you are thinking the IRS then says, “or you could keep your money, but you have to buy a house on credit with it.”  Well all of a sudden your demand for a mortgage has increased significantly, you say, “tell you what I don’t really want to have a large debt, but in this case I will buy a new house instead of give you my money.”  Your overall demand was increased by the “force” of the government.

The problem with forced demand is that you have to continue to supply the force to keep the same level of demand.  The natural and free state of things would exist where the “free demand” is.

We are in a time where the market is trying to move back to its natural state where it should be with only “free demand.”  However, this hurts the people that supply based on “forced demand.”  They are going to do all that they can to further increase the force needed to keep the forced demand high.

Remember in the United States we live in “The Land Of The Free.”  Let’s make sure we don’t let the school bully take that away from us.

Top links for today are…

1. How Not To Use Power Point: (Video) Comedian teaches us some good lessons about making good presentations with Power Point.
2. Pedestrian Street Art by Peter Gibson: Peter Gibson (aka Roadsworth) began painting the streets of Montreal in the fall of 2001. He was motivated by a desire for more bike paths in the city and a questioning of “car culture” in general.
3. 19 Really Cool Gadgets For Your Office Or Cubicle: The office can be a cold, hard, unfeeling, life-sucking place to spend your working days, but then again you don’t have to live in Dilbertsville. For all the stigma surrounding “the office,” you’re getting unique opportunities to interact with people and your environment in between filing TPS reports.
4. The 5 Fastest Ways To Make The Worlds Smallest Man Feel Even Smaller: Prove to him that he is only a little bigger then a book. Bonus: Put him in tiny boots.
5. Life Is All About Timing: 7 Tips To Get It Right: Complete what you’ve started: Stopping and starting a task time and again so having to start from the beginning when you return to the original challenge is just a waste. Make sure that, once you’ve started you don’t stop until the task is in a state that you could easily pick up where you left off.