tag:blogger.com,1999:blog-78210378886467607172024-02-19T18:33:05.257-05:00An Austrian PerspectiveRandom musings on the world, the markets, and economy from an Austrian economics perspective.Unknownnoreply@blogger.comBlogger65125tag:blogger.com,1999:blog-7821037888646760717.post-29956861756946089742010-01-27T12:56:00.000-05:002010-01-27T12:57:55.065-05:00The Path To TyrannyMy book, <span style="font-style: italic;">The Path To Tyranny</span>, is now available for sale on Amazon.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://www.amazon.com/gp/product/0982604009?ie=UTF8&tag=thpatoty-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0982604009"><img style="display: block; margin: 0px auto 10px; text-align: center; cursor: pointer; width: 176px; height: 28px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAJy3kKNX3uY6Vs1-ZnlJR5ULjRIrKZeEvBhnzicZ-CcbQd0Nv2dhqcZRj1ZXFKWQO3AIHPzspEvygdeA4HrjBJJ9dV96xaiXdnVDKCzlosTdnCYB1aXygQcljwqQiGxRdlrOLa9oOGVYK/s400/buyamazon.gif" alt="" id="BLOGGER_PHOTO_ID_5431480260829068770" border="0" /></a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-40037322630939266132009-12-03T14:52:00.001-05:002009-12-03T14:53:41.441-05:00On Tiger WoodsI am quoted about Tiger Woods' recent indiscretions:<br /><br />http://pajamasmedia.com/instapundit/89407/<br /><br /><blockquote>TIGER WOODS, IMAGE, AND INFIDELITY. Is infidelity an external force, something that “takes down” a man? And Tiger may be only human, “but wasn’t Tiger Woods perceived as a special god-like man? And isn’t that key to the most lucrative aspect of his career, endorsements?”<br /><br />UPDATE: Reader Michael Newton writes: “Tiger was respected and admired not just for winning golf tournaments, but for his discipline and concentration. So many of his ads play up the ‘mental’ part of his golf game. Now we find out he lacks discipline away from the golf course and he looks like a charlatan selling us a bill of goods.” Everybody’s human, and nobody’s without flaws. But those who let themselves be built up into something more than human tend to find that people are disappointed when they turn out to be human after all.</blockquote>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-43599574164249763112009-12-02T10:32:00.002-05:002009-12-02T10:33:50.089-05:00The Path To TyrannyThe website for my new book, <a href="http://www.thepathtotyranny.com">The Path To Tyranny: A History of Free Society's Descent Into Tyranny </a>is now up and running. It is still under construction though.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-50030461079653404322009-09-03T18:09:00.001-04:002009-09-03T18:11:20.583-04:00We can't buy everybody health careI keep seeing people write and hearing people say that everybody should have the right to health care.<br /><br />Here are some numbers:<br /><br />World Gross Domestic Product: $61 trillion (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29) <br />World population: 6.8 billion (http://www.census.gov/main/www/popclock.html) <br /><br />GDP per person: $8,971 <br /><br />Do you think everybody can get health care on just $8,970/year income with much of that first going to pay for food, shelter, and clothing, which take priority over health care?Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-47331638268948659482009-08-07T09:39:00.003-04:002009-08-07T10:03:38.192-04:00Economic recovery?Recent economic data shows that things are not as bad as they once were or that we are actually recovering. I am not too sure. The Fed and Treasury have put a lot of new dollars into the system and the the Democrats in Congress along with President Obama are well on their way to spending the $787 billion in "stimulus."<br /><br />The stimulus will temporarily push forward demand. Keynes argued that the government should increase spending during a recession and decrease during the good times. Unfortunately, we forget to decrease it during the expansions. Nevertheless, this stimulus is temporarily boosting the economy, but will result in lower economic output in the future, simply shifting demand from the future to the present.<br /><br />Meanwhile, the sudden injection of tons of money into the system makes all economic calculation impossible. If you add a trillion dollars into the system, it appears like we are richer, spending more money, and companies increase their production. But it is all a smoke screen. It is simply new money devaluing old money, the basic financial situation has not changed. The "real" amount being produced and earned has not changed, though it has appeared to.<br /><br />So it is impossible to know whether the economy really recovering or if we are simply shifting demand and creating an illusion.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-9835677283962368332009-07-31T07:18:00.002-04:002009-07-31T07:20:29.235-04:00President Obama had beer at the White House yesterday with police officer Jim Crowley and Professor Henry. Using all his famous personality and charm, Obama got the two of them to "agree to disagree."<br /><br />Now we just need Obama to get Israel and the Palestinians or North and South Korea to have beer with him at the White House. Maybe they too can agree to disagree!Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-19183166610677604032009-06-04T07:48:00.000-04:002009-06-04T07:53:15.595-04:00Nuclear for Iran, but not for USObama said in his Cairo speech: "And any nation -- including Iran -- should have the right to access peaceful nuclear power if it complies with its responsibilities under the nuclear Non-Proliferation Treaty." <br /><br />The US last built a nuclear power plant thirty years ago. Why should Iran be allowed to build nuclear power plants while the US's electric companies are not?Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-76663692419103384432009-05-27T21:00:00.003-04:002009-05-27T21:01:24.519-04:00No posts in a whileI'm sure you've noticed I haven't posted anything new in a while. I started writing a book and haven't paid as much attention to the blog. Sorry to disappoint.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-37017911826522068962009-05-07T12:11:00.003-04:002009-05-07T20:46:52.911-04:00Obama giveth and Obama taketh awayHeadline: <a href="http://news.yahoo.com/s/ap/us_obama_budget;_ylt=AjziHLFFv9_sTNZSp63d2Zqs0NUE;_ylu=X3oDMTJnYzN2OWNsBGFzc2V0A2FwLzIwMDkwNTA3L3VzX29iYW1hX2J1ZGdldARjcG9zAzIEcG9zAzYEc2VjA3luX3RvcF9zdG9yeQRzbGsDd2hpdGVob3VzZW9i">Obama wants to cut $17B from budget</a><br /><br />The reality: <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aFoD4LsL9QPE&refer=worldwide">President Barack Obama is seeking $81 billion more in spending on domestic initiatives in his record $3.55 trillion budget plan while calling on Congress to trim $17 billion worth of programs, including raising more tax revenue from the oil and gas industries. </a><br /><br />Only in Washington can you increase spending by $64 billion and get credit for budget cuts.<br /><br />Update: Now Yahoo is showing the headline "Obama seeks to trim 121 federal programs." What a joke!<br /><br />UPDATE: IBD reports: <a href="http://www.ibdeditorials.com/IBDArticles.aspx?id=326588784995930">Bush was ridiculed in his last budget for proposing cuts of $18 billion on 151 separate discretionary programs, but the GOP was hammered relentlessly for its supposed profligacy. Where are the critics now, as deficits are estimated to hit $4.42 trillion through 2012, and total debt will soar from 41% of GDP in 2008 to 67%?</a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-42049485793732101062009-05-07T12:09:00.000-04:002009-05-07T12:10:27.685-04:00British tax ratesAdam Smith must be turning over in his grave: <a href="http://www.economist.com/opinion/displaystory.cfm?story_id=13576151">Marginal tax rate in Britain hits 61.5%.</a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-36343272977012972009-04-23T19:53:00.003-04:002009-04-23T21:12:42.945-04:00Misdirected outrageIt has now been revealed that:<br /><br /><a href="http://www.marketwatch.com/news/story/b-says-govt-threatened-management/story.aspx?guid={81A41436-492E-4B02-83A7-C21429391E27}&dist=TQP_Mod_mktwN">Bank of America Chief Executive Ken Lewis said that the Treasury and the Federal Reserve threatened to remove him and the firm's board of directors if the company did not go through with a planned acquisition of Merrill Lynch late last year. According to the minutes of a December 22 meeting, which were released Thursday by New York Attorney General Andrew Cuomo, the government made the threat when the bank was considering invoking a "material adverse change" clause to quash the deal after it became clear Merrill's finances were collapsing. According to the minutes, Lewis, told the board that, "the Treasury and Fed stated strongly that were the corporation to invoke the material adverse change clause in the merger agreement with Merrill Lynch and fail to close the transaction, the Treasury and Fed would remove the board and management of the corporation." </a><br /><br />I've heard that a number of major shareholders will try to oust Lewis, claiming that he was looking out for his own job instead of the interest of the shareholders. Why am I not hearing more people blame the Paulson and Bernanke?<br /><br />I want to see the shareholders of Bank of America sue the Fed and Treasury, which committed at least two crimes: covering up the material information and blackmailing Bank of America's management.<br /><br />But I am going to excuse Mr. Lewis even though he "should have" released the information to shareholders. He was probably worried about more than just losing his job. When the federal government tells you do something or else, you really have to worry. We have seen many businessmen thrown in jail recently on trumped on charges. Remember Martha Stewart, who was found guilty of lying to investigators about insider trading for which she was found not guilty. I am sure that when Mr. Lewis was told that he has to keep the information quiet and continue the merger with Merrill Lynch, the Feds also told him that breaking off the merger would crash the stock market and financial system and they would hold him responsible. Mr. Lewis was probably worried about more than just losing his job.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-17926723233877696982009-04-20T10:46:00.004-04:002009-04-20T11:22:26.087-04:00Efficient Market?While I am no firm believer in the efficient market hypothesis, I do question whether it is worth the time and effort to try beating the market. If only mutual fund managers would stop trying:<br /><br /><a href="http://finance.yahoo.com/news/SampP-Majority-of-Active-Fund-prnews-14971382.html">Over the five year market cycle from 2004 to 2008, the SPIVA scorecard shows that the S&P 500 outperformed 71.9% of actively managed large cap funds, the S&P MidCap 400 outperformed 75.9% of mid cap funds, and the S&P SmallCap 600 outperformed 85.5% of small cap funds. These results are similar to that of the previous five year cycle from 1999 to 2003.</a><br /><br />For the vast majority of people who don't have the time or patience to try to beat the market, low cost index funds are obviously the way to go.<br /><br />And for those who think they can beat the market: good luck. When you take into account the costs of trading (commission, spreads), you are starting from a losing position. Add to that the opportunity cost (how much money could you make or how much fun would you have if you didn't spend th time trading) and trading doesn't seem to be a profitable venture.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-2064971291398860372009-04-19T17:11:00.002-04:002009-04-19T17:24:36.938-04:00Chauncey Gardner for PresidentI said many times during the election that Barack Obama ran as a modern day <a href="http://www.imdb.com/title/tt0078841/">Chauncey Gardner</a>.<br /><br />Now, Obama senior adviser David Axelrod said: <a href="http://www.breitbart.com/article.php?id=D97LOI9G0&show_article=1">"You plant, you cultivate, you harvest. Over time, the seeds that were planted here are going to be very, very valuable."</a> <br /><br />David Axelrod's statement could have easily been said by Chauncey Gardner. If you have not yet seen Being There, I highly recommend it.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-60073457902491308052009-04-03T20:39:00.002-04:002009-04-03T20:48:27.317-04:00President Obama is black?EUGENE ROBINSON: <a href="http://www.ibdeditorials.com/IBDArticles.aspx?id=323650615576622">"Not even three months have passed since President Obama's historic inauguration, and already it tends to slip the nation's collective mind that the first black president of the United States is, in fact, black."</a><br /><br />I don't know about everybody else, but I never cared about Barack Obama's race. I based my vote on the candidates' positions, character, qualifications, and experience. It made me sick to listen to all those people talk about the "historic" election and inauguration. What was so historic about it? We've been electing Presidents for over 200 years and this election was little different from those that preceded it. The only thing "historic" about it was that many people voted for a candidate to prove to the world, the country, and themselves that they are not racist. I already knew I was not racist and didn't feel the need to prove it. I am glad to see those on the left will finally "focus on Obama's ability, not his color," though I am not too sure how able he is based on his performance so far.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-12596112984600532732009-03-30T17:32:00.002-04:002009-03-30T17:35:23.198-04:00GM bankruptcy?<a href="http://online.wsj.com/article/SB123841609048669495.html">The Obama's administration's leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.</a><br /><br />For months, we libertarians have been saying to let GM go bankrupt. The lefties called us crazy and talked about all the jobs that will be lost. Somehow, I doubt they will attack President Obama with the same level of anger, if at all. In the mean time, the taxpayers could have saved tens of billions of dollars had we let them go bankrupt.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-19572143948121375712009-03-29T19:55:00.002-04:002009-03-29T20:29:04.098-04:00The government solution<a href="http://news.yahoo.com/s/ap/20090329/ap_on_go_ca_st_pe/geithner_bailout">Geithner on the Sunday talk shows</a>: "The market will not solve this."<br /><br />Yes, of course the market will not solve this economic crisis because it is not being given a chance. Except for the deregulation or Reagan in the early 1980s, the market hasn't been allowed to work us out of a recession, depression, or panic in over nearly a hundred years (the last time was in 1921).<br /><br /><br />Geithner added: "And the great risk for us is we do too little, not that we do too much."<br /><br />SARCASM ALERT: I totally agree! Federal government spending has gone from 19% to 28% of GDP, but that is not nearly enough. I think it should go to 40 or even 50%. Heck, why not 100%? Remember, "the great risk for us is we do too little, not that we do too much." So government spending accounting for 100% of GDP should alleviate that concern.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-33997482130661385632009-03-26T13:11:00.003-04:002009-03-26T13:22:27.655-04:00<a href="http://edition.cnn.com/2009/BUSINESS/03/26/france.boss.released/">French workers on Thursday freed the manager of a factory run by U.S. company 3M held hostage in his office for more than 24 hours in a labor dispute over terms for laid-off staff.</a><br /><br />French workers have every right to protest and express their grievances. But to hold a person hostage is clearly a violation of his liberty. How often do we hear these "liberals" (socialists really) go on about the government violating civil rights, yet here they have no problem doing so themselves?<br /><br />We are seeing the same problem with AIG here in the US. Not only do we hear Senators, ACORN, and protesters attack AIG executives and their big bonuses, their spouses and children are afraid of being attacked.<br /><br />Over in England, <a href="http://www.thesun.co.uk/sol/homepage/news/money/article2339952.ece">Fred Goodwin, CEO of Royal Bank of Scotland, had his house vandalized his kids bullied, and wife shouted at in the street.</a><br /><br />The intolerant left is bringing back <a href="http://www.amazon.com/Liberal-Fascism-American-Mussolini-Politics/dp/0385511841/ref=wl_it_dp?ie=UTF8&coliid=I1FP4GVXH2YNDS&colid=3UZDNAERA8TKO">Liberal Fascism</a>.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-63552790037847838932009-03-25T17:44:00.001-04:002009-03-25T17:44:55.161-04:00Postal chief says post office running out of money<a href="http://www.breitbart.com/article.php?id=D97582V00&show_article=1">The post office will run out of money this year unless it gets help, Postmaster General John Potter told Congress on Wednesday as he sought permission to cut delivery to five days a week.<br /><br />"We are facing losses of historic proportion. Our situation is critical," Potter told a House panel.<br /><br />The agency lost $2.8 billion last year and is looking at much larger losses this year. Reducing mail delivery from six days to five days a week could save $3.5 billion annually, Potter said. </a><br /><br />Anybody looking forward to a health care system run by the government?Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-76565197851525258932009-03-19T17:23:00.002-04:002009-03-19T17:30:10.215-04:00Who will buy the rest?The Treasury bond market went wild yesterday after the Fed announced it will buy $300 billion of Treasury bonds. The 10-year Treasury rate fell from 3.00% to 2.53%, the biggest decline in years.<br /><br />While $300 billion is a lot of money, the expected deficit this year is $1.75 trillion. So after the Fed buys their chunk, who will be buying the other $1.45 billion? The market got excited about yesterday's news, but the fundamentals are still working against Treasury bonds.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-88738058750316718602009-03-19T15:08:00.003-04:002009-03-19T15:31:09.331-04:00AIG bonuses<a href="http://www.marketwatch.com/news/story/house-approves-bill-tax-aig/story.aspx?guid={0EAB224A-FC97-410C-A210-F7766237C699}&dist=msr_10">"The bill would apply to bonuses of people making more than $250,000 a year, and would apply only to payments from companies getting more than $5 billion from the federal government."</a><br /><br />So now, everybody making more than $250,000 and getting bonuses at AIG will quit and find a job elsewhere. For example, if a trader makes tens of millions in profit for the company or a salesman brings in hundreds of millions in new client funds, that person will quit and find work for somebody willing to pay for his talents. In the end, the good employees, the ones earning big bonuses as a result of making huge profits for the company, will quit. And the bad employees who don't do well enough to earn a bonus will stay.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-79144980509282072282009-03-18T13:55:00.003-04:002009-03-20T12:17:25.295-04:00AIG distractionI am a bit confused why everybody is an uproar about the $160 million of bonuses given to AIG executives. AIG has received $173 billion from the government so far, so the bonuses make up just 0.09% of the total. Maybe we should be focusing on the other 99.91%?<br /><br />By comparison, the recent budget bill included $8 billion in earmarks. Congress porks up 50 times as much money as the AIG execs, but Congress distracts us with AIG's "greed" and wants us to ignore Congress's waste and corruption.<br /><br />Why aren't we hearing about the huge bonuses that Lehman executive are getting? Oh yea, because the government let Lehman go bankrupt and now we don't have to reward their incompetence.<br /><br />UPDATE: We must not forget that the federal government will get back 35% of those bonuses through the income tax. So the bonuses account for just 0.06% of the total money given to AIG.Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-85370185656680921772009-03-13T15:06:00.002-04:002009-03-13T15:15:54.312-04:00Preference to American Workers?Recently, Senator Charles Grassley of Iowa said that Microsoft should give preference to American workers instead of foreigners when laying off employees. He said it was Microsoft's moral obligation.<br /><br />Disregarding the argument about whether a company can have morals (they certainly should have ethics, but morals?), the question arises of whether this should apply to all US corporations.<br /><br />How about Exxon Mobil, for example? Shouldn't Exxon give preference to American workers? Shouldn't Exxon expand production in the US with US workers rather than venture overseas? As such, shouldn't the US government make available all area with drillable petroleum, such as ANWR and the continental shelf, to help employ US workers? Isn't it a "moral obligation" to do so?<br /><br />(Yes, I know Mr Grassley is in favor of increased oil production and drilling in ANWR. I'd like to hear him lecture his fellow Senators about their moral obligations instead of lecturing a company that has already created millions of new jobs.)Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-91615453077747256022009-03-13T14:12:00.001-04:002009-03-13T14:13:45.265-04:00Gordon Gekko lives!<a href="http://www.politico.com/news/stories/0309/19972.html">Lawrence H. Summers, the White House economic adviser: "Before, we had too much greed and too little fear. Now, we have too much fear and too little greed."</a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-88826940512594694642009-03-12T13:35:00.002-04:002009-03-12T13:38:02.225-04:00Free market socialism<a href="http://www.pasadenastarnews.com/ci_11874886">Cities selling stimulus money</a>Unknownnoreply@blogger.comtag:blogger.com,1999:blog-7821037888646760717.post-53929917886554813862009-03-09T12:46:00.001-04:002009-03-09T12:48:31.087-04:00The Death of CapitalismIt is often hard to precisely date a transition from one era to another. <a href="http://anaustrianperspective.blogspot.com/2009/02/lost-decade.html">In a previous post, I argue that the current crisis stems from the LTCM crisis in 1998 and the moral hazard and low interest rate that followed, but that is certainly up for argument.</a><br /><br />These days, one often hears the refrain that capitalism in the US is dying. But in fact, America left free market capitalism way back in 1913.<br /><br />The year 1913 is best known in the US as the year Woodrow Wilson became President. Woodrow Wilson, of course, was the US's first "modern liberal" President. Two other events, which the Progressives from both parties had been working on for years, finally occurred in 1913 that marked the end of American capitalism: the income tax and the Federal Reserve.<br /><br />The Sixteenth American, giving Congress the "power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration" was ratified by the required number of states in 1913. As promised, the income tax at first affected very few people. From 1913 to 1915, most people paid no income tax, and the top income tax rate was a low 7% on incomes above $500,000 (a huge sum in those days). But then came World War I and the top tax rate jumped tenfold to 73%. The top tax rate would eventually fall back to 24% under President Coolidge, but the government had proven that it can and will increase taxes significantly if it "needs" to. Under FDR, the top tax rate would hit a whopping 94% and even the lowest rate was at 23%, about as high as the top tax rate under Coolidge.<br /><br />The second act, which Progressives had been working on for years, was the Federal Reserve System, which was enacted by the Federal Reserve Act of 1913. Like the income tax, this act appeared to have little significance at first. The purpose of a Federal Reserve was to provide an "elastic currency," which would in theory help prevent panics like that of 1907. The obvious initial problem with the Federal Reserve System is incompetence. With such a system, we rely on the Federal Reserve member to decide when and by how much to expand or contract the money supply. Herein lies the fatal conceit that government agents can know what market participants do not know. Market participants take their cues from price signals to determine supply and demand (in the case of money, they look to interest rates). In order to be more effective than the market system, government agents must have some other vast source of knowledge to replace price signals. History and logic prove that they do not.<br /><br />While the Federal Reserve System is certainly a statist system, it was initially constricted by the gold standard. The Federal Reserve could expand and contract money supply in the short term, but the long term money supply was determined by the amount of gold in the system As long as we had the gold standard, the Fed was limited in its inflationary abilities. The gold standard stayed around much longer than low income taxes. While England and most other countries left the gold standard in World War I, the US managed to maintain it until 1933, when gold coins were confiscated and the conversion rate was changed from $20.67 per ounce of gold to $35 per ounce. This standard, more or less, was maintained until 1971 when the US left the gold standard once and for all.<br /><br />Not surprisingly, if one looks at the long term trend of inflation in the US, one sees a big spike during WWI, when Britain left the gold standard and the world's gold came into the US, another increase in inflation starting in 1933 and through WWII, when the US changed the dollar to gold ratio and made gold coin ownership illegal, and after 1971 when the US permanently left the gold standard.<br /><br />These two acts spelled the death of the United States' long history as a capitalist country. With the income tax, and more so with income tax withholding, a person's income no long belonged to himself. Yes, the government is kind enough to let us keep 70% of our income. If you believe your income belong to you and you give the government a share, try not paying your taxes. Furthermore, the government can raise taxes to extreme levels (94% under FDR) and even do so retroactively (under Clinton). When the government can take as much of your future or even past income with threat of garnished wages and imprisonment, obviously your income no longer belongs to you.<br /><br />While the income tax takes away your income, Federal Reserve induced inflation takes away your wealth. Since the creation of the Fed, the value of a dollar has declined to 5 cents. Of course, we all expect inflation and it is built into bond rates and expected returns for stocks. In "normal" times, the constant 2-3% rate of inflation is discounted and does not affect the value of our assets. But not all times are normal. In the late 70s and early 80s, inflation shot up to double digit rates. The government can easily run the printing press, pushing inflation higher to devalue US government debt, either on purpose or through incompetence. Now, anybody who has US dollar denominated assets, such as Treasury bonds, US bank or money market accounts, or US equities, will see their net worth shrink dramatically.<br /><br />Starting in 1913, the government has the power to take away your US dollar denominated wealth through inflation and to take away your income through income taxes. All of a sudden, the US government, not the American citizen, became the economic judge, jury, and executioner. As a result, 1913 goes down in history as the year capitalism died in the United States.<br /><br /><br />BTW, 1913 also marked the death of states rights with the ratification of the Seventeenth Amendment, transferring Senator selection from each state's legislature to popular election by the people of each state. Prior to 1913, the state legislatures chose Senators, giving the states a powerful check on the federal government. But after 1913, with direct election of Senators, the Senate became little different than the House of Representatives and Senators became more interested in "national" legislation and no longer had to follow the advice of the state legislature to get re-elected. As U.S. Senator Zell Miller of Georgia said: "Direct elections of Senators … allowed Washington’s special interests to call the shots, whether it is filling judicial vacancies, passing laws, or issuing regulations." In 1913, the states lost their last check on federal power and the federalist system officially died.Unknownnoreply@blogger.com