Love his discussion of the tea parties being neither Republican nor Democrat.

. . . . and my handlers will have an even harder time controlling the people.

Obama yesterday expressed concern at the sorry state of the news industry and said that he will look at a news paper bailout, because otherwise, blogs will take over the world, and that would be a threat to democracy, The Hill reports.

“I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding,” he said.

He said he would be happy to look a bills that could give tax newspapers tax-breaks if they were to restructure as 50 (c) (3) educational corporations. One of the bills is that of Senator Ben Cardin, who has introduced the “Newspaper Revitalization Act.”

(Read more from businessinsider.com)

I think they are scared . . . . I am a blogger, hear me roar!

Dr. Yuri Maltsev was a member of then-President Gorbachev’s perestroika reform team. In this great interview with Radio Free Market, he corrects the generous perception historians have of Gorbachev, illustrates the flaws of Socialism, and speaks at length about the healthcare in America.

Much of the early discussion in this interview traces Dr. Maltsev’s essay (here).

pt. 1

pt. 2

pt. 3

This is an important essay for anyone who wants to understand banking.

The first bankers were goldsmiths, who owned safes in which to store the raw materials of their profession. Wealthy individuals paid goldsmiths a fee to store their gold, and goldsmiths issued them receipts. Eventually these individuals started using the warehouse receipts as fiduciary media; meaning that rather than go to the goldsmith and redeem one’s gold in order to purchase something, these individuals started endorsing over their warehouse receipts. Thusly, the warehouse receipts circulated in the economy rather than the gold itself. Over time the goldsmiths realized that they could issue warehouse receipts in excess of the gold held in their vaults and reap a profit, because at no time did all the people who owned warehouse receipts for gold travel to the bank at the same time to redeem their certificates for gold specie. Now, the goldsmiths did not simply spend the excess receipts on consumer goods; rather, they lent them to borrowers and earned interest. (Doubtless the goldsmiths and even some economists today do not consider this practice to be fraud.) Since there now were more warehouse receipts for gold circulating in the market than gold in the vault to back them, it was said that the gold reserves amounted to only a “fraction” of the outstanding claims.

. . . .

All would be well until the public became concerned that the bank had over-issued certificates. (Sometimes rumors were started by his competitors.) Then the holders of the certificates would “run” to the bank to redeem them for gold. A bank run had been born.

. . . .

Notice that the certificates backed 100% by gold could always be redeemed without any difficulty. Thusly, such money could never be the source of inflation or deflation. But the excess certificates were not back 100% by gold; they were backed by the promise of the borrower to repay–that is, this money was backed by DEBT! If the debt could not be repaid, these excess money certificates could not be redeemed for gold.

. . . .

Of course, money certificates today are backed by nothing—not gold, nor silver, nor cockleshells. The money we use is fiat money, and yet governments everywhere maintain the fiction that banks must hold reserves in some small percentage amount in order to cover their customers’ deposits. But what are these reserves? These reserves are debt, too.

. . . .

In the U.S. the only money that may be used legally “for all debts public and private” is a Federal Reserve note. These notes—the money we carry in our wallets—are referred to as “standard money”. There is no recourse to anything beyond these paper notes. If a person wished to “redeem” his Federal Reserve note, he could go to the nearest Federal Reserve Bank and redeem it for…another Federal Reserve note.

. . . .

If that person deposited his Federal Reserve note in a bank, the bank would create a demand deposit, also known as a checking account. The bank would send to the Federal Reserve Bank the Federal Reserve notes that it collected whose numbers were above what it deemed necessary to meet the normal needs of its customers for pocket cash. These notes would be deposited in the bank’s reserve account at the Fed. (A bank’s “reserve account” is nothing more than a checking account.) But the bank would not be required to maintain a 100% reserve account balance to match the total of all of its demand deposits. It is required to hold only a fraction in reserve–along a sliding scale, the fraction becoming greater for larger banks–to meet the withdrawal needs of its customers. The rest of his reserve account balance is “excess”, meaning not required to meet his “reserve requirement”.

So what can a bank do with its “excess reserves”? It can create a loan to another of its customers, credit that customer’s demand account, which will increase its reserve requirement and reduce its excess reserve position at the Fed by a fraction of the amount of the loan. The bank—actually, the banking system–can continue to lend and create demand deposits in this fashion until its reserve account balance matches its “reserve requirement”. This is how banks create money out of thin air, and one can readily understand the enormous ability of the banks to expand the money supply from this updated fractional reserve banking practice.

The key point is that the bank created the new demand deposit by creating a loan—the loan is an asset on the bank’s books and the demand deposit is a liability. Thusly, money in our bright new world of fractional reserve banking is backed by DEBT! In order for a deposit to be redeemed would require that the loan be repaid. If the loan cannot be repaid, the bank cannot meet its withdrawal obligations and goes bankrupt.

. . . .

Enter a new player–the central bank. Our Federal Reserve Bank (or European Central Bank, or Bank of England, or Bank of Japan, or Bank of China) was created to prevent bank insolvency. The central bank stands ready to loan our bank unlimited funds so that it may honor its deposit withdrawal obligations. . . . but where did the Fed get the funds to place in our troubled bank’s reserve account? Why, it created them out of thin air, too! . . . The central bank has become a money creation machine.

. . . .

Thusly, all central banks are the source of what the public calls inflation, creating money out of thin air to prop up bank credit expansion made possible by fractional reserve banking. The entire Rube Goldberg mechanism is a thing of frightening beauty, beloved by college professors who force their students to understand all the gory details, but especially beloved by bankers and politicians who can literally paper over bad debt with massive increases in the money supply. . . . The long-term harm to the economy is found on many fronts, from higher prices (perhaps even hyperinflation) to moral hazard to civic unrest as interest groups fight one another to feed at the government’s feed trough. Each dollar of new money, born of debt and not production, reduces the purchasing power of all other dollars already circulating in the economy. Nothing has been produced, not one nut or bolt, not one new car…nothing. But more money creates the temporary illusion of prosperity. One’s home increases in value. One’s 401K increases in value. Jobs are plentiful. New office buildings pop up to house all the new businesses that are born. The only problem is that nothing has been built on true savings, only debt. Yes, it is a brand new world, but it is a frightening one that cannot last. (Read more from patrickbarron.blogspot.com)

There’s been a lot of discussion about the new and powerful federal agencies that would be created by the passage of a national health care bill. The Health Choices Administration, the Health Benefits Advisory Committee, the Health Insurance Exchange — there are dozens in all.

But if the plan envisioned by President Barack Obama and Congressional Democrats is enacted, the primary federal bureaucracy responsible for implementing and enforcing national health care will be an old and familiar one: the Internal Revenue Service. Under the Democrats’ health care proposals, the already powerful — and already feared — IRS would wield even more power and extend its reach even farther into the lives of ordinary Americans, and the presidentially-appointed head of the new health care bureaucracy would have access to confidential IRS information about millions of individual taxpayers.

In short, health care reform, as currently envisioned by Democratic leaders, would be built on the foundation of an expanded and more intrusive IRS.

Under the various proposals now on the table, the IRS would become the main agency for determining who has an “acceptable” health insurance plan; for finding and punishing those who don’t have such a plan; for subsidizing individual health insurance costs through the issuance of a tax credits; and for enforcing the rules on those who attempt to opt out, abuse, or game the system. A substantial portion of H.R. 3200, the House health care bill, is devoted to amending the Internal Revenue Code of 1986 in order to give the IRS the authority to perform these new duties. (Read more from washingtonexaminer.com)

This is a great little interview. The part at the end about Obama eviscerating the anti-war movement is especially interesting.

How can Congress get around the Tenth Amendment and regulate almost every aspect of American life?

One way is by claiming that the Tenth Amendment doesn’t apply because Congress is merely acting within the scope of its enumerated powers. But to make this claim, one must assume that some of the enumerated powers are much broader than they really are.

One of the enumerated powers cited by advocates of the modern monster-state is the Commerce Power. This derives primarily from two sources:

(1) the Constitution’s grant to Congress of authority to “regulate Commerce . . . among the several States” and

(2) the Constitution’s grant to Congress of authority to “make all Laws which shall be necessary and proper for carrying into Execution the foregoing powers. . .”

According to promoters of the monster-state, those constitutional phrases go further than allowing Congress to regulate trade among the states. They also allow Congress to control manufacturing, wages, agriculture, crime, mining, land use, firearm possession, and a range of other activities.

How can they justify this? Basically, they make two arguments. The first argument was spun during the New Deal by a University of Chicago law professor. (Too many law professors spend entirely too much time fabricating constitutional theories to promote big government.)

This professor argued that during the Founding Era the word “commerce” meant more than trade. Instead, he contended, “commerce” included all gainful economic activities. Hence Congress has a license to regulate the entire economy.

An even broader version of this theory was published more recently by a Yale law professor. He maintains that “commerce” means any human interaction – so the federal government can regulate almost anything, so long as it doesn’t trample one of the specific guarantees in the Constitution, such as Free Speech.

On investigation, however, the claim that “commerce” meant “all gainful activities” or “all interactions” turns out to be completely untrue. It flies in the face of much of what we know about the Founding Era, including specific representations by leading Founders that most regulation would be reserved to the states.

But because it is sometimes necessary to prove the obvious, several other academics (such as Georgetown University’s Randy Barnett and I) have examined literally thousands of appearances of the word “commerce” in the historical records from the Founding Era. And those records show clearly that “Commerce” in the Constitution means trade and associated activities, but no more (e.g., here).

The second argument for an almost unlimited Commerce Power currently prevails on the U.S. Supreme Court. (Don’t let anyone tell you the present court is “conservative” on such matters.) This argument acknowledges that when the Founders wrote “Commerce,” they meant only trade and a few allied activities, such as navigation.

But it goes on to say that modern economic life, unlike life during the Founding Era, is highly interdependent, so it is now “necessary and proper” for Congress to regulate everything that substantially affects commerce. . . . (Read more from tenthamendmentcenter.com)

See MSNBC slander 10th Amendment advocates:

Criticism here.

I found these charts at cato-at-liberty.org.

There is no recession in the government business. Government (Federal, State & Local) already employs a sixth of America’s workforce.

by Robert Higgs

Our predecessors dealt with their worries by relying on religious faith. For tangible assistance, they turned to kinfolk, neighbors, friends, coreligionists, and comrades in lodges, mutual-benefit societies, ethnic associations, labor unions, and a vast assortment of other voluntary groups. Those who fell between the cracks of the voluntary societies received assistance from cities and counties, but governmentally supplied assistance was kept meager and its recipients stigmatized.

In the 20th century, especially during the past seventy years, Americans have placed their faith in government — increasingly the federal government. Since Franklin Delano Roosevelt assumed the presidency in 1933, voluntary relief has taken a back seat to government assistance. Eventually, hardly any source of distress remained unattended by a government program. Old age, unemployment, illness, poverty, physical disability, loss of spousal support, childrearing need, workplace injury, consumer misfortune, foolish investment, borrowing blunder, traffic accident, environmental hazard, and loss from flood, fire, or hurricane all became subject to government succor.

. . . .

Our ancestors relied on themselves; we rely on the welfare state. But the “safety net” that governments have stretched beneath us seems more and more to be a spider’s web in which we are entangled and from which we must extricate ourselves if we are to preserve a prosperous and free society.

. . . .

The modern welfare state is often viewed as originating in Imperial Germany in the 1880s, when the Iron Chancellor, Prince Otto von Bismarck, established compulsory accident, sickness, and old-age insurance for workers. Bismarck was no altruist. He intended his social programs to divert workingmen from revolutionary socialism and to purchase their loyalty to the Kaiser’s regime; to a large extent he seems to have achieved his objectives.

. . . .

We can have a free society or a welfare state. We cannot have both. (Read more from mises.org)

Aug. 18 (Bloomberg) — For much of the last year, central bankers, industrial leaders and politicians have been warning us about deflation. Falling prices, they tell us, will create another 1930s-style depression. The only answer is to print money furiously.

Now it turns out the theory is a lemon.

Deflation is no threat at all.

It doesn’t prevent an economy from functioning, and it doesn’t stop it from recovering either. The evidence suggests a period of sustained deflation might be what indebted economies need to get them back on the right track.

U.K. Chancellor of the Exchequer Alistair Darling said in a speech earlier this year that the Bank of England must be “prepared to act” to prevent price deflation.

“We are very keen on avoiding deflationary risk,” said European Central Bank President Jean-Claude Trichet in an interview this month. Much the same message has been pumped out around the world by economic leaders.

Nor have they been slow to put their freshly minted money where their mouth is. The Bank of England has embarked on a program of “quantitative easing,” or creating new money, to stave off the threat.

The trouble is, the theory doesn’t stack up.

Deflation, after all, has already arrived.

. . . .

Deflation may be bad for particular interest groups, which happen to be very powerful. It is bad for chief executives. It is easier to keep your profits rising in a mildly inflationary environment. You can just jack up your prices a bit, and you can often cut workers’ wages by stealth by holding wages steady.

The banking industry, which has come to rely on inflation to make highly leveraged loans sustainable, also dislikes deflation. Likewise, it is bad for governments, which use inflation to reduce the value of their debts.

On the other hand, deflation is good news for savers, who get richer just by hanging on to their cash. And it is beneficial for consumers, who get cheaper prices. It is usually good for workers as well, as they can generally hold the value of their wages, even while prices fall.

There are winners and losers, just as there are from most economic developments. The important point is that the people who lose are more powerful than the people who gain. That might explain why we hear about the dangers of deflation, and not about its advantages. It still doesn’t make them right.

There is no threat from deflation. It may even be desirable if it encourages a balance between saving and consumption, and discourages governments and banks from taking on debt. (Read more from bloomberg.com)

WOOOHOOO!

History here: