Government debt, the consumer promising production

Government doesn’t produce anything. It always consumes more than it produces. When it attempts to produce something, it always has to consume more in tax revenue than it produces in order to produce whatever it is it’s trying to produce. So you always end up with a black hole. This is because if the government needs more money, they can ask the Fed or tax you for it. A constant source of revenue at the point of a gun or the flick of a switch.

We are all taught that money doesn’t grow on trees. But for the government it does.

What does it mean exactly that “the global economy is broken”? How can that actually be quantified? Well, we discussed previously that money is not wealth. Money is merely the means with which one can either produce or consume wealth. So theoretically, we could have a world with money everywhere but no wealth. This would be the world of maximum inflation and minimum prosperity.

A broken global economy means that too much money has been spent on consuming wealth and not enough has been spent producing it. An undrugged economy would be able to balance that out when investors spot a need for more production and supply it. But that can’t happen in this economy because the main consumer, the government, forbids market entrepreneurs from entering the market and rebalancing the production side of the equation with regulation, taxes, forms, and the like.

So the government, just like the Keynesians want, becomes the spender of last resort. Spreading money around and getting less efficient in every spending round. Whereas in the first round, say they had to spend $10 for every unit of wealth, now they have to spend $50. But the amount doesn’t matter to them because they can always print it.

And then you have “government debt”. Debt meaning money is owed. Money, again, can either represent newly produced wealth (in the best case) or preexisting wealth. The former is when a business succeeds. The latter is when you are taxed or your money inflated.

Any normal business pays back its debt by either producing or going bankrupt. The government though can just steal it from you and pay back its debts, making you poorer.

Solving the conundrum of posthumous Mormon baptism

Ynet published an op ed by Rabbi Levi Brackman where he says that Jews should stop freaking out about the Mormon practice of baptizing long dead Jews so they can call them Mormon and they can pass the big Mormon gatekeeper at heaven after having waited at the Mormon gates of Heaven for 70 years or so.

Well, the Mormons are pretty damn late if it took them so long to finally think of us that maybe we need a little holy water sprinkled on something so we can get past the Mormon Heaven bouncer. But Rabbi Brackman is right, and I support any pundit who goes all out on Abe Foxman and the ADL, which is arguably the most useless and even damaging Jewish organization in existence today that actively encourages the very anti Semitism it is trying to quash by whining about everything and making every Jew on the planet look like a giant wuss.

The conundrum here though is that posthumous baptism on dead holocaust victims enrages us because it shows that not even death can stop the inquisition anymore. And Christian love can turn to hate at any moment as we all know. A hypocritical sick twist of love and hate, a passive-aggressive act of contempt of Judaism that  makes us nauseous. But then again, we don’t want to take it too seriously as if to imply that it actually works and all the Jewish Holocaust victims are all “Mormon” now, partying away with Brigham Young in the sky and doing ecstasy.

So the best thing to do, in my opinion, is make the ADL useful and have them publicly mock the practice by inventing a “special Jewish spell” taken right out of something like Harry Potter or whatever and announce that the Jews have made a special baptism repellent powder we had our best Rabbis sprinkle through all the Mormon air vents to prevent the baptism from working. Or something stupider. The more asinine the better.

The dumber you can make this thing, the more respect we’ll get rather than screaming that the Mormons are sprinkling water on our dead and Mormonizing them as if that actually had some metaphysical effect.

No amount of Jesus fairy dust is going to do squat, so my top childish idea is to pour some sewage in their baptism water. I suggested this to the friend who sent me the Rabbi Brackman article, and she responded with an ingenious line:

Quick! Last one to take a %#$^ in the baptism water’s a Mormon!

Can Ron Paul really win this thing?

It has always been my opinion that Ron Paul will not have any sort of surge. Those who think he will do not understand that the anti Paul vote is much stronger than the anti Romney vote.

Let’s take someone like Santorum for instance. You have your average voter that’s looking for someone on his team, the “Republicans,” but he’s looking for the best player, the one who can go the most yards and beat the “Democrats” and their quarterback Obama. To the average voter, this whole election is just a game. It’s not about issues and who you think will be best for the country. It’s who can win the game for your team so you feel like you’re a winner if you’re on that team. That’s pretty much it.

Surges can only happen for candidates who are pretty much the same as other candidates, because any real difference in issues will force a voter to think that maybe something he votes for will ACTUALLY change the country in a real fundamental way, something he’s not willing to do. So the mob will turn from one candidate to another, so long as they’re pretty much the same.

If you’re waiting for Ron Paul to surge, keep waiting. He won’t. There are only two ways he can win the Republican nomination. The first and most obvious is that everything he has been saying for the last 40 years comes true and the dollar falls and chaos ensues. That would take voters out of their cheerleading stupor and start to think about real issues.

But the other way is a la the story of Gideon in the book of Judges, chapters 6-8. He’s the guy that led the Jews against Midian with 300 people, a group that God purposely whittled out to prove that victory is His and not an army’s.

The Republican nomination process is just so convoluted in a way that Ron Paul could actually win without getting a significant percentage of the popular vote. If Paul supporters stack the delegate deck and we end up with a brokered convention, for example, and after being released if they are pledged to another candidate, they vote for Paul in a second or third round.

This could theoretically happen.

As regards a face-off between Obama and Paul, that would just be electrifying. Seriously, I would crave every debate, every face-off, it would be absolutely fantastic. You’d have two people that really, essentially, stand for absolute opposite things. Obama for state power, Paul for individual freedom, and of course in the end Paul would win easily, because the difference would be so stark it would wake up droves.

Then why not wake up now? Because with the possibility of having just a cheerleading game, the team players won’t go for something real. But when it’s right in front of them, then the whole game changes into one that’s for keeps.

Jews control the economic world…as always

Anti Semites and other lunatics love spreading the canard that Jews control everything and run the world like a puppet show. This is obviously stupid, but it does, like all lies, have a smidgen of truth in it. (See Rashi on Joseph’s dreams.)

We don’t intend to, but the world always divides on Jewish schisms. Like the claim that Israel causes all the world’s wars, it sort of does inspire them if not intentionally. There’s nothing we can do about the fact that we are the core of Western Civilization other than to accept it and assume the role in order to lead the world, finally, to peace. Until we accept the role that the anti Semites insist that we have, the world will continue to be at war.

The most obvious example right now is Iran’s intention to destroy Israel, and the fact that America is now threatening to enter the scene and start yet another war. We, the Jews, didn’t want anything to do with this, but once again, we are forced to take center stage. That is our role after all.

But this post was initially going to be about the economy and economic philosophy. So here it is. The two schools at war now are the Keynesians and the Austrians. Besides Keynes himself, virtually everyone else in this war is Jewish.

On one hand, you have Paul Krugman, Alan Greenspan, and Ben Bernanke, all Jews. They like the idea of price stability, because they think price stability is essential to keeping an economy stable. So when prices go down, they buy bonds and print money so the prices go back up. And when prices go too high, they sell bonds and suck up money so they go back down when they should be higher.

The opposite of course is true. Price stability only destabilizes an economy. As supply and demand changes, prices MUST change. Otherwise, malinvestment occurs when people buy things that aren’t worth what the real market price should be and vice versa. This gives you booms and busts.

On the other side of this war are Ludwig Von Mises, F.A. Hayek, Peter Schiff, and Murray Rothbard. All Jews. They think we shouldn’t do anything to fix prices. As Mises puts it in his book “The Theory of Money and Credit”: (Page 102 in the Liberty Fund edition for those interested)

The loss of a consumption good or production good results in a loss of human satisfaction; it makes mankind poorer. The gain of such a good results in an improvement of the human economic position; it makes mankind richer. The same cannot be said of the loss or gain of money. Both changes in the available quantity of production goods or consumption goods and changes in the available quantity of money involve changes in values; but whereas the changes in the value of the production goods and consumption goods do not mitigate the loss or reduce the gain of satisfaction resulting from the changes in their quantity, the changes in the value of money (prices) are accommodated in such a way to the demand for it that, despite increases or decreases in its quantity, the economic position of mankind remains the same. An increase in the quantity of money can no more increase the welfare of the members of a community, than a diminution of it can decrease their welfare.

Ludwig Von Mises. A Jew.

And as the Keynesian Jews and the Austrian Jews duke it out, the global economy hangs in the balance. Consider me one more Jew on the Austrian side of the equation.

The Jews control the economic world…as always.

Military interventionism and Keynesian interventionism are two sides of the same coin

The bedrock of Keynesian economics is that depressions and recessions can be avoided by the government printing and spending a bunch of paper. We can all live in a quasi-economic boom forever by the blessed gift of government intervention.

The key mistake made here as we have discussed in this blog before is hubris. Keynesians believe they have finally found the cure to economic downturns in government power. A “new economy” they spoke of before the dot com bubble burst. The “your house will never lose value” mantra of 2002-2006.  They always think they found the key to everyone being rich forever…until all the paper wealth evaporates and the fed has to find another sector to stick it in and tell everyone to go look over there and invest.

Imagine if sleeping were considered “recession”. Then a Keynesian would suggest downing caffeine pills at 3 am and celebrate the fact that you are still awake, though drooling, zombified, and shaking. But you’ve been “stimulated” and the recession of sleep has been countered!

Until of course you run out of caffeine pills and you collapse at high noon in your factory on the assembly line and get tenderized into a car part. That’s when the bubble bursts. So they suggest more caffeine pills and slap themselves on the back with a good raise in printed money salary.

But this post was about military interventionism. Just like economic interventionism, the military kind is based on spending insane amounts of paper money and assuming, with much hubris, that the government can keep the entire world balanced by handing out varying amounts of paper to different dictators and sending in the army all the way to Borneo as needed.

Just as government spending keeps economies in a quasi state of caffeinated zombishness, government spending on the military also keeps the entire world in a piss-offish caffeinated ready-to-strangle-each-other grip until the caffeine runs out and somebody starts WWIII.

Take my country, Israel. American government intervention here has brought us the Oslo Peace Process, which has kept both sides at each other’s throats for 17 years. Or more than that. If we weren’t pressured in ’67 to stop the war, there would be no conflict now. And every time there’s a flare up it just gets worse and everyone intervenes so nobody can win.

How about you just let us go at it until somebody wins and decides what to do with the loser?

There’s some Austrian Economic Foreign Policy for ya.

Ron Paul 2012.

About my newborn daughter’s name – Dafna Betty Farber

Ever since I can remember – possibly when I started watching Friends in high school, I wanted a daughter so I could name her Phoebe, and she’d be Phoebe Farber, except I’d spell it Feebee because it makes more sense and I don’t know why it’s spelled the other way, though it probably has something to do with Greece, which doesn’t even have our alphabet but I have a sneaking suspicion they have something to do with it, that bankrupt bottomless bailout pit.

Anyway, my wife vetoed the Feebee Farber option, even though my college roommate David found a New York Times article about a woman named Phoebe Farber. I have yet to meet her.

The runner up for names for me was always a twin set of girls named Zoe and Cloie, which would be awesome, but I don’t have twins yet, and I think my wife is going to veto that if it ever happens.

Then I got really into Futurama and started developing a crush on Leela, the purple-haired cyclops, and I really liked the character of Phillip J. Frye, who I have a lot in common with actually. So I wanted to name my kids Frye and Leela, which I could actually theoretically pull off with Hebrew equivalents if I ever needed to.

Then I started to realize I really wanted to name my kids after cartoon characters – but never ever Disney. Enter Dafna, a nice Hebrew name meaning bay leaf that I always liked, and I could call her Daffy and she’d be a cool girl.

As for Betty, that served the double purpose of being my Savta’s (grandmother’s) name, and being a cartoon character’s name. Savta’s given name was actually Pessy, which is Yiddish, and the Americans didn’t really know what do with that in the 20’s so they called her Betty.

We were thinking of Pessy possibilities – Pessy Flora Farber being the most prominent, Pessiflora being the Hebrew for passionfruit, but that was just way out there even for me. Then I figured that “Pessy” is a product of Jewish exile as Yiddish is just corrupted Hebrew, so I may as well preserve the Americanization of Savta’s name, Betty, so I did.

As for the person Dafna Betty is named for, Savta had one talent that made her stand out, something I only just realized when I started thinking more and more about it only yesterday.

The mitzvah she did best more than anyone I can think of was Hocheach Tochiach – the art of rebuking, but not in a condescending way or a belittling way, but actually in a way that made her pretty much universally respected in her community. She was the satellite that my entire extended family – consisting of something near 100 people (rough estimate) revolved around until she died in 2005.

One thing my father said at her funeral that everyone there pretty much agreed on was that they all cared more about Savta’s opinion than they did about their own mothers’ opinions.

I can’t explain how, but Savta always knew – seamlessly and effortlessly – exactly when and when not to insert herself in an argument, and if she was going to, exactly how to do it without threatening either side. And when she told you you were doing something wrong, she always did it without making you feel bad about yourself. I don’t know how she did it, but she did. I don’t know anyone else who even comes close to that kind of talent.

One short example, I was never good at calling her even though I knew she was alone much of the time. I had to be pushed and reminded constantly. And one time she told me, in almost a laugh-it-off tone, “Rafi, I love you even if you NEVER call me!” And somehow we both laughed even though I should have felt horrible and guilty.

One thing about the mitzvah of rebuking is that if you know how to do it correctly, it means you’ve got the rest of the stuff right as well. If you know when to rebuke, you know and care about right and wrong. If you know when not to, you know humility and human nature. If you know how to without making people feel bad or defensive, you respect others.

So if you can do that, you’ve got pretty much the whole thing. That’s what I wish for my new daughter, Dafna Betty Farber, who I hope will have Savta Betty Farber’s talents in this area of life, something I still lack.

What thermodynamics can teach us about economics – money is NOT wealth

One of the basic assumptions of Keynesian economics is that government can plop money into the system when the system is slowing down. The new money starts flowing around and things get revitalized. The new money is either borrowed from someone else, say China, or it is stolen from the population of the US itself by printing it and slicing off a piece of everyone’s wealth by diluting the dollar.

Let’s just assume for now that the money is borrowed instead of printed. OK, so the US government borrows money from someone else by selling a bond and then using that money to “jumpstart” the economy. They “jumpstart” it by sticking that money somewhere and hoping that whoever they give it to uses it to make more money. Eventually, the money that they borrowed has to be repaid.

The moral hazard here is that the government feels that it can just print the money when the bill comes due. Technically, they can. And that’s the problem.

Here’s the problem restated: Let’s say a group of people get together to invest in a start up. They risk their wealth to pour into a business that is going to produce…I don’t know…hoverboards. If they successfully produce one, then they’ll get a return on their wealth and end up with even more wealth. Because this group of investors knows very well that if they fail, they can’t just “print” the money to pay their debts. They have to succeed or they go bankrupt. They lose their wealth, and that’s it. That’s why they try really hard to succeed.

They are taking their wealth, which they worked for, and sticking it into hoverboards, and risking it. If they win, the economy grows and more wealth is added to the economy. If they don’t, that welath is lost in consumption that didn’t produce any wealth in the end.

But if the GOVERNMENT gives out a loan for hoverboards and the people they gave it to are lazy asses and they use it to buy jaguar-skinned comforters filled with platinum dust instead of figuring out how to produce hoverboards and the government doesn’t really care because if they lose the money, they can just PRINT it, then the chances that the money loaned will produce NOTHING, skyrockets.

So when the government moves to stimulate the economy with someone else’s wealth, they are ideally trying to get people to produce things with that wealth so in the end there is more wealth so they can theoretically pay back the people they borrowed money from. But if they can’t, they just print up money and steal wealth from you and ship it to China thereby taking even more wealth out of the economy and draining the whole system. Or even more ludicrously, they can print it up to pay an American citizen back, thereby stealing from him and paying him back at the same time.

So where do thermodynamics come in? The first law of thermodynamics states that the amount of matter and energy in the universe is constant. The second law of thermodynamics states that the universe tends towards chaos inexorably. The only reason things can get organized here on planet Earth is that we have a constant source of energy pouring in here, which is the sun. But we have to do work in order to organize things here. The economic equivalents of those laws, as close as I can parallel them, would be these:

Matter and energy in thermodynamics equals money in economic terms. Organization in thermodynamics equals wealth. So the economic equivalents of the first two laws of thermodynamics are

  1. The amount of money in the economy is always constant
  2. The economy always tends towards chaos, unless we use money to organize things, thereby producing “wealth”.
So, whereas the amount of money in the world is constant, the amount of wealth in the world is always changing. If money is used to produce things (organize things, create hoverboards), wealth increases. If money is used to consume things (eat, party, purchase jaguar skinned comforters stuffed with platinum dust) wealth decreases. But money always stays constant. Money is only a means with which one can either produce or consume wealth. Just as matter and energy is only a means with which one can either create or destroy.

The Keynesian approach contradicts these laws by equating money with wealth. It says that the amount of money that exists in the world varies at any given time by government decree. It also assumes that the economy tends towards wealth instead of chaos, because it doesn’t matter where the money goes as long as it’s flowing according to Keynes. For Keynes, the very act of money moving through the system means that wealth is being increased. Yeah, and I have a voodoo doll at home that works just great.

So what you’ll have in the end is a big ball of flaming economic entropy with a whole bunch of money but no wealth anywhere. Welcome to the Keynesian Debt Bubble. Welcome to the 21st century.