John Pugsley - The Anarchist

Danger ahead: money growth soars

U.S. consumer prices and core inflation, as tracked and calculated by the government’s Bureau of Labor Statistics, both took an unnerving jump in January. The CPI rose 0.2%, down from December`s 0.4% rise but double Wall Street`s expected 0.1% increase. Meanwhile, “core” inflation, which excludes food and energy prices (because they tend to fluctuate wildly), increased 0.3%, an amount equal to the total rise over the past three months.

No doubt these revelations will initiate a flurry of activity on Wall Street, as economists expected a 0.2% rise in core inflation. (You remember what economists are, right? Those are the people, who, if laid end to end, would point in different directions). The yield on the benchmark 10-year note rose 4 basis points to 4.71% at 9:20 a.m. this morning in New York. And, thanks to the belief that inflation will force the Federal Reserve to engineer even higher interest rates, thereby enticing bond holders to prefer US bonds over other currencies, the dollar advanced against the euro and extended a rally versus the yen.

Federal Reserve Chairman Ben S. Bernanke has been telling us that inflation remains the central bank's primary concern. "If inflation becomes higher for some reason, then the Federal Reserve would have to respond to it,'' he said in response to questions from House Financial Services Committee Chairman Barney Frank. But for now, all is rosy, he said. Last week he told lawmakers that next year he expects lower prices for oil, commodities and rent to push down the inflation gauge to within his comfort zone. The gauge has been at or above Bernanke's "comfort'' zone of 1%-2% for almost three years.

The promises that price inflation will abate in the future are the stock-in-trade of Fed chairmen, since they must not frighten people. The only thing that holds up the value of the currency is public confidence that it will have value in the future, so damage that confidence and instantaneous collapse occurs. Bernanke may temporarily instill confidence by his soothing remarks, but what is the underlying cause of price inflation?

Simple. Price inflation is caused by monetary inflation. When money is created faster than real goods are produced, money falls in value. Period. Considering the current rate of money growth, that truth should cause panic on Wall Street, for sure, as revealed by the astounding Federal Reserve figures released last Thursday. Here are the rates of growth in the M2 money supply over the past 3 months, 6 months and 12 months:

 3 Months from Oct. 2006 TO Jan. 2007-----8.4%

 6 Months from July 2006 TO Jan. 2007-----7.2%

 12 Months from Jan. 2006 TO Jan. 2007----5.5%

Bernanke is pretending to be concerned about a 0.3% increase in consumer prices, even as the Fed shovels paper money into the furnace, causing a blaze that must inevitably result in a dramatic drop in the value of the US dollar.

It’s time to batten your financial hatches. Before your dollars lose even more purchasing power, hedge by taking positions in real goods. Gold, silver, industrial commodities, energy products, and the companies that produce them. Money is wildly overvalued. Now’s the time to convert it into tangible wealth. If you aren't a member already, join the Sovereign Society today. We'll show you the path to safety and profits.

 

Our universal sense of right and wrong

As the 2008 presidential campaign warms, it’s a testimony to the power instinct that anyone would want the job of heading an modern nation, let alone the 900-pound gorilla of nations, the United States.

Bush’s war in Iraq has entangled the U.S. and allies in a grinding trap, Iran races ahead with its nuclear program, Israel faces an array of hatred from surrounding Arab countries, bombings in India, Pakistan, Indonesia rattle hopes for peaceful reconciliation of disputes, and an unnerving arms control dispute, the most serious of the post-cold war era, emerged yesterday when Poland and the Czech Republic indicated an interest in hosting facilities for the Pentagon's missile defense shield. If they follow through, Russia threatened to target the central Europeans, prompting Germany denounced the US moves as potentially destabilizing.

Nor are these the only conflicts of the world’s “tribes”. Africa, South America, China, and Southeast Asia, are likewise teeming with external and internal disputes over territory, resources, religious ideologies, and political power. The current world strife is not new. The problem has been with us since civilization began. It would seem that we are no closer to a solution, but much closer to a disastrous conclusion.

The problem? Absent from the contentious polemics of the day is any reference to a set of moral principles that could unravel the Gordian knot of human conflict. While most would like to think of themselves as acting morally (certainly Bush anoints himself with moral rectitude), what is “moral” action? Is killing moral? Is theft moral? Is lying moral? If you say, no, then is a politician acting morally when he sends troops to kill Iraqi insurgents, knowing innocents and his own troops will be killed as well? Is the tax collector moral when he forces you at gunpoint to hand over your earnings so that he can protect you from his announced enemies abroad and even from your own self at home? Is Bush or any politician moral when he or she lies in order to get public support for actions?

When is an action moral? The answer, of course, depends on the definition of ‘moral’. Morality is usually thought to have its roots in religion, however Marc Hauser, Professor of Psychology, Organismic and Evolutionary Biology, and Biological Anthropology at Harvard, and author of Moral Minds: How Nature Designed our Universal Sense of Right and Wrong, argues that the source of morality is in our genes. Pursuing the emerging science of evolutionary biology, he and other leading researchers in the field are piecing together the building blocks of human nature, and the result holds answers that may save the species.

Hauser, as well as others including Oxford evolutionary biologist Richard Dawkins, argue that morality is a byproduct of natural selection, and appears in one form or another in other mammals. “As with grammar, flying beneath the radar of our awareness…is a universal moral grammar…evolved over million of years to include a set of principles for building a range of moral systems.”

While for centuries scholars presumed that moral judgments of what is right and what is wrong can be derived from  experience and education, Hauser argues that humans have a moral instinct “unconsciously propelling us to deliver judgments of right and wrong, independent of gender, education, and religion.”

To test how deeply a sense of morality is instinctive, Hauser and others have confronted research subjects with ‘moral dilemmas’, studies that tend to confirm the evolutionary roots of right and wrong. In one such moral dilemma originally proposed by philosopher Phillipa Foot, we imagine a runaway train bearing down on a group of people trapped in a stalled car on the tracks. They will certainly be killed if the train hits them. An individual standing beside the track sees the train coming, and has the power to throw a lever and divert the train onto a siding. Unfortunately, there is a man on the siding who will be killed if the lever is thrown. Is it immoral to throw the lever and kill the single individual, or not throw it and let the five die?

Instinctively, most research subjects queried felt that the moral act is to save five lives at the cost of one. But, what if the individual on the siding had no lever to divert the train, but could stop it by physically pushing another car carrying one innocent individual onto the tracks. Would that be moral, or murder, or moral murder? Most subjects surveyed considered it moral to throw the switch, but immoral to physically push the individual onto the tracks.

Now Hauser presents a more difficult moral dilemma. Five patients in a hospital are dying, each with a different organ failing, and each could be saved with a transplant of that organ. In the waiting room is a healthy patient with those five organs. Is it moral to grab him, kill him, take his organs, and save the five patients? Most consider it clearly immoral to take his life to save the five patients. But what is the difference between that and pushing the car with a lone innocent onto the railroad track? The difference is our innate feeling that aggression against an innocent individual is wrong.

Immanuel Kant, one of history’s most influential philosophers, would agree. He reasoned that in principle, it would be immoral for one person or group to use a non-consenting individual as a means to their own ends, no matter how it benefited them. He argued that moral requirements are based on a standard of rationality he dubbed the “Categorical Imperative”. Other philosophers, such as Locke and Hobbes, agreed. But what these 18^th and 19^th century philosophers could not perceive before Darwinian natural selection arrived, was the evolutionary underpinnings of the “reason and experience” that led them to their conclusions.

That feeling you and I get when we instinctively perceive an action to be right or wrong is the whispering of our ancestral genes telling us that some action will help or hinder our survival or our procreative chances. As the subtitle to Hauser’s book states, nature designed our universal sense of right and wrong. It was designed by natural selection as a survival tool.

This leads back to the choices that politicians are forcing on the world. In a thousand ways, they violate the principles of natural morality.

What does this evolutionary-rooted morality suggest relative your own actions? It suggests that Kant was touching on a truth about human nature when he reasoned that it is immoral for one person or group to force a non-consenting individual to serve their own ends, no matter how it benefited that individual or group. To us as individuals, it confirms that we are instinctively outraged when our property is stolen from us under the guise that others need it more. When innocents are attacked or killed under the argument that its for the good of the group, it’s no different that taking the patient from the waiting room and harvesting his organs for the benefit of the other patients.

Ultimately, and if the species is lucky enough to survive, the moral dilemma that has confounded mankind for thousands of generations will be solved through an abandoment of the failed nation-state conflicts, and an abandoment of group power over the individuals in the group.  Political power, under the guise of defending individuals, will be replaced by individual methods of self defense that do not require the sacrifice of the lives and property of innocent bystanders.

The Sovereign Society was founded on the principle that each individual is sovereign, and justly owns his life and property, and also is  responsible for his or her own self defense. You can't demand that the state agress against others in order to defend yourself. Any individual acts immorally if any other non-consenting individual is aggressed against. Because of the innate moral sense built into the average human, a society of sovereign individuals, each following an instinctive sense of right and wrong, would be the most peaceful and productive that ever existed on earth.

The trade deficit is really a freedom deficit

The news is awash with wailings over the latest Commerce Department report that the U.S. trade deficit in December rose a larger-than-expected 5.3 percent to $61.2 billion. Last year, 2006, marked the fifth consecutive year that the trade deficit hit a new high. It seems that Americans are continuing to buy too many goods from China, too much oil from around the world, and more and more vehicles from Japan.

Bush administration officials blame the wider deficits on faster growth in the United States. Bush has pledged to keep pursuing free-trade policies, while Democrats, now in control of Congress, demand a change in course.

As usual, lobbyists line up outside the politicians' offices, making the age-old case that U.S. labor and manufacturers are suffering from unfair competition. They push for tariff barriers as well as sanctions to make China revalue the yuan. American consumers, meanwhile, scour the malls and the internet for the best prices, scooping up low-cost imports, pretty much unaware of the political pressure being brought to bear. The few that do care can’t match the funding of the special interests, and barely mount a whisper in political corridors.

The trade deficit bogeyman has been around for centuries. However, as is the case in so many political debates, the root of the problem is not American’s buying too much, or the apparent trade deficit, but the underlying political trickery that makes a trade ‘deficit’ keep appearing.

Those of us sovereign individuals, that is, we who believe we should have the right to do as we please with our own property, look at the question of free trade and the purported trade deficit through the lens of common sense.

Consider what happens when individuals barter with each other. A baker trades a loaf of bread with the farmer for a dozen eggs. A tailor trades a suit of clothes for a cow. A migrant worker trades an afternoon’s labor for a meal and a place to sleep. Is a ‘trade deficit’ possible in any of these cases? Could there be a deficit if, say, a shirt maker in China trades 1,000 shirts for 100 barrels of oil from, say, some producer in Texas?

Obviously, no. A gives something to B in exchange for something else and both get what they bargained for. No deficit is possible.

So how is it that when the farmer, or the migrant worker, or the Chinese shirt maker trade their goods and services for money, that suddenly the deficit problem pops up?

Because when individuals trade real goods, the exchange is complete. But when one half of an exchange is for money, the government enters the picture. Individuals create real goods and services with labor and capital, while governments create the money by “fiat” (i.e., by law), simply pushing computer keys and running printing presses. The newly created money, which cost next to zero to print, buys up real goods and services. And as the money percolates through the economy, it leaves a swath of destructive imbalances, including such things as inflation and trade deficits. Governments then step in with more laws and restrictions that purport to solve the economic problems that their fiat money policies spawned.

Money creation it’s a form of theft (and, as my friend Richard Maybury once said, theft is just a nice word for taxation), albeit so subtle that the public never seems to catch on. In a world of where individuals and not governments were sovereign, the marketplace couldn’t have trade deficits or inflation, as the marketplace has feedback mechanisms to deal with anyone who creates irredeemable money. But when governments usurp the freedom of individuals by passing laws defining legal money as the money printed by the government, all manner of economic evils follow.

What can a sovereign individual do? Forget futile efforts to influence the politicians, and assume everything they do to ‘solve’ the trade deficit will reduce your freedoms even more. Go to the root of the problem, which is fiat money. Historically, gold and silver have been the free-market’s choice for trade, and the ultimate refuge from fiat monies. You can regain some sovereignty in the monetary arena by holding and dealing in real money whenever possible. Gold and silver, whether held as assets to defend against depreciating currencies, or as mechanisms for trade through free-market exchanges like GoldMoney.com, or LibertyDollar.org, are real money. Hold and use real, free-market money whenever you can.

Casualties of war

The daily barrage of news about casualties in the Iraq war creates great political opportunities as Democrats and Republicans posture in pro-war or anti-war rhetoric. For most Americans, the daily news distressing, but life and the Super Bowl go on. For a few, those who have personal friends or loved ones on the ground in Iraq or Afghanistan, the tension is palpable, and day-in, day-out they fear that knock on the door or phone call.

The call came for our family last week.

I have a beautiful granddaughter, Chelsea, who just turned 22. Last year she fell in love with Timmy, a handsome young marine from New Mexico. He had already served two tours in Iraq, and was scheduled for one more tour before his term is up in June. Chelsea and Timmy got married and in December we had a family dinner to wish Timmy a safe journey to Iraq for his final tour.

Last week the call came. Timmy’s gunnery sergeant called Chelsea and broke the news that Timmy’s squad had been hit by a suicide bomber. The captain had ordered the squad to assemble for a re-enlistment talk, a Iraqi man ran up to the group, threw up his arms, and exploded. Four members were killed, and Timmy was seriously wounded.

Shrapnel had blown multiple holes right through his legs and arms, some fragments lodged in the bladder and stomach, both femurs were broken, his arm and shoulder were broken, his left hand nearly severed. He was flown to a military hospital in Germany, where he underwent multiple surgeries, and on Sunday arrived at the National Naval Medical Center in Bethesda, Maryland. Chelsea and his parents were there waiting when he arrived. The surgeries continue.

It appears that Timmy will survive. He's fully awake now, and he remembers vividly what happened. The doctors anticipate that in a month or so he’ll be able stand and begin walking. Hopefully, over time, he’ll regain limited use of the left hand, although it’s too early to tell. As for the psychological damage, it irreparable.

We could say that Timmy is luckier than many. Four of his squad are dead, and two others are in the same hospital, one in better condition, and the other much worse. Or maybe he could have been as unlucky as the marine in the room down the hall. Chelsea found that young man’s mother weeping in the hall. A small boy had thrown a grenade at him and it had blown off the young marine's face.

Of course, the government works hard to suppress the gruesome details such tragedies, as all governments do. The news will report “four marines were killed today,” but no mention or pictures of the agonies of the wounded, or of the pain of their families. If news shows did a weekly tour through the U.S. military hospitals that are handling the river of shattered young soldiers, there might be a backlash that could bring Mr. Bush’s current war to an end.

I’m not so naïve as to think that wars will end when people are exposed to the suffering war causes. Would it were so simple. The evidence of the suffering has always been there for anyone who cared to look. War goes on, decade after decade, century after century, and wars will continue. Your family’s experience is probably similar to mine. My grandfather served in the army in the First World War. My father served in the Army Air Corps in World War II. I was drafted just as the Korean War ended. My son was just a bit too young for Vietnam, but my grandchildren are now fully exposed to this greatest of human follies. There is a war for every generation...sometimes two. Unless society finally grasps the cause of war, I’m certain all of our great grandchildren will get their turn.

I hope that you are not so naïve as to think that simply changing politicians or political parties is the answer to war. All of the elections and coups d’etats of history have yet to end war. No, war is not caused by putting the wrong people in government, it is caused by handing a monopoly on power to any group of people. It is the very existence of the state that makes war possible. As Randolph Bourne so aptly put it, “War is the health of the state.” Wendy McElroy noted in her essay, “War’s Other Casualty”:

In times of peace, people are largely defined by their society and they interact with Government, giving little thought to the State. In times of war, the hierarchy and the power of these concepts is inverted. The Government virtually becomes the State, and society is subordinated to both.

In a just and rational world, which we hope will evolve before war annihilates us all, states and government would not be accepted as necessary, and war would not be needed to keep those states healthy. In a world in which individuals retain sovereignty over themselves, individuals would not be subordinated to the whims of politicians, and young men like Timmy would no longer be sacrificed for the health of the state.