Putting welfare for farmers in perspective

The USDA budget for 2012 was $145 billion. That's $500 for every man, woman, and child in America.

This is a quote from the Environmental Protection Agency's website:

"There are over 313,000,000 people living in the United States. Of that population, less than 1% claim farming as an occupation (and about 2% actually live on farms). In 2007, only 45% of farmers claimed farming as their principal occupation and a similar number of farmers claiming some other principal occupation. The number of farms in the U.S. stands at about 2.2 million."

So, assuming that 1% of the US population claims farming as an occupation, but only 45% claim farming as their principal occupation, means that the US has 700,000 full time farmers. Dividing the USDA budget by that number means that the average annual taxpayer cost per full time farmer in the US is over $200,000.

Dividing the USDA's budget by 2.2 million farms means that the average farm costs the taxpayer $66,000 per year. This means that the average farm cost to the taxpayer is 44% higher than the average US household income of $46,000.

Costly "ersatz" technologies

UKIP's Roger Helmer on costly "playground technologies". The German word for a costly but less efficient product is "ersatz". It's primary use is during wartime, during which the nation is forced to use less suitable products. Today politicians everywhere are forcing peaceful citizens to adopt wartime measures. The standard of living of all the world's citizens will fall due to this fallacious and politically driven ideology. Free trade and unhampered capitalism will reveal the most efficient use of all resources. Rather than save resources, these market interventions force us to consume resources unnecessarily.

The importance of the dollar as a reserve currency

We use the term "reserve currency" when referring to the common use of the dollar by other countries when settling their international trade accounts.  For example, if Canada buys goods from China, it may pay China in US dollars rather than Canadian dollars, and vice versa.  However, the foundation from which the term originated no longer exists, and today the dollar is called a "reserve currency" because foreign countries hold it in great quantity simply to facilitate trade.  The first reserve currency was the British Pound Sterling.  Because the Pound was "good as gold", many countries found it more convenient to hold Pounds rather than gold itself during the age of the gold standard.  The world's great trading nations settled their trade in gold, but they might hold Pounds rather than gold, with the confidence that the Bank of England would hand over the gold at a fixed exchange rate upon presentment.  Toward the end of World War II the US dollar was given this status by treaty following the Bretton Woods Agreement.  The International Monetary Fund (IMF) was formed with the express purpose of monitoring the Federal Reserve's commitment to Bretton Woods by ensuring that the Fed did not inflate the dollar and stood ready to exchange dollars for gold at $35 per ounce.  Thusly, countries had confidence that their dollars held for trading purposes were as "good as gold" as had been the Pound Sterling at one time.

However, the Fed did not maintain its commitment to the Bretton Woods Agreement and the IMF did not attempt to force it to hold enough gold to honor all its outstanding currency in gold at $35 per ounce.  The Fed was called to account in the late 1960s first by France and then by others until its gold reserves were so low that it had no choice by to revalue the dollar at some higher exchange rate or abrogate its responsibilities to honor dollars for gold entirely.  To it everlasting shame, the US chose the latter and "went off the gold standard" in September 1971.

Nevertheless, the dollar was still held by the great trading nations, because it still performed the useful function of settling international trading accounts.  There was no other currency that could match the dollar, despite the fact that it was "delinked" from gold.  There are two characteristics of a currency that make it useful in international trade: one, it is issued by a large trading nation itself, and, two, the currency holds its value vis a vis other commodities over time.  These two factors create a demand for holding a currency in reserve.  Although the dollar was being inflated by the Fed, thusly losing its value vis a vis other commodities over time, there was no real competition.  The German Deutschemark held its value better, but German trade was a fraction of US trade, meaning that holders of marks would find less to buy in Germany than holders of dollars would find in the US.  So demand for the mark was lower than demand for the dollar.  Of course, psychological factors entered the demand for dollars, too, since the US was the military protector of all the Western nations against the communist countries.

Today we are seeing the beginnings of a change.  The Fed has been inflating the dollar massively, reducing its purchasing power vis a vis other commodities, causing many of the world's great trading nations to use other monies upon occasion.  I have it on good authority that DuPont settles many of its international accounts in Chinese yuan and European euros.  There may be other currencies that are in demand for trade settlement by other international countries.  One factor that has helped the dollar retain its reserve currency demand is that the other currencies have been inflated, too.  For example, Japan has inflated the yen to a greater extent than the dollar in its foolish attempt to revive its stagnant economy by cheapening its currency.  So the monetary destruction disease is not limited to the US alone!

The dollar is very susceptible to losing its vaunted reserve currency position by the first major trading country that stops inflating its currency.  There is evidence that China understands what is at stake; it has increased its gold holdings and has instituted controls to prevent gold from leaving China.  Should the world's second largest economy and one of the world's greatest trading nations tie its currency to gold, demand for the yuan would increase and demand for the dollar would decrease.  In practical terms this means that the world's great trading nations would reduce their holdings of dollars, and dollars held overseas would flow back into the US economy, causing prices to increase.  How much would they increase?  It is hard to say, but keep in mind that there is an equal amount of dollars held outside the US as inside the US.

 
Perhaps only such non-coercive pressure form a sovereign country like China can wake up the Fed to the consequences of its actions and force it to end its Quantitative Easing policy.

No need for national conflict over Arctic resources

Arctic leaders talk in Russia about tapping riches without ruining environment

http://rt.com/news/arctic-forum-russia-putin-315/

The nations of the world are right to discuss opening the Arctic to economic development without threats of national conflict. Austrian economic theory points the way. Previously untapped resources become the sole property of the first to bring them to market. In his Second Treatise on Government John Locke explained that man has the right to property ownership in any previously untapped resource via "mixing one's labor" with it. Austrian economists call this the homesteading principle. Therefore, the Arctic should become a free economic zone, and property rights should accrue to whichever individual, company, or country homesteads it. The benefits that will accrue to the citizens of the world are the same regardless of who brings the product to market. It is important that the new owners obtain complete ownership of the resource so that they will capitalize it for the long term rather than simply exploit it for temporary gain. Any homesteader may, of course, transfer his ownership rights to anyone else at any time. Plus, any owner loses his right to the property if he abandons it; then the property becomes available to the next homesteader. The homesteader may rightfully claim ownership only to the property that he can work. He may not claim the entire Arctic or even a large part of it without working it.

IMF calls for a socialist EU

Eurozone governments must give up more power to avoid another crisis, say IMF economists

http://www.telegraph.co.uk/finance/financialcrisis/10333439/Eurozone-governments-must-give-up-more-power-to-avoid-another-crisis-say-IMF-economists.html

The IMF--whose mandate for existence ceased when the US went off the gold standard in 1971...yet, like Dracula, it still walks the earth, sucking the lifeblood of more victimes--has recommended that the EU become one, big socialist union in order to fight the scourge of deflation. God forbid that deficit countries "suffer" deflation, whereby their costs of production fall and the nation becomes more competitive. Fighting deflation has become one of the world's greatest fallacies. Deflation is GOOD. Lower prices are GOOD. This is how an individual and an entire nation recovers. In his seminal book America's Great Depression Murray N. Rothbard explained how Presidents Hoover and FDR insisted on propping up prices during the Great Depression, which only prolonged the misery. Jorg Guido Hulsmann explains the economic theory involved in this short book Deflation and Liberty.

Failing to address the core problem

Draghi wants permanent eurozone bailout fund

ECB president Mario Draghi wants a 500 billion euro bank bailout fund, as if a one time bailout is all that is needed. However, the core problem has not been addressed. Fractional reserve banking means that the banks can pyramid multiple amounts of new lending (creating new money in the process) out of a small increase in reserves. This "something for nothing" credit expansion causes an unsustainable bubble, and that which cannot be sustained will not be sustained. The malinvestment must be liquidated, and Draghi assumes that his bailout fund is sufficient to save the banks...just this one time. But Draghi's proposed one time bailout will be repeated again and again until we realize that lending must be funded from real savings and not newly printed fiat money, created by the banks' privilege of fractional reserve lending. The template for an honest and noninflational banking system can be found in Murray N. Rothbard's The Mystery of Banking.

Lowering the bar

From Open Europe news summary of September 20, 2013:

European Commission finance officials have tentatively reached an agreement to adjust the way the ‘structural deficit’ of eurozone countries is calculated. This could allow for an easing of austerity since more of the deficit could be seen as ‘cyclical’.WSJ

This would be hilarious if it were not so serious. Since the deficit countries lack the courage to balance their budgets and, furthermore, have no reason to do so in a union without real enforcement, the euro elite have decided to redefine success by lowering the bar! When will the rest of Europe wake up and realize that the EU and the EMU suffer from structural faults that cannot be avoided? The EU is a socialist organization, whereby success is punished and failure is rewarded. There is no way to avoid the inevitable consequences of such a structure. Europe's capital base and its world competitiveness is being undermined by its attempt to place entire countries on welfare.