Incompressible

Prices rise over time. Today, people call this general increase in prices, “inflation.” In the past, however, when the government created new money, people said the government was inflating . Whenever the government inflated the amount of money, there was a general rise in prices. Before we discuss inflation, it is important that we have a firm grasp on what money is. Before there was money, there was barter, or direct exchange – my wooden club for your piece of sharpened flint, or my goats for your daughter. Direct exchange is problematic because, among other things, you may not be able to find someone who wants to trade what you want for what you have. At some point, people began to engage in indirect exchange. I want bread and I have candles, but the baker doesn’t want candles. So, I ask the butcher if he wants some candles in exchange for some meat. If he agrees, I can exchange candles for meat. Then, I can exchange the meat for the bread that I actually want. The ...

Consider this, if every woman on planet earth has two children, the human population will essentially flatten to a constant (it would decline very slowly). For the sake of this discussion, let us define human survival as "replenishing the current population" - neither increasing nor decreasing it. Survival is achieved exactly when the human population does not decrease. On this view, let's think of two children as a woman's "expected contribution" to human survival. Of course, this is a fantastical criterion, but note that our genes are obviously hardwired to maximize reproductive success to assure survival. If they were not so hardwired, we would not be here today. For each woman who chooses not to contribute her two children, some other women must pick up this burden if the human population is to be replenished. If half of all women were to choose to have no children, the other reproductive half would have to have 4 children on average in order to ensure h...

A common misconception about finance and economics is that those who give a loan are abusing (hence the term "usury") the borrower by charging him interest. However, it is easy to see that this notion is both naive and wrong. Let's say I have $100 in my pocket. I can either keep the money in my pocket or spend it on something. Now, let's say you come to me and ask to borrow $100 for one month and I agree. However, if I give that $100 over to you, then for one month (until you repay), if I see something I want to buy - perhaps on a clearance sale that will be gone in a day - I have to forgo that purchase because you are using my money for the time being. Once the month is up, you repay me my $100 but it has cost me to allow you to use the money. Perhaps I could have saved $20 on a pair of boots that were marked down but sold before you gave me my money back. In that case, I have borne what economists call  opportunity cost  because I lost an opportunity to save some mo...

Here is  an article  discussing a book on a fascinating event in the history of WWI. This event underlines the fact that war is solely the consequence of the existence of the state. The state  is  war. I am reading Machiavelli's  The Prince  and he inadvertently makes the case that the state is war in section XIV "What a Prince Should Do Regarding the Military", where he says: Thus a prince should have no other object, nor any other thought, nor take anything else as his art but that of war and its orders and discipline; for that is the only art which is of concern to one who commands. And it is of such virtue that not only does it maintain those who have been born princes but many times it enables men of private fortune to rise to that rank; and on the contrary, one sees that when princes have thought more of amenities than of arms, they have lost their states. And the first cause that makes you lose it is the neglect of this art; and the cause that enables you to acquir...

Butler Shafer - a columnist at LewRockwell.com -  described  his disgust while staying in San Francisco during a Navy Blue Angels demonstration in an article written several weeks back. The first time I read it, I felt he was being a bit of a whiner - almost everybody loves to see stunt airplane performances... so what if it irritates Butler Shafer? But one of the things he discusses is the double-standard between rules on private sector and government air safety. There is a double-standard between private and government performance of stunts,  or  levelling of houses  in residential neighborhoods with jet fighter aircraft during routine training flights. If this had been a private jet, we would read something like, "Nike Corporate Jet Kills US Immigrant Family" and we would hear of lawsuits being filed against Nike, Leer, and so on. But since this was the Marines, why, the father  ought  to forgive the pilot for saving his own skin while letting the jet hurtle, unguided, int...

Here is a  disturbing article  from today's New York Times. Obama is apparently really planning a New New Deal (I'm crossing my fingers and hoping this is all very exaggerated). But I wanted to talk about one specific line from the article, "His address on Saturday followed the report on Friday indicating that the country lost 533,000 jobs in November alone, bringing the total number of jobs lost over the past year to nearly 2 million." So where did these jobs go? Did they just evaporate into thin air? There were 2 MILLION things that one year ago needed to be done, but today no one can afford to pay someone to do. This is very difficult for me to believe! To me, it seems to be fallacious to speak of jobs as if they are some kind of product, e.g. "The government vows to create X new jobs by this time next year" or, as above, "Y jobs were lost during the last Z months." Jobs are neither a good or service, they are a contract between an employer and ...

Anthony Gregory takes on the Federal Reserve in this terse but to-the-point  article . In a few short paragraphs, he summarizes the arguments which debunk the myth that the Federal Reserve is something other than the engine of corporate fascism, the enemy of all free people. Here's a quote: "Then there is the idea that the Fed keeps the booms and busts in line. This is another total reversal of the truth. In a normal market setting, savings and inflation would be in harmony. The willingness of some to save and the demand of others for credit would work out to an equilibrium and produce the market interest rate. The Fed’s injection of new money into the system undoes this delicate balance. People get cheap credit and invest wildly in projects for the future, but those low rates no longer correspond to high savings. The consumers are still spending like crazy, the investors are investing like mad. This is what causes booms and eventually busts. When years later, people have not ...

During the Bush administration, we heard a lot of opposition to the efforts of the neo-conservatives and their "Project for a New American Century" with its chilling, bold desire to construct an American empire. I have presented reasons in the past to believe that the United States is a global empire. Irrespective of where you stand on the issue of whether the US  technically  is or is not an empire, the US government and every other government on earth is blatantly Machiavellian in their justifications for their actions. In case you're wondering who Machiavelli is, he wrote an important book in the late 15th century titled  The Prince  which is basically a handbook on  how to retain power , even at the cost of violence and other immoral acts, while yet retaining the external semblance of moral authority. In short, it is a guide on how to retain power at almost any cost. One problem with modern politics is that it has, in many ways, become frankly Machiavellian. For examp...

I think one of the most common misunderstandings of the free market is in understanding why competition is good. Competition is not good because it makes businesses "try harder." Competition is good because only a business which produce goods and services that are more in demand than the goods and services which the business consumed to produce them does not go bankrupt. It is not because individual entrepeneurs are induced to try harder to give consumers what they want that competition is good but that those entrepeneurs who produce goods and services which are less in demand by the market than the goods and services consumed to produce them are bankrupted. This minimizes waste by constantly transferring resources from less valued uses to more valued uses. In biology, there is a concept called "lamarckism." From Wikipedia, lamarckism "is the once widely accepted idea that an organism can pass on characteristics that it acquired during its lifetime to its offsp...

So, apparently prostitution is only illegal if it's not  really expensive . If you are too poor to be a client of the Emperor's Club, then you just might  go to jail  for accepting or giving money in exchange for a perfectly legal activity. Yes, we need the Eliot Spitzers and Tom Darts of the world to come in and save us from the depredations of the evil connivers running Craigslist. A particularly chilling comment from the Right Illustrious Tom Dart, "If we had the resources, we could be making these arrests every minute of the day." Is that a world you want to live in? A world where half the population is incarcerated because they want to have sex (and are sometimes willing to pay or be paid for it)? The state is a crime syndicate. Their Dons - like Spitzer - break the very rules we believe we have empowered them to enforce only to have their "indiscretions" swept aside "in the interests of the public" while the poor and minorities have outright ...

Here is an  article  discussing the votes in South Dakota, Colorado and California against gay marriage. In a democracy, what does this mean? More people were willing to mark their inclination against gay marriage on a ballot than were willing to mark their inclination in favor of gay marriage, that's all it means. So how can that justify the use of state coercion against gays to prevent them from entering into a marriage? In the "good" old days (and in some parts of the world today), sodomy was outright illegal with punishments varying from an overnight stay in jail to torture and burning at the stake. Certainly, no moral justification can be offered for these behaviors and none but a Fred Phelps would even try to offer any, these days. But we still rationalize the same behavior  in principle,  just not in degree. Inducing completely unnecessary emotional suffering on people who want to marry is not morally justifiable. How does 50%+1 or more of those participating in a ...

Ron Paul  proposed a bill  last year that would eliminate taxes on tips. This would provide  genuine  help to people in the "working class" - as the media Marxists like to condescendingly refer to productive people. We need to get this bill back on the table and get relief from government taxation to productive people.  So, big government liberals: how do you justify  not  untaxing tips?!

I'm writing this post because the most common objection to my position on taxes (that "taxes" is just a euphemism for "robbery") is that, even if taxes  are  immoral, they are necessary since there is no other way to pay for so many of the necessary services which government provides. What is a public good? The technical definition is that it is a good which is non-excludable, which means that  you can't charge for its use once the good has been produced. Take a fireworks display. Once you shoot off the fireworks, you cannot charge people to see them because they are up in the air, visible to everyone. If you can't charge anyone, then it obviously won't be profitable to do it, and the market will fail to produce the good. Before delving into the technicalities of how public goods can be produced without taxation, let me address again  why we should want to . There are two major reasons, one ethical, one utilitarian: 1) Taxation is robbery and moral a...

The Federal Reserve - whether you realize it or not - is the Federal government's secret money machine. As such, the Federal Reserve is a  tax system . Bernanke himself admits in  testimony  before Congress that the Federal Reserve is a tax machine when he responded to questioning by Ron Paul that "... I couldn't agree more that inflation is a tax..." Of course, Bernanke does not admit that the Federal Reserve is the  primary or solitary cause  of the rise in prices, but instead adopts the mantle that the Federal Reserve is actually  fighting  inflation, a patently absurd notion. A dollar today buys what a dime bought in 1971. At the same time, the money supply has been expanded many times under the auspices of the Federal Reserve. Of course, this is only a coincidence!  What is important is that you realize that the Federal Reserve expands the money supply (prints money), that the expansion of the money supply raises prices in general, and that a general rise in pric...

I t seems almost every time I turn on the TV or read a mainstream news article about the economic collapse, it is  once again  the "free market" who is the culprit. When times are good, everybody - even liberals - loves the free market. When the going gets rough, all of a sudden, it is the free market that is to be blamed! But what  is  the free market? It seems that people have all kinds of funny preconceptions about what the free market is, ranging from criminal anarchy to European mercantilism. The free market consists of just two concepts: - Property - Exchange The free market has its ultimate roots in humanity and human evolution. Even animals exhibit the concept of property. Dogs mark their territory. Birds protect their nests, and so on. And, at some point in human evolution (possibly before), people began to exchange items with one another... my sharpened stone for your club. This is the origin of barter. But not all property is alike and not all exchange is alike. Wh...