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The Only Thing We Have To Fear Is Liberty Itself

How can it be that conservatives are so preoccupied with restraints on sexual freedoms while simultaneously claiming to be for smaller government?  Conversely, those who favor every kind of liberty when it comes to sex find themselves very much at home with big government and its liberty stealing control in our everyday lives.  Why is this?

For one, “Sexual liberty” is a narrow view of liberty.  True liberty encompasses much more than merely the freedom to follow natural proclivities to procreate with no more concern for the offspring than dogs.  On the other hand, a young man with an entrepreneurial spirit wishing to start a business of his own will learn very quickly that liberty outside of free-for-all sex is an illusion.  He will encounter an army of bureaucrats armed to the teeth with volumes upon volumes of regulations that they intend to enforce, and who couldn’t care less about your success with your hard-earned investments.

But we as a people have grown used to a government that has taken on the persona of Mother.  “Don’t do that little Johnny, you might fall!”  “Make sure you eat your organic vegetables little Susie… so you can be a healthy girl”.  “Make sure you wash your hands… Hold onto that handrail…  Put your seatbelt on… don’t make the planet overheat” and on and on.

We all must admit that the thoughts of an over-protective Mama-government not halting traffic for us and holding our hands as we cross the street evokes, at least a little, insecurity.  There’s a certain level of comfort in Mother-nanny-state’s mandates that we stay on her side of the street where she can keep an eye on us, and keep us out of trouble; all the while consoling us that we can self-gratify sexually all we wish, under the protection of her skirt.

But true liberty calls from the wild.  She beckons the young man to come to the neighborhood of uncertainty where she resides, wherein he might discover his destiny, reach his true potential, and outside of which he will never be anything but Mama’s little government boy.

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What In The World Is A “Derivative”?

Suppose you’re a farmer.  Come spring you plant your crop and then wait for nature to take its course.  As you wait, you eye the horizon for clouds, realizing that you are at the mercy of the elements.  Anything could happen, and that anything could cost you your crop.

Then someone knocks on your door.  It’s a man in an expensive suit wanting to buy a portion of your crops while the seeds are still in the ground.  But there’s one catch to his offer; he’s offering you a price below market.

You understand the benefit in his offer because you know that your crop could fail.  His offer looks and feels much like insurance to you, the price of which is the sharing of profits and risks.  You both understand this.

At stake in such a transaction, just as in our discussion of debt, is the future, and future production. 

If you do decide to sell then a contract is drawn up and signed.  That contract now becomes part of the “futures” market, and since it derives its value from a portion of your future production, it is called a “derivative“.  This derivative can now be bought and sold by the owner of the contract.  

This derivative’s value will probably vary.  If a dry season threatens your crop its value may go down. If crops elsewhere in the world fail it may go up.  It could very well be bought and sold several times with profits or losses for its owner while your crop sits in the field.

These kinds of contracts do not apply to crops only however.  They could apply to all sorts of other contracts that derive their value from future production.  Even portions of your own future might be winding their way around these markets.  If you have signed a contract to repay a loan for example, as with a mortgage, you can almost bet on it.

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We Might As Well Face It… The World Needs Slaves

What image comes to mind when you hear the word “slave”?  A black person picking cotton on a Southern plantation?  Well that image is history.  The 21st century slave looks much different in America.  That whole idea of “owning” slaves is passé.  It’s way too messy–and an HR nightmare too; not to mention very expensive. No, the only similarities between nineteenth century and modern-day slavery is the Democrat Party’s support of it.

Have you ever heard speak of those who are “doing work that American’s won’t do”? This usually refers to  migrant farm workers… kind of like cotton pickers on old plantations. I’ve heard many use those very words, including President Bush and my own Senator, John McCain. Hearing those words for the first time made my head cock like a sheep dog seeing a three-headed man for the first time. What an odd statement.

Well, translated, “doing work that American’s won’t do” = “doing work that corporations would rather not pay free market wages for”; or put differently, “Slave labor”.

Would you pick lettuce for two hundred grand a year… with benefits? I would… and I’m an American. So the question isn’t whether or not Americans will do that job, but rather can illegals, read the modern equivalent of slaves, be imported to do it for a price that makes Americans happy with their salad… and their “compassion”?

The next question, that even the economic moron understands is: “What would paying lettuce-pickers  $200,000 a year do to the price of lettuce?” But buried in that question is an assertion, which is: “I want my salad for the price I’m use to paying, and I’m willing to enslave the less fortunate to get it”, or, put differently, “we might as well face it, the world needs slavery”.

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Similar Posts:

1. You Will Always Be In Chains

2. Economics = Blackmail 

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It Really Isn’t All That Complicated

I hold to a philosophy in life that most everything can be reduced to a more simpler form, and hence life, including politics, religion, and yes even economics is ultimately simple to grasp and understand with just a little application.  I could talk about the allocation of resources, demographics, equality and so on, or I could, for example, say something so simple as, “one can’t spend more than one has”.  Now there’s a basic fact so simple a child can understand it.  Resources cannot simply be wished or legislated into existence.  It’s a stubborn thing, reality.

We are supposed to believe, however, that some things are so complicated that their understanding can only reside within the minds of higher thinkers.  We can trust such minds, for example, to understand how it is possible to get something from nothing; for that is exactly what spending more than one has by printing money attempts to do.  It’s like magic.  But the real magic is in how the people are convinced to vote for the theft of their own private property.  The conniver is quicker than the connived.

The fact is that under the guise of complicated, nuanced and difficult-to-understand “economics” liberty, as well as resources, is being stolen.  Wisdom dictates suspicion when a thing is made out to be so complicated that the basics no longer apply.  The elementary student understands that 2+2=4, and no matter how complicated the math in which this equation is applied, it will always be true.  In the same way, no matter how complicated the economics, more can’t be spent than is had.  So when it appears that a government, or a person for that matter, is pulling it off, suspicion is in order; especially if the explanation sounds more like a distraction than an explanation: “Hey look!  That rich guy over there has a lot, and you don’t!”

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If Free Market Government Really Were God, Its Name Would Be Keynes

Laws, rules and regulation provide the mold, so to speak, that shape the allocation of scarce resources.  Therefore, how a society collectively perceives the decree-er of these “laws” will determine how its resources will be allocated.   If a society sees its government, or a particular party or kind of government, as a deity, able to dictate good and evil, then that society will have much trust in its government.  There will be enough trust in fact to allow it to allocate resources fairly.

Now, with this in mind, consider that economies have up and down cycles.  The Keynesian economic model assumes that government, with divine attributes, can soften these cycles through economic stimulus in down cycles and high taxes in up cycles.  That is about as basic as I can put it, but I think it suffices.  But this theory has a major flaw.  It assumes that those who are elected into government are trustworthy.  It assumes that politicians have somehow transcended the base elements of humanity such as greed and self-interest, and have become angels who desire above all else that the people bask in good economics.  This is folly.

The government, in general, can never decrease its spending in the up cycles.  And it rarely decreases taxes in the low cycles.  See last 4 years.  Political opponents will be more than happy to point out in an ad that mean ole politician Bob cut spending or lowered taxes for the only people who pay them, the rich.  He will show a family sitting in a homeless-shelter looking dispirited and dejected as a result of Bog’s “draconian” and greedy ideas.  So, while up cycles never produce political incentives to cut spending, down cycle always present opportunities to increase spending… again.

The basic element of economics is man.  If the man who studies economics misjudges man, his theories will inevitably be flawed, and men, at least thsoe not in government, will suffer.

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What Happens When The Nanny State Becomes The Loan-Cosigner State?

Today we learn a new word.  Moral-hazard. Well really it’s two words but don’t get distracted.  Listen up!  You already owe the nanny-state about $200K, and you ain’t got no co-signer.

The term, “moral hazard”, is an insurance term.  It works like this.  Suppose every time someone asks you to borrow ten bucks you say, “sure, no prob”.  You’d be broke all the time, sure, but hey, let’s face it, you’d never have a shortage of friends, right?

Then a couple of patsies come along willing to insure your loans cheap!  Their names are Fred and Fan; but that’s not important right now.  They make a deal with you.  They sell you a policy on your loans that pays you $20  if one of your friends defaults on a $10 loan.  Who could pass on a deal like that?  You only go around once in this life, right?  Why not do it with gusto… or something like that.

In the insurance business, deals like this are appropriately known as moral hazards.  It entices me, the insured, to be careless, even unethical maybe, because I will actually be better off if my friends don’t pay me back.  Insurance companies who must meet payroll and pay the rent shy away from such foolishness.  But there are some insurance companies that don’t have to worry about such pesky problems because they have their own patsies.  That would be you, the tax payer.

So, if you’ve ever wondered how bankers could loan out money to anyone who could fog a mirror and still be around today to pour money into leftist political campaigns, now you know.  They really never were in jeopardy of losing the money they loaned.  You were.  And that, for those making bad loans, was no prob.

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Prices, When I’m Selling They’re Too Low And When I’m Buying They’re Too High

A real estate agent relayed to me a story.  She went to see a couple wanting to list their house.  The couple informed her of the price at which they wanted to list the house.  Puzzled the agent asked them where they got such a figure.  “Easy” they said.  “We just added up all our debt” and this is what we need to pay it off.  She burst into laughter.

So how are prices set?  For anyone interested in economics this is a great question because the answer  is the same regardless of what is being sold, a house, a piece of candy, or even your services to your employer.   To think about how the price of something was arrived at is a good start to understanding the economic reality in which we live.

We tend to think that it costs however much to make, say, a loaf of bread, then the store buys it and sells it for a profit.  But it’s not quite that simple. The farmer who grew the wheat also hoped to make a profit, as did the truck driver, the baker and so on.

So the question of how a price is derived is not only the chain of costs associated with putting it on the shelf, but also the profits of each of those involved in that chain. As you might imagine this is a lot of people, many that you wouldn’t think of like oil and steel refineries, tractor companies, and so on. It is an extensive list and an extremely complex undertaking.  Yet, at the end of the chain, there it is for about two bucks, a loaf of bread. So how are the prices set all along the way?

Well that’s not so complex at all and no different than what you charge your employer really… it’s as much as possible.

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