What is this "the market" you speak of, if not a series of government grants and privileges?
Without the Treasury honoring the Federal Reserve's obligations, there is no "the market."
You want competing currencies? Get a time machine and go west. We tried it. It sucked. Every other day another bank went bust, and took a whole bunch of worthless currency and overhyped bullion promises with it. Turns out private sector currency manipulation makes Keynesian governments look like boyscouts.
So we tried to print all our own public currency at the Federal level, and that didn't work so well either. Well.. a big part of the problem was that we ended up in the middle of a crazy civil war, so maybe we should also remember that two governments operating with purely public and purely fiat currencies were able to raise the largest industrial-era armies the world had ever seen. Just imagine if they had skipped the war and gone straight to building railroads?
But alas, the public currency died at the demands of the British financiers who made loans to our shattered republic in the aftermath of destruction. They insisted we abandon our current corporate regulations to adopt their concepts of limited liability and government sponsored cartels that evolved directly from the hereditary privileges of those aristocrats chartered to do the crown's royal business. Upon securing favorable loan and regulatory terms with the U.S. Congress, they funneled huge sums of cash to Rockefeller, Morgan, and other would-be "barons" who could successfully corner and monopolize essential industries.
The restoration of the financial nobility's control over America was set to be codified in 1913, but there was just one fatal flaw in the Federal Reserve System: It was too effective.
By 1929, consolidation of the nation's wealth and inequality had reached such a peak that it made 1850's slave plantations look like a bunch of egalitarian hippy communes.
But a strong economy can't exist unless a lot of people have discretionary income: When you consolidate all of the country's capital, no one has anything left to spend. Sure, you can build an incredible palace here or there, but the rest of the economy collapses and you end up with pissed off peasants at Blair Mountain or something.
So we came up with one more solution in the 1940s. It was incredible. It put every other innovation to shame.
We kept the effectiveness and price stability of the Federal Reserve System, but we stripped it of the rich-right wing WASP conspiracy to "get as fucking rich as possible and fuck everyone else" by recovering a large part of the profits of those who were most able to manipulate it for their own benefit.
We took that money and we built transportation networks and schools that were the envy of the world! And you know what happened next? Those kids growing up in those schools grew up to know a lot of stuff about how to build stuff and make even more money! The economy boomed! We went to the goddamn *moon*!
Since then? Well, a lot of the banks attached to those old names, Chase-Rockefeller, JP Morgan, Goldman Sachs... well, they own everything again. The economy's shit. The peasants are getting pissed off, and they'll probably only continue blaming the Muslims for so long...
Despite a lot of strong emotional reactions, we don't have a new president and the composition of Congress hasn't changed all that much. In that most basic sense, the federal elections of 2012 haven't really changed anything at all.
At a deeper level though, there seems to already be a shift in the public mood and debate. In many ways, the entire narrative that Republicans have been working on for the last four years is in the process of falling apart at a rapid pace.
Obama's first election wasn't a fluke
Above all, the 2012 election has reaffirmed the nation's decision to elect Barack Obama. This proves that the first time was not an accident and that Obama is no Jimmy Carter. In fact, no matter what happens now, American history will always at least remember Obama as a two-term president. With an administration spanning eight years, it is undeniable that he will leave a lasting influence on the country.
Elected Republicans rediscover compromise
The narrative that has been sustaining Republican deadlock in Congress was that the American people had rejected Obama through the rise of the Tea Party in 2010 House elections. Accordingly, any efforts they made to undercut his agenda should theoretically be representative of America's wishes. Now, that narrative is useless, and key Republican figures have noted that there are ready to compromise and work through some of Obama's proposals.
Specifically, recent polls indicate that if an agreement isn't reached to prevent the "Fiscal Cliff" Republicans have been hyping, it will be the Republicans themselves who end up with most of the public's blame.
Obama's aggressive electoral strategy paid off
A lot of pundits thought Obama was being overconfident with his attempts to spend limited campaign resources in traditionally red states like North Carolina. Cautious liberals recommended a defensive strategy focused on a rust-state battleground, but Obama decided to launch an attack straight in to some of the states other Democrats would have written off from the start.
Without a doubt, Obama's gambit returned a huge profit of electoral votes. Not only did he win by a larger margin than Carter, Eisenhower, or Nixon, he also proved that he can take bold action and succeed where others have failed.
The GOP is becoming even more divided
Hard-core conservatives are convinced that Romney lost because he was too moderate. Moderate Republicans think the opposite. The libertarian wing of the GOP is pointing to poor treatment of Ron Paul to explain a record number of votes for Gary Johnson and poor turnout for Romney.
It might not even matter which group is right, because the simple existence of such bitter divisions is going to complicate the construction of any new uniting narratives.
Many Republican voters just don't want to talk about it
Another interesting trend I've noticed from around the web is that a lot of conservative commenters only want to talk about how they don't want to talk about politics any more. They claim liberals are mean and that the country is doomed, but otherwise, they've had enough.
From Reddit to forums we've never heard of, bipartisan discussion boards are becoming lopsided as Republican supporters increasingly refuse to participate.
Except the ones who should probably stop talking...
But, if you look hard enough in to the places where "libruls" aren't allowed to post, you can still find plenty of proud Republicans out there with increasingly insane political views. We've heard the birther conspiracies, and we've heard the secret Muslim theories, but now some are wondering out loud if he's the anti-Christ himself. Apparently, that "Saracen bastard" can't even pardon a turkey without infuriating the far-out fringe of the far-right wing.
"Foot in mouth" disease has been a rampant problem among Republican politicians lately, and enthusiasm for carrying the GOP torch seems to be left with those who have little tact or political common-sense.
What does the future of the Republican party hold? That isn't completely clear yet, except that the future can no longer resemble the recent past. The strategy and narrative that dominated 2008 to 2012 have failed, and picking up the pieces will be even more difficult this time around.
The political and media establishment has finally found something they can unite over - their seething hatred of Ron Paul and everything his unconventional campaign threatens to do to their financial and political base of power.
With recent polls showing a surge for Ron Paul in the Iowa primary caucus, a massive wave of attack pieces has been unleashed today in the mainstream press.
Empty Accusations of Racism
A Google News search reveals that more than 200 articles have been published today in mainstream papers that are related to the twenty-year old newsletters that once went out under Ron Paul's name.
In every election since then, Ron Paul has denounced the content of the newsletters and denied writing them. This claim is highly believable to anyone who has followed the writings and speeches of a man who claims Dr. Martin Luther King and Rosa Parks as personal heroes and idols.
At the time these newsletters were published, the Representative from Texas was active in his medical practice. A practice that, I might add, never turned a single patient away for race, religion, creed, or even an inability to pay. Consistent with his libertarian principles, the doctor would rather take a loss on delivering a poor family's child than accept funding from Medicare and other federal sources.
If anything, the newsletters show a lack of oversight and a managerial failure for a man who had little such experience at that point in his life. Twenty years out, I believe he may just have learned a lesson and grown from the consequences of his mistake. While he does accept a moral responsibility for allowing such racist trash to go out under his name, there is nothing else in his history to suggest he ever believed or intended to endorse the things that were written.
On actual policy proposals, Ron Paul is the only candidate who would end the incredibly racist wars on drugs and terrorism. Study after study shows that minorities are disproportionately impacted by our current drug laws, and they're also more likely to serve on the front lines in dangerous combat positions. For these reasons, he has actually picked up more support from African Americans than any other Republican in recent history.
Individualism vs Group Mentality
When asked about his views on race, Ron Paul sticks to his individualistic ideology:
In the long run, the only way racism can be overcome is through the philosophy of individualism, which I have promoted throughout my life. Our rights come to us not because we belong to some group, but our rights come to us as individuals. And it is as individuals that we should judge one another. Racism is a particularly odious form of collectivism whereby individuals are treated not on their merits but on the basis of group identity. Nothing in my political philosophy, which is the exact opposite of the racial totalitarianism of the twentieth century, gives aid or comfort to such thinking. To the contrary, my philosophy of individualism is the most radical intellectual challenge to racism ever posed.
As an individualist, Ron Paul shows no allegiance to the groups recognized by the political establishment. His message doesn't follow the party line of Republicans or Democrats - and it infuriates those invested in the system that has repeatedly failed the American citizen.
But you can't be serious!
Many other media outlets are taking a less subtle approach to their attacks on Ron Paul. They claim that even if he wins Iowa, he can't win anything else - or that he just can't be taken seriously because his positions don't line up with the increasingly unpopular and out of touch orthodoxy coming from Washington D.C.
One popular theme is that if Ron Paul does win in Iowa, it won't do much but discredit the state's primary process. This idea has been introduced by none other than Iowa's governor himself, who is basically saying to ignore the wishes of his state if those wishes aren't acceptable to the narrow range of ideology propagated by the political establishment:
“People are going to look at who comes in second and who comes in third,” said Gov. Terry Branstad. “If Romney comes in a strong second, it definitely helps him going into New Hampshire and the other states.”
Politico takes the idea and runs with it, musing about whether or not a Ron Paul win could completely "kill" the caucus. Of course, the Iowa caucus was fine when it picked Bush twice, but as soon as there is a candidate who will stand up to the military contractors and financial interests, the system is held in doubt.
As serious as it gets
Whether or not Ron Paul can maintain his lead in Iowa - and how far that momentum will carry him through the primaries - is yet to be seen. What is certain though, is that many Americans are uniting in support of the one man in this election who strikes fear in to the advocates of the system and status-quo. Perhaps they should wake up to the reality of their own declining relevance instead of trying to tell us what is reasonable and acceptable in this nation's political discourse...
Two federal judges have ruled against the healthcare bill - and two others have upheld it as necessary and proper. Before long, this issue is likely to find its way before the Supreme Court.
But what authority and legitimacy does that Supreme Court have left when one of its members uses to ignorance as a defense against his own illegal actions? And aside from the financial and tax problems, there are even investigations of improper actions that might construe a more direct conflict of interest. If Scalia and Thomas have come accustomed to enjoying the perks of ruling in favor of certain interests, the state of our legal system is bleak indeed.
Unfortunately, the problem with the law is a lot bigger than a few conservatives justices can demonstrate on their own.
Pundits and politicians have been making a big deal about two big problems facing America: healthcare, and the environmental risks & costs created by global warming and all of the other consequences tied to burning carbon-based fuels. In the last year of two, some significant legislation has passed with the intent to fix these issues.
But the new laws and reforms seem too expensive or complicated to actually enforce.
It was reported yesterday that General Electric had just received a waiver from the Environmental Protection Agency regarding those environmental laws. The initial reports weren't quite right though - GE won't actually own the power plant. They are going to sell the turbines and steam generators so this still leaves a question about conflicting interests. Of course, GE is one of the top recipients of government spending, one of the top news broadcasting companies (NBC, MSNBC, CNBC), a major outsourcer, and one of the country's biggest polluters - so how did their CEO end up on Obama's job creation board again? The same way they sell turbines and steam generators that would otherwise violate federal environmental rules.
For a more direct example of selective law enforcement, healthcare provides us a great insight. While most employers and individuals will be required to provide a certain minimum of coverage. Unless you've got a waiver too...
Because as it stands, more than 700 such healthcare waivers have been issued for such politically invested organizations as the Institutional Brotherhood of Electrical Workers & Trade Unions, Teamsters, McDonald's, and a whole bunch of others.
So if you're big enough to buy political favors, or "too big to fail" in general, the law simply doesn't apply.
Is it too complicated? Is it too expensive to actually follow the law of the land? Or is it really just a way for politicians to pay back the money that makes their careers?
Of those options, I'm not sure it even matters... because in the land of infinite laws, everything is permitted while nothing is allowed...
Especially as in reference to the settlement of the United States, and the origin of America's monetary systems, corporations, and ownership class
See, when William the Conqueror got to London London, there was already a walled city there and any attempt to seize it would have been quite bloody. It had old Roman defenses and advanced forges to make quality weapons and metal currency. They even had rudimentary banks and pretty good access to naval trade without much vulnerability to naval attacks. So instead, William set up his own castle and army on the other side of the river so he could keep an eye on and tax the city as much as possible. This gives him a sphere of influence over local agriculture, and it gives him a powerful point of trade leverage with the city. Oh yeah, recent discoveries also suggest that there was already a fairly urbanized Anglo-Saxon settlement there outside the walled city. They would have definitely been good allies for the new self-proclaimed king.
William's solution to gaining control of the walled city was to commission a new class of nobility: the barons, a commercial elite nominally loyal to and backed by the crown. Of course, the king couldn't control the barons and just two saeculum later they would revolt, kidnap the king, and force him to sign concessions over to the city (Magna Carta).
What concessions did they want? They wanted control of the money supply: exclusive license to mint coins and more freedom for the baronry. They also wanted a bridge over the river that could be used as fortification against the king's potential invasion. This was also around the same time the Bank of London opened its first branches in Ireland & Scotland (next to the brand new prisons and noble's castle, of course).
Fast forward a mega-cycle and some of the walls between banks, kings, and priests started to break down between Henry VIII, Elizabeth, and James_I_of_England itemtype='http://schema.org/Person'>James I. Instead of London building up defenses pointed internally, the ruling classes start to plot together about expanding influence externally.
So by the time James I was king of the UK (~1600), the military could actually expand out and start to collect land & taxes from the Scottish & Irish. Even though James himself was Scottish, this was a pretty messy process because the army was basically enforcing the king's ownership of everything. But to keep the nobles happy, the crown had to give them bigger mansions, more rural estates, and more for-profit plantations packed with virtually free labor.
"Oh, this was your land? Those were your ancestral cattle herds? Haven't you heard that all cows and dirt belong to the crown now?" Add in Guy Fawkes, and suddenly everyone and every clan who didn't immediately submit was written off in the English history books as terrorists, heathens, raiders, and bandits.
It gets soooo bloody, especially after Cromwell, that the nebulous concept of "the people" starts to become a recognized political institution. The House of Commons starts off as relatively insignificant, but over hundreds of years "the masses" have kind of found their identity & occasionally fight back. Mostly though, commoners are being pushed back and toward the New World - because if you aren't English or noble you just might starve after your taxes were paid. (At one point, every food other than potatoes is taxed at 100%, and this kind of made the potato famine in to a big deal. Fat landlord to starving peasant: "Oh you grew a carrot? I'll take that, by order of the king! Yum!" It was also obviously illegal for commoners to go hunting and fishing in the king's woods, rivers, and seas)
Fast forward again: The barons won even more significant concessions between 1860 and 1910. Fundamental to this was the limited liability corporation and private central bank. Before then, corporate charters were limited to the king's direct approval, but after that they were pretty much open to anyone who already had money (guess who already had all the money?!)
Under pressure from the dominant empire of the day, and in financial trouble from the Civil War, American politicians also accepted these "innovations." Of course, that meant a whole lot of English money flooding in to the American economy through a select few "robber" barons, and institutions that would protect them from any responsibility for the costs of human tragedies and tactical mistakes they'd make. Perhaps most essential of all, was preventing the issuance of more Greenbacks or United States Notes or State-Chartered Bank Notes - non debt-based fiat currencies.
By the dawn of the mass media era, only a few broadcasting companies existed, and they were all tied right in to the big London/NYC banks and the military industry. A combination of high capital requirements and restrictive political licensing kept significant competition from popping up. To see how that plays out in the real world, just look at the Anglo-Persian Oil Company (a.k.a. BP) and America's involvement in Operation Ajax:
"Hey Iran: all of your oil and sand belongs to the barons now." And anyone who resists is a terrorist, heathen, raider, or bandit...
So... here we are! Even though the crown itself is obsolete, the same old ~2% nobility still own ~50%+ of everything. Some might call the growing cultural inclusiveness and merit-based ascension of some businessmen to this elite as progress enough. The "full citizen" part of the empire has also grown. I guess it is something but I won't accept it as "good enough."
And if there's any credible yet non-violent threat to the system, it is alternative forms of money and media. Money that is backed by something, or even nothing at all if it isn't denominated in debt and issued by a select cartel. Local currency, bit-coins, bags of old silver quarters - whatever.
If that doesn't work, the choices might boil down again to fight vs. flight. History just warns me that the fight is doomed to division & failure... and that we've pretty much run out of places to flee to!
Anyway, this is what the history of English-speaking political and commercial institutions might sound like, if it wasn't already written by the winners. 😉
As 2011 starts, I'd like to take a little look at the state of politics and the economy for the coming year.
Obama is about half way through his term with an approval rating around 50%. While he has no particularly popular programs to claim victory on, he can at the very least say that he's one of the most well-regarded members of the federal government. His calm and cool demeanor is simply preferable by contrast to the typically rabid and doom-predicting politicians we've had for the last decade or so.
A new Republican majority is taking over the House of Representatives, and the polls indicate that they're also getting a little bit of a honeymoon type boost. While Congress is never particularly popular as a whole, it is still up a few points over the last few weeks since the Republicans took over. Even though the Republicans have a few more seats in the House, no one really expects them to pass much against the Democratic Senate and President. Instead, the likely outcome of the 2010 election is more gridlock and inaction.
Healthcare reform remains relatively unpopular, with about 60% of the population saying they don't support the recent changes. Those who have healthcare as an employment benefit still like the coverage they've got, but the problem is that they're healthy enough to work a forty plus hour week and they don't actually see the costs or terms of their policy until much further down the line. Republicans will try to repeal this reform bill, but unless they offer some radically progressive alternative to the status quo they won't get much support from anyone but their most die hard base.
The economy is teetering toward a dangerous position. Bailouts and stimulus measures have stopped overall prices from falling: but unfortunately, gas is back over $3 and houses continue to crash. Instead of ever trickling down, the financial system bailout has enriched commodity holders while preventing price drops in the cost of living. Of course, even though housing wealth drops rapidly, rents have been on the way up. Workers are feeling the pinch from every direction, and if this trend continues it will only climax in a new wave of foreclosures and bankruptcies. Those, in turn, hurt the collateral that underlies our highly leveraged financial markets, and creates a new run on the banks and markets.
Will the cost of living recede again, or will wages suddenly catch up with them? The first is unlikely due to government policy, and the second is unlikely due to a large number of unemployed individuals willing to work for less. Then, when and if the next panic hits, will Obama respond with the same kind of panic that enabled Bernanke and Paulson to enrich their friends on Wall Street, or will he find the courage to act more like the Obama from the elections?
There is a whole lot going on in politics today, but it seems like Wikileaks continues to steal the show and set the debate.
As I write this, Julian Assange is sitting in British custody and awaiting extradition to Sweden on some strange sex charges. Many in the media are calling these accusations of rape, but some reports claim that the translated police complaints actually refer to an issue with a broken condom. The crime he's being charged with is relatively low level though, and Sweden promises not to continue the extradition chain to America. What Julian should be afraid of then, is that the British may choose to send him straight to D.C. instead of Sweden.
Then the American government will have to torture him to keep the truth hidden.
The latest round of diplomatic cable releases have proven a great embarrassment to the American political establishment - and an excuse to make heavy-handed threats against internet freedom, alternative media, and journalism in general.
Lieberman personally contacted Amazon.com to get the Wikileaks site pulled from their hosting services, and newspapers like the New York Times have been cautioned by other senior officials to watch what they're saying. Financial service companies from Visa and MasterCard to PayPal have all fallen to pressure to cut off Wikileaks donations. Colleges have warned students that linking to, talking about, or even reading the leaked documents could be bad for their entire careers.
In response, those three websites experienced some down time today as the internet fought back. DDOS attacks clogged up the servers and slowed business to a crawl.
So despite a lot of sound and fury from public officials in powerful positions, Wikileaks is still online and the major corporations that supported the government's secretive agenda are not.
Is this the first hint of a new turning, a new conflict that pits the political power of information-age upstarts against the established industrial-era elite? I say, bring on this non-violent fight for the freedom of information.
Best case: Everyone defaults.
Then, when the banks fail (again) we DON'T bail them out.
Reform Federal Reserve so that money creation is done through public, member owned, and not-for-profit banks: eliminate private banking representation on the board. If we're going to subsidize banking as if it were a public good, we should operate it as a public utility.
Institute simple yet gradually progressive tax system to pay for remaining public obligations. Eliminate deductions/exemptions/incentives/payroll taxes.
There ya go. All debt-related problem are solved!
Worst Case: Get ready for 30 years of austerity and a violent awakening that gives way to the unraveling of empire and an even more violent crisis that shakes the very foundations of our government & corporate economy.
What do you want the next 70 years to look like?
Korea North Korean threats are back in the news lately - this time following the attack on a South Korean naval vessel that cost 46 lives. Many have noted that this is significantly more aggressive than their usual verbal threats, but even if they are willing to risk war it is not the thing that they really want.
Context - all about the weather
The geography and climate of the peninsula is important to understanding the way Korea originally evolved prior to the arbitrary seperation along the 38th parallel:
So while the two states are close in proximity, their environments are worlds apart. The south has fertile flood plains, rolling hills, and lots of good fishing - the north has desert, mountains, and very little agricultural land.
Historically, it made sense for these regions to be united. Due to the long border with 8 million people there are currently at risk from a lack of nutrition.
Meanwhile, the nuclear testing conducted over the last few years has backfired in a spectacular way: instead of drawing in tribute from fearful neighbors, it has reduced the amount of food that rich western states are willing to donate to an increasingly unstable regime. In fact, the food aid is dwindling in real time and supplies will run out within the month of June unless something changes.
Stuck between starvation and war
Kim Jong Il isn't a very mentally well-balanced or physically healthy leader. Or he might be dead and impersonated by a puppet for the benefit of some shadowy cabal that needs an icon the people recognize and fear. Whatever the truth might be, the son he's chosen to succeed him isn't exactly going to inspire confidence in anyone. The bottom line is that there isn't a whole lot holding this society together at the moment, and if the outside sources of food dry up there would be multiple humanitarian disasters breaking out all at once: the deaths by starvation, and the inevitable military crackdown on a population with nothing left to lose from revolt.
The alternative doomsday scenario, of course, is war. And at some point, war does become the best choice for North Korea if they are forced to choose between an offense against the south and famine & internal implosion. War might be a 99% chance of loss, but there is a 100% chance that they won't produce enough food to sustain their population.
If the tone regarding talk of North Korea is different this time, it is because there are a few extra factors adding stress to an already desperate situation. While it is impossible to return to the pre-nuclear status quo of food aid in response to aggressive language, a failure to support the nutritional needs of the North will soon lead to mass death one way or the other.
Increasingly, it is "the market" that shapes our social destiny and financial choices, but what is a market and more specifically, what is our market?
An ever present concept
The freest market is the one that exists conceptually in relation to every voluntary human transaction or exchange. When the neighbor kid offers to mow your yard for $30 or $40 and you agree - you've created a market for exchanging cash and services. By publishing this website, I've provided an info-tainment product offered at no fee to you. In the broader online market, the price for content is typically set around "free."
So whether the exchange is one on one or part of a larger clearing house like the internet is for information, all voluntary trades can be classified as market activities. In theory, the aggregate of these voluntary choices is "The Free Market," but in reality many exchanges and economic choices are not entirely consensual or free to fail.
The Market in Practice
In more common terms, "The Market" is a series of political and private institutions designed to rapidly make economic choices on an international scale.
While Wall Street is the center of activity, it is actually the Treasury and the Federal Reserve that operate as the origin point for this market. As money is created, it flows from the public institutions into private banks that in turn lend the money out for a profit. As the bailouts have demonstrated, these loans will be allowed to fail - although there are plenty of other ways for money to enter society at large, none of them would be quite so profitable for the entrenched interests who already have enough wealth and influence to insure that they get what they want.
Typically, the majority of a bank's loans are issued to state and local governments, large corporations, or for residential mortgages. From there, smaller businesses can acquire currency by providing products & services to those entities, and labor can acquire currency by working directly for someone else who is in the loop. In short, this is how money trickles down from the rich and occasionally makes it in to the hands of the working poor.
State of the Market
The biggest banks not only have the most influence over the Federal Reserve, they also have an infinitely implicit guarantee of profitability. While they are theoretically paid to make large economic choices in a market-like way, the removal of their risk distorts the choices they'll ultimately make. This moral hazard is the status quo and its hard to believe it is an accident or an honest attempt at maximizing efficiency.
When the markets go down as they have over the last few weeks, what is actually happening is that those who are voluntarily invested in the system are walking away and looking for something a little less rigged. Inevitably, when the next emergency bailout or "market support" is announced, the "markets" will appear to do better but only in that they are even less functional as markets.
This is a crisis of legitimacy, and the cure is part of the cycle that devalues our market's market-like functions. A few patches and bandaids is not "reform," rebuilding from the ashes of a failed system will be the only true reform.
Until then, good luck...