The Emperor Has No Clothes!

Butler Shaffer is a free man. He has also been called an anarchist. Butler Shaffer earns a living by teaching at a law school, where it is certain he is unlike few if any other law professors on the planet. Why, because he recognizes that the ultimate source of sovereign power is the individual, not the state.

In a recent essay published at Lew Rockwell's site, Butler Shaffer pointed out the intellectual and political bankruptcy of the Republican Party. According to Shaffer, the GOP, the "Grand Old Party," is now on a crusade to create "resistance to Obama's socialist agenda over the next four years," and to "stop Obama's plans to bring socialism to America."

Yet, Shaffer asks, where were the Republicans "when their GOP president, George W. Bush, was engaging in wars that put billions of dollars into the pockets of their corporate friends, and led the same president to state, to members of Congress, that he would declare martial law if they did not pass legislation bestowing hundreds of billions of dollars of largess upon Wall Street banking interests? Is the GOP so hopelessly bankrupt that some of its members must resort to a distinction without meaning that condemns state socialism while ignoring its own contributions to the state-sponsored economic destruction emanating from a Republican White House?" Shaffer asks is the Grand Old Party "henceforth to be known as the "Grasping Omnipotent Plutocracy?"

Shaffer points out the "fundamental distinction" between the mythical "free market" and the currently dominant "business system" is the "socializing the costs of doing business, while privatizing the profits." The Bailouts, projected to eventually cost in the neighborhood of $7.7 trillion are evidence. What makes a large financial institution or auto manufacturer for that matter worthy of a Bailout? This last question is being asked now that the Democrats are getting into the plunder and pillage mode to protect their power base funded in large measure by the precious union contracts that are bankrupting American car companies. What disqualifies individual home owners from a Bailout? Clearly the only meaningful distinction is membership in the Plutocracy.

And what pray tell does this really mean to each of us? Shaffer shows the math is simple. Each of us, every man, woman and child in the United States is now on the hook for about $25,000 in additional debt. Divide the cost of the bailout by the population of the country: $7,700,000,000,000 by 300,000,000 and you'll find The Rainmaker has understated the number a tad. Hopefully you enjoyed the party over the past few months.

The Rainmaker doesn't mean to quibble with Butler Shaffer, in fact we have no disagreement with him at all beyond the fact that he doesn't carry the analysis far enough.

In fact, Butler Shaffer is correct and the Republican Administration's actions are socializing risk while privatizing profit. But, Congressional Democrats have worked hand in glove with the Administration. Now, the same folks who designed and are executing the Bailout for the Bush Administration have been tapped by the incoming Democratic Administration to serve as our economic stewards for the at least the next four years. Clearly there is a consensus in Washington among the Republicrat and Demopublican factions of the Plutocracy to change nothing.

And, the hits just keep on coming. There will eventually be another $3 trillion of debt associated with the current wars. And, beginning in 2010 the Medicare system is cash flow negative, which is a $36.6 trillion problem. Then in 2017 Social Security goes under water at an unfunded cost of $7 trillion. There is also the nontrivial matter of unfunded pension liabilities guaranteed by the government and other miscellaneous obligations that add up to another $600 million. There is also the national debt accumulated over the past fifty or so years, which was about $8 trillion back in July. All those numbers on the entitlements and pensions are according to Fortune Magazine in their special report on the U.S. economy published November 24, 2003.

Thus the real financial fiasco is thought to total at least $55 trillion and, brace yourself, your share is in the neighborhood of $180,000 rather than the mere $25,000 suggested by Butler Shaffer for the fall follies in Washington. And, the politicians aren't done yet.

Neither are you. A few days ago we pointed out that government can't give anything to anyone without eventually taking it from someone else. That someone else is you, your children and your grandchildren. Where will you and each member of your family come up with that $180,000? Many of you will say tax the rich and of course to some degree that will happen, but the rich ways of gaming the system to limit their exposure. Others will say tax the corporations and that will happen. But ultimately those corporate taxes will be passed along to you as higher prices. One way or another the government is coming to your home and your family looking for that money.

The Rainmaker thanks Roger for the following thought provoking observation written by Scottish history professor Alexander Tyler in the late 18th century on the subject of the end of the Athenian Republic:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always vote for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During these 200 years, those nations always progressed through the following sequence:

1. From bondage to spiritual faith;
2. From spiritual Faith to great courage;
3. From courage to liberty;
4. From liberty to abundance;
5. From abundance to complacency;
6. From complacency to apathy;
7. From apathy to dependence; and,
8. From dependence back into bondage."

If you have any doubts about what is happening in these United States, read "Dependent on DC," by Charlotte Twight.

Can the American Republic be the exception Tyler's theory? That is up to us. Do your really expect to get the change you can believe in from the Obama Administration? If so there is also a bridge you might be interested in buying.

Or, is it perhaps time to follow the example of John Galt and vote with our feet before it is too late?

Words of Wisdom

The following observations are true although the author is unknown to the Rainmaker. Please read, consider and share them as you see fit.

First, it is impossible to legislate the poor into financial freedom by legislating the wealthy out of financial freedom or even into poverty.

Second, what one person receives without working for, another person must work for without receiving.

Third, the government cannot give anybody anything that the government does not first take from somebody else.

Fourth, when half the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody is going to get what they work for, that is about the end of any nation.

Fifth, it is simply impossible to multiply wealth by dividing it.

Finally, it is simply impossible to legislate morality.

The Rainmaker thanks Peter Poranski for inspiring this post.

Sir Francis Bacon Part Two

A few days ago The Rainmaker published a discussion of a very short but interesting set of propositions by Sir Francis BAcon, politician, statesman, poet, author, philosopher and enthusiastic promoter of the scientific revolution. That post was inspired by our correspondendent Diana. As promised in that post our reactions will be provided to both Bacon's "Stumbling-Blocks to Truth," and Diana's points to ponder. Diana's material is highlighted in Bold, the original text of The Rainmaker's original post will appear in italics and today's text will look just like this.

As a thinking society, what can we learn about ourselves from assessing Sir Roger Bacon's 'Stumbling-Blocks to Truth?'

All The Rainmaker really knows about Roger Bacon is that he was a pretty amazing dude...The Rainmaker had never heard of these four stumbling-blocks to groking the truth. An Aside: "Grok" is a term from Robert Heinlein's "Stranger in a Strange Land," the first libertarian book The Rainmaker ever read (almost 40 years ago...ouch!) and the term "grok" means "to know completely." Obviously the definition of "grok" has been grossly simplified for brevity but any fundamentalist Heinlein fans will have to bear with this for now. It's still a great read after all these years.

Back on track: Here is what Peter's email for Diana said about Bacon's blocks in full: (The Rainmaker's comments are inserted into Diana's text in regular type.)

Four very significant stumbling-blocks (are) in the way of grasping the truth, which hinder every man however learned, and scarcely allow anyone to win a clear title to wisdom and truth. (Circa 1214-1294)

They are:

1) submission to faulty and unworthy authority

The Rainmaker agrees that Sir Robert nailed the problem pretty concisely yet compreshesively and suspects that Machiavelli would consider #1 above to be an Oxymoron.

2) long-standing continuance of custom

The Rainmaker suspects that Hobbs would disagree the #2 is always an obstacle. The Rainmaker can almost anticipate George Wills column to refute this proposition.

3) popular prejudice and regard to the opinion of the unlearned

4) concealment of ones own ignorance while exhibiting wisdom"

The Rainmaker strongly suspects that Sir Roger Bacon would be glad he didn't live in the era of Congressional hearings, spin doctors and cable news networks as those pertain to items #3 and #4.

The Rainmaker is no philosopher but sees nothing to disagree with in the four statements. All four are indeed stumbling-blocks in the way of grasping the truth.

The foregoing was obviously, at least to The Rainmaker Bacon's material. The following is from Diana by way of her spouse Peter P.

"We seek truth to analyze problems and to avoid making similar mistakes in the future yet in our politically charged world we find intellectual dihonesty and purposeful chaos.

We ask ourselves:

1) Are these stumbling-blocks to truth and wisdom being used against us?

Yes, and The Rainmaker believes they are being used with malice aforethought. Search for this website featuring the "Money as Debt" movie and invest 45 minutes, then let The Rainmaker know if you agree or disagree with this answer.

2) Who in government is telling us the truth?

Only those with their mouths shut who are not writing anything. Seriously The Rainmaker believes one can trust that government which is closest to home most and hold that government more accountable. The closer one gets to the center (a state capital or Washington) the less trustworthy and the less accountable the politician or bureaucrat.

3) Does the media use it's medium to keep us from obtaining the truth and wisdom?

The media is a medium of obfuscation, interest group propaganda, sensationalism and entertainment. The media will keep us from obtaining the truth only if we allow it to do that. In the Rainmaker's opinion we are each on our own hook when it comes to becoming informed and wise.

4) How are the candidates using deception to sway our thinking?

In every way they can conceive of in order to obtain their respective real objectives, which are almost universally applicable to any candidate for any office:
*To be elected;
*To grow (pick at least two) powerful, wealthy and famous at public expense;
*To maximize their personal perogative's and perks;
*To use their power to peddle influence in order to lavishly fund their reelection campaigns;
*To be reelected often at any cost, which usually means don't rock the boat and go along to get along;
*To conceal "their own ignorance," confusion, uncertainty and insecurities while exhibiting apparent "wisdom" that in reality is merely conventional wisdom;
*To maximise their own perceived power and privilege;
*To leave a "legacy" of honor purchased at the taxpayer's cost and the soldier's life, both spent as necessary to furthur the politicians self interest; and,
*To do the right thing for the country, its citizens and the world if it doesn't conflict with any of the preceeding objectives.

The Rainmaker believes that if asked, any politician will answer that his or her objective is the last one listed and further, that being masters of "Cognitive Dissonance" politicians and bureaucrats have usually convinced themselves that is in fact the case. However, it is the Rainmaker's opinion that the previous eight objectives are pretty much listed in the real world order of importance.

5) How did we get into this economic crise?

The Rainmaker believes the United State's monetary system is inherently dishonest. As the monetary system is the medium in which a society functions, when it is poluted it will eventually do to society what dirty water eventually does to a fish--kill it. There has never been a paper money, debt money system that has managed to survive 100 years. Ours is about 94 years old.

Therefore since the medium in which society functions is dishonest--no matter how well meaning and personally honest most people in a society might be and usually are in their day to day lives--the society itself is tainted. Periodic economic dislocations are probably inevitable in any society, but the dislocations experienced by a society function with dishonest money are more frequent, more severe and ultimately fatal. That is The Rainmaker's observation regarding Diana's final point.

The Rainmaker offers the following support of this observation. That support is in the form of three books.

The first is "Money and Debt" by Thomas Greco. It can be found at a website called "Reinventing Money" in the "library" on that site and can be downloaded for free (it's only a 65 pages). It comes in three parts (meaning separate pdf files).

The second is "Debt Virus" by Dr. Jacques Jaidaran M.D. and it can be found at most online booksellers. "Debt Virus" is excellent although longer and a more expensive option than "Money and Debt.

And if really ambitious, read "Wealth, Virtual Wealth and Debt," written by an English Nobel Prize winning physicist Frederick Soddy. It was written about 80 years ago and reads that way. But it is well worth the effort.

Just something to ponder...

Obviously The Rainmaker's hot button was pushed by Diana's material. Hopefully you will find some value in all of this. Even if it is only value equal to a dime, it is 30% more in terms of intrinsic worth than the paper and ink we call money. This is because a dime is actually worth more regardless of the denomination of the bill the paper and ink comprise. That's right the intrinsic value (the worth of each bill, be is $1.00 or $100.00) is about $0.07.

Sir Francis Bacon

Today The Rainmaker received an email sent by Peter P. on behalf of his spouse Diana. The subject line was "Only For The Intellectually Curious."

The first reaction was "Yeah, right." But then The Rainmaker started to read. Even a blind squirrel can find a nut once every now and then. And The Rainmaker is grateful to be the squirrel that decided to read Diana's insightful thoughts, questions and observations. She might have been Socrates in a former life!

The Rainmaker is really happy to have invested the time to read and ponder Diana's observations on Bacon as well as her wise questions. Hopefully you won't be dissappointed that to have this material inflicted on yourselves.

The email begins by asking the question:

"As a thinking society, what can we learn about ourselves from assessing Sir Roger Bacon's 'Stumbling-Blocks to Truth?'"

All The Rainmaker really knows about Roger Bacon is that he was a pretty amazing dude who lived about the same time as a fellow named Shakespeare was alleged to have lived. There is an emerging consensus (although still significant doubt) that if Shakespeare didn't right his material Bacon is a very likely suspect to be ghost writer. The Rainmaker had never heard of these four stumbling-blocks to groking the truth. An Aside: "Grok" is a term from Robert Heinlein's "Stranger in a Strange Land," the first libertarian book I ever read (almost 40 years ago...ouch!) and the term "grok" means "to know completely." Obviously the definition of "grok" has been grossly simplified for brevity but any fundamentalist Heinlein fans will have to bear with this for now. It's still a great read after all these years.

Back on track: Here is what Peter's email for Diana said about them in full:

"Four very significant stumbling-blocks (are) in the way of grasping the truth, which hinder every man however learned, and scarcely allow anyone to win a clear title to wisdom and truth. (Circa 1214-1294)

They are:

1) submission to faulty and unworthy authority
2) long-standing continuance of custom
3) popular prejudice and regard to the opinion of the unlearned
4) concealment of ones own ignorance while exhibiting wisdom"

The foregoing was obviously, at least to me Bacon's material. The following is from Diana by way of her spouse Peter P.

"We seek truth to analyze problems and to avoid making similar mistakes in the future yet in our politically charged world we find intellectual dihonesty and purposeful chaos.

We ask ourselves:

1) Are these stumbling-blocks to truth and wisdom being used against us?
2) Who in government is telling us the truth?
3) Does the media use it's medium to keep us from obtaining the truth and wisdom?
4) How are the candidates using deception to sway our thinking?
5) How did we get into this economic crise?

Just something to ponder..."

The Rainmaker commented on the Bacon material and responded to Diana's thoughts and points to ponder. Rather than be a typical media outlet The Rainmaker will give you some time to ponder these points on your own before poluting your thought process with Rainmaker opinion, suposition and prejudice. In a day or two, perhaps longer another post will explore the already written observations, thoughts, conclusions, rants and, hopefully, provide the occasional insight.

Until then, hasta la vista!

Interesting Times

Earlier today I spoke with my friend Greg Fossedal on the telephone and we agreed that the election is over but for the counting. Obama is opening a lead over McCain that has been expanding ever since the financial crises caught our attention. Neither of us can imagine a scenario that wins the election of McCain. Of course this is the year of the unexpected and our expectation of the electoral outcome smacks of conventional wisdom, which is usually wrong.

Then a gentleman with whom I correspond but who I have never personally met, Peter Poranski (obviously an Irishman), made a comment in an email, which I found fascinating. Peter said that if we elect McCain we'll be a Socialist country in two years, but if we elect Obama we'll be there in six months. So, that leads me to ask, if we are ending up in the same place either way, why vote for the cheap imitation? Clearly "We are the change we have been waiting for!" Obama is the "The Man!"

Nevertheless, all is not well. I write this tonight on my balcony, having watched the sunset over the Potomac, the monuments and, I fear, the Republic.

Today the White House is occupied by a man who pays lip service to Free Markets but then tells the Secretary of the Treasury to do what needs to be done, regardless of the politics and candidate McCain echos that after the Bailout's initial defeat in the House but adds, regardless of the law!

A similar point of view led his predecessor Lyndon Johnson to create the diabolical twins Freddie and Fanny in an effort to hide the financial implications of financing the war in Viet Nam. In 1965, LBJ also brought us the blessings of Medicare, which goes into the red on a cash flow basis in 2010 and depletes it's unfunded Congresional IOUs in 2018; falling 20% short of breakeven thereafter.

Another President, FDR, created another Ponzie Scheme known as Social Security to show "progress" and buy votes in the midst of the Great Depression. This piece of financial sleight of hand goes into cash flow negativity in 2017 and exhausts its unfunded Congressional IOUs in 2042; falling 30% short of returning the "contributions" made by employees thereafter.

Imagine paying into a health insurance plan or savings account and discovering that when you need the money back you should forget about any return on investment at all and will only receive back 80 or 70 cents, respectively on these two entitlement programs, on each dollar of principle you deposited into the system?

Imagine that the consensus solution to put these trains back on the track is to raise the payroll tax, the most regressive tax imposed on Americans, as much as 50% while cutting benefits to close the 20% Medicare and 30% Social Security shortfall.

In other words, all that money we paid into the Medicare and Scoial Seurity surpluses between the 80's and now simply evaporates. Meanwhile we have the satisfaction of knowing the money stolen from each or our pachecks every payday by that bandit FICA has helped fund a solvent and robust Federal Thrift Savings Plan for Federal Employees and Congress Critters, featuring those dreaded personal accounts the rest of us can't be trusted with. FICA has also paid for series of wars, weapons systems and boondogles like the infamous "Bridge to Nowhere." Doesn't all that make you proud to be an American?

Wow, if Wall Street did that we'd all be howling that those greedy capitalists should be sent off to jail. Yet your elected leaders over at least 40+ years have done exactly that. My friends (with apologies to John McCain) we have been taken for a ride. Neiher Senator Status nor Senator Quo, as my friend Greg Fossedal calls Obama and McCain, will change this scenario if elected President this November.

As the old Chinese curse says, "May you live in interesting times." We are well and truly cursed.

The Invisible Hand

Al Gore recently made news saying within ten years non carbon sources should provide all electricity generation in the United States. That would be a laudable outcome. Of course it won't happen unless there is a government mandate. Mr. Gore obviously has no problem with government making these decisions. But, candidly, that isn't the way the world really works. How do we know?

We know because centralized decision making has failed over and over. The grand experiments with state control of the economy failed repeatedly, most notably in the former USSR and the People's Republic of China. In fact the Chinese ecnomic miracle was made possible by Comrade Deng's decision to embrace decentralized economic decision making a few decades ago.

Other less well known failures of centralized economic decision making abound, featuring "deciders" such as the despot de jure of various third world countries as well as World Bank, the International Monetary Fund or Fannie Mae.

But what is the alternative?

Clearly, given a chance people will make the best economic decisions they can. Eventually they do the right thing and positive unintended consequences result for all of us.

Today we have two examples of this phenomena reported in the Washington Post. One is an effort by baseball, and other pro sports to "go green." (See: "Green Becomes the Official Color of Baseball" July 19, 2008 at http://www.washingtonpost.com/) Another describes an economic phenomena resulting in 10% of electric power in Texas now coming from wind energy. (See: "The Aswer's In The Wind--and Sun" July 19, 2008 at http://www.washingtonpost.com/)

These examples required zero government intervention or interference. People and corporations are following their elightened self interest; simply doing well by doing good.

Back in 1776 at the same time as the American experiement inspired by self interest began exploring a new theory of individual sovereignty in the "Declaration of Independence," a Scottsman named Adam Smith wrote "The Wealth of Nations." In it he predicted that "the invisible hand" would motivate the exact sort of outcomes as the Washington Post reported in today's paper.

I wonder how the baseball teams and wind generation companies managed without Al Gore, Congress and whoever becomes President telling them what to do.