By Mark Alvarez-Anderson, on August 16th, 2011
The key to an economic recovery does not rest in Washington. The key to an economic recovery is to put Washington through a recession. Any efforts by politicians to con you into believing they’re stimulating some kind of economic progress – again, bribing you with your own money – by promoting one form of energy or another should be detected as a ruse.
Some politicians have gone “green” in the name of curtailing “dependence on fossil fuels” and “foreign oil.” It’s a sham. Why not promote a certain type of underwear in the name of curtailing dependency on a foreign brand?
The fundamental problem is that most politicians and central planners view the economy as a blob to be manipulated, rather than a complex capital structure involving individuals making choices in exchanges, a process of production, and a price mechanism.
The reason why the United States is so dependent upon foreign oil is due to policies that have already been put in place. The solution, then, is to repeal and correct these policies – not creating new legislation.
Artificially low interest rates, brought on by loose monetary policy at the FOMC, drives capital overseas (by deploying unearned income from a printing press, disconnecting consumption from production, capital is also consumed). Capital naturally gravitates to cheaper, more efficient, higher-yielding economies. Rather than generating revenue and income, the nation spends beyond its means.
If a person, firm, or nation is dependent upon inflationary credit expansion (as opposed to credit expansion from savings), then that person, firm, or nation is insolvent and inefficient. We are spending beyond our means, which – yes – engenders dependence upon cheaper markets to supply us with production.
If you want to reduce dependence upon foreign “anything,” then the Fed has to lift interest rates and Washington has to abandon the spending orgy. Dollars that have been accumulating in foreign reserves will then come flowing back into the system.
I know “clean” energy sounds so nice, so attacking it is very “environmentally-incorrect.” I will put everything I possibly can into layman’s terms. Let’s start with the following axiom: we consume energy in everything we do. If you’re that environmentally-conscious, you shouldn’t be online reading this right now because you’re using electricity which is consuming energy.
Solar energy sounds so nice. After all, it comes from the sun. But let’s not forget that there is a process of production here. Take, for example, the solarization of a house. Solar energy requires panels, charge controllers, batteries, inverters, etc. And then let’s not forget capital asset depreciation. Energy is consumed during the process of production.
If “clean” energy has a positive yield, then it will be profitable and private enterprise will pony up the capital. The government need not encourage this. If “clean” energy has a negative yield, then this means that it is unprofitable and dependent on so-called “dirty” energy for its sustenance. It would be akin to consuming 1,000 blueberries for every 500 you’re growing – nobody in their right mind would pursue that course absent government subsidies. Somewhere, you have to make up the difference.
This leads me to the following axiom: the most profitable and economically-efficient form of energy, within the construct of the unhampered market, is also the cleanest form of energy.
The best ecological hygienist is the unhampered market. Suppose a logging company owns a forest. That logging company can clear-cut the forest, say, tripling immediate income. However, this must be weighed against diminishing future income, or the capital value of the forest as a whole. Suppose, however, this is government property. This calculation no longer needs to be made, and the objective is going to be rapid extraction of resources.
No shocker, then, that government is the biggest abuser of the environment and waster of resources. Look at the atomic weapons tests done in the Nevada desert – and right on top of our own military service members.
The government does not sustain itself by satisfying consumer demands, but through compulsory taxation. Government subsidies to, and control over, industry diminishes the need to set prices pursuant to supply vs. demand. Why? Because sustenance is no longer dependent upon having to satisfy consumer demands. Sustenance is disconnected from the satisfaction of consumer demands.
It’s the price mechanism that ensures resources are allocated and managed efficiently. The price mechanism can only function within the construct of the unhampered market, allowing for producers to set prices pursuant to supply vs. demand (i.e. market-clearing prices). The scarcer the supply, the greater the demand, the higher the price. Consumption runs inversely with prices.
Government subsidies distort prices, interfering with the price mechanism, and cause prices to be set above, or below, market-clearing prices. There is a paradox in government policy in that the government encourages consumption without production (in the name of economic stimulus), tells us that we should conserve resources, while simultaneously punishing “price gouging.” Within the construct of the unhampered market, there can’t be price gouging any more than there can be wage gouging, since vendors can’t short inventories at prices beyond what consumers are both willing and able to pay.
Prices send signals to entrepreneurs, telling them where to deploy capital. Prices tell consumers what to buy and what not to buy. The price mechanism can only function within the construct of an unhampered market. There’s no need for the government to encourage or discourage the use of any kind of energy. And let’s not forget that tax credits are subsidies camouflaged as tax cuts. A tax credit merely allows a person to use a portion of income for a specific purpose (i.e. indirect subsidy). (See: http://www.businesstaxrecovery.com/articleupdates/definition-tax-credit)
I write as a native-Minnesotan. Minnesota is one of the first states that employed the use of ethanol-blend fuels. Let me say that if I see anything with ethanol in it, I avoid it like the plague. It’s “cheap” for a reason; it’s inefficient.
Only can politicians get away with turning efficient food into inefficient fuel. If politicians keep at it, we will soon be filling our automobiles up with corn and drinking motor oil. Maybe after installing those solar panels, the government can begin shooting those pollution particles (See: http://www.telegraph.co.uk/earth/environment/climatechange/5128109/Shoot-pollution-particles-into-atmosphere-to-cool-Earth-says-Obama-adviser.html) – which supposedly ”clean energy” is designed to prevent – into the atmosphere in order to block the sun and “save” us from “global warming.” Sounds like the perfect plan. It’s a plan only a politician in D.C. could dream up.
Soon, we will not only be dependent upon foreign sources of “fossil fuels,” but also so-called “clean energy.” Unless you get out and support Ron Paul for president.
By Thomas Knapp, on November 17th, 2010
Ever heard the one about “a tale told by an idiot, full of sound and fury, signifying nothing?”
The congressional earmarks saga is a tale told by charlatans trying to distract you from the Really Bad Stuff.
For those who don’t follow this stuff closely, here’s a simple version of how earmarks work:
1) Congress appropriates $130 billion for “Agriculture” (yes, that number is close to the current figure).
2) The Honorable Gentleman from Iowa puts an item — an “earmark” — in that appropriation requiring that the US Department of Agriculture $10 million of that $130 billion to fund the [the Honorable Gentleman from Iowa's name] Corn Research Center in Ames (I just made that up, but I wouldn’t be surprised if it resembles a real earmark).
The case against earmarks is that they:
- Are “pork” used by incumbents to buy re-election (”I earmarked $50 million in the Defense budget to ensure that the little dials on the Army’s radios would be manufactured right here in Secaucus”).
- Promote corruption (Acme Guide Missile Systems, Inc. gives a congresscritter a big campaign donation or a brown paper sack full of cash; said congresscritter earmarks an even bigger amount in a way that forces it to be spent with Acme Guided Missile Systems, Inc.).
- Result in silly/extraneous spending just to bring home the bacon (I seem to recall reading that the late US Senator Robert Byrd [D-WVa] once earmarked money to restore an old store as an “historic landmark” because it was the second location in the US to sell Chanel No. 5 perfume).
All of these things may be true, but here’s the case for earmarks:
- They generally constitute less than 1% of the federal government’s total budget. If that rate holds true for Agriculture, call it $1.3 billion total in that particular area. All the rearing and pitching about them is mostly just a way to distract from the fact that Congress is spending $128.7 billion in non-earmarked funds on Agriculture. Think maybe there’s a little fat in that bigger piece of the budget puzzle? But that doesn’t get talked about, because everyone’s throwing a fit about the Corn Research Center or whatever.
- They limit the power of the executive. Instead of handing Barack Obama $700 billion for “defense” and turning him loose to buy lollipops for the Russians and bombard Baghdad with packages of mail-order Swiss Colony cheese logs, Congress tells him that at least some of that money has to be spent in very particular ways. Granted, it pretty much amounts to those cheese logs going to Boeing workers in St. Louis instead, but any leash on the president, even one held by that bunch of reprobates down the street at the Capitol, is better than no leash at all.
So the two-case for earmarks is a) they’re not a big deal in the scheme of things and b) they may have at least one mildly positive feature.
I agree that that’s not a very strong case, but it’s a case, at least.
The important thing to remember is that all the caterwauling over it is intended to distract your attention from the 99% of the federal budget that isn’t earmarked. It’s pretty much a more boring version of “teh gays are gonna GETTT YEWWW!” or “Osama bin Laden may be under your bed right now — take off your shoes and stand in front of the porno scanner, please” or “the brown people who speak Spanish are going to take your job if you don’t give us another $10 billion to fight them off.”
Watch the birdie.
By Thomas Knapp, on August 31st, 2010
Per Reuters:
The Muslim center planned near the site of the World Trade Center attack could qualify for tax-free financing, a spokesman for City Comptroller John Liu said on Friday, and Liu is willing to consider approving the public subsidy.
There’s some weasel wording in there, so let’s unpack it.
The issue isn’t “tax-exempt financing” per se. All financing (and everything else!) should be tax-exempt.
Nor is “tax-exempt financing” by definition a “subsidy.” Not taking money from someone isn’t the same thing as giving money to someone.
But this actually is a subsidy — it’s one of those “public-private partnership” things, where a quasi-governmental organization (a “local development corporation”) is allowed to issue bonds (the interest on which is tax-exempt to the bondholder, hence the “tax-exempt financing” language) to complete the project. If the project goes under, the taxpayer takes the hit for payment on the bonds.
Note to Park51/Cordoba House’s principals: You shouldn’t even be thinking about trying this.
A majority of the populace appears to have already swallowed the “Ground Zero Mosque” demagoguery hook, line and sinker and are hell-bent on stopping you from building your cultural center.
Of the minority standing up for your property rights and religious freedoms, a significant portion of us are civil (or uncivil, as the case may be) libertarians who are standing up only for your property rights and religious freedom.
Most of us aren’t Muslims or particularly enamored of Islam.
Most of us don’t really give a tinker’s damn whether the thing gets built or not — we’re just standing up for your right to build it, if you choose to, on your own property and with your own money.
It’s a fragile coalition centered around rights versus might, freedom versus compulsion, tolerance versus suppression.
As soon as you start claiming a “right” to stick your hand in taxpayers’ wallets for a bailout if your project goes south on you, that coalition disintegrates.
So don’t do it.
By Trace Mayer, on June 7th, 2010
The entire system around which daily life is organized in the United States, undergirded by the Federal Reserve Note dollar, is crumbling. Both long-term trends and externalities, like the BP mess, are natural and predictable consequences. Inertia is such a strong force that the avoidable often becomes, in the macro, unavoidable. But individually you can starve the vampire squid institutions and organizations and in doing so likely increase your health, wealth and happiness. 
PUNISHMENT FOR NATIONAL SINS
In the grand picture this BP mess in the Gulf of Mexico is a tiny and immaterial result from using a fiat currency and fractional reserve banking system.
The Founding Fathers were a particularly contentious lot during the Constitutional Convention. A major point of disagreement was slavery and the slave-trade compromise hinged on a clause found in the United States Constitution Article I Section 9 Clause 1 which contained an interesting word: dollar. Obviously, if the term dollar did not have a commonly accepted definition then this slave-trade compromise would not have been agreed to in the convention. But now the question What Is A Dollar? has no intelligible answer under federal law.
George Mason, a slaveowner, famous American Revolutionary Statesman, Delegate from Virginia to the Constitutional Convention and the “Father of the Bill of Rights” said,
Every master of slaves is born a petty tyrant. They bring the judgement of heaven upon a country. As nations cannot be rewarded or punished in the next world, they must be in this. By an inevitable chain of causes and effects, Providence punishes national sins, by national calamities.
The slavery issue, which could have been addressed and settled at the Founding, was instead, because of inertia, postponed until it erupted in a bloody crisis led by America’s greatest despot. The monetary issue, in contrast, was settled at the Founding and has been steadily eroded since until the United States and the world now finds itself in a very difficult and dangerous predicament.
Individuals, cities, counties and States are using Federal Reserve Note Dollars as legal tender and this is unconstitutional. Of course, the United States Supreme Court has not and most likely will never address the issue and so it is left to fester and boil until an avoidable crisis becomes unavoidable. Dr. Edwin Vieira in Pieces of Eight foresaw, chronicled and forewarned about all of this. It seems Seth Lipsky of the Wall Street Journal, like most in the Establishment, is a little late, ignorantly or deliberately? Inertia.
GOVERNMENT SUBSIDIZED OIL
Since Henry Ford refined the assembly line into an efficient factory the United States has been favoring oil through tax policy which has artificially stimulated demand. Now the entire American infrastructure has been built around this premise and as Dick Cheney says, “The American way of life is not negotiable.” Just ask Saddam, Obama or Ron Paul.
Of course, a couple natural byproducts of this favorable tax policy for both supply and demand of oil, ranging from highway funding or the public school transportation system to the primary residence interest tax deduction or municipal bond tax exemption, is lower cost resulting in increased demand and the rise of special interest groups such as Big Oil. Then supply which would most likely not ordinarily be produced is sought for production instead of substitute or alternative goods which often encounter legislative barriers to entry. Special legislation is enacted to protect suppliers against externalities so that the commodity can be provided at a lower cost which further feeds demand. The governmental intervention changes the economics; the economics guide the culture and ultimately impacts behavior.
Then, BAM! An externality black swan lands like the Exxon Valdez mess or BP’s massive pollution of the Gulf of Mexico. Sure, Exxon probably does not intend to wreck the oil tanker but if they can privatize the gains and socialize the losses then it would create shareholder value.
While Exxon polluted Valdez on 24 March 1989 the case was finally heard on appeal to the United States Supreme Court on 27 February 2008, about 19 years later and the decision merely remanded the case back down to the 9th Circuit Court of Appeals and limited the punitive damages to the compensatory damages of $507.5M even though Exxon’s behavior was ‘worse than negligent but less than malicious’. In the meantime, after the first verdict JP Morgan Chase created the first CDS for Exxon in 1994 because of the initial $5B punitive damage award and inflation has since eroded the vast majority of the value of 507.5M Federal Reserve Note Dollars. Thus began the rise of the derivative industry.
While President Obama is strutting around browbeating BP the outcome will likely be similar to Exxon’s which is still unresolved even though three United States Presidents have completed five terms. For example, Exxon posted record profits of $45.2B in 2008. This is an example of privatizing the gains and socializing the losses. Likewise BP will probably privatize the gains with their average net income for the last three years of $21.316B while socializing most of the losses resulting from this massive corporate defecation in the Gulf. Inertia at work to sustain the unsustainable system which had its genesis decades ago.
CONCLUSION
BP’s massive pollution of the Gulf of Mexico will have a tremendous negative impact on millions and millions of people. But BP, like the investment banks they are intertwined with, will likely be able to privatize the gains from oil production and socialize many of the losses. This is just a single example of ‘an inevitable chain of causes and effects’ that are driven by physical and economic law.
But if you think the pollution in the Gulf of Mexico is tremendous then I doubt you understand the scale of the damaging externalities resulting from the current worldwide monetary system. In the grand picture this BP mess in the Gulf of Mexico is a tiny and immaterial result from using a fiat currency and fractional reserve banking system. Exxon Valdez, BP Gulf of Mexico, Chernobyl, Soylent Green, Union Carbide’s Bhopal, the American military, the Health Care Bill, Monsanto’s Food Inc, and etc.
Using a sound money system as demanded by the United States Constitution while boycotting fractional reserve banking, in other words starving the vampire squid, is one way to protect and preserve both your personal health and the environment. In other words, stop paying these institutions and organizations to kill you and destroy the environment! To the extent possible, move your money, support HR 4248, alter your habits, change your buying patterns, cancel your cable, buy gold, and boycott unethical, immoral and damaging companies. You will likely be healthier, wealthier and happier if you do.
DISCLOSURE: Long physical gold, silver and platinum with no interest the XOM, BP, the problematic SLV or GLD ETFs or the platinum ETFs.
By Eldon Mast, on March 4th, 2010
Virginia’s Landmark Solar Power Project to be Hosted on University Campus
Eastern Mennonite University (EMU) in Harrisonburg will soon be the site of Virginia’s first commercial-scale solar photovoltaic (PV) installation in the Commonwealth.
The new installation is part of a proposed revision to the campus master plan to allow for approximately 600 kilowatts of solar energy panels to be installed on the campus. The installation is expected to generate about 12 percent of EMU’s total electricity use and save the university an estimated $2 million in avoided electricity costs over the 25-year project.
EMU was one of the three national leaders in efficient energy use out of 90 colleges and universities surveyed by the Association of Higher Education Facilities Officers in 2007. In addition to the new solar initiative, EMU sponsors numerous green programs on campus, including an institutional commitment to sustainability.
Under an innovative financing program that has been used extensively by universities in states like California and Colorado, EMU will effectively “host” the installation, paying only for the electricity generated by the panels installed on the campus through a 25-year power purchase agreement with Secure Futures, LLC, a private solar development company based in Staunton, Va.
“This will represent a signature project for EMU, as it embodies the stewardship values of our institution as well as building on our record as a leading green university,” said EMU President Loren Swartzendruber.
“The signature components of this project include using state-of-the-art solar technology, and, through Secure Futures’ unique financing model, supporting a three-tiered sustainability program including campus, curriculum and community sustainability,” said Ron Piper, vice president for finance at EMU.
Staunton-based Secure Futures, LLC, obtained a grant commitment of $225,000 from the Virginia Department of Mines, Minerals and Energy (DMME) for the project. Tony Smith, CEO of Secure Futures, said “this project will represent a milestone for renewable energy in Virginia insofar as scale and impact. We’re excited to see a first example of a solar project achieving electricity rates comparable to those offered on the electric grid, especially since Virginia has among the lowest electricity rates in the country.”
Ken Jurman, renewable energy manager for the Virginia Department of Mines, Minerals and Energy (DMME), noted that “The EMU solar project as described fits well within the scope and intent of Virginia energy policy to encourage renewable energy resources. I’m very pleased that this initiative is moving ahead – it’s exactly the kind of thing we want to encourage across the Commonwealth to move toward a sustainable energy future.”
Secure Futures designs, develops, finances and maintains turnkey distributed solar solutions in collaboration with tax-exempt entities to reduce their electricity costs and to create environmental and economic benefits for customers and their communities.
By Winton Bates, on February 26th, 2010
‘Where have you been? Have you been hiding from me?’ I saw it was Jim speaking when I looked up from reading the paper. I hadn’t exactly been avoiding him, but then I hadn’t really missed not seeing him for a few months.
Jim asked me if I could give him a lift home. He gave me some long and convoluted explanation about why he needed a lift, but I thought he was probably just looking for a captive audience – someone to talk to about something that was on his mind.
He certainly did have something on his mind. As soon as we started off he asked me what I thought of the outcome of the Copenhagen climate change summit. I admitted that I thought it was fairly predictable. Given the way western governments were approaching the issue it would have been hard for China and India to accept that they were serious about achieving concerted action even if the science was settled. I said that if governments thought the stock of greenhouse gas emissions was a serious problem they would be focusing on the incentives needed to develop technologies that would reduce the stock of emissions, rather than just attempting to cap the growth of emissions.
Jim said: ‘I thought that emissions trading schemes, like the one Kevin Rudd is proposing were meant to provide appropriate incentives for firms to develop better technologies.’ I responded that in my view Rudd’s ETS stood for Enormous Transfer Scheme. I suggested that the Australian government was attempting to confuse welfare issues with environmental issues in order to smuggle income redistributions into the scheme. I added that it was crazy for Australia to go it alone without concerted international action and that if we are concerned about incentives for developing new technologies we should be thinking in terms of explicit taxes rather than cap and trade systems.
Jim said: ‘Ah, that’s Warwick McKibbin’s view isn’t it.’ While I was still pondering whether I had under-estimated Jim’s knowledge of the topic, he pointed to a house we were just passing. ‘Look at that abomination’ he said. I assumed that he was referring to the solar panels that covered a substantial part of the roof. I said: ‘I don’t think they look too bad, actually’. ‘It’s not how they look’, he replied. ‘Every time I pass that house it reminds me that the government subsidies that encourage people to put those things on their roofs are an abomination. Solar panels are about the most costly method there is of generating electricity. If governments were really serious about climate change they would be spending taxpayer’s money more wisely so we get bigger bangs for our bucks.’
I observed that Jim’s comment must mean that he was obviously not a fan of Tony Abbott’s winner-picking proposals to reduce CO2 emissions. Jim said: ‘I wouldn’t mind so much if Abbott could actually pick a winner to subsidize. The technologies that he has picked so far are either proven losers or have no track record. If he really wanted to pick a technology that had some hope of competing with fossil fuels without huge subsidies he would advocate the nuclear power option.’
I couldn’t help asking: ‘Does that mean that you would support revival of the proposal to build a nuclear power station at Murray’s beach on Jervis Bay?’ When I glanced across to see how Jim was reacting to the idea of a nuclear power station in his own back yard, he growled: ‘Look where you are going!’
After what seemed like a long silence, Jim asked: ‘What do you think of no regrets policies?’ I replied: ‘What, like the federal government’s home insulation scheme?’ Jim replied: ‘I think the government might actually be regretting introducing that scheme with so much haste last year. No, what I meant was a great big new tax on carbon emissions’.
I was dumbfounded. When I asked Jim to explain how this could be a no regrets policy he asked me whether I had supported the introduction of the GST as a broad-based tax to replace less efficient forms of taxation. When I nodded he then asked: ‘Do you think a tax on carbon emissions would be a more efficient way of raising revenue than existing taxes on insurance and stamp duties on property transfers?’ I had to admit that it would probably be more efficient than some other taxes. Jim then said: ‘So wouldn’t it make sense to introduce a great big new tax on carbon emissions as a no regrets policy? If we do this we might even be able to have an impact on global emissions by persuading governments in some other countries that this is a good idea’.
While I was pondering how to respond Jim laughed and said: ‘I don’t expect you to see anything about this on your blog. Judging from what you have written there about climate change I expect that the polar ice caps would need to melt before you would support introduction of a tax on carbon emissions as a precautionary measure’.
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