by Danny de Gracia, II
A weekly liberty briefing and news guide to keep you informed and prepared on what’s UP to more freedom or DOWN to bigger, more intrusive government.
Quote of the Week:
“I had rather be shut up in a very modest cottage with my books, my family and a few old friends, dining on simple bacon, and letting the world roll on as it liked than to occupy the most splendid post which any human power can give.”
–Thomas Jefferson
Local News
Elections, pop culture and the future of Hawaii democracy (Hawaii Reporter, 11/19)
In this week’s Hawaii Reporter, I was very fortunate to be able to secure for Oahu readers an exclusive interview with none other than the very famous D.M.J. Aurini, who is a YouTube commentator and author of the exciting post-apocalyptic thriller As I Walk These Broken Roads. Aurini and I discuss the recent Hawaii elections, the increasing trend towards cultural Marxism in the United States and the decline of Western civilization.
ANALYSIS: For starters, if you haven’t already, do be sure to check out Aurini’s YouTube channel in which he weekly discusses politics, history, psychology, generational dynamics, economics and what it means for the future of the West. The general message that you will get from Aurini is that the West is in an identity crisis and we are witnessing the rapid decline of our society at all levels. There are serious structural issues which, long ignored, are now causing problems that can no longer be kicked down the road.
This being said, over the last few weeks,, the mainstream media has been building up drama over the impending fiscal cliff. What average Americans don’t realize is that the so-called “fiscal cliff” is actually a self-inflicted crisis created in large part by the very supposed “government solutions” to the 2008 banking crisis. Those of us who have been attending information briefings and budget discussions around the nation know that the real “fiscal cliff” is actually a crisis of new government created and funded by the stimulus program that can no longer be paid for with existing tax revenues.
Let me take you back in time to explain what’s going on here, since this is quite a complicated topic. After the collapse of several notable banks and insurance companies in 2008, the Bush Administration was extremely concerned about something called “Systemic Risk” – that is, the possibility that the ripple effects from toxic assets and zombie financial institutions could result in the entire global market collapsing. The government dumped billions on the banks to keep them solvent and Congress later created the stimulus to prevent a lack of credit from slowing down the economy. All of this was done to prevent a global financial implosion from happening. (The implosion occurred anyway, but we won’t get into that in this article.)
The theory behind stimulus is that the government can, through lowering interest rates and/or large injections of money into the economy, increase aggregate demand (spending, consumption, production, etc.) and somehow “save” the economy. The problem with this, however, is that printing dollars doesn’t actually create wealth; it only creates a temporary and very unsustainable appearance of wealth.
Governments at all levels—which already were running unstable budgets—suddenly got stimulus funds and suddenly created what I call “Departments of Everything” to spend cash in the hope of bolstering the economy. The only thing they bolstered was government, and now the beasts of spending want more!
Our markets, economy, government and even our culture have been distorted by inflation and massive government spending. The presence of government intervention causes all of us to do things that, under normal circumstances, we would not do. Economist Murray Rothbard teaches that the correct action in a financial crisis is to cut government spending and not to prop up bad investments with taxpayer dollars so as to allow the market to seek equilibrium and the public to save more money that they can create capital later.
Sadly, our government just doesn’t get it. I can tell you right now that the “negotiations” to stabilize the budget are going to be exercises in fuzzy logic and funny math because they won’t actually deal with the root crisis at hand. Government is getting too big and no one has the courage to reform it. Sometimes I wish that some member of Congress would just stand up in the middle of a fiscal discussion and hold up the defective budget and shout at the top of their lungs, “Can you count, suckas?!” like Roger Hill in the 1979 movie The Warriors.
What is going around us is a serious DOWN towards less freedom and DOWN towards an ever declining quality of life. Get to know the issues, talk with your friends and family about what’s going on and keep your circle of acquaintances informed. These are desperate times!
What Would the House of Souki Mean for Hawaii? (Civil Beat, 11/21)
Civil Beat explores what the impact of a Souki speakership in the Hawaii State House would be: “That includes legislation that favors the environment rather than developers, taxpayers instead of big business interests, transparency over back-room deals, disclosure versus obfuscation, ethics instead of ethics exemption … Civil Beat analyses has shown that Say supporters have had much more success in getting bills passed and directing capital improvement project monies into their districts. That could change, too. Souki said the House will not consider a hike in the general excise tax, and, though he will continue to support gambling proposals, he doubted that his colleagues would join him.”
ANALYSIS: No matter what, it is important that Hawaii’s legislators recognize that our state (and nation) is in a severe financial crisis that is both structural and increasing. We can all debate the finer points of policy later, but right now everyone should be concerned about the fact that government in its current size and rate of spending – relative to the devaluation of the dollar and inflation – is unsustainable.
This upcoming Legislature should not be handled in the same manner that prior sessions have gone. The Hawaii State House of Representatives, which holds the purse strings of this state, should make it their top priority to bring in new economic advisers and policy consultants to get a clean and different perspective on the direction of our state’s fiscal trajectory. The entire structure of the budget needs to be carefully reviewed, every program needs to be put against the litmus test of “Is this absolutely necessary for the survival of Hawaii’s people?” and the old economic models which failed to accurately predict the crisis we are in need to be tossed out.
The words we are looking for right now are “attention to detail.” No matter who occupies what seat or office in the Legislature, we need attention to detail in getting Hawaii back on its feet again. I highly recommend that every single one of you reading this makes an effort at least once this year to visit the Legislature in person and meet with your elected leaders and tell them to make fiscal reform their top priority. If you want UP to more freedom, we all need to take an active role in ensuring our elected leadership does its job right.
Senate panel wants review of UH finances (Maui News, 11/20)
The Maui News, via AP, reports “A state Senate panel said Monday that the University of Hawaii could have avoided losing $200,000 in its failed attempt to hold an athletic department fundraiser if officials had performed due diligence on a company claiming to be Stevie Wonder’s booking agent.” The report goes on to say “No one at the university looked into whether Epic Talent LLC was an authorized representative of the singer”.
ANALYSIS: One of the most frustrating things is that government often fails to pay attention to detail and do due diligence when it comes to planning and implementation of its projects. More often than not, government agencies always do things the worst way possible (and at the highest cost!) which leaves the public with a dysfunctional outcome. In spite of all these things, we are told that government is necessary to protect the public and steer our interests towards prosperity.
The ongoing investigation of just what went wrong at UH should be a wake-up call to every single man, woman and child that government is not perfect, government does not know best and government falls victim to the exact same scams that fool ordinary people – the difference being, when government is involved, all the taxpayers are put on the hook.
We need to develop a new competence in liberty and an attitude that when it comes to getting something done right, keep government 100% out of it! When government is responsible for our success, expect to FAIL. This is a serious DOWN for all of us here in Hawaii.
National/International News
Twinkie maker Hostess to close down, sell brands (The Seattle Times, 11/21)
Candice Choi via AP reports “Twinkies, Ho Hos and Wonder Bread are up for sale now that a bankruptcy judge cleared the way for Hostess Brands Inc. to fire its 18,500 workers and wind down its operations. A last-ditch effort to end a strike with Hostess’ bakers union failed Tuesday night and Judge Robert Drain on Wednesday approved the company’s request to shut down its business and sell the pieces to the highest bidder. Hostess lawyers told Drain that they needed to begin the liquidation process quickly to take advantage of a surge in outside interest in its brands, which in addition to its namesake include Nature’s Pride, Dolly Madison and Drake’s.”
ANALYSIS: Everyone wants to know “Who killed the Twinkie?” Depending on the political alignment of your favorite news outlet, the evil maniacs responsible for undoing America’s favorite sweet snacks are either unreasonable unions or evil multinational corporate interests. But, since I’m neither a liberal nor a conservative, I’ll tell you who is really to blame for Twinkie extinction: inflation.
As I have mentioned in previous Perspectives, a nation’s central bank – in our case, the Federal Reserve – does more than just print money, it is the pacemaker for the very heart of our economy. Whenever interest rates or raised or lowered, the contraction or expansion of credit creates ripples throughout the marketplace which impact everything from investment to production to employment (and even birth rates!).
The massive injections of cash into our economy over the last nine years have distorted prices and increased the demand for money at all levels. The result of this is that commodities are more expensive, labor costs more and whatever money people do have isn’t enough for very long. Unions respond to this by demanding “living wages” and higher pay, CEOs respond to this by giving themselves raises and government responds by raising taxes. Everyone has to “be a jerk” in their own special style of torment when the currency is being debased and hyperinflation is in progress.
So yes, while you most certainly can blame the tactics of both labor and management in the most immediate sense of bringing about the fall of the Twinkie, the real culprit is government control of the money supply. Thomas Paine wrote in 1786:
“There are a set of men who go about making purchases on credit, and buying estates they have not wherewithal to pay for; and having done this, their next step is to fill the newspapers with paragraphs of the scarcity of money and the necessity of a paper emission, then to have a legal tender under the pretense of supporting its credit, and when out, to depreciate it as fast as they can, get a deal of it for little price, and cheat their creditors; and this is the concise history of paper money schemes.”
Sound familiar, anyone? So while you may mourn the loss of the famous Twinkie, what you should really mourn is the destruction of the dollar. This is a serious DOWN for all Americans and for everyone attached to our currency scheme. Today it was the Twinkie, but tomorrow, expect to see more of your favorite things destroyed by inflation.
Solyndra lawyers reap green, but not energy (Washington Times, 11/21)
Jim McElhatton reports, “Bankrupt solar-panel company Solyndra LLC and the criminal investigation into its downfall have faded from public view, but the law firm representing the company in a grand jury probe quietly has stayed busy, racking up nearly a half-million dollars in legal fees over the past year, records show. Aside from documenting the personal fortunes of lawyers making up to $660 per hour, the fees are significant because of why the law firm was hired in the first place … Now the firm wants to get paid. Its final bill: $479,885, reflecting nearly 1,200 hours of work, according a review by The Washington Times of law firm invoices. About half of the money included in the firm’s final bill already has been paid out, according to the firm’s fee application filed in U.S. Bankruptcy Court in Delaware.”
ANALYSIS: Whenever government picks winners and losers, we’re always stuck with the losers and the disastrous consequences that follow. To some, Solyndra is an example of “business as usual” in government but to the rest of us, Solyndra is a market failure paid for on the backs of the hardworking American who sees more and more of his money disappearing to inflation every year.
Whenever someone in government has a brilliant idea that they’d like to subsidize, just say “NO!” Only markets can determine when ideas are the most profitable. Government’s attempts to shove ideas down our throats will always result in disaster down the road. If you want UP to more freedom and government, keep government’s powers limited and their spending as minimal as possible! Let there never be another Solyndra or bridge to nowhere so long as the taxpayers are alert and engaged!
National Defense University releases new study on Chinese military
The Center for the Study of Chinese Military Affairs (CSCMA) and the Institute for Strategic Studies at the NDU has released a new report entitled “The Chinese Air Force: Evolving Concepts, Roles and Capabilities.” The report, which can be downloaded here, explores the leadership culture, the command structure and the technological strengths and weaknesses of the Chinese People’s Liberation Army Air Force (PLAAF).
ANALYSIS: Definitely take the time to download, read and carefully study the latest report. Make no mistake, however – while during the election year so much hype was stirred up over the supposed threat of terrorism and Iranian nuclear research, the real nation to watch is the rising dragon across the Pacific Ocean.
Sadly, the United States military has spent the last ten years in decline, both as a result of its high frequency of counterterrorism/counterinsurgency missions abroad and the cost of operations in Iraq and Afghanistan. Only now are our policymakers beginning to view with concern China’s emerging place as the dominant power in Asia, but it may be too late as our growing budget woes make matching the Chinese arms race next to impossible.
With Hawaii situated strategically in the middle of the Pacific, every single one you should pay close attention to what is going on in China. Read the report and make your own conclusions, but stay alert and remember to communicate regularly with your elected officials about issues like this. Demand that your federal and even state officials keep you appraised and in the loop on the strategic and diplomatic developments in the Pacific Ocean. The most basic function of a government is to keep its people safe, but if our leaders can’t even do that, what good are they?
If you want UP to more freedom and liberty, you need to keep up with current events. Our elected officials determine what is important based on what you say is important – or fail to say at all.
Until next time fellow friends in liberty, good luck and enjoy the coming holiday season!
Danny de Gracia is the Economic Policy Adviser for the Grassroot Institute of Hawaii. Views expressed in this column are intended to promote creative thought, educate, and, we hope, prompt comment. Accordingly, thoughts expressed do not necessarily reflect the official position of Grassroot Institute of Hawaii or the author.
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