Is Ron Paul Crazy? Part III

The Federal Reserve is a Central Bank. A Central Bank provides a government with its currency. Because of legal tender laws making it illegal for citizens of the US to use any other currency other than Federal Reserve Notes (USDs), the Federal Reserve is the sole producer of the nation's money supply. This is also known as a monopoly.

The Federal Reserve is made up of 12 regional banks. Directing the actions of these banks are what is known as the Board of Governors and the Federal Open Market Committee. Both of these are federal agencies. When a government agency has official control of a monopolized good (in this case money) that is socialism (or fascism, but that is a whole other topic!). Every country in the world has socialized money.

Is Ron Paul Crazy? Part II

In the previous post I focused my attention to an analysis of the gold standard and how gold came to be used as money. This post will focus on another of Ron Paul's "crazy" policy platforms; End the Fed. Discovering and understanding the nature of the Fed must begin with a discussion of inflation and fractional-reserve banking.

Despite what you hear on the news or read in the Wall St Journal, Economist, or NY Times, inflation is not an increase in the price level. Inflation is an increase in the money supply. While it is true that inflation tends to lead to an overall increase in prices, it does not necessarily have to be so. It is perfectly possible that the price level can decrease after an increase in the money supply.

While most people have heard of the term inflation, few have no idea whatsoever as to to what fractional-reserve banking is. By law, banks are only required to keep a certain percentage of their cash obligations on hand. For example, say the US requires that all banks must keep 25% of the cash on hand that it owes to owners of checking accounts. Now I go to my bank and deposit $1000. Because, by law, the bank only needs to keep 25% of this $1000, $750 (called bank credit) are available to be loaned out by the banker. While my check balance shows that I have $1000 in the bank in reality there is only $250.

Now this math may not seem to add up to most people. That's because it does not. You may also think that it sounds an awful lot like a pyramid, Ponzi, and now Madoff scheme. That's because it is.

Defining Evil

In order to not do evil it is necessary to first define what evil is.

I believe there are two categories of evil; fraud and violence. Fraud consists in deceptive acts such as cheating and lying. Violence involves the use of force to steal, murder, or injure someone's person or property. The threat of force, coercion, is also considered an act of violence and to be considered evil also.

Unfortunately in this world there are people that, for whatever reason, engage in antisocial acts of behavior and often resort to the various methods of evil listed above. Therefore men must inevitably resort to corresponding acts of violence to protect their person or property.

At this point it becomes necessary to separate acts of aggression versus act of defense. The acts above are commonly referred to as acts of aggression when initiated by an aggressor. Aggressive acts can never be justified if one is to commit oneself to doing no evil. Defending oneself from acts of aggression, however, is justified.

In future posts I will discuss whether or not governments are the most adequate method for defending against aggression (I obviously believe they are not) but for now I just wish to clarify my position on what constitutes evil and draw a distinction between aggression and defense.

I will also, using the definitions above, show how many people engage in evil without knowing it.

For a good read on libertarian legal philosophy with regards to aggression and property rights please read Murray Rothbard's essay on Law, Property Rights, and Air Pollution.

Inaugural Post

Welcome to my new blog Tu Ne Cede Malis, or Do No Evil!

My job requires a lot of travel and a lot of "me" time which inevitably leads  to me having conversations with myself and working out arguments on a lot of subjects (usually political/economical) in my head. Unfortunately working out these problems in my head is of no real use if I do not share and, most importantly, test them with other people.

So I decided to start this blog to do just that; share, discuss, and spread my ideas with family, friends, co-workers, and anybody else who happens to find this blog. If I can attract enough conversation then I would like to add a forum to the site. I may even compile all of my posts into a comprehensive theory of social interaction (aka economics) and publish a book.

I must stress, however, that the ideas and opinions I hold are not something I magically developed over night, but are the outcome of a long journey I began about 2 years ago this month. As a matter of fact, most of the opinions (which I believe to be truths) I hold now are ideas that I flatly rejected when the journey began.

The ideas I wish to spread are not new. They are ideas championed by the great classical liberals such as John Locke, Thomas Jefferson, Frederic Bastiat (The Law), John Stuart Mill (On Liberty). These men helped influence the next line of the champions of liberty like Ludwig von Mises (Human Action), F.A. Hayek (The Road to Serfdom), Henry Hazlitt (Economics in One Lesson), Leonard Read (I, Pencil), and Milton Friedman (Capitalism and Freedom). Today's most well-known icon of the classical liberal tradition is of course non other than Ron Paul (The Revolution: A Manifesto).

The beliefs of the classical liberals could be summed up as this; governments are a necessary evil. Because it was evil, however, they demanded that the government should be minimized to basic legal (upholding contracts, courts) and defense (local police, military) services. They thought that combining a democratic government with a written constitution would be enough to check the growth of the government and prevent it from turning it into a despotic regime.

At some point in time these beliefs began to be challenged. The Anti-Federalists challenged the notion that the US Constitution could check the growth and power of the federal government. The Federalists (led by Alexander Hamilton, a loyal British nationalist) proclaimed that dividing the central government into 3 parts (Executive, Congress, Supreme Court) would create a "separation of powers" and each branch would provide a check upon the others. The Anti-Federalists quickly demolished this notion. Because all of the supposed checks were contained within the federal government itself it would be within the self-interest of the members of all branches to work together to expand all of their powers. Anyone who takes the time to read the Anti-Federalist Papers would be shocked at how prophetic their forecasts were.

Frederic Bastiat noted that man, in order to remove uneasiness, must eventually use labor. But labor, especially manual labor, is an uneasiness in itself. Therefore man seeks ways to eventually remove the need to perform labor. His only options are to save the necessary funds or to commit theft. Politics gives the man a third choice; use his power to vote to force taxes upon others. Thus Bastiat proved that once a government was given the power to tax the growth of government would be unlimited. History confirms this.

It was from the works of these challengers to the classical liberal tradition that led Murray Rothbard to the ultimate conclusion that not only are governments not necessary for civilization, they are the very destroyers of it. This idea has become commonly referred to as anarcho-capitalism or market-anarchy.

If there is one book I would recommend anyone to read it would be Ron Paul's The Revolution: A Manifesto followed by Henry Hazlitt's Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics. Both of these are relatively short and easy for anyone to read and understand.

I am aware to most reading this post that these views will come across as extremist and laughable. I most certainly did not accept them right away and I do not expect anyone else to. In future posts I will touch on the above subjects in much more detail. My only point for now is to show that the beliefs I hold are the outcome of hundreds of years of political and economical theory and historical observation.

I welcome all comments, although comments containing profanity will be deleted. I will also not engage in debates with commentors who wish to engage in ad hominem attacks or simply dismiss the ideas I put forth as simply "crazy" or "stupid".

While most of my posts will be of the economical/political nature, I will also post my thoughts on current events, sports, nutrition, etc. For example, if Syracuse basketball is not ranked #1 in both polls tomorrow morning I will surely be posting a furious rant on that.

Welcome

This site is currently under construction.

I plan on finishing up the layout and colors this weekend.

I will have my first post by the end of the weekend.