Sunday, February 20, 2011

"The state was to serve the people"

Interesting interview of an informed ex-banker. He discusses democracy, deflation, hyperinflation, the Middle East, war, and spiritual awakening.

Jay Taylor: I think the West is on a steep and slippery downward slope. If when we talk about the West, we talk about free markets and freedom and liberty and the importance of the individual. The individual is here now to serve the state and not the other way around. When the U.S. Constitution was formed, the idea was that the state was to serve the people. So every time there is another bailout that bails out the large banks that are bedfellows with the government, every time that happens a bit more of our freedom escapes us.

The West is heading away from a democratic environment, where individuals matter, and is moving more and more toward statism, where the individuals are here to serve the state. I would also like to mention that democracy was never mentioned in the U.S. Constitution; it was to be a republic, a limited government republic, so that the markets would rule, not politicians. But that has been turned on its end.

... you have to predict when the velocity of money is going to change; when will people finally decide and have enough confidence to stop sitting on their savings or start spending it in the United States?

More about Jay Taylor.

Friday, February 11, 2011

Rand Paul CPAC 2011 Speech

Note how Rand Paul ties the unconstitutionality of the health care bill into potentially broad implications for the Commerce Clause.

For government debt, "We are approaching the point of no return." Rand says the Republican budget proposal is not enough. "It is too timid and we must be more bold." "We must cut the unconstitutional programs." "We believe in abolishing the Department of Education."

"The most important constitutional thing our government does is our national defense. You can not say the doubling of the military budget in the past ten years has all been spent wisely and there is not any waste. If you refuse to acknowledge there is any waste that can be culled from the military budget, you are a big government conservative and you can not lay claim to balancing the budget."

Wednesday, February 2, 2011

Rand Paul's First Speech On Senate Floor

Rand Paul begins his first speech by describing Henry Clay "The Great Compromiser".

One sentence from Rand's speech:
"The problem we face is not a revenue problem, it is a spending problem."

Iceland Did It Right

In 2008 while the banks were failing, Congress passed a law that Bush signed to bail out the banks. Both Obama and McCain supported this banker bailout.

Ron Paul opposed any bailout and called for other type of reforms to remedy the crisis. Ron Paul also said, "I find it difficult to muster much sympathy for the CEO's of Lockheed Martin and Goldman Sachs."

In the US, the banks had huge bailouts which they leveraged to pay massive bonuses to their failed executives while continuing to use mark-to-fantasy accounting to cover up their imploding balance sheets. The banks haven't fixed their capital problems.

In terms of multiples of GDP, Iceland had a much larger bank problem than the US, and Iceland put the banks into receivership. This wiped out the owners and creditors of the banks, which is the proper and legal process. Just over a year later, Iceland had a stable economy and a rejuventated and sound banking system.

By bailing out the banks, the US and Ireland provided social welfare to failed bankers at the expense of the taxpayers. Iceland did the right thing.

Iceland Proves Ireland Did `Wrong Things' Sacrificing Taxpayers
Unlike other nations, including the U.S. and Ireland, which injected billions of dollars of capital into their financial institutions to keep them afloat, Iceland placed its biggest lenders in receivership. It chose not to protect creditors of the country’s banks, whose assets had ballooned to $209 billion, 11 times gross domestic product.
With the economy projected to grow 3 percent this year, Iceland’s decision to let the banks fail is looking smart -- and may prove to be a model for others.
“If we’d guaranteed all the banks’ liabilities, we’d be in the same situation as Ireland,” says Arnason, whose Social Democratic Alliance was a junior coalition partner in the Haarde government.
By guaranteeing bank liabilities, Ireland faces a public debt burden as high as 12 times the country’s GDP. Iceland’s is about 85 percent.