Stop hiring people to dig holes and refill them

It was a few months ago when I heard some guy, I think it was Jessie Jackson’s son actually, say that he supported the “outright hiring of 10 million people” or however many unemployed there were at the time. Hiring them to do what, exactly? To all go dig holes and refill them? And then I heard this interview with Congresswoman Maxine Waters (or is it Senatress) that Obama has to be “bold” and “stimulate” the economy with “1 trillion dollars”.

So I suppose that with the magic trillion bucks he’s going to hire the 10 million unemployed to go dig him some holes and refill them thereby stimulating the economy and making us a fully employed country.

What’s a trillion divided by 10 million? 10 thousand bucks a hole-digger? That’s not enough. They’ll be poor. They won’t be able to buy enough food with the holes they dig and refill. Maybe we should make them dig twice as many holes and refill them so they’ll be more productive, and then we can double the “stimulus” to $2 trillion and they’ll be at minimum wage. (Which itself is a government mandate.)

This is obviously the more ludicrous side of the whole issue. The more mundane is that whenever people ask Ron Paul what will happen to the economy when all those government workers he wants to fire go unemployed and the jobless rate spikes and where does the trillion dollar spending cut go, they’re asking as if by the very act of spending one trillion dollars, the government is creating wealth. No, they’re not digging holes and refilling them. They’re just stamping forms and filing them. But that’s

PRETTY

DAMN

CLOSE.

When you cut them away, the trillion dollars used to pay them to stamp those forms gets freed for people who use the money to create things that people actually need.

But the journalists can’t stomach that fact. They think that if you shrink the government, unemployment goes up, and that’s all that matters.

The truth is, every overpaid and useless government employee is on welfare. He’s wasting his time and the country’s time, and eating up your money. So we may as well stop the nonsense, stop hiring them to dig their holes and just tell them they’re on welfare. Stop the Orwellian nonsense.

The point of a job is not to influence the unemployment rate. The point of a job is to produce wealth that people need – emotional wealth, psychological wealth, spiritual wealth, or physical wealth. If you’re not doing that, you’re on welfare.

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Government debt, the consumer promising production

Government doesn’t produce anything. It always consumes more than it produces. When it attempts to produce something, it always has to consume more in tax revenue than it produces in order to produce whatever it is it’s trying to produce. So you always end up with a black hole. This is because if the government needs more money, they can ask the Fed or tax you for it. A constant source of revenue at the point of a gun or the flick of a switch.

We are all taught that money doesn’t grow on trees. But for the government it does.

What does it mean exactly that “the global economy is broken”? How can that actually be quantified? Well, we discussed previously that money is not wealth. Money is merely the means with which one can either produce or consume wealth. So theoretically, we could have a world with money everywhere but no wealth. This would be the world of maximum inflation and minimum prosperity.

A broken global economy means that too much money has been spent on consuming wealth and not enough has been spent producing it. An undrugged economy would be able to balance that out when investors spot a need for more production and supply it. But that can’t happen in this economy because the main consumer, the government, forbids market entrepreneurs from entering the market and rebalancing the production side of the equation with regulation, taxes, forms, and the like.

So the government, just like the Keynesians want, becomes the spender of last resort. Spreading money around and getting less efficient in every spending round. Whereas in the first round, say they had to spend $10 for every unit of wealth, now they have to spend $50. But the amount doesn’t matter to them because they can always print it.

And then you have “government debt”. Debt meaning money is owed. Money, again, can either represent newly produced wealth (in the best case) or preexisting wealth. The former is when a business succeeds. The latter is when you are taxed or your money inflated.

Any normal business pays back its debt by either producing or going bankrupt. The government though can just steal it from you and pay back its debts, making you poorer.

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The inanity of government hiring regulations, Natasha case in point

Before I get started with this case study, let me clarify that Israel is a socialist country founded by Marxists. So there is very little freedom here.

Now, that being said, government controls healthcare and education entirely. My wife, Natasha, works at a college that is funded by the government. It is extremely inefficient because, no matter how wasteful it gets, taxpayer funding is always guaranteed. Natasha is also very pregnant. There is also a law here that you can’t fire pregnant women. Sounds great, right?

Well, I came home today and Natasha told me that because she’s giving birth (God willing) before the semester actually officially ends, the college cannot legally NOT rehire her. So because she’s having a baby, she’s assured a placement next semester, regardless of whether the college has a class for her to teach.

Well, good news for us, right? Eh…I’d much rather not pay taxes than pay taxes and have my wife get a job because it’s illegal if she isn’t rehired.

It turned out OK for us, but what if circumstance were reversed? What if they refused to hire Natasha initially, suspecting she was pregnant, because they know that they wouldn’t be able to let her go the following semester?

The whole system is rotten. Taxpayer money flowing through a system and misdirected through legal mechanisms will only cause mal-investment, which, any Austrian will tell you, will have to be liquidated. Money earned through government force may as well be welfare. Money must represent value. Not government intrusion.

Natasha is a good teacher. She should be rehired on the basis of need and talent. If they have no need for her, they shouldn’t rehire her just because she was pregnant. If they do, we’re getting money that represents no value.

And the debt bubble expands just a little bit more.

What will we spend it on? Probably gold.

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Europe and the entire Western economy is a Global Ponzi scheme

It hit me when I was reading an article about Italy “refinancing” its debt by selling bonds. Bonds are debt.

The definition of a Ponzi Scheme, as I’m sure we all know ever since Madoff ran away with $50 billion that never existed, is paying investors off with money from other investors.

In financial newspapers and other smart guy publications with articles written by people with $100,000 MBA’s that aren’t worth 50 cents, they’ll call it refinancing, or restructuring, or recombobulating, or whatever. Doesn’t make a difference. When a country like Italy sells bonds in order to pay off other maturing bonds, they are by definition engaging in a Ponzi Scheme. They are taking money from new investors – the buyers of the new bonds – to pay off old investors – the holders of the old bonds.

The reason the financial magazines and websites and newspapers call it “refinancing” is that they don’t want us to freak out and pull our money out of Europe by calling it what it is, because this would mean the reset button would have to pushed all the sooner.

It’s not just Europe. America pays off interest it owes to China and Japan with money that it borrows from somewhere else. It pays off old treasury bills by selling new ones. There’s no real genius to it.

Why can’t they pay off with real money? Because they’re busy using that to blow up rocks in Afghanistan and Iraq with billion dollar precision missiles.

The entire Western economy is nothing but selling bonds to pay off bonds. Paying off investors with other investors’ money. The clock stops when they can no longer attract new investors.

That’s when 1.5 quadrillion dollars in global derivatives gets wiped off the books in one shot.

Stay safe out there.

 

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Ron Paul is to Government Spending as Moshe Feiglin is to the Oslo Peace Process

Ron Paul and Moshe Feiglin; both libertarian, both trying to change the course of history.

There comes a time in every man’s life when he has to make a fundamental decision about the direction his life will take. This point can be called the “free will” turning point of a person’s life that happens very rarely, usually only once in a lifetime. It delineates a turning point when someone is finally faced with the decision about what kind of person he will be. Once made, the choice can only be changed with extreme difficulty.

The same can be said for countries. There comes a point in every country’s life when that country has to make a fundamental decision about which direction it will take, how the country will define itself.

As Ron Paul repeatedly states (for there really is nothing he says that isn’t repeated), America made her decision in 1913 as to what kind of country she was going to be, and that is a country with an unstoppable and ever expanding central government.

1913 introduced the income tax and the Federal Reserve to America, which established the precedent that not only could the government print money whenever it wanted, but it could actually take away whatever percentage of your income from you that it wanted as well. This paved the inexorable path to the erosion of the gold standard and the adoption of money backed by…the word of the Government.

Such was the road paved for big government in America, and now, not only are Americans OK with the fact that they don’t own their own incomes except by government benevolence; some actually expect, even DEMAND that the government take MORE of their money. And not only are Americans OK with the fact that a group of 12 people can conspire in secret meetings to print trillions of dollars in currency, effectively devaluing the money that people have in their bank accounts. Americans are actually THRILLED when the Fed says they are going to “do more” to “stimulate” the economy by running the printing presses.

America made a decision in 1913 on big government. To change that direction requires not simply a change in style. It requires a 180 degree paradigm shift in the way America thinks about itself as a country. It will require huge amounts of pain when the country realizes that it’s entitlement system is broken, that it is not all-powerful, that it can no longer pass out checks like water. This requires another free will decision about its own identity, and as we said at the beginning of this post, free will decisions are rarely made twice in a lifetime, be it of an individual, or of a country.

When America decided on Big Government in 1913, that paved the way for that government’s hubris in assuming that she runs the world and can meddle in global affairs with impunity, without declaring war, without consulting Congress, just on a presidential whim go in and do something.

As for Israel, our problem isn’t fiscal. Unlike America, Jews have a constant fear that they are about to be destroyed, so being fiscally irresponsible is not an option for us. Our problem is our sense of self.

In 1993, Israel made a free will decision. When she signed the Oslo Accords with a people that claimed we are living in its land and not our own land, she made the decision that Israel is not Jewish land. From that point on, everything Israel has done has been on the premise that every Jew here is an occupier of Arab land.

Every time we are attacked, we withdraw. Every time we withdraw, we are attacked. And then we tell everyone that we want to give the land away, but that we’re worried we’ll get killed if we do. Every political party in Israel is built on the premise that we have no choice but to give away our country. Right and Left strive together towards the same goal, for there is no alternative without a complete paradigm shift. Just as both Democrats and Republicans strive towards big government, Likud, Labor, and Kadima strive towards Oslo.

To change the Oslo perspective will take another free will decision by Israel as to the purpose of its existence as the Jewish State. The only one trying to make this paradigm shift is Moshe Feiglin.

Feiglin, like Ron Paul with the Republicans, is running in the main “Right Wing” party, the Likud, which once stood for Israel as the land of the Jewish People. Ron Paul and Moshe Feiglin are both despised and feared by their respective partys’ establishment. Both Ron Paul and Moshe Feiglin are trying to bring their parties back to their roots. Both Ron Paul and Moshe Feiglin even bike several miles every morning.

Both Ron Paul and Moshe Feiglin are trying to do the impossible and change the way their countries think about themselves.

And both Ron Paul and Moshe Feiglin want America to stop giving foreign aid to Israel. Read Feiglin’s position on this here.

Finally, both Ron Paul and Moshe Feiglin know this: If their respective countries continue in the paths that they are on now, the future of the free world is quite dim.

But I suspect that both know the following as well: At some point, both will wake up. The only question is, how much will we all have to lose before they both do.

Whether we like it or not, America and Israel are all that’s left of the free world, and both countries are in existential quandaries. Both, with God’s help, will get back to their roots and find themselves, with the help of Ron Paul and Moshe Feiglin, who I hope in the very near future will become very close friends.

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