Fire Hydrant of Freedom

I liked that one

I wonder what  the ingredients were in the magic powder?

"Let us recollect that peace or war will not always be left to our option; that however moderate or unambitious we may be, we cannot count upon the moderation, or hope to extinguish the ambition of others." --Alexander Hamilton, Federalist No. 34, 1788

"I have been happy ... in believing that ... whatever follies we may be led into as to foreign nations, we shall never give up our Union, the last anchor of our hope, and that alone which is to prevent this heavenly country from becoming an arena of gladiators." --Thomas Jefferson, letter to Elbridge Gerry, 1797

Merry Christmas to all.  Wish you all the best and a Happy New year

"But if we are to be told by a foreign power ... what we shall do, and what we shall not do, we have independence yet to seek, and have contended hitherto for very little." --George Washington, letter to Alexander Hamilton, 1796

"Strangers are welcome because there is room enough for them all, and therefore the old inhabitants are not jealous of them; the laws protect them sufficiently so that they have no need of the patronage of great men; and every one will enjoy securely the profits of his Industry. But if he does not bring a fortune with him, he must work and be industrious to live." --Benjamin Franklin, Those Who Would Remove to America, 1784

"Born in other countries, yet believing you could be happy in this, our laws acknowledge, as they should do, your right to join us in society, conforming, as I doubt not you will do, to our established rules. That these rules shall be as equal as prudential considerations will admit, will certainly be the aim of our legislatures, general and particular." --Thomas Jefferson, letter to Hugh White, 1801

I googled the quote of Alan Greenspan in Crafty's post above to verify it and found this article by Greenspan from 1967

http://www.constitution.org/mon/greenspan_gold.htm

Gold and Economic Freedom

by Alan Greenspan

Published in Ayn Rand's "Objectivist" newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

Contents | Text Version

"In a society under the forms of which the stronger faction can readily unite and oppress the weaker, anarchy may as truly be said to reign as in a state of nature." --James Madison, Federalist No. 52, 1788

Crows are amazing

[youtube]http://www.youtube.com/watch?v=NhmZBMuZ6vE[/youtube]

"As riches increase and accumulate in few hands, as luxury prevails in society, virtue will be in a greater degree considered as only a graceful appendage of wealth, and the tendency of things will be to depart from the republican standard. This is the real disposition of human nature; it is what neither the honorable member nor myself can correct. It is a common misfortunate that awaits our State constitution, as well as all others." --Alexander Hamilton, speech to the New York Ratifying Convention, 1788

"And you will, by the dignity of your conduct, afford occasion for posterity to say, when speaking of the glorious example you have exhibited to mankind, had this day been wanting, the world had never seen the last stage of perfection to which human nature is capable of attaining." --George Washington, The Newburgh Address, 1783

"Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature that such devices should be necessary to control the abuses of government. What is government itself but the greatest of all reflections on human nature?" --James Madison, Federalist No. 51, 1788

"Such will be the relation between the House of Representatives and their constituents. Duty, gratitude, interest, ambition itself, are the cords by which they will be bound to fidelity and sympathy with the great mass of the people." --James Madison, Federalist No. 57, 1788

"History affords us many instances of the ruin of states, by the prosecution of measures ill suited to the temper and genius of their people. The ordaining of laws in favor of one part of the nation, to the prejudice and oppression of another, is certainly the most erroneous and mistaken policy. An equal dispensation of protection, rights, privileges, and advantages, is what every part is entitled to, and ought to enjoy. ... These measures never fail to create great and violent jealousies and animosities between the people favored and the people oppressed; whence a total separation of affections, interests, political obligations, and all manner of connections, by which the whole state is weakened." --Benjamin Franklin, Emblematical Representations


What would Franklin have thought of the 16th amendment?  A progressive was president and progressivism was on the rise in 1909 when the 16ht  was introduced.

"Every child in America should be acquainted with his own country. He should read books that furnish him with ideas that will be useful to him in life and practice. As soon as he opens his lips, he should rehearse the history of his own country." --Noah Webster, On the Education of Youth in America, 1788

"Without wishing to damp the ardor of curiosity or influence the freedom of inquiry, I will hazard a prediction that, after the most industrious and impartial researchers, the longest liver of you all will find no principles, institutions or systems of education more fit in general to be transmitted to your posterity than those you have received from your ancestors." --John Adams, letter to the young men of the Philadelphia, 1798

"History by apprising [citizens] of the past will enable them to judge of the future; it will avail them of the experience of other times and other nations; it will qualify them as judges of the actions and designs of men; it will enable them to know ambition under every disguise it may assume; and knowing it, to defeat its views." --Thomas Jefferson, Notes on the State of Virginia, Query 14, 1781

Happy Birthday to the United States Marine Corp!!!   Thank you all!!!

"t is the reason alone, of the public, that ought to control and regulate the government." --James Madison, Federalist No. 49, 1788

individualism

[youtube]http://www.youtube.com/watch?v=BW-cUgZg178[/youtube]

"Wisely, therefore, do they consider union and a good national government as necessary to put and keep them in such a situation as, instead of inviting war, will tend to repress and discourage it. That situation consists in the best possible state of defense, and necessarily depends on the government, the arms, and the resources of the country." --John Jay, Federalist No. 4

"The Grecians and Romans were strongly possessed of the spirit of liberty but not the principle, for at the time they were determined not to be slaves themselves, they employed their power to enslave the rest of mankind." --Thomas Paine, The American Crisis, No. 5, 1778

http://www.physorg.com/news/2010-11-dc-hacking-future-online-voting.html

D.C. hacking raises questions about future of online voting
November 1, 2010 By Sean Greene
For the upcoming election, Washington, D.C., was preparing to allow some voters to send their ballots in over the Internet. It's a good thing election officials tested the system first.

 
Just two days after the District of Columbia Board of Elections and Ethics opened the application for the public to experiment with this fall, the system was hacked. Unbeknownst to D.C. officials, a team of computer scientists from the University of Michigan took control of the website and changed the code to make it play the school's fight song.
The fight-song gag was the part of the hacking that elections officials discovered themselves. More troubling is what they didn't notice.
That was revealed at a recent D.C. Council committee hearing, where J. Alex Halderman, a University of Michigan professor who led the hacking effort in order to demonstrate the system's security flaws, testified that his team had in fact wrested complete control over the elections board's server. Halderman produced 937 pages of names, addresses and PIN numbers of test voters who had signed up to try out the system. Had it been a real election, Halderman said, he could have changed the votes on ballots or revealed voters' supposedly secret choices on the Internet. Additionally, Halderman's crew wasn't the only one rooting around in the D.C. system. They noticed other attacks occurring, originating in China and Iran.
In response, the elections board decided to shelve the idea of having voters submit ballots online. Eligible voters in the military and others living overseas can still use the system to receive blank ballots, rather than waiting for them in the mail. But they'll have to print the ballots out and mail them back to Washington.
While the D.C. episode was a setback for voting over the Internet, elections experts disagree on what it means for the future. Some say the District's experience demonstrates what computer scientists have been saying for years -- that the Internet in its current state cannot allow for secure online voting. Others, including D.C.'s top elections official, still see potential in online voting. In fact, the state of Arizona and eight counties in West Virginia aren't giving up plans to go ahead with their own online voting experiments on November 2.

"If there is a form of government, then, whose principle and foundation is virtue, will not every sober man acknowledge it better calculated to promote the general happiness than any other form?" --John Adams, Thoughts on Government, 1776

"The history of ancient and modern republics had taught them that many of the evils which those republics suffered arose from the want of a certain balance, and that mutual control indispensable to a wise administration. They were convinced that popular assemblies are frequently misguided by ignorance, by sudden impulses, and the intrigues of ambitious men; and that some firm barrier against these operations was necessary. They, therefore, instituted your Senate." --Alexander Hamilton, speech to the New York Ratifying Convention, 1788