Delusional Leftists will Freeze

I love the leftists in their lollipop world.

Owners of other kinds of plants keep shutting them down due to economic pressure: Massachusetts’ last coal-fired power plant just switched off, and one of three coal plants left in New England, in Connecticut, is slated to change to natural gas. The Pilgrim nuclear plant in Massachusetts is also scheduled to close.

But gas pipelines have proved challenging to build in the region, and capacity hasn’t expanded much. The grid operator has a new plan, starting next year, to offer financial rewards to generators that perform well when the system is taxed, though it acknowledged this may not be enough on the coldest days.

Peter Shattuck, who directs the Massachusetts office at the Acadia Center, which supports clean energy, said New England should rely on backup oil to run power plants until an expected surge in renewables comes in the next decade. He doesn’t favor gas pipelines.

“The big boost in renewables is coming,” he said. “We need to start using less gas.”

In summary, New England is shutting down coal and nuke plants, and plans on building more gas power plants.  The only problem is that the eco-freaks won’t let anyone build new natural gas pipelines to supply the power plants.  So the delusional Shattuck recommends running on backup oil.  And how are you going to get the oil to the power plants idiot?  If you can’t build a gas pipeline, how are you going to build an oil pipeline?  You’ll also need huge tanks to store the oil.  Then you can pay much higher rates for the oil fired electricity while you wait for the magical “renewables” to show up delivered by the flying unicorn that sh*ts rainbow skittles.

This reminds me of two quotes from Rand.  In one, a producer was interogating a parasite trying to find out how he could be so delusional:

Producer: If you do these policies, you’ll starve.  You are making it impossible to stay in business.  How can you do this?  What are you counting on?

Parasite:  We don’t think about those things.  That’s your business.  You’ll figure it out.

Here Rand was showing that the problem is with the Producers agreeing to work in conditions where excellence is punished.  Her solution is to let the parasites finally face the consequences of Leftism.  This is known as Moral Hazard.

Next is her famous quote:

You can ignore reality, but you can’t ignore the consequences of ignoring reality.

So New England is heading full steam towards brown outs and black outs.  Sit back and laugh.  Take the advice of everyone’s favorite godless heathen (pray for his conversion) Aaron Clarey: Enjoy the Decline.  (This is the title of his book, which will keep you sane.  Pick up a copy.)

Fixing Banking

At some point (hopefully) we’ll have to fix the banking system and prevent the boom-bust cycles.  Here’s a short list of requirements:

  1. End fractional reserve lending.  All loans must come from deposits plus paid in capital.
  2. Eliminate Federal Reserve Notes and replace with the dollar.
  3. Preferably the dollar will be backed by gold, but there’s a chance all of our gold is gone.
  4. If we don’t have gold, switch to the green back.  These are dollars issued by the treasury.  The monetary base would grow 1% per year, i.e. the Treasury would issue 1% of monetary base each year and deposit the new money in the government account (reducing taxes).
  5. If GDP growth averaged 3%, we would have a mild deflation year in year out.  So you would see a 2% real raise each year in falling prices.  This is how economic productivity gains would be naturally spread out to the population.
  6. The FDIC would be eliminated.
  7. The Federal Reserve would become an insurance arm of the government, getting back to its original mission.  It would buy long term instruments (e.g. mortgages) at a discount, and pay out the cash to troubled banks.  So if your bank had a bank run, the bank would “repo” mortgages to the Fed, which would pay 90 cents on the dollar to the bank.  Once the emergency is over, the bank would repay the money and get their mortgages back.
  8. End government usury, i.e. no government debt.
  9. Reinstate Glass Steagall.  I don’t want my savings account dollars being invested in rehypothecated swaps on Albanian bond interest rate options.

Now I do have a problem with the greenback.  The problem is the 1% limit.  Given the history of our country where 90% of our government is unconstitutional (read the 9th and 10th amendment), you know they’d find a way around the 1% growth and start printing.  This is why I prefer gold.  However the greenback is superior to the Fed which quadrupled its balance sheet and is praying that the excess reserves don’t start draining into the economy (hyper inflation).  I think the economy is so dead from Obama that they are safe, but it is a big risk to take.

Misallocation and Usury

An excellent interview with Lacy Hunt.  Ties in usury and misallocation.  I’ll be picking up a copy of Kendlebergers Manias, Panics, and Crashes.  Hunt seems to hold my thesis.  Long bond yields go down and be very careful about the stock market.  The purpose of this interview is not to advise you on investments, but to get you to think about the Austrian concept of misallocation, and how usury plays into that.  Note Hunt uses the term “wrong kind of debt”.  We’ll correctly identify that as USURY.  Interview starts a few minutes in.

Podcast Episode 7: Virtue and Original Sin

I discuss virtue, 2 in particular, Original Sin and Subsidiarity.  I left out one point: “What does the Left fear more than anything?  The statement: “We don’t need you.” “.  This is related to the saying discovered by #GamerGate and amplified by the alt-right: “We don’t care”.  Somewhat germane to their hatred of subsidiarity.

Direct Link:

Treasury Direct

I’ve been using Treasury Direct for a few months now and it is a nice service.  Here’s a review of what it is:

Treasury Direct is a government internet service that allows you to buy T-bills.  It is run by the Treasury.  You can buy other Treasury instruments with the service, however I’m sticking to T-bills.  The government account links to your bank account, so when you purchase a T-bill they use a service similar to “Bill Pay” to withdraw the money directly.  When you hit “Approve” on Treasury Direct, they withdraw the money; you don’t have to do anything else.  When the T-bill matures, they deposit the money back into your bank account.  There is also a reinvest option per transaction which I intend to use.

What is a T-bill?  A T-bill is a relatively short term instrument that you purchase at a discount.  They are sold in $100 increments.  So if you buy (1) T-bill, Treasury Direct will withdraw say $95 dollars.  After maturity, they pay you $100.  The time periods available are 4 weeks, 13 weeks, 26 weeks, and 52 weeks.

An important feature of T-bills is that they are safer than a bank account.  If T-bills ever go belly-up, we are living in an apocalypse and the banks have long ago blown up.  The only thing safer than a T-bill is gold.  (You should own a little gold and silver.  I like junk silver coins).

T-bills pay more than a CD, and there is no commission if you use Treasury Direct.  T-bills are linked to Fed action since they are on the short end of the yield curve.  Theoretically this means 13 week and 26 week bills should have the most movement, and I’m laddering in to them.  Note, I don’t give investment advice, and if there is one area where I’m a novice, it is with interest rate investing, so do your own research.

Currently 26 week T-bills are paying 1.07%.  I am currently building a “ladder” which means purchasing a few each month, then adding to that “tranche” when they mature.  Doing this over time your account grows.  A nice feature of this is that if an emergency comes up you will have a certain tranche mature that month and you can use the money for the emergency.

Here’s a link to current interest rates:  Current Interest Rate Link

Here’s the link to Treasury Direct:

I’ll put Treasury Direct in my Links section.  That way if you want to get to your account, you can come to this isle of sanity and get your fill of a few podcasts and blogposts, then head over to Treasury Direct to take care of your finances.

Some of the more observant people reading this who also read my book are probably thinking: “You hypocrite, this is usury you are advocating.”.  If you are thinking this, I salute you for bringing up a reasonable objection.  However, recall I wrote that in a fiat paper money system, if the interest you receive is less than the inflation rate, it is not usury, as in Justice you are due back the VALUE that you lent.  Inflation is somewhere around 2%, so you can invest with a clean conscience.  This is an investment in safety primarily.

A Problem with Capitalism?

BP shareholders yesterday backed the oil and gas company’s new pay policy and a move to cut the remuneration of chief Bob Dudley by 40 per cent after last year’s large-scale investor rebellion.

More than 97 per cent of votes cast at BP’s annual meeting supported Mr Dudley’s $11.6m pay package for 2016 — down from $19m in 2015 — as well as a new three-year policy that cut bonuses and other remuneration.

So to sum up, Dudley who has delivered a mediocre performance this year, and horrendously in 2015 (BP stock crash) has just had his pay cut by $7.4 million.  The cut in his pay for one year is larger than what I will make my entire lifetime.

Did Dudley quit? No.  Did he push back?  No.  So if he’s been there for say 5 years, the capitalists (pension funds and life insurance companies) have been ripped off $37 MILLION in dividends.  From the compensation of ONE executive.

Now the title I used is somewhat misleading, this is not necessarily an issue with capitalism; more it’s an issue with corporate governance.  We can also add the reckless behaviour of money center banks during the housing mania.  Yes, the insanely low interest rates set by the Federal Reserve banking guild played a big part in that, but are you telling me not one money center bank had a board that was nervous?

Now one problem is that our current tax system incentivizes bonuses through stock issuance to execs (let alone stock options), and a preference for capital gains over dividends.  As I mentioned in my book, I could not make any conclusions until after some common sense reforms were put in place: eliminate cash salary limits, tax capital gains at the same rate as other income, and make dividends paid out of profits tax free (the company already paid the corporate income tax on them).  Obviously such changes would make companies a lot more concerned about providing a steady, slowly growing dividend.  And that might be all that it would take.

But today an executive is given stock, so he wants to see the stock price spike up, and investors don’t want dividends, they want capital gains.  Throw in cheap money from the Distributist banking system for stock buy backs, and you have the perfect storm.  That’s probably the problem right there.

Still, looking at the Dudley example, where BP stock got creamed and he still got $19 million, I’m open to other problems (let’s not get sucked into a false dichotomy) with our current corporate governance model.

Usury addendum

I was listening to an interview the other day on the Fox Sirius radio channel.  The person being interviewed was John Kasich, governor of Ohio, a Republican.  He was asked about problems with the proposed TrumpCare.  To paraphrase:

“Well, it contains $X Billion dollars for preexisting conditions.  No governor can support that, because it is nowhere near enough.”

OK.  So Ohio can’t provide subsidized health plans to those with preexisting conditions.  That makes sense.  If he tried to raise taxes enough for the handout, he’d get thrown out of office.  And his legislature isn’t going to even vote on that since they rather like the coke and whores that goes along with their job, and they want to keep the party going.

But why does he think the Feds can do it?  Oh yeah, that’s right, the Federal Government has the Federal Reserve bankers’ guild which will buy all the bonds they can print.  Then the bankers can come collect on our unborn grandkids.  Isn’t that great?  Our unborn grandchildren can live in a world with crappy streets, high prices, high taxes, no jobs, and reduced police and fire protection while they are forced to pay back the Trillions and Trillions of dollars in debt.

There was another comment he made, that he couldn’t support a plan that would “deny” people coverage.  Think about that.  Have you heard of any law being proposed that would make it illegal for you to go to a doctor?  (The irony is that it is illegal for you to shop across state lines or buy real insurance.  I’ll go over that in the upcoming podcast).  No, there’s no law that makes it illegal for you to go the doctor.  So let’s insert some truth into his statement: “I oppose Trumpcare because he refuses to saddle our unborn grandchildren with mountains of debt so that everyone can get Fed cash and prizes today.”.  Put’s it in perspective.

The good news is I think this blows up a lot sooner than people are planning on.  Puerto Rico just got wiped out with $100 Billion in debt.  That’s big leagues.  The next bigger domino will fall.  It will be a major US city or a country in Europe.  It’s coming soon.

Government Usury

Today I’m writing about a particular problem with government usury.  In short, usury is charging interest on a non-productive loan.  By definition 95% of government debt is usury (the exception being road construction bonds backed by toll roads).  Before I begin my analysis, I want you to imagine the following:

Tomorrow you wake up and it is announced that Trump and Congress have canceled Social Security, Medicare, Medicaid, Food Stamps, Agricultural subsidies, WIC, and educational grants.  The plan going forward is for the individual States to take care of all of these.  Now I’d celebrate,  but I’m a tiny minority that shows up as a rounding error.  What would be the reaction of most Americans?  How about, “That’s insane, there’s no way that the States will be able to afford all of this.”.  Hopefully you’ve already figured it out.

Or consider the current (early May) bleating and caterwauling by the sub-100 IQ party known as democrats over the supposed opt-out for States to cover preexisting conditions.  Well, why shouldn’t the States pay the medical bills for those with preexisting conditions?  Again, because they can’t afford it.  But the Federal Government can, right?  Mommy will come wipe my arse and government will come take care of these infantile adults, right?

This insanity is due to usury.  Government usury consigns our kids and grandkids to debt slavery so that democrat idiots can try to build their utopia today.  The reason the States can’t pay for all of this socialism is because they don’t have access to the debt markets they’d need and can’t magically print up “money”.  The Federal Government has access to the Distributist Banking Soviet known as the Federal Reserve and can issue as many bonds as they please (for now), which the bankers’ guild will purchase.  However printing money does not equate with creating wealth and real production, so this will end in Argentina.

It’s already starting.  First it was smaller municipalities like the California towns, the Alabama town and Harrisburg going bankrupt.  Then it was a major city like Detroit.  Recently it was a territory, Puerto Rico, which is quite large.  On deck we have Chicago, New Jersey, and California.  After that will be the US government.  Yes it can happen here and it WILL happen here.

Or you can recall the whole purpose of Obamacare.  Quick aside I’ll be publishing a podcast on High Medical Costs (not insurance costs) in a few weeks.  Anyhow Obamacare was nothing more than a tax to bail out Medicaid and Medicare.  And it blew up to the point that you have to pay a ton of money for a policy that you can not use due to the deductibles.  All of that money was used to pay for Medicaid patients.  People got ticked so it failed.  However the problem has not gone away and Trump Care will hit the same dead end unless the reforms I talk about in the podcast are enacted.  If you want to get a jump on this discussion, go to my Links section and check out Link 3.

Usury has many problems, but in this case we are seeing Moral Hazard.  This country’s flirtation with the utopian leftists is not being punished by something called Reality.  Instead, we borrow the money with government bonds and leave it to our kids and grand kids to pay off.  I think the end of the road is a lot sooner than most people think however.