Liberty Maven

The Money Matrix explores Seigniorage as Legalized Silent Plunder with an introduction into medieval and modern banking.

Originally posted August 24th, 2008 by Jake, the Champion of the Constitution at http://www.nolanchart.com/article4580.html

Our next topic is that of seigniorage, which is a silent weapon used historically by governments repeatedly legally plunder the populace.  Let’s start by defining it followed by several examples.

Seigniorage – Revenue or profit taken from the minting of coins, usually the difference between the value of the bullion used and the face value of the coin.  In economics literature, the term is frequently used as a synonym for monetary expansion.  Root of the word means a French feudal lord, and refers to the lord’s right to confiscate, or steal, money from the people.

The Lord’s Right to Steal – An Abbreviated History of Coin Clipping

As we saw earlier, governments often use ‘legal tender’ laws to force everyone to use their legal tender money, and only their legal tender money, as money.  Note when I use the term “law” in this case, I mean law by decree, but it could also be common law.  However, these laws were preceded by at least two very important steps.

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Michael Phelps and other American athletes are bringing back loads of Gold, Silver, and Bronze Medals from the Beijing Olympics. A young libertarian economist asks if it was worth it.

Originally posted August 24th, 2008 by Jake, the Champion of the Constitution at http://www.nolanchart.com/article4585.html

I confess that due to being an athlete and loving competition myself, I greatly admire the athletes.  Their abilities represent the human potential, and in a way every world record set pushes at our limits.  However, surely a darker way of looking the Olympics is similar to Dan Clore’s article “A Libertarian View of the Olympics” as just a nationalized bread-and-circus event or an opiate for the masses.  Surely some of the events are graded in a subjective manner – while one can run a marathon with a certain indisputable time, the same cannot be said of diving or synchronized swimming, or this jump-rope-tossing-and-dancing event I saw.

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I.O.U.S.A

A special live event and screening of a documentary on fiscal responsibility entitled I.O.U.S.A. was held this evening. Ron Paul had a small part in the movie (actually two), but it was one of the more crowd pleasing moments of the entire movie. Paul’s clip showed him questioning Greenspan and telling him that if a doctor had the same failure rate at meeting his goals, patients would die. Then silence and everyone staring at each other, including Greenspan, all dumbfounded. Hilarious. The packed theater thought so too as the crowd laughed heartily and loudly.

The movie as a whole took great pains to be non-partisan and was quite successful. Ron Paul was the only Presidential candidate in the movie painted in a positive light. In fact he was utilized as an expert, especially during the discussion of the Fed and it’s power. The unflattering moments were saved for George W. Bush in the final part of the movie on the “leadership deficit”.

Bill Clinton received some positive air play for balancing the budget in the late 90’s. I was pleased that they then accurately added Social Security and Medicare to the budget equation showing the surplus being wiped out.

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Bob Barr

This afternoon WashingtonPost.com had a Q&A session with Bob Barr. I found it somewhat annoying that he didn’t answer all the questions (or they weren’t included in the transcript) when someone asked a two- or three-part question, but nonetheless it could serve well for those not too familiar with Bob Barr. Oh, and the closet Libertarian purist in me cringed when he called for “some form of a consumption type tax” in lieu of the IRS and payroll deductions.

Read it here.

Reuters released an article (on their political blog) today asserting that Barack Obama is getting the most money from American troops (and military). They even mention Ron Paul.

According to a study released by the Washington watchdog group Center for Responsive Politics, U.S. troops, and especially those deployed abroad, are talking with their wallets and saying they want Democrat Obama as the next president.

Obama has received nearly six times as much money from troops deployed overseas at the time of their contributions than McCain and the “fiercely anti-war Ron Paul,” another Republican presidential candidate, CRP said.

According to the group, Obama received $60,642 in contributions from 134 troops deployed abroad. McCain only got $10,665 from 26 soldiers, while Paul received $45,512 from 99 troops.

Through June 31, CRP said contributions from all U.S. military personnel netted Obama $335,536, compared with $280,513 for McCain.

Ron Paul dropped out of the race officially in mid-June. The few months prior to that he hardly campaigned anywhere since John McCain attained enough delegates to be the GOP nominee. The study neglects to mention that Ron Paul received donations during a period when he wasn’t even campaigning yet he still managed to be only $15K shy of Barack Obama. It is also interesting that they neglected to mention the total sum of military donations for Ron Paul while mentioning the amounts for Obama and McCain.

I suppose the intent of the article was to use Ron Paul (yet again) as a baseball bat to beat up McCain in favor of Obama. The media’s love affair for Obama continues.

Today’s article at the Ludwig von Mises Institute , written by Thomas E. Woods, Jr., discusses the tragic even 75 years ago during the Great Depression, thought it would be a good and proper thing to confiscate all monetary gold from American citizens.

It’s been 75 years since the federal government, on the spurious grounds of fighting the Great Depression, ordered the confiscation of all monetary gold from Americans, permitting trivial amounts for ornamental or industrial use. This happens to be one of the episodes Kevin Gutzman and I describe in detail in our new book, Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush. From the point of view of the typical American classroom, on the other hand, the incident may as well not have occurred.

A key piece of legislation in this story is the Emergency Banking Act of 1933, which Congress passed on March 9 without having read it and after only the most trivial debate. House Minority Leader Bertrand H. Snell (R-NY) generously conceded that it was “entirely out of the ordinary” to pass legislation that “is not even in print at the time it is offered.” He urged his colleagues to pass it all the same: “The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation.”

Continue reading the article here.

In between all of the Paris Hilton and Britney Spears gossip the entertainment magazines have a mind-numbing filler page called “Separated At Birth”. The idea is to match up two celebrities who look so similar that they could be twins.

Paris Hilton and Britney Spears

Ok, these two look nothing alike. On a slightly more serious note, after Ron Paul gained such a large grassroots support base during his primary campaign the observation was made that he resembles Gandalf, the fictional wizard from the Lord Of The Rings. In fact, someone created a picture comparing the two…

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The Money Matrix series rolls on by asking ‘What are the Types of Money?’ and ‘What is the “Best” Currency and Why?’

Originally published August 7th, 2008 by Jake, the Champion of the Constitution at http://www.nolanchart.com/article4440.html

In Part 3, it was explained that money is a commodity and its main purpose is to serve as a medium of exchange. We also learned about the 7 “Ron Paul requirements” of good money. This article will define the four types of money followed by a discussion of what is the best currency.

Money can be classified into 4 types.

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Last time, we touched on the basics of commodity spreads and went over the basic example of soybeans (S) and soybean meal (SM), or the “crush spread.” We noted that by tracking their ratio (S/SM), we could identify times when the relationship between these two contracts is out of alignment with the historical relationship, and take advantage by buying the undervalued contract and simultaneously selling the overvalued.

An important question is: how much do we buy and sell? The obvious (and easiest) answer is to buy one contract of the undervalued commodity, and sell one contract of the overvalued. However, each commodity gives the owner power over a certain number of the commodity – one soybean contract controls 5,000 bushels, for example – and the values of these contracts might be different.

To give an example, let’s look at the soybean / soybean meal spread that we were looking at before. As the chart showed, the ratio of 3.631 looks lower than usual, meaning that soybeans are undervalued and soy meal is overvalued. A $1 move in the contract price of soybeans is a move of $50 in actual value; a $1 move in the contract price of soybean meal is a move of $100 in actual value. These can be calculated from the screen captures above – on the left is the “tick” size for soybeans, and on the right is the “tick” size for soy meal. As the ratio suggests, the two typically trade at a ratio of (roughly) 4 to 1 – that is, the price of the soybean contract will move 4 times as much as that of the soy meal contract. Let’s assume that tomorrow, the soybean contract moves up $4, and the soy meal contract moves up $1, in accordance with this ratio.

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D o w n s i z e r - D i s p a t c h

“We make money the old fashioned way. We print it.”
– Art Rolnick, former Chief Economist, Minneapolis Federal Reserve Bank

Subject: How big is the money supply?

The value of your money depends on the amount of money in circulation. Is it possible for you, as a layman, to learn and understand how large the money supply is, and whether it’s growing or shrinking?

Probably not. There are many measurements of the money supply, and there seems to be no consensus about which measurements are best. These measurements go by the names M-zero, M1, M2, M3, and MZM. There’s even something called the “True Money Supply,” devised by Murray Rothbard, and reported at the website of the Ludwig von Mises Institute.

The “True Money Supply” page will also give you numbers for M1, M2, M3, and MZM, but the numbers are only updated through April, and the M1 measurement, for some reason, is only current through February of 2006.

Well, you could try the Federal Reserve instead. They ought to know, right? Well, there are problems there too. The Fed doesn’t report M3 anymore, which some people think is the best measurement. The Fed also provides two different numbers for M1 and M2, one seasonally adjusted, and one not, without explaining what the seasonal adjustment entails. Worse still . . .

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