Archive for January, 2008

Competition in Currency: Ron Paul’s “Nutty” Idea

Sunday, January 27th, 2008

Here is an article Peter Brimelow published in Forbes magazine in 1988 about competition in currency and free market innovations in the monetary payments system. And, yes of course, he mentions me in the article.
- Joe Cobb

[Link to article] Peter Brimelow’s Absolutely Definitive Account of This Weird Competing Currencies Idea Ron Paul Keeps Talking About [link here]

My own work with Ron Paul as his staff aide on the Banking Committee of the House of Representatives, 1983-85, led to the introduction of legislation that became Public Law 99-185 on December 17, 1985 (99 Stat. 1177), the “Gold Bullion Coin Act of 1985.”

Our original plan was to introduce an American legal tender gold coinage denominated only in units of weight (troy ounce or gram of gold). This idea was promoted by Ron Paul when he served on the U.S. Gold Commission. The Gold Commission was established by Congress in 1978, and members were appointed by Treasury Secretary Donald T. Regan in 1981. My own private group at that time was named the “U.S. Choice in Currency Commission.” We lobbied the members of the Gold Commission in favor of F.A. Hayek’s idea of competition in currencies, with gold bullion-weight coins as our centerpiece.

Ron Paul was converted from the classical gold standard ideas of Murray Rothbard - who wanted to fix the price of gold in terms of U.S. dollars, as it had been from 1792 until 1971. For an argument how Rothbard’s idea is bad, see Milton Friedman, “Real and Pseudo Gold Standards,” Journal of Law and Economics, vol.4 (1961).

For more discussion of how “parallel currencies” work, successfully, see the work of Prof. Roland Vaubel, University of Mannheim, Germany.
http://snipurl.com/Vaubel

Ron Paul adopted my proposal - and Milton Friedman’s - to have gold monetary units denominated by bullion weight, which is a natural measurement in the market, instead of being denominated in artificial “units of account” such as the dollar, mark, franc, pound sterling, yen, et al. Although we got the law passed to create the bullion coins (tangible things to concretely represent the Units-of-Bookkeeping, which are the main thing in any monetary system today), we did not achieve our main goal - to create a parallel currency in the United States.

This gold-weight-denominated alternative currency would have been a private, competitive alternative to the Federal Reserve monopoly over “dollars.”

Unfortunately, unlike the classic prototype of this kind of coinage and accounting system, the South African Krugerrand (which is not denominated in the paper “rand” currency units of that government), the Congress passed Public Law 99-185 with fictional “face value” amounts. They claimed this was necessary to make the bullion coinage legal tender. Of course, the South Africans had no problem making the Krugerrand legal tender without a fictional face value in paper rands; but we lost that debate.

It is good to see Peter Brimelow reviving publication of this old article [link here] from Forbes magazine. It is an idea whose time will be coming later in the 21st century.

Joe Cobb
Glendale, Arizona

Kubby for President

Thursday, January 24th, 2008

The Economic Issues are Hot Today

I have decided to sign on to the Steve Kubby for President candidacy, for the Libertarian Party nomination. I know Steve personally, and I plan to work very hard for his success in getting the LP nomination in Denver, Memorial Day weekend. He will get on the ballot in at least 2/3 of the USA, and if we do as well as in years past, we can be on the ballot in 49-50 states.

Steve Kubby plans to emphasize the economic issues. I am an economist, so I have agreed to become his central advisor in that role. For an introduction to the tax and budget ideas, you can check out my own web site, www.JoeCobb.com, but Steve Kubby’s personal views are for him to tell you as the election campaign moves forward.

Here are two of my own ideas about abolishing the income tax and cutting government spending. If my own ideas are helpful in summarizing what Kubby would do in the first year after Jan.21, 2009, having won election to the Presidency of the United States, enjoy my speculative fiction.

Speculative Fiction

(1) First, Kubby tells America and the world that we will stop “forecasting” revenue and expenditure numbers in the government’s budget. “Imaginary numbers” are what have caused the current crisis, as the politicians try to predict the future and pass laws spending money that will never be collected. (See “Why Do We Need a Government Budget?” on this site.)

(2) Second, Kubby tells America and the world that we will stop attempting to collect the Federal income tax, until such time as the Congress approves a resolution to repeal the 16th Amendment. The income tax is ruining America and it must go! (See my book on this site.)

(3) Third, Kubby tells America and the world that we will balance the Federal budget by cutting spending, but the Congress in 2009 will choose what programs to cut.

Kubby will promise NOT to write up a budget during his first 100 days in office, because that would be a serious time to work with Congress and study what must be done to save the American economy and to cut the size and power of the Federal government.

This is a very significant change

This is a very significant change, perhaps the most important detail in the Kubby program. The Federal government’s budgetary process is broken and must be changed. This how we purge the forecasted revenues (”imaginary numbers”) out of the budgetary system and use actual tax collections as our basis for planning expenditures.

Nobody can predict the future, and government budgets are importantly different from private budgets, which are useful planning tools. Government budgets are a relic from the old infatuation about government central economic planning, an idea that should have died with the old Soviet Union.

Kubby will use Congressional “continuing resolutions” to pay for government programs and to force Congress to cut spending.

See this reference to understand more about the “continuing resolution” method, by which Congress evades the deadlines to pass annual appropriations bills. Lazy Congress. Should do more “oversight” work and less earmarking. Wikipedia: Continuing Resolution [ link here ]

(4) Fourth, Kubby welcomes your own comments. You can use the comments sections on my own web site to publish your ideas. Thanks for stepping into the arena.

Question from a Friend

Thursday, January 17th, 2008

My friend wrote me, “… It’s so obvious….politics isn’t about knowledge, politics is about power….”

Yes, politics is about power.

Of course politics is about power.
That is why Libertarians want “to sit in the chair, at the desk.”
If we don’t sit there, somebody else will sit there.

We, however, will perform “Justice.”
That means we will NOT DO ANYTHING.
Justice requires letting people do what they want to do,
not to police them.

That, in a short poem format is why I am motivated to work inside the Libertarian Party to get elected to public office.

My opponents believe people will hurt each other. Some of them believe government laws and regulaitons will make people behave better, or spend their money better. I disagree.

Manifesto

Thursday, January 10th, 2008

by Jim Babka and Perry Willis

“The Revolution was effected before the War commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments of their duties and obligations . . . . This radical change in the principles, opinions, sentiments, and affections of the people, was the real American Revolution. — John Adams, (1735-1826), Founding Father and 2nd U.S. President, February 13, 1818

A man strings together long chains of poetic but meaningless phrases, such as “the audacity of hope” and “the urgency of now.” He speaks constantly of change, but the nature of this change remains undefined. His words are full of “sound and fury,” but “signify nothing.” Nevertheless, he is hailed not merely as a man, nor as a candidate, but as a movement.

A woman almost cries. It is a tiny expression of emotion born of a wounded ego. She fears the loss of the chance to control the lives of millions, and to bend them to her highly personal vision of what they need. Beyond this the tears say nothing, and mean nothing, but thousands swoon and she is rewarded with victory.

Another man states a willingness to keep American troops in Iraq for 100 years — a policy that will inflame the patriotic and religious emotions of a billion Muslims. And yet, he is hailed as a sober man, perhaps uniquely qualified to protect you from the very forces he promises to incite. Many members of the media freely admit that this man’s main constituency is the media itself. After all, he has no money, because no one cares to give him any, but the media’s cheer-leading is enough to lift him to victory.

Meanwhile, another man is largely ignored by the media. He is rarely mentioned in the same breath as the “Audacious Hoper,” the “Tearful Egotist,” or the “100-year spiller of other people’s blood.” And yet, he has many millions of dollars, because hundreds of thousands of people cared to give it to him. This man has run for president before. He was ignored by everyone then, but he is supported by many now. The difference is the label he runs under. Only that, and little more. His positions remain mostly the same. Only the label has changed.

Look around. Take notice. People vote for reasons having nothing to do with issues, beliefs, philosophy, or ideology. They vote because of poetry, tears, media cheer-leading, and labels. This happens because people do not care for their votes, which cost them little, in the same way that they care for their money. They may not give a man who favors a hundred year war their cash, but they will give him their vote, even when they oppose his war.

Votes are treated like bets. They are like cheers at a sports arena. The evidence for this is very clear. And yet, so many of us act as if changing how people vote will change the world.

No, changing minds is what will change the world.

Invest your time and money attempting to win votes, and no matter how much ground you think you’re gaining, at the last minute you will lose your entire investment to poetic sounds, egotistical tears, empty labels, or the sports cheers of the media. And many of the minds you may have changed in the process will snap back to their old positions, because you lost the vote.

But invest your time and money to change minds directly, and you will gain the world. The votes may even follow. But be under no illusions, the votes will merely follow, they will never lead. Electoral success will be the last thing that happens in the process of change, not the first. Grasp this fact, or you will groan forever in futile effort and constant despair.

This is our manifesto.

For centuries African-Americans had to enter buildings through side doors, but now it is possible that an African American will enter the White House itself, through the front door. This didn’t happen because people were specifically elected to make it happen. It happened because minds were changed, and the votes followed.

For long years a woman’s place was in the kitchen, but now her place is anywhere and everywhere she chooses, perhaps even the Oval Office. This didn’t happen because anyone was elected to make it happen. It happened because minds were changed.

Martin Luther King didn’t run candidates and elect them to office. He, and the brave men and women who suffered under the fire hoses and the biting dogs, changed minds through the example of their courage and peaceful suffering.

Gandhi didn’t elect a slate of candidates to vote the British out of India. Ghandi changed minds, including the minds of the British, and then the British left.

The Berlin Wall, and the communist governments of eastern Europe, didn’t fall because new legislatures were elected to make them fall. The change happened because minds changed, including the minds of soldiers who decided to no longer obey orders.

We don’t have cheap air travel and shipping today because someone was specifically elected to make those things happen, we have them because the people in power became intellectually convinced that it would be good to deregulate trucking and air travel.

Congressman Walter Jones, a man who supported the Iraq war so passionately that he wanted to change the name of French Fries to Freedom Fries, didn’t switch to opposing the war because his conservative constituents re-elected him for that purpose. His policy changed because his mind changed in the face of the evidence.

In the long run, people hit only what they aim at. As long as we aim mainly at votes our arrows will constantly pass through a cloud of smoke — a cloud that is blown this way and that by the gusts from media windbags. But if we aim at changing minds, our arrows will begin to hit home, and cause real, lasting change.

This is our aim. And we hope to make it your aim too. We want to change people’s minds about what is needed strategically, in order to more effectively cause a change in people’s philosophy of government.

To change minds we must make the case for small government seen and heard by everyone, everywhere, every day. It really is that simple.

What would it take in terms of time and money to convince the people of the need for things like the “Read the Bills Act,” and the “One Subject at a Time Act?” What would it take to convince people to not be afraid of terrorism? The answer to these questions provides the target we need to hit.

In this regard we want to bring to your attention the fact that the British government has decided to no longer talk about a “war on terror.” This hardly represents a fundamental change in government policy, but it does reflect a change in the beliefs of British leaders. It is a step in the direction of our “I am not afraid” campaign. We need to convince our own leaders to take the same first step.

You can push for this to happen by sending your elected representatives an “I am not afraid” message. Use your personal comments to point out that the British government has dropped the “war on terror” rhetoric. Urge your government to do the same thing. You can send your message here.

You can also help us to grow to the point where we can make our message heard by everyone, everywhere, every day. You can do that by making a contribution here [link].

Jim Babka and Perry Willis are the President and Communications Director of Downsize DC, a public internet lobbying organization to bombard members of Congress with emails about issues of concern to libertarians and to all good Americans who prize freedom.

Long Range Solar Forecast

Thursday, January 10th, 2008

05.10.2006

Solar Cycle 25 peaking around 2022 could be one of the weakest in centuries.

May 10, 2006: The Sun’s Great Conveyor Belt has slowed to a record-low crawl, according to research by NASA solar physicist David Hathaway. “It’s off the bottom of the charts,” he says. “This has important repercussions for future solar activity.”

The Great Conveyor Belt is a massive circulating current of fire (hot plasma) within the Sun. It has two branches, north and south, each taking about 40 years to perform one complete circuit. Researchers believe the turning of the belt controls the sunspot cycle, and that’s why the slowdown is important.

“Normally, the conveyor belt moves about 1 meter per second—walking pace,” says Hathaway. “That’s how it has been since the late 19th century.” In recent years, however, the belt has decelerated to 0.75 m/s in the north and 0.35 m/s in the south. “We’ve never seen speeds so low.”

According to theory and observation, the speed of the belt foretells the intensity of sunspot activity ~20 years in the future. A slow belt means lower solar activity; a fast belt means stronger activity. The reasons for this are explained in the Science@NASA story Solar Storm Warning.

“The slowdown we see now means that Solar Cycle 25, peaking around the year 2022, could be one of the weakest in centuries,” says Hathaway.

This is interesting news for astronauts. Solar Cycle 25 is when the Vision for Space Exploration should be in full flower, with men and women back on the Moon preparing to go to Mars. A weak solar cycle means they won’t have to worry so much about solar flares and radiation storms.

On the other hand, they will have to worry more about cosmic rays. Cosmic rays are high-energy particles from deep space; they penetrate metal, plastic, flesh and bone. Astronauts exposed to cosmic rays develop an increased risk of cancer, cataracts and other maladies. Ironically, solar explosions, which produce their own deadly radiation, sweep away the even deadlier cosmic rays. As flares subside, cosmic rays intensify—yin, yang.

Hathaway’s prediction should not be confused with another recent forecast: A team led by physicist Mausumi Dikpata of NCAR has predicted that Cycle 24, peaking in 2011 or 2012, will be intense. Hathaway agrees: “Cycle 24 will be strong. Cycle 25 will be weak. Both of these predictions are based on the observed behavior of the conveyor belt.”

How do you observe a belt that plunges 200,000 km below the surface of the sun?

“We do it using sunspots,” Hathaway explains. Sunspots are magnetic knots that bubble up from the base of the conveyor belt, eventually popping through the surface of the sun. Astronomers have long known that sunspots have a tendency to drift—from mid solar latitudes toward the sun’s equator. According to current thinking, this drift is caused by the motion of the conveyor belt. “By measuring the drift of sunspot groups,” says Hathaway, “we indirectly measure the speed of the belt.”

Using historical sunspot records, Hathaway has succeeded in clocking the conveyor belt as far back as 1890. The numbers are compelling: For more than a century, “the speed of the belt has been a good predictor of future solar activity.”

If the trend holds, Solar Cycle 25 in 2022 could be, like the belt itself, “off the bottom of the charts.”

[ original link ]

Author and Production Editor: Dr. Tony Phillips
Credit: Science@NASA
Curator: Bryan Walls
NASA Official: John M. Horack
Previous Update mentioned in the above media release: June 9, 2005
Contact NASA

More Information
Who’s Afraid of a Solar Flare?
— (Science@NASA) Solar activity can be surprisingly good for astronauts.

SUBSCRIBE TO Science@NASA

A word about solar cycles: Astronomers number each 11-year solar cycle, 1, 2, 3 and so on. For obscure historical reasons, Solar Cycle 1 is a nondescript cycle which peaked in 1760. The most recent cycle, Cycle 23, peaked in 2001 and is coming to an end now. Hathaway’s prediction concerns Cycle 25. “The speed of the conveyor belt predicts solar activity two cycles ahead,” he explains. “The belt was moving slowly during Cycle 23; that means Cycle 25 will be weak.”