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"Like Marx Heinlein gets in some good jabs at democratic societies, and like Marx the alternative he suggests would be a nightmare if implemented."

Alright - first, allow me to point out that Heinlein's world in Starship Troopers represents a relatively stable world, AFTER they emerge from the real nighmare of anarchy.

But, that wasn't your point, nor is it mine.

I question whether that "nightmare" of Heinlein's world is any worse than what we have today. I mean, look at the United States. Unemployment is over 20% http://www.shadowstats.com/ It seems that more people get welfare in various forms than actually work in this country. We see at least one state nearly paralyzed with the issue of illegal aliens. 1 in ten adult males are incarcerated and/or in the "criminal justice" system as a parolee, probation, or whatever.

The world in which 'Starship Troopers' is based actually looks pretty appealing to me.

But then, one man's meat is another man's poison, right? In Heinlein's world, I have already earned my citizenship, and I have the right to look down on the mere peons. In our world, here and now, there are any number of people who have more rights than I have, and my service to my country means just about squat.

Although the Bureau of Labor Statistics puts $1.00 in 1988 at $1.87 today, the real rate of inflation is much higher. From a popular perception standpoint, Wal-Mart's low prices are masking the double-digit inflation in healthcare, education, and housing (prices are still historically high relative to wages). From a BLS calculation standpoint, BLS pulls dirty tricks like considering only rents instead of home purchase price, considering that houses in West Virginia are equivalent to houses in Arlington, Virginia because they're in the same Census Metropolitan Statistical Area, and considering that an actual DVD player price should be adjusted down 50% because it's technologically superior to a VCR.

Shadowstats.com, which uses pre-Clinton formulas to compute CPI, now has a free calculator. Without a subscription, it requires Photoshop to measure the bar heights, but I've measured that $1.00 in 1988 is over $5.00 today.

512MB USB thumb drives can be had for $3.99.

And that's compared to a 3.5" floppy disk. To try to add some fairness, I avoided a comparison with 5.25" floppies in 1982, which were $1.50 then.

When new formats are introduced, there is a discontinuity in prices. It makes for a sawtooth graph. You're cherry-picking the edge of the sawtooth and whining about it.

So, it is your position that because it happens to a small percentage of people, then it's alright?

Hmmmm. That's not terribly hard to buy into. "It isn't likely to happen to me, or anyone I know, so we can ignore that problem!"

Except, that the percentage is growing. More and more people have no healthcare plan, or have to choose between groceries and medications, or are losing their homes after some catastrophic accident or illness.

Fewer and fewer people occupy that wonderfully comfortable niche that we call "middle class", and more and more people live on the brink of bankruptcy and homelessness.

Surely, you didn't sleep through that whole economic meltdown, did you? What is the unemployment rate today? http://www.shadowstats.com/alternate_data Take your pick from the sets of numbers. None of them are good.

In the case of government run health care the government loses money if people are sick. So they have an incentive to redefine what sick means.

There, fixed that for you (see CPI for similar example).

The government has a few unemployment figures. The news reports the standard UC 3 one, the "People drawing unemployment". The UC 6 figure is for people drawing unemployment, people no longer drawing because it ran out, and underemployment (Being cut to 20 hours instead of 40, being hired to flip burgers after losing a white collar job, etc). This number is currently 16%. So the economy is in pretty sad shape.

Unemployment is getting pretty close - it was 25% during the depression and U6 is probably over 20% now.

FYI: ShadowStats puts U6 at 17% and their own alternate formula at 22%.

Continue to believe the government when they say there is no inflation - there's even DEFLATION (hah! Then why do prices keep going up? How much is gold this morning? $1147/troy oz?).

You sound like a conspiracy theorist. Why would gold, an industrial commodity, be in the inflation basket? How much gold did you have for breakfast today?

Yeah, believe that. Or you can see the real numbers, calculated in the traditional way.

The shadowstats people are in the business of selling newsletters, not in the business of truth. Here is a debunking of their misleading sensationalist claims by BLS economists John Greenlees and Robert McClelland.

Oh, I would love to hear you detail exactly how the government has been gouging you in particular.

      Oh let's see - start with 1) destroying the value of the US dollar, which both increases the cost of imports (trivial stuff like, say, oil), 2) persistently lying about inflation because ok we'll say there's no inflation by taking out transport and energy from the inflation equation then we'll use substitution and hedonics to skew the inflation numbers in our favor and of course the cost of housing tripling or more has NOTHING to do with inflation and when you hear on the news things like "tuition fees have not kept up with household income" that isn't inflation either.

Here's a quote for you:

"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

So I guess you belong to the 999,999 other people. I hope enjoy having your savings destroyed by inflation. Continue to believe the government when they say there is no inflation - there's even DEFLATION (hah! Then why do prices keep going up? How much is gold this morning? $1147/troy oz?). Yeah, believe that. Or you can see the real numbers, calculated in the traditional way.

Last I looked they stopped publishing it.

For that matter the data I see shows you to be mistaken. M1 up about 21% sense 96, M2 up about 24%.

Cite: http://www.shadowstats.com/alternate_data/money-supply

Their guess for M3: up about 40%.

The real danger is having those same morons in charge when the printing presses get kicked into high gear.

Xenophobia. Yeah, I see it. I don't much like it. It is a symptom of ignorance, and it's quite hard to cure. BUT - maybe it's fair to point out that xenophobia may be a valid reaction to what has been going on over the last few decades. NAFTA, CAFTA, whoring ourselves out to make China a "most favored trading partner". Outsourcing, immigration (both legal and illegal), hiring of foreign nationals (work permits, as opposed to immigrants), as well as corporations shipping production jobs overseas wholesale. All these things, plus terrorism, have taken their toll. America's wealth is being drained, people are afraid, and people are reacting.

Xenophobia? Again, I see it as ignorance, akin to paranoia. But then again, it's not paranoia if everyone really IS out to get you, is it?

Our government is almost willing to admit that unemployment is at 10%. For a more accurate picture of unemployment, visit http://www.shadowstats.com/article/employment Depending on the methods used to figure unemployment, the figures vary. SGS places it at 21.4% for September.

Browse around shadowstats to get an idea how and why the government fails to make accurate reports on the economy.

The administration apparently had hopes that capturing the Olympics would help the economy. That's the only reason I can think of for our head of state to lobby so hard for it.

• The nation's key economic indicator has always been the Gross Domestic Product (GDP).

As opposed to what? The GNP?

Yes, as opposed to GNP. To really understand why the government switched from using GNP as the key growth indicator, to using GDP, go read this article.

From the article:

The related Gross National Product (GNP) is the broadest U.S. economic measure and includes the GDP plus the balance of international flows of interest and dividend payments. For net debtor nations such as Guinea-Bissau and the United States, GDP usually will show the stronger growth than GNP, since the outflow of interest payments does not get charged against economic activity. For this reason, the United States switched its primary reporting from the GNP to the GDP in 1991. Put in perspective as of the "final" estimate of second-quarter 2004, annualized real GDP growth was 3.3%, down from 4.5% in the first quarter, while GNP growth for the same period was 1.9%, down from 3.9%.

...

Varied academic theories, often with strong political biases, have been used to alter the GDP model over the years, resulting in Pollyanna Creep, where changes made to the series invariably have had the effect of upping near-term economic growth. Whether the change was to deflate GDP using "chain-weighted" instead of "fixed-weighted" inflation measures, to capitalize rather than expense computer software purchases, or to smooth away the economic impact of the September 11th terrorist attacks, upside growth biases have been built into reported GDP with increasing regularity since the mid-1980s.

Basically, the GDP calculation has been routinely and repeatedly tweaked by the government to cast a more positive light on the country's immediate economic situation, to the point that it is now basically worthless and almost completely disconnected from reality.

Sorry, real unemployment, minus the number massaging the government has dropped in over the last 50 odd years, is a little under 21%. Link.

It's a bit under 10% as measured the new way created under clinton.

It's over 16% the way they measured it until then.
http://www.shadowstats.com/alternate_data

And it's over 20% if you include people who have run out of benefits and people who used to make six figure incomes who "have a job" for a fraction of their former pay.

These are really historic times... the banks are refusing to take ownership of houses that should be foreclosed on. The banks are refusing to list houses they have foreclosed on to artificially pump prices. Cities are tearing down thousands of houses rather than let them sink to their true price (which may actually be zero anyway since without a job, you can't pay anything for a house).

http://www.shadowstats.com/

As soon as any of the indicators go up (these are pretty reliable predictors of activity), the FED simply filters the money out of the banks, rates go up for daily business paper and money is more scarce.

ITYM the FED causes a recession.

You're surprised that retailers have a profit margin over the manufacturers price? I think you're just bewildered that people might even want to own gold. You have a lot to learn my son ;] In actuality, the paper money you trust is 'marked-up' constantly and behind your back. The value of the US dollar has lost more than 90% of it's value in the last 100 years. How?... It's called monetary inflation, the greatest secret tax ever conceived. Government deliberately prints more money than the GDP justifies and waters down that paper in your pocket and in the bank. You think 5% depositor's interest is making you money? Think again. See the *real* inflation at http://www.shadowstats.com/ and see that you are earning *negative* interest. ie. You are being robbed. Gold maintains it's purchasing power for a number of reasons, paper money does not. Learn about gold, and how invariably ALL paper money becomes an elite tool to steal from the middle class, over a long period of time. We are very close to the inevitable collapse now. If you don't think it's inevitable, read history. All paper money collapses, it's just a matter of time. You think it's different this time? How? Has greed and corruption been bred out of the human race?

GPs post was pretty nonsensical, and I would responded if you hadn't already done so. Still, there were a couple things about your post that struck me as odd.

The creation of money is governed by supply and demand of loans, there is nothing artificial about it.

Except that the Federal Reserve Bank either pushes money in or pulls money out by buying or selling those loans in their "open market operations"... there's nothing natural about those transactions.

I hope you will agree than the higher the money supply is, the less each individual dollar will be worth, also known as inflation. (That is, of course, assuming the total amount produced remains roughly constant.) Dollars react to supply and demand just like any other good, aside from the fact that the supply is controlled by government printing and fractional reserve requirements. Check out the increase in money supply in the past 8 months, and then tell me whether you think there will be inflation whenever consumer demand (which some call "velocity") picks back up.

http://research.stlouisfed.org/fred2/data/M1SL.txt

(M1 may not be the best indicator... M3 is probably better, but the fed stopped reporting it in 2006, as it started showing higher growth rates than M1 and M2.)

The US had an annualized inflation rate of 0,09% in December 2008 and hasn't had an inflation rate above 4% since 1991. What exactly are you talking about?

Using CPI as a measure of inflation is... not optimal. They keep changing it, starting in the early 90s, which is (not coincidentally) when you cited as the last time the CPI was above 4%.

http://www.shadowstats.com/article/56

"Monkeying with the key metrics -- like "unemployment" (ignoring those no longer actively seeking work) and "cost of living" under continual "revision" for political purposes since at least 1983 (when "cost of living" replaced house prices with "imputed rent") -- has left us without the information we need to realistically address economic policy.

It's sort of like a junkie being asked diagnostic questions like
"Where does it hurt?" by a doctor who is prescribing him opiates."

You hit the nail on the head.
Manipulating economic stats has become a new art form.

For a dose of reality go to this web site.

Some of us saw this coming a long time ago. How to Fake Unemployment Numbers..

GDP has similar faults, like firing US workers, and importing more foreign goods increases US GDP !!

There is an alternate way of measuring GDP, (total US wages and salaries paid), but reporting that number (~6.85T$ in 2008 dollars) would crush the life out of the Markets.

For much of the 90's and 00's both the markets and the world economy have been living in a fantasy land.

A long-standing rule of thumb for "recession" is that it is defined as contraction in the GDP for at least two consecutive quarters (six months).

Yes, but when measuring this economists always take the so called "real GDP". In other words, GDP adjusted for inflation, using the official CPI figure. What they don't tell you is that the CPI is completely disconnected from reality - a figure manipulated by government economists so that inflation-adjusted payments and benefits can be as low as possible. CPI has absolutely nothing to do with real inflation and "real GDP" has absolutely nothing to do with real economic growth.

I can't help but notice the parallels between America's situation and Rome during its final centuries. Rome eventually degraded as barbaric pressures from the outside world overwhelmed their ability to control them.

Rome's problem was that it reduced its money supply by 90% towards the end and debased its existing currency until it was nearly worthless. As a result, commoners lost their land and homes and refused to support the government which was then able to be easily toppled from without.

We'd never do something so foolish, right?

I have real doubts about the bailout "working". The underlying problems with the financial system are more fundamental. We have a sizable chunk of the financial system based on the assumption that real interest rates (after inflation) will remain negative.

Currently, US dollar inflation is around 5.4%. (9% to 11% if you use classical numbers, computed the way inflation was calculated prior to the 1980s.) Normally, the Fed funds rate is just above inflation, LIBOR and the prime rate run around 2% above inflation, and mortgages run about 6% above it. For the past year, the Fed has been flooding the financial system with cheap money, at 2%, in a failing attempt to avoid a recession. LIBOR is 3.88%. So we're currently in a situation where key real interest rates are well below inflation. LIBOR, in real terms, is about -1.5%. This is very unusual historically.

The problem is that 1) negative real interest rates can't last for long without producing runaway inflation; the money has to come from somewhere, and 2) there are sectors of the financial system that are addicted to those low, low rates. Last week, LIBOR briefly hit 6.88%, businesses were screaming "credit crunch", and AT&T and GE were having difficulties rolling over their commercial paper. (GE Credit borrowed short and lent long, which is a bet on low interest rates.)

The mortgage portion of the economy is heavily dependent on those low interest rates. A mortgage really should cost a good borrower about 11.5% right now; 6% as the cost of the mortgage, and 5.4% for inflation. The "bailout" is all about keeping those interest rates artificially low. For a while longer.

Probably not that much longer. Expect a "credit crunch" in 2009 as financial reality reasserts itself.

There's nothing wrong with a credit crunch. It just means that businesses have to finance more with equity and less with debt. (Because interest on debt is deductible by business borrowers, there's a systemic bias towards financing with debt.) Consumer credit rates, other than for autos, are already at credit-crunch levels. (Stop in at your local "payday loan" outlet and ask them what their APR is.) And besides, we might see worthwhile interest rates on savings accounts.

What's "normal?" 3% real interest on savings accounts, 6% on loans, and the median house costs 2.5 years median income. That multiplier got up to over 4 in the US nationally, and over 10 in some markets. That was two years ago; now those numbers are lower, but not low enough.

When bubbles burst, they burst all the way. Tokyo residential real estate dropped over 90% when their bubble burst in 1989, and never went that high again.

We told you this would happen. You didn't listen. Now suffer the consequences.

Why? Describe the process you're suggesting, and why it wouldn't happen without fractional reserves.

Full reserve banking. Money which is lent out to one party is taken away from the lender for the period of the loan. With fractional reserve lending, the original lender still has access to their money through the bank's reserve, almost doubling the money with each loan. Then there's a race against the debt.

With 100% reserve lending, money is removed from the lender and given to the borrower, the lender no longer has access to the money. It's gone, and if the borrower defaults, the lender loses their money permanently. The money has moved, not grown. Therefore the act of lending itself doesn't cause a boom.

No boom, no bust.

How do you get 95%? AFAICS, even M0:M3 doesn't get to 95%. In what way are notes and coins guaranteed?

1 trillion in physical currency, and M3 estimated 14 trillion. ~95%

The ratio of the total amount of money to notes and coins.
http://www.fms.treas.gov/bulletin/
http://www.shadowstats.com/alternate_data/money-supply

Notes and coins are "legal tender" and must be accepted as payment for a debt, they also don't evaporate in a puff of debt, only in the puff of a government.

You'd have to create an awful lot of new M0. Someone would still have the impossibly difficult decision 'how much?'. And I don't see how this would end boom and bust.

Really. What's the world worth? Everything... Imagine holding it in your left hand. In your right, you have all the money in the world... 1 cent.

Basically this is what Europe did when they switched to the Euro... Not so difficult. Course the Euro is just as fiat as the dollar. The actual amount doesn't really matter, as long as the smallest unit usefully represents the smallest thing one can buy.

Really? I thought the very fact that gold kept being mined out of the ground, caused a steady inflation. Except it was uncontrollable and unpredictable.

Then you had stuff like the discovery of gold and silver mines by the Spanish in America, caused some uncontrollable bursts and fits of hyper-inflation in Spain.

I found some data here that comes to inflation between -3% and 4% per year from 1500 to 1650, with an average of about... 0.84% (350% total). Whereas if I go to the first google result for "Inflation Calculator", I see that we've had 360% cumulative inflation since 1976, or about 4% per year.

Recent inflation averages 5 times as high as this "Spanish Hyperinflation" (or if I use the shadowstats numbers about 6% or 7% per year, so 8 times the Spanish hyperinflation).

Or read a bit about the Black Death outbreaks. Unemployment practically disappeared, as there were not enough peasants and craftsmen for the nobles to employ. Prices shot up. There was some _massive_ inflation in the 14'th and 15'th centuries. (Which also provides some early illustration for that curve at work.)

Sure. Fewer people equals more money per person equals higher prices. Fewer people also equals more land (capital) per person which makes it easier to get use of the capital you need in order to work. No causal relation between the inflation and the unemployment, since there's a third change driving them both.

At any rate, heck, your government (assuming you're in a western country) still applies that curve quite successfuly. Again, that's how and why we all control inflation. But, at the very least, there you go, most governments still didn't abandon it at all.

Right, they didn't abandon it. Which means that if it worked, we wouldn't get stagflation and jobless recoveries.

(Government reports last week show the economy improving, and NOT in a recessaion, as the Democrats would have you believe).

Why on earth would you trust government statistics? They love to change how those statistics are calculated so they can manipulate them. If they can't manipulate those statistics easily they just stop printing them, like M3 information.

Visit this website if you want to see how the government manipulates basic economic data.

If you trust politicians, television and the government to tell you what to think, you're in trouble.

Remember these are government workers - don't expect any of this was competent. I don't know if he was innocent or not, and I doubt we will ever know - in the mean time, this takes the heat off the law men.

I just don't think I trust the government anymore -- they are all telling too many lies:

Here are some government lies

Last year Ron Paul introduced the Free Competition in Currency Act of 2007 which would make alternate currencies legal, though not change other aspects of what you can do with currencies (e.g. money laundering would still be illegal).

Few young people realize that until the 1964-1968 time period it was possible to bring your dollars to the government and get precious metal on demand. This gave the dollar real worth. Since that time, the government has found that it can simply make more money out of thin air and spend it on government programs to generate votes. As with any supply and demand equation, when they start running the printing presses to make more dollars, the dollars you have in you bank account become worth less. You're losing money value and the government is gaining money value, but your 'taxes' are low. One can see this in inflation charts which start to skyrocket in the 1970's, relative to decades previous. Interesting note: if we measured inflation today the way we used to back then, our inflation rate would be 11%.

The Wall Street Journal recently ran a graph showing the value of the dollar vs. gold vs. oil. If we look at the start of the decade until now, if we were holding euros instead of dollars, gas would only be about $2.70 at the pump - that extra $1.30 can be viewed as lost power of the dollar. But, the euro is no panacea either - if you compare the price of gas to the price of gold, it's nearly flat. How about $1.20 gas? I actually saw $5 diesel in CT last weekend.

Not surprisingly, the government decided to stop keeping track of 'M3', or the money supply of the dollar recently. Private economists have continued the calculations and it's easy to see why the government doesn't want to talk about it.

So, back to the beginning, the government has taken irresponsible action with the way it manages the value of its currency, and they have laws preventing people from opting out of their mismanagement. Afraid of a little competition, are they? Experience shows that the most likely effect of competing currencies, even ones that mimic the way the government operated in your parents' generation, would be to pressure the government to exercise some restraint. Of course, if this competition is illegal, they'll continue with their outrageous devaluation.

Folks who think a little competition helps to keep markets fair, and monopolies hurt them, would do well to contact their representatives in government about the aforementioned bill.

A fun site, with alternative economic numbers and an explanation of how they're derived, is http://www.shadowstats.com/

Here is a link from the shadowstats site to their well hidden free report, or rather some of their free FUD:
http://www.shadowstats.com/article/292

A summary of this FUD might be that it is about what American residents can do to prepare for a depression coming RSN. It gets even more absurd the FUD paper mentions how the US dollar will undergo seven to ten digit percentage hyperinflation RSN. It also gives questionable suggestions like buying "financial hedges" like gold, and using the gold and other items in barter transactions after the coming "calamity" when the US dollar loses its value.

The author backs up his statements with misleading graphs, no explanation of the methodology used to generate the figures for the graphs. There is a source given for the original data in the graphs, however the author has given no links back to in order to find the original figures so that one could to duplicate the results from the graphs. The first graph in the report has continuous inflation numbers for the US going back to 1665 and no explanation of the relevance of these figures to today's situation, 333 years later. Additionally, for this first graph, the author also prominently inserts some of his own unsourced data. The line for his data starts at a similar position as the line for the other data on the graph and the values increase geometrically which badly distorts the vertical scale. The author also chooses colors for the lines that allow his data to obscure the more continuous figures. The extraneous figures on the graph from before 1946 and the author's added data makes the graph nearly impossible to analyze at all. Even worse, all of the graphs are extremely misleading like the first graph. The entire piece is egregiously bad FUD. I would assume the rest of the site contains more too.

In any case, if a situation occurred which caused a total breakdown in order and social structure, Gold and other precious metals would be of the same value as a small chunk of basalt, optionally painted with acrylic paint with suspended crushed pyrite used as a pigment. In this case Gold have no value. In such a situation where Gold was worthless, the one of the ways Gold could regain value is due to its scarcity, it could be used as currency in a small regional market. However, the value of Gold would come from being scarce which would make it a "fiat" currency. Also, Gold would not necessarily regain much value because it has few applications in many manufactured items. Additionally, other metals and alloys could be used instead if Gold was scarce.

This is another example of how good news in the economic field can easily go unchecked because it is beneficial for everyone involved (in the short term) for the world to believe them.

My favorite, and perhaps the most drastic, example is how the US government grossly misrepresents employment stats, the consumer price index, and the GDP. This creates another bubble; not for the New Economy or for the housing market, but for the US as a nation. As long as people keep believing in the "world's strongest economy", investments pay off much as they do in a pyramid scheme - but the point where they won't becomes ever more dangerous the longer the scheme holds.

I for one prefer investments in Europe if only for the seemingly more reliable numbers they have there. Investing in the US is a way too dangerous gamble right now.

Whats funny about Narus?
US $475 million dollars would still buy a few units.
But keep watching that M3 data (The Federal Reserve ceased publishing M3 statistics in March 2006).
http://www.shadowstats.com/alternate_data

No wonder Gen Y is cynical about salaries.

Ron Paul was good friends with Nobel Laureate Milton Friedman, I'm sure you would consider him a "respected" economist. http://www.lewrockwell.com/paul/paul352.html Ron is also a follower of the Austrian School of Economics, a very respected school of economic thought. Ron Paul is a true student of Economics, likely the only candidate that truly understands Economics. I hope you realize that the federal reserve is a PRIVATE enterprise. It has been responsible for the latest housing and dot-com bubbles. I suggest you look at the History of federal banks or reserves and who the federal reserve truly represents. Andrew Jackson has written "I killed the Bank" written on his tombstomb. His reasons for wanting to kill the Second Bank of the United States: "It concentrated an excessive amount of the nation's financial strength in a single institution. It exposed the government to control by foreign interests. It served mainly to make the rich richer. It exercised too much control over members of Congress. It favored northeastern states over southern and western states. " from wikipedia. You think anything has changed??? The current Federal Reserve was by the top families(Morgans, Rothchilds , rochefellars) in Jekyll Island (look it up). Do you think they were looking out for the good of the public? http://www.amazon.com/Thieves-Temple-America-Federal-Reserve/dp/0975965484 Just one point, and this is really scary, especially since I've been studying economics for years and never heard of this until recently. The way CPI was historically calculated is that if a typical basket of goods is steak and wine, they would track the prices of steak and wine over time. BUT, in the early 1990s, the FED decided that if steak and wine became too expensive, people would substitute it with Hamburger and Coke. So the new CPI was not the adjustment for the cost of livings, but instead, it measures the adjustment for the COST OF SURVIVAL. http://www.shadowstats.com/article/56 This is a (still??) free society, so you are allowed to criticize Dr. Paul, but I ask everyone to do some research, his views are soundly footed in economics and history

And you do it with fake money.

In the olden days "dollar bills" wire actually silver or gold certificates. You could trade these paper certificates for the actual gold or silver. Prior to this, you'd carry it in a coin purse. But the paper money while more subject to wear, was lighter and literally more flexible and therefore comfortable. A US Dollar was based off the Spanish dollar and was settled on 371.25 grains of .999 fine silver officially by the government, with a gold standard following.

This limited inflation (the only way to deflate the currency was to send bankers to the hills to mine metals) and was real value.

Then in 1913 two things happened: we got the Federal Reserve and the 16th amendment. These two institutions, both once non-existent, rule the country today. With the creation of the FR the US borrowed money from the FR ]]at interest[[ setting up a positive feedback loop of inflation. In order to do this they also had to decouple the money from the metal backing, which was completed in 197[2?] under Richard Nixon. If you want to see real inflation, it is measured in the M3 statistic, which the Fed stopped publishing recently. But you can see it here Instead of talking inflation, the Fed tries to talk CPI - which is an aggregate from several industries. Notably absent is the mortgage market, which ask anyone, its costs have doubled in the the past 5 years. But the CPI leaves this out, and only includes rents, which have stayed disproportionately low because of all the house seekers.

Today the paper you move about is as valuable as those bits in the computer. If the word "certificate" appeared on them it would be completely a different situation. You could go to the bank and get metal, whose value wouldn't ever go down. But now, you can't expect to leave $30,000 in the bank and have the same buying power 10 years later. Over the last 90 years, the dollar has fallen to just $0.04 of its original value, as valued by the silver market.

But getting back on topic - any kind of calamity that shakes the confidence of Americans will affect the buying power of the dollar. Not a new vein of gold, not a run on banks, not a stock market crash. The only absolute value is cold hard cash. And by cold and hard I mean a metal.

--Epilogue--

I often wonder what all this means int he grand scheme. If you have money, this is an issue. If you have debt, it is actually a good thing because debts are paid off with future, depreciated money, and they take that money at face value. (Which an old bill is rarely worth.) The key here is to have one foot in both areas: pay off debts with inflating currency and have your investments in metals-backed currency.

There has been a movement to inflation-proof currency, known as the Liberty dollar. These were negotiable certificates which actually were redeemable for metal. The Federal Reserve shut it down and seized all the silver, because this, while completely legal, are the one thing a person can do to retain control and live outside the system. If it ever got popular (and I believe it would, particularly in times of inflation) the Federal Reserve would have competition that couldn't be influenced by it. The important thing to note is that it would be no different of a situation than America, pre-1913.

Finally, note that the Federal Reserve is not Federal (it is private) nor is it a Reserve (it holds nothing - the gold it once held is unaccounted for.) The only worse-named entity is Social Security.

Taxes

The option to tax is not the requirement to tax. The income tax was temporary on the wealthiest 5% to pay for WWI, the entry into which by the U.S. has parallels to the unethical invasion of Iraq. Repealing the income tax would just put the U.S. back to between the founding of the Constitution and WWI.

Congress taking abortion out of the Supreme Court

Ron Paul explains the Constitutional basis directly in the bill:

(3) Article III, section 2 of the Constitution of the United States gives Congress the power to make "such exceptions, and under such regulations" as Congress finds necessary to Supreme Court jurisdiction.

In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.

Health Care

There is no need for this to be handled at the federal level -- states can handle it just fine.

Global warming

I personally would stretch the commerce clause to cover the environment since air and water do not know state boundaries, but I can go with Ron Paul's approach of first having the federal government "do no harm", such as by eliminating corporate welfare to big oil. Boulder is suing the federal government over global warming due to its OPIC and Imp-Ex agencies, which do things like pay for oil pipelines in third world countries under the premise of providing economic development to the countries. Ron Paul has long stated he would like to eliminate OPIC and ImpEx.

Income disparity

Going on a gold standard, as Ron Paul advocates, would eliminate the hidden tax of inflation. As I've mentioned here before, I make 4x now as a seasoned professional than I did 20 years ago when I just graduated. Yet when using CPI computed according to pre-Greenspan formulas, it's 8% per year and I make less now than I did 20 years ago. Under a gold standard, wages would not automatically fall every year, and things like the minimum wage (which BTW should be at the state and local level, not the federal level) would not lag behind real prices.

In short

Ron Paul is for personal liberty, including the Iraqis and the pre-born. He does not believe liberty should be extended to illegal immigrants, but would like to expand legal immigration somewhat once the incentives for illegal immigration are removed: welfare, education, healthcare, and birthright citizenship.

http://www.shadowstats.com/ or for the even more pessimistic formula: http://www.shadowstats.com/imgs/sgs-cpi.gif

Sure, that's all well and good, except for the fact that none of these shadowy saviors who cry foul about the government's numbers ever provide their own formulas / proof. All they do is slather their websites with their life story and their own mysterious numbers on graphs, and expect you'll buy it.

And when I say buy it, I mean it literally. If you want more than a few meaningless graphs, you need to pony-up the 89.00 for the 6-month subscription. And I seriously doubt even the newsletter you get contains any of the actual formulas or raw source data references, because then what would he sell to all the fools out there?

http://www.shadowstats.com/ or for the even more pessimistic formula: http://www.shadowstats.com/imgs/sgs-cpi.gif

Sure, that's all well and good, except for the fact that none of these shadowy saviors who cry foul about the government's numbers ever provide their own formulas / proof. All they do is slather their websites with their life story and their own mysterious numbers on graphs, and expect you'll buy it.

And when I say buy it, I mean it literally. If you want more than a few meaningless graphs, you need to pony-up the 89.00 for the 6-month subscription. And I seriously doubt even the newsletter you get contains any of the actual formulas or raw source data references, because then what would he sell to all the fools out there?

So you compare it with inflation.

Remember that the CPI calculation got changed so not include the very things that people spend their money on and go up in price - which makes sense since there are a bunch of things indexed to the CPI numbers so it's in the interests of those who calculate them to keep them low.

http://www.shadowstats.com/ or for the even more pessimistic formula: http://www.shadowstats.com/imgs/sgs-cpi.gif

So you compare it with inflation.

Remember that the CPI calculation got changed so not include the very things that people spend their money on and go up in price - which makes sense since there are a bunch of things indexed to the CPI numbers so it's in the interests of those who calculate them to keep them low.

http://www.shadowstats.com/ or for the even more pessimistic formula: http://www.shadowstats.com/imgs/sgs-cpi.gif

A lot of people go to Wal-Mart, see the low prices, and think inflation is low. They forget about housing, college tuition, and healthcare, which have all been running at double-digit percentage increases annually for the past several years.

One can only "innovate" a gallon of milk so much. So, food prices generally rise with inflation. (IIRC, they're actually one of the prime measures of inflation.)

You are right, but if only the BLS agreed with you. Most of the inflation numbers people quote are so-called core inflation which excludes food prices. This makes sense if we want to talk about last months inflation, but not so much if want to discuss year over year inflation. I don't know why more careful distinctions aren't drawn by the press when they report this sort of stuff, but that's the breaks.

Second, inflation is more likely around 6%. See for background: http://www.shadowstats.com/ The gist of which is BLS changed its method of computing CPI at the beginning of the Clinton Administration.

Shadow stats gives a pretty rigorous assessment. My own analysis of Federal Reserve Annual Reports pegs inflation at roughly 10%, but my work was very rough back-of-the-envelope type stuff based on trends in Fed's SOMA account. So, I am willing to believe 6%. Other analysis: http://www.nowandfutures.com/cpi_lie.html

If you read the Economist, the last page publishes a commodity price index. The percent change over one year ago is roughly 15-20% per year, consistently every publication week.

Let's be economically realistic here. If you look at the OLPC progress timescale here:
http://laptop.org/en/vision/progress/index.shtml
You will notice that the price tag of 100$ per laptop initiates back in the end of 2004.

Now, I hope all of you here have heard about an economic phenomenon called inflation - the process where governments inflate money supply making your dollars buy less. Very few know that for the past decade or so the government has been massaging the official inflation numbers to make them appear lower - this allows them to make fewer and fewer payments on inflation adjusted liabilities such as social security. However, they still publish all the numbers one needs to calculate the actual inflation, and some people have been doing that, look for example here:
http://www.shadowstats.com/cgi-bin/sgs/data
Notice how inflation has been running steadily at about 10% for the last few years. Today, the engineers who drafted the 100$ plan in the end of 2004 / beginning of 2005, should expect the cost to be 100*1.1*1.1*1.1 or roughly 135 dollars.
That already would take a lot of sensationalism out of the story. However, let's not stop here. Remember, the real culprit behind inflation is the money supply, and consumer inflation is usually the latest to price rising party. The money supply (as you may have noticed from previous link) has been running at 14% annually, causing serious mischief in prices of things like energy (http://www.investmenttools.com/futures/energy/index.htm) or metals (http://www.investmenttools.com/futures/metals/welcome_to_the_page_about_copper_futures.htm) - both are important for making technology.
Just for the sake of an example, let's trivialize the problem a little, and say that to make a laptop you need to spend 60% of your budget on metals, and 40% on energy (it's wrong, but I am just making an example). What would you expect to happen to the price of such laptop according the charts I linked to? Well, it would go up from 100$ to slightly over 200$.

So what is the real story here, engineers screwing up their designs, or governments inflating away the buying power of the dollar making the same thing cost twice more over 3 years?
Look at my links, do your research, decide for yourself.

In fact, the Consumer Price Index for March 2007 (which, of course, includes groceries) was just published yesterday. It's presently at 205.352, up from 199.8 a year before- or, an increase of ~2.8%. This is practically a textbook example of a normal, low inflation rate. But don't let any facts rain on your parade.

http://www.shadowstats.com/cgi-bin/sgs/data

read the real stats.

Its closer 100%/10years.

Now re Gold, wow thats like 350%

So if GOLD is REAL MONEY, then yeah, its closer to 400%

well just according to the us government Statistics CPI, the US dollar has lost 90-95 percent of it value. This should price gold today at around $800. Of course the CPI is manipulated to be lower than it really should be, so gold should really be higher than that. See Shadow Stats for more details on that. I can't find a graph now, but if you graph of the cpi you will see that it is fairly flat until 1913, when the Federal reserve was created on December 23rd 1913 (guess why on that date).

The Fed is not there to stop inflation but to create it!!!!! They are the biggest counterfeiters and fraudsters (also in control of the biggest ponzi scheme)in the world (along with all the other central banks), helping steal REAL wealth from the masses and giving it to the banks, who receive the newly created high power money first. People know that communism didn't work because the central planners could not work out what was needed. Well what makes you think the "central planning" Federal Reserve can do any better. Finally with the Federal Reserves role as managing the currency as well as policing the banks is like a fox guarding the hen house.

Finally the average life of a fiat currency is about 30 years, the US dollar in its current form is about due for demise.

The story makes clear why a statistic such as average income or wealth is bogus. It means nothing for the vast majority of people. A far better measure would be median income or wealth.

But then, government statistics are there to mislead you instead of inform you. To see what else is bogus, look here: http://www.shadowstats.com/cgi-bin/sgs/.

CONCLUSION

There are 77 million baby boomers now ranging from age 41 to age 59. All are hoping to collect tens of thousands of dollars in pension and healthcare benefits from the next generation. These claimants aren't going away. In three years, the oldest boomers will be eligible for early Social Security benefits. In six years, the boomer vanguard will start collecting Medicare. Our nation has done nothing to prepare for this onslaught of obligation. Instead, it has continued to focus on a completely meaningless fiscal metric--"the" federal deficit--censored and studiously ignored long-term fiscal analyses that are scientifically coherent, and dramatically expanded the benefit levels being explicitly or implicitly promised to the baby boomers.

Countries can and do go bankrupt. The United States, with its $65.9 trillion fiscal gap, seems clearly headed down that path. The country needs to stop shooting itself in the foot. It needs to adopt generational accounting as its standard method of budgeting and fiscal analysis, and it needs to adopt fundamental tax, Social Security, and healthcare reforms that will redeem our children's future.

(emphasis added)

The question we should be asking, is why is US growth so low, and how can we fix it.

Your post has the answer to your question:

Contrary to popular belief, a substantial amount of engineering for Dell is done in the US, not in Taiwan. Employees have constructed an effective wall to foreign design centers and have actually left the company any time mgmt has tried to tear it down (thanks to HP for showing employees what to be afraid of).

Dell is an exception, rather than the rule. Jobs have been fleeing the United States for years... First it was manufacturing, then engineering/technology too. Foodservice and low-level Health Care positions don't pay nearly as well as manufacturing, IT, or engineering used to. Wages in the jobs that are still in North America are being squeezed by competition from low-wage China and elsewhere.

There's no chance of fixing the economy now - the time for action was in 1992/1993, when Traitor Bush the Elder first negotiated the North American Free Trade Agreement and Traitor Clinton pushed the NAFTA implementation bills through the congress. Or in 1995 when the World Trade Organization was first organized. Or in the 80's, when Reagan (really, Puppet Master Bush the Elder) was printing money to pay for his military buildup. Or in the late 60's/early 70's, when the Feral Government was printing money to pay for the Vietnam war. Or even more recently, when Traitor Bush the Junior negotiated the Central American Free Trade Agreement (and others).

There's also the hordes of illegal immigrants (encouraged by the corptocracy) depressing working class wages... But vdare was yesterday's story...

The best we can do now is elect a congress who will impeach/convict the Bush/Cheney junta. Tell your friends - Fire the [republican] incumbents, the Bush depression has already begun.

Economic restructuring is a good thing, because many of us are miserable in the current political/economic climate. Look at the people you see out in WalMart's isles: fat & sick, and looking for satisfaction in meaningless trinkets. Going to get a little rough, but it will certainly be worth the struggle in the end.

I've some earthboxes and seeds, so I won't be entirely dependant on produce shipments from far away, picked by mexican slave labor.

These earthbox pictures are from 3 weeks ago (start with the last picture). The plants are coming along nicely, and I'll be harvesting my first lettuce & tomatos soon (I'm in the desert southwest, so the plant-killing summer heat has just recently abated).