Sunday, December 19, 2010

Peak Homo Sapien Sapiens. The Coming Catastrophe

We live in interesting times. For most of human history, our numbers dwindled below 1 billion globally. It wasn't until 1804 that we reached 1 billion because of technological advances resulting from fossil fuels. For most of human history, we had relied on the sun for energy. Whatever fell from the skies and was captured by plants and converted into chemical energy was the energy that we could use.

When fossil fuels were discovered and started to be used, we were tapping into vast stores of chemical energy. It was energy that had been captured by plants and animals eons earlier. There's nothing wrong with using it but we must use the "energy piggy banks" gifted to us with great responsibility because it simply won't last forever.
Instead, we have greedily and rapaciously used these fossil fuel reservoirs to our own detriment. The burning of fossil fuels releases Earth-warming greenhouse gasses into the atmosphere. These gasses will permanently alter global weather patterns and make agriculture more difficult and unpredictable. Unfortunately, the current economic paradigm calls for infinite growth and ignores the limits and capacity of the Earth.
I tried to debate the limits of growth with an economic professor but it was like arguing with a pigeon. He believed that humans populations and economies can sustain infinitesimal growth. He refused to draw connections between the study of life (biology) and the study of human life (economics). This arrogance of people, of our own superiority to Mother Nature, is what will get us all killed.

We must realize the truth: that the Earth is a closed biosphere and that what we are doing to it: our unbridled consumption, our daily choice to take the car to go 1 block to the store on the corner; and our sense of entitlement will be the end of us.

What do we do? Use less energy. Money is energy so vote with your wallet. Recycle. Fix and reuse what you can. Don't buy into the Black Friday hype. Save your money for a rainy day.

Friday, December 10, 2010

There Goes the 4th Amendment! The Unconstitutionality of the TSA

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
-The 4th Amendment

Our founding fathers were a wise bunch. They could recognize a tyrannical government an Atlantic Ocean away. They rebelled and set out rules set in stone to give future generations a set of rules to live by. Slowly but surely, we have forgotten their wisdom and now we are paying for it.

By now you've probably heard of those TSA goons poking and prodding grandmothers and children. These are a bunch of useless bastards who couldn't get a job doing anything else. We don't need their useless security. What has made us more secure while flying is not forcing everyone to give up their liquids and nail clippers but by putting a gun in the cockpit of every airplane.

Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.
-Benjamin Franklin

The excuse that by buying an airplane ticket you're waiving your Constitutional rights is BULL. Airports are government and therefore public property. The same rules that apply off the airport apply in the airport.

Technology has allowed TSA goons to strip you without probable cause. Their machines are exposing you to carcinogenic x-rays and stripping your dignity in the process. Are you going to
stand there and take it? I have decided to stop flying because I simply don't need to. Some of you still need to fly so here's a way to stick it to them:
Metallic-ink shirts that will prominently display the 4th Amendment on the TSA goons' screens when they strip search you.

Sunday, December 5, 2010

How to Start the Next American Revolution

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
-Thomas Jefferson

Late night philosophizing and researching led me to this Q&A section with the founders of PayPal. In the video, Peter Thiel talks about how PayPal is NOT a bank but is a payment processor. They do not engage in fractional reserve lending.

The implication of this is huge. PayPal is the ONLY "full-reserve bank" in existence. They do not need FDIC insurance because they do not make any loans. PayPal cannot have a bank run by design.

Eric Cantana called for a European bank revolt via a withdrawal of funds into cash. That is highly unfeasible because digital cash and electronic payment is a necessity of modern life. Instead:

  1. Setup a PayPal account
  2. Sign up for a PayPal debit card so you can use your PayPal funds for daily purchases, etc
  3. Withdraw all your funds from your Bank of America or other "Too Big to Fail" banks to PayPal
  4. Use your Paypal funds to buy a physical ounce of silver or gold to put more pain to the COMEX naked short sellers. Hat-tip of this idea to Max Keiser of the Keiser Report.
I am not against fractional-reserve lending because they provide a vital service to the economy: investing and lending. I am against the fractional-reserve lenders and investment bankers putting a gun to Congress's head and demanding bailouts and threatening that "the economy will get it" if they don't get their way.

If we have enough of them, full-reserve banks will provide a stable platform to rebuild an economy in case of the black-swan event case that investment banks and fractional-reserve lenders take too much risk and start blowing up.

The revolution starts now, carpe diem.

UPDATE: I have since found that PayPal simply stores their excess cash in a commercial banking account which makes them prone to failure as well. There truly is no "full-reserve bank" available to keep your money safe.

Friday, December 3, 2010

The Current Financial System is Too Big to Fail


Because the distinction between banks that keep your money (commercial banks) and banks that invest your money (investment banks) has been blurred even more.

A long long long time ago, the first banks were actually goldsmiths. These goldsmiths took your gold and held onto it for you because back then, gold was money. In exchange for your deposit they gave you a receipt. Eventually people found it was easier to trade these receipts for goods instead of going to the goldsmith, getting the gold out, and paying the dairy farmer to get your milk.

The goldsmiths used to charge a fee for this service of convenience and that's how they made their money.

Eventually some goldsmiths got the bright idea to loan out their vast stores of wealth, at interest. These were the investor goldsmiths. They did so without telling their customers that that's what they were doing with their money. A lot of money was made.

Investor goldsmiths took customers away from regular goldsmiths that weren't making loans because these investor goldsmiths were able to offer their services for free. They could make money loaning money out instead of charging the customers who gave them gold to keep. This angered the regular goldsmiths because people weren't keeping their money at the regular goldsmiths anymore. They had to copy Investor Goldsmith to just keep up.

One of these regular goldsmiths got the bright idea of paying people to keep their money for them. This Bankster Goldsmith would pay 3% interest to people who saved money with him and would charge people who needed money 6% interest. The Bankster Goldfish was able to make the 3% difference and did very well for himself for awhile.

Other goldsmiths caught on quickly and attempted to get bigger by offering more interest to savers and less interest to debtors. These banksterer goldsmiths took on a bigger risk and the goldsmith industry got extremely competitive.

Eventually, Conman Goldsmith got the bright idea to start a rumor about his Banksterer Goldsmith because he understood how the business worked. Rumors about how banksterer goldsmith was going out of business spread like wildfire. People wanted their money back from him but he couldn't give it back because he had loaned out their money. Upon hearing this the mob grew angrier and even more irrational and hung him from the tree on Main Street.

The mob then grew leery of all goldsmiths. They confronted each one and demanded their money back. Bankster Goldsmith was hung next to Banksterer Goldsmith. Investor Goldsmith also could not pay back his depositors and was hung next to Bankster Goldsmith.

Only Regular Goldsmith could pay back his depositors. Unfortunately, not many people had their money with him because everyone wanted free business checking and interest on their savings. The mob hung Regular Goldsmith anyways for their justice is anything but.

In the end, the only people with gold left were the mob's grandmothers who had kept their gold under their Sealy mattresses because the same thing happened to them many moons ago. Oh, there was also Conman Goldsmith who got away with all the gold because he started the first rumor that brought the whole system down and saw it coming.

The problem is that all banks loan out people's money so that when, not if, failure happens, nothing will be left. In the Great Depression, people's life savings were wiped out as banks failed left and right and there was no stable foundation to rebuild the economy.

The solution to the current financial crisis is to provide the stable foundation of regular goldsmiths, of banks that charge people money to store their money but do not lend it out. These "full-reserve banks" could coexist with risk-taking fractional-reserve banks. Both would provide a vital service to the economy and in the event that that an economic crisis struck, banks could be allowed to fail without crashing the entire economy because ALL modern banks can experience a bank run.

Under this proposed system, bad investments can be written off and purged and the economy would quickly recover. But under our current system, the bailouts will get bigger and bigger until the dollars we bail out failed institutions with will become worthless.