Southern Bread Blog

This is the first of a new series of posts I’ll be doing where I’ve taken brief snippets of video or audio on particular topics and edited them down into easily consumable form. Sometimes it’s just hard to read an 800 word blog post or article. We’re all busy. These snippets will never be more than about 3 minutes long at the very most so that you can easily listen while doing other work.

My hope is to build up enough of these covering every topic possible. That way it will be a freely available resource whenever someone asks you about a certain issue. You can just find the appropriate “liberty shot” about that topic and shoot it to them. Or maybe the next time there’s a big news event you can tweet a few shots about it. We’ll see how it goes.

Bet you didn’t know ol’ Ike said this:

Dwight Eisenhower

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.

-–Dwight David Eisenhower, “The Chance for Peace,” speech (1953)

Here’s an audio excerpt from the speech:

One of the favorite free market failure claims that leftists love to make is that of the auto industry and fuel economy. They claim that if it weren’t for the EPA, all we’d be getting from the car makers are V10 gas hogs getting 12 miles per gallon. Are they right? Of course not. All we have to do is dig a little bit into some historical literature, otherwise known as old magazines, and pull out some car ads. Here’s a Ford ad from 1937 for their Ford V-8:

1937 Ford V8 Ad - Look Magazine

Perhaps you have wondered a little why the 1937 Ford V-8 offers a choice of two engine sizes. The answer is simply that it brings the advantages of V-8 ownership within the reach of many more people.

The new 60-horsepower V-8 engine, optional in several body types, makes possible a lower priced car with lower operating costs. It gives good performance–with gasoline mileage so high that it creates an entirely new standard of economy in modern motor car operation.

The improved 85-horsepower V-8 engine provides all the smooth speed and pick-up for which Ford cars are famous–with unusually low gasoline consumption.

Two engine sizes. One big car. Brilliantly modern in appearance. With all-steel body…fast-stopping, Easy-Action Safety Brakes…and other important improvements in safety, comfort, quiet. Built of fine materials, to high precision standards, by well-paid workmen…and deservedly called “The Quality Car in the Low-price Field.”

–Look Magazine, 1937 [em. mine]

Remember that the EPA didn’t come into existence until 1970 – 33 years after this ad ran. You mean, people actually want their cars to consume less of their money? Shocker. Also notice how they promote that they pay their workers well. That was evidently a direct reference to the passage of the Wagner Act, which had allowed unions to force GM to unionize earlier in ’37.

Schiff talking recently about how the Treasury bond market is constantly manipulated. There has always been a necessary, incestuous relationship between the Federal Reserve, the Treasury and large banks. It’s not some new development:

Peter Schiff

But another very large chunk of Treasuries go to “primary dealers,” the very large financial institutions that are designated middle men for Treasury bonds. In a late February auction, these dealers took down 46% of the entire $29 billion issue of seven year bonds. While this is hardly remarkable, it is shocking what happened next.

According to analysis that appeared in Zero Hedge, nearly 53% of those bonds were then sold to the Federal Reserve on March 8, under the rubric of the Fed’s quantitative easing plan. While it’s certainly hard to determine the profits that were made on this two week trade, it’s virtually impossible to imagine that the private banks lost money. What’s more, knowing that the Fed was sure to make a bid, the profits were made essentially risk free. It’s good to be on the government’s short list.

Given that the Treasury is essentially selling its debt to the Fed, in a process that we would call debt monetization, some may wonder why it doesn’t just cut out the middle man and sell directly. But the Treasury is prevented by law from doing this, so the private banks provide a vital fig leaf that disguises the underlying activity and makes it appear as if there is legitimate private demand for Treasury debt. But this is just an illusion, and a clumsy one to boot.

–Peter Schiff, Europac

To this point we have learned two main principles about how money develops in a society. You could call these iron clad rules about the evolution of money. First, money develops because trade is necessary and direct exchange is impossible on a large scale. Secondly, we know that whatever the most easily exchangeable commodity is at a given time will be money.

Knowing these two points and having a knowledge of history will leave us with an obvious piece of knowledge. It seems that, throughout history, gold and silver have most often been used as money. Every nation at some point in their history used these precious metals as currency. Indeed, as recently as 1971 the Federal Reserve was still redeeming foreign bank deposits in gold through the so-called “gold window.” So why are gold and silver so often the standard for money?

Murray N. Rothbard

Historically, many different goods have been used as media: tobacco in colonial Virginia, sugar in the West Indies, salt in Abyssinia, cattle in ancient Greece, nails in Scotland, copper in ancient Egypt, and grain, beads, tea, cowrie shells, and fishhooks. Through the centuries, two commodities, gold and silver, have emerged as money in the free competition of the market, and have displaced the other commodities. Both are uniquely marketable, are in great demand as ornaments, and excel in the other necessary qualities. In recent times, silver, being relatively more abundant than gold, has been found more useful for smaller exchanges, while gold is more useful for larger transactions. At any rate, the important thing is that whatever the reason, the free market has found gold and silver to be the most efficient moneys.

–Rothbard, What Has Government Done to Our Money?

Critical Points:

• Money will be whatever the most marketable good is. – Indirect exchange gives birth to money. As people begin to trade indirectly, the thing that they buy the most as an intermediary good will become money. Perhaps butter is money for a while. And then maybe it evolves to salt, since salt is much less perishable than butter. We have all heard the historical fact that Rome used salt to pay it’s troops. Then, eventually, gold or silver might supplant salt as money since salt has this bad habit of dissolving if it rains. But the basic principle is that whatever people find to be the most easily exchanged good will be money.
• Money naturally evolves from the market. – Notice that money can not be imposed on a society or market. Because money is the “most exchangeable good” in a market, it requires a market in order to evolve. Government can not simply mandate that a certain thing be money. We have forgotten that the dollar was not simply imposed on the American (Gitmo Nation) public by the government. It evolved naturally from the citizenry’s favorite coin, the Spanish mill dollar. This particular coin was consider to be very trustworthy and of very high quality. The government coinage that came later in the form of American (Gitmo Nation) gold and silver dollars owed their heritage to the Spanish mill. And, it was the market that made that choice.

Great lecture from Anthony Gregory at this years Austrian Scholar’s Conference:

Iraq, Afghanistan, War and Money: A Look at Two Presidencies:

The audio was terrible on the original video, so I cut out the three testimonies and boosted the volume on each.

Lewis Lehrman:

James Grant:

Joseph Salerno:

Good stuff from Tom here. Seemed to really make an impact on Dennis.

I’ll have to say that I’m fascinated by old magazines. It’s just so captivating to look back 40 or 50 years and see what was going on at the time, and what was popular. So, in that vein, I came across an old issue of Look magazine from 1949 the other day and saw this article headline: Is Our Government Too Big? It’s an analysis piece based on the work of the “Hoover Commission.”

Join me as I look at what they thought big government was in 1949 and laugh at it:

Hoover Commission, 1949

If you ran your own business the way the Federal Government is run, you’d probably go broke.

That’s the inescapable conclusion to be drawn from the Hoover Commission’s study of our Government. The Commission’s reports for the 81st Congress show thousands of examples that might well lead to waste and inefficiency – such examples as these:

1. It took a Government agency several months and cost $5,000 to comply with an order to cut its employees from 7,000 to 5,000. Paper work is so voluminous that the tendency in government is to keep an inefficient employee rather than to go through the red tape necessary to dismiss him.

2. Thirty-eight different government agencies lend money.

3. Sixteen different government agencies are engaged in wildlife preservation.

4. The Bureau of Indian Affairs in the Department of the Interior has 393,000 Indians under its jurisdiction or care. It employs 12,269 persons to administer its program. That’s one employee for every 32 Indians.

5. The Veterans Administration requires an average of 73 days to pay death claims on Government life insurance. Whereas private insurance companies pay about 80 per cent of their death claims within 15 days after receipt of satisfactory proof of death.

6. Toll rates on the Panama Canal in 1948 were the same as they were 10 years earlier, in 1938, despite the fact that expenses were up 79 per cent.

7. The Army tore down a camp in Alaska that cost $16,000,000. It shipped the lumber to Seattle, Wash. The Department of the Interior got the lumber in Seattle and shipped it back to a point 10 miles from where it was.

On and on they go, these stories about what’s wrong with the business of government. You and other Americans are paying $40,658,000,000 to keep it going.

–William B. Arthur, Look [em. mine]

Boy, all that sounds really familiar doesn’t it. It goes on:

By its own admission, it employs 2,090,554 civilian workers, with an annual payroll of more than $6,000,000.000. Its 1,816 separate bureaus and agencies occupy 46,865 separate offices whose combined area is equal in size to the area of 170 buildings like the Empire State. It took 1,353 pages of fine print in a book weighing six pounds, five ounces to present the budget estimates of your government’s business for 1949 fiscal year operations.

It has a debt of $252,435,000,000. That’s equal to an obligation of $1,722 for every person in the country. It costs more than five billion dollars a year just to pay the interest on that debt. That’s more than the annual cost of operating the entire Federal Government in the years before 1934, except for the war budgets of 1918-21.

–William B. Arthur, Look [em. mine]

How do all those stats compare to government today? Well, I tried to get a handle on how many total civilian Federal employees there are now but found it practically impossible. I did find a bunch of articles listing the Federal head counts, but they were all different. Some varied by as much as 600,000. And, all of them didn’t include large portions of Homeland Security. Then, when you compare that with this article saying that DHS contractors outnumber actual employees you just have to throw your hands up and ball park it at somewhere around 4.5 million for all 3 branches, excluding military. But, who really knows.

What about total Federal payroll? The latest figures we have are for 2009 by the Census Bureau. It gives annual payroll as around $15 billion per month for the 2.8 million employees listed. Since we know that 2.8 million figure is dubious and it’s been two years since those figures were accurate, we can safely assume the total Federal payroll is well over $200 billion. But, again, who really knows.

How many pages are in the 2011 Federal budget? You can download the entire thing as a collection of 25 PDF files. The total page count is around 3500 pages.

And what about debt. Well, this one is just laughable. The current Federal debt is $14.2 trillion. The entire 1949 debt load fits into the “.2″ of our current debt. And paying the interest on that debt cost us $413,954,825,362.17 in 2010. That’s equal to $46,103 of debt for every man, woman and child in this country. It takes $1,344 per person just to pay the interest on the national debt.

Oh, to be 1949 again.