Saturday, June 30, 2012

Lungsod ng Kawawang Muntinlupa — Using Social Media to Change Governance

I recently came across a Facebook page (it's actually a user page instead of a page users can "like") called  Lungsod ng Kawawang Muntinlupa.

The administrator of the page posts grievances and allegations about the current administration in power. From what I hear, they get their information from whistleblowers within the administration itself. One of them, supposedly already in a witness protection program, my sources say.

The allegations are actually very grave from crony suppliers, hundreds of millions in unexplainable spending, undeclared assets and liabilities and many more.

I am not saying that these allegations are true. What I am saying is that they are very serious and should be investigated. And, if proven true, let those who are accountable face the consequences of their actions. Stealing and abuse of one's power as a public servant is one the most disgusting crimes and should be dealt with in accordance with the law. 

We've seen the power of social media bring down tyrannies and dismantle corrupt governments in Lybia and Egypt and so what more in a small city like Muntinlupa.

This kind of attitude, this outrage for corruption, should be encouraged. The ability to petition and question your government is the foundation of a democracy. It is a reflection that those in power are governing only at the consent of the governed. And now, with innovations in new media and social media, the ability to disseminate information, to engage in citizen journalism and activism, has become as easy as a click of a button.

People should continue creating pages or forums like this where people can freely assemble and exchange information. We should demand a speedy investigation from the Ombudsman.  We should demand for transparency from our government, perhaps petition our own congressmen to pass the Freedom of Information Bill. Only when we become conscious and active about these things can we ever change governance in our country.

It's interesting that my very first post in this blog is actually about this giant Christmas tree that the current mayor bragged about on national television (see The Government's Spirit of Christmas). Muntinlupa is my home city and it has had a long history of corruption and bad governance. The citizens deserve prosperity and we should never allow anyone to enrich themselves at the expense of this prosperity.

My appeal to the mayor is to release a formal statement explaining the issues and allegations raised in the page and that he resign if he's not able to provide proof that he is innocent. The burden should always be on those in power. Remember that he is a public servant and the citizens are his master and not the other way around.

Thursday, June 28, 2012

BSP to Loan IMF 1 Billion Dollars to Help Bailout Europe

"MALACAÑANG on Tuesday allayed concerns over the $1-billion loan of the Bangko Sentral ng Pilipinas (BSP) to the International Monetary Fund (IMF) and reminded those strongly opposed to the move that the BSP, under the helm of Gov. Amando Tetangco Jr., has consistently shown prudent fiscal management and stewardship." (source)

You know shit just got real when the IMF will borrow money from our central bank so they can help the bailouts in Europe. Nothing in that previous sentence makes sense to me. A third of our population still lives at less than 2 dollars a day and yet our central bank is invoking authority to lend a billion dollars to the IMF (when technically we are already in debt to them) to give to the eurozone countries that need bailing out like Greece, Ireland, Portugal, Spain. See, it all seems senseless. And by bailing out, it merely means giving all this money to their bankers. Here's MEP Nigel Farage explaining the irrationality of all this as the EU discusses bailing out Spain:

Nigel Farage on the Spanish Bailout

The idea is that they're just buying each other's debts. They can't even do it on their own anymore that they're asking for help even from countries like ours who have far more needs in growth and development. The justification, I am assuming, is that if we do not help the bailouts then it will all be catastrophic for the whole world. When really, this "catastrophic" disaster, the collapse of the EU seems  inevitable. One day, no matter who they borrow from, they just won't be able to buy each other's debts anymore. It's not going to work. We, too, are in debt. Borrowing from those in debt to buy someone's debt, it's just an absolutely irrational cycle.

I actually just wrote about all of this the other day (see Nigel Farage predicts Euro Crisis).

"In a statement, [Sen. Ralph] Recto said he is not opposing the government’s decision but said that the BSP has no sole proprietary rights over the Philippines’ dollar reserves. He added that the BSP should first request for a consensus or secure appropriation cover from Congress." (source)

Again, the executive branch feels like they can do whatever they want without the consent of the people or the people's representatives. That's ideally the point of the separation of powers. It's so that the executive can't just go around lending a billion dollars to people. But are these reserves really under the control of congress?

This is where the separation of powers get blurred. BSP will claim that they've already been given mandate to govern on the reserves as they wish. The IBON Foundation's different take on the issue (see IBON explains BSP loan to IMF) even reports that we've been lending to the IMF for some time now.

As a libertarian, I obviously don't agree with the sentiment that this 1 billion dollars should instead be spent by government for welfare or infrastructure. The IBON article above even explains that these reserves are separate from the government's budget. These are dollar reserves. Meaning the paper money printed by the Federal Reserve eventually become our reserve. This is paper lent to us as to give value to our paper.

Again, I introduce a position that's probably so different form the left/right paradigm. I want to expose the immorality of monetary policy that is monopolized. Just look at how ridiculous the whole Euro crisis has become. The reason they get to buy each other's debts is because all this is just artificial. The interest rates are artificial. The money is artificial. The markets are already rejecting all of it. 

If we do not spend within our means and take care of our debt and rethink the real role of government, we will end up just like Europe. Having the concept of governments and money based on debt is all so immoral.

Tuesday, June 26, 2012

Trade a Book With a Friend!

I got a chance to trade books with a friend who has several differences in beliefs and opinons with me. He gave me Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit V. Banerjee and Esther Duflo (seen below). And to him, I shared Economics in One Lesson by Henry Hazlitt.

What a great intellectual exercise, I realized! You get to promote your own advocacy at the same time showing you are open to the ideas of others. The fact that you can trade books makes it all very non-partisan and non-dogmatic. It's a good way of having a check and balance of one's own beliefs and biases. 

I did tell him about Walter Block's overly cheesy introduction of the version of Economics in One Lesson I gave him. It's understandable, I guess, because this is the book that converted him into libertarianism. He was an economics student then. So this book really is perfect for those who have had training in economics and those interested in social issues and political philosophy.

When I asked to trade books, I mentioned that I wanted something I might disagree with or has the potential in persuading me. This makes me really excited to start reading the book. Maybe I can even write about what I learn here in this blog. 

I also got to use the Kindle Cloud Reader for the first time. It has such an awesome interface. I should seriously get a Kindle soon.

If you liked this post then you might also like:
1. Top 10 Libertarian Books
2. The Philosophy of Liberty 
3. How an Economy Grows and Why it Crashes

Monday, June 25, 2012

Nigel Farage Predicts Euro Crisis

Don't you just love it when libertarians predict things? It shows how credible the libertarian perspective is and how it offers an alternative to the left/right paradigm of mainstream economics and politics.

"Nigel Farage was right"

Nigel Farage is the leader of the United Kingdom Independence Party (UKIP), a party that advocates Britain's withdrawal from the European Union and, of course, the abolition thereof. Domestically, the party also advocates libertarian principles like smaller government and individual freedom. 

It is very reminiscent of the "Peter Schiff was Right" videos up on YouTube. I did talk about monetary freedom a while back and posted that video as well (see Investing in Gold in the Philippines). As I have said, it seems libertarians have a knack for warning against upcoming crises and Keynesians and statists are very skilled at ignoring these warnings (and many times just laughing at them).

Imagine a government on top of all governments, depriving people of monetary freedom and sovereignty, with the power to create a single artificial interest rate for all countries in the EU, and with the power to print money at will and debase their own artificial currency. That is the European Union, justified supposedly by the noble intention of attaining "stability" as Farage mentioned. He is, in fact, correct that this organization should instead be named the Debt Union.

We've seen Eurocrats, unelected by the people of Greece for example, deciding the fate of Greece. It's ridiculous. And not surprisingly, the people of Greece voted just a few days ago to stay in the European Union. And the solution the eurocrats see, as usual, is more printing, more bailouts, more debt. Hair of the dog.

And the same has been happening for other members of the EU. After billions in bailouts, after failures in Portugal, Ireland, Spain, and soon many more, it's obvious that the markets have been demanding that sovereignty be returned to the people of Europe. They can always only inflate too much until their bubble bursts.

And, again Farage points out, many of the members of the European parliament don't have any sort of understanding about economics or why this is all happening. Politics as usual.

And eventually, this concept of getting bailed out whenever they fail will no longer work. People will lose faith in the Euro as a currency for trade and this big government monopoly agenda in Europe will collapse on itself. 

If you liked this post then you might also like:
1. The World is Losing Faith in the Dollar
2. Ron Paul Supporters Are All Over the World
3. Deficit Spending of Governments

Sunday, June 24, 2012

Disneyland Philippines in Clark Pampanga is Great News

"MALACAÑANG sees no reason to block Pampanga Rep. Carmelo Lazatin’s proposal to have a Disneyland at Clark Freeport." (source)

I'm not really sure if this is the official photo, I just saw it in Facebook

What do they mean they see no reason? Of course! They shouldn't even have authority to block any sort of investment. This should be for the people of Pampanga and property owners to decide. 

We need to rethink these kinds of centralized authority we give to national government and give back sovereignty to local governments. This will allow for competitive policy. Sort of like that charter cities idea of Paul Romer I wrote about before (see Paul Romer talks about Charter Cities at TED).

There should be this right for local governments to lower tax and minimize red tapes if they want to instead of the national government dictating the rules. Although it's unlikely for this kind of policy to happen because it will lower corruption revenue, if even one local government decides to do this and there is progress others can copy the same model. Also, if there are failed policies, not everyone as a whole is affected. This is what I mean by competitive public policy. 

We should really think about decentralizing government. Although historically, even decentralized governments grow too big anyway, it's still much better than giving so much authority into just one central unit of government. Along with some kind of tangible transparency program (see Freedom of Information Bill in the Philippines), it will be much easier to contain localized power that is accountable to local people instead a national government governing for all.

That being said, I do find the parliamentary system quite favorable but not really a necessary change since we can also copy the state's rights model in the US. Either way, the goal is that we take money and power from the government and give it back to the people. Surely there is a need for charter change and give the right to local governments to enact any sort of pro-market reforms. Problem is that a constitutional assembly here in the Philippines will most likely be filled with people hungry for power and even a bunch of actors or actresses that don't even have the slightest ideas about economics, law, and political science or philosophy (or maybe those with philosophies that are against freedom and liberty).

I think I have mentioned before that there really is so much unused space here in the Philippines and that we should decentralize imperial manila and give back power to provinces so that there will be development. Many times these investors themselves will be the ones handling infrastructure needs. Just look at the amazing development in The Fort in Taguig. That land used to be government owned but in the hands of the market and private sector, tons of jobs were created and there is growth and progress. There is even an example in Gurgaon city in India where there was no need for government intervention whatsoever (see Gurgaon City in India — growth and progress when there is absence of government).

Anyway, I've gone so far from the topic I intended to write about haha. Yes, Disneyland is great news. These kinds of theme parks are usual indicators of economic growth and national security. If we look at the Index of Economic Freedom, you'll see that theme parks like Disneyland or Universal Studios or others usually choose to invest and develop in the more economically free countries. Aside from the businesses and jobs this kind of investment will be able to create, tourists will also see that its quite safe to travel to the Philippines because institutions are putting trust in our economy and national security.

Thursday, June 14, 2012

Milton Friedman's Pencil

In the video below, Milton Friedman ever so beautifully explains how the whole world cooperates through trade by using a simple pencil as an example.

Milton Friedman's Pencil from the documentary Free to Choose

I've always loved Milton Friedman's free market rhetoric. He's just able to explain it all in simple terms and with real-life examples. It's as if he already has the answers in his head. Always confident and ready, it seems.

This pencil story shows the beauty of free and voluntary trade and is testament to why governments should never hinder trade or put burdens on traders. Fair and voluntary trade always results in peace and prosperity.

I had this joke with a friend once that if North Korea had S&R, the people would instantly embrace capitalism. There was this girl who escaped from NK and when she was interviewed she said she was so surprised that there was so much more food in a market economy as compared to their society that espoused "equality" for all.

And I do wish that we become more open to trade. The other day, my friend got home from Spain and brought some Jamón Curado. I was surprised that we can't make it here. We have pigs too, right? Trading will give us ideas of how to innovate and improve. In the same manner that we have stuff here like rice or whatnot that's probably better than those in Spain. Trading is like collaborating. And through trade, we can have an incentive to compete and become better.

I love a lot of imported goods (that's why I mentioned the S&R thing) but at the same time I also love a lot of local goods. Protectionism is seen as a patriotic position when really all it does is stomp growth and innovation and distorts prices in the market. When the State tries to protect a certain sector from being "killed" by globalization, it is merely creating an artificial growth in that industry that would otherwise have been forced to innovate and compete. I made an example before about the failures of protectionism in the Film and TV industry of the Philippines.

More recently, I saw this article shared on Facebook that the government destroyed millions worth of smuggled onions. The idea, again, is that it kills local farmers of onions. But then that's how the market works. If someone can provide better service or better quality products at lower price, consumers will choose it. We can't just deprive our consumers as a whole of choices because we want to bail out one sector of society.

And this isn't just a local concern. Imagine all the embargo and trade sanctions all over the world on "enemies" of the US. It just creates more hostility and deprives many innocent citizens of those nations with food and technology.

Hong Kong, being the freest economy in the world, having the least taxes and no tariffs whatsoever was successful in converting China into a more capitalist society thereby alleviating so much poverty. And this small city with no natural resources remain to be one of the most peaceful and prosperous in the world. You don't see terrorists landing planes on their buildings or cutting off heads of hostages. When I was there a few years ago, I saw people of different races and religions peacefully engaging in voluntary trade.

And Singapore, the "authoritarian model" that many of the people I've debated with want to copy remains to be the second freest economy in the world next only to Hong Kong (see The Singapore Argument). That's just a fact. It's dangerous when we advocate opinions not backed by research or data. I even recently wrote about Facebook co-founder Eduardo Saverin migrating to singapore because of their very low taxes, minimal red tapes, and less intrusive government.

Many libertarians have a lot of disagreements with Milton Friedman. I haven't researched more about it but apparently he advocated some sort of central banking or something like that. Even Jeffrey Sachs pointed out that he was pretty much statist (see Why Jeffrey Sachs is Mistaken About Libertarianism). I don't really mind. His wonderful rhetoric about free markets and free trade is just so brilliant and undeniably a great contribution to the liberty movement.

The pen(cil) is mightier than the sword. Keep on writing.

Tuesday, June 12, 2012

Lew Rockwell explains how Ron Paul and his son Rand Paul are Different

I was obviously infuriated with Rand Paul's endorsement of Mitt Romney as you can see in my previous post For Sale: Rand Paul and I do stand by my disdain with this revelation. To further strengthen my view of Rand Paul, here's Lew Rockwell, chairman of Ludwig Von Mises Institute, who seems to have a very similar opinion as me about the issue:

Lew Rockwell: Ron Paul and Rand Paul are Different

"Too bad it was on Hannity, who is, of course, an enemy of Ron Paul. I think it's not a surprising announcement at all. Rand has always made it clear that he's not a libertarian [but a] Republican conservative... I think what we have to think about is, first of all, congratulating Ron Paul on all he's done, on the millions of kids he brought to the liberty movement not only in this country but in foreign countries," says Lew Rockwell.

We seem to agree on the big disappointment that Rand had to do the endorsement in Hannity's show and with how Ron Paul has spread the message of liberty all over the world (see Ron Paul supporters are all over the world).

It's also good that he mentioned that Rand Paul is a Republican conservative as compared to Ron Paul who is a libertarian. I've always had a problem explaining to people why Ron Paul is in the Republican party and how he's not a neoconservative nor was he an advocate of any of the policies of George Bush. Lew Rockwell even mentions in the latter part of the video that Ron Paul never endorsed nor voted for Bush even if he was part of the Republican Party (for more on the differences see my article Liberal vs Conservative vs Libertarian).

The interviewer then continues with "Lew, I know you're saying it's not really a surprise but a lot of people in the blogosphere are very shocked and are saying, you know, he's a sell out".

Yeah, I'm surely one of those in the blogosphere calling him a sellout. Not to mention that this "blogosphere" the interviewer refers to is social media, which serves as an alternative source of information and news for people all over the world which, I believe, contributes greatly to the campaign for liberty (see my article on Why is Ron Paul Attracting Young Voters?).

In the latter part of the video, Lew then recommends that people don't vote at all. It's interesting that many times I am criticized for having never voted in my life. You see, many libertarians don't believe in voting or any other sort of political action to achieve social change. 

I've always argued that education (blogging and sharing information in social media being just some means to do so) is much more powerful and effective than political action. If I can change the mind of just two individuals about certain policies or political philosophies, that's already more powerful than one unconscious vote. And by unconscious vote, I mean those who vote not based on platform or ideology but based on skills in rhetoric and demagoguery.

It's funny though that Lew Rockwell says Ron Paul is an exception to this rule. It's true that I will only vote here in the Philippines if someone like Ron Paul or someone with the same kinds of advocacies in his/her platform runs for office. Although I'm not really as extreme as Rockwell about this issue as I'm already considering endorsing and promoting Gary Johnson in this blog for the 2012 US presidential elections (I mentioned this in the For Sale: Rand Paul post).

Can I just say that I love RT news. The mainstream media, regardless if conservative or liberal, will always have some sort of bias in protecting the establishment's interests. This is why it's always so refreshing to watch RT news and see a different perspective on the news.

When I was in a hotel in Tagaytay a few weeks ago with some friends, I actually noticed that the cable there had RT news! I should call my cable service provider and inquire if they have RT.

Friday, June 8, 2012

For Sale: Rand Paul

Just when I thought nothing could make my throbbing hangover headache worse: yup, Ron Paul's son, rookie senator from Kentucky Rand Paul is all over my newsfeed for endorsing Mitt Romney. Allow me to quote from Adam Kokesh's Twitter account "I'm not surprised Rand Paul endorsed Romney, only that he did it so soon." I've got two words to summarize how I feel (and perhaps have always felt) about Rand Paul: Sell Out.

Rand Paul endorses Mitt Romney on Hannity

And Hannity, of all places. What a blow to his father's principles. And Hannity has the decency to say "I have no idea why [Ron Paul is] still mad at me". Maybe he's forgotten all about the 2008 Republican presidential elections or all his opinion pieces calling Ron Paul "crazy". Now all of a sudden he "agrees with many things" with Ron Paul? It's purely ridiculous bantering to somehow appeal to fiscal conservatives who support Ron Paul.

It's pure and simple that when you endorse Mitt Romney, then you endorse his platform. That's the main point of an endorsement, really. And who can truly believe, with Romney's history of flip-flopping, that the guy is against SOPA? Not to mention he supports all the costly wars and interventionism of the US, bombing Iran and many other countries, the Patriot Act, the NDAA, the TSA, TARP and the bailouts, the War on Drugs, the fake spending cuts, the secrecy of the Federal Reserve (all of which Obama supports too by the way) and so much more (it might be too long to list Romney's flawed platform so I should probably save that for another post). Basically, all these are things that your father passionately fought against, Rand. He was marginalized and people laughed at him when he talked abou these things. Hannity, that guy you're talking to on that interview, is one of the people who laughed at your father! It's disgusting and I'm infuriated.

Your father would never have done something like this. There was a time when he endorsed Reagan because of the platform he ran on. But when Reagan and his administration strayed away from this platform HE RESIGNED. He would never compromise his principles. This is something you obviously didn't get from him (I can't believe I'm writing as if I'm talking to him).

I'm obviously really pissed off by this news. I'm one of those who aren't so pleased regardless of his agenda (some say that he's just trying to infiltrate the establishment). I don't really care what kind of influence Rand will get out of this. I couldn't care less if he gets a VP ticket. I can't believe he will be going around the US to campaign for Romney, talking to real people, and will be lying to them that Romney will limit the size and scope of government.

On the photo above, Ron Paul wears his military uniform when he was drafted during the Vietnam war and with him is, yes, his son Rand Paul. It's quite ironic to point out that Mitt Romney was very supportive of both the draft and the Vietnam war and yet was deferred several times.

I've always thought that the race isn't over until the national convention in Tampa on August. In case that it is, this blog will probably be endorsing Gary Johnson instead, the official Libertarian Party nominee (I will write more about him real soon). But here's to hoping that all this is still very premature.

If you liked this post then you might also like:
1. Ron Paul Supporters are All Over the World
2. Top 10 Libertarian Books
3. Why is Ron Paul Attracting Young Voters

Wednesday, June 6, 2012

In Case of a Zombie Apocalypse: Prepare Manila!

With the Miami cannibal attacks trending all over the interntet, I figured it would be fitting to write about the impending zombie apocalypse. Aside from mental and physical conditioning, we will definitely be needing a lot of how-to guides and equipment in case of an outbreak here in Manila. Surely, watching episodes of The Walking Dead or playing Left 4 Dead won't be enough to make any of us prepared but here's something that might help: is a website managed by my friend Anthony and was initially created for the purpose of informing and preparing Manila for natural disasters like earthquakes or floods. I've always noticed though that the content of the webpage could also be found very useful in case of a zombie apocalypse. I've actually insisted that he should write an article about a zombie apocalypse but he mentioned that it will need extensive research (not to mention our lack of knowledge on how zombies will come to be and how it's all gonna go down).

In the Prepare Manila Facebook group, a community of avid "preppers" or survivalists share ideas, tips, techniques, and trade equipment or share equipment sources. They talk about different kinds of equipment that will surely be helpful in case of a zombie apocalypse like weapons, emergency kits, first-aid kits, sustainable energy resources, water distillation equipment, and many other survival tools and gadgets.  

A rendering of me in a zombie apocalypse (c/o Adrienne Bernal)

I'm not really so aware of gun control laws in the country. I've actually never fired a gun before. The libertarian position though is that we all have the right to keep and bear arms. I noticed that in most zombie fiction, one of the first struggle of individuals are lack of firearms and other weapons. 

Also, I must mention that the government, whom we've granted a monopoly on weapons and force, can easily justify some sort of martial law or junta government in this kind of chaotic situation. If the zombies aren't runners (slow and stupid zombies like the ones in Shaun of the Dead), there's probably good reason to fear other humans more.  

A scene from 28 Days Later (probably my all-time favorite zombie film)

Being prepared in times of an unforeseen disaster is surely a personal responsibility. I'm sure there's no harm in investing in contingency plans and equipment. I should personally focus on getting in shape (all I've been doing is sitting on my ass and writing, really). Yeah, maybe I'll go to the gym tomorrow.

Rule #32: Enjoy the little things.

If you liked this post then you might also like:
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Tuesday, June 5, 2012

In Gold We Trust — Doug Casey, Hyperinflation vs Deflation, Investments, and the Post-Apocalypse Economy

I got a chance to hang out with some avid followers of Casey Research here in the Philippines along with other friends of liberty. It was actually my first time to hear about Doug Casey and I must say that I learned some new things about money, investments, and the economy. It was quite fitting because I actually just wrote about investing in gold right before attending the dinner.

A girl uses money for heat during the hyperinflation in Germany 
because it burnt longer and was virtually worthless

The first topic discussed was the immorality of fiat currency. There was even a presentation on the history of money and how fiat currency came to be.

There were also worries of a massive and abrupt deflation as compared to the position that I've always been exposed to which is hyperinflation. This speculation takes the position that the market will eventually self-correct and money will return to its natural deflationary value. At the time of a collapse, everyone will start selling and the value of money will rise. And since no one can really tell whether there will be deflation or hyperinflation, a part of one's investments must also be in liquid paper money.

Apparently, Doug Casey even has a formula on how exactly one should divide his/her net worth into investments. Some in physical gold bullion, some in gold stocks and mining stocks, some on energy stocks, etc. I'm actually getting interested in all these finance stuff with a libertarian perspective. Maybe I should subscribe to some Casey Research publications. It's always nice to learn about how to protect one's money and how to make more of it.

There was also a strong agreement on the benefits of the internet as a means of disseminating information and serving as an alternative to mainstream media (see also Stay the Hell Away from my Internet). It is most probable that the main reason that libertarian and Austrian School positions are gaining popularity nowadays is because of the internet. We even discussed problems with convincing others, even our own relatives, into investing in gold; this is a sentiment I surely shared. In the end of it all though, money and monetary policy might just be the key into changing public opinion about statism.

I have written about a "post-apocalypse" or post-collapse economy before (see Marc Faber on Monetary Policy) and it's interesting that the person who gave a talk on money last night had a similar accent to Marc Faber (we were even in a Swiss restaurant).

All these predictions are usually marginalized or shrugged off as unnecessary alarmism by the mainstream. This has always been the case throughout history. It has always been those telling the truth who were marginalized and had the minority position. It's obvious that humanity hasn't learned from this mistake. It seems that only a catastrophic economic collapse would make people understand what has been going on.

The US and Europe have been showing grave symptoms of an economic collapse and yet the only solution they seem to be considering is more of the endless hair of the dog stimulus packages. This is the great prescription of Keynes that drinking some more is the solution to a hangover when really in the longrun it'll only make your hangover worse.

It was comforting to hear that the effects of the global collapse might not be as drastic here in the Philippines in the same manner that the recent recession in the US almost didn't affect us at all. There are several reasons for this including our natural lack of care for many of the State's attempts to control the market. Filipinos seem to have a knack for not asking permission from the government when exercising the inalienable right to engage in voluntary exchange. There's a lot of Agorist-esque counter-economics going on.

Although in such a situation that we are drastically affected, there could be chaos and those we've granted a monopoly on force and on weapons could easily justify a take over to form a junta government. I am sure it's obvious that I'm generally fearful of living in an Orwellian society.

This is why we should always appreciate property, freedom, liberty, and choices and we should never give the State authority to take away these things. During the depression in the US, the State had the power to confiscate properties like gold. It scares me that similar things can happen in case of an economic collapse. The government should always only be our servant and never our master. The little authority we are giving them today to steal from our hard-earned income may just be the monstrous authority they will be able to use to deprive us of property and liberty in the future.

The 5 peso coin in itself is now more valuable than just 5 pesos

It was also discussed last night that the 5 peso coin is actually now worth more than 5 pesos. I don't know the exact figures but this is a classic example of the value of a currency getting debased. The copper, nickel, and whatnot in the coin's value appreciated as compared to the value of the peso (which is again a direct consequence of monetary policy). So apparently, it is illegal to horde too much of 5 peso coins. You can actually go to jail for wanting to keep your hard-earned income and the State has the authority to confiscate your property.

Now it makes sense to me why old coins have so much more value today. I've always assumed that it was just sentimental value for collectors. It now makes sense why older coins were much heavier and seemed to have more metal in it while nowadays coins are so much lighter. It's always been that currency gets debased while the price of metals used appreciated.

Regardless of what happens in the future, it's a rational position to invest in gold and other precious metals like silver. Again, as I have said before, profit is probably just a small bonus of investing in precious metals. Prices of gold or silver seem to have been falling recently but in the long run my bet is that prices will soar. Although learning about the possibility of deflation is so drastic and throws off most of my own speculation. There's really so much more to learn. Being that I'm not from an economics or finance background, there's really so much more to learn. I will be writing here about monetary policy as I learn more about it so be sure to drop by again real soon!


Sunday, June 3, 2012

Investing in Gold in the Philippines — Protect Your Money from the Discretion of Central Bankers

Ron Swanson, esteemed libertarian from the TV show Parks and Recreation, explains in one episode that he doesn't put his money in banks and instead buys gold and buries it in different locations much like a pirate would do. Although this show exaggerates his character and his principles, there is sense in what he is saying. Gold has always been regarded as a "hedge against inflation"; it's just historical fact and common knowledge. In this article we will examine the benefits of investing in gold (and how to invest easily over the internet), what inflation really is, and what influences the value of our money today.

Ron Swanson invests in gold

It would be nice to start with 1971 when the US decided to abolish the Bretton Woods system, stray away from the gold standard, and turn the dollar into "fiat currency" which ultimately means that the value of money is derived from government regulation or law. Inevitably, the dollar then became the world's reserve. No, the money in your wallet right now isn't really backed by gold as you think. Money is printed at the discretion of central bankers. It's basically an "IOU" piece of paper backed and monopolized by the State.
10-year trend of gold

With the trend on the graph above, you can only imagine the profit those who invested in gold in 2002 back when gold was less than $400 an ounce. But you see, investing your hard-earned money in gold is not really all about profit (that's just a bonus, really). Investing in gold is all about protecting your money from the discretion of central bankers. Basically, every time they increase the money supply, our money is devalued. And it is at their discretion how much to inflate and when. Even Keynesians themselves are never in exact agreement on what to do exactly with the money supply. This is why it is really left to their discretion. F.A. Hayek referred to this as the pretense of knowledge.

Take note though that this isn't a mainstream position when it comes to the economics community. Mainstream economics is still controlled by the Keynesians and is still what's indoctrinated to economics students in universities all over the world whereas positions from the Austrian School of Economics (this is the school of thought that most, if not all, libertarians advocate) are marginalized and  ignored.

I understand that "experts" (those with the pretense of knowledge, as I have said) will tend to disagree with me on this one. Who am I anyway, right? Just some random blogger from the Philippines who thinks he knows better than Ben Bernanke or Paul Krugman or many other scholars of Keynesian economics. I guess the only thing I can ask is, would you rather believe in those who didn't see the recession coming and even encouraged the housing bubble or those who predicted it and warned against it:

Proponent of Austrian School of Economics Peter Schiff Predicts Recession
(even mentions investing in gold in the latter part of the video)

Going back to inflation and investing in gold, let's say you earned 1000 pesos today by giving up your time and working hard and tomorrow the central bankers decide that they want to increase the money supply. Even when you still have the 1000 peso bill in your pocket, its value has been debased. I don't really know how else to refer to this other than theft. Inflation is one of the most immoral tax of all. It's legalized theft, really. Ron Paul has a really good example to Ben Barnanke in this video:

Ron Paul schools Bernanke about competing currencies

Ron Paul shows Bernanke a silver coin and tells him that in 2006, back when Bernanke sat in position in the Federal Reserve, that coin would have been able to buy 4 gallons of gasoline yet now is able to buy 11 gallons of gasoline. "Now that's preservation of value," Ron Paul argues. So really prices aren't just rising, the value of money and its purchasing power is falling and this is all directly associated with central banking policy.

Then Bernanke argues that we are free to invest in gold or silver if we want but then what he's not responding to is that Ron Paul wants money to be backed by commodities like gold or silver. It doesn't even necessarily have to be gold, it will be dictated by the market. This is why Ron Paul has been fighting for competing currencies, an idea that, as Paul mentioned, Hayek advocated. The people will have the choice to opt out of the monopolized paper money of government and finally the market will be able to decide what truly has money. 

Ron Paul asks Bernanke if Gold is Money

In the video above, Bernanke is stomped and was forced to answer that central banks hold gold merely because of tradition when really we have already established that it is common knowledge that gold is able to preserve and even gain value. But Keynesians were indoctrinated with mythical macroeconomics and flawed history lessons that they will always stand by government's paper. And surely bureaucrats and politicians love this kind of monetary policy because they are able to print and spend endlessly with no constraint whatsoever. And because the chance for going back to the gold standard or the chance for competing currencies is very slim, the price of gold will keep on rising until central banks of the world and institutions like the Federal Reserve eventually destroys itself.
Ron Paul debates some guy about gold standard on Colbert Reports

My friend and fellow libertarian Paul How has a good article about how to easily invest in gold or silver here in the Philippines (see his article how to buy gold or silver in the Philippines). Also, another friend suggested the other night (it's actually the conversation that inspired me to write this article right now). For most of the sites, you can just use your credit card to buy or sell gold or silver.

I'm actually meeting up with some other libertarians later and I heard someone will be giving a talk about money and banking (one of them, I think, is even doubtful of Ron Paul's sincerity or integrity which is probably the most far-fetched thing I heard but I'll keep an open mind). I do hope I am able to learn more and eventually share what I learn on this blog. At the end of it all, going to this blog religiously is probably the best investment you can ever do.

if you liked this post then you might also like:
1. The World is Losing Faith in the Dollar 
2. Sari-Sari Store Economics
3. Keynes vs Hayek Rap