Greed

Greed (or self-interest) is a natural and important human trait in achieving our goals
and an essential aspect of the free market. Milton Friedman explains in this great video clip
why greed is important in improving the overall wellfare for society.

Have a look:

Bitcoins – The money of the future

Yesterday, I blogged about the downsides of fiat money (currencies that are not backed by real assets). –Through the actions and interventions of central banks, a currency may lose its value and the resulting inflation may “eat up” the savings of people.

The introduction of electronic money, which is not controlled by any central bank, provides an alternative payment method. Even though a number of virtual currencies have been introduced prior to bitcoins, this currency offered a reliable alternative to “common” money for the first time.

Invented by a mysterious programmer who calls himself Satoshi Nakamoto, bitcoins do not rely on any central money supply but are created by so called “miners”, users who solve cryptographic puzzles and by this, slowly increase the money supply.

Even though the currency is only accepted by relatively few companies, the acceptance of bitcoins grew has increased greatly over the past years.

Let’s see what the future holds: In a couple of years we may all pay in bitcoins :)

If you are interested in more information on bitcoins, take a look at this great article: http://www.wired.com/magazine/2011/11/mf_bitcoin/all/1     

Fiat money increases inequality

In 1971, Fiat money was introduced, replacing the gold standard. Since then, money is not backed by any collateral any more. As a consequence, governments (or rather central banks) continuously increased the money supply, therefore causing inflation. People hurt most by inflation are employees and savers. On the other side, banks and investors who can effort to own real assets have profited from the increase in money supply. Therefore, fiat money increases inequalities between the rich and the poor.

For a short and comprehensive view on Fiat money, take a look at the video:

The philosophy of liberty

What is liberty? What is the principle libertarian ideals are based on?
The key theme of liberty is self-ownership. No human being can be owned by another human or a group of humans.

Self-ownership manifests itself in three forms:
1.    Life
2.    Liberty
3.    The product of your life and liberty

The product of your life and liberty is your property.
Liberty in all of its forms is the most important good we have!

For an insightful perspective at liberty, take a look at this great video:

One million dollar penny

Through TARP banks received $ 700,000,000,000 in bail-out money, paid for by US taxpayers. This caused an outcry by many Americans - and rightfully so. However, this 700 billion dollar bailout is tiny compared to the more than $ 16,000,000,000,000 (16 trillion) spent by the Federal Reserve in emergency loans.

The following video (by jazzntoehead) explains very well how much money this actually is.

Ron Paul beats Obama in Ohio

According to a Fox News poll based on a telephone survey with a random sample of 505 registered voters, Ron Paul would beat President Obama in Ohio (42% vs. 41%), should he be nominated as the Republican candidate in the 2012 elections.

Also two other Republican candidates, Rick Santorum and Mitt Romney, are able to get more votes than Obama, according to the poll. Only Newt Gingrich would lose the state if he was running against Obama.

As one of the swing states, Ohio played a key role in the 2008 presidential elections.
Ron Paul’s approach to foreign policy, emphasis of personal freedom and constitutional rights and reduction of the federal government’s influence secured him widespread support – especially from younger voters.

In addition, Dr. Paul is one of the few persons in politics who did not change his political decisions when it seems politically advantageous, but stuck to his principles.

Even if Ron Paul should not be nominated and go on to win the presidency: He has motivated a lot of people to pay attention to politics more closely.

#2 Keynes vs. Hayek - Song

The battle between Keynsians and Austrians continues ... in the following music video:

Keynes vs. Hayek – Rap song

In the early and mid-20th century, John Maynard Keynes’ economic theory was the predominant school of thought to explain economic behavior. Advocating government interventions and financial stimuli in order to avoid economic downturn, Keynesianism became very popular by politicians and many economists. While Hayek and his concepts were nearly forgotten in this time, Austrian School economics became more visible through the prudent economic policy of politicians such as Margret Thatcher in the UK and Ronald Reagan in America (who was influenced by Milton Friedman).

The following rap song is dealing with the struggle of both economists and the success of their theories:

Are you a libertarian?

 David Nolan, one of the founders of the Libertarian Party in the US, created a chart (see on left side) to graph different political orientations based on the degree of political and economic freedom.

Ranging from a high degree of economic freedom and little personal freedom (Conservative) to a high degree of personal freedom but little economic freedom (liberal), libertarians see both personal and economic freedom as essential for an enlightened human being. Only by letting people the freedom of choice they can truly reach their full potential.


You think freedom is a basic human right?
Take a test and find out, where you stand politically: http://www.quiz2d.com/

President Obama publishes first budget draft for 2013

President Obama announced his 2013 budget proposal on Monday. Even though his plan is not expected to pass Congress, it is seen as a strategy for the November election. According to the budget plan, revenue through taxes would increase by $1.5 trillion until 2023. A key aspect of the plan is a tax reform that targets at increasing taxes for wealthy Americans, while providing subsidies to various other groups, including students. A finalized version of Obama’s tax reform is expected at the end of the month.

Even though the president’s budget plans include a deficit reduction, the deficit is projected to grow substantially in the coming years. The US federal debt is already at more than $15 trillion and is projected to grow in the future. – and these numbers are provided by the government, meaning the projections on growth are rather exaggerated. Also, the reductions mentioned concern only the deficit. – the debt is still rising.
Furthermore, the assumption that a tax increase for the rich would not have any impact at all on productivity and growth is simply wrong. Rich individuals might choose to work less if they can keep less of the money they earned. In addition, some might move to other countries where taxation is lower (e.g. Singapore).

In general, it is right to address deficit reduction. However, instead of increasing revenue through tax increases, the government should focus on cutting spending first before any tax increases might be considered.
Politicians have to address debt reduction more aggressively – a constitutional amendment limiting the deficit is absolutely crucial!

How to fix the US health care system - Milton Friedman

Recently, I stumbled upon a video by Milton Friedman who brilliantly explained what the role of government concerning health care ought to be and how the current health care system in the US can be fixed.

As of today, the United States has the most expensive health care system in the world! Through the actions of politicians who try to capture as many votes as possible by catering to special interests, the costs of the society as a whole are dramatically increased from the level at which they would be if the market was allowed to function freely.

There is no such thing as free birth control

President Barack Obama announced last week, health insurance should also cover contraceptives for women. Employers would therefore be required to provide contraceptives free of charge to their female employees. This would include all employers, even churches who oppose the use of contraceptives.

As a private institution, the church should be able to decide whether or not it wants to provide those measures to its employees.  However, aside from the intrusion on personal freedom, there is a (possibly) even more critical economic dimension to this controversy.

As Peter Schiff points out in his video (see below), providing free contraceptives will lead to increased costs for employers and increased costs overall, since women will select the most effective products, regardless of price, if these products are provided for free.

The US already spends more money on healthcare than any other country in the world. Instead of providing more “free” coverage(the costs are just transferred to the taxpayers), the government should focus rather on spending the money it has most effectively.