How China Can Cause The Death Of The Dollar And The Entire U.S. Financial System

They can bring down the hammer at any moment and they know it

by Michael Snyder 

The death of the dollar is coming, and it will probably be China that pulls the trigger.  What you are about to read is understood by only a very small fraction of all Americans.  Right now, the U.S. dollar is the de facto reserve currency of the planet.  Most global trade is conducted in U.S. dollars, and almost all oil is sold for U.S. dollars.  More than 60 percent of all global foreign exchange reserves are held in U.S. dollars, and far more U.S. dollars are actually used outside of the United States than inside of it.  As will be described below, this has given the United States some tremendous economic advantages, and most Americans have no idea how much their current standard of living depends on the dollar remaining the reserve currency of the world. 

Unfortunately, thanks to reckless money printing by the Federal Reserve and the reckless accumulation of debt by the federal government, the status of the dollar as the reserve currency of the world is now in great jeopardy.

As I mentioned above, nations all over the globe use U.S. dollars to trade with one another.  This has created tremendous demand for U.S. dollars and has kept the value of the dollar up.  It also means that Americans can import things that they need much more inexpensively than they otherwise would be able to.

The largest exporting nations such as Saudi Arabia (oil) and China (cheap plastic trinkets at Wal-Mart) end up with massive piles of U.S. dollars...

Instead of just sitting on all of that cash, these exporting nations often reinvest much of that cash into low risk securities that can be rapidly turned back into dollars if necessary.  For a very long time, U.S. Treasury bonds have been considered to be the perfect way to do this.  This has created tremendous demand for U.S. government debt and has helped keep interest rates super low.  So every year, massive amounts of money that gets sent out of the country ends up being loaned back to the U.S. Treasury at super low interest rates...

Venezuela's short cut to socialism

Government "Occupies" Electronics Retail Chain, Enforces "Fair" Prices

The socialist paradise that is Venezuela has already shown the Federal Reserve just how the world's greatest "wealth effect" can be achieved courtesy of the Caracas stock market returning over a mindblowing 475% in 2013. Of course, while the US inflation is still slightly delayed (if only for non-core items and those that can't be purchased on leverage) Venezuela's own 50%+ annual increase in prices is only part of the tradeoff to this unprecedented "enrichment" of society, or at least 0.001% of it - after all, it's all about the égalité.

More problematic may be the fact that in addition to a pervasive toilet paper shortage, a collapse in the currency, a creeping mothballing of the local energy industry due to nationalization fears, and a virtual halt of international trade as the country's FX reserves evaporate, Venezuela's relatively new government has adopted arguably the best and brightest socialist policy wielded by both Hollande and Obama, namely the "fairness doctrine."

However, in this case it is not about what is a "fair" tax for the wealthy (as taxes in Venezuela's socialist paradise will hardly do much to build up the desperately needed foreign currency reserves), but what is a "fair" price for electronic appliances like flat screen TVs, toasters, and ACs. The result is that Maduro's government now determines what equilibrium pricing should be.

The reason for this latest socialist victory over the tyranny of supply and demand is that overnight Venezuela's President Nicolas Maduro ordered the "occupation" of a chain of electronic goods stores in a crackdown on what the socialist government views as price-gouging hobbling the country's economy. Various managers of the five-store, 500-employee Daka chain have been arrested, and the company will now be forced to sell products at "fair prices," Maduro said late on Friday.

Overcoming the Contradictions of Liberal Democracy

Part I. Sociobiology and Social Engineering

By Pedro Schwartz

Democracy is an unstable system that often does disservice to individual liberty. With this stark assertion I want to pose two problems that have been with the friends of democracy from the very earliest times—going back to the Athenian followers of Pericles when traduced by Plato, to Alexis de Tocqueville and John Stuart Mill when concerned with the enlargement of the franchise, down to Friedrich Hayek and James Buchanan when proposing remedies for the demagoguery of our day. The first is that government of the people, by the people, for the people has more than once been on the point of perishing from the Earth. The second is that democracy, though the political corollary of individualism, has in practice often tyrannized the individual. One explanation for the recurring instability and frequent oppressiveness of democratic politics is that they are due to the natural attrition of human arrangements. A better answer is that they are the consequence of systematic flaws in our political systems. Democracy as practiced is flawed. Democratic life is beset by paradox. These imperfections must be brought into the open and remedied if we want liberal democracy to survive.

Let me give two samples of the confusion and contradiction that beset present day political life: the crisis of Welfare and the denial of capitalist growth.

The failure of the Welfare State

The financial crisis that started in 2007 is perceived in Europe as the writing on the wall for the original idea of the Welfare State. Financing pensions, health, and education on egalitarian lines is now seen as a system of social service with all the wrong incentives: demand runs wild, quality of service deteriorates and taxpayers groan under their weight.

The trouble is that a majority of voters seem to want a Welfare State that they now know is unsustainable. For many years they were content to sell their birthright for a mess of potage but suddenly now they fear they will go hungry: their pensions are being cut, the queues before the hospitals grow longer, and an increasing number of their young go uneducated.

Nothing could go wrong. Right?

How will it end?

by Keith McCullough

I’m sick and tired of half-baked econ PhDs trying to centrally plan our lives. 

The European Central Bank cutting rates and devaluing The People’s currency as European growth is accelerating (not a typo) took my level of disgust up another notch yesterday. I didn’t think that was possible. I guess I thought wrong. 

Like the Fed, the European central planners thought that cutting rates was going to “stimulate growth”, or something like that. Meanwhile, the market’s reaction to yesterday’s European rate cut “news” was global  Growth Slowing. 

Huh? 

Yes. Much like the “growth” style factor being for sale in US Equities ever since the Fed’s unaccountable decision not to taper (Financials down, Staples/Telcos straight up), that’s precisely how Mr. Market voted, worldwide, after the ECB rate cut:

1.      US Growth Stocks got killed yesterday (Nasdaq -1.9%); Russell2000 now -3.7% from its YTD high

2.    European Growth Stocks stopped going up (yes, we sold everything on the ECB “news”)

3.    Asian Stocks continued lower overnight – China and Japan down another -1.1% and -1.0%, respectively

Actually, since the Fed’s slow-growth-no-taper decision and ECB rate cut, from their recent highs:

1.      China’s Shanghai Composite Index is -6.7%

2.    Japan’s Nikkei is -4.7%

3.    US Growth Stocks like Facebook (FB) and Tesla (TSLA) are -12% and -27%, respectively

These academic wonks of the Keynesian empire fundamentally believe that Deflating The Inflation (from the world record inflation they perpetuated via currency devaluation in 2011-2012) is now the world’s greatest threat.

Deflating the Inflation Myth

The Absurdist Myth That Inflation Drives Growth

By GENE EPSTEIN

Contrary to recent assertions, rising prices don't help profits or encourage people to spend quickly.

Desperate times can breed ideas born of desperation. The sluggish rate of economic growth is getting blamed on a new scapegoat, the tame rate of price inflation. The consumer price index ran just 1.2% higher in September than the same month a year ago, the Bureau of Labor Statistics reported last week, a rate of increase that falls noticeably short of the 2% target set by the Federal Reserve. And according to simplistic logic, economic growth would get a shot of adrenaline if only prices would rise a lot faster.

"Rising prices help companies increase profits; rising wages help borrowers repay debts," opined the New York Times last week ("In Fed and Out, Many Now Think Inflation Helps," Oct. 26). "Inflation also encourages people and business to borrow money and spend it more quickly."

Somehow that prescription didn't work out so well in recession year 1974, when the CPI jumped 12.3%, while the economy shrank. And as the chart on this page shows, despite the claim that profits benefit from rising prices, actual profit rates were much lower in 1974 than they have been over the recent expansion.

Can We Support 75 Million Retirees in 2020?

Printing or borrowing money are both attempts to get a free lunch; alas, there is no free lunch.

by Charles Hugh-Smith

I received a number of interesting comments on my recent series on the insolvency of the Social Security Ponzi Scheme:

The Generational Injustice of Social (in)Security (November 6, 2013)

The Problem with Pay-As-You-Go Social Programs: They're Ponzi Schemes (November 5, 2013)

There are two questions here:

1. How can we sustainably pay for 75 million beneficiaries in 2020?

2. Are there sufficient resources, labor and capital to support 75 million beneficiaries in the manner that they were promised?

The first question presumes there are limits on the creation of 'free money," and the second presumes there are limits on the surplus generated by the economy that can be devoted to supporting retirees.

As a quick primer on Social Security: the program, paid by payroll taxes on earned income, has two funds: one for worker/retirees and survivors of workers, and another for disabled workers and their dependents.

As of 2011 ( Annual Report of the Trustees of the Social Security Trust Funds), there were 38 million retirees, 6 million survivors and 11 million disabled and their dependents drawing benefits from the program. The latest numbers from the Social Security Administration (SSA) show 57 million beneficiaries as of 2012.

Since there will be 53 million people 65 and older in 2020, and the number of survivors and disabled are rising as fast or faster than the number of retirees, we can project the program will have around 75 million beneficiaries in 2020, seven short years away.

(Given that the number of people choosing to retire early at 62 rather than wait for full benefits at 66 is exceeding SSA projections, this estimate is probably conservative.)

Reader D.L.J. proposed a solution that many believe would be sustainable: dispense with payroll taxes, illusory trust funds and borrowed money entirely, and just print the money and transfer it directly to retirees: 

Now set aside your traditional view of 'how the system now works'.

What if each of the 50,000,000 retirees received a monthly check for $2500 for $30,000 per year. It doesn't come from a trust fund and it doesn't come from a working member of the workforce; it comes directly from the US Treasury. There are no bonds issued to raise the money, no interest to pay and no maturity schedule--just money credited to the accounts of the seniors.

Now, what if at the same time, there is no payroll tax to fund the, well, trust fund.

The 50,000,000 retirees would/could spend their $30,000 each into the economy to support the production of goods and services of 50,000,000 active workers providing an average contribution to income of $30,000 each. Of course the workers would actively purchase goods and services from one another as well.

Over the years, I have received many similar proposals from readers, the key component being the issuance of cash by the U.S. Treasury rather than the Treasury borrowing money on the bond market via selling Treasury bonds.

Human inability to grasp very large numbers abused by politicians and the FED

Even worst, humans get used to not being able to grasp them

By James Murray

 Crows are considered the most intelligent of the bird family. They can count to three. Anything over three is "many" to a crow. Humans are basically the same way. At some point numbers get so big that they just become "many."

Everyone understands $100, how long you have to work to earn it and what it will buy.

A package of printer paper with 500 sheets is about 50 mm (2") thick. Stack 2 packs of paper together and you have a stack of 1,000 sheets about 100 mm (4") tall.

If you stacked up $100 bills 100 mm tall, you would have $100,000. Everyone understands $100,000. It will buy you a small house, several cars etc. If you are working, it could be one year’s salary or several years’ salary.

If you are watching TV and someone is being held for ransom and they only want $100,000 that sounds pretty small. A million sounds better, doesn't it?

What does a million look like? Since $100,000 is 100 mm high, a million must be 1 meter (about 40") tall. How much does one million dollars in $100 bills weigh? 10 Kg (22 pounds).

A million dollars is about the point where people begin to lose the concept of money. Very few branch banks ever keep over $100,000 in cash. Short of drug dealers and people in counting houses, very few people have seen a million dollars in cash.

However, most people have a pretty good idea about what a million dollars will buy. Several average houses, one million dollar house, 20 cars for $50,000 each, etc. A million is a pretty good sized number but still within human concept.

Several years ago, there was a movie where a casino was robbed and $160 million was stolen. Four guys, each carrying two bags walked off with the money. Oh, really?

If $1 million weighs 22 pounds then $160 million would weigh 3,520 pounds. Each of the four guys would have to carry 880 pounds. I don't think so. The movie got away with that deception because no one in the audience had the slightest idea how large or how heavy $160 million would be.

Once you get over one million, very few people have any concept of the number.

A billion is 1,000 million. If $1 million is 1 meter high, $1 billion would be 1 KM (about 6/10 of a mile). No one knows what a stack of $100 bills a kilometer high looks like so let's lay them down. Most people have a good idea of what a kilometer is in distance. You can walk a kilometer in about 10 minutes. So $1 billion equals a kilometer in distance.

The FED is injecting $85 billion a month. That's a stack 85 kilometers high or long.

A field guide to alienating the Middle East

Iran: Obama's ironic beacon of hope

By Bob Dreyfuss 
Put in context, the simultaneous raids in Libya and Somalia last month, targeting an alleged al-Qaeda fugitive and an alleged kingpin of the al-Shabab Islamist movement, were less a sign of America's awesome might than two minor exceptions that proved an emerging rule: namely, that the power, prestige, and influence of the United States in the broader Middle East and its ability to shape events there is in a death spiral. 

Twelve years after the US invaded Afghanistan to topple the Taliban and a decade after the misguided invasion of Iraq - both designed to consolidate and expand America's regional clout by removing adversaries - Washington's actual standing in country after country, including its chief allies in the region, has never been weaker. 

Though President Obama can order raids virtually anywhere using Special Operations forces, and though he can strike willy-nilly in targeted killing actions by calling in the Predator and Reaper drones, he has become the Rodney Dangerfield of the Middle East. Not only does no one there respect the United States, but no one really fears it, either - and increasingly, no one pays it any mind at all. 

There are plenty of reasons why America's previously unchallenged hegemony in the Middle East is in free fall. The disastrous invasions of Afghanistan and Iraq generated anti-American fervor in the streets and in the elites. America's economic crisis since 2008 has convinced many that the United States no longer has the wherewithal to sustain an imperial presence. 

The Arab Spring, for all its ups and downs, has challenged the status quo everywhere, leading to enormous uncertainty while empowering political forces unwilling to march in lockstep with Washington. In addition, oil-consuming nations like China and India have become more engaged with their suppliers, including Saudi Arabia, Iran, and Iraq. The result: throughout the region, things are fast becoming unglued for the United States. 

Its two closest allies, Israel and Saudi Arabia, are sullenly hostile, routinely ignore Obama's advice, and openly oppose American policies. Iraq and Afghanistan, one formerly occupied and one about to be evacuated, are led, respectively, by Prime Minister Nouri al-Maliki, an inflexible sectarian Shi'ite closely tied to Iran, and President Hamid Karzai, a corrupt, mercurial leader who periodically threatens to join the Taliban. In Egypt, three successive regimes - those of president Hosni Mubarak, Mohammad Morsi of the Muslim Brotherhood, and the chieftains of the July 2013 military coup - have insouciantly flouted US wishes. 

Obamacare and Cronyism

A free-for-all of special interests is having catastrophic results

By  James V. DeLong

Once upon a time, there was a theory of government called “interest-group liberalism,” which held that a workable American democracy could be based on an infinite number of special interests’ elbowing each other in their battle to get to the government trough or to grab control of some regulatory apparatus.

Once upon a time — which is to say, now.

Sometimes this theory analogizes the political jostling of interest groups to the rough-and-tumble of the free market, but in fact it represents a dark parody. In a market, people promote their self-interest by providing goods and services that other people value and buy voluntarily. In interest-group liberalism, players make shifting power alliances so as to loot other players, or more often to loot those not in on the deal, which is usually the public.

The accurate Washington aphorism is, “If you are not at the table, you are on the menu,” and if this seems cynical, remember the words of comedian Lily Tomlin: “No matter how cynical you get, it is impossible to keep up.”

With luck, Obamacare will represent both the acme and the beginning of the end of the delusion that government by special-interest collision and collusion is a viable political system, and will trigger a return to the appreciation of limited and prudent government working within the framework of the free market and laws of general applicability.

After passage of Obamacare in 2010, Senate grandee Max Baucus recounted the history of the law. He lauded his staff, particularly the chief health counsel, who, he said, put together the white paper that became “the blueprint from which almost all health-care measures in all bills on both sides of the aisle came.”

Baucus’s staffer certainly did know the health industry. She had worked for Baucus earlier in the decade, but moved over to insurance giant WellPoint, where she became chief lobbyist. She returned to the Senate to work on the Obamacare legislation, moved on to HHS to help craft the implementation process, and, in December 2012, left government to work for health and drug company Johnson & Johnson. J&J is also part of the crony health cabal; it is a member of the PhRMA industry group, which supported the passage of Obamacare with a $150 million advertising campaign.

Economics Is a Science

Robert Shiller on Economics – Is It a Science?

By  Pater Tenebrarum

Fresh from winning an economics prize awarded by a central bank (the Nobel prize for economics was established by Sweden's central bank and only uses Nobel's name in memoriam: “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel”), Robert Shiller asks in a recent article: “Is Economics a Science?”

The article doesn't start out all that well from our perspective, but there are also a few points made in it we can agree on. We will comment on several excerpts below. Shiller begins as follows: 

“I am one of the winners of this year’s Nobel Memorial Prize in Economic Sciences, which makes me acutely aware of criticism of the prize by those who claim that economics – unlike chemistry, physics, or medicine, for which Nobel Prizes are also awarded – is not a science. Are they right?”

“One problem with economics is that it is necessarily focused on policy, rather than discovery of fundamentals. Nobody really cares much about economic data except as a guide to policy: economic phenomena do not have the same intrinsic fascination for us as the internal resonances of the atom or the functioning of the vesicles and other organelles of a living cell. We judge economics by what it can produce. As such, economics is rather more like engineering than physics, more practical than spiritual.” 

(emphasis added)

This is what we meant when we said it doesn't start out all that well, although it certainly begins by asking a good question. However: Necessarily focused on policy? The discovery of fundamentals can be safely ignored? As Ludwig von Mises pointed out (see also further below), economics is the best elaborated branch of the science of human action, but we don't believe that there are no longer any fundamentals left to discover. 'Best developed' is not tantamount to 'fully elaborated, nothing left to find out'.

The Drift toward Despotism

Too many of our rulers and their enforcers reflexively see the citizenry as a threat

By  Mark Steyn

At a time when over 4 million people have had their health insurance canceled, it’s good to know that some Americans can still access prompt medical treatment, even if they don’t want it. David Eckert was pulled over by police in Deming, N.M., for failing to come to a complete halt at a stop sign in the Walmart parking lot. He was asked to step out of the vehicle, and waited on the sidewalk. Officers decided that they didn’t like the tight clench of his buttocks, a subject on which New Mexico’s constabulary is apparently expert, and determined that it was because he had illegal drugs secreted therein. So they arrested him, and took him to Gila Regional Medical Center in neighboring Hidalgo County, where Mr. Eckert was forced to undergo two abdominal X-rays, two rectal probes, three enemas, and defecate thrice in front of medical staff and representatives of two law-enforcement agencies, before being sedated and subjected to a colonoscopy — all procedures performed against his will and without a valid warrant.

Alas, Mr. Eckert’s body proved to be a drug-free zone, and so, after twelve hours of detention, he was released. If you’re wondering where his lawyer was during all this, no attorney was present, as police had not charged Mr. Eckert with anything, so they’re apparently free to frolic and gambol up his rectum to their hearts’ content. Deming police chief Brandon Gigante says his officers did everything “by the book.” That’s the problem, in New Mexico and beyond: “the book.”

Getting into the spirit of things, Gila Regional Medical Center subsequently sent Mr. Eckert a bill for $6,000. It appears he had one of what the president calls those “bad apple” plans that doesn’t cover anal rape. Doubtless, under the new regime, Obamacare navigators will be happy to take a trip up your northwest passage free of charge. That’s what it is, by the way: anal rape. The euphemisms with which the state dignifies the process — “cavity search” — are distinctions that exist only in the mind of the perpetrator, not the fellow on the receiving end. Fleet Street’s Daily Mail reports that this is at least the second anal fishing expedition mounted by local authorities. Timothy Young underwent a similar experience after being fingered by the same police dog, Leo, who may not be very good at sniffing drugs but certainly has an eye for a pert bottom. At the time of Mr. Young’s arrest, Leo’s police license had reportedly expired a year-and-a-half earlier, but why get hung up on technicalities?

The Constitution? What Constitution?

End Runs Around the Constitution

By Andrew P. Napolitano

Two weeks ago we learned that the National Security Agency (NSA) has been spying on the chancellor of Germany and on the president of the United States. Last week we learned that it has spied on the Pope and on the conclave that elected him last March. This week we learned that it also has spied on the secretary general of the United Nations and has hacked into the computer servers at Google and Yahoo.

What’s going on?

President Obama, who has yet to address these outrages to serious questioners, must know of them, because apparently he has gotten into the habit of wanting to know in advance what is on the minds of those with whom he is scheduled to meet. The New York Times reported recently that it learned from NSA whistleblower Edward Snowden that the NSA happily told Obama what U.N. Secretary-General Ban Ki-Moon was planning to ask him well in advance of when he asked it. The NSA could have learned that only from its surveillance of the secretary general’s personal cellphone calls, emails and texts. It seems the NSA is providing this service to its clients, and chief among them is the president.

Also among them are other parts of the government, such as the Department of Justice, the IRS, the FBI and the Department of Homeland Security. This is where we find even more dangers to personal freedom than the constitutional violations and personal privacy outrages visited on all Americans and on foreign officials. The NSA claims it can operate outside the restraints of the Fourth Amendment. The NSA and its congressional apologists have argued that because its task is essentially to gather foreign intelligence for national security purposes only, and because the Fourth Amendment, which requires detailed language in search warrants particularly describing the person or place to be searched and the person or thing to be seized, only restrains the government when it is engaged in criminal prosecutions and not when it is on a fishing expedition for intelligence purposes, the Fourth Amendment does not restrain the NSA.

More Euro-Fantasy

Much of the construction and the future design of a United Europe dreamt of by the elites is too absurd to take at face value

By Anthony de Jasay

Germany has a new government. As far as one can foretell, its byword for the next four years will be "steady as she goes". Forty per cent of the electorate voted center-right, 25 per cent center-left. For most practical purposes it looks that the bulk of the electorate is quite content to have the country go on becoming like a greatly enlarged Switzerland. There is less and less left of the romantic, passionately patriotic, dutiful and a little maladroit German of history. The modern German is mostly inward-looking, more interested in his hobby than in national affairs, and pragmatic rather than highly principled. He does his duty reliably as in the past, but does so because that is the way quietly to get richer and not because he feels under moral compulsion. He does not see why Germany should have a foreign policy, and he is quite content to witness the process by which she is getting ever closer to becoming a member of a federal Europe provided this does not call for one-sided financial sacrifice. Paying dearly for it would, of course, be most un-Swiss.

However, embedded in all this prosaic sobriety and practical sense is a minority of opinion-makers, jurists, civil servants and other elements of the elite who persist in believing in a tightly-knit federal Europe as an ideal for which they will strive at any reasonable cost and that the present opportunity to create such a Europe is a chance which must not be missed. Though in a minority, they are highly influential and have very little opposition from the mostly passive majority. It is they who spread the belief that allowing Greece to default, France to be humiliated, and deficit countries to be squeezed beyond the politically tolerable would be fundamentally mistaken. At times, their arguments seem to lack any reference to reality and resemble delirious fantasies of the sectarian. A somewhat similar clinging to a delirious dream also characterizes the non-German federalists who make the running in their respective countries, though their motives are dissimilar and much less idealistic.

Another Step Closer To Economic Armageddon

Draghi introduced additional ease into Europe this morning

By Monty Pelerin

A surprise rate cut (67 of 70 economists did not see it coming, which provides a proxy IQ test for these geniuses) created turmoil in markets.

What this means by noon today is unknowable. What it means in a larger context is not:

• Europe is not in good shape. Anyone who believed they were, should be disabused of such notions.
• The forcing down of interest rates once again further exacerbates the longer-term mis-allocation of resources. Such actions may buy time, but only at the cost of greater problems down the road.
• Maco-economics is failed witchcraft which should be apparent to anyone paying attention. Yet it will continue to be used to justify “remedial” actions out of desperation.
• Governments around the world have only this hammer (liquidity/stimulus). They will hammer away even though that cannot solve the problem(s).
• Liquidity and stimulus will not end in the US or Europe until markets end it. The market ending will be either an implosion or a crack-up boom. Either is possible at this stage.
• Governments are in full pretend mode. They have no control over the situation other than to fool people into believing that things are getting better.
• The policies employed by governments ensure the destruction of economies and themselves. Governments spiral downward toward defaults and bankruptcy that will take economies with them.
• Currencies are being destroyed in terms of purchasing power.
• Nothing is being done to correct economic problems. Politics has deemed true remedies too severe. They are off the table, replaced by extend and pretend actions.
• The shelf-life of this government fraud is limited. Economic Armageddon is coming.

The frustrations of watching this play out are huge. So too is the knowledge that this entire scheme jeopardizes more than living standards and economies. It threatens the very future and quality of civilizations themselves. 

The Outrage Arrives

You can't keep your insurance because Democrats don't want you to control your own health-care spending

By By HOLMAN W. JENKINS, JR

The White House has issued a clarification. When the president said if you like your insurance plan you can keep it, what he meant was you can keep it if he likes it.

Hundreds of thousands of Americans who are getting policy cancellation notices this month can't be as surprised as they pretend to be. President Obama made it clear at his 2010 health care summit what he thought of their taste in insurance.

"It's the equivalent of Acme Insurance that I had for my car. . . . It's basically not health insurance," he explained. "It's house insurance. . . .

"I'm buying that to protect me from some catastrophic situation; otherwise, I'm just paying out of pocket. I don't go to the doctor. I don't get preventive care. There are a whole bunch of things I just do without. But if I get hit by a truck, maybe I don't go bankrupt."

Notice his disdain for those who buy high-deductible policies to protect themselves only from unexpected and unmanageable health-care costs. They are too cheap or too dumb to reach into their own pockets for necessary care that isn't covered by their policy or triggers the deductible.

These customers might like their plan. Their plan might even be the best cure, as many experts believe, for what ails our health-care system, namely too much incentive for Americans to overconsume health care. But Mr. Obama doesn't like their plans so they can't keep them.

Democrats at least are consistent. Back in 1993, during the fight over HillaryCare, Mrs. Clinton explained Democratic reasoning to then-House GOP Leader Denny Hastert. If Americans are allowed too much discretion over how they spend their health-care dollars, Mrs. Clinton said, "We just think people will be too focused on saving money and they won't get the care for their children and themselves that they need . . .

"The money has to go to the federal government because the federal government will spend that money better."

Not only was it deliberate ObamaCare policy to make sure plans millions of Americans like would no longer be available, forcing them to buy more coverage than they want or need. NBC reports that the White House—as Mr. Obama was promising Americans they could keep their current plans—was estimating at least seven million people would not be allowed to keep their current plans.

In drafting rules to put ObamaCare into effect, the Health and Human Services department under Kathleen Sebelius tightened the grandfathering eligibility to make sure even more people would be forced to switch to the excessively costly policies that Mr. Obama wants them to buy. Mr. Obama says he cares about your incentive to get preventive care or tests that you may not get if they don't appear to involve a free lunch.

But the truth is, he wants you to pay for coverage you'll never use (mental-health services, cancer wigs, fertility treatments, Viagra) so the money can be spent on somebody else.

A nod goes to the Los Angeles Times, whose coverage of the inequities of ObamaCare has been exemplary. On Monday, it set the political world afire with a story about thousands of Californians losing coverage. "This is when the actual sticker shock comes into play for people," UCLA health-care researcher Gerald Kominski told the paper. "There are winners and losers under the Affordable Care Act."

Welcome to the United Police States of America

There comes a time when silence is betrayal

By John W. Whitehead

No longer is it unusual to hear about incidents in which police shoot unarmed individuals first and ask questions later. What is unusual is our lack of outrage, the relative disinterest of our elected representatives, the media’s abysmal failure to ask questions and demand answers, and our growing acceptance of the status quo in the United Police States of America—a status quo in which “we the people” are powerless in the face of the heavy-handed tactics employed by the government and its armed agents.

However, as I document in my book A Government of Wolves: The Emerging American Police State, it’s all part of the larger police state continuum. Thus, with each tragic shooting that is shrugged off or covered up, each piece of legislation passed that criminalizes otherwise legal activities, every surveillance drone that takes to the skies, every phone call, email or text that is spied on, and every transaction that is monitored, the government’s stranglehold over our lives grows stronger.

We have been silent about too many things for too long, not the least of which is the deadly tendency on the part of police to resort to lethal force. However, as Martin Luther King Jr. reminded us, “There comes a time when silence is betrayal.”

Fiscal Cancer Hits Home

Kiss Your Pension Goodbye

By Dennis Miller

I was on the reunion committee for my 50-year high school class reunion a few years back. As we tried to track down classmates, we discovered that many—including a few I had known quite well—had died from lung cancer. These folks would light up a cigarette, joke about cancer sticks, cough, and make fun of their addiction. They ignored their symptoms and the constant warnings from their families and doctors, and they suffered the ugly consequences.

Former US Comptroller General David Walker appeared on 60 Minutes back in July 2007. His message? Our country is suffering from a fiscal cancer far more dangerous than any external threat. The federal government is broke. It has promised entitlement benefits—health care in particular—that it cannot afford. While few economists disagreed with Walker's projections, politicians were unwilling to actually address the problem. From their standpoint, it's always better to push the problem off to a later date in the vain hope (or delusion) that it will simply disappear.

Walker eventually gave up trying to educate politicians and took his message straight to the people. The Wall Street Journal referred to him as "Chicken Little," and no one in Washington wanted to hear his doom-and-gloom message. After all, the economy was fine (remember, this was 2007). They either could not or would not see the problem. Walker was ignored.

Since then, the fiscal cancer Walker warned of has continued to grow. In July 2007, our national debt was $8.9 trillion. Six years later, it has nearly doubled to $16.7 trillion. The cancer has metastasized.

A Different Fiscal Cancer Hits Closer to Home

While the fiscal cancer Walker warned of continues to grow, pensioners are about to battle another type of cancer—one that is eating away at the money they thought would sustain them through retirement.

The Road to Decline

America’s Self-Inflicted Wounds

By Ting Xu

It is alarming to read the campaign advice that Marcus Tullius Cicero, the great Roman orator, received. Cicero was encouraged to inflame his opponents with scandals, pay special attention to the wealthy and powerful, keep up the hope of the zealous and devoted, put on good shows and “promise them anything” they want and forget about it. His successful campaign mirrors today’s political theater in America. But Cicero’s devotion to political maneuvering did not protect him (he was murdered by Mark Antony during his pursuit to become dictator of the country), nor the Roman republic. The sad story of the blunt calculating brilliance of Cicero and the fall of the great Republic should serve warn America: freedom and democracy are not free.

America’s greatness was very much a function of the visionary pragmatism of its founding fathers. The common sense decision to pursue liberty, equality and individual well-being was achieved through creativity, openness and consensus based on compromise.  American leadership internationally is based on not only its economic prosperity, but also the sense of hope it brings to those who seek peace and development. The country has achieved great things and the American dream stays alive in a society that offers all the possibilities that are created because America is a leader in the pursuit  of open markets, technological innovation, and equal opportunity.

Self-Esteem vs. Self-Respect

Different as depth and shallowness

by Theodore Dalrymple
With the coyness of someone revealing a bizarre sexual taste, my patients would often say to me, "Doctor, I think I'm suffering from low self-esteem." This, they believed, was at the root of their problem, whatever it was, for there is hardly any undesirable behavior or experience that has not been attributed, in the press and on the air, in books and in private conversations, to low self-esteem, from eating too much to mass murder.

Self-esteem is, of course, a term in the modern lexicon of psychobabble, and psychobabble is itself the verbal expression of self-absorption without self-examination. The former is a pleasurable vice, the latter a painful discipline. An accomplished psychobabbler can talk for hours about himself without revealing anything.

Marx and Left Revolutionary Hegelianism

The End of History that Wasn't

[This article is excerpted from volume 2, chapter 11 of An Austrian Perspective on the History of Economic Thought (1995)

by Murray N. Rothbard

Hegel's death in 1831 inevitably ushered in a new and very different era in the history of Hegelianism. Hegel was supposed to bring about the end of history, but now Hegel was dead, and history continued to march on. So if Hegel himself was not the final culmination of history, then perhaps the Prussian state of Friedrich Wilhelm III was not the final stage of history either. But if it was not the final phase of history, then mightn't the dialectic of history be getting ready for yet another twist, another Aufhebung?

So reasoned groups of radical youth, who, during the last 1830s and 1840s in Germany and elsewhere, formed the movement of Young, or Left, Hegelians. Disillusioned in the Prussian state, the Young Hegelians proclaimed the inevitable coming apocalyptic revolution to destroy and transcend that state, a revolution that would really bring about the end of history in the form of national, or world, communism.