Monday, August 17, 2009

Catching With a Vintage Baseball Glove

I spent most of the baseball seasons from 1974 to 1979 either playing baseball, poring over my baseball cards, reading about baseball, or daydreaming about baseball. I thought back then that if there were any justice the universe, someone who loved baseball as much as I did would have to be a big leaguer some day. Well that did not happen but I continued on as a fan until I lost interest finally during the steroid era. Since I have had only a lukewarm interest in baseball for the last ten years or so, I from time to time quip that I have forgotten more about baseball history than most people know. I believe this to be literally true.

When my daughters expressed an interest in playing fastpitch softball recently, my interest in baseball was rekindled. As I played catch with my daughter I realized how much I loved and missed baseball. Not so much the modern game, where most players hideously wear their baseball pants down over their socks, but the game before the modern glove, say, before World War 2. I had been a Yankee fan for most of my life but I had always been captivated by the picture of the sliding Pepper Martin of the 1934 "Gashouse Gang" St. Louis Cardinals that hung on my bedroom wall. That picture captured the raw, hustling, and fun style of play I loved and tried to emulate as a skinny shortstop for the Thatcher Men's Club team of the Elmira Small Fry baseball league. So in my rebirth as a baseball fan, I decided that it was the St. Louis Cardinals for me. Again, I am not as much a fan of the modern team but of the 1934 World Series Champion team. My favorite player on the team is Joe Medwick. He was also Yogi Berra's favorite as a youth growing up in St. Louis.

The evolution of the baseball glove has always fascinated me. Just looking at an old glove that is so small and has not even got stitching between the fingers makes one wonder how those old timers caught a ball with those things. On the other hand, I was always contemptuous of the modern "peach basket" gloves that emerged during my youth and are still going strong. They just seemed like cheating to me. So I simply had to buy a vintage glove and try it for myself. I won a Joe Medwick autographed model on ebay. What follows are my observations on catching a baseball with a vintage glove.

My first observation is catching with vintage glove requires a more heightened level of alertness than a regular glove. Playing with a modern glove is fun but can be a pretty nonchalant venture. One needs to be on his toes and two hands should be used on every catch possible with a vintage glove or you will drop a lot of balls.

Next, vintage gloves can hurt. My hand swelled considerably after catching about twenty balls tossed underhand in to the air. This taught me that catching a baseball with a vintage glove was very much like catching a football: catch with two "soft" hands taking momentum off the incoming ball by easing it in toward your body and quickly get it into your throwing hand. If ESPN calls great fielding plays "Web Gems" because most great catches are made in the web of the modern glove, then great plays with a vintage glove should perhaps be called "Palm Pearls".

Finally, it is clear that there are balls that would be easy catches with a modern glove that will not be caught with a vintage glove. Chances that come in low to the backhand side are the toughest to deal with.

Catching and throwing a baseball is one of life's purest joys. There is nothing wrong with a modern glove, but every baseball lover should experience catching with a vintage glove. It is pure bliss.

Sunday, August 16, 2009

How I Rediscovered Swill Beer

Like many folks these days, I have in varying degrees incorporated red wine, coffee, tea, cocoa and even beer into my daily routine after reading about their health benefits. Concerning wine and beer, let it be said that I have never been a big drinker. I started trying to drink one beer like a porter, stout, or pale ale every day because I read that they had the most antioxidants; I did grow to actually like them, savoring them for their taste. This despite the fact that, as my daughter reminded me, I do not drink beer for the taste but for the health benefits.

My trip into porters, stouts, and pale ales led me into the fascinating world of craft brewing. Craft brewing, or micro-brewing, is a classic reaction to the kind of blandness that inflicts many mass-produced products. Mass production has always helped the common man; it also creates the opportunity for small time producers who can make custom, niche products often with "snob appeal".

To most craft brewers, mass-produced beers of Anheuser-Busch, Coors, and Miller are "swill", unworthy of the beer connoisseur. Thus the craft brewing culture bred a new kind of beer drinker, the beer snob. The beer snob often claims to be able tell what kind of barley, hops, yeast, and adjuncts are used in a beer and render a verdict on said beer's worthiness. "Adjunct" is dirty word in the world of beer snobbery. An adjunct is some other grain, usually corn or rice, that brewers of swill use to replace some of the barley malt of the standard water, barley malt, hops, and yeast that make up beer. Use of adjuncts by craft brewers is a cardinal sin to many beer snobs.

I must admit to becoming a small time beer snob myself. I had sworn off any beer produced by Anheuser-Busch, Miller, or any huge brewer. I rationalized that these beers just did not have the taste or health benefits of the porters, stouts, and pale ales I was drinking at a rate of one bottle per day or less. However, I discovered a craft beer, Session Lager, by the small Full Sail brewery in Oregon that would become my bridge back into mass-produced swill.

American beer before Prohibition was dominated by the lagers of 19th Century German immigrants which had displaced the ales of early American times (many of the framers, like Washington and Jefferson, brewed their own ales). It was the German brewers who introduced the adjunct, usually corn, that would characterize American beer. Corn was introduced to tame the the flavor of the six-row barley available in America (German brewers had used two-row barley in Europe). American beer was always lighter in flavor and easier to drink that its European counterparts. Americans were hard-working and America has a hotter climate than Europe so this style, American lager, fit right in.

Prohibition destroyed the American lager. The beer produced after Prohibition, was even lighter. This was the "Western lager" of Coors, Anheuser-Busch, and Miller, the beer that the modern craft brewing movement reacted against and demonized as "adjunct-laden swill". Enter Session Lager.

Some craft brewers decided that pre-Prohibition American lager was not so bad and might be an interesting brew, if only to provide a nice summertime "lawnmower" beer. Session Lager is such a beer. It comes in cool 11-ounce retro stubby bottles. I picked up twelve on a lark and was enchanted. I decided that Session Lager was my new beer of choice. Ever cost-conscious, however, I began to eye the sub-premium swill at the end of the beer cooler like Busch, Milwaukee's Best, etc. with renewed interest. I remembered from my youngers days that of all the awful cheap beer I ever drank, Busch was the best. So I picked up some Busch beer. To my surprise, it wasn't much different than Session Lager. If fact, it was really just as good at two-thirds the price.

So here's my advice: reconsider the swill that you have abandoned. You may be surprised by American lagers that are perhaps more respected around the world than they are in America.

Monday, July 20, 2009

Hot Stove League 1933-34 Part 2

In the midst of our "Great Recession", we should be glad that things, so far, aren't as bad as during the Great Depression of the 1930s. For comparison, we could note that professional sports today are not nearly as bad off as the most popular sport of the Great Depression, big league baseball. However one thing today is much worse: the economic ignorance of the public.

For illustration of this ignorance, I point to the "vulgar Keynesian" notion that consumer spending drives the economy expressed in the absolutely absurd blog post of Washington Redskin Chris Cooley entitled, "Albert Stimulates" which renowned hot air dispenser Jim Rome gushed about . Cooley wrote a tour de force of banality with gems like: "NFL players and new NFL contracts are an fantastic way to stimulate the economy." and "Oh, and lets not forget our friendly car and home taxes - over [$]30,000 a year for me, fun times." Cooley actually celebrates the fact that half of his earnings are eaten by taxes!

Here are the wonders Cooley tells us the big salaries of professional athletes are doing for the economy: "Cars, houses, clothes, food, women, jewelry and all of it at a rapid pace." Lost on Cooley is that the money spent "lavishly" by athletes does nothing special for the economy. "Let's also consider what the market needs for any type of a bottom, or a rebound. Well I guess I can't consider myself enough of an expert to start to explain that but, I'm thinking if we could get someone to stop selling off all their shit and start buying back in I think we would have a start." Again, apparently lost on our oracle of the gridiron is that if someone is selling, someone else must be buying, "So if I was receiving a enormous contract this year I may figure it would be a great time to buy some 50 -75 percent off stock." For him to buy, someone must be selling off.

Cooley sums up his assault on clear thinking, "Huge contracts for athletes mean one thing. Shit tons of money will be poured back into our country. You think these guys are slow play investors who will sit on their money like a goose. Absolutely not, their money is being spent, no questions asked."

A far cry from economic ignorance illustrated by the pompous Chris Cooley, was the good sense displayed by sportswriters, team owners, and baseball players of the 1930s. While the New Deal administration of Franklin D. Roosevelt had largely bought into the fallacious idea that consumer spending drives the economy (this in spite of the fact that FDR actually campaigned against the outrageous spending of the Hoover administration which had also bought into the spending driven economy), many Americans, including baseball players and owners, understood that cutting costs, making sacrifices, and providing a better goods and services were the only way to survive the hard times.

Baseball actually faced financial difficulties, "A man can't go to a baseball game when he hasn't any money." said Commissioner Kennesaw M. Landis in 1933. Fortunately, while much of the rest of the economy was being regimented under the NRA's Blue Eagle (ala Mussolini's fascist program in Italy) to regulate wages (keep them artificially high) and production, baseball teams could be thankful that they remained free to cut costs and run their business without the interference of NRA bureaucrats.

With regard to salaries the great John J. McGraw said, "Salaries must come down...owners are losing too much money." Come down they did. Sid Keener of the St. Louis Times Dispatch reported that average salaries were down to about $7500 (about a 25% drop), still only a little lower than the peak salary for a great of an earlier time, Christy Mathewson, who made only $10,000. Salary cuts also caused something that may surprise today's sports fan. There was actual concern as to whether playing baseball was a better deal than some other line of work. But Cardinal GM Branch Rickey said that even at a salary like $6500, a player should be able to save $5000 a year. So after only a handful of seasons a player could have a nice nest egg set aside; Rickey said that the Cards had more men than they could use willing to play baseball. Superstar Dizzy Dean's wife told how she refused a wedding ring until after they had a house paid for "free and clear". In contrast, apparently following the Chris Cooley school of profligate spending, 60% of NBA players are broke in five years making salaries that dwarf those of 1930s baseball players.

Also to save money, rosters were cut from 25 players to 23; the eventual champions of 1934, the "Gashouse Gang" St. Louis Cardinals only carried 21 players for most of the season. Also to save salary cash, the 1930s saw many player-managers, who had little help running the club: Frankie Frisch of the Cardinals, Bill Terry of the 1933 champion New York Giants, Charley Grimm of the Cubs, Jimmy Wilson of the Phillies and Pie Traynor of the Pirates among others. Contrast to FDR and his "Brain Trust". Babe Ruth actually made more money in 1934 doing radio broadcasts sponsored by Quaker Oats than from his baseball salary. The Boston Red Sox for 1934 became the first team to offer profit-sharing with players to inspire them to win and thus draw more paid attendance. Most players understood the need to cut salaries. "Pepper" Martin of the Cardinals said, "Shucks, no one's interested in what they're paying want to know what kind-a year I'm going to give 'em...Pep'll be hustling, giving his best and trying all the time." I wonder if Chris Cooley and the spoiled brats of modern sports could say the same after taking a pay cut.

Owners also debated the merits of radio broadcasting. Some, like the Cubs and Pirates, allowed the broadcast of their games by radio while others did not, thinking radio broadcasts lost more business than they brought in. Owners hoped that the resumption of alcohol sales with the repeal of prohibition in 1933 would also boost business. Night baseball was considered (and vetoed) between 1933 and 1934 to allow more people to make it to the ballpark without interference with work hours. Another change, perhaps to enliven fan excitement, was the National League's adoption of the American League's livelier baseball.

The 1934 season was still a tight situation for baseball despite the cost cutting. In the Pittsburgh Press, Chester L. Smith made a series of suggestions to stem the tide of red ink: replace the male concession vendors with pretty girls, replace the megaphone announcer in many parks (like Sportman's Park in St. Louis) with a public address system, put all games on the radio, and sell beer at the ball park.

The major leagues survived the Great Depression without any direct help from the New Deal by attempting to run their businesses more frugally and offer a more entertaining product. Fortunately, owners were not hampered in their efforts by the kind blithe ignorance that had infected the government at that time and that now infects practically our whole populace.

Wednesday, July 15, 2009

Hot Stove League 1933-34 Part 1

Tuesday night's All-Star game featured zero home runs and a brisk pace by modern standards, ending in two and a half hours. The winning tally in a 4-3 contest was manufactured by a hustling triple and an opposite field sacrifice fly. Here is the round tripper-free scoring summary:

Top 1st: American
- M. Teixeira reached on fielder's choice, D. Jeter scored, J. Mauer to second on first baseman A. Pujols' fielding error
- J. Hamilton grounded into fielder's choice, J. Mauer scored, M. Teixeira to third, J. Bay out at second

Bot 2nd: National
- Y. Molina singled to center, D. Wright scored, S. Victorino to third, S. Victorino scored, Y. Molina to second on center fielder J. Hamilton's throwing error
- P. Fielder ground rule double to left, Y. Molina scored

Top 5th: American
- J. Mauer doubled to left, D. Jeter scored

Top 8th: American
- A. Jones hit sacrifice fly to deep right, C. Granderson scored

With the top active home run clouters mostly absent from the all-star showcase, perhaps a new era of baseball is emerging, harkening back, if not to the Dead Ball era, at least to the relatively less lively ball of the National League 1920-1933.

Baseball history has the neat dividing line between the pre-1920 Dead Ball era and the Live Ball era which has prevailed ever since. Few are aware, however, that the ball of the National League from 1920 to 1933 was by no means a dead ball, but was merely a "livelier" ball.

The Great Depression perhaps influenced the National League in 1934 to adopt a new onion "stabilized" to the vivacious sphere used in the American League. The reasoning was reminiscent of that used to market sports to non-fans in modern sports. Scoring, scoring, scoring and more scoring was thought to bring in ladies and children. De-emphasized would be the subtleties that true fans loved: the stolen base, the hit and run, the double stretched into a triple. Why bother trying to squeeze out extra bases risking an out when the mighty swoop of a home run will score a runner from first as well as from third?

John E. Wray of the St. Louis Post Dispatch used the terminology of the time to deride the new ball's effect on the game:

"The new deal baseball would act like the New Deal dollar is supposed to---it would stimulate business...It is the prevailing belief that the public worships at the shrine of the Big Wallop...As regards the Knot Hole Gang [kids in St. Louis who watched the game through knot holes in the wall around Sportsman's Park] and the free ladies' day patronage, this is true. With many of these the climax of the game is...a knock over the wall. Whether the lively ball or the batter's prowess accomplishes this doesn't concern them. But the old "die hard" boys who like to see a run EARNED will never be reconciled to seeing a tally gained by intelligence and planning offset by a rubber-cored wallop over the roofs."

Damon Runyon wrote this in the New York American after two games in the 1934 season: "At the rate of 13 or so a day, there may be 2,000 homers hit by the end of the season, making the game more and more a matter of slug and run home."

"The introduction of the lively ball to the National League has meant a decided new deal for batters. A check of 45 regular players shows they made at total net gain of 1,227 points in their batting averages over their 1933 rate at a corresponding date. That's not recovery, it's pure inflation." wrote Caswell Adams in the New York Herald Tribune on June 20, 1934. By July 24, Sid Keener declared in the St. Louis Star Times, "Mr. Lively Baseball is all the pitchers complain about. The National League has increased its batting average from .266 in 1933 to .282 in 1934."

Like the New Deal, the new lively ball did not revive the fortunes of baseball or the general economy. "There's red ink on many baseball ledgers where red ink never went before. More money's in circulation than in the past two years. Why aren't baseball clubs getting their share of it?" opined Chester L. Smith of the Pittsburgh Press.

Whether it was due to juiced players, a juiced ball or deflated pitching, the late era from the mid-nineties to mid-aughts has been just what Damon Runyon described as a matter of "slug and run home". As a lover of the older game of speed and strategy, I was turned off by this era of home run "inflation". This was also an era of Fed credit-induced bubbles, first in tech stocks then in real estate. As increased frugality in our personal economies becomes more prevalent in this era of popped bubbles, hopefully the new crop of All-Stars will signal a new modesty in power hitting. We all scrap for a living and sacrifice some luxuries; hopefully ball players will scrap for extra bases and make more sacrifice flies for winning runs as in last night's game.

Saturday, June 13, 2009

Terraplane Rock

Here's a song I made up a while ago that I've wanted to record in some form. This is done very primitively.

The song is loosely based on Robert Johnson's "Terraplane Blues". In Johnson's song, nothing goes right so it's blues. In mine everything is going fine so it's rock. It's a basic I-IV-V type song that has been done a thousand times. My favorite song that uses this basic structure is "Rev It Up & Go" by the Stray Cats. Since the guitar is too loud, here are the lyrics:

The ride is so good can't you hear the engine moan;
Yeah, the ride is so good can't you hear the engine moan;
I been ridin' that Terraplane since I been home.

Flip my switch and your horn it starts to blow;
Yeah, flip my switch and your horn it starts to blow;
We're making a connection somewhere down below.

Pop your hood and baby I'll check the oil;
Yeah, pop your hood and baby I'll check the oil;
Then we'll ride that Terraplane until it boils.

Cause it's rock, rock, Terraplane rock;
Rock, rock, Terraplane rock;
Yeah, rock, rock, Terraplane rock;
Cause it's rock rock rock, Terraplane rock;
I been been rockin' that Terraplane since I been home.

For those who care, the amp is my little Crate GX-15R with the Gain on 10, Reverb on 7, and volume about 2. My homemade guitar is pine with a particle board top and a Danelectro Lipstick pickup wired direct to the jack.

I hope you enjoy it.

Thursday, June 11, 2009

If You Can't Hum It, It Ain't Music?

To be sure, I'm a big fan of Gary North's work. Occasionally, however, Gary moves outside of his field of expertise and the results aren't always pretty. His guitar play list was, as I said in my previous post, fine. It was not, though, even close to a representation of what has been accomplished with the guitar by its greatest players. I made a video play list in response which included Eddie Van Halen, Steve Vai, Joe Satriani, Junior Brown, and Brian Setzer.

Mr. North replied to my post via email:

"Technical virtuosity is no substitute for a lack of musical taste.

If you can't hum it, it ain't music."

While I agree that technical virtuosity is no substitute for musical taste, let me translate Gary North's first line: the guys on your list blow away the guys on my list so rather than acknowledge that I'll fall back on something nebulous like "taste".

All of the players from my list are virtuosos with great taste (Brian Setzer won a Grammy for his version "Sleepwalk", a song played by many prominent guitarists who didn't garner that award). So we just disagree on this point--fine. I also had to take issue with the second statement, "If you can't hum it, it ain't music".

Here are some absurd conclusions that flow from this "Humability Standard":

1. Chords (three or more consonant notes played together) are not music since a person can only hum one note at time. A trio humming together could make music with chords; North's "you" would be a plural in this case.

2. Since the capacity of the lungs, which humming depends on, is limited, if some series of notes goes on rapidly and long enough that the hummer(s) must take a breath and therefore miss a note, the sounds are no longer music.

3. If sounds are being played rapidly enough that the pitch being hummed cannot be changed rapidly enough to keep up, the sounds are not music (sorry "Flight of the Bumble Bee").

4. Any notes not within the human vocal range are not music since they can't be hummed.

So the "Humability Standard" in defining music introduces an arbitrariness, i.e., every person can call the same sounds "music" or not according to their own vocal range, lung capacity, and ability to rapidly change the pitch of the notes to be hummed. So what is music to Mariah Carey may not be music to the rest of us.

"If you can't hum it, it ain't music" has a folksy charm, but it's the same sort of nonsense a father of a generation ago might have used to dismiss the rock and roll racket coming from his son's room that the son apparently mistook for music.

My players are far better than Gary's and his reply was as absurd as legendary classical guitarist Andres Segovia's statement that the electric guitar wasn't even a musical instrument.
Segovia actually broke off a possible professional relationship with Chet Atkins when he learned that Atkins played electric guitar. I'm also pretty sure that the players in his list would agree that they do not measure up to the players on my list.

Tuesday, June 9, 2009

Guitar Heroes

The electric guitar is simply the most expressive musical instrument in the world.  I’ve written in the past on my opinion of the world’s greatest guitar player, Brian Setzer.  Gary North recently published a video compilation of his favorite players.  Gary had some interesting picks but they were nowhere near the best playing in the world. So let me get started with some of my favorites.  There is always room for debate in these matters but I believe that my compilation will get the reader much closer to witnessing the greatest playing of the electric guitar.

Let’s start with what I call the Pyrotechnic School.  Its founder is Eddie Van Halen.  If you think of a man in front of a wall of speakers commanding their awesome sonic power with a guitar as a hero, then any dictionary entry for “guitar hero” should have EVH’s picture next to it.  His school is characterized by lighting speed all over the fretboard, screaming harmonics, whammy bar gymnastics, volume knob manipulations, double hammer tapping techniques, and anything generally that squeezes new sounds out of the electric guitar in a musical way.  Here is EVH is his prime doing a guitar solo back when that was one of the highlights of any rock show:


One might complain that this was just self-indulgent parlor tricks.  Perhaps, but it is what the crowd wanted to hear and any VH fan would recognize the improvisations on the “Little Guitars Intro”, the intro to “Mean Street”, “Spanish Fly” and of course the iconic “Eruption” itself.  Eddie Van Halen also has the greatest catalogue of songs of any hard rock player.

Next is Steve Vai.  He first came to prominence as Eddie Van Halen’s “replacement”, playing with former Van Halen singer David Lee Roth.  Steve Vai is far from a Van Halen clone; in some ways he has taken EVH’s style to another level.  Steve Vai is a genius in his own right.  Here he plays "For the Love of God":

To watch genius at work, check out Steve Vai explaining his song, "Freak Show Excess":

The last of the Pyrotechnic School I will highlight is Joe Satriani.  His original album "Surfing With the Alien" was an incredible introduction to another man who has been a true original.  Here is "Surfing With the Alien":

If that doesn't satisfy, there's always Satriani's incredible "Satch Boogie":


Now I shift gears to the amazing psycho-country of Junior Brown.  He was a real inspiration to me in combining guitar solos with cool songs.  Here is one of his coolest, "I Hung It Up":

Finally I give you the man, Brian Setzer.  No matter what the genre, rock, country, jazz, classical or any combination thereof, Brian Setzer can stand out; he's a master of virtually all that has preceded him and a great creator himself.  His style is also very friendly and catchy.  Here he plays "Guitar Rag" and then "Sleepwalk":

There are many others that could have been included, Danny Gatton and George Benson to name a couple, but this should give anyone a super introduction to the best of the greatest musical instrument known to man: the electric guitar.

Here's the author's minor contribution to cool guitar playing:

Wednesday, March 25, 2009

History of Paper Money Fraud

Another bow tie wearer, Lawrence Parks, explains the fraudulent process by which we've ripped off by paper money.

Saturday, March 21, 2009

Save the World? Learn Economics

The recent death of actress Natasha Richardson has given the socialized medicine of Canada another black eye. After the original 911 call, it took four hours to get Richardson to a hospital in Montreal because Quebec has no medical helicopter system. "Our system isn't set up for traumas and doesn't match what's available in other Canadian cities, let alone in the States," said Tarek Razek, director of trauma services for the McGill University Health Centre, which represents six of Montreal's hospitals." In a brilliant analysis of what's wrong with socialized medicine, Bill Anderson points out that countries with socialized medicine systems are always relatively under-supplied with capital goods, like medical helicopters. Anderson's county of residence has 80,000 people and more MRI machines than Montreal which has several million residents. It is numbers like these that lead to the quip that it is easier in Canada to get an MRI for one's dog than for one's aunt.

Today, wealthy Canadians can simply bypass Canada's inferior health care system (provided they are not in the same situation Natasha Richardson was in) and get medical care in the relatively capitalist U. S. system. Were the United States to adopt a system like Canada's, health care would eventually be much worse than it is today. Wealthy Americans would bypass this new American system by going out of the country to a hospital that will allow doctors, likely refugees from the U.S., to cater to them. Thus the limousine liberals who advocate socialized medicine for the masses know that they themselves will not have to wait in line for health care.

The bigger question, however, is how does someone like Bill Anderson analyze a question of political economy like the provision of health care? Answer: He simply applies knowledge of economic truths to real situations. The fact that we have a system of economic knowledge to draw upon to guide us is largely the consequence of the stubborn adherence to professing the truth of the greatest economist of the 20th Century, Ludwig von Mises. With courage and at great personal and professional cost, he battled the destructive intellectual trends of the last century: historicism, socialism, fascism, interventionism, and any other doctrine which promised prosperity yet was bound to bring misery.

Although Ludwig von Mises believed, like Max Weber, that economic science is value free and should not be influenced by the personal opinions of the scientist, he strongly advocated laissez-faire capitalism. There was no inconsistency. Just as a biologist needs objectivity in studying harmful bacteria, he may be motivated to study the bacteria in order to save humans from the misery the bacteria cause. Thus von Mises had developed economics as "scientific theory without any thought of its political significance". Yet he passionately advocated laissez-faire economics because his critique of interventionism led to the conclusion that interventionist government policies subvert the free choices of individuals and always accomplish the opposite of what the policy makers profess to be the goals of the policy. Laissez-faire is the proper policy is so far as mankind prefers "life to death, health to sickness, nourishment to starvation, [and] abundance to poverty." For Ludwig von Mises, advocacy of laissez-faire was advocacy of civilization itself.

Ludwig von Mises wrote in his magnum opus Human Action "Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen." Can a simple person learn enough economics to actually make sense of the world and evaluate government policy? Certainly. Economics is not, as one might think from browsing through the requirements for a degree in economics from a typical college, the realm of specialists with knowledge that is beyond the comprehension of mere mortals. Physicist Ernest Rutherford is reported to have said, "If a principle of physics could not be explained to a barmaid, ...the problem was with the principle, not the barmaid." So too with an economic principle.

Where to begin learning economics and becoming a citizen qualified to make sound pronouncements on the seemingly endless string of policy blunders by government? I recommend four books for beginners, although there are others. These can be read for free:

The Concise Guide to Economics by Jim Cox

Economics in One Lesson by Henry Hazlitt

What Has Government Done to Our Money? by Murray Rothbard

Economic Policy: Thoughts for Today and Tomorrow
by Ludwig von Mises

Happy reading!

Monday, March 9, 2009

Milkcow Blues in Chandler, AZ

The lack of a capital theory is one of the many problems with mainstream economics. Capital, to most economists, is just a homogeneous blob that they assign a letter, like K, and then use in some Rube Goldbergesque equation, a process that they mistake for actually doing economics (at least Rube's contraptions worked). Real economists, however, have a conception of capital that recognizes its heterogeneity. There are stages of production, each results in goods; some are goods used to make other goods and some are the finished goods for consumer use. This capital structure is created and guided, if left alone, through a system of prices and ultimately reflects the demand of consumers. The upshot of this is that the ship of economy is guided by what Ludwig von Mises called "Captain Consumer". Any forceful interference by the government in the form of law or spending new money, will enable its favored consumers but only by thwarting the demand of other consumers and distorting the capital structure (spending tax revenue also distorts the capital structure in the same way). This kind of distortion can only last as long as the government money continues to flow.

The creation of new money, i.e., inflation, by the government thus creates one of the great ethical problems of our time. When the government creates new money, through the central bank (either by creating reserves for the banking system or financing government deficits), the capital structure of the economy becomes distorted. Certain ventures boom, like residential real estate. However other ventures, that would have been supported by consumer demand, are starved as resources flood into the favored venture and industries that support it. Inevitably the money spigot is turned down and these once-booming enterprises go bust--effecting not only those directly involved, but also many innocents in a radiating pattern of economic doom.

Chandler, Arizona provided a microcosm of this process in action. Chandler historically was a rather sleepy farming town, with dairy farms supported mostly by local grain fields. Its main claim to fame was Arizona's first vacation resort, the San Marcos Hotel. The gradual process of farms giving way to residential and commercial real estate development accelerated in the 1990s and was at a full gallop in the new millennium until the real estate bubble burst in 2008. Having been a Chandler resident since 1996, I had a front row seat. If, as Jim Rogers predicts, the farmer in the future will be driving a Lamborghini by producing food for an ever-hungrier planet, the Chandler dairy farmer got Lamborghini-rich in the near past by selling his farm to ever-hungrier real estate developers. Thus driving Chandler roads gradually became a less aromatic experience.

The ethical problem with new money and credit creation (which would be simple counterfeiting if done by a non-government entity) comes from the shotgun blast of pain that is suffered by parties not involved directly in the credit-creating event, specifically of late, the mortgage contract. In Chandler, many productive farms that could help feed the local population are gone, replaced by residential areas suffering from high foreclosure rates. The symbol of the real estate bust in Chandler is, perhaps, the bankruptcy of Fulton Homes. Its upscale development in Chandler called Fulton Ranch now lies well short of finished. If the future of the world food supply is as dismal as some think, we may miss the farms lost here in Chandler. Chandler is but a small example of the Federal Reserve's credit-induced distortion of the capital structure, the excesses of which need to be liquidated so that capital can be put into the hands of productive capitalists, serving Captain Consumer.

The Fed's credit-induced boom and bust calls into question the need for a government-sanctioned counterfeiter of last resort to encourage recklessness in the lending practices of financial institutions, bringing pain to the entire economy. The position here at Bow Tie is clear: END THE FED.

Post Script: Hear my witty song inspired by a now-defunct diary farm in Chandler: "Milkcow Blues".

Thursday, March 5, 2009

Jim Rogers

One of my bow tie heroes, Jim Rogers, on our current state of affairs.

Friday, February 27, 2009

Empire Skit

Skit 1: Money

Skit 2: Taxation and Inflation

Skit 3: Empire

Dramatis Personae 

King Roosevelt II—tyrant

Sir Hamilton--advisor to King Roosevelt II

Duke of Delanoleader of King Roosevelt’s army

King Grover—honest king from neighboring kingdom

Sir Ludwig—advisor to King Grover

Duke of Cincinnatus—leader of King Grover’s militia

Thaler—honest minter now living in Grover’s kingdom



Scene 1

The castle of King Grover

Narrator—Here we find King Grover considering a problem with the neighboring kingdom of King Roosevelt I 

King Grover—This urgent message from King Roosevelt could mean trouble; it seems he’s unhappy about our merchants redeeming the paper money from his kingdom for gold.  It says that his King’s Bank is running dangerously low on gold and silver and is threatened with bankruptcy. 

Enter Sir Ludwig

Sir Ludwig, have you given any thought to the recent message from King Roosevelt.  The neighboring king is displeased with our merchants.

Sir Ludwig—First it should be said that if King Roosevelt were not fighting aggressive wars and living in extravagant luxury, he would not need to have his bank printing so much paper money.  Our merchants are simply redeeming what is owed them.  This should never give an honest merchant or king any trouble.  You, King Grover, set an example of just rule; you tax only enough to pay for the royal police and royal courts with only a modest castle, no permanent army, and a strong navy to protect our merchant ships from pirates.

King Grover—I do try to always do what is right and rule justly, but what are we to do if King Roosevelt threatens war?

Sir Ludwig—I do not believe it will come that at first.  I expect that the king will simply declare that the paper money of The King’s Bank will no longer be redeemable in gold or silver.  I have heard some reports that he has already done this to the subjects in his own kingdom.  Our main concern is what will happen to trade between our countries.

King Grover—What do you mean?

Sir Ludwig—When our merchants are no longer able to redeem paper money from The King’s Bank for gold or silver, they will probably not accept it anymore as payment for goods. 

King Grover—Then they shall need to use a different money, no?

Sir Ludwig—Exactly, our merchants and those from Roosevelt’s kingdom will need to do business with honest, redeemable money; the kind provided by honest minters. 


Scene 2

King Roosevelt’s castle 

Narrator—Here we find King Roosevelt, considering a problem. 

King Roosevelt—I thought our paper money plan could go on forever, but foreigners are ruining my schemes by redeeming our paper money for gold and silver; we should have known it would come to this.

Enter Sir Hamilton

Hamilton, have you given any thought to our growing problem. 

Sir Hamilton—We have already taken the first necessary measures; we have made the paper money of the The King’s Bank no longer redeemable for gold and silver for our subjects.  Further we have required that our paper money be accepted for all debts, both taxes and to private merchants.  We have also made it illegal for subjects to own gold and silver.

King Roosevelt—But what about goods that must be bought from other kingdoms?

Sir Hamilton—I will schedule talks, with your permission, between our ambassadors to work out a plan where the royal banks will agree to stop redeeming the others’ paper money for gold and silver.  This should allow us to continue to print paper money as needed and to buy goods from one another.  An exchange ratio between the paper money our kingdom and the paper money of other kingdoms will have to be worked out.  It will add some trouble to our trade with other kingdoms, but should remedy our problems.  In the long run we may have to consider using a single paper money among countries who will agree to do so.  This will create less confusion.

King Roosevelt—But who will be in charge of a such a paper money?

Sir Hamilton—No doubt the country with the largest army, that being us.

King Roosevelt—What about the kingdom of Grover?  He has no royal bank and can’t seem to control his minters’ redemptions of our paper money for our gold and silver.

Sir Hamilton—Such renegade kingdoms as Grover’s will need to be brought into line.  Our message on the subject should have reached King Grover by now.  If we can’t trade with merchants from Grover’s kingdom to buy what we want because they refuse to use our paper money, we will simply take it by force. 

Enter messenger

Messenger—Trouble at almost every branch of The King’s Bank!  The people in mobs are demanding gold and silver for paper money.  Reports of this keep coming in!

King Roosevelt—I thought you said this problem was taken care of, Hamilton!

Sir Hamilton—Once our army has killed a few of these “bank runners” who dare defy the law, order will be restored.

King Roosevelt—Messenger, send for the Duke of Delano.

Messenger—Right away your highness.


Scene 3

Grover’s castle

Narrator—Here we find King Grover considering his reply to King Roosevelt. 

King Grover—I believe a diplomatic solution to our problem with King Roosevelt is best.  War never makes the people better off and must be avoided.

Enter Sir Ludwig

Sir Ludwig—I’ve been thinking about our problem with King Roosevelt; peace must be maintained for the people to thrive. 

King Grover—Exactly, compose a letter to King Roosevelt and I’ll review it with you before we send it.

Sir Ludwig—Right away.

Exit Sir Ludwig 

Scene 4

Thaler’s new mint in the kingdom of Grover

Narrator—Here we find Thaler considering his new situation. 

Thaler—Things are much better here in Grover’s kingdom.  I can mint coins and take deposits of coins for safekeeping without competition from dishonest bankers like Dilutio.  King Grover requires all minters and bankers who take deposits of gold and silver to always have 100 percent of the gold and silver on hand.  I am worried, however.  King Roosevelt has made the paper money of The King’s Bank no longer redeemable for coin.  It’s no large problem as long as some money can be found that our merchants will accept to trade with merchants in Roosevelt’s kingdom.  But King Roosevelt will no doubt be threatened by any money that competes with his own.  He may try to stop the use of all honest money in his kingdom.  If he does this, most trade between our merchants and theirs will stop.

Scene 5

Grover’s castle 

Narrator—Here we find King Grover and Sir Ludwig going over a letter meant for King Roosevelt. 

King Grover—Excellent, we can only hope that King Roosevelt will see the error of his ways.  He needs the trade between our nations to continue as much as we do.  We are ready to defend ourselves, nonetheless; our citizens have always been great soldiers willing to defend their country.

Sir Ludwig--- I certainly hope it doesn’t come to war. 

Enter the Duke of Cincinnatus 

Duke of Cincinnatus--- The local militia commanders have been put on alert  

King Grover --- Very good, we cannot afford to take any chances.

Scene 6

Roosevelt’s castle 

Narrator--- Here we find King Roosevelt and Sir Hamilton going over the message from King Grover.

Sir Hamilton--- Confound that Grover!  He leaves us no choice but war.

King Roosevelt--- I am afraid you are right again.  The unpleasantness with “bank runners” has, as you predicted, been put down for now.  Perhaps a new war with Grover will rekindle the patriotism of our people. 

Sir Hamilton--- At least it will give us another pretext for rounding up unpatriotic citizens who complain about the banks.

Enter the Duke of Delano

Sir Hamilton--- Duke, as I, ahem, we feared, King Grover is being uncooperative.  Prepare to invade his kingdom.  In the meantime, shut down all trade across our common border and arrest any “pirate” who dares smuggle goods in from Grover’s kingdom by ship.

Duke of Delano---Right away.  But I must warn that the army and navy are both weakened by our past adventures.  Plundering others countries hasn’t brought in enough to pay for the cost ruling them.  We are having trouble finding new fighting men. 

King Roosevelt---Nonsense!  All of our conquests have paid for themselves and so will this one.  We’ll draft the soldiers and create the money we need.  See to it Sir Hamilton.

Sir Hamilton--- Right away. 

Narrator--- So King Roosevelt invaded Grover’s kingdom.  However Roosevelt’s kingdom, weakened by constant war and inflation, could not conquer the citizen soldiers of Grover’s kingdom.  After the war, the honest minter Thaler returned home was elected king.  The people of both Grover’s kingdom and Thaler’s kingdom had learned important lessons about trade, honest money, war, and empire.  If goods don’t cross borders, armies are likely to.  Honest money facilitates trade and keeps government small while inflated money weakens the economy and feeds a corrupt government.  Wars and empire do not enrich a conqueror; they, along with inflation, drain the life out of country and lead finally to disaster. 



Taxation and Inflation Skit

Skit 1: Money

Skit 2: Taxation and Inflation 

Dramatis Personae

King Roosevelt II—he needs money to finance his wars

Sir Hamilton—advisor to the king

Duke of Delanoleader of the king’s army

Thaler—an honest minter of gold and silver coins

Dilutio— a dishonest minter of gold and silver coins ready to help the king



Scene 1

The king’s castle 

Narrator—Here we find King Roosevelt II considering a problem

King Roosevelt—What problems I have: my armies are running out of supplies and the people have almost nothing left to take as taxes to supply them.  If only I could find a new way to tax.  Everything I take from the people isn’t useful in supplying an army.

Enter Sir Hamilton

Have you given any thought to our problem supplying the armies?

Sir Hamilton—In fact, your highness, I have.  Remember I informed you that the people now are using coins made from gold and silver, minted by respected private citizens, as a medium of exchange.  These coins are so universally valued that you can use them to buy anything, even army supplies.

King Roosevelt—Go on, Hamilton.

Sir Hamilton—Well, although I’m sure you already thought of this, why don’t we just collect these gold and silver coins as taxes?  Then we can buy all the army supplies we want, anywhere we want.

King Roosevelt—Splendid!

Narrator—So things went well for the king, he collected gold and silver coins as taxes and bought all the war supplies he needed. 

Scene 2

At Dilutio’s mint


Narrator—Here we find Thaler asking Dilutio for the gold and silver coins in exchange for paper certificates. 

Dilutio—Your gold and silver coins are now loaded and ready for you and your armed guards to transport to your mint.

Thaler—Thank you, Dilutio.

Dilutio—I trust you, Thaler, not to tell anyone, but I hope no one else comes asking to redeem gold or silver certificates for the actual coins, I may run out of coins.

Thaler—How can that be, every certificate is backed by coins, is it not?

Dilutio—At one time, yes, but I’ve come up with a great way to make extra profits.  Instead of just charging a fee to store people’s coins in a safe place and giving them a paper certificate which they can use as if it were money, I now print more paper certificates than I have gold and silver coins and then loan them out at interest.

Thaler—Good heavens!

Dilutio—It’s a great scheme; I just have to make sure that everyone doesn’t come at the same time to redeem their paper certificates for gold or silver coins.  If they did, I’d be ruined, of course.

Thaler—Well, Dilutio, you can have your scheme.  I prefer to make an honest living.  I have only my reputation for the pureness of my coins and the redeemability of my paper certificates in coin on request to keep me in business.  I can’t risk my reputation on fraudulent schemes like your own.

Dilutio—But you’ll keep this just between us, right?

Thaler—I will for now, even while I advise you to abandon your scheme as soon as possible.

Exit Thaler 

Scene 3

The king’s castle 

Narrator—Here we find the king discussing military affairs with his top commander

Duke of DelanoYour highness, our last campaign was a success but we need more supplies and money to pay the troops if we are to continue on to victory.

King Roosevelt—I don’t see what more I can do, the people will revolt if I raise taxes again.

Enter Sir Hamilton

Hamilton have you any ideas on how we can raise more money for our next military campaign?

Sir Hamilton—Well, we could sell off some your hunting grounds, they would fetch a handsome sum.

King Roosevelt—Out of the question!  You have some nerve even suggesting it.

Sir Hamilton—Sorry, your highness.  There is one other scheme I have heard of, but it’s quite dishonest.

King Roosevelt—When have we ever had time for honesty here, except among ourselves?

Sir Hamilton—Fine, in that case, we could melt down all of the gold and silver coins, then add some base metal, like nickel, and then restamp them as coins with the royal seal.  Then we could buy many more extra war supplies without raising taxes and no one would know.

King Roosevelt—Brilliant!  Proceed with this plan right away. 

Narrator—So things went well for the king, he melted down all the gold and silver coins collected as taxes and reminted them with lower gold and silver content, ending up with twice the amount of money originally collected in taxes.  He bought all the war supplies he needed and no one caught on, at first. 

Scene 4

Thaler’s Mint 

Narrator—Here we find Thaler examining some of the new royal coins 

Thaler—So these are the new royal coins, minted, we are told, to protect us from dishonest minters who mint impure coins.  These coins don’t look or feel right to me.  I think I will melt them down and see how pure they are.

That evening, after melting down the royal coins

Ah ha!  So the king claims to be protecting us from dishonest minters who would defraud us while all the time it is he who defrauds us!  His royal coins have only half the gold they claim to have.  The king has been paying for war by defrauding the people.  No wonder goods cost more lately.  All of this new coinage is driving up prices. 

Scene 5

The king’s castle 

Narrator—Here we find the king thinking about what to do about unrest over high prices 

King Roosevelt—The coinage plan had worked so well until recently.  While the people seem to have no idea who or what is to blame for higher prices, they still expect me to do something about it; but with the war to fight, I simply cannot abandon the royal coinage program.

Enter Sir Hamilton

Hamilton, have you given any more thought to our problem with high prices? 

Sir Hamilton--Yes, I have actually.  I believe you will find my plan most clever and effective.  Perhaps you have heard of the minter and money lender, Dilutio.

King Roosevelt—Not until now, no.

Sir Hamilton—Well it seems that Dilutio, so my spies tell me, both mints gold and silver coins and loans out certificates that can be exchanged for gold and silver coins at interest.  Therefore there are more paper certificates circulating as money throughout the kingdom than there are gold and silver coins to redeem them.

King Roosevelt—So what does this have to do with the problem of high prices.

Sir Hamilton—Quite simple, we blame the high prices on Dilutio’s expansion of the paper money supply.  This draws attention away from our own practice of diluting the value of gold and silver coins.  Further, we can make ourselves into heroes of the people by taking control of Dilutio’s mint in order to make its operation honest again.

King Roosevelt—How can we convince Dilutio to agree to this?

Sir Hamilton—Again quite simple, for while we will give Dilutio’s mint the appearance of honesty by putting the royal seal on its coins and paper certificates, we can then print all of the paper certificates we want to pay for war supplies.  The whole affair will be so confusing that the people won‘t know what the problem is until it’s too late to do anything about it.  All of the paper certificates from Dilutio’s mint will be given as loans to the kingdom.  Dilutio will also be able to continue to loan his customer’s deposits and earn interest.  It’s a win-win situation; Dilutio himself actually suggested it to me.  If anyone complains, we will inform them that the good credit of the kingdom cannot be sacrificed; the loans must be repaid.

King Roosevelt—Pure genius!  Proceed at once. 

Narrator—And so Dilutio’s mint was taken over and the king got his money to pay for his war.  Soon the king found that Dilutio’s mint, now renamed The King’s Bank, could loan him money for just about anything he wanted.  Sure, prices in the kingdom would go up, but if the king didn’t spend too much of this new paper money, the small price increases could easily be blamed on bad weather, greedy storekeepers, or anything except their true cause—the king’s own spending of new paper money.  At least one problem remained—what if many people came to the bank to exchange their paper money for gold and silver coins?  Clearly there wouldn’t be enough coins and the dishonesty of the The King’s Bank would be exposed.  So Sir Hamilton convinced the king to outlaw all honest competition to The King’s Bank 

Scene 6

Thaler’s mint

Narrator—Here we find Thaler looking over the king’s latest proclamation 

Thaler—Well, this is the end.  I now must close my mint.  The king’s proclamation says that in the name of preventing dishonest men from making coins, all private mints like mine must be closed.  I guess the The King’s Bank dislikes having any competition when it comes to making dishonest coins.  Now all we’ll have is the king’s diluted gold and silver coins and his inflated supply of paper money.  The rising prices caused by this dishonest money are really just cleverly disguised theft by the king.  The king can pay for wars, reward his friends, and live in luxury, all at the people’s expense.  The people will be made poorer and poorer and never understand why.

Narrator—So concludes, for now, our sad tale of dishonesty in powerful places.  Justice may yet be served however.


Skit 3: Empire


Money Skit For Kids

Skit 1: Money

Dramatis Personae

Egg farmer—he wants new shoes

Ophelia—egg farmer’s wife

Shoemaker—he doesn’t like eggs, but needs wheat for bread

Zapata—shoemaker’s wife

Wheat farmer—likes eggs and has more wheat than he can use



Scene 1

Egg’s farmer’s kitchen 

Narrator—Here we find the egg farmer and his wife in their kitchen 

Egg Farmer—I sure could use some new shoes, these are all worn out.

Ophelia—Well why don’t you take some of our extra eggs to the shoemaker and see if he’ll trade some eggs for shoes

Egg Farmer—I’ve got it!  I could trade some of these eggs for a pair of shoes.

(Ophelia rolls eyes and looks at the audience)

Ophelia—Great idea.


Scene 2

Shoemaker’s shop 

Narrator—Here we find the shoemaker and his wife with no wheat to make bread

Zapata—I sure would like some wheat to make some bread

Shoemaker—Honey, I already traded shoes to the wheat farmer for wheat; how can I get more wheat?

Zapata—I don’t know, but here comes the egg farmer with a basket

(Egg farmer enters)

Egg Farmer—Good day all! 

Shoemaker and Zapata—Good day

Egg Farmer—I am wondering if I might trade you some eggs for a new pair of shoes

Shoemaker—Sorry, we don’t like eggs, but if you had some wheat, we’d be interested

Egg Farmer—I’m only an egg farmer but I’ll see what I can do (leaves)


Scene 3

Wheat farmer’s barn 

Narrator—Here we find the wheat farmer, hungry for an omelet 

Wheat Farmer—I’m sure getting tired of bread all time, I’d like some eggs.

(Enter Egg Farmer)

Egg Farmer—Hello, I’ve got some eggs here and I’m wondering if you might want to trade some eggs for some of your wheat

Wheat Farmer—So, you want to make some bread?

Egg Farmer—No, I actually want some shoes.

Wheat Farmer—Well, shouldn’t you go to the shoemaker then?

Egg Farmer—I did, but he didn’t want eggs, he wanted wheat.  So I came here.

Wheat Farmer—What a coincidence!  I want eggs to make an omelet and have the wheat you need to trade for the shoes you want.

Egg Farmer—Oh happy day!

(They exchange the eggs for the wheat) 

Narrator—And so ends our little tale.  The egg farmer got his shoes, the shoemaker got his wheat, and the wheat farmer got his eggs—all where better off and happier too.  As time went on, the people of this town found that gold and silver coins became known as the one thing that everyone would accept in exchange for anything they wanted.  So gold and silver coins became money, the universal medium of exchange, and trade became much easier for everyone.  Townspeople no longer had to search the whole town looking for someone who wanted to trade what they had to trade for what they wanted.  Soon the king heard about these gold and silver coins and began to demand them as payment for taxes.  Then trouble began, but this, I fear, is a tale for another day.

Skit 2: Taxation and Inflation


Take five minutes to listen to the best short explanation of what we need to do and why we need to do it.

Wednesday, February 25, 2009

Contra Obama, We Need To Be Quitters

The witty saying on the t-shirt goes, "Rehab is for Quitters"; well maybe members of the Obama administration should think about becoming quitters. Obama is intoxicated with using government power-- witness his delusional statements from last night's speech before a joint session of congress:

"The fact is our economy did not fall into decline overnight. Nor did all of our problems begin when the housing market collapsed or the stock market sank. We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. The cost of health care eats up more and more of our savings each year, yet we keep delaying reform. Our children will compete for jobs in a global economy that too many of our schools do not prepare them for. "

So the stock market and the housing market collapsed because of our importing oil, our increasing health care costs, and our lousy education system? Are we to believe that if the stock market and the housing market didn't collapse we would still be deficit spending to the tune of over a trillion dollars?

"And though all these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before."

The obvious solution to this problem is that both individuals and the government should run up even more debt? Obama said we need to get the banks lending again. But as James Grant said so succinctly, banks made a lot bad loans when times were good, what kind will they make now in bad times? The Fed could easily open the flood gates on a new round of excessive bank lending by simply refraining from paying interest on the reserves banks have with the them. If this did not work the Fed could charge a fee on bank reserves. This would lead to a new inflationary era of lowered lending standards just like the one that caused our current mess. We cannot get out of our current situation by doing more of what got us into it. Obama says this himself, but does it anyway--delusional.

"In other words, we have lived through an era where too often short-term gains were prized over long-term prosperity; where we failed to look beyond the next payment, the next quarter, or the next election. A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future...People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway."

If Obama can get away with this type of rhetoric it only indicates that our national delusion matches Obama's. Prizing short terms gains is the way government always works; the rest of us can be driven to this by the kind of inflationary credit environment we've been living. Murray Rothbard explains:

"[During a period of inflation]: people become enamored of "get-rich-quick" schemes, seemingly within their grasp in an era of ever-rising prices [think housing and stocks], and often scorn sober effort. Inflation also penalizes thrift and encourages debt, for any sum of money loaned will be repaid in dollars of lower purchasing power than when originally received. The incentive, then, is to borrow and repay later rather than save and lend. Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of "prosperity."

What institution is responsible for the flood of credit which built the stock and housing bubbles? That bastion of government-sponsored central planning, the Federal Reserve. One might disagree saying that Wall Street, Fannie Mae and Freddie Mac were the source of much of the credit that fueled the housing boom in particular. Actually through securitization and sale of mortgages, they merely recycled credit. Often it was recycled by way of foreign central banks, like that of China, which buy these mortgage-backed securities. But why does China have so many dollars with which to buy these securites? Because our Fed-inflated dollar is the number export of our economy; the dollar is the world's reserve currency. These dollars are all exported Fed-driven inflation.

"Regulations were gutted for the sake of a quick profit at the expense of a healthy market."

It is likely that Obama is referring here to the Gramm-Leach-Bliley Act of 1999 which broke the separation between commercial and investment banking established by the Banking Act of 1933. The "deregulation" of 1999 was really more of a re-regulation which true free-marketeer Congressman Ron Paul criticized at the time:

" we are considering a bill aimed at modernizing the financial services industry through deregulation. It is a worthy goal which I support. However, this bill falls short of that goal. The negative aspects of this bill outweigh the benefits. Many have already argued for the need to update our financial laws. I would just add that I agree on the need for reform but oppose this approach...My main reasons for voting against this bill are the expansion of the taxpayer liability and the introduction of even more regulations. The entire multi-hundred page S. 900 that reregulates rather than deregulates the financial sector could be replaced with a simple one-page bill."

Far from deregulating banking, Gramm-Leach-Bliley was 900 pages of different regulations that failed to do the job. Among the most troubled banks are those, like Citigroup, that were under the regulatory supervision of Tim Geithner's New York Federal Reserve. Geithner’s promotion to Secretary of the Treasury is a classic case of how promotion works in government--the most incompetent sycophants rise. Those who foretold of our current crisis like Ron Paul, Peter Schiff, and James Grant are left out of the official conversation on solving the crisis. Those who failed to foresee it, denied it as it unfolded, and then blamed all of the wrong people (like short sellers and hedge fund managers) are still in charge.

"And all the while, critical debates and difficult decisions were put off for some other time on some other day."

Make no mistake, critical debates are still being put off. The stimulus bill was voted on without even being read by congressmen. Medicare and Social Security are ticking fiscal time bombs that the huge current deficits make even more dangerous.

Now is the time to act boldly and wisely -- to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do…”

Obama’s claim that his porcine fiscal stimulus law will grow the economy so as to offset, by way of tax revenues, the borrowing done to pay for it is patently absurd. While the massive spending in the stimulus law may create some jobs for the short term, other jobs that would have been created with those resources will be lost and the economy’s structure of production will be thrown even more out of whack, creating more economic pain down the road.

What Obama fails to grasp is the distorting effects of money creation. We had massive, unsustainable malinvestment in housing due to the Fed’s easy money policies. Not only was the house building business unsustainable but a whole array of housing-related businesses, also fed on the Fed’s easy money, were also unsustainable. Now Obama wants to create some unsustainable malinvestment in energy, health care and education. This will fail to bring future prosperity.

“I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity...For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle class in history. (Applause.) And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.

Sorry, but this is nonsense from someone in need of history lessons. The transcontinental railroads built with government money were monuments to waste, fraud and abuse that illustrate virtually everything wrong with government infrastructure “investment”. Shoddily built along routes chosen to wring maximum subsidy from the government rather than to operate efficiently, every government-subsidized transcontinental would go bankrupt by 1893. If one thinks that government subsidy was the only way to build a transcontinental railroad, one should think again. James J. Hill’s Great Northern Railroad was built "without any government aid, even the right of way, through hundreds of miles of public lands, being paid for in cash." I guess a business can grow without an endless stream of easy credit, the Great Northern did not go bankrupt when the other transcontinentals did.

The wonder of the G.I. Bill is another of the great myths that we labor under. As Thomas DiLorenzo so boldly put it, “In truth, the G.I. Bill was a budget-busting middle-class entitlement scheme that had destructive effects on higher education, and set the stage for virtually all our current educational problems.

His allusion to the wonders of NASA leads nowhere as well, Tim Swanson:

“The perceived benefits of a vain, nationalized space program include, among others, the fallacious need to fight the mythical shortage of scientists and engineers. Whereas in reality, it has stymied private tourism, exploration, and research for nearly half a century…It is a monumental drain of capital resources to simply satisfy a nationalist ego; and its motto should be changed to reflect the only groups that benefit from its existence, politicians and contractors: For Benefit of Few.”

With Obama’s speech said and done, one recommendation can be made: we need to become a nation of quitters. We need to quit believing that the government can save us from the problems it has caused. We need to go into rehab to rid ourselves of our addiction to believing any government promises, not just those of the latest messiah of salvation via government.