10/15/2014

Lawyer Tricks & Vampire Ethics

One of the most important ways to get involved with the Libertarian Party is to run as a candidate for public office.  In 2010 I had a great time running an educational campaign for State Representative for District 49.  I wasn't in it to win it, but I was able to spread the message by answering questionnaires and with newspaper, radio, and television interviews.  The most rewarding part of the experience was being invited to a local middle school to give a presentation about libertarianism.

Unfortunately, this year I couldn't make the commitment to run an educational campaign, so instead I signed up to be a "paper candidate" for a local office.  This means I'm not actively campaigning, but still helping the LP by giving a libertarian option for voters that will help get our numbers up in the aggregate.  This November we will have 132 candidates on the ballot across Texas and I'll be running for Justice of the Peace for Travis County, a position that I would seem to be totally under-qualified for and would seriously impede my career in IT Consulting if I were to win.

However, the law is something that I've been studying for a number of years and if I somehow won this race I would be willing to put my career on hold to serve out the term.  The local chapter of the League of Women Voters sent a questionnaire concerning the race, but only two questions allowing 450 character answers didn't leave much of an opportunity to explain my platform.  Nevertheless, I was able to give a standard libertarian answer for the question of how I would ensure that the role of "the people's court" is fulfilled:
"As JOP I would radically change the goal of the JP court from focusing on revenue generation for the state to protecting the rights of the individual.  This means rightly prosecuting crimes that are malum in se, evil in themselves, while vigorously defending people accused of "crimes" that are malum prohibitum, illegal by statute.  In this way the people will see the court as a tool for seeking justice, not as a device for taking their liberties."
In other words, if you're going to have a state, use it as a tool for defensive purposes only.  Don't use it for enforcing statutes against victimless crimes just to steal people's money.  That's pretty basic libertarianism 101 stuff.  It was the second question that I found more interesting.  What changes, if any, are needed in court processes and procedures to make the court more efficient and effective in fulfilling its duties?
"The entire court system is engaged in a variety of scams and conspiracies to rob the people of their liberties.  Lawyer tricks confuse people into waiving their natural rights and volunteering into oppressive contracts with the state.  I would not seek to make the court more efficient in these corrupt machinations, instead I desire a court that effectively presumes innocence and honors due process rights of the defendant from agents of the state."
Scams and conspiracies?  Lawyer tricks?  Corrupt machinations?  These allegations require some explanation.

Boss Hoggism or Legal Sleight of Hand

During my process of waking up, Aaron Russo's documentary America: Freedom to Fascism had a big impact on me, particularly the segments on the constitutionality and legality of the income tax.  It's one thing to look at black operations by CIA type groups, they happen in the shadows and don't require many people to execute.  But these allegations made about the income tax were something else entirely, a conspiracy of an entirely different nature.

One of the most credible people interviewed in the film on this topic was Joe Banister.  Like other former IRS agents, it all started when he heard of the $50,000 challenge to show the law that required the average person to file a 1040 and pay a tax on his labor.  As a special agent of the Criminal Investigation Division for the IRS, Mr. Banister thought this challenge was something he could easily accomplish to dispel the rumors.  Months later, Banister submitted a preliminary report to his supervisors with his startling conclusions regarding the income tax.  Instead of proving the "anti-taxers" wrong, he ended up giving his resignation to his longtime employer and becoming one of the leading figures in the tax honesty movement.

But for people like Mr. Banister it doesn't end there.  The most credible and prominent people in the tax honesty movement are invariably drug before a kangaroo court and indicted on something, anything.  Even when they win on appeal it is only through a long fight over multiple years that drains their life savings.  It's a battle that destroys marriages, lives, family - and for what?  It takes a special kind of person that holds their integrity above all else to choose to fight this battle rather than to just give in and let the tax man have his cut.

Seeing people like Irwin Schiff, Sherry Jackson, Joe Banister, and others relentlessly prosecuted to make an example for the rest of us has a real chilling effect.  What is to be done when the system is so lawless?  How do you fight a system with a clique of boss hoggs running things at the top that don't give a damn what the law actually says?  If you try to fight back and stand on your rights you are subject to their army of useful idiots that follow orders and don’t know any better.  It's a pretty depressing and shameful situation we're in.

It was through only after reading Peter Eric Hendrickson's Cracking the Code and listening to the Rule of Law Radio show for several years that I've slowly come to a different conclusion about our predicament.  Rather than seeing the conspirators as brutish criminals that are totally lawless and respect nothing but violence, I see them as intelligent criminals that use complex legalese and magician's sleight of hand tricks on the meaning of words themselves.  They have an entirely different lexicon of legal terminology that's completely different from the common meaning of words and from their perspective if you're ignorant enough to fall for their elaborate scams then you deserve what you get.

They aren't completely amoral, they have their own system of ethics - the ethics of a vampire.  Just as the mythical vampire can't feast on your blood unless you are foolish enough to invite him into your home, even if you do so under mistaken pretenses, this criminal class preys on people's gullibility and faith in government to trick them into volunteering into private contracts that have no legal, lawful or ethical foundation.  Buyer beware.  Read the fine print.  These are the mottos that give their conscience sanction.  Ignore them at your own risk.

Define Your Terms

Words have meaning, and when words are put to parchment and signed by powerful people to become "laws" they have the force of the state behind them.  This means that if you violate these laws, whether deliberately, through ignorance, or even innocent misunderstanding, men with guns will follow orders and steal your property, kidnap you, lock you in a cage, and even kill you.  Clearly, the first step on the path to avoiding the violence of the state is to understand the meaning of the laws to know what duties, responsibilities, and constraints bind your actions.  But the meanings of words change all the time - look at any page from the Urban Dictionary and you'll find examples of words that have a radically different meaning then they did 50, 20 or even 5 years ago.  The point being, if a law is created that imposes certain duties on the governed, then new or different duties cannot be created simply by the result of certain words having their meaning changed over time.

My favorite example of this is the word "regulate".  Today it means that 100,000 bureaucrats can tell you what to do in virtually every area of your life, but in the time of the Constitution it meant "to keep regular."  For example, "regulating the value of coin" instructed the congress to keep it from overly fluctuating through inflation and deflation, "regulating commerce among the states" allowed the federal government to prevent the states from enacting tariffs against each other, and having a "well regulated Militia" meant the individuals compromising that militia were well trained and had properly working firearms.

It's hard enough to comply with all the laws when there are so many that it's even impossible for the federal government to give an estimate, but it would be impossible if the law constantly changed as the common usage of words did as well.  Lucky for us, words have special meanings when they are specifically defined in statutes, and if they are not defined there you look for the meaning in a law dictionary like Bouvier's or Black's Law Dictionary.  Unlucky for us, this double-edged sword is the source of the lawyer trickery that fool hapless saps into volunteering into contracts, submitting to jurisdictions, and otherwise opting themselves in to requirements and obligations that have no legal basis.

Before visiting three of the biggest scams that rely on legal sleight of hand, let's review a word that is central to understanding all of them: include, includes, including.  In common language, the word "includes" would be translated to "such as".  For example, "I enjoy eating fruit, including apples".  Under a normal context I may also enjoy eating oranges, but in the world of legalese we may find that this word is not one of enlargement, but one of restriction.  Instead of translating to "such as", includes is defined as "means".  The impact is that, for the purpose of that sentence, the common definition of "fruit" no longer applies and now "fruit" means apples and only apples.

There is a Latin term for this, inclusio unius est exclusio alterius, "the inclusion of one is the exclusion of another."  According to Black's Law, "When certain persons or things are specified in a law, contract, or will, an intention to exclude all others from its operation may be inferred.  Under this maxim, if statute specifies one exception to a general rule or assumes to specify the effects of a certain provision, other exceptions or effects are excluded.”  There are websites filled with quotes from supreme court rulings, hundred page treatises, and finely written essays dedicated to this seemingly innocuous term because of how this word can create multi-layered definitions that have to be carefully analyzed to have any chance of arriving at the correct interpretation.  As we'll see, it is the cornerstone of some of the most invasive laws that impact us every moment of our waking lives, but with a correct understanding of what it means in legalese they just melt away like snow on a sunny day.

Cracking the Code

The income tax: is there a more destructive, unjust, or idiotic law?  It is a fact that taxes are used to deter behavior, hence we have "sin taxes" like those on cigarettes.  So why would any society seek to deter productivity?  The harder one works, the more one earns, the more is taken away, not just proportionally but progressively.  How much wealth was never created because doing so would bump one into the next "bracket" and cause a net loss, incentivizing those to choose leisure instead of labor?

The income tax exposes the presumption of our political leaders: that they are our masters, that they own us.  The fruit of my labor is not mine, but the governments, and those men with guns will choose how much will be returned to me.  In the "land of the free", where we supposedly fought a civil war to abolish slavery, it is a sad lesson how quickly we accepted new masters.

A direct tax on income is also blatantly unconstitutional.  The constitution gives two and only two types of taxation: direct and apportioned or indirect and unapportioned.  In the first case the federal government can only directly tax the people if the tax is apportioned by the state populations.  In the second case it can only tax the people without regards to state enumeration if it is indirect, such as a tax on tobacco that one can avoid by growing their own tobacco or refraining from its use.  As described in America: Freedom to Fascism, Supreme Court rulings declared an income tax unconstitutional before the 16th amendment and after its passage they ruled that it granted no new powers of taxation.  So if they didn't have it before, and they didn't get it, then how is it that we all sign self-confession forms under penalty of perjury every year (5th amendment, anyone?).

But what if it didn't have to be this way?  When the tax code was put on the internet, for the first time allowing one to quickly execute key word searches across its hundreds of pages and three million words, Peter Eric Hendrickson claimed that he cracked the code to this mystery.  By finding every use and definition of terms like "income", "wages", "employee", "employer", and "trade or business", he discovered that the income tax could actually comply with the constitution and the supreme court rulings but under this legalese interpretation the income tax laws no longer applied to the vast majority of private individuals.

As quoted and explained in detail throughout the book chapter and verse, the income tax is filled with particular definitions and circular logic that results in it only being applicable to the payment of federal government workers.

"Wages" is defined as "all remuneration... for services performed by an employee for an employer", where employee is defined as including "an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Colombia, or any agency or instrumentality of any one or more of the foregoing."

Similarly, the term "trade or business" includes "the performance of the functions of a public office".  "Wages" is defined as "including personal service as an officer or employee of a State", and then "state" is "construed to include the District of Colombia".

Remembering the legalese definition of "includes", does it sound like you work for an "employer"?  Are you engaged in a "trade or business"? Do you earn "wages" or "income"? You may not if you don’t work for the federal government!

Why would it be constitutional to put an income tax on federal government workers but not the rest of us in the public sector?  Remember that one of the constitutional taxes is indirect and unapportioned, and that government workers don't really pay taxes, they consume tax money.  If someone gives you $20, and then takes $5, did they "tax" any money, or did they just give you $15?  That is the crux of the issue - when the same entity is paying "gross income" and "withholding" a certain percentage and then paying "net income", then what does it matter what bookkeeping mumbo-jumbo is happening, the net result is that entity, the federal government, is paying its workers.  Working for the federal government is not a right, it is a privilege, and therefore it would fall under the indirect and unapportioned taxing power of the constitution.

So when millions of people file 1040 confession forms and say "I'm an employee", "I make wages" and "I'm engaged in a trade or business" the government sits back and nods, happy to keep the fantasy going.  If you're willing to make these claims the government won't be correcting you - that's up for you to figure out.

Drivers License: Transport or Travel?

One of the fundamental differences between rights and privileges concerns the requirement for a license to use property.  The owner of property can exercise all the rights associated with the property, with the only limitation being not to violate the rights of others.  The owner can extend a privilege concerning the property in the form of a license, which is permission to perform some action that, without such authorization, would constitute an illegal action or trespass.

Thus, what do we make of the situation when a libertarian activist asks a traffic officer if he's being detained on a warrantless DUI checkpoint which he believes to be unconstitutional, and the cop snarls, "driving's a privilege, not a right!"  Here we have a dilemma.  Do you own your vehicle?  If you did, you'd have certain rights over it, not privileges granted by a license.  The Supreme Court has ruled that we have a right to travel, a right of locomotion, a right to move from one place to another according to inclination, a right of free transit from or through the territory of any state.  It seems plausible, after all we pay for the roads with the tax on gasoline, but this conflicts with our daily experience that a traffic officer can pull us over, demand our license, and impound our vehicle on the flimsiest of pretenses, especially since the militarization of the police and the escalation of the war on drugs.

Once again, it seems we might have a conspiracy of lawyer tricks run by criminals with vampire ethics and enforced by useful idiots that have never read or understood the law they believe to be rightly enforcing.

Eddie Craig is an Air Force veteran and a former Nacogdoches Sheriff Deputy that has spent the last 12 years researching various Texas Codes, especially the Transportation Code.  I first heard him on Rule of Law Radio where he described the myriad violations that occur during every traffic stop according to the Texas Transportation Code.  Eventually he compiled his research into a workbook and traffic seminar, and I was able to attend his first presentation at Brave New Bookstore.  Unsurprisingly, his findings echoed many of the same themes I had already found when researching the income tax.  It seemed there was a code to crack concerning the traffic laws as well, and Mr. Craig had found it.

Assuming we have a right to use our property, our personal vehicles, the first question to ask is what is a drivers license and who needs one?  The Texas Transportation Code defines it as "authorization issued by the department for the operation of a motor vehicle" and claims that a person "may not operate a motor vehicle on a highway in this state unless the person holds a driver's license."

The next question is, what is a motor vehicle?  It is consistently defined as "a device in or by which a person or property is or may be transported or drawn on a public highway".  Unsurprisingly, we consistently see the word transportation used in these definitions, but what is surprising is that it's never defined anywhere in the Transportation Code.  According to our hierarchy of legal definitions, this means we need to look at legal dictionaries and the case law that goes with it.

In Black's Law Dictionary, transportation is defined as "The removal of goods or persons from one place to another, by a carrier."  And this is where it gets interesting.  According to every legal dictionary a carrier, a common carrier, a contract carrier, and even a private carrier are all referencing the act of transportation of passengers or freight for pay.  Carriers are in the "regular business of transporting people and / or freight".

So if we put this all together, one needs a driver's license to operate a "motor vehicle", which is a device used in "transportation", which is the act that a "carrier" engages in when operating a business of transporting people and / or freight for payment.  I don't drive a taxi.  I'm not hauling semi-trailers across the country for a living.  So why again do I have a driver's license?

The reason the government can license and register the act of running a business off the use of the roads is because those individuals are exercising a privilege.  This is in contrast to private individuals that have a right to travel in their personal property on the public roads.  Those roads are owned by the people and are for the general public's convenience and pleasure.  Using the roads for business is an extra-ordinary use of the public roads and that is why they can be licensed, because those people are engaged in using publicly owned property to make money.  In other words, they are engaged in commerce.  Regulating ("keeping regular") interstate commerce is a power that is specifically delegated to governments to do - not to infringe in the rightful use of our private property.

So the next time you get pulled over for speeding, take a look at the statute that authorizes the department of transportation to erect speed signs and ask, "who do speed signs apply to?"  Maybe the traffic officer is confusing you for someone engaged in commerce.


Gold Fringe Flags, Strawmen, and Billion Dollar Birth Certificates

You're not an "employee", you don’t earn "income", you don't operate a "motor vehicle", and you don't engage in "transportation".  Still following along?  If so, this next topic may stretch your credulity to its limit.  It has its origins in the beginning of the country, leaving the gold standard, and the moment you were born.  It includes gold fringed flags, admiralty law, your name in all capital letters (Capitis Diminutio Maxima), your birth certificate, treasury bonds, your "straw man" or "legal fiction", and every interaction you've ever had with government, police officers, courts, and corporations.  This one goes down the deepest trails of the rabbit hole, and sometimes you'll wonder if the proponents of these theories are government agents trying to entrap you, but if you take the time to survey the information and take a step back the resulting landscape comes together consistently, and it just figures that we'd live in a world where something this crazy could be true.


The best place to begin might be with your strawman, your legal fiction, the corporate entity that was created the moment the ink was dry on your birth certificate.  If your parents named you John Doe, your straw man might be named JOHN DOE.  This character is a "person", but unlike a flesh-and-blood human being, he is a legalese "person", a n artificial person or corporation.  This corporate person can sign contracts, assume duties, incur penalties, and it has the unfortunate tendency to get people confused with you, the flesh-and-blood human being.

That bad side of this situation is that this elaborate scam is what gives all the lower courts such as traffic courts, family courts, and tax courts the jurisdiction to act upon you - because you volunteer into it!  Whenever a summons appears that asks for "JOHN DOE" and you show up saying, "that's me" no one is going to correct you.  Whenever they ask you if you "understand the charges" you are agreeing that you "stand under" their jurisdiction and from then on volunteer into their private contract.  Instead of living under common law, your straw man operates under admiralty law because a birth certificate literally hands over the new born's straw man to the government as a ward of the state, just as a ship wrecked in the sea can be found and claimed by new owners.  This is why court rooms have a gold fringed flag, because they are operating under admiralty law.  This explains why a judge can say "I don't want the constitution brought up in my court", because his court has nothing to do with the constitution, it is all private contracts through color of law like the Uniform Commercial Code.

This isn't just about tricking you to get jurisdiction for petty fines and fees, your straw man is also worth money, a lot of money.  This is where the theory gets into the creation of the country and leaving the gold standard - that without lawful money of gold and silver to discharge debts the government had to create a way for citizens to discharge their obligations in the new world of fiat money.  Hence, you find the curious phenomenon that your birth certificate will have a serial number and a stamp or seal from an entity like the American Bank Note Company.  Once the birth certificate / bank note is signed, it goes to the Department of Commerce, and from there to the International Monetary Fund (IMF).  At this point it's listed as collateral for the UNITED STATES CORPORATION so that the gold ole USA can take out a loan for millions with our birth certificate as collateral.  Why would they think of our birth certificate as collateral?  Because we are going to be good cattle for our masters, we'll volunteer into contracts, work as "employees", pay "income", submit to registration, apply for licenses and pay all kinds of penalties and fees for activities that should be absolute rights.

If there is a good side to this scenario, it's that in the farthest depths of patriot mythology you'll find references to "commercial redemption", the "secured party creditor process", and "reclaiming your strawman".  The idea is that there are certain forms you can sign and actions you can take to reclaim your "legal fiction" from being a tool of the state and use it for your own purposes - and that also includes those millions of dollars of fiat currency tied to your birth certificate / bank note.  The UCC1 Financing Statement tells the public that you officially reclaim control over your Agent in commerce, your strawman.  Your parents may have abandoned him to the government, but now you're ready and willing to take him back.  File a few more forms and you'll have direct access to an account at the Treasury in your strawman's name, you'll be filing tax forms on behalf of your strawman, and you'll regain your status as a sovereign human being, a secure party creditor, at the same level of states, banks, and the gods themselves.

Conclusion

Now the question comes, after you've thoroughly researched these claims for yourself, what do you do about it?  If the answer is nothing, then it doesn't really matter whether the men behind the curtain are lawless thugs or just clever schemers.  If you knowingly continue to volunteer into contracts, assume obligations, and opt-in to taxes that don't apply to you then the only thing that's changed is you no longer have the right to complain about any of it.

That said, there is a risk / reward tolerance for everyone, and these are important decisions that should not be taken lightly.  I ran into Joe Banister at the Austin airport once and asked him what he thought about Cracking the Code.  He said it was 100% accurate, but the question remains, is this a battle that you are willing to fight yourself, or are you going to instead support people that are fighting it on your behalf?

Accepting the risk really depends on the magnitude of the reward.  With cracking the code the risk comes if you lose your nerve and admit that you make "income" after all, then you could be slapped with a $5,000 frivolous filing fee.  But if you stick to your guns you may instead receive a hefty check from the Treasury department and have your return added to the Bulletin Board displaying the $11,000,000+ from the tens of thousands of returns that have used the CTC method.

If you're going to cut up your drivers license, burn your registration, and throw away your license plate it seems like you are in for some battles ahead.  Even doing everything right, traffic cops will take you to jail and impound your vehicle out of ignorance, and only through fighting legal battles, suing the county and police departments, and battling lengthy appeals will you finally get to the situation where a patrolling cop radios in your suspicious car that doesn't have a license plate only to have HQ radio back "don't mess with him, he's not worth the trouble".  That is the price to travel as a free man.

When I first heard about the strawman / Secured Party Creditor strategy on Rule of Law Radio I categorized it as patriot mythology that was more likely to be a Federal sting operation than anything real.  Since then I've met someone that's gone through the process and has shown me his documents and explained how he has paid his taxes, utility bills, and even purchased real estate through his reclaimed strawman.  He also warned that if you don't do it correctly you could go to jail for securities fraud.

Do the research, weigh your options, and make a decision: will you continue to invite the vampires in, or will you kick them out once and for all?

9/21/2014

How I Woke Up

We've just passed the 13th anniversary of 9/11 and now, more than ever, individuals on all sides of the 9/11 spectrum are demanding to know more about what really happened on that day.  On one side you have the co-chairs of the 9/11 commission report, Lee Hamilton and Thomas Kean, who have called for the 28 classified pages of the 9/11 commission report to be released in the public eye.  As more and more congressmen and senators read those pages for themselves, a growing coalition on the right and left is forming behind a bill that would declassify them for all to see.  On the other side of the 9/11 spectrum you have Architects and Engineers for 9/11 Truth (AE911 Truth) making unprecedented ground in their cause.  AE911 Truth is a major force behind the High Rise Safety Initiative, which has collected tens of thousands of signatures from New Yorkers and is currently fighting and appealing various legal battles to ensure a ballot measure will be put to the voters that would require the NYC Department of Buildings to investigate the causes of high-rise building collapses in New York City, starting with World Trade Center 7.  AE911 Truth has also put up a video billboard in Times Square this month showing millions of New Yorkers the 6.7 second collapse of WTC 7 and challenging them to "Rethink 911".

But for the 9/11 truth movement, one of the most exciting events is a new documentary called Anatomy of a Great Deception.  It has been getting great reviews from the 9/11 truth community and Richard Gage, founder of AE911 Truth, is calling it "the best chance in years to push the 9/11 debate into the mainstream".  So what is so revolutionary about this movie? Does it have new information or new evidence? No, the hype around this documentary is not because of the evidence it presents, but the way it presents it.  It's not overloaded with ten thousand questions and puzzle pieces of evidence concerning the various reasons to doubt the official story.  Instead, it's a personal story, a story of how one man stumbled upon an innocent question that lead him to another question, and then to another, until months later he was on the brink of personal disaster.  David Hooper is a successful businessman and entrepreneur; and in this very personal film he relates how his research destroyed his world view and almost ruined his most precious relationships with his wife, family and friends.

As Hooper describes the genesis of this film, "I began assembling footage to visually relay what I had found for my wife, my sister, and a couple of dear friends.  This footage turned into the documentary The Anatomy of a Great Deception."  Hooper's amateur documentary succeeded to convince his family where other documentaries failed.  As word of mouth spread, Hooper decided to raise money to take his film to the next level and professionally release it so that others in the 9/11 truth community could share it with the people in their lives.

Several years ago, for various reasons, I decided that I would not promote 9/11 truth in the same way that I unashamedly promote libertarianism and Austrian economics.  Yet, I can't honestly describe how I've come to be the person I am today and carry the beliefs that I do without going back to 9/11.  More specifically, not 9/11, but WTC 7.  Like Hooper, that building shattered my world view and set me on a course of investigation that would completely transform my belief system.  So in the same spirit that Hooper took when telling his story, I will tell mine.  My purpose is not to try to convince anyone to accept my beliefs, I've given up on that long ago.  I merely hope this will help others understand my journey.

WTC 7 and Me

The most transformative event of my life occurred on Saturday, April 15th, 2006 - Easter weekend.  I was completing my Senior year at the University of Iowa and I had recently taken an internship at the Operator Performance Laboratory instead of pursing a 3rd summer with my door-to-door book selling career.  I had completed the math and physics classes required for all engineers, and now that I was taking my upper level courses in Electrical Engineering things were really starting to get interesting.  The seemingly abstract world of calculus and differential equations was finally made real as I learned how to apply those concepts to understand the physical phenomena of the world around me.

It was under this context that I went home for the holiday weekend and my youngest brother showed me a video that he had accidentally found while searching for Tool music videos.  Someone had intentionally mislabeled a 5 minute video called "Painful Questions" to trick people like my brother into downloading it.  He was shocked and scared by what he saw, and he didn't discuss it with anyone until I came home for a visit.

He told me he had a video that I needed to see, I watched it, and my whole world was turned upside down.


It's hard to remember my exact reaction, but I was in a state of total shock, my mind racing at the consequences of what I saw.  I watched it again and again to make sure I could believe my eyes.  The video was a condensed version of a longer documentary by Eric Hufschmid called Painful Deceptions.  While the full length documentary covers many aspects of 9/11, this 5-minute version only discussed a sky scrapper called World Trade Center Building 7, or WTC 7, which I had never heard of before.  In this crude and unprofessional video I was quickly made aware of a few key facts:

  1. On 9/11 there existed a modern 47-story steel-framed skyscraper called WTC 7.
  2. This building was not hit by a plane on 9/11, but it did catch fire on several floors.
  3. At 5:20 pm on 9/11 this building "collapsed" into its own footprint in 6.7 seconds.

That's all I had, 3 inconvenient facts and the video of it "collapsing" from multiple angles over and over again.  Right away I saw this could not have been a fire-induced "collapse".  What I saw looked identical to a building that was brought down in a controlled demolition.  But that conclusion was too painful, it immediately brought question after question: Who was responsible for bringing this building down?  If WTC 7 was a controlled demolition, does that mean the Twin Towers were too?  If so, then that means people in the government were involved.  How was I not aware of this event?  Does that mean elements of the media are in on this too?  How could people be so evil?  How could a conspiracy this big and this important be hidden from me for so long?

I didn't have answers to any of those questions.  For all I knew, myself, my brother and the maker of this video might be the only 3 people in the world that were aware of this evidence.  I couldn't wrap my head around the giant implications of this revelation, but I had seen all I needed with my own two eyes.  Eric Hufschmid's video might have also brought up the fact that the maximum temperature of an office fire is 1,700 degrees Fahrenheit while the melting point of steel is 2,700.  It might have shown me examples of other sky scrappers that had burned longer and hotter than WTC 7 but weren't even weakened, let alone brought down.  It probably pointed out that no sky scrapper in history had ever collapsed due to fire.  It might have mentioned a character named Larry Silverstein, the man who told fire fighters to "pull" WTC7 and whose recent acquisition of the lease for the Twin Towers 6 weeks before 9/11 would allow him to collect billions in insurance claims.  It might have even shown examples of reporters saying WTC 7 collapsed before it did, most notably the BBC reporting it had collapsed while it was still standing and visible in the background!

But I didn't need any of that.  The three inconvenient facts were all I needed and they could not be refuted.  No one denied that this mysterious building existed and fell on 9/11 and the rest I could see for myself from the video evidence.  The height of this building and the speed in which it "collapsed" were a matter of public record.  And that is the key that woke me up - the fact that this building "fell" so fast and into its own footprint, the path of most resistance.

In physics I had learned how calculus could take me from the velocity of a moving object to the change in velocity (acceleration) to the change in acceleration.  In statics I learned how to calculate the opposing and combining forces of objects at rest - how various forces would act against "static" objects like weights, dump trucks and buildings on ramps, pulleys and wires.  I knew how the law of conservation of momentum applied to inelastic collisions and how kinetic energy and gravitational potential energy would be converted to other forms of energy like heat and sound.  So when I saw the videos of WTC 7 coming straight down in 6.7 seconds I knew that fire and gravity alone could not have caused this.  Why?

David Chandler, the retired physics teacher who forced NIST to admit in its final report that WTC had 2.25 seconds of complete free-fall acceleration, puts it this way:
“Anything at an elevated height has gravitational potential energy.  If it falls, and none of the energy is used for other things along the way, all of that energy is converted into kinetic energy – the energy of motion, and we call it ‘free fall.’  If any of the energy is used for other purposes, there will be less kinetic energy, so the fall will be slower.  In the case of a falling building, the only way it can go into free fall is if an external force removes the supporting structure.  None of the gravitational potential energy of the building is available for this purpose, or it would slow the fall of the building.
...
[P]articularly striking is the suddenness of onset of free fall.  Acceleration doesn’t build up gradually...  The building went from full support to zero support, instantly...  One moment, the building is holding; the next moment it lets go and is in complete free fall...  The onset of free fall was not only sudden; it extended across the whole width of the building...  The fact that the roof stayed level shows the building was in free fall across the entire width.  The collapse we see cannot be due to a column failure, or a few column failures, or a sequence of column failures.  All 24 interior columns and 58 perimeter columns had to have been removed...  simultaneously, within a small fraction of a second.”
That explanation spoke to my education, but I thought of a much simpler way of finding the absurdity in this situation.  Without even having to perform the calculations myself, I could go to a simple free fall calculator online and execute a thought experiment.  Knowing the height of WTC 7 was 190 meters, I could plug in my own weight and the air resistance coefficient for a person sky diving and calculate the time it would take for me to fall that distance in free fall acceleration.  The answer: 6.75 seconds...  So if I had jumped off the top of WTC 7 the moment it started "collapsing", I would have hit the ground only 1/20th of a second faster than the roof did?  What hits first, my falling body with nothing but thin air underneath, or WTC 7 with 40,000 tons of structural steel to crash through?  The question answers itself.

I could fall the same height of WTC 7 in 6.75 seconds, only 0.05 seconds longer than it took WTC 7 to "collapse".

It didn't add up, and I knew that I couldn't go back to my normal life and forget about this information.  My world view had been shattered.  I didn't understand the big picture, but I knew that I needed to reset my biggest assumptions about how the world worked and do some serious research to understand how this event could be possible.

Down the Rabbit Hole

To my great relief, over the next few days I found that there was a whole movement of people well aware of the evidence calling into question the official story of 9/11.  I watched dozens of documentaries that exposed me to more and more information like Loose Change, 911 Press for Truth, and what became one of my favorites, 9/11 Mysteries: Demolitions.

I read the testimony of Sibel Edmonds, the FBI translator for terror-related communications and the "most gagged person in the history of the United States of America" who said 9/11 was executed by the "highest levels of NATO, the U.S., M16, CIA and the Pentagon."  I listened to the harrowing story of William Rodriguez, the last man out of the Twin Towers who saved countless lives by leading firefighters up the stairwells with his master key. Unsurprisingly, I had never heard his testimony of bombs going off in the basement before the planes hit.

I wanted to know all I could about 9/11 and along my journey I found claims that made sense to me and plenty of claims that didn't hold water.  Some people said that no planes hit the buildings - that they were holograms!  Others said only space beams or secret direct energy weapons could account for the buildings collapse.  Others claimed that it was all a conspiracy orchestrated by "the Jews".  I found documentaries and YouTube comments that were downright hateful, bigoted, ignorant, and devoid of logical thinking.  Before long I realized that I knew enough about 9/11, in fact I had known all I truly needed to know in the first 5 minutes with my 3 painful facts concerning WTC 7.  I didn't need to know exactly what really happened on 9/11 - whether it was space beams or nano-thermite that brought down the towers didn't add much value.  If WTC 7 could not possibly have been a fire-induced collapse, if that part of the official story was a lie, then the rest of the narrative goes with it.

The big question was cui bono, who benefited?  Who had the motive, the means, and the opportunity to pull this off?  I recalled going to the theatre to see Michael Moore's film "Fahrenheit 9/11" and walking away unconvinced.  If this was all about making money off oil sales it seemed like there were easier ways to get it done.  Eventually I stumbled upon Alex Jones and his film Terrorstorm: A History of Government Sponsored Terrorism.  Now the rabbit hole was getting deep and splitting off into a dozen different directions. From the first time I tuned into the Alex Jones Show he begged his listeners not to believe a word he said but to research the facts for themselves, and I took him up on that challenge.  Every guest he had was an expert on a different topic pointing me to research Eugenics, the Franklin Cover-up, government drug trafficking, the fluoridation of the water supply and a dozen other topics that I would have dismissed as "conspiracy theories" in my old mindset but now I was willing to approach with an open mind.  One of his guests was producer and director Aaron Russo and I watched his documentary America: Freedom to Fascism.  His film sent me back 100 years to 1913 where I started researching the creation of the Federal Reserve and the origin of the income tax.  Now that international bankers were in my sights, my research took me to Antony Sutton and the powers that bankrolled both sides of the greatest wars of the last century including WW1, WW2 and the cold war.  Finally, I started reading the words of the conspirators themselves, books like Tragedy and Hope and The Anglo-American Establishment by Carrol Quigley, The Grand Chessboard by Zbigniew Brzezinski, white papers like Rebuilding America's Defenses by the Project for a New American Century, and declassified documents like Operation Northwoods.

As I processed all of this information found in countless books, reports and documentaries a coherent picture started to emerge.  This picture was composed of a hundred puzzle pieces and 9/11 was just one of those pieces to the larger puzzle.  If I took any one of these other pieces and examined it in isolation I could see how one's first reaction would be to discard it.  "What is more likely, that this one particularly conspiracy theory is real or that everything I know is wrong?"  But when you have a hundred of these instances the odds flip in the other direction and now evidence of an "invisible hand" guiding these events seems more and more plausible.  This force is composed of the most inner circles of banking, government and military found in groups like the Council on Foreign Relations, the Bilderberg Group, and the Order of Skull and Bones.  Some call the this group the Illuminati, Gary Allen called them the Insiders, Alex Jones refers to them as globalists, the John Birch Society described them as a "conspiratorial cabal of internationalists, greedy bankers, and corrupt politicians", and the most popular name of all is what many top government and banking elites refer to as the New World Order.

9/11 Truth Evangelicalism

Once I felt that I sufficiently understood enough of the big picture that I could explain the "who, what, and why" of 9/11, I began spreading the word all day, every day.  First I would burn DVDs of my favorite documentaries to hand out to friends, family, classmates, co-workers and strangers - anyone that would listen.  Then I learned about the activists in Alex Jones' home town of Austin, Texas.  They started a student group called Project for a New American Citizen (PNAC), a play-on words of the previously mentioned Project for a New American Century, a think tank composed of top government officials in the bush administration that infamously longed for a "catastrophic and catalyzing event––like a new Pearl Harbor".

Knowing there is strength in numbers, I formed a chapter of that student group at the University of Iowa and started trying to recruit other activists.  When I was invited to speak at PNAC's conference in Austin, "Rebuilding America's Senses", I met the men behind Brave New Bookstore.  Instead of burning 1 DVD at a time myself, I would order 100 or 500 DVDs and ship them straight to the bookstore.  They would use their superior equipment to burn them all in a fraction of the time and send them to me, professionally labeled, ready to distribute.  Now I could take my activism to the next level.

I networked with the campus anti-war group (those things still existed when the red team was in charge) and secured a booth at their rally.  I made a giant banner for our table and relished the opportunity to hand out DVDs and fliers for our scheduled campus meeting.  I used our status as a recognized university student group to get funding and to set up a table at the student union so that everyone could know why "9/11 was an inside job".

Ultimately, I didn't have much success gaining the kind of converts I wanted.  I expected people to have the same reaction I did when shown WTC 7.  If that particular piece of evidence didn't have the effect I expected, then I had an entire arsenal of 9/11 questions to throw at them - surely something would stick.  But instead, only a handful of people had the same "awakening" that I did, where they recognized the importance of this information and went on their own quest to research and find the truth.  In retrospect, I didn’t have much at all to do with those people, they had the type of life experience or personality that would set them onto that path whether or not I had intervened.  Instead, the majority of people reacted in one of a few ways to my 9/11 Truth evangelicalism:

  • Some claimed to understand what I had shown them but then took an ostrich approach to the information.  One person literally said, "You are right about this, but you shouldn't talk about it."  That statement boggled my mind.
  • Others would agree with me when I talked to them, but then if they encountered someone else preaching the opposite view they would change their tune like a leaf in the wind.  They weren't convinced by the evidence, they were just easily persuaded by anyone that spoke with authority.
  • The vast majority weren't convinced by the evidence I presented.  My carefully presented arguments would elicit an emotional response and the next thing we're in an argument.  In the case of a close friend or family member we would end with a stalemate to save the relationship, there are some topics that we just don't talk about.

I didn't come to the conclusion that I should change tactics until the professor that I worked for asked me about my new beliefs.  This was a man I highly respected.  He held multiple advanced degrees in Electrical, Mechanical, and Industrial engineering.  When I worked at his lab I saw him accomplish feats of technical ability that truly humbled me and showed me how much I had to learn.  I did my best to just stick to the scientific facts around WTC 7.  I thought that since that was the evidence that woke me up it had the best chance of getting through to him.  After some back and forth debate I drew a picture on the whiteboard to illustrate my closing argument.  It was a long vertical rectangle on one side (to represent one of the Twin towers) and next to it was a square 1/5th the size of the rectangle suspended in the air.  I asked him, "explain to me the mechanism that would allow the structure to the left to crash through itself and come to the ground at nearly the same speed that it would take the structure to the right to fall through the air".

If there's any reason to question 9/11, the speed and the manner in which the buildings fell is it.

He looked at me and said, "I don’t believe people can be that evil".  And that was it.  We didn’t speak of it again, and frankly, the wind was taken out of my sails.  I realized then that there were some topics that are just too painful to try to push on people and 9/11 was certainly one of them.  Like the Matrix, no one could be told what 9/11 truth is.  You have to see it for yourself.

Changing Tactics: From Negative to Positive

It was around the time that I was becoming disillusioned with 9/11 Truth activism that I stumbled upon a series of YouTube videos of Michael Badnarik's constitution class. This was my 2nd great awakening. After the first 2 segments I was hooked and I proceeded to watch the entire series in one sitting.  He is the one that first taught me the difference between rights and privileges and how they are interconnected with the concept of property.  The consistent logic and common sense of his arguments rang true - even if he held some radical views like "just about everything the government does is unconstitutional".  Learning that he was a presidential candidate for the Libertarian Party, I started reading about libertarianism.  From there I heard about a book called Economics in One Lesson.  Reading that book was my third awakening.  Henry Hazlitt introduced me to the Austrian School of Economics and for the next few years all my free time was spent reading the works of its greatest thinkers, from the founder Carl Menger, to the heroic Ludwig Von Mises, to the man that would become my intellectual mentor through his works on history, economics, ethics, and libertarianism - Murray Rothbard.

Unlike my other awakenings where there was a clear event that separated a former way of thinking from a new world view, my transition from a constitution-supporting minarchist libertarian to a full-blown rothbardian anarcho-capitalist came gradually.  I don’t recall a particular doubt that was shattered as a grand event but I do know that it was through reading Rothbard that the economic, ethical, and even practical case for individualist, property-rights based anarchism made more and more sense.  With all arguments for the "middle of the road" night-watchmen state laid to waste, there was only two logical places to go: full-blown socialist collectivism or to the logical conclusion of libertarianism, anarcho-capitalism.

This second and third awakening was just as important as the first because it showed me what I was for, not only what I was against.  Libertarianism taught me the moral case for freedom: how the consistent application of the non-aggression principle would solve most, if not all of the conflicts we encounter in society.  Austrian Economics teaches the consequences of whether or not we follow the non-aggression principle. It shows how voluntary interactions lead to wealth creation, to capital formation, and to a rising standard of living for everyone.  On the flip side, when we abandon voluntary and peaceful solutions and go to the government with our problems, the laws of human action dictate that scarce resources will be misallocated, wealth will be squandered, and we will be worse off than we would be otherwise.

Without a solid foundation in economics and an ethical / political philosophy, it's easy to be lead astray by anyone that claims to have a common enemy.  For instance, the documentary Zeitgeist became very popular and also spoke to the 9/11 truth community.  However, as the solution for the problems in the world it endorsed getting rid of all money and entering a resource-based economy where all decisions would be dictated by a technological elite with the promise that everything would be free. With an understanding of what money is and how free-market economic decisions ultimately guide scarce resources to be efficiently allocated these pipe dreams are easy to see through.  But without that understanding a 9/11 truther may be jumping out of the frying pan and into the fire.

The other big difference these final awakenings had was to my effectiveness as a communicator and an activist.  From an end-point perspective, I want as many people to join my cause as possible.  So looking at it practically, it is a very difficult and possibly fruitless undertaking to convince someone of a giant conspiracy so that they are against what the New World Order is pushing.  Instead, you can teach logic, economics, and libertarianism so that one naturally ends up at the very same solutions.  This line of attack also allows people to keep the commonly held assumption that the government is filled with well meaning people at all levels.  Once someone finds a hundred examples of government policies that have the opposite effect of the claimed goal, the next logical step is to question if our elites and leaders can really be so intelligent and successful in some areas while completely ignorant and incompetent in others.  At that point one may independently come to the conclusion that it is much more likely that some of our government leaders simply have a different set of secret goals that are not communicated to the public because they are not in our best interest.

Conclusion

In April of 2006 there was no official story on WTC 7.  The 9/11 Commission Report didn't devote a single sentence to the third worst structural failure in history.  That in itself was revealing to me but now that NIST has provided its final report in November of 2008 defenders of the official story are in an even more indefensible position.  At least with no story one could speculate on mysterious causes for WTC 7's collapse such as diesel tanks that may have been stored in the building or entire sections that may have been scooped out by debris without any photographic evidence showing it.  But now NIST's final report has come out and it explicitly states that fire alone caused the collapse and those other factors did not contribute!  Yes, that's right, a heretofore unknown phenomenon called "thermal expansion" explains how normal office fires caused a chain reaction of a "key critical column" to fail and that alone set off a "rapid succession" of structural failures that resulted in a 47 story building laying in a pile of rubble.  I'd call this the "death star" theory of WTC 7.  And while on the one hand I recognize how ridiculous all this is, I always try to keep in mind how difficult this information is to others - even to fellow libertarians or Austrian economists.

Understanding that there is a place and time for everything, I keep my multi-layered beliefs separate based on the type of activity I'm engaged in.  I find that some 9/11 Truth activists continue to talk about 9/11 all day, everyday, whether they are at a libertarian event, a Mises circle, or the local city council meeting.  And on one hand I can't blame them - I used to be that way myself.  But instead of using that approach I like to think of my interactions with others as carefully going through a series of filters.

If I'm interacting with someone that is a die-hard member of the republican or democratic party I'll ask a series of questions related to economics or libertarianism to see how well I can poke holes in their belief that the use of government violence is the best way to solve the issues of society.  If I'm talking to a John Stossel type of libertarian I will try to challenge them to strengthen their foundation by digging deeper into Rothbard and the works of other Austrian economists.  If I'm talking to a fellow anarcho-capitalist, someone that is well aware of the state's crimes and is courageous enough to think we are better off with no state than with one, then that's when I'll start pushing their boundaries when it comes to "conspiracy theories".

There are many entrances to the rabbit hole and while the "collapse" of WTC 7 was the starting point for me that doesn't mean it should be the starting point for everyone.  Looking at the history of false flag attacks on America, 9/11 is just one of many and it's notable only for its boldness.  When the Golf of Tonkin was admittedly faked and resulted in the death of some 3.1 million people in the Vietnam war, or one looks at the false narrative that justified dropping atomic bombs on civilian cities, or the west's involvement in funding Mao Zedong and the mass murder of 60 million people - what are 3,000 deaths compared to that?  Admittedly, the people behind that event were full of hubris and confident in their control over the American booboisie to think they could blow up buildings in broad daylight and get away with it - and that in itself is noteworthy as it shows just how serious a predicament we're in.  But as every 9/11 anniversary comes to pass and every additional false flag event wakes up another wave of people and re-energizes the truth community we'll see if their gamble pays off.

7/28/2014

Battle of the Bears: Deflation or Inflation?

In the first corner, we have Harry S. Dent, Jr. Dent is known for predicting both the decline of Japan and the impact of the Baby Boom generation hitting its peak in spending in the 1990s when most economists were proclaiming the opposite.  In his numerous television and media appearances, Dent warns of a stock market collapse and a deflationary depression due to massive debt deleveraging and the mass retirement of the Boomers.  His company is Dent Research, where he sells subscriptions and products that promote "capitalizing on the predictive power of demographics".  His latest book is The Demographic Cliff: How to Survive and Prosper during the Great Deflation of 2014-2019.

In the opposing corner we have Peter D. Schiff.  Schiff is known for being the lone voice to warn of the housing bubble and stock market crash of 2008.  A video compilation of his media appearances between 2006 and 2007 called "Peter Schiff was Right" went viral with 2 million views, showing him make accurate and dire predictions only to be openly mocked by the media.  Schiff calls himself the "original opponent of the 2008 Wall Street bailout" because he predicted the government's reaction to the crisis and opposed it in 2007, a year before it was even proposed.  In media appearances and on his radio show, Schiff warns that the crash he predicted hasn't happened yet, that what we saw in 2008 and 2009 was merely "the tremor before the earthquake".  He is the founder of several companies, including his investment / brokerage firm Euro Pacific Capital, Euro Pacific Precious Metals, and Euro Pacific Bank Ltd.  In his latest book, The Real Crash: How to Save Yourself and Your Country, Schiff warns that the twin bubbles of the U.S. dollar and treasury bills will pop when the rest of the world stops trusting America's currency and credit, giving us the real crash.

These two men have so many similarities.  Both have accurate and less than accurate predictions to their name.  They seem to have hired the same graphic designer for their latest books, and David Stockman, former OMB director under Reagan and author of The Great Deformation: The Corruption of Capitalism in America, gave them both favorable reviews.  They are both opposed to the government's economic stimulus and both claim that a major crash is coming - warning that our economy is built on a foundation of quicksand.  Both have companies and products behind their name and offer advice in their books that will help their readers brace for the storm ahead.  They both have explanations for why economies rise and fall, and yet, they disagree on something that would seem to be basic and fundamental: will we have inflation or deflation?

The Case for Deflation

The essence of Harry Dent's outlook and the basis for his economic predictions can be summed up in 7 words: People do predictable things as they age.  Given the information age we live in, Dent takes readily available statistics like birth indexes and consumer behavior patterns to make both short and long-term predictions.  To Dent, demographics is the "ultimate indicator that allows you to see around corners, to predict the most fundamental economic trends not just years but decades in advance".

The first step is to identify your peak birth years, like the baby boomers who accelerated in 1937 and peaked in 1961.  The next step is to identify the age when the average individual or family spends the most on some good or service.  The last step is to perform simple arithmetic and then... profit!

For example, the typical household spends the most money overall when the head of the household is age forty-six, so using the powers of addition we arrive at a peak in spending and a concomitant economic boom from 1983 to 2007. Dent argues that despite some bubbles in stocks and real estate that burst along the way, this is exactly what happened.

Dent believes this method also works for specialized industries.  For instance, we know when the typical family rents an apartment, buys their first starter home, upgrades to a McMansion, buys a vacation home, downsizes to a retirement home, and then goes onto a nursing home.  Therefore, we know when we should see these real estate markets rise and fall accordingly.  We also know when the average family will spend the most on diapers or potato chips, mini vans or sports cars, prescription drugs or Carnival cruises, so invest accordingly.  Dent believes that the single most important factor driving middle class economies is consumer spending by age.  In The Demographic Cliff, he states, "consumers are 70 percent of the GDP, and business investment only expands if consumer spending is growing and the government taxes businesses and consumers for its revenues; hence, it follows consumer spending indirectly as well."

Indeed, according to Harry Dent, demographic trends are the primary force driving inflation, deflation, and the booms and busts that take place in the economy.  Dent states, "Inflation rises with younger people entering the workforce, then wanes after they become most productive in their forties.  Deflation can set in when more people retire than entire the workforce."  Based on this understanding, Dent found a strong correlation between the growth in the labor force and inflation, with inflation following by 2.5 years.  Because he can predict the average number of twenty-six year old who will enter the workforce and the average number of sixty-three year olds that will exit, he can predict workforce growth and inflation nearly two decades in advance.  Dent used this "Inflation Indicator" to predict near zero inflation by 2010 in the 1980s, and like clockwork, that's what happened.  To Dent, the role of central banks and politicians is of secondary, or even nominal importance compared to demographic trends.  Dent states, "The greatest inflation in modern history was not caused by central bankers, nor was high workforce growth in the 1970s caused by politicians.  Who would want to create 16 percent inflation and mortgage rates and upset everybody?"

With this understanding of inflation and deflation, it is not surprising that Harry Dent also has a thesis on booms and busts that is centered on demographics.  He calls this the "Eighty-Year, Four-Season Economic Cycle" with the duration equaling roughly the average human lifetime.  Just like we have spring, summer, fall and winter in weather, and youth, adulthood, midlife, and retirement, in life, and innovation, growth, shakeout, and maturity in our business cycle, he sees this 4 stage pattern driving the overall economic cycle:
"New technologies and generational boom-and-bust cycles create a sustained boom that starts in the spring, hits speed bumps in summer with high inflation (think high temperatures) and falling generational spending that then descends into an autumn bubble boom with rising generational spending and productivity, falling inflation and interest rates.  That final boom creates bubbles in financial assets and new technologies and business models that, like after the fallow season of winter, will pay off for many decades to follow, but must first get more efficient by means of the deleveraging of debt bubbles and financial assets (as happened in the 1930's and will occur in the decade ahead).

This is a natural cycle of boom and bust, inflation and deflation, innovation and creative destruction that is the invisible hand of the free market system that has driven us to unprecedented wealth and incomes, especially in the last century.  But, as we've seen, governments taking more and more of the debt drug have stopped the rebalancing of our economy after a glorious fall bubble boom.  That means we won't get to spring and long-term growth again unless we allow the rebalancing and deleveraging to happen."
Hence, Harry Dent has major concerns with the governments of the world partaking in stimulus programs - they are directly fighting the natural and unavoidable deflationary "winter season" of the economic cycle.  Of the four major challenges that he sees coming over the next several decades, he lists #1 as "Unprecedented private and public debt - we must deleverage in the coming decade, against the determined efforts of banks and governments, or the debt will weigh us down for decades".  He looks at the total government debt (19.8 trillion), the total private debt (39.4 trillion), the foreign debt (2.3 trillion) and our unfunded liabilities (66 trillion) to arrive at $127,000,000,000 of debt, or 8.2 times the GDP.  This is the elephant in the room that cannot be ignored forever.

While Dent shares this concern of our debt with many other economists, primarily those he deridingly calls "gold bugs", this is where we start to see big differences.  Dent sees the dollar maintaining its value relative to other currencies, as he believes, "The lesson of the late 2008 meltdown was that the U.S. dollar is the safe haven."  He believes it is a myth that "The falling dollar is eroding our store of value and capacity to save".  Inflation is not a concern for him - it's as ridiculous as worrying about heavy snow in the middle of summer!  Dent predicts gold will continue the decline we've seen the last two years and eventually drop to $250/oz. by 2023.  With the demographic cycle and our mountain of debt as more powerful than any other economic factor, Harry Dent is predicting a deflationary depression from 2014 to 2019.  This will be when America falls off "the demographic cliff".

The Case for Inflation

Whereas Harry Dent sees economics as a byproduct of demographic factors, Peter Schiff adheres to the Austrian School of Economics, and next to Ron Paul, he is one of its most famous modern proponents.  Schiff had a head start in life in this regard, as he is the son of Irwin Schiff, a libertarian, economist, and famous tax protestor who testified before congress' committee on banking and currency to speak against the repeal of the gold reserve requirements for United States currency in 1968, 3 years before Nixon took us off the gold standard.  Irwin, at the age of 86, is currently serving a sentence for tax crimes and promoting his view that the United States government is applying the income tax incorrectly and unconstitutionally. Peter Schiff has spoken about his father's sentence, but I have also heard him tell stories of his father taking him to stores in the 60's as a boy to exchange dollars for pre-1965 coins that had 90% silver content.  Growing up, Irwin would also tell Peter and his brother stories that taught economic theory, which eventually came to be published as How an Economy Grows and Why it Doesn't.  In tribute to their father, Peter and his brother Andrew released a retold version of that story titled How an Economy Grows and Why it Crashes, which I think is one of the best introductions to economics ever written.

Hence, The Real Crash is a book written by someone with a solid background in economic theory.  When you hear him predict the housing bubble to a group of mortgage bankers in 2006 or hear him explain why the economic meltdown should have surprised no one at the Austrian Scholars Conference in 2009, he gives the same point-by-point, detailed analysis as he does in his book of how various interventions in the market have side effects that are easily predictable to someone with an understanding of how the free market works.  For Schiff, the solution is clear and consistent:
"We need to stop bailouts, government spending, government borrowing, and Federal Reserve manipulation of interest rates and debasement of the dollar.  We need to reduce government spending so we can offer real tax relief to the productive sector of our economy.  We need to repeal regulations, mandates, and subsidies that create moral hazard, lead to wasteful and inefficient allocation of resources, and artificially drive up the cost of doing business and hiring workers.  We need to let wages fall, allow people to pay down debt and start saving, and allow companies to make capital investments so that America can start making things again."
His proposed solutions aren't a silver bullet.  As he explains, this is like taking control of a car going 80 miles an hour and steering it into a ditch.  You might walk away with some injuries, but its better than crashing into a brick wall at 120 mph down the road.  But this is the only solution to keep us from continuing our habit of repeating the same mistakes over and over again.  In the 1990s we saw the Federal Reserve inject money into the economy that blew up a bubble in stocks, particularly dot-com companies.  When that bubble burst, instead of learning from that mistake, we allowed Greenspan to manipulate rates even lower, and combined with other government subsidies and programs, we inflated a bubble in housing and the financial institutions that were involved.  Just as Schiff predicted, we didn’t learn from that mistake either, and we compounded the problem with the Wall Street bailouts and government stimulus.  Without another bubble to inflate, we are setting ourselves up to destroy the dollar.  Schiff explains:
"Just as the housing bubble delayed the economic collapse for much of the last decade on the strength of imaginary wealth, the government bubble is propping us up now.  The pressure within the bubble will grow so great that the Federal Reserve will soon have only two options: (a) to finally contract the money supply and let interest rates spike - which will cause immensely more pain than if we had let this happen back in 2002 or 2008; or (b) just keep pumping dollars into the economy, causing hyperinflation and all the evils that come with it.

The politically easier choice will be the latter, wiping out the dollar through hyperinflation.  The grown-up choice will be the former, electing for some painful tightening - which will also entail the federal government admitting that it cannot fulfill all the promises it has made, and it cannot repay everything it owes.

In either case, we'll get the real crash."
Schiff is concerned about our 127 trillion debt and some of the other same economic indicators as Harry Dent, he just has faith that our government is going to make the same mistakes that they've been making the last few decades.  It's like watching a twilight zone fire department attempt to put out fire with gasoline.  It would be great if they'd admit their incompetency and try using water, but this is an institution that has been taught and trained to do things their way for decades.  So if you had to take a bet if the fire would continue to grow or get extinguished, knowing what you do about the people trying to put it out, where would you put your money?

The difference is two-fold, first the question of political expediency.  Can anyone imagine the government admitting we've made a horrible mistake, that social security and our other entitlement programs are bankrupt, and that we need to declare bankruptcy as a country and restructure our debts with our creditors?  No, with a 4 year term limit, any administration is going to continue business as usual and kick the can down the road for someone else to inherit.  The way Schiff sees it, we'll hear:
"Need to pay off the national debt?  Fine, just print more money, and pay it off with that money.
Need to pay for unsustainable entitlements like Medicare and Social Security?  Fine, just print more money, driving up nominal wages and thus tax revenue."
The second big difference between Dent and Schiff is to question what other governments will do when it's clear that the United States has neither the means no the ability to pay off its debts without massive inflation.  Dent argues that it doesn't matter, the dollar will not lose value because other countries are also inflating, and besides, 2008 taught him that the dollar is the save haven.  Schiff asks the question, will that dynamic last forever?
"As of 2010, 60 percent of foreign exchange reserves are in U.S. dollars.  That means, as a foreign country, you're willing to take dollars because you know some other country will be willing to take dollars.  That other country will take dollars because some third country will take dollars.  If this sounds familiar, its because we've seen it before.

In 1999, people were investing in dot-coms not because they thought these companies might make a profit, but because they thought someone else would be willing to buy the stock at an even higher price.

In 2006, people were buying houses not because they thought the house was worth that much, but because they thought they'd be able to flip it for more money to someone else.

This is only slightly different from a Ponzi scheme.  It all depends on the existence of a greater fool.  Eventually you run out of fools and the bubble pops."
So again, are we never going to run out of fools?  Will China continue to send us ships full of goods, only to return to their shores empty with nothing to show for it but more of our bonds?  Will they do this forever?  And if this won't last forever, what will happen then?  Schiff doesn't claim to be able to predict to the same level of accuracy as Harry Dent with respect to when events will happen.  He doesn't take the short term approach, but he has confidence in what will happen in the long term, and he's willing to ride out the temporary bumps in the road until we get to that destination.  It's not a destination he wants, because it's not a pretty picture:
"Unfortunately, the only way the Fed can keep rates artificially low as inflation rises is to create even more inflation.  Our creditors are only willing to lend us money at low rates because they believe inflation is not a problem, and that if it were to become one, the Fed would quickly extinguish it.  Once they discover otherwise, our creditors will refuse to lend.

So to keep rates down, the Fed will have to buy any bonds our creditors will refuse to roll over.  The problem is that the more money the Fed prints to pay off maturing bonds, the more inflation it must create to buy them.  This process feeds on itself.  Soon it's not just Treasuries the Fed has to buy, but all dollar-denominated debt.  No private buyers will purchase corporate or municipal bonds at rates far below the official inflation rate.  That is when its balance sheet really explodes.  Soon the inflationary fire threatens to burn the dollar and our entire economy to a cinder.  At that point the only choice is between hyperinflation and default.  This is the rock and the hard place the Fed will eventually be between."
Dent may have a point when it comes to the role of demographics in economic trends.  It is plausible that you can foresee when the economy will need more apartments vs McMansions vs retirement communities based on the years since the baby boomers peaked.  But to ignore the power of a government that will do anything to maintain its status of having the world's reserve currency or of the reckless nature of politicians that will do anything to stay in office is to pretend that the hyperinflations of Weimar Germany or Zimbabwe never occurred.  If the bankers are willing or forced to print endless amounts of money, then we will see inflation, demographics be damned.

Lost in Translation

Now that we've reviewed the cases for deflation and inflation from two leading experts that both predict a coming crisis during this supposed stimulus-induced recovery, let's take a step back and revisit our core definitions.  Recently the Austrians have been mocked and accused of making up their own definition for inflation out of thin air, but in actuality there has been a difference of opinion on this term for over 100 years, making meaningful discussion of this concept all the more difficult.

As Robert Murphy recently wrote, Ludwig von Mises and other proponents of the Austrian School of Economics refer to the object of inflation as the money supply itself, while other economists refer to inflation as a rise in the price of goods.  Specifically, Mises said the only rational definition of inflation would be "an increase in the quantity of money … that is not offset by a corresponding increase in the need for money."  This qualifier is important, because according to the Austrian school an increase in the supply of money and an increase in prices are not the same thing or even a necessary consequence of each other.  True, if you imagine a thought experiment where you magically double the supply of money that everyone possesses and hold everything else the same, then twice the number of dollars would be chasing the same amount of goods and services so you would see those prices increase.  But in the real world there are many factors that could drive prices down, including demographics and other consumer trends.  So all the Austrians can say is that logically, an increase in the supply of money will increase prices higher than they would otherwise be absent that increase in the money supply.  What would the prices be absent the inflation of the money supply?  It's impossible to say.  Maybe other factors would have driven prices down 10%, but due to the inflation of the money supply they only went down 5%.  In this case an inflation of the money supply didn't result in "prices rising" - so it's important to distinguish the two.

This qualifier is important considering some of the claims that Harry Dent makes when he makes the case for inflation being a good and necessary thing:
"All debt and financial asset bubbles are followed by deflation, not inflation or hyperinflation.  The core theory behind the hyperinflation view is that governments, by endlessly inflating, create inflation.  The argument is that this causes a debasing of the currency, robbing you of your purchasing power and standard of living.  This is simply not the case, and if you don't understand what actually causes inflation and why it is often not a bad thing, you will make bad investment decisions."
I was hoping for a well thought out rebuttal, but I came away disappointed:
"Since its invention in 1971, the ever-multiplying microchip has created a revolution in human communications.  The microchip's rapid evolution has also been a clear sign of progress and a harbinger of a higher standard of living.  So why would the multiplication of dollars not also be a sign of progress that similarly fosters a revolution in urbanization, a more complex and richer specialization of skills, and an improved standard of living?  We're not talking about the recent QE here.  We are talking about the story of economic history: more dollars per person and, more to the point, increasing urbanization that leads to rising affluence and the need for more dollars for transactions."
So according to Dent, as more people enter the work force, the increased specialization requires the need to pay people more money.  Through a mechanism that Dent doesn't identify, this need for money results in its creation, thus, inflation is natural and even welcome.  Schiff argues the opposite:
"For most of our country's history, the dollar gained value.  The dollar was worth 75 percent more in 1912 than it was worth in 1800.  You know those stories were your parents or grandparents tell about how they used to buy a sandwich and a fountain soda for a dime?  How everything was so much cheaper back in the day?

If you were around in 1900, for instance, the old folks didn't tell those sorts of stories.  What cost a dime in 1900 probably had cost fifteen cents in 1875, and twenty cents in 1800.

Of course, since 1912, the dollar has lost more than 95 percent of its value.  What cost a nickel in 1912 costs a dollar today. What cost $50 in 1912 costs $1,000 today."
Schiff goes onto explain the economic reasons that inflation is harmful:
"Inflation discourages savings and encourages consumption.  If you save your money for later, you know it won't be worth as much later.  That means you may as well spend it today before it loses its value.

Savings are the only way an economy can progress.  Only with savings does anyone have the capital or the leisure time to make machines, invent something new, or launch companies.  So by discouraging saving, steady inflation stultifies economic progress."
Dent uses the same rationale for explaining why inflation is good to make the case that the dollar hasn’t really lost value since 1913 since we are so much richer today.  Ironically, Dent writes:
"Are you better off than your great-granddaddy was? Indeed you are: after adjusting for inflation, wages are 7.1 times higher than in 1900, the very period of rising inflation and the supposedly falling "value" of the dollar.  Hence, it's not the "value" of the dollar but what your income in dollars will buy over time that counts."
The purchasing power of the dollar has dropped while real manufacturing wages have increased (according to government CPI).  So which is it, have we gotten richer or poorer than our grandparents?

Finally we come back to something that Schiff and Dent would agree on, the "value" of the dollar cannot only be expressed in nominal terms, but in relation to other items.  But while Dent points to the conveniences of modern times in proof that the "Purchasing Power of the U.S. Dollar" chart is misleading and wrong, Schiff has made the opposite case through real world examples.

In one broadcast, Schiff expounded on the statistic that in 1947 the average non-farm worker made $50 per week.  Translating this into "real money" (gold), that would be 1.4286 ounces of gold a week (at $35/oz.), which today would be $1,928.61 per week (at $1,350/oz.).  But back then people didn't pay income taxes, so instead of making the equivalent of $108,002 a year, assume 30% more from income tax and you arrive at $140,401 per year.

Now recall that today the average person makes $43,000 per year, and that person is probably a college graduate.  Now the mystery of how the average worker in 1947 with nothing but a high school degree could afford to support a wife and 5 kids in a house with a two car garage - he was making 3 times as much!

In another episode Schiff reminisces about the Brady Bunch and wonders how a modern day Brady Bunch could afford their live-in house keeper, Alice.  Again, we arrive at the same conclusion: back then Mike Brady, an architect, could afford a 4 bedroom house, a live-in house keeper, 6 kids, a wife that didn't have a job, and 2 cars.  That show wasn't based on science fiction - that is how the average American could live back then.

People can disagree on this point, but I don’t believe the proliferation of iPhones and iPads constitutes an improvement in the standard of living when it now takes two wage earners to put bread on the table instead of one.  In a free market economy we should expect falling prices and higher quality as the natural order of things, not higher prices.  Since everyone reading this has always lived in a world of rising prices due to the Federal Reserve creating artificially low interest rates and an expanding monetary base, this might be hard to imagine, but Schiff explains:
"Slow, steady deflation, though, is the natural state of things in an economy with sound, stable money.

Think about it this way: does creating a particular product or performing a particular service generally become easier or harder over time?  In most cases, it becomes easier: your computer becomes faster and the software gets better.  Manufacturing equipment improves.  Through practice, people figure out more efficient ways of doing the same thing.

So as widgets get easier to make, the cost of production goes down.  In a competitive market, this will bring the price of the widget down.  In other words, what we see with electronics would be the case with everything.
...
As long as you keep pace with the market, you can keep your pay steady, but prices will fall.  That way, you're getting richer."
Indeed, we should be getting richer.  Absent the government interferences described in The Real Crash, we should be enjoying all the material goods of modern technology while at the same time being able to work less and enjoy more leisure.  We should be working 10 hours per week and living in a Jetson's world, but instead our government seems intent on returning us to the world of the Flintstones.

Conclusion

Given the hero like status I confer to Peter Schiff it's hard to come off as objective.  That said, since I've been fearing inflation and preparing for the collapse year after year, I wanted to give Harry Dent the benefit of the doubt and let him make his case for deflation with an open mind.  After all, he shares many of the same concerns as other economists I respect, so maybe he is just seeing something that they're not.

Needless to say, I came away from his book very much unconvinced.  What I admire in people is consistency, and that is not something I find in Harry Dent.  While Dent claims to "espouse free-market capitalism as much as anyone", he goes on to call for a carbon-tax to "account for costs that the free market can't control", he supports government enforced savings programs to "combat our worst tendencies to not save", he says we need more government and more taxes to fund it because "Capitalism cannot excel in a libertarian society", and he supports a government-driven one-payer system for the most basic health care services because that brings "universal care and economies of scale and bargaining power to lower costs".  With a friend of free markets like that, who needs enemies?

Compare his recommendation of how to fix our healthcare system with Peter Schiff's analysis and the difference is striking.  Schiff devotes 34 pages to explaining how the government interventions that have been created over the last 50 years have caused our health-care system to be the mess that it is today.  It's almost like he's speaking directly to Dent when he writes:
"Health Care is different.
...
Often, politicians and journalists say it in order to justify government interference.  We can't just live this up to the market, because the market doesn't work here. Health care is too different.

Or people say "health care is different" as a way of explaining away all the problems regarding health care in our economy.  It's easier than trying to root out the causes.

But no, health care isn't that different.  The laws of supply and demand still apply.  If health care seems to operate outside the normal laws of economics, it's because our government treats it so differently."
From there Schiff goes on to explain the how the third-party-payer problem, the tax deduction on health care, over regulation of insurers, Obamacare, socialized medicine, the employer-based insurance system, malpractice reform, the FDA, and the licensing model for doctors all conspire to wreck our healthcare system one way or another.  He explains the history of each government intervention and logically traces how it has caused a problem.  That problem only leads to another "solution" by government intervention, which leads to another problem, until we get to the point that we're at today where a supposed supporter of free-markets like Harry Dent is endorsing a full-blown single-payer socialized healthcare system as the solution.

If there is something to be gained from Dent's book, I find some of the detailed investment advice interesting, such as when would be the best time to invest in apartments, starter homes, or retirement / vacation homes.  He believes that businesses that focus on health facilities, nursing homes, and assisted living care facilities will be needed for the next few decades - that makes sense.  But given his overall outlook on the future and his severe lack of solid economic theory, I'd take his advice only for short-term investments that I'm willing to lose.  When it comes to where I'm putting my money for the long-term, I'm unconcerned with The Demographic Cliff and I'm preparing for The Real Crash.
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