31 December 2010

Future, Past

This is still a vanity blog as I said when I started it at the end of DEC 2005: this is not a dialogue blog, nor one that particularly entices commentary. I added the comments feature at the behest of a few individuals who then, of course, rarely commented. It is not that sort of blog, not a social blog. For the most part I am not a social person, and rarely did I go out when I was well and now, in worse straights, those times are limited still further. The social gatherings I did go to were rarely those to 'blow off steam' but, rather, had a point to them: conventions, interest meetings and gaming sessions. I dearly love society and those that keep it going. Unfortunately I am not refreshed nor renewed when partaking of it.

Also while I may write about current events it is in no way to assert that they should be read now, in the present, when these things are current. This blog has not been about the now, the present, but about a time after now, a time when these messages in bottles dispersed into caches around the globe will be available to those who need them. I desperately want them to not be needed by those in the future who will stumble across them.

Hope, while many things, is not a strategy.

It has been my pleasure and my horror to examine the 'problems' of the modern world in regards to terrorism. The horror, beyond the activity itself, is the degradation of our language, politics and even how we conceive of such things as society as we head down a path that is unmoored from the past. The past is to be our teacher and, as a teacher, she is not necessarily nice, sweet, kind, decent and even has some rather harsh concepts to get across to us. If we tremor in fear at those lessons, seek to say 'we are much better now' or to do worse and say 'what bad people these were in the past' we then distance ourselves from who and what we are as human beings. The horrors of the past are sometimes done in ignorance of what it is that is being done: the Children's Crusade began with such fervor over the innocent going to war, their fate, however, could have been predicted by any military expert who stepped away from the ideology and just looked at the skills and logistics of those going to war. World War I was taken on with the full and complete knowledge of how warfare had fundamentally changed as seen in the US Civil War and, yet, that was all discounted because we were (after all) Americans and uncouth. Yet the brutal logic of rate of fire, increased accuracy at far further distances and the invention of the machine gun all had precursors in the US Civil War that saw the first static trench warfare of the modern era in the Siege of Richmond. Europe had decided to ignore the past in that instance and in that of the Children's Crusade, and the result was horror beyond belief. Today the sensibilities of the effete elite are queasy even at the mention of war and what it is, as a function of Nation States. This does not get you an era without war, but an era with old forms of warfare that were being crushed when we were civilized now finding new root and growing quickly.

Those who wish to point out the cold facts of what warfare is, in the modern sense, are shunned by those who dare not even let themselves think of human conflict. When it is pointed out that the civilized rules of war that we have created to ensure the absolute brutality of war is kept at a minimum, they scoff, at once, and point to Dresden or Hiroshima. Yet the logic of Total War is that public military forces are but a representation of their Nation State and that mass war requires mass production which, in its turn, requires that the commerce of the Nation State be put into the battlefield to support the logistics of mass warfare. In a very real sense World War I and II were not won on the battlefield, but in the factories, mines, dams and productive capacity of the Nations involved to field forces. Soviet Russia moved entire factories to the Urals lest they be over-run and the Nation lose its production capability. Germany was at once blocked from resources and then had their productive capacity bombed and that was in retaliation for Germany doing the same thing to the UK. Japan did not realize the true wealth of North America in her resources and idled factories, and the fact that the Nation had to buy much of the steel seen in its aircraft, tanks and ships from the US before the war, speaks volumes about the inability of the island Nation to last through a long war. That is why they went after Manchuria, raped Peking, and went after Dutch and British holdings that had oil fields attached to them: the resources were necessary to run a modern war.

This logic of war cannot be glossed over and say that we are less civilized for waging it this way, and any student of history will look back at the 30 Years and 100 Years Wars and see that even without modern productive capacity, the populations were not exempt from the ravages of war and, in fact, were often the targets of war, though not due to industrial might but due to religious concerns. The absolute horror of 20% of Europe dead due to the 30 Years War started the Western Nation State into the idea of civilizing warfare and examining just what war was in the era of the Nation State. Here the differentiation of the powers of a Nation State and its government were put in context of society and discourse between Nations so that it could be examined, reflected upon and codified. The logic of those time still exists, today, in Total War and we consider it brutal beyond all knowledge to attack those who do not take part in the support of armies in the field... even when Total War requires that same commitment due to the logic of industrialized warfare.

Now we live in a post-Total War era: where the weapons are so horrifically capable that those of Mass Destruction must be aimed at population centers as they are the productive capacity of a Nation State. Yet, with all that power, the recent fights in the world have been of the small scale and of a different tone, tenor and type than we have seen in the interim period of the late 19th through the last quarter of the 20th century. We cannot return to those days as they are gone to us in our technical genius. Yet that same technical genius has put into play the most corrosive and destructive type of warfare known to modern man and it is not that of Nation States but individuals and bands of same, fighting without sanction as zealots and warlords. This most abhorrent kind of war we have tried to call 'terrorism' but even those on the political Left admit that 'terrorism' is just a tactic. With that said none dare call this type of war that 'terrorism' is a part of by its proper name.

It isn't because we fear that name. We should be so lucky!

It is because the political class of the 20th century has seen fit to try and divest our societies of their understandings of the nature of war, Nation States and Empires, and so they have decided that the term of 'piracy' deals with ships, booty, parrots, rum and an era long, long gone. Yet they exist not just as 'pirates' but as this thing known as 'terrorism', and they both come under a larger term that describes all this activity that you can read about going at least as far back to the fall of the Old Hittite Empire all the way to Soviet paratroop forces in the 1920's going after a bandit army in the hinterlands. The logic of what to call this category of activity, call it 'piracy' or 'terrorism' or 'bandit armies' or 'barbarian hordes', is known by the activity they do in pursuit of their ends.

If Public War, that thing we do as Nation States with solemnity, votes, declarations and such is what we know and it is the sanctioned use of force to assert the will of a Nation, then what is its opposite?

It is not Total War, that is Public War at its terminal conclusive stance in the system of Nation States.

This other form of warfare is done by individuals, without sanction, without pomp, without accountability, without public assent, without uniforms, without chain of command, without any trappings of establishing a Nation State or at least a State so that we may call them 'rebels' and at least offer them the sanctuary of the civilized rules of war. Those who disdain all of that are the enemies of not just their targets, but of all civilized means as they set themselves up to be judge, jury, executioner and they have no codified stance so they mete out such things at whim.

The term for this is Private War and it is the scourge of mankind as it is the harbinger of civilizations about to collapse or on the brink of same.

The Bronze Age saw this happen and the records are in numerous places with only Ancient Egypt surviving, and then only after losing all of its holdings East of the Sinai and West into the desert and coastal areas of North Africa. The Old Hittites, Assyrians, and Achaean Greek civilizations all fell. Ancient Egypt survived under Ramses III who would defeat the Sea Peoples and secure the coastline of Egypt. The ravages of the Sea People are still in evidence on inscriptions in Egypt, Syria, Turkey, Greece, Crete and as far west as Gibraltar including Greek colonies in Sicily and the Italian Peninsula. The Linear B alphabet was lost due to this, as was literacy amongst the Greeks. The New Hittites would never establish the depth of power of the Old Hittites and never assemble anything close to the Old Hittite diplomatic archive. Egypt was destabilized and only pushing the Sea People and their land based confederates back to the shores saved the core of Ancient Egypt.

What fell was, of course, Troy, but more importantly the Old Hittite trade web that stretched beyond Egypt to what we now call Ethiopia all the way out to Mesopotamia and perhaps even to China, northeast to Siberia, north to the Baltic Sea and West to modern day France and Gibraltar. Troy was the major trade-hub of goods going from the Black to Mediterranean Seas, and goods going from Asia minor to Europe, and the islands and southern coast of Asia Minor represented a wealth of Hittite affiliates and colonies that plied their trade with the Greeks and Egyptians. They probably used many languages for trade, but only one was kept in baked clay which now has piles of shards in the Eastern Med and can be found scattered across some parts of the Western Med and even along the old Hittite trade routes into Asia: Linear B. Once deciphered Linear B proves out to be Greek and the shards are parts of shopping lists. There are still unmarked piles of shards of Linear B to this day, out in the open, they are that common. When you see a pile a foot deep, and more in the surf in the shoreline and further piles and scattered pieces along trails, you begin to get the idea of just how common shopping lists were and just how often they were used. The vast trade complex at Troy, with the perfect winds and shallow (now silted in harbor that is a field) plus scores of out-buildings, secondary wall, moat... all of that was a trade city of vast wealth that would dry up with the harbor and the moment trade was no longer safe through it. A decade long war to deprive Troy of its satellite support cities worked very well: Troy fell. So did the trade web.

Troy fell to war as we more or less know it, although without civilized refinements it was Public War of the 'attrition' sort.

What came after you can read about in the Odyssey: men on ships going to far shores for wealth, trade goods and even just for food. There is evidence that at least one Old Hittite city depopulated completely with its people set to sea who would then migrate West after ravaging the Eastern Med. After those times of troubles the resettling of all these peoples onto the shores of the Med would lead to new peoples arising (like the Phoenicians) and start to set the basis for much of the later history that would come about because of this set of migrations. What actually set them to motion may be multi-causational: the Lukka people lost their city when they went against their former Hittite allies, the Denyan's were possibly the Israelite Tribe of Dan exiled to ships, a somewhat drier and cooler climate regime changed fertile agricultural zones from where they had been, a plague ravaged the Old Hittite Empire, a number of smaller trade cities on Anatolia suffered from war and invasions, the possibility of earthquakes hitting a major city or a volcano erupting cannot be discounted... what can be said is that when civilized ways collapsed the uncivilized ways of warlords, pirates, brigands and roving peoples began. This may have gone on for as long as 300 years, but the transition from relatively stable City State and Imperial relations to roving Sea Peoples is, perhaps, all of two generations at the starting end. Call it less than 100 years, and probably less than 60 years.

It takes a number of items to bring down a civilized set of interactions between States. Today we have the breakdown of international trade due to absolutely insane forms of spending and borrowing not just in the US but across Europe, Asia as well. Unwilling to pay for government services up front, governments go into debt, money systems become destabilized and when this spreads into the interiors of Nations, then the ability to actually trade based on debt starts to decline, often rapidly. Building magnificent projects or spending huge amounts to 'help the retired' does not mitigate the debt that piles up that is to be paid off: trade suffers as debt is a very hard thing to trade with as its real value is in the negative, not the positive. Today thousands of ocean going freighters are at anchor in parts of Oceania and a 19th century clipper ship delivered goods faster than today's transports because it isn't worth spending the money to go fast. A President wants a railroad system as fast as it was... in the 1920's. Hooking people on government handouts turns them into beggars in their own land, waiting for handouts from the benevolent tyrants who have impoverished them with the very best of intentions. Strife of the Private War kind restarted, with great vigor, as ideological in nature, fostered by the USSR and other 'Red' Nations. Now, that has spilled over into religion and there is a religion on the move: Islam. Just as the Sea People move, so do they, and they bring their culture of strife with them, which gets you strife in your own land. It is not civilized to treat women as property, kill daughters because they dare to seek companionship of someone you do not approve based on religion, and to put forward that your religion will dominate all others and be the only religion on Earth.

Christians had some very nasty wars to go through to finally realize that the God of Reason does not speak in such ways but through persuasion of the mind. Yet that very ability to reason is now put at odds with an age of unreason in finances, debt, services, and a high twisting of what it means to be civilized so as to never criticize one's own degeneracy in not opposing the downfall of it. If we cannot oppose that most degenerate form of war, Private War, in which all Nations are at peril, then how, praytell, can the effete elite ever think about actually paying for the goodies they so dearly want via other people's money? Government is not made because man is 'perfectible' but because we are beings of nature with the flaws of nature within us and the very best we can do to safeguard ourselves from our fellow man is to create accountable governance. If we could be perfected by spending, we long ago would have reached that point and turned into perfect beings. Or at least convinced the poor that they should seek to not need a handout in perpetuity and to help their fellow man by working for what they eat... unfortunately the fruits of one's labor are readily taken by government with ever expanding appetite and power.

Government is built upon the ruins of paradise not because we are evil, but because in Nature and without society, there is no difference between evil and good. When man reverts to Natural Man by conscious design, he becomes that horror able to do anything at whim, including wage war on the rest of mankind. When we are able to reason we stop being amoral animals and become moral creatures who seek society so as to protect one's family, oneself and then those that are agreeable to common ways. All government is self-government, and must start with the individual. When you wish others to pay for your goodness, you are not upholding your part of the bargain: seeking to have government steal from others to 'do good' is an evil act in and of itself as it seeks to allow one to wash oneself of the responsibility to care for their fellow man in common society. That is not a 'noble' cause, even when nobles practice it: it is a degradation of your moral character, by you, because you are afraid to do good. Government is a necessary evil due to our fear of our fellow man turning into a creature of Nature once more against our society. When government is turned by those who do not uphold their compact with the rest of society, then government becomes evil and divorces itself from the role of being accountable defender of society and becomes the tyrannical dictator to society. The only governments ever able to sustain itself on that basis is called an Empire and they don't last long when more than 1% of the population is literate.

Which is why you aren't taught history, or much of anything else of value, and learning math and the natural sciences is demeaned in favor of the ideologically driven 'social sciences' which have no standards they must adhere to. For all that is taught, little is learned, and slowly the wedge of unreason is driven into our society by no longer teaching what civilization rests upon: YOU.

This is a vanity blog as I do have my points of vanity from time to time.

It is not a blog of unreason, unthinking or uncaring: I do my best to tell you what I see, how I see it and why (that part left out by so many) I see it that way.

I send out no negatives on anything save for those with negative behavior, negative attitudes and negative actions. Those that degrade and corrode society deserve criticism, as does their favored means to do so via our government. Yet for problems I bring up I do try to show a positive means out of them, or at least show they are part of the human condition beyond the ability of any government, at any time, to ameliorate because they are part of the Nature of Man. That is the civilized way to do things and to be civilized one must be civil.

Being civil to each other is our duty.

If you lose a civil tongue you are becoming uncivilized and no matter how good that feels at the start, it winds up with all your cherish gone from you as when you are in need you will find the milk of human kindness has run dry for you... because of what you have said and done in life. Screaming and churning your guts in hatred because someone dares to think differently and disagree with you in a civil manner is just the opposite of being civilized.

I have found that when all is in chaos, being a bastion of order gives calm to those around you.

It is not easy nor without cost to be civilized.

It really is cheaper than degrading yourself to let government be civilized for you, however.

Physically and mentally I am better off than I was when I started: this blog has helped me to recover.

Now there is hard work ahead to continue civilization, and I am busy within the limited energy I have.

Posting will be light. My prior posts show much of where we are going and what is needed to get through.

You cannot think your way to survival, you can only do your way to survival.

Now I do as I say.

Say what I mean.

Mean what I do.

29 December 2010

All I needed to know to fix things was to read Instapunit

It seems I've been reading too much Instapundit these days as the good ideas on how to change the accountability system in DC is coming via his front page.  Now since he gives you what other people are saying, he acts as an aggregator of items... thus the Insty link will be first, his link out second, and any text by his readers or at the linked site will then be brought out. I will add commentary as needed.

Going in reverse chronological order!

Insty - Referencing an earlier post gets an e-mail from TaxProf Paul Caron:

This is the 14th year in a row the GAO has been unable to give a clean auditor’s opinion on the Government’s books!

One wonders why the 112th Congress does not try to extend Sarbanes-Oxley to Congress and treat members as “signing officers” for the U.S. Budget, subjecting them to liability for the GAO’s inability to opine on the Government’s financial statements.

As Insty said: Fat chance. But heh.

Do note that Congress exempts itself from health, safety, workforce rules, and all sorts of other items because... it can!  I didn't know we had an aristocracy in charge of our government.

The GAO hasn't been able to verify the books for 14 years, which means the last time it could do that was 1996.  This is not 'Bush's Fault', but he certainly didn't help, either.  Note that Clinton's vaunted economic mojo didn't prevent this, so I'm not pining away for a renewed Clinton Administration, either. 

And Congress is the 'signatory authority' on spending via the US Constitution.  Every contracts officer in every agency in the federal government is given the OK by Congress to spend.  So, yes, Congress should be considered for liability, too.  Hit them in their own pocketbooks for mismanagement.


Insty - CHANGE: 111th Congress Created More National Debt Than First 100 Combined.

Stop the spending!  You will hear that a lot from me... so simple that even Congress can't figure out how to do it, but a Caveman sure could.


Insty - DAN MITCHELL: Why Can’t We Copy those Radical Free-Market Canadians and Privatize the Air Traffic Control System?

And we could do the Post Office, too!  Although Canada hasn't figured that one out, yet.


Insty - SO IS THIS THE HOPE, OR THE CHANGE? Bureau of Labor Statistics: “Long Term Unemployment” Extended to 5 Years.

Note that this was done for inflation during the Carter years so as to lessen the analysis of what was really going on.  Now we have 'core inflation' which is energy and one or two other items, and the rest of it which is food and daily living expenses.  We used to track all of it, now its all about 'core inflation'.  Remember, when those in power see bad statistics they don't explain them, they change how you measure them.


Insty - UNEXPECTEDLY! Consumer Confidence Shows Surprise Drop In December. “Consumers’ labor market assessment worsened. The ‘jobs hard to get’ index rose to 46.8 percent in December from 46.3 percent last month, while the ‘jobs plentiful’ index dropped to 3.9 percent from 4.3 percent.”

After 'stop the spending' applying to governments there is 'No Shit Sherlock' or NSS applying to the obvious. Insty uses sardonic and sarcastic lead-ins instead, which works just as well.


Insty - MORE ENERGY CORNUCOPIANISM? Drilling for oil and gas in the Beaufort Sea.

Yes there is lots more of the old style of energy resources out there than anyone had ever thought.  'Peak Oil' is a static system analysis based on the known... what wasn't discovered must change that analysis as well as how we consume energy playing its role.  But then I'm for solar power satellites and getting off of stored energy reserves and having to go through intermediary sources (like bio-fuels or algae).  We have a lovely fusion reactor that is always on, so why not use it?


Insty - FINANCIAL TIMES: Non-US banks gain from Fed crisis fund: Half of emergency credit facility cash went to foreign institutions. Healthy ones in many cases — because the Fed didn’t want weak ones to be stigmatized.

Yes, we are bailing out Europe.

No, it isn't working.

Yes we are penalizing the taxpayer and screwing up our economy in search of doing these things, instead of letting the rule of law put things through normal foreclosure and bankruptcy proceedings.

Stop the spending and NSS.


Next is a long one as it tripped off this story idea...

Insty -

JERRY POURNELLE: “The most important event of 2010 was the election, when the country, having turned the Republicans out and confirmed that in the election of Obama, turned the Democrats out as well, and sent a number of newcomers to Washington in the hopes that they would not be captured by the system. Washington meanwhile made ready for them, planning to absorb them into the Iron Law mechanisms that have always been so successful. The most important event of 2011 will be the response of the new Congress to the manipulations of the Creeps and the Nuts, who remain with considerable influence, and the argument that ‘this is the way things are done’ in Washington.

UPDATE: Reader Tim Scott emails:

I see that you have a quote from Dr. Pournelle’s CHAOS MANOR website that was posted yesterday. In my opinion you should have quoted this instead:

Whether the Republicans will stand up to this is questionable. They have the power: they only need to insert “No monies appropriated under this Act shall be applied to the enforcement, regulation, application, implementation, or in any other way of the Patient Protection and Affordable Care Act popularly known as Obamacare”. The Obama Patient Protection etc. act gets its own appropriation, which can be done with considerable care. This will require patience and discipline among Republicans in the face of united scorn from the establishment Country Club Republicans, the mainstream media, and all of the Creeps and the Nuts.

We’ll know soon enough how this will go.

Spread the word on THAT one and see what happens.


Yes!  As a fan of Jerry Pournelle, I do agree with him on much and this is one of those times.  Notice that it doesn't matter how you refer to Congresscritters, Left/Right, Dem/Rep, liberal/conservative, Creeps/Nuts... they all fit.

Definitely a NSS moment.


Insty - FLEECED: The upper 1% earned 19.6% of total income before tax, and paid 41% of the individual federal income tax. “No other major country is so dependent on so few taxpayers.”

We have the most 'progressive' tax code on the planet, to the point where, for the government of all the people less than half the people pay for it.  That is not right and even the poor should pay something to our common government as it protects them as well as the rich.  Otherwise you get a government of, for and by the rich... which is where we are headed.


Insty - JACQUES ATTALI: The West And The Tyranny Of Public Debt.

I'm just giving you the link, the text is worth reading.  Our debt is going to destroy the way we live and work, if we let it.

We must Stop the spending and pay off our debts and be responsible fiscally as a Nation as much as we expect ourselves to be.  And we, as a people, understand that we are to blame for our own fiscal insanity, so to we come to see that government is but a dark reflection of us.


Insty - CAN THIS SURVEY BE RIGHT? In The Worst Economy Ever, People Are Quitting Their Jobs With Nothing Else Lined Up. “While the unemployment number is growing, there is also a growing number of people who don’t see their joblessness as a bad thing.” It’s not unemployment, it’s funemployment!

And his reader replies on the topic say that, yes, this is right.  Not just 'Going Galt' but, also, 'Going Looter' as the public dole looks better than having a real job.  This is how you lose your liberty: it takes a government to 'help' people to do it.


Insty - MICKEY KAUS: Obama And Income Inequality: No New Brazils! “The question is then what makes Brazil Brazil. Is it wild riches at the top, or extreme poverty at the bottom? It seems pretty obvious. . . . The solution is tight labor markets. Get employers bidding for scarce workers and you’ll see incomes rise across the board without the need for government aid programs or tax redistribution. A major enemy of tight labor markets at the bottom is also fairly clear: unchecked immigration by undocumented low-skilled workers. It’s hard for a day laborer to command $18 an hour in the market if there are illegals hanging out on the corner willing to work for $7. Even experts who claim illlegal immigration is good for Americans overall admit that it’s not good for Americans at the bottom. In other words, it’s not good for income equality. Odd, then that Obama, in his ‘war on inequality,’ hasn’t made a big effort to prevent illegal immigration–or at least to prevent illegal immigration from returning with renewed force should the economy recover.”

Via the government minimum wage we have made it so that productive jobs cannot be done by Americans at that minimum wage.  Others can and will take those jobs - illegally.  And if you 'legalize' all the 'illegal immigrants' then they will not be able to keep their former low-paying jobs as... they are citizens!

Why doesn't 'comprehensive immigration' ever get traction?  Imagine the unemployment rate skyrocketing the month after it is passed.

You can't get to a place where citizens can't get jobs because it is illegal to do them at a certain wage... only a government can do that for you.


Insty - JOHN TIERNEY: Economic Optimism? Yes, I’ll Take That Bet.

Good, good reading!

The short term is nasty.  The long term is bright so long as we get rid of the over-burden placed upon our goods, services and liberties.

I like that bet.  Surviving to the long-term is the problem, however.  Rome could have been corrected (as Augustus saw in his last days) if it had leadership willing to turn it back into a republic.  The tightly woven trade structure of the late Bronze Age, however, could not be saved by any single thing.  One came to depend on centralized power, the other centralized and supportive trade... which are we closer to, today?  Or is it neither?  Or both? 

Still, the 5 year bet is a good one if you see how the markets work.

Government is screwing up the market mechanisms.

Our choice: Rome, Greece, or trusting in our liberty and holding people and companies accountable without telling them what to do via regulation.  One of these works, and well.  The others, not so much.


Insty - CHANGE: Cash-Strapped Cities Hit Tax-Exempt Nonprofits With Plethora of ‘Fees.’

Note that 'non-profits' that serve as major income points to make a few individuals rich is something that, really, isn't a 'non-profit' just a limited profit arrangement.

And that takes us to 27 DEC 2010!


In two days we have seen the macro-economic scale: Energy and Trade are most likely to recover and expand.  In the long run things are never as bad as they seem.

Government has been lying to you for decades to try and absolve itself of problems and keep an over-regulated system afloat.  This is not working and is a countervailing force to the longer-term good trends.

In the very short term our people are being corrupted by a system that supports non-work, supports diluting the population by forcing citizens not to work, and then encouraging productive citizens not to work.

Some of the simplest solutions have come in a mere two days!

First - Congress is to be held accountable, personally, for the spending they pass.  They are the originator and that is what they wanted... unless they tried to write themselves out of the bill, in which case there is a Constitutional case to be brought.

Second - There must be a standardized way to examine consumer spending and cash flow.  The current system is being gamed and no one trusts it any more.

Third - Obamacare must be attacked via non-funding on all fronts by the House, all the way to provisos in each spending bill for that so that Obamacare becomes its own, separate, entity.  The States are doing the Court route, which is independent of this, but the massive change to healthcare must be ended.  Ditto this on the 'financial' system that the outgoing Congress is trying to set up.

Fourth - Energy is there for the taking and will lead us to more energy sources over time.  Apparently the planet has a lot of goodies stored away for us... if we dare to use them.

Fifth - Government must stop thinking that it can 'do good' by saying how little a man can make, giving freebies to the 'unemployed' and sucking the lifeblood from this Nation to pay to 'support' other Nations that couldn't figure out fiscal rectitude if they tried.  Paying good money after bad is a bad idea, and 'unemployment' must be limited to encourage the search for new jobs and new types of jobs.


Yes, Stop the spending!

The things that 'regulate' the economy and our lives are now acting contrary to all good sense.  These organs of society started with the best of intentions, but fell into Pournelle's Iron Law of Bureaucracy.  Thus, acting to their own ends for more power, such cancerous organs must go to save the patient which is the Nation.  We will have problems after we get rid of such comfortable cancers, but we will be able to get up and move around and pick up the pieces.  Better that than to succumb to the cancer, now, isn't it?

Regulation only works for regulators.  We now get more authoritarianism, less liberty, less freedom and less personal accountability because government is willing to 'help' us with such lovely, soft chains.  Soon you will live and die at the behest of bureaucrats, there to 'help' you.

But you were born free.

25 December 2010

Merry Christmas!

May your Christmas me joyful and bright,

Merry Christmas to all.

17 December 2010

States on the brink

Prof. Bainbridge offers an interesting look at the possibilities of what would happen if a US State, in this case California, goes bankrupt.  He raises the question if the federal government could offer some sort of 'bailout' and then asks what would that look like?

Before jumping all the way to bankruptcy views of either the personal or commercial kind, lets take a look at the US Constitution and what it has to say about such matters:

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Section 8 is always a good place to start!  Here, however, the general Welfare clause is due to all the States, equally, thus the federal government cannot be seen as 'on the hook' to bail out California.  California did not incur its debts in the name of We the People but for its own population, and, from that, it is primary in its responsibility to solve its debt problems, not the federal government.

This is in stark contrast to the Revolutionary War debt owed to France, which was then apportioned out to the States to pay (which caused the impoverishment of farmers in the North and led to the rising of rebellion).  In that case it was a debt take on by We the People and the burden was to be shared.  Here that is not the case.

The next clauses in Section 8 of interest are the following:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

Highlighting of sections is mine, throughout.

Here there is the interesting piece on the 'uniform Laws on the subject of Bankruptcy'.  This would, apparently, be the clause to look for to create legislation.  With that said the action where it is to be applied to is 'throughout the United States'.  Thus the laws created must be throughout the States so that there is a recognized way for those within the States to have a uniform process applied to them.  If it was then the language would read something like 'Bankruptcies to and throughout the United States'.  This is far too much power to give to a federal government if you are a collection of sovereign States looking to form a joint venture that applies to all of the sovereigns.

With that said the question of making bankruptcy laws for the States, as States, is questionable as they are the sovereign actors that sign on to, and lend power to, the federal government.  As sovereign actors they have the authority to dispute laws which apply to them as sovereigns and an attempt by the federal government to dictate bankruptcy laws to the States is not something that is outlined by this clause.  This is the first stumbling block: as the States are the ones who bring the Constitution into force for their people by agreement, then they are the ones left holding the bag for their people for their interior administration.

There are two venues for how to approach this.

1) Each State creates its own laws for what happens when it goes bankrupt.  This is problematical as it is unlikely to be seen as trustworthy given that the very same government is the one spending the State into bankruptcy.

2) A Convention of the States is held to create a system applicable to all of the States.  This could be through the federal government or by a common assent of 3/4 of the States to agree to have a newly devised system applied to them.

Due to the strict limitation of federal power by Amendments IX and X, the States are left holding the bag for their own problems in the realm of debt.

Those are the positive powers of Congress, as seen in Section 8, and while great for normal affairs of a Nation as a whole, they do not address the Nation as parts as those parts are independent actors within the Union they agree to.

Now onto the the States.

Section. 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

Generally I like to think of Section 10 as the Ten Commandments for the States as they are of the 'thou shall not' form.  Still within that form there are positive articles.

The part on coining money that I highlighted I tried to deal with in a prior post.  Here the proscriptions are fierce, and yet at one time the United States had money from different States under the Constitution.  The difference between now and then is that our current money is scrip that has no backing, while what is allowed is gold and silver Coin as tender for payment.  The United States, itself, stayed on a gold standard before the federal government started to just print money and President Nixon took us off the gold standard.  Paper money can and did represent gold tender with so many dollars per ounce, and this was also true of the States at one time.

Thus, one possibility is the one I outlined in my prior post: have the gold bullion held by the US Treasury divvied up to the States by population with the States to have a gold backed debt scrip set by the State (say at 1200 scrip per ounce of gold, or 2 grams of gold per single scrip).  This could be circulated as Tender in Payment of Debts with a cashout period of, say, 5 years to allow the economy to stabilize inside California (or any other State for that matter).

This would have the benefit of being gold backed, and thus having real value, and extremely limited, which would force California to cap off its debt spending if creditors no longer accepted greenbacks.  Part of sliding into bankruptcy is having your credit drop to nothing, and you are forced to deal in real money that has some backing to it.  As each person in California would have a vested interest in keeping their gold backed scrip inside the State, this would create a decision point on what to do about spending.  A penniless State is one that beggars the imagination, and yet the citizens from it would be free to leave for more fiscally sound States while leaving the bankrupt State behind.  Or the citizenry could demand that the State stop spending the very last part of its wealth, for that is what the gold represents, and downsize internally.  This is a variation of the 'in State' way to solve the bankruptcy via the allowance of being able to pay off debt with only gold or silver. 

When a State loses its creditworthiness it finds borrowing impossible.  Thus a debt scrip would allow it to re-organize internally while the government drastically downsized to fit its revenue from taxation and not squander the last of its wealth in gold and silver.  When others stop accepting money on credit due to the amount of debt financing an individual has to do, they are unable to borrow and must pay 'cash on the barrel'.  Thus it is for a State and once they run out of greenbacks, which would be very quickly these days, they are no longer going to get monetary 'floats' on even short term debt: basic necessities become something you pay for up front, not even on account.  Since such purchasing happens between a State and private enterprises, there is no conflict between the States as this is a business matter, not an internal State-to-State matter: businesses have the right to refuse custom based on inability to pay and being a sovereign does not change that relationship.  This may seem in conflict with Article IV:

Section. 1.

Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.

But that is for laws and proceedings, not for actual credit or debt obligations.  Thus all of Articles I, II and III are done and now into Article IV a bit further.

Here is the meat of what Prof. Bainbridge and some commentators are getting at:

Section. 3.

New States may be admitted by the Congress into this Union; but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.

Section. 4.

The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened), against domestic Violence.

Section 3 is pretty clear: you must be able to guide your own actions as a State before you can be admitted into the United States.  Thusly California is a sovereign with voluntary entry into the Union.  To become a Territory would require the consent of the governed and this is, essentially, a discorporation of a sovereign State:  California, as a sovereign entity, would be at an end.  This is not something that can be imposed by any law as it is the people of the United States, in each State, who guide their own destiny.  While putting forth that having California as a Territory might be more pleasing and be something that the United States is better able to deal with, the United States would then be on the hook for all the debt of the prior State.  To do that would also require an agreement, by Congress, to accept the Territory of California into the protection of the United States as once a State discorporates there is no 'reversion' to the United States as it was free and independent territory before it joined the United States. 

While the United States government would, presumably, claim possession of California, it would be with the understanding of it as a 'failed State' with debt obligation.  That would be true of Mexico, China, Russia or any other Nation that wanted to do so: those debts do not go away and a larger sovereign entity assuming possession of California is stuck with its debt.

The only way for California to rid itself of debt, and this is in the extreme, would be to totally disband and repudiate its current government and hold an internal convention to create a new one only after the old one had defaulted on all debts.  This could, of course, be done within the framework of the US as it stands: the people are free to make any interior government for their State so long as it upholds the commonality of the Constitution.  With that said, California would have trouble getting any credit, any loans, indeed anything, on an other than 'cash only' basis if it did this.  Those that go into default have a very, very, very hard time getting their creditworthiness back, and such a default would reflect badly upon the rest of the States through no fault of their own... which is why States would seek to have their creditworthiness rated separately from that of the Union and other States.  California, meanwhile, would have a State with no contracts, no labor unions, nothing left from its previous incarnation and start from scratch with a new constitution, new laws and a new representation system.  There would be no 'debt spending' as no one will give California any credit and the State may, in fact, see itself wanting a debt scrip just to get some working overhead as a new entity.

The prospects of a new government, after the old one defaults and disbands, is perilous inside or outside the Union: those who would seek to control the new State constitution would try to make it a 'modern' over-burdened affair that, unfortunately, would have no credit to run on.  No matter what would be written into the thing, without any cash to institute any grandiose wealth redistribution schemes, the government would be severely limited in what it could do.  And any attempts to 'soak the rich' even more would cause further emigration from California of anyone willing to work for a living.

Basically California needs to learn the basics of doing for oneself and getting out of the idea of people being entitled to anything more than Life, Liberty and the Pursuit of Happiness... and that last is a risky business as they have found out after catching Happiness: they are now succumbing to it.  They have forgotten the Life is in the Pursuit of Happiness, using one's Liberty.  The moment you think you have gotten it you soon find yourself without Liberty and then, very quickly, without a Life worth living.

14 December 2010

Some thoughts on Julian Assange

Just a thought on the NYT report that Assange has gotten the UK courts to get a bail amount set for him.

First off the publication of the information that prompted his detainment is not the first time he has done so against the US government, and prior ones included the names and information about our sources and methods in Afghanistan.

Second the civil law may not hold much of a venue against a mere publisher of such information.

Third, drafting any such ex-post facto law is truly horrific as one could never know what is and is not legal to do at any time. The civil law is not the place of venue for Mr. Assange on such publication matters, quite obviously.

Thus we start with the full documents on the International Humanitarian Law held by the ICRC, and go down to the Methods and Means of Warfare.

From that list I will start with the Lieber Code that was instantiated by President Abraham Lincoln for the Union forces 1863, which continued to be used into the 1890's.  Thus this part is of interest not only about Mr. Assange, but his informants and highlighting is mine throughout:

Art. 88. A spy is a person who secretly, in disguise or under false pretense, seeks information with the intention of communicating it to the enemy.
The spy is punishable with death by hanging by the neck, whether or not he succeed in obtaining the information or in conveying it to the enemy.

Art. 89. If a citizen of the United States obtains information in a legitimate manner, and betrays it to the enemy, be he a military or civil officer, or a private citizen, he shall suffer death.

Art. 90. A traitor under the law of war, or a war-traitor, is a person in a place or district under Martial Law who, unauthorized by the military commander, gives information of any kind to the enemy, or holds intercourse with him.

Art. 91. The war-traitor is always severely punished. If his offense consists in betraying to the enemy anything concerning the condition, safety, operations, or plans of the troops holding or occupying the place or district, his punishment is death.

Well that starts to put a sort of proper perspective on things as the Congressional Authorization for the Use of Force is a Declaration of War.  Thus those helping us in Afghanistan are brought into the conflict and the publication of their names is a direct help to the enemies of the US.  Really, you shouldn't do that during wartime.

Now to skip ahead to the Hague Convention II 1899:

On spies
Art. 29. An individual can only be considered a spy if, acting clandestinely, or on false pretences, he obtains, or seeks to obtain information in the zone of operations of a belligerent, with the intention of communicating it to the hostile party.

Thus, soldiers not in disguise who have penetrated into the zone of operations of a hostile army to obtain information are not considered spies. Similarly, the following are not considered spies: soldiers or civilians, carrying out their mission openly, charged with the delivery of despatches destined either for their own army or for that of the enemy. To this class belong likewise individuals sent in balloons to deliver despatches, and generally to maintain communication between the various parts of an army or a territory.

Art. 30. A spy taken in the act cannot be punished without previous trial.

Art. 31. A spy who, after rejoining the army to which he belongs, is subsequently captured by the enemy, is treated as a prisoner of war, and incurs no responsibility for his previous acts of espionage.

Whoever provided the information to Mr. Assange would be considered a spy in the Hague Conventions.  Would Mr. Assange?  If he was just given the information and went through proper channels at DoD to ask about publication, the answer would be 'no': the information would have been cleared by a power in the war.  As he did not do so and did communicate the information to our enemies in the field, then his activity is that of espionage.  Similarly the 1907 Hague Convention IV has the same verbiage for Spies.

Now onto another part of this with the Hague Convention V 1907 which deals with Neutral countries:


Article 1. The territory of neutral Powers is inviolable.

Art. 2. Belligerents are forbidden to move troops or convoys of either munitions of war or supplies across the territory of a neutral Power.

Art. 3. Belligerents are likewise forbidden to:
(a) Erect on the territory of a neutral Power a wireless telegraphy station or other apparatus for the purpose of communicating with belligerent forces on land or sea;
(b) Use any installation of this kind established by them before the war on the territory of a neutral Power for purely military purposes, and which has not been opened for the service of public messages.

Art. 4. Corps of combatants cannot be formed nor recruiting agencies opened on the territory of a neutral Power to assist the belligerents.

Art. 5. A neutral Power must not allow any of the acts referred to in Articles 2 to 4 to occur on its territory.

It is not called upon to punish acts in violation of its neutrality unless the said acts have been committed on its own territory.

Art. 6. The responsibility of a neutral Power is not engaged by the fact of persons crossing the frontier separately to offer their services to one of the belligerents.

Art. 7. A neutral Power is not called upon to prevent the export or transport, on behalf of one or other of the belligerents, of arms, munitions of war, or, in general, of anything which can be of use to an army or a fleet.

Art. 8. A neutral Power is not called upon to forbid or restrict the use on behalf of the belligerents of telegraph or telephone cables or of wireless telegraphy apparatus belonging to it or to companies or private individuals.

Art. 9. Every measure of restriction or prohibition taken by a neutral Power in regard to the matters referred to in Articles 7 and 8 must be impartially applied by it to both belligerents.

A neutral Power must see to the same obligation being observed by companies or private individuals owning telegraph or telephone cables or wireless telegraphy apparatus.

I do love the formality of such things!

The Convention covers the countries and Neutral persons:



Art. 16. The nationals of a State which is not taking part in the war are considered as neutrals.

Art. 17 A neutral cannot avail himself of his neutrality
(a) If he commits hostile acts against a belligerent;
(b) If he commits acts in favor of a belligerent
, particularly if he voluntarily enlists in the ranks of the armed force of one of the parties. In such a case, the neutral shall not be more severly treated by the belligerent as against whom he has abandoned his neutrality than a national of the other belligerent State could be for the same act.

Art. 18. The following acts shall not be considered as committed in favour of one belligerent in the sense of
Article 17, letter (b):
(a) Supplies furnished or loans made to one of the belligerents, provided that the person who furnishes the supplies or who makes the loans lives neither in the territory of the other party nor in the territory occupied by him, and that the supplies do not come from these territories;
(b) Services rendered in matters of police or civil administration.

Well espionage, which includes the transmittal of information is helping out a party to a conflict or, more appropriately, against a party to a conflict.

Now a fascinating addition to the Hague Conventions are the Hague Rules 1923 that cover wireless transmission, as they would also apply to our current mixed-mode internet:

Art. 8. Neutral mobile wireless stations shall abstain from keeping a written copy of wireless messages received from belligerent military wireless stations, unless such messages are destined for the said neutral stations.

The violation of this rule entitles the belligerents to confiscate the texts in question.

Oh, and that would mean Mr. Assange was taking sides in the conflict(s) the US is in, by his own action.

The Fourth 1949 Geneva Convention only covers espionage as it relates to occupied territory, and deals more in the field than things outside of it.  Full trials are to be provided for 'protected persons' (civilians) in the area of occupation for any offenses (military or civil) done there.  Thus as Afghanistan has been liberated but still requires the presence of US forces to maintain its integrity against hostile elements at war with both Nations, that means that either party in the territory (Afghanistan or the US) may utilize the general schema.  Now given that full trial and appeals are available, lets look at what is within its confines:

Art. 68. Protected persons who commit an offence which is solely intended to harm the Occupying Power, but which does not constitute an attempt on the life or limb of members of the occupying forces or administration, nor a grave collective danger, nor seriously damage the property of the occupying forces or administration or the installations used by them, shall be liable to internment or simple imprisonment, provided the duration of such internment or imprisonment is proportionate to the offence committed. Furthermore, internment or imprisonment shall, for such offences, be the only measure adopted for depriving protected persons of liberty. The courts provided for under Article 66 of the present Convention may at their discretion convert a sentence of imprisonment to one of internment for the same period.

The penal provisions promulgated by the Occupying Power in accordance with Articles 64 and 65 may impose the death penalty against a protected person only in cases where the person is guilty of espionage, of serious acts of sabotage against the military installations of the Occupying Power or of intentional offences which have caused the death of one or more persons, provided that such offences were punishable by death under the law of the occupied territory in force before the occupation began.

The death penalty may not be pronounced against a protected person unless the attention of the court has been particularly called to the fact that since the accused is not a national of the Occupying Power, he is not bound to it by any duty of allegiance.

In any case, the death penalty may not be pronounced on a protected person who was under eighteen years of age at the time of the offence.

Art. 69. In all cases the duration of the period during which a protected person accused of an offence is under arrest awaiting trial or punishment shall be deducted from any period of imprisonment of awarded.

Art. 70. Protected persons shall not be arrested, prosecuted or convicted by the Occupying Power for acts committed or for opinions expressed before the occupation, or during a temporary interruption thereof, with the exception of breaches of the laws and customs of war.

Nationals of the occupying Power who, before the outbreak of hostilities, have sought refuge in the territory of the occupied State, shall not be arrested, prosecuted, convicted or deported from the occupied territory, except for offences committed after the outbreak of hostilities, or for offences under common law committed before the outbreak of hostilities which, according to the law of the occupied State, would have justified extradition in time of peace.

So it is a multipart thing that allows for trials: espionage, or serious acts of sabotage against military installations, or intentional offenses which caused the death of one or more persons.  For Afghanistan the recourse is to its own civil code to see what the punishments would be, while for the US we could use our military code or the Taliban civil code as that was pre-existing prior to hostilities.  Really you would have a better chance with the current regime than the US.  Perhaps Mr. Assange will give himself up to them?

The US has not signed up to the 1977 Geneva Convetions so they are not considered as part of what is or is not espionage for the US.

Thus we quickly run out of what to do with Mr. Assange: he is performing the act of partisan espionage contrary to his status as Neutral citizen.  He is violating the Neutrality that is garnered him by being a non-combatant civilian and actively working against one of the belligerents in a conflict to supply information to the enemies of that belligerent.  Yes our civil laws may be lacking here, but we are at war and peace has not been declared in either Iraq or Afghanistan, nor have the Congressionally set objectives given to the Executive been met.

The case of Julian Assange and Wikileaks is not one of civil courts, but courts martial, and any Nation involved in Afghanistan can put out that he is a threat to their troops in the field and their allies.

Of course that would be the civilized thing to do: get Mr. Assange a full military trial with defense lawyers to account for his activities of breaking his neutrality and publishing such information injurious to the US and those who have helped it, as well as those we have liberated.  But then we stopped acting civilized when we started trying to treat war as a 'police matter'... instead of as war.

Perhaps we can start to treat civil actions differently from martial actions, and start to recognize those making Private War upon us just as all Nations since the dawn of history have done.  Mind you, that isn't pretty.  But it is civilized, if you have the stomach to be civilized, that is.

06 December 2010

Unthinkable, thought

The Economist presents an article on 02 DEC 2010 on How to resign from the club.

The 'club' in question is the Eurozone, and resigning from it is presented as a showing how Nation States can get over a debt crisis via examining past such crises in other Nations. The EU has a problem in that it is not a Nation State but a cooperating agreement amongst Nation States and, thusly, more of a confederation than a federation (as these things are normally termed for such governmental arrangements). Thus leaving the EU would be done to localize debt to those debtor Nations within the EU and as a result end the Euro as a currency. The article presents the rationale for this, but does not come down in an advocacy position, but a neutral one as this is an article to examine the process not the implications of it beyond the economic.

To start the reasons for leaving are put into question form:

The idea of breaking up the currency zone raises at least three questions. First, why would a country choose to leave? Second, how would a country manage the switch to a new currency? Third—and perhaps most important—would leavers be better off outside the euro than inside it?

Why Leave

First is the 'why' question for a country - what is the rationale for this leaving of a common currency?

The primary reason is economic independence from the common currency and there is a reason for doing so for both strong and weak economies (as measured in their economic activity, debt load and state of solvency).

Germany, with a relatively robust manufacturing economy that has been shedding social programs and increasing the retirement age, is seen as able to cover its debt better than other Nations in the EU. Thus their portion of the common debt would have the backing of a strong currency and even see an influx of funds from other countries from individuals seeking a 'safe haven' for their cash. This would require massive changes to the banking regulation which seeks to get at savings accounts outside the country, but that could be put down as effective for EU funds only, and those converted to other currencies (like the brand new Deutschmark) would not have that regulatory overhead. This would be kept in check, to a small extent, by keeping lines of credit open for liquidity to foster economic activity. The change-over would cause an export problem as the strong DM would mean that the value of its goods would rise as compared to under the Euro, but that would be from a stable economic base that has actual liquidity to it. Thus a transition, though hard, would not be expected to be long.

Greece and weak countries, at the other end of the scale, also need economic policies that reflect their populations. The Euro has been no boon to these countries, either, as the ability of the earned Euro to purchase goods from stronger Nations within the Eurozone has decreased. Weaker economies having to compete inside the Eurozone are unable to do so and they are pressed from the outside by Asian manufacturers able to undercut Eurozone production costs. Thus, while holding to a Euro means having a more powerful currency, you have far less of it due to lack of economic activity and governmental promises on retirement and other payouts to selected groups of people within their Nations. Leaving the zone means that these countries (Greece, Spain, Italy, Portugal, Ireland) can put out currencies that can be devalued and yet find a stable floor based on the state of the economy. These Nations would become quite poor as they have a non-economical basis for their social structure in regards to working life, labor costs, and taxing policy, all of which would return to local control without EU overhead. And independent Nation is better able to navigate social policy, as an example, than a larger Confederation forcing an end social policy via a currency and regulatory system that does not take local conditions into account. These Nations did not change their policies coming into the Euro, beyond some one year benchmarks, and continued their spending policy for a generation based on lower interest loans garnered by joining the EU. Now that all comes due with defaulting on debt looming on the horizon.

How to Leave

The 'how' part is the mechanical part - the way to get from Point A to Point B.

Here the article is short and sweet, with some analysis after:

How could this be done? Introducing a new currency would be difficult but not impossible. A government could simply pass a law saying that the wages of public workers, welfare cheques and government debts would henceforth be paid in a new currency, converted at an official fixed rate. Such legislation would also require all other financial dealings—private-sector pay, mortgages, stock prices, bank loans and so on—to be switched to the new currency.

That plus have the printed and coined new currency ready to go, and having the banks exchange the old and new. The original set conversion ratio would last for a period of time and then the old scrip is no longer legal tender (although a minor collector's item for numismatic enthusiasts for generation after). This has been done a few times in the history of the US and happens far more frequently outside the US.

Argentina is a Nation that did this during its fiscal crisis and, as a result, destroyed its own banking system with a contraction in available credit to cover losses on loans that had a more favorable exchange rate than other items so as to keep savers mollified.

Germany would tend to have a stronger currency than an abandoned Euro, not only because Germany has left the Euro but due to the Euro having represented an average value across all Nations: the less capable Nations brought the value of the Euro down as they did not change social and fiscal policy to that of thrifty Nations like Germany. A new DM would gain its own adherents and those that then convert their local currencies on the basis of the DM for purposes of trade and commerce. The cost of the value of its debt would fall, over time, if it could keep its fiscal house in order and maintain a productive economy with low economic overhead by the national government. Its current holdings in other EU countries would be devalued while its own currency gained strength, and limitations on capital movement from weak countries would limit the ability of Germans to shift those funds or convert capital into liquid assets.

Weaker Nations would have to set limits on the amount of withdrawals per person, per year to transfer into a DM. This is on top of the losses that all people would suffer (personal, commercial, financial and institutional) due to the sudden change in value of the Euro in regards to the currencies leaving it. Those in weak countries paid in devalued currency would not like that state of affairs and yet see that they have limits on exactly how much of that currency can leave the Nation. This acts in the form of a firewall that limits currency trading and capital flight at the expense of internal accounts being devalued. Thus some capital is retained even during a general currency devaluation. Here good laws would allow for a legal process of wealth transformation to take place so as to avoid lawsuits over the incurred costs of devaluation. The internal scrip for these Nations would be debt obligation (or IOU) scrips that would, over time, be converted to a real currency. It would be an extremely devalued currency, yes, but the only one for legal tender in the Nation after all the Euros had been converted to them.

While a shrunk Euro would still have its member Nations to back it, those outside of it would be faced with the EU board acting to the interests of members... although the question of how long the Euro would survive comes into being with Germany leaving or one or more of the weak economies deciding to 'go it alone' to survive.


Shifting a National currency, even when done via normal means such as the need to replace one format of bank notes with another or going on/off a gold/silver standard is one that does happen for normal Nations. In the latter part of the 20th century this has happened more often than most people think as you consider the Nations that have gone off of a worthless internal scrip to create one of value: Poland, Hungary, Czechoslovakia, Romania, Bulgaria, East Germany (moving to the DM then Euro), and Russia. These Nations all faced a scrip that was uniform under Communist rule, but of no real value outside of its trading block. Dollars went for ten to one hundred times the official exchange rates inside these Nations, and when time came to break away their currencies got unhooked from the centralized system run from Moscow. We don't notice those change-overs, in the West, but they did happen quietly and efficiently as the Eastern Bloc vanished in a matter of years, taking Russia with it out of the Communist era.

Argentina has been more problematic, but while facing a set of challenges for having a currency not pegged to a foreign currency, it is a set of problems largely under the control of the Nation and its policies. That is the goal of the exercise, to bring the financial house under sovereign control and have a Nation set its own path on what is agreeable and disagreeable to it and suffer what fate hands out to those choices.

The US

The United States has many artifacts of the EU in its common currency arrangement: member States taking on huge debt load at rates that they could not normally get, a massive decrease in productivity due to the overhead of the State, and the flight of capital and individuals from some States to others. Additionally the National system has taken part in multiple Ponzi schemes for public programs, these being Social Security, Medicare and Medicaid, all while enacting laws and regulation that increase the cost of manufacturing causing a flight of capital overseas for decades, thus lower the rate of economic growth. On a National level spending, regulation and social payouts are the mirror of that in some European Nations now looking to cut back on them severely: Great Britain, Germany, France. Meanwhile there is also a debtor State problem with a number of States with their own social programs that are fiscally unsound in the realm of public spending: CA, NY, IL, MI, MA all come to mind.

There is already the start of a debt scrip system going on in CA as the State is now offering IOUs to those who should receive refunds on their income tax. At this point CA does not accept such scrip to pay off debt to the State, but the moment it does so it has its own and devalued currency. NY has made some similar sounds as well as a few other States so highly in debt that they cannot offer standard refunds on taxes.

This state of affairs of States having their own currencies existed right up to the Civil War and is perfectly legal but how you do it is important, and CA is not headed into good territory there.

Here are the powers of the Constitution in this realm:

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;


Section. 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

CA is running afoul of Section 10 of the US Constitution and to complete its system of scrip would be required to offer gold or silver backing for its debt obligations. Basically a gold or silver debt scrip.

Just how much gold and silver does CA have? Beyond what is in 'them, thar hills' not much due to the FDR Administration having gold taken into Ft. Knox from all over the Nation as it was illegal to have large quantities of gold. Which brings up the question: is it legal for the US federal government to have done that? As the States are permitted to make legal tender of gold and silver, does the US government have the power to stop them from doing so by confiscating the gold and silver from those States?

Consider a proposal to have CA, say, ask to have its portion of the US held gold and silver reserves returned to it via population size. It would be recognized that the federal government has its own need of reserves and that could be made at 30% of the total held for the Nation.

Just working with gold the US has 4,603 tons, or 147.4 million troy ounces, the latter of which is easier to work with for numbers (going via Wikipedia for ballparking here), and this isn't including other bullion reserves like those at West Point.

So a proposal to keep 1/3 in reserve for the federal government means the following is available to the States via population: 98.27 million troy ounces.

Current population of the US at the census site: approx 311 million people.

Current population of CA: approx 37 million.

Call that just a bit shy of 12% of the population, which would yield it 12% of the gold: 11.8 million troy ounces.

Total long and short term debt issued by CA (Source: CA Treasurer's Office): approx. $53.3 billion

Note that CA's debt is huge compared to any price of gold today.

With that said the State would have the legal basis to offer a currency with a conversion rate to the US dollar for CA incurred debt. If set sufficiently above the current rate of conversion, say at $1,500 per ounce, the new Golden Bear (which I invent for this purpose) currency would have a lower valuation than US currency but have full gold backing to it. CA could start issuing this currency to those who would be getting tax refunds or other forms of funds from the State and create a dual currency system within the State for its own gold tender and standard US greenbacks. In addition CA would probably place a holding time limit for cashing out gold, so that the Golden Bear will have time to circulate and get a real value, perhaps as much as 5 years for that.

CA would then have to decide if it wanted to incur debt via US dollars or its own Golden Bears. While 11.8 million troy ounces sounds like a lot, that is less than 1/3 troy ounce per citizen in the State. If CA can get its fiscal house in order in 5 years, stop the debt outflow and get a sane tax climate in place for investors, it can offer a 'safe haven' currency that is gold backed (possibly have silver backed ones as well, but it is difficult in getting the silver reserve figures) and holds the State to the value of the currency.

The Golden Bear would be a 'hard' currency and if set above the current conversion price of gold, then gain few attractors but serve as a reserve system to pay off internal debts owed to the citizenry. Citizens would be faced with a currency that would take a few years to convert to physical gold (with 1 troy ounce = 1.0971428571 ounce = 31.1034768 gram) with each Golden Bear dollar only about 0.02 gram weight or waiting to get paid in US greenbacks once CA got more of those to go around... which it might do by marketing Golden Bears or converting a portion of its debt into Golden Bears for payout (possibly the short term debt). Once in circulation the value of the US greenback would float compared to the Golden Bear and it is possible that CA might even see an influx of some cash if it can get its fiscal house in order.

Of course CA and probably AK would see a major uptick in the gold prospecting business as getting gold and getting gold backed tender in return makes the gold portable. CA might see an increase in gold reserves, over time, if it got its house in order. Other States might take this route to try and get some foundation to their economies and find some, final bottom to their fiscal woes as they have a new and much smaller economic platform to move to. This would mean that most of the 'services' in the way of regulations, 'entitlements' and even such things as public pensions would either get liquidated or devalued or have a final gold backed tender put into their holdings which they can sell at market prices.

Congress did not have the power to stop this after the Civil War and no power was given to it during or after then to allow it to stop such things: they are allowed in Article 10 explicitly. While paying off debts to the federal government would still be done in greenbacks, if those are seen as getting worth less and less, then the States would have a means of fall-back currency by issuing gold and silver backed tender based on the holdings being held for all of the people at the bullion depositories. The US federal government would still have a substantial gold and silver deposit for the Nation, but the rest would be used by the States to create legal tender in the States for State obligations. And as it is circulated debt backed by gold, it is not normal valued currency and might be impossible to tax (can you tax debt? my guess is: no).

A two-track system would be a PITA, to be sure, for each State, yes. But this might be a way to give the people of those failing States some assurance that there is a final, much smaller, fall-back position for their States that would have an opportunity to shed obligations and right their economies. And with a gold backed system the people would be assured of being able to get some useful currency after their State's bankruptcy and re-ordering to become solvent. We would still be a common Nation, but those in financial crisis would be allowed to figure their way out on their own and not put the entire Nation at peril for the spendthrift ways of the few.