Archive for the ‘Epistemology’ Category

This is from the opening sentence in an email I recieved today from the office of Ted Cruiz:

“One question is on the mind of all Americans: can we trust the Obama administration to keep its promises, protect individuals’ rights, and uphold the law?” — Ted Cruz

You can’t make this stuff up. This was and is certainly not on my mind. The question on my mind is does the office of Ted Cruz think we’re all idiots (I’m giving Ted the benefit of the doubt here). I like Ted Cruiz, but he’s got to keep a tighter muzzle on some of the dumber things coming out of his office. I’ve never heard of the name for the concept I was thinking about when I first read that opening sentence, so I had to look it up. It’s not official, but it fits: triple contradiction.

How can one person (let alone all Americans), who understands what he is asking, trust another to achieve the impossible by bringing a contradiction (let alone a triple contradiction) into physical existence?

Let me explain the triple contradiction here, in case you’re not already with me. It is expected from the Cruz office that we weigh our trust for Obama to keep his promises, secure our rights, and uphold the law. Each of these three requirements contradict one another.

If Obama keeps his promises, our rights and the law will be violated. If Obama secures our rights, existing laws will not be upheld and his promises will continue unfulfilled. If he upholds the law, rights will be violated and his promises will continue unfulfilled.

Obama has demonstrated, that if we let him, he would rather choose to keep his promises over the other two options. This brings me to his infamous quote, “We can’t wait for Congress to do its job, so where they won’t act, I will.” — Obama (http://www.newsday.com/news/nation/obam … -1.3287261).

Need I remind you this is in complete contradiction to the supreme law of the land — our Constitution? Executive fiat — excuse me, executive orders — that bypasses the legislative branch is a massive breach of separated powers designed into the Constitution. If these orders are not a breach of powers, then why go to Congress in the first place? Well, Mr. Criminal-in-Chief? Many examples exist where Congress did not take any action on Obama’s promised agenda, so he took it (http://www.pbs.org/newshour/rundown/201 … +News+Blog))

Many more promises still are outstanding, and how many do you think Congress will act on? All of them? (http://www.politifact.com/truth-o-meter … er/browse/)

If the president keeps his promises without Congress, which is certain given the recent history, he will violate the law.

Many, if not all, of his promises would violate individual rights, if kept. If he keeps his promise to say, double the federal cancer research funding for example (http://www.politifact.com/truth-o-meter … -research/), he will violate individual rights. The government must first take before it can fund anything, and calling it taxes or claiming a good cause doesn’t change the nature of the violation of property rights involved — forced expropriation is forced expropriation whether a burglar or a government does it. Keep in mind that we didn’t always have an income tax in this country (for a reason).

Certain laws currently violate individual rights too. For example, Obamacare. Need I say more? So, if Obama upholds that law he will continue to violate our rights. Don’t forget that if he upholds the supreme law of the land, many of his promises will continue unfulfilled as Congress continues to take no action.

There you have it: the triple contradiction. How can we trust anyone to actually achieve it, if we actually understand what that means? And more importantly to me is why does the office of Ted Cruz think I’m stupid enough to think of such a thing? Do I have idiot printed on my forehead inlarge bold letters? Come on, Ted, clean up your act!

By Bosch Fawstin:

Front Page MagazineI wrote this a few years ago, and I think it’s worth posting again, particularly after the latest jihadist attack in Boston. I noticed, after the attack this week, that a number of people are using more proper terminology to identify this enemy, which is very important in taking on the enemy. I recall watching panel discussions after 9/11, with each panelist using a different term to describe the enemy we face. That annoyed the hell out of me as I think it’s incredibly important to identify the proper terms when speaking about our enemy, and to NEVER create terms, for whatever reason. To me, the only difference between “Islamism” and Islam is three letters. Below I try my best to make the case why we should always call Islam “Islam.”

Continue reading here

Originally posted By Bosch Fawstin On December 2, 2011 @ 12:38 am In Daily Mailer,FrontPage

Muslim_Roulette_“There is Islam and there are Muslims. Muslims who take Islam seriously are at war with us and Muslims who don’t aren’t.

“But that doesn’t mean we should consider these reluctant Muslims allies against Jihad. I’ve been around Muslims my entire life and most of them truly don’t care about Islam. The problem I have with many of these essentially non-Muslim Muslims, especially in the middle of this war being waged on us by their more consistent co-religionists, is that they give the enemy cover. They force us to play a game of Muslim Roulette since we can’t tell which Muslim is going to blow himself up until he does. And their indifference about the evil being committed in the name of their religion is a big reason why their reputation is where it is.

“So while I understand that most Muslims are not at war with us, they’ve proven in their silence and inaction against jihad that they’re not on our side either, and there’s nothing we can say or do to change that. We just have to finally accept it and stop expecting them to come around, while doing our best to kill those who are trying to kill us.

“Another problem with Muslims who aren’t very Muslim is that they lead some among us to conclude that they must be practicing a more enlightened form of Islam. They’re not. They’re “practicing” life in non-Muslim countries, where they are free to live as they choose. But their “Islam” is not the Islam. There’s no separate ideology apart from Islam that’s being practiced by these Muslims in name only, there’s no such thing as “Western Islam”.

“Non-observant Muslims are not our problem, but neither are they the solution to our problem. Our problem is Islam and its most consistent practitioners. There is nothing in Islam that stays the hand of Muslims who want to kill non-Muslims. If an individual Muslim is personally peaceful, it’s not because of Islam, it’s because of his individual choice, which is why I often say that your average Muslim is morally superior to Mohammad, to their own religion. The very rare Muslim who helps us against Jihad is acting against his religion, but that doesn’t stop some among us from thinking that his existence somehow means that he represents more than himself.”

More…

This Could Be Us

At what point, or what is it going to take to get the uninformed (cons, libs, reps, dems, et al.) to see the gravity of our current trajectory as a nation. Our spending exceeds our revenue, which means we currently barrow money to function. It is difficult to visualize the amount of all three (our nation’s revenue, spending, and borrowing) without a visual aide.

The total debt our borrowing creates is so high that it’s difficult to visualize without the visual aide of skyscrapers.

The law of non-contradictions dictates that we cannot have our cake and eat it too. That means we cannot borrow money to spend it, and also have that money to pay back the debt. This also means there is a limit to how much our government can take from the economy (in the form of taxes) to optimize revenue and any more beyond that point reduces the revenue — we are likely beyond that point. People are hoping we haven’t reached that point and an increase in revenue — by 100% if we want to break even — will solve the issue. There are other options available beside everyone paying double in taxes across the board in return for nothing.

Assuming we want to pay down the debt, the options are as follows: spend less, print money, some combination of the first two which I will not discuss for brevity sake, or continue to do nothing.

If we go with option one, at some point our borrowing must stop and we must pay back our debt. That means our government will need to spend nearly half — if not more– of what it currently spends just to slowly (centuriesish) pay off the debt.

The alternative is to destroy our currency by printing money to pay off the debt. That means money would be worth practically zero, which will make everyone who doesn’t own objectively valued items (like a car, or gold, or a house, etc.) penniless, while the prices for services go through the roof. I’m talking people can’t even guarantee when their going to get their next meal. Any cash left in your hands would have more value as toilet paper or scrap metal than it would as currency — that’s why our government stopped minting silver dimes and quarters in 1974.  Who knows what would happen to our government, but the last time this type of inflation occurred in Germany, they found themselves ruled by the Nazi.  Who could blame them for wanting order from the mass chaos that ensued from a debauched currency?

The alternative to either of the first two choices, which are at least attempts to solve the problem, is to CONTINUE to do nothing. We will reach a point where we cannot physically meet all of the payments on our debt. When that happens our credit plummets like any other person who fails to make payment. That means the chances of someone lending us money at current interest rates drops to zero, if we can find a lender willing to lend us money at all. If we can’t barrow money, forget about it. We will be forced to cut our spending or print money (the first two options). If we continue to borrow at higher rates, this only delays the next time we fail to make payment… again. So if we haven’t lost the option to borrow before now, then the chances just went up — forcing us to options one or two. This process of borrowing and defaulting repeats until we proceed with options one or two or we have no more lenders left to borrow from and we are forced to options one or two.

Now if we have no intention to pay off the debt, we will still need to spend less since it’s safe to say no one will lend us money, or we need to print more money to keep up with spending. The first option will result in a similar outcome as option one above.  The second option will result in a similar outcome as option two above.  The only difference is that certain countries we owe money to may be required to go to war with us due to the impossible situation our permanent default puts them in (survival-wise). It won’t be too difficult to demonize us so that their populous wants our heads on a platter — their government will be all too happy to direct the angry attention of their masses away from themselves and use us as a scapegoat. I cannot guarantee we make it out of such a war since our permanent default will likely cripple both of our economies, and shear masses will mean everything in such a war.

So there you have it.  Without the ability of raising revenue, our choices ultimately are: we pay off the debt by spending less or printing money, or we permanently default and still spend less or print money. Out of the four, three will likely produce an outcome that will lead to our demise, which leaves us with one option that gives us a chance for a future — spending less money in order to pay down the debt.

I’ve suggested as convincingly as I can, for a couple of years now, that we need to limit government to its proper role of securing rights — and that’s it! This limitation is cheap and affordable. If we stayed at that limitation since 1776, the chances of such a state as we currently find ourselves in reduces to near zero — securing rights just ain’t that expensive. This limitation also gives us a decent out of our current situation — it allows us to pay down the debt by spending less money.

If not limiting government to an affordable size, then what is it that you would suggest? And remember, you cannot have your cake and eat it too.

Before you respond I have something I want some of you to consider. If you’re set on raising revenue, what if raising revenue isn’t possible over the long-run? Wouldn’t you want to know that bit of information? If you are wrong, and revenue cannot be raised to sufficient levels for the reason I stated, then you are essentially choosing the do nothing option, which will eventually force your hand anyway.

Fortunately, and yet unfortunately, one man and the philosophy he follows cannot destroy America alone; it is a metaphysical impossibility. This is unfortunate because the body politic of a society, on the other hand, is capable of destroying (or saving) America depending on the general philosophical principles that they hold and act upon. America’s fate is how important this topic and discussion truly is. Americans have a philosophical choice to make and America rests in the balance. Her fate will depend upon the aggregate choices every American makes — making no choice is one option, but that choice will not prevent any undesired or desired consequences. It will simply defer the conscious selection of America’s outcome to those willing and able to make this imperative decision.

To start this discussion, I will outline and describe the four philosophical categories — Metaphysics, Epistemology, Ethics, and Politics — that Barack Obama held during his 2008 Presidential campaign, which the body politic supported at that time as they voted him into office. I will then proceed to highlight the contradiction and provide a non-contradictory alternative. I am hoping that this distinction will aid your decision as to which philosophy to follow; for, man has no choice in possessing a philosophy. Man’s only choice regarding his philosophy is whether his philosophy is consciously weighed and rationally selected, or whether it’s a hodge-podge of random assimilations that his experience happens to expose him to.

Obama begins his belief in metaphysics with a reality that is non-objective. For example, he is quoted as saying, “…[W]e live in a… contradictory world.”[1] This seems simple enough, but Obama further complicates his belief when he says, “Citizens are required to engage in a process of testing their ideas against an external reality (emphasis mine).”[2] If reality is non-objective, then a logical person might ask, “What’s the point of testing ideas against reality”? Obama’s purpose in claiming that we live in a contradictory world seems to be only to describe that sometimes it’s contradictory and other times it’s not. This is convenient when one says contradictory statements and expects others to overlook it.

Obama’s beliefs in metaphysics direct his beliefs in epistemology. If we always lived in a contradictory world, then we could at least be certain about being uncertain, but since the world is sometimes logically consistent, then one cannot even be certain about their uncertainty. Obama says it best himself when he says, “I am robbed even of the certainty of uncertainty — for sometimes absolute truths may well be absolute.”[3] Because Obama believes certainty is not possible, reason must be impotent; therefore, he must reach out for other means to discover truth. It is clear that Obama selects feelings and instincts for discovering truth when he says, “…if I could reach those voters directly, frame the issues as I felt them, explain the choices in as truthful a fashion as I knew how, then the people’s instincts for fair play and common sense would bring them around (Emphasis is mine).”[4]

Obama’s beliefs in epistemology logically ties into his beliefs in ethics. If everyone were uncertain about everything, then how could anyone judge the morality of anybody else or how could anybody judge them? This is the foundational premise for moral relativism, especially when Obama says, “…[I]f… my notions of truth and goodness… are as true and good… as yours — then how can we ever hope to form a society that coheres?”[5] This “non-cohering society” is what Thomas Hobbes refers to as the war of all against all.

Obama’s belief in man’s natural state of war of all against all necessarily leads to his conclusions in politics — government intervention and constraint. Since men would naturally be at odds against one another given moral relativism, then the government must exist to settle this natural antagonism between men. Obama stated clearly several times that he wants government to do more and individuals to do less, to the point that it must be common knowledge by now. I am not sure to what extent his desire to grow government goes, but here’s an indicator: “Economies collapse despite the best-laid plans.”[6] That seems like a willingness to go beyond any limit imposed by reality or economics, because this argument suggests that the fault lies with reality and not the “best-laid plans.”

Obama’s contradiction arises from the very root of his beliefs, which undercuts and voids the rest of the philosophical framework that he follows. Contradictions do not and cannot exist. Nothing can be and not be at the same time in the same respect. The fact Obama thinks contradictions exist is simply his admission to the world that there are errors in his thinking. Contradictions may exist in wording, but not in reality nor conceptually. You will never find one in reality or conceptually and this law of non- contradiction holds true for all true principles. This is what binds ideas to reality.

If we live in a non-contradictory world, then we are free to discover it. Our means to discover truthful knowledge is reason, which is the non-contradictory integration of new information that we acquire through our senses with the rest of our knowledge. Just as our senses can never perceive a contradiction in reality because contradictions cannot exist, the integration of this information should not lead to a contradiction. So if we integrate that information correctly, then our knowledge is also non-contradictory.

Man is not infallible, however, for he is a volitional being. Choice is where the possibility of errors arises. Man is capable of selecting what he believes to be true or not and he can choose the method and standard he uses in determining what is true or not. Errors, therefore, can be made in what man considers true because errors can be made in the method he uses for determining truth. Common experience demonstrates this to all honest inquirers. Fortunately the process of obtaining knowledge through reason is self-correcting if an error is indeed made. The method of correcting errors is to identify and then resolve any contradictions in your thinking.

All knowledge is rooted in observation; therefore, one’s knowledge in ethics, if it is to be rationally validated must be rooted in observation. Our observation of reality and the application of reason force us to see that all living entities under normal conditions act in their self-interest. Plants obtain water, nutrients, and sun in the best proportions suitable for their life to the best of their ability. Unreasoning animals seek shelter, water and food in the best proportions suitable for their life to the best of their ability. As soon as their ability isn’t sufficient they die. Once dead no action is possible to them any longer; their body remains, but their life goes out of existence. Man must discover, unlike plants and non-reasoning animals, what is in his self-interest, and his means of discovery is his rational mind. Just as man may make errors in thinking, so he may make errors in what is rationally in his best interest; however, the process is self-correcting for the same reason all false ideas and principle are self- correcting when using reason.

If reality is non-contradictory, if truth is possible to man via reason, and if a rational ethical framework exists, then by life’s standard men can live harmoniously amongst one another so long as they secure their right to act on their rational judgment.

Rights are the proper ethics for man brought into a social/political context. It is their individual requirement of life, but translated into conditions that involve other men. Men act to secure rights because their wellbeing requires that their rights be secured. The means to secure rights is banding together in self-defense — i.e., instituting a government amongst men.

Rights are unalienable and will remain unalienable because man’s interests will always require that they are un-obstructed in a social/political context. The initiation of force against other men works directly against their ability to act in their rational self-interest and it forces them to act or not to act regardless of what their judgment may conclude. Securing rights prevents the initiation of force, thus allowing men to peacefully reason with one another to achieve common goals. This is the natural harmony between rational men.

Men may make errors in thinking and act to violate another’s rights. If this were not the case, then self- defense would have never been conceived in the minds of men. The police exist to neutralize violators of rights domestically, the courts exist bring those who succeed in violating rights to justice, and the military exists to neutralize the violators of their citizen’s rights that reign from foreign forces.

It is important to note at this point, when comparing the two alternatives, that neither set of ideas are original; some of them can be dated as far back as Plato. These philosophical frameworks, however, when assimilated by a society guides that society in a noticeable direction for better or for worse. For example, the classical Greek civilization was driven by Aristotle’s metaphysics (objective reality) and epistemology (reason), which lead to enlightenment and grand achievements in math, science, and art. During the dark ages in Europe, however, Plato’s metaphysics (man’s mind is disconnected from actual reality so who knows what reality truly is) and epistemology (uncertainty or revelation) ruled that society’s beliefs, which lead towards darkness and deterioration. In the 1400s Thomas Aquinas reintroduced Aristotle’s epistemology into European society; it resulted in the renaissance, which I like to think of as the rebirth of reason, and all the natural consequences that go with such a belief — enlightenment and achievement. Our society at present is at this critical juncture again: it’s either going to be Aristotle, the enlightenment and achievement, or Plato, darkness and deterioration.

This brings us back to the main point — America’s fate and the choice you hold. The choice before you, my fellow Americans, lies in this: will you learn from history and move towards enlightenment and achievement or are you willing to surrender the fate of America to those who think that “economies collapse despite the best-laid plans”?
More Obama quotes that supports conclusions reached in this paper regarding the pilosphy he follows can be found here.

———————
[1] The Audacity of Hope by Barack Obama, ©October 17, 2006, pg. 56
[2] The Audacity of Hope by Barack Obama, ©October 17, 2006, pg. 92
[3] The Audacity of Hope by Barack Obama, ©October 17, 2006, pg. 97
[4] The Audacity of Hope by Barack Obama, ©October 17, 2006, pgs. 17 and 18
[5] The Audacity of Hope by Barack Obama, ©October 17, 2006, pgs. 86-87
[6] The Audacity of Hope by Barack Obama, ©October 17, 2006, pg. 36

I started reading Barack Obama’s book, “The Audacity of Hope: Thoughts on Reclaiming The American Dream,” (TAoH) and I discovered something I did not expect — a logically consistent philosophy. The foundation of this philosophy, however, is based on a false principle. The nature of false principles is that they logically sprout into false corollaries. So Barack Obama’s philosophical framework may be consistent, but it will be consistently false.

It is not one man and his philosophy that’s destroying America; that’s impossible, which is fortunate for mankind in general if you could picture what the world would be like if it wasn’t impossible. It is never one man that drives a nation toward destruction. Take Adolf Hitler for example, he wasn’t the only one in Germany to believe in what he was saying. As for America’s case, the fact that Barack Obama was voted into public office by a majority of voters indicates that the ideas Barack Obama represents resonates with the majority of Americans. A majority of the population holding false principles, in a consistently false philosophical framework, can and will destroy a nation whether it is German or America. It would destroy any nation.

The purpose of this paper is to challenge those false notions that seem to resonate with the majority of Americans in order to break their appeal and suggest an alternative philosophical framework that is based on a true principle and is also logically consistent throughout its corollaries. The method I will use to accomplish this is to quote Barack Obama’s own words in order to describe his philosophy; then I will prove that the principles are false by highlighting contradictions. Finally I will proceed to provide a non-contradictory alternative.

Let us begin with the basic outline of Barack Obama’s philosophical framework:
Metaphysics: non-objective reality, “…we live in a… contradictory world.” (pg. 56, TAoH)
Epistemology: Uncertainty, “I am robbed even of the certainty of uncertainty…” (pg. 97, TAoH)
Ethics: Relativism, “…my notions of truth and goodness… are as true and good… as yours…” (pg. 87, TAoH)
Politics: Bigger Government, “getting more things done.” (pg. 3, TAoH)

Let us continue with a more detailed breakout of the outline.

Metaphysics:
These are quotes from Obama that supports what I have identified as his metaphysical beliefs:

  • “It is precisely the pursuit of ideological purity… that keeps us from finding new ways to meet the challenges we face as a country.” (pg.40, TAoH) Ideological purity meaning logical consistency in this context; logical meaning non-contradictory.
  • “…maturity to balance idealism with realism.” (pg. 42, TAoH) In this context he attempts to divorce ideas with reality. This suggests there can be no logical consistency between ideas and reality.
  • “At times our values [of individualism and communal values] collide…” These “tensions arise not because we steered the wrong course, but SIMPLY because we live in a contradictory world. (emphasis mine)” (pg. 55-56, TAoH) This again highlights that ideas cannot be consistent with reality.
  • President Obama has this to say about President Lincoln’s hard choice in initiating the civil war: it “was a matter of maintaining within himself the balance between two contradictory ideas…” (pg. 98, TAoH) Again suggesting that contradictions are a part of life and reality.

No sane person explains that we “live in a contradictory world,” without paying lip service to a non-contradictory world.

  • “citizens are required to engage in a process of testing their ideas against an external reality.” (pg. 92, TAoH) What good would any test of reality be if the results were contradictory because of a contradictory world?
  • When receiving advice from potential Mentor within the senate, Barack Obama discovers that “Most of the advice [he] found useful; occasionally it was CONTRADICTORY (emphasis mine).” (pg. 73, TAoH) The implicit understanding is that contradictory information is false or useless. So it is clear that Barack Obama understand that the world is not always contradictory and contradictions mean that something is false.

His purpose in claiming that we live in a contradictory world seems to be only to describe that sometimes it’s contradictory and other times it’s not. This line of thinking is useful when one says contradictory statements and expects others to overlook it.

Epistemology:
His beliefs in metaphysics lead to his beliefs in epistemology. If we always lived in a contradictory world, then we could at least be certain about being uncertain, but since the world is sometimes logically consistent, then one cannot even be certain about their uncertainty.

  • “I am robbed even of the certainty of uncertainty – for sometimes absolute truths may well be absolute.” (pg. 97, TAoH)
  • “…all of us are imperfect and can never act with the certainty that God is on our side; and yet at times we must act nonetheless, as if we are certain.” (pg. 98, TAoH)
  • He is very clear that he doesn’t know, “This isn’t to say that I know exactly how to [change our politics and civic life]. I don’t.” (pg. 9, TAoH) Let us take him at his word, and find somebody who does know.
  • “I offer no unifying theory of American government… Instead what I offer is… my own best assessment — based on my experience as a SKEPTIC … (emphasis mine)” (pg. 9, TAoH) Skeptics are historically doubtful of everything. Skepticism is the result of absolute uncertainty.
  • “… [the process of making law in America] suggests that both our individual and collective judgments are at once legitimate and highly fallible.” (pg. 93, TAoH) Is it that difficult to see that such reasoning is driven by uncertainty? Barak Obama continues:
    • “…the process of making law in America compels us to entertain the possibility that we are not always right and to sometimes change our minds;” (pg. 93, TAoH) by what standard should we change our minds? None is given or suggested — just doubt yourself.
    • “[the process of making law in America] challenges us to examine our motives and our interests constantly,” (pg. 93, TAoH) but it does not challenge us to examine the logic within our reasoning?

Because uncertainty is epidemic and reason is helpless to save us, he reaches out for other means to discover the truth. The means he chooses are feelings and instincts:

  • “I find myself returning again and again to my mother’s simple principle — ‘how would that make you FEEL?’ — as a guidepost for my politics… Like any value, EMPATHY must be acted upon. (emphasis mine)” (pg. 67-68 TAoH)
  • “…if I could reach those voters directly, frame the issues as I FELT them, explain the choices in AS TRUTHFUL a fashion as I knew how, then the people’s INSTINCTS for fair play and common sense would bring them around.” (pgs. 17, 18)
  • “the Constitution envisions a road map by which we marry PASSION to reason… (emphasis mine)” (pg. 95, TAoH) Reason is too noble to be influenced and compromise with passion — passion can follow reason, but reason can never follow passion or it ceases to be reason.
  • “[Bill Clinton] INSTINCTIVELY understood…(emphasis mine)” (pg. 34, TAoH)

If I believed such tripe, I would be uncertain about everything too, especially if I had no correct method of thought to guide me and I relied on feelings and instincts. Fortunately we do have a correct method: that method is reason as defined as the non-contradictory integration of information provided by our precepts into the whole of our knowledge and experience.

Ethics:
His beliefs in epistemology consistently ties into his beliefs in ethics. If I was uncertain about everything, then who am I to judge the morality of others and who are they to judge me? This is the foundational premise underlying moral relativism:

  • “…if… my notions of truth and goodness… are as true and good… as yours — then how can we ever hope to form a society that coheres?” (pg. 86-87, TAoH) This is what Thomas Hobbes describes as “the war of all against all,” for which Hobbes proposes a solution — “…men would form governments…” (pg. 87, TAoH) This state of war is the natural state of men, were it not for governments — so says Hobbes (and now Barack Obama).  This belief is the sanction for government’s involvement in all of man’s dealings.

Politics:
His beliefs in ethics consistently lead to his conclusions in politics. Since men would naturally be at odds against one another, then the government must decide. It is fairly clear that Barack Obama wants government to do more and individuals to do less:

  • “…[Americans] wanted clean air, clean water… and… they wanted to be able to retire… children should be able to go to college even if their parents aren’t rich”, and “THEY FIGURED GOVERNMENT SHOULD HELP (emphasis mine).” “…I knew once again just why I’d gone into politics.” (pg. 7, TAoH)
  • “…government spending and regulation could serve as vital ingredients… to market growth, and… could help promote social justice.” (pg. 34, TAoH)
  • “…government has a role to play in promoting opportunity and prosperity for all Americans…” (pg. 40, TAoH)
  • “Sometimes only the law can fully vindicate our values…” (pg. 62, TAoH)
  • “…one of the things that makes me a democrat…” is “this idea that our communal values, our sense of mutual responsibility and social solidarity, should express themselves… through our government.” (pg. 63, TAoH)
  • “…I also believe that our government can play a role in shaping… culture for the better…” (pg. 63, TAoH)

I do not know for sure that this desire to expand government has a limit, but here’s an indicator:

  • “Economies collapse despite the best-laid plans.” (pg. 36, TAoH) That seems like a willingness to go past any limit imposed by reality or economics, because the argument suggests that fault lies with reality and not the “best-laid plans.”

No American politician talks about central planning without paying any lip service to the rights of man — knowing, if not consciously then subconsciously, that central planning requires the violation of rights.

  • Obama quotes part of the preamble of the Declaration of Independence (pg.53, TAoH), but stops short of the most essential part, with regard to the purpose men establish government in the first place: “…That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.” (DoI)
  • Barack Obama claims that the idea of UNALIENABLE rights is the “substance of our common creed.” (pg.53, TAoH) Then he explains that “individual rights are almost entirely SUBJECT to the self-restraint of [government members], (emphasis mine)” (pg. 53, TAoH) thus contradicting our common creed. Rights are either unalienable or not.
  • He clearly doesn’t think much about securing rights as the legitimate purpose of government when he states, “The legitimacy of our government… depends on the degree to which [self-reliance, self-improvement, risk-taking, drive, discipline, temperance, hard work, thrift, and personal responsibility] are rewarded.” He uses this standard of legitimacy to smuggle in “equal opportunity” and social justice, which necessarily snuffs out rights. (pg. 54-55, TAoH) The security of rights and organized injustice — i.e., equal opportunity and social justice as Barak Obama defines them — cannot exist within the same government action.
  • He then goes on to explain that “…laws constraining liberty…” are legitimate so long as they, “…are uniform, predictable, and transparent…” (pg. 87, TAoH) The germ leading to this conclusion is egalitarianism. Equality of misery will be the only thing this accomplishes.

He succeeded in adhering to a philosophy that pays lip service to unalienable rights, and then proceeds to completely eliminate the idea with contradictions. This is very consistent with his metaphysical beliefs. He proceeds to justify his violation of rights with his understanding, or should I say misunderstanding, of the U.S. Constitution:

  • The statement, “…individual liberties… enshrined in our Constitution…” (pg. 86, TAoH), clearly indicates a misunderstanding of the purpose of our Constitution. Take a look at the wording within the Constitution yourself; the object under focus is the federal government. The Constitution was designed and built to form and limit the legal activities of the federal government — not its citizens. Do not confound identifying preexisting rights and limiting the government’s legal actions around them, which is clearly written within the Constitution, with establishing new rights for its citizens.
  • “I have to side with Justice Breyer’s view of the Constitution — that it is not a static but rather a living document, and must be read in context of an ever-changing world. How could it be otherwise?” (pg.90, TAoH) I’ll answer that. Like most contracts the terms of the agreement are between two or more parties — in this case the People, their States and the proposed Federal Government. These terms cannot change until the contract is changed. There is no living and breathing terms of agreement possible here. Do not confound the amendment process with what Barak Obama is advocating — the former is a process for the different involved parties to adjust the contract and the later is the evasion of identifying any terms within the contract.
  • Another error is Barack Obama’s failure to understand why “[the Constitution] provided no protection to those outside the constitutional circle.” (pg. 95, TAoH) The Constitution is a contract between the citizenry, the States and the Federal Government. How can any contract extend beyond its participants? My best guess is that Barack Obama doesn’t know that the Constitution is a contract or he doesn’t understand the use and limits of contracts.
  • He gives examples of the Constitutional text “lacking” context and uses that as an excuse to alter the terms within the Constitution: “The constitutional text provides us with general principle that we aren’t subject to unreasonable searches by the government. It can’t tell us the founder’s specific views on the reasonableness of an NSA computer data-mining operation.” (pg.90, TAoH) Yes, yes, the founders we so smart as to create the best form of government the world has ever seen, but they never gave us a standard for reasonableness. How little he must think of them and their work — i.e., the Constitution. I would alter the context of the Constitution too if I thought like he did about our founders’ ineptness. Well if you read the fourth amendment a little further, then you will see what is considered unreasonable: unreasonable is anything without “probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” (US Constitution) A few qualifiers for a reasonable search are probable cause, which means any evidence to suggest, along with at least one witness to observe the evidence, and a very narrow or specific location to search for the evidence that was seen. Nothing is lacking here.
  • Here is another Constitutional text “lacking” context provided by Barack Obama, “The constitutional text tells us that freedom of speech must be protect, but it doesn’t tell us what such freedom means in the CONTEXT of the Internet (emphasis mine)” (pg. 90, TAoH). Besides the blatant falsehood surrounding the idea that “the constitutional text tells us freedom of speech must be protected,” the context involving the medium of speech is irrelevant. The first amendment actually says, “Congress shall make no law… abridging the freedom of speech.” (US Constitution) The first amendment clearly limits government action rather than calling it to action regarding speech. That being said, it is clear now that any speech being conducted on the Internet doesn’t change a thing with regard to government action — no action is granted or authorized.

I have no degree in constitutional law, and Barack Obama does — what kind of nonsense is being taught to the “experts” if I have to point out the obvious contradictions in their thinking?

I’ve highlighted the philosophy guiding Barack Obama’s thoughts and actions. I even pointed out some of its falsehood by identifying some of the philosophy’s contradictions. Now, I will briefly point out the rest of its errors and offer an alternative.

Metaphysics:
The errors in this category of Barack Obama’s philosophy go without saying. Contradictions do not exist and cannot exist. Nothing can be and not be at the same time in the same respect. The fact he thinks contradictions exist is simply his admitting to the world that there is an error in his thinking.

Contradictions may exist in wording, but not in reality or conceptually. For example I might say a leaf is all red and all green at the same time. The contradiction is obvious; the leaf is green and not green at the same time and red and not red at the same time. The respect in this case is the color. Though it may be said in written or verbal words, it cannot, however, be the case in reality or conceptually. Can you conceptually think of a leaf that is all red and all green at the same time? All honest people will answer no. You will never find one in reality either.

This law of non-contradiction holds true for any true principle. This is what binds ideas to reality.

Epistemology:
Uncertainty arises out of an uncertain reality, but since reality is certain and non-contradictory then so can be your knowledge of reality. Additionally, an appeal to instinct and feelings are not a means to discover knowledge. Can you instinctually determine a coin flip? No? How about while using your feelings? Again, no. There is a certain means, however, of determining a coin flip: using your own eyes to determine for certain if it landed heads or tails. This is the simplest case, but no matter the complexities leading to truthful knowledge the essentials are the same: if an idea is true, then it must be consistent with reality and experience. All truthful ideas can be reduced back to simple observations because observations are our direct connection to reality.

If we live in a non-contradictory world, then we are free to discover it. Our means to discover truthful knowledge is reason, which is the non-contradictory integration of information, that we acquire through our senses, with the rest of our knowledge. Just as our senses cannot ever perceive a contradiction in reality because contradictions cannot exist, the integration of this information should not lead to a contradiction. So if we integrate that information correctly, then our knowledge is also non-contradictory.

We are volitional beings so we have the ability to choose between alternatives where a choice is possible. These choices range from beliefs to actions. This is where the possibility of errors arises. We can select what we believe is true or not. Errors can be made in what we consider true and errors can be made when we attempt to reason. Common experience demonstrates this to all honest inquirers. We have all made a mistake at one point in what we think is true, or at least the less honest among us will agree that we have observed others make that mistake.

Fortunately the process of obtaining knowledge through reason is self-correcting. Humans are fallible, and if we error, the error is in our integration for we accepted a contradiction somewhere in our thinking. The error can never be with reality or our senses because the process that makes our senses work (or don’t work) and reality itself functions independent of our volition; they cannot accept or produce a contradiction. Therefore, if you think you’re facing a contradiction, then check your previously integrated information — i.e., check your premises. One of your integrations will be wrong — i.e., it will be inconsistent with reality.

Ethics:
Our observation of reality and the application of reason force us to see that all living things under normal conditions act in their self-interest. Plants obtain water, nutrients, and sun light in the best proportions suitable for their life to the best of their ability. Unreasoning animals seek shelter, water and food in the best proportions suitable for their life to the best of their ability. As soon as their ability isn’t good enough they die. Once they die, then no actions are possible anymore. Man must discover, unlike plants and non-reasoning animals, what is in his self-interest, and his means of discovery is his rational mind. Just as he may make errors in thinking, so he may make errors in what is rationally good for him; however, the process is self-correcting for the same reason all false ideas and principle are self-correcting when using reason.

This idea, if true, blasts an irrecoverable hole in notion of moral relativism.  It suggests that an objective rational morality exists for man and can be discovered using reason.  This also eliminates the logical consequence of moral relativism: man’s natural state is war.  This notion suggests that there is no conflict of interest between rational men; they can live in harmony.

Politics:
If, as Barak Obama suggests, men are incapable of being certain, moral relativism reigns and constraint is necessary, then I have a few questions (proposed by Frederic Bastiat) for those men who wish to apply for roles within the suggested authoritarian government:

  1. Has anyone identified a satisfactory form of constraint?
  2. Can that person convince the mass amount of people who give preference to other forms of restraint?
  3. Will all men be able to give into that form of constraint, which in theory runs against all individual interests?
  4. Assuming that men will allow this new restraint to rule them, what will happen if an inventor discovers a different and better form? Are we to remain consistent, knowing our situation to be more vicious than it has to be, or are we to change our organization every day according to the caprices of fashions and utility that inventors’ brains may dictate.
  5. Wouldn’t the rest of the inventors, whose plans were rejected, united together against the one that has been selected? Wouldn’t their success be to the degree that the selected plan ran counter to individual interests?
  6. Last of all, does any human force or capability exist that is able to overcome the antagonism between all men that we suppose is natural and the very source of human action?

Frederic Bastiat continues: “Imight multiply such questions ad infinitum, and propose, for example, this difficulty:

“If individual interest is opposed to general interest, where are we to place the active principle of Constraint? Where is the fulcrum of the lever to be placed? Beyond the limits of human society? It must be so if we are to escape the consequence of your law. If we are to entrust some men with arbitrary power, prove first of all that these men are formed of a different clay from the other mortals; that they in their turn will not be acted upon by the fatal principle of self-interest; and that, placed in a situation that excludes the idea of any curb, any effective opposition, their judgments will be exempt from error, their hands from rapacity, and their hearts from covetousness.

“The radical difference between various Socialist schools (I mean here, those which seek the solution of social problems in artificial organization) and the Economist school, does not consist in certain views of detail or of governmental combination. We encounter that difference at the starting point, in a preliminary and pressing question: Are human interests, when left to themselves, antagonistic or harmonious?” (Harmonies of Political-Economics: Book I)

If reality is non-contradictory, reason is possible to all men and a rational ethical framework exists, then, by the standard of life for rational men, men can live harmoniously amongst one another so long as they secure their right to act on their rational judgment.

Man is capable of functioning in isolation and survives quite well. It is rationally in his better interest to work with other men to achieve common values, which would not be possible otherwise; like building structures, achieving technology, or more generally put: division and economy of labor. Man can achieve more values that further his life by dividing up the work load and trading each other’s achievements.

Rights are the proper ethics for man brought into a social/political context. It is their ethical requirement of life, but while living with other men. Men act to secure rights because their life requires that their rights are secured. The means to secure rights is banding together in self-defense — i.e., instituting governments among men.

Rights are unalienable and will remain unalienable because man’s life will always require them in a social/political context. Initiation of force against other men works directly against their ability to act in their rational self-interest and prevents any ethical actions — it forces men to act or not to act against their reasoning and judgment. Securing rights prevents the initiation of force, thus allowing men to peacefully reason with one another to achieve common goals. This is the connection between ethics and politics. This is the natural harmony between rational men.

Men may make errors in thinking and act to violate another’s rights. If this were not the case, then self-defense would have never been conceived in the minds of men. The police exist to prevent violations to rights domestically and the courts bring those who succeed in violating rights to justice. The military exists to prevent the violation of rights from foreign forces.

To sum up our journey, a correct and consistent philosophy is needed to replace Obama’s so that America can avoid destruction. The one that seems most likely to succeed in saving America is as follows:

Metaphysics: Objective Reality: Contradictions do not exist.
Epistemology: Reason: our means to eliminate contradictions in our thinking.
Ethics: Rational Self-Interest: all livings things must act in their self-interest; man must rationally act in his.
Politics: Secure Rights: governments are instituted by men so that man is safe to act in his rational self-interest in harmony amongst other men.

(Note from author: I have recently been convinced that fractional-reserve banking, though it’s a bad idea, should not be outlawed.  The government should not outlaw bad ideas unless fraud or another for a violating rights is involved.)

 

In order to understand the Federal Reserve (FED), you need to understand credit expansion and the banking systems, which is full reserve and fractional reserve banking.  In order to understand the banking systems, you need to understand the nature of wealth and money, and their differences.

Money does not equate to wealth, or put slightly differently, money is not wealth .  If money was wealth, then why does printing money not increase the total amount of wealth in our society?  Sure, money can be traded for items that satisfy our needs or wants of utility, but as is, the paper is not useful — it’s only potentially useful.  What money represents — e.g., things that satisfy our needs and wants of utility — is useful, which is money’s source of value.

Money is simply a tool of exchange and a means of saving — i.e., the postponement of consumption.   Wealth is the goods you have at your disposal, which will satisfy your needs or wants of utility — i.e., wealth is your standard of living.  The wealthier you are the more you have at your disposal.

The implications behind the meaning of money — as a tool of exchange and a means of saving — are that to possess money you must have produced something of value and passed on your disposal of it to someone else in exchange for an IOU on society — the trade isn’t complete until you trade that IOU for something you need or want.  In essence, you’re bartering and exchanging what you produced for something you haven’t produced — money is simply the median or the “middle-man.”  Money has value but it doesn’t represent a static standard of wealth.

Think of the errors that one might conclude if one equates wealth to money consistently to that end:

1.  Wealth can be produced by reproducing money

2.  Wealth is only as static as the amount of money that exists, which leads some to assume wealth is static

3.  Since wealth is static, then it’s only fair to redistribute it evenly (a common argument)

4.  Profit is exploitation and wealthy people must have exploited the poor (another common argument)

5.  The exchange of money means one benefits at another’s expense

6.  Exporting is good because it brings in money, and therefore, wealth (another common argument)

7.  Importing is bad because it sends money out, and therefore, it drains our wealth (another common argument)

8.  Money just sitting on a table does not multiply; therefore, lending money cannot multiply wealth; therefore, lending money at interest is charging for something money has no ability to produce — more money; therefore, money should be lent at no interest, otherwise it’s exploitation (not an uncommon argument)

People in our society also tend to equate the dollar value of an item as its worth — another error.  Let’s say an item produced was originally $8 per unit.  Now let’s say that half of the items were destroyed — the unit may now be closer to $16.  Instead, let’s say that the money supply reduces by half — the item may now be closer to $4.  In the first case the item’s value relative to demand went up, and in the second case the value stayed the same relative to demand, but the price went down — the value of money fluctuated.  (We are assuming of course that the effects of inflation were instantaneous).

There are many reasons for the value of money to fluctuate.  For example, we could create more money, it can be destroyed, people’s interest in it could change, more things are produced, fewer things are produced, and probably more variables have a play (like foreign currency) than what I have listed.  (A speculator’s sole purpose is to predict these fluctuations and act on those predictions).  People’s desire is hard to predict, which means desire would be hard to predict for any kind of currency whatever; therefore, let’s limit the scope of our study to the aspects that cause fluctuations that can be predicted — like production and the creation of money.

Let’s first analyze what different effects that fluctuating currencies has on wealth.  Gold is a great place to begin our study because, compared to fiat money, gold has a relatively static quantity.  We’ll then shift our focus to fiat money because it contains a lot of the same principles as gold, but in addition to those, fiat money can rapidly multiply.

Given our study, the only real means for gold’s value to fluctuate is a change in the production of goods.  If production increases, then deflation takes hold, which means the value of gold goes up (relative to goods) because you can buy more with the same amount of gold.  If goods and production are destroyed, then inflation takes hold, which means the value of gold goes down (relative to goods) because you are able to buy less than before.

What happens to the treatment of gold as its value decreases? People tend to exchange more of it for goods because a certain amount of gold does not go as far as it used to; therefore, people pay more to receive the same about of goods.  The less gold is worth, the more people prefer goods over gold.  One can anticipate a threshold for the use of money — i.e., men in society have to reach a certain level of production, which isn’t much, to warrant the use of money over barter.

Who are the winners and losers if the devaluation of gold occurs?  The wealth in savings decreases along with gold — savers lose.  The total amount of goods decreases, and therefore, so does the standard of living  — everyone loses.  Because the standard of living decreases, people are less able to store their money in banks — the banks lose.  Does anyone win in this case?  I don’t think so; I can’t think of anyone who benefits.  Maybe those who take out loans benefit by paying back the loan with less valuable money than they borrowed, but that’s isolating a particular situation of the borrowers whole life; his standard of living will decrease with everyone else’s.  Even if someone ends up better off than before, they would be even better off if devaluation did not occur.

What happens to the treatment of gold as its value increases?  People tend to exchange less of it for goods because a certain amount of gold goes farther than it used to; therefore, people can buy the same things with less gold leaving them with change in their pocket.  The more gold is worth, the more people prefer gold over goods.

Who are the winners and losers if the value of gold increases?  The wealth in savings increases along with gold — savers win.  The total amount of goods increases, and therefore, so does the standard of living — everyone wins.   People are able to save more money and borrowers pay back loans with more valuable money — the banks win.  (Sure, borrowers need to work harder to pay back the loan, but that’s no different than paying interest).  Some people will lose, but only on their own efforts and risk to capital.

To sum up, a gold currency will tend to guide self-interest people towards production and savings making everyone a winner.

Shifting our attention towards fiat money; it has all the fluctuations of gold (as mentioned above) except in addition to those fluctuations, its value can fluctuate easily by reproducing or destroying it.  Since the destroyer of fiat money is the sole loser, however, we can assume no one is that self destructive; therefore, we can limit our focus solely on situations covering the production of fiat currency.  In order to isolate the effects of printing money, we need to consider a scenario with static production, meaning the same products are produced every year.

To begin, as one spends freshly printed money, he removes from society the product of their labor without reciprocating.  This causes more money to exist than what goods have been produced; therefore, the more money you print and spend, the lower its value will become due to inflation.

Inflation is not instantaneous because it takes awhile for its effects to propagate.  The information only propagates as the money exchanges hands.  For example, one can print a pile of money in their basement, but until they spend it the effects will be contained in his basement. Why is this?  Because the printer of money hasn’t made a claim on society by spending that money; it’s not until he removes goods from society without producing goods that society finally begins to realizes there are less goods than before (relative to money).  T he first recipient of freshly printed money may not know the money he’s receiving is printed, but after several exchanges people will adjust their prices when more demand for goods (relative to money) increases.  On the other side of the exchange, the first user of freshly printed money extracts its full value before inflation, but as the exchanges continue, the value extracted decreases as inflation increases.

Who are the winners and losers when money is printed?  The printer of money obviously benefits by being able to consume goods without producing them; however, this causes a strain on everyone who does produce equal to or more than they consume because the printer of money consumes what they have produced — everyone else loses.  The individuals who save money lose wealth in their savings as the value of their money is redistributed into the new total of money — they lose.   Those who take out loans benefit more than savers in the short run because the money they use to pay off the loan is worth less than the money they borrowed; however, in the long run their standard of living decreases with everyone else’s.   There is a point where the standard of living suffers so much that one is unable to pay off a loan and buy sustenance — i.e., their life is no longer self-sustaining. These borrowers go bankrupt, thus consuming the goods of society (spending the loaned money) without producing (not paying off the loan) — they join a similar status as printers on money.  So those who benefit the most are the printers of money and the borrowers of money  (for the short term) — neither of which produced anything for the privilege of spending money– while everyone else suffers.

We now know the different causes of fluctuations in the value of money that can be controlled, which means we discovered enough context to continue onto the banking process; and after that, the Federal Reserve.

Given a static value for currency, let’s see what purposes or value a bank provides.  If men had the ability to keep all their money on their person, then the necessity of banks goes down.  If men could secure their money better than banks, then the value in using a bank goes down.  Since men have trouble keeping all of their money on them securely, banks have value.  This is why men uses banks; for security and ease of use.

The first banks that were used kept money in a vault, and they never lent any of that money out; that type of system is called full reserve banking where 100% of the deposits are kept in their reserves (AKA their vault).  Banks were able to stay in business because they earned money for securing its members’ money — people would pay the banks to secure their money.  The banks would also lend out money that they owned at interest.  At times, they even acted as middlemen between one of their depositors and a borrower and earned some sort of commission on that money.  Full reserve banking does not cause the value of money to fluctuate because it doesn’t reproduce money nor does banking in and of itself produce enough goods to change the value of money — it just secures the principle of property rights ensuring property owners keep their property.

A second system of banking is called fractional reserve banking, and, as the name sounds, the bank is able keep less than 100% of their deposits in reserve, which means the banks can lend out depositors’ money at interest without their knowledge.  The depositors no longer have to pay banks to secure their money because the cost is paid by the interest earned on the lent money; in fact the bank earns so much money that they pay the members for storing their money in their bank.  This banking system causes the value of money to fluctuate, so this warrants further analysis.

The essential difference between the two systems that causes the value of money to fluctuate under fractional reserve banking, but not under full reserve banking, is that for full reserve banking the lender losses access to their money when a loan is created.  For fractional reserve banking, however, loans are made without any lender losing access to their money .  It is important to understand this difference and its full implication because without doing so would mean increasing your risk of making bad evaluations in your conclusions based on this information — like people often do after they equate money to wealth.  First let’s further understand the difference before we get into its implications.

For full reserve banking, when a loan is made the lender sees the money leave his account along with a place holder (or an IOU) for that money; the person taking out the loan has the money along with a negative place holder.  Each place holder and money, or lack of money, counter balances each other — i.e., money with a negative place holder, and lack of money with a place holder cancel each other out.

For fractional reserve banking, however, the bank sees the lack of money along with a place holder, while the person borrowing the money sees the money along with a negative place holder — seems equivalent to full reserve, doesn’t it?  Well, not quite.  Where does the bank get the money to lend?  Is that their money?  It can be, but more than likely that money comes from a depositor.  (It doesn’t matter if the bank uses $100 from one depositor or 10,000 pennies from 10,000 depositors — the essentials are the same regardless of the break down).  What place holders or money transfers do the depositors see?  The answer is none — they see 100% of their money in their account.  Is this a problem?  You bet it is — it’s the root contradiction which causes secondary and tertiary effects down the road.

A contradiction follows the formula of something that is and is not at the same time in the same respect.  Well in the fractional reserve bank’s example, the depositor’s money is his (as displayed in his account) and is not his (as displayed in someone else’s account) at the same time (from the initiation of the loan until it’s paid off) in the same respect (as seen in an account) — the very definition of a contradiction.  It is inessential that the banks have not named one depositor they’re taking from when they take from the pool of money in their vault  — that money came from somewhere and doesn’t eliminate the contradiction.  It is inessential that the lender puts collateral up against the loan to counteract the risk of default — it doesn’t eliminate the contradiction.

The contradiction is the single piece of essential information because contradictions cannot exist and every attempt to bring a contradiction into existence has resulted in some sort of annihilation.  For example, think of the results of carrying out polices based on equating money to wealth — e.g., you seek to print more money, you wage war to confiscate money, you eliminate trade as people attempt to sell their products and boycott yours and vice versa, etc.  It eventually results in the annihilation of whatever value you were trying to create — i.e., money and societies lose their value.  In the case of fractional reserve banking, as we will discover, the results are the same — i.e., the retardation of wealth at best and destruction of wealth at worst.

(This particular contradiction within fractional reserve banking is also a violation of property rights, where property is necessarily singular ownership — i.e., one thing one owner.  For fractional reserve banking, multiple owners exist for a single thing — i.e., depositors and borrowers own the same dollar.  Of all the economic reasons I’ll go over in explaining the perils of fractional reserve banking, it is the argument for securing property rights that should be sufficient to a free society, that has any interest in remaining free, in ceasing the act on moral grounds and making it illegal).

In full reserve banking, the amount of claims (potential claims) on society are never greater than (and are actually equal to) the amount produced — i.e., the producer lends his claim on society in exchange for interest, which is paid by the borrower.  In fractional reserve banking, however, you have greater claims on society than what has been produced because you have producers who do not lend their claim on society, and you still have borrowers who acquire a claim; this creates a lag effect, where claims on society increases faster than what is produced.  Where did the increase in claims come from?

So how did the banks succeed in creating a contradiction if they cannot exist?  How is it that the depositor’s money is and is not his at the same time in the same respect?  I’ll I’ve you a hint, a contradiction cannot exist.  When you think you’re facing a contradiction, check your premises; you’ll find that one of them is wrong.

Our essential premises are that the depositor still has access to his money and that the money supply did not multiply.  We know that bank runs can occur, which leads one to suspect the former.  We also know that the depositor can use his money (under normal conditions), which leads me to suspect the later.  The truth is that both premises are false under different contexts, and both are never true at the same time.  The double contradiction only serves to further conceal the contradiction — it allows most to accept the lie that both premises are true, which is only half of the truth when in fact both are never true at the same time.  The reason that two contradictions seem to exist is because the respects (remember “…in the same respect”) change subtly making it hard to track.  In one respect, the money is owned on paper, and in another respect the money is owned physically.  On paper the money supply multiplies and physically it does not .  So when the money is owned in one respect, let’s say physically, then the money supply premise is true, while all depositors having access to their money is false.  If money is owned in the other respect — on paper — then all depositors having access is true, while the non expansion of the money supply is false.  (I suggest rereading the arguments surrounding the different respects of ownership until it sinks in).

A fair number of people see that both premises are false under different conditions, but fail to understand the implications or severity in accepting the contradiction.  They obviously understand from history that bank runs are bad, but think they can be avoided and see no negative repercussions for expanding the money supply.  We understand, from our discussions of inflation, why expanding the money supply is bad.

Who are the winners and losers under fractional reserve banking?  Savers find that the money they saved loses value over time more than the interest they earn on that money — they lose.  More consumers than producers exist at any one time   — everyone loses as the standard of living suffers.  Bankers are able to earn a ton of money from interest on money they didn’t own — they win, but only for the short term because their standard of living suffers more than it would have if the money supply didn’t expand.  (It’s would be difficult for bankers to understand this because they can potentially make 45 cents on the physical dollar every year).  The borrowers win in the short run by paying off the loan with less valuable money, but like the bankers, their standard of living suffers in the long run for the same reasons as bankers.  There is a point where the standard of living suffers so much that one is unable to buy sustenance and pay off their loan — their life is no longer self-sustaining.  Unlike full reserve banking, however, where the lender would lose his money along with the person he lent money to, no depositor “loses” theirs under fractional reserve banking.

A limit exists for how much banks can lend out, under fractional reserve banking, and still function.  If they keep 100% in reserves, then it’s no longer fractional reserve.  If they lend out all of their reserves, then they default on any withdrawals, which results in a bank run.  What number, between 0% and 100%, allows a bank to function and allows depositors to have access?  It really depends on how much people need money.  The ability for people to save increases as the standard of living increases; and vice versa as the standard of living decreases.  In addition, when people borrow money, they use unconsumed goods — i.e., what would become savings — to pay off the principle and the interest.   There is a point, therefore, like there is in the use of money, where the standard of living needs to reach a certain point before fractional reserve banking can exist because people need to save money in order for fractional reserve banking to function and people need to earn enough to save.

Let’s assume that we reached the limit of credit expansion, what happens when we reduce the amount of credit by paying off loans?  Deflation occurs.  Is this a good thing?  We discussed earlier that deflation is good, but in this case, it is good only under a certain context.  The savers benefit because the value of their money increases — they win.  The standard of living increases as more goods are consumed when people start to pay off loans — everyone wins.  The borrowers suffer because they need to pay back the loans with more valuable money than they borrowed — they lose, but they would pay interest anyway.

Deflation is bad under fractional reserve banking, however, if it occurs rapidly.  For example, the faster deflation occurs the harder it will be for borrowers to pay off the loan and buy sustenance, which increases their likelihood of bankruptcy.  Borrowers lose the ability to pay off the loan because they now need to work several times harder (up to 10 times) to pay off loans — they lose.  The more borrowers that go bankrupt, the less money the banks will have to pay depositors their interest.  The less the banks have to pay depositors, then the more likely they will go bankrupt — they lose.  If a bank manages to avoid bankruptcy, they will still be unable to return to full reserve banking; that equates to lost value.  The bigger the gap between what the banks have in reserves and what the depositors have in their accounts, then the more value is lost — savers lose.  The more value that is lost, then the more the standard of living suffers — everyone loses — e.g., the market crash of 1929.  The trend of fractional reserve banking is to resist returning to full reserve for that exact reason — everyone loses.

So at the limit of fractional reserve banking — meaning the reserves are at their lowest and the expansion of the money supply is impossible — is it better than full reserve banking?  Under full reserve banking production matches or surpasses claims to consume, the standard of living matches advances in production, and property rights are protected.  Under fractional reserve banking at its limit, production lags behind claims to consume (remember there are more claims to consume than what people produce due the fractional reserve banking contradiction), the standard of living matches advances in production, and property rights are violated.  All being equal, if my evaluation is correct, a full reserve banking society would improve their standard of living at a similar rate to that of a fractional reserve banking society; however, there would be a period of time, for the fractional reserve banking society, when the standard of living would lag behind until the limit of expanding money is reached.  The icing on the cake (sarcasm), however, is that everyone’s property in banks are constantly at risk because they are relying on others not to make a physical claim on their money.  As our standard of living continues to drop, how much longer to you suppose people can live without making that physical claim?

We talked about the nature of money, the ways in which it can fluctuate, different systems of banking, and the implications of each; now we have a great base of knowledge to discuss the FED.  Every fact you read about the FED is true, but not the evaluations.  For example, they do control the money supply by setting the interest rate for loans, but that is not in the long term interest of anyone, and only serves the short term interests of very few people.  They don’t print money and loan it out, they simply loan money in the form of electrons, and fill their reserves with printed money that the US Treasury Department printed — essentially the same thing as loaning printed money.  They actively strive to cause inflation, between 3% and 5% every year, which continually increases the limit   of fractional reserve banking; thus, avoiding the system’s natural limit.  The FED is able to loan money even if there are no depositors to back it up.  Depositors become an old fashioned notion when the production of every dollar carrying person is backing up the freshly printed bills.  This leads us to our next question: is fractional reserve banking better than full reserve banking if the natural limit placed on fractional reserve banking is removed?  The question reduces to, is steady inflation better than steady deflation?  You have the information; you be the judge.  I suggest starting with the lagging of production behind consumption that we discussed in fractional reserve banking, which would necessarily continue and become greater.  Is that good?  Do you think there is a possibility where the increases in claims to consume would surpass the advances in production?  And finally, do you benefit?

The FED is convinced that their actions are in the best interest of the country, and therefore, in your best interest — that is their evaluation.  What is yours?