Giving Government Sanction over Life, Liberty, and Property.

Society is premised upon certain bedrock principles; life, liberty, and the pursuit of happiness.  Life is the right of all rights and man is the rightful owner of his physical, spiritual, and emotional life.  Every man is the rightful owner of his body and his life.

Accordingly, every man is responsible for sustaining his life.  In other words, every man has the natural right to his own self-preservation.  To preserve his life man employs his physical and/or intellectual abilities to produce a good or service.  What man produces is his property and man participates in the voluntary exchange of goods and services in a free-market system called capitalism to ensure his own self-preservation.

Private property rights is the implementation of man’s right to preserve his own life.  To confiscate a man’s property is to reduce or eliminate his ability to preserve his life.  Likewise, dependence upon the government to preserve life is to voluntarily enslave oneself to the ruling class and grant them sanction over your life.

Government uses force and coercion to confiscate property from its rightful owner and redistributes it to those that otherwise have no rightful claim to that property.  According to some this is considered charitable or compassionate.   However, if one man where to take another man’s property it is illegal and immoral. Likewise, if government acts collectively to take property it is also illegal and immoral.

To give sanction to government force and coercion over a man’s life, liberty, and property is to give sanction to legal plunder.  More importantly, it gives another man dominion over you; to control your freedom, your personal and economic choices, and your dreams. In essence, government control over your life.

Free market participants require both producers and consumers to co-exist for the mutual benefit of each other.  One man produces a good another man desires and a mutually beneficial exchange occurs.  The exchange may be a direct system known as barter or an indirect system of exchange where some form of specie/currency is used.  A good is exchanged only if it pleases the producer and the consumer.  The producer cannot force the consumer to purchase his goods.  Therefore, the producer must not only produce a good desirable to others in society, but the good must be of sufficient value and quality to attract consumers.

One essential aspect of free markets is not only the opportunity to succeed but the opportunity to fail.  In a recent interview with the BBC, Kyle Bass of Hayman Capital Markets said “Capitalism without bankruptcy is like Christianity without Hell”.  Free markets depend upon both success and failure for the market to function properly.  Failure is an option and a very necessary option in a free market system.

Government intervention into free markets perverts and retards the voluntary exchange of goods and services between members of society.  On a more basic, human level government intervention effects man’s ability to exercise his economic liberty and to pursue happiness.  Government restricts and/or prohibits self-preservation to varying degrees.  The perversion of free markets, especially the banking system, is a primary example.  This directly impacts man’s ability to preserve his life.

The country has not operated in a truly free market system for over one hundred years.  Government intervenes in every major industry including, but not limited to; banking, health care, transportation, energy, mining, finance and insurance, agriculture, manufacturing, and mass media. Moreover, government intervenes by picking winners and losers which further erodes free market principles.  Some examples are;  government grants, subsidies, tax provisions, and regulations.  Lastly, government bailouts are the antithesis of free markets.

Government intervention in one specific part of the free market system is germane to the economy as a whole; the banking system.  Consequently, government’s actions jeopardizes our liberty and property.  Let me explain.

Our economy is one based on indirect exchange where a good or service is purchased using currency.  The Federal Reserve Note is a fiat currency.  A fiat currency has no intrinsic value and, in fact, its only value is that it allows consumers to procure things of real value. 

Consider the concept of wealth.  Wealth is nothing more than your surplus production of goods and services.  Today, people either produce a good or provide a service and in exchange are paid compensation.  Each person then exchanges their compensation for goods and services they desire.  Any excess compensation not otherwise used to procure goods and services is your surplus (savings).  Generally, a person’s savings is their wealth.  Historically, savings are deposited at banks and in return the bank pays you interest on your savings.  Alternatively, savings could be invested in equity or bond markets, commodities, real estate, etc. Nevertheless, in most cases wealth is denominated in our currency.

In a free market interest rates for savers and borrowers float freely based on supply and demand and other factors.  Productive output grows through private investment of excess savings or equity on corporate balance sheets.  However, government sets the interest rates through the Federal Reserve Bank instead of the free market.  Interest rates effect credit and borrowing, savings, liquidity, employment, and the flow of private capital. 

Interest rates affect government activities as well.  Profligate government spending results in annual deficits that must be funded.  Government borrows money by selling securities to buyers of our debt.  Those buyers receive a return on investment based on interest rates established by the government.  As annual deficits become more commonplace the long-term accumulation is the outstanding national debt. 

Individual wealth is at risk because the currency most wealth is denominated in is the very currency the national debt is denominated in.  At minimum, the currency functions as both an indirect medium of exchange and a store of wealth/purchasing power.  The inherit danger to the people is the fact that our wealth is denominated in the same currency as our debt. 

Remember, government has three methods to raise revenue; tax, borrow, and inflate.

The government cannot tax or borrow their way out of a $15 trillion debt.  The only viable option the government has is to inflate the money supply.  Besides interest rates, the government also controls the money supply.  This is the very clear and present danger Americans face.  As government inflates the money supply each unit of currency loses its purchasing power.  A larger money supply makes it easier for the government to pay off/down the $15 trillion debt.  Government uses dollars nominally and has no concern with the wealth or stored purchasing power of a dollar.  However, remember most Americans wealth is also denominated in the same currency as the debt.  Wealth is the store of purchasing power and the government intends to take every action within its powers to save the banking system, which means they will sacrifice our wealth to do so.

Your wealth is the product of your life’s effort to sustain your life.  As government inflates the money supply and destroys your wealth, government has dominion over you. Government created a conflict between the banking system and individuals.  We know that government will intercede to save the banking system at our individual expense.  We the people are the sacrificial lambs in this arrangement. 

The current interest rate policy is to keep interest rates artificially low so the interest payments due on the debt are minimized.  However, this affects savings and investment, especially for lower income earners.  A bank savings account pays no more than 1% interest.  This is the nominal return and does not factor in inflation.  The real return is negative because inflation is 4-6% (depending on the source).  So, a person earning $25,000 a year that is able to save $1,000 is actually losing wealth (property) by saving it.  The government discourages savings to promote consumption.  Too add insult to injury, the government then taxes the saver on the interest earned even though they are losing wealth/purchsing power due to monetary policy. 

Today, economic growth is based upon credit expansion.  Consumers and businesses alike are encouraged to borrow; either to spend or to expand business.  Government deficits routinely exceed $1 trillion which requires the government to borrow money that is then sent overseas to China and other countries creating huge trade imbalances.  Since the world is run on fiat currencies there is no real clearing mechanism for the imbalance, so the Chinese buy our debt.  While this cycle tempers domestic inflation to a degree, it creates an unsustainable debt the country cannot repay.

Society is divided into two camps; those that cherish individual liberty and freedom, and free markets vs. those that give sanction to an all-powerful, centralized government and central planning.  Enshrined in our founding documents are the natural rights to life, to liberty, and to the pursuit of happiness.  The proverbial line in the sand was drawn and is quickly eroding under the constant pressure to obliterate our natural rights and confer, explicitly or implicitly, upon government the power to exercise dominion over life, liberty, and the pursuit of happiness. 

Society must return to its founding principles:  Constitutionally limited government!  Federalism!  Individual responsibility!  Private Property Rights!  Free Markets!

What say you?

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2 Comments

Filed under Economy, Philosophical

2 responses to “Giving Government Sanction over Life, Liberty, and Property.

  1. friofrijoles777

    Outstanding post, Scott!

  2. Augie

    Very “Sound and Sober” Entry!

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