This is part of the ongoing Recommended Video archive.

On March 13, my brother Peter and I had the great pleasure to meet Congressman Tom McClintock, who was elected in 2008 to represent District 4 in California. This is his first time serving at the national level, after serving the State of California, in the Assembly and Senate, since 1982. He was endorsed by Ron Paul during his congressional campaign, and was one of the first congressmen to cosponsor Ron Paul’s Federal Reserve Transparency Act, H.R. 1207. Read more details about my visit with McClintock here.

In the midst of the constant economic meddling we have grown accustomed to, it astonishes me when mainstream “economic experts” such as Ben Bernanke, Tim Geithner, and Nobel Prize winner Paul Krugman simply say that “bubbles happen.” It is commonplace, they say, for bubbles to appear and the role of government and central powers is to step in to prevent its popping. Essentially they are saying that the market created the problem, but it is too dangerous to let the market to correct itself; therefore new regulations and interventions must come into play to solve the problem.

The first flaw with this theory is that bubbles are not just created by accident. It is not the natural course of a strong economy to be either constantly on the upswing of a boom or the downswing of a bust. It is not the natural course of a currency to depreciate over time. It is not the natural course of prices to consistently increase. Yet over the past several decades, it seems that the economy is always on the verge of “overheating”, “deflating”, “slowing”, nearly any term you can think of.

It’s become a mainstream belief that too much economic growth and productivity is a bad thing, and will lead to a terrible recession. The Fed raises interest rates to slow growth, but subsequently lowers rates dramatically when the economy begins to slow down to make sure it doesn’t halt too much.

Through the laws of supply and demand, which people generally seem to think they understand, prices should go down over the long run, not up. In recent history, ever since the Fed came into existence and the gold standard was diminished, general prices are increasing due to the rapid expansion of the money supply. It is vital to realize that it is not prices that should go up, and the currency that should go down, but rather the currency that appreciates value and the prices that fall.

Even in the 19th century, probably the closest thing to a real free market in recorded history, the government’s intervention managed to create numerous financial panics. The U.S. had two central banks during the century that, along with various acts by Congress, played a large role in cheapening credit to artificial levels and encouraging unsustainable speculation. During the Civil War period the U.S. adopted both a fiat monetary system and income tax, which contributed to the 1873 panic. Escalated government intervention, central planning, and behind-the-scenes manipulation have been the natural trends of all countries throughout history, and they have never worked.

Bubbles are not created by voluntary, personal exchange that you have in a free market. Today, bubbles are created when interest rates and credit are constantly manipulated (by the Federal Reserve) beyond or below their natural levels, causing malinvestment and artificial wealth and opportunity. This provides short-term relief and optimism to the economy at the expense of the creation of a larger, irrational, unsustainable bubble that is fueled by the easy credit. Activating the printing presses and creating cheap credit appear to be some of the easiest illusions for government and central planners to work under in order to expand their power and presence within the economy.

Ever since we lost the last connection to gold in 1971, the U.S. has been on a path of self destruction by ignoring sound monetary policies that a lasting economy is built upon. We have followed the flawed Keynesian economics’ belief that you can devalue the currency and pile up debt with little consideration of the longer-term consequences.

The Fed injects money into the economy at low rates that would not be acceptable with a free market monetary system. This manipulation devalues the dollar, pressures the middle class (due to decreased purchasing power of the currency), and promotes irresponsible and unsustainable behavior such as excessive speculation, overvaluing assets, and discouraging wise saving practices. This is the reality that we will have to face sooner rather than later. No amount of government control and central intervention can sustain failed ideas and principles.

It is not the principles of the savings, production, and individual responsibility that create massive bubbles; rather, it is the Keynesian ideals of currency inflation, debt and borrowing, and interventionism that create messes like the one we face today.

Bubbles do not come out of nowhere, but they are pushed along by money and credit created out of thin air by an elite few. An economy built on corporatism, central planning, and government control is forever destined to suffer the perils of an unstable, manipulated, inflated foundation. The only lasting cures for these economic ills are the principles of hard work, savings and investment, with the freedom and responsibility of private property.

This is part of the ongoing Recommended Video archive.

This is part of the ongoing Recommended Video archive.

It seems to have become a mainstream acceptance that the U.S. has the responsibility to keep its military overseas. It’s the role of the world superpower, they say, to maintain a military presence and spread order through the world. It’d be nice if this were true, but no superpower has lived long enough to show the success of this theory.

The very principle of maintaining an empire, presence, or force outside of your own borders is not one that you’d expect to be followed by a country founded on individual and state sovereignty. Our current principle is worse than this, however. We say that because we’re large we have the responsibility or right to spread our force around the world. This has been the policy followed through history by tyrants, emperors, and kings, not free individuals.

Whether force is spread through trade or military decisions is irrelevant in the long run. When a government uses force to shut down free trade, as many countries (starting with the U.S.) did in the Great Depression, the effects will often be as painful as military force. Individuals suffer, the economy weakens, and freedom is reduced. Sanctions and other trade control methods do not harm the governments they are intended for, but the people within those externally manipulated countries.

The Constitution gives the U.S. no authority to mingle in the affairs of other nations, and certainly not ongoing military occupations and nation building. Today, approximately one quarter of the U.S. military is overseas in more than 150 countries, racking up a bill to the tune of hundreds of billions of dollars every year. It is a weak argument that having all of those American troops constantly in foreign countries adds to the safety and security of our nation.

Ever since World War 1, when the U.S. took a much more forceful role in world affairs, we have had nothing but trouble. The U.S. took it upon itself to lead the charge of an interventionist foreign policy after World War II, which brought about the terrible atrocities of the Vietnam War and an ongoing war in many Middle Eastern countries. It was after WWII that Congress ceased to follow its constitutional duty to control and maintain the decisions of war, and the U.S. has not won a foreign conflict ever since.

Recently, the U.S. has had the problem of getting deeply involved in conflicts that it simply can’t contain or control. Through the CIA we helped arm the mujahideen “freedom fighters” to battle against the Soviets in the 1980s, which backfired largely in the form of two men who we supported and trained, Saddam Hussein and Osama bin Laden. Those who are our friends one day turn against us years later, in cowardly but deadly fashion.

As Congress has either neglected or forgotten its duty when it comes to military spending, the executive branch has grabbed much of the power of war and military might. Mixing executive power and war is extremely dangerous, and will more often than not lead to the work of tyranny, unpopular and unnecessary wars and entanglements, and a larger disconnect and misrepresentation of the people.

U.S. foreign policy today has become a philosophy aimed not at protecting our own country, but using military force for the benefit of a select few who certainly do not have the interests of the American people in mind. We keep thousands of troops in countries that have not committed any harm to the U.S., have not threatened national security, and represent the furthest thing from a danger to the U.S. War is a terrible thing, but the more it gets into the hands of the executive branch and the more that Congress ignores its responsibility, the higher the likelihood of corruption, influence of special interests, and needless death of American troops and innocent civilians is.

A foreign policy of a nation keen on spreading freedom must support the ideals of non-interventionism and free trade; protect and strengthen our troops by having them defend their own country, and maintain a policy of true free trade with all nations decided by the people, not their governments. People talk about global society and how we’re all one family, then it’s time to act like it. Enough of this nonsense that we need governments or the U.N. to spread these ideals. We are all humans and a few empowered officials cannot spread principles or beliefs through forceful actions, a lasting change will only come from change in the minds of man.

It is time to recognize the fallacies of an interventionist foreign policy. A playground bully seems to best represent our current foreign policy principles: because I am the biggest one, you and your friends must obey my commands or face the consequences of my force. It is ludicrous that because we are the biggest and most successful nation we have the right, duty, or responsibility to use our military for a use other than national defense and the protection of individual liberty and freedom.

This does not make us any friends. It’s come to the point where we bribe, sanction, and occupy nearly every country in the world for one reason or another to our liking.

What message does this current belief send the world?

Let’s say that China passes the U.S. in economic size in thirty or forty years, as has been projected by many economists and investment firms. Does this automatically give them the right to come into our borders, overthrow our government, train our police, control our trade, install new leaders, and give us a new system of government? There is no justification for this belief. Just as a man who is seven feet tall does not have extra duties or rights than a man who is six feet tall, neither does a superpower have the right or duty to intervene in the affairs of all nations smaller than itself.

It is time that we abandon the foreign policy followed in the medieval ages and return the the principles of the Founding Fathers, freedom, and peace. It is neither sustainable or practical to assume that military force can accomplish more long-term change than strong minds and the peaceful exchange of ideas, goods, and discussion between people and their respective nations.

The recent AIG bonus debacle has angered many people, but usually for the wrong reasons. While the $165 million in bonuses handed out to its high level employees is nothing to support or be proud of, it is disheartening when Congress and President Obama spend this much time going after $165 million and discussing nothing of the $170 billion+ they’ve already specially loaned to AIG. Now, a special 90% tax has been passed to recall the bonuses which, if signed into law, marks a huge expansion of the federal government’s power to intervene.

Bonuses are an easy item to attack and gain “extra credit” for, but I’d like to think that people could read through the lines a little bit more than this. If the federal government can just tax a company’s bonus payments (after giving them billions of dollars in bailout money), where does it go from there? Can the federal government just waltz in and pass special taxing legislation when a company does something it doesn’t like?

There are quite a few people who tell us that Washington D.C. is “broken”. I don’t necessarily disagree with this, although I’m sure I have different complaints than they do about government. But these same people want the “broken” system to legislate, mandate, and regulate “moral and ethical decisions.”  So the bureaucrat in D.C. knows more about the right morals and ethics of business than the people who actually put their time and money into a business? Washington should not be thrown onto a pedestal to regulate ethics when it itself is reeking of foul and corrupt play.

The reasoning behind intervening in AIG in the first place, with the bailouts, is shaky at best. Obama recently spoke on this topic:

So the problem with AIG was that it owed so much and was tangled up with so many banks and institutions that if you had allowed it to just liquidate, to go into bankruptcy, it could have brought the whole financial system down. So it was the right thing to do to intervene in AIG.

If they got so tangled up with debt exposed to many industries, why in the world do they need a bailout? Why can’t they learn their lesson? Using the “too big to fail” argument, we are told that AIG can’t fail because it would be too painful for the overall economy.

I’m confused.

Obama has said countless times that he wants to change the way Wall Street works. If this is the case, why is he jumping to the plate to continue bailouts, preventing the marketplace from making this very change on its own?

If AIG’s practices got it too interconnected within the financial system, clearly something needed to change with its business. Our financial system is not built on a very stable foundation to begin with, and the market was sending strong signals that things needed to change.

But the Washington bureaucrats just couldn’t dare let this atrocity happen. This way the whole country pays to bailout failed business practices, a failed financial system, and a few irrational individuals who started the madness. Rather than let the people who created the mess fail, go bankrupt, and allow a better operation to come of it, politicians made the decision to keep Wall Street the way it is. Instead, new regulations are proposed to be thrown on Americans nationwide to regulate “ethics and morals” and lord knows what else.

What the government has done throughout the past year especially is try to discourage regulation from the market. Rather than take the signs that the financial system, despite massive central intervention over the past century, is not working, that government sponsored enterprises Fannie Mae and Freddie Mac are not sustainable, and that subprime mortgages obviously aren’t a smart plan for the bank or client, the government actually prevented the short-term failure of all these things. Ignoring the free market’s regulatory power for expanded government regulation will turn out to be the most deadly mistake we take from these rough times.

Those who preach that we need more government intervention do not understand the regulatory powers of the free market. They say that the whole financial system would collapse if the government did not intervene, but do they ever think that we might need to do things in a new and better way? A financial system built on a stable foundation won’t just “collapse”, but an inflationary system manipulated by central powers and government planners will.

The problem with government intervention and socialism is the assumption that government knows the best solution for each and every person, problem, and industry. Through the depths of history no socialist has dared believe that people could enact reasonable solutions through their own errors, trials, and hard work. A government-managed system assumes there is no better way to run an operation, which leads to inefficiency and mismanagement of capital that it didn’t earn in the first place (tax dollars).

Do not believe for a second that one more government regulation or intervention will get us out of this mess or prevent the next one that is sure to come. The market has tried to show us that the way things have been done can’t last, but the government attempts to overrule the power of the invisible hand with bailouts, forceful regulation, and varying treatment to different industries. It isn’t difficult to see that the market is yearning for a new system, but the majority of our politicians would rather take things into their own hands and stick some paint on a building scheduled for demolition.

In a free market it is the consumer and individual who make the regulations. The government is constantly working to take away that regulatory power and instead place it the hands of a few bureaucrats who promise to protect us from ourselves.

Don’t forget that the market was well on its way to punishing the irresponsible business practices; it was not the government regulatory agencies who made the first move. By simply allowing the market to regulate itself, we would be well on our way to deflating the bubbles, weeding out (not bailing out) failed ideas, and by learning from our mistakes we could once again be on the path toward sound economics, sustainable decisions, and freeing the unyielding regulatory power of the individual.

This is part of the ongoing Recommended Video archive.

Today foreign policy has largely taken a backseat to the economy as the main issue being discussed locally and nationally. But foreign affairs have done anything but settle down over the past several months.

During the Presidential debates between Senators’ Obama and McCain, the main debate on foreign policy was over how to best invade and increase forces in Afghanistan and Pakistan. The two did their best to separate themselves from each other on the issue, but in the Senate they have both voted similarly on key foreign policy legislation. Whether it be the FISA bill in 2008 granting immunity to telecommunication businesses wiretapping phones under federal order, or consistently voting to continue funding the Iraq War over the years. By looking at their voting records we can see that Obama and McCain have largely seen eye to eye on foreign policy.

Today, the lack of change in foreign policy is apparent. The marines currently in Iraq are beginning transfer to Afghanistan, and more troops are planned to be brought into the country this year. The “Iraq withdrawal” plan has turned into nothing but a cover to continue the occupation of 35,000 to 50,000 “residual force” troops beyond 2010. The body count in Pakistan, from U.S. attacks, continues to rise since late January when the Obama Administration began its operation. Despite protests from the Pakistani government, these attacks are expected to continue increasingly in the days ahead.

True debate on foreign policy has been disregarded and ignored for quite some time. Ever since World War 1, the United States has taken a larger military role in world activities. As we have seen with Obama, McCain, and Bush, the principles have remained the same: continue and increase interventions in the Middle East, keep thousands of troops in Iraq for an indefinite period of time, and hardly a thing is mentioned about the countless troops placed worldwide in Europe, Korea, South America, and many other countries.

The core problem with U.S. foreign policy is very similar to the core problems of the federal government’s escalated domestic involvement with the economy. It is a short-term focused approach that does not account for individual responsibility, long-term sustainability, or the effects of blowback tomorrow because of yesterday’s actions.

The principles of domestic and foreign policy that a nation takes are very much intertwined with each other. A government heavily involved in foreign policy will lead to a government much more involved domestically, and visa-versa.

While the effects may not be immediately seen, it can’t be interpreted as a mere coincidence that U.S. entanglement overseas greatly escalated after the Federal Reserve and Internal Revenue Service were created in 1913. The power to print money and tax private property will lead to an expanded, intrusive government domestically, and in the long run that government will not hold back from expanding overseas.

What is it that we stand for? Democracy? Individual liberty, freedom, and right to one’s life are what we have fought for since 1776; not a majority rule through democracy. No matter how worthy or incredible a system may be, not one political, economic, or social system can be spread through force and sanctions without weakening or completely destroying its reputation.

The U.S. has pursued a foreign policy approach resembling that of a bully, rather than a beacon of freedom. How can we say that spending nearly 20 years in Iraq has spread American ideals of life, liberty, and the pursuit of happiness?

Spreading principles cannot work if it is done through force, whether it be with the economy or dealing with a foreign country.  Leading by example, proving that freedom works, showing that free individuals can achieve more than use of military force, will bring about much more powerful, effective, and respected solutions of peace and prosperity worldwide.

Part 1:

Part 2:

This is part of the ongoing Recommended Video archive.