“He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our People, and eat out their substance.” – Declaration of Independence, 1776

The below pictures were from a presentation given at yesterday’s “Towne” Hall on May 24.  I’ve added a few comments with documentation links.  The quote above from the Declaration easily applies to the 22.5 million bureaucrats, America’s second largest job sector, who make nearly twice the average wage of the private sector.

While America is not Greece – or Iceland – there are glaring similarities.

While the Republocrats are not King George… they are far worse.

For Liberty and the Constitution,

Jake Towne

USDA link here.  Note the strong rise in number of SNAP food stamp recipients during the past year.  One would expect to see this number dropping or even flat-lining – along with employment rising – if a recovery were underway.

BLS link here.  Note that while the “newspaper” unemployment rate is still 10%, the U-6 figure – which more accurately describes total unemployment is 17% – a depression statistic.  I’ve described the common sense solutions to end rampant unemployment almost overnight in the campaign’s Jobs plank.

Since the BLS drops off workers from its U-6 figure, the real unemployment rate is most likely slightly greater than 17%.  Shadowstats estimates the rate at about 22%.

The current national debt – which is closely tied to the USTreasury market is now over $13 trillion.  Current government plans include massive deficit spending through 2013, and the government’s optimistic projections of a return to “normalcy” even then should be severely doubted.  Source of budget data.  However, due to the cash-based accounting method government uses, this hides the undeniable fact that the real national debt is much larger when GAAP (Generally Acceptable Accounting Principles) are used to identify future taxation sources and future debts such as Social Security and Medicare (see below).

The above is taken from the Treasury Department’s latest report from April 2010 where government’s inlays – social security and retirement taxes, income taxes (both personal and corporate), and excise taxes can be seen.  The average monthly level is about $170 billion per month.

From the same report, the level of government spending, which averages about $300 billion per month.  (Only the government can run that type of accounting, due to its money-printing!)  While Social Security and Medicare are a major expense, the level of “National Defense” spending appears deceptively low as it is just the DoD budget.  As I wrote about in “Guns or Health Care?” plenty of “Other Non-Defense” spending are in fact related to the military – Homeland Security, the nuclear arsenal under the Dept. of Energy, Veteran’s Affairs, the Treasury’s military retirement program, etc.

As seen in the official USTreasury report on page 178/254, the total unfunded liabilities for Medicare and Social Security is a jaw-dropping $107 trillion over the future of these programs.  While I predict the Democrats may bear the brunt of the blame for the collapse of Medicare, one must not forget that it was the Republican’s massive expansion of Part D’s prescription drug plan that worsened the fiscal situation.  One interesting possible interpretation of the recent health care takeover plan is it may simply be a stop-gap solution to temporarily increase taxes over the next few years.  (On Social Security, I will be delivering a presentation in more detail next Friday.)

The above is built from the Federal Reserve H.4.1 data here.  The red line is the total (reported) balance sheet of the FED, which has more than doubled since the time of the Banker Bailout.  While the original TARP bailout (not shown) accounted for much of the initial sharp increase, most of the debt has been replaced by $1.12 trillion of mortgage-backed securities from Freddie Mac and Fannie Mae (the purple line).   This graph shows the nationalization and propping of America’s entire residential housing industry. The yellow and green lines show the cumulative totals of USTreasury and USAgency debt held by the FED.  While the Federal Reserve has admitted it will take losses on the MBS debt, the question remains as to how much and when.

The purchasing power of the dollar has lost well over 94% since FDR took America off the classical gold standard in 1933 through monetary inflation.  The monetary inflation is caused by the FED.  They debase the dollar by creating more and more irredeemable paper dollars.  Graph provided by Bloomberg Financial, 2009.

The above chart shows the “real interest rate” from 1970 to 2009, formula below.  It is an approximation for the dollar’s purchasing power versus time.  While in 1980 it reached nearly +10% (savings rate of ~19% and inflation of ~10%), in 1990 this rate went negative and continued dropping.  The chart shows the capital and savings of America being ruthlessly destroyed by the FED and the government.  Source.

Real Rate of Interest = (Interest Rate earned by a bank savings account) minus (Inflation Rate)

The rising price of gold over the past decade demonstrates the destruction of the world’s paper currencies.  In the past several weeks, gold reached all-time record highs in dollars, yen, euros, Swiss francs, and British pounds.  As described in this article, the gold price is likely suppressed by governments in order to make their own currencies look good as I wrote about in “The Summers Gold Price Suppression Scheme.”  Gold trades over $20 billion USD per trading day – or over $20 trillion annually – a figure larger than the $15 trillion GDP figure used for the United States.

To cap off the situation with the dollar, the latest quarterly banking profile from the FDIC indicates the deposit insurance fund (DIF) is bankrupt.  While consumers at failed banks still receive “insured” funds, the losses are presumably filled in with dollars from the FED, as reported last here.  The current FDIC “watch list” rose to 775 banks, or almost 10% of all FDIC-insured banks in the US per p. 3/26.

The crux of the Over-the-Counter derivatives problem is its enormous size.  However the $600 trillion figure shown is the derivatives’ contracts notional value – a true market value cannot be assessed.  The primary issue with OTC derivatives is that they trade off of exchanges, so their contents are opaque to the rest of the marketplace.  Note that exchange-traded derivatives (EXD) are much smaller.

BIS data here.  Note the sharp drop following the 2008 financial crisis.  More details on derivatives can be learned in “What the Heck are Derivatives?” and “Bring Light to Dark Derivatives!”

Jake Towne is running for U.S. Congress in eastern Pennsylvania’s 15th district in 2010. Prior to returning home, he had been living in Shanghai as an engineer in the semiconductor industry for over 3 years. As part of defending liberty and championing the Constitution, Towne is offering the citizens in his area a novel form of accountable government called “Our Open Office.”

Currently I read reading the book 33 Questions About American History You’re Not Supposed to Ask by Thomas Woods (author of recent best-seller Meltdown). In it Woods brings up the Civil War and questions if it was really only or largely about slavery, as is commonly believed and taught in U.S. classrooms. He mentions a letter that Lord Acton, one of the leading figures in the libertarian school of thought, sent to Robert E. Lee in 1866.

I saw in State Rights the only availing check upon the absolutism of the sovereign will, and secession filled me with hope, not as the destruction but as the redemption of Democracy. The institutions of your Republic have not exercised on the old world the salutary and liberating influence which ought to have belonged to them, by reason of those defects and abuses of principle which the Confederate Constitution was expressly and wisely calculated to remedy. I believed that the example of that great Reform would have blessed all the races of mankind by establishing true freedom purged of the native dangers and disorders of Republics. Therefore I deemed that you were fighting the battles of our liberty, our progress, and our civilization; and I mourn for the stake which was lost at Richmond more deeply than I rejoice over that which was saved at Waterloo. — Lord Acton (Emphasis added.)

The more I research and think of the Civil War, the more I recognize that it was not a war about slavery, but a war of central, national authority and individual, sovereign states. If the South was seceding simply over the issue of slavery, they likely would have fervently supported the Corwin Amendment, which left the issue of slavery up to the states and out of the jurisdiction of Congress:

No amendment shall be made to the Constitution which will authorize or give to Congress the power to abolish or interfere, within any State, with the domestic institutions thereof, including that of persons held to labor or service by the laws of said State.

The Corwin Amendment was passed by both the House and the Senate on March 2, 1861, two days prior to Lincoln taking office. Lincoln supported the Amendment (which would have been the 13th Amendment) in his First Inaugural Address and mentioned, “I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so.”
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Today we have lost many of the essential values and practices that the U.S. was founded upon. The Founders upheld the belief that humanity comes from God, who Himself is a free and eternal being. Every human is given the desire to be free of all artificial restraints and, in a sense, become just like the God that created them. The Founders revolutionarily transferred this belief of Natural Law into the works of government and the Constitution. Because humanity is a part (and some would say a gift) of God, humanity itself comes with certain properties, rights, and freedoms outside of the power of any legislator, government, or king.

“God who gave us life gave us liberty. And can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are a gift from God?” – Thomas Jefferson

We have forgotten that belief in Natural Law. So much unchecked power has since been placed in the hands of government; protecting the laws and rights of life, liberty, and property is no longer seen as the first and most important role of government. This, on its own, I see as a major departure from true morality and religion, and a most dangerous potential of things to come in the future.

What happened? We seem to believe that organized religion, not individual initiative, creates morality, spirituality, and true values. However, many of the Founders were not very active in any organized religion, as we know it. They saw religion as a platform of strong principles upon which every individual ought to voluntarily live upon, not as a bureaucracy that dictates what is right, what is wrong, and how people should live.

The problem with organized religion, and I believe the Founders recognized this, is that it starts with empowered people talking down to supposedly less knowledgeable individuals, not with individuals recognizing their roots to God inside themselves. Religion is not something to be passed down by bureaucracy; it all starts where it was initially created: inside every person. This is the basic principle that the Founders followed. When we began to follow the belief that religion comes from the top down (organized religion), we also accepted the idea that some or all of our God-given rights and freedoms come from empowered individuals higher up on the chain. It is a backwards way of thinking.

“Clearly the person who accepts the Church as an infallible guide will believe whatever the Church teaches.” – Saint Thomas Aquinas

“The highest manifestation of life consists in this: that a being governs its own actions. A thing which is always subject to the direction of another is somewhat of a dead thing.” – Saint Thomas Aquinas

I see true religion as principles and practices that are controlled, more than anything else, by the nurturing of an individual. The Founders repeatedly wrote and spoke about how the U.S. was founded on the principles of Christianity and Jesus, not on the principles of the Church. The teachings of Jesus and the Bible would do much good for the world (and I’m sure they do in many cases), but the principles are now spewed and diluted through organized religion.

Honest religion and spirituality does not start with a group, it starts with an individual. A group can certainly support an individual, but not through grasping for power and control over an individual’s principles and morals. We are too short-sighted to recognize that religion is much more powerful on an individual level than any bureaucracy can dream to be.

“Happiness is secured through virtue; it is a good attained by man’s own will.” – Saint Thomas Aquinas

Every individual is looking for happiness and freedom from artificial restraints, just as the Founders recognized in drafting the Constitution, supporting the Declaration of Independence, and ratifying the Bill of Rights. The Founders strongly believed that there was a higher law, a Natural Law, that starts with the individual and forms the basis of self-government.

Areas of personal religion that the Founders intended to remain an individual duty have underhandedly been transferred to the government. The Founders were adamant about personal charity, love to your fellow man, and following a strong moral bearing. Unfortunately, today we accept the notion that it is government’s role to engage in charity through various forms of welfare and special favors, an area that was supposed to be the cornerstone of individual religion and a moral nation. As we started losing touch with the power of individual morality, we attempted to transfer that power to government bureaucracies to engage in that morality for us.

A free and moral individual, citizenry, and nation, no matter how good the intentions, should never support the idea that government can spread charity by forcefully taking money from one group and giving it to another. The Founders would be appalled with these principles of government and the blatant disregard for individual responsibility to engage in basic charity and morality. When the Founders talked about a moral and religious nation, they were not talking about people going to church every Sunday. They were endlessly explaining the importance of individual religion and individual morals, untouched by the hand of government.

No matter how hard they may try, morality does not come from government, organized religion, or even a Saint. Morality and religion do not function if they are imposed on a person. True and untouchable morality, spirituality, and religion come only from ourselves when we are ready for truth – recognizing the power of love inside every one of us, the importance of personal charity, religion, and morals, and the principles of freedom and happiness from our Creator that remain inalienable to all. When we forget the principles of basic happiness, we forget the principles of basic freedom and liberty.

“When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them… We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” — Declaration of Independence

“It is the mutual duty of all to practice Christian forbearance, love, and charity toward each other.” – James Madison

“Man cannot make, or invent, or contrive principles: he can only discover them; and he ought to look through the discovery to the Author.” – Thomas Paine

“Our ancestors established their system of government on morality and religious sentiment. Moral habits, they believed, cannot safely be entrusted on any other foundation than religious principle, not any government secure which is not supported by moral habits…. Whatever makes men good Christians, makes them good citizens.” – Daniel Webster

“(T)he propitious smiles of Heaven can never be expected on a nation that disregards the eternal rules of order and right which Heaven itself has ordained.” – George Washington

“That religion, or the duty we owe to our Creator, and the manner of discharging it, can be directed only by reason and conviction, not by force or violence; and therefore all men are equally entitled to the free exercise of religion, according to the dictates of conscience.” – Patrick Henry

“Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” – John Adams