Category Archives: Politics

Another reason we could make it

Not a sufficient or even sensible reason for California to just break off from the United States entirely, but something I realized last night: California has more teams in the NHL playoffs than Canada does. Canada has 33.3 million people, California has about 37 million. Of course, Canada has 225,000 registered minor players in Ontario compared to California’s measly 4,300.

Of the three NHL teams located in California,

  • The Ducks have 11 Canadian players
  • The Kings have 11 Canadian players
  • The Sharks have 18 Canadian players

Conversely,

  • The Duck have 0 Californian players
  • The Kings have 0 Californian players
  • The Sharks have 0 Californian players

While not as self-sufficient as Minnesota or Massachusetts at providing our own hockey players, I think California has demonstrated a more-than-adequate ability to import high-quality Canadians to supply all of our domestic puck-chasing needs.

Four More Years

Due to the 22nd Amendment to the United States Constitution, we didn’t get a chance to re-elect George W. Bush and carry on his proud stewardship of our nation. Happily, we were able to replace him with a younger, healthier, more ethnic version to carry on his legacy. Looking at a few key policy matters that factored in to my personal voting decisions back in 2008, I see a bit of a pattern forming:

Subject G.W. Bush B.H. Obama
Tax breaks for the stupendously wealthy Yes Yes
Withdrawal date for Iraq Dec 31, 2011

Maybe Later
Occupation of Afghanistan Indefinite Indefinite
Airstrikes in Pakistan 42 times About 200 times
Airstrikes in Yemen Maybe once in 2002 Yes
Airstrikes in Somalia Yes Probably
Illegal detentions in Guantanamo Bay Started it Yes
Illegal wiretapping of U.S. citizens Yes Voted for it
High-level investigation of war crimes Haha, no We don’t want to look back
Says we don’t torture Not torture, honest Not any more, honest
Bombing Libya Renewed diplomacy Dropping bombs like your moms
Can pronounce “nuclear” Nuke-u-ler Nuclear

I write this largely because of my disappointment in Mr. Obama’s speech yesterday. This man used to teach constitutional law, and now seems to think that Article 1, Section 8 of the U.S. Constitution can be delegated indefinitely and for whatever whimsical purposed the president likes, that the 4th and 6th Amendments simply do not apply to anybody, and that Article 4 doesn’t make treaties like the Geneva Accords legally binding upon the U.S. government.

Miss you yet, George? I hardly noticed you were gone.

Hyperinflation and You

As somebody who listens to talk radio and watches news networks on a regular basis, I see a lot of ads from folks like Monex or Goldline. The basic premise is supported by the echo-machine narratives told by the newscasters and pundits, in a kind of disinformation kabuki dance. It goes like this:

The U.S. federal government runs at a deficit. The deficit currently stands at a very large number and contributes greatly to an even larger federal debt. Because the federal government owes this money in U.S. Dollars and the federal government can print additional money to honor these debts, the existence of this debt devalues the money itself. As the value of a dollar decreases, any asset that is defined strictly in terms of dollars would also decrease in value, so buy gold and be wealthy after the United States crumbles into financial oblivion. Gold is presented as both a supremely secure value and a good yield.

This is a pretty attractive chain of reasoning, if only it all added up that way. Rather than listen to the radio and TV pundits (whose paychecks are made possible by advertising from these gold-peddlers), let’s cast about looking for some other source of financial expertise. Let’s keep in mind that everybody has their interests and factors that influence what they say about markets. How about we don’t look at what anybody says about hyperinflation and the price of gold, and instead look at the actions of the bond markets?

When the United States needs another $80 billion to bomb an Afghan village into the dirt, the money can come from three sources: they can levy taxes and fees to replenish the treasury, they can print additional currency to produce the funds directly, or they can sell bonds on the open market. For political and practical purposes, the government is overwhelmingly predisposed to sell bonds. This is what many politicians refer to as “putting it on the credit card.” During the initial bond sale, the interest rates given are determined by auction. This means the Treasury’s bond yields reflect the value investors were willing to place on the good credit of the American government. Investors responsible for about 1.6 trillion dollars (the most recent estimate of our annual deficit) need to weigh all their options, including private financial instruments, securities, and commodities against the perceived dangers of economic and political instability and various actors’ credit-worthiness and arrive at an interest rate that is high enough to merit investment in Uncle Sam’s promise to return payment. Since U.S. Treasury bonds are paid in dollars, inflation has to be taken into account in that decision process.

Bearing in mind that you don’t play around with hundreds of millions or billions of dollars on the open market without knowing your stuff (let’s assume a little faith in the intelligence and self-interest of big-time investors), the yield on a Treasury note needs to at least equal the expected inflation rate or it’s probably not worth buying. As of this writing, a ten-year note will pay out 3.58%. This means that the market-at-large thinks that inflation will be something short of that, averaged out, over the next ten years. We can figure out exactly what the market expects inflation to be by looking at the cost of inflation-protected bonds (which yield a guaranteed rate over whatever inflation ends up happening), which are at 2.45%. 3.58% (10-year bond) minus 2.45% (inflation-protected bond) is 1.13%.

Folks looking to sell you gold, and folks looking to sell ad time for folks looking to sell you gold, say we’re looking down the barrel at a sure-fired guaranteed financial apocalypse. $1,600,000,000,000.00 in bond sales this year says those people are full of it.

As for the notion that gold is a supremely-secure investment (by golly, it’s been valuable since the days of Abraham!), tell this to anybody who invested in gold at $1781.00 per ounce (adjusted for inflation) back in 1980. They can fetch $1432.00 for it today. If they’d bought a thirty-year treasury bond that same year, they’d have locked in about 9.8% at its lowest yield in June. Inflation since then has totaled 166.29% (cumulative), so a $10,000 investment in the T-bill would have yielded $165,222.89 in June of 2010. The $10,000 investment in gold at June 1980 prices (average was $672) would fetch you $21,309.52 at today’s price. Just keeping up with inflation would have fetched $26,500 or so.

Don’t be a sucker, and keep in mind when some chalkboard-scribbling pinhead is trying to get your scared about muslims and blacks and unions, they’re just warming you up for their advertisers.