Showing posts with label immoral laws. Show all posts
Showing posts with label immoral laws. Show all posts

Thursday, February 21, 2013

The War on Coins

Since minting coins have become more expensive and costs taxpayers more, governments are beginning to have second thoughts about issuing them. Some have even pondered to prohibit hoarding or collection.

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From Bloomberg’s chart of the day:
Pennies and nickels have cost more than their face value to mint since 2006, resulting in a loss of at least $436 million to U.S. taxpayers.

The CHART OF THE DAY shows that in 2012, the penny cost almost 2 cents to make and the nickel more than 10 cents, according to the U.S. Mint’s annual report released in January. Those prices have almost doubled over the past seven years.

“If you look around in the budget, there aren’t a lot of places you can find savings where you don’t cut a program and you don’t raise anybody’s taxes and you can impact the deficit,” said Jim Kolbe, a former Arizona congressman who sponsored legislation to abolish the penny and dollar bill. “This is one where you can do that.”

Neither of Kolbe’s bills, introduced in 2001 and 2006, made it to a full congressional vote.
Canada has scheduled to phase out their version of penny.

As pointed out above, both coins in the US costs about or more than twice the face value.

The real reason for the rising costs of coin issuance has been due to the government’s domestic monetary policies of inflationism or currency devaluation.

The Nickel, which is a 5 cent coin issued by the US Mint, has maintained its composition of 75% copper and 25% nickel since 1866, according to Wikipedia.org

On the other hand, the penny, a one cent coin, has changed content over the years.

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Table from Wikipedia.org

As I earlier pointed out, as the US government debates on the destiny of coins, some people like hedge fund manager Kyle Bass have embarked on hoarding coins. Popularly been known for introducing the “Nickel trade”,  Mr. Bass bought 20 million nickels worth $1 million in order to hedge.

The difference between the Nickel and the Penny aside from the nominal face value has been that content-wise, Nickel has maintained its mix, while the penny has been gradually reconfigured or debased.  Thus I believe Mr. Bass’ preference for the Nickel.


People hoarding coins in the realization that coins provide hedge against inflationism has been a natural response. This is known as the Gresham’s Law

As the great Ludwig von Mises explained,
Mintage has long been a prerogative of the rulers of the country. However, this government activity had originally no objective other than the stamping and certifying of weights and measures. The authority's stamp placed upon a piece of metal was supposed to certify its weight and fineness. When later princes resorted to substituting baser and cheaper metals for a part of the precious metals while retaining the customary face and name of the coins, they did it furtively and in full awareness of the fact that they were engaged in a fraudulent attempt to cheat the public. As soon as people found out these artifices, the debased coins were dealt with at a discount as against the old better ones. The governments reacted by resorting to compulsion and coercion. They made it illegal to discriminate in trade and in the settlement of deferred payments between "good" money and "bad" money and decreed maximum prices in terms of "bad" money. However, the result obtained was not that which the governments aimed at. Their decrees failed to stop the process which adjusted commodity prices (in terms of the debased currency) to the actual state of the money relation. Moreover, the effects appeared which Gresham's law describes.
The Philippine government recognizes of the growing disparity between coin content and face value which they suspect has led to “hoarding”.  Thus, like the warnings of Mises, the government reacted by resorting to compulsion and coercion: A bill has recently been introduced to ban coin hoarding in the Senate.

Apparently, taxing people hasn't been enough, politicians want to forcibly acquire more of people’s savings through inflation, and this is why a local representative recently urged the domestic central bank to impose stiffer fine for coin hoarding.

The bias against coins can be seen even in the BSP commemorative offering. Of the coins and notes available for sale at the BSP website, the only coin is the Nickel commemorative coin: 1998 People Power Revolution P10 BUS is offered, the rest are notes.
 
Funny how times have changed. Do you know that coin debasement was punishable by death in the US in 1792? Today, preserving your savings via coins has been seen as crime. Or may I say inflation was evil then, today inflation has been seen as the moral order.

Thursday, January 03, 2013

Quote of the Day: Price controls Create a Population of Liars

Economists are trained in theory, statistics, modeling, and other skills. Historians are trained in the careful scrutiny and interpretation of historical sources. Neither economists nor historians, unfortunately, are trained to use common sense in their work. Postwar proponents of the reimposition of price controls have often pointed to the success of such controls during the war. Yet, despite thousands of employees and an army of volunteer monitors associated with the Office of Price Administration and despite the U.S. Attorney General’s prosecutory zeal in hauling alleged violators into court, the government’s price-control efforts during World War II failed to stem the tide of rising prices set in motion by the huge contemporary increases in the money stock.

Price controls, at most, only create a population of liars. True prices continue to do what the existing economic conditions cause them to do. No one can control the amount of precipitation by passing a law against reporting more than a stipulated amount of rain and snow.
This is from Austrian economist Robert Higgs at the Independent Institute on the evils of Price Controls

Wednesday, October 03, 2012

Gary North on How to Gum Up Any Institutions

Well if governments can make a mess of society through immoral  statutes and regulations, people can reciprocate by goofing up the system through non-violent means.

Austrian economist and author Gary North offers how to gum up any institutions, not limited to the government.

Rules are about redirecting people’s behavior to assure compliance. And institutions rely on sets of rules for it to thrive.

Economist Gary North explains:
First, every institution assumes voluntary compliance in at least 95% of all cases. This may be a low-ball estimate. Most people comply, either out of fear or lack of concern or strong belief in the system and its goals.

Second, every institution has more rules than it can follow, let alone enforce. Some of these rules are self-contradictory. The more rules, the larger the number of contradictions. (There is probably a statistical pattern here – some variant of Parkinson's law.)

Third, every institution is built on this assumption: partial compliance. Not everyone will comply with any given procedural rule. There are negative sanctions to enforce compliance on the few who resist. They serve as examples to force compliance. Conversely, very few people under the institution's jurisdiction will attempt to force the institution to comply exactly with any procedural rule.

These three laws of institutions – and they really are laws – offer any resistance movement an opportunity to shut down any system.
Economist North provides an example of how Vladimir Bukovsky jammed the Soviet Union Gulag, along with other inmates, by sending daily letter of protests to the Soviet bureaucracy from which the latter had to legally respond. The result was bureaucratic chaos.
As the 75,000 complaints became part of the statistical record, the statistical record of the prison camp and the regional camps was spoiled. All bureaucrats suffered. There went the prizes, pennants, and other benefits. "The workers start seething with discontent, there is panic in the regional Party headquarters, and a senior commission of inquiry is dispatched to the prison."…

Finally, in 1977, they capitulated to several specific demands of the prisoners to improve the conditions of the camps. The governor of the prison was removed and pensioned off. Their ability to inflict death-producing punishments did them little good, once the prisoners learned of the Achilles' heel of the bureaucracy: paperwork.. The leaders of the Soviet Union could bear it no longer: they deported Bukovsky.

Alinksy realized early that very few people will pay the price that Gandhi paid. So, he devised a system of resistance that lowered the risk, thereby lowering the cost. He understood the economists' law: "When the cost of producing anything falls, more will be supplied." More of what? Resistance.

His system involved at least one of two tactics: (1) violating a rule to which only a minimal negative sanction was attached, (2) follow the organization's procedural rules to the letter in a Bukovsky-like manner.

He tested his non-violent strategy and tactics in the 1960s in Chicago. He wrote a book on his system, Rules For Radicals (1972). He wrote this.
Let us in the name of radical pragmatism not forget that in our system with all its repressions we can still speak out and denounce the administration, attack its policies, work to build an opposition political base. True, there is still government harassment, but there still is that relative freedom to fight. I can attack my government, try to organize to change it. That's more than I can do in Moscow, Peking, or Havana. Remember the reaction of the Red Guard to the "cultural revolution" and the fate of the Chinese college students. Just a few of the violent episodes of bombings or a courtroom shootout that we have experienced here would have resulted in a sweeping purge and mass executions in Russia, China, or Cuba. Let us keep some perspective.

We will start with the system because there is no other place to start from except political lunacy. It is most important for those of us who want revolutionary change to understand that revolution must be preceded by reformation. To assume that a political revolution can survive without a supporting base of popular reformation is to ask for the impossible in politics. Men don't like to step abruptly out of the security of familiar experience; they need a bridge to cross from their own experience to a new way. A revolutionary organizer must shake up the prevailing patterns of their lives – agitate, create disenchantment and discontent with the current values, to produce, if not a passion for change, at least a passive, affirmative, non-challenging climate. "The revolution was effected before the war commenced; John Adams wrote. "The Revolution was in the hearts and minds of the people. . . . This radical change in the principles, opinions, sentiments and affections of the people was the real American Revolution." A revolution without a prior reformation would collapse or become a totalitarian tyranny.

Read the rest here 

Mr. Alinsky then devised of 13 tactical guidelines for the “gummit” model, again Mr. North:
  1. Power is not only what you have but what the enemy thinks you have.
  2. Never go outside the experience of your people.
  3. Wherever possible go outside the experience of the enemy.
  4. Make the enemy live up to their own book of rules.
  5. Ridicule is man's most potent weapon.
  6. A good tactic is one your people enjoy.
  7. A tactic that drags on too long is a drag.
  8. Keep the pressure on.
  9. The threat is usually more terrifying than the thing itself.
  10. The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition.
  11. If you push a negative hard and deep enough it will break through into its counter side.
  12. The price of a successful attack is a constructive alternative.
  13. Pick the target, freeze it, personalize and polarize it.
The Gandhi Alinsky disobedience model reminds me of Etienne de la Boetie, French judge, writer and founder of modern philosophy and one of the early advocates of civil disobedience, who once wrote 
Resolve to serve no more, and you are at once freed. I do not ask that you place hands upon the tyrant to topple him over, but simply that you support him no longer; then you will behold him, like a great Colossus whose pedestal has been pulled away, fall of his own weight and break into pieces
Gumming up a tyrannical institution is a way to re-establish or win back freedom.

Wednesday, September 26, 2012

Quote of the Day: Overrated Sincerity, Incorruptibly Evil

Another reason when corruption seems a better option…
As far as I know, Robespierre, Lenin, Stalin, Mao, and Pol Pot were indeed unusually incorruptible, and I do hate them for this trait. 

Why?  Because when your goal is mass murder, corruption saves lives.  Corruption leads you to take the easy way out, to compromise, to go along to get along.  Corruption isn't a poison that makes everything worse.  It's a diluting agent like water.  Corruption makes good policies less good, and evil policies less evil.

I've read thousands of pages about Hitler.  I can't recall the slightest hint of "corruption" on his record.  Like Robespierre, Lenin, Stalin, Mao, and Pol Pot, Hitler was a sincerely murderous fanatic.  The same goes for many of history's leading villains - see Eric Hoffer's classic The True Believer.  Sincerity is so overrated.  If only these self-righteous monsters had been corrupt hypocrites, millions of their victims could have bargained and bribed their way out of hell.

Wednesday, May 16, 2012

Philippines Moves to Ban Coin Collection

The Philippine government has expanded her version of financial repression

Using flimsy scapegoats, a bill has been filed to criminalize coin hoarding.

From Yahoo.com

Coin collectors beware.

Senator Manuel Lapid has filed a bill to penalize the hoarding of coins to avoid coin shortage.

Citing figures from the Bangko Sentral ng Pilipinas (BSP), Lapid said there should be around 17.34 billion coins--worth around P18.94 billion--in circulation. He said that would mean around 184 coins per Filipino.

"To enterprising crooks, this volume of coins in circulation is a goldmine. Recent valuation of the worth of the country's coinage suggests four of the coins are worth more than their face value if melted," he said in his explanatory note.

Lapid warned that melting down coins "along with the common practice of keeping coins in piggy banks, commercial undertakings such as the Automatic Tubig Machines which use coins for operation, video games machines and illegal numbers games, may threaten the sound circulation of coins in the country."

His bill defines coin hoarding as possessing coins of legal tender "beyond the requirements of his regular business as may be determined by the BSP."…

More from the same article,

Although coin collecting is allowed, the BSP can demand that people turn in all their coins within a month of declaring a coin shortage. Under the Lapid bill, "failure to make the surrender within the required period shall constitute coin hoarding."

The bill proposes a penalty of one year in prison and a fine of P100,000 "for every one thousand pieces of coins hoarded or a fraction thereof."

If passed into law, the bill allows the government to confiscate the coins for its own use.

Finally the admission…

The bill also proposes to allow BSP, in case of a coin shortage, to require all business transactions to be done in coins. "Any transaction to the contrary shall be considered coin hoarding," his bill reads.

"Though the day may be far when we may legally accept being given candies for change instead of coins, such a problem may not be remote as indicated by reports in other jurisdictions. It is thus imperative that preventive measures be put in place," Lapid said.

BSP has had a coin recirculation program since 2005 to address perceived coin shortages in some areas in the Philippines and to save money because the “intrinsic value of the coin is greater than its nominal value especially for the lower-denominated coins.”

First, government issues you the money to use, and then wants to dictate to you how much, and what medium, you should keep and use. If this isn’t an example of despotism, then I don’t know what else is.

Next, the Philippine government finally admits that “intrinsic value of the coin is greater than its nominal value especially for the lower-denominated coins” which means the government has been inflating the purchasing power of the local currency, the paper Peso, away.

Yet instead of maintaining monetary discipline, they chose to pin the blame, threaten to criminalize and perhaps actualize confiscation of the savings owned by the innocent citizenry. This should be a noteworthy example of arbitrary immoral laws.

Also, as predicted, inflationism’s alter ego has always been price control. The proposed banning of the hoarding of coins extrapolates to forcing people to keep coins in circulation, for imagined hobgoblins.

This also means forcing people to accept the coins at face value, which ironically they admit, has been worth more. So in essence, the Philippine government wants you and me to forget about prices and values or economics.

[Updated to add: I forgot to mention that what the government fears is that when the value of coins immensely widens from its face value, out of the effects of inflation, the tendency is for the public to hoard them. This is Gresham's Law at work which I mentioned earlier when Ron Paul talked about modern day coin debasement]

Yet setting up a strawman to justify the attack on the citizenry, through price controls, has long been a pattern of desperate politicians, as the great Ludwig von Mises explained,

in futile and hopeless attempts to fight the inevitable consequences of inflation — the rise in prices — are masquerading their endeavors as a fight against inflation. While fighting the symptoms, they pretend to fight the root causes of the evil. And because they do not comprehend the causal relation between the increase in money in circulation and credit expansion on the one hand and the rise in prices on the other, they practically make things worse.

Moreover, this represents an assault to the informal economy which operates mostly on cash (paper money and coins). This means that such law will become an instrument of subjugation and repression of mostly the poor (who don’t have bank accounts and who are most likely the major users of coins), the middle class, and importantly the political opposition.

Lastly, I am inclined to think that some vested interest groups have been pushing to keep these coins for themselves, of course, by forcing the public cough up on these coins through legislation.

The great Frédéric Bastiat in “The Law” warned

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

Confiscation of coins will not remove the effects of monetary inflation.

Yet by disallowing people to save through their preferred means and by confiscation of their savings means that such policy have the latent intent to destroy people's wealth.

Quote of the Day: Should We Obey Immoral Laws?

Moral people can't rely solely on the courts to establish what's right or wrong. Slavery is immoral; therefore, any laws that support slavery are also immoral. In the words of Thomas Jefferson, "to consider the judges as the ultimate arbiters of all constitutional questions (is) a very dangerous doctrine indeed, and one which would place us under the despotism of an oligarchy."

That’s from Professor Walter E. Williams at the lewrockwell.com