After Ron Paul raised questions about possible past Federal Reserve misdeeds including allegations of involvement in Watergate payoffs, Ben Bernanke answered smugly: “These specific allegations you’ve made, I think are absolutely bizarre.”

The crowd reflexively laughed at Dr. No’s perceived looniness and pundits have already depicted his concerns as “wild” and “odd.”

Well, it seems that Paul may have been onto something . . . or at the very least raised legitimate questions that deserve investigation. A few minutes on Google News produced this 1982 story from the Milwaukee Sentinel by Richard Bradee of the paper’s Washington bureau:

Police who searched the room the Watergate burglars used found $4,200 in $100 dollar bills, all numbered in sequence. Proxmire asked the Federal Reserve Board where the money came from. As he explained in a letter to the late Rep. Wright Patman (D-Tex.), chairman of the House Banking Committee: “I got the biggest run-around in years. They ducked, misled, lied, and gave me the idiot treatment.”

Last Spring I was considering blogging about Marco Rubio’s run for the U.S. Senate in Florida, but decided against it.  I’m a Floridian, so it’s interesting to me, but I thought he was too much of a long shot to be of much interest to people outside of Florida.  Now, Rubio appears to be the hottest Senate candidate nationwide.

Some background: Rubio is running for the Senate seat formerly held by Republican Mel Martinez.  Martinez decided he’d had enough of the Senate in 2008, and not only wasn’t running for reelection, he was resigning his seat in mid-term.  His replacement, George LeMieux, appointed by Governor Charlie Crist, was a long-time aide and friend of Crist’s.  LeMieux is not running to keep his seat, but Crist is running for that seat.

Crist, finishing his first term as governor, decided that rather than run for reelection he would run for what amounts to an open Senate seat, now occupied by his friend who appears to be just a place holder for Crist until the November election.  Meanwhile, Jim Greer, another Crist buddy and until a few weeks ago head of the Republican Party of Florida, not only supported Crist for Senate, but told other Republicans they shouldn’t run.  Interparty competition would just weaken the Republican candidate in the general election.

Marco Rubio, former Speaker of the Florida House of Representatives, was term limited out of office two years ago, and announced he was also running for that Senate seat.

Rubio looked like a long shot, running against a fairly popular governor with lots of name recognition state-wide and support of the state’s party.  As Speaker of the House, Rubio certainly has some background in politics, but not nearly as much name recognition (until recently).  Everybody knows the governor; few people know the Speaker of the House.

Now I notice Rubio getting lots of press in national outlets.  I’ve seen a number of stories about Rubio that don’t mention he’s running against Crist, but it seems like whenever a story about Crist appears, the story mentions that he’s running against Rubio.  (The stories never mention Kendrick Meek, the front-runner among Democratic candidates.)

The buzz on Rubio comes from two sources.  First, he’s a Cuban-American whose parents fled the Casto regime.  Second, and more substantially, he’s a very committed fiscal conservative.  I’ll stop short of calling him a libertarian, but (1) there’s lots for libertarians to like about Marco Rubio, and (2) he holds firm to his principles.

Despite the name recognition advantage, in straw poll after straw poll Rubio has been beating Crist, and that has thrust him from an almost-unknown to prominence.  This  happened because the people who vote in early straw polls are better-informed, and liked Rubio better than Crist.  My perception is that Crist is a populist who will take any position he believes will get him more support, whereas Rubio is a committed fiscal conservative who has principles and lives by them, which Republicans who voted in early straw polls liked.

Now the press is treating Rubio as at least a credible candidate, and maybe the front-runner for the Republican nomination, and that press coverage is giving Rubio more visibility, both state-wide and nationally.

Rubio is still behind Crist in fundraising, but Rubio’s rise is something those who favor more limited government should note.  If he wins the Senate race he will look like a giant killer, and will be a credible presidential candidate in 2016.

From a distance it appears that Rubio is a lot like President Obama, notwithstanding their very different political views.  Both rose out of nowhere, apparently, and as a Hispanic minority Rubio, like Obama, will appeal to the “diversity” crowd.  If Rubio wins the Senate that parallel will surely be noted.

But Rubio and Obama differ in more than just their political views.  While Obama was a community organizer, Rubio served eight years in the Florida House of Representatives, the last two as Speaker, until he was term-limited out of office.  Rubio was a tough and principled leader as Speaker.  He held firm to his ideals, and I give him much credit for holding the line on Florida’s state government expenditures as revenues fell throughout the recent recession.  While he was Speaker, he set the fiscal agenda more than Governor Crist.

If Rubio looks attractive at a distance to those who favor limiting government, he should look even more attractive once people get to know him.  His candidacy is picking up steam, even as Crist’s appears to be falling apart.  The odds look good that he will not only be Florida’s next U.S. Senator, but also will become a visible proponent for limited government on the national stage.

The idea that markets are efficient has come under fire in recent months. Can we be confident that market participants will make repeated, systematic errors? Consider an example. We were taking a walk in our neighborhood a few days ago and came across an office chair that one of our neighbors had put by the curb. My wife and our friend with whom we were walking remarked that they had seen this very same chair the day before. I decided to take the chair home: the wheels seemed fine, it was comfortable after a few seconds, and it offered the arm rests that my current office chair doesn’t. I plopped our nineteen-month-old down in the chair and pushed it home.

This morning, I learned why the chair was sitting by the curb. After sitting in it for a couple of minutes, I learned that it’s broken in such a way as to make you feel like you’re about to be thrown on your face forward and to the right. Next garbage day, the chair will be sitting on the curb in front of our house–where it will likely be picked up by one of the people who will occasionally drive through the neighborhood on garbage day looking for stuff that can be salvaged.

What does this say about financial markets? The salvage market in the places we’ve lived is extremely efficient. We have a decent bookcase that I picked up next to a dumpster in graduate school, but most of the opportunities to get useful stuff out of others’ trash are almost always snapped up very quickly. If people are quick to snap up marginally useful salvage on garbage day, it isn’t clear to me that we should expect people to leave multi-million dollar piles of money on the table in their financial transactions.

The Federal Reserve last week announced that it had raised the discount rate – the interest rate at which member banks, which now includes GMAC and other formerly non-bank financial institutions, can borrow from the Fed – by 25 basis points, from one-half of one percent to three-quarters of one.

It is no wonder that capital markets reacted as if nothing of substance, monetary policy-wise, had happened. Widely interpreted in the press as a “signal” that the Fed will sometime in the unknown, but perhaps foreseeable future begin reversing the easy money policy it adopted in response to the financial crisis that began in December 2007, the discount rate move was nothing of the sort.

It is ludicrous to characterize the discount rate as the interest rate that penalizes banks for having to apply for “emergency” loans from the central bank.

If it is to serve that purpose, as I learned at the knees of Tom Saving and Phil Gramm, the discount rate must closely approximate the market interest rate. Banks otherwise will have incentive to borrow funds from the Fed and then relend them at a profit. Given that market interest rates on mortgages and other secured consumer loans currently are running at five or six percent per year, it makes only a small difference in profitability if lenders can borrow from the Fed at three-quarters rather than one-half of one percent.

(An old banker’s rule from earlier times: 5-9-1. Borrow at five percent, relend at nine and be on the golf course by one.)

Borrowing at the discount window remains quite profitable. So, why are banks apparently reluctant to make loans? The answer is not a lack of liquidity or loanable funds. The answer is credit risk. Many lenders have learned to their chagrin to be wary of extending credit to borrowers who are unlikely to repay, unless, of course, those loans can be resold to Fannie Mae or Freddie Mac, thereby shifting the risk of default onto the taxpayers’ tab.

Monetary policy has become dysfunctional and counterproductive under Ben Bernanke’s watch. If his regime had intended to signal a reversal of easy money and a return to the Fed’s primary objective of maintaining a sound currency and a stable price level, the discount rate would have been raised much more dramatically.

. . . and he didn’t even realize it. While much of what we hear from the military bureaucracy about progress in the various wars is simply not true, when Odierno was asked about a change in the “don’t ask, don’t tell” policy, he was caught off guard and a small tidbit of truth was recorded.

He said:

“All I’m saying is as I’ve implemented this war now for seven-years, we’ve been able to get forces out that are ready and prepared to conduct operations.

“My opinion is everyone should be allowed to serve, as long as we’re able to fight our wars and we’re able to have forces that are capable of doing whatever they are asked to do,” he said.

The wars are not really fought but “implemented;” they are implemented by uniformed bureaucrats like Odierno; and any policy shift is fine by them, as long as it has no impact on them being able “to fight our wars.” He and his gang are modern Roman generals—finding their reward in the steady continuation and extension of the impulsive political adventures of past and present American caesars. When these generals publicly swear to uphold the Constitution and defend the republic, it’s either one more heartfelt lie, or stand-up comedy.

Joan Baez (pictured in her former, peacenik persona, above), fresh from a visit to the White House, speaking at a charity benefit Sunday night:

To hell with Afghanistan, [the Obamas] are so appealing.

How about this as an amendment to the Constitution of the United States?

Amendment 28:
Section 1: The president shall determine the dollar amount of total federal outlays prior to the passage of the budget.  Congress must allocate outlays to remain within this dollar limit.
Section 2: The presidential budget cap can be exceeded by a three-quarters vote of both Houses of Congress.

This would designate one individual as the person responsible for the total level of federal outlays, and therefore for the amount of the budget deficit.  With this responsibility presidential candidates would include in their platforms the budgetary caps they would propose, and it would be easy to see whether, once in office, they kept their promises.  One could imagine fiscal conservatives campaigning on setting a stringent cap, whereas those who favored a larger role for government would campaign for a higher cap.

As a check on presidential power, and to allow for urgent situations, Congress could override the presidential cap by a three-quarters vote.

I’ve seen lots of proposed balanced budget amendments, but they all seem to have too many loopholes, are too complicated, and during a time of budget deficits would seem to essentially be a constitutional requirement to raise taxes.  This amendment would not have those problems; however, it does not address the problem of unfunded liabilities.  I admit unfunded liabilities are a big problem, and this amendment only addresses the more narrow issue of deficit spending.

I don’t see any real negative consequences from such an amendment, and I do see that it has the potential to control excessive expenditures.

What do you think?

I don’t listen to talk radio all that often, but appreciate all efforts from whatever quarter that get people rebelling against reckless government actions. As far as I can tell, there’s general talk radio consensus at this point that bailouts and stimulus packages don’t help the economy. But a huge hole remains—the perennial myth that “World War II brought us out of the Great Depression.”

As Bob Higgs has shown, in numerous scholarly as well as popular publications and interviews, the private sector of the economy continued to perform poorly throughout World War II and normal, civilian-oriented prosperity only resumed after the war, in 1946.

The misconception that World War II was a period of prosperity apparently comes from measurements such as the unemployment rate falling from an estimated range of somewhere between 9 and 15% in 1940, down to 1.2% in 1944. As Dr. Higgs points out, this is not surprising given that a total of 16 million people served in the military forces during the course of the war, and were thereby removed from the labor force. Meanwhile, industry shifted to producing vast amounts of materiel to be destroyed—planes, ships, guns, etc. If such production created prosperity, then building airplanes simply to crash them into the ocean would indeed be good economic policy. At the same time, consumer goods became largely unavailable and/or rationed, and standards of living remained quite low. Yet the attitude of “shared privation for the common good” in many ways made people feel no longer depressed despite the very real fact that the economy remained below pre-1929 levels of prosperity.

Thus, the Depression continued despite the end of idle labor or the perception of the people living at the time. As Dr. Higgs points out:

diverting nearly 40 percent of the total labor force into military-related employment and producing mountains of guns and ammunition do not create genuine, sustainable prosperity, as people would discover if they tried to operate an economy on this basis for more than a brief period.

If the war is supposed to have ended the Depression, then why didn’t the end of the war plunge the country back into depression, or at least recession? Instead, despite more than 10 million men reentering the civilian work force and large-scale government spending ending with FDR’s death and the war’s end:

The year 1946, when civilian output increased by about 30 percent, was the most glorious single year in the entire history of the U.S. economy. By 1948, real output was back on its long-run growth trend, and during the decades that followed, the economy was spared the sort of deep and long debacle that a congeries of wrongheaded government policies had caused during the 1930s.

This repudiation of Keynesianism by actual events should have sounded the death knell for the fatally flawed theory. Yet Keynesianism instead continues to thrive, wreaking havoc upon yet another generation. And the myth of wartime prosperity is simply part and parcel of this same theory that feeds further calls for large-scale government spending programs to “stimulate” the economy, “create” jobs, pursue bail-outs, or any other misdirection of resources from private to public hands.

As Ludwig von Mises observed, “War prosperity is like the prosperity that an earthquake or a plague brings.” What will it take to get the message out?

James Cameron’s blockbuster Avatar is a thrill to see, and various commentators have judged the film for whatever ideological message they have found in it, but what struck me most is that the Na’vi people, in defending their land on Pandora from the imperialist exploitation by the humans, are engaging in one of the few just wars you’ll ever see, in fiction or real life. It reminded me of the clearly just defense of Narnia in the first Chronicles of Narnia film, so stark was the issue of right and wrong.

The movie has been lambasted by some conservatives who want to conceive of the movie into a message about environmentalism. Of course, actual pollution, strip-mining and the destruction of indigenous people’s lands by uninvited foreign corporations empowered through militaristic might should not be defended in any event—and such devastation of habitats is a very real, tangible act of aggression, unlike the far more tenuous environmental concerns like global warming that have distracted the entire conservation movement from genuine environmental degradation.

And the key point here is that the Na’vi are in fact people, sentient beings, much like the seemingly primitive alien races brutalized by the human-dominated empire in the Star Wars saga, or many other such epic stories. The Na’vi also command their own environment, taming and domesticating lower lifeforms, willing to put their own lives above those of the flora and fauna on Pandora, when need be.

It is true that they have a different set of values than modern industrialized man, but this is no reason to dispense with their property and community rights over their own territory. Whether one comes away admiring their cultural values or not—personally, unlike many who saw it, I was glad to be back inside with modern technology when the flick ended—the Na’vi rites and rituals work for their own circumstances. The Na’vi respect nature, but understand this respect as important in the context of utilizing nature for their own health and happiness. Their rituals of nature worship could be twisted into some message about the green movement, but so could the fact that the invaders in Independence Day sought to steal Earth’s natural resources. It is a real theme in history and an established one in myth that criminal gangs, bands of aggressors, states and quasi-governmental corporations will conquer indigenous peoples and rob them of their land and resources. Besides, even considering the peculiar relationship the Na’vi have to their land, one could see it as a form of technological transformation, a command of nature that the Na’vi have learned to wield. They treat nature with respect, but in a human way—taking control of animals and plants—and thus are very unlike the modern anti-human environmentalist ideal that sometimes puts sentient beings below other life forms. If James Cameron indeed intended a typical environmentalist trope, he failed.

The Na’vi have a mystical connection to their land that might bug some people, seeing all lifeforms as interwoven in a somewhat holy relationship, but this should be no more objectionable than the way the Jedi approach the Force. It is also plausible to say that the Na’vi simply have a respect for natural law, objective truth and morality that is completely lost on the materialistic, utilitarian and militarized humans who come in to steal their land. This movie is about one people defending their property rights as well as cultural values against an unambiguously rapacious and aggressive modernist invader. In any event, primitives have a right to defend whatever seemingly bizarre yet peaceful cultural practices are part of their identity.

And the way they defend it is unquestionably just. The war is winnable, unlike most that modern governments find themselves engaged in. It is declared by the proper authority, insofar as all the tribes voluntarily congregate to fight the invader. It is a last resort, since the human aggressors seem intent to exterminate all who try to stay on their land. The violence is proportional and no innocents are attacked. The only people who are harmed are belligerents. What’s more, the Na’vi take prisoners, who seem to be humanely treated, in massive numbers and let them return to where they came from in peace. Although defending their turf and having lost many of their people to the humans’ aggression, the Na’vi are much more humane in their response than the aggressors.

It excites me that people see this movie and cheer for the good guys, because rarely in a movie are the good guys so emphatically in the right and the bad guys so inescapably in the wrong. I love cheering for the white hats in an action or fantasy movie, but few protagonists offer as much with which to sympathize without reservation as do the Na’vi people. Even in Star Wars, there is more moral ambiguity, as the rebels and Jedi commit acts of fraud and violence against non-aggressors. But the real lesson here is that a truly just war is much more difficult to find in the real world, where usually both sides are at least somewhat substantially in the wrong. However, generally one side is more wrong than the other, and when we look at this movie in the context of America’s ongoing foreign policy that has persisted for decades, it could not be clearer than the Na’vi, whatever they symbolize, do not represent the U.S. government.

As reported in the London Daily Mail, Phil Jones, the scientist at the center of the Climategate scandal in which leaked email documents reveal that IPCC scientists were manipulating data, has now made a series of major admissions, including the following:

* Data for the IPCC’s vital “hockey stick graph” used by climate alarmists has gone missing
* There has been no global warming since 1995
* Warming periods have happened before, such as the Medieval Warm Period—but NOT due to man-made changes

The interview of Jones was conducted by the still pro-alarmist BBC, which continues to insist that the leaked emails were “stolen,” even though they legally were supposed to have been released years ago as a result of requests filed through the U.K.’s Freedom of Information Act. Nevertheless, this stunning series of retractions of key positions that Jones and others have long claimed to be “settled” further places the entire global warming mantra in doubt. As the Mail notes:

Colleagues say that the reason Professor Phil Jones has refused Freedom of Information requests is that he may have actually lost the relevant papers. . . . The data is crucial to the famous ‘hockey stick graph’ used by climate change advocates to support the theory.

Professor Jones also conceded the possibility that the world was warmer in medieval times than now—suggesting global warming may not be a man-made phenomenon.

And he said that for the past 15 years there has been no ‘statistically significant’ warming.

Yet, Jones continued to defend his illegal refusal to provide the data to others for verification or explain why he could not do so:

Professor Jones criticised those who complained he had not shared his data with them, saying they could always collate their own from publicly available material in the US. And he said the climate had not cooled ‘until recently – and then barely at all. The trend is a warming trend’.

But Dr. Benny Pieser, director of the sceptical Global Warming Policy Foundation, said Professor Jones’s “excuses” for his failure to share data were hollow as he had shared it with colleagues and ‘mates’.

He said that until all the data was released, sceptics could not test it to see if it supported the conclusions claimed by climate change advocates.

He added that the professor’s concessions over medieval warming were ‘significant’ because they were his first public admission that the science was not settled.

In a further article in the Times of London, “World may not be warming, say scientists,” a series of additional scientists are confirming that there may in fact be no warming at all.

[N]ew research, including work by British scientists, is casting doubt on such claims. Some even suggest the world may not be warming much at all.

“The temperature records cannot be relied on as indicators of global change,” said John Christy, professor of atmospheric science at the University of Alabama in Huntsville, a former lead author on the IPCC.

The doubts of Christy and a number of other researchers focus on the thousands of weather stations around the world, which have been used to collect temperature data over the past 150 years.

These stations, they believe, have been seriously compromised by factors such as urbanisation, changes in land use and, in many cases, being moved from site to site.

Christy has published research papers looking at these effects in three different regions: east Africa, and the American states of California and Alabama.

“The story is the same for each one,” he said. “The popular data sets show a lot of warming but the apparent temperature rise was actually caused by local factors affecting the weather stations, such as land development.”

The Independent Institute’s publications on the science of climate change have consistently been shown to have been accurate, refuting the junk science used to defend the IPCC’s claims of climate alarmism:

Hot Talk, Cold Science: Global Warming’s Unfinished Debate, by S. Fred Singer, foreword by Frederick Seitz

New Perspectives in Climate Change: What the EPA Isn’t Telling Us, by S. Fred Singer, John R. Christy, Robert E. Davis, David R. Legates, and Wendy M. Novicoff