The economy: Fixing the money supply: Introduction and initial questions

On PBS's "Fixing the Future: NOW on PBS", this question was asked: Does the economy exist to serve the people, or do people exist to serve the economy?

Here's a better thought: The economy exists to allocate scarce resources in the best (or near-best) possible way, such that everyone benefits from a share of the better allocation.

Yes, the economy should exist to serve the people. At the moment, it doesn't.

What is the central flaw? It turns out that there is one, and only one, central flaw. But how to solve that central flaw ... not so simple, not so clear.

(To clarify: This is not the only flaw. It is not the only big flaw. If you are familiar with the assumptions of micro-economics at the base of economic theory, you know that they all have flaws and problems. You know that the flaws inherently introduce feedback into the equations, and equations with feedback are subject to chaotic behavior that cannot handle station analysis and needs simulation or dynamic analysis that is completely "hand-waved" out in normal economic studies. But this is, as far as I can tell, the single biggest, and most impactful / far-reaching flaw of them all.)

The central flaw: A scarce resource is used to determine the allocation of other scarce resources. Money is used to determine how resources are allocated. But money is scarce -- artificially. There is an artificial limit on how much money there should be, and it's less than what's needed to make things actually work. It's short because the planning for how much money there should be never took population growth into account. And it's been short since the baby boom -- the "stagflation" of the 70's comes directly out from this viewpoint as an expected behavior (and normal means of looking at the economy have trouble explaining stagflation).

But this means that inflation is a result of three different factors -- supply of money, supply/demand for goods, and population levels. Population levels are normally ignored in this analysis.

How do you solve this issue? How do you put more money in to fix the scarce-ness of money? Do you want to put more money in? Should you? Do you reduce the costs of things to let the buying power of the existing money increase to handle the increase in population?

I cannot say that I have "The" answer. But I do have "An" answer that works.

It requires the understanding that money has no value in and of itself. The pretense that a dollar should be about equal to one Spanish gold doubloon has to be completely abandoned.

Here's the "punch-line". You are not expected to understand this, any more than you'd understand a joke if you just heard the last line without the buildup.

It is meant to be something to think about, to wonder. Just like a joke's punch-line by itself might make you think about word meanings, sound-alikes, or similar, this is for you to think about.

The punch-line: The government needs to directly give cash to people as a source of money, balanced by taxes taken from those entities -- people and non-people -- that concentrate money. The "Fountain and sink" model from RPG's and online games is the way to re-build the real life economy.

If your first thought is, "That's crazy", then good. What's your second thought? Your third? If you're so sure it must fail, why?

Did home loans cause the financial crisis?

Today, on Fareed Zakaria GPS, one of the guests was O'Neill. He was a treasury secretary during the Bush (2001-????) years.

O'Neill laid the blame for the housing crash on home loans with little or nothing down. According to him, the crash would not have happened if all home loans had required 20% down.

This seems silly to me. I saw many loans issued that only made sense if you assumed that the value of the house would go up, and then require you to sell or refinance to pay off the loan -- in other words, the loan assumed that the house would pay for itself. Loans that had a low interest rate during the first few years (5 to 7), and then either a large interest increase, or a balloon payment. Loans where your interest rate was higher than your payments (so your balance would increase; in theory, your house value would go up faster).

Why is this bad? If you require that a loan is only issued if it is likely to be paid off, then a high house price will not sell -- no one that wants it can afford the loan. If a house is priced so high that the loan is not likely to be paid off, and therefore cannot be issued, then the house needs to come down in price.

That's how a market makes sense. When prices go up, up, up, people stop buying, and the prices have to come back down. That's functional.

Instead, we had a market where prices went up, up, up, and bankers proceeded to make loans on the assumption that not only would they continue to go up, up, up, but someone else later would buy a loan thinking that it would continue to go up, up up.

Blaming the people who wanted a house loan with little or no down is crazy.
Blame the lenders who decided to issue loans that could only be repaid if the house was sold at a large profit.

Was this a valid drug case conviction? Or was this a denial of a fair trial?

According to the AP news wire today, there was a court case in Cleaveland, where a federal judge refused to grant a new trial to three people convicted of dealing drugs.

(I'm not allowed to copy the actual story, so I'll just give a summary here.)

Apparently, U.S. District Judge James Gwin ruled that, while he did not approve of the way the government handled the case, the defendants failed to show prejudice in their original trials, and so would not be granted a second trial.

Now, this is, in a nutshell, exactly my issues with the federal court system. This country, alone, first, and (as far as I know) unique in the world, operates on the principal that the federal government is not all powerful, and cannot do whatever it wants. The 10th amendment makes it abundantly clear that the federal government is restricted. The 9th makes it clear that we start with the assumption of rights of people (and states). The preamble makes it clear that justice, rather than arbitrarily rulings, is the key. We've got the right of a jury trial stated multiple times.

Yet, rather than letting a jury hear this case, a judge said that, even though the judge did not like what was done, the people accused of a crime, and potentially convicted in error, could not prove that they were not given a fair trial. Not: The government must prove that they followed the rules. The accused, innocent until proven guilty, now have the additional burden of proving that the government failed to follow the rules. Not to a level of proof acceptable to a jury, but to a level that is more than required to convince a judge that something is wrong.

So what is the issue here? Get this. Sit down. Normally I cut these in my RSS feed; this time I'm not cutting this.

The DEA agent who provided testimony against them was on trial for putting false information in his reports.
He was aquitted.
The federal government withheld information/evidence that could have been used against this DEA agent.
The indication is fairly strong that had this evidence been presented, then either (A) the agent would have been found guilty, or (B) the evidence would have been considered tainted, and not permitted in this court case that found these three people guilty.

So, lets see if I understand this correctly:
1. DEA agent falsifies testamony. (a violation.)
2. Government has evidence that it refuses to turn over to the other side in a trial (a violation).
3. Government deliberately misrepresents the agent's work (a violation)
4. The judge agrees that the government did not act properly
5. The judge ruled that, because the prior trial was not proven to be in error, must be held acceptable.

So what possible standard of improper trial can possibly be held here?

Again: No jury was allowed to examine the question of "was this trial fair". The judge did not approve of the government's action. The government failed to provide a fair and unbiased trial. The government withheld evidence that would have harmed its case.

And the convictions were upheld.

A quick and dirty diary

So where are my recent postings?

I just finished and submitted my EEO (equal employment) formal dispute against the commerce department. No action came from the first (informal) dispute. (If you're curious, I was training for the second stage of census work -- non-respondent follow up -- and was not hired despite a perfect score on the written test.)

I have to deal with Capital One (does anyone know how to sue a credit card company? I don't know the first step, and cannot afford any lawyer fees), the IRS, the FTB, etc.

Joy is "We are right, unless you first prove us wrong" that these all use.

A bunch of deep questions, and a bunch of light answers

There are some very deep questions to be asked.

1. What is a government
2. What is a country
3. What is the goal of a government
4. What makes these people, and not those people, a government for this country

5. What is money
6. What is debt
7. What is inflation

8. What is a corporation
9. What is the goal of a corporation
10. What makes these , and not those , a corporation?

11. What is law? What is a court? What is legal punishment?

#11 is hard. To a large extent, the answers given in the first 4 define a big deal of #11. But perhaps this is the wrong approach -- perhaps #11 should be answered first, and from that work backwards to determine #1-4.

I don't expect everyone to agree with my answers. These are not "deep" answers that follow -- they are fairly shallow. Every one of these can be expanded into a long article.

But this gives a starting point. Lacking some sort of overview, nothing else that I say will make sense.

(WARNING: This is LONG. Every one of these points can be expanded into a full length blog. Consider this post an overview only; each of these will be examined, although not necessarily immediately, and not necessarily in this order. If you are going to skip this, please look at an excellent examination of this in fiction, "The Ungoverned".
Wiki article: http://en.wikipedia.org/wiki/The_Ungoverned
Entire story online: http://www.webscription.net/chapters/1416520724/1416520724___4.htm )

Questions for Kagan

These are questions for Kagan.

On PBS News Hour, you were quoted as saying that you consider a prior decision by the supreme court to be a fixed decision, and that we must honor the prior decisions as a fundamental point of our legal system. "Once the court has decided a case, it is binding precedent, and I think that is an enormously important principle of the legal system, that one defers to prior justices or prior judges who have decided something,  and that its not enough, even if you think something is wrong, to say "oh well, that decision was wrong, they got it wrong"

Based on this, I have these questions.

1. Should "Separate but equal" have been overturned?
2. Should Austin have been overturned by Citizen's United?

3. To what extent do you consider any past issue, no matter how badly determined, to be open for re-examination?

4. Where do you see the boundary between the legislative authority of the legislative branch of government, as set in article one, and the judicial authority of the courts to create new rules?

Draft 2 of proposed amendment #1

The proposed amendment is now being broken up into many small parts.

We start with this:

Proposed amendment to the US Constitution.

1. It is recognized that an implied right of the 9th amendment is the right to a election, and vote count, that is relatively free of corruption and error, given the current level of technology and ability.

2. No vote count that fails the test of corruption and error shall be certified. If necessary, a second election shall be held using different technology.

3. Congress shall have all authority to pass laws addressing any issue with regard to this, including but not limited to:
* Accuracy of voting machines and the vote count procedure
* Determination of acceptable technologies.

(** Important: What else should go into this list? **)

4. Enforcement of this amendment shall be delayed 5 years after approval. The intent and purpose of this delay is to give states the opportunity to acquire voting equipment that satisfies basic accuracy standards, as well as to provide congress with the opportunity to consider and discuss, and pass laws in accordance with section 3.

The real issue with the supreme court: Overturning Austin

There's a lot in the Citizen's United ruling that is just bad. Bad logic (and outright logic errors); mis-application of prior rulings; making rulings on subjects without taking arguments pro and con, and those rulings being outright wrong/full of errors; etc. Steven's dissension makes a point of this.

More discussion on this is at XKCD, as before.

But there is one key issue that was recognized -- BADLY, and improperly -- in Austin. A "9th amendment" implied right.

The right to a relatively corrupution free vote and vote count.

That may sound silly. But lets face it: If it were not for that, no one would care about Chicago last century, or Ohio and Florida this century.

Can corporations be subject to jail or execution? Should they?

Over at The Archdruid Report, there's an interesting take on corporate responsibility:

http://thearchdruidreport.blogspot.com/2010/01/housebreaking-corporations.html

The kernel of that is in two points:

First, something which I would agree with, but use somewhat different wording:

Still, the most obvious difference between corporate persons and natural persons these days is that the corporate kind are noticeably more antisocial. They pursue their purposes – primarily, making money – with a single-mindedness and a lack of concern for consequences that, in natural persons, would be accurately labeled psychopathic; they’ve proven themselves consistently willing to lie, cheat, steal, and kill whenever the likely return on these acts outweighs the risk of punishment.

Can you force an insane person to be committed to a mental institute? Used to be yes; now it seems to be no. Can a psychopath be locked up if they present a danger to others? Can a corporation that acts in a manner that causes danger to others be locked up? What does it mean to be locked up?

One popular proposal would subject corporations to regular review by some independent body which could annul the charter of any corporation that refused to be properly housebroken, forcing its dissolution. What would keep this body honest in the face of the fantastic potential for corruption, the proponents of this notion do not say, but there’s another issue here: we’ve actually got a tolerably effective way of responding to antisocial behavior; we just don’t apply it to corporate persons the way we do to natural persons.

Sadly, I have no solution to the corruption issue, and fear that this cure would be worse than the disease. What about review by the courts? Archdruid has an even better answer at that point:

This is why natural persons who are convicted of felonies, by and large, can’t get away with just paying a fine; they go to jail, or if the crime is heinous enough and it happens in a jurisdiction with capital punishment, they die. While it has its failings, this approach to antisocial behavior generally works a good deal more effectively than the wergild principle.

From this perspective, the problem with corporate persons is simple enough: the only risk they run in breaking the law is that they have to pay wergild, and that doesn’t constrain antisocial behavior any more effectively now than it did in Anglo-Saxon times.

A little history since I'm taking away some context: "the earliest version of English common law, from which our American legal system descends, operated entirely on the basis of fines. The principle of wergild, as it was called, gave each person a cash value". If you can pay the fine, you can get away with anything. We've had similar things in this country at times; pay a fee to support the war, and avoid the draft ("There's no difference between a conscript and a convict"), etc.

Archdruid even goes so far to recommend jail, or dissolution (death) for corporations that break the law. Jail consists of the government taking over the corporation, possibly firing people at the top, stock losing all value (dividends, voting rights, etc) during this time. Profits go to the government. Death even includes creditors getting zero; all assets sold at auction, funds going first to victim restitution, etc.

Is this a good idea? I like the idea -- the kernel is great. But the execution is horrible.

Consider one company at the start of this whole economic mess. A bank, that was in the business of "junk loans". Instead of junk bonds, many of which would be worthless, you had junk bond funds -- lots and lots of junk bonds, so that even with some worthless, the whole group paid well. Now take that same approach to home loans. Lots of loans, many worthless, sold and packaged as a group.

One Monday, that investment bank was $120 per share. Employees there were required to keep their retirement package in, at least in part, company stock.

By next monday, the banking regulators had shut it down. They turned down a $4 per share offer, for a $2 per share offer. They wanted the death of the bank to hurt.

But they wound up hurting people whose job required them to invest in that bank, more than people who had the choice to invest in that bank.

What's the problem?
1. Lack of information. Had the true state of Bear Stearns been known, there's no way it would have had a share value of $120.
2. Lack of choice. Employees that are forced to choose from a company's choice of stock investment options are unfairly hurt by this.

Archdruid also makes the same mistake that the SCOTUS made -- the confusion between "corporation" and "Corporation that exists to make profit". Note that I'm also trying to distinguish "Corporation that makes profit on behalf of shareholders, publicly traded". A private corporation really does look like a group of people getting together as a group to excersize the rights of people as a group.

Maybe private corporations need to lose the liability limits that public corporations have. More rights comes with more responsibilities. Isn't that what we teach our children?

Is that what corporations are today? Children that have no parents?

Can a strict constitutionalist really be in favor of limiting free speech?

So this is something that may seem like a shock. Can a strict constitutionalist, like me, really be in favor of restricting free speech?

What would happen if you had truly unrestricted free speech and freedom of the press?

1. The 7 words decision would be overturned.
2. Prisoners would be allowed to publish papers telling the world about their situation.
3. Prisons would not be able to restrict access to computers, or computer discussion forms; in fact, it could be argued that they would be required to provide computer access for prisoners to write blogs or participate in discussions about the treatment of prisoners.
4. 6-12 year olds, in elementary school, would have the right to speak out against their teachers, or engage in "learning strikes".
5. Publication of books, or games, or computer programs, etc, to teach law breaking would be unrestricted --


• States could not restrict the teaching of Lock Picking, but anyone could provide very realistic training tools, games, online sites, etc, such that anyone could be expected to be able to pick most consumer locks and enter any residence
• Books on how to kill a person would be legal
• Posting of advertisements seeking hitmen, or offering hitman services, would be legal.
• NB: This doesn't mean the act of killing would be illegal, but the advertisement would be just more freedom of the press.

Do I think that this is a good thing? 

Interestingly enough, while a book on how to kill someone may be bannable, a program on how to break into a computer program is not only not bannable, but a standard tool for testing your computer system for basic security leaks. At least, until you run it at work -- then you can be convicted of three felony counts. That's not a lie -- a computer admin, newly hired, was sued by the company he worked for, after running COPS on the system to test it for security issues.

The book on killing someone? While I don't have the case to cite, this happened while I was growing up, and was reported in the Los Angeles times.

Lock picking? We locked ourselves out of a building. Standard $10 doorlock. Had to get a professional lockpick out. I wanted to watch him, to learn how to do this myself; he told me that state law prohibited him from letting me watch.

So do we have freedom of the press, freedom of speech, freedom of teaching today?

To a larger degree than any other country, yes.
Absolute? No.

Should this be absolute? I'll leave that as an open question.

Discussions this week, at XKCD...

There is a lot of discussion on this topic this week at XKCD
http://forums.xkcd.com/viewtopic.php?f=8&t=57164

What is clear seems to be that this amendment needs to be broken up into several:

1. Some review on supreme court decisions (see Steven's dissension, as well as the logic errors I pointed out in the XKCD thread)
2. Some partial overturning of the ruling (The spending by Citizen's United is valid; the decision to overturn all corporate restrictions is not).
3. Entirely separate, restrictions on the claimed rights of corporations.

The rest of the amendment

Two parts here. First, a few sections need minor fixes. Second, the second half is now presented.

First, the fixes. Bold is added text; strikethrough is removed text

Section 2:

A: People, or person, as used in the constitution, refers to natural people. It explicitly excludes robots, artificial intelligence devices, corporations, or any other created entity. The 10th amendment does not grant rights to these entities.
---
As much as I'd like to leave that bolded section out, and claim that it's implied, I feel much better with it explicit. Courts have a history of not reading implications / implied conclusions of the constitution.

Section 2B has bad wording. It needs improvement, and I don't know how to write it better.

First draft of proposed amendment

This does not look like typical amendments to the constitution. But this gives us a place to start from. Please, make comments.

This is half of it.

Amendment nnn

Section 1. Intent and purpose
The intent and purpose of this amendment is to clarify the relationship and relative powers of the constitution, the judiciary and legislative branches, the relative rights of individuals, groups, and corporations, and the effect of interstate commerce by corporations and state jurisdiction.

Additionally, this amendment seeks to clarify the meaning of "people" as used in the 14th amendment and enforce the 3rd section of the 14th amendment.

Section 2. Definition of "people"
A: People, or person, as used in the constitution, refers to natural people. It explicitly excludes robots, artificial intelligence devices, corporations, or any other created entity.

The goals of an amendment dealing with rights of corporations

This is the first page of this blog dealing with an attempt to write a proposal for a constitutional amendment to address the recent Supreme Court ruling.

I don't know how to write a good amendment.
I do know what I want it to cover.
So I'm putting this out to try to get others to help.

Proposal for constitutional amendment

Intent: Address recent supreme court ruling granting rights to corporations

The central view here is that corporations do not have rights. The 10th amendment specifically assigns rights to people and states, only.

Intent: Permit people to maintain rights as a group

The SC ruled that people may come together as a group and still maintain rights. There is no issue with this -- it is valid. But that doesn't mean that all possible groupings must have all possible rights. A group of protesters that engage in a political protest, and group arrest, is one thing; a corporation that cannot go to jail is something else.
Or does a corporation, upon existing for 18 years, gain the right to vote?
The key: People have rights. Groups of people have rights as the people. Corporations are fictional entities that do not themselves have rights, while the people in those corporations do.

Welcome and introduction

This blog is properly titled "Impeach the president: The political and economic blog of a strict constitutionalist". I have been looking at creating this blog for about 5 years now.

I am not picking on Obama. Since I started paying attention during the Reagan years, every president has violated the oath of office at least once a month. *EVERY* president. The oath of office requires that the president defend the constitution, and generally the president does not take action to stop bad court decisions or other issues.

What finally motivated me is this whole "Corporations have the same rights as individuals" ruling of the supreme court. (Citizens United vs The Federal Election Commission, giving corporate entities more free speech than normal people, and indicating that corporations have full rights of individuals). This is as bad as the Dred Scott decision, and will result in a constitutional amendment.

The biggest question is: Who will write it? What choices will the Senate pass on to the states? Will there be only one proposed amendment, or multiple?

This is what actually drove me to start this blog. I want to make sure that all the issues that lead up to this bad decision by the Supreme Court are addressed and fixed. And unlike most lawmakers who just say "Here's the answer", I want help. I want feedback and discussion with people, not just lobbyists.