A good laugh

A couple of nights ago I was watching an old Jim Rogers video on CNBC from Nov 2007. He was on Fox Business discussing Fannie Mae which, at the time was trading at about $30. Here's the video. The current price for Fannie is $0.63.

I decided to take a quick glance at Fannie's balance sheet and if you look at it, hence the title of the article, you'll get a good laugh. How was this stock ever valued over $2.00?

Oil prices

I just saw a crazy statistic.

Asia and the U.S. have about the same consumption of oil daily. I don't want to quote an exact figure, so check it out for yourself. Asia has about 3 billion people (China and India are over 1 billion a piece) and the U.S. population is about 300 million. That means Asia has the same current consumption as the U.S. and 10 times the population. I wonder what that means for future oil prices? I guess it depends on your view of future growth in Asia. Of course prices will also be affected by U.S. consumption. My guess is that U.S. consumption will stay relatively flat, and could possibly fall in the long run due to the "green revolution" which I think will only become more popular...especially if energy prices rise. In Asia, I think it is inevitable that consumption will increase dramatically. As an example of future growth prospects, for the past three months, car sales in China surpassed that in the U.S. for the first time ever. I would say that is at least one example of an argument for potential increase in energy prices and commodities in general.

Couple that with money supply growth and I think commodity prices go much higher in the long run.

History Lesson

This is a great article on Mises.org by Robert L. Scheuttinger called Price Fixing in Ancient Rome. It covers some of the terrible economic policies enacted by Caesars and Emperors which eventually led to the downfall of Rome. Check it out.

http://mises.org/story/3498

More power to the Fed??

President Obama came out this week with a new framework to regulate the financial system and ensure us once and for all that a " financial crisis of this magnitude will never happen again." The proposed changes give sweeping new powers to the Federal Reserve who will now act as our systemic risk regulator, carefully monitoring the markets to protect us from ourselves.

As a brief background, the Fed was created in 1913 specifically to quell recessions (called panics at the time), ensure price stability and maintain a stable financial system. Keep that in mind.

I decided to look at the history of recessions in the U.S. I used one point of reference, 1913 - the year that the Fed was chartered. Time period 1 - 1800 to 1913 and time period 2 - 1913 to present are about 100 years each, giving us a relatively equitable time frame to evaluate the performance of the Fed.

Phase 1 saw the US fall into 8 recessions. Considering that the U.S. was a fledgling nation and experienced the industrial revolution during this time, I say that 8 recessions in 113 years isn't too bad.

Since the creation of the Federal Reserve and the start of Phase 2 in 1913, the U.S. has experienced 15 recessions, including the current crisis and the Great Depression. So in the 96 years since the Fed was created, the number of recessions has doubled and we still have 17 years to go....

Interestingly, Sen. Aldrich - the chief of the National Monetary Commission and one of the original proponents of the Fed - studied central banking extensively in Europe and modeled the U.S. Federal Reserve system on the central bank in place in Germany at the time. Of course it was only a decade later when Germany's central bank, the very one championed by Aldrich and the National Monetary Commission, caused Germany to spiral into a hyperinflationary depression that left that country and its citizens in total ruin.

I prefer Phase 1. It's time to abolish the Fed.

HR 1207 and S 604

There's a bill in the House entitled HR 1207. This is Ron Paul's bill to audit the Federal Reserve. Without going into too much detail, the Fed is a government sponsored quasi-private bank that has total control of the money supply and bank lending rates. While this is bad enough in itself (and totally contrary to free market principles), the Fed has no Congressional oversight and currently cannot even be audited by Congress. Every American should be outraged that our economic futures are entrusted to a group of secretive bankers.

HR 1207 is the first step in uncovering the true nature of the Federal Reserve and this bill needs as much support as possible. There are over 230 co-sponsors in the House which is great news. S 604 in the Senate is the "sister" bill and I urge everyone to contact your Congressmen and Senators and tell them to support HR 1207 and S 604.

For more info....

http://www.campaignforliberty.com/campaigns/hr1207home.php

First Post

This is my first post and introduction to my blog. As currently envisioned by me, the blog will serve as a forum to discuss the ideals of individual liberty, economic freedom, sound money, a non-interventionist foreign policy and in general, returning the country to its Constitutional roots. I see this as an exercise in my personal growth that will hopefully be beneficial to others as well.

As of June 2009 I am a graduate student studying for my masters in accounting. In addition to this, I am a student of Austrian economics and free market capitalism.

My plan is to make posts on topics of interest and I look forward to sharing my thoughts on the events and happenings of the days ahead.