Sunday, July 29, 2012

My Blog has Moved!

Just a quick post to let you know that I have moved my web presence to I plan to keep this Blogger site alive for the foreseeable future, since there are many links to various blog posts that are still active. At some point, I will take this site down, but will leave it for now.

I hope you find the new site more engaging, interesting and a better platform from which to pursue the mission of completing and promoting The America First Trilogy, including the idea of Spiritual Patriotism.

Your interest, support, assistance, encouragement and criticism are all much appreciated and welcomed!

Many thanks!


Friday, June 29, 2012

Rise of The Independents (53% Say Neither Party Represents American People)

A new survey from the polling firm Rasmussen Reports shows that the majority of Americans believe that neither major political party represents the American People.

This poll confirms what I, and other folks like me, have ben saying for some time - that increased political polarization was pushing moderates and centrists out of two major parties making the fastest growing political affiliation "Independent" or no affiliation at all. The purging of moderates from both the Republican and Democratic parties has led to increased political polarization between them, making them less representative of all of the American people.

Loss of Centrists = Paralysis

The far-right Republicans began the effort to boot moderates out of their party, calling centrists "RINOs" or Republicans In Name Only, in the mid 1980s. Over decades, conservative activists and political commentators established a rigid dogma to which every Republican candidate and officeholder had to subscribe: Tax cuts are always good in all circumstances (especially for wealthy campaign donors), no tax increases of any kind, anti-abortion, pro-vouchers (privatization for more profits) for schools, less regulation always, intolerance of homosexuals, exclusion of any religious/spiritual thought outside of fundamentalist Christianity and no gun regulation of any kind.

And, the Democrats did the same thing when they purged their party of centrists, especially from the South and West, calling them "DINOs" or Democrats In Name Only. The far-left, urban Democrats on the coasts turned their backs on their rural, southern and western party members when they established a counter-dogma to the Republicans: Tax the rich always, never reform or cut entitlement programs, permit open borders, never offend ANYONE (especially a pro-Dem voter), guns necessarily turn good people into sociopathic killers, religion and faith is for stupid people (unless they vote for us), anything goes social mores, abortion should be legal in all circumstances, legalize marijuana, resist any and all efforts to reform public education and regulate/strangulate the evil energy industry at every turn.

With the elimination of centrists and moderates from both major parties, the pragmatic center at the heart of our political institutions was lost. Political centrists are generally less ideological and more willing to listen and negotiate. Centrists are willing to make compromises on small issues in order to advance progress on the big ones.

Now that they are absent from the legislative process, our legislatures are populated with extreme partisans who are either incapable, or unwilling, to make any concession for the greater good. Every issue is a wedge issue and every disagreement is cast as a "battle" or a "fight" to "take back" America from the other side. Consequently, our political institutions are paralyzed, incapable of solving our nation's pressing problems.

Most People Don't Think Like Politicians

As the polls are beginning to show, most people don't think like politicians. You and I survive and get ahead in this world by communicating, talking and negotiating with our families, friends, co-workers, employers and customers every day. We serve our clients by listening to their needs and earning their business by coming up with creative ways to help them. We know that a binary, black-and-white approach rarely gets us ahead, because life doesn't work that way.

We are forced to deal with our challenges to our closely held assumptions and often find greater peace and joy by working together to achieve a common goal. We have to balance our budgets, sacrifice lower priorities daily for more important needs. When we see our political leadership amount to little more that being Complainers in Chief, we wonder aloud how anyone could have voted for them.

What is the solution? If you listen to the candidates, political commentators and elected officials, they'll tell you that we need more of "us" and less of "them." As a practical matter, given our fractured political landscape, neither of the major political parties will ever win enough of a majority in the House, Senate (with its absurd filibuster rule) and the White House to impose their will on the country. And, if they do, then there will be a rallying cry from the other side to "take back" America, again.
The political ping-pong match never ends, because both parties have a strong interest in maintaining the "battles" and never actually solving our problems. If they did, then they wouldn't have any hot button issues with which to anger their supporters and motivate them to willingly write a check.

And, The Winner Is...

The big winners of the two-party duopoly are the multinational corporations with interests that are not necessarily aligned with those of the American people. Or, for that matter, any people except for their executives, legislators and judges they have bought with campaign contributions and other special benefits. No wonder you and I don't believe that either party represents us.

But, why is it worth it for politicians to sell themselves so easily? After all, don't they have to look at themselves in the mirror? Surely, in a land of 350 million people there are others qualified to serve?

The answer is that candidates might sell themselves easily, but they're not on the cheap.

They profit mightily from legal corruption. Until recent passage of the STOCK Act, insider trading by Congressional members was legal! And, the STOCK Act did not repeal the even bigger, and more profitable business of supplying Wall Street with "political intelligence" (I know, an oxymoron). In a recent survey, the Americans who increased their wealth the fastest were members of Congress!

The End Game

I don't believe that either party has a final end game, other than to maintain the status quo and enrich themselves at the cost of the American people. Keeping the polarized political bases red-hot angry, guarantees a steady flow of campaign cash and partisans showing up at the voting booths. Big donors are pleased, as they back both major parties.

Third Party Rising? Not So Fast

The answer must be that we need a third party to counter the poles of the right and left. The obstacles to an alternative to the two-party duopoly, however, remain high. In fact, in another Rasmussen Reports poll, 63% of Americans believe the current system discourages third party candidates.

It shouldn't come as any surprise that the two major parties have done just about everything they can to promote and solidify their political brands by making it next to impossible for third party candidates to obtain Electoral College delegates.

The duopoly has been so successful, that our political brand-scape is akin to being able to choose between only "Coke" or "Pepsi" in the soft drink aisle. What if I'm in the mood for something lighter, say a Fresca, or different, like a Dr. Pepper? Sorry, in the Republican-Democrat duopoly, you only have the choice of two slightly different shades of cola. Seven-Up and Sprite drinkers are left out cold.

Winds of Change

Bottom line, things change, although not always at the pace that we would like to see it. The current duopoly will persist so long as we accept it. So far, there's enough Americans buying into the "us-versus-them" model to maintain the status quo.

But, fundamental change usually comes when one least expects it and from an unanticipated direction. For example, who would have thought that the self-immolation of a desperate fruit vendor would ignite what we now know today as the Arab Spring? I don't believe that the catalyst for change in America will have to be so extreme, but when it comes, there will be no mistaking it.

Maybe the first step is to go online and change your voter affiliation from one of the duopoly parties and choose "Independent" or "Unaffiliated."

Friday, June 22, 2012

95,000 Syrian Refugees in Jordan

I write for many reasons, but one of them is to demonstrate that spiritual values are alive and well even in today's world. So many times I hear folks say that they wish for the days when God spoke to man, as if only in Biblical times did God, His prophets and spiritual beings communicate directly with humanity.

One of the reasons I write with current events in mind is to show how God and his invisible (at least to most of us) agents and helpers could be working behind the scenes today. I am no prophet, just a writer with a big imagination. However, it never fails to hit me when I see something in the books I write come to life in a news story.

For example, the AP recently reported that 95,000 Syrian refugees are now in Jordan, homeless, fleeing the horror show that the government has taken on tour from city to city in a murderous effort to crush the opposition. That is the exact scenario in Made In China that manifests a new movement to free the Syrians and even humanity. I have to admit, it makes me feel a little guilty that I wrote something that, at least partially, is coming true and profiting from it (not much, but a few bucks per copy sold).

I also try to see the best in people, regardless of their backgrounds or what their appearances might otherwise suggest. I'm not naive, there is evil in this world, but I do attempt to identify the silver lining in the storm cloud. That's what Made In China is about when it comes to the Syrian refugee situation. I am hopeful that a silver lining similar to what is written about in the book could manifest there, but I have no illusions that the road to something better isn't paved with much pain, blood and sacrifice yet to come.

I have a suspicion that perhaps God and His angels have always been with us and indeed are even working here today, searching for hearts and minds sensitive to His Plan. If we have the ears to hear (listening) and the eyes to see (observing), then we might indeed witness the works and influences of the Most High in our ordinary lives and those of others.

If you believe in the power of prayer and know that you are a source of spiritual energy that knows no bounds, then I kindly request a prayer or a moment of silence for the Syrian people. May their losses and sacrifices evoke a greater unity and outpouring of love among us all.

Friday, June 1, 2012

America In Recession by End of June 2012

In September 2011, the Economic Cycle Research Institute (ECRI) predicted America would enter into a new recession within six to nine months. Between August 2011 and mid-December 2011, the S&P 500 fluctuated at or below its 360-day moving average. Then, in mid-December the broad market rallied through January and into April. Skeptics of the recession call pointed to earnings reports, better jobs numbers and the stock market rally. Note, however, that all those data points cited as evidence of growth are coincident or backwards looking telling us nothing about the future.

What the critics failed to recognize was that the most recent stock market rally was, for the most part, a reaction to Fed policy to keep interest rates low. Fed policy juiced bank balance sheets with liquidity (cash), but with the velocity of money at an all-time low, it was clear none of the Fed cash was making it into the economy via loans. Why? Consumers and businesses in the post credit crisis era have an aversion to debt (hoarding cash and paying down debt) as well as increased credit standards by banks. 

Banks, especially investment banks, are in the business of making a return on their capital. Instead of making loans to consumers and businesses, the banks put the cash to work in risky assets, like the stock markets, since they couldn't earn much of a return on the all-time low interest rates engineered by the Fed. And, we're now just beginning to see some of the problems of bad bank decisions, such as JPMorgan's derivative losses estimated at up to $5 billion (thanks London Whale). What other problems may be lurking out there, we just don't know. 

Now, the data is coming in and it is clear that ECRI appears to be right. ECRI co-founder Lakshman Achuthan has taken a beating for his recession prediction in the face of a rallying stock market. But the stock market, largely reacting to Fed monetary policy, is not the real economy. Over the long-run, the equity markets do tend to follow the real economy (GDP), but often depart from "reality" as we've seen in the past. The U.S. is heading into a recession in 2012, and now the stock market is finally catching on. 

It seems that some in the financial press are coming back and agreeing that, indeed, America is headed back into a new recession. Great video at this link

And, there's nothing anyone can do about it. This recession will be the 48th since 1790. In a free market economy, there is a business cycle and there is precious little that government policy makers can do to stop it. They can try to make it less painful, but no president of any political party can effectively manage the business cycle. Political pundits, elected officials and candidates with little formal economics training consistently fail to note this fact, and the electorate is still willing to accept that politicians play a central role in the economy. 

What's wrong with the economy is that real income growth has stalled. The decline in real wages is a long-term trend that started decades ago. Today, consumers have less real income than they did 20+ years ago. Most families need two full-time wage earners to afford healthcare, education and normal living expenses. The jobs that used to fill the middle class have been largely outsourced to low-wage nations, and employers pursuing a globalization strategy have no reason to give American workers a raise. Education is critical to getting ahead in America, but the rising cost of a higher education will soon separate us into a nation of "have's" and "have not's" unless something is done. 

Cutting taxes on businesses won't do that much, because employers don't hire ahead of demand increases (rising revenue). Right now, U.S. companies have trillions of cash sitting on the sidelines, not because they are taxed too high, but because they don't need to add capacity to meet the tepid demand for what they are selling (industrial capacity utilization at ~78% is still below the pre-recession average of ~80%). The real solution here is to cut taxes on individuals and employers need to give their workers a raise. 

But, there's that debt bomb ticking away...

That's a topic for another post. 

Tuesday, May 8, 2012

School Vouchers, The New Tribalism and the Law of Unintended Consequences

Readers of my books know that I write about controversial subjects and deliberately confront hypocrisy and double-dealing wherever I may find it, even if it makes you (and me) uncomfortable. At the heart of my patriotism is that Americans are one people united by ideas and virtues, not race, religion, ethnicity or socioeconomic status. These were the ideals on which our nation was founded, and from my perspective, the forming of a more perfect union begins inside of each one of us and in recognition that we are all in this experiment in Self government together.

Yet, not everyone believes this. There appears to be a rising tide of separatism in the United States, and more visible to me is an increased impulse to tribalism in my own neighborhood. Increasingly, people and groups seek to isolate themselves. Instead of looking for common ground, they divide Americans into "us" and "them."

In what should ordinarily be a relatively non-controversial subject - our local schools - the new wedge issue in the political "battleground" state of Colorado is the idea of school choice and vouchers. In Douglas County, Colorado (where I live) the local school board carefully crafted a school voucher proposal designed to legalize the use of public funds to pay for tuition at religious schools, which has driven neighbors apart.

Fixing what isn't broken

Here's a snapshot of the Douglas County School District (DCSD). It is the third largest in Colorado and the 81st largest in the country, serving 59,000 students. DCSD students consistently test in the top 10% in state-wide tests. Our students by and large graduate from high school and then pursue a college degree. Many choose to serve in the military, too. In short, the Douglas County School District (DCSD) is producing bright and motivated young men and women prepared for greater academic achievement and service to their nation. Fiscally, DCSD has a projected $45.5 million surplus for the period ended September 30, 2011. By any common sense measure, an outside observer would describe Douglas County schools as strong and meeting the needs of the community, state and country it serves.

Yet, against this backdrop of scholastic success, a small group of parents feel that they need more choice, not because of failing schools or poor academics, but because they want their kids to receive a religious education paid by taxpayers. Nearly all of the voucher program proponents and those who wanted to enroll in the program want to use public funds to pay for a religious curriculum, specifically fundamentalist Christianity.
To succeed where they have failed before, voucher program advocates and the DCSD school board hired high-priced lawyers that were funded by conservative donors. The pro-voucher attorneys were tasked to craft just "the right" words in an attempt to make the program legal under the state constitution. To get around the funneling of public funds directly to a religious school, a practice already declared unconstitutional by the Colorado Supreme Court, the attorneys instead described the vouchers as "scholarships" paid directly to parents, who could then use the money to pay for a religious education. Despite the considerable time, expense and conflict the Douglas County School Board incurred (by no means are Douglas County voters unanimous on vouchers, one way or the other), the Colorado Supreme Court didn't buy this new packaging of an unconstitutional idea and struck it down.

What is ironic about the pro-voucher movement is that we already have school choice in Douglas County. As a result of the Open Enrollment policy, any student in the county can attend any DCSD school that has space available. So, it is clear that the school board wanted to expand the menu choices to include not just DCSD schools, but also religious schools (an unconstitutional practice). I'll get into why diverting public funds to religious schools is an idea that carries unforeseen risks later in this post.   
And, the DCSD school board is at it again. Undaunted from losing again at the Colorado supreme court, voucher proponents have gone on a media offensive and brought into the county high-profile conservatives (e.g., Dick Morris, former advisor to president Bill Clinton and now a Fox News personality and talk radio personality Hugh Hewitt) to preach to the choir at events that promote vouchers as the solution for a "broken" system. However, based on student performance and the District's strong financial footing, Douglas County schools are far from "broken."

Perhaps some of the persistence to push for public funding of religious and/or private schools can be explained, at least in part, by the outside influences funding the pro-voucher efforts. I suppose the privatization forces believe that Douglas County voters are more conservative than those in other counties and would be more willing to approve a system to divert public funds to private institutions. If approved in Douglas County, then they could apply the same tactic in other districts, some that may in fact need reform. If so, they haven't indicated as much.

Life in Douglas County

For those living outside Douglas County, they might look at our school voucher debate and well wonder — What is going on? A short description of life in Douglas County is in order.  
My wife and I moved to Douglas County about 20 years ago and still live in the same house in which we staked our homestead. We decided to make Douglas County our home for several reasons, including the highly rated school system. We figured it would be a good place to call home and raise our children.

Ours is one of the most, if not the most, affluent counties in the state and one the top in the country. According to the U.S. Census Bureau, Douglas County had the highest median household income of any Colorado county or statistical equivalent in 2000. In 2009, it ranked #7 in the United States in that category - it was one of two in the top 15 areas not in the vicinity of New York or Washington. Okay, so we're well off, but that's because most of my neighbors are generally well-educated professionals. We are engineers, doctors, attorneys, business owners, financial professionals and are otherwise employed in high-skilled occupations (there's even a writer or two among us).

Our family goes to a Christian church down the road and we also like to attend services with our friends at their churches when invited. We consider ourselves strong in our Christian faith, which is not limited to just church. It is during dinners, weekends, hikes and evenings that we often discuss spiritual values with our children and discuss the stories, allegories and lessons found in the Bible and from other influential books. We believe we are holding up our responsibility to teach our children the right-hand path and the way of Christ, in the privacy of our home, in church and in nature.

As a Douglas County resident, our children are products of the DCSD. Our oldest is in college and doing very well. Fortunately, DCSD offered her the opportunity to take AP classes in high school and as a result, she entered college with 12 college credit hours under her belt. Our youngest is still in DCSD and we're very pleased with the majority of his teachers and the opportunities he has for learning (no teacher is "bad," but some are more skilled than others).

But, no school or district is perfect. We know reforms are desperately needed in other school systems. If we were in charge of DCSD for a day, we'd have all our teachers read The Minds of Boys: Saving Our Sons From Falling Behind in School and Life by Michael Gurian. The lack of religion is not what ails American education; it is that our educational methods haven't kept up with the times.

We're admittedly quiet about our faith. Our relationship with God is an ongoing private conversation, but that doesn't make our relationship with Him any weaker. We strive daily to bring God into our relationships with friends, family, teachers, clients, colleagues and others, but we don't feel the need to advertise our piety or to impose our particular set of religious values on the Jews, Muslims, Hindus, Buddhists and atheists with whom we work and socialize daily. We approach our fellow spiritual brothers and sisters in the world with the recognition that the divine spark is present in each of us, and we build relationships based on the values we have in common, and don't get wrapped-up in our differences (we'll try to remain humble and let the Lord figure it all out at Judgment Day).

Based on our experiences, we don't understand the objection to public schools in Douglas County or the need to use public funds for a religious education. So far, we have yet to come across any teacher or administrator saying or doing anything that is counter to our understanding of Christianity and we can't think of any DCSD policies that impair us or our kids from practicing our faith.

What's really going on - the new tribalism

So what's really going on in Douglas County? Voucher proponents know they can't win on the notions of failed schools or oppression, so they focus on choice. So what's wrong with giving parents the ability to direct the tax monies they pay into the schools they prefer? Is it really about "choice," or is the impulse to separate from the rest of society a germ of something else? Ordinarily, I'd say there's nothing wrong with choice, except the DCSD voucher program is a symptom of a more serious cultural undercurrent that threatens our national unity.

Even if we can't always see their wisdom today, America's Founding Father's recognized the value of a "public good." Public goods are things that we all benefit from, directly and indirectly and even if we don't use or consume it in equal amounts. The most common forms of public goods are infrastructure projects - bridges, roads and canals that facilitate the movement of goods and people across the country. Another public good is the U.S. Postal Service, which at the time of the writing of the Constitution was the then current version of the internet - an efficient means of communication. And, no public good was considered more essential to the new republic than a free education to anyone who wanted it. No longer would only the privileged few and wealthy get an education, the Founders knew that the healthy functioning of our republic required intelligent and literate people.

They were right then, and they still are today. We all benefit from a culture that values education and a system that makes it available to all. Even if you aren't a parent of school-age children, only the most libertarian would suggest that they aren't better off living in a nation where their neighbor's kids have access to a free education that prepares them for college. I am not defending the current system in all respects, reforms are needed, but to weaken public education is a misguided approach and diverting funds to religious institutions holds inherent risks that even the well-meaning voucher proponents don't see (yet).

The Law of Unintended Consequences - religious education and equal protection

I can't help but think that if the diversion of public funds to religious schools via vouchers or any other direct or indirect method, was ever permitted by the courts, then the Law of Unintended Consequences could create some serious risks in our multi-ethnic, multi-religious and multi-colored society.

For example, if school vouchers are approved, then all faiths and religions would have to be treated equally under the law (the only way such a law could be approved). I used to joke to myself and wonder how school choice proponents, Christian or otherwise, would feel if Wiccan parents decided to create a school in Douglas County for witches and warlocks? Could a Hogwarts School of Witchcraft and Wizardry be far behind, so long as students could pass the standardized tests? If the proposed lottery system resulted in vouchers awarded going to students who only attend Christian schools, then could a lawsuit be far behind claiming that the lottery is discriminatory because not enough wizards (or other group) received enough scholarships? The entertainment value would be worth it, if the legal bills to the district weren't going to be so high!

Joking aside, there's a serious issue here. Forget about witches, warlocks and government-run schools. What if Islamic fundamentalist parents built a madrasah in Douglas County and then chose to send their kids to a voucher-funded school that taught only memorization of the Koran and that non-Christians must be converted or killed? In many madrasahs, children are programmed through repetition that Jews are followers of the Devil and that infidels (anyone non-Muslim) must be converted or murdered. Vouchers could very well bring the most extreme forms of religious intolerance into our society, right under our noses, legally. I know this is not what pro-choice-for-schools proponents have in mind, but the possibility is a risk not worth taking.

The school voucher movement is indicative of a larger cultural desire to separate into like-minded enclaves and avoid the difficult work of cooperation and compromise needed for a diverse society to survive. By playing to tribal sentiments, our leadership is failing in its responsibility to unify people with our common values. The larger danger is that if leaders continue to lead this way, then America will become divided and weak at precisely the time we need to unite and be strong in a volatile world. We used to trust each other to teach our kids, but now we look at teachers, priests, politicians, business people, doctors, bankers, investors and others with suspicion. Instead of knowing that we've instilled the virtues into our children and then send them forth into society and schools as confident in their faiths, we seek to protect our kids from "them."

Freedom of religion means freedom from the state

It bears mentioning that the Founding Fathers themselves were a diverse group of people, coming from different backgrounds and holding very diverse views on religion and spirituality. Some, like Samuel Adams were very much on the side of bringing religious virtues into the public square while others, namely Thomas Jefferson, the author of the Declaration of Independence, was outright hostile to religion.

Regardless of their background or orientation to religion, the greater objective was the same - to avoid the tragic mistake made in their mother Europe of having religion and the affairs of the church intertwined with politics. The result was that religion was used as a hammer to destroy those who disagreed with the church and as a litmus test for public office or obtaining an education. In the name of "choice," Douglas County school voucher proponents are unknowingly (apparently) pushing us down the slippery slope to the integration of church and state, something our Founders so energetically sought to avoid.

As a Christian, the last thing I want is for public funds to be used to pay for a religious education. I can foresee a time under vouchers, years down the road after we have forgotten the original reasons why we ostensibly approved them, when the state assembly gets into the business of legislating faith. If the golden rule applies - that he who has the gold makes the rules - then vouchers give government a beachhead in our religious institutions. With human nature being what it is it is not too difficult to imagine the temptation for politicians to create a state-approved Bible from which all religious schools accepting state funding have to teach. I want to practice my faith and worship God free from government coercion or intervention. Public funding of religious schools has the potential to breed an entirely new and disturbing mix of religion and politics that our Founding Fathers would find disagreeable at best, traitorous at worst.

In this globalized age, America must continue to lead as free citizens united in the notion that true patriots love their country and their countrymen, rather than devolving into the tribalism, religious exclusion and racism that seems to still have a grip on most of the "rest of the world." America is an exceptional nation, but rolling back the clock to embrace a model our founders specifically disapproved of makes us more like just like everyone else.

Like all things in life, be careful what you wish for, because you just might get it.

PS - sorry for the long post, but not all things should be reduced down to a sound bite.

Saturday, April 28, 2012

New 5-Star Reviews for Made In China!

Writing is a solitary avocation. Although we collaborate with others from time to time, the actual act of writing necessarily occurs alone. As I write this post (alone!), other authors all over the world are banging away on keyboards in home offices, on commuter trains, in basements, sitting at a lunch table, on their family breakfast table, in a car waiting for kids to get out of ballet lessons, on airplanes or anywhere where we might carve-out a few valuable and precious moments to to concentrate and transform our thoughts and emotions into the written word. Thank goodness for laptop computers!

And, we are all writing different in genres and stories based on our diverse experiences and imaginations, but I suspect that we are all trying to do the same thing - impact our readers in some way and evoke some sort of response. When we get a good review, it is like manna from heaven! Someone cared enough to share their opinion! Since so few readers actually provide a review, when they do it is a cause for celebration. And it is in that spirit that I am pleased to highlight some reviews from those who have invested their valuable time and money into reading my latest work - Made In China, the second book in the America First Trilogy.

Here's what they had to say about Made In China:

"Strap in, Buckle up and hang on! James Viser does it again! He offers up another brilliant, highly entertaining, thought provoking well-written installment in this trilogy. Enjoy this page-turner that is sure to leave you waiting for the final installment in this trilogy."

"SHOCKING Page Turner! Love the Mystical City! I read Viser's first book, Lie Merchants, and thought it was great. In Made In China, he takes his craft to the next level, and it is great to see a new author develop so quickly."

"Made in China continues the struggle between greed and patriotism, between jihadism and freedom and brings the good and bad guys together again in the Gobi Desert in Mongolia. This is where the most inspiring metaphysical action takes place as well as a desperate firefight struggle and he keeps us guessing all along. There is no way we can guess the ending. Stunning surprise!"

So, thank you TJ, JC and Robert! You've given others some insight into my brand of fiction - political action/adventure thrillers with a metaphysical twist.

Friday, April 20, 2012

The Real Re-Distribution of Wealth (How the Fed Favors The 1%)

Great Op/Ed piece in Wall Street Journal explaining Fed policy and real income redistribution. The author does a very good job making a complex subject like Fed policy easy to understand. If you don't know how money is created in our current system, this doesn't tell you everything about how that process works, but it does describe the inherent risks. Well, enough of my words, read on:


April 19, 2012

How the Fed Favors The 1%

A major issue in this year's presidential campaign is the growing disparity between rich and poor, the 1% versus the 99%. While the president's solutions differ from those of his likely Republican opponent, they both ignore a principal source of this growing disparity.

The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm: the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.

David Hume, the 18th-century Scottish philosopher, pointed out that when money is inserted into the economy (from a government printing press or, as in Hume's time, the importation of gold and silver), it is not distributed evenly but "confined to the coffers of a few persons, who immediately seek to employ it to advantage."

In the 20th century, the economists of the Austrian school built upon this fact as their central monetary tenet. Ludwig von Mises and his students demonstrated how an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last. Monetary inflation is a process, not a static effect. To think of it only in terms of aggregate price levels (which is all Fed Chairman Ben Bernanke seems capable of) is to ignore this pernicious process and the imbalance and economic dislocation that it creates.

As Mises protégé Murray Rothbard explained, monetary inflation is akin to counterfeiting, which necessitates that some benefit and others don't. After all, if everyone counterfeited in proportion to their wealth, there would be no real economic benefit to anyone. Similarly, the expansion of credit is uneven in the economy, which results in wealth redistribution. To borrow a visual from another Mises student, Friedrich von Hayek, the Fed's money creation does not flow evenly like water into a tank, but rather oozes like honey into a saucer, dolloping one area first and only then very slowly dribbling to the rest.

The Fed doesn't expand the money supply by uniformly dropping cash from helicopters over the hapless masses. Rather, it directs capital transfers to the largest banks (whether by overpaying them for their financial assets or by lending to them on the cheap), minimizes their borrowing costs, and lowers their reserve requirements. All of these actions result in immediate handouts to the financial elite first, with the hope that they will subsequently unleash this fresh capital onto the unsuspecting markets, raising demand and prices wherever they do.

The Fed, having gone on an unprecedented credit expansion spree, has benefited the recipients who were first in line at the trough: banks (imagine borrowing for free and then buying up assets that you know the Fed is aggressively buying with you) and those favored entities and individuals deemed most creditworthy. Flush with capital, these recipients have proceeded to bid up the prices of assets and resources, while everyone else has watched their purchasing power decline.

At some point, of course, the honey flow stops—but not before much malinvestment. Such malinvestment is precisely what we saw in the historic 1990s equity and subsequent real-estate bubbles (and what we're likely seeing again today in overheated credit and equity markets), culminating in painful liquidation.

The Fed is transferring immense wealth from the middle class to the most affluent, from the least privileged to the most privileged. This coercive redistribution has been a far more egregious source of disparity than the president's presumption of tax unfairness (if there is anything unfair about approximately half of a population paying zero income taxes) or deregulation.

Pitting economic classes against each other is a divisive tactic that benefits no one. Yet if there is any upside, it is perhaps a closer examination of the true causes of the problem. Before we start down the path of arguing about the merits of redistributing wealth to benefit the many, why not first stop redistributing it to the most privileged?

Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments L.P., based in Santa Monica, Calif.

A version of this article appeared April 20, 2012, on page A13 in some U.S. editions of The Wall Street Journal, with the headline: How the Fed Favors The 1%.