Recently, I received an email that requested I boycott Exxon and Mobil stations in order to help bring the current high price of gasoline down.  Here is the thinking behind the email:  because Exxon Mobil is the largest oil company in America it can set industry prices at the pump.  In other words, because of its size, it can set prices artificially high to maximize profits knowing full well that smaller gasoline retailers, who are also interested in big profits, will set their prices commensurate with Exxon Mobil.  By boycotting Exxon Mobil, demand for its gasoline decreases thus forcing the company to cut prices.   As Exxon Mobil cuts prices, so must others to remain competitive.  The hope is that the lowering of prices at the very least puts a halt to rising prices at the pump and ensures that Americans can purchase gas this summer for less than four dollars a gallon. 

The originators of this movement should be commended for their clever idea and for taking matters into their own hands instead of instinctively turning to the federal government to solve their problem.  However, their attention is mis-directed as it should be focused on the U.S. government and not Exxon Mobil as the cause of high gasoline prices.

For instance, in 2002, the year before the U.S. military invaded Iraq, crude oil prices were $22.81 a barrel (see chart below).  Today they are around $118.00 a barrel.  The cause for the dramatic rise in price (the largest one in such a short period of time in history) certainly has more to do with the war in Iraq than anything else.  As the war drags on and America’s presence in Iraq becomes more entrenched, the price of crude increases even more.  Investors are concerned that at some point the violence in Iraq caused by the U.S. invasion will spread to other Middle East oil producing nations thus cutting off worldwide supplies.

A perfect example of this fear happened last Friday.  Oil prices per barrel reached a record high of $119.55 on the news that a U.S. military ship fired on Iranian ships in the Persian Gulf.  This, of course, is not the first time that the U.S. military has had a confrontation with Iran near the Gulf.  As the Bush Administration continues to instigate armed conflict with Iran, the price of crude will continue to rise on the fear that the Persian Gulf soon will be filled with missiles instead of full oil tankers. 

Then, there are taxes.  The average price of a gallon of gasoline in the U.S. right now is $3.60.  According to government statistics, federal, state, and local taxes make up twenty percent of the price of gas.  Do the math.  Without any taxes, the price of gasoline would be approximately $3.00 per gallon.  Eliminating taxes would provide a significant $6.00 savings for every ten gallons purchased.  Imagine how much money could be saved per fill up by owning an SUV?  Now, I do not condone eliminating gas taxes.  After all, they are technically user fees, which I support over taxes. They go to repairing roads, which people who buy gas and pay the taxes use.  But, it should be noted that a large portion of the price of gas goes to the government at all levels and not the oil companies. 

Finally, the price of gasoline has been affected by the value of the dollar.  The value of the dollar has been dropping for some time due to the Federal Reserve Bank printing too much money.  Investors sense rightly that we are on the verge of inflationary times, because of the Fed’s actions, so they have been dumping their dollars in favor of commodities.  One commodity they are buying to hedge against inflation is oil.  Money flowing into oil makes its price rise.  The dollar’s performance last Thursday speaks to this truth.  The value of the dollar improved on Thursday based on speculation that the Fed is concerned about inflation and may not cut interest rates further.  At the same time, oil dropped by $2.24 a barrel.  However, as mentioned earlier, conflict in the Gulf the next day, spiked the price to its highest level ever. 

We are all concerned about the rising price of gasoline and how it makes us all feel the pinch.  The politicians and media want us to believe that the oil companies are to blame.  The proof is clear: the blame for higher gasoline prices should be placed on Uncle Sam.

source: InflationData.com

http://inflationdata.com/inflation/default.asp

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

In the United States, gun ownership was considered such an important right that the founders included it in the Bill of Rights right behind freedom of speech, dissent and religion.  The founders of the United States knew that gun ownership (voluntary ownership) was a natural right equal to the other above mentioned rights.  They also knew that human nature has the potential for mischief.  To guard against mischief – thievery, foreign invasion, and usurpation of rights, citizens needed a means to defend themselves.  Voila, the right to not only keep, but also bear arms was born.

Present day Zimbabwe is a perfect example of what the founders of the United States had in mind when they devised the second amendment right to own guns.  Let’s face it, Zimbabwe is suffering from mischief at the hands of Robert Mugabe and is in dire need of a revolution.  Contrary to what Thabo Mbeki, the president of South Africa, has recently said about there not being a crisis in Zimbabwe, the country is in a horrendous condition.  Shelves are empty in stores; inflation is at a phenomenal 100,000 percent; and people are resorting to eating giraffes for sustenance.  In spite of this grotesque situation, Mugabe will be able to steal yet another election and continue the genocide against his people that he and his henchmen commenced about a decade ago.  The country needs a revolt, but chances are slim and none that it will happen from within.  Why?  Because the average Zimbabwean does not possess the means to make it happen.  They are not allowed to own guns.

The last time an effective revolt could have taken place in Zimbabwe was 1999.  That was the year before the Mugabe regime began seizing commercial farms and redistributing them to his cronies and military backers.  The economic consequence of this policy has been devastating, but that is not the point of this article.  The point is that as the government was confiscating farms it was also canceling gun licenses and seizing firearms to ensure a smooth functioning of the land redistribution scheme.  Then in 2005 another round of gun take ways took place.  According to one anonymous government source at the time, “The ban is targeted at all automatic weapons which the government fears could pose a security threat in the country should the civil strife in Zimbabwe turn violent”.  All smart dictators know that when you take away guns from the citizenry you take away one of the few resources they have to guarantee their rights.  In addition to Zimbabwe, look at China, Iran, Burma, Cuba, and North Korea for proof.

Unfortunately, the time for average Zimbabweans to learn this lesson is past.  Their guns and therefore the means to end crimes committed against them by their own government are lost.  This lesson, however, should not be lost on those that still possess the right to defend themselves against mischief both foreign and domestic. Because, in the words of George Washington:  “A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government.”

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

This week, we celebrate Tax Day.  While most Americans accept April 15 as a consequence of citizenship, I view it as a national holiday that symbolizes how far we have strayed from Constitutional government.  The whole tax code is a complicated web of waste and corruption.  If they were alive today, some of our most revered leaders would share my view.

     The same prudence which in private life would forbid our paying our own  

     money for unexplained projects, forbids it in the dispensation of the public

     moneys. -- Thomas Jefferson, 1821

Citizens Against Government Waste (CAGW) recently released their annual publication “Pig Book” which chronicles fiscal year 2008’s congressional earmarks. According to CAGW, Congress passed, as part of 12 appropriations bills, 11,610 projects worthy of the title “pork barrel spending.”  The number of projects represents a 337 percent increase over the 2,658 projects from the year before.  The 11,610 projects were worth $17.2 billion which represented a 30 percent increase over the fiscal year 2007 total of $13.2 billion.  Egregious offenders of federal pork include:  Montana Senators Max Baucaus (D) and Jon Tester (D) for $148,950 for the Montana Sheep Institute, Representative Charles Rangel (D-N.Y.) for $1,950,000 for the Charles B. Rangel Center for Public Service, Maine Senators Susan Collins and Olympia Snowe (R), and Rep. Thomas Allen (D-Maine) for $188,000 for the Lobster Institute, and Representative Mike Thompson (D-Calif.) for $211,509 in olive fruit fly research in Paris, France.  And you thought sheep, lobsters, and olive fruit flies were not in our national interest.  One thing is certain, none of these expenditures meet constitutional muster.  Thanks to CAGW for allowing us to see how our elected officials are good stewards of our tax dollars.

     I cannot undertake to lay my finger on that article of the Constitution which   

     granted a right to Congress of expending, on objects of benevolence, the     

     money of their constituents.... -- James Madison, 1794

How many times have we heard from congresspersons that we must all pay our “fair share” of taxes to provide for the “common good”?  What is a fair share?  Those words are not in the Constitution.  Something else that is not in the document is the authorization to spend money on welfare programs, government run insurance schemes, and aid to other countries.  James Madison knew this and he was the “Father of the Constitution”.  In fiscal year 2008, our tax dollars will be spent in the following quantities:  $36 billion in foreign aid to developing countries, $33.6 billion for the Housing and Urban Development Department, and $58 billion for the Health and Human Services Department.  All of this spending is done with good intentions to help people, but none of it is constitutional.

     Collecting more taxes than is absolutely necessary is legalized robbery. -- Calvin Coolidge

A few years back, I made a similar comment to a good friend about taxes and legalized theft.  He looked at me incredulously and then laughed hysterically.  Just because something is legal does not make it right.  We can point to slavery and Jim Crow Laws for proof.  According to the Constitution, all of Congress’s powers are in Article 1, Section 8.  These powers can be placed in seven categories:  coining money, immigration law, post offices, patents and copyrights, courts, the military (including sole right to declare war), and Washington, D.C.  Congressional authorization to spend money on farm subsidies, education, national parks, and corporate welfare is not mentioned.

How many of us have heard that the Constitution is an archaic piece of paper that no one should pay attention to any longer?  It is just this kind of thinking that has given us unreasonable searches and wiretaps through the so called “Patriot Act”.  No, the Constitution is not an old fashioned, outdated document.  It guarantees our rights as citizens and limits the power of the government.  So, if you are one who believes that April 15 is a consequence of citizenship, reconsider.  April 15 should be a reminder of the bountiful times Congress violates the very document they swear to uphold.  Happy Tax Day everyone!  

Resources:

Famous-Quote.net – http://www.famous-quote.net

Citizens Against Government Waste - http://www.cagw.org

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

This week the International Monetary Fund (IMF) announced plans to sell a portion of its gold reserves.  It seems the IMF is not needed as much as it use to be – many developing countries in Asia and Latin America possess large reserves of foreign currency, alleviating the risk of economic crisis and consequently the need for emergency loans from the IMF.  Thus, the bank has a shortfall of revenues and wants to liquidate some gold so it will have cash to invest to cover the current and any future shortfalls.

It is refreshing that the IMF is not “hitting up” its member countries for the funds needed to cover the shortfall.  After all the U.S. contributes a bunch of dough to the IMF already and with the Fed induced recession, and the endless wars we fight (e.g. poverty, illiteracy, Iraq, Afghanistan, terrorism, poppies, other drugs, etc…), things are a little tight there at home (For new readers I currently reside in Zambia).  Instead it is selling assets to do the job.  However, the proposed sale raises several questions in my mind.

First, I find the timing of the proposed sale of IMF gold curious.  Why at this moment when the worldwide economy looks like it is about to go into the toilet?  Six billion dollars is not a lot of money.  The IMF estimates that the Fed induced subprime crisis will cost the world economies over one trillion dollars.  So it can’t be that the IMF is planning to use the six billion dollars to help its members through this crisis.  I suppose the IMF will use the funds from the sale to invest in government and corporate bonds to make a profit to cover current and future shortfalls.  Question is, if the IMF is needed less and less for their services, why not just cut back operations to the bone like other businesses do that experience revenue loss and expect future revenue losses?

Second, why does the IMF have such large assets?  IMF gold reserves alone at current market prices are worth ninety-five billion dollars.  How can the IMF have amassed such a large endowment if its mission is humanitarian?  After all, the IMF’s purpose is to stabilize economic situations by providing emergency loans to developing countries that are in over their heads.  Further, if their business is that profitable why does Congress still commit the American taxpayer to contribute billions of dollars to them each year?

Third, even though the Fed and IMF are not directly linked, is the IMF not guilty of a form of insider trading?  The Fed caused the price of gold to skyrocket by debasing the dollar.  Along comes the IMF ready and willing to “dump” gold on the market to realize a windfall profit, as the politicians would call it. 

The sale of the gold is not automatic as it must be approved by the member countries of the IMF.  Given Congress’ inability to say no to the Fed I have little hope it will squash this sweetheart deal.  With tax day less than a week away, we should be demanding that Congress pull out of the IMF.  While the IMF can realize its golden opportunity by making a killing in the gold trade, the Congress should protect American taxpayers from the fiends that used our money to get rich.  

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

Another issue that is being largely ignored by the media favored presidential candidates is foreign aid.  I suppose the topic is not very sexy, but at a time when we are experiencing a credit crisis and Americans are losing their homes and will soon be wondering where their next paycheck is coming from, foreign aid seems like an important topic to discuss.  It is also no small matter – since 1960, the rich countries of the world have transferred, sorry, I mean, provided 2.6 trillion dollars in aid to developing countries.

A wise man once said that “foreign aid amounts to taking money from poor people in rich countries to give it to rich people in poor countries”.  Former Nigerian President Olusegun Obasanjo has been quoted as saying, "Corrupt African leaders have stolen at least $140 billion from their people in the 4 decades since independence."  Corruption is the biggest, but not the only problem with foreign aid.  There is also the problem of giving money to countries that do not have the infrastructure or educated work force to use it towards development.  Since independence in the 1960s and 1970s the countries of Sub-Saharan Africa, have seen their food production fall by roughly 20 percent and per capita GDP fall at a rate of half of one percent annually.  If foreign aid is successful, than what accounts for these statistics?  I realize that a portion of aid money has always gone to education.  As a teacher currently living in a recipient country, I can tell you first hand it has not worked in this area either.  In Zambia, after 43 years of independence, schools are still woefully resourced, in many instances staffed by teachers who do not have college degrees and crammed with up to 50 students per class and Zambia currently is a success story both economically and politically on the continent.

The opposite extreme from Zambia is her neighbor to the south, Zimbabwe.  Once the breadbasket of Africa, Zimbabwe has fallen on hard times in the last decade due to the wrongheaded policies of its dictator, Robert Mugabe.  It has the highest rate of inflation in the world, currently at 100,000 percent.  Unemployment is at around 80 percent of the work force.  Shelves are empty and the people are facing starvation.  Yet Zimbabwe currently receives about $700 million a year in international aid (source: all Africa.com- “Zimbabwe: Mugabe's Last Stand”).  Where does the hard international currency go?  As recently as the 1990s Zambians would drive down to Harare to do their shopping.  Now Zimbabweans come to Lusaka to live.

The fact is that foreign aid does not work and is a waste of money.  While there have been some success stories in the developing world since independence movements swept across the globe in the 1960s and 1970s, those countries probably would have become successful without foreign aid anyway.  Many developing countries in the world are one coup or fraudulent election away from dictatorship.  As we have seen in Zimbabwe, years of foreign aid have been wasted and permanent development has become an elusive pipedream.  The British government estimates that Zimbabwe will now need three times the $700 million a year in international aid it currently receives to help it back on its feet.  If granted, what is the guarantee that we won’t be having this same conversation about Zimbabwe in 20 years?

At a time when the United States is 10 trillion dollars in debt, it is preposterous to continue giving aid to developing countries.  We are throwing money we do not have down an open sewer and financing the opulent retirement of dictators around the world.  Additionally, this is one more program that allows the Federal Reserve to print more dollars and further debase our currency.

Instead of foreign aid, our policy should be one of free trade and business deals.  Lowering trade barriers would benefit all - American workers and companies and developing countries.  Africa is mineral rich.  In Zambia recent geological findings point to oil and uranium reserves underground.  The focus should be on American companies cutting business deals in countries like Zambia to extract oil, uranium and other resources from the ground.  U.S. companies would benefit from such deals, but the bigger beneficiaries would be the developing countries which gain tax revenues, jobs, and infrastructure.  The biggest winner of all may be the U.S. taxpayers who will no longer see their hard earned money go down the drain.

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

CNN recently aired a program entitled “Mortgage Meltdown”.  The show featured panelists sitting at a card table in a casino discussing the subprime crisis.  As they talked about the various culprits responsible for the current financial mess, three recurring themes were evident – easy money, fraud, and stupidity. 

Stupidity – This was possessed by the millions of borrowers who signed their names to loans they should have known they could not pay back.  These include people who bought more house than they needed.  In the show they featured a truck driver struggling to pay a mortgage on a six bedroom house she purchased even though she was single.  Then there are the stories of borrowers who after getting into their homes face major repair expenses and begin to fall behind on their mortgages.  Folks who live paycheck to paycheck should know better than to get involved in a huge obligation like a mortgage.  Generally speaking, the ultimate underlying problem here is stupidity.  Instead of watching TV or shopping at the mall, Americans need to use their brains more.  I just bought a home last summer and I admit that I did not read all of the fine print, but I know what I signed, how much my closing costs were, how much my initial payments and escrow were and how much I will pay when my rate adjusts in two years.  This is just not hard and with laws on the books, public libraries, and the internet, consumers have more than enough material to read to educate themselves on probably the biggest thing they will buy in their lifetimes. 

Fraud - According to the CNN Special Report, loan officers of many primary mortgage lenders used fraud and deception to secure large loans for their clients.  This included fudging the numbers and outright falsification of incomes and other important information on loan applications.  You see, these first tier lenders were only concerned with consummating the deal and not whether the loan made sound financial sense.  After all, most of these loans got bundled into packages and sold to such market stalwarts like Bear Stearns.  These savvy financiers are smart enough to know that enough bad loans will eventually trickle down to hurt the whole market.  Of course, they got their commissions first and so everything is right with the world.

Easy Money – If you’ve read my previous blogs then you know, without question, I place the biggest blame for the current crisis and several others, including the Great Depression, on the Federal Reserve.  According to the CNN Special Report, Alan Greenspan as chairman of the Fed. for close to twenty years embarked on a policy of easy money – low interest rates and expanding money supply.  According to one panelist, Greenspan was like the parent who just could not say no to their child.  Americans wanted continuous growth without pain and Greenspan determined to make it happen at all cost.  The dot com bubble of 2000 foreshadowed what is happening today in the housing market. Did the Fed. pay heed then?  The answer is an emphatic no!

So, what should be done to remedy the current circumstance?  The President and the Treasury secretary want to give even more power over the economy to the Fed.   Our government is always willing to put more gasoline on the fires it starts.  I want the Fed. to have more power to fix the mess it caused about as much as I would want the stupid borrowers or fraudulent financiers to have that power.  Sorry, but I care more about those of us that are innocent in causing this fiasco.  Those of us that neither through our actions or brain lock had anything to do with the crisis.  First of all, the FBI should investigate those cases of fraud perpetrated by both lenders and borrowers.  Those found guilty should be prosecuted to the fullest extent of the law.  Second, whether there was fraud or not, those borrowers that have lost their homes or will lose their homes should suffer that fate as a consequence of their stupidity.  The government should provide no aid to them and should make it clear that the days when bad decisions are rewarded are over.  Lastly, and most importantly, the Fed. should be forced to sell the gold it originally confiscated from the public when we went off the gold standard to compensate for damages caused by its member banks in making the bad subprime loans.  Beyond this, the Fed. should be abolished and a one hundred percent gold standard should be instituted to prevent the manipulation and depreciation of our currency in the future.

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

As Lisa and I arrived at the airport in Dar es Salaam, Tanzania, we were greeted with sniper fire and mortars.  It was all we could do to keep our heads down and run for cover.  Our greeting ceremony had to be held in the basement of the airport.

Tanzania is actually a lovely country.  Some blogable moments came from our visit and I would like to share them with you.

George Bush – He looks awful.  The president was in Tanzania a short while ago.  A friend of ours, who works for the U.S. government in Dar as Salaam, met George Bush and was surprised by the president’s appearance – heavy lines on his face, gray hair, and a look of total exhaustion.  However, Bush is loved in Tanzania.  After all, he arrived with suitcases full of our tax dollars.  He was there to personally review “President Bush’s Plan to Eradicate Malaria”.  Funny how politicians always take the credit for and have their names affixed to things that other people paid for. 

America Backers – We met several people that love the U.S.  As I have stated in a previous blog, foreigners think highly of our country.  On this trip we heard Tanzanians use words like wonderful, efficient, and freedom when referring to the U.S. 

Chinese –We met a young entrepreneur in Zanzibar whose enterprises include a second hand clothing business.  He buys tons of leftover clothes from Goodwill, Salvation Army, and similar companies and then sells them on the African continent to the poor who need them.  This explains why we are forever seeing t-shirts of American sports teams on the streets of Lusaka and other African cities.  He told us that his business is a low-margin venture anyway and then on top of that the Chinese have been successful in lobbying the Zambian government to impose a 100 percent duty on imported used clothing.  This duty of course protects Chinese textile imports into Zambia.  China is very quickly becoming an economic powerhouse in Africa because it is contributing to developing the continent by brokering business deals not throwing money at corrupt leaders like the West has done for years.

Shipping Containers – A note to the wise investor – when the dollar is weak, go into the shipping container business in the U.S.  Our young entrepreneur friend also told us that shipping containers in the U.S. are very scarce right now.  Of course with the weak dollar exports from the U.S. are way up.  Consequently, shipping containers are leaving the country faster than they are coming back.

An Observation – Zanzibar is a traditional, Islamic island.  Most of the merchants there are Muslim and conservative at that – women were covered from head to toe including face veils.  My take was that it didn’t matter to them that we were Americans (Americans are easily distinguished from others overseas by our dress and accent).  We had what they desired – money.  We were welcome on their island because our business was valuable for them to take care of their families and build a good life.  There is a lesson to be learned from this.   

Let’s return to the opening paragraph for a moment.  This story of our arrival in Dar es Salaam will be very affective if I ever run for president and need to show off my foreign policy experience.  The best part is that there is no video to show that it didn’t happen.

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia.  Send him email at lovesliberty@gmail.com.

You should be as mad as hell.  All Americans should be outraged.  The Federal Reserve after causing the current economic crisis is now using our currency, the lifeblood of our economy, to bailout investment houses that have been grossly irresponsible in their business practices.

Unless you have been at the beach, you are probably aware that over the weekend, the Fed. bailed out Bear Stearns and saved it from bankruptcy.    For a long time, Bear had made a fortune on its mortgage-backed securities, but with the subprime crisis many of those investments soured and the bank was in danger of collapse.  Its stock plunged by 47 percent on Friday.  In the Fed’s bailout, Bear got a 28 day loan financed through JP Morgan.  For its part, JP Morgan got to buy Bear for pennies on the dollar, risk-free, because the Fed. is guaranteeing up to $30 billion of the bad loans and assets that got Bear into trouble.

The very crisis that got Bear into trouble, the subprime crisis, is the fault of the Fed.  For years, the Fed. has kept interest rates artificially low luring marginal borrowers into the housing market.  The member banks of the Fed. gave these borrowers adjustable rate mortgages, in many cases, with no money down and no verification of income.  The loans were eventually passed up the line as mortgage backed securities to Wall Street giants like Bear, who saw green and didn’t ask the right questions either.  In the meantime, the rates on the mortgages adjusted to levels that the borrowers could no longer afford.  Voila, the house of cards that the Fed. built is collapsing.

If that is not bad enough, the Fed. is now attempting to cover its tracks by doling out more dollars and putting its good name behind all of the bad debt, all in the name of maintaining confidence in the financial markets.  Since Congress gave the Fed. the power of the printing press many years ago, it can make these promises – not without a devastating cost, of course.  At a minimum, that cost comes in the form of a devalued dollar (at an all time low against other major currencies already), increased inflation, a declining stock market and further increases in the price of oil (currently at $111 a barrel due to speculators dumping dollars for commodities).      

Bear is the first big institution to fall.  Bet your depreciated bottom dollar there will be others.  Common sense and the mildly trembling voice of Treasury Secretary Paulson this morning is proof of that.  The question is, how far is the Fed willing to go to maintain confidence in the financial markets?  The bigger questions are: what about the millions of Americans facing foreclosure? What about the retired folks who are invested in the free-falling stock market?  How about the middle and lower classes that are paying higher prices at the pump and using a currency that is worth less and less?  In the real world, people that created a mess like the one the Fed has created would be held accountable.  Those adversely affected would be awarded reparations.  This does not happen in the Fed’s world.  It simply gets to print more and more money and hope the crisis goes away.  I am as mad as hell about this.  Thankfully, I will be away for a week on the sunny beaches of Zanzibar.  When the next financial crisis happens this week, I’ll find out about it when I get back.

Kenn Jacobine teaches History and English for the American International School of Lusaka, Zambia

Within the last week, two reports have been issued on human rights.  The annual U.S. human rights report was released on Tuesday and it contained harsh criticism for China.  Specifically, the report accuses Beijing of further restricting free speech, censoring the Internet, mistreating prisoners, and  forcing relocations of people to make way for projects related to the Olympic Games to be held in August in Beijing.

I have no doubt that the allegations against the communist leaders of China are true.  Beijing’s leadership still retains a tight control over Chinese society in spite of the liberalization of the Chinese economy.  One can hope that as the Chinese economy continues to open up and grow, a middle class will develop which will be a prelude to democratization and political liberty.  We have seen this happen in Eastern Europe after the fall of the Soviet Union and many political scientists believe it could happen again in China.

The second report in the last week was issued by the Pew Center.  This report indicated that for the first time in history, more than one in every one hundred American adults is in custody, either jail or prison.  The report went on to say that the United States is the world’s incarceration leader.  With 2,319,258, adults behind bars, the U.S. is far ahead of more populous China with 1.5 million people behind bars.  The U.S. is also the world leader in per capita inmates with 750 per 100,000 people ahead of Russia with 628 per 100,000 people.  Having only 5 percent of the world’s population, the United States imprisons 25 percent of the world’s inmates.

Do the U.S. prison statistics mean that we live in a crime ridden society?  According to the Pew Center, the answer is no.  The increase in the inmate population is not because crime has increased but because tougher sentencing laws such as three strikes and your out have increased sentences overall and therefore increased prison populations.

Absent from the analysis is the effect of the so called “Drug War”.  It is estimated that over 50 percent of inmates in state and federal prisons are there as a result of the Drug War.  We are not talking about violent criminals necessarily, but recreational drug users.  Even the violent drug criminals would be greatly diminished in number if all drugs were decriminalized and they had the opportunity to buy and sell in the free market.  When was the last time there was a shootout over a loaf of bread deal gone bad?

However, this article is not about advocating for the decriminalization of drugs.  It is about comparing the two civil rights reports that were released recently.  One shows a country with still a long way to go in guaranteeing civil rights for all its citizens.  But from other indicators, specifically economic, it is a country that is headed in the right direction as far as building a society based on middle class values and liberty.  The other report names the country that imprisons more citizens than any other in the world.  But from other indicators, specifically legislative, it is a country that is headed in the wrong direction as far as restoring a society based on middle class values and liberty.  With a continuance of the “Drug War” and the so called “Patriot Act” as well as a few other unconstitutional laws in the congressional pipeline more rights will be lost by Americans and the prison population will continue to grow.  Before the U.S government criticizes other countries for human rights violations it should clean up its own act.  After all, he who lives in a glass house should not throw stones.

Pew Center on the States:  http://www.pewcenteronthestates.org

Kenn Jacobine teaches for the American International School of Lusaka, Zambia

”The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

It is not often that a book about economics is both brilliant and easy to understand by the lay economist.  Professor Rothbard’s book is such a book.  He clearly laid out monetary theory and the history of the state’s destruction of it.  Originally written in 1963, his analysis of money is timeless.  This book is a must read for anyone at all concerned about the future of our country.

He began by explaining how money evolved out of previous barter economies.  Several problems existed with barter.  In some instances there was the problem of indivisibility into smaller units.  For example, it was hard to trade a cow for a goat if a whole goat did not equal the value of a whole cow.  Another problem was with the lack of coincidence of wants.  Suppose the cow owner wanted ten chickens instead, but a chicken owner wanted an ostrich the cow owner did not possess.  You see the problems.  The solution according to Rothbard was a medium of exchange that would be divisible, acceptable to a large number of people, and transportable (no more carrying chickens on your back, although I have seen this done in Africa where villages still operate primarily on a barter system).

The important point here is that money, represented at the time by gold, was/is a commodity.  It was/is traded directly for other goods and services and was/is valued.  Money is the same as the cow in our previous example, but better because it is divisible, and versatile.  Rothbard believed that learning this lesson is one of the world’s most important tasks because like other commodities by indiscriminately increasing the supply of money you lesson the value of it.

And Rothbard believed that that is the goal of all governments – to inflate their currencies to pay for the promises made by their agents (e.g., politicians).  Once gold backing was out of the way, governments could “print money out of thin air” to pay for all of its whims.  He provided an excellent summation of the various phases of “the monetary breakdown of the West.  It is a fascinating inquiry and one that left my blood boiling.  Galling was how over time and in subtle ways, governments took control of the money in their countries.  This was done first through government monopoly of the minting business.  Then government issued a name (dollar, franc, etc…) for the minted currency. This was meant to disassociate it from any relationship to the metal it was backed by.  Thirdly, legal tender laws were passed which gave the government power to declare what money was – either gold or silver backed currency or something else.  Lastly, the ultimate usurpation of the power to control money was the creation of central banking. Once central banks existed, any “emergency” was used to gradually and completely remove currencies from gold backing.  These emergencies included corporate wars (WW I and WW II), a central bank induced depression (1929-1940), and central bank inflation in the 1960s.

As the finale to his brilliant work he offered his argument for a return to a 100 percent gold standard.  On page 126 is the example that caused my epiphany.  Under a gold standard, if France inflated the supply of its currency, then the increased supply of francs and incomes in France would drive up the price of French goods.  This would make them less competitive against foreign goods pushing up French imports and pushing down French exports.  With gold flowing out of France, because foreigners would not accept a depreciated franc for payment, the French government would have no choice but to contract the supply of the franc to avoid national bankruptcy.  This in turn would cause French domestic product prices to fall and a reversal of gold outflows.  According to Rothbard, the gold standard would not perfectly prevent boom-bust cycles caused by inflation, but it would keep them more closely checked.

What Has Government Done to Our Money? is a must read for all.  Liberals should read it to understand how welfare state programs are negated by inflation caused by those same programs.  Conservatives should read it to understand how far they have strayed from a system that they once called their own.  Others should read it to get angry at what the government has done and is currently doing to our money and then use that anger to affect real change at the ballot box.

Returning to our opening quote, it was not from the book.  It was Alan Greenspan’s from an essay he wrote in 1966 favoring a gold monetary standard.  Everyone has heard the quote, “there is something rotten in Denmark”.  The rottenness in Denmark cannot compare to the rottenness of the Federal Reserve.

Kenn Jacobine teaches English and history for the American International School of Lusaka, Zambia

I remember the day 16 years ago when my boss came rushing into the office to announce that the Wall Street Journal was reporting that the United States economy would be in recession soon.  He immediately called a meeting of all of his managers and began preparing for a recession.  This included canceling material orders and cutting back on overtime.  Sure enough, three months later the economy fell into George H. W. Bush’s recession.  You all remember the “no new taxes” recession, where the former president promised not to raise taxes during the campaign and then did once elected.  Boy, the apple does not fall far from the tree.

The point is that recessions are self-fulfilling prophecies.  When someone is reparable, like a well known economist, and they say publicly that the economy is going into recession, it will because people and businesses will prepare for one thus causing it to happen – self-fulfilling prophecy.  Hence, the current President Bush’s statements today that the U.S. economy is not recession bound is a calculated move by the President to convince Americans that we aren’t headed towards a recession, thereby avoiding the self-fulfilling prophecy routine, thereby avoiding a recession.  The problem is that the President has a history of lying.  It’s one thing to use deceit to rally the country around an unconstitutional, unjust war.  After all, the poor will pay a higher cost of the burden than anyone else.  But, if this President thinks for a minute that economically astute Americans are going to trust him with their economic well-being, then he is dumber than anyone could have imagined.

The fact is that the U.S. economy is probably already in recession.  Recently it was reported that consumer confidence has plunged, the wholesale inflation rate is soaring (thank you Ben Bernanke), the number of homes being foreclosed has jumped (thank you Alan Greenspan), home prices are falling sharply and there is a prediction that big increases in health care costs are on the horizon.  In President Bush’s own words:  "I believe that our economy has got the fundamentals in place for us to ... grow and continue growing, more robustly hopefully than we're growing now; so we're still for a strong dollar."  One can only wonder how the man sleeps at night, let alone talks with a straight face.

The President’s most recent lies will not be believed by even that small percentage of Americans who think he is doing a good job.  It is unfortunate that economic hard times will probably last through the remainder of his final year in office and then we will have either Barack “the socialist” Obama or John “I will divert America’s attention away from the crummy economy by invading Iran” McCain to look forward to to heal our economic ills.  Where is Jack Kevorkian when you need him?

Kenn Jacobine teaches English and history at the American International School of Lusaka, Zambia  

Last week, while discussing the turmoil in Serbia and the assault on the U.S. Embassy, with my class, one of my eighth graders, a Dutch student, asked, “why does the whole world hate the United States?”  I thought for a minute and then realized that the whole world does not hate the United States, quite the contrary, they simply hate our government.  I must say it is with good reason.

I have lived abroad for the last seven years in three different countries (Ecuador, Mali, and Zambia) and have rarely experienced anti-American sentiment.  When 911 happened, the American community in Ecuador was supported and comforted by the Ecuadorian people.  My family personally received emails and letters of condolences from them.  In all three countries, American ideals – equal opportunity and freedom, as well as our way of life are greatly admired.  There are always lines at our Embassy of people applying for visas to visit, work, or study in the U.S.  These are hardly the actions of people who hate the U.S.

However, while aspiring to live in the U.S. and appreciating our way of life, many do hate our government for how it acts around the world. 

Iraq – The U.S. government bombed Iraq through the 1990’s to allegedly aid the Kurds even though when the Kurds expected our help to overthrow Saddam at the end of the first Gulf war they were left high and dry by the U.S. government.  Then the U.S. invaded Iraq under the pretext of carefully orchestrated lies about Saddam’s links to al-Qaida and weapons of mass destruction (see Center for Public Integrity website).  With no end to the undeclared war in sight, John McCain has indicated that U.S. forces will be in Iraq for another one hundred years.  The terrorists are licking their chops.

Japan – Recently, two U.S. marines have been accused of raping Japanese children.  This caused a public outcry in Japan certainly against those marines but also for the U.S. to remove its military bases from Japanese soil.  The war has been over for almost sixty-three years and we still occupy Japanese soil.  Why?

Cuba – We have economically embargoed that country for forty-six years.  Bad health is what eventually made Castro step down.  With new leadership in place in Cuba, this would be the perfect time to end the embargo and attempt to bring real change through free market economics to Cuba.  Our “leaders” seem none too keen for that.

Kosovo – The Serbs hate our government’s actions there just like we would hate theirs’ if the Serbian government encouraged Florida to secede from the U.S.

Canada – Our friends to the north have even been peeved at us for our government’s self-righteous attitude toward their medical marijuana law. 

Now, I know I run the risk of being called unpatriotic and some would even say I should just stay abroad if I hate my country so much.  Grow up.  To criticize one’s own government is a natural right and a responsibility of citizenship.  Our government has not only wronged many in the world, it has wronged its own people.

It takes money from hard-working Americans and gives it to institutions like the United Nations and World Bank, who then give it to third world dictators and bureaucrats who put it in their personal bank accounts.  These countries then go into default on their loans and the American taxpayer is called to bail them out again.

Our government allows the Federal Reserve Bank to print money out of thin air.   Then it distributes it first to its banking and corporate buddies.  The bankers and corporate types enjoy pre-inflated money while the American worker eventually experiences higher prices and is left holding the debt of the newly printed money from the Fed.

Uncle Sam has continually eroded the rights of the very citizens it exists to protect.  The so-called Patriot Act has expanded the federal government's ability to use wiretaps without judicial oversight; has made it far easier for the government to monitor private internet usage; has authorized “sneak and peek” warrants enabling federal authorities to search a person’s home, office, or personal property without that person’s knowledge; and has required libraries and bookstores to turn over records of books read by their patrons. 

There are other examples of our government’s cruel and unusual punishment that could be stated - the Drug War and eminent domain to name just two.  I had high hopes (no pun intended) that this election cycle would be different.  That as a country we would demand more from our leaders.  Barack, Hillary, or John are not going to deliver.  In the larger scheme of things, it does not really matter if the world or individual Americans hate our government.  What matters is that Americans understand the reasons why Uncle Sam is hated and stop playing the patriotism card.  The U.S. government is doing a lot of things wrong and it is up to the American people to put a stop to it.  Hopefully, eventually, this will happen through the ballot box not the battlefield.