Ive written the following to pete Dominick. I was hoping for feedback and fact checking, as well as any ther cmments before I send it.
An open letter to Pete Dominick, host of Stand Up with Pete Dominick on Sirius XM’s POTUS channel:
Dear Mr. Dominick,
I’ve been a listener of your show for a little over a year now, and I disagree with you on pretty much every topic, but I keep coming back because, firstly, I think you are a funny and affable individual, and I think I’d like you on a personal level. Second, I have always thought that you, more than O’reilly, Limbaugh, or any of their liberal counterparts, give people their fair shake in expressing their side of the equation. But lately, with regards to this American jobs act, as well as your ideas on fixing the banking industry, especially when you reference the nobility of the “Occupy Wall Street Movement”, you have been getting noticeably bad about not considering the points of the callers you disagree with and have been interrupting them mid-sentence which is the very reason why I don’t listen to those other hosts and their shows. Now, even most the callers that disagree with you would probably disagree with me as well on some level, as I am an anarcho-capitalist, however, as a man who regularly tells his listeners to “think for yourself”, I would expect more from you, and I have expected more from you this past year despite our disagreements.
Last time I called in we debated the merits of the Austrian school vs more mainstream economics with regards to job creation and banking industry. You asked me if I have read Chomsky, to which I replied with an emphatic “Yes!” and have read his Manufacturing Consent and Profit Over People. I have also read Keynes’ General Theory of Employment, Interest and Money, so I have given the other side its fair shake. I ask, have you read Keynes’ General Theory? I would venture to say most have not, and I doubt you have either, for if you and the general population had, it would be evident what a contradictory and sordid mess of platitudes that it is. If one is to subscribe to the ideas of a man, I think it important that one might read his work before doing so. I would also advise, as you so often do, to read the counter arguments to these ideas. In this case, have you considered Mises’ Human Action, Bastiat’s That Which is Seen, and That Which is Not Seen, or Hayek’s Road to Serfdom? I find it shameful that as a 22 year old, I am probably more informed and intellectually well rounded than the average 60 year old when it comes to economics, history, policy, and current events. After all of my readings, from all the many angles, I have concluded that capitalism – pure capitalism; the kind not found anywhere on Earth currently – is the most efficient organization of society, and in the next paragraphs, I’ll tell you why. If, however, one reads all the many worldviews that I have read and comes to a different conclusion, then that is acceptable, and even admirable; a situation deserving of debate. Until that time, I maintain my previous points and ask that you seriously consider the following.
Now, with regard to this American Jobs Act, I must point out that lately you have been asking, “is it too much to ask of these richer individuals to pay a little more in taxes?” First, the most obvious objection in my opinion is your tendency to clump all rich (those making over 200K/yr) people into the same group that Wall Street Investors belong to. This generalization is not even generally true. While generalizations are necessary, especially when running a three-hour show covering many political topics, I think one should still practice some discretion when using them. However, even if we were to assume that you don’t associate all rich with the Wall Street bad boys, at the very least, you do point a judgmental finger at a specific type of rich: those who are against raising taxes. You portray them as some devious group of vultures waiting to prey on the less fortunate. This however, is nothing more than a caricature, and a useless one at that. I know many individuals who probably fit the criterion of a rich person, even by American standards, yet I find it doubtful one would describe these individuals as such vultures as previously described, if one were to know these individuals personally. Many have religious and/or principled stances against certain or all kinds of taxation and despite their disagreement, still pay it and find the means to donate more, be it to their church or some other fraternal or philanthropic organization who donates to the poor of america. I am also ignoring the fact that even the quality of life among our poverty level greatly exceeds that of the middle classes in most other countries around the world. Any study of the history of child labor and its respective laws thereof are proof of this fact.
Unfortunately, your lackadaisical use of language does not end here with regards to your question of “is it too much to ask…”. You ignore that it is not the people of America who are asking the rich for more in taxes, but rather the government who would be doing the “asking”. I think it is rather disingenuous to insinuate that the government ever asks for anything. The method by which government extracts funds from the public is not by way of some option; it takes by force, in much the same way it has taken de facto control of myriad countries by force in empire building for over a century. The kind of force we are treated to here at home is just a little subtler than our foreign counterparts are exposed to, and so I strongly encourage you to change your wording, lest you mislead your listeners.
Now that I’ve tried to expose any of the less obvious fallacies in the technicalities of your semantics, I want to move on to the bones of the topic at hand. You have also occasioned to paint the picture that the rich and the large corporations sit on the profits they make and the tax cuts they receive. But, do you really believe they simply place this newfound money under their pillow, allowing none of it to accrue interest? I think you would admit the latter to be the truth of the matter, with the exception of any purchase of Gold to hedge against inflation; an evil I will address momentarily. Of course they place these newfound funds in banks! These banks then lend the money out for other businesses to start and to hire and to produce goods and services. It is true that banks also lend money deposited by Peter so that Paul can buy a home, and, as of the last several decades, this practice has acquired some very nasty incentives, which have become the impetus toward some even nastier consequences on the market of real-estate. You have rightly questioned and brought up for discussion this very topic, and I commend your inquiry, but there lies in our world a very common fallacy that plagues our understanding of that world. This fallacy is the myth that markets, specifically free markets, boom and bust on their own, due to greed and lack of oversight inherent within the system. Falser words have not been spoken. It is first important to remember that our banking system is not a free market banking system, even in the lightest sense of the words.
Traditionally, prior to the creation of centralized banking, banks held two functions. These functions were separate from each other but both equal in importance with regards to money and society. The first function was to house your money (in this case gold, silver, or other real forms of money) and keep it safe from those that might steal it. The second and separate function was to act as an investor of any excess money one might be willing to put into the care of the bank.
Within the first function (when a bank simply protected your money), deposits were made into checking accounts, and the bank then issued a bank note to the depositor. From this practice, fiat (or paper) money was born. So long as the bank’s reputation was lauded among the populace, these notes were accepted as sufficient substitutes for real money (such as gold) because the individual could simply visit the bank and trade in the note for his gold payment. Eventually, the writing of checks emerged, where the gold was simply transported to each bank note receiver’s checking account, eliminating the need for the receiver to visit the bank who issued the note at all. For services such as these, the bank would charge a modest fee, but no risk of loss would exist for the depositor into this kind of account.
Now, for the second function, where the bank acted as a loaner of money for projects, homes, and businesses, the depositor accepts risks not present in the first function of a bank as explained in the account type above. In this second type of account, a depositor would deposit his money just as before. However, this depositor is entrusting his money to the prudence and wisdom of the bank to invest his excess funds into a venture that might yield some return on his savings. The depositor in a loan account believes that the bank possesses a greater aptitude for investment than he, and is thus agreeing to the risks involved in such an account. Any losses will be borne by the depositor, but if the bank has properly assessed the credit history of the borrower and the solidity of his business plan, the investment should be a successful one, and the depositor and the bank will share in the profits of the venture without the depositor having lifted a finger. As an added benefit, the depositor is also relinquished of any fees that might arise with his account.
This is the free-market banking system; separate services offered from a business in which you are free to utilize if you feel they might benefit you. But the FED has so perverted these functions. No longer are they separate, and the problems we associate with capitalism and free-markets are nothing more than the malpractices of the FED. The FED’s main function is to inflate money, bail out member banks, and socialize losses while privatizing profits, and the tool the FED relies upon most to achieve these goals is fractional reserve banking policy. The American public has been foolish enough to believe that it can earn interest on its savings, while at the same time ensuring its money will always be available to it whenever it wants or needs it. This illusion is perpetuated by the FED and its member banks. Under this system, when you deposit your money, you are guaranteed its availability, however if a run on the bank were to occur, you would be out of luck. To hedge against this occurrence, while still maintaining interest rates and money availability, banks started using the money in the checking accounts they managed to loan out to businesses and individuals. This money was not authorized for loans, just for safekeeping. The businesses and individuals who received these loans then deposited this money in their checking accounts, again believing this money was being stored, not lent. This all would have been fine except that this money was being written on the books as an asset. They were spending this money, and yet others were spending these very same dollars as well on other projects that they had taken out their loans for.
You see the issue now, don’t you? This is embezzlement and fraud of the highest degree, and in a free market, banking practices like these would be criminal. But, as I’ve stated before, there is nothing capitalistic or free-market about our system. For this system to be achievable on the scale in which it is currently practiced, you need a cartel, and this cartel is the FED and its members. The FED is, technically speaking, a private bank in which congress has so foolishly bequeathed the power to print money, and set the discount rates (the rate of interest charged to financial institutions who borrow from the FED), which, in effect, controls interest rates on loans to the consumer. This greatly distorts the main vessel of communication that business owners and entrepreneurs rely upon to properly invest scarce resources and money. For instance, when interest rates are low, this should mean that there is ample savings in loan accounts to be lent for investment into producer goods such as factory equipment or long-term production projects like housing. Basically, when consumers save their money they are signaling to entrepreneurs “we want goods in the future.” When savings is low, then interest rates are high which tells entrepreneurs there is a lot of money in the short-term consumer goods market such as shoes or furniture. When interest rates are manipulated by being artificially raised or lowered, these signals are corrupted and are rendered meaningless, thus entrepreneurial analyzing of consumer wants and needs cannot be properly executed which causes booms and busts in financial bubbles such as the housing bubble. When Alan Greenspan, then chairman of the FED, cut the federal funds target from 6.5% in January 2001 to below 1% by 2003, we had negative interest rates, after inflation is considered. This slash in the interest rate caused mortgage rates to plummet to the lowest they had ever been in our nation’s history. This plummet in rates caused a boom in borrowing and lending, but particularly in the real estate market, with commercial banks doubling the amount of loans they made to homebuyers. With all of the individuals worthy of such credit having been provided for, the next obvious option was to extend these same deals to individuals with less than envious credit ratings. Even if most never paid for their homes, the interest rates from the FED were so low that it would be nearly impossible not to make money. With all of this new demand for housing, developers had a field day; inaccurately believing the demand for homes was actually warranted by market forces. With all of this new money being thrown around the real estate market, it is no wonder home prices skyrocketed. But the market has a way of correcting itself, even if we don’t want it to. By the time we realized no one could actually afford the homes they were buying, it was too late and recession ensued to punish us with the consequences of intervening in the market. But, why real estate so much more than other markets? Mortgage-backed securities, credit derivatives, Fannie Mae, and Freddie Mac were but other instruments the state used to hide how risky these investments actually were, and so closes another chapter in our economic befuddlement as a nation.
But the powers of the FED do not end there. The FED has also been given the ability to greatly influence monetary policy; all of this without so much as a single audit. They are the only “private” bank that is allowed to do internal audits, like allowing a fox to report his own plundering of the chicken coup. So what’s in it for the government, you might ask, Mr. Dominick? Why would an institution that is supposed to “protect the consumer” give so much power to one so-called “private” bank? It’s quite simple. Forget the printing presses! This method of banking and the policy that allows it is a godsend for an institution, like the government, constantly in need of more money and credit and no real easy way to get it. The FED, due to its permission to add reserves to the balances of its member banks, inspires ever more lending. This creates inflation, which comes in handy when you want to delay a recession, and thereby delay the government’s being blamed for that recession.
The government also has other motives for its cooperation with the FED. Because governments tend to spend more than they collect in taxes, there may come a time when the debt becomes too large, and the populace starts to raise some hell over it. Accordingly, the politicians have at their disposal several ways they can reduce this debt. There is, of course, the most obvious method and that would be taxation, but this option tends to be very unpopular politically. Somewhat less unpopular depending on whom you are talking to are cuts in spending. This one, to me, is a no brainer because it has been clear for quite some time how much waste is present in both military as well as social or domestic spending. However, a politician never wants to relay the news that cuts have been made in his district or state, so politicians all tend to agree not to cut spending, lest they wish to jeopardize their reelection. The issuance of government guaranteed bonds has also been a method for raising money, but these are somewhat specious in that if one does not have money in the first place, it hardly follows that they will be able to pay you back in any legitimate way in the future. Also, in most cases, the very issuance of bonds implies an inability to manage money properly, and leads one to wonder why such an investment would be prudent. Plus, the interest accrued on these bonds hardly compensates for inflation, which leads me nicely into the most preferred method of raising money when government debt is reaching critical mass: inflation. Inflation is preferred because its negative effects on the populace are not evident until long after most have left office, and in some senses this burden is distributed fairly equally among the populace; you might say it is the fairest way to be screwed. In exchange for the government’s granting of specific powers to the FED, government has the added benefit of calling on the FED to print more official U.S. currency to pay the burden of its debt, without any clear money trail as to who or where this money went – the FED is, after all, a “private bank”. What we do know is whoever receives this money first hot off the press will feel virtually none of the effects of its consequences: higher prices and lower relative value of the national dollar compared with other currencies. These first users include anybody the government owes money to, but especially private firms that provide anything from military research to the building of governmental housing projects. What we also know about the inflation method of government debt relief is that it hurts the poor the most, as the poor are the last in line to use these dollars injected into the economy. By this time, prices have adjusted to the new dollars, and products and services have sky rocketed in price, yet the value of these services to society has stayed the same.
If you don’t yet believe me about the evils of inflation and the harm it causes, look back to 1923 Germany and its hyperinflation from its depression directly after and caused by the signing of the Treaty of Versailles. According to Constantino Bresciani-Turroni, by December of 1923, it was 4,200,000,000,000 German marks to 1 US dollar. Let me repeat that, “4 trillion and 200 billion German marks for every 1 US dollar.” Can you imagine how useless a currency would become if you had these kinds of exchange rates? Do you see how much wealth was lost for everybody? Just for an illustration of what this would look like: it has been said a man of the Weimar republic was out trying to buy some bread. He had placed his money in a wheelbarrow and left it out in the street as he entered the bakers shop. When he returned, the wheelbarrow was gone, but the money lay blowing in the wind in the street. Children used the marks to build kites while their parents used it as kindling for fires. Earlier on, before the exchange rates were this absurd, a man entering a bar would order two beers at a time knowing that by the time he could finish the first, the price of a beer would have doubled. The market finally made its case clear to the Germans of the Weimar Republic; that paper money is and always has been worthless. It is a representation of its specie, and printing more creates poverty, not wealth. This is what central banking deals in though, Pete. They deal poverty for the rest of us, while favored banks and the government get richer. At some point in time, this charade will have to end. Unfortunately, all of us will be paying for it.
Next, I want to address your love of the American jobs act. I can only point you to men smarter than I, but, in short, the belief that government can fix an economy simply by hiring people is a tragedy as old as time. Just because you hire more teachers does not mean kids will become smarter or more competitive in the world market. Just because you spend trillions on infrastructure does not mean the economy will be jumpstarted. Just because you hire more police officers and fire-fighters does not mean our streets will be safer. If there is no need for these things, you are simply diverting scarce and much needed resources away from where they will be needed. If that iron ore that John Doe mined a month ago would be more profitable to invest in the building of a railroad instead of the building of a bridge, then there is a reason for that. It means that somewhere in the process, the market (consisting of the dollar votes of the whole of society) was telling us that the railroad is needed or wanted more than the bridge.
When you tax the populace and hire a teacher, then yes, society as a whole has gained a teacher. But, in the tradition of Bastiat, what is not seen? Because resources and wealth were diverted away from the private sector to hire the teacher, a shoemaker was not hired. Again, we as a society are richer a teacher, but poorer a shoemaker. Yes, this teacher might add benefit to our society, but not as much as the shoemaker, or else the market would have dictated that a teacher be hired.
As for the hiring of fire-fighters and especially police, the same argument applies as above, but with a side appeal for you, Pete. You have expressed your wish to at least legalize marijuana, and I believe I have also heard you wish to extend this to all drugs. If so, I completely agree with you. Do you really want precious wealth to extend the police state that we live in? With our jails full of so called “criminals” who are only guilty of victimless crimes such as drug possession or consumption, and 1 in every 100 Americans being locked away in prison, and one in every 31 being placed behind bars and monitored on a daily basis. Do you really want to increase the amount of people enforcing these silly and immoral laws just for the sake of providing jobs that I have already proven will not provide assistance to the economy?
Finally, I want to touch on infrastructure spending. You recently had a professor on your show (I don’t remember his name) saying that our infrastructure is degrading and becoming useless. I would agree to this point. Most of our infrastructure, such as highways and bridges, is both poorly maintained and haphazardly constructed. Might I remind you though that most of our infrastructure is constructed and managed by governmental agencies; proof once again of governments inability to properly spend and oversee the taxpayers dollars. I’m sure both you and the professor might even relent that my point, at least in this case, is true, however you might reply that government is the only entity that could or would take on such a tremendous task as highway and bridge funding. If I could but paraphrase you, “there would just be no profit in it, thus no interest for a private firm to take on such a necessary task.” However, if there is demand, and I think you would agree there is certainly demand for roads and bridges, then it will be built. There are in fact many roads and bridges built by private firms and individuals and most are actually free to use. This could be for any number of reasons, but usually the expense of the build is more than offset by the increase of profits brought on by the increased traffic in their area. But there also exist many private highway builders who charge tolls for its usage. Of course many would grumble at the thought of paying every time they got on a highway, but this expense would also be offset by lower taxes, as we must remember that nothing is actually free. Lets not kid ourselves by saying that the poor would never be able to afford it. Their taxes must be lowered as well. They pay proportionately more in taxes than anyone else; the cards of taxation are stacked against them, but not because the rich don’t pay enough. No! The truth is that everyone pays far too much! Lower taxes on all! The government has us by the balls on every single thing we purchase: electricity taxes, state and local sales taxes, sewer fees, water taxes, personal property taxes (what of yours isn’t personal property?) on your cars, county, state, and federal sales taxes, local, state, and federal income taxes, FICA, Medicare, property taxes, marriage penalties, grocery taxes, utility taxes, FCC taxes, county taxes, on your phone bill there is local taxes, line taxes, 911 taxes, municipal taxes, county, state, and federal taxes, and SIN! taxes on beer and cigarettes just to name a few!
If slavery is working for someone else’s benefit without receiving any defined benefit of your own, then we are all at least part-time slaves to our government. We as Americans have got to stop blaming each other for our nations problems! We need to stop blaming black people, immigrants, gays, Muslims, Christians, Southerners, Northerners, the poor, the rich, the middle class, entrepreneurs, the common laborer, and any other targeted group. The best way to subjugate a people is to create a fictitious common enemy, and ironically America is that common enemy. We are so preoccupied bickering and blaming each other for our nations problems that we are missing the forest for the trees. Our enemy is right in front of us. It dictates our money, our lifestyle, our choices, and in some form or another everything else important to us. We are loosing our own identities in order to destroy each other’s. But lets direct this enthusiasm to the real enemy: state control of our freedom - true, unfettered freedom. The point in all of this is to point out one over-arching theme that needs to be corrected in America’s thought if we are ever to see a brighter day for all Americans. This system we live in, and the enemy we are faced with, is corporatism, socialism, crony-capitalism, democracy, whatever you want to call it; it’s here, and it’s winning, but I have hope in peaceful solutions and the power and will of individuals. But first thing is first: we must know who to fight and why we are fighting them. Until then, we are just practicing on each other.
I leave you with this. It has been said “if men were angels we wouldn’t need government.” I propose the following reply, the “unseen” or flipside, if you will: “Because men are not angels, they are scoundrels, and I would be skeptical to trust a government of scoundrels.”
I love your show though, and still listen everyday because it makes me a smarter person. I hope you’ll consider what I’ve here written to at least confirm you of your own beliefs.
Respectful and longtime listener,
Colin
I don't know who Pete Dominick is, but I don't think he will read a letter of this length, unless you give him very good reason to at the beginning.
I disagree with you on pretty much every topic
This is just about the worst thing you can say at the start of a letter. You should be doing just the opposite: emphasizing your common ground and common ends.
I find it shameful that as a 22 year old, I am probably more informed and intellectually well rounded than the average 60 year old when it comes to economics, history, policy, and current events. After all of my readings, from all the many angles, I have concluded that capitalism – pure capitalism; the kind not found anywhere on Earth currently – is the most efficient organization of society, and in the next paragraphs, I’ll tell you why.
If he gets this far, he'll surely stop after reading this. It's arrogant and patronizing. It is obviously a veiled attack on him. "I'm smarter than you; let me tell how the world works." That attitude is not going to get you anywhere.
What outcome are you hoping for by writing this letter?
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