http://news.yahoo.com/s/ap/20100107/ap_on_bi_ge/us_health_care_overhaul

President Barack Obama signaled to House Democratic leaders Wednesday that they’ll have to drop their opposition to taxing high-end health insurance plans to pay for health coverage for millions of uninsured Americans.

Put aside the constitutional arguments, the moral arguments, the legal arguments for a minute. It’s not my responsibility to pay for your “health coverage.”

If anybody has the responsibility to pay for your health insurance, it’s you.

Taking money from me against my will for your own selfish benefit is theft. Having the government take money from me against my will for your own selfish benefit is STILL theft.

“Deficit-neutral”

As in: “Any health care plan that I sign into law must be deficit-neutral”

This one is *awesome* because when you say it, you sound fiscally conservative, but it allows you to continue on as a free-spending Marxist ideologue.

So what does it mean? Well, the health care bill is expected to cost between $900 billion and $1.2 trillion over the next 10 years. How does one go about spending a trillion dollars without adding to the deficit?

1. Cut benefits. Barry says he can do most of this by cutting out the fraud and waste in the current system. It begs the question: why don’t we cut out the fraud and waste anyway, and leave the government tyranny part out and see where that gets us? But that’s a non sequitur when you’re busy hoping and changing.

Another way to lower costs in a health care plan is to stop caring about peoples’ health. For example, get a group of distinguished intellectuals to say that women don’t need to be tested for breast cancer anymore. That will save a lot of money.

2. Raise taxes. Steal property from people who have it and give it to people who don’t, and claim that it’s justified because you’re morally and intellectually superior to everybody else. You know how to “manage” everybody’s life better than they do.

Deficit-neutral is the new, politically convenient way of operating a tax-and-spend scheme without calling it tax-and-spend. To a liberal, it’s “responsible” to pay for their unnecessary, unwanted, illegal programs by raising taxes and rationing access to resources. Backward, bottom-feeding conservatives, on the other hand, think it’s irresponsible to pass unnecessary, unwanted, illegal programs in the first place.

Secretary of State Hillary Clinton was visiting Pakistan this week. Drudge picked up on this choice quote:

“The percentage of taxes on GDP (in Pakistan) is among the lowest in the world… We (the United States) tax everything that moves and doesn’t move, and that’s not what we see in Pakistan,” she said.

“You do have 180 million people. Your population is projected to be about 300 million. And I don’t know what you’re going to do with that kind of challenge, unless you start planning right now,” she said.

“If we are going to have a mature partnership where we work together” then “there are issues that not just the United States but others have with your government and with your military security establishment”.

Let’s start with that last part. In order to effectively "work together" with Pakistan, Hillary believes that they need an empowered central government and an effective "military security establishment." I can understand her point there. The state department would like to negotiate with one party rather than a bunch of tribal leaders and various corps of Islamic nutballs who integrate seamlessly into Pakistani life. But the interesting part is how she thinks a loose confederation of tribes and religious factions are supposed country is supposed to get to that point.

Her answer is by raising taxes. America taxes "everything that moves and doesn’t move." Pakistan doesn’t. Therefore, Pakistan is a mess, while America is strong. It’s about taxes, and taxes are about government control. It’s not about the character of the people, or their shared culture, or their ties to the land, or their recognition of natural law. It’s about taxation and government control.

I mean, surely she intended a nuanced interpretation of her statement, in which we’re supposed to take into consideration that the result of taxation will be the development of a vast bureaucracy to provide government-run education, press, banking, manufacturing, health care, retirement and jobs as a result of the collection of those taxes. But that’s not what she said, and what she said has meaning. It’s great when, once in a while, a liberal lets a little light shine in on the truth that lies within their cores.

In this case, liberals believe that government makes nations, whereas more enlightened people believe that a nation establishes a government for itself. It’s an important distinction. A nation is made up of people with a common language, common culture, and a historic claim to the land on which it exists. Pakistan is not a nation in the same way that America is a nation. There are over 60 different languages spoken by its population. It’s official language is English, but its national language is Urdu which less than 10% if its population speak. It’s 96% Islamic, but there’s the usual hateful split between Shia and Sunni among the population, which pretty much guarantees perpetual cultural violence and conflict. And up until 1947, there had never been a historical "Pakistani" state. It was created by the ever-disastrous British border-drawers who just flat-out made stuff up because they didn’t know what else to do with all the land that their empire couldn’t control.

But all that is secondary in importance. What REALLY matters, in the Clintonian, progressive world-view, is the ability of the the central government to impose top-down, bureaucratic, central planning and control. In other words, they want to apply to Pakistan the same liberal fascist form of government that they’re building here.

Taxation to a conservative is a necessary evil to be avoided when possible, used only to ensure the liberty of its citizens. To a progressive, taxation is an essential tool of authoritarianism used for the advancement of government power.

So to sum up what I’ve written  so far in Part 1 and Part 2:

1. The value of something is determined by what someone is willing trade for it.

2. Money is a medium of exchange, and as such it only works if people think it’s worth something.

3. Money is valuable because the government says it is, but

4. The more money that’s available in circulation, the less valuable it is.

So now let’s close the loop on that last one. Money isn’t backed by anything solid or valuable. It’s only backed by the promise of the government that issues it to be responsible with it. If the government allows too much of it to be created, the value of the money relative to the amount of goods declines. Also, if the government itself becomes unstable or appears to be irresponsible, or reaches a point where it appears to be unable to support its debt, the value of that money will decline. People will want less of something if they’re uncertain that its going to be as valuable tomorrow as it is today.

So that’s how we get exchange rates. If your country is politically stable, responsible with the amount of money it creates, and responsible with its debt load, foreigners with less stable currency will want to hold your currency instead. People have liked the dollar more than other currencies for a long time because of America’s political stability, military strength, vast industrial base, prospects for growth, etc.

There’s been talk through the years of creating a new world currency backed by oil, but that petro-currency would be backed by a lot of goofy countries with goofy leaders and populations that are dominated by a goofy religion that encourages self-detonation and Jew-killing when things aren’t going right. That’s a little too much uncertainty for people who don’t want to risk their money. Similarly, up until recently with the introduction of the Euro, no single European currency was very attractive, what with the European tendency to reduce its infrastructure to rubble and population to corpses every few decades.

By comparison, the dollar looked pretty sweet.

But now, for many reasons (most of them self-inflicted) the dollar is weakening relative to other currencies. China and India have emerged as real economic players. American deficits are skyrocketing, and we’re making money out of nothing to pay for them. Our industrial base is moving off-shore. We seem to be intent on expanding the welfare state, further burdening the producers while increasing benefits for non-producers. Our economic health now rests not with ourselves, but in the hands of a couple of Asian countries who have been willing to buy our government’s debt since we’re addicted to spending more than we earn, but who are now not so sure they want to keep buying and holding quite so much.

So things aren’t quite as rosy as they used to be.

In Part 1, I came to the conclusion that the value of something is determined by what someone is willing trade for it, and that includes the value of cash/paper money/currency.

Our money has absolutely no intrinsic value (to have intrinsic value means that it can serve a purpose in and of itself, ie, you can eat it, build something with it, perform a service with it, etc.) Intrinsically, a dollar bill is actually worth less than the paper it’s printed on, because in order to use it for writing on effectively, you’d have to recycle it and bleach it to get all the green crap off of it first. A dollar only has value as long as someone else wants it, and its only worth what someone will give you for it. (Note, it didn’t used to be that way, but it’s the way it is now.)

Here’s what gives dollars value:

1. The government says it has value. As strange as it sounds, that’s about the best answer I can find. From the United States Coinage Act of 1965, "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver coins are not legal tender for debts." In other words, in order to pay your taxes, debts and dues, you have to pay in dollars. The government will not accept your sack of potatoes or your pair of shoes as payment for your taxes. Since everyone has to pay taxes, and the government only accepts dollars, people have to acquire dollars, and therefore find value in them. It’s arbitrary and phony value, but it’s value. (Oh, and it’s illegal for a business to refuse payment in US currency, but that’s more of a supply thing than a demand thing. It’s interesting to note, though, that people are forced by law to accept something as payment that has no intrinsic value.)

Another factor that affects the dollar’s value is that, since around the time of World War 2, when the United States emerged as the ultimate victor, economic colossus, and western military superpower, the dollar has been, in effect, the world’s reserve currency. This means that international commodity prices are quoted and traded in US dollars. Why US dollars? Because a) early on, the US dollar was backed by gold, b) the United States was the most economically and politically stable country on earth, and c) we had a massive trade surplus that meant people needed our dollars to buy our stuff. People wanted dollars, which meant dollars had more value. Countries stockpile dollars by trading their own currency for them, or by buying US government debt. Either way, with everybody wanting dollars, the value of the dollar increased. Supply and demand at work.

In the 1970s, the United States abandoned the gold standard. Before this point, people could trade currency to the government for a set amount of gold. This meant that in order to issue money, the government had to have a certain amount of gold reserves available to exchange for currency. This gave paper money real value. It wasn’t intrinsic value, and the government still set the amount of gold you could exchange it for, but it was still backed by a valuable asset. But by abandoning the gold standard, the dollar was suddenly backed by nothing more than the promise that the US government (and its proxy, the Federal Reserve) would act responsibly with the money supply (and/or kill anybody who threatened the dollar-based, centrally-managed global economic regime, but let’s save that for another time).

The point is that since the dollar doesn’t really mean anything, it can mean…anything. It’s ripe for manipulation by politicians, central bankers, financial cartels and other miscreants.

OK, so now that we know that a dollar has value, how do you really know what the value of a dollar is at any given time? Well, that’s super-complicated, but I’ll start trying to explain it using another massively oversimplified potato sack analogy!

Let’s say that there are only $100 dollars available in the world. You and your neighbor each have $1 to spend each week. The local grocer is sells 2 sacks of potatoes every week for $1 each, and you and your neighbor each buy a sack of potatoes every week. This situation has been going on for quite some time.

Now let’s say the government that issues dollars increases the amount of money available to everybody, and now you and your neigbor each have $2 to spend each week. The first week, you show up, flush with cash, and buy both sacks of potatoes for a total of $2. Your neighbor shows up later, but can’t buy potatoes, and so goes home hungry and pissed. The next week, your neighbor shows up first, hungry as hell and afraid to go hungry ever again. The potato merchant, knowing that the demand went up last week, raised his price to $2 per sack, which he learned is now the price that the “market” will accept. Your neighbor buys both sacks ($2 from this week plus his $2 from last week = 2 sacks of potatoes). You stay home, since you’ve still got enough potatoes from your double-purchase last week. The following week, you show up, but now your $2, which seemed like a windfall a couple weeks ago, will now only get you one sack of potatoes, just like before you got your raise. Your neighbor blows his extra money for the week on some shit he didn’t need before, artificially driving up demand (and prices) for whatever he bought. The grocer thinks he’s a business genius until he realizes that all the crap he usually buys has inflated in price, too, since everybody has twice as much money to spend. It’s a friggin cluster-eff for everybody involved.

Meanwhile, there’s a third neighbor who, with his $1 per week, decided to scrimp and save and get by on half a dollar worth of apples each week and save the rest of the money. Over time, he had $20 saved up, almost enough to buy a fine new mule! Then the government came along and inflated the currency, everybody spent it willy-nilly, prices increased, and now his $20 would only pay for half a mule, and it’ll take another 20 weeks of scraping by on crappy apples just to get back to the point where he was before inflation. All of this through absolutely no fault of his own.

And that’s inflation. Inflation is increased prices caused by the increase in the supply of currency relative to the amount of goods available. This is important to understand, because a lot of people think that inflation is any increase in prices. For example, they think that when oil prices go up, it’s because of inflation, or that inflation can be caused by high oil prices, but that’s not really true. Inflation is a very specific kind of price increase that’s caused by an increase in the amount of currency available. So there.

Now obviously, we don’t generally see 100% inflation rates in this country very often (although we have in the past). The mechanic works the same though. If inflation is steady at 3%, any money that you’re hiding in your mattress loses that much of its value every year. You have to earn at least that amount in interest in order to stay even. It’s sickening and stupid, unfortunately.

Anyhow, next up, I’ll try to explain to myself how exchange rates work, and why currency manipulation is an important tool for all the pointy-headed bastards who run the financial system in the country. Cheers!