The Frugal Libertarian

I first read Naomi Wolf’s book The Beauty Myth seven years ago.  Although I did not agree with all of her conclusions, it completely changed how I viewed all forms of media in our culture.  She opened my eyes to how powerful fear is in convincing the public of anything.  I think she is misguided on several issues but I have always had great respect for her. 

Today that respect grew even more.  Here is a very interesting discussion between her and Lew Rockwell.  I really admire her curiosity.  I like people I can disagree with and still have an intelligent conversation with.

I have always been skeptical of everything I hear.  I think it is because my brothers lied to me so much when I was little.  I like to search for my own answers.  Unfortunately this is not a common characteristic among Americans.  This is why it has been so easy for our government to grow into its current monstrousity. 

Karen De Coster talks about this more here.  I couldn’t have said it better myself.

You often hear about the shrinking middle class in this country. The Democrats will tell you it is because the rich are hogging all the money and the Republicans will tell you that it is because of the Democrats tax policies. I think there is truth in both sides, but I will not go into that right now because I do not believe either to be the biggest cause of a shrinking middle class.

I believe the middle class is shrinking because of the artificially low interest rates perpetuated by the Federal Reserve. Easy credit has completely changed our culture. We no longer have much motivation to delay our gratification. Why wait. Buy now, pay later. Karen De Coster thinks the later may have just snuck up on us.    She thinks the bubble is going to burst and I agree.

I often wonder if people know how to use a calculator. If you look at the median income of homeowners (around $70,000) and the median home price (at its peak around $250,000, now about $190,000), the numbers just do not add up. Once you add in all the other average expenditures for an American family, the picture really starts to look bleak.

The average car payment is over $400. Many families have two new cars with large payments. The average credit card debt is $9000.00, which would make the payment about $250.00 dollars a month. Then you have insurance (home, auto, health), heat, electric, fuel, cable, phone, internet, cell phones, trash, water and food still left to pay for. Just using modest estimates I calculate that you would have only a couple hundred dollars left over at the end of the month. And, that is without putting anything away for retirement.

A couple hundred dollars is not much when you own a house or have a child. Even with my frugal ways there is always something unexpected come up that I must pay for each month. The basement needs a dehumidifier while the baby’s room needs a humidifier, the dog needs a hernia repair, the car needs new tires, etc. If you throw any type of wrench into the situation, such as loosing a job, families have little to fall back on.

Now, of course many people think the government should do something to help out the middle class, but why not help ourselves? Stop consuming what you cannot afford. If you do not have at least $500 left over at the end of the month (after putting money away for retirement) than you need to make some cuts in your budget.

I would start with the car. You do not need a new car every three years. You don’t really need a new car ever. Buy used with what you can afford to buy in cash. I remember when I was a kid very few people had a brand new car all the time. Everyone got around just fine.

Next, get rid of your cell phone. If you really need one for emergencies, than get a prepaid phone. I like the GoPhone. It only cost about $8.00 a month. I mean do you really need the cell phone for everyday use. Surely you can decide which spaghetti sauce to buy without calling your spouse for their opinion. And, don’t give me the whole, “but I don’t have a land line so I need the cell phone”. Well, get a land line. You can get a cable phone with free long distance or VoIP cheaper than most cell phone packages.

Hopefully, one positive result of this financial crisis could be that many people will have a wake up call and see that we are consuming ourselves into oblivion.

With the election just a week away, the Letters to the Editor are getting more and more ridiculous.  There were so many to choose from this last week, but here is the winner.

Obama a vote for socialism?

The socialists are coming! The socialists are coming! This tired old canard is the last desperate gasp of Sarah Palin and every other conservative who doesn’t have a single substantive issue left to stand on.

It isn’t socialism to expect the vast resources of our government to make minimal efforts at improving the lives of our citizens. It isn’t socialism for our elected officials to be concerned about the health, education and well-being of those who elected them. It isn’t socialism for every person and business to pay a reasonable and proportionate amount of taxes to run our country, repair our infrastructure, help those less fortunate and save our environment.

And finally, it isn’t socialism to expect our president and his advisers to preserve basic freedoms that allow some misguided people to shout “socialism” rather than joining the effort to move our United States back to a position of international respect and leadership.

Ross Freese  Kansas City

Before I get into whether or not Obama is a socialist, let me first talk about the most ridiculous statement in this letter. Mr. Freese says “It isn’t socialism to expect the vast resources of our government to make minimal efforts at improving the lives of our citizens.” The government has “vast resources”? This is news to me. The only resources the government has are those that they have taken from us. They have no resources of their own.

Socialism is a generic term for several similiar political theories. Wikipedia says ”Socialism is not a discrete philosophy of fixed doctrine and program…Some socialists advocate complete nationalization of the means of production, distribution, and exchange; while others advocate state control of capital within the framework of a market economy”

Our government already controls much of the production and distribution in industries such as health and education, so all those things that Mr. Freese thinks are not Socialism could arguably be just that.

So is Obama a Socialist? I don’t know him personally so I can’t say, but his policy proposals are a lot closer to socialism than capitilism. Obama’s tax proposal is probably the best example. This plan would give tax credits to some people while raising taxes for others to pay for it. This is “nationalization” of capital distribution. In a free market capitilist economy capital distibution among workers is achieved through wages. Obama wants to circumvent this and take charge of dealing out his idea of “ecomomic justice.”

I do find hope in the fact that so many letters have been written arguing that Obama is not a Socialist.  Does this mean that many people still find the idea of socialism unattractive?  If so there may still be hope for our country after all.

I have talked about this before, but a new report has come out from the Federal Reserve in Minneapolis that once again points out that the credit markets do not really seem frozen.  Also read Kirk Tofte talk about this more.  He wants to know why we are being led to believe there is a credit crunch if the numbers do not back it up.  I would also like to know.  Is there data that we do not have access to?  If so, why not?  I am not really that big on conspriracy theories but I think something smells fishy.  Could the people that are really in trouble be trying to make it look like everyone is in trouble so we will be more likely to bail them out? 

Also, on a similiar subject.  Paul Krugman thinks the government should use their new ownership in banks to force financial institutions to loan more money.  (Krugman won the Nobel Prize in Economics this year.  With Al Gore winning the Peace Prize last year and now Krugman, the Nobel Prize is dead to me.)  Who exactly does he want them to loan money to?  I think Casey Khan said it best:

“Even if the banks are forced to lend, what if nobody wants to borrow?
Are potential borrowers going to be forced to borrow? Who are those
borrowers supposed to be, and for what are they going to borrow from
the banks to purchase? Will there be a random generation of forced
borrowing? Will people in high tax brackets be forced to borrow? Or
will there be a progressive form of forced borrowing, where each
bracket has to borrow based on a factor of their annual income? Does
Krugman want people to borrow to buy homes, GM cars, or ant farms?”

I know I may be beating a dead horse, but I feel like it must be said until people get it.  If debt got us into this mess, how is debt going to get us out.

I really have nothing to say about this audio clip  of Obama.  It speaks for itself.

My local newspaper once again showed their complete misunderstanding of economics and their completely liberal bias.  Today’s editorial calls for Congress to do something about bond-rating agencies.  They say the problem is that the rating agencies are paid by the bond issuers and not the buyers.  This is an obvious conflict of interest.  I would agree with that, but why would Congress need to do something about that? 

In the same editorial they point out that private enterprise has already come up with a solution.  They said “One firm that’s trying to offer an alternative model is the Egan-Jones Rating Co., which is paid by investors rather than bond issuers.”  When people see that this rating agency provides a superior rating service they will flock to them.  If other rating agencies want to compete, they will have to change to a similiar model.  Problem solved. 

Still, The Star wants government intervention.

If a depression is really just around the corner, you may want to stock up on some essentials before your dollars are not worth anything. (Is that too gloom and doom, I really am trying to be optimistic.)

Laundry detergent has always been one of those things that I hated buying. I know I have to buy it, but it cost so much and gives me such little satisfaction. It is not like I wash my clothes and think ” wow that was a good time”. I may spend more money on less useful things, like coffee, tea, cookies, or booze, but all those things make me think “wow that was a good time”. I guess that makes laundry detergent kind of like taxes for me.
Anyway, if you are going to stock up on essentials, don’t forget laundry detergent. It is one thing to be poor, but smelly, that is just too sad. To help you decide how best to spend your depreciating dollars, here is my cost per load for different laundry detergents. I am only doing cost per load on powder detergent for now. It is easier to stack, so it makes it more appropriate for hoarding.
This is cost per load based on the price at my local Wal-mart.
Tide: $0.18 per load
Gain: $0.13 per load
Cheer: $0.15
Arm and Hammer: $0.10
Surf: $0.10
Sun: $0.06

Now I have always been skeptical of how much detergent you need per load. Why should I take their word for it? Of course they will tell me to use more then I need. That just means I will have to buy more, so I always use about half of what they tell me, so really my cost per load would be half of what I listed above.

I personally will pay a little extra for quality when times are good. I prefer Charlie’s Soap. If you buy the 5lb bucket it will cost $0.10 a load. And, I actually believe how much they say to use. (Just a tablespoon.) I discovered this when searching for a good detergent for my daughter’s cloth diapers. I don’t mind paying a little extra for the good stuff. Plus, it is so good you don’t need fabric softener, so you save some money there.
A 5lb bucket of Charlie’s Soap will do 1280 loads. That should last 3 years or so. I would buy two. With all the government meddling this is sure to be a long depression. Better have 6 years worth of detergent just to be safe.

I guess it is a good thing that I am using cloth diapers for my baby girl because they are cheaper and not to save the environment.  A new study shows that they may add more CO2 to the atmosphere than disposables.

So I guess we can live with piles of poop diapers in landfills or die from the heat of global warming.  I think I will take my chances and keep using the cloth.

The idea that FDR’s policies prolonged the great depression has always received rebuke from many who see the government as a tool to be used against the evils of capitalism.  But, now the idea may be getting some legitimacy.

A couple of economist at UCLA have put out a report saying just what the Austrian economist have been saying for many years. They had this to say: “The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

I am glad they have put out their report.  It could not come at a better time.  Let’s not repeat FDR’s mistakes.