The Core of American Liberty

by Bill Bonner

I've been at the beck and call of rich men all my life. But I'll be damned if I'll be at the beck and call of every son-of-a-bitch with a 3¢ stamp.
~ William Faulkner on losing his job at the Oxford, Miss., post office
One of the rarely cited advantages of having money is that you're less beholden to others who have it too. The more you have, at least in theory, the more you can ignore the other fellow with it, and go about your business. Nor need you drink the same cocktail or rush to the same mall so you can outfit yourself in the same duds.
In short, with a little capital of your own you can do what you want.

And the fellow who said "money can't buy happiness" has apparently not read last Thursday's New York Times:

Broadly speaking, the data now indicate that as people get richer, they report getting happier too. Though it's not quite that simple.
Justin Wolfers, an economist at the University of Michigan who helps advise the U.S. government on happiness statistics, told me that poor people in poor countries are not unhappy simply because they don't have wads of cash. They are more likely to have fewer choices, more children who die in childbirth and other grave problems. And while wealthier nations are generally happier, there is no evidence, Wolfers says, that an artist would be happier if she became a hedge-fund trader.

The Importance of Capital
But we're talking capital, not cash flow. The trouble with cash flow is that it doesn't spring ab ovo from nowhere. It comes to your hands from the greasy mitts of someone else.
If they don't keep the cash flowing, you may not have any. Unless you're a government employee or a tenured professor, a job is just a job. You serve at the pleasure of others. If you give them displeasure, they can cut off your income.
Capital is different. If you have enough of it, you don't have to work for anyone. You can go fishing, pick your teeth and maintain unpatriotic opinions.
Capital frees you from politics too. According to the most recent numbers, nearly half of U.S. households now rely on other people's money for some or all of their income. They are beneficiaries of one or more of the feds' transfer programs. Money is taken from others; it is transferred to them, as if to a getaway car.
The feds even have the chutzpah to give the recipients of this stolen loot an electronic card called the "Independence Card." Independent is exactly what these people aren't. Instead, says Charles Hugh Smith over at OfTwoMinds.com, they are like feudal serfs.
"The core of American liberty is widespread private ownership of property," he writes. If you want to be free you have to have your hands on the "means of production." Otherwise, you've got to learn to bend.
Imagine that you have zero equity in the house you own, Hugh Smith suggests. How free are you then?
Or imagine that you need to buy a house and need a mortgage. The mortgage market is almost 100% controlled by the feds. How free are you?

The Rise of "Neo-Feudalism"

Hugh Smith does not mention it. But imagine that you rely on the feds for unemployment benefits, food stamps, healthcare or Social Security. Are you a free man? Or a serf?
Smith says we live in a condition of creeping "neo-feudalism." A few people own a lot of property. Most own very little. His attention is focused on housing, where he believes the feds are quietly taking more and more property out of private hands and putting it in the hands of rich, concentrated elites.
He's probably right about that. But it seems to us that even more neo-feudalism is taking place right out in the open – where large groups now depend on the feds... and on Fed's EZ money... to maintain their current standards of living.
Balance the federal budget? Stop the Fed's printing presses? Let interest rates rise to a normal level?
Forget it. The serfs can't afford it.

February 13, 2013

Bill Bonner is a New York Times bestselling author and founder of Agora, one of the largest independent financial publishers in the world. If you would like to read more of Bill’s essays, sign-up for his free daily e-letter at Bill Bonner’s Diary of a Rogue Economist.