Manarin Investment Counsel, Ltd.

If we don’t like a product one company offers, we can instead choose to use the product of another company. This competition forces accountability for both companies. The federal government allows no such competition for currency. We’re stuck using the dollar and stuck with its value being tied to the whims of bureaucrats who manipulate it to achieve their own goals.

 What if we weren’t?

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The calamity in Europe is a prime example of what happens when you let Keynesians hold the purse strings, and the outcome isn’t pretty.

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We’ve got some great guest hosts to share the studio with Dana and Curren this week for the radio show.  For those of you in the Omaha area, be sure to tune in to 1110 AM KFAB this Sunday morning at 9AM catch a special edition of our radio show, “It’s Your Money.”  For everyone else, you can find the show here on our website at http://manarin.com/radio-show/.  Advisors Tom Kerins and Tim Bastian join us to discuss the Fed’s latest announcement, what’s going on in Greece, and how they see things shaping up in the next couple of years.   Tom, our lead author for our newsletter, & Tim are former members of the economics faculty at the United States Air Force Academy and Tim is currently in the same role at Creighton University.  You’ll certainly want to hear their insights on the current financial environment.

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With each headline about debt downgrades, and Greek financial issues, doom and gloom is the theme. We're always told about how things are becoming. What they neglect to tell you is that for each banking crisis and struggle, there have been numerous ones just like it. Every banking system in every country has crises from time to time. It's just the nature of the beast. Here's a great article from the American that shows all of the different banking crises that occurred throughout the 20th century. You'll be surprised at how common an event it is. Certainly not the end of the world..

http://www.american.com/archive/2011/september/theres-usually-a-banking-crisis-somewhere

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“Tune into CNBC or click onto any of the dozens of mainstream financial news sites, and you’ll find an endless array of opinions on the latest wiggle in equity, bond and commodities markets. As often as not, you'll find those opinions nestled side by side with authoritative analysis on the outlook for the economy, complete with the author’s carefully studied judgment on the best way forward.”

 http://www.caseyresearch.com/articles/us-monetary-system-verge-collapse

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Government action saved us from the recession, right? Not so fast

Click Here

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The Wall Street Journal has a good piece running right now showing how abandoning the gold standard has destroyed our purchasing power over time.

http://online.wsj.com/article/SB10001424053111904007304576494073418802358.html

Also

http://news.yahoo.com/nixons-colossal-monetary-error-verdict-40-years-later-140035743.html

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If you’re not listening to our radio show, you’re missing out on important news and commentary that will help put everything into perspective and keep you on the long-term path to wealth. We love getting feedback on the show. This last week, I mentioned how President Coolidge cut taxes, and how that, in part, led to the boom of the “Roaring ‘20s.” One of our valued clients, Travis, wrote in a correction that it was actually Warren G Harding that initially cut the taxes and that Coolidge continued cutting taxes throughout his administration. He was even nice enough to back up his claim with evidence, which is always useful. Good ear, Travis, and thanks for listening!

http://www.cato.org/pub_display.php?pub_id=13561

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Sound economic commentary stands the test of time. Take a moment to read this passage from “Business Tides” by Henry Hazlitt.

How to Reduce the Budget
January 20, 1947
The most important thing about the budget for 1948 is its overall dimensions. It calls for expenditures, in the second full year of peace, of $37,500,000,000. This is more than was spent in four whole years just before the war or in twelve whole years around the ‘20s. It permits no reduction whatever in the present wartime level of tax rates. And it provides a balanced budget only on the most optimistic assumptions.
A regular technique has now been established for disposing of those who express concern about a peacetime budget of these dimensions. It is to ask tauntingly: “Where would you cut?”—as if no answer could be given except something like “I’d refuse to pay the interest on the national debt,” or “I’d cut out national defense.” Sensible budget economies, of course, can never be made by offhand amateur efforts to throw out arbitrarily whole categories of expenditures. But it is absurd to conclude that substantial budget economies therefore cannot be made at all.
What is mainly wrong with the rhetorical “Where would you cut?” is its implicit assumption that the burden of proof is on those who wish to cut. The burden of proof, on the contrary, must be on those who wish to make the expenditures. Any dollar of expenditure that they cannot affirmatively justify ought not to be made. It is the duty of Congress, acting on behalf of the American people who are asked to pay the bill, to scrutinize every dollar of these proposed expenditures with the utmost care.
The duty of scrutinizing requests for funds falls upon the Congressional appropriations committees. They need to do a far less perfunctory job than they have done in the last sixteen years. They need expert investigators. They need examiners who know what questions to ask and what evidence to require. Such a procedure would squeeze down present estimates, with few exceptions, all along the line.
The biggest items, of course, would profitably repay the closest scrutiny. Perhaps we do need to spend more than $11,000,000,000 for national defense in 1948. But the question is not closed by mere rhetorical insistence that “We cannot imperil our national defense.” This sum for one peacetime year is more than we spent on defense in the whole fourteen years from 1926 through 1939, in the latter half of which the Nazi and Japanese aggressions were yearly mounting.
It may be replied that we were starving our armed forces at that time. Yet it is still appropriate for Congress to ask first, whether we now need to spend more than $11,000,000,000 a year on defense, and second whether, if so, the armed forces are proposing to spend all the money in so effective a way that we shall actually be getting $11,000,000,000 worth of defense.
The same type of scrutiny might be made regarding expenditures for veterans’ benefits. For 1948 these are set down at $7,343,000,000. This is the estimate of the President a year ago for veterans’ benefits even in the current fiscal year. It exceeds our entire Federal expenditures for all purposes whatsoever in the fiscal year 1938. It will bear examination. If the President’s estimates for national defense and veterans’ benefits, as well as other major items in our national expenditure, are to be considered sacred and untouchable, we shall never get economy.
A final fact must be borne in mind when the budget is discussed. There are few Federal expenditures for which some plausible defense cannot be found. People tell us that we “must” keep this or that item in the budget because it does this or that good. What is forgotten is that every dollar of budget expenditure means the removal of a dollar from somewhere else by taxes. It is money that the taxpayers could and would otherwise use to buy things that they need themselves. Where the taxpayers are corporations, it is money that would probably be used for expanding plant, increasing production, providing employment and higher wages out of increased productivity.
The unparalleled burden of taxation on this country today discourages and retards increased production and industry growth at a thousand points. It is hurting our strength for either war or peace. This above all is what should be constantly kept in mind.

 Do we not hear the same protests in 2011 that were heard over 60 years ago? Do they make any more sense now than they did back then? The more things change, the more they stay the same. Economies will grow in spite of government actions, rather than because of their actions.

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