Redistricting Report

At our Tea Party meeting this past Saturday, we heard from local House Rep. Mike Schofield, who was on the Redistricting Committee, and also Tom Nobis, our SREC (State Republican Executive Committee) Chair, to talk about the outcome of the legislature’s redistricting process.

Rep. Mike Schofield at the Cypress Texas
Tea Party on October 23, 2021.
We meet at a BBQ place, and we work
around the stuff they store in that room.

Rep. Schofield is a good storyteller. He gets up to talk—he talks fast—and an hour and a half later he takes a breath. Before we get to redistricting, I’ll just share one of his stories, for anyone out there who thinks there’s no voter fraud. For background, during early voting, we can vote at any voting location. There were, I’m trying to recall, 40-60 voting locations. There were many more in 2020. He says, 

You may remember back in 2018 they actually beat me by 113 votes. Now, I’m sure I had more actual voters than my opponent did, but after they stuffed the ballot box in some places, we came up 113 short.

Now, by the way, they tried that again this time [2020]. There were 60 votes a day being cast in a precinct over here [SE Harris County] during my race. You may recall there was a pandemic. People were afraid to get out from under their bed. But somehow 60 people a day would drive from here [west end of Harris County] through the fourth largest city in America, out the other side, and vote in the same precinct in my race.

What was happening was, they were stuffing the ballot box. And they knew they had won by 113 votes last time, so they figured the 600-and-some votes they stole this time would be enough to win. What they didn’t know was that I was trying to beat my opponent so badly that, even with the 600 votes, we still beat her by 3500.

So, that kind of stuff goes on. And it goes on more now that the elections are being controlled by the Democratic Party. So, I figured, I’d better get on Redistricting and defend my district.

We didn't have literal ballot boxes to stuff. What he means, I think, is that someone got a list of names from his district and then voted for them. It would have to be someone with access to the machines. That's why it's important to have workers from both parties, as well as poll watchers.

House Districts and General Redistricting Info

I’m assuming similar discussions are going on across the country.

Rep. Schofield says he refers to redistricting as pushing the reset button. Populations move around. There’s growth in some places, not in others. He says,

Now, the very first principle of redistricting, no matter what part of the country you’re in, no matter what year it is, is population. That’s why we do it. People—they get so caught up in the partisan, and the racial and Voting Rights Act and all this, they forget what this is actually for.

The Constitution requires that we redistrict every 10 years to more or less make everything equal again. And the reason is, if you’re in a district like mine, we were the fourth largest district in Texas. And when they started, ten years ago, they were all roughly—we don’t require exact equality in Texas, but they were roughly equal. And then growth happens. Right? And some places shrink in population. Other places grow.

Of the 150 districts in Texas, in the House, the first largest growth and the fourth largest growth were both in Katy [west of Houston, west end of Harris County, and some in Ft. Bend County; Schofield’s was fourth] We’re supposed to have grown from about 167,000 people at the beginning of the decade to about 194,303. Exactly…. That’s supposed to be what we’re all supposed to get to: 194,303. My district had 282,000 people. So, if you lived in my district, your vote counted less, because you’re a lower percentage, than in someplace where they had 187,000 people in their district. Your vote counts on a proportional basis for less than theirs does.

Redistricting has to happen before primary elections, which happen early in the year of even-numbered years. Getting the numbers into the hands of legislators was delayed, so it couldn’t be done during the regular legislative session last January-through-May (in Texas, during odd-numbered years). It couldn’t even be handled during our first two 30-day special sessions.

We were concerned it wouldn’t get done in this third session either. The Dems had walked out of the first special session, saying they were preserving voting rights from the horrendous new legislation designed to make it easier to vote but harder to cheat. They ran out the clock while they were getting Covid and otherwise hanging out in DC. And they have fled the state before during redistricting legislation. This year, I guess they gauged, accurately, that people were already annoyed with them enough over their shenanigans, so they stayed in Austin during the third special session, which was dedicated to redistricting.

Even though the redistricting legislation has now passed, there’s always the possibility that someone will challenge it in court and delay our primary. But for now, we think our primary will happen on the first Tuesday of March, as scheduled.

Redistricting didn’t start from scratch at the beginning of this special session a month ago. Rep. Schofield, along with the committee, was working on map redrawing all through the legislative session, based on estimated numbers.

The numbers come from a snapshot in time: April 1, 2020. However many people, and wherever they were living on that date, that’s what counts. Schofield’s district, HD 132, grew by 30,000 in just one year, and may have grown another 20,000 in the time since the census date. That meant he needed to lose about 88,000 out of his district based on growth since the last census. Controlling how that went was why he wanted to be on the committee that got to decide. He’s puzzled by representatives who called him the last couple of weeks, worried about what was happening to their district. They could have called him any time since February, rather than waiting until it was being voted on.

There are rules determining how redistricting must be done. The purpose is to make all districts approximately equal in size. When they work on US Congressional districts, that has to be literally equal, down to the individual voter, but things aren’t quite that exact in the state House and Senate. There is a rule for the House that they can’t cross county lines. On at least two sides of Schofield’s district, that’s a constraint. Then there are efforts to use natural boundaries, such as highways, waterways, reservoirs, etc.

When you see contorted, oddly shaped districts, the ones that people use to describe gerrymandering, those are shaped that way in order to meet the requirements of the Voting Rights Act, to allow for minority representation. In Harris County, he pointed out one of these that is Hispanic, and another that is Black. The assumption, for those who set up those lines, is that they will vote Democrat, so it’s actually in the law that districts must be set up in a way to favor Democrats.

Oddly, the reason for the Voting Rights Act is to counter previous gerrymandering intent on preventing minority representation. That was done by Democrats. Every time. So, the Democrats gerrymandered to make districts the way they wanted them—based on race. And that caused a law to be put into place for the Democrats to make districts the way they want them—based on race. The solution? Somehow overcome the lie that the Republicans were the racists. It’s a slow process.

Anyway, while my House district , HD 138, shifted somewhat to the west, I’m still in the same district. I was moved in 2010, so I’m glad I don’t have to deal with another new House district.

Current and new House district maps
images available at District Viewer, here

Senate Districts

The Senate has 31 districts in the state. By comparison, there are about to be 38 congressional districts. So the state senators have more constituents than US Congressmen have.

Like the House, they start with the districts they had and make adjustments from there. They need to each have 940,178 more or less.  They don’t get to deviate as much as House districts do, because they don’t have a county line rule. But they can be off by a small handful.

Rep. Schofield gave us some behind-the-scenes play in the legislature. The Senate originates its own map and then sends it to the House, and vice versa. In most legislation, when a bill passes the originating chamber, it gets passed on to the other one, where it can undergo a fair amount of amending before getting back to the originators, who then can either concur with the amendments or get a reconciliation committee, made up of members of both chambers, to come to an agreement on what ought to be in the bill.

Redistricting bills, however, are expected to be left alone by the other chamber. As some Democrat House member once put it, “The Republicans are the opposition; the real enemy is the Senate.” If they don’t want they other chamber messing with their map, it behooves them both not to mess with the other chamber’s maps.

In order to avoid getting each other’s bills messed with, they have an arrangement where they will gavel down at exactly the same moment. If one chamber gaveled down (approved the other chamber’s map with a vote) first, the remaining chamber could then mess with its map at will, and there would be no leverage to stop it. So the two chambers, located at opposite ends of the building, open up all doors between the two, and coordinate so that both can gavel down at the exact same moment. Because, you know, trust is everything—but you can’t trust anybody.

Current and new Senate district maps
images available at District Viewer, here

Tom Nobis summarized for us the SD changes in Harris County and affecting Montgomery County, just to the north, with this graphic:

 

Congressional Districts

Congress is totally different in many ways. Mainly, they don’t draw their own districts. The state legislature does it. In Texas, that originates in the Senate, but it seemed to me they worked together on this map quite a lot.

Some people suggest putting together a non-partisan commission, to take politics out of redistricting. In theory that may sound good, but it’s not possible in reality. Rep. Schofield says,

No such thing as a non-partisan angel gonna drift down from heaven and make sure everything is fair.

He says, when the legislature goes through their process, everybody fights for their area. They tug and they pull, and they go, “I want these guys on the other side of the reservoir,” and so forth. There are a lot of complicated issues. You deal with the minority areas first—and that’s why they come out looking so oddly shaped. Then you deal with all the other things that the constituents and the representatives might care about.

But when you have these nonpartisan groups, say 7 of each of the two major parties, plus an impartial judge, what you get is, one side wins 8-7 and takes everything. That judge belongs to one of the parties, and may have been appointed by the governor. So that’s the tie breaker. There’s nothing non-partisan about it, except the label to fool the people.

Anyway, so you’ve got growth. In Texas, we’ve had growth—and added congressional seats—every census since statehood, I think he said. Wherever those new districts go, it’s like dropping two giant boulders in the middle of existing districts. And they have to have exactly the same number of people in them as every other district, when everything is said and done. Around 875,000. If you can’t get it right, you have to split up precincts, or blocks, or maybe just cut a house or two, until you get it exactly right. That is, according to how it was on April 1, 2020; you could be off by thousands by the time redistricting goes into effect, but it’s the count on that date that matters.

There were various places around the state that were suggested for the new districts. The decision finally came down to Harris County, where Houston is, and the Austin area.

The splat of the Harris County boulder came down on my district. I was in District 2, with Rep. Dan Crenshaw. He got pushed further north (not sure he’s actually still living in that district). And I’m now in the new CD 38. Wesley Hunt has declared as a candidate; he ran against Lizzie Fletcher in CD 7 two years ago. I imagine others will run as well. But he’s former special forces, a friend of Crenshaw. He’s conservative.  And happens to be black, which makes him bulletproof against certain criticisms. I’m looking forward to learning more about him.

What I’ve heard is that both Crenshaw’s district and the new district are likely to go safely Republican, and CD 7 will be sacrificed to the Democrats for the foreseeable future.

Rep. Schofield talked about the philosophy behind safe versus competitive districts. He said people complain when they’re in a district where their representative doesn’t agree with them on various issues—likely because they’re in a different party. If you’re in a competitive district, 49% or so of the district is going to feel like that—dissatisfied, unrepresented. But in a “safe” district, a higher percentage of constituents will be satisfied with their representative. So he’s changed his opinion over the years and now favors safe districts when possible.

That’s great if you’re in agreement with your representative, but what if you’re not? We’ve had sympathy for conservatives in Sheila Jackson Lee’s area for ages (she wins with over 80% of the vote; it’s  too much to be attributable to voter fraud). Rep. Schofield says, it’s not that you’re without representation. It’s like, when you’re in a group and order out for pizza, who gets to decide what kind of pizza? The guy who wants only cheese so everyone is OK with it? The one who wants meat lovers? The vegetarian? Whoever wins, the others still get their slice of pizza (the representation); they just may have to pick things off or go without what they would have preferred.

Current and new US Congressional district maps
images available at District Viewer, here

 

Other Districts

We talked only briefly about SBOE (State Board of Education) districts. The legislature sets those up as well. There were 15 before redistricting; there are 15 after. These are the largest in the state. It’s an unpaid position, without a bunch of constituents financially supporting a candidate. So getting to visit every part of the district is practically impossible.

We also talked about the Harris County Commissioner Precinct redistricting. This isn’t a legislative issue; it’s being done at the county level. But it’s on our minds. Harris County is, I think, the second largest non-state government jurisdiction in the US. It’s run by someone on her first job out of college, since 2018. It’s run badly. And it’s run according to whatever “progressive” (i.e., Marxist) strategies of the pushiest commissioner (one Rodney Ellis) wants. There are five commissioners: 3 Dems, 2 Republicans. These two intrepid Republicans go up against this wall of hypocrisy and graft daily. (The list of their faults and failings is too long for this late in a post.)  The Dems don’t like the opposition, the calling to account, the occasional public calling them out so the public knows what they’re up to. What they want to do is get rid of one of the Republican commissioners. They’ve chosen Tom Ramsey (mine is Jack Cagle). The plan is to pile as many Republicans into Cagle’s district as they can manage—taking them out of Ramsey’s. The hope is that they can then oust Ramsey and wreak havoc with a 4-1 Commissioner’s Court, plus Hidalgo the County Judge (executive). That would be the setup for a decade.

They may handle the redistricting at their regular Commissioners’ Court Meeting tomorrow (October 26) at 10:00 AM, hoping to slide it in before anyone notices. If you live here and would like to take a stand against local tyranny, you need to sign up by 8:00 AM to speak virtually (sign up and info here). 

If not, they will have a public hearing on Thursday (October 28) of this week, 12:30 PM. The County GOP was sending out announcements today, calling for a large voice from the people.

 

So, in summary, statewide we’re doing OK as conservatives. Locally, in Harris County, some of us are OK and some not. By law, redistricting has to be done. I’m glad this decade it was done with conservatives in the driver’s seat.

Texas Special Session

Here in Texas, the legislature meets mid-January to early June every other year, so we finished up last month. But the Governor can call the legislature back any time for a limited time. Usually this happens shortly after the end of the regular session, when the governor wanted something to happen that didn’t happen during the session. That’s the case now.

Governor Abbott has scheduled the special session to begin July 18^th, and he has listed twenty items for the legislature to deal with. That’s a lot of items. Among them are some bigger priorities. (The full list can be found here.) 

There’s a main reason that these things didn’t get handled in the special session: Speaker of the House Joe Strauss is not on the same side as Governor Abbott. He’s the same party. But the way the speaker is chosen now is slanted toward the liberal side, at least when the Republicans are in power.

The speaker comes from the majority party, but the Democrats in the House will support whichever candidate is most aligned with them. So the speaker gets 100% of the Democrat vote. Then the speaker just needs a relatively small percentage of Republicans.

He can totally ignore the strong conservative masses that have elected Republicans to every statewide office, and a robust majority in the House; he can curry favor with the more “moderate,” i.e., less conservative, House members, offer them their choice of committees and chairmanships, and he locks up the vote. And he’ll get some of the conservative votes too, because anyone who opposes him gets relegated to committees where they can do the least good for their constituents.

So, until we figure out a way to have Republicans do the electing of the House Speaker (as in the US House, where a caucus of each party chooses a speaker, and the one chosen by the majority party wins—so the minority party doesn’t do the choosing), we’re stuck with this roadblock to important legislation.

This past Saturday at the local Tea Party meeting, we heard from State Senator Paul Bettencourt and State Representative Mike Schofield, to talk about the upcoming special session.

Senator Paul Bettencourt

Sen. Bettencourt says there are three possibilities for how the session will go:

1)      The legislature will pass the sunset legislation and go home.

2)      The legislature will pass sunset plus a few items, but leave the big ones undone.

3)      The legislature will handle pretty much the whole list.

The sunset bill is to keep some state agencies from shutting down; it’s assumed to be necessary.

Option 1 would start a House meltdown. There are risks to failing to do what they’re supposed to do. If they do the bare minimum and vote to go home, that will lead to a roll call vote. That puts everyone on record as going against the Governor or not. It won’t go well for them at re-election time if they claim to be conservative but flout the governor’s agenda. Option 2 would be minimal, but still might lead to yet another special session.

There are three main issues among those twenty items:

·         Property tax relief.

·         School choice.

·         Privacy protection.

Property Tax Relief

The bills are not always written the same as for the regular session; sometimes we’ll get something that considers what failed in the regular session, but sometimes we’ll get something better.

Senator Bettencourt has been working for property tax reform. During the session he was asking for a cap of 3% plus inflation; during the special session the cap is lowered to 1% plus inflation. And in the special session he’ll only need 16 or 30 senators to pass it, (50% plus 1) instead of 20 (2/3 of the Senate).

There’s a swath of the state from Dallas-Ft. Worth to San Antonio (not including Austin, this time) with ridiculous property tax hikes. The current cap has been a percentage of home value plus inflation plus economic growth. Since the term “economic growth” is unmeasurable and totally meaningless, caps have been meaningless.

Chip and Joanna Gaines, of HGTV's Fixer Upper
image from here

Senator Bettencourt gave an example of why a real cap is needed. You know the HGTV show Fixer-Upper, with Chip and Joanna Gaines, of Waco, Texas? They take the worst house in the best neighborhood, and they turn it into the buyers’ dream home, right? Well, bureaucrats who assess property values have been following the show and purposely reassessing the value of the fixed-up homes. Homes have had as high as 1000% increases in their property taxes.

People are being punished for using their resources to make their homes nicer to live in; they’re being taxed for creativity and hard work. Those obscene property tax increases can put the cost of living in a house beyond the budget of those buyers—who were making a positive contribution to their neighborhood. That’s not the Texas way.

School Choice

Neither Senator Bettencourt and Representative Schofield were optimistic about school choice—even though they both favor the Educational Savings Account idea. Rep. Schofield says, “There’s too much fear of competition.” That’s fear among teachers unions—which have much more interest in wages for their union members that in education for children. 

We don’t know yet how the bills will read exactly, but the likelihood is that the ESA bill will be aimed at special needs students. While I’d prefer more market forces in every aspect of education, it’s tough to argue against meeting the needs of special needs students at lower cost per student. [Among several PragerU videos on school choice, is "Why Special Needs Students Want School Choice."]

The way it is working in Arizona, the family of the student is given a sum that is something like 90% of the cost of educating that student. It can be used only for education purposes (sort of like how a health savings account is used only for healthcare purposes), but the parents get to decide what is best for their child.

This is different from a voucher, which is a ticket, essentially, that can be spent as a whole at one alternative education place, such as a private school. The ESA can be used in part for a chosen form of therapy, in part for a tutor, in part for a block of a school week at a public or private school, or in part for homeschool curriculum—or any combination.

As they start looking for options, the market responds. And the market always eventually responds with better quality and lower prices.

If the family gets their student’s needs met without spending all the money in a given year, that money stays in the account for use in a later year, when maybe a more expensive program might be needed. If the money doesn’t get spent by high school graduation, the student can use it toward higher education. 

The program is optional, so no students would be forced into it. Any family can choose to stay in public school.

So ESAs are a win-win for special ed students and their families, and for school districts, which have trouble meeting the needs of these students anyway. And that 10% that the family doesn’t get stays in the school budget.

But the public school monolith sees it as the camel’s nose under the tent. If that camel is competition, then it is just barely the nose, but wouldn’t it be great if we had that whole camel in the education tent?

They absolutely don’t want competition. They want a public school monopoly, subsidized by people so frustrated that they pay out of pocket to meet their children’s needs elsewhere.

Opponents are misnaming the ESA option, lumping it in with vouchers, a term that causes a knee-jerk reaction in educators who get their information mainly from their unions.

Anyone who really knows about ESAs would likely vote for this bill, but fear of the overbearing unions will probably block it this time, leaving the special ed students with their critical needs unmet.

Privacy

The third big issue, privacy, is what we sometimes refer to as the bathroom bill, and which the media mischaracterizes as transphobic.

As Rep. Schofield said, “We didn’t make an issue of it; Anise Parker did.” Transgendered people have been quietly using whatever restroom made them comfortable, from the invention of public restrooms up until 2015, when Houston’s mayor decided to make it an issue by forcing it on the city—including not just public city buildings, but private business properties. She tried to thwart the will of the people by throwing out their petitions, and she really stepped over the line when she tried to subpoena every speech or communication given by churches, so she could search through them for things she might find objectionable.

image found here

Once the courts slapped her down—several times—the people got their say, and this very urban, majority-liberal city, which had twice elected a lesbian mayor, soundly voted against her proposal.

Then Obama got on the bandwagon and decided, by fiat, to force a private space rule on the whole country. To be clear, he said high schools (and of course other facilities with locker rooms, bathrooms, or dressing rooms) must, because of his insistence only, allow any anatomical male who wants to say he is a female (for any purpose—can’t be questioned for actual intent; and note that a male claiming to be transgendered to female is still likely to be sexually attracted to females) to shower naked in front of and with female high school students. No regard for the discomfort this would cause high school girls or their parents would be considered. End of subject. Anyone who objects would be labeled a bigoted, transphobic troglodyte who should be publicly shamed, fired, and never allowed to work or function in society again.

Compromises, such as private showers or bathrooms for transgendered students, were dismissed as insensitive to the transgendered—meanwhile, overruled as not worth considering are the sensitivities of the 99.7% majority.

Obama’s overreaching executive order has been repealed, but many school districts and businesses around the country have kept the rule change to appear “tolerant.” That is why Texas is taking the step of protecting citizens by returning to separate gender private spaces as a rule of law.

I think the bill will pass, because this is Texas, and we don’t like fools telling us we have no right to privacy in our private places. If Strauss fails to bring it for a vote again, it will mean coming back for another special session.

During this special session, expect the media to do its thing against anything good for freedom, prosperity, and civilization. But, if the people send their support to their representatives in Austin, we might get the work done that should have already gotten done.

Random Economic Thoughts

On Saturday Texas Representative Mike Schofield came out to our local Tea Party meeting, talking about the upcoming legislative session, and whatever else was on our minds. He gave an explanation about federal and state economics that made sense to me, and I’d like to share.

Rep. Mike Schofield speaking to us last Saturday
photo: Cypress Texas Tea Party

This is from my notes, so not direct quotes. But he said the federal government ran out of money decades ago. It has no money—so it spends debt. 

This isn’t like you and me, or even the vast majority of states that are required to have a balanced budget. We can spend beyond our ability to repay for a while, but soon we have to tighten our belts or find additional income to repay the debt.

The federal government is far beyond the ability to ever repay, and yet they keep spending. They get away with it in just a couple of ways. One is higher taxes, but you can’t do that indefinitely. People won’t tolerate it, and the economy slows to a crawl or into a recession when government removes so much money from the market.

The other thing they do, which has been their preferred choice lately, is to push programs down to the states. They keep hold of the rules and regulations (so they can take credit for "doing good") but push the bill onto the states.

What is the way out? We can hope that a Trump administration will reverse the trend. Heads of programs can remove requirements (unfunded mandates). Another hope is that new appointments to the Supreme Court will stop ruling those myriad regulations, with laws created by unelected bureaucrats, as unconstitutional.

There is an old view—believed by the democrat party and beyond—that you win the election so you get to do what you want. But we have this document called the Constitution that says otherwise. It’s not about doing what you want; it’s about doing what you’re allowed by the supreme law of the land to do. As for the Supreme Court, you certainly shouldn’t be on the Court if you don’t believe in the Constitution.

Rep. Schofield then talked about the Texas constitution. With a balanced budget requirement, when you cut taxes (and literally cut revenue), you have less money to spend. You can’t expand the size of government.

So when the federal government comes in and mandates a program, it literally cuts what the Texas legislature can do with the state budget.

For example, Medicaid is a cancer on the budget. Of $209.4 billion, $64.2 billion is for this one federal program. All we can do is keep qualifying down to narrow the group.

When you buy into the program, you’re stuck with the terms of the deal. But the federal government can change their part of the deal and still won’t let you out of your requirements. They might provide less federal money. They might stop paying entirely, and you’re still required to provide the program in full—now totally at state expense.

Then they say things like, “Then you’ll need to have an income tax.” They want government to have more control over every citizen’s money, because they think they know better than you how to spend your money.

That brings us to one of the basic principles of the Economic Sphere of the Spherical Model: Who decides what will be done with the fruits of your labors? If you want the benefits of the prosperity hemisphere (north on the sphere), the decider should be the person who did the work to earn the money, not some far distant wielder of power. 

This morning I was listening to the third hour of the Glenn Beck radio show. He was talking with Chris Martenson, of PeakProsperity.com. Glenn asked what we could expect from the Fed this week, and how that would affect us. Martenson responded that they would have to raise rates. And the two discussed why. Eventually they got to talking about imbalances. And Chris Martenson made this assertion:

Chris Martenson of PeakProsperity,com
photo from their website

Chris: These things have all been building for a really long time, Glenn. And I think if we had to, if we wanted to put our finger on something, we would say August 15th, 1971, when the United States abandoned the gold standard for the world—that’s really where all of this started. And these imbalances are enormous now.

Glenn: Well, that’s when we all decided we wanted a life we couldn’t afford. So the United States did that, but we convinced the rest of the world that, we’ll continue to buy your stuff, so that will be good for you. But we all said—all of us—we want more stuff than we can afford if we base our dollar or our currencies on gold. Is that accurate?

Chris: It is, because gold provides a set of restraints that you just can’t get around. And, if you can’t get around those restraints, well, sometimes you get to live beyond your means, but very soon thereafter you have to live below your means. The world kind of collectively said, “We don’t like that below our means part. How can we just forever live above our means?” That’s how these imbalances got started.

And it’s a very human thing, Glenn. We’ve seen this so many times in history, and here we are again.

They discuss the differences between inflation and deflation.

Chris: So, everybody I talk to says, “Look, I like falling prices.”

That’s not what the Fed is targeting when it’s worried about deflation. They have a different thing they’re worried about where prices rising or falling are the symptoms, but the cause is what they’re concerned about. And the cause is either our credit markets are expanding or they’re contracting. When they’re expanding, which is inflation, everything kind of works. Governments can continue to run deficits, and big banks can do crazy dumb things. And it all seems to work out. 

The opposite, though, Glenn, when credit is falling, that’s also known as 2009 in the United States. It is deeply scary. What works in forward doesn’t work at all in reverse. The whole system shudders and threatens to collapse. It’s a really scary moment.…

Remember, the Federal Reserve is not really federal; it’s a private entity. It’s got a charter from the US government, and it operates in a very nice monopoly. But it’s first set of clients, always, is the banks. So if the banking system’s happy and expanding, the Fed’s happy.

Glenn: OK, so they’re not worried about deflation; they’re worried about the bank. But, by doing what they’ve done, they are throwing caution to the wind by printing $7 trillion dollars’ worth of currency. Never been done before in the history of the world. And expecting that hyperinflation won’t happen. How can we have printed that much money and not have the problem of the Weimar Republic? What’s the difference?

There are some discussions, then, about where the printed money has been floating around. Instructive. But we really want to know about that hyperinflation thing looming over us.

Chris: The bubbles always have the same self-reinforcing mental map on the way up. People think it makes sense: “Well the last guy paid $79 million, and I paid $85 million. Surely somebody is going to pay me $100 million for this piece of art.” That’s all self-reinforcing on the way up. And we don’t know why, but eventually there’s a pin that that bubble finds, and when it bursts, then you discover what is the true value of things. And things go down very quickly at that point.

Glenn asks, again, will the bubble burst badly, or are there systems in place to prevent that now?

Chris: Well, you know, if it’s not going to burst, we have to believe in the four most dangerous words in human investing history, which is: This time it’s different.

It’s not different. It’s never different. I’m seeing the exact same psychology, rationalizations, post facto rationalizations that people make.... To me, it’s much easier to understand where we are if you see that we’ve got a very scared set of central planners. They’ve worked themselves into a multi-decade corner. They don’t know what to do. So they print.

 And you can find this story in Roman times; you can find it in the first paper money in China. You can find it all through history. And it boils down to this, Glenn; it’s very simple: humans would much rather take a little risk today, instead of some pain today, in the hopes that things turn out better in the future. We always go down the same path.

I highlighted that. I think it explains a lot. 

But, about that hyperinflation: will we see it, Glenn asks, within the next four years?

Chris: We’re going to see it at some point. It could come at any time. It will happen at some point. And I think that the best quote on this comes from Ludwig von Mises; he’s an Austrian economist. And he said, “There’s no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

This isn’t good news, of course. We probably ought to have some food stored, and have some real assets. I don’t know if gold is the right answer. I don’t know what is the right answer. I guess I’m not here to answer how to mitigate the damage caused by the central planners; I’m here to point out that the central planners never do a better job of controlling the economy than a true free market would do.

If only we could try that for a change.