Liberals will complain conservatives blame them for everything.

Today, Drudge linked to a Financial Times of London article about the squabbling between the Saudi oil minister and a leading prince. The oil minister said not to worry about falling oil prices below $80 a barrel. The prince suggested that was malarkey.

Apparently, the Saudi government budget requires 90% of revenues come from oil revenue. On top of that, the budget requires $89 per barrel to avoid dipping into the rainy day fund. Since the Saudi government has 100% of their budget in rainy day funds, the oil minister suggest there's not much risk to a short-term drop in oil prices.

At the end of the article, the author points out that the IMF is raising concerns to many Middle East countries about their high dependency on oil to meet their breakeven points.  These governments need to be careful of overly generous welfare budgets. The author emphasizes the following oil revenues could lead to social disruptions as soon jihadists start using the coming financial distress as a motivational tool. At the same time, these governments may not be able to finance the military to keep these jihadists in check.

Part of the fallen oil revenues comes from increased oil production in the US. At the same time the international energy agency is warning that the demand for oil is falling due to a collapsing world economy.

So why does the dispute between two Saudi princes have anything to do with American politics? Is there anything more than simple foreign-policy politics?

US stock market is showing signs of beginning a collapse. Many collapses begin with prices starting to shoot up and shoot down in irregular cycles. After the instability comes the fall.

Essentially, Democrats have been so interested in pushing their nonsensical political goals without any regard to its effects on people and businesses. The number of Americans who remain unemployed many years into the Obama Administration is no small part of this problem. The American consumer does not feel comfortable spending money on anything beyond the necessities of life.they feel very limited in their ability to invest in the future. Owners of businesses are not willing to hire full-time employees because of healthcare costs arising solely from Obamacare. They are cutting healthcare insurance expenses as fast as they can just to maintain a breakeven point. 

America has been the engine of worldwide growth since at least 1895. In the name of democratic political goals, we have steadily destroyed what made our economy the envy of the world. Economic strength allows deep pockets to finance the ability to create and maintain a cutting edge and powerful military. 

This military allows the use of threats of force to bring wayward regimes into line with peaceful intents. This limits the amount of war that America needs to fight. Every war avoided by a projection of force is cheaper than any war actually fought. All you need to do is simply compare the costs of the Iraq war and the Afghanistan war with what we had followed throughout the term of the Cold War. During the Cold War America could project more force around the world and limit the amount of money that was spent in any one region of the world. In the current environment, America does not have the ability to project force and has spent money in a very limited region of the world.

Democrats have used teachers unions to miseducate our youth and college age students that the military force is about empire building. Nothing is further from the truth. The projection of force is necessary whenever small groups of people are together. In cities we call a projection of force a police department. In statewide situations it includes the National Guard and state police. In federal circumstances it includes multiple law-enforcement agencies and the US military. 

From our nation's founding, it has been widely understood that the ability to project force is a necessary component of maintaining peace. The ability to project force is also one of the key characteristics that should be fulfilled by government. 

Since liberals completely misunderstand the role of force in maintaining peace they misunderstand the need for individuals to bear arms. They misunderstand the need for police to be able to maintain a threat of force to avoid actual conflict. They misunderstand the need for the US military to be able to maintain a threat of force to avoid conflict overseas and for border agents on our borders.

The ability to maintain the threat of force, the ability to pay for the threat of force, the ability to provide for oneself, and the ability to grow business enterprise or inextricably linked. When those links are broken, you end up with a series of chaotic events. 

Throughout history there have been many fools who have persuaded themselves that they can create chaos and then ride to the rescue to receive the accolades of the many for the fool's efforts at taming chaos. All too often these fools are consumed by the chaos they create. The problem is they are not often consumed quickly enough to prevent the chaos. They often are allowed to survive so that the chaos has its opportunity to reach its maximum force. 

Obama seems to be one of these fools. He has worked actively to undermine the US economy. He has always said that he was doing this in the name of equality and fairness. The result of his equality and fairness is creating a series of opportunities for thugs and criminals to end up equally stealing from all members of American society until all are impoverished, except the most criminal. He believes that all businessmen are criminals. Instead he creates an environment that creates a self fulfilling prophecy. Only crony capital behaviors can make money in the environment that Obama seeks.

He creates situations where money can only be compiled in large masses by major corporations under the thumb of US government and government agencies. Then those agents of the government, whether direct or indirect are then only allowed to use money in the ways that government allows. Each step along the way individuals have an opportunity to become the criminal that misappropriate some money.

This completely works in opposition to all tenets of American government from its founding. In those situations the individual is empowered to protect himself and his property. He is not able to accumulate nearly as large as some of wealth because other people are accumulating wealth at the same time. The competition results in better goods and services with smaller accumulations of wealth in any one person's hands.

 Large accumulation of wealth are most likely in situations where the government has tried to intercede. It happens most in current American society whenever the Security and Exchange Commission has set up rules blocking the use of small investments and less large regulatory hurdles are overcome, leading two large sums of wealth in fewer and fewer hands. Essentially government asked to lower the costs for wealthy people to acquire more assets and raise the costs for smaller competitors to be involved in the market. This is all done in the name of protecting the many.

It happens when government decides to improve everybody's health care by raising the cost to entrepreneurs for running their business. They trying to keep the cost of paying for healthcare to businesses. They played this game since World War II by creating tax deductions in high tax rate situations. The population becomes dependent on the employer to pay for healthcare. The population has no idea what the real health costs are. They just know they need a job to get healthcare. With the cost of healthcare continuing to go hide because the customer has no idea of the costs, government continually intercedes and creates repeated problems that continually escalate the cost of healthcare.

Obama only accelerated this historic process. In effect, this  acceleration provides a counterbalance to the accumulation of wealth by individuals. It makes it nearly impossible for breaking even Enterprises to stay in business. The revenue generation collapses. They're no longer able to pay taxes to the government. The government has to cut back on spending in order to justify it. In looking for cuts it looks for the biggest place that cuts can be made the voters will not feel. The first place to look is the military.those cuts or harder for an individual to see unless he is in the military. The general public feels better about themselves. At the same time the US is able to project less power.

Essentially the restriction of US economy both drives down the cost of oil and creeds and stability in runaway pricing countries such as Saudi Arabia while making the US less safe.

Democrat policies to discourage oil exportation from the US, limiting drilling in the US, and putting overly burdensome environmental regulations on any drilling efforts have served to keep the US limited on it's own oil production. Given the fact that the oil that is capable of being extracted from the US is far larger than the amount that is considered part of our oil reserves,this leads to many questions about how we serve to artificially raise the price of a barrel of oil.The recent boon in production in the US from the Bush administration energy policies has led to this new reintroduction of market economics to the international oil market.

While a short-term transition will lead to instability throughout the Middle East, over the long term it has the potential to create new stability. Unfortunately, that new stability needs the projection of force to allow the transition to move towards an orderly settlement as opposed to the increase in chaos that is most likely without a projection of force from a stable player like the US. 

And more logical set of circumstances to create long-term stability would be to reduce the burden is on American business, make drilling easier in the US, remove artificial financial support for alternative energy sources that do not generate economically efficient BTUs, and increase the size of US military. With these policies in place there would be a push on the price per barrel of oil to actually come to a economically driven equilibrium. The force available from the US military would be able to limit the effects of national and large-scale military operations for groups seeking to promote chaos.deployment of rapid response groups would be able to limit the effects of partisan military tactics by smaller military groups. Then jihadists and other chaos inducers  would be put back in their place because they would find it less useful to get killed with no gains to show for their death. The threat of their death would become more valuable for US policy. The US would need to be involved in fewer actual military conflicts.

Simply put Democrat ideals inevitably lead to chaos. They promote chaos. They aspire to chaos. They don't understand how much death and distraction they leave in their trail. They claim to be improving an individual's life. They see the individual voter they wish to persuade. They pay no attention to the unseen thousands of people that are destroyed by these policies. There is no moderation or balance in their thought. Since they cannot think past due one person standing in front of them as a possible voter, they cannot claim to actually be rational and reasonable. To be rational requires thinking through the logical consequences of inaction. The hardest part of rational thought is to seek out unseen and possible, unintended consequences. A Democrat will avoid these thoughts at all costs. The voter today and tomorrow supersedes all other concerns.

Frankly, the cost of the price of oil tells more about what is likely to come in the near future than many other elements of economic analysis. High oil prices mean more money is available for destabilizing forces that thrive on chaos. Lower oil prices lead to thriving orderly economic units. 

So tell me again, why oil is so evil?

Comparing Obama to Reagan: it's not even close

Many Democrats try to avoid any discussion of Reagan compared to Obama. When they do allow such a comparison, they often try to obscure the facts. This article http://www.americanthinker.com/2013/08/reagan_vs_obama_its_not_even_close.html devastates that bias toward Obama.

So gas prices are down?! What?!

This guy at Forbes.com has a brilliantly simple way to show that gas prices are not high. The dollar is just collapsing under the weight of Obama.

So should we start a website of the average cost of goods and services against the ounces of gold that the spot market would require?

What does defense spending produce?

In reading, Victor Davis Hanson's article on the myth of World War II spending, I had some thoughts about economics that are quite tangential to VDH's point.

VDH points out how liberal's are changing their story about the Keynesian effects of spending during the Depression and WWII.

In reading this, my mind jumped back to Economics 101 in the classic Guns versus Butter choice. As you all remember, this is the choice that we as a society through government have to make whether we want more guns or more butter, but we can't have both. Laying aside one of the flaws of this dichotomy that good spending increases the size of the economic pie, so you end up with both, there are some inherent teases in this set of false choices that drives much liberal economic thinking.

Since most liberals only use economics classes to recite catch phrases and not dig any deeper, this guns versus butter is one of their favorites. In their eyes the choice is quickly converted into a choice of welfare versus defense spending. The notion for them is that if there are limited dollars, money spent on either welfare (using government distributed butter as the image) or guns (using army rifles as the image) is gone once spent. The choice must be made. The compassionate minded must choose butter and reduce spending on guns.

I do not dispute the fundamental choice that guns versus butter was supposed to teach. The lesson is supposed to be that must make choices in government spending. The problem is that the images are misleading to the uninquiring so they create false confidence among liberals that they understand economics.

Let's dig deeper. Butter represents welfare spending and other government spending on the domestic front like building highways or public schools. Guns represent the army, navy, and marines. (I am not sure where the FBI, ATF, or state and local police fit in most liberals minds. I suspect that the FBI and ATF are guns because I believe they are non-union and that police are butter because they are often union. Am I jaded?)

For the simple minded, purchasing guns is bad. Analysis done.

For the deeper minded, let's keep exploring what these images really represent and whether a better set of images are available.

Butter as domestic spending has the feel-good aspect that anything spent at home gets a better society. Guns as military spending has no feel-good aspect to the average liberal. The choice seems easy. Not knowing anything about the author of this method of teaching, I wonder what his motivations were.

In the real world, this dichotomy is a disaster. Most federal domestic spending is far beyond the scope of what is allowed under the US Constitution. Education? No. Welfare? No. Social Security? No. Medicaid? No. Obamacare? No. Liberals feel good but have no legal basis for their programs.

The problem with most of these programs is that they are grant programs. As a lawyer, I look at transactions to see if each party to the transaction gives something of value to promote the exchange. If so, there is a contract. If not, there is a grant or a gift. Both would be legal transactions for individuals, but not necessarily for constitutional governments. The problem with most liberal, grant programs is that the government is not a party receiving a benefit back from the other party. The programs produce no value because it is simply the transfer of money. The recipient may have strict restrictions, like the Program formerly known as Food Stamps or Medicaid, where misspending is a felony. Other programs have no restrictions on the expenditures, like Social Security or unemployment benefits.

Of those that go for specific purposes, like the Program formerly known as Food Stamps or Medicaid, the government gets nothing, but the program beneficiaries get specific goods or services. Since the government gets nothing, it has no accounting method to show that the government balance sheet has increased. It gets the benefit that fewer food riots will occur or old people attacking the car of the Chairman of House Ways and Means. The food providers or medical providers who receive the money on the beneficiary's behalf do increase their cash flow and hopefully their wealth through retained earnings after paying expenses. The program beneficiaries have little incentive to change their behavior within the program. Their choice is pass or fail: stay in the program or quit. Most economic choices are ones of timing of expenditures, size of expenditures, and selection of goods and services purchased balanced against choices on how to obtain more resources to use in the next round of purchases. These government programs destroy the choice about how to garner more resources.

On the guns side of the equation, most people have trouble explaining what gun purchases in a time of peace buy for the general public. Buying more and bigger guns is not what we are talking about here. What we are talking about here is buying sufficient guns, military talent, and logistical capabilities that are most likely enemies fear to attack us at home or to attack our citizens abroad. We are buying peace of mind. Most liberals believe this is just as much conservative feel good as butter programs are liberal feel good.

If we are discussing whether to buy a multi-million dollar airplane because it is cool, I would agree with the liberal. If we are talking about projecting power with that airplane to the four corners of the earth so that we don't have to put boots on the ground in every corner of the earth, I would beg to differ with the liberal.

Ultimately, buying peace of mind with the military is a difficult concept to grasp. Why do we want peace of mind? As a liberal hiking in the mountains of ancient Persia, will you be arrested as a spy? We know from recent history the answer is yes. The fear of arrest overseas in that type of situation is an example where the US has not bought sufficient peace of mind. As a conservative businessman traveling in Venezuela, are you likely to be arrested as a spy? Not that I am aware, no. The US has bought sufficient peace of mind there. Can an American travel to the Caribbean and avoid arrest? Absolutely. The travel is cheaper than Venezuela and less personal security is probably needed. I would suggest the quiet presence of the US Coast Guard and US Navy in and around the old pirate-haven Caribbean is a major reason.

The guns choice allows American citizens to move around the world more cheaply under fewer threats which in turns allows more commerce.

A similar domestic guns choice of welfare versus police demonstrates that higher police presence reduces crime where high welfare spending has no causation at all. But high welfare spending and inadequate police presence guarantees a safe incubator for criminal activity. Commerce disappears. Jobs disappear. Wealthy families leave.

Just think how many private transaction are peace of mind purchases: psychiatry, massage therapy, gift shops filled with useless knick-knacks, nice restaurants, flower shops, mega-groceries, luxury homes and cars, etc. If we converted our economy into one that refused to sell anything that offer peace of mind, we would have politburo-run grocery with lines out the door and no food on the shelves.

We buy peace of mind every day. The military is first and last line of defense from foreign threats to our daily bliss. The police are our second-to-last line of defense (don't forget the Second Amendment is the source of the last line of domestic defense) to domestic threats to our daily bliss.

The stronger we are perceived by our enemies, the more likely are enemies go elsewhere.

The guns versus butter analysis is one of the greatest sources of liberals complete disconnect from reality when we discuss government spending. They misapply its true lessons and superimpose their own notions of right and wrong choices. Now all guns choices are bad and all butter choices are good.

The real choices are between expenditures that reduce the daily cost of living for self-sufficient citizens and those that increase the financial burdens on the self-sufficient. The choice is the great wide open versus prison.

Expenditures on highways reduce the daily cost of living by allowing more independent movement of infinite variety. (Some Constitutional questions remain about whether the federal government is properly the dominant player.) Highways give government a general use product that no other provider can provide efficiently and widely. The benefits of highways are easily and objectively measured by traffic counts and value of commerce passing over it. This allows a systematic analysis of good places to place or expand highways. It allows successful governments to build infrastructure for actual growth occurring, not wishful thinking. (Yes, politicians with earmarking and pork barreling ignore these objective measures. That is a reflection of decisions made at the wrong level of government than a bad use of money.)

Expenditures for grant programs with no reciprocated consideration are undesirable. (The individual states need to be aware of these economic problems arising from grant programs, but are not Constitutionally prohibited from pursuing them.) Grant programs benefit only one person or organization at a time. The benefits are diffuse and not subject to measurements of benefits that not subjective. The consolidation of benefits mostly go to the politicians who support the benefit and not to a community.

Once we become aware of the inherent fallacies of liberal reliance on guns versus butter, we are better able to deal with the real problems on the side of the equation called "butter." "Guns" can be expensive, especially during a hot war, but are easier to identify and corral. "Butter" is budget busting, as Obama has demonstrated, and harder to fix.