The TSA stands outside the free market

A Free Market in Air Security.

There has been a large uproar about the newly established security procedures at many U.S. airports. Passengers are confronted with newly purchased “advanced imaging technology” machines which show them naked on a computer screen in another room to be viewed by government TSA personnel. In addition to humiliation of the virtual strip search, there are no assurances that the x-rays used by the machines do not have long term adverse health consequences.

Those travelers that opt out of the machines can instead be patted down in an invasive way which includes touching the groin and breast areas of the body. To many travelers neither choice is acceptable for them or their children.

Of course people want to be able to travel safely, but not at the expense of being treated like criminals when they are simply customers wishing to use the service they have purchased.

The reason there is a massive disconnect between the wishes of the airline customers and the government TSA officials in charge of security is because the government operates outside of the marketplace. They have one tool and one tool alone at their disposal, coercion. You have to do things their way or you do not get to use the service you have purchased. Worse yet you could be arrested along the way.

QE2 is a roaring success.

Last week the Fed announced that it will buy $600 billion dollars in U.S. bond in a move dubbed Quantitative Easing 2 or QE2. Of course left out from the mainstream media’s reporting of this is the fact that the money for these bond purchases will simply be created by a bookkeeping entry. This is pure theft and dilutes the value of the dollar just as if a counterfeiter flooded the market with $600 billion in phony Federal Reserve Notes. Commodities continued their trek higher last week in response with gold leading the move higher to a new all time high.

The pretense for the massive bond purchases by the Fed is that it must do this to revitalize the economy and increase GDP. Unfortunately for the Fed, the data shows that quantitative easing does not increase GDP because there is a coincident slowing of monetary velocity at the same time.

This is explained by John Hussman in his column two weeks ago: “The belief that an increase in the money supply will result in an increase in GDP relies on the assumption that velocity will not decline in proportion to the increase in money. Unfortunately for the proponents of ‘quantitative easing,’ this assumption fails spectacularly in the data.” Link here:
Not only is quantitative easing unable to create GDP growth after factoring in inflation, but it doesn’t even grow GDP in nominal terms. If quantitative easing does nothing to boost GDP, might there be other reasons the Fed is engaging in it?