I spend most of my day doing research for Richard C. Young & Co. Ltd., Young Research & Publishing, and richardcyoung.com. And position papers from the Cato Institute are among my most valued resources. Debbie and I have just returned from the Cato Institute’s three-day policy conclave at the Ritz-Carlton Sarasota, Florida (wonderful hotel with top-notch staff and food). These events offer seriously thoughtful presentations and breakout sessions. Rep. Justin Amash (R-MI), one of the featured dinner speakers, was outstanding. There is also ample time allotted for afternoon recreation activities and local tours. There is not a more independent, small government, nonintervention-oriented think tank in the world. Not even close. How about Heritage and AEI, you might think. Well, Heritage has now created a politically charged PAC, which for me knocks Heritage out of the running. And AEI, to put it succinctly, is the bastion of neocon thought. No thanks.

It has been a pleasure for Debbie and me to get to know co-founder Ed Crane, Chairman Bob Levy, CEO John Allison, and so many distinguished Cato policy scholars, including Louise Bennetts, David Boaz, Mark Calabria, Michael Cannon, Chris Edwards, Gene Healy, Brink Lindsey, Justin Logan, Dan Mitchell, Roger Pilon, Chris Preble, Julian Sanchez, and most recently Xia Yeliang. A wonderful group. Each is committed to the constitutional federal republic, small central government our Founders intended. Were America managed by this group of individuals, rather than the tragic unconstitutional last two White House administrations, America would be not only safer, but also more prosperous.

I hope that over the course of the coming year—If you believe in the wisdom of Thomas Jefferson, Patrick Henry and Sam Adams, to name the obvious—you will become a Cato Institute Benefactor and join Debbie and me in achieving a better understanding of the federal republic form of government our Founders spelled out succinctly in the Constitution.

Warm regards,

Dick Young

My family and I have been watching the violent political turmoil in Ukraine with a heightened level of interest. My wife is from a city in Poland a stone’s throw from the Ukrainian border. Already bloodied protesters have been bussed across the border to Polish hospitals in Laczna, Kielce, Warsaw and elsewhere. Hospitals along the border have all been mobilized to receive a flood of wounded refugees, and drop sites are being setup across Poland to accept first aid supplies, bandages, money and food to be sent to the protesters.

We have wondered how a flood of refugees crossing the border would affect our friends and family in Poland. Worse yet, could a conflict in Ukraine draw neighboring countries into the fighting? Any foreign intervention would surely bring Russia into the fray in Ukraine, and if a NATO member like Poland were pitted against Russia on opposing sides of the conflict, surely the U.S. would become involved to protect its ally. The outcome of any such violence in Europe can not be good.

The fact is that Ukraine is essentially two countries tied up in one with a number of ethnic enclaves making things even more complicated. In the broadest sense, in the Western half you have ethnic Ukraines, and in the Eastern half you have ethnic Russians. Much of Western Ukraine previously was a part of the Polish-Lithuanian Commonwealth and not until after WWII were all the current pieces of Ukraine amalgamated as one country.

The cultural divisions show up loud and clear in maps of Ukraine’s votes. You can see in election maps below from 2004, 2007, and 2010 that the votes split geographically from North West to South East. The same group of Ukrainians that protested against Viktor Yanukovych in the 2004 Orange Revolution are the ones protesting him again today. Until these inherent issues are sorted out in Ukraine, there’s going to be friction.

With all the internal differences in Ukraine in mind, then come the dynamics of the EU vs. U.S. vs. Russia. The EU wants Ukraine in the fold. And the U.S. definitely is on board with the revolution, but judging by the intercepted conversation between Victoria Nuland, assistant secretary of state for European and Eurasian affairs, and Geoff Pyatt, the U.S. ambassador to Ukraine (recording below), the goals of the EU and the U.S. may not intertwine completely. But there is no doubt that by freeing Ukraine, Russia’s sphere of influence would be greatly diminished.

Ukraine is an economic and strategic prize for whomever can modernize its economy. Ukraine is a veritable bread basket when it comes to agriculture. According to Ukraine Digest, 30 percent of the world’s super-productive black soil is in Ukraine, with 42 million acres of arable land. Given western style improvement, Ukraine’s food production could probably increase considerably.

Perhaps most importantly, Sevastopol, the Ukrainian port on the Black Sea, is home to Russia’s naval headquarters. This is Russia’s best port and they lease it by subsidizing Ukraine’s natural gas supplies to the tune of $40 billion until the lease expires in 2042. If Ukraine were to become reliably “western” and wanted to join NATO it would likely expel the Russian navy from Sevastopol. That would be a major strategic coup for NATO and the West. Denying the Russians their best warm water port would not only be embarrassing for them, but also strategically important for future conflicts in the Middle East in which Russian may want to join. This would diminish the Black Sea fleet’s capabilities for some time, as the Russian base in nearby Novorossiysk is still being built out.

The situation in Ukraine is rapidly changing and protesters and opposition officials seem to have taken control of Kiev, and possibly the country. President Yanukovych appears to have fled the capital and is rumored to be hiding out in the Russian speaking region of Ukraine. Opposition leaders have called for his arrest. The best possible solution for Ukraine would be a peaceful agreement that leads to the maximum levels of freedom for Ukrainians. Barring that, the conflict and strife could go on for some time.

12 to 0? No, not the latest hockey score from Sochi. Rather, 12 is the number of times since 1840 that the U.S. has faced a systemic banking crisis, while Canada has had 0.

Remember “too big to fail?” Well how about “built to fail?” At this year’s excellent Cato Benefactors Summit in Sarasota, Florida, Louise Bennetts, Cato Institute’s associate director of financial regulation studies, helped explain how financial “reforms” are actually setting the stage for the next crisis in the banking industry. Louise recommended to Dick and me that we read Fragile by Design, which, among many things, tells why Americans perhaps want to keep their cash close at hand. In Fragile by Design, authors Charles W. Calomiris and Henry Kaufman explore the murky world of politicians, bankers, bank shareholders, depositors, debtors, and, of course, “we, the people”—the befuddled taxpayer.

After ordering Fragile by Design, go to Cato.org and review upcoming Cato events not only in Washington, but around the country. You may be as baffled as we are as to why the Washington elites aren’t being thrown out and why Cato Institute is not making policy decisions for our country today and for future generations.

To give you a better taste of what goes on at a Cato event, we will be posting more in coming weeks from such Cato scholars as Roger Pilon, Chris Preble, Ilya Shapiro, Gene Healy, Jim Harper, Dan Mitchell, the Michaels Cannon and Tanner, and, of course, former BB&T CEO John Allison. And this is just the short list. Have you read anything about Congressman Justin Amash? He was the breath-of-fresh-air Keynote speaker at Cato’s Benefactors Saturday dinner. Dick and I feel honored to be part of this remarkable organization. Stay tuned and stay in touch.

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Saving money is hard. But the earlier it’s started, the easier it gets. I was stacking quarters the other night to explain the concept to my kids. Saving money early helps to bring time into the equation. The result is compounding money–a phenomenon Albert Einstein referred to as the 8th wonder of the world.

The New York Times reports here that such is the case intended by the Pentagon. The Cato Institute’s Chris Preble in The Power Problem  has previously provided a detailed blueprint for streamlining America’s military to make America safer. Here Chris looks at the Pentagons current proposals with some guarded optimism.

Someone has begun leaking elements of the Pentagon’s FY 2015 budget, and the leakers apparently want reporters to focus on proposed cuts in the U.S. Army. The headline in the New York Times warns readers that the Army will shrink to “a pre-World War II level.”“The proposal,” explains the Times, “takes into account the fiscal reality of government austerity and the political reality of a president who pledged to end two costly and exhausting land wars. A result, the officials [who leaked to the Times] argue, will be a military capable of defeating any adversary, but too small for protracted foreign occupations.”

“You have to always keep your institution prepared” for the unknown, a senior Pentagon official told the Times, “but you can’t carry a large land-war Defense Department when there is no large land war.”

Reaction from other Beltway insiders has been predictably apoplectic, but one doubts that the American public are terribly worried about a military that might be slightly less likely to get involved in unnecessary and counterproductive nation-building missions in distant lands. The war in Afghanistan started with strong public support, as it was clearly connected to the events of 9/11. It no longer is, and Americans want out. The salespeople for the war in Iraq tried to connect that escapade to 9/11, but the Iraq war effort also lost public support when that rationale fell away, and the costs mounted into the trillions.

In this case, at least, the public is smarter than the politicians who supposedly represent them. Americans were unenthusiastic about the Libya caper of 2011, and they effectively blocked efforts to embroil the United States in the Syrian civil war last fall. The Pentagon’s budget might finally be reflecting the reality that the American people actually want President Obama to do what he said he was going to do: focus on nation building at home.

As Cato Institute’s Michael Tanner explains, in 2008, when President Obama first took office, public debt equaled 39% of GDP. Today it is over 73%, the largest share since 1950 when America was still paying down WWII debt.

When President Obama took office, debt held by the public equaled 39 percent of GDP. Today, it exceeds 73 percent. That’s its largest share of the economy since 1950, when we were still paying down the World War II debt. If one includes intragovernmental debt (such as the bonds in the Social Security and Medicare trust funds), our national debt exceeds 103 percent of GDP, bigger than our entire economy. Of course, the unfunded liabilities of Social Security and Medicare have continued to grow as well. Throw those in and, even using optimistic assumptions, our real debt runs as high as $83.9 trillion, roughly five times larger than our economy. (By some calculations, it’s even higher.)

Austerity? Not so much.

Obama’s fix for this? “Abandon the era of austerity.” And rather than trying to impose fiscal restraint, Republicans have joined Democrats in passing, for example, a massive new farm bill that will cost taxpayers $1 trillion over the next 10 years. The only rumblings coming from some Republicans is that Chuck Hagel’s five-year defense plan doesn’t spend enough, even though the plan spends about $100 billion more than sequestration levels. For more on defense spending shenanigans, read what Cato’s Chris Preble and Ben Friedman have to say in today’s post, Flash: Hagel Military Cuts but Tip of Iceberg.

I recently trained with Sig Sauer Senior Instructor Steve Gilcreast over a two day concealed carry course at Sig Sauer Academy. Steve spent last week teaching a masters level class to agents in Quantico, VA. He’s the best at what he does. One of the many takeaways from the class is that you have to be accurate. Speed is secondary. Try and be the best at accuracy. To paraphrase Bruce Lee, I’d rather face someone that’s good at 1,000 things than the guy who’s the best at one. The point of shooting is to hit your target. There’s no point in being fast if you can’t hit the target. The following video is of a drill similar to one in Sig’s defensive pistol course I took over the summer. As you can see by Steve’s demonstration, it’s accuracy first then speed.

Cato Institute fellow Dan Mitchell writes of “Obama’s Stimulus: Five Years of Keynesian Fairy Dust” in which, as he notes, the White House has pulled numbers out of thin air based on economic models using Keynesian theory. Mr. Mitchell explains Obama’s program of redistribution, where it is assumed that there are no “opportunity costs” when government borrows money and spends it. As Dan writes, a nice theory… but only on a blackboard. Stimulus schemes tend to reward interest groups with the most political clout. The biggest problem with Keynesianism is that real world evidence is so unfriendly. Keynesians don’t seem to appreciate that recessions generally are the result of bad government policies—such as inflation, housing subsidies, etc.—that lead to fundamental and unsustainable economic imbalances. Keynesian economics is about the government taking money from the private sector. It is the perpetual motion machine of the left. The political class loves Keynesian theory because it tells them that their vice is a virtue. They’re not buying votes with other people’s money. Instead, they’re “stimulating” the economy.

The Keynesians basically assume that there are no “opportunity costs” when government borrows money and spends it. That’s a bit of economic jargon, but it’s simply a way of saying that Keynesians think that money, for all intents and purposes, will sit idle and gather dust during an economic downturn in the absence of government.

This is a very nice theory…but only on a blackboard.

In reality, there is an “opportunity cost” when government borrows money and spends it. Resources are diverted from the productive sector of the economy. This might not be a problem if government spent money wisely, but stimulus schemes tend to reward interest groups with the most political clout. So instead of outlays for physical and human capital, which at least theoretically might improve the economy’s productive capacity, the White House directed the bulk of the stimulus to redistribution programs and handouts to state governments.

Moreover, the Keynesians don’t seem to appreciate that recessions generally are the result of bad government policies — such as inflation, housing subsidies, etc — that lead to fundamental and unsustainable economic imbalances. Unfortunately, more government spending often is designed to prop up these imbalances, which can create a longer and more painful period of adjustment.

But the biggest problem with Keynesianism is that the real-world evidence is so unfriendly. Consider, for instance, that the White House claimed that the unemployment would never climb above 8 percent if the stimulus was adopted.

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