I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.- Thomas Jefferson.

debt clock

Tuesday, September 28, 2010

Well, it seems to be education week or month or something in Washington and on NBC coinciding w the release of the movie, Waiting for Superman. There is clearly something wrong w our public school system, which spends more money per student than any other country, but w poor results. I have seen and read parts of Obama's recent speech on the subject, and his words and actions seem somewhat contradictory. While I am not an expert, I have read a fair amount on the subject, and certain things seem glaringly clear.

1. The federal govt is more of a drag than a help. Govt makes most things worse, so why would we entrust the education of our children to the govt.

2. Throwing more money at the problem (the standard democratic answer) is not a good answer.
3. The teachers unions are a huge drag.

4. Greater parental involvement is a key, yet most of Obama's proposals seem to further limit the role of parents.

As a libertarian, I think the free market could do a lot better than the govt. Federal control and attempts to make all schoools and curriculum the same is wrong. Privatize education, let private companies compete to offer the best educational choices. The only way to find out what works is to try different things. Give tuition vouchers to poor children, or all children. (yea- I know that last one isn't very libertarian)

Monday, September 27, 2010

Rick’s Picks

Thursday, September 24, 2010

(There’s a good reason why bullion traders and investors have nicknamed the COMEX the CRIMEX. Read Robert Moore’s essay below to see why. Moore, a frequent contributor to the Rick’s Picks forum, says bullion bankers have leveraged the commodity exchange’s liberal rules to perpetrate a fraud that would land you or me in jail. RA)

In 2004, two young men named Robert “Buddha” Gomez and James Nichols fleeced thousands of people to the tune of $21 million by selling them “paper” automobiles. Here’s a link to more on this fascinating story by Car and Driver’s John Philips. These two hucksters swindled thousands of people into paying real money for nonexistent cars that were part of the fabricated estate of a fictitious, deceased eccentric millionaire, who declared in his will that these cars were only to be sold to “decent, churchgoing people” at unheard of bargain-basement prices as low as $1,000.

If Gomez and Nichols had known what was good for them, they would have studied the COMEX gold and silver futures market a little more closely before embarking on their little adventure into the exciting world of fraud. We all know that a futures contract is merely a paper promise to deliver a quantity of bullion (or some other commodity) for a pre-determined price at some future date. This is analogous to the paper promise to deliver “miracle cars” at some future estate settlement date; and as long as the promise to deliver can be sold to a willing buyer, then the scam can continue in perpetuity.

Gomez and Nichols’ scheme collapsed and they were both hung out to dry when the need to deliver real cars to settle these purchase agreements came due. In the gold and silver markets, by contrast, the scam is aided and abetted by a regulatory environment whereby the threat of default is curtailed simply by raising the number of allowable paper promises (aka position limits) that can be issued by willing sellers. The COMEX allowable position limits in Gold and Silver are already completely out of whack, and when you add the “special limit exemptions” that have been extended to the “Big 8” bullion banks, the true scale of the fraud committed in the interest of preserving faith in paper money becomes clear. As these position limit exemptions have increased ever higher toward infinity, the legal ability to sell “Gold that grows on trees” has influenced bullion-bank traders to be more bold and more deeply entrenched in the fraud.

Where’s the Demand?

Just look at this comparison graph (above) showing the extent of forward selling (days of production) by the largest traders in various commodity markets to get a feel for the level of forward selling that gold and silver are subjected to by the big commercials, compared to other commodities. Why would world markets need so much forward sold silver and gold? Doesn’t everyone know that gold has very limited industrial use (especially compared to platinum or copper), and since photographic storage has moved from cellulose to silicon, industry’s chief consumption points for silver have also diminished drastically. And, if this much gold and silver really is changing hands out there, then why are eligible COMEX inventories sitting at 20 year lows? If the Big Commercial traders are laying on these enormous short positions as part of a legitimate hedging strategy, then why wouldn’t the same strategy work with crude oil? Or Wheat? And, most notably — why wouldn’t this same hedging strategy work with copper? Is it purely coincidence that there is so much concentration by a few mega-banks on the short side of the open interest in precisely the two elements that have served as the most viable forms of money for longer than any other medium in human history?

Okay, I’m drifting dangerously close to the “tin foil hat” event horizon. Let’s get back to Gomez and Nichols. These two chumps were eventually brought down by people who became impatient due to their expectation of physical delivery of the cars that they “purchased.” So too might the expectant recipients of physical bullion eventually reach the same level of impatience with those who are selling them paper promises to deliver real bullion (that is, unless they really, actually prefer owning even more potentially worthless paper contracts over physical metal).

Madoff’s Lesson

Bernie Madoff declared that he knew his empire was a Ponzi scheme for years before he got taken down, and he stated that once you realize it is fraud, your only choices left are to let it collapse immediately, or run the fraud as high (and as long) as you can. You become consumed by it. Is this what is happening today in the big silver and gold exchanges?

If you can logically conclude that there is no fraud in the COMEX gold and silver markets, then you can also conclude using the same logic that what Robert Gomez and James Nichols went to prison for was selling “futures contracts” against automobiles that they did not own, and had no intention of ever delivering. Is this any different from the forward-sold (i.e., short) positions in COMEX gold and silver? If Gomez and Nichols had successfully attempted to persuade the judge to allow them to simply increase the number of automobile delivery promises that they are entitled to issue, they might have been able to buy some cars in the “current month Craig’s List spot market” and made good on their earlier promises.. They would both still be free men, right?

Et tu, COMEX?

from brainrules.blogspot.com/

A good example is driving while talking on a cell phone. Until researchers started measuring the effects of cell-phone distractions under controlled conditions, nobody had any idea how profoundly they can impair a driver. It’s like driving drunk. Recall that large fractions of a second are consumed every time the brain switches tasks. Cell-phone talkers are a half-second slower to hit the brakes in emergencies, slower to return to normal speed after an emergency, and more wild in their “following distance” behind the vehicle in front of them. In a half-second, a driver going 70 mph travels 51 feet. Given that 80 percent of crashes happen within three seconds of some kind of driver distraction, increasing your amount of task-switching increases your risk of an accident. More than 50 percent of the visual cues spotted by attentive drivers are missed by cell-phone talkers. Not surprisingly, they get in more wrecks than anyone except very drunk drivers.


CIA, CFR, Bilderberg Ties To The Ground Zero Mosque

September 20, 2010 by Bob Livingston

It has become patently obvious the Ground Zero Cordoba House mosque is a CIA-backed, One World Government-inspired plot designed to jinn up Americans’ anger at Muslims and increase support for the global war on terror.

Reporting for The New York Observer, Mark Ames tied together the links between the mosque, the CIA and the U.S. military establishment.

One of the mosque’s main financial backers is 52-year-old New Yorker R. Leslie Deak. Deak donated $98,000 to the nonprofit Cordoba Initiative between 2006 and 2008. Deak is a “business consultant” for Patriot Defense Group, LLC, a private defense contractor for the CIA and U.S. military. The secretive organization doesn’t even list the names of its management team but describes them as former Special Forces, former CIA, former State Department and former Secret Service.

The Observer also notes Deak’s strong ties to Mark Treanor, the former general counsel for Wachovia Bank which was fined $160 million for laundering Mexican drug money while Treanor was there.

Additionally, Deak’s father Nicholas was a former top intelligence commander for the OSS (the forerunner of the CIA) and his company, Deak-Perera — which at one time was one of the world’s largest foreign currency and gold dealers — was accused in 1984 of laundering Columbian drug cartel money. The elder Deak was murdered at the company headquarters in 1985.

The article also ties together the links between Leslie Deak and Goldline International, the company that sponsors Glenn Beck’s radio show, his FoxNews television show and some other neo-conservative, pro-war pundits. Of course, FoxNews is partially owned by Saudi Arabian Prince Al-Waleed bin Talal, who also funds projects for the mosque’s front man, Imam Rauf.

Deak’s Deak Family Foundation is also a supporter of the American Society for Muslim Advancement (ASMA), of which Rauf is a part. The ASMA is financially supported by, among others, the Carnegie Corporation of New York, Rockefeller Brothers, Rockefeller Philanthropy and Rockefeller Brothers Fund.

Rauf, has worked as an FBI “consultant” and was recruited by former President George W. Bush advisor and confidant Karen Hughes to lead the administration’s Middle East propaganda efforts. Rauf is also an active member of the Council on Foreign Relations.

All this ties the whole operation to the CIA, the CFR, the Bilderberg Group and the military-industrial complex.

The CIA and the military-industrial complex stand to gain billions of dollars from a continuation of the global war on terror which gains support from this manufactured controversy. Meanwhile the CFR and the Bilderbergers and their global elite friends have a powerful issue that takes momentum away from the rising tide of patriotism and political awakening of the masses that’s been harming their globalist agenda.

Friday, September 24, 2010

Investors Are Deaf to the Screams of Gold, Cotton: Mark Gilbert

By Mark Gilbert - Sep 22, 2010 6:00 PM CT Email Share
Most of us own truths too painful to confess. We drink too much. We lust inappropriately. We envy. We covet material goods, when every study shows experiences count for so much more. Confessing them, even just to ourselves in the long, dark teatime of the soul, is too distressing.

The collective subconscious of the financial markets is no different. It knows pension systems are bankrupt, water wars are coming, China will best the West, Keynesian stimulus is a surefire way to stoke inflation, gold is saying something, and the banking community remains as rapacious as it was prior to the credit crisis. Knowing and admitting isn’t the same thing.

The following paragraphs list some of the taboos that should ping our radar harder.

In Price Is Knowledge

If you told Rip van Bondtrader that gold had risen to a record during his decade-long slumber, he’d want to know what the inflation outlook was, and how badly he’d gotten killed on his bond investments. He’d be astonished to discover that he’s made a total return of about 8 percent since January on Treasuries maturing in more than a year.

“What makes the gold story so interesting is that bullion has so many different correlations -- with inflation, with the dollar, with interest rates, with political uncertainty,” according to David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto. “This year, for example, gold has shifted from being a commodity toward being a currency -- the classic role as a monetary metal that is no government’s liability.”

Gold may be screaming more about a general mistrust of the securities markets than about the prospect of rising prices. Rip, though, would be similarly horrified to see cotton trading near a 15-year high at more than $1 a pound, or wheat surging more than 30 percent in the past year, helping to drive a UBS/Bloomberg index of food prices up by about 28 percent. The official figures say inflation is dormant; the phrase “lies, damned lies and statistics” springs to mind.

Lots of Clever People Don’t Believe in Currencies

Imagine trying to explain to a grandmother or a teenager that a lot of very clever people in the financial world don’t actually believe in dollars, euros and yen. Exchanging goods and services for bits of paper is a confidence game, say some; a conjuring trick without bones, because without the skeleton of a gold standard, so-called fiat currencies are worth nothing more than the paper they are printed on.

Even the majority of finance professionals who don’t see any need to back currencies with precious metals are haunted by the thought of the central bank printing presses whirring into action. And, with every nation in the world trying to export its way out of trouble, the beggar-thy-neighbor race to devalue currencies will only gather pace in the coming months.

When I’m 64

Folk wisdom claims that bumble bees defy the laws of physics because their power-to-weight ratio should be insufficient to allow flight. Luckily, because the bees don’t know this, they happily take off, buzz around and land, buoyed by blissful ignorance. Similarly, no sane investor would ever buy a stock or a bond if they stopped to consider the inverted- pyramid mathematics of an ageing, death-resistant population, a slump in birthrates, and the New Normal of spectacularly low returns in a post-bubble environment.

How on Earth is society going to pay pensions to this growing army of old people? If granddad does what investment theory says he should and socks his nest egg (assuming he even has one) into the ultra safety of Treasuries, earning a record- low yield of less than 0.45 percent on two-year securities, how will he afford his medications? Many countries and companies are probably bankrupt once you account properly for their future obligations; some problems, though, are too big and too intractable and too downright scary for polite conversation.

Water, Water Everywhere

The recent surge in the price of wheat as a summer-singed Russia banned exports should have been a sign that food security is a global tinderbox waiting to flare. Everyone has read the stories about Chinese officials wandering around Africa buying agricultural rights that last for decades; no-one wants to really consider the consequences of not being able to feed their kids.

While the West was tinkering with its crops to grow allegedly environmentally friendly fuel for our automobile obsession, the nation that takes the long view was snapping up long-term leases on the world’s bread boxes. In the not-too distant future, nations that currently share rivers will divide into those geographically fortunate enough to be the source of those waterways, and those risking drought and deprivation.

The Inflationary Consequences of John Maynard Keynes

Inflation is always and everywhere a monetary phenomenon, according to Milton Friedman, who has been eclipsed in recent years by his chief competitor, John Maynard Keynes. Every bond investor suspects that chucking billions of dollars into the global economy builds a bed of kindling; nobody wants to shout “fire!” in a crowded trade.

The Answer to Too Much Debt Is Not More Debt

Lending to governments is not risk-free, whether that government is Argentina, Iceland, Ireland or the U.S. These days, when you buy government debt, you are taking on the credit risk of the global financial system because that is what the too-big-to-fail doctrine has saddled the world’s taxpayers with.

This week’s successful debt auctions by Ireland, Greece and Spain sure beat the alternative of failed sales with nobody turning up. With central banks acting as buyers of first and last resort, however, it is impossible to pretend that the capital markets are functioning properly -- another dirty little secret kept suppressed deep in the subconscious.

(Mark Gilbert is the London bureau chief and a columnist for Bloomberg News. The opinions expressed are his own.)

Thursday, September 23, 2010

Libertarians fight to break cycle of battered gay voter syndrome

WASHINGTON - Like abused spouses who keep returning to their aggressors, gay voters keep handing their votes to the Democrats who abuse them.

The Libertarian Party (LP) wants to break this self-destructive behavior and offers LGBT voters a better alternative.

LP Chairman Mark Hinkle said, "Exit polls indicate that Democrats get over 70% of LGBT votes in federal elections. Those voters must really love the Democrats' rhetoric, because they certainly aren't seeing any action.

"President Obama and the Democrats had almost a year of complete control of the federal government: the Presidency, the House, and a filibuster-proof 60 votes in the Senate. They could have repealed 'don't ask don't tell.' They could have gotten rid of the Defense of Marriage Act. But they didn't do either of those things. That's a complete and total betrayal of all the promises they made to gay and lesbian voters for years.

"After a carefully orchestrated failure in the Senate, the Democrats are now blaming Republicans for blocking the repeal of 'don't ask don't tell.' Of course, three Democrats just voted against it too, including Majority Leader Harry Reid. Reid claims he voted for procedural reasons, but the whole situation seems calculated to look like they're trying to help, while making sure they don't actually help."

Unlike the Democratic and Republican Parties, the Libertarian Party believes that gays and lesbians deserve equal treatment under the law.

LP Executive Director Wes Benedict added, "The Libertarian Party neither supports nor opposes gay relationships. Libertarians are black, white, young, old, straight, gay, Christian, atheist, yuppie, hippie, rich, poor, greedy, generous, eccentric and just plain average. Though their backgrounds and lifestyles are diverse, they are united on the principle of minimum government and maximum freedom."

The LP Platform states:

"1.3 Personal Relationships

Sexual orientation, preference, gender, or gender identity should have no impact on the government's treatment of individuals, such as in current marriage, child custody, adoption, immigration or military service laws. Government does not have the authority to define, license or restrict personal relationships. Consenting adults should be free to choose their own sexual practices and personal relationships."

The Libertarian Party has 21 candidates for U.S. Senate and 170 candidates for U.S. House in the upcoming November 2010 elections.

For more information, or to arrange an interview, call LP Executive Director Wes Benedict at 202-333-0008 ext. 222.

The LP is America's third-largest political party, founded in 1971. The Libertarian Party stands for free markets and civil liberties. You can find more information on the Libertarian Party at our website.

Monday, September 20, 2010

Congressmen Weiner and Waxman Set Gold Hearing


Just as the government is trying to prevent people from investing in anything other than T-Bills by raising taxes on taxable interest and dividends to confiscatory levels, it's also trying to prevent you from parking your wealth in assets, like gold, that compete with the paper dollars issued by the Federal Reserve and the Treasury. A press release from Rep. Anthony Weiner, Democrat of New York, not yet (as of this instant) posted on Mr. Weiner's Web site, announces that a September 23 hearing of the Subcommittee on Commerce, Trade, and Consumer Protection (a subcommittee of Rep. Henry Waxman's Commerce Committee) will focus on "legislation that would regulate gold-selling companies, an industry who's [sic] relentless advertising is now staple of cable television."

From the press release: "Under Rep. Weiner's bill, companies like Goldline would be required to disclose the reasonable resale value of items being sold." That's great. Are Mr. Weiner and Chairman Bernanke also going to agree to print on every dollar the reasonable expectation that its value will be eroded by inflation?

Gold investors (or speculators) are already punished by the federal government by having their investment, even in a gold exchange-traded-fund, taxed at the higher rates that apply to collectibles rather than long term capital gains.

Not to mention the fact that Mr. Weiner's regulatory push seems as much aimed at conservative journalists as at the gold-dealers. The press release says, "Goldline employs several conservative pundits to act as shills for its' [sic] precious metal business, including Glenn Beck, Mike Huckabee, Laura Ingraham, and Fred Thompson. By drumming up public fears during financially uncertain times, conservative pundits are able to drive a false narrative. Glenn Beck for example has dedicated entire segments of his program to explaining why the U.S. money supply is destined for hyperinflation with Barack Obama as president."

Imagine the uproar if a Republican-majority Congress started investigating and having a regulatory crackdown on big advertisers in liberal outlets such as the New York Times. The First Amendment freedom-of-the-press crowd would be marching in the streets.

The whole situation is amazing. If Mr. Weiner really wants to calm fears about hyperinflation, the last way to do it is to have a government hearing cracking down on the people warning of it.

The press release reports that "invitations to the hearing have been sent to the representatives of Goldline International, the Federal Trade Commission, the Consumers Union and other potential witnesses, including former Goldline employees." Mr. Weiner might also consider calling John Paulson and George Soros, who have also reportedly been buying gold lately, though Mr. Soros was also quoted as calling it a bubble. But Mr. Paulson saw the housing bubble coming so he might be right about the inflation risks, and Mr. Soros is a big funder of left-wing causes, so neither of them would fit with the objective of the hearing.

Anyway, we are looking forward to the hearing, which should be quite a show.

Signs Of A Crumbling Regime

September 20, 2010 by Bob Livingston

Can you see it? The signs are everywhere. The regime is crumbling.

No not the President Barack Obama regime, though that is part of it; maybe even the catalyst in the United States, at least. I’m talking about the regime in general; the system.

You can see it in places like Greece. There the government has been fighting for its economic life. Years of socialist redistribution — theft from the producers to finance the growing State leviathan and unionized public and private sector employees — have caught up.

The government is now instituting “austerity” measures. It has to. It can’t meet its obligations. So it’s cutting back on growth in salaries, vacation days, benefits and pensions. Unionized public works employees and service employees aren’t happy their gravy train has jumped the tracks. They strike and riot. Greece may or may not survive.

Much the same is going on in other parts of Europe. The French government’s plans to save money by raising the retirement age to 62 from 60 sparked a one-day strike among workers from the public and private sectors in transportation, education, justice, healthcare, media and banking.

The “little people” are waking up to the fact that their governments — the elected class — have done them a disservice. Their regimes, financed by fiat money and having positioned themselves as the “Great Nannies,” are unable to fulfill promises of utopia, wine and roses.

Instead, the elected class enrich themselves. They finance wars through fiat, sending the masses in as fodder while the military-industrial complex grows stronger and pushes for more wars and more fiat money.

Here in America there have yet to be massive strikes and riots, though there are plenty of disaffected people with time on their hands to conduct such shenanigans. According to the U.S. Department of Labor there are 14.9 million unemployed. There are actually more. The government cooks its books. It doesn’t count those no longer seeking work.

Obama blew into office in January 2009 with stratospheric approval numbers. His “Hope and Change” mantra convinced many that “free stuff” was coming their way. In several videos posted on YouTube before Obama’s inauguration some of his voters say money from Obama’s “stash” will come to them or that they will no longer have to pay their mortgage or for gas. Apparently they really believed they no longer were obligated to pay their debts just because the Marxist was elected.

Obama and his Corporatist Democrat cohorts proceeded to pass more stimulus bills and focused on ramming Obamacare down the throats of the American people. The American people wanted the regime to focus on job creation rather than bailouts and Obamacare. The “free stuff” never came. Those waiting on it apparently don’t understand that governments don’t give… governments only consume: one way or the other.

The bailouts enriched the banksters and Wall Street, and Obamacare — a Eurosocialist healthcare model — was implemented to steal freedom from of choice from Americans and saddle them with coming additional taxes and death panels that will decide whether they live or die. What’s more, to comply with the coming mandates to insure the previously uninsurable and everyone else, insurance companies are raising rates faster than they did before healthcare became “free for all.”

But the regime doesn’t like any kind of dissent. So it threatens, through a letter from Health and Human Services Secretary Kathleen Sebelius, to put health insurers out of business if they don’t quit “using scare tactics and misinformation to falsely blame premium increases for 2011 on the patient protections in the Affordable Care Act.”

Sebelius says her experts and academic advisors believe any increased costs to insurance companies will be minimal. Government experts and academics operate in the fantasy land of theory. Businesses operate in the realm of reality. Businesses understand that regulations and mandates cost them money.

It’s not the first time the regime has threatened businesses. When AT&T, Caterpillar and others explained to shareholders what the new healthcare law would cost, the thug Congressman Henry Waxman (D-Calif.) demanded proof and threatened to bring them before Congress. Waxman backed down when the companies provided proof.

You may recall that Obama’s thugocratic regime also threatened those holding the debt of General Motors and Chrysler during bankruptcy negotiations. “Agree to our settlement or risk getting nothing,” was the message. “Two hundred years of case law on bankruptcy be damned,” the thugocracy said.

The result of all this is approval ratings in the low 40s for Obama and single digits for Congress. The elites first caught wind of voter dissatisfaction during Town Hall meetings. No longer were they pleasant affairs attended by a few old codgers looking for a free cup of coffee. Now voters were expressing their discontent. The elites got scared and ducked and ran or hired thugs to protect them from their “malcontent” constituents. They grabbed video cameras or ordered them turned off. These embarrassing moments appeared on YouTube for any who were interested to see.

When special elections were held, incumbents and establishment candidates got trounced. Tea Parties grew stronger, their message resonated and spread. The large rallies in Washington, D.C., and around the nation frightened the regime.

The regime has responded. With corporate mainstream media’s audience falling precipitously the regime realized it was losing the message. People no longer turned to the alphabet soup news gatherers and the “All the news that’s fit to print” newspapers that all spread the same government propaganda. They sought their news from other sources: talk radio, the Internet.

So now the regime is pushing a bill to turn off the Internet. It also seeks a “fairness doctrine” so it can control radio content. Moves such as these will draw out the masses. If that happens the results won’t be pretty.

The Republican establishment is not immune from the public’s ire. In fact, the Republican Party is in the crosshairs of the Tea Party. Tea Party candidates are taking out the traditional “chosen” Republicans and reshaping the GOP in their image. The regime is surprised.

It shouldn’t be. The Republican establishment backs liberals like Mike Castle — a pro-abortion, pro-gun control, tax and spend liberal who calls himself a Republican — who as a Congressman sided with the Democrats more than Republicans. Tea Party conservatives figured it’s better to back a conservative with a chance she might lose in November than support a liberal Republican who votes for Democrat policies they’ve rejected.

So Christine O’Donnell whipped Castle for the Republican Senate nomination in Delaware. The Republican regime went into a snit, called O’Donnell names and cast doubts about her electability.

Karl Rove, the former advisor to President George W. Bush and architect of many of the Republican failures during the Bush years that resulted in the ascendancy of the current Democrat and Obama regime, was the poster child of regime arrogance on election night. He called O’Donnell nutty, and added other less-than-flattering adjectives. The National Republican Senate Committee said it would not be supporting her candidacy. What arrogance!

No matter. Tea Partiers responded. On Wednesday after her nomination, O’Donnell saw donations pour in from across the country. Her website crashed from the traffic.

Sensing trouble, the NRSC relented and quickly cut a check to her campaign.

The Republican establishment is slow to learn. The regime has a history of backing the wrong candidate: Charlie Crist over Marco Rubio, Senator Lisa Murkowski over Joe Miller, Trey Grayson over Rand Paul, Senator Bob Bennett (R-Utah) over Mike Lee, Rick Lazio over Carl Paladino. The regime doesn’t have it figured out yet.

“Establishment Republicans have no idea how livid Americans are with them,” Richard A. Viguerie told The Washington Examiner last Wednesday. “Republican leaders are in a panic because they have lost control of the Republican Party. Grassroots constitutional conservatives are inside the Citadel, and are poised to take over.”

The public is fed up. Democrats don’t yet realize it, but as soon as the Tea Party finishes cleaning up the parts of the Republican Party they can get to this election cycle, the Democrat purge will begin in earnest. That cleaning starts on Nov. 2. It won’t end there, regardless of the outcome. There will still be a lot of trash in Washington — Republican and Democrat — on the day after the first Tuesday after the first Monday in November. But Americans are as energized over the idea of a cleansing as they have ever been.

Democrats and Republicans alike face a tsunami in November the likes of which they still can’t imagine. Americans are ready to throw off the yoke of slavery they have toiled under for many years. The straws of control, taxes, government spending and regulations have finally broken the camel’s back.

The fascist regime is no longer stable. It knows only control, wars and more spending. So it continues to grow deficits, conduct wars without end, rattle sabers for more wars, put more regulations on food, push more “approved” harmful drugs on consumers, order more vaccinations, restrict access to natural health supplements and exercise more control over the public.

The regime calls for tax increases. This, too, is an effort at more control. It is legalized theft of your production.

Gold hit a record high last week. It is evidence the public is aware the regime is crumbling. The fiat system, instituted under the darkness of night 97 years ago, is failing. Throwing more fiat at the debt and deficits have succeeded only in creating more debt and greater deficits. The calculator the regime uses only adds and multiplies. The subtraction key doesn’t work. History shows this is a recipe for failure.

Store food for food and food for barter. Store water for sustenance. Store guns and ammunition for protection. Store gold and silver for wealth preservation. Prepare; for the regime is crumbling.
Is this maybe an attempt to cut down the high rate of homosexuality at MICDS?

Thursday, September 16, 2010

How Hyperinflation Will Happen

Monday, August 23, 2010

by Gonzalo Lira

Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggregate asset prices as never before. Since the credit crunch of September 2008, the U.S. and world economies have been slowly circling the deflationary drain.

To counter this, the U.S. government has been running massive deficits, as it seeks to prop up aggregate demand levels by way of fiscal “stimulus” spending—the classic Keynesian move, the same old prescription since donkey’s ears.

But the stimulus, apart from being slow and inefficient, has simply not been enough to offset the fall in consumer spending.

For its part, the Federal Reserve has been busy propping up all assets—including Treasuries—by way of “quantitative easing”.

The Fed is terrified of the U.S. economy falling into a deflationary death-spiral: Lack of liquidity, leading to lower prices, leading to unemployment, leading to lower consumption, leading to still lower prices, the entire economy grinding down to a halt. So the Fed has bought up assets of all kinds, in order to inject liquidity into the system, and bouy asset price levels so as to prevent this deflationary deep-freeze—and will continue to do so. After all, when your only tool is a hammer, every problem looks like a nail.

But this Fed policy—call it “money-printing”, call it “liquidity injections”, call it “asset price stabilization”—has been overwhelmed by the credit contraction. Just as the Federal government has been unable to fill in the fall in aggregate demand by way of stimulus, the Fed has expanded its balance sheet from some $900 billion in the Fall of ’08, to about $2.3 trillion today—but that additional $1.4 trillion has been no match for the loss of credit. At best, the Fed has been able to alleviate the worst effects of the deflation—it certainly has not turned the deflationary environment into anything resembling inflation.

Yields are low, unemployment up, CPI numbers are down (and under some metrics, negative)—in short, everything screams “deflation”.

Therefore, the notion of talking about hyperinflation now, in this current macro-economic environment, would seem . . . well . . . crazy. Right?

Wrong: I would argue that the next step down in this world-historical Global Depression which we are experiencing will be hyperinflation.

Most people dismiss the very notion of hyperinflation occurring in the United States as something only tin-foil hatters, gold-bugs, and Right-wing survivalists drool about. In fact, most sensible people don’t even bother arguing the issue at all—everyone knows that only fools bother arguing with a bigger fool.

A minority, though—and God bless ’em—actually do go ahead and go through the motions of talking to the crazies ranting about hyperinflation. These amiable souls diligently point out that in a deflationary environment—where commodity prices are more or less stable, there are downward pressures on wages, asset prices are falling, and credit markets are shrinking—inflation is impossible. Therefore, hyperinflation is even more impossible.

This outlook seems sensible—if we fall for the trap of thinking that hyperinflation is an extention of inflation. If we think that hyperinflation is simply inflation on steroids—inflation-plus—inflation with balls—then it would seem to be the case that, in our current deflationary economic environment, hyperinflation is not simply a long way off, but flat-out ridiculous.

But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.

Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.

Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.

Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.

This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.

But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)

It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—

—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.

In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.

So this is how hyperinflation will happen:

One day—when nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)—there will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.

This will jiggle Treasury yields, as asset managers will reduce their Treasury allocations, and go into the pressured commodity, in order to catch a profit. (Actually it won’t even be the asset managers—it will be their programmed trades.) These asset managers will sell Treasuries because, effectively, it’s become the principal asset they have to sell.

It won’t be the volume of the sell-off that will pique Bernanke and the drones at the Fed—it will be the timing. It’ll happen right before a largish Treasury auction. So Bernanke and the Fed will buy Treasuries, in an effort to counteract the sell-off and maintain low yields—they want to maintain low yields in order to discourage deflation. But they’ll also want to keep the Treasury cheaply funded. QE-lite has already set the stage for direct Fed buys of Treasuries. The world didn’t end. So the Fed will feel confident as it moves forward and nips this Treasury yield jiggle in the bud.

The Fed’s buying of Treasuries will occur in such a way that it will encourage asset managers to dump even more Treasuries into the Fed’s waiting arms. This dumping of Treasuries won’t be out of fear, at least not initially. Most likely, in the first 15 minutes or so of this event, the sell-off in Treasuries will be orderly, and carried out with the idea (at the time) of picking up those selfsame Treasuries a bit cheaper down the line.

However, the Fed will interpret this sell-off as a run on Treasuries. The Fed is already attuned to the bond markets’ fear that there’s a “Treasury bubble”. So the Fed will open its liquidity windows, and buy up every Treasury in sight, precisely so as to maintain “asset price stability” and “calm the markets”.

The Too Big To Fail banks will play a crucial part in this game. See, the problem with the American Zombies is, they weren’t nationalized. They got the best bits of nationalization—total liquidity, suspension of accounting and regulatory rules—but they still get to act under their own volition, and in their own best interest. Hence their obscene bonuses, paid out in the teeth of their practical bankruptcy. Hence their lack of lending into the weakened economy. Hence their hoarding of bailout monies, and predatory business practices. They’ve understood that, to get that sweet bail-out money (and those yummy bonuses), they have had to play the Fed’s game and buy up Treasuries, and thereby help disguise the monetization of the fiscal debt that has been going on since the Fed began purchasing the toxic assets from their balance sheets in 2008.

But they don’t have to do what the Fed tells them, much less what the Treasury tells them. Since they weren’t really nationalized, they’re not under anyone’s thumb. They can do as they please—and they have boatloads of Treasuries on their balance sheets.

So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave.

Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse. They will be aware how precarious the U.S. economy is, how over-indebted the government is, how U.S. Treasuries look a lot like Greek debt. They’re not stupid: Everyone is aware of the idea of a “Treasury bubble” making the rounds. A lot of people—myself included—think that the Fed, the Treasury and the American Zombies are colluding in a triangular trade in Treasury bonds, carrying out a de facto Stealth Monetization: The Treasury issues the debt to finance fiscal spending, the TBTF banks buy them, with money provided to them by the Fed.

Whether it’s true or not is actually beside the point—there is the widespread perception that that is what’s going on. In a panic, widespread perception is your trading strategy.

So when the Fed begins buying Treasuries full-blast to prop up their prices, these asset managers will all decide, “Time to get out of Dodge—now.”

Note how it will not be China or Japan who all of a sudden decide to get out of Treasuries—those two countries will actually be left holding the bag. Rather, it will be American and (depending on the time of day when the event happens) European asset managers who get out of Treasuries first. It will be a flash panic—much like the flash-crash of last May. The events I describe above will happen in a very short span of time—less than an hour, probably. But unlike the event in May, there will be no rebound.

Notice, too, that Treasuries will maintain their yields in the face of this sell-off, at least initially. Why? Because the Fed, so determined to maintain “price stability”, will at first prevent yields from widening—which is precisely why so many will decide to sell into the panic: The Bernanke Backstop won’t soothe the markets—rather, it will make it too tempting not to sell.

The first of the asset managers or TBTF banks who are out of Treasuries will look for a place to park their cash—obviously. Where will all this ready cash go?


By the end of that terrible day, commodites of all stripes—precious and industrial metals, oil, foodstuffs—will shoot the moon. But it will not be because ordinary citizens have lost faith in the dollar (that will happen in the days and weeks ahead)—it will happen because once Treasuries are not the sure store of value, where are all those money managers supposed to stick all these dollars? In a big old vault? Under the mattress? In euros?

Commodities: At the time of the panic, commodities will be perceived as the only sure store of value, if Treasuries are suddenly anathema to the market—just as Treasuries were perceived as the only sure store of value, once so many of the MBS’s and CMBS’s went sour in 2007 and 2008.

It won’t be commodity ETF’s, or derivatives—those will be dismissed (rightfully) as being even less safe than Treasuries. Unlike before the Fall of ’08, this go-around, people will pay attention to counterparty risk. So the run on commodities will be for actual, feel-it-’cause-it’s-there commodities. By the end of the day of this panic, commodities will have risen between 50% and 100%. By week’s end, we’re talking 150% to 250%. (My private guess is gold will be finessed, but silver will shoot up the most—to $100 an ounce within the week.)

Of course, once commodities start to balloon, that’s when ordinary citizens will get their first taste of hyperinflation. They’ll see it at the gas pumps.

If oil spikes from $74 to $150 in a day, and then to $300 in a matter of a week—perfectly possible, in the midst of a panic—the gallon of gasoline will go to, what: $10? $15? $20?

So what happens then? People—regular Main Street people—will be crazy to buy up commodities (heating oil, food, gasoline, whatever) and buy them now while they are still more-or-less affordable, rather than later, when that $15 gallon of gas shoots to $30 per gallon.

If everyone decides at roughly the same time to exchange one good—currency—for another good—commodities—what happens to the relative price of one and the relative value of the other? Easy: One soars, the other collapses.

When people freak out and begin panic-buying basic commodities, their ordinary financial assets—equities, bonds, etc.—will collapse: Everyone will be rushing to get cash, so as to turn around and buy commodities.

So immediately after the Treasury markets tank, equities will fall catastrophically, probably within the next few days following the Treasury panic. This collapse in equity prices will bring an equivalent burst in commodity prices—the second leg up, if you will.

This sell-off of assets in pursuit of commodities will be self-reinforcing: There won’t be anything to stop it. As it spills over into the everyday economy, regular people will panic and start unloading hard assets—durable goods, cars and trucks, houses—in order to get commodities, principally heating oil, gas and foodstuffs. In other words, real-world assets will not appreciate or even hold their value, when the hyperinflation comes.

This is something hyperinflationist-skeptics never quite seem to grasp: In hyperinflation, asset prices don’t skyrocket—they collapse, both nominally and in relation to consumable commodities. A $300,000 house falls to $60,000 or less, or better yet, 50 ounces of silver—because in a hyperinflationist episode, a house is worthless, whereas 50 bits of silver can actually buy you stuff you might need.

Right now, I’m guessing that sensible people who’ve read this far are dismissing me as being full of shit—or at least victim of my own imagination. These sensible people, if they deign to engage in the scenario I’ve outlined above, will argue that the government—be it the Fed or the Treasury or a combination thereof—will find a way to stem the panic in Treasuries (if there ever is one), and put a stop to hyperinflation (if such a foolish and outlandish notion ever came to pass in America).

Uh-huh: So the Government will save us, is that it? Okay, so then my question is, How?

Let’s take the Fed: How could they stop a run on Treasuries? Answer: They can’t. See, the Fed has already been shoring up Treasuries—that was their strategy in 2008—’09: Buy up toxic assets from the TBTF banks, and have them turn around and buy Treasuries instead, all the while carefully monitoring Treasuries for signs of weakness. If Treasuries now turn toxic, what’s the Fed supposed to do? Bernanke long ago ran out of ammo: He’s just waving an empty gun around. If there’s a run on Treasuries, and he starts buying them to prop them up, it’ll only give incentive to other Treasury holders to get out now while the getting’s still good. If everyone decides to get out of Treasuries, then Bernanke and the Fed can do absolutely nothing effective. They’re at the mercy of events—in fact, they have been for quite a while already. They just haven’t realized it.

Well if the Fed can’t stop this, how about the Federal government—surely they can stop this, right?

In a word, no. They certainly lack the means to prevent a run on Treasuries. And as to hyperinflation, what exactly would the Federal government do to stop it? Implement price controls? That will only give rise to a rampant black market. Put soldiers out on the street? America is too big. Squirt out more “stimulus”? Sure, pump even more currency into a rapidly hyperinflating everyday economy—right . . .

(BTW, I actually think that this last option is something the Federal government might be foolish enough to try. Some moron like Palin or Biden might well advocate this idea of helter-skelter money-printing so as to “help all hard-working Americans”. And if they carried it out, this would bring us American-made images of people using bundles of dollars to feed their chimneys. I actually don’t think that politicians are so stupid as to actually start printing money to “fight rising prices”—but hey, when it comes to stupidity, you never know how far they can go.)

In fact, the only way the Federal government might be able to ameliorate the situation is if it decided to seize control of major supermarkets and gas stations, and hand out cupon cards of some sort, for basic staples—in other words, food rationing. This might prevent riots and protect the poor, the infirm and the old—it certainly won’t change the underlying problem, which will be hyperinflation.

“This is all bloody ridiculous,” I can practically hear the hyperinflation skeptics fume. “We’re just going through what the Japanese experienced: Just like the U.S., they went into massive government stimulus—hell, they invented quantitative easing—and look what’s happened to them: Stagnation, yes—hyperinflation, no.”

That’s right: The parallels with Japan are remarkably similar—except for one key difference. Japanese sovereign debt is infinitely more stable than America’s, because in Japan, the people are savers—they own the Japanese debt. In America, the people are broke, and the Nervous Nelly banks own the debt. That’s why Japanese sovereign debt is solid, whereas American Treasuries are soap-bubble-fragile.

That’s why I think there’ll be hyperinflation in America—that bubble’s soon to pop. I’m guessing if it doesn’t happen this fall, it’ll happen next fall, without question before the end of 2011.

The question for us now—ad portas to this hyperinflationary event—is, what to do?

Neanderthal survivalists spend all their time thinking about post-Apocalypse America. The real trick, however, is to prepare for after the end of the Apocalypse.

The first thing to realize, of course, is that hyperinflation might well happen—but it will end. It won’t be a never-ending situation—America won’t end up like in some post-Apocalyptic, Mad Max: Beyond Thuderdome industrial wasteland/playground. Admittedly, that would be cool, but it’s not gonna happen—that’s just survivalist daydreams.

Instead, after a spell of hyperinflation, America will end up pretty much like it is today—only with a bad hangover. Actually, a hyperinflationist spell might be a good thing: It would finally clean out all the bad debts in the economy, the crap that the Fed and the Federal government refused to clean out when they had the chance in 2007–’09. It would break down and reset asset prices to more realistic levels—no more $12 million one-bedroom co-ops on the UES. And all in all, a hyperinflationist catastrophe might in the long run be better for the health of the U.S. economy and the morale of the American people, as opposed to a long drawn-out stagnation. Ask the Japanese if they would have preferred a couple-three really bad years, instead of Two Lost Decades, and the answer won’t be surprising. But I digress.

Like Rothschild said, “Buy when there’s blood on the streets.” The thing to do to prepare for hyperinflation would be to invest in a diversified hard-metal basket before the event—no equities, no ETF’s, no derivatives. If and when hyperinflation happens, and things get bad (and I mean really bad), take that hard-metal basket and—right in the teeth of the crisis—buy residential property, as well as equities in long-lasting industries; mining, pharma and chemicals especially, but no value-added companies, like tech, aerospace or industrials. The reason is, at the peak of hyperinflation, the most valuable assets will be dirt-cheap—especially equities—especially real estate.

I have no idea what will happen after we reach the point where $100 is no longer enough to buy a cup of coffee—but I do know that, after such a hyperinflationist period, there’ll be a “new dollar” or some such, with a few zeroes knocked off the old dollar, and things will slowly get back to a new normal. I have no idea the shape of that new normal. I wouldn’t be surprised if that new normal has a quasi or de facto dictatorship, and certainly some form of wage-and-price controls—I’d say it’s likely, but for now that’s not relevant.

What is relevant is, the current situation cannot long continue. The Global Depression we are in is being exacerbated by the very measures being used to fix it—stimulus is putting pressure on Treasuries, which are being shored up by the Fed. This obviously cannot have a happy ending. Therefore, the smart money prepares for what it believes is going to happen next.

I think we’re going to have hyperinflation. I hope I have managed to explain why.

Wednesday, September 15, 2010

Internet Kill Switch Bill On Senate Short List

September 15, 2010 by Bob Livingston

The Internet Kill Switch Bill I’ve told you about before (here, here, here and here) continues to evolve and is creeping closer to reality.

According to Moneycontrol.com, two separate bills — one pushed by Senators Joe Lieberman (I-Conn.), Susan Collins (R-Maine) and Thomas Carper (D-Del.) and another backed by Senators Jay Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine) — have been combined and are now on the Senate’s short list for passage.

The new bill would give the power to shut down the Internet in case of national emergency to the Department of Homeland Security. Under the bill the Internet could be closed down for four months before Congress could review it. The bill would also require cybersecurity professionals be certified.

The elected elites couch the bill as necessary for national security, but Lieberman let slip the real reason when he told CNN’s Candy Crowley, “Right now China — the government — can disconnect parts of its Internet in a case of war. We need to have the ability to do that, too.”

Of course, China disconnects portions of the Internet whenever there’s civil strife, as do other totalitarian regimes. It’s done to suppress the flow of information. Elites hate the free flow of information.

Rockefeller has gone so far to say he wishes the Internet had never been invented and we still communicated with paper and pencil.

Senate aides told Moneycontrol.com the bill faces a number of hurdles but the goal is to get the bill passed and on President Barack Obama’s desk by the end of the year. The bill could come up in the next four weeks, or it could be much later, aides said.

This bill is about one thing: The totalitarian suppression of free speech. The elites and corporate press know they have lost control of the message. This has resulted in the rise of the Tea Party and general discontent over the direction of the American political system. That frightens the fascists on both sides of the aisle.

The Internet Kill Switch Bill is their effort to regain control.

Hat Tip: Infowars.com

Tuesday, September 14, 2010

Harry Reid Caught Using Fleet of SUVs

Senate Majority Leader Harry Reid has been caught using a fleet of SUVs at his Clean Energy Summit in Las Vegas, Nevada. While Reid, Center for American Progress CEO John Podesta, and other high-profile environmental activists blasted carbon-based fuels at the Reid-sponsored summit, Reid and other bigwigs were caught on film driving to and from the summit in several SUVs.

Heartland Institute Senior Fellow James M. Taylor was watching an environmental protest outside the summit when three large SUVs pulled up to the doors of the Thomas & Mack Center. Reid and a few aides hopped in. The SUVs then carted Reid and his aides 100 yards through a half-empty parking lot to the protest site. After telling protesters and assembled media about America’s need to cut down on carbon-based fuel emissions, Reid and his aides hopped back into the waiting SUVs for the 100-yard return trip to the Thomas & Mack Center.

Read more about the incident at Environment & Climate News.

“I was absolutely astonished, not to mention appalled, that Harry Reid would retain a fleet of gas-guzzling SUVs so that he and a few aides would not have to walk the mere 100 yards to address environmental activists,” said Taylor, who photographed Reid standing in front of his SUVs addressing the environmental protesters.

“If greenhouse gas emissions are such a problem, you would think Reid might have actually made the short stroll through the parking lot, or at least retain Priuses rather than large SUVs for the summit,” said Taylor.

James M. Taylor is available for interviews and can be reached at 941/776-5690 and jtaylor@heartland.org.

Monday, September 13, 2010

There’s A Reason Joe And Jane Voter Are Cranky

September 13, 2010 by Bob Livingston

President Barack Obama unleashed his October Surprise a little early, announcing last week his plan to get the Federal Reserve to print $50 billion more dollars and funnel it to the unions under the guise of improving America’s roads, railways and runways. Perhaps he wanted to get a head start in case this one fails, too.

The plan will bring the total amount of stimulus dollars allocated for infrastructure to $280 billion. You remember those shovel-ready projects that were supposed to stimulate the economy? They apparently weren’t so ready after all. Only about a third of the original $230 million has been spent.

Yet Obama feels the need to pile on more. He couched the plan, called the “Plan to Renew and Expand America’s Roads, Railways and Runways,” as a way to put people back to work. But the only people who are going to benefit are unions and Democrats running for the House and Senate who are going to get more campaign cash from the unions as a result of what columnist Michelle Malkin calls “The Mother of all Big Boondoggles.”

Malkin points out that because of Obama’s Executive Order 13502, contractors who bid on large-scale public construction projects worth $25 million or more must submit to union representation for its employees. Mandates of this sort raise the cost of projects from 9 percent to 18 percent depending on the project and the market, research has shown.

Even unions recognize that projects using union labor increase costs. Recent reports indicate that when labor unions need construction projects done they more often than not chose non-union contractors to do the work, admitting it’s done to save costs.

But Obama is willing to expedite the collapse of the United States economy for the immediate benefit of his union thug buddies and, ultimately — he hopes — his Democrat lackeys in Congress.

Whether he can get such a bill through Congress is another story. Even Democrats, sensing the mood of a populace growing increasingly skeptical of more government spending, are leery of voting for anything that will add the country’s debt burden.

It’s not that they oppose the spending. Were we a year or more away from elections Democrats — and not a few Republicans — would be eager to pile on the spending. After all, spending other people’s money is what the elected elites do best.

But politicians read polls, and polls showing that Republicans hold a 13-point favorability edge over Democrats in the Congressional elections have the Democrats feeling queasy.

Republicans — once so demoralized by the drubbing they received in the 2006 and 2008 elections — are feeling emboldened by the same news. They are — mostly reluctantly — joining with the Tea Parties to oppose more spending and more debt. Some of the GOP Congressmen who supported stimulus spending pushed first by big government, big spending President George W. Bush and then Obama have been handed their walking papers and are about to join millions of Americans in the unemployment lines.

That’s a good place for them. Hopefully they will be joined by many more elected (and suddenly newly-unelected) elitists after Nov. 2.

But if the GOP does as well as some are predicting and take the House — and possibly the Senate — they’d better not forget that the electorate is cranky. Joe and Jane Voter are fed up with politicians who get richer as “public servants” while Joe and Jane cut back on spending, try to pay down their debt and one or both are either unemployed or supporting an unemployed family member.

Joe and Jane expect the Republicans to repeal Obamacare, cut government spending, cut taxes, bring fiscal sanity back to Washington, eliminate regulations that hamper businesses and finally, create an environment that allows manufacturers and other businesses to return to America. Joe and Jane are aware that the biggest tax increase in U.S. history looms, as the Bush tax cuts are set to expire with 2010, and they expect Republicans to do something about that.

If the Republicans fail and continue to conduct business as usual — that is as they did while in the majority most of the period from 1994 until 2006 — Republicans will suffer in two years hence the same fate Democrats are about to suffer.

Meanwhile Recovery Summer — at least in the minds of Obama and Vice President Joe Biden — rolls on. (Don’t tell them summer’s over and Labor Day is behind us.) Unemployment remains high, housing starts and construction, manufacturing and consumer purchasing remain low. That’s quite the recovery.

By pouring obscene amounts of stimulus dollars into Wall Street, the banks and goofy programs that encourage consumers to spend money they wouldn’t otherwise spend, first Bush and then Obama and their Keynesian economic teams created a lot of little artificial bubbles throughout the economy. They gave the impression of a recovery but are now beginning to pop.

As the National Inflation Association wrote on Sept. 1:

The pain that was felt after the collapse of Lehman Brothers (in September 2008) is nothing compared to the pain that will come when we begin to feel the effects of bailing out the rest of Wall Street. U.S. second quarter GDP growth was revised down on (Aug. 27) from 2.4% to 1.6%. In order to get this 1.6% GDP growth, the U.S. government had to spend $3.7 trillion on bailouts, stimulus bills, the buying of mortgage backed securities, and other commitments.

General Motors reported today that their August deliveries fell 25% from one year ago to 185,176 vehicles. The U.S. government used "cash for clunkers" to buy GDP growth in 2009, but that growth stole from future automobile sales. NIA believes that GM’s sales decline is a sign that the U.S. will likely see a sharp contraction in GDP beginning in the third-quarter, which will lead to the Federal Reserve implementing the mother of all quantitative easing and cause a massive sell off in the U.S. dollar.

Christina Romer, outgoing Chairwoman of Obama’s Council of Economic Advisers, today called for more government spending and less taxes as a way to bring down unemployment. The combination of more government spending and less taxes equals massive inflation, but this represents the state of mind in Washington today. Inflation is still the last thing on their minds because they don’t see it yet.

Even though we might not see massive across the board price inflation at this time, gold and silver prices have been surging ever since NIA released its article "Gold and Silver Capitulation is Near" on July 28th. Gold is very close to breaking its all time nominal high of $1,264.90 per ounce set during June and silver is getting ready to test the critical $20-$21 per ounce resistance level.

Rising gold and silver prices indicate that the U.S. is headed for an explosion in budget deficits that will rise far beyond what it can pay for through borrowing. Leading Chinese economists are now calling Japanese debt less risky than U.S. debt and with the Japanese savings rate in decline, the U.S. will soon have nobody left to borrow from. The only option will be monetization and already the Federal Reserve is getting ready to buy $10 billion to $30 billion per month in U.S. treasuries to keep its balance sheet at inflated levels.

There are now 50 million Americans on Medicaid, with annual Medicaid costs rising 36% over the past two years to $273 billion. The recently enacted health care bill will add 16 million more Americans to Medicaid beginning in 2014, but the U.S. government will likely go bust by then. It is impossible to have an economic recovery when jobless benefits are encouraging Americans to stay unemployed. U.S. unemployment insurance spending has nearly quadrupled since 2007 to $160 billion annually. Even food stamp costs have surged 80% over the past two years to $70 billion annually.

Once Americans get used to receiving and relying on government entitlement programs, it is hard to wean them off of them. NIA has been hearing reports from members with friends who say they will only "come out of retirement" if they can find a job that pays $25 per hour or more, because with anything less it wouldn’t be worth losing their jobless and food stamp benefits. Americans expect to receive their jobless benefits forever and we are sure Obama will continue to extend them leading up to the 2012 election.

There are now countless warning signs all around us on a daily basis that the U.S. is headed for a complete societal collapse.

The Federal Reserve’s reign of economic terror is nearing an end. It has led to the loss of wealth — the dollar has lost about 95 percent of its value since 1913 — and mounting debt and those who thought they were coming out ahead by putting their money in a savings account have learned their money actually lost value due to inflation.

For the last 11 years the stock market has been stagnant, so those with retirement plans in mutual funds have not made money either. And some economists are predicting a 50 percent market crash by year’s end. (Meanwhile gold has climbed from $278 per ounce to $1,250 an ounce in the same time frame. Gold expert Jim Sinclair predicts gold to rise to $1,650 and beyond by mid-January.)

It seems the only ones making money are the elected elites, CEOs of the now mostly nationalized (through regulations that removed competition and granting of favored status gained by subsidizing the elected elites) large corporations, Wall Street fat cats, and Big Pharma. According to Philstockworld.com, about 10,000 individuals hold 30 percent of the nation’s wealth. The middle class has grown poorer and the number of people on the government dole has increased.

This discrepancy can’t continue and a major correction will have to occur. The free-spending actions of Bush and Obama have only pushed that correction down the tracks a little further. We agree with the NIA that the U.S. is headed for an economic collapse.

The question is; are you prepared? If you have bought gold and silver, stockpiled food, water, guns and ammunition and are prepared to grow your own food and barter for more food, water and guns, you are as ready as you can be.

Get ready. The ride is about to get bumpy. And who knows? Obama may yet have another surprise for us in October.

Friday, September 10, 2010

Is There Such a Thing as a Free-Market Bull?

By Vedran Vuk

Can you be a free-market supporter without being a bear? After all, government grows endlessly larger and larger. It’s hard to stay optimistic about what appears to be inevitable doom. But there are two ways of looking at the problem. Most are more familiar with the bears who watch for the next downturn and invest heavily in gold. And of course, in our opinion, this is a highly warranted perspective at the moment.

But there is a way to be a free-market bull, even in this grim environment. Instead of focusing on the growing size of government, this perspective focuses on the strength of capitalism. In many ways, capitalism has become stronger and stronger over the last century – especially on an international level. Today’s world trade is historically unmatched as new economies arise from absolute poverty. Market analysts can no longer focus on the U.S. and Europe alone but must pay close attention to Japan and the BRIC countries as well.

According to the free-market bull view, capitalism is similar to an avalanche. Once triggered in motion, little can stop the avalanche. One can throw regulations, social welfare programs, and other interventions into the avalanche’s way, but the snow will simply roll over them all. Even FDR was only able to choke off capitalism momentarily; free enterprise came roaring back after the war. His policies resulted in a Great Depression, but not a “Permanent Depression.” History sides with the bulls.

Capitalism has faced many dangers from Nixon’s abandonment of the gold, to LBJ’s Great Society, to endless spending in every administration. Through all of these events, capitalism somehow fights back, survives, and even prospers. Today’s companies and technologies are simply amazing. Our growth hardly appears stunted in the past few decades. If anything, these policies have slowed us down but haven’t stopped progress.

Does this mean the bears are wrong and bulls correct? Not at all. What really separates the two groups is timing.

The greatest free-market thinkers, such as Ludwig von Mises and Friedrich Hayek were certainly bears. Hayek wrote the Road to Serfdom during WWII because he thought that capitalism was coming to an end. In retrospect, his timing was off. Similarly, Ludwig von Mises wrote about the impossibility of socialist calculation and central planning. He never witnessed the fall of the Soviet Union in his lifetime, but ultimately he was correct. The bull and the bear believe in the same ideas. Only the free-market bull believes that the collapse will come later, while the bear believes it will come today.

Though the bull has been lucky thus far, there are plenty of cautionary tales that should warn him now. Japan’s lost decade is a glaring example. After years of regulation and intervention, something finally snapped. Almost no one saw it coming. It’s risky to be a free-market bull. Sure, the market might survive yet another recession, but it also might not. With the second longest recession continuing, even the bulls must be less confident now.

So what does the common investor take away from this? You could choose to be either a bull or bear. But there are smarter ways. In The Casey Report, we recommend holding one-third gold, one-third cash, and one-third other investments. Whether you’re a bull or a bear, the gold allocation makes sense. The bull looks at it as an insurance policy, and the bear sees a great investment. But regardless of the perspective, it’s worth owning.

Social Engineering Bill In Senate Will Force You Into City

September 10, 2010 by Bob Livingston

A social engineering bill to restrict residence in the suburbs and rural areas and force Americans into city centers has passed the United States Senate Banking Committee and is on the fast track to passage in the Senate.

The bill is called the Livable Communities Act (SB 1619) and it was introduced by corruptocrat outgoing Senator Christopher Dodd (D-Conn.). It seeks to fulfill the United Nation’s plan Agenda 21, adopted at the Earth Summit in Rio de Janeiro in 1992 and signed onto by “New World Order” President George H.W. Bush.

This bill is designed to destroy your community. According to the non-profit American Policy Center the bill:

Is a blueprint for the transformation of our society into total Federal control.

Will enforce Federal Sustainable Development zoning and control of local communities.

Will create a massive new “development” bureaucracy.

Will drive up the cost of energy to heat and cool your home.

Will drive up the cost of gasoline as a way to get you out of your car.

Will force you to spend thousands of dollars on your home in order to comply.

A carrot and stick policy will be used to get your local government to sign on. The carrot is billions of dollars in grants available if your local government agrees to amend zoning laws that restrict housing in outlying areas, forcing people to give up their homes and land and move into the city center.

The stick will be denial of the funds and bad publicity generated by “Green” organizations criticizing government officials for turning down free money.

The rub is the grants will come with strings attached that force local governments to bend to the will of the Feds.

The idea of these social engineering initiatives is to force people to live in a congested area in high rise buildings with housing on the upper floors and stores on the bottom. The whole area will be linked by mass transit creating the “utopian” communities loved by socialists.

The result will be higher costs for housing (because overcrowding will make housing space a premium) and goods and services (because of less choice and competition) and less freedom to move about (because cars won’t be necessary and parking space will be prohibitively expensive).

As we pointed out here President Barack Obama is — not surprisingly — an advocate of this type of nonsense. And his cabinet is populated by elitists who think they know better than you how you should live.

It is imperative that you call your two Senators immediately and tell them to oppose Dodd’s SB1619.

Wednesday, September 8, 2010

Ludwig von Mises

"Government is the only institution that can take a valuable commodity like paper and make it worthless by applying ink"

Friday, September 3, 2010

Vodafone joins queue of firms to leave China

Telecoms company is planning to sell its £4bn stake in China Mobile.

By Ambrose Evans-Pritchard

Published: 10:58PM BST 29 Aug 2010

Vodafone Group

The British mobile group holds a fifth of the free float of China Mobile, the world’s biggest operator with 554m customers. It is weighing options for an open sale of shares on the Hong Kong stockmarket, or through a direct deal with a strategic player.

Few company chiefs speak out against China for fear of hurting their prospects, but their numbers have been swelling recently. Peter Loescher from Siemens and J├╝rgen Hambrecht from Germany’s chemical group BASF told premier Wen Jiabao last month that the playing field in China is increasingly tilted against foreigners.

Chinese mobile market slows in weak economyJeff Immelt, the head of GE, vented his frustrations in Rome, complaining that the company’s efforts to gain a foothold in China were failing to pay off. “It’s getting harder for foreign companies to do business there. I am not sure that in the end they want any of us to win, or to be successful,” he said.

GE is moving production of its hybrid water heaters to Kentucky, saying rising Chinese labour costs and shipping costs make it more competitive to produce locally for the US market.

Steve Balmer from Microsoft said early this year that China’s software piracy was a constant thorn in the side. “China is a less interesting market to us than India or Indonesia,” he said.

The American and European chambers of commerce in Beijing have issued reports about subtle barriers, dubbed the “Great Wall of China”. They are particularly concerned by China’s central bank’s actions to hold down the yuan.

The European chamber said the investment climate in China was on a “declining trend”, as moves to open up the economy and lift curbs on foreign capital had reached stagnation. It said Beijing’s “Indigenous Innovation Policy,” uses procurement incentives to help Chinese firms at the expense of foreigners in fields such as software and clean-tech.

The US chamber said its survey found that 38pc of its members felt “unwelcome in the Chinese market”, up from 23pc in 2008. China is also becoming a more expensive place to operate, with rigid labour contracts that make it hard to fire workers and a rising tax burden.

Vodafone had once hoped to be the Coca-Cola of mobile phones, present in every corner of the world, so the retreat from China is a setback. The company continues to develop software with China Telecom, but plans to focus on its core markets of Europe, Africa and India.

JPMorgan has plans to shut down all of its prop trading desks, says Bloomberg.

JPMorgan Is Shutting Down All Prop Trading Desks

Courtney Comstock
Aug. 31, 2010, 3:00 PM



Email Article



Email Sent!

You have successfully emailed the post.

Jamie Dimon

Image: ap

JPM Sep 2 2010, 04:15 PM EDT

From Bloomberg:

CNBC just reported that under 20 commodities traders in London were told to apply for jobs elsewhere inside the bank.

They say the move will take around one to two months.

JPM told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all its proprietary trading, according to a person briefed on the matter.

The New York-based bank will shut proprietary trading in fixed-income and equities later, the person said.

Banks right now are changing the roles of their prop traders because of new regulations imposed on them by the FinReg bill.

There were rumors a few weeks ago that Goldman would shut down its prop trading units. Since then, those rumors have reversed.

But other banks - like Citi and Bank of America - have already made moves to change the roles of their prop traders.

The announcement about JPMorgan is different because they apparently plan to shut down ALL prop trading desks. News has only emerged about one or a number of prop trading desks closing at other banks.

But shutting down prop trading desks actually might resemble just changing the name of prop trading, not the practice. Prop traders are no longer "prop traders," and many have been moved to client-based desks.

(For a prime example of how the role of prop traders is changing, look how Citi changed one of their star prop traders's, Sutesh Sharma's, role at the firm.)

Proprietary trading can easily become related to client operations and very closely resemble the prop trading done on strictly defined "prop trading" desks.

Thanks to a line in the Volcker Rule which specifies trading "operations unrelated to customer operations," as long as the "prop trading" is done for client-related purposes, it's OK.

Napoleon Bonaparte

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain. -

Whose Side Is He On?

September 3, 2010 by Bob Livingston

The Barack Obama administration has sided with the world against Arizona. That’s essentially what he did when the United States State Department referred the Arizona immigration law to the United Nations Human Rights Council for review.

So first Obama has his Justice Department sue a sovereign state for seeking to uphold existing Federal immigration laws, and then he submits the law for international review by a committee on civil rights that boasts China, Saudi Arabia, Libya, Russia, Cuba, Pakistan, Tunisia and Egypt as members.

You know, those countries that make dissidents disappear into the bowels of gulags — if not graves — that demand its women stay covered from head to toe, that imprison political prisoners without trial, that mutilate women’s genitals, that forbid women from being in the company of men that aren’t blood relatives or their husband, that beat or stone criminals and that persecute Christians. Yeah, those countries.

That begs the question. Just whose side is Obama on?

Thursday, September 2, 2010

The King May Throw You a Bone, But He Won’t Give Up His Seat

One of my favorite essayists does it again. He somehow manages to find the perfect metaphor for a thought I've been repeating in various different ways for a long time. Democrats think they are the answer when republicans are in power and vice versa, and that things will get better when they're back in charge. How's that been working out over the last 100 years?
By Vedran Vuk

It’s hard not to get hopeful about a possible overthrow of the Democrats. But will things change as a result? In my opinion, yes and no. As an analyst for The Casey Report, I constantly analyze the past to discern future trends. In the last century, government has grown bigger and bigger, decade after decade. There’s no reason to expect an alternative outcome for the next decade. In this case, the trend is not your friend.

If an ETF or derivative tracked market freedom over the last century, it would probably be a penny stock by now. No one would get excited over an investment with a hundred-year track record of failure. And hence, we shouldn’t get too excited about political change.

Perhaps I’m wrong and this is the turning point. But just as picking the bottom of a stock is next to impossible, predicting the turning point for a two-century trend is even more improbable. For this reason, I will not be celebrating when the Democrats are booted out.

The nature of the beast will not change – no matter which party is in power. Economist Murray Rothbard put it best: “…the State is nothing more nor less than a bandit gang writ large.”

Many of my free-market friends say, “What a great line!” And then they quickly return to promising hope and change with a free-market flavor. However, I take the line quite literally. It’s not a funny jab at the government but instead a definition. The government is not some association where we hold hands and decide how to best run the country. The entire apparatus exists as an engine for wresting hard-earned goods from productive members of society. Millions depend on this gang writ large, whether through government contracts, agency jobs, or personal benefits.

Why, it’s not even difficult to find conservatives and libertarians living off the government dole. The richest counties of this country surrounding D.C. won’t relinquish their plush lifestyles for any ideology. Government employees, welfare recipients, and the government-made millionaires will fight tooth and nail for their money. The Tea Party soccer mom doesn’t stand a chance.

But some argue that this time, it can be done. Our positions make sense, the Tea Party has momentum, and things can improve. To an extent, this view holds some merit. After all, gangs of thieves can improve sometimes.

Could a decent person join the Bloods or Crips gangs in L.A and improve them? Sure he could. Occasionally, gangs do make peace treaties with each other. There are careless gangs that murder innocent bystanders in drive-by shootings, and there are those who assassinate their opponents with precision. A decent person could negotiate peace treaties and curb the violence. But what our reformist gang member can’t change is the nature of the gang.

Many larger criminal organizations perform good deeds for the public. Whether it’s giving out turkeys at Christmas or even building houses and soccer fields for the poor, as Pablo Escobar did in Columbia. The occasional kickback is the norm with large gangs and the governments. When the Republicans take over, they will likely throw out a turkey or two to the free-market mobs – most likely through a populist tax cut.

Of course, the D.C. free-market intellectuals will rejoice at these “victories.” However, these gains only work to disguise the enterprise’s true nature. The small respites from government growth build false hope in the government process. In reality, the government can change no more than can the Bloods or Crips. The king will throw a bone from his table to placate the masses, but don’t expect him to give up his seat.

Government has been and always will be crime and theft on a large scale. So, enjoy your Republican turkey when it comes, but don’t expect a revolution along with it. The road to serfdom continues. At best, our masters will allow a momentary pit stop on our march for yet bigger government.

A Minority of One

September 2, 2010 by Robert Ringer

As President Barack Obama continues to transform the United States into a socialist hell, yet another poke in the eye is the National Mediation Board’s recent proposal to make it easier for airline and railroad workers to unionize.

For 75 years the rule has been that in order for any class of workers (e.g., pilots) employed by an airline or railroad to unionize, a majority of all employees in that class have to vote for unionization. But the proposed new rule would require only that a majority of employees who actually vote on the question of unionization would be needed to unionize.

All Democrats love unions; Republican progressives love unions; and even many conservatives believe that a worker should be allowed to join a union voluntarily, so long as those who do not want to join the union are not forced to do so.

Which probably makes me a minority of one. Why? Because not only do I believe that workers do not have a right to unionize a company through tyranny of the majority, I don’t believe that any worker has a right to join a union without the consent of his employer.

It is a basic tenet of libertarian-centered conservatism that without property rights, no other rights are possible. Unfortunately, most people do not understand this fundamental concept. They view property only as inanimate matter, separate and apart from a person’s life. They cannot seem to make the connection between the two.

In actual fact, they are so connected that one is virtually an extension of the other. How can one separate a person’s life from his property? If you took everything that an individual owned, the fact is that he would not own his own life because whenever he attempted to create something for his personal gain, the fruits of his labor could again be confiscated.

The same is true of purchasing property. The money used to make a purchase presumably was earned through the purchaser’s efforts. That makes the money an extension of his life and, therefore, the same would be true of anything purchased with that money. No matter what the circumstances, when a person’s property rights are violated, his freedom is violated.

A libertarian-centered conservative (i.e., a true conservative) believes that no one has a right to any other person’s property, which includes both his body and everything he owns. Once this concept is understood it would be proper to say that, in reality, all crime is based on trespassing on the property of an owner.

When people make “humanitarian” statements about human rights being more important than property rights they are, in a sense, correct. That’s because human rights include property rights, as well as all other rights of man.

A man has the right to dispose of his life and his property in any way he chooses, without interference from others. By the same token, he has no right to dispose of any other person’s life or property, no matter what his personal rationalizations may be.

As explained in The Fundamentals of Liberty by Robert LeFevre, there are only three possible ways to view property:

Anyone may take anyone else’s property whenever he pleases.

Some people may take the property of other people whenever they please.

No one may ever take anyone else’s property without his permission.

It is self-evident to anyone who believes in individual liberty that the only morally valid way to view property is No. 3. Likewise, no one has a right to tell a property owner (property being land, buildings, a business or anything else that a person may own) what he can or cannot do with his property.

Take a business, for example. It belongs to the owner, whether he started the business himself or bought it from someone else. No one has a right to take any part of someone else’s business, nor do they have a right to tell him what he can and cannot do with his business.

If a business is a public company, it is the property of a large number of people (shareholders). Thus, size is irrelevant when it comes to property rights. When property rights are violated against a multinational corporation as opposed to a mom-and-pop business, it simply means that far more people become victims of government aggression. It is a moral absurdity to believe that bigness validates aggression.

Therefore, as a minority of one, I am compelled to say that regardless of the size of a business, the only way unionization is morally valid is if the owner of that business voluntarily agrees to it. Why? Because it’s his business! It’s his property! And it is his human right to set the rules for his own property!

In a truly free society, a worker has one inalienable, overpowering right with regard to his job: He can quit at any time. He is not a slave, so his employer cannot chain him to his work. If he wants to belong to a union he is free to search for employment with a company that allows workers to unionize.

The fact that many people reading this article will find my comments to be extreme speaks only to how far down the road toward socialism we have traveled. We no longer respect property rights, especially when the property is a business. Generations have been brainwashed into believing that abstract notions such as “the good of society” and “social justice” are more important than private ownership.

The proposed new ruling by the National Mediation Board opens a debate over the issue of whether 75 percent of the overall majority of workers in a given class should be required to unionize an airline or railroad, or just 75 percent of those who actually participate in voting on the question. But, in reality, the debate is nothing more than a distraction. The real debate should be over whether or not employees should be allowed to unionize at all without the consent of the owner.

This is precisely the kind of issue that has caused conservatives to lose their way over the years. Until politicians have the courage to confront an issue such as unionization head on and stop buying into debates about whether to move further to the left or stick to what has become the status-quo left, America will continue its acceleration toward total collapse — both morally and economically.

It will be interesting to see if anyone reading this article has a strong enough belief in the absolute sanctity of property rights to agree with what I’ve said here. That would be nice, because it would instantly elevate me to the status of being part of a minority of two.

–Robert Ringer