Order the DVD at: http://infowars-shop.stores.yahoo.net…
Fall Of The Republic documents how an offshore corporate cartel is bankrupting the US economy by design. Leaders are now declaring that world government has arrived and that the dollar will be replaced by a new global currency.

President Obama has brazenly violated Article 1 Section 9 of the US Constitution by seating himself at the head of United Nations’ Security Council, thus becoming the first US president to chair the world body.

A scientific dictatorship is in its final stages of completion, and laws protecting basic human rights are being abolished worldwide; an iron curtain of high-tech tyranny is now descending over the planet.

A worldwide regime controlled by an unelected corporate elite is implementing a planetary carbon tax system that will dominate all human activity and establish a system of neo-feudal slavery.

The image makers have carefully packaged Obama as the world’s savior; he is the Trojan Horse manufactured to pacify the people just long enough for the globalists to complete their master plan.

This film reveals the architecture of the New World Order and what the power elite have in store for humanity. More importantly it communicates how We The People can retake control of our government, turn the criminal tide and bring the tyrants to justice.
A film by Alex Jones.

http://www.ourfuture.org/blog-entry/2009124902/imperial-blues-0

Excerpt:

“Far worse in many ways than the money squandered on wars abroad is the attention consumed, the values distorted. This president understands that Americans are focused on the economic troubles here at home. In his speech last night, he argued “as we end the war in Iraq and transition to Afghan responsibility, we must rebuild our strength here at home. Our prosperity provides a foundation for our power. It pays for our military. It underwrites our diplomacy. It taps the potential of our people and allows investment in new industry. And it will allow us to compete in this century as successfully as we did in the last.”

Note the order of priority. Our “strength here at home” is needed because it (1) is the foundation of our power; (2) pays for our military; (3) underwrites our diplomacy. It also taps the potential of our people and allows us to compete globally. Stunningly absent in that martial list is any sense of creating a society that has eradicated hunger and poverty, that has secured the American dream for its citizens.“

And that, in a nutshell, is the inevitability of the fiat monetary logic.

Brisbane General Strike, 1912

Our old friend the essayist Jeff Snyder, author of the famous polemic on behalf of individual self-defense by handguns “A nation of cowards” from The Public Interest* in 1993,

*The influential former quarterly (1965-2005) founded by Irving Kristol and Daniel Bell (Nathan Glazer replaced Bell in 1973), reanimated this fall as National Affairs

and a contractarian ethicist much indebted to early republican thought, as well as such mid-to-late-19th century thinkers as Kierkegaard and the individualist anarchists, and Bertrand de Jouvenel from the mid-C20, has just posted his latest essay “Trust Busting By The People, For the People: A direct action plan for bringing down the US financial system“, at his new site Secessio Plebis:

A forum for direct action proposals to overthrow, supplant and undermine hegemonization and the political organization of society through nonviolent, cooperative social action, specifically, through withdrawal of support (moral, psychic and physical) and noncooperation.

Snyder’s links to such historic essays as “The Ethics of Dynamite” by Auberon Herbert are well worth the exploring.

Our response to an earlier draft of his essay follows.

I enjoyed the piece. Your analysis of the Federal Reserve System and fiat money, as you probably know, squares pretty well with what I read ages ago by Ludwig von Mises and Murray Rothbard in their respective writings on money, credit and the business cycle. And your reading of  , I think, comes through in your holding the state to the sort of strict contractarianism to which we would hold private parties, and which it routinely violates at every turn. The use of facts and figures was helpful, too.

In a way, I felt echoes of what those of us who cut our teeth on the hard-money movement of the 1970s and 1980s went through during and then after the historic run-up of gold and silver prices in 1980 – the distinction between investing in gold and silver from reasons of sound-money doctrine and/or allied fears of hyperinflation down the road, versus the pitfalls of investing in it and then taking potentially big hits when the prices no longer rose, and fell. My own education on that score, happily, only lost me $67.50, as c. late 1980 I invested in several rolls of silver dimes at $202.50, only to sell a while later when the value had dropped to $135. For such reasons of prudence,  Harry Browne, in formulating his Permanent Portfolio strategies to meet the changing times, recommended gold and silver as one of only four legs of a media-diversified portfolio that also included stocks, bonds and cash/money-market instruments.

The strong “Modest Proposal” aspect of the article comes through in the admission that those enacting in their financial lives the “radical” measures proposed will at each point take the sort of hits those undertaking “faith-based” purchases of gold and silver did in fact suffer during, per my example, the Reagan years. Right now, the kind of people making such “sacrifices for the cause”, as we know, are only a tiny minority of the hard-core committed, and are heavy in the Ron Paul demo. But witnessing among the great middle of the US population the sort of developed revolutionary consciousness required is, of course, highly unlikely from purely educational efforts and the sort of “unmasking” of the state characteristic of Spooner, Rothbard, &c., whose native demo, like most such subcultures, stays at a saturation point at well under a million members. What would probably be required to capture the numbers of people not otherwise susceptible to doctrinal appeals of the sort you and I have imbibed, is the ongoing development of crises and the resulting naked exploitations preceding and succeeding them of a sort too brazen not to be grasped by John Q. For the great majority of those with a steady income, a place to live, lights and cable TV and A/C that still work, and a car to drive, revolution prompting thoroughgoing withdrawal of assets from traditional media seems far off, to say the least. The essay admits up front that the measures suggested will require people to take an asset-hitting leap of faith, and people would do that only if they felt their immediate interests were directly threatened otherwise – and to avoid that sort of material threat developing, and the consciousness by a critical mass of the need to literally pledge their lives’-savings and fortunes (sacred honor having long since departed), the powers that be seem to have a “narsenal” of PR tricks and mystifications to keep most of us in our place most of the time. Alas. Which is not to say things could not get that bad at some future point. Whether even those of us most bleakly convinced of the state’s naked perfidies in all spheres would wish things to reach such a stage is an open question. We want to free the slaves, yes – but do we want to undergo another Civil War to do it? Are there ways less gut-wrenching? I haven’t a clue. Most even of our freedom-fighters are fairly comfortable, and disinclined to take to the streets with bullhorns when the conference tables of the think-tank already have their name cards laid out next to the water-pitchers and the C-SPAN cameras. The dogmas of voting, looking to the two Satanic parties, and rallying round the flag when “security” seems besieged are so proverbial among us as to render the mass-withdrawal scenario, at the moment, a wonderful seed for a screenplay, which is nothing to sneeze at – fiction is as fruitful an avenue to dramatize ideas, even, as here, sound ones, as nonfiction.

For more of my thoughts on historical tradeoffs, the anti-”heroic” mediocrity of our day and why that might not be the worst thing in the world, see my cracker-barrel philosophy of history sketched at Dan McCarthy’s blog, tossed off before Rod Dreher surprised me in quoting from it on his own popular “Crunchy Con” blog a few days later.

It is useful, though, as a clarifying thought exercise to sketch such counterfactuals as those outlined in “Trust Busting”, as we ask ourselves if freedom of the sort we seek is likely, possible or probable given the prices we’d all have to pay to get there, and whether we’d stick with the devils we know rather than give up big $ on behalf of those we don’t:

The undiscover’d country from whose bourn
No traveller returns, puzzles the will,
And makes us rather bear those ills we have
Than fly to others that we know not of.
Thus conscience (or, comfort, inertia, Anheuser-Busch) does make cowards of us all
And thus the native hue of resolution
Is sicklied o’er with the pale cast of thought
And enterprises of great pith and moment
With this regard their currents turn awry
And lose the name of action.

DSL.

G. Edward Griffin

Guest Interview

11/29/2009 – with Scott Smith

The editors of the Daily Bell are pleased to publish an exclusive follow-up interview with legendary hard-money historian G. Edward Griffin who has much to say about the economic crisis, the mood of the monetary elite and the effect of the Internet on freedom.

Introduction: Mr. Griffin is a distinguished film producer, author and political lecturer. He is the founder of Freedom Force International, a libertarian-oriented activist network focused on advancing individual freedom. First released in 1994, Mr. Griffin’s best-selling financial book, The Creature from Jekyll Island, is a no-holds-barred look into the inner workings of the Federal Reserve banking system, or cartel if you will. Mr. Griffin peels back the layers of obstruction to rational analysis and leads the reader on a wonderfully researched, although disturbing, journey from the very beginning, when the Fed was still in the planning stages, up to the present, where it is now struggling to survive. For many years, the editors of the Daily Bell have been avid readers of Mr. Griffin’s tremendous literary contributions on free markets and personal liberty. His insights are especially noteworthy given the validity of his vision and the exciting and troublesome nature of the times in which we live.

Daily Bell: Has the stimulus helped? Why or why not?

Griffin: Has the stimulus helped? I guess the question is has the stimulus helped whom? Or What? The general idea is that the stimulus is supposed to stimulate the American economy and help the American people and in that I don’t believe that there is any reason to think that it has helped at all. I don’t think it was really designed to do that at all. It was designed to be sold that way but I don’t think that anyone in Washington thought that it would actually accomplish the end objective. Now I suppose that some people did think so, I would have to backtrack on that, there are some collectivists that believe the government can solve all problems, that the government can take everything from the citizens and redistribute it back to them in a more efficient manner. There are people like that out there and they thought the stimulus package would help. Surely everybody understands that the money that is being spent is coming out of the pockets of the very people it is supposed to help.

Daily Bell: From the central banking mechanism?

Griffin: Yes, the government doesn’t have this money. The government is spending this money but they don’t have this money, and the paradox there is that they are not collecting it from taxes but they are just creating it out of nothing. They are using the Federal Reserve mechanism to create this money out of nothing, push it into the economy and then that results in inflation. The cost of it is born by everybody but it is usually born mostly by the people at the bottom of the economic scale who will feel the effects of inflation the most.

Daily Bell: Modern governments are supposed to take care of the poor, but often it doesn’t work that way.

Griffin: The very wealthy don’t suffer too much from the effects of inflation and the upper middle class get by OK, but the bottom part of the middle class and those who are on limited incomes have a real tough time with inflation. So I am saying the cost of all these stimulus packages are falling on the very people who are supposedly to be helped and not only that, the benefit is not going to those people at all but to the politically favored class, those who are in government jobs or government contracts with the government. It is going to the banks, going to the insurance companies, the big corporations – all who have strong lobbying influence with Washington. The money is coming from the middle and lower class and going to the politically favored class. So is it helping? It is helping the politically favored class a lot, it is helping the politicians a lot because they can posture and grandstand and say we are doing something, we are taking charge here. So it is helping them. But as for helping the economy or the people at large, it is a miserable failure.

Daily Bell: Are we headed toward price inflation?

Griffin: I think we are going to see some continued deflation in the economy, particularly in the bubble sectors. These markets had a long way to contract and I don’t think they are finished. However, it is inevitable that we are going to see price inflation and lots of it. Probably hyper-inflation because the only thing these people in Washington know is how to print more money which almost inevitably leads to higher prices.

Daily Bell: Isn’t price inflation already in the system?

Griffin: Of course it is, particularly in cost of living sectors – food, education and healthcare. Things people have to deal with every day. We are already are seeing price inflation there.

Daily Bell: Price inflation, which inevitably results from the printing of money. …

Griffin: What is interesting when you have a complete understanding about this, is to realize that while they are creating tremendous amounts of money out of nothing and pouring it into the economy through the politically favored class, as I mentioned earlier, at the same time a tremendous amount of money is dropping out of the system at the bottom because of the collapse of real estate values, the loss of savings, the writing off of bad loans, mortgages or writing off a $20k or $30k credit card bill or whatever the debt is. And eventually they go into bankruptcy court and they are cleared of that debt, that money literally goes out of existence.

Daily Bell: So inflation – which is actually the quantity of money – is evening out for the moment?

Griffin: With the fiat money system, money comes in and out of existence and people sometimes forget that fact. So in these economic downturn times, a lot of money is disappearing and at the same time is appearing at the top. The thing to keep your eye on is where the money is going out of the system. It’s coming out of the middle class. These are the people that have lost their savings, have lost the equity in their homes. They have lost all the money that they thought they had in the way of assets, a lot of it anyway. So we see there is money going out and at the same time there is money coming in. It is a transfer of wealth. The wealthy, because of the political connections, are making more and more money and the middle class is literally being squeezed. These guys at the top hope to squeeze these middle guys out of existence.

Daily Bell: Is the power elite running scared?

Griffin: I wouldn’t say they are running scared. I think they are cautious. I think things are unfolding pretty much the way they had anticipated all along. I think these people are smart enough to realize that as we come closer and closer to their New World Order, as they like to call it, the system is becoming more and more a command economy rather than a free market.

Daily Bell: But aren’t people waking up?

Griffin: There is a lot of upheaval going on. I think there is anticipation that there is a lot of waking up going on. But I think they have been preparing for that. I think they are cautious, but I think they fully expect to contain that or possibly turn it to their advantage. For example, if they could encourage rebellion, revolts and riots, that would provide the excuse for martial law. I think the motivation behind their equipping police forces and national guard units with crowd control weapons and the reason they have been building these massive FEMA concentration camps all around the country, is their anticipation of the need for a final crackdown.

Daily Bell: Has the Internet contributed to elite setbacks?

Griffin: I think the Internet has been the most powerful force to set back the plans of the power elite. They hate the Internet, they hate the free exchange of information. You can see the impact all around the world. The totalitarian systems are moving heaven and earth in order to regulate and restrict the free use of the Internet. They want to control it. They can control it. And they are working very hard as we speak to maneuver the legislation so that they will control it.

Daily Bell: How are they going about it?

Griffin: They are trying to sell it to the average person as a good move for the public. They are trying to convince people that if the government doesn’t control the Internet then we will have pornography, people will have their privacy stolen, children will be abused. A lot of people don’t really understand the real issues. They say “oh yeah, naturally we need more and more regulation on the Internet.”

Daily Bell: This is being done independently by governments?

Griffin: Actually, there is a movement afoot for the United Nations to control the Internet. The idea is that international control would be fairer than what we’ve got now, which is a good deal of American control. Of course, most countries don’t make any pretense of respecting individual rights or free-speech. They are totalitarian in nature. The whole world is filled with dictatorships of one kind or another, and these people have no respect for human rights or freedom of speech. You can be sure that if the United Nations winds up in control that the free exchange of information that the whole thing will come to a shuttering stop!

Daily Bell: Not a pleasant thought. But meanwhile, the power elite has other things to occupy itself with. Is it fair to say that the fiat money system is broken beyond repair?

Griffin: No, the fiat money system is all that the world has right now. Of course, it is not working well at all and thus there has been talk of a new monetary system – one that might possibly be backed a little bit by gold or silver. But that’s what they always say to sell it in the early stages. If you look at the people who are making these statements, the Western world leaders, they are enemies of gold and silver. They love fiat money. They want to control it because it’s a means of strengthening their hand over the people. Fiat money is not dead by any means.

Daily Bell: Is there more unrest in the West than the mainstream media suggests?

Griffin: Good question, I don’t know that I am qualified to answer that. My contacts indicate that there is a lot of unrest when you get out beyond informed groups to the people who make up the bulk of the population. But it’s unrest that is not knowledgeable; it’s not based on information.

Daily Bell: What is the trigger, then?

Griffin: It’s based on emotion and envy and anger and I am afraid that that kind of unrest can be used to bring about the very opposite of what we need in this world. If you can manipulate the mobs into being angry, say for example, at capitalism, then you can end up with something even worse.

Daily Bell: Yes, that’s why change has to be non-violent.

Griffin: And it has to be knowledgeable. It’s not knowledgeable to say the banks are failing and therefore capitalism has failed, so let’s try socialism. What’s left out of that argument is that the banks are not functioning within a free-market system. The banks in the world today are a prime example of collectivism. They are in bed with the government. They couldn’t exist without government favoritism and government monopoly. The banks and the government are practically one in the same. That’s not capitalism, that’s not free enterprise competition. But the masses have been told that that is capitalism. So when the collectivist system goes belly up, as it periodically does, then those who are misled can get angry at capitalism, which is the wrong target. I worry about that kind of rising resentment and anger in the world because it is not based on facts.

Daily Bell: Yet understanding of free-markets has taken off in the last decade, thanks to the Internet in large part.

Griffin: Funny, I am thinking that there are two parts in my brain fighting against each other at the moment. On the one hand I want to say something very positive and encouraging because there certainly are strong signs of a growing movement for the free market. But when you look at who is still in charge of the world’s governments and institutions, it’s still a very small component of the larger scene.

Daily Bell: But it is growing? …

Griffin: Yes, it is definitely growing and I believe it has a solid base to it. In fact, I get a great deal of encouragement from that. We just have to keep the fire under it and I think as more and more people become upset with the collapse going on around them, they will honestly start looking for a new way. And thanks to the Internet, many are starting to realize that we haven’t had free-enterprise capitalism, we haven’t had free markets for many years. I’m encouraged by that, but we still have a long way to go.

Daily Bell: We compared the Internet to the Gutenberg press and said the results would be similar. Do you think so?

Griffin: I think that is a good analogy. The Gutenberg press made information available to the masses and the Internet has done the same. Good analogy, yes.

Daily Bell: We’ve spoken about some general threats to the freedom of the Internet. Will the current American administration be able to crack down on the Internet and censor its messages about free-markets and freedom in general?

Griffin: The current administration can do anything it wants to do. That is the answer to the question. They have the political power, the military power and the economic power. They own the economy and they control the military. And the media goes along with everything they want to do. I think they want a crack down, and will try, but they are going to need some kind of an excuse. They are going to need some kind of a major event to justify it.

Daily Bell: Will Ron Paul and his free-market message have an increasing impact on American politics?

Griffin: I believe he will, but I don’t know if it will be because of his personal involvement or this thing that we might call the Ron Paul phenomenon. Ron Paul generated this phenomenon because of his astoundingly excellent position on so many policies and because he ran as a candidate of a major political party which gave him visibility, which he would never have had, particularly with young people. Once that is started, it can’t be stopped really. Once the bell is rung it can’t be un-rung. So I think, even if Ron Paul is not personally involved in any more political movements, that the Ron Paul phenomenon is going to continue to grow.

Daily Bell: We think the conservative movement is desperate to co-opt the libertarian message and has launched a number of artificial candidates to do so including notably Sarah Palin. Agree?

Griffin: I agree that that is a strategy they have considered and would execute if they could. When it comes to particular candidates, I don’t know enough about them. Sarah Palin is very hard to pin down. I don’t know what her political philosophy is. And that worries me, because if someone is offering themselves for leadership, especially in these troubled times, they have to stand up and say what it is they believe in. I am talking about real principles and not just in terms of whether we should or shouldn’t drill oil. That’s an issue, and an interesting issue, but what are the principles, what is the ideology, what is the yardstick that will be used, the guidelines that will be used to make all the decisions that come down the line.

Daily Bell: She comes off as free-market oriented in some ways but not in others. Most notably her ongoing support for the military industrial complex is problematic.

Griffin: I don’t know what her philosophy is. But I have a feeling that what you said is absolutely correct, that they are going to package her as a quote “conservative” whatever that means. Certainly, they are going to package her as a constructive alternative to Obama. Yet when it comes to the real issues like the loss of American sovereignty, the abolition of the Federal Reserve System, important issues like that, we don’t know where she stands.

Daily Bell: We think the American intel establishment is launching more and more conspiratorial and pro-war Internet sites – ones that nonetheless feature free-market rhetoric – in order to confuse the public. Agree?

Griffin: I am not aware of them but it sounds like something they should do. If I was running their strategy, that is exactly what I would do. I don’t know what sites you would be referring to but I would expect that to be the case.

Daily Bell: Will the American establishment media ever get to the bottom of 9/11?

Griffin: The American establishment media will never get to the bottom of 9/11 because they are controlled by the same financial and political forces that seem in some sense responsible for 9/11. I am talking about that cluster of personalities on the Council of Foreign Relations and the people that circle around them. They are the ones that are really calling the shots, not only in the government, but also in the media, educational systems, foundations, etc. The media is as much a part of that group as the government. So I don’t expect to see the media break step with the official position of the government.

Daily Bell: Why did John Farmer, the 9/11 Commission lead litigator, recently come out with a book that basically accused the entire American military, political and industrial structure of lying about what happened on that terrible day?

Griffin: I don’t know, I have not read the book but I am guessing that it might be a kind of decoy to lead people away from the real issue. I suspect that it is part of a decoy. Make a half confession instead of a fuller one.

Daily Bell: Did you ever believe this sort of free-market movement would exist – as it evidently does – within your lifetime?

Griffin: I never questioned whether there would be a free market movement – I was determined to be part of it. That is much of the focus of my work. Yes I did expect to see it.

Daily Bell: Can you list some of your own notable accomplishments – outside of writing one of the best books ever on the Federal Reserve – in aiding this trend?

Griffin: As far as my own work is concerned, others would be better to evaluate how effective that was. I just keep chugging away as best I can.

Daily Bell: What do you believe will happen within the next ten years? Are you optimistic for free markets and freedom in the West and in particular in America?

Griffin: I divide my view into the short view of history and the long view. I have to be honest and say in the short run that I am very pessimistic. I believe that the forces that brought us to this situation are firmly in control of the systems of the world right now. I don’t think we are going to see a turn around in the short term.

Daily Bell: You are speaking of governmental forces?

Griffin: No, I’m not just talking about the political structures, but about the media centers and the educational systems and the labor unions, the church organizations. All the great power centers where people have their leaders and derive their opinions. Those are now all firmly in the hands of collectivists who have this single goal of establishing a new world order based on the model of collectivism.

Daily Bell: You see it as very pervasive.

Griffin: They are in charge. Anyone who thinks we are going to turn that around quickly, well, I don’t think he or she is being realistic. But that does not mean that the long view cannot be favorable. I’m much more optimistic in the longer term. There’s no way to stop this thing in my view. They can stop some of us, but they can’t stop all of us. The ideas cannot be stopped. Once people understand the truth, they are not ever going to easily forget it.

Daily Bell: You’ve done a great deal to help with that effort.

Griffin: All of us together are building a movement where an understanding of free-enterprise and free-markets is reaching the point of critical mass. People are passing the word. Books are being written. DVD’s are being distributed. Outside of the mainstream media, the Internet is having a powerful impact. The overall flow of information is pretty strong right now. It is going to take about two generations, in my opinion, but in the long run I see total victory for free markets and for personal freedom. I feel really good about that.

Daily Bell: From our point of view, the Middle Eastern wars are intended to spread Western-style collectivist democracy to the Islamic world. Has the West stumbled in its war against the Muslim religion (failure in Afghanistan, Iraq, Pakistan, etc.)?

Griffin: Have they stumbled? In my view, the conflict between the Western world and Islam is largely manufactured. There is no question that there are extreme groups within Islam, but my own research leads me to the conclusion that those are the very groups that have been fronted, aided and abetted by forces within America because they wanted to create an enemy – a dreaded foe to justify all the other schemes.

Daily Bell: The BBC, in a program last year came to a similar conclusion.

Griffin: Without an enemy, they cannot fight a war. Without a war, they cannot justify being in the Middle East. If they are not in the Middle East, they can’t control the oil and on and on you go.

Daily Bell: So … it’s at least partially manufactured?

Griffin: The war against Islam is manufactured and is actually a war that need not be. Did they fumble the war? No they created it! They created it and it is just a meme. They don’t want to win the war! They want to fight the war for ten years, twenty years, thirty years. They are not fumbling it. It is exactly what they want. It is not a question of winning or losing, it’s a question of just having it, prolonging it and using it as a means of scaring the daylights out of the American people and conditioning them to accept the loss of their freedom at home.

Daily Bell: Homeland Security is a dangerous institution in our opinion and one of the prime outcomes of 9/11. Do you see it being rolled back?

Griffin: I do not see it being rolled back under the present regime. It is not there because the American people wanted it, it is there because rulers wanted it and we still have the same rulers. I don’t see any reason why they would roll it back. They might try to tidy it up a little bit, so far as public relations are concerned. But I would be very surprised if they cut its budget, cut its staff, cut its powers or anything like that. I think it is going to continue to expand, all aspects of it.

Daily Bell: We had a polite but public argument with the savvy Ellen Brown. Can you give us a further response to Ellen Brown’s (Brownian) perspective on nationalizing banks since they, rather than the Federal Reserve, are responsible in her view for banking abuses?

Griffin: Well I am not aware of that debate, but I am certainly able to address the issue of nationalizing banks. There is no reason in my mind for the banking system, or for that matter, the automobile industry, the motion picture industry, housing or any other part of American life to be run by the government. I don’t see any reason for the hospitals or medical clinics to be run by the government either.

Daily Bell: Good point.

Griffin: The idea that whenever there is a problem the solution is for the government to go in and take control is one of the most absurd and childish concepts I have ever heard of. The idea that the government can do anything better than the free market is just based on complete absence of understanding how the free market works. The only thing I think the government can do better than anybody else is to fight a war. The only thing a government can do better is to kill and destroy, and that is what it is good at. If war is used to kill and destroy in defense of a nation, in defense but not as an aggressive act, and it is used to defend the lives, liberty and property of its citizens then war performs a proper function, in my view.

Daily Bell: So you see a need for some kind of limited government, practically speaking.

Griffin: It is tragic that we have to defend ourselves. But history shows if you cannot defend yourself then you become a slave to someone who moves in and takes over. So we need to have the killing machine, but that’s about all.

Daily Bell: But not the banking system?

Griffin: The idea that government should be running the banks is absurd. The American government has been in the banking business since 1913 when the Fed was founded. The solution is not to get more into the banking business but to get the government out of it completely. So I would say no, let’s get the government out of the banks completely and then make the banks follow the rules and regulations that any other business must follow. Give them no favoritism, no subsidy, no bailouts. Make them honor their contracts and if they fail then they fail. Let new banks come into existence.

Daily Bell: How long has gold and silver been used as money? We think silver anyway is a substance that has been used in commerce for up to 10,000 years of human history, not 2,000 as certain monetary authorities suggest.

Griffin: I would have to get my notes out on exact dates but it doesn’t really make any difference if it’s been 2,000 years or 10,000 years. The real issue is not how long but how well it has performed in that function. When you look at the historical record, there is nothing that has done as well as gold or silver as a medium of exchange because it has all of the essential qualities required of money. It is not perishable, it’s divisible, it has great value and it can be precisely measured. People have used just about everything for a medium of exchange but nothing has worked as well as gold and silver for thousands of years. The record is clear on it. That is what history has chosen over and over again. Why do we have to go looking around for something else? I don’t understand that.

Daily Bell: Do you have any other comments to make regarding where we are at this point in the 2000s rather unique history?

Griffin: The only comment I would like to make is that it is an exciting time in which to live. I am glad I am living at this time. I am glad because, for me or anybody else who is a free-market thinking person and one who cares about the future, it gives us an opportunity to make a difference in the world. I think it is a wonderful time to be alive.

Daily Bell: Thank you, Ed. You continue to make a huge difference. It is always a pleasure and an honor to speak to a free-market legend in his own lifetime!
After Thoughts with Scott Smith

What can we say about this remarkable man and the remarkable and honest answers he has provided us? Ed Griffin has fought for freedom throughout his life and his famous book on the Federal Reserve has in one way or another inspired millions to question their assumptions about money and the reality of their lives in modern society.

Ed Griffin is an achiever for freedom and he has continuously made an effort to advance its cause. We don’t have any explanation for what makes Ed Griffin go. He obviously does what he does because he has to do it. We’re just glad he’s around.

If we had any quibble with this interview (how can we, really?) it would be in the area of pessimism – even short-term pessimism. We know Ed was just explaining his viewpoint as honestly as possible, but we think, generally, that pessimism probably expends negative energy that would be better spent doing positive things.

And Ed, despite his views about the elite and their controlling ways, has quite obviously never let pessimism slow him down. He went out and wrote a tremendous book (one of a number he has written) that literally changed people’s lives and perceptions of their culture.

Additionally, Ed is very active in the peaceful fight for freedom in America. He may be pessimistic, short term, but he is the most active pessimist we know. Every day he gets up and does his part, his share, to fight collectivism and to try to gain back some ground for the American Constitution.

For us, Ed is a great inspiration – as a leader, as a fighter in a peaceful revolution of ideas and as a person who has created a life based on an inspiring and important belief structure that he obviously built up on his own. Ed, by the way, lived much of his life in a pre-Internet era. Much of his adult work was conducted pre-Internet, which makes it all the more noteworthy.

For us, of course, as we have often reported, the Internet is something of a game-changer. We look at what the Internet has allowed people to accomplish in terms of supporting freedom, and we begin to believe that the changes that have been made by the Internet are “already in the pipeline.”

Yes people’s minds have already been changed. Now, Ed Griffin believes it may take another two generations to show overwhelming results. But maybe not. There is, as Ed himself agrees, a foundational freedom movement in America, and we see one growing in Britain as well. There are setbacks in all things, and cyclical turnings as well. But people like Ed Griffin and Ron Paul inform us through their actions and intent that there are always two sides at work – and at least two stories being told simultaneously. And maybe, ironically, Ed’s own efforts may contribute to speeding things up. Freedom, real freedom, may not take two generations to achieve.

We want to end by observing that Ed Griffin-a man who certainly ought to know – sees many positives in the world today and in the Internet as well. What we’ll take away from this interview is the energy it exudes, and the excitement that Ed obviously has about the future of freedom, even as he acknowledges, realistically, the challenges ahead.

Thanks again, Mr. Griffin, for all you’ve done and have yet to do.

Interviews and after-thoughts may include the contributions of several Daily Bell editors and writers.

The proof: In the people’s reactions and anyone viewing this video.

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But we have a group of scoundrels creating havoc. If we accept it is happening abroad, why can’t we accept it is happening here.

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False flags, betrayal, vaccines – anything to insure mayhem, fear and lack of fraternity…

<< GASP !! >>

Well !!  From the perspective of a new Libertarian-Progressive, and former Democrat, I say …

… maybe there’s hope for the Democratic Party …. after all!

Now … let’s see if the Democrats finally take the partisan blinders OFF COMPLETELY and recognize the dirty bankster hands in not just the U.S. military/industrial complex but also in our own country’s economic implosion as well!

There’s only ONE FIGHT worth fighting for, and that’s for the PRESERVATION on our own soil of the natural LIBERTIES of the Sovereign American Citizen as enumerated in the U.S. Constitution, for REAL, gold-backed currency, for ABOLISHING the Federal Reserve, for the REAL Free Market via ACTUAL Capitalism, and for restraint of Big Government to the limits as prescribed within the U.S. Constitution!

Biggest State Party to Obama: Get Out of Afghanistan

by Norman Solomon

Monday, November 16, 2009

(Reposted from CommonDreams.org)

This week begins with a significant new straw in the political wind for President Obama to consider. The California Democratic Party has just sent him a formal and clear message: Stop making war in Afghanistan.

Overwhelmingly approved on Sunday by the California Democratic Party’s 300-member statewide executive board, the resolution is titled “End the U.S. Occupation and Air War in Afghanistan.”

The resolution supports “a timetable for withdrawal of our military personnel” and calls for “an end to the use of mercenary contractors as well as an end to air strikes that cause heavy civilian casualties.” Advocating multiparty talks inside Afghanistan, the resolution also urges Obama “to oversee a redirection of our funding and resources to include an increase in humanitarian and developmental aid.”

While Obama weighs Afghanistan policy options, the California Democratic Party’s adoption of the resolution is the most tangible indicator yet that escalation of the U.S. war effort can only fuel opposition within the president’s own party — opposition that has already begun to erode his political base.

Participating in a long-haul struggle for progressive principles inside the party, I co-authored the resolution with savvy longtime activists Karen Bernal of Sacramento and Marcy Winograd of Los Angeles.

Bernal, the chair of the state party’s Progressive Caucus, said on Sunday night: “Today’s vote formalized and amplified what had been, up to now, an unspoken but profoundly understood reality — that there is no military solution in Afghanistan. What’s more, the vote signified an acceptance of what is sure to be a continued and growing culture of resistance to current administration policies on the matter within the party. This is absolutely huge. Now, there can be no disputing the fact that the overwhelming majority of California Democrats are not only saying no to escalation, but no to our continued military presence in Afghanistan, period. The California Democratic Party has spoken, and we want the rest of the country to know.”

Winograd, who is running hard as a grassroots candidate in a primary race against pro-war incumbent Rep. Jane Harman, had this to say: “We need progressives in every state Democratic Party to pass a similar resolution calling for an end to the U.S. occupation and air war in Afghanistan. Bring the veterans to the table, bring our young into the room, and demand an end to this occupation that only destabilizes the region. There is no military solution, only a diplomatic one that requires we cease our role as occupiers if we want our voices to be heard. Yes, this is about Afghanistan — but it’s also about our role in the world at large. Do we want to be global occupiers seizing scarce resources or global partners in shared prosperity? I would argue a partnership is not only the humane choice, but also the choice that grants us the greatest security.”

Speaking to the resolutions committee of the state party on Saturday, former Marine Corporal Rick Reyes movingly described his experiences as a warrior in Afghanistan that led him to question and then oppose what he now considers to be an illegitimate U.S. occupation of that country.

Another voice of disillusionment reached party delegates when Bernal distributed a copy of the recent resignation letter from senior U.S. diplomat Matthew Hoh, sent after five months of work on the ground in Afghanistan. “I find specious the reasons we ask for bloodshed and sacrifice from our young men and women in Afghanistan,” he wrote. “If honest, our stated strategy of securing Afghanistan to prevent al-Qaeda resurgence or regrouping would require us to additionally invade and occupy western Pakistan, Somalia, Sudan, Yemen, etc. Our presence in Afghanistan has only increased destabilization and insurgency in Pakistan where we rightly fear a toppled or weakened Pakistani government may lose control of its nuclear weapons.”

Hoh’s letter added that “I do not believe any military force has ever been tasked with such a complex, opaque and Sisyphean mission as the U.S. military has received in Afghanistan.” And he wrote: “Thousands of our men and women have returned home with physical and mental wounds, some that will never heal or will only worsen with time. The dead return only in bodily form to be received by families who must be reassured their dead have sacrificed for a purpose worthy of futures lost, love vanished, and promised dreams unkept. I have lost confidence such assurances can anymore be made.”

From their own vantage points, many of the California Democratic Party leaders who voted to approve the out-of-Afghanistan resolution on Nov. 15 have gone through a similar process. They’ve come to see the touted reasons for the U.S. war effort as specious, the mission as Sisyphean and the consequences as profoundly unacceptable.

Sometime in the next few days, President Obama is likely to learn that the California Democratic Party has approved an official resolution titled “End the U.S. Occupation and Air War in Afghanistan.” But will he really get the message?

WeThePeople Tell The Government What To Do, NOT the other way around!

The majority of people have turned against Zionism (with frightening speed), including the majority of Jews outside Israel. Then what is left for the oligarchs of finance and media to do? To also shed the zionism.

The cavalcade of anti zionist sentiment, often highlighted in the Israeli press, is surely striking home.

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Where will this leave the die hard settlers and neocon backers? Out in the lurch is the answer.

Well known is the politician’s ability to turn on a dime, less well known is the same abillity for the Oligarchs and even the religious.

After all they rule over populations, that abide by neither religion nor free market economies. And how will these oligarchs deal with their brethren, those extremists in the West Bank, who actually believe in a Greater Israel.

I think at the very top of Judaic power a decision has been made to abandon Zionism, for the sake of keeping Jewish identity and power. They know whites are still the dominant economic class in post apartheid South Africa.

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And all the zionist control of our institutions will have to be transfered to other hegemonic goals, yet still enshrine the same people.

All that can go wrong with this plan is a war, and who would start that???? The lunatic rightwing Israelis would, and they want to do it in the name of all of the Jews. The Israeli PM is relaying the message that all Jews are part of this Mafia, and they are ready to enforce it, speaking just a week ago 9-9-09, Netanyahu said:

Netanyahu’s speech at Jewish Federations of North America GA

Strengthening Jewish identity can no longer be a task exclusively for the Diaspora.

It is increasingly the responsibility of the Jewish State. Over a decade ago, I was proud to be the first Prime Minister to allocate state funds to bolster Jewish identity outside of Israel.

And I assure you that in my second term, I intend to do even more.

Which is a call to ensure all Jews assist in taxing the Goyim, and waging war on Islam, so that Jewish Fiat Money rules. And whatever money Israel allocates (from US foreign aid) will be used like a carrot and stick on Jews to abide, first with incitement, secondly with pain.

Leaving any intelligent or humanist Jew to say, take your judaism and keep it.

There are a couple of myths in Israel:

1/ Only the right can make peace.

2/ War is profitable

talk about getting it wrong

Meanwhile there are some bigwigs in the diaspora waging a campaign now that says a Jew does not have to mean one is a Zionist or a war criminal.
The established Zionist British MP Gerald Kaufman voiced the first realization that Post Zionism has hit the Zeitgeist.

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British Jewish Zionist MP Gerald Kaufman says Israel acting like Nazis in Gaza

“They are not simply war criminals; they are fools.”

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http://detnews.com/article/20091117/METRO/911170327/1409/METRO/Silverdome-sale-price-disappoints

“Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County. [...]  The price: $583,000. [...] We had hoped it would have brought more, but now the city can be freed of its upkeep and get it back on the tax rolls,“

This is what deflation does. It reduces nominal wealth thus it reduces overall revenue streams and so it reduces tax revenue. As nominal wealth declines, entities can no longer expand outstanding debt due to diminished collateral. As revenue declines, entities can no longer expand debt and/or service existing debt and must lay off workers. As tax revenue falls, local governments have to lay off and curtail public spending.

Allowing banks to disregard mark-to-market accounting rules aims to avoid just this type of situation in the hope to buy time.

But inflation has a limit. If that were not the case, then you would expect some degree of direct correlation between inflation and GDP progression. But that is not the case. Since 1980 government and household debt expanded by 1200% to $26Trillion but GDP only expanded by 100% to $14Trillion. Thus inflation conforms to the law of diminishing returns.

From the inception of the modern Dollar in 1913 inflation proved to be a barrier almost immediately in 1929. Subsequently, by declaring convertibility to gold but not allowing anyone to check the quantities of the metal in storage, the USA were free to pretty much print whatever amount of money they wanted. Till the late 60s when the situation was fairly similar to where we are today.

By the early 70s it was decided to abrogate the monetary agreement that had been in force since WWII in favor of floating exchange rates meaning that now Europe too was on a fiat monetary system. Thus inflation could now be pushed into the new vacuum of the European markets. Then came globalization effectively allowing us to push inflation into the last remaining markets and the Euro that allowed us to inject a further dose of inflation in Euroland. Thus till very recently, inflation could come to the rescue of governments by decreasing nominal debt outstanding.

There are no more markets of any consequence that we can bring in on the inflationary gig. Thus my contention that we’ve reached the end of the inflationary cycle.

Industrial capacity and debt obligations are at historic highs. Interest rates, savings and capacity utilisation are at historic lows.

Why would gargantuan spending by governments to add even more industrial and commercial capacity solve anything?

Incidentally. Gargantuan government spending guarantees prolonged deflation because increased taxes will erode spending, hiring and investment. Therefore, if anything, spending of this magnitude only serves to delay the eventual recovery.

So, buying time may be a viable strategy if and when inflation has room to run. I think inflation can no longer be expanded at this point and that a gradual contraction in prices, wages and asset values is with us for some years to come.

The trouble is that the existence of government if predicated on inflation. No inflation = the bankruptcy of government.

Can a Western government declare bankruptcy?

Chipping away at public services one item at the time….

As government is unable to expand credit markets and as most tax revenue is going towards debt service despite the lowest interest rates in history, public service must be curtailed.

Curtail enough public services (police, fire fighting, refuse disposal… health care…… pensions) in an environment where unemployment is rising at the same time that the power and business elites are implicated in scandal after scandal and you got yourself the ideal conditions for civil unrest.

http://money.cnn.com/2009/11/16/news/companies/US_postal_service/index.htm

Civil unrest means government will fall.

I know that. Some other people know that. Some politicians may know it too and of those that don’t know it, they can feel the winds of change bearing down on their little fiefdoms.

How do you prevent a total loss of power of the incumbents? You engineer a war of course and, at this rate, the next war will be a real war where Western society will be packed off to the front, civilian industry will be turned into war industry and food and energy will be rationed.

You may think I am off my rocker.

If I am right and, so far, empirical evidence tells me I am because:

The gargantuan amount of money that has been created in the past year alone has so far failed to work it’s multiplier magic on the overall economy

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And since the gargantuan sums that have been handed over to banks are just sitting there

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And because we still have significant overcapacity

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… and because of this…

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… and because of this…

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… and finally, in an economy that is 80% consumer based, because of this…

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… if I am right (and the above data says I am) and we have entered a cyclical deflationary era, government won’t be able to expand credit markets no matter what it does and monetization of the debt issued by the treasury is not going to help if not to destroy the currency thus the economy.

Incidentally, considering that the Bank of International Settlements estimates global financial obligations to be worth at a minimum US$500Trillion and that world GDP was at one point hovering around US$50Trillion and that the majority of these derivatives are held by US and EU banks (and only four banks hold the lion share of the lot)… major global currencies are not going to take kindly to the moment in time when these obligations must be satisfied…

Can a Western government declare bankruptcy and, in one fell swoop, admit that, in fact, we are no better than your garden variety Mugabe?

I think not.

If any of the above indicators don’t start trending in the opposite direction we’ll have us a war by 2013/2015 latest.

This blog is for my buddy Jim.

When I switched my major from business to economics, I had no idea the change it would bring to my life. Perhaps I was naive. I thought economists were a bit more progressive. I thought that economists were legitimate “thinking outside the box” folks. So, when I received a B on a paper about how a sustained rise in energy prices would lead to unchecked inflation because this idea was “completely ridiculous”, I was a bit disheartened. I wrote this paper circa 2003, long before the effects of rising energy prices were felt a couple years ago. But I digress.

Getting back to the gold standard… This caveman style of money fits right up there with having king rule. It is practically the same principle. He with the most gold rules. The gold standard comes from the innate human desire for shiny objects. A piece of shiny yellow metal that has relatively little utility compared with other natural resources, should not dictate the value of a country’s currency.

Now, back in the day (when the world was obsessed with shiny yellow metals), a gold standard would make sense. During those times, it was important. Today, gold has limited economic use. The high price of gold today is merely because of speculation about the USD and belief that the antiquated gold standard has merit.

The reality is that a country with little gold but an abundant supply of other natural resources and production and consumption of goods and services or advancements in science is far more valuable than a country that has tons of gold and little to no production.

Back in the day, kings didn’t have vast computer systems and economic tracking abilities. So, they did things the easy way. I’ve got gold. I’ve procured more gold. I am a better king. Today, we could smart bomb the king and take all his gold. The gold wouldn’t make our currency more valuable, but the smart bomb would.

Economic, political, social, medical, banking, and other infrastructure systems should (and arguably MUST) evolve with technology. Currency values can and should be defined by the value of a country’s output and consumption. Awaiting Jim’s Austrian theory of economics response

You can’t make this stuff up…

http://online.wsj.com/article/SB125799009185344567.html

“Budget experts said committing some TARP funds toward debt reduction could help calm concerns about the size and intent of the program.“

I don’t doubt you are all good people, but it is hell here on the ground. Everything is upside down.

There’s a lot of betrayal, framing and deception.

Being in your position must require a lot of alliances, but really, I reckon some of them are dubious.

There’s the fundamentalists, the criminals and the enforcers. Somewhere amongst it all are some very clever people.

But here on the street, its like being in a prison. The criminals run the police, everything is corrupt.

And one gets in trouble for speaking the truth. Can’t you do anything about it?

I mean being at the top, and owning all the banks, is it worth all this aggravation?

Everyone is uptight and afraid.

For your enforcers fear is the only weapon left, it is constantly coming at us from all angles.

The whole shebang has become sordid, all the joy and fun has evaporated.

Man has turned against man. I think the Fiat money thing is finished.

It’s just produced a lot of lies.

There’s no point in you saying “but it is everybody”, coz we can’t even say what we’d like to say.

All we hear is “ave another pint”. But there must be more to life?

Not so long ago, people trusted each other, doors didn’t have to be locked. Now anyone is on constant Guard.

People are disappearing, getting framed and getting spiked. That is the reality.

While all the media says is some politician said this or that, well the bottom is falling out.

Petrol waiting for a spark is the best way to explain things.

What about speaking out for a change? Before it comes uninvited.

We can talk about the Rothschilds, but we cannot talk about the enforcers with no uniforms.

And they never tell us their names, and they never show themselves. And so many of us try to mimic this modus operendus that operates above us.  Hence the only mobility on offer is crime and corruption.

For how long will we imagine that our politicians have any power? That they are even privy to the facts? Or that they can see the wood for the trees.

If you ask me, we need to adopt some Sharia laws.

History is full of Rothschilds that turned around, starting with the Buddha.

AUTHOR of 2007’s Crash Proof: How to Profit from the Coming Economic Collapse, Peter Schiff is an investment adviser, blogger and frequent commentator for dozens of financial print and television media outlets, reports Hard Assets Investor.

President of Euro Pacific Capital, Peter Schiff served as an economic adviser to Republican candidate Dr. Ron Paul during his 2008 presidential campaign, and he is currently running for US Senate, opposite incumbent Democrat senator Chris Dodd in Connecticut.

While at the recent Inside Commodities conference recently, Hard Assets associate editor Lara Crigger grabbed a few minutes with Peter Schiff to take his pulse on the global economic markets, including his thoughts on runaway inflation, the Dollar’s future as a reserve currency, and a possible return of the Gold Standard…

HardAssetsInvestor: Earlier today at the “Commodities 2010: The Road Ahead” panel, you said you think the US is headed for runaway inflation, rather than deflation. Why?

Peter Schiff, president, Euro Pacific Capital: We’re headed that way because we’re creating too much money. Interest rates are too low. The Federal Reserve continues to expand its balance sheet. It continues to buy up assets that it shouldn’t be buying. That is basically the poison that the government has decided to swallow.

We have a choice between allowing a deflationary bust, allowing asset prices to collapse, allowing businesses to fail and allowing the recession to worsen in the short run; or we can try and postpone some of that pain by creating inflation, and deal with the inflation pain down the line. The latter is what the government has chosen. Unfortunately, they chose wrong, from the point of view of the American consumer, the American worker, the American saver. The American economy is going to pay dearly for the price of re-electing some of these incumbent politicians.

Crigger: On that same panel, you also said you thought the Dollar would eventually lose its status as the world’s reserve currency. What do you think it will be replaced with?

Peter Schiff: I don’t know. Hopefully nothing. I don’t think we should have a reserve currency.

Crigger: Why not?

Peter Schiff: Well, it’s led to a lot of problems in the global economy. When the Dollar was backed by Gold, and was redeemable by gold, it being the reserve currency was okay. But at the moment, there are no currencies backed by gold. So I think that foreign central banks should hold gold as their key reserve, and not another currency. They can also have some foreign currencies as part of their overall reserves, but I think that gold should play a much bigger role in giving value to currency.

Remember, you can’t have a monetary system without money. And money is gold. Just printing paper – there’s nothing behind that. There’s nothing intrinsic there. It always leads to chaos. If you can just print money at will, it has no scarcity. Then you have inflation; you have these asset bubbles; and you don’t have a well-functioning global economy. Hopefully we don’t anoint another reserve currency.

Crigger: But what about a basket of currencies?

Peter Schiff: Well, foreign governments can hold baskets of currencies, but I wouldn’t want something run through the International Monetary Fund, where they’re creating baskets and so on. I don’t want to interject the IMF in there.

But certainly, the only other aspect would be how you price certain key commodities. Just because oil is priced in Dollars doesn’t mean that currency is or should be a reserve currency. It just means that’s the currency they’re looking to price in. But they can also price in Gold Bullion.

I think pricing in the Dollar is going to change, because as the Dollar becomes an increasingly weak currency, if you’re going to price things in Dollars, that means you’re going to have to constantly raise your prices in order to retain your value. It might be better for countries like the Opec oil nations to pick a currency that’s more stable, so that they have more transparency in their pricing. I think that will happen across the board for other commodities; those that are now priced in Dollars might end up being traded in other currencies with a more stable value.

Crigger: Does this mean you’re advocating a return to the Gold Standard?

Peter Schiff: Well, the gold standard works. What we have now does not. Our founding fathers put us on a gold standard for a good reason, because paper currency existed around that time. It had existed in the past. And they were familiar with how miserably it had failed. So they wanted to set us on a gold standard. And we became the world’s wealthiest nation while on the gold standard. We were on the gold standard for all of the 19th century, which was our fastest-growing century (more so than the 20th century). We had the Industrial Revolution; we built up our arsenals and our democracy – we won World War II on the gold standard. We were actually on the gold standard up until Richard Nixon ended it in 1971. So to say that the gold standard is somehow arcane, or that you can’t have economic growth on the gold standard – that’s all nonsense.

It’s the politicians who don’t like gold, because Gold imposes discipline on politicians. It keeps them honest, and politicians don’t want to be honest. They want to get elected.

Crigger: So which commodities do you think will do well in 2010?

Peter Schiff: Gold!

Crigger: Gold, of course. Anything else, though?

Peter Schiff: I like them all. Agriculture. Silver. Silver will probably do better than gold, actually.

Crigger: Because of its industrial applications?

Peter Schiff: Yeah, and I think it has some interesting factors. Usually in bull markets for precious metals, you should look at the ratio of gold to silver. At the moment, silver looks cheap to me.

Crigger: Thank you very much for your time! Enjoy the conference.

Looking to Buy Gold today? “If there’s an easier way, I’ve yet to find it,” says one BullionVault user…

Hard Assets Investor, 10 Nov ‘09

Hardassetsinvestor.com is a research-oriented website devoted to sharing ideas about investing in the natural resources sector. Published by Van Eck Associates Corporation, the site offers an educational resource for both individual and institutional investors interested in learning more about commodity equities, commodity futures, and gold – the three major components of the hard assets marketplace.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Trends forecaster Gerald Celente discusses the Newspeak of State officials with Lew Rockwell, Jr.: “The wealth of the nation is going to the ‘too big to fail’s” (13:41):

Download the mp3 here.

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What Is Inflation and How Does One Measure It?

by Michael Shedlock

To understand inflation, one must first understand what money is and how to measure it. Please read What is Money and How Does One Measure It? before attempting to understand what follows.

Unfortunately there is no general agreement as to the definition of inflation. Here are some of the widely used definitions as noted in Inflation: What the heck is it?

Commonly Used Definitions

1. Decline in purchasing power of the currency held
2. Rising prices in general (essentially the same as #1 although some might disagree)
3. Rising consumer prices (CPI)
4. Rising producer prices (PPI)
5. Rising prices due to expansion of money supply
6. Rising prices due to expansion of money supply and credit
7. Expansion of money supply
8. Expansion of money supply and credit

Four of those definitions refer to money supply. That brings up another issue. When one refers to “money supply” are they talking about M1, M2, MZM, Money AMS (Austrian Money Supply), or simply the amount of money they have in their bank account or wallet at the time of the conversation?

Definitions 5 and 6 refer to “rising prices” yet fail to distinguish between consumer prices, producer prices, or simply prices in general. It seems we could easily add a lot more definitions.

Furthermore, some people make no distinction between money and credit but others do as noted by choices 5 thru 8.

Still others insist than in the fiat world we are in, the web is so tangled between money and credit that this mess is not even worth bothering to figure out. Those folks simply hold gold and wait for “The Crash”.

However, it is simply impossible to have a debate about inflation (or anything else) unless the parties can agree on a definition.

Like it or not, we live in a fiat world. Therefore we must attempt to have sound definitions that best describe the fiat world we are in.

The definition I adhere to is: Inflation is a net expansion of money supply and credit, where credit is marked to market. Deflation is the opposite: a net contraction of money supply and credit, where credit is marked to market.

Popular View

The most common definition of inflation is rising prices.

Moreover that is the definition central bankers want you to believe. That definition allows central bankers to print money at will, generally inflating prices everywhere (until asset prices crash as they just did), all the while proclaiming they are “inflation fighters”.

Austrian economists see things differently. They understand that rising prices are a possible “result” of inflation, not a measure of it. While all Austrian economists would agree with that statement most I believe would ignore credit and simply state that inflation is an expansion of money supply (again with many different interpretations of what “money” is, even amongst Austrian economists).

Theoretical Stance Yields Poor Results

While I am sympathetic to the theoretical notion that inflation is an expansion of money supply, such a definition leads to impractical results. Take the idealized case of a country on a gold standard. The true amount of money is the measure of gold.

However, prices can soar if more credit is extended on the gold than there is physical gold. This happened in spades in the prelude to the great depression (and many other credit bubbles as well, all of which ended in deflation).

Prices can also soar or collapse for other reasons such as a change in time preference (the desire to hold money vs. spend it), shortages caused by crop failures, rising productivity, new deposits (or lack thereof) of natural resources, and what other central bankers are doing in regards to printing money.

It is complete silliness to think the Fed is in control of (or can even properly measure) prices, especially asset prices. The Fed ignored asset bubbles twice recently with disastrous consequences. Yet, there is no good way to judge why stock prices are rising. Stock prices can rise as as a result of increasing productivity, falling or rising commodity prices, or simply because of central bank printing.

Merriam Webster Definition Of Inflation

It is virtually impossible to measure why prices are what they are and the “why” is what is important. Thus a focus on prices is misguided. The 1957 Merriam Webster definition of inflation was “An Increase in money supply and credit”.

The definition now found in the Merriam Webster online dictionary puts the cart before the horse, but it at least still has the cart and the horse in the definition. Most commonly used definitions don’t.

Main Entry: in·fla·tion
Pronunciation: \in-ˈflā-shən\
Function: noun
Date: 14th century

1 : an act of inflating : a state of being inflated: as a : distension b : a hypothetical extremely brief period of very rapid expansion of the universe immediately following the big bang c : empty pretentiousness : pomposity
2 : a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services

It is by design of the Fed and bankers that the definition has morphed into common usage to something that removes the Fed from its role in causing inflation.

Cause Of The Great Depression

I believe it safe to say that Austrian economists in general would agree that the cause of the great depression was the massive runup in credit that preceded it. Of course the policies of the Fed and Government in attempting to fight deflation made matters much worse.

Clearly then, credit has a role in the boom, and credit had a role in the bust, so one must take credit into consideration.

Making matters worse, in a fractional reserve system, it can be very difficult to distinguish between what is credit and what is money. The prime example of this is the debate as to whether savings accounts are a measure of credit or money.

A strong theoretical case can be made that in a credit-based fiat regime that the proper measure of money is simply base money supply and that everything else is credit.

Indeed, as I have pointed out most “money” in checking accounts is not really there at at. It has been lent out, redeposited, and lent out again. In other words it is imaginary.

Let’s take another look at three measures of money supply.

Base Money Supply

M Prime

True Money Supply

Wide Difference Of Opinion About What Money Is

The above three charts depict “money”, each with their proponents. There is also M1, M2, MZM, and M3, also with their proponents.

Those measuring money as Money AMS or M Prime would have money supply at something like $2,500 Billion. Those sticking with TMS would come up with money supply at $5,500 billion. While base money supply is $1,800 billion. That is quite a difference.

The TMS explanation on Mises says “The True Money Supply (TMS) was formulated by Murray Rothbard and represents the amount of money in the economy that is available for immediate use in exchange.”

The above statement is false. If everyone were to go and withdraw money tomorrow there would be a massive systemic crash and bank failures because the money simply isn’t there. The deposits are imaginary.

Please consider this Rothbard snip about savings accounts from The Inflationary Boom: 1921-1929

In recent years, more and more economists have begun to include time deposits in banks in their definition of the money supply. For a time deposit is also convertible into money at par on demand, and is therefore worthy of the status of money. Opponents argue (1) that a bank may legally require a thirty-day wait before redeeming the deposit in cash, and therefore the deposit is not strictly convertible on demand, and (2) that a time deposit is not a true means of payment, because it is not easily transferred: a check cannot be written on it, and the owner must present his passbook to make a withdrawal.

Yet, these are unimportant considerations. For, in reality, the thirty-day notice is a dead letter; it is practically never imposed, and, if it were, there would undoubtedly be a prompt and devastating run on the bank.[2]

Everyone acts as if his time deposits were redeemable on demand, and the banks pay out their deposits in the same way they redeem demand deposits.

The necessity for personal withdrawal is merely a technicality; it may take a little longer to go down to the bank and withdraw the cash than to pay by check, but the essence of the process is the same. In both cases, a deposit at the bank is the source of monetary payment.

TMS adds in savings accounts because they “act” as if the money is there available on demand, even if it is not. However Shostak does not add in savings accounts for precisely the same reason. I side with Shostak.

The irony is that most of those claiming to only count money and not credit in their definitions are doing anything but.

Moreover, even Shostak’s Money AMS or M Prime includes the results of credit transactions because money from checking accounts has been swept into savings accounts and lent out. (See the discussion of sweeps in What is Money and How Does One Measure It?).

The fact that savings deposits have no reserve requirements at all makes matters even worse.

Practically Speaking, Both Money AMS and True Money Supply Contain Credit

As long as one is embarking down a “practical path” one may as well have a completely practical model.

My practical model as defined in Fiat World Mathematical Model says that credit and credit marked to market dramatically effect the way the economy works.

In a fiat world, money is printed into existence by the central bank – in the United States the Fed. Given there is nothing backing up this money, it is inherently worthless. However, one can think of as real. It was printed (even if only electronically), therefore it exists.

In addition to the previously mentioned money supply, fractional reserve lending allows credit to be extended by banks and financial institutions on top of that inherently worthless money. Indeed, banks and financial institutions have leveraged credit to base money at ratios of 30-1, 50-1 or even higher.

It’s pretty amazing if you think about it: Credit is extended with 30-50 times leverage on inherently worthless paper.

Ponzi Financing

Borrowers have to pay interest on the amount borrowed. However, the interest and the debt cannot possibly be paid back except by an ever expanding Ponzi scheme of lending. That scheme can last only as long as everyone believes the debt can be paid back and the market value of that debt keeps rising.

It’s a faith based system in which banks extend loans and hold the credit on the books (or in many cases off the books in various structured instruments). The banks are thought of as being well capitalized as long as the value of credit on the books in relation to their reserves meets some ridiculously low minimum set by the Fed.

This is how the system works, using the term “works” loosely.

Day of Reckoning

The day of reckoning comes when asset prices start falling, defaults soar, and the value of credit on the books starts plunging. That day of reckoning has arrived.

And if leverage is high enough, as it was with Bear Stearns and Lehman, the institutions are wiped out overnight. Citigroup (C), Bank of America (BAC), Fannie Mae (FNM), Freddie Mac (FRE) and AIG are essentially in the same position of Lehman except the taxpayers via the Treasury are funding the bailouts.

Practically speaking, the process of wiping out that credit (or even marking that credit to market) has a profound affect on the way asset prices react, the way corporate bond yields react, and the way treasury yields react.

Practically speaking we are in deflation by many measures of credit, as well as symptoms such as treasury yields, falling home prices, the CPI, rents, credit card rates and usage, etc, while those looking only at Money TMS (or even money AMS) say we are not in deflation and never will be.

One can define inflation and deflation however one wants. However, a true test of the model is how well it predicts behavior of people and asset prices in comparison to stagflationary periods in the 70s as well as a universally recognized deflationary period like the Great Depression

Valid Measures Of Inflation?

Money AMS (which M Prime tries to mimic) may be a good measure of “Monetary Inflation”, with True Money Supply (TMS) is a fair second-best choice. However, neither properly accounts for the real world effect of what happens to the economy when bank lending and credit falls off the cliff.

This “recovery” we have seen is based on a mirage, that the debts on the books of banks is not as bad off as everyone thought. This is what happens when a Fed and Congress throw $trillions around in bailouts and various stimulus plans.

Did the Fed stimulus temporarily produce inflation causing marked to marked credit on lenders books rise? Yes that is possible, perhaps even likely given the reaction to the stock market.

However, given that true mark to market accounting is not taking place and banks and lenders are playing shell games with the Fed and investors, it is not possible to know.

What we do know is that banks are not lending.

Total Bank Credit

Total bank credit is in uncharted territory at -5%. The series has never gone below 0 before. We can also see excess reserves piling up at banks.

Excess Reserves At Depositary Institutions

The Fed has printed but the money is just sitting there. Is that inflation?

Please consider this audio with Austrian Economist Frank Shostak on Mises on September 30, 2008 discussing recent actions by the Fed.

Will this printing create [price] inflation? This is dependent very much on what money will do next. If banks will not lend and banks sit on that cash forever and ever like the great depression because the risk is too high and the banks do not know if the lending will end up in good assets or bad assets, and because banks are in so many bad assets now they probably will not lend at all.

That is the observation that Murray Rothbard made, that during the Great Depression that banks have chosen not to lend because the risk of accumulating bad assets was far to high. So they were sitting on massive reserves. That is what is developing right now.

A good example is what happened in Japan in 2001-2002 where the Bank of Japan pumped 300% at one stage and lending continued to collapse. I expect similar things to happen here. If lending will not increase we can conclude this will not be inflationary.

Why Aren’t Banks Lending?

Inquiring minds might be asking “Why Aren’t Banks Lending?”

1) There are no credit-worthy businesses that want to borrow.

2) Consumers are tapped out and do not want to borrow.

3) Banks are scared to death of pending commercial real estate losses, credit card losses, residential real estate losses, home equity lines of credit losses, and losses in general.

4) Asset prices are simply too high (and banks know it) and the securitization market has dried up

Number three above is the most critical one. Banks need those reserves to cover future writeoffs.

Assets at Banks whose ALLL exceeds their Nonperforming Loans

ALLL stands for allowances for loan and lease losses.

Allowances for loan losses will decrease as charge offs increase. However, the above charts are in relation to non-performing loans.

Because provisions for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings have been wildly over-stated. That is one indication of optimistic forward earnings.

Another indication of optimistic forward earnings is that banks have not yet gone to a mark-to-market model on assets. Factor both together and financial earning estimates are wildly optimist.

Not only are forward earnings estimates ridiculous, future writeoffs are poised to soar.

Square Pegs And Round Holes

It is important to understand that all of us are attempting to model our own interpretations of how to apply an Austrian economic model in a fiat credit-based world.

Measuring inflation solely by Money AMS or True Money supply while ignoring credit even though both measures contain credit transactions is attempting to put a square peg into a round hole.

As a practical matter, I could see a deflationary credit bust coming and called for all time record low yields in treasuries on January 20, 2008 in Time To Short Treasuries?

Kass: The bond market is in a bubble that is reminiscent of (and quite possibly as extreme as) other bubbles during previous eras. From my perch, the only issue is the timing of this trade.

Mish: Timing is indeed everything and perhaps there is a temporary selloff. But the primary trend is for lower yields. Perhaps much lower yields. There is no bubble in bonds. Not yet.

Those who want to see how low treasury yields can get and stay there, need to look at Japan. Yields in the US are going to go far lower and stay lower longer than nearly everyone thinks.

Right near the tip top of the commodity bubble on June 26, 2008 when everyone thought yields were going to the moon and the dollar would crash I asked: Is The Inflation Scare Over Yet?

Those focused on the CPI failed to see any chance of the Fed Fund’s Rate at 2.00 again. On the other hand, those focused on the destruction of credit from an Austrian economic perspective got this correct. That is just one reason why it makes more sense to watch the credit markets than the CPI. The second is the CPI is so distorted it is useless.

In my opinion, it is very likely new all time lows in the 10-year treasury yield and 30-year long bond are coming up.

Tuesday, January 06, 2009: Reflections On 2008, Themes For 2009

It is quite possible the lows in treasury yields are in. Unlike 2008 where I was constantly beating the drums for lower yields, 2009 could be different.

Well 2009 was different and the reason is the massive amount of stimulus. However, that stimulus has not produced any meaningful results as can be seen by jobs and by bank lending.

As a practical matter this looks like the false bounce in Spring of 1930.

Humpty Dumpty On Inflation

Assuming we can all agree that the US was in deflation in the 1930’s, then let’s discuss the conditions at the time as well as what happened to cause those conditions.

Please consider Humpty Dumpty on Inflation

Practical Definitions Of Inflation And Deflation

Most know my definitions by now but here they are again for convenience.

• Inflation is a net increase in money supply and credit.
• Deflation is a net decrease in money supply and credit.

In both cases credit must be marked to market to make any practical sense out of what is happening. Those who focus solely on money supply cannot easily explain stock markets that have fallen in half (this does not happen in disinflation), TIPs yields, a global race to ZIRP, or many other events that are happening.

Humpty Dumpty Defines Inflation

Unfortunately there are many definitions of inflation and deflation strewn about. Some play the role of Humpty Dumpty changing meanings at whim, switching from commodity prices, to consumer prices, to expansion of base money or M3 or whatever measure of money seems to be expanding at the fastest rate.

Some do the inflationista two-step to avoid admitting that we are indeed in deflation, choosing instead to call it “disinflation”

In short: “We are going to have a period of deflation that we will instead call disinflation.”

‘When I use a word,’ Humpty Dumpty said, in a rather scornful tone,’ it means just what I choose it to mean, neither more nor less.’

‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

‘The question is,’ said Humpty Dumpty, ‘which is to be master – that’s all.’

A Practical Look At “Flation”

Here is a table of conditions and whether or not one would expect to see those conditions in inflation, deflation, stagflation, hyperinflation, and disinflation. Some expectations are debatable so I left those blank.

click on chart for sharper image

That chart is from December 11, 2008 thus some may disagree with where a few of the marks are.

Still others might suggest that treasury yields are now rising and the bottom in treasury yields is in. Certainly at 0% the short end of the curve has bottomed, and perhaps the long end has too.

However, as a practical matter, the 10-year treasury yield at 3.40% as of November 2, 2009 is amazingly low, especially in light of the fact that hard-core inflationists expected yields to do be soaring to 10% based on misconceptions about the CPI and/or money supply.

Symptoms vs. Definition

Bear in mind the above table is a table of symptoms one would expect to see in deflation. A practical test of a good definition inflation and deflation is whether or not one would have predicted those symptoms based on their model of inflation and deflation.

Those following money supply or the CPI certainly could not have reasonably expected a simultaneous massacre in both the stock market and treasury yields in conjunction with rising corporate bond yields.

Those who could see and understand what a collapse in credit would do, had no such problems.

Where To Now?

Corporate bond yields have fallen since I wrote about Humpty Dumpty. And certainly the stock market has risen. However, underlying credit conditions have not improved.

Marked-To-Market valuations have likely improved, but given the underlying fundamentals have not changed, I see no reason to change my model just yet.

Credit (and credit problems) dwarf monetary concerns at the present.

Until something happens to disrupt that model (far more likely from Congress than the Fed at this point) I see little reason to change my model. In fact, it will likely not be the model that changes, but rather changing conditions will give the model a different forecast.

Right now, I still expect the US to slip in and out of deflation and recession for years to come just as happened in Japan. I also expect we will suffer through a Decade of Lost Jobs.

Those focused on money supply alone, the CPI, the stock market, so-called leading indicators, or any other factors are likely to miss the boat unless their forecast just happens to be in alignment with credit conditions.

Unfortunately, I cannot state a precise measurement of inflation or deflation given the shell games at the banks and the Fed regarding mark-to-market accounting.

However, the hard data shows banks aren’t lending, consumer credit is contracting, credit writeoffs are likely to exceed monetary printing, and symptoms like treasury yields are in generally in agreement. That to me is good enough.

Given that credit conditions and bank lending have not changed and treasury yields are still near historic lows, fears over run away prices and soaring interest rates are misplaced. You can choose to call this environment “inflation” or “stagflation” if you want. No one can stop you. However, practically speaking, there is far more “stag” than “flation” and the proper prefix is still “de”. The stage is set for another market crash.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post ListMike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

On ABC’s “This Week with George Stephanopolous”, George Will of The Washington Post points to India’s recent run on the dollar as an indicator for a coming fall in the subjective greenback in favor of “other better stores of value”. Veteran White House correspondent for ABC, Sam Donaldson, says if that’s the case, “then, we’d better throw Ben Bernanke and the Fed out… Let’s get rid of them now before they do further damage.” (2:13):

Subcommittee Guts Ron Paul’s Bill to Audit the Fed

by Charles Scaliger

3 Nov 09 | The New American

The Federal Reserve Transparency Act (H.R. 1207), Congressman Ron Paul’s landmark bill to audit the Federal Reserve, has been gutted in a House subcommittee as it works its way toward a vote in the full House. The bill, which has garnered an astonishing 308 cosponsors from both parties, has attracted the scalpel of North Carolina Democrat Mel Watt (whose district happens to include Charlotte, the home of Bank of America, America’s largest commercial bank). According to Congressman Paul, whose Campaign for Liberty posted a video on the bill last weekend, Watt has cut out “just about everything” in prepping the bill for a full committee vote. (6:42):

The bill in its original form required audits of Fed transactions with foreign banks, of its deliberations on monetary policy, of the activities of the Open Market Committee, and disclosure of communications between the Federal Reserve Board and reserve banks. All of these provisions, according to Congressman Paul, have been removed. “There’s nothing left,” Paul told Bloomberg News in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

Congressman Paul intends to try to reinstate the bill’s original language and provisions in full committee deliberations, and is hopeful that many of the bill’s hundreds of co-sponsors will exert appropriate pressure on the committee to bring the bill in its pristinity to a full House vote sooner rather than later.

One of the bill’s most powerful sponsors, Congressman Barney Frank (chair of the House Financial Services Committee), intends that the bill in its final form require a lapse of time between Fed actions and their disclosure to auditors and Congressional overseers. Frank believes that a delay would “lessen market impact” while ensuring Fed accountability in the longer run. Congressman Paul, however, is opposed to any such dilution of the bill’s language, believing that any mandated delays in holding the Fed accountable would allow the central bank too much room to evade responsibility.

Congressman Paul is still optimistic that the bill will pass in some form, given the magnitude of support it has received. He noted that the Federal Reserve and the interests that defend its so-called “independence” (read: “secrecy”) are very entrenched and unlikely to yield without a fight.

The current struggle underway to subject the Federal Reserve to congressional scrutiny may turn out to be as historically significant as President Andrew Jackson’s titanic contest of wills with the arrogant, crafty head of the Second Bank of the United States, Nicholas Biddle. The latter, in trying to stave off the dissolution of his beloved seat of power, used the resources of the bank to create a recession and marshaled all his allies in Congress and business against Old Hickory, but ultimately lost the battle. Whether Congressman Paul and his allies can carry the day against Fed Chairman Bernanke and his host of establishment supporters remains to be seen.

*************

(h/t: SaveOurSovereignty3)

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The “Affordable Health Care for America Act”: some facts and falsehoods about the latest push towards socialized medicine from Freedomain Radio. (18:11):

References: http://www.fdrurl.com/tn60

Stefan Molyneux runs Freedomain Radio, the largest and most popular philosophy show on the web. His books, podcasts, and videos are available free on the web. Mr. Molyneux accepts donations with the utmost gratitude.

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Democracy is the rule by the will of the majority. One of the characteristics of democracies is the decentralization of power so that the power of each entity can be checked and scrutinized by other entities thus no one entity can act unilaterally and independently.

The monetary system however, falls outside the democratic process and is imposed by government.This fact in and of itself is already an aberration as politicians are not at all well versed in economic theories and applications and, even if they were, political considerations would always trump economic considerations. Politicians are politicians because they want to lead a group of people. Therefore, politicians must inherently and by necessity be ideologues manipulators of information. They have no idea of the how and why the economy works or doesn’t work as the case may be and, if they did, populism would overcome any other consideration under penalty of losing the power to lead. The only thing politicians know is that they need money. Lots of it.

Also, not only does government retain the right to impose a monetary system but it also retains the right to manipulate interest rates.

In the West, in a gambit to keep up the appearance of satisfying democratic principles, governments have bestowed the authority to set interest rates and create the currency to an ostensibly independent “authority” that in the USA is the Federal Reserve.

Since 1913 in the USA and then in Europe from 1971 and then gradually around the world, governments have imposed on their societies a “fiat” monetary system.

Fiat money is a construct that has little grounding in reality. Unlike value based money, the creation of a given quantity of fiat money is a deliberate act. One would assume (hope) that this deliberate act would be grounded in economic conditions. However, empirical evidence shows that not to be the case.

Thus the combination of fiat money and democracy can only result in an accelerating inflationary trjectory leading to a final inflationary blow-off phase followed by deflation.

http://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-monetary-system/

Inflation is not an equitable dynamic. At the outset, the result of inflationary policies will show up fairly evenly across sectors leading to gains in asset prices and wages for all. But as the inflationary dynamic progresses, inflation shows up more in some sectors than in others creating bubbles that eventually burst (tech bubble, housing, currencies…). In a fiat monetary context the usual remedy for a bursting bubble is to create more money (liquidity) thus pushing even greater degrees of inflation into the system.

As the inflationary dynamic develops and as bubbles burst along the way, inflation progressively shows up in fewer and fewer sectors until towards the end of the dynamic all nominal gains are concentrated exclusively in the financial sector.

You may wonder why.

Fiat money is a dynamic that is exponential in nature thus limited mathematically. The entity that benefits the most from inflation is the entity that receives the money first. Every subsequent user of the money benefits less and less from the use of fiat money. This is because every additional Dollar bill created devalues all previously created money.

In the USA, the Federal Reserve creates the bills and loans them the the Treasury. That’s right. The money is loaned at interest. Thus, the very instant that a Dollar bill crosses the threshold of the Federal Reserve on its way to the Treasury, it is devalued by and amount equal to the interest rate the Fed charges.

Thus, if someone rustled up all the money in circulation and returned it to the Fed, he/she would still be in debt to the Fed by an amount equal to the interest outstanding on the money that has been repaid….

…

…. can you spot the absurdity… ???

If we return all the money in circulation, we would still be in debt to the fabricator of the currency. However, having now returned all the money, there would be no money left in circulation with which to pay the interest owed…

This is where you would have to sell yourself to the fabricator of the currency and you better hope he’ll have you…

- If the American people (or any other people) ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered. The issuing power of money should be taken from banks and restored to Congress and the people to whom it belongs. I sincerely believe that the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.
(Thomas Jefferson)

- Permit me to issue and control the money of a nation, and I care not who makes its laws. (Mayer Amschel Rothschild)

Therefore, towards the end of the inflationary dynamic, all nominal gains are concentrated in the financial sector because it is the entity closest to the fabricator of the currency. Naturally not all in the financial sector profit equally, thus you have your Lehmans and your Washington Mutual sacrificials for example.

Without counting corporate debt,

- in 1980 we needed $2 Trillion of debt to produce GDP worth $6 Trillion

- in 2008 we needed $13 Trillion of debt to produce GDP worth $6 Trillion

It is unclear to me why or how anyone would think this trajectory is sustainable. If a similar arrangement is not sustainable for an individual household, it most certainly is not sustainable by the government because government finances are sustained by the individual household. How’s that for absurd.

And, incidentally, 2008 GDP is nothing like 1980 GDP distorted as it is by hedonic adjustments and imputations for example, two gimmicks aimed at showing lower inflation in the CPI ( so as to pay less pension increases for example) but higher GDP growth. Gimmicks as I said.

Let’s try a different approach.

In order to be able to do this:

-

-

Government has only two options:

Option 1 – GDP must advance faster than debt (this, incidentally, is the ideal option)

-

-

Since 1980, Federal debt has expanded from roughly $1 Trillion to just shy of $12 Trillion. That is an advance of well in excess of 1000%. But as attested by the above official data, GDP has only expanded from $6 Trillion to just above $13 Trillion. That is an advance of just over 100%.

Thus option 1 is clearly not in play here.

Option 2 – Interest rates must be manipulated lower

-

http://mwhodges.home.att.net/piechart.htm

Towards the end of the inflationary dynamic, the state has a vested interest in disregarding the law.

If you’ve read my rants prior to this one, you know that my pet peeve is the monetary system. And although you may sympathize or even agree with my position, what very few of you will agree to is that the monetary system does not only affect the economy but also our social structure and the way we live our lives.

If towards the end of the inflationary cycle you agree that in order to maintain a positive inflationary trajectory government must disregard the law, I am almost sure you may have a harder time still understanding how unconstitutional behavior in matters of terrorism relate to inflation.

http://www.informationclearinghouse.info/article23896.htm

Excerpts from the article:

“Yesterday, the Second Circuit — by a vote of 7-4 –  agreed with the government and dismissed Arar’s case in its entirety.  It held that even if the government violated Arar’s Constitutional rights as well as statutes banning participation in torture, he still has no right to sue for what was done to him.  Why?  Because “providing a damages remedy against senior officials who implement an extraordinary rendition policy would enmesh the courts ineluctably in an assessment of the validity of the rationale of that policy and its implementation in this particular case, matters that directly affect significant diplomatic and national security concerns” (p. 39).  In other words, government officials are free to do anything they want in the national security context — even violate the law and purposely cause someone to be tortured — and courts should honor and defer to their actions by refusing to scrutinize them.”

“Reflecting the type of people who fill our judiciary, the judges in the majority also invented the most morally depraved bureaucratic requirements for Arar to proceed with his case and then claimed he had failed to meet them.  Arar did not, for instance, have the names of the individuals who detained and abused him at JFK, which the majority said he must have.  As Judge Sack in dissent said of that requirement:  it “means government miscreants may avoid [] liability altogether through the simple expedient of wearing hoods while inflicting injury“ (p. 27; emphasis added).”

One of the keys to being able to ride roughshod over standing laws is the ability to escape scrutiny and/or the ability to escape prosecution. The end of the inflationary cycle must inevitably bring about a hardening of the institutions related to security and, gradually, to a militarization of civic institutions such as the police. As that is happening, the state also needs to make sure that whatever standing laws may exist in the land, they may not be brought to bear upon the administration.

Inflation as a deliberate policy is pernicious.

The only reason the government of a nation chooses a fiat monetary system is to have the ability to push inflation (creation of credit and money) faster than underlying economic activity.

Fiat money is a fantastic construct that would allow for fine tuning of the economy and mitigation of the effects of the natural ebb and flow of economic activity.

However, in a democratic context as incumbent administrations necessarily follow one another in the seat of power, fiat money can lead nowhere other than to the permanent expansion of inflation. It could not be otherwise because even assuming that economic conditions should call for reduced spending, no administration would accept to willingly decrease its budget.

The idea to make the central bank independent is supposed to facilitate just that process. As the guardian of interest rates and the fabricators of the currency, the central bank (the Fed in the USA) should act independently and manipulate interest rates according to economic activity.

However, that has never been the case. For whatever reason, central banks are not independent. The Fed certainly isn’t and as the US$ is the global reserve currency, by extension, neither are the other central banks. Certainly not the ones that matter.