The Death of Osama and the Lack of Political Will

The announcement that US Special Forces had found and killed Osama Bin Laden has brought out a variety of reactions to the event and reactions to the reactions. After watching them the old concept of the “theater of the absurd” comes to mind.

While the release of pent up frustration in celebratory reaction by much of the public is understandable, its condemnation as somehow crude or gosh is just as predictable. We we’re told that we should be “better than that,” that we should not celebrate the death of another human being. That it brought us “down to the level” of the Arabs who celebrated in the streets on 9-11.

Well at this point, for me at least, the revulsion factor kicks in. I would ask just who do these sanctimonious jerks think they are? But then I remember that they are most likely the products public education and the victims of some faceless pseudo-Marxist college professor, and are therefore completely lacking in any real exposure to military history. How else can one explain how their pontifications are so out of context with any historical precedent? I guess then that by their standards we had no right to celebrate the end of World War II or when von Ribbentrop or Tojo danced at the end of a rope after their convictions for war crimes. I doubt that the vast majority of them could tell you who von Clausewitz or Sun Tsu were without making a quick check with Wikipedia first. As such I am forced to dismiss their opinions as not worth consideration never mind even being bothered listening to them. This is what happens when people become more concerned with political correctness, moral relativism and “sensitivity.” The very notion that we should be “civil” in how we conduct war is ludicrous on its face. As someone who has traveled through the Arab and Islamic world I can state without hesitation that the only thing they respect is strength, and that they have nothing but contempt for weakness and accommodation.

So what then will become of American foreign policy in the wake of Bin Laden oh so celebrated demise? Given the combination of the particular ideological bent of the current administration and the continued and growing economic problems on the home front I would suspect that the lure of isolationism will become far more appealing. The population in general has grown weary of a seemingly endless war, so I would fully expect this administration to use this as an excuse to declare “mission accomplished” in the Afghanistan Theater and begin pulling out the vast majority of our troops. This would then become fodder for the re-election campaign slogans that Obama “got us out of the war” in Afghanistan. This of course would then begin the pressure to do the same in Iraq. Throwing in the need to cut our expenditures as an added measure may well make such a move politically irresistible. I’m not saying that I would be opposed to such a move if it included the caveat that it include a warning to both the Taliban and Iran that any further terror attacks against Western interests or an aggressive move into Iraq would be met with a swift and decisive move to stop it, up to and including the nuclear option. If he were to couple any such withdrawal with an announcement of renewed support for Israel and that a percentage of our troops in the area were going to be re-deployed there as a tripwire against renewed Arab state aggression against it I might change my mind. Sadly I don’t think such decisive and bold actions are within the realm of this President’s thought or even consideration.

Wars are won by seeking out and exploiting your enemies’ weaknesses. For the Islamists we face their greatest weakness is in their religion itself. Although there are those within the military and intelligence establishment that recognize this, our government lacks both the spine and the political will to exploit it.

So What's Another Trillion or two?

As the debate on the debt ceiling begins to move closer to its inexorable place on the front burner we are beginning to see what some of the real numbers are, and we can expect the hyperbolic rhetoric to ratchet up a few more notches. It would be hard to imagine anyone being able to top former Bush Treasury Paul O’Neill who recently stated "The people who are threatening not to pass the debt ceiling are our version of al-Qaeda terrorists. Really. They're really putting our whole society at risk by threatening to round up 50 percent of the members of the Congress, who are loony, who would put our credit at risk."

Never the less expect the issue to create some sharp divides, both in Congress and amongst the public. Needless to say the politicians will play football with this for as long as they can and milk it for whatever perceived partisan advantage they think they can get. Facing reality and making hard choices are not their forte, never has been and don’t expect it to be anytime soon. As someone once said “Governments always do the right thing, but not until all other options have been exhausted.” Pretty much sounds like the game plan we can expect.

Already things are starting move into the realm of what can only be called bizarro world. With only some $30 Billion remaining below the legally prescribed maximum, (.002% of the total $14.3 Trillion allowed) the Treasury announced today that it plans to issue $72 Billion in 3, 10 and 30 year bonds next week. This of course would place the Treasury department technically in violation of the law. But who’s going to stop Little Timmy Geithner and his band of merry pranksters? The President? The Congress? Don’t hold your breath. Congress and the DOJ can’t even be bothered to enforce the new regulations they passed in the Dodd-Frank so-called financial reform law. I’d like someone to ask the CFTC about those required position limits that were supposed to be in place by January 15 but are still “under consideration." Couldn’t possible have anything to do with the CFTC Chairman being a “former” Goldman Sachs employee now could it? But I digress.

I would expect that this “technical” violation will become the Administration’s lever to try and force the increase through. “We can’t have this situation go on. We can’t prosecute the Secretary of Treasury for willful violation of the law now can we?” Yeah right like that will ever happen.

So now we get to the revelation of what the Treasury really wants. Hold onto your hats, or more precisely your wallets. The Treasury says it needs an additional $2 Trillion debt capacity through the end of 2012! I’d ask if they are kidding but I know that they are perfectly serious. Never mind that this number is well over 100% of US GDP or represents a 14% increase in total debt. The problem that is not being spoken of, is not that the Congress is going to keep spending like there is no tomorrow, that’s to be expected, we’re talking Congress here, it’s that of the already $14.3 Trillion in outstanding debt, 28% of it is due to come due in this same period.

So here we sit already $14.3 Trillion in the hole and Timmy and company want to dig the hole $2 Trillion deeper. Of that already existing $14.3 Trillion, $4 Trillion either has to be paid off, rolled over, or sold to new holders. Paid off? Not a snowballs chance in hell. Rolled over? That percentage already held by the FED, maybe, as to the rest, not a snowballs chance in an equatorial jungle. Sold to new holders? Therein lays the POMO game's perennial out. Think Japan is going to be buying any more US debt, never mind rolling over what they already have? I doubt it, they’re already selling anything not welded down to finance their rebuilding process. China? Well they might by some but it will be far outweighed but what they are already selling and what they will continue to sell. India? Same story as China. The Europeans? Silly rabbit. PIIGS is all you need to know there.

Who does that leave then? It doesn’t take a genius to guess the FED and ultimately the US taxpayer and their children and grandchildren. So you can pretty much bet that the Wall Street banks will continue to prosper and pass out those fat bonus checks while our GDP begins to contract, real unemployment grows and the rest of the world casts an increasingly jaundiced eye on our ability, never mind willingness to address or fiscal problems.

What could possible go wrong? Never mind. I forgot is it "Survivor" or "Dancing With The Stars" that’s on tonight? Bin Laden is still dead isn’t he? Can we bring him back and kill him again?

My Silver Dreams of Cheap Gas and Bread and Circuses

So now we have a new distraction to keep our attention focused away from the pickpockets of Wall Street. Our military and intelligence teams that made it possible to bring Osama Bin Laden to his just reward deserve all the congratulations and praise for a job well done, that are coming their way. But in the long term it will not change the ongoing deterioration of either our economy or the overall foolishness of thinking that fiat currency has any real value just because Uncle Ben Bernanke and Tiny Tim Geitner say so.

Look at it this way.
In 1964 gasoline was $0.25 a gallon, today its $4.00 a gallon.

In 1964 LBJ removed all silver from American coinage and recalled all Silver Certificate currency bills.

Today a 1964 90% silver quarter ($0.25) has a melt value of $8.00.

In 1964 a 16 gallon tank could be filled for $4.00.

Today a 16 gallon tank costs $64.00.

BUT if we were still using silver coinage and Silver Certificates that $0.25 face value quarter would buy you 2 gallons of gasoline and you could fill your 16 gallon tank for only $2.00!

So before you go complaining about the oil companies and speculators “ripping you off,” ask yourself a couple of questions:

1. Was it the oil companies or the politicians and the bankers who put us this road to fiat currency ruin by taking us off the silver standard?

2. Was it oil companies or the politicians and bankers who sold off ALL of our nations silver reserves?

3. How is it that as the politicians keep getting those fat campaign contributions and the bankers on Wall Street keep getting those fat yearend bonuses checks, you get up every morning and worry about how much gas and food have gone up and will you have a job next week.

But hey we do have your bread and circuses! Osama Bin Laden is dead, the dollar may take a dead cat bounce off of the .73 level for a few days, so all is well, right? After all its NBA and NHL playoff season, Baseball is just getting started, so we can get lost in that for awhile. At least until the cable company comes along and pulls the plug because your unemployment ran out.

When O'Reilly and Obama are on the same page, you know you're being had.

So now our would-be “master of all things energy related” has decided it’s time to take on the “corrupt speculators” in the oil market. I’d say this was hilarious but unfortunately he’s serious. But what are we to expect from a neophyte whose depth of understanding of how markets and economies function is about as deep as a mud puddle after a quick spring rain. What’s even more disturbing is seeing populist pundits of the so-called “fair and balanced” kind carrying his water and providing political cover by spouting the same garbage.

This is what happens when ideologically driven politician and pundits listens to a bunch of ideologically driven economists who have no more of a clue than they do. Pundits, Presidents and economists have no more influence on the state of the economy than the weather man on the six o’clock news has influence on what tomorrow’s weather will be.

We’re in this mess because politicians and economists think that all that is needed is just one more government intervention, one more tweak to the system is all that’s needed to fix a particular problem or aspect of the economic landscape. Too bad for these self-important and self-proclaimed experts, economics operates in a vast interconnected world of supply and demand, and reacts in direct correlation to actual and/or perceived value of the currency of exchange.

Both the Obama administration and O’Reilly are engaged in a pernicious little game of either denial of reality or deliberate obfuscation in order to keep the public from casting a critical eye upon actual cause of rising energy and food costs, namely a weak dollar policy, endless spending by Congress and endless printing at the Federal Reserve.

Where O’Reilly’s reasons maybe simply be to further his populist reputation, Obama’s, being a politician, are far more cynical. All the rhetoric about allegedly wanting to defend the consumer aside, his focus is on getting himself re-elected and the “record profits” and speculation make for a convenient scapegoat for his dismal failure on the economy.

In the meantime this false narrative will be played for all its worth by the media and campaigns. None of which will do anything to change the underlying spending and printing problems or slow down the unraveling of the economy by but a fraction. O’Reilly and the like will use their stance to try and apply pressure to the Republican candidates to if not endorse, at least not oppose the continued kicking of the can down the road.


Both sides are making the bet that our fractured economic system can be held together long enough to ensure that the next President whoever it may be will not be someone who will challenge the corruption of the existing incestuous relationship between Wall Street, the Treasury Department and the Federal Reserve.

A lot of things can change of course between now and the nominating conventions and the election, and it would be my bet that they will. During the first two years of this administration the big “inflation is under control” con job has held together. One of the factors helping this has been the American family, those that still have jobs anyway. In the face of what they better recognize than our so-called political leaders as economic uncertainty at best and disaster at worst, they have cut back on spending, added to savings, paid off consumer debt and some have even made extra payments on the principle of their mortgages. All this has had the definitive effect of decreasing the velocity of money through the economy. But now the cumulative effect of decades of growing spending, growing debt and just plain bad monetary policy have triggered a growing political instability in the Middle East and are exacerbating the all too predictable and inexorable beast of inflation.

With these responsible and frugal families seeing the evidence spreading all around them, higher prices at the gas pump, higher prices and smaller packages at the grocery store, lower interest on their savings and higher charges for using their credit cards, we can fully expect a shift in the mindset of these formally frugal families. With a growing sense of futility for all their efforts, and seeing that each new pay check is able to buy less and less, therein lays the danger of a paradigm shift in their attitude towards money itself.

Why postpone on spending on the everyday things they need to survive, when they know full well that by the time the next paycheck arrives things will be even more expensive? Why try to save when it’s buying power shrinks exponentially against any interest payments they may earn and the anticipated price for whatever they are saving for? When this change in attitude sets in look out! When the acceleration rate of money through the economy goes up, the already increasing inflation rate will be placed on steroids. Throw in another economic or political shock event and the breaking point will be reached and all confidence will be lost in the viability of the Dollar. That will be when bad inflation will tip over into hyperinflation. When that happens, all bets on the existing system will be off, violence will rear its ugly head and people will listen to any demagogue that comes along and makes the promises they want to hear. Fear will become the driving motive of politics.

The Suckers Bet.

Far too many Americans are confusing high inflation and hyperinflation. The most frequently sited example of hyperinflation is Weimar Germany. Most renditions of the story lay the blame for it on the Versailles treaty. Actually that was only one of the sources of Weimar Germany’s inflation problem. It started with German monetary policy during the war. Faced with the costs of the war they printed large quantities fiat currency. At the end of the war the further burden reparations exacerbated the already existing problem.

In short high inflation comes from bad governmental monetary policy in response to debt, regardless of the source. Hyperinflation comes when the public loses confidence in the national currency and acceleration rates grow exponentially.

Germany in the 1920’s is only the most extreme example. Look also at the hyperinflationary events in Chile and Argentina. Same story high debt addressed by excessive money printing followed by loss of confidence in the currency and then rapid acceleration rates.

The underlying source or causes of the debt are always the same, high government spending coupled with bad central banking policy that only profits the banks and saddles the public with the debt.

How is this any different from what we face today? Well it is, we have the added complication of a rigged game. Anyone who thinks that the Federal Reserve Bank is either independent or Federal is ignorant, delusional or both. The FED is a private bank owned by the very banks it purports to regulate. What a joke.

Look at the revolving door between Goldman Sachs, the Treasury Department and the FED Board; collusion of the first order. Look at the POMO process since the collapse in 2008. Before 2008 the FED bought between 10% and 15% of US Treasury offerings. Now post collapse through the POMO process the FED ends up holding 70% of US Treasury offerings because no one else wants anything to do with US debt paper, and in the process the primary dealers (the banks that own and control the FED) make a killing on every step of the process.

First the PDs (Goldman Sachs, JP Morgan, BofA etc. borrow money from the FED at essentially 0%. They then use these funds to buy US Treasury Bonds for which they receive a transaction fee from the Treasury Department. After holding these Bonds for as little as two weeks they then sell them back to the FED for 3% to 4% more than they paid for them, depending on the term of the Bonds. If this weren’t bad enough, the scam doesn’t end there. They then take their ill-gotten proceeds, the transaction fees and profits from the re-sale of the Bonds and park them back into their accounts at the FED as “excess reserves” where they are draw 4% interest on the deposit! Well now guess whose money funds these transaction fees, re-sale profits and deposit interest payments? Look in the mirror, its you, the US taxpayer.

If this doesn’t make you mad enough look at that 1/10 of 1% these same banks are paying you on your savings deposits, and then compare it to the $4,200,000,000,000 ($4.2 Billion) in taxpayer funds the primary dealers will pocket just from the QE2 program. All for doing nothing more than moving electronic digits from one ledger book to another and then back again. Oh and also keep in mind that BofA and these other PDs don’t pay a single dime in income tax on any of it!

Again far to many Americans want to defend this kind of criminal fraud for nothing more than partisan political reasons. The banks will thank them for it and laugh in their faces as they pay out their massive bonuses funded by the tax payers while they pay them that luxurious 1/10 of 1% on their savings and then charge them 1-1/2% for managing what ever they have left in their IRAs or 401Ks.

So yeah we should bitch at Congress for massive spending but we should also bitch at them for lining their coffers with campaign contributions paid out of the pocket change of these same banks, for which they return the favor by structuring the tax code that lets them get away with paying no taxes on this pernicious scam. The taxpayers are being played for suckers and are paying for the privilege. Sadly there are far to many people too blinded by this fools a errand of left vs. right to see the game, and they never will until its far too late, and hyperinflation destroys everything they have.


Before anyone claims I simply hate banks, let me just say that I hate the theft and fraud they perpetrate and the so-called regulators and politicians of both parties that let them get away with it, and I have nothing but contempt for fools who think they are out to do anything but enrich themselves with the taxpayer’s money. I have found that those who would defend them either work for a bank, which makes them nothing more than shills, or they don’t know any more about the functioning of currency than what they were told was true in high school. There’s an old saying; “a fool and his money are soon parted.” These are just the fools the banks and politicians are looking for. If they think the Congress “has its thumb on the FED” they are not just fools, they an idiots as well.

Why I Buy Gold and Silver.

Gold and silver values (not prices) are only a reflection of the rapidly evolving new reality.

There will always be those who will deny that the entire western financial system is F.U.B.A.R. You know the term, denying it, finger pointing or making excuses for how we got here won’t change the facts. There is no intention from any of the politicians or bankers of doing anything to fix the problems at their root cause, OTC derivatives. The European Union has outlawed naked CDSs (credit default swaps) which is at least an indication that they are trying to do something. Whether it will prove too little, too late or not, time will tell. The chances of anything like that happening in the US are absolutely ZERO.

To say it is very late in the game is a gross understatement.

The times of any kind of normal conditions, however you might want to define them, are gone and they’re not coming back any time soon. One needs only look at the FACT that before the crisis of 2008 the Federal Reserve was buying between 10% and 15% of US Treasuries, now they are virtually the only buyer and by this action alone they are consigning the Dollar to its doom.

Only by adjusting our attitudes and actions to this new reality is there any hope for getting to the other side with any semblance of intact wealth and security. This applies at both the individual and societal level

The system has already failed, act accordingly. There are no political champions waiting in the wings with the will or ability to fix it. Even if there were, there exist no means that could be applied that would not in the short term cause an even more severe economic dislocation than we are already faced with. Even if there were some practical solutions left (and there aren’t), neither the banks nor the politicians would allow them to be applied because it would diminish their power.

We have embarked on a third war in the Middle East and it will be impossible to disengage as the chaos spreads. Kind of reminds one of the Uncle Remus story of the Tar-Baby. It is utter madness and no good can come from it. The revolutions and wars in the Middle East are not pro Western and not pro democracy, they are anything but.

Look back at what the price of commodities were 2 years ago and what they are today. By the time we reach the next election they will look like bargains by comparison.

If you are holding physical bullion and food stocks hold on to it as it will be the only insurance you will have and you’re going to need it. Show some pity for those who would deride you for holding insurance, they will be the first victims of their own hubris, but be careful, for as the rug is pulled out from under them they will blame you for their situations and many of them can and will resort to violence.

It is not a question of if the prepared will prevail. We already have prevailed. Our holdings will be the only discount to the hyper-inflation that is already written on the pages of history, nothing can or will stop things from being turned to that particularly ugly page. But we have to get to that page before we can move on to the next chapter.

For those of you who remain skeptical, get a clue, neither the Democrats nor the Republicans have the courage to admit what’s really going on, even if they do, nor do they have the slightest inkling of what to do about it. Their loyalists will be the first to be abandoned when the S.H.T.F. One more thing to keep in mind as things unravel: Ideological purity and political loyalty are the first things dissolved in the churning acids of an empty stomach.

Are We Living in an Old Joke?

There’s an old joke we are all familiar with: Everybody complains about the weather but who really does anything about it.


So what can actually be done to actually improve the economic situation? Well here’s a suggestion just for starters.


Reform the corporate tax code to create two-tiered system.


Level one: If your business income is derived from the manufacture, transport or sales of real physical goods you get taxed on that income at a very low rate. This would apply from the top to heavy industry all the way to the bottom where the mom and pop shop is selling gas and potato chips. There could be differentiations within this group depending upon what percentage of components or raw material goods are derived domestically and what percentage are imported. This would encourage the expansion of on shore business to produce or procure components or raw materials here at home rather than importing them. In other words a tariff by other means.


Level two: If your business income is derived from speculation, i.e. just moving money from one pile to another and not actually producing any real goods as exemplified by the FOREX carry trade, commodity speculation, stock and bond trading, you get taxed at a much higher rate and have severe restrictions on what are allowable deductable expenses. This would not include the individual who trades within small accounts or their 401K or IRA to try and make a few extra bucks to put their kids through school or make their retirement a little easier. We’re talking large institutional speculators. Can you hear me Goldman Sachs, JP Morgan etc. etc. etc. This would not include the transactions wherein they make loans to businesses or mortgages or car loans and the like, provided they keep those loans on their books so as to maintain a real interest and indeed risk in how well you do. The very minute that they bundle those loans into CDOs (collateralized debt obligations) all previous and future income becomes taxed at the tier one rate.


Item three: Over a set period of time phase out and then ban all OTC derivative trade or at least tax them at such a rate as to make them completely unprofitable. Ban the issuance of CDSs (credit default swaps) to anyone other than the primary risk taker. Ban financial and securities firms from taking out CDSs on the securities they have sold to their customers.


Don’t hold your breath waiting to hear any of our politicians talking such common sense as long as the revolving door between Wall Street and the Treasury Department remains in operation. Even suggesting it would unleash a pestilence of lobbyists and under the counter campaign contributions to kill it like nothing that has ever been seen.


We have been suckered into believing the fixed pie theory. It’s a fallacy perpetrated by the left and the banks. The money exists, government policy, and in this case tax policy, must be changed to pull it out of speculative none productive applications and into manufacturing where real wealth and jobs are created, the economy expands and the pie gets bigger.

A QUESTION OR TWO FOR GLENN BECK

It would be hard to deny that Glenn Beck has become a force to be reckoned with in the arena of contemporary political commentary. Like anyone else in the field, his effectiveness can be judged, at least in part, by the reactions of his detractors and admirers alike. One would hope that he would be the first to agree that no one should be judged solely by either the condemnation of their enemies or the praise of their allies. At the recent CPAC meeting he was introduced with the comment that his show was like, and I paraphrase here, listening to an advanced class in American history. It is true that he presents his audience with an almost overwhelming volume of material, frequently referencing Jefferson, Madison and Washington. We mustn’t forget however that he is a man with a perspective and an agenda.

As such, like any other commentator he is more than capable and willing to leave out of his story those things that don’t quite fit into his perspective and agenda or would make the reality less clear and simple as he would portray it. My case in point being, that while he so frequently references Jefferson, Madison and Washington, the name of Alexander Hamilton has rarely crosses his lips, and when it does so, it is most often with some derision.

So my issues with Mr. Beck would be to ask him is this omission willful or accidental? Has he bought too deeply into the characterizations of Hamilton coming from his enemies? On one of his recent television shows he had behind him a large stack of books he claimed as part of his historical reference. Among them was Ron Chernow’s recent biography of Hamilton. Has he actually read it? Has he read Steven Knott’s “Alexander Hamilton and The Persistence of Myth”? How about John Gordon’s “Hamilton’s Blessing: The Extraordinary Life and Times of Our National Debt”? All of these are good references that put Hamilton and his policies in contexts and perspectives beyond that of either his contemporary detractors or their modern day equivalents.

Modern historians all too frequently forget that in the period of our history after the ratification of our Constitution and for decades thereafter, if not unto the present day, the conflict between the Jeffersonian and Hamiltonian schools of thought on both finance and foreign policy was perhaps the most formative one in the creation of what the American Republic has grown to become. Within the context of the historical record it is no more possible to divorce Hamilton from Washington than it is to divorce Jefferson from Madison. Nor any of them, one from the other.

Neither can one divorce Hamilton from American industrial development and wealth, and the growth of the middle class it created, any more than one can one divorce Jefferson’s and Madison’s agrarianism and regionalism from the tragedy of the Civil War. Although it is true that Hamilton considered the Constitution a “flawed document,” no one worked harder for its ratification, often in concert with Madison. The “Federalist Papers” stand as ample testimony to that fact. Jefferson support for it was lukewarm at best. He did not consider it “democratic” enough and accepted it largely as a deferment to his friend Madison and as a fait accompli.

Hamilton stands apart from his contemporaries simply by his background. While Messer’s Jefferson, Madison, Washington and Adams all came from the backgrounds of the privileged and landed gentry, politically and emotionally wedded to their individual States, Hamilton was America’s preeminent nationalist and the arch type of the American self-made man. Born to unwed parents, raised in poverty and orphaned at a young age, he was driven to greatness by just these shortcomings. Having come here as a young man he bore no allegiance to any one State, not even New York where he spent most of his life. As such he was considered an outsider by most of his founding brethren.

The notable exception to this being Washington himself, whom Hamilton had served as his chief aid-de-camp and private secretary during most the Revolutionary War. It is often forgotten that it was Colonel Hamilton that led the final attack at Yorktown that captured the British redoubt breaking the back of their defenses and convincing Cornwallis to surrender (whereas both Jefferson and Madison lacked any military experience). In 1789 it was Hamilton whom Washington called upon to serve as our nation’s first Secretary of the Treasury. Washington so trusted Hamilton that much of Washington’s correspondence during the war was drafted by Hamilton’s hand and was signed by the General with little or no revision. This relationship continued even after Hamilton left the Treasury Department. The largest part of Washington’s famous farewell address being of Hamilton’s composure.

Through his rigorous study of the classic histories of Rome and Greece, no one understood better than Hamilton and by extension Washington, the fragility of the new Republic and the threats posed to it by the financial chaos of out of control inflation and a mountain of debt. Sound familiar? The term “Not worth a Continental” was a part of the American lexicon well into the nineteenth century, and for good reason. After the Revolution, American debt paper was held in such low regard that it traded at 10% to 20% of face value on European markets. If the situation was not corrected, and quickly, the new nation would not be able to conduct any further borrowing; monies desperately needed for both infrastructure and programs mandated by the new Constitution.

Such failure would have left the nation in the position of the “weak sister” and subject to the predations of Spain which coveted those territories south of the Ohio, east of the Mississippi, and west of the Appalachians, and England which had yet to withdraw its troops from the Northwest Territories as had been required by the Treaty of Paris.

Hamilton’s primary purpose in his programs for the assumption of the State’s war debts and the creation of the Bank of the United States was to bind the States together financially, to give them a set of common interests and the strength of unity that would be needed in a world hostile to the very concept of its existence. He succeeded beyond even his own imaginations. By the end of Washington’s second term, American debt paper was trading at a premium above face value and was considered far more stable and reliable than that issued by most of Europe, most of which were personal debts of the crowned heads of Europe rather than sovereign debts of the nations themselves.

It seems then a bizarre irony that Jefferson, Madison and Adams were most fond of heaping calumny upon Hamilton, even after his untimely death, that of being elitist and aristocratic, despite that being precisely the backgrounds from which they came. It could be said that they were the authors of the method of resorting to the personal attack when unable to refute the logic or efficacy of your opponent’s position that seems so prevalent today. Further irony came in that Jefferson, Madison and Monroe all came to conduct their administrations far more in line with Hamiltonian nationalism than either Jefferson’s agrarian isolationism or Jacobin egalitarianism.

Without Hamilton’s Bank of the United States Jefferson would not have had access to the funds he needed to purchase Louisiana. An act, about which he and others in his own party had doubts, especially concerning how in conflicted with their “strict constructionist” interpretation of the Constitution. Madison’s allowing of the charter for the Bank to expire, for political rather than financial reasons, had disastrous consequences for the raising of the funds needed to conduct military operations during the War of 1812. The “Monroe Doctrine” became a cornerstone of American foreign policy for over one hundred years. It could be argued that they all found that lofty rhetorical platitudes were of little use when faced with the realities of having to govern in a hostile world.

Again, sound familiar? So blinded was Jefferson by his mistrust and hatred of Hamilton and his personal conviction that Hamilton had used the office the Secretary of the Treasury for personal gain that one of his first acts on assuming the Presidency was to direct his own Treasury Secretary, Albert Gallatin (himself an immigrant and the son of Swiss nobility) to audit the Treasury’s books in search of Hamilton’s fraud. He found none, and reported back to Jefferson that the accounting systems were so scrupulously structured as to almost preclude fraud being possible. Rather than admit to anyone or even himself that he might have been wrong he became further convinced that Hamilton was even more conniving and clever in instituting his fraud than even he had imagined!

Such was Jefferson’s gratitude to Hamilton for his having persuaded Federalists in the House of Representatives to switch their votes from Burr to Jefferson and break the deadlock of the election of 1800, the one single event, more than any other, that set the course to his death at Burr’s hand.

Lest one fall too deeply for the notion that Jefferson was the great champion of or admirer of the masses I would refer you to Jefferson’s own “Writings, Notes on the State of Virginia” wherein he proposed an educational system that would single out the best students for advancement while the “residue” were “dismissed,” “by this means twenty of the best geniusses [sic] will be racked from the rubbish annually.” {New York: Library of America, 1984, page 272.} Sounds all too much like many comments coming from the left today, Daily Kos, Democratic Underground, Keith Olbermann. Bill Mahr etc., that those who oppose progressive’s agenda are to ignorant or stupid to know what is in their own best interest.

By way of contrast I would give you President Washington’s letter to Hamilton upon his decision to resign as Secretary of the Treasury: “After so long an experience of your public services, I am naturally led, at this moment of your departure from office –which it has always been my wish to prevent- to review them. In every relation which you have borne to me, I have found that my confidence in your talents, exertions, and integrity, has been well placed. I the more freely tender this testimony of my approbation, because I speak from opportunities of information which cannot deceive me, and which serve satisfactory proof to your title to public regard.” {“The Founders on the Founders” University of Virginia Press, 2008 page 198.}

Neither was Hamilton shy in his opinions of Jefferson and Madison. Writing to Edward Carrington in 1792, with whom he had served at the Battle of Yorktown and in the Continental Congress: “Mr. Madison cooperating with Mr. Jefferson…have a womanish attachment to France and a womanish resentment of Great Britain.” {Ibid. page 382.} In the end perhaps Jefferson, Madison and Monroe’s greatest fear of Hamilton was that he was certainly no “democrat.” In hind sight perhaps that’s not such a bad thing.

None of this is stated in order to detract from Jefferson’s or Madison’s great accomplishments that have served our nation well over some 235 years nor to obscure Hamilton’s personal shortcomings and failures, he had more than his share, but rather to try to put them all into a combined context, each into their interconnected place. They were all the greatest of men in the most trying of times, and as all men they were possessed of strengths and weaknesses.

It has been the historical persistence of their great conflict over time, the ebb and flow, the ascendency of one and the decline of the other that has shaped our nation’s history as much or more than any other. They are as inseparable today as they were in the 18th century. The advent of progressivism and socialism today is but a continuation, albeit in a highly perverted form, of Jefferson’s Jacobin inspired egalitarianism. Where Jefferson envisioned a nation of agrarian masses shackled to ignorance and the plow, today’s progressives strive for a nation where the masses are equally shackled to ignorance and the welfare state.

Conversely it was Hamilton who envisioned a diverse economy of farms and industry that would forever break our dependence on Europe and foster the kind of human inventiveness that could and did drive us further forward. I’d think that that is the kind of progress we can all endorse.

So Mr. Beck if I may “Question with boldness,” Why have you left this most important man and his accomplishments out of your narrative? To leave Hamilton out of our history, how our nation came to be, and what it has become, is not simply a disservice to Hamilton, but a disservice to the American people who must have all the facts in order to make the decisions that will shape the future.

Would you not think, before “Not worth a Federal Reserve Note” becomes a part of the new American lexicon, is not perhaps an open and honest re-examination of Hamilton and how his lessons might apply to today in order?

While marble and granite memorials to Jefferson and Washington stand prominently in our Capital, Hamilton’s is but a single statue in front of the Treasury Department. Or is it? Look around you. We live in a nation that is much more a reflection of Hamilton’s vision than that of Jefferson. How long it stays that way is up to us. But making decisions without all the facts may well be akin to building foundations on shifting sands. I’d beg you sir, and all of us to carefully reconsider Hamilton's absence from your narative.

Obama says "I quit!"?

At what point is it possible that President Obama just throws up his hands and says "I quit!"? Who could blame him? Among the universal traits of all politicians is either creating a mess and leaving it for others to clean up or inheriting a mess and making it worse. Add in those other problems that are beyond a limited capability to comprehend, never mind find a workable solution for, and you have all the markings of (A) cutting and running and being labeled a coward and a fool, or (B) hanging on and assuring you will be recorded by history as arrogant, incompetent and a fool,

That seems a pretty harsh assessment so let's look at it from a case in point basis.

When elected and faced with $100 Trillion in unfunded liabilities in Social Security, Medicare and Medicaid, did he address those problems? No, he decided to expend countless hours and all available political capital in essentially doubling down on that astronomical number by passing a new unfunded liability, health care "reform." Small wonder this dog came back to bite him the next time the voters went to the polls.

When elected the nation had a cumulative debt (and this only at the Federal level) of over $8 Trillion and a deflationary housing crisis not seen since the 1930's. Did he cut the budget? Did he rein in the Wall Street banks? Did he shut down Fannie and Freddie that along with the banks had created the housing mess? No, he shoved another $5 Trillion into the bottomless pit of government debt and deficit spending. Then as if to make things even worse he awards Ben Bernanke with another term as Chairman of the Federal Reserve Board, giving the all clear signal to the banks to keep on keeping on with their gouging the public and the taxpayer, and paying out those huge bonuses, as unemployment rises and GDP and tax receipts fall.

It's not just Obama and the Democrats that have chosen this path to fiscal self-destruction; they are after all, just following the European model they seem to so greatly admire. And just how is that working out? While having been eclipsed of late by the glare of events in Japan and the Middle East, financial conditions in the Euro zone continue their deterioration unabated. German/Greek bond spreads have reached almost 12% as that government seem incapable of doing anything. Irish bond yields are above 10% on rumors of coupon payment failure and increasing signals from the newly elected government is not going to go along with the ECB/IMF bank bailout program and the dictated austerity budget that came along with it. Portugal's government appears on the verge of falling under circumstances similar to the Irish. The Italian government, already racked by their never ending corruption problems, now faces an energy crisis as they are more dependent on Libyan oil, natural gas and capital than any other European State. In just three months inflation in the UK has reached 4.4%, and that's just the "official" number. Annualized it would be almost 18%! Never mind Belgium, they haven't had a sitting government in six months and nobody seems to care.

When elected the situation was by no stretch of the imagination stable, but at least it wasn't anything approaching the utter chaos we have now. I guess that Chamberlainesque apology and vacillation tour didn't work out so well. Perhaps now sensing that those tanking approval numbers really do mean something , he has taken another swipe at the tar baby of Arab tribal warfare, only to see his UN mandate and NATO cohesion start to come apart after less than a week. The Arab League started to go wobbly almost as soon as the first bombs hit the ground; The Germans have said "no thanks" and withdrawn all their assets from the region. Although the Brits and the French remain resolute for the moment, neither has the depth of financial of military infrastructure to maintain any protracted engagement. Guess who that will leave holding the proverbial bag and with his fist firmly embedded and stuck to the tar baby?

The implications of all this for an ongoing and already disastrous domestic energy policy are all to obvious to even elaborate on.

So the question for President Obama becomes will it be A or B above? Or is there perhaps a scenario C we are not seeing? That being the possibility of the Clintons playing a Machiavellian power game just below the surface wherein Obama resigns, the bumbling Biden becomes President and appoints Hillary as his VP and then he in turn resigns for "health" reasons, handing her an unelected Presidency and an almost unassailable position in the upcoming election.

Just a thought, but I don't think it's outside the realm of possibility, or of the Clintons' twisted machinations.

A Parable on the Media Gods

Way back in ancient times, before the internet, when there was a “fairness doctrine”, before cable news systems there existed gods and lesser gods. The New York Times was the Zeus of the news world and resided on the new Mount Olympus known as the island of Manhattan. The lesser gods of ABC, CBS and NBC all paid fealty to the supreme lord by taking the stories published in the NYT and regurgitating them on their nightly news broadcasts. Obsequiousness to the great “Grey Lady” was the normal order of things, simply because that was how it had always been.

But the world of the gods began to change with the advent of cable television and it’s giving birth to a new lesser god, CNN. The order of things on Mount Olympus changed little at first as CNN remained loyal to father NYT, but the mortals below soon became restless with the oppression of the gods, and being what they are, some of them rebelled. Soon they gave birth to a lesser god of their own, FOX, and this new lesser god refused to pay homage to father NYT or any of the other lesser gods for that matter. At first this new lesser god struggled under the weight of the older gods but still refused to bend its knee to them. The word began to spread amongst the mortals that perhaps they too need not cast their fealty to the gods of Manhattan. Soon the mortals became empowered to become their own gods! The internet was born and gave birth to its own child the “blogosphere!”

All this of course angered the gods of Manhattan. “How dare these mere mortal pray to other gods!” they bellowed in their private conclaves. They would never state so publicly but they knew that just as with the gods of ancient Greece they would be rendered powerless without the fealty and prayers of the mortals. Soon not only was it their power that became diminished but also that of their demigods, the politicians, over whom they claimed the power to create or destroy at their whim. Not only had these impertinent mortals created their own rivals to the gods of Manhattan but they were beginning to not just challenge, but replace the demigods that had been chosen for them!

With each new lessening of their power the gods of Manhattan would hurl new bolts of thunder and lightning down upon the mortals from on high. “This FOX you attend is a false god, a usurper of the wisdom of Manhattan! Your new politicians are powerless; we will destroy them just as we have those that came before them that refused to bow before us!” But the mortals continued to ignore the gods of old and their newly created lesser gods of MSNBC and CNBC as well. Fewer and fewer mortals went to their temples of circulation and Neilson numbers, so each new lightning bolt was weaker and farther off the mark that the last. The edifice of their temples, the great taxing and redistributing, all powerful government wherein their demigods had resided, were being redecorated by the mortals in their own image.

The gods of Manhattan have not passed into mythology yet, the rumblings of Mount Manhattan will continue for some time but they grow weaker with each new cycle of the rebellion of the mortals, but like the Titans that preceded the Greek gods of Olympus they will soon fade into the mists of time, starved of the offerings of circulation and Neilson numbers.

Into the Vortex

Over the course of the last almost one hundred years, since the inception of the Federal Reserve Bank, our financial systems and its bankers and our political system and it politicians have become increasingly and indeed incestuously intermingled. This relationship has created what can only be defined as a vortex of corruption. Into this vortex have been drawn a wide variety of other American institutions including unions, insurance companies, mega corporations like GE and variety of so-called non-profit organizations that claim to be independent and unaffiliated but in reality function as shock troops, employed to work around the social edges of the vortex, stirring up the periphery with outrageous behavior just enough to keep the public and the media distracted from the more insidious looting of the nation’s, if not the worlds wealth through the pernicious practices of institutionalized inflation, progressive taxation, and the creation of a vast body of citizens dependent on the same institutions of government. This army of dependents then in turn enslave themselves further by paying for the chains they are shackled with by voting for the same politicians who forged them.

So while on the one hand, the actions on the periphery stir the opposition to useless emotional rage targeting the surface corruption of the likes of ACORN and Planned Parenthood or Jesse Jackson and Al Sharpton blatantly playing the race car, all the while on the other hand the powers behind the curtains, the FED, the TBTF banks and their wholly owned and fully subsidized politicians have looted 90% of the value of the dollar, taken us off the gold standard and demonetized real money, silver.

This has created an imbalance in the distribution of the nations wealth that has not been seen since the late ‘20s in the lead up to the collapse of “Black Monday” that plunged the nation and the whole world into the “Great Depression.” But rather than honestly informing the public of this great imbalance and its inherent dangers, the game continues unabated through the POMO process wherein the banks, acting as Primary Dealers, borrow money from the FED, essentially themselves, as they are the owners of the FED, at near zero interest rates, and buy Bonds issued by the Treasury Department. As Primary Dealers they receive a “fee” from the Treasury for making theses purchases. Then after holding these T-Bills for as little as three weeks, they turn around and sell them to the FED for a 3-4% premium over what they paid the Treasury for them. They then take these profits and deposit them back into the FED and receive another 4.5% interest on the deposit of these now “excess reserves.” This little bit of paper shuffling yields about $6 Billion each month on which they earn $270 Million each year for each monthly deposit or close to $3.5 Billion each year. All this is paid for by the largess of the American taxpayer. In addition to this the taxpayer also get the privilege of paying the interest and principle due on the T-Bills originally issued by the Treasury Dept.

I fail to see how anyone could come up with could come up with a more fraudulent and legal scheme to fleece the working taxpayers while paying out a pittance to an ever expanding dependent class to buy their votes to elect the politicians who keep the whole thing in place by accepting the bribes know as campaign contributions from the very malefactors that built the corruption in the first place. And who says America isn’t a great place!?!

The Sadness and the Danger of Left's Inability to Make an Argument

I frequently post on a comment board on my local newspaper’s online edition. Although I try to post what are primarily information comments. Some of which later show up here. The responses I receive are generally respectful even in disagreement. There are a few however, who can’t or won’t so limit their responses. Such terms as “hack,” “tin-foil hat wearer,” “libertarian worshiper” and worse frequently appear. Such pejoratives are used as blanket condemnations of me on a personal level, without either explanation of why such conclusions are reached or even the most basic attempt to counter or refute the position I took that elicited the reaction. So a couple of days ago I posted the below comments directed towards this group, that I in general refer to the “usual suspects”:

“I worship no one but my lord and savior Jesus Christ. (A practice you so frequently denigrate) I post no Republican "talking points." When they are right they are right, when they are wrong they are wrong. I call them as I see them. The same applies to the Democrats. But then, I do post points of substance, and that is exactly what you can't stand. The thought that others may apply their own critical thinking and reach conclusions different than yours it what you find so frightening. Such fear leads you to try and project you very own deficiencies onto me. The left’s drunken delusions of liberal utopia that they thought that simply electing Obama would bring to fruition have turned to chimera it but a flash of time and it enrages you. So go ahead and attack me all you want, vent your spleen until you are bled white for all I care. I have all the confidence I need that the political turmoil and financial manipulations of which I have complained and results of which I have predicted are about to merge into the breaking point of an exponential curve (there’s that pesky combination of engineering and history stuff again) that will accelerate out of control very quickly. When exactly? I can’t and won’t predict. But I do feel the winds of the flapping wings of a Black Swan, where and when it will land is anybody’s guess.”

This, predictably, brought forth the usual vituperations, accusations of arrogance and projection those of us on the conservative side of things have come to expect.

We must stand fast with the courage of our convictions and understand that there will always be people who are incapable of critical thinking, who are locked into a myopic partisan mindset that can only be defended by mindless regurgitation of what they have been taught. It is this shallow intellectual structure of learning “what to think” as opposed to learning “how to think” that renders them unwilling, if not incapable, of considering new information or different perspective. For them anything that demonstrates that what they have been taught to be true is no longer valid must be viciously condemned and rejected out of hand, as unworthy of even consideration. Remember the very last thing they want is for others to think for themselves, to examine both sides of an argument and reach their own conclusions.

Such resistance structures of pathological rigid thinking can only stand for so long. Although as viewed from the inside its walls may appear to stand strong, especially to those who dwell solely within them, they are blind to the erosion of the foundation from outside currents, events and facts that will inevitably lead to their collapse. Sadly many of the inhabitants inside such structures, will, even after its collapse, insist that the disaster was not because it was built on unstable ground or was eroded by changing events and new revelations, but because so many others refused to dwell within its walls.

And this is when we must be most guardred, because when such foundations of thought are torn away it can lead to an instability that feels justified in resorting to violence.

On Wisconsin!

It’s fitting if not ironic that Wisconsin, the birthplace of the public employee union may well become its burial ground as well. Maybe we should call what is unfolding there the “Nightshade Revolution,” as they seem to be poisoning themselves by the consumption of the fruits of their own corruption.

So then I have a few questions for our liberal and union friends that are in need of answers.

1. How is it not corrupt, if not morally incestuous, for public employee unions to use the state to forcefully expropriate dues from its compulsory members and then use those dues to elect the very politicians with whom they negotiate their contracts?

2. Is it simply beyond the intellectual capabilities of the left to see the hypocrisy of chanting for freedom and democracy while attempting to block a vote by duly elected representatives? Or that Democrat State Senators have fled from the democratic process because they know they will lose that vote?

3. Are these same Democrats that so loudly protested Republican efforts to use the established rules of the US Senate to block President Obama’s Agenda now celebrating an abrogation of the rules of the Wisconsin Senate?

4. When President Obama said “Elections have consequences,” and “We won,” did he mean that they only have consequences for his opponents, and his friends in organized labor should be exempt from the consequences of elections or their own corruption?

I for one welcome the public employee unions taking the hard line in Wisconsin. The sooner they self expose their attitude that the State’s purpose is to serve their employees and line the coffers of the unions, over and above the needs and concerns of the public they are supposed to be serving, the sooner this monster can be slain and shoved into the grave of history it so justly deserves. That the union bosses would sooner risk the jobs of their members rather than their corrupt power structure should be telling to anyone who takes the time to do any critical thinking about what is going on here, as to just who they are really looking out for.

On so-called Social Justice.

Once again our leftist friends fail to understand the differences between the success of the American Revolution and the failure of the French Revolution and how it pertains to the current (dis)order of things. It comes down to the fundamental fact that in order for the seeds of individual liberty to grow into a healthy tree of sovereign self-government it requires the fertile soil of personal responsibility.

The American Revolution and the system of government that grew out of it was successful because we already had a long history of self-government that evolved from the conditions of the 18th century wherein the distance to Europe was great and communications were slow. These conditions necessitated the creation of systems of self-government. They flourished and grew in spite of the economic restrictions placed upon the colonies that we solely in place for the advantage of the financial and royal elites of Britain. When the restrictions became more onerous and disadvantageous to the colonists the seeds of rebellion began to grow. Our Revolution, like all revolutions, grew more out of economic conditions than social ones. The Founders recognized that our economic success grew from individual liberty not some vague notion of social equality.

By contrast the French Revolution was a failure, not because of any lack of inspiration created by the American success, but because it quickly devolved into these vague notions of social equality rather than individual liberty and personal responsibility. Quite simply, what the French lacked was any history of self-government. So among the seeds of the tree of liberty were sown the the weeds of egalitarianism. Unfortunately these weeds flourished on the wonton bloodlust of the Jacobins. They produced the pretty but inedible flowers of emotionally appealing rhetoric but not the delicious fruits of a sustainable political economy. In the end, after all the chaos and carnage all they were left with was another tyrant who mouthed the words of liberty and made of himself an Emperor and an empire that resulted in nearly two decades of war and uncounted deaths. Then after Napoleon was gone, and the continent had been bleed of money and lives, the very same institutions and families that the revolution had sought to over throw were back in power. The great hopes of Goethe, Schiller, Von Humboldt and Beethoven for a German Constitutional Republic based on the American model were crushed at the Congress of Vienna and Russia was the dominant power on the European Continent.

Egalitarianism, such is the breeding ground of tyranny and the demagogue, be they 18th century Jacobins, 20th century fascists or our 21st century advocates of “social justice” and jihadists. The notion that the chaos in Egypt can be channeled into the emergence of secular populist state is dubious at best. Like the French, the Egyptians, and the entire Arab world lacks any historical foundations of self-government. Why then should we expect anything but the seeds of tyranny to grow? “Meet the new boss, same as the old boss.” I am not saying that there is not an underlying desire for human freedom, just that the initiating factor is economic, in this case rising food prices. When you have large segments of any society surviving on a minimal income and food prices start to go up at double digit rates every month it’s not reasonable to expect anything else but chaos.

The pundits that would have us believe that the unfolding events across North Africa were unforeseen and unpredictable are lying through their teeth. They are the natural outgrowth of Keynesian economic policy. So a hearty thanks to Helicopter Ben and the Federal Reserve Bank. Their policy of unlimited printing and unlimited sovereign debt has revived the DJIA in the short term. Only problem is that now our greatest export is inflation. Yes we might complain at the gas pump or the grocery store, but then we’re not trying to live and eat on the equivalent of two or three dollars a day now are we? Well not yet at least.

Musings from Tryon Street in Charlotte.

Are we approaching the silly season or the season of pretending?

If you look closely you can see a bit of color appearing in the leaves of the Oaks and Maples. The Canadian geese around the lake at Freedom Park seem to have taken on a bit of restlessness. If you listen carefully on these still warm nights that’s not just sushi fatigue you can almost hear spreading among the bankers of Dilworth and Meyers Park. The fall approaches with an ever-quickening step, its very name portending a decline of sorts. The government’s continued publishing of numbers even they don’t believe any more doesn’t hold back the looming reality that is beginning to penetrate through the fog of specious economic prognostications. Even as the day traders, huddled before their flat screens, nervously pray to the gods of CNBC that it’s all just a bad dream; still those visions of shrinking index numbers and negative equity just won’t go away. A seaming weariness grows and an almost imperceptible groan is heard all along Tryon Street. Pedestrians along the Overstreet Mall take furtive glances at each other, each with that unanswered question in their eye; what was that the sound we just heard, perhaps the economy taking that final sigh before slipping into a coma?

So why shouldn’t it? After all we’ve had peak credit and peak oil and all the other peaks visible to the denizens of the lower floors. Now the season of peak pretending has come and gone in an instant. All our pretending bought us reprieve from the havoc of mismanagement and fraud didn’t it? We all knew that the true conditions would reveal themselves eventually, but please God just not today. Now their specter is on the rise, worse than any of our Grandparents nightmares from the ‘30’s. As someone once said, “When nothing is believable, what’s the point in pretending any more?”

When a new reality sets in, it’s time to do some reassessment. We’re looking at some “bad ju-ju” here. Too many years of getting something for nothing, knowing full well that it always ends in tragedy, whatever can go wrong, will go wrong. All those things we have refused to restructure and resize to conform to the reality we denied existed are about to be done for us by the immutable laws of history and economics. What was once a nation of hardworking self-reliant and for the most part moral citizens has become inhabited by far too many over-entitled, self-indulgent and yes at times barbaric morons ruled by thieves and con artists calling themselves financers and politicians. What was once solely the realm of economics is about to become political, and dangerously so.

While we bemoan our losses in our 401ks, our home equity and manufacturing jobs, there is a greater loss many as yet fail to recognize. The loss of the rule of law, without which we enter the wasteland of nothing matters and anything goes wherein consequently, everything goes. That we had the rule of law is what has kept China and Japan and others buying our debt for all these years. Their continued buying was predicated in the belief that in the U.S. would enforce those contracts because that was the law. It wasn’t arbitrary and after all in spite of our flaws it made thing work better. As the rule of law disintegrates we kid ourselves to we think the rest of the world doesn’t notice. They are beginning to stop believing in our money, indeed in our future. As that confidence is lost they will sell all those billions in Treasuries for whatever they can get, and our economy will get flushed away like a quick summer flash flood down Little Sugar Creek.

Like the line from Cool Hand Luke “What we have here is a failure to communicate” - honestly, by all of our political leaders, both left and right. The separation between what politicians say and what people are actually experiencing has widened to an unbridgeable chasm. Example, Obama comes out in praise of the new Chevy Volt as the savior of the auto industry, except at $41,000 no one but the costal elites can afford it and even they won’t buy it. Why would they, that new BMW or Lexus is much flashier anyway. Example, Senator McConnell doesn’t want corporations to have to publicly disclose just which political ads they are paying for, claiming it will lead to job losses. Really? Or is he just running cover for their dubious justifications for shipping even more jobs overseas?

It isn’t just government that has failed us. It’s the news media, businesses, the education system, even the courts. All have become the political instrument of one faction or another, and hence all have become suspect. And why shouldn’t they? Just look at the new so-called banking regulation bill. Two thousand pages? That isn’t the rule of law, that’s just deliberately adding more chaos to an already overly complex chaotic system. Why, so they can tell us they did something? Wouldn’t it have been far more effective to just admit that a mistake was made in repealing the Glass-Steagall act and reinstate it? But why reinstate an effective law that was less than forty pages when they can birth a monstrosity of two thousand pages that no one has read never mind understands except maybe the bureaucrats that will use it as a shield for the fat cats and a bludgeon against honest businesses and citizens.

The fall of election years used to be characterized as the silly season, now I think it’s going to just be crazy and irrational. Many will forget how it’s our institutions that have deliberately misled us; their confusions will devolve into a vicious certitude devoid of any semblance of reality. Demands for trials for our perceived enemies in the kangaroo court of public opinion will become just what they are, another mockery of the rule of law. Will the chaos in political arena and the chaos in the markets become reflections of each other? We all need to pray that things don’t unravel, because if they do it could well become a cascade. Like the old analogy; when you have a fire in the Circus tent, don’t expect too much from the clowns’ bucket brigade. Up to now all our elected clowns have done is throw more kindling and kerosene onto the funeral pyre.

I’m sure I’m not the only one who has this sense, but a lot more of us need to start paying attention to that prickly feeling as the hairs on the back of our neck start to stand up with each new absurdity. Oh what the heck maybe I just need to take a vacation, the politicians have everything covered right? And what they don’t the gods of CNBC do, right? Right?

The Deficit, Inflation and the Theater of the Absurd

Let’s face it folks the economy is in a severe recession. As both a cause and effect of this recession the US banking system took a crash in the Fall of 2008, a crash that is still ongoing some two years later.

What the recession and the banking crisis has caused are a fall in cumulative demand levels and a fall in cumulative asset value. People are spending less, and asset values have fallen, in both nominal terms and as compared to any basket of hard commodities.

It is in these two measures of economics that divide current American macroeconomic thought into two camps. The first group looks at cumulative or aggregate demand levels, while the second looks at cumulative or aggregate asset values—each camp sees their particular object as the basic underpinning of economic growth, development and prosperity. So when either of these camps see their chosen metric slide, they become unhinged. They declare a crisis and further declare that “something must be done”.

Well something has been done, repeatedly, over decades: it's called The Deficit.

To counter falling demand levels, the Federal Government launches massive spending programs, financing the spending with debt issued by the Treasury. And now that the first massive spending program has had negligible results they are of course looking at creating another big spending package some time soon. This will of course keep the demand camp happy.

At the same time, to combat the fall in asset values, the Federal Reserve Board has entered into an asset purchase program that is just as massive, unprecedented and irrational as the spending programs. Through a complex and deliberately opaque scheme, the Fed has relieved the Too Big To Fail banks of their toxic assets, and given them cash. The Too Big To Fail banks then turn around and use that cash to purchase the very Treasury bonds which are being used to finance the massive spending programs. What results is a big incestuous kabuki dance of collusion and corruption between the Treasury, the Fed and the TBTF banks. Whether it will be the courts or history that lays bare the underlying criminality only time will tell. But on the face of it, it looks criminal to me.

So herein is the yin and the yang, the Janus if you will, of The Deficit, more Federal spending on the one face, and more propping up of asset values on the other.

But don’t be confused, The Deficit (upper case) I refer to is not the fiscal or budgetary shortfall. I am defining The Deficit as a structure of policy, a political mentality. This mentality is shared by both demand and asset based economists. In this realm of The Deficit, the larger economic policy questions are no longer either/or; instead they become both/and.

Under this construct all policy options are on the table, because according to this macroeconomic policy known as The Deficit, the budgetary shortfall (the deficit, lower case) can never result in the US going bankrupt. Both sides of the political aisle are in concurrence. As Dick Cheney phrased it, “deficits don’t matter.” So then develops a political attitude that The Deficit as an economic policy can just continue indefinitely.

Never mind that historically The Deficit is without precedent: Never before has a reserve currency provider accumulated this much debt, based on a currency that floats on nothing more than military power. So this then becomes the critical issue: The dollar is a fiat currency. The Roman, French, Spanish, British, Austro-Hungarian empires, all went way into debt on numerous occasions, but none ever did it on the basis of a purely fiat currency. The US is the first to do so.

The Deficit as policy of US has had several definable effects:
1. It has allowed the Federal Government to finance all of its spending programs, satisfying the demand camp. No need for political talk of “tough choices”—the Federal Government has been transformed into the Great American Teet.
2. It has allowed the TBTF banks to deny the fact that they are broke. The FED’s toxic asset purchase program has kept the banks solvent in a perceptual if not practical sense; they have the cash to pay off their liabilities. At the same time and more importantly from the FED's point of view, it has propped up deteriorating asset values, again in a perceptual if not practical sense.
3. It has created budgetary shortfalls after budgetary shortfalls of overwhelming proportions. Debt is rapidly approaching 100% of GDP, with no end in sight.
4. Lastly, and most importantly and dangerously, it has instilled a generalized delusion amongst policy makers and politicians alike that the budgetary shortfalls and accumulated debt do not matter, and that liquidity and stimulus simply must be provided in the face of a crisis. The rationale being that the economy is incapable of withstanding the shock of a change in policy.

It is argued by some that the most important of all of these effects is that as the accumulated debt has crossed the 100% of GDP mark, nothing bad has happened. This has given far too many a false sense of security, chicken little was wrong today, things are the same today as yesterday. Warm in their self-delusion the policy makers have in essence said “Who cares about the deficit, let’s keep on spending.”

But this begs the question: What if the sky does fall? What if we are just experiencing the lull before the storm? Just how long do they think we can continue down this path of accumulating budgetary shortfall after budgetary shortfall? It has to lead to some kind sort of reckoning, right? Think of it like a drinking game, it sure feels good while you're at it, but you know full well that come the dawn you’ll feel like death warmed over.

So then the delusion becomes a self-fulfilling prophesy, propigated via those in the know, the oh so clever, spouting sensible sounding words claiming that The Deficit will not harm us in the long run. We then get tag teamed by another bunch arguing that the accumulated debt, just from its sheer size, will become its own growth engine, and will create economic growth to such a point that “The Deficit” will pay for itself. To the politicians whose only desire is to get re-elected, this bit of financial wizardry almost seems believable, so they adopt it as policy.

If anyone dares contend that The Deficit and monetization might in time lead to hyperinflation, they are attacked, ridiculed and scoffed, in effect are told, “We’ve got deflation, folks—forget about inflation, never mind hyperinflation: We’re going spend our way out of the deflationary trend”. It’s then further argued that after deflation is brought under control by more spending the economy will begin growing again, and that’s when we’ll be able to address the deficit.

Do some research on the financial blogs about this point. Most of them, who should know better, argue that because we were in a deflationary environment, there are no current or foreseeable inflationary pressures. They will then move on to contend that since we are in a deflationary trough and inflation is unlikely, that hyperinflation is an impossibility.

These oh so clever people, and the people who believe them, what I refer to as “the usual suspects,” make a common mistake. They confuse inflation with hyperinflation. Sure they do look alike on the surface, they are both money losing value against commodities, wages, etc., over time. So their conclusion becomes that hyperinflation is just inflation on steroids. This is not just a fallacy but a very dangerous one.

Yes inflation is the result of economic over-heating, wage pressures or raw commodity prices, forcing up consumer prices up all across the economy. In other words, inflation is the economy consuming commodities, raw materials and/or labor, to meet demand. These are all real and measurable factors in economic terms.

Hyperinflation on the other hand is an intangible, a psychological effect. It is the manifestation of the loss of faith: The loss of faith in the economy, the currency that is the instrument of the economy and a loss of faith that the politicians can do anything about it. It is not prices rising because the economy is expanding too quickly (whatever that means); it is prices rising because nobody believes that money is worth the paper it’s printed on.
Within the realm of hyperinflation there are two interconnected subtypes. Firstly you have the Zimbabwe-style hyperinflation as an example of out of control government money-printing. This example fosters the notion that hyperinflation only results from this kind of disorderly printing. Yes it is hyperinflation but it primarily the result of ageing despots grasping at dwindling power. It is not the systemic or psychological kind.

Secondly there is Chile’s hyperinflation in 1973 that led to the September 11 coup and Weimar Germany’s hyperinflation that led to you-know-who. These are the systemic or psychological kind, driven by a combination of real and perceived scarcity. This is what happens when the scarcity of basic commodities abruptly leads to a loss of faith in money. It becomes a psychological contagion, the belief that no amount of money will allow you to get what you need or want. This psychological dislocation of the population then leads the government directly into the first type, out of control printing. That in a nutshell is hyperinflation.

As was predicted by the deflationists in 2008 the US economy is most assuredly in a deflationary trough, the evidence is all around, and all too obvious, so I am not arguing otherwise. What I am contending is that the current deflation can tip over into hyperinflation, and rather quickly. The thing that could tip us over from deflation into hyperinflation is of course “The Deficit”.

Not simply the budgetary shortfall itself, but the policy embodied by “The Deficit”: The twisted delusion that the solution to the problem is to throw more money at it, spend more money, dump as much liquidity into the market as needed, to prop up the twin aggregates of demand and asset values.

This deluded corrosive sense that fiscal and budgetary shortfalls don’t matter is what I believe will tip us into hyperinflation. Policy makers and politicians have lost all fear of excess liquidity and spending as an instrument to overcome any problem. They will have no compunctions about adding to the deficit when the next crisis hits. That’s when hyperinflation will bare its teeth and bite us you know where.

If I had to venture a guess as to what will trigger a hyperinflationary catastrophe it would be either one of the larger Asian economies comes unglued or a sudden and unexpected commodity spike or. Not necessarily a big one, but it’ll be dramatic, and enough to cause a panic.

The stage will then be set, the audience is seated, and the curtain will rise on the first act of the hyperinflationary play. The opening scene will be a market panic, and it’ll be fast. By the middle of the first act the policy makers and politicians will take center stage and once again turn to The Deficit, opening the spigots of more liquidity and more stimulus. As the curtain falls on the first act the financial markets will finally begin to react to the realization that the debt is unsustainable: It will become obvious even to them that either all those the T-Bills cannot be repaid, or that if they are, it will be done through monetization, out of control printing at the FED.

As act two opens the psychology sets in and the panic begins feeding on itself. The decimal point will start shifting to the right with every new measure. Everyone will want to get off the stage, out of the dollar, and they’ll all want to be the first to hit the exit.

Anyone who watches the markets knows that they can turn on a dime, and that in the short term they are not rational. In panics they are no more rational than a junkie in need of a fix. As the second act closes everyone will be getting out of dollar denominated instruments. The cascade grows, as Wall Street fat cats and Main Street little guys try to move everything they can into hard assets: Precious metals, land, food, anything that is required consumption or can be seen as a store of value.

So then the final act will be hyperinflation as has been defined above: A loss of faith in money, and the belief that no amount of it will buy what you need.

The Deficit. He is both the producer and the director, orchestrating every move from the pit in front of the stage.

So as the final act unfolds faith in the dollar is lost, hyperinflation runs rampent, as government continues providing stimulus and liquidity which the populace will see for what it is, nothing but worthless paper. How the story ends I do not know, I wish I did.

I do know that actions have effects—I do know that massive deficit spending of a fiat currency will have consequences. I do know that the policy embodied by The Deficit has brought the US and indeed the worlds economy to the brink of seld-destruction—with no way to pull back from that brink. So before you think you can settle comfortably into your balcony seat there are only two questions that need to be answered: One, when will the economy finally tip over the edge, and two, what will give it that final push? Perhaps there is another question, one of a more personal nature, What have you done to prepare and protect yourself and your family?

Kleptocracy and Misdirection.

The Kleptocrats from both sides continue to play their political games in Washington while our Liberty is being sold to the highest bidder. The so-called stimulus package is laden with pork and paybacks to the special interest groups that brought these thieves to power. I guess that explains the about 37% confidence rating people have that it will have any positive effect. The politicians and the media would prefer that the public look at the American financial crisis in isolation. The picture they paint from that perspective is bad enough, but don't you dare examine it as a self-portrait of the artists. Blame the banks, blame the lack of regulation, blame anyone but the politicians that created the mess in the first place.

But there is more than just the picture that is being put before us. Just because there are things off the edges of the canvas and unpainted by the artist doesn't mean they're not there and are not elements of what you can see. The wider view is there for all to see, and it does not take a whole lot of research to find it. But even if you can see those elements of the wider picture the last thing the kleptocrats want you to do is to bring them into focus and integrate them into that wider view.

I for one am not buying the "Don't look behind the curtain" sales pitch coming out of Washington. That the politicians have pushed the economy to the edge of collapse through profligate spending and irresponsible regulation is bad enough, but it's not just the US that is in peril. The economies of all of Europe are in worse shape than we are. Iceland has already gone bankrupt, Ireland is on the brink of default and all of Eastern Europe, only so recently liberated from the yoke of Communism is preparing to default on hundreds of billions in loans from Western Europe. The Russians have put all their eggs into the basket of high oil prices and are now reaping the whirlwind of budgetary collapse. Small wonder then, that they have resorting to their old ways of saber rattling and imperialist aggression.

On our own southern border Mexico is in such a state of chaos the viability of the government is in open question. Drug cartels have so intimidated and corrupted law enforcement and local governments that the crime there has become the prevailing way of life and is spilling over our border and spreading the cancer of chaos from Texas to California.

Here at home one state after another are facing budgetary collapses of their own. California seems a lost cause; Kansas has run out of money, many others are seeking to tax everything in sight, chasing fool's errand short term solutions to the seemingly insoluble.

In an attempt to keep the public oblivious to the chaos they themselves have created, the politicians are now embarked on a campaign of misdirection, a new crusade to narrow the public's focus away from seeing the problems created by their quintupling the money supply and the accumulation of massive amounts of un-payable debt. They would rather we be concerned with the "imbalance" of opinion expressed in the free market place of ideas! Conservative talk radio is to be targeted for having become a commercial success. This of course is being put forward in the name of "Fairness," or localization of radio content.

In their typical overreaching manner they will not be content with just demonizing the likes of talk radio. The House Energy and Commerce Committee is now looking at what policies could be put in place that would allow government oversight of the internet. Even looking so far as to require those who would editorialize, i.e. express their opinion, on the internet, to post links on their sight connecting to sights of opposing opinion.

It might be 25 years late but 1984 is here.

Standing on principle

I am a free and sovereign citizen of a free and sovereign state. I relinquish certain of those rights to my state in exchange for that state’s guarantee to protect those and all of my God given rights, as enumerated in my state’s Constitution. Acting as an agent of its citizens, my state freely entered into a compact with other free and sovereign states to create a Federal government whose sole purpose is to act within a strictly limited authority granted to it by those member states; Said authority being too; 1. Act as the common agent of those member states and their citizens in relations with foreign powers, and to protect them from the infringement of their sovereign rights and the rights of their citizens by any foreign power. 2. To create and defend a common currency to be used within the several states and to set and control its value and its value in relation to foreign currency and, 3. To guarantee the free and unrestricted trade between the several states.

Further it is the responsibility of my state to protect my rights and its rights from usurpation by the Federal government should it seek to enact laws or exercise authority beyond those responsibilities granted to it by the several free and sovereign states.

I would sooner die fighting, with my personal liberty and moral integrity intact, going before my maker with a clear conscience on those accounts, than to surrender them to the usurpation of the Federal government. My personal liberty and moral integrity are not for sale at any price.

A Time to Say No. The Politics of America's Deconstruction.

I used to think that the leadership of the Democrat Party could be best characterized as little more than a bunch of "useful idiots" as Lenin put it. Fools so consumed with the preservation of their own power base that the needs of the nation as a whole were secondary at best, oblivious to the notion that they were driving us off a cliff just so long as they were the ones behind the wheel and looked stylish doing it.
Not that the Republicans were a whole lot better. Having squandered the great opportunity provide by both the "Reagan Revolution" and Newt Gingrich's "Contract With America," they took to spending like Democrats, and now that they have lost two elections in a row they look even more foolish than the Democrats. As if "standing on principle" now will produce any better result than arguing about the placement of the deck chairs on the Titanic. A day late and a few trillion dollars short.
Of late I have become convinced that there is something much more venial going on here. It's not just that the Republicans have sacrificed their souls on the same alter of political expediency that is the Democrat's stock and trade; it's that they have allowed themselves to fall into the trap that has been laid out for them.
The history of our nation has always been full of political contention. Underlying much of it however were always the concepts of reasoned compromise and the "loyal opposition." Who can honestly say they think political debate functions at a level of anything even resembling these concepts anymore?
The elements of the left, including a compliant news media, have buried the idea of "loyal opposition" and succeeded in replacing it with a system of vitriol that has divided us into two camps, both equally convinced that the other is not just of the opposite opinion but possessed of evil intent. Both sides become so convinced of their rectitude that any lie and provocation is justified means to achieving goals.
For the conservatives herein is the trap. Forced into a position of constantly being on the defense, they all too easily have adopted the tactics of the left in a vain attempt to counter them, not realizing that this is precisely the posture the left wants them to take. Having lured the conservatives into the trap the left springs it. Essentially saying "Look at those mean, uncaring Republicans, they call us names!" "We just want to help the children!" Thus positioning themselves as the perennial altruists the unwitting public laps up the "It takes a village" porridge as "just right," the panacea of all their woes, "we needn't worry the Democrats will save us."
The way is then paved for the endless parade of ever expanding social welfare and entitlements fed by a propaganda machine that convinces all too many that they have a "right" to be supported by government, that they have no obligation to seek betterment through their own effort. The all knowing and all caring government will see to all their needs. Bombarded by propaganda and outright lies they become convinced that the evil conservatives are trying to deprive them of their "rights." So blinded by misdirection they become oblivious to the chains of dependency the left has link by link tied to their ankles and shackled to the edifice of the nanny state.
The thing is not even the Democrats can reasonably believe that what little is left of the productive economy and the few taxpayers left can sustain an ever expanding program of social welfare "rights." The financial collapse coming out of such policy is as predictable as sunrise following the dawn. It's not that they don't care; it's that that is their intent. Herein is where the venality I spoke of earlier comes into play. This situation is not all arising out of some set of some set of random events. It arises out of a template laid down back in the mid 1960's. A template created by the protégés of Saul Alinsky.
What has come to be known as the Cloward-Piven Strategy was first published in The Nation magazine in May of 1962. What the authors referred to as the "orchestrated crisis" is to be hammer by which capitalism can be destroyed. The method is exactly what we are seeing; overwhelm the budget with so many benefit "rights" that the system collapses of its own weight. The plan of the Democrats is not to rebuilt America but to transform America, sacrifice the productive economy for the welfare state and in so doing destroy the very values that made America great.
If we as individuals don't stand up now and say no to this pernicious plan we will no longer be "citizens" of a great nation but merely "subjects" of the state.

Taxes for Thee, but not for Me, Crisis for us All.

It seems that every other appointment the President Ellsworth makes is some kind of tax cheat. Throughout the Presidential campaign we heard a lot of talk about sacrifice and "patriotic duty" to pay more in taxes. I guess this so-called patriotic duty extends to everyone except those in the new administration. Combine this with the piling on of unfunded mandate after unfunded mandate and it's not just that it's a house of cards it's that the foundation is built of unconstitutional sand that's going to wash away in a flood of inflation.

It's not just the individual citizens that are starting to get fed up with an out of control Federal Government but the States as well. Is it little wonder then that State after State are seeing resolutions introduced in their legislatures reasserting their rights under the 9th and 10th Amendments to the Constitution. 8 so far and word is that some 20 more will see them introduced in the next few weeks. As the numbers grow it will bring forth a Constitutional crisis simply beyond the comprehension of President Ellsworth, but way beyond his ability to deal with as well.

Joe "the plagiarist" Biden was right Pres. Ellsworth is going to be tested, he just didn't foresee that it's going to be a combined test of an internal Constitutional crisis and an external threat coming from enemies who all ready see President Ellsworth and our nation as weak and vulnerable. Continuing to march down the corporativist road of combining business and government will only accelerate the crisis on both fronts.

And so it Begins.

If I'm not mistaken one of the lynch pins of the Democrat party's most recent electoral success was that for the last 8 years or so the Republicans had succeeded in intimidating the voting public by fear mongering about the war on terror. The Patriot Act was a usurpation of power blaa blaa blaa...... Gitmo, blaa blaa blaa.....

And yet now that the Democrats control both Houses of Congress and the White House they want to pass a fiscal monstrosity by calling it a "stimulus package." I am finding it hard to disabuse myself of the notion that I'm being fear mongered into accepting a crap sandwich that's being sold as Dr. Feelgood's magic Elixer.

Some of those in the all so well informed media and inside political circles have, much to their own chagrin, acknowledged that the new Messiah isn't exactly getting his way, or that the magic of the momment is fading faster than a drunken stupor induced quickie Las Vegas wedding.

It not as if our new President doesn't have his hands full as it is. Now it seems there are some new pressures soon to come to bare from an entirely unexpected quarter. There had been some whispers about it but now the cat is out of the bag.

That most ugly of spectors, at least for Democrats any way, has arisen. That old bugaboo that strikes fear into the heart of any good pandering Democrat - Federalism. It seems that just this week a Resolution was introduced in the New Hampshire House asserting of all things that New Hampshire is a free and independent State and that specificly, any law enforcement measures enacted by the Federal Government that are outside the bounds placed upon it by the Constitution can be considered null and void. That the Federal Government has no right to enfore laws within the State of New Hampshire that is does not have the authority to inact in the first place.

Now I can't personally atest to the makeup of the New Hampshire State Legislature nor the resolutions chances of passage there. But word of it having been introduced there will no doubt spread to other states that just may be considered more fertile ground in which to grow. A wide swath between the gulf coast and the Canadian border comes to mind.

For those who might be want to read the resolution for themselves, I would refer you to some of Pat Dollard's excellent work.

http://patdollard.com/2009/02/new-hampshire-fires-first-shot-of-civil-war-resolution-immediately-voids-several-federal-laws-threatens-counterstrike-against-breach-of-peace

Thoughts on Personal Security

So there I was feeling secure in my world, surrounded by my stockpile of canned green beans, counting my silver coins and cleaning my guns. When it comes to my attention that my very lively hood was in immediate jeopardy! But not just my lively hood but that of another 500 million Americans as well. Ok maybe not 500 million others but at least 499,999,999 of us. I mean how could I possibly doubt such sage wisdom coming from Queen Nancy herself, it simply could not be possible that the great oracle of Sodom and Gomorra west (otherwise known as San Francisco) could be wrong! Things like that just don’t happen!

But then I saw that all was saved! President Ellsworth came to the rescue and told us all not to worry! He was not going to let any of those evil bankers make more than $500,000 a year! Saints be praised! The capital world was so impressed with such profound wisdom that they pulled another few tens of billions of dollars out of the stock market! Maybe they're concerned that I might be trying to corner the market in canned green beans. I think I had better check the futures numbers on that ASAP.

After having checked my green beans stocks I feel that I already have a large enough share of that market that I needn’t concern myself with being damaged by the green bean speculators any time soon. I’m going to need to find something into which I can diversify. I was thinking maybe vacuum pumps! There could not possibly be a whole lot of competition in the vacuum pump market. So as a careful investor I started doing my research. Lord was I in for a shock, someone had already beaten me to it and had the market all locked up. Even more shocking I find it was Queen Nancy herself! Seems NASA has hooked tubes to her ears and found a void big enough to suck the very existence out of a black hole! So who needs to go back to the moon there’s plenty of space right there on the Potomac!