Thursday, April 23, 2009

INDIVIDUAL FIRST, BROTHER SECOND

My instinct as an individualist and artist has always warned me most urgently against this capacity of men for becoming drunk on collective suffering, collective pride, collective hatred, and collective honour. When this morbid exaltation becomes perceptible in a room, a hall, a village, a city, or a country, I grow cold and distrustful; a shudder comes over me, for already, while most of my fellow men are still weeping with rapture and enthusiasm, still cheering and venting protestations of brotherhood, I see blood flowing and cities going up in flames.

—Hermann Hesse

The economy has shifted along such drastic faultlines that young people today are often in their 30s before they actually live on their own outside a group house situation. Nothing inherently wrong with that arrangement, but it does color one's youthful political thinking reflected across other crucial issues still unfamiliar to them in any personal way.

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Tuesday, April 21, 2009

LUCIUS QUINCTUS CINCINNATUS

WHY DO WE NOW ACCEPT MERE politicians when we once yearned for an immaculate statesman?

Cincinnatus was regarded by the Romans as one of the heroes of early Rome and as a model of Roman virtue and simplicity. A persistent opponent of the plebeians, he was forced to live in humble circumstances, working on his own small farm, until he was called to serve Rome as dictator, an office which he immediately resigned after completing his task of defeating the Aequians. His immediate resignation of his absolute authority with the end of the crisis has often been cited as an example of good leadership, service to the public good, civic virtue, and modesty.

Interestingly, this past winter, having recently arrived to the farm only a few weeks before, I quickly dubbed the large black cat who began appearing daily for a couple of hours each day, Cincinnatus. I had no knowledge of the cat, or the name I had bestowed upon him. My only connection to the name Cincinnatus was the memory of a crusty old character in a popular 1960s television series I watched as a child.

The cat showed up around his favorite hole near the barn and stables for about two weeks, in hindsight the same two weeks we were fighting our kitchen mice problems inside the house some five hundred feet away. My brother took to Cincinnatus, and pried him with scraps and goodies in hopes of persuading the small but nimble enforcer to stick around for indoor duty. Over the next two weeks we trapped two mice in sticky traps, releasing them into the creek the next morning. Then, just as quickly, Cincinnatus disappeared. And so did the evidence of a night mouse...

Only today, several months later, and still no sight ever again of the old cat Cincinnatus, did I seek out the origin of our fleeting feline's name. I don't know why it occurred to me, but in this Age of Google, it did. How apropos, however. Now that our dear president has carefully steered America through her greatest crisis since the election (pick anything, flailing banks, stimulus, pirates, and Iran, the Saudi bow, rejecting Bibi, right-wing radicals, and embracing Chavez), perhaps we can hope that His Illustriousness and his South Chicago Gang will now step down and leave the running of this ship of state to mere sea captains.

On the other hand, back in the days of Rome, those cynical plebeians were no less likely to stage a tax revolt than they are today.

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Sunday, April 19, 2009

WILLING THE MILQUETOAST DELIVERANCE



CONSERVATIVE PUNK GEORGE F. WILL takes no prisoners in rebuffing hapless liberalista Ariana Huffington but good a few weeks ago on a Sunday morning political chat show. The distinction is made here between arrogant humility and humble arrogance. The Left likes to pretend that showing respect (which either comes off like paternalism or the equally inconvenient kowtow) is all that matters in overcoming international hostility. Unfortunately, there is little example of that happening in nature except among the chattering classes whose weapon of choice remains the knife in the back of opponents and allies alike.

You've got to love the true Western pacifist grounded in personal strength and unassailable character, but can you actually find one, other than the Amish perhaps?

Indeed, there are pacifists who are crippled by their own flaws and lack of courage. There are pacifists who are vicious to their core while touting a mystical peace, despising their own brethren while ignoring the disgrace of the enemy, and there are smorgasbord pacifists who simply prefer pet causes over any sort of comprehensive worldview.

Each of these phony pacifists and appeasers is pacifist in name only, and all generally subscribe to the concept of social engineering any way they can get it. The Buddhist zen master, who cares not a wit for the kingdoms of humanity, however, is rather scarce we've noticed.

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Thursday, April 16, 2009

SAME SAD TALE OF GREED AND DOMINATION



THIS IS THE HOUSE that fell on the mouse that Jill and her best friend Jack built. Or something like that.

Well, it's gobble gobble gobble super-corporation time again! Capitalism eats its own young again. Damn! And I'm such a big fan of capitalism, too. Why does it have to be this way? Why does it always move toward brutal corporatism and homogeneity? I've never uncovered the answer to this mystery? Surely the flaw is not in the blueprint, but is a conscious decision made at some point along the growth baseline. In other words, the capital enterprise doesn't have to evolve into high corporatism, if it wasn't that that creature yesterday.

In fact, a few years ago I belonged to some one of the early blogger entities, but after a couple of days of earnest activity I allowed my account to fall dormant. Later, I tried to return to the site, failed at log-in, having not kept a record of my log-in information, instead relying on my memory of the usual suspects. So, I tried to create a new account, and was repeatedly rejected for the next few weeks. The name of that rather fabulous (I still like its original concept and interface) site was TextAmerica. It had the great idea to charge for what had been a "free" service.

Then Textamerica deleted all content related to those old "free" accounts—the ones created by their earliest and arguably most loyal users. My account had been blocked, and during the transition phase, I wasn't even offered a chance for a paying account.

Moral of the story: TextAmerica went belly up in less than a year. Its domain name is now used by some other type of company which seems to be a loser, something from the late 90s or for mid-school children, if the contents of their rather bleak homepage over two years later is any indication.

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THE CONSTITUTIONAL REVIVAL

Liberty
CONSTITUTIONAL SCHOLAR and nationally syndicated talk host Mark R. Levin is enjoying his third consecutive week at number one atop the New York Times Bestseller list with his book Liberty and Tyranny: A Conservative Manifesto. What's more, is the book has increased its lead over the number two and number three books with each successive week.

Mr. Levin is president of Landmark Legal Foundation. He has also worked as an attorney in the private sector and as a top adviser and administrator to several members of President Ronald Reagan's cabinet.

This book explores with distinction the critical identifying features that have made the United States of America integrally different from all other nations in the history of humanity. Levin draws a portrait of the founders and framers, not overlooking those intellectuals and thinkers who preceded and inspired them. The spark of genius which is overlooked and diminished in any collective or totalitarian statist approach to government, the USA was founded on the ideals of life, liberty, and the pursuit of happiness...

That we have these rights conferred on us, not by man or government, but by Natural Law, which originates with the Creator is not a trifling idea. Mr. Levin has written a commendable and compelling book, and will be remembered not only for its ideas but its timeliness.

Yesterday's Tax Revolt Tea Parties which were held in every state across the nation, despite the Democratic leadership and the MSM's dismissive coverage, appears to have been a rousing success as people of all demographic backgrounds turned out in surprising numbers.

The Congressional Speaker of the House, Nancy Pelosi, dismissed the impact of the gatherings as highly financed astro-turfing, a coinage actually invented by President Obama's chief strategist David Axelrod in describing his own often-spectacular tactics during the 2008 presidential campaign.

Predictably, the media only reluctantly covered the tea parties on tax day and rather than report news as they found it, many took it upon themselves to express their frustration by mocking the events and the folks attending.

As Glenn Beck reports...

A truly amazing piece of audio—a CNN reporter (using that phrase very, very loosely) interviewing a man with his child, and seemingly personally offended that someone could actually criticize the government spending that's going on. She demonstrates her complete lack of understanding of history and instead reveals her pro-Obama views as she calls the protests 'anti-government,' 'anti-CNN' and the best for last... 'it's not family viewing.' Huh?

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Tuesday, April 14, 2009

FROM MOHAMMED TO AYN RAND

IN A SPLENDID FRONTPAGE.COM piece, David Swindle, free lance writer, film critic, and blogger, interviews the former Muslim cartoonist Bosch Fawstin, creator of the fascinating anti-jihadist superhero character Pigman. It's time for Americans to inform themselves, grow bold, and take a stand, each in his or her own way wherever one can against the stealth jihad creeping into every continent on the globe, bringing the promise of sharia law with it. Here's a taste of what Mr. Fawstin is doing in this direction:

DS: What prompted you to abandon Islam? Could you discuss the circumstances behind that decision?

BF: I didn't so much abandon Islam as fade away from it, and I didn't have much faith to lose to begin with. It's tough to say you've left something if you've never really embraced it. Hugh Fitzgerald is right in saying "the atmospherics of Islam" can affect even the least devout Muslim in a detrimental way. A strong thrust within Islam is to see any and all things outside of Islam as worthless, most particularly non-Muslims. When we did go to mosque there was never any real sense that something important was taking place. The majority of us who were involved in this pretense had no idea what to do, unless we followed the imam's prayer moves (and many in attendance were fooling around anyway). "Islam" was the name of the thing that was held as 'the good' in my household, and it was that vagueness which helped keep it at bay. It was only when I started taking morality seriously that I realized Islam had nothing to offer me.

DS: You say that Islam had nothing to offer you. What did you find that did? What are the schools of thought and who are the thinkers who have most influenced you and your work?

BF: I found Ayn Rand's philosophy of Objectivism, first by watching the film version of The Fountainhead, and then by reading her novels and nonfiction works. I felt at home reading her work. It was the first time in my life that I saw the concept of morality being taken seriously outside of religion. A morality that was based in reality and had more to say about life on earth, freedom and the individual than anything I had read before. It was only fitting that my favorite storyteller in comics, Frank Miller, was also influenced by her work, as was another favorite of mine, Steve Ditko, who has spent most of his career expressing Objectivist ideas through his work.

DS: Now that we know a bit more of the background behind your work lets discuss some of the specific pieces in ProPiganda and the ideas they depict. One of the most challenging, interesting illustrations in the book is the “They Say We Say” image on page 43. It's an illustration of a point you elaborate on in the book's essays: the enemy is Islam, the so-called moderate Islam of the West is not really true Islam at all. This strikes me as one of the most important ideas in the book. It's also one of the most controversial. Could you elaborate on this idea for those new to your work?

BF: They say Islam, we say anything but Islam, leaving the troubling impression that the enemy's religion is something other than Islam. There is no "Political Islam" or "Totalitarian Islam" that is distinguishable from Islam itself. Islam is normatively political and totalitarian. We have evaded the true meaning of Islam in the name of respect for religion. But we cannot avoid the consequences of doing so. Mohammed was a Muslim and his religion was Islam; he was not an Islamist practicing Islamism. He was a Muslim who practiced Islam and engaged in its violent Jihad, forcing Islam into a world it failed to get into on merit. And any Muslim who is peace-loving and tolerant is by implication condemning their violent, intolerant "prophet" and the means by which their religion was spread. How Islam spread tells us exactly what Islam means. When the moral standard for an entire culture is a bad guy who crossed the line as a way of life, it explains why his most devout followers are the most violent among Muslims. We can try our best to stay clear of Islam, but Muslims have proven that they will never keep Islam to themselves unless they are forced to. It is a faith that sanctions any evil against those who are not part of it. Our not calling this evil by its name, Islam, is sanctioning it and leaving ourselves at the mercy of those who will stop at nothing to bury all we hold dear.

DS: This understanding of Islam would represent a pretty fundamental shift in the American approach to the War on Terror. Currently US policy from the President down has held that Islam is not the enemy, that Islamic terrorists represent a perversion of Islam, and that the US is not engaged in a war with Islam. The ideas of ProPiganda turn that approach on its head, flipping each proposition 180 degrees: Islam is the enemy, Islamic terrorists are merely acting as Mohammad did, and that we actually are fighting a war against Islam. What implications would such a shift in ideas yield toward how the United States deals with this threat? In one of your essays you challenged President Bush for his "quarter-assed response to 9/11." Would it simply be a matter of getting more aggressive? Do we need to fight the War on Terror Pigman style?

BF: If 2,996 American politicians were murdered on 9/11, do you think Washington would have been interested in exonerating Islam and allowing this enemy to kill again? We all know the answer. Our politicians are so disconnected from the American people, that they now do everything but their job. If they can't defend us, they're good for nothing. They think that their job in this war is to win hearts and minds that already belong to Islam. And while they dispassionately wage a war on "terror", not jihad, they allow the two greatest state sponsors of jihad terrorism, Saudi Arabia and Iran, to remain in business. For now, our government goes big on us and small on jihad, while telling us that we are not fighting a war against Islam, even though Islam is fighting a war against us.

Ayn Rand said, "To fear to face an issue is to believe that the worst is true." And the worst is true about Islam, which is why no one in our government challenged Bush's famous anti-reality check, "Islam means peace." We have gone from the terribly named "War on Terror" to the now even more euphemistic "Overseas Contingency Operation," while the enemy has stuck with the same jihad for over a thousand years.

Those who've sworn to defend us have decided that there are more important things to them than defending us. As I wrote in my introduction to ProPiganda, "Our leaders have decided that, while the protection of America is optional, the defense of Islam is absolute." Our government has waged war the way the enemy wages peace and has never given the enemy a reason to end jihad. This enemy has been out for blood for over a thousand years. Obama, following in Bush's compassionate war mode, is hoping that the enemy tires in the face of our unused power. But they will never tire of spilling our blood; this is what they do, what they've always done, and they have always counted on their savagery to help them overcome all odds against those they conquered. So yes, we need to fight the War on Jihad, Pigman style. Above all, we need to follow the truth to wherever it may lead in order to show us what must be done. We need to terrify the enemy by saying and doing the once unthinkable against them and all they hold dear. You will see what I mean in The Infidel.

Read it all.

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Monday, April 13, 2009

ALL THE WORLD'S A DISTRACTION

THE UNFLAPPABLE MARK STEYN has taken rightful issue with the New York Times and its coddling of the new president's fondness for declaring international events such as North Korea's recent missile launch and now the Somali pirate escapades mere distractions. Mere distractions, that is, from his stated course at full throttle to rectify national inequalities.

Steyn, who was recently cleared of charges by the Canadian Human Rights Commission, is no stranger to the leading leftist pet ideas of the day as he writes:


As my colleague Andrew McCarthy wrote, "Civilization is not an evolution of mankind but the imposition of human good on human evil. It is not a historical inevitability. It is a battle that has to be fought every day, because evil doesn't recede willingly before the wheels of progress." Very true.

Somalia, Iran and North Korea are all less "civilized" than they were a couple of generations ago. Yet in one sense, they have made undeniable progress: They have globalized their pathologies. Somali pirates seize vessels the size of aircraft carriers flying the ensigns of the great powers. Iranian proxies run Gaza and much of Lebanon. North Korea's impoverished prison state provides nuclear technology to Damascus and Tehran. Unlovely as it is, Pyongyang nevertheless has friends on the Security Council.

Powerful states protect one-man psycho states. One-man psycho states provide delivery systems to apocalyptic ideological states. Apocalyptic ideological states fund non-state actors around the world. And in Somalia and elsewhere, non-state actors are constrained only by their ever-increasing capabilities.

When all the world's a "distraction," maybe you're not the main event after all. Most wealthy nations lack the means to defend themselves. Those few that do lack the will. Meanwhile, basket-case jurisdictions send out ever bolder freelance marauders to prey on the civilized world with impunity.

Read it all.

While we are very grateful and proud that the American captain, his crew, and ship were safely rescued, even after reading all the official and unofficial conjecture, one still wonders why it took so long.

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PARSING A JOKE ONE LAUGH AT A TIME

Found this little ditty on the web somewhere, and while I'm not much of a purveyor of fine humor, I found this one hilarious enough of a "trifecta infectus" to pass along...

Last Tuesday, as President Obama got off the helicopter in front of the White House, he was carrying a baby piglet under each arm. The squared away Marine guard snaps to attention, Salutes and says: "Nice pigs, sir." The President replies "These are not pigs...these are authentic Arkansas Razorback Hogs. I got one for Secretary of State Hillary Clinton, and I got one for Speaker of The House Nancy Pelosi." The squared away Marine again snaps to attention, salutes and says, "Excellent trade, sir."

Speaking of Obama's seemingly proto-socialist and intrusive policies (wasn't I doing just that?), here's a quote worth its salt:

"You cannot help the poor by destroying the rich. You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot lift the wage earner up by pulling the wage payer down. You cannot further the brotherhood of man by inciting class hatred. You cannot build character and courage by taking away people's initiative and independence. You cannot help people permanently by doing for them, what they could and should do for themselves."

—Abraham Lincoln

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REGISTERING THE FIREARMS

HOUSE SPEAKER NANCY PELOSI, California Democrat, announced last week that she wants to register guns. Her next move will be to try to confiscate them.

The speaker picked a television show with a viewership of 4.6 million to float the Democrats' coming gun-control push. Questioned on ABC's "Good Morning America" about the prospect of new gun-control laws now that "it's a Democratic president, a Democratic House," she responded, "We don't want to take their guns away. We want them registered."

Politicians and bureaucrats routinely claim that registration helps solve crimes. If a registered gun is used in a crime and left at the crime scene, registration supposedly lets the police trace the gun back to the criminal. Though this turn of events might work on fictional TV crime shows, it virtually never occurs in real life. Criminals' guns are rarely left at crime scenes. When guns are left behind, it usually is because a crook has been seriously injured or killed and the police are poised to catch him anyway.

The few guns left at crime scenes rarely—if ever—are registered to the perpetrator. If they are registered at all, it is to someone else, whose piece was stolen. Despite what Mrs. Pelosi might think, those who use guns to commit major crimes such as robbing and killing are unlikely to respect her request to file paperwork so the government can catalog the tools of their trade.

Numerous examples disprove gun-control propaganda. Hawaii has had licensing and registration of guns for about 50 years. After all of the administrative expenses and inconvenience imposed on gun owners, police there cannot point to a single crime that has been solved as a result of those programs. Given Hawaii's remote island geography, this should be an ideal place to keep track of guns because movement in and out of the state is limited and legal importation is controlled. If registration is going to work anywhere, it should work there. Unfortunately, criminals seem to be able to get their hands on guns virtually anyplace in the world.

Other jurisdictions with a history of strict handgun bans, such as the District of Columbia and Chicago, have even required registration of hunting rifles and shotguns for more than 20 years. Neither the District nor Chicago can point to any crimes that have been solved using registration records.

Read it all.

Hmm, I think I'm going to go and purchase a firearm for the first time. If confiscating legally owned firearms doesn't reduce crime, then the government is indeed trying to wrest power from the people—which is why I and every member of my family should own a gun. The rapid speed and vitriolic nature of these powerful Democrats in moving their agenda is frightening, and despite all I have ever believed about this country and its honor in leadership, I do now believe we are headed for a constitutional crisis with the transnational statists.

Perhaps we may all soon need to defend liberty and the constituion of the United States by own own actions and blood, if this awful trend proves more a taste of reality than unsubstantiated conspiracy theory.

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Sunday, April 12, 2009

NAVIGATING GOLD'S NORTHPOINT

GARY NORTH not only has skin but he also has his head in the monetary game. Read this informative article, and prepare yourselves for the likelihood of a continuation of global financial distress. In the meantime, you may want to subscribe to his newsletter.

Issue 847 April 10, 2009

THE GOLD WAR: WILL YOU LOSE IT?

If you own gold, you are in a war. You are under assault. You had better figure this out early.

There is a full-scale war against you. The politicians and central bankers who are conducting this war against you are determined to see that you lose money on your investment.

I have written a detailed report on this: "The Gold Wars." You can download it free of charge here:

The reason why you are under assault is because you have demonstrated by your purchase of gold or a gold-related investment that you do not trust the monetary policies of your nation's central bank. If you are an American, this means you do not trust the monetary policies of the Federal Reserve System. You have taken a step that confirms your lack of trust in the government and its central bank. If you think the government and the central bank will sit quietly, while millions of citizens buy gold as a way to hedge against government and central bank policies, you are terminally naive.


A PERPETUAL WAR

Governments and central banks for almost a century have done whatever they could to keep citizens from using gold as a way to hedge their economic futures against the taxation policies of the government and the inflation policies of central banks.

The war escalated a few days after the outbreak of World War I in August of 1914. At that time, central banks authorized commercial banks to cease redeeming paper money for gold at a fixed rate of exchange. For most of the world, that prohibition extended during the war, after the war, during the Great Depression, during World War II, up to today.

The United States government forbade American citizens from owning gold, beginning in 1933 and extending to the end of 1974.

Today, no government is restrained by a gold standard. No government, no central bank, and no commercial bank is required by law to redeem paper money or bank accounts for gold at a fixed rate of exchange.

This has freed governments and central banks from the limit which the traditional gold standard had imposed on them. When they inflated the currency, people who understood what was going on would go to their local bank and exchange paper money or bank account entries for gold or silver coins. They understood that the increased money supply would lead to a rise in prices, and that gold would flow out of the commercial banks and the central bank of the nation in question. They lined up early to get their gold, so they would not be stiffed by the commercial banking system and the central bank, which they knew would be the case if the central bank continued to inflate the currency.

People who own gold coins are skeptics regarding the fiscal and monetary policies of the government. There are people who buy gold as a temporary speculation, the same way that they would buy copper, but I am talking about people who buy gold coins and take delivery. These people are professional skeptics regarding governments and central banks. They are the sworn enemies of governments and central banks. The very fact that they would go to a coin store and purchase bullion gold coins testifies to their lack of trust in governments and central banks.

Politicians and central bankers regard such people as enemies of the state. They will do whatever is possible to impose losses on these people, so that others in the society will not perceive that those who are skeptics about government fiscal policies and central bank monetary policies are making money. The worst thing that can happen from the point of view of a government or central bank is the people who are completely skeptical about governments and central banks should get rich as a result of the policies of governments and central banks.

The goal of the politicians and central bankers to make certain that the public is anesthetized regarding the disastrous effects of severe monetary inflation on the wealth of individuals. A rising price of gold sends a signal to those members of society who trust the integrity and good judgment of politicians and central bankers. The signal says: "Skeptics are making money. You're losing money. Buy gold."


FROM JOHNSON TO OBAMA

The government of the United States has had a problem with gold-buying skeptics ever since the Vietnam War. Late in Johnson's administration, foreign central banks, especially the central bank of France, began cashing in dollars and demanding delivery of gold at $35 an ounce. This led to a gold run on the Treasury, which was in effect a gold run on the Federal Reserve System. This sent a signal to investors that central banks no longer fully trusted the United States government to be able to meet its contractual obligations to governments and foreign central banks.

Nixon closed the gold window on August 15, 1971. He broke contract with all foreign nations and central banks. He did exactly what the skeptics had predicted that the government would do: refuse to deliver gold at $35 an ounce.

That sent a signal to investors that the Nixon administration was going to require the Federal Reserve System to inflate the currency. This is exactly what the Nixon administration did. So did Carter's. The 1970s were the worst period of price inflation in peacetime American history.

By the end of the decade, January 1980, gold rose for one day above $800 an ounce. But the central bank under Paul Volcker had reversed policy in October of 1979. The Federal Reserve began to tighten money. This led to the collapse of gold and silver prices in January 1980, and also to the 1980 recession. That cost Jimmy Carter his presidency.

There is a legitimate way for central banks to fight gold and inflict losses. The way to do this is for central banks to stop increasing the money supply. That is a perfectly legitimate policy. That is what the traditional gold standard required of central banks. When central banks followed policies of monetary inflation, and the price of gold rose as a result, the run on gold would begin.

Paul Volcker fought gold investors from 1979 to 1982. The Federal Reserve reduced the increase of the money supply. This was what the traditional gold standard always did. It forced central banks to stop inflating. If they did not stop inflating, there would be a run on the supply of gold by a small minority of investors. They would bring in IOUs to gold and take their gold home.

Central bankers do not want to fight gold investors in this way. They want to continue to expand the money supply but not face the consequences in the arena of public opinion. They seek ways to force down the price of gold because the price of gold is an indicator of central bank monetary policy. Central bankers today have a number of anti-gold investor policies.


ANTI-GOLD INVESTOR POLICIES

The most common policy is to lease gold to a specialized group of insiders known as bullion banks. The central banks call this leasing, but it is operationally a form of gold sales.

The central bank leases gold at well under 1% per annum to bullion banks. Bullion banks then sell the gold into the private market, take the money, and invest it in government bonds or other investments that pay far more than 1% per year.

That gold is gone. To get the gold back, the central banks would have to demand payment in gold by the bullion banks. The bullion banks could not repay this gold without going into the gold market and purchasing it. This would drive up the price of gold. It would bankrupt the bullion banks.

So, central banks do not require the bullion banks to repay the gold which the bullion banks borrowed from the central banks. The central banks simply roll the loans over, year after year, and the bullion banks invest the money that they get from selling the gold. These central bank sales are not recorded as sales by the central banks. The public remains oblivious.

The central banks maintain the fiction that they still own the gold. They report their holdings of gold as not having changed. But, from an economic standpoint, the gold is gone, and there is no possibility of central banks will ever get it back from the bullion banks.

Another way that central banks and governments battle investors in gold is to announce, from time to time, that the central bank is contemplating the sale of gold. This scares some gold investors, who sell their goal. Of course, other investors who know the name of the game buy the gold. By threatening to sell gold, central banks are attempting to push down the price of gold.

The latest example of this came at the G20 meeting on April 2. An announcement was made that the International Monetary Fund will make available special drawing rights (SDRs), which will serve as money for central banks. To raise some of this money, the IMF will sell some of its gold. That was the official announcement.

The IMF has been threatening to sell gold for several years. To do this takes a majority vote of the member nations of the IMF. It is clear that the member nations are willing to allow the IMF to do this. Previously, this was not clear.

The figure quoted by the press regarding the amount of gold be sold is 400 tonnes. World production of gold each year is in the range of 2500 tonnes. It is unlikely that the IMF will sell all of this gold at the same time. It is likely that these sales will be stretched out over at least a two-year period. So, the sales are likely to increase the supply of available gold by perhaps 8% for two years. In a time when central banks are increasing the monetary base by 100% per annum or more, this increase in the supply of gold available for purchase is not substantial.

There is another issue to consider. It is likely that most of this gold will be purchased by other central banks. If this should turn out to be the case, then the actual supply of gold coming into the public domain will not change. Nevertheless, the announcement was made that these sales will take place. This put downward pressure on the price of gold.

Why would a central bank or the IMF say in advance that it planned to sell a large portion of its gold holdings? When a large holder of commodities is going to sell the commodity into the open market, he does not announce this in advance. His goal is to maximize the amount of money he gains by the sale of the asset. If he warns the world in advance how much he plans to sell and over which time period, this will depress the price if the sale constitutes a significant quantity. It is economically irrational for a seller of commodity to say in advance how much she plans to sell. I say "economically irrational" on the assumption that the goal is to make a profit. But if the goal is not to make a profit, but rather to inflict economic harm on people who hold a particular commodity as an investment, the announcement makes eminently good sense.

The fact that the IMF sale was announced by the IMF for years preceding the G20 meeting, and the fact that it was announced at the G20 meeting, indicate the degree of the hostility of the IMF and the central bankers to people who invest in gold. They were willing to take a loss in terms of the amount of money they could have obtained for the gold by quiet, unannounced sales.

They are willing to take this loss because they believe that it is more important to create uncertainty in the gold market than it is to maximize the amount of fiat money gained by the sale of gold. So committed are these people to inflicting financial losses on gold investors that they are willing to suffer hundreds of millions of dollars of losses. After all, it's not their money.

The classic example of this was Gordon Brown's decision in the late 1990s to sell half of the gold reserves held by the Bank of England in trust for Great Britain. In terms of today's price of gold, his decision cost the government something in the range of $10 billion. He drove down the price of gold to a little under $260 an ounce in 2001. He inflicted damage on a tiny minority of investors in gold, and he inflicted enormous damage on economic reserves of his country. He did this as Chancellor of the Exchequer. Today, he is the Prime Minister. He is now pressuring the Bank of England to inflate at unprecedented rates in order to save the banking system.

Any suggestion that Gordon Brown understands economics is laughable. Any suggestion that Gordon Brown is envious against investors in gold seems to be substantiated by his public career. He is representative of virtually every national politician and every central banker. He hates the fact that investors in gold can drive up the price of gold, thereby embarrassing the government and the central bank.

The rising price of gold warns the general public that the government's tax policies and the central bank's monetary policies cannot be trusted. Worse, a rising price of gold transmits the availability of a profit opportunity: get rid of fiat money and purchase gold.

Politicians and central bankers are frantic today to keep the general public from being aware of the enormous increase this taken place in the monetary base of every Western industrial nation. They do not want the public to perceive that the central banks are in panic mode because of the disaster has taken place in commercial bank balance sheets. Large commercial banks around the Western world are bordering on bankruptcy. Central banks and governments are intervening frantically to keep the banks' doors open, in order to keep the public confused about the implications of the worldwide economic recession that has come as a result of worldwide monetary expansion by central banks from the year 2000 until 2004.


PRICES CONVEY INFORMATION

Prices convey information about economic conditions. The price of gold conveys information about the likelihood of future price inflation. This information governments and central banks want to distort. They do this by manipulating the price of gold through leases that are actually sales and sales that are announced in advance.

When an individual invests in gold, he is making a statement. He is saying that he does not trust the powers that be. The powers that be deeply resent this. So, an individual who actively takes steps to increase the price of gold, which he does by buying it, should be aware in advance that he and people like him will be the targets of deception, envy, and ridicule. Buying gold is not the same as buying other commodities. Other commodities are not perceived as touchstones of central bank monetary policy. The price of gold is, even though most of the gold in private hands winds up as jewelry to be used in dowries in India. Far more than central banks, Indian fathers set the price of gold. At the margin, however, central banks do affect the price of gold.

With the rising productivity of India, the gold market has received a long-term increase in demand. This can be offset by the worldwide recession, which is now in progress. When Indian fathers decide that times are getting better, they will start buying gold again. Today's policies of monetary expansion, which lower real wages and therefore get people back to work, will begin to affect the worldwide labor markets. This will increase the demand of gold in India.

It is unlikely that a tradition governing marriage that has prevailed for thousands of years is likely to change just because a relatively small fraction of the Indian population has moved into modern urban capitalism. On the contrary, there is likely to be increased demand for gold, because fathers will be enabled to purchase more gold for their daughters than before because they are making more money than ever before.

This is why the attempt of governments and central banks to lower the price of gold will backfire. Eventually, governments will run out of gold to sell, and so will the IMF. They will run out of gold to lease. While I do not think the politicians will ever catch on to the fact that their nations' gold is gone, leaving only IOUs for gold written by bullion banks that are on the verge of bankruptcy anyway, I do think that at some point the central banks will stop leasing gold. They will stop leasing it because they will not have enough to lease to substantially affect the price of gold.

I do not think the central banks will ever demand repayment of their gold by the bullion banks. The bullion banks would simply declare bankruptcy, and be done with it. That would publicly expose the central bankers as economic idiots, which happens to be the case, and the idiots don't want the bad publicity. So, the gold is gone, and the public will not find out that the gold is gone. The gold is nevertheless gone. Gone in the sense of outside of control by central banks. It is inside the dowries of women in India and a small handful of goldbug investors.

At some point, the number of investors who figure out that they had better buy gold is going to go from less than 1% of the public to 5%. When that happens, the supply of gold will not increase, and the price of gold will skyrocket. If as many as 10% of the investing public tries to put 10% of their assets in gold, I suspect the price of gold would go to $10,000 an ounce. The gold market is so marginal in the overall commodities market that the attempted 10% of investors to increase their holdings of gold to 10% of their assets would make today's holders of gold very rich and very happy. I think at some point this is going to happen, but I think it is going to happen in a time of price inflation so bad that the purchasing power of the currencies will decline so fast and so far that the fact that you can get rich in fiat money by selling your gold will not persuade you to sell your gold.


CONCLUSION

Who is going to win the gold wars? Holders of gold. The big winners will be Indian wives whose fathers gave them a lot of gold as a dowry. The rest of us gold bugs will also do well. The general public will never catch on in time, and by the time that it occurs to even 10% or 20% of investors that they’d better buy gold, it will cost them so much to get into the market that they will not make the kinds of profits that today's gold investors are going to make.

Governments and central banks can continue to fight the gold war by means of gold leasing, outright gold sales, and threats of gold sales, but for as long as they inflate the money supply to obfuscate the price of economic depression, they will be running out of ammunition. They are in a war in which ordinance is in fixed supply. They cannot go into the gold market and replenish the supply of gold without driving up price of gold.

Central banks are expanding the money supply, which is providing ammunition for those of us who want to fight the gold war by buying more gold. In contrast, central banks are not expanding their holdings of gold, but rather depleting them, and so they will not be able to fight this fight indefinitely.

They may be able to fight it for as long as the threat of recession hangs over the world economy. But when the recession ends, or appears to end, as a result of the massive monetary inflation and massive deficits that the governments of the world are running, there will be a new market for gold that is unprecedented in its intensity.

This does not mean that everybody is going to buy gold. It probably does not mean that even 20% of investors will buy gold. All it will take is about 10% of investors to decide to put 10% of their holdings in gold. Governments and central banks are going to lose the war on gold because they refuse to fight gold by the one technique that can give them victory: stop printing money.

As you may well perceive, there is much more to say on this vital topic. Read more here.

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Tuesday, April 07, 2009

WORLD WAR II ALSO A DISASTER?

Here's an interesting take on an old debate offered up by a Human Events reader from the Freat State of Ohio, backing up former Nixon speechwriter, former presidential candidate, and current MSNBC political pundit Patrick Buchanan once again on the "unnecessary war" the latter believes the Second (and First, for that matter) World War to have been.

AMERICA'S INVOLVEMENT in WWII was a total disaster.

The war started when Germany invaded Poland. After millions dead on both sides at the end of the war Poland was turned over to the Soviets. We never even accomplished the initial goal!

Adolph Hitler wanted to deport the Jews. Awful yes, but if we would have accepted them we would have gotten a million educated immigrants. Better than the millions of uneducated immigrants we get today. After Hitler's death the Germans would have gotten back to sanity. With the death of millions of Europeans, the Middle Eastern nations were able to rise to more power. This is also the reason millions of Muslims have been immigrating to Europe.

With the invasion of Muslims and the low birth rate of Europeans indigenous Europe will cease to exist in a generation. WWII may have very well be the seed that lead to the extinction of indigenous Europe. Remember the Holocaust didn't start until well after the war started and might never had happened if there had not been a war. So don't use the Holocaust as a reason for the war.

The Japanese front is even a more obvious failure. We never should have stuck our nose into the orient's business. We kicked the Japanese out of China, thus letting the Communist take over. This lead to Mao's murder of about 100 million Chinese. This is no improvement over the Japanese controlling China. The new Japanese Empire would have collapsed eventually, like all empires do. We didn't need to kill millions to speed it up.

Millions dead for no improvement at all and probably made things worse. This is nobody's definition of success.

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Friday, April 03, 2009

THE TAO OF STRENGTH

THE SUPERPOWER OBSESSION is mostly an American idiosyncrasy, in terms of nationalism and cultural hegemony, at this point in time (Arabic-Islamic supremacism notwithstanding). Its only virtue is to lead, invariably, to recurrent absurd discussions.

"Do not try to override the world with force of arms...
It is in the nature of a military weapon to turn against its wielder.

To hold on to weakness is to be strong...

There is no calamity like not knowing what is enough.
There is no evil like covetousness.
Only he who knows what is enough will always have enough

To be over-developed is to hasten decay.
This is against Tao and what is against Tao will soon cease to exist.

It is Heaven's Way to conquer without striving...
To get responses without speaking...
To induce the people to come without summoning...
To act to plan without haste...

The Wise is self-effacing and scanty of words.
When his task is accomplished and things have been completed
All the people say, "We ourselves have achieved it!""

Laozi

Needless to say, nothing could be less American than the above. Observers of China would be well-advised to remember the above; for in essence, it remains fundamentally Chinese.

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