Letter to Senator Grahm Re Moore Nomination

Dear Senator Graham:

I noticed your comments about Stephen Moore.  I appreciate the importance of shallow grandstanding in politics, but you might consider the one-sided bias of the media in "outing" conservative Republicans and protecting leftists.  Saying that Moore's nomination is "problematic" does much to empower Antifa and its media mouthpieces like the New York Times.

Sincerely,

Professor Mitchell Langbert

How High Can the VIX Go?

VXX over the Past 10 Years. Chart Courtesy of Nasdaq.com

The VIX measures stock market volatility.  Over the past ten years, it has declined from over $14,000 to about $35. That is due to the masseuse skills of the Federal Reserve Bank, which is lightening its deep tissue, shiatsu, and Swedish massage.  The VXX is up 6% today according to Yahoo Finance.  Stock market declines are usually short, absent government intervention as occurred under Franklin D. Roosevelt's administration, but steep. They are, of course, difficult or impossible to time.

The Progressive Syllogism

This is the progressive syllogism:

(1) The Federal Reserve Bank prints money.
(2) The money is invested in tech firms like Twitter and Facebook.
(3) Twitter and Facebook "manage" speech.  

I'll leave the conclusion to you.

Stock Buybacks and the Wisdom of Presidents

Steven Pearlstein of the Washington Post published an article that draws a parallel between the mortgage bubble of the Bush years and the current corporate stock buyback bubble, which to be fair began under Obama but continues under Trump. Pearlstein omits the biggest bubble of all:  the Obama bailout that sustained years of malinvestment in derivatives and real estate.  Also to be fair, the Obama bailout began under Bush but was ramped up.  At one point economists at the Jerome Levy Center at Bard College identified $29 trillion in subsidies to Wall Street; hence, Obama oversaw the largest subsidization of any industry in the history of the world.

Here is the wisdom of presidents, reflecting the democratic, Progressive genius of the American people:

Bush:  Have the Fed print lots of money and sell houses to people who can't figure out how to find a job. 

Obama: Have the Fed print lots of money and give it to Wall Street investors who can't figure out how to invest. 

Trump: Have the Fed print lots of money and give it to corporate executives who can't figure out how to innovate.

Public Opinion about the Fed

Pew has done an interesting opinion survey about the Fed. Pew finds that Democrats and leftists tend to like the Fed while Republicans and pro-freedom Americans tend to dislike it. The breakdown of the opposed-to-favor ratios is as follows. The omitted proportion is "don't know": Rep:48:39; Rep-Cons 54:33; Rep-Mod: 40:13; Dem: 28:57; Cons-Dem: 26:59; Left-Dem: 30:56. Overall, 37:47.
The Fed is among the most-entrenched federal institutions, yet the total difference is a mere 10 points (37:47).
The Fed is an institution that subsidizes the wealthy and those who do not work at the expense of those with moderate and lower incomes. It fosters corrupt, insider relationships among government, money center banks, and Wall Street. It has supported one bubble after the next, to include the Latin American debt crisis; the Hunts' cornering of the silver market; Long Term Capital Management; the millennial derivatives bubble; the ongoing stock, bond, and real estate bubbles; and a whole slew of other kooky bubbles and mistaken economic policies. Leftists like the Fed because it permits ongoing indebtedness to subsidize welfare benefits. Rockefeller Republicans like it because it subsidizes and bails out their incompetent investment decisions.
Unfortunately, though, American indebtedness is now in excess of 105% of GDP, and Social Security will be 25% underfunded in 15 years. Sooner or later the debt bubble will burst, and Americans used to welfare will suffer because of the left's good intentions. The left has always had a taste for gambles that lead to mass suffering, and we will see that outcome again, although I doubt that we will see the mass murders of Cuba, the USSR, and the PRC. Rather, we will probably see some riots and mostly quiet suffering, elderly people eating pet food, and a reversal of the 180-year-old free market trend of lengthening life spans.
I also suspect that conservatives have trouble vocalizing these concerns because elite conservatives are in bed with elite leftists. The military industrial complex, for instance, receives support from the paper money system.

The Banking Interests Behind the New Deal

In 2014 Nomi Prins wrote this piece in Fortune about the bankers behind the New Deal.  The New Deal was a banking revolution. The social aspects, cherished by the Democratic Party, were window dressing. Franklin Roosevelt had been a Wall Street fund manager, and he gave the American monetary system to Wall Street. That was the main point of the New Deal. 

Prins's story leads to Winthrop Aldrich, uncle of Nelson Aldrich Rockefeller and David Rockefeller.

Aldrich's father, Senator Nelson W. Aldrich, was the architect of the Federal Reserve Bank.

Incidentally, Bush's great grandfather, Samuel P. Bush, had served on the first board of the Cleveland Federal Reserve Bank. Samuel had been the president of Frank Rockefeller, John D. Rockefeller's brother's, company, Buckeye Steel.

FDR's great great grandfather, Isaac Roosevelt, had been Alexander Hamilton's partner in founding the Bank of New York, now part of Mellon. There's documentation, including a court case, that a bank for which Prescott Bush, Bush's grandfather, served on the board had helped fund Hitler.

Franklin Delano Roosevelt's uncle, Frederic A. Delano, was a Hong Kong-based railroad tycoon who served as the first vice chairman of the Federal Reserve Bank in Washington in 1914.

FDR represented the open control of America by elite financial interests that his cousin, Theodore Roosevelt, had put into play. Wilson signed the Federal Reserve Act, but Wilson would not have been elected if TR had not run as a third party candidate. The funder of his party, the Progressive or Bull Moose Party, was George Perkins, a close assistant to JP Morgan and former president of International Harvester.

Frank Vanderlip, who was present at the famous Fed-planning session at Jeckyll Island in 1910, was also a personal friend of Woodrow Wilson because of their work on shaping the modern American university system. Wilson, who had met JP Morgan because Morgan was a donor to Princeton, dropped Vanderlip as a friend and associate at the point at which Wilson entered the 1912 race. Vanderlip talks about that in his letters. No one knows the reason for sure, but it seems obvious.

Judge Gorsuch and the Dissolution of the Administrative State

The New York Sun ran an editorial today about a New York Times article by two children of left-wing judges.  They claim that the appointment of Judge Gorsuch will threaten the administrative state. The reason is that Judge Gorsuch opposes a decision called Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc  (467 U.S. 837, 1984), and Judge Gorsuch's appointment may lead to  its reversal.  The decision enunciated the Chevron principle, by which the Supreme Court held that when decisions are unclear the courts should defer to administrative agencies.

Repeal of such deference would be a great thing, and if we start a tabulation of costs versus benefits of the Trump administration, curtailing or ending the Chevron principle would add to the benefits side of the ledger.    

I go further.  The Chevron principle is a good argument for the inability of the courts to determine Constitutionality.  That claim was made in the early 19th century, but it was violated by Abraham Lincoln and denied by Andrew Jackson.  

The  Lincoln and Johnson administrations were unwilling to adjudicate the issue of secession. Rather than sue the first seven states that seceded, Lincoln chose to raise an army and illegally threaten them with military power.  The issue of secession was never adjudicated, which is why the North did not punish the leaders of the Confederate States of America for treason. If secession had been adjudicated early on, Chief Justice Taney's Supreme Court may have ruled on the side of the South.  The Civil War may have been averted.  At one point Lincoln issued an arrest warrant for Chief Justice Taney, but it was never carried out.  

The Chevron doctrine exhibits an authoritarian bias that reminds me of of Friedrich Hayek's warning, in The Road to Serfdom, that the bureaucratic state is inherently dictatorial.  By renouncing its own authority in favor of bureaucrats, the Supreme Court has ceded American governance to dictatorship by appointed agency.

The bungling incompetence of the appointed dictatorship that the Times has supported since the 1930s needs little clarification.  From 1830 to 1970 the average American saw wage gains of .5% to 2.0% per year.  Since the expansion of the administrative state under Johnson and Nixon, and especially the abolition of the gold standard in 1971 and the expansion of the powers of the Federal Reserve Bank, economic improvement for the average American has been nil. 

If wage gains had continued at 1.5% per years from 1971 to 2015, the average American would be earning roughly twice what he is earning now.  The administrative state is responsible for the halving of Americans' wages. 

The Superbubble and the Wisdom in Owning Gold

Gold Prices Since '08--An 18-Month Stagnation Mirrors the 1983-2001 Era

Money Supply M1:  Obama Meant Change

Monetary Base--Can Be Expanded Tenfold  from Here

I have been subscribing to Przemyslaw Radomski's Sunshine Profits newsletter for four or five months. One of his Kitco articles is here.  He is a capable technical analyst who is predicting a gold-price turnaround. His short-term predictions may be correct, although there’s reason  not to be surprised if there are a few years of a hiatus in gold’s movement upward (the current hiatus has lasted 1.5 years, as the top chart indicates). Even if Radomski is right and gold rallies this year, there could be a several year stale period before another epic-scale rally occurs. That's not to say to sell gold because the Federal Reserve Bank and the federal government have led America to an unstable, casino economy.  Because the US monetary system is unstable, gold is a hedge.

If fundamental political and monetary patterns don’t change, then gold can see a much larger long-term upswing than the six-fold-or-so increase that has occurred over the past 10 years.   From 1981 to 2001 there were fundamental bullish reasons to buy gold, but the Reagan, Bush I, and early Clinton years' monetary expansion caused lower commodity prices. Gold’s price fell to a low of about $250. This occurred because Federal Reserve money printing increased competition among miners as well as manufacturers.  Mining competition increased supply just as the supply of consumer goods increased, resulting in intermediate-term price depression. Also, the Chinese absorbed American inflation by demanding dollars to buy treasury bonds.   

The Chinese policy continues, and now we see a new monetary expansion under Obama that dwarfs the Reagan-Clinton-Bush expansion (see the second and third charts above).  If the Chinese policy changes, or the initial depressing effect on commodity prices from the Obama monetary expansion ends quickly, a larger bull market can occur in gold in the intermediate term than occurred from 2001 to 2011.  

The 1980s and 1990s economy was something like the 1920s, with monetary expansion funneled into stock-and-real-estate bubbles rather than price inflation.  Because the prior, 30-year monetary expansion mutes the effects of the three QEs, and the Fed added the QEs to the 30-year expansion with no reallocation or liquidation of the (distorted) real economy, in the coming years we can expect larger bubbles or larger inflation than we’ve seen in the past.  Either may augur well for gold once a shakeout in the mining sector occurs.

Let’s say natural gas fracking and shale oil cause energy price declines. The result can be a more expansive economy.  Let’s say the Fed is reluctant to withdraw the bank credit and monetary base that it has created. (The money supply –M1—has gone from $800 billion in ’08 to over 2.4 trillion now, while the monetary base has gone from a little over $800 billion in ’08 to over $2.8 trillion now, as per the two above charts.)  In that case, the monetary base can be expanded so that the money supply is up to 10 times the monetary base. That will occur in an inflationary period. In other words, the $2.8 trillion in monetary base can become $28 trillion in money supply, leading to a more than tenfold increase in the supply of money.  

That’s not all because, first, the US federal debt is currently $16 trillion, $5 trillion of which is held by foreign holders. Let's say the US economy continues to stagnate. At some point there may be a panic in US debt.  If so, there will be sales of dollars in exchange for other currencies and assets, resulting in a large inflow of dollars into the US.  Also, according to this Fedral Reserve Bank report:  “Estimates by the Federal Reserve suggest that as much as 60 percent of the $760 billion in U.S. currency outstanding at the end of 2005, or roughly $450 billion, was held outside the United States.” In the event of a run on the dollar, large dollar holdings can be repatriated through demand for exchange at banks and purchases of US assets. The result will be a dollar collapse. 

Hence, holding gold along with  other non-dollar assets such as stock has a diversification rationale.  The Fed's hyper-expansion is having the same effect on the stock market that the 1983-2000 expansion had, but the economy is much worse off in terms of misallocation of resources.  In the past, monetary bubbles and their concomitant asset bubbles and inflation were followed by contractions, but that has not occurred;  Obama and Bernanke have invented the superbubble.

Investors are no better off than they were in 2003 and 2007, and the stock market is at similar levels.  Interest rates are near zero.  Although the Fed has caused valuations of future earnings to increase to nearly infinite levels, causing the stock market to escalate, stock market prices are constrained by the availability of money to invest.  Will banks continue to pump up the stock market in a kind of Ponzi scheme whereby the Fed prints money, uses it to buy treasury bonds, and the banks then use the printed money to pump up the stock  market?  Alternatively, can foreign investors carry the US stock market to ever higher levels?   It is not at all clear that the current stock market valuation is more than one more peak in a secular bear market that began in 2000.

Another problem with the stock market is that during periods of uncertainty, there can be sharp falls in valuations.  If, for example, there is a currency collapse, the stock market might fall because of the risk.  Hence, we see the wisdom in owning gold.

A Colossal Failure of Common Sense

I have been preparing a new course called Government and Business, and I wanted to include a few examples of the consequences of monetary expansion and ongoing Fed policy.  A good candidate is the case of Lehman Brothers.  I ordered Lawrence G. McDonald and Patrick Robinson's A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers from Amazon and read it over the past two days. It is a colorful, enjoyable book that I recommend.  It is mostly well written, but there are occasional sophomoric grammatical errors.  I wondered whether Three Rivers Press bothered to copy edit the work; at the same time,  McDonald's self-deprecating humor reminded me of Ragged Dick's from Horatio Alger's novel; moreover, the early part of the book is a  rags-to-riches tale.  McDonald pulls no punches in describing Richard Fuld and Joe Gregory's (the top management's) incompetence.

McDonald lacks a paradigm to accurately grasp the sources of Lehman's failure.  He sees Fuld's dominance of the firm as the cause--if only his friend Michael Gelband had gained control of the institution, things would not have gone wrong.  His philosophy is the result of his education at the University of Massachusetts Dartmouth and, more generally, of the one-dimensional coverage in the media and in universities, which serve as cheerleaders for America's value-destroying financial-and-banking system.  Things may have gone better if competent people were at the helm, but there are few competent people; they weren't at the helm at Goldman, AIG, Bear Stearns, GE Capital, or any of the other foolishly run outfits that were trading derivatives that they did not understand.

The cause was not bad leadership, but a bad system that permits the Fed to print money and hand it to people who lack the ability to use it wisely.  Investment in Wall Street's waste and the income tax crowd out innovative investment such as occurred in the late 19th century, when there was was no Fed, no central bank, no income tax, and Wall Street was in extremis. Historically, Wall Street's strength and growth rate are inversely related to the nation's innovation and the average American's financial well being.  Yet, Americans continue to vote into office politicians whose first priority is to subsidize Wall Street. 

Lehman had borrowed two thirds of a trillion dollars in printed money. The Federal Reserve Bank had stolen its value from the American people and handed it to half-witted crooks like Fuld and Gregory.  Lehman does not represent a deviant problem like bad leadership. It represents the core of the problem: malinvestment because of a financial system that has no incentive to invest optimally and that lives off the theft of wealth from the public; the stock market will not rise without such theft.

The entire money supply during the millennial years was close to $800 billion.  An amount equal to almost the entire US money supply was handed to half wits who proceeded to buy hundreds of billions of dollars in over-valued real estate and take financial gambles that they did not understand.

McDonald's message, which he does not grasp, is that the American systems of government and finance are  broken and cannot be fixed. An American people that continues to be satisfied with the stealing that underlies the profligacy McDonald describes (via the Federal Reserve Bank, which had printed the money Lehman badly invested ) is the underlying problem.  On this score, McDonald stands accused of apathy along with the rest of a nation that has allowed itself to be financially molested for the past century.

Perhaps a tragedy greater than the fall of Lehman is that smart guys like McDonald and his friends can think of no more imaginative career than living off printed money and playing financial markets. When America was a worthwhile place to live, people like McDonald, Gelband,  and McCarthy were inventors rather than stock jobbers. 

McDonald is a true insider, and he gives an insider's picture of the distressed asset trading desk at Lehman.  He is starry eyed, referring to his various colleagues as "the best in history" at various points, but the sophomoric grammar and starry-eyed reverence amount to a small price to pay for McDonald's wit, charm, idealism, and apparent workmanlike competence with respect to his craft.  At Enron there were two or three people, chiefly Vince Kaminski of Enron's risk management group, who saw that the firm was headed for disaster.  McDonald asserts that several of his trading colleagues, such as Michael Gelband and Larry McCarthy, had warned Fuld and Gregory of an impending crash in the real estate market nearly two years before Lehman's ultimate demise;  they and several others in McDonald's group had resigned months and weeks before the collapse. The remaining members of his group took over the firm when it was already too late; as will occur with the United States, things had to get close to the edge before Fuld and Gregory could be ousted; it seems to me that America may face a fate similar to Lehman's.  Hopefully, by then I will be resident elsewhere.

I think I will fit part of this book into my course, which also includes some material on Long Term Capital Management and Enron--all products of the American Whigs' and financial establishment's stealing from the Americn people via the value-destroying Federal Reserve Bank.  If you want to know why the average American's real hourly raise hasn't gone up since 1970, read this book.  The high salaries in exchange for the destruction of real wealth by Wall Street's bums is malinvestment on a scale that Ludwig von Mises could not have imagined.

The Federal Reserve Goes Parabolic

When traders say that a security has gone parabolic, they mean its price is increasing at an increasing rate.  Naive investors are drawn to the security, but to experienced investors the rapid increases signal an incipient collapse. That's because the excessive price stimulates experienced investors to sell. The upward spiral ends, causing those who entered the market during the parabolic increase to sell too. The ensuing crash is excessive, and the price falls below the security's true value because investors who otherwise would have held the security sell from fear.

The Federal Reserve Bank  has increased the money supply at a parabolic rate. The money supply has been increasing regularly since the 1930s.  Once of the results of the money supply's increase has been excessive investment in real estate, especially in politically sanctioned projects.  The projects include the urban renewal of the 1950s and 1960s, the construction of the suburbs, the development of the suburban mall, the expansion of retailing, and the sub-prime crisis. Some of these would have occurred, but to a lesser extent, without the Fed.  Others, like the sub-prime crisis, would not have occurred at all.

The excessive real estate investment arose because the money the Fed creates is deposited with risk- averse money center banks that prefer guaranteed returns.  Besides the real estate bubble of the past seven decades, there has been a government bubble. Rather than rely on democracy, which would not have supported the current level of spending if taxpayers had been forced to pay the market value of the cost of government each year, the central bank facilitates issuance of bonds, allowing the public to vote for politicians who spend more than the public has in resources. The public lacks the intellect to vote otherwise--its taste for doing what seems right or beneficial prevails because it lacks the ability to analyze the costs.  The advent of Keynesian economics causes supposed experts to offer the irrational advice that the public favors on its own--to spend money it does not have.

Hence, the Federal Reserve is inconsistent with democracy because it permits the public to vote for politicians who spend more than the public would want them to if they were required to cover the costs, and to spend more than government can pay back.  The resulting debt is becoming too large to pay back. Government will then deprive bond holders of their wealth by debasing the currency.This will harm those whose assets are in dollars or who receive wages.

The public does not want a dollar collapse--but it votes for it because the media and the government-financed school system advertise a distorted view of the costs and cripple citizens intellectually so that they believe the claims of supposed experts even when they are repeatedly wrong. A case in point is the economics profession.  Few economists predicted the sub-prime crisis or the tech bubble. But, despite their history of error, economists and the news media continue to broadcast the same predictions.

 The money center banks tend to invest with risk-averse, large corporations. It is evident that the corporations are risk averse because executives need to be paid in stock options whose purpose is to stimulate risk.  Wall Street sanctions publicly traded corporations through the stock market.  Executives are rewarded if the stock price rises. The corporations, then, only take risks of which Wall Street approves. The result of hiring psychologically deviant, risk-averse executives and then  countering the risk aversion with stock options is that the nature of the risk the executives take tends to pander to Wall Street's needs.  As a result, mergers and acquisitions tend to dominate firms' risk taking. Firms do not serve product markets--they serve financial markets.   

The largest way that the Fed distorts risk taking is through its subsidies to the stock-and-bond markets, and, consequently, hedge funds through (1) direct lending to hedge funds and Wall Street banks, (2) issuance of government securities that Wall Street sells, and (3) depression of interest rates that cause the stock market to increase inversely.  The rise in the stock market since 1937 is due to the Federal Reserve Bank. That rise has come out of the real hourly wage.

In 2008 the Fed began a massive quantitative easing that has caused bank credit to increase three fold and may potentially increase the money supply thirty fold.  This is equivalent to a parabolic price increase in the securities market.  The effects of the parabolic increase are (1) trivialization of technology at an increasing rate, (2) increasing crony capitalism, and investment in frivolous public-private partnerships, (3) subsidies to hedge funds and other socially unproductive financial firms, and (4) the current stock and real estate market comebacks.

The trivialization of technology is seen in the massive stock price increases of firms like Facebook and LinkedIn.  In the 19th century, technology meant the invention of the automobile and A/C electricity.  In the 21st century it means a program by which you add people unknown to you, called  friends, to a computer program whose purpose is also unknown.  


Like all parabolic price increases, this one too shall pass. But the collapse of the dollar's value does not just mean that a few greedy investors will be harmed. It means that all working Americans, suckers who have voted for Democrats and Republicans, will be harmed.

Gingrich, Like Cagney, Is Better than Romney

  Newt Gives It to the Taxpayers



The Economist was ebullient when Romney was winning. Now that Gingrich has trounced Romney in South Carolina, our financial overlords in the City of London and on Wall Street may be may be a bit less, but almost as, content. The difference between Romney and Gingrich is like the difference between Cary Grant and James Cagney. Romney, the debonair aristocrat, an opportunist beneath his manly charm, Gingrich, the thug who twirls around in a ménage à trois before mashing a grapefruit in taxpayers' faces (see Cagney's Gingrich-like performance in The Public Enemy above).  These are two dogs out of the Council on Foreign Relations' kennel.

Of the four standing GOP candidates Romney is the most accomplished, having achieved impressive business success.  In contrast, Gingrich's chief achievement, his appointment to speaker of the house, led to quick failure due to his incompetence.  Romney is a stable and cautious friend of global financial interests while Gingrich is full of big ideas, each one more destructive than the last.  In the last debate, Gingrich's proposal for a government subsidy to build a port in Charleston was an example. Gingrich seems to have planned a massive pork barrel project for each city in which a debate is held.

Romney blows with the winds; Gingrich proves that 180-year-old tax-and-spend Whig socialism is alive and well. Romney is in the centrist, globalist, and corporatist tradition of Richard Nixon;  Gingrich is in the Whig tradition of Henry Clay and Abraham Lincoln. Lincoln practically bankrupted Illinois with frivolous infrastructure projects, and, now that Illinois's credit rating has been reduced, what better expression of the GOP's big government Whig tradition than to nominate Gingrich?

Presidents don't usually win or lose because of ideas. Lyndon Baines Johnson fought Goldwater over the New Deal, but Kennedy had just been shot. Perhaps Ronald Reagan fought a campaign of ideas, but would he have won without his actor's charm?  And did he really believe that government was the problem? He didn't act like it.  Rather than ideas, Nixon's half-day-old whiskers are the kind of issue that America's increasingly impoverished electorate emphasizes. America was once the richest and freest country in the world, but television news has led it to its favoring candidates, like Gingrich, Romney, and Obama, who are bleeding them, diminishing their freedom, and creating a paper money aristocracy at their expense.

That said, Gingrich is better than Romney for one reason: Gingrich can't win. He can't win because his image is tarnished, he is fat, his ideas are ridiculous, and he is an imaginative sexual virtuoso.  That makes him preferable to Romney, who can win. 

The most important thing in this election is a strident protest vote.  The greater and more explicit the vote against the Federal Reserve Bank, the greater a threat to its political security, the sooner the Ron Paul revolution will win.  In the event that Paul loses the primary race (and his 13% showing was better than in '08, but discouraging), a vote for the Libertarian Party in the general election will speak more loudly than one for the GOP candidate. There is more likely to be a stronger protest vote with a Gingrich than with a Romney candidacy.

As well, a Republican Congress coupled with a Democratic presidency is unlikely to achieve much. That is the best we can hope for.  If the Republicans win both branches, we will see plenty of ports and plenty of pork in Charleston and every other hurricane-prone city in the country, if not the world.  

My Letter to the Kingston Freeman Concerning Gary Weiss's Op Ed

The Kingston Freeman published my letter in response to Gary Weiss's Op Ed concerning Ron Paul:

Dear Editor:

Congressman Ron Paul disavows letters which he says he did not write (syndicated columnist Gary Weiss, The Street – Freeman website, Dec. 28, “Ron Paul captures the crackpot vote").

Contrast that Christmas-sized portion of hate doled to Paul to your handling of Barack Obama.

In 2008, there was no criticism of then-Sen. Obama’s associations with anti-Semites and felons, to include Bill Ayers, Jeremiah Wright, and Father Pfleger. In contrast, Weiss convicts Paul without trial.

Paul is the only candidate to question both parties’ refusal to discuss the bipartisan commitment to the Federal Reserve Bank and its creation of income inequality by diverting wealth from the public to Wall Street.

As Nicola Matthews and James Felkerson of the Jerome Levy Institute reveal,  in the past few years the Fed has purchased $29 trillion in assets.  The assets were financed with dollars the Fed printed from thin air.

We have not felt the effects because central banks prop up the dollar.

To the extent that the toxic assets are less than the $29 trillion, there is a loss to the public, likely in the trillions.

The entire American GDP is about $14 trillion.

But that’s the least of it.

 

By tripling the money supply since 2008 (from $800 billion to nearly $3 trillion), the Fed and the two major parties have opened the door to the money center banks increasing the American money supply 30-fold.

The potential instability exceeds that of the 1930s.

So far, only Paul has raised these issues.

Maybe I can see Weiss’ point:

Why discuss the Fed when there are plentiful opportunities in the op-ed market to call Paul, R-Texas, and his supporters names, but few to discuss substantive issues? 

MITCHELL LANGBERT

West Shokan

mlangbert@hvc.rr.com

1933: Democratic Party Government Steals Public's Gold

H/t Daily Bail. From The Pittsburgh Press, March 10, 1933.  

"Fear of public disgrace or threatened fine or imprisonment drove hundreds of gold hoarders to the windows of the Federal Reserve Bank today, to turn in metal in sums raising from $5 to $700,000. "

What had become of the Americans of the Whiskey Rebellion? A nation that drinks obsequious cowardice from  its education system's deserves neither liberty nor security.

Learning from Jefferson

In 1791 there was a debate as to whether Congress should establish a central bank.  As Treasury Secretary, Alexander Hamilton conceived of it, wrote a report on the bank supporting it, and proposed the legislation. The bank was approved by Congress, but the vote was entirely regional. The Southern delegation opposed it while the larger Northern delegation supported it. Governor Henry Lee of Virginia proposed that Virginia start a competing bank.  Referring to the US Congress as a "foreign legislature" Secretary of State Jefferson wrote the following to Governor Lee, quoted on page 352 of Ron Chernow's biography of Alexander Hamilton:

The power of erecting banks and corporations was not given to the general government; it remains then with the state itself.  For any person to recognize a foreign legislature in a case belonging to the state itself is an act of treason against the state.  And whosoever shall do any act under color of authority of a foreign legislature--whether by signing notes, issuing or passing them, acting as director, cashier or in any other office relating to it, shall be adjudged guilty of high treason and suffer death accordingly by the judgment of the state courts.  This is the only opposition worthy or our state and the only kind which can be effectual...I really wish that this or nothing should be done. 

In other words, Jefferson would have had the governor of Virginia execute Ben Bernanke.  Am I missing something, or wasn't Jefferson the greatest of the Founding Fathers?

A Federal Reserve Bank Position is Bachmann's Acid Test

I spent a few minutes Googling +Michele Bachmann +"Federal Reserve Bank" and found little. Bachmann's website says that she is for cutting government and debt, but, like the fatuous debate about the Glass Steagall Act, saying you are for cutting taxes is beside the point. (The Glass Steagall Act is a matter of irrelevance to the bubbles that have riddled the American economy since the establishment of the Federal Reserve Bank.) Ronald Reagan said he was for cutting taxes, but through supply side cum Keynesian economics he created a thirty-year bubble whose bursting we now see. Bachmann says that she is for less debt, but Reagan said he was for less government; he did not really cut government (his increases in defense spending compensated for his cuts in domestic spending).

In short, the Republicans have lied for 30 years. They have repeatedly said that they favor small government and free markets, but there was no significant reduction in government or in regulation during any of the Republican administrations. George W. Bush expanded government, setting the stage for Obama's return to the pre-Reagan government expansion pattern.

The only way to limit government is to prevent money-printing.  This would have the side effect of forcing some manufacturing back to the United States as the treasury bonds that are currently used by foreign banks to prop up the dollar would not be issued with the current profligacy. In turn, stock markets and Wall Street as well as government would shrink.  The mess that a century of Progressivism has created would begin to be sorted out. It would not be pleasant, but if we do not do something now there will be worse hell to pay when the dollar finally collapses.

Bachmann is smart enough to have ideas about the Fed, but her Website seems to be silent, and she has not responded to my earlier letter. Unless she is willing to discuss a policy that would contain or eliminate the Fed, her small government credentials are bogus.  She is another Progressive masquerading as a friend of small government.

Letter to Michele Bachmann Concerning the Fed

PO Box 130

West Shokan, NY 12494

June 26, 2011

Michele Bachmann

103 Cannon HOB

Washington, DC 20515

Dear Ms. Bachmann:

Please take a position concerning the Federal Reserve Bank and the legal tender law.

I recently gave a small contribution to your campaign and to Ron Paul's and Gary Johnson's. I am not certain that I will vote for a Republican in November 2012, though.  One reason I contributed to you is the legacy media's bias against you.

In order for me to continue to support your candidacy I will need to know where you stand on the Federal Reserve Bank. You need to be specific.  Stephen Moore's recent Wall Street Journal article* about you was unconvincing. Moore indicates that you would appoint a different Fed chairman than Bernanke, not that you would eliminate the post altogether. I appreciate your opposition to TARP.  But the headline referred to Ludwig von Mises while the authors whom you admire include Art Laffer and Milton Friedman.  Milton Friedman's monetarism and Art Laffer's supply-side economics depend on big government.  Perhaps you might base your position on Hayek's essay "Denationalisation of Money." 

I await your position on the Fed, which is the decisive one concerning big government, for the Fed is a necessary and sufficient condition for big government.

Sincerely,

Mitchell Langbert, Ph.D.

*http://online.wsj.com/article/SB10001424052702304259304576375491103635726.html?KEYWORDS=bachmann

Jim Rogers Paints Bleak Scenario

In a June 8 interview on CNBC Jim Rogers paints a bleak outlook for the US economy.  Much of what he says coincides with Ron Paul's 2008 book End the Fed.  Rogers is saying that he has NO US STOCKS. I am thinking in terms of high dividend yield stocks like Philip Morris (PM and MO) and Verizon (VZ). He thinks that the end of quantitative easing two, which is resulting in the stock market correction of the past few weeks (and it's bad today) will be followed by a QE3, resulting in a classic hyper-inflation and economic collapse.

It would be nice to hold the yuan, but Everbank does not make a yuan CD available.  I agree with Rogers about waiting for a dip to buy gold and silver. I'm crossing my fingers for $25 or $28 silver, in which case I will get back in.

I was just reading Murray N. Rothbard's What has Government Done to Our Money? which is an excellent, condensed version of his Mystery of Banking.  The issues that Rothbard talks about in his books, written several decades ago, are alive today.  Rogers's pessimism is realistic. But what to do? Foreign stocks haven't performed that well recently either. A collapse in the US economy will bring down the world.  BRIC hasn't been doing well, even if in the long run there is more reason for optimism in China and Brazil.

If there is another 2008 collapse it might be wise to recall what happened in 2008. The dollar went up, not down. I'm not a fan of the dollar, but the short term fluctuations that the Fed has caused are incredibly destructive to the small investor who risks his livelihood because of them.

The current Federal Reserve Bank system is a complete failure. Price instability, dozens of booms and busts since 1913, the Great Depression, the 1970s Stagflaton which hurt me personally, the recent financial crisis, the lack of jobs in America, the destruction of good jobs, all of this has come about because of the Fed and because of the legacy media and the failed two-party system.

Review of Ron Paul's "End the Fed"

 I just submitted this piece to Mike Marnell's Lincoln Eagle. It may appear in the June or July issue.

Review: Ron Paul's End the Fed

Mitchell Langbert, Ph.D.*

Ron Paul, End The Fed.  New York: Grand Central Publishing. 2009. 212 pages.

"There was no food, however, in the whole region because the famine was severe; both Egypt and Canaan wasted away…They came to (Joseph)…and said, 'We cannot hide from our lord the fact that since our money is gone and our livestock belongs to you, there is nothing left for our lord except our bodies and or land. Why should we perish before your eyes…Buy us and our land in exchange for food, and we with our land will be in bondage to Pharaoh…and Joseph reduced the people to servitude, from one end of Egypt to the other." --Genesis 47: 13-22

            I have just finished Representative Ron Paul's End the Fed.  I consider it must reading for all Americans, but especially for Congressman Maurice Hinchey and most other local politicians, Democrats and Republicans alike. For a century American citizens have chosen, ostrich-like, to avoid discussion about the Federal Reserve Bank. Their head-in-the-sand attitude is encouraged by the legacy media, all of which is owned by interests beholden to Wall Street, which, along with commercial banks, government employees and big businesses benefit from the Federal Reserve Bank's redistribution of wealth from you to them.  The Fed does this by printing dollars, making yours worth less and soon, according to Representative Paul, worthless. 

            The fact is that the richer you are the more you benefit from the current Federal Reserve Bank system, and the media is indebted to the super-rich. George Soros, for instance, just gave funding to National Public Radio. Warren Buffett owns stakes in The Washington Post and Capital Cities ABC.  General Electric and Bill Gates own MS-NBC.  Sumner Redstone owns CBS. As far back as 1912, The New York Times silenced presidential candidate Robert M. La Follette when he publicly stated that the magazine industry, like the newspaper industry of the day, had fallen under Wall Street's editorial domination.  To this day the Ochs Sulzbergers, the inheritors of The Times who oppose inheritance for everyone else but have never opposed family trusts for the super-rich, are key apologists for the Federal Reserve Bank.

            In his book, Representative Paul makes clear why you should pay no attention whatsoever to the legacy media-- NPR, CBS, ABC, NBC, CNN, The New York Times, The Washington Post, or Newsmax.  The Federal Reserve Bank is the single most important story of today, yet none of the legacy media chooses to explain what it is doing to you financially.

            In a nutshell, the Federal Reserve prints money, uses it to buy bonds from commercial banks, which then expand the amount of money up to ten-fold and lend much of it to Wall Street, hedge funds, sub-prime real estate interests, big companies, and government. The last, in turn, subsidizes special interest lobbies like government employees, the Association of Trial Lawyers (now called the American Association for Justice), and the National Lawyers' Guild.   The economics profession gains considerable prestige and power from this arrangement, and has become a vested interest just like any other. Any economist who defends the Fed, and virtually all do, is part of the economic chicanery that is bringing America down.   

            The Fed has been badly managed, and in his book Representative Paul shows why.  Big, money center banks in New York City lend the Fed's counterfeit printed money to incompetently run Wall Street firms which invest it in bubble investments that make money in the short run but crash in the longer run. Then, rather than allow the badly run Wall Street firms to collapse, economists and the legacy media clamor for even bigger investments to the badly run firms in part at taxpayers' expense and in part through more counterfeit.  Although manipulative politicians like Representative Hinchey postured about the first bailout, they know that their interests coincide with Wall Street's, hedge fund managers' the super rich's and the National Lawyers' Guild's. The success of Representative Hinchey's favorite programs depends on Federal Reserve Bank credit expansion. Representative Hinchey would likely be poorer without the Fed.

            Where does the wealth come from which is allocated to Wall Street and Hinchey-style government mismanagement? It comes from you. The Congressman whom you have been electing has benefited from the Federal Reserve Bank's fraud for his entire career, most recently by voting against an audit Representative Paul proposed that would have required the Fed to show how much wealth it is diverting from your pocket via rising prices to firms like Mitsubishi Bank, Deutsche Bank, Citibank and other trans-national banks.  Americans' real (inflation-adjusted) hourly wage hasn't risen since 1970, but lots of money has been diverted to foreign banks and corporations.   You can see why Hinchey voted against an audit of the Fed. People who have nothing to hide hide nothing.

            So, Representative Paul concludes, the dollar is going to collapse, and that will make you worse off. It might throw you out of work, or it might cause a gradual or perhaps a rapid hyper-inflation that will reduce your standard of living.  The fault clearly rests with Congress, including your representative, Maurice Hinchey.  But how do you prepare for the coming economic decline for which Americans have voted?

            For me, there are three kinds of investments that make sense. I hope to eventually retire, not to make big money through speculation.  I don't recommend this for you; rather, you need to think for yourself.  In my case I am first gradually putting a large share of my savings in gold (GLD) and silver (SLV), 20 or 30 percent.  Second, I am taking a stake in other commodities, especially agriculture (DBA) and oil (DBO).  Third, for cash income I am buying high dividend yielding stocks such as Verizon (VZ) and Philip Morris (MO and PM).  If the dollar collapses, Philip Morris will still sell cigarettes.

            Congressman Ron Paul is pessimistic about the end result of the Federal Reserve Bank's policies. If you want to pretend that what we face today is business as usual, I will buy you a ticket to an ostrich farm I know of in Big Indian, and you can plan to retire there. Meanwhile, read Ron Paul's End the Fed and face the facts-- both parties have been complicit in wrecking the American way of life. Monetary debasement has accelerated and will eventually harm you. Currency collapses end freedom, what you know as the American way of life.  We are in the endgame now. There is nothing left for Soros, Buffett, Goldman Sachs, Ben Bernanke, Alan Greenspan and the American Association for Justice (what a laugh) to steal.  If you believe the legacy media you will get hurt.

 

*Mitchell Langbert is associate professor of business at Brooklyn College. He blogs at http://www.mitchell-langbert.blogspot.com