Liberty Maven

The great Doug Wead is at it again. This time he asserts that Ron Paul can be the GOP nominee in 2012. The first step in such a result is winning the Ames, Iowa Straw Poll in 2011. He makes a convincing case.

Ron Paul is the leader of a movement, he offers a different option altogether, whereas Palin and Huckabee and others will simply be in a personality contest. If they win in Ames, it is only one of many more contests to follow. If Ron Paul wins in Ames, he awakens a whole political movement.

Read the entire excellent piece here.

“The [gold] bulls are on the warpath.” – Dr. Antal Fekete, December 10, 2008

by Jake, the Champion of the Constitution

Originally published December 11, 2008 at http://www.nolanchart.com/article5631.html

“And we are in no mood for prisoners.” – Jake, the Champion of the Constitution

I’ve written what is amounting to a short series on what is, in my opinion, the major economic event of gold going into backwardation and what this will mean.  Due to recent interest, particularly email comments, in this article I would like to further describe this event and in the next part share links to more gold and silver news on this topic with you (as well as some objective criticism of Fekete).  I think it is also important to note that I am no expert.  I fully realize I could be wrong for now, or misjudge how the government forces will intervene.  It is far from clear whether this backwardation will become permanent.  That said, I do believe that the resistance shackling gold and silver will be eventually be overwhelmed; it’s just a question of when.  In the final analysis, Gold is the world’s greatest chance at economic liberty and a world with far less war. (photo2)

Part I: “The End for the Dollar and all Fiat Currencies (1/5)“

Part II: “The Next Bubble to Pop! (2/4)“

Part III: “On Gold and Market Manipulation (3/5)“

Supplement to explain futures market basics and backwardation: “The Money Matrix – What the Heck Are Derivatives? (PART 10/15)“

Part V:  I’m writing it as fast as I can!!

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In this article reporting on the latest UCLA “Anderson Forecast” we get a quote from David Shulman, the report’s author.

“They’re talking a lot of infrastructure, which makes a lot of sense. They’re talking a middle-class tax cut. I think when Congress gets through with this they’ll be raining money on the economy,” Shulman said.

Uh-huh. Previously in the piece Shulman laments the “risk” of deflation. The type of deflation he is talking about is price deflation, not money supply deflation, and price deflation is already here. I’m curious what he thinks will happen when we start “raining money on the economy.” He also magically predicts the restoration of growth in 2010.

The historical long-term trend of 3 percent growth will not resume until 2010, the report said.

Mark your calendars for January of 2010, then come back here and see if he was right. Even if he is right, what good is a growth in GDP of 3% when inflation is growing at 50-60% or more? Shulman’s prediction of “raining money” is already happening and when currency rains, price inflation pours.

So Shulman makes two predictions that are already underway and can be seen with the naked eye. It is this kind of brilliance that got us into this mess in the first place.

Or maybe his “forecast” was meant as humor. If so, he certainly made me laugh. I wonder who will laugh last?

Here is Ron Paul from the floor of the House speaking out against the Auto Bailout among other things. I have to admit I love hearing Ron Paul get animated like this for what he believes in. His opening remarks are rife with sarcasm. He argues that bailing out the auto industry is unconstitutional and it is morally improper to take money away from one group to give it to another group. Closing these remarks he says:

“…But those two arguments are rather weak arguments…” (tongue firmly implanted in cheek)

He goes on to talk about the economic ramifications. This is classic Ron Paul. You must watch this.

“What does $15 billion dollars mean anymore?”

“We are on the road to nationalization!… without a wimper.”

“.. Car Czar? It is such an embarrassment. It is such an insult to us who believe in freedom, who believe in sound money and limited government. It’s such an insult to the whole idea that made America great!. And this is what it has come to? Bailout after Bailout….”

I grew up in the 1970′s. My parents didn’t have much but they had me. They got married because of me. They loved each other though. They are still together, for better or worse. I recall being excited about moving into our first house. My parents were renters until they purchased their first home in 1979. It was a duplex. I find myself reading economics books these days. Invariably, the 70′s are frowned upon as rather dark days in America’s economic history. As I read about these dark days I think about my family situation at that time. I had no clue about what was happening economically.

I was aware of the Iran hostage situation though. I recall thinking how much I was supposed to hate Iran. In fact, there is a grainy 8mm home video of me doing an impression of Jimmy Carter saying “I’m going to flush those Iranians down the toilet!” It’s quite embarassing, but I was 10. I forgive myself. I hope you can too.

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Justin Raimondo of Antiwar.com takes on the new push for globalism by picking apart the Gideon Rachman article previously posted more effectively than I ever could. Raimondo points out the suspension of our better judgment in the face of crisis.

Number one is the globalization of the “crisis” mentality that our international elites have seized on as a rationale for extending their power, and not just over the economic meltdown, but also over global warming and “a global war on terror.”

He also points out the severe attack on liberty such a global system would bring:

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[Editor's note: We posted the Thompson video earlier, but here is Jake's take on it.]

Although I am no supporter of Fred Thompson, I applaud anyone who understands some basic principles of Austrian economics.

by Jake, the Champion of the Constitution
Originally published Wednesday, December 10, 2008 at http://www.nolanchart.com/article5624.html

Although ex-Republican 2008 Presidential candidate Fred Thompson recently announced he was withdrawing his intent to join the RNC and instead return to acting, I believe he made a shrewd political move (or suicide??) here with this Youtube video release, which was well worth 8 minutes of my time even though I almost chortled myself to death near the end. As the Obama birth saga continues, I can not take too much more political humor.

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It is quite fascinating to add up the things Ron Paul was right about over the years. There is one thing I sincerely hope he is wrong about, and I suspect he hopes he is wrong about it too. He laments and warns of a continuing effort toward global governance. There is a potential for taking the idea of a one world global government to extremes, but extremism is not required to imagine its plausibility anymore.

In a thought provoking article in the Financial Times, Gideon Rachman explores the possibility, especially now that Barack Obama will be President.

Barack Obama, America’s president-in-waiting, does not share the Bush administration’s disdain for international agreements and treaties. In his book, The Audacity of Hope, he argued that: “When the world’s sole superpower willingly restrains its power and abides by internationally agreed-upon standards of conduct, it sends a message that these are rules worth following.” The importance that Mr Obama attaches to the UN is shown by the fact that he has appointed Susan Rice, one of his closest aides, as America’s ambassador to the UN, and given her a seat in the cabinet.

A taste of the ideas doing the rounds in Obama circles is offered by a recent report from the Managing Global Insecurity project, whose small US advisory group includes John Podesta, the man heading Mr Obama’s transition team and Strobe Talbott, the president of the Brookings Institution, from which Ms Rice has just emerged.

The MGI report argues for the creation of a UN high commissioner for counter-terrorist activity, a legally binding climate-change agreement negotiated under the auspices of the UN and the creation of a 50,000-strong UN peacekeeping force. Once countries had pledged troops to this reserve army, the UN would have first call upon them.

I’ve always marveled at the phrase “peacekeeping force”. Hmmm I wonder what percentage of the 50,000 would be American? I’m also curious if our government would be able to find enough volunteers for such a force. In fact I would expect there to be a well armed faction against such nonsense. It seems Rachman thinks so to…

These are the kind of ideas that get people reaching for their rifles in America’s talk-radio heartland. Aware of the political sensitivity of its ideas, the MGI report opts for soothing language. It emphasises the need for American leadership and uses the term, “responsible sovereignty” – when calling for international co-operation – rather than the more radical-sounding phrase favoured in Europe, “shared sovereignty”. It also talks about “global governance” rather than world government.

But some European thinkers think that they recognise what is going on. Jacques Attali, an adviser to President Nicolas Sarkozy of France, argues that: “Global governance is just a euphemism for global government.” As far as he is concerned, some form of global government cannot come too soon. Mr Attali believes that the “core of the international financial crisis is that we have global financial markets and no global rule of law”.

Leaders do not hesitate to use crisis and unrest to help push their own agendas. We saw it from FDR during the Great Depression. We saw it with George W. Bush with Iraq. Now we may see it from Obama to help “solve” our economic problems. After all don’t we need a global governmental body to fix the global economic crisis?

For liberty’s sake, I certainly hope not.

While watching this video I found myself continually looking for the puppet strings attached to Fred Thompson.

I expected Ron Paul to jump out at the end holding the puppet strings.

He never did. I respect Fred Thompson more today than I did yesterday. His voice still makes me yawn uncontrollably for some reason. But his words had me nodding, not off, but in agreement the entire time.

Watch Fred Thompson discuss our economic crisis with some biting sarcasm below.

This article seeks to define financial derivatives and why they are so important. Future and spot market basics are also examined so the Reader understands how the price of gold and silver is determined.

by Jake, the Champion of the Constitution

Originally published December 9, 2008 at http://www.nolanchart.com/article5620.html

First, why should we care?

“Derivatives are financial weapons of mass destruction.” Warren Buffet, 2003

Good enough. Reader, the term “derivatives” have been bandied about and even demonized by many writers (including myself), so it’s best to understand them and their importance. This article will first define derivative, fully answer the above question, and in the third section give a quick lesson on some future and spot market basic terms.

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Modern financial derivatives all started with commodities, namely rice and grain. The earliest recorded financial derivative market I know of came in the early 1700s in imperial Japan at the Dojima Rice Exchange. Although the realm did use coins, they also used rice as another major form of indirect exchange. (Part 3 explained why using rice was a horrible idea.) The samurai stole (or to be more polite, taxed) rice from their serfs, but due to a set of bad harvests and market manipulations by traders, they found their purchasing power to be very adversely effected. A funny way to think of it is that new armor & swords, and lovely geishas were too expensive in terms of rice. Our poor samurai were left scratching their helmets on what to do. (photo)

The samurai decided to sell their harvests forward to stabilize their income. For instance, Joe the Samurai convinces Bob the Trader to give him a set amount of coinage (say 15 coins, or the futures price) in exchange for his rice crop (say 1 bushel) that will be delivered on a settlement day (say 3 months later). When this “futures contract” settlement date arrives, Joe gets the 15 coins, Bob gets the bushel of rice and sells it, hopefully for the price he was expecting to receive, say 18 coins. Joe gets the steady income he desired. Bob makes a tidy profit of 3 coins in return for risking that the price of rice would drop below the spot price on the date he sells the bushel. In other words, Joe the Samurai trades his price risk (the rice’s price volatility) for Bob the Trader’s basis risk (the difference between the futures price and the spot price). Spot price is the market price for immediate delivery on the day Joe and Bob made the contract).

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