Archive for July, 2009

Douglas Gnazzo’s “Honest Money”

July 27th, 2009 12:33 am  |  by  |  Published in Banking, Big Government, Books, Commentary, Constitution, Debt, Economics, Federal Reserve, gold standard, inflation, Liberty, Money  |  Comments Off

“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, men become the tools of men. Blood, whips, and guns – or gold. Take your choice – there is no other – and your time is running out.” – Ayn Rand

by Jake Towne, the Champion of the Constitution

Originally published Saturday, July 25, 2009 at

Douglas Gnazzo’s 2008 book, Honest Money: A History of United States Gold and Silver Currency, is an essential add to the reading list of any serious student of monetary systems. Far shorter than the massive tome of Edwin Vieira’s hopefully-soon-to-be-reprinted Pieces of Eight at 226 pages, Gnazzo takes the reader on a pleasurable blitzkrieg through our country’s rich monetary history, from the founders and the Constitution to modern times. Perhaps the most enthralling section of the book is the closing chapters where Gnazzo’s gives his thoughts on a future commodity-based currency and, more importantly, how to transition there from where we are now. Like myself, Gnazzo has called for a national debate on the subject before it is too late.

Gnazzo splashes all the colors of the truth on the wall for his readers. He relates how our money was slowly debased by the politicians’ wars and those pesky central bankers who weeviled their way back into power after America’s first two central banks were destroyed. He relates how the destructive virus of public debt was sown in during the founding of our country chiefly by Alexander Hamilton, the Revolutionary war hero and mercantilistic servant of the aristocracy in America.

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April Fools Joke in July? WaPo Attacks Ron Paul and Fed Audit

July 25th, 2009 11:22 am  |  by  |  Published in Activism, Banking, Big Government, Commentary, congress, Debt, Economics, Federal Reserve, Free Market, government spending, inflation, Liberty, Maven Commentary, Money, Ron Paul  |  8 Responses

Upon reading it I had to verify that the date wasn’t April 1st. The Washington Post published an editorial attacking the notion that Congress (and the American people) should know what is happening to OUR money. Perhaps they are against such transparency because they received a sizable bailout from the Fed like so many others in the past year. Or is “bailout” the right word when you publish tripe like this? Maybe “bribe” would be more accurate.

No I’m not saying they actually received any money from the Fed because I don’t know if they did or not. After all knowing such things is illegal under current law. I’m merely saying that if we had a full Fed audit we would know. Their efforts to stymie bipartisan no-brainers like HR1207 and S604 reeks of putrid quid pro quo status quo in Washington DC.

Here’s a taste, grab your vomit bag:

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No Exit for Ben

July 24th, 2009 2:02 pm  |  by  |  Published in Bailouts, Banking, Commentary, Constitution, Debt, Economics, Federal Reserve, Free Market, government spending, inflation, Liberty, Money, Peter Schiff, Politics  |  1

by Peter Schiff, president of Euro Pacific Capital and author of The Little Book of Bull Moves in Bear Markets

In a Wall Street Journal op-ed on Monday, and in congressional testimony later in the week, Fed Chairman Ben Bernanke reassured all that thanks to his accurate foresight and deft use of the Fed’s policy toolkit, he could maintain near zero percent interest rates for an extended period without creating inflation. With supernatural powers such as these, one wonders if Ben would be better employed by the Justice League rather than the Federal Reserve.

Ben’s game plan is apparently simple: once he determines that the economy is on solid ground, he will use the monetary equivalent of Superman’s laser vision to strategically evaporate all the excess liquidity that he has recently created without endangering the recovery. Don’t try this at home, kids.

In other words, as he did just a few years ago when the subprime fiasco began to emerge, Bernanke is assuring us that inflation is contained. He is just as wrong now as he was then.

The idea that the inflation genie can be painlessly rebottled has no historic precedent. Even mainstream economists, who’ve never met a fiscal stimulus they didn’t like, agree that central banks must act preemptively with regard to inflation. Bernanke is making the case that the new set of liquidity tools, hastily developed in the panic of late 2008, will act just as well in reverse. But liquidity is a lot like liquid, it’s a lot easier to spill than to un-spill. The Chairman believes that his new gadgetry will allow him to perform a feat of monetary magic no other central banker has managed to pull off. But given his history of getting it wrong, why should we assume that this time he will get it right?

The bottom line is that Bernanke has no exit strategy. He can talk about it all he likes, but when it comes time to actually pull the trigger, his nerves will buckle. The current communications campaign is simply an attempt to calm the markets. I doubt few citizens or members of Congress had any hope of understanding the exit strategy mechanisms that Bernanke described. Many likely place their faith in his seeming mastery of financial minutiae. Sadly, as with the mythical “strong dollar policy,” confident talk may be the sum total of the Chairman’s strategy.

He senses that the villagers, in the form of currency traders and bond market vigilantes, are becoming a bit restless. To sooth their concerns, he must pretend that he has the situation under control. Like Jack Nicholson in A Few Good Men, he knows full well that markets simply “can’t handle the truth.”

But make no mistake, in order to mop up all the excess liquidity, the Fed will need to raise interest rates substantially to attract buyers for all the bonds that the Treasury must sell. Fed officials know that our economy is completely dependent on cheap money and limitless government credit, and can’t tolerate the loss of either. Of course, the longer the monetary spigot remains open, the more addicted to low rates we get, and the harder it will be to kick the habit. If the Fed could not remove the punch bowl during the years before the bust, how will they do so while the economy is far weaker? Even if they do start the process, the minute the “recovery” seems in jeopardy, look for the Fed to turn the showers back on.

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Quick Hits: Health Care, Worshiping the Common Good, and Random Thoughts

July 24th, 2009 8:15 am  |  by  |  Published in Activism, Big Government, Commentary, congress, Constitution, Free Market, Health Care, Liberty, Market Regulation, Maven Commentary  |  3 Responses

Perhaps this week’s “quick hits” should be renamed “quick hit” because I’m going to focus on a single issue: health care.

This week I’m pondering (like many) the future of health care and what Obama’s efforts represent on a philosophical level. It’s easy to dismiss it negatively by calling it “socialized medicine”, but what does the effort to morph our health care system mean in the grand scheme? Getting to the nuts of it, it is a fight between individual liberty and collectivism.

Blind worship of the common good is the boot upon individual rights and the roadblock to innovation. Despite best intentions some always end up being “more good” than others.

The health care plan being touted by Obama and his palace guards spits in the faces of our Founders, further shreds our Constitution, and murders small businesses. Small business is the engine of the U.S. economy. Obama wants to pour water in the gas tank.

CATO has a very nice  site dedicated to educating the masses about the health care proposals being considered on Capitol Hill. Also, they don’t just criticize the Obama and Congress plan. They propose reforming health care based upon free market principles. I don’t necessarily agree with some of what they propose, but it is infinitely better than all forms of the travesty Obama is pushing.

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Congress Responsible for Mini-Bailout of $6.2 Billion to Delphi and Next Week’s Quarter-Trillion of New Debt

July 23rd, 2009 11:16 pm  |  by  |  Published in Bailouts, Banking, Big Government, Commentary, congress, Economics, government spending, Liberty, Money  |  Comments Off

The Pension Benefit Guaranty Corporation bails out Delphi as the Treasury madness slips into gear. Is YOUR pension fund solvent? Just ask the oracle of Delphi.

by Jake Towne, the Champion of the Constitution

Originally published Thursday, July 23, 2009 at

oracleYesterday, the Pension Benefit Guaranty Corporation (or PBGC) announced it will take over payments for 70,000 workers and retirees from the bankrupted Delphi, the large auto parts maker per the Wall Street Journal. This “mini-bailout” is to the tune of $6.2 billion.  (Oracle of Delphi photo courtesy Patar knight license)

The PBGC is an agency of the US government, created by the Employee Retirement Income Security Act of 1974. It is the government’s pension equivalent to the FDIC, which “insures” bank accounts. (For more on the FDIC debacle, please read “Off a Cliff with No Airbags: The FED Banking System Quivers in Fright“.) The PBGC claims to “protect” the pensions of nearly 44 million American workers, but the reality is that the agency is insolvent with a deficit of $33.5 billion per the WSJ. Since there are political implications from the GM bankruptcy, more or less Delphi employees and retirees are just lucky to receive this charity money from the government. These days, even some who ARE able to withdrawal from other retirement plans like 401k’s are having issues obtaining their funds as I reported on here “Wall Street Journal Reports 401k Withdrawals Frozen or Slowed“.

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Make Senators use socialized health care too!

July 23rd, 2009 10:30 am  |  by  |  Published in Big Government, congress,, Health Care, Liberty, Market Regulation, Politics  |  3 Responses

D o w n s i z e r – D i s p a t c h

Quote of the Day: “Ironically, as we’re moving toward having our government completely control health care, countries with government-run health care are moving in the opposite direction. Almost every European country has introduced market reforms to reduce health costs and increase the availability and quality of care.” — David Gibberman, writing in “American Thinker” (HT: Professor Mark Perry, Carpe Diem blog)

We like to find levers — proposals that can accomplish a lot with a little. Ideas like our “Read the Bills Act” and our “One Subject at a Time Act” are classic examples. Well, Senator Tom Coburn has found a lever of his own . . .

He proposed an amendment in the Senate Health Committee that would require members of Congress to switch from their current health insurance plans to any government provided insurance scheme that’s created as part of proposed health care legislation.

This really put the members of the Senate Health Committee on the spot. If their plan is really so good, shouldn’t members of Congress be subject to it too? Every Republican but one (Judd Gregg) voted for the amendment, but so did the Chair, Democrat Chris Dodd, as well as Democrats Barbara Mikulski and Ted Kennedy. But . . .

It’s notable that Democratic Senators Sherrod Brown, Sheldon Whitehouse, and even self-admitted socialist Bernie Sanders, all voted against the amendment. Socialized health insurance that’s good enough for you, apparently isn’t good enough for them.

We need to do to the entire Congress what Senator Coburn did to the Senate Health Committee — put them on the spot.

Please use’s health care campaign to send your Congressional employees another message opposing government controlled health care, and favoring free market reforms.

This time, please use your personal comments to say the following (you can cut and paste if you want). . .

I approve of the Coburn amendment added to the Senate health care bill. Congress should have to switch their health insurance coverage to any so-called “public plan” they create for the American people. If you aren’t willing to do that then you shouldn’t be voting for this bill.

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More on the now defeated Concealed Carry State Reciprocity Amendment

July 23rd, 2009 8:15 am  |  by  |  Published in Civil Liberties, Commentary, Constitution, Gun Control, Liberty, Maven Commentary, states rights  |  6 Responses

The amendment I discussed yesterday,  S.845, which would allow concealed carry permit holders to legally carry into other states as long as that state’s laws were followed failed today. The vote was 58 for the amendment and 39 against. 60 votes were required for acceptance.

I can’t help but wonder if Norm Coleman had defeated Al Franken and if Arlen Specter didn’t switch parties the required 60 would have been reached. Both Franken and Specter were among the 39 who voted ‘No’.

After some thought I realized there is a valid argument that this amendment could violate states rights. The argument is based on a bit of a “catch-22″ built-in to the amendment. In short, the amendment would allow concealed carry permit holders to “violate” the state laws that apply to obtaining a permit. For instance in some states the law is such that in order to get a permit one has to pass a live firing test. The amendment would nullify that rule for someone who enters the state from a state that does not have such a requirement.

That being said, there’s something to be said for thinking of it like one thinks of a driver’s license. The laws governing obtaining a driver’s license differ in each state, yet we don’t seem to have a problem allowing reciprocity for cars crossing state lines as long as the rules of the state are obeyed.

And what about the 2nd Amendment? The entire debate should be rendered moot if we actually followed the 2nd amendment. Isn’t it true that humans have a natural right to defend him/her self from harm? After all the Bill of Rights does not grant us rights, it merely affirms our natural human rights. We had the right to defend ourselves from harm pre-Constitution.

Below I’m including the remarks from Virginia Senator Jim Webb delivered yesterday during the debate on this amendment. He was one of several Democrats who voted for the amendment. As one of his constituents I thank him for doing so. I’d like to be thanking him for also cosponsoring S.604 to fully audit the Federal Reserve, but he hasn’t done that yet. I hope in time he does so.

In the meantime, enjoy his strong and thoughtful arguments on the amendment today.

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Ron Paul: What Are They Hiding?, Keynesianism is Dead

July 23rd, 2009 12:56 am  |  by  |  Published in Banking, Big Government, congress, Debt, Economics, Federal Reserve, Free Market, government spending, History, Money, Ron Paul  |  2 Responses

Ron Paul continued his media assault today with another appearance on Fox Business News again discussing HR1207 and auditing the Federal Reserve.

During the segment Ron Paul says, “What are they afraid of? I mean they are getting tenacious now. So the harder they fight us, the more it stirs up what are they hiding?

The problem is “that the world has followed Keynes instead of Mises.”

Paul even declares that “Keynesianism is dead.” (not sure I agree with Dr. Paul on that point.)

Enjoy the segment in two parts below.

Part 1:
Part 2:

(Thanks to Minnesota Chris)

Skating on Thin Ice

July 23rd, 2009 12:30 am  |  by  |  Published in Banking, Debt, Economics, Investing, jobs, Liberty, Money  |  2 Responses

By John Browne – Senior Market Strategist, Euro Pacific Capital

As 2009 moves past its midpoint, many market participants are briskly trying to forget the carnage of 2008 and the first quarter of 2009. But, before we get lost in the euphoria of the 36% Dow rally in the Spring/Summer of this year, a little hindsight is in order. In March, the Dow had plunged to 6,547, or some 53 percent down from its nominal 14,164 high in 2007. Despite the recent gains, we are still nearly 40% below the 2007 peak. This is a brutal truth that everyone seems to be ignoring.

Last week, Merrill Lynch, that storehouse of economic sagacity, announced that the recession was over. Even the bearish NYU economist Nouriel Roubini was reported as saying “the worst is behind us.” However, wishing earnestly for something does not make it so.

Admittedly, the financial meltdown that threatened in late 2008 appears to have been contained. In addition, the Fed’s actions in the credit markets have held interest rates down and turned the yield curve positive. The credit markets also have started to ease. In addition, the federal government’s injection of trillions of dollars into the economy has “boosted confidence” for those too short-sighted to know the consequences. This welcome news has provided impetus to equities.

In combination with reassuring remarks by senior administration officials and retail investors’ wish not to be left behind, money has started to move back into American equities. The resultant rally in stocks seems to have validated the preceding optimism.

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Concealed Carry State Reciprocity and the States Rights Argument

July 22nd, 2009 11:53 am  |  by  |  Published in Civil Liberties, Commentary, Constitution, Gun Control, Liberty, Maven Commentary, states rights  |  2 Responses

Today the Senate is debating what has come to be known as the Thune Amendment (S.845), which would allow those with concealed carry permits to carry in other states. Watching the debate is rather interesting. Just about every Senator who rises to oppose the amendment argues that it “tramples states rights”. As an individual who supports states rights this caught my attention.

Does the Thune Amendment actually violate states rights?

It does not. It can be thought of as applying the laws of state driver’s licenses to concealed carry permits. The summary of the amendment makes it clear that it requires that the carrier follow the laws of the state in which he/she is carrying:

A bill to amend chapter 44 of title 18, United States Code, to allow citizens who have concealed carry permits from the State in which they reside to carry concealed firearms in another State that grants concealed carry permits, if the individual complies with the laws of the State.

Yet every Senator opposed to the amendment is falsely arguing that it violates states rights?

Incidentally, I applaud my own Senator, Jim Webb, for supporting the amendment against the wishes of his Democratic colleagues.

The vote is supposed to occur about an hour from the time of this writing. I’ll write more following the vote.