Archive for October, 2010

Tail wags dog? Bachmann wants Constitution classes

October 31st, 2010 1:17 am  |  by  |  Published in Big Government, Commentary, Constitution, Liberty, Maven Commentary, Politics  |  4 Responses

Michele Bachmann wants her fellow lawmakers to go back to school. She’d like to make Constitution classes available to our elected officials.

I’m all for our representatives learning more about the Constitution, but isn’t it a bit backwards to ask them to swear an oath to defend something and then ask them to go to school to learn about what they just swore to defend?

From Politico:

For the Tea Party soldiers worried that the young upstarts they’re poised to send to Congress will lose their constitutional druthers once they get to Congress, Rep. Michele Bachmann has a message: Fear not, she’s going to set up constitutional classes.

Bachmann spokesman Sergio Gor says, “It was something she’s always wanted to do. There’s so many folks that come to Capitol Hill to discuss obscure and mundane topics, but no one coming regularly to discuss bill of rights or the role of government.”

Bachmann won’t be teaching the classes, Gor says, but will help organize sessions with constitutional scholars, experts, and judges likely to be held in one of the committee rooms on the Capitol Hill complex. The classes will be open to any members — not just freshman — looking to continue their study of America’s founding documents. They will not be open, however, to staff or members of the press, and the list of speakers won’t be made public.

I can think of only one appropriate “speaker” or teacher of the U.S. Constitution for these lawmakers. And no, it’s certainly not our constitutional scholar President of the United States. When I read “constitution” and “class” in the same sentence I can think of no one other than Michael Badnarik. I wouldn’t trust anyone else with the task.

Keep Your Head Above Dollar

October 29th, 2010 2:34 pm  |  by  |  Published in Bailouts, Banking, Big Government, Debt, Economics, Federal Reserve, government spending, inflation, Liberty, Money, national debt, Peter Schiff  |  Comments Off

by Peter Schiff, president of Euro Pacific Capital, and host of The Peter Schiff Show, broadcasting live from WSTC Norwalk CT from 6pm – 8pm Eastern time every weeknight, and streaming at www.schiffradio.com

There has been so much discussion recently about “QE 2″ that you would think the entire financial sector were about to embark on a transatlantic cruise. Unfortunately, they, and we, are not so lucky. In the year 2010, “QE 2″ doesn’t refer to a sumptuous ocean liner, but a second, more extravagant round of “quantitative easing” – stimulus. In the past, this technique was simply called “printing money.” As if the nation has not already suffered enough from the first round, Captain Ben Bernanke and the Fed are determined to compound the damage by hitting us with another monetary juggernaut. Their stated goal is to boost the economy and create jobs. However, since economic growth cannot be achieved by printing money, their QE 2 will sink just as surely as the Titanic.

The intent of QE 2 is to lower interest rates to promote job growth and avoid the apparently growing threat of deflation. But the very idea that the economy is weak because interest rates are too high is laughable. Deflation is the market’s cure for the asset bubbles that have recently burst, so any attempt to avert it will only weaken the economy further.

In fact, one of the reasons the US economy is in such bad shape is that interest rates are already too low. Low rates have encouraged excess borrowing, by both individuals and governments, and discouraged saving, fueling new asset bubbles at the expense of legitimate investment. As a result, the dead weight of debt has simply overloaded our economy, and our creditors are getting nervous. What we need now is to make hard choices, not engage in more easing – to deleverage, not borrow more.

Worse still, by keeping rates too low, the Fed has enabled the US government to grow significantly larger than it otherwise could had its borrowing been restrained by higher rates. Absent these low rates, Washington likely wouldn’t have passed expensive new healthcare and financial regulation reforms; they would be too busy trying to keep the lights on in the Capitol.

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The One-Sided Compromise

October 29th, 2010 10:24 am  |  by  |  Published in Banking, Economics, Election, Federal Reserve, inflation, Liberty, Money, Politics  |  Comments Off

John Browne, Senior Market Strategist at Euro Pacific Capital

Last weekend, the G-20 finance ministers met in South Korea to find areas of agreement in preparation for the main G-20 gathering in November. The Chinese rebuffed renewed American pleas for them to revalue their yuan. They rejected Secretary Geithner’s suggestion of a four percent cap on current account surpluses. However, in return for accepting America’s continued dollar debasement, the Chinese did agree to “look into” a revaluation of the yuan and the management of trade surpluses. They also agreed to an international self-policing regime to curb currency manipulation. This ‘one-sided’ compromise was hailed in the Western media as a triumph for Mr. Geithner. The US stock markets and dollar rallied. All looked good for the election season in November.

Unfortunately, compromises are never one-sided; they are only construed as such. Though the reporting failed to emphasize it, Mr. Geithner actually agreed to a massive shift of monetary power in exchange for China’s empty concessions. The shareholdings and board composition of the huge and powerful International Monetary Fund (IMF) have now been shifted. China will now become the third largest shareholder of the IMF and the developing economies will get a six percent larger voting share. Two European states will lose their seats on the IMF’s board in favor of developing countries.

Meanwhile, China, supported by Russia, India, and even Brazil, continued to lobby hard for the US dollar’s privileged role as the international reserve currency to be replaced by a wide basket of currencies and gold. To this end, the IMF has recently been given additional “emergency” lending facilities. These could be used in a coming sovereign default crisis to ‘bail out’ Western countries, at which point they would be unable to resist global economic governance under the guise of the reformed IMF.

In short, Secretary Geithner’s “victory” at the G-20 was one only King Pyrrhus could love.

But the blame cannot be laid entirely with Mr. Geithner. The fact that he left the meeting at least saving a bit of face for his delegation is a monumental achievement, considering the dismal condition of the US economy.

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Stop the Invasiveness of the Body Scanners

October 27th, 2010 1:04 pm  |  by  |  Published in Activism, Big Government, Civil Liberties, DownsizeDC.org, Liberty, Politics, privacy  |  1

Quote of the Day: “I don’t know why everybody is running to buy these expensive and useless machines. I can overcome the body scanners with enough explosives to bring down a Boeing 747. That’s why we haven’t put them in our airport. — Rafi Sela, leading Israeli airport security expert, referring to Tel Aviv’s Ben Gurion International Airport, which has some of the toughest security in the world

As you read what follows . . .

* If you want your Congressional Representatives to take action to stop the TSA from using using scanners that will show you naked, please ask yourself . . .
* How many more people in YOUR district would need to pressure YOUR REPRESENTATIVES to get them to take action to protect YOU.
* What is the number? How many people will it take in your district?
* Whatever that number is, what can you do today, right now, to get others in your district to take the action that you are taking. Please reach out and touch people and get them to join YOU in asking Congress to protect YOU.
* Doing this isn’t up to DownsizeDC.org. It’s up to YOU. All we can do is provide you with tools to make it easier to get what you want. The rest, recruiting others to help YOU get what YOU want, is entirely up to you.

Here’s the issue . . .

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Don’t Fear the Euro

October 23rd, 2010 12:10 pm  |  by  |  Published in Banking, Debt, Economics, Federal Reserve, inflation, Liberty, Money, national debt, Politics  |  Comments Off

Michael Pento, Senior Economist of Euro Pacific Capital

When the euro hit a low of $1.1917 against the US dollar on June 7th, 2010, the airwaves crackled with assertions that the European common currency, beset by Greek debt problems and intra-union discord, was destined to trade at parity with the greenback. They were wrong. Since then, the euro has risen over 17% against the dollar, hitting $1.3961 today. The current upswing, delivered courtesy of the Fed, has at least temporarily silenced the euro’s critics. It should also serve to impugn the notion that the US dollar holds a permanent position as the world’s reserve currency.

To be clear, I have always felt that the euro is just another flawed fiat currency. However, since its inception in the 1990s, it has earned my begrudging respect. Most analysts have reservations about the euro, but I see cause for some confidence.

Together, the 27 countries that comprise the European Union represent the largest single market in the world. Its GDP on a purchasing power parity (PPP) basis was $16.5 trillion in 2009, which is greater than the $14.2 trillion US economy in that year. The economies of the 16 countries in which the euro is legal tender produced a GDP of about $10.5 trillion on a PPP basis. That is equivalent to 74% of US total output in ’09. Therefore, the economy of Europe, however measured, is similar in size and scope to that of the US and should be viewed with the same gravitas.

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Decoupling: Alive and Well

October 21st, 2010 11:12 am  |  by  |  Published in Big Government, Debt, Economics, inflation, Liberty, Money, national debt, Peter Schiff, Politics  |  Comments Off

by Neeraj Chaudhary, Investment Consultant in the Los Angeles branch of Euro Pacific Capital

While the US economy continues to weaken (see my recent commentary: Don’t Doubt the Double-Dip), many foreign economies continue to experience solid — even spectacular — economic growth. When the global economic crisis began in 2008, many forecasters doubted that the world economy could return to growth without the US consumer. But the world is learning what Peter Schiff has long predicted: that the US consumer is a drag on the world economy, not an engine for growth. As “decoupling” becomes more apparent, emerging economies are forming trade links among themselves, accelerating the process of decline for the United States.

To get a better understanding of how decoupling works, it helps to picture a train in motion. Together, the cars and engine travel together on the track. Now imagine that last car, the caboose, detaches from the rest of the train. At first, the caboose travels at nearly the same speed as the rest of the train. The distance between the two is hardly discernable. Over time, however, the car slows down as friction and gravity take their toll. Meanwhile, the engine powers ahead. The distance between the caboose and the train gradually becomes greater and greater, until finally the engine is gone from sight, leaving the caboose sitting idle on the track.

This process describes how many of the world’s economies are steadily pulling away from the United States. As trade links grow between countries far from our shores (such as those being solidified between Asia and South America), the distance between the United States and the rest of the world is becoming larger, and decoupling is becoming more and more pronounced.

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Concision: The Preferred Weapon for Fighting Liberty

October 21st, 2010 6:00 am  |  by  |  Published in Commentary, Liberty, Media, Politics, Ron Paul, Video  |  2 Responses

The recent appearance by Ron Paul on MSNBC demonstrated perfectly the tactic, used repeatedly by the MSM, called concision. Concision is essentially when commercial broadcast media uses the time constraints of the medium to their advantage. The host extracts a view or statement held or made by the guest that is unconventional or outside of the realm of the agreed upon limits of any given debate by the corporate media. For example, a popular agreed upon debate question is, ”Are we fighting the war in Afghanistan correctly,” rather than, “Should we be fighting the war in Afghanistan at all?” Once the view or statement is introduced the host forces the guest to defend their statement within the confines of the MSM commercial broadcast setting.

The most infamous recent example of this tactic being used against a Liberty candidate was when Rachel Maddow attacked Rand Paul for stating he would not have supported one of the ten titles of the Civil Rights Act of 1964. The title that assumed the Federal Government owns all private property and therefore can impose their will on the property owner. The key to that interview was Maddow’s demand for a yes or no answer to the question, “Should Walworth lunch counters should [sic] have been allowed to stay segregated, just yes or no please.” Because Maddow asked the question in a yes or no format, the average viewer may have been tricked into believing that Rand Paul’s answer was evasive. However he was trying to lay out the context necessary to properly answer the question while remaining loyal to his convictions. However, the time frame allotted for his response was disproportionate to the complexity of the question.

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Tax Cuts Won’t Cut It

October 18th, 2010 8:04 pm  |  by  |  Published in Big Government, Debt, Economics, government spending, Money, national debt, Peter Schiff, Taxes  |  Comments Off

by Peter Schiff, the president of Euro Pacific Capital, and the host of The Peter Schiff Show, streamed live Monday through Friday from 6pm – 8pm Eastern time at www.schiffradio.com.

Congressional Republicans and Democrats are engaged in a heated debate over which Americans deserve not to have their taxes raised, with both claiming that some form of tax cut will stimulate the economy. The primary point of divergence is what type of cuts will be most likely to get Americans spending, and whether the wealthy will wastefully save their extra cash or use it to create jobs. This debate is academic. If a stronger economy (rather than pre-election posturing) is really the goal, then tax cuts alone will fail.

The real impediment to economic growth is not taxes, but the government spending that makes high taxes necessary in the first place. Given the widespread, but erroneous, belief that spending is the root cause of economic growth (rather than saving and investment), it may shock many to know, especially my fellow Republicans, that of all the three means to finance government – taxation, borrowing, and money creation – taxation is the least destructive over the long term.

I will discuss this topic in depth tonight on the debut broadcast of The Peter Schiff Show, my new weekday radio show on WSTC in Norwalk, CT. Stream it over the Internet from 6pm-8pm Eastern time, every weeknight at www.schiffradio.com.

Despite the visceral sting on April 15th, taxes have the virtue of being honest, direct, and most importantly, visible. By transferring purchasing power from one group to another, taxes take a pie that has already been baked and change how it is sliced. But taxes do create dangerous disincentives if they are abused. Raise taxes high enough and society’s most productive individuals may stop working; keep raising them, and the public may riot. As a result, a government that relies primarily on taxes tends to be one that lives within its means.

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California vs. Holder, and the coming drug war battle

October 16th, 2010 10:22 pm  |  by  |  Published in Big Government, Civil Liberties, Commentary, Constitution, Drugs, Individual Responsibility, Liberty, Maven Commentary, rule of law, states rights  |  3 Responses

First, some background. Proposition 19 in the State of California would “allow Californians age 21 and older to grow up to 25 square feet of marijuana and possess up to an ounce. It also allows cities and counties to authorize cultivation and sales, and to tax them.”

Eric Holder sent a letter to some former DEA administrator’s who have urged the Justice Department to oppose Proposition 19. In it he wrote:

“Let me state clearly that the Department of Justice strongly opposes Proposition 19. If passed, this legislation will greatly complicate federal drug enforcement efforts to the detriment of our citizens.”

So does this mean that Obama’s justice department will begin enforcing federal drug laws once again in California? Yes, it appears it does.

This goes right back to the nullification debate. Do states have the right to nullify unconstitutional federal laws? Given this news it appears that Obama’s justice department’s Constitution goes right from Amendment 9 to Amendment 11.

It appears that a certain California Sheriff has a similar version of the Constitution:

Los Angeles County Sheriff Lee Baca, who is a co-chairman of the main opposition committee, released the letter at a news conference at his headquarters Friday, flanked by two former DEA heads, the district attorney and the Los Angeles city attorney.

“He is saying it is an unenforceable law and the federal government will not allow California to become a rogue state on this issue,” Baca said. “You can’t make a law in contradiction to federal law as a state. Therefore Proposition 19 is null and void and dead on arrival.”

Wow. Baca’s ignorance would be astounding if it wasn’t for Obama through Holder saying basically the same thing. This directly contradicts our Founders. Obama is King and anyone who disagrees with him are peasants or worse, racists. I suppose we can thank Abraham Lincoln for this.

The America we live in is one where the National Government can nullify state laws and “F%*@ the Founders” sing the Statists.

Global Currency Meltdown

October 14th, 2010 7:46 pm  |  by  |  Published in Bailouts, Banking, Debt, Economics, Money, national debt  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

As the recession and resultant stimulus packages add to higher unemployment and increasing public-sector deficits, the government is seeking to boost the value of overseas earnings that are accrued by US corporations. To aid in this effort, the Fed is being pressured to erode the value of the US dollar, thereby making foreign sales more lucrative in nominal terms. But this form of stealth protectionism will fail just as surely as more overt trade barriers.

Like all commodities, the relative value of currencies is influenced by reward, risk, and future expectations.

The interest rate earned by holding a particular currency represents the ‘reward’ end of the equation. Assuming similar risk profiles, money tends to flow towards the currencies with higher interest rates.

Relative risk is in the eye of the beholder and often is difficult to quantify. In the main, investors view a nation’s balance of payments deficit as a major risk factor in evaluating the relative value of its currency.

Another long-term measure of risk is government debt as a percentage of Gross Domestic Product (GDP). If a large national trade deficit is accompanied by a relatively large debt-to-GDP ratio, the level of risk is increased.

Given the current state of the global economy, it should be clear to all that the US dollar is being priced higher than is warranted and the Chinese yuan is priced lower.

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