Archive for December, 2010

Forever Stamps Tell Us Much

December 31st, 2010 3:07 pm  |  by  |  Published in Bailouts, Big Government, Debt, government spending, Liberty, Peter Schiff  |  3 Responses

Peter Schiff, CEO 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

The United States Postal Service announced this week that all future first class postage stamps sold will be the so-called “forever stamps” that have no face value but are guaranteed to cover the cost of mailing a first class letter, regardless of how high that cost may rise in the future. Currently these stamps are sold for 44 cents, but will increase in price if and when the Post Office hikes rates.

Apart from sounding the death knell of the one cent stamp, the news is interesting on two fronts: it provides insight into remarkably irresponsible government accounting, and it provides investors with the most attractive Federally-guaranteed inflation protected asset available on the market today.

Over the past fifty years, the USPS has raised the rates on first class postage 20 times. During that time the stamp prices have gone up more than 1,100%. Given the increasing frequency of rate hikes (three in the last four years) the Post Office claims it made the move to forever stamps to save money on printing costs and to increase customer convenience. The public seems to appreciate the product and has snapped up a staggering 28 billion forever stamps since they became available in 2007.

But the real reason behind the permanent switch is that it allows the Post Office to hide its insolvency behind phony accounting numbers, setting itself up for a massive taxpayer financed bailout in the not too distant future.

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Rising Rates Reveal Debt Reality

December 30th, 2010 1:14 pm  |  by  |  Published in Debt, Economics, Federal Reserve, government spending, Liberty, national debt, Obama, War  |  Comments Off

by Michael Pento, Senior Economist at Euro Pacific Capital (

The Fed’s lucky streak of luring bond investors with low interest rates may be drawing to a close. Nevertheless, the extended period of low borrowing costs has bred a new breed of investor. To the bulls and bears, we can now add the ostriches – those who bury their heads in the sand of declining debt service ratios while refusing to face up to intractable levels of total US government debt. If these ostriches were to actually look at the numbers, they would realize that it is their investments which are made of sand.As the issuer of the world’s reserve currency, the US government has enjoyed the benefits of low interest rates despite its inflationary practices. When we run a trade deficit with a country like China, they have a strong incentive to ‘recycle’ the deficit back into our dollars and Treasuries. This practice has hidden what would otherwise be much higher borrowing costs and much lower purchasing power for the dollar. This artificial price signal allows people like Paul Krugman to claim that the Obama Administration’s stimulus programs should be much larger. Because our yawning fiscal deficits have not driven bond yields significantly higher, he sees no reason to curtail spending. Krugman wants to spend like its World War III, and then has the nerve to call those worried about the budget mindless zombies!

Krugman is just one partisan Democrat shouting at mirrors, but the misunderstanding has struck the right-wing as well. Last week, in a debate with me on CNBC’s The Kudlow Report, Brian Wesbury, Chief Economist of First Trust Advisors and writer for The American Spectator, claimed that our $9.3 trillion national debt is of little consequence because our GDP is a far greater. However, he failed to note that our $14.7 trillion of GDP only yields about $2.2 trillion in revenue for the Treasury. To fully access that entire GDP, the government would have to raise all tax brackets to 100% without producing any reduction in output or decrease in revenue. This is, of course, preposterous. As was demonstrated in the 1970s, even small increases in marginal tax rates have a substantial negative impact on output. A healthier appraisal would center on the fact that our publicly traded debt is now 422% of our annual tax revenue.

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No, Mr. Krugman, You’re Eating America Alive

December 23rd, 2010 10:37 pm  |  by  |  Published in Economics, Liberty, Money, national debt  |  Comments Off

by Neeraj Chaudhary, Investment Consultant at Euro Pacific Capital

Here we go again. This week, Paul Krugman, the 2008 Nobel Prize winner in economics and the go-to guy for progressives who need a morale boost, launched another misguided attack on Austrian School economists. From his New York Times soapbox, he referred to the free-market Austrian “hard money” philosophy as a “zombie idea” that is inexplicably eating the brains of the voting public.

The attack would hardly be worth a reaction if it weren’t for the fact that column did create a buzz. In the piece, he repeated a refrain that has become common for the empirically defeated Keynesians. Said Krugman, “many economists, myself included, warned from the beginning that [President Obama's original stimulus plan] was grossly inadequate.” He continued, “[a] policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics.”

When looking for zombies, the first place Mr. Krugman should look is in the mirror. He has one answer to every problem: eat more taxpayers. He isn’t even a true Keynesian. Mr. Krugman is the guardian of a system that died a long time ago. He is the walking undead of the New Deal era.

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REAL ID: A Major Victory is Near

December 20th, 2010 2:13 pm  |  by  |  Published in Big Government, congress,, Politics, privacy, REAL ID  |  12 Responses

“Repeal the Real ID Act” is’s oldest active campaign.

That’s because REAL ID – which is a de facto national ID card – lays the foundation for a future police state.

That’s why so many people have fought against it so hard for so long. And thanks to that resistence REAL ID still hasn’t been implimented, six years after it became law! A big part of this is because of your pressure.

And now there’s more good news . . .

There’s a silver lining in the monstrous, 1,926-page appropriations bill (H.R. 3082). This bill rescinds funding for a REAL ID “hub.” The House already passed the bill, and the Senate will consider it as soon as TODAY.

This hub would have created a centralized ID verification system, where states share driver information with each other. Without this hub, REAL ID suffers a fatal blow.

That’s why we’re asking you to tell Congress to support this cut in REAL ID’s budget, and to repeal REAL ID altogether.

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A 30 minute sit-down with Ron Paul

December 19th, 2010 8:56 pm  |  by  |  Published in Bailouts, Banking, congress, Constitution, Debt, Economics, Federal Reserve, Free Market, gold, gold standard, government spending, inflation, Money, price controls, Ron Paul, Taxes  |  Comments Off

CSPAN’s show, Newsmakers, aired this weekend. Their guest was Congressman Ron Paul. Most of the questions revolved around economics and the Federal Reserve. It’s refreshing when Dr. Paul is given the proper amount of time to explain his positions without the interruptions that always occur on the mainstream media outlets.

You can watch the entire show here at

A Christmas Miracle: Someone on the Left actually understands Rand Paul

December 18th, 2010 7:47 pm  |  by  |  Published in Civil Liberties, Commentary, Liberty, Maven Commentary, Politics, Rand Paul  |  5 Responses

I often grow sleepy reading the incessant and inane Twitter comments from the Left about Rand Paul. Granted, it’s hard for some to be enlightening in 140 characters or less. Given some of the comments though, I doubt they’d be enlightening with more characters at their disposal. So in that regard, thank gods for Twitter’s character limit!

Rand Paul’s ideas, like his fathers, do go beyond the length of a tweet, or a debate soundbite. And they are even enlightening, sometimes. To demonstrate this here is a recent tweet from an un-named and un-enlightening liberal individual:

65-31. Sorry for your loss, Rand Paul…SUCK ON IT!

The casual reader would automatically assume that Rand Paul’s position on “Don’t Ask Don’t Tell” would be strong on keeping it in place. However, Rand Paul’s actual position is that it should be left up to the Pentagon (or “the leadership of the military“) to decide whether to repeal it or keep it. The statement from his campaign also denounced the “political posturing” associated with the issue.

Paul’s position, at first glance, could be seen by some as political posturing in its own right, but digging a bit deeper, isn’t his position the correct one? Isn’t it also a libertarian one? It is essentially, a states rights argument. Shouldn’t the decision be made by those that are closest to the issue? This statement hardly demonstrates that Paul is against DADT repeal.

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For Whom the Bell Tolls

December 17th, 2010 4:50 pm  |  by  |  Published in Bailouts, Banking, Debt, Economics, 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

There is an old adage on Wall Street: no one rings a bell to signal a market top or bottom. Yet, I have found that bells do ring; it’s just that few people know exactly what sound to listen for.

Perhaps the biggest and most liquid of all markets is for US government bonds. That market has been rallying for almost thirty years. The bull can be traced back to 1981, when Treasury bond yields peaked at about 15%. At that time, high inflation and a weakening dollar had justifiably squelched demand for Treasuries. Even the ultra-high interest rates were not enough to attract buyers.

But this was also when the proverbial bell was rung. Fed Chairman Paul Volcker had signaled, by jacking up interest rates so high, that he would stop at nothing to break the back of inflation. Volcker’s iron will, and Reagan’s unflinching support, restored demand for Treasuries for the next three decades.

We have arrived today at a similar inflection point. After falling steadily for 30 years, bond yields are now heading north with a full head of steam.

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The Dollar Threads a Needle

December 17th, 2010 9:51 am  |  by  |  Published in Debt, Economics, inflation, Liberty, Money, national debt, Taxes  |  Comments Off

John Browne, Senior Market Strategist at Euro Pacific Capital

Pre-holiday cheer is certainly evident in the financial markets. The overwhelming consensus is that the Congressional agreement to not raise taxes while extending hundreds of billions in new stimulus will finally allow the recovery to take hold. The good feelings are underscored by less-than-awful employment reports and modest slowdowns in foreclosures. Another point of optimism is the continued buoyancy of the US dollar, which has weakened over the past few months, but has not collapsed.

However, I believe the dollar’s survival remains tenuous and highly dependent on factors outside of the control of US policymakers. As I see it, the dollar is caught between four major forces: American debt levels, weakness of the euro, underlying strength of the yuan and, lastly, threats to its privileged international reserve status.

In 2010, the major collapse of the US dollar, which many of us expected to see, did not materialize.  Indeed, the dollar experienced periods of relative strength, due largely to an absence of apparent domestic inflation and concerns not just about the value of the euro, but its continued survival. In recent weeks, there have been some signs of economic recovery in the United States, of rising inflation in China, and of increasing concern about the euro. As a result, the dollar is finishing the year with some wind in its sails.

For now, the markets seemed convinced that the trillions of dollars injected into the economy by the Fed and the Administration will not be inflationary. I suspect this illogical consensus has in no small part been made possible by the government’s success in disguising the real level of consumer price inflation. However, the level of government debt continues to accelerate, promising serious problems ahead.

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Ron Paul: Not Greenspan nor Bernanke, it’s the system that’s not viable

December 16th, 2010 5:19 pm  |  by  |  Published in Banking, Big Government, Debt, Economics, Federal Reserve, inflation, Money, Ron Paul  |  Comments Off

In an interview with the Wall Street Journal Ron Paul discusses his upcoming Fed oversight subcommittee chairmanship. He targets the system rather than individuals, and rightly so, as usual.

An excerpt:

Over the past year, we’ve seen a lot more information about the Fed coming to both Congress and the public. Do you think it’s made a difference?

It hasn’t changed policy. I think it’s made the difference that we understand it a little bit better. And it hasn’t gone well for the Fed. The popularity of the Fed has changed. They’re being challenged from all angles right now. … It isn’t so much what I will do. It’s going to be that these policies are doomed to fail. They always want me to attack Bernanke. It isn’t the individuals. It’s not Greenspan, it’s not Bernanke, it’s the system and it’s not viable. They cannot practice central economic planning through the Federal Reserve. They cannot have stable prices, whatever that means. They cannot prevent prices from going up when the time comes for prices to go up. The perfect example of their ineptness is their mandate to have full employment.

A number of Republicans want to change the Fed’s dual mandate to focus on inflation. What effect do you think it would have?

Probably not a whole lot. But I like the subject because it does go after the Fed. They assume too much responsibility. It brings up the subject of unemployment. Since they have totally failed on that this is a great time to talk about, what good is a mandate?

Read the rest here

Do You Want to be Buried in Tax Paperwork?

December 14th, 2010 12:56 pm  |  by  |  Published in Activism, Big Government, congress,, fascism, gold, Liberty, Market Regulation, Politics  |  Comments Off

Unless Congress acts to fix their mistake, a paperwork tsunami will drown every business, including yours, and all of your favorite organizations, including Downsize DC.

This coming tsunami is the new requirement that every business must fill out 1099s forms for every company with which it spends more than $600. This new burden was a provision of the Obamacare bill.

Everyone hates it. Both parties CLAIM they want to repeal it, but they can’t agree about where to fit it in their tight schedule, or whether or not to “pay” for the lost revenue with spending cuts elsewhere.

Well, they SHOULD cut spending. But let’s be clear: There’s NO revenue loss to contemplate. The 1099 requirement will cut into profits. That would mean less, not more revenue for our bloated government.

Please tell Congress to stop delaying and to please repeal the 1099 requirement immediately.

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