Archive for January, 2011

A Mockery of a Sham

January 28th, 2011 3:24 pm  |  by  |  Published in Banking, Federal Reserve, Liberty, Market Regulation, Peter Schiff  |  Comments Off

by 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

Back in October of 2009, when Congress first announced the formation of a commission to investigate the cause of the 2008 financial crisis, I knew immediately that their ultimate conclusions would support the agendas of their respective political parties. (Watch the video blog I recorded that day) Particularly, I knew that the commission’s Democrat majority would use the crisis to justify more government involvement in the financial markets. These concerns have now been fully validated.

Given that I was one of the few people who had accurately predicted the magnitude of the housing bubble, and had laid out in my 2007 book Crash Proof the specific consequences for the banking system and the economy when it burst, I immediately contacted the commission offering my services as a witness. In particular, I assumed that the Republicans on the panel would appreciate hearing from someone who thought that the crisis resulted from too much rather too little government regulation. (see my 2008 Washington Post op-ed)

To burnish my credentials, I sent the commission a list of articles I wrote between 2004 and 2008. Much of that pre-crash critique is summarized in a speech I gave in 2006 to The Western Regional Mortgage Bankers Association.

However, despite these supporting materials, my repeated outreach to the commission bore no fruit. At that point, I realized that they had no interest in giving any visibility to the narrative that I favored, namely that the ultra-low interest rates engineered by the Greenspan-Bernanke Federal Reserve were the primary factor behind the financial crash of 2008.

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Do you need the Patriot Act?

January 28th, 2011 3:14 pm  |  by  |  Published in Civil Liberties, congress, Constitution, Liberty, patriot act, privacy  |  Comments Off

Quote of the Day: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” – Fourth Amendment to the Constitution

Forty-five days after 9/11, Congress passed the USA PATRIOT Act without reading it. This new law was supposed to protect you from terrorism, but it has really left you unprotected against lawless federal agents.

The Patriot Act contains numerous violations of the Fourth Amendment. It gives federal agents vast new powers that have been abused to investigate innocent Americans.

In 2001 and 2006 concerned members of Congress urged expiration dates on some of the Patriot Act’s most controversial powers. Regrettably, Congress has constantly renewed those powers, despite a multitude of FBI abuses. Last year, the extension was passed with just a voice vote!

Now, another expiration is at hand — February 28, 2011. Unfortunately, Rep. Mike Rogers, Chairman of the House Intelligence Committee, has introduced H.R. 67 to renew the provisions for another year.

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Pie in the Sky

January 28th, 2011 1:58 pm  |  by  |  Published in Election, government spending, Liberty, Obama, Politics, Socialism  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

Following the huge gains made by Republicans in the midterm elections, it was widely expected that President Obama would use the State of the Union address to signal a major policy shift toward the center of the political spectrum. On the surface, at least, he appeared to do just that, hinting that he took budget management very seriously and that Americans should be prepared for shared sacrifice. However, as the final applause still echoed in the House chamber, many astute pundits were left trying to make sense of the many contradictory policy prescriptions the President proffered.

Classical political maneuvering dictates that when clouds are grey, politicians must offer good news, tell jokes, and remind us warmly of our childhood (or in Obama’s version, America’s triumph over Russia in the Space Race). Disclosure of specific measures should be avoided at all costs. President Obama followed these tactics closely.

While he did address plans to cut non-defence, discretionary federal spending – a small fraction of the overall budget – the President also announced his intention to increase spending on several existing and new initiatives. The scope of the new initiatives will surely eclipse the modest cuts pledged.

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Ron Paul, Rand Paul raise a double-barrel toward the Federal Reserve

January 26th, 2011 11:56 pm  |  by  |  Published in Activism, congress, Federal Reserve, Free Market, Maven Commentary, Politics, Rand Paul, Ron Paul  |  6 Responses

Let me begin by refusing to apologize for the inflammatory rhetoric in the title of this post because I’m not CNN’s John King. Once again, Ron Paul has re-introduced his Audit the Fed bill in the House. This time his son, Rand Paul, has introduced the companion bill in the Senate. It’s time to put your lawmaker in your cross-hairs and get them to target the Federal Reserve for an audit.

PC SPEECH JOHN KING STYLE DISCLAIMER: We do not condone literally putting your lawmaker in the cross-hairs of your gun or guns. We merely mean that you should become active and request that your lawmakers support a full audit of the Federal Reserve as outlined in these bills. We also do not mean to suggest you, Ron Paul, or Rand Paul, literally grab a double barrel shotgun and shoot it at the Federal Reserve building or any Federal Reserve employee or official. Ok, enough! Now read the damned press release below, please.

SPRINGFIELD, Va.–(BUSINESS WIRE)–Congressman Ron Paul and his son, Senator Rand Paul, today introduced companion legislation in both chambers of the United States Congress to require a full and thorough audit of the Federal Reserve.

The bills, both titled The Federal Reserve Transparency Act of 2011, but known better as “Audit the Fed,” are numbered H.R. 459 in the House and S. 202 in the Senate and continue the efforts championed by Ron Paul last year that won 320 co-sponsors before passing the House and 32 cosponsors in the Senate before falling short on a floor vote.

H.R. 459 starts the session with 56 original bipartisan cosponsors, while Sen. Jim DeMint (R-SC) and Sen. David Vitter (R-LA) are original cosponsors for S. 202.

The Federal Reserve Transparency Act of 2011 would open up the Fed’s funding facilities, such as the Primary Dealer Credit Facility, Term Securities Lending Facility, and Term Asset-Backed Securities Lending Facility to Congressional oversight and audit by the non-partisan Government Accountability Office. Additionally, audits would include discount window operations, open market operations, and agreements with foreign central banks such as ongoing dollar swap operations with European central banks.

Public polling conducted by Rasmussen Reports in December 2010 indicated that 74 percent of the American People demand transparency at the Fed and support a full audit as called for in the Audit the Fed legislation. In 2009 and 2010, Campaign for Liberty generated over 2.5 million grassroots contacts to federal lawmakers in support of Audit the Fed.

“The Federal Reserve and its loose money, easy credit policies are the culprit for so many of the dire economic problems we face. Americans continue to demand transparency at the Federal Reserve, and Campaign for Liberty is proud to lead the fight to make this legislation the Law of the Land,” said Campaign for Liberty President John Tate. “All across the country, grassroots citizens are uniting behind Ron and Rand Paul and will demand this audit, this year.”

Cutting government… the Rand Paul way

January 25th, 2011 11:20 pm  |  by  |  Published in Big Government, Commentary, Debt, government spending, Liberty, Maven Commentary, Politics, Rand Paul  |  4 Responses

After the mostly nauseating SOTU speech by Obama… I noticed that Rand Paul’s press release earlier today announcing his bill to cut spending by $500 billion in 1 year. Not only that but he posted the bill itself along with a 37 page overview with highlights of specific departments/funding he would cut. It’s quite interesting to read and rather bold. In other words… I love it.

Yes, it will never pass, but I still love it.

Some highlights if you are not interested in opening the pdf linked above (though I recommend it because he explains why the cuts can be made):

  • Legislative Branch – Cut by 23%
  • Judicial Branch – Cut by 32%
  • Dept. of Agriculture – Cut by 30%
  • Dept. of Commerce – Cut by 54%
  • Military/Dept. of Defense – Cut by 6.5%
  • Dept. of Education – Cut by 83%
  • Dept. of Energy – Cut by 100%
  • Health and Human Services – Cut by 26%
  • FDA – Cut by 62%
  • CDC – Cut by 28%
  • NIH – Cut by 37%
  • TSA – Cut by 40%
  • Housing and Urban Development – cut by 100%
  • Eliminate Amtrak Subsidies
  • EPA – Cut by 29%
  • International Aid – Cut by 100%
  • NASA – Cut by 25% (mentions fostering private space exploration/tourism)
  • FCC – Cut by 22%

Senator Rand Paul responds to Obama’s State of the Union speech

January 25th, 2011 10:54 pm  |  by  |  Published in Big Government, Debt, Economics, government spending, Rand Paul  |  2 Responses

Senator Rand Paul has issued his own response to Obama’s State of the Union speech tonight.

This came after issuing a press release announcing that he has introduced his own plan to slash the federal budget by $500 billion dollars in 1 year.

WASHINGTON, D.C. – In the face of an ever-expanding national debt, newly elected Senator Rand Paul is taking a bold and proactive step in protecting our national security and lowering our deficit. By introducing $500 billion in spending cuts today – to be enacted over one year – Sen. Paul is starting an important conversation with his Senate colleagues about how to fix our nation’s current economic situation.

“I am proud to introduce my own solution to the mounting debt our spendthrift, oversized government has accrued. By rolling back to 2008 levels and eliminating the most wasteful programs, we can still keep 85 percent of our government funding in place,” Sen. Paul said today.

“By removing programs that are beyond the constitutional role of the federal government, such as education and housing, we are cutting nearly 40 percent of our projected deficit and removing the big-government bureaucrats who stand in the way of efficiency in our federal government,” he continued.

Rand Paul understands what ails us and appears to have the proper solutions. Obama appears to know what ails us, but offers more of the same old failing solutions. More information is available on Rand Paul’s web site, including the text of his spending cut bill.

The Great Debt Shift

January 25th, 2011 12:11 pm  |  by  |  Published in Big Government, Debt, Economics, national debt  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

If one were asked to describe the major global economic changes that have unfolded since the financial crisis began, a good starting place would be the massive shift of debt from the private to the public sector. Attempting to arrest a deepening crisis, governments all around the world have bailed out businesses and companies by transferring bad debts to the public books. Although these moves have provided some current stability (after all, governments are much less likely to default), the long-term consequences may be dire.

Two of the world’s largest economies, the EU ($16 trillion) and the US ($14 trillion), have become the leading practitioners of private-to-public debt shifting. The US has assumed the debts of banks, insurers, mortgage holders, and even entire industrial sectors. The European Union has done the same for entire states. The resulting public debt levels are, predictably, placing strains on both the dollar and the euro.

Worse still, the bailouts have created a spirit of apathy toward debt accumulation. Western governments have embarked on a debt binge for the ages. Already, the credit ratings of the United States and some of the EU’s core countries, such as France and the UK, are being questioned.

While this socialization of private debt has created deep citizen resentment, it remains to be seen whether political pressure is enough to hold back the tide. In the US, the forces of fiscal restraint appear to have the upper hand at present; but, this late in the game, it is far from certain that the newly elected fiscal hawks will be able to avert civil unrest and debt default.

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Bernanke’s Golden Dismount

January 25th, 2011 12:08 pm  |  by  |  Published in Economics, Federal Reserve, gold, inflation, Liberty, Money, unemployment  |  Comments Off

by Michael Pento, Senior Economist at Euro Pacific Capital (

There can be little doubt that Fed Chairman Benjamin Bernanke has been a very, very good friend to gold investors. However, some of those who have benefited from his largesse now fear that the recent selloff in gold indicates an imminent end to Bernanke’s monetary high-wire act. Most assume that a cessation of the Fed’s stimulative efforts, if it were to occur, would spell the end of gold’s bull run. But a closer reading of Bernanke’s economic philosophy and the Fed’s own recent history, shows that once central banker begins a strenuous routine starts, it is very hard, if not impossible, for them to dismount.

It is widely believed that the unemployment rate, core inflation and home prices are the three key pieces of economic data that Bernanke and his Fed cohorts rely upon when formulating monetary policy. Although other data points, such as regional manufacturing surveys and the producer price index (which have rebounded significantly in some cases) attract some attention, they do not carry near the weight of the big three. With the unemployment rate remaining north of 9.4%, YOY core CPI inflation still less than 1% and the Case/Shiller Home Price Index down .8% from the year ago period, the Fed is in no mood to downshift. If anything, my guess is that Bernanke will step on the gas.

More importantly, in light of Bernanke’s often stated conclusion that premature Fed tightening in 1937 and 1938 led to a prolongation of the Great Depression, even if the big three metrics were to show marked improvement, any future increase in interest rates will be moderate and held in abeyance for as long as politically possible.

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HR 408: Spending Reduction Act will actually ELIMINATE programs!

January 25th, 2011 12:01 pm  |  by  |  Published in Big Government, congress, Constitution,, government spending, Liberty, Politics  |  2 Responses

Quote of the Day: “…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.” – Thomas Jefferson

The House Republican Study Committee (RSC) has proposed the Spending Reduction Act.

This bill actually targets dozens of programs for elimination or reduction. You can see the list in a pdf format here:–TWOPAGER.pdf

The cuts would total $2.5 trillion over ten years. Some of that amount could be based on rosy scenarios. It’s certainly true that cuts to defense and entitlements must still be made to balance the books, but this bill is still an important first step. It means . . .

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Do You Like Tax-funded Political Campaigns?

January 21st, 2011 1:33 pm  |  by  |  Published in Big Government, Election, Liberty, Politics  |  Comments Off

Quote of the Day: “There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” — Robert A. Heinlein (1907-1988) American writer

Should you be forced, at the point of a tax-collector’s gun, to fund . . .

* political candidates you dislike?
* the communication of political beliefs you oppose?

If not, then I hope you’ll join us in paying for a legal brief to the Supreme Court that will oppose tax-funded political campaigns.

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