Archive for January, 2011

China’s Inflation Problem Looms Large

January 20th, 2011 12:59 pm  |  by  |  Published in Communism, Economics, Federal Reserve, government spending, Liberty, Money, Peter Schiff, Politics  |  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

The global economy has become so unbalanced that even government ministers who would normally have trouble explaining supply or demand clearly recognize that something has to give. To a very large extent the distortions are caused by China’s long-standing policy of pegging its currency, the yuan, to the U.S. dollar. But as China’s economy gains strength, and the American economy weakens, the cost and difficulty of maintaining the peg become ever greater, and eventually outweigh the benefits that the policy supposedly delivers to China. In the first few weeks of 2011 fresh evidence has arisen that shows just how difficult it has become for Beijing.

Twenty years ago, China’s leaders decided to ditch the disaster of economic communism in favor of privatized, export-focused, industry. The plan largely worked. Over that time, China has arguably moved more people out of poverty in the shortest amount of time in the history of the planet. But somewhere along the way, China’s leaders became addicted to a game plan that outlived its usefulness.

In order to maintain the peg, China must continually buy dollars on the open market. But the weaker the dollar gets, the more dollars China must buy. And with the U.S. Federal Reserve pulling out all the stops to create inflation and push down the dollar, Beijing’s task becomes nearly impossible. Last week, it was announced that China’s foreign exchange reserves, the amount of foreign currency held at its central bank (mostly in U.S. dollars), increased by a record $199 billion in 4th quarter 2010, to reach $2.85 trillion. These reserves currently account for a staggering 49% of China’s annual GDP (if the same proportional amount were held by the U.S., our measly $46 billion in reserves would have to increase 163 times to $7.5 trillion).

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Hands Off the Internet!

January 18th, 2011 1:42 pm  |  by  |  Published in Big Government, congress,, fascism, Liberty, Market Regulation, Politics, privacy  |  1

The Internet managed to revolutionize our lives without the involvement of busy-body politicians. Instead, the Internet is entirely regulated by non-State institutions, incentives, and rules. These free market forms of regulation actually work, unlike most State regulations. The politicians find this hard to tolerate, so they’re constantly looking for excuses to meddle.

That’s why is introducing our Hands Off the Internet campaign.

If you like what the free market version of the Internet has done for you, then please take action to protect it from interference by The State.

In the coming weeks and months we’ll use this campaign to address specific issues. But Congress should also be told right now where you stand on the issue as a whole. That’s why we’re asking you to send a letter to your Representative and your two Senators telling them that you value Internet freedom.

The hard-wired letter says . . .

Please oppose any attempts to undermine Internet freedom.

You may borrow from or copy these additional remarks, or write something of your own . . . Read More »

No State Bailouts!

January 17th, 2011 1:17 pm  |  by  |  Published in Bailouts, Big Government, Debt,, Federal Reserve, government spending, Liberty, Money, national debt, Politics, Taxes  |  1

Quote of the Day: “We have too many high sounding words, and too few actions that correspond with them.” — Abigail Adams (1744-1818) Source: letter to John Adams, 1774

Many states can’t pay their bills. Their unfunded obligations total trillions of dollars. Some of these states will want a bailout from Congress. Do you want to pay for this, or should the politicians and the unions who created these messes feel the pain instead of you?

I wrote Congress telling them to oppose any bailout of our corrupt and incompetent state governments.

I encourage you to do the same, using our “No Bailouts” campaign. The hardwired letter to Congress reads . . .

“No government money, whether borrowed or taxed, should ever be used to bail out private financial interests, or wasteful state governments.”

If you want to add to this letter you may borrow from or copy what I wrote . . . Read More »

The Dictator Fallacy

January 13th, 2011 12:39 pm  |  by  |  Published in Big Government, Constitution,, Liberty  |  Comments Off

The Downsize DC Foundation’s website,, continues to grow. Today, we bring you one of those articles, from the Our Lexicon category . . .

“The Dictator Fallacy” by Jim Babka

fal·la·cy -
* a misleading or unsound argument.
* Logic. any of various types of erroneous reasoning that render arguments logically unsound.

Do you . . .

* believe in our Constitution with its different branches and its separation of powers?
* support the idea that The State should be managed by elected representatives?
* oppose monarchies, dictatorships, and other authoritarian forms of The State?

I bet you’d answer “Yes” to all of these questions.

Despite answering yes, nearly everyone pretends, at some point, that they can design laws and programs that manage human behavior, leading to an ideal social result.

* Maybe even you believe you know the best way to solve a particular societal problem with a better organizational solution.
* Perhaps you admire and support a particular candidate who claims he has just the right incentive, program, or regulation that will do the trick.

Well, if you ever catch yourself (or another person), making such a pronouncement, then you can KNOW that either you (or they) are wrong. You see . . .

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The Youthful Fuel for the Peaceful Revolution

January 12th, 2011 9:34 pm  |  by  |  Published in Activism, Constitution, Individual Responsibility, Politics, Ron Paul, Young Americans for Liberty  |  1

During his 2008 presidential campaign, Ron Paul, never failed to mention the importance young people played in his hope for a better future for America. In every one of his speeches and interviews he would always use the words, “and especially the young people”. Paul has stated that it is a key strategy because young people tend to be more open-minded and aren’t so stubborn to cling to outmoded establishment beliefs. This is where the Young Americans for Liberty and their new initiative, “Year of Youth” can be essential.

The stated goal of the “Year of Youth” is:

to identify, train, and mobilize thousands of youth activists for a massive wave of youth campaigns across America in 2012.

• IDENTIFY: recruit 25,000 constitutionalists
• TRAIN: teach 1,000 committed activists
• MOBILIZE: endorse 100 campaigns in 2012 (through a YAL affiliated PAC)

This is a lofty but totally worthy goal. Please take some time to check out the “Year of Youth” web site and help out the project in any way you can.

Will The Tea Party Congress Bring Recovery?

January 7th, 2011 2:02 pm  |  by  |  Published in Bailouts, Big Government, Economics, Election, government spending, Liberty, Politics  |  Comments Off

by John Browne, Senior Market Strategist at Euro Pacific Capital

While the markets have known for almost three months that the 2010 election delivered the House of Representatives to the tea-infused Republican Party, I did expect a greater reaction on Wall Street to the formalities of the opening sessions of Congress yesterday.

If the Republicans make good on their campaign promises, we will see cuts in government spending and an end to fiscal stimulus. Given that short-term stock market performance is very much dependent on such government assistance, the current rally is hard to fathom. Meanwhile, gold and silver have experienced a counterintuitive correction (although to be honest, pundits are making much more of this 4% pullback than the size of the move merits). Could it be that the markets now believe that fiscal restraint in Washington is the best pathway to growth? Can a leopard really change his spots?

Not likely, I say. Rather, I believe that we are simply seeing some short-term momentum. Speculators tend to buy and sell on momentum, while investors tend to accumulate on dips and sell on fundamental changes.  Anyone with a pragmatic view of Washington must realize that real change is unlikely.

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As the 112th Congress begins, father Ron Paul and son Rand Paul make media rounds

January 6th, 2011 12:31 am  |  by  |  Published in Big Government, congress, Debt, Economics, Free Market, government spending, Health Care, Politics, Rand Paul, Ron Paul  |  1

The 112th Congress was sworn in yesterday. As expected John Boehner became the new Speaker of The House. Senator Rand Paul and Congressman Ron Paul made several media appearances together.

First, Ron and Rand appeared together on ABC Morning News with George Stephanopoulos:

Neil Cavuto talks to father and son in a more lighthearted discussion but ultimately they discuss raising the debt ceiling and economics. At one point Ron Paul laughs at the nibbling around the edges and says, “I want to repeal the whole government.” Good old Ron.

And finally both appear on John King USA on CNN:

Blame America or Blame the Government?

January 5th, 2011 12:18 am  |  by  |  Published in Blowback, Commentary, Foreign Policy, Liberty, Robert Higgs, terrorism, War  |  1

The great Robert Higgs makes the best argument yet against the idiotic neo-conservative “blame America” accusation in his latest commentary.

Higgs writes:

In discourse about public affairs, words matter much more than most people appreciate. We live immersed in language so twisted and abused, in part by the design of interested parties and in part by the sloth of inattentive speakers and listeners, that we often fail to notice or object to linguistic miscarriages that pass for intelligent expression. The examples are legion, but here I have in mind a particular turn of phrase that American conservatives, especially neocons, have employed in recent years as a counterstrike against critics of U.S. foreign and defense policy:  They describe such critics as “blaming America” or sometimes as “blaming America first” for attacks against this country or its citizens abroad.

Thus, for example, those who fault U.S. Middle East policies for creating the conditions that caused Muslim fanatics to attack Americans, both at home and overseas, are said to be blaming America for what the policy’s defenders’ take to be the unprovoked acts of terrorists bent on imposing Sharia on the United States, destroying this country’s freedoms, or attaining another such farfetched objective.

Applications to earlier events and policies include use of the expression to fend off the arguments and evidence of those who maintain that the Roosevelt administration waged economic warfare in 1940-41 to provoke a Japanese attack that would justify and lead directly to full-fledged U.S. engagement in World War II; and use of the expression against those who argue that the Truman administration bore at least partial responsibility for the onset of the Cold War. People accused of blaming America are commonly called “America haters.”

Although this riposte to criticism is the rhetorical tactic of first resort for the more simple-minded, flag-waving species of self-anointed patriots, it is by no means their exclusive property. Neocons writing in such elevated outlets as the New York Times and the Washington Post have not been bashful about smearing their critics as people who “blame America.” I noticed this linguistic resort most recently in a commentary by an intelligent, reasonable economist and was shocked that he would embrace this trope while suggesting that “pacifists” and others who criticize U.S. foreign and defense policies are unrealistically imagining that international disputes and warfare can somehow be eliminated from human affairs.

In my view, replying to policy critics by accusing them of “blaming America” is worse than linguistically crude and ideologically twisted; it is stupid.

Read the rest of Higgs at The Independent Institute.

Numismatics Are Fool’s Gold

January 4th, 2011 2:11 pm  |  by  |  Published in Economics, gold, Liberty, Money, Peter Schiff, precious metals  |  3 Responses

by Peter Schiff, CEO of Euro Pacific Precious Metals and author of the hit economic fable How an Economy Grows and Why It Crashes

Last month, I addressed the hype around gold confiscation, and debunked the myth that collectible or numismatic coins would offer effective protection. But there is another sales pitch that many dealers will use while trying to “up sell” you to numismatics. They may argue that on investment merits alone, numismatics are a better bet. While this may be a more rational line of thinking than the typical confiscation con, it is bad advice for investors hoping to protect their assets in an economic slump.


I have long urged investors to keep 5-10% of their portfolios in physical precious metals, and add even more exposure when appropriate through the Perth Mint certificate program and mining stocks. This advice, far outside of the Wall Street mainstream, stems from my view of the kind of crisis we are approaching.

Many people assume that the crash I wrote about in the original “Crash Proof” was the credit crunch of October ’08. They are mistaken. Though I did accurately forecast the economic events of 2008, my ultimate prediction was that these events would set into motion a larger crash to follow. That crash, the one I have been warning about for a decade, is a collapse of the international dollar standard.

This is the crisis for which the smart money is already preparing. The People’s Bank of China, Reserve Bank of India, Goldman Sachs, Barclays Capital, John Paulson, Jim Rogers, and countless other big names are all protecting themselves from a global monetary breakdown by buying gold. But are they doing it with numismatics? Among the big players, the answer is universally no.

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Rand Paul and Ron Paul on Anderson Cooper 360

January 3rd, 2011 11:54 pm  |  by  |  Published in Big Government, Foreign Policy, Politics, Rand Paul, Ron Paul, War  |  Comments Off

Ron Paul and incoming Kentucky Senator Rand Paul sat down with an interview with Anderson Cooper earlier tonight. It was an interesting contrast of styles with a similar message.