It turns out he was not much more than the architect of the housing bubble which contributed greatly to the economic mess we are suffering through right now. He was the maestro of moral hazard.

Greenspan’s successor, along with his partner in the Treasury are traipsing down the same path. Bernanke and Geithner are the Dukes of Moral Hazard. Bernanke is Luke and Geithner is Bo.

While they tinker with the economy (General Lee) they are making life hell for the rest of us. We are a bunch of Rosco P. Coltranes to them.

What is this moral hazard that I speak of?

Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.

So the Dukes continue their bailouts, money printing, and money laundering just to keep the moral hazard government-sponsored Ponzi scheme afloat.

Meanwhile the dollars we are left with purchase less with every passing day. This is how our dearly beloved government can utilize the hidden tax of inflation to raise taxes. And they can do it without major public scorn since most do not understand that inflation is as evil a tax as the income tax.

There are a few things we can do to help people understand. First, make sure you contact your representative and request they cosponsor HR1207 or S604 to audit the Fed. Next, read Ron Paul’s newly released book, “End the Fed“. It will give you a deeper understanding of The Federal Reserve and arm you with persuasive arguments for abolishing it. Paul effectively ties the Fed to the general persistent growth of government and its intrusion in our lives.

With the Fed around there is no such thing as “limited” government. Government is a perpetual growth industry.

Aren’t we tired of this constant heavy hand regulating us into oblivion? It is high time for the people to stand up and regulate the government.

That would be change I could believe in.

One of the key ingredients in attaining some semblance of freedom is to become financially independent. A new book, “5 Steps To Freedom“, by Jeff Nabers and Phoebe Chongchua supplies us with some extremely effective tools to escape financial slavery. Take elements of Tom Wood’s “Meltdown“, Ron Paul’s “Manifesto“, and Peter Schiff’s “Crash Proof” all rolled into one and you come very close to describing “5 Steps To Freedom”.

The five high level steps are:

1. Measure
2. Move
3. Maintain
4. Multiply
5. Mention

The first portion of the book is an education on topics such as:

• How to evaluate your wealth by creating your own currency without using the fluctuating values of federal reserve notes as your only measure.
• Knowing what inflation is and how it affects your wealth.
• Why investing in precious metals like gold is a great way to help protect your existing wealth.
• How the government manipulates economic statistics to make us believe we are more prosperous than we really are.
• And much more.

The final part of the book gives us several case studies that demonstrate how we should think about investments. This portion is extremely useful because it shows how seemingly good investment ideas can end up being much more risky than you think. It’s an effective method to teach an investment mindset geared toward income rather than speculation-a running theme in the book.

The principles of freedom are apparent throughout the book. It becomes obvious, even before he is mentioned several times, that the authors are huge fans of Ron Paul. The book can be thought of as a no-nonsense guide to investing for libertarians and freedom-seeking individuals of all flavors.

The only negative regarding the book is that I found the transition between the first part and the case studies to be a bit like an infomercial, but once the case studies started that quickly disappeared. Jeff Nabers promotes the Solo 401K in the book, but he does so mostly by example and never tries to force it upon the reader. It is offered as a tool for those looking for an alternative, freedom-oriented investment direction.

The philosophy of liberty is an ongoing theme and applying that to investment decisions makes this book indispensable in today’s freedom-eroding world. I recommend it highly.

Purchase “5 Steps To Freedom” and be sure to visit the accompanying web site: 5StepsToFreedomBook.com for more information.  Your financial net worth will thank you later.

by Jake Towne, the Champion of the Constitution

Originally published Saturday, July 25, 2009 at http://www.nolanchart.com/article6666.html

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.

With patience, Gnazzo carefully explains the legal differences between currency, bills of credit, lawful money (still coins of gold and silver per the Constitution to this very day), and the public debt. He relates how Hamilton as Secretary of the Treasury, deliberately confused the bills of credit and public debt with lawful money, a distinction that should never have been made.

The key points he lists to remember when dealing with the national debt are:

• Federal Reserve Notes (bills of credit) circulate as currency by “fiat,” or decree
• Federal Reserve Notes are secured by U.S. Treasury Bonds (also bills of credit)
• Federal Reserve Notes “pay off” U.S. T-Bond principle & interest

His accurate conclusion? It is “all one big circular game of musical chairs.” Gnazzo is also quite the philosopher, and just one of the many insights I took from his book was the subject of this article “What is Wealth?”

Honest Money is available here in both PDF and audio book formats. I don’t wish to delve too deeply into the book, but I will say I have read a lot of literature on monetary systems over the past year, from Adam Smith’s Wealth of Nations, Thomas Paine, the 1894 Coin’s Financial School from the silver Populist movement, to plenty of more modern authors like Rothbard’s critical works, Cleon Skousen, Milton Friedman, Antal Fekete, the Bill Bonner crew, Ferdinand Lips and Gary North. Gnazzo’s books tops them all for its combination of quality of research, intensity, and brevity. If I had to pick a single, medium-length 200-page book for the willing student of honest money to read/listen to, this would be the one. The prologue to the book can be read for free here.

The next installment of my Money Matrix series will attempt to synthesize learnings from Gnazzo’s book with Mises’ Human Action and current events in the US Treasury market.  For me, the implications derived from my studies have been profound.

P.S. What about a 50 pager version, you ask? Free download from Rothbard here. Please note I have made no financial gains (nor stand to make any!) from this book review.

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Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available.  A novel campaign website built by Raging Debate, TowneForCongress.com has recently opened. [Reach the Author Here!]

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (7/2/2009)

by Jake Towne, the Champion of the Constitution

Originally published on Thursday, July 9, 2009 at http://www.nolanchart.com/article6610.html

Yesterday I was unpacking my books from China, a chore that took a few hours. I came upon a wonderfully illustrated, hardbound edition of Henry Wadsworth Longfellow’s “The Wreck of the Hesperus.” Unable to resist, I sat down and cracked it open – the copy is about 70 years old.  (photo1 photo2)

For a little background, Longfellow was a New Englander who lived seaside for much of his life from 1807-1882. Many of his poems have a rhythmic cadence, and he is also very well known for the poem “Paul Revere’s Ride.” Here is “The Wreck of the Hesperus:”

It was the schooner Hesperus,
That sailed the wintery sea;
And the skipper had taken his little daughter,
To bear him company.

Blue were her eyes as the fairy flax,
Her cheeks like the dawn of day,
And her bosom white as the hawthorn buds,
That ope in the month of May.

The Skipper he stood beside the helm,
His pipe was in his mouth,
And he watched how the veering flaw did blow
The smoke now West, now South.

Then up and spake an old Sailor,
Had sailed the Spanish Main,
“I pray thee, put into yonder port,
for I fear a hurricane.

“Last night the moon had a golden ring,
And to-night no moon we see!”
The skipper, he blew whiff from his pipe,
And a scornful laugh laughed he.

Colder and louder blew the wind,
A gale from the Northeast,
The snow fell hissing in the brine,
And the billows frothed like yeast.

Down came the storm, and smote amain
The vessel in its strength;
She shuddered and paused, like a frighted steed,
Then leaped her cable’s length.

“Come hither! come hither! my little daughter,
And do not tremble so;
For I can weather the roughest gale
That ever wind did blow.”

He wrapped her warm in his seaman’s coat
Against the stinging blast;
He cut a rope from a broken spar,
And bound her to the mast.

“O father! I hear the church bells ring,
Oh, say, what may it be?”
“Tis a fog-bell on a rock bound coast!” –
And he steered for the open sea.

“O father! I hear the sound of guns;
Oh, say, what may it be?”
Some ship in distress, that cannot live
In such an angry sea!”

“O father! I see a gleaming light.
Oh say, what may it be?”
But the father answered never a word,
A frozen corpse was he.

Lashed to the helm, all stiff and stark,
With his face turned to the skies,
The lantern gleamed through the gleaming snow
On his fixed and glassy eyes.

Then the maiden clasped her hands and prayed
That saved she might be;
And she thought of Christ, who stilled the wave,
On the Lake of Galilee.

And fast through the midnight dark and drear,
Through the whistling sleet and snow,
Like a sheeted ghost, the vessel swept
Tow’rds the reef of Norman’s Woe.

And ever the fitful gusts between
A sound came from the land;
It was the sound of the trampling surf,
On the rocks and hard sea-sand.

The breakers were right beneath her bows,
She drifted a dreary wreck,
And a whooping billow swept the crew
Like icicles from her deck.

She struck where the white and fleecy waves
Looked soft as carded wool,
But the cruel rocks, they gored her side
Like the horns of an angry bull.

Her rattling shrouds, all sheathed in ice,
With the masts went by the board;
Like a vessel of glass, she stove and sank,
Ho! ho! the breakers roared!

At daybreak, on the bleak sea-beach,
A fisherman stood aghast,
To see the form of a maiden fair,
Lashed close to a drifting mast.

The salt sea was frozen on her breast,
The salt tears in her eyes;
And he saw her hair, like the brown sea-weed,
On the billows fall and rise.

Such was the wreck of the Hesperus,
In the midnight and the snow!
Christ save us all from a death like this,
On the reef of Norman’s Woe!

In the past, the poem just brought thoughts of pity for the poor maiden and her headstrong father. This time though, an allegory struck me.

The Father/Skipper is the world’s central bankers and governments who have fastened us, say Lady Liberty or the maiden, to the mast using the bonds of fiat money. We too, may have little warning before the time arrives when we realize that the central bankers are powerless and frozen dead at the wheel.

For the time being, the charade made by the Money Masters is still in place, but the storm still rages on. Meanwhile they lie, saying that we are in deflation of -2%, when the truth is prices are inflating at a +6% rate. They say unemployment is 10%, or 9.6% like it’s some kind of going-out-of-business sale, when the truth is it’s at depression levels of 21%.

Of course their prime fear is a psychological realization of these facts by the population at large. Some have even told me that my writing is a disservice, as if the charade could be maintained forever.

The fact remains, it cannot. The US banking system is horribly insolvent. The $592 Trillion USD in notional derivatives contracts still hangs like the sword of Damocles above us. The prolonging of mass unemployment is, in a major fashion, due to government propping up the financial sector and housing bubble which should have – admittedly rather violently due to the machinations of the FED – collapsed back in 2007. However, a recovery would then have been rather swift, and the bankrupted firms quickly bought up by stronger hands. Instead the malaise spread to all other sectors of the economy.

In their desperation, the central bankers and world governments may turn to desperate delay tactics. At the G8 meeting this week, the Associated Press reports a group called United Future World Currency bribed [my terminology] world leaders with a gift commissioned by Italian Prime Minister Silvio Berlusconi, 10 handmade books bound with silk and gold thread with a marble bas-relief for the covers. The group also included 10 coins made of gold, valued at about $4,000 each for each of the world leaders. Members of the group, per its website include Belgian central banker Luc Luycx and Italian central banker Guido Crapanzano.

It is extremely ironic that the gifts were made of true money, gold, and a lot of lip service is given to gold but the plans for the people would simply be the usual fiat, fractionally-reserved FRAUDULENT currency. See the design here, and logos here. Their website states that they are also seeking to destroy the anonymity of money, and make it completely traceable and have funded studies to “to study the potential for a new coin with a high level of protection against counterfeits. In short, an ‘intelligent coin’ that can communicate with mobile phones, give and receive inputs and be recognized as fake or authentic.” Privacy advocates, including myself, will be screaming bloody murder.

Perhaps the most laughable section of United Future World Currency’s website is the skewed version of monetary history written by Silvana Balbi de Caro. Ironically, the history still gives lip service and acknowledges that gold and silver have been money throughout all of human history. It even alludes to the uncontested fact that when the gold and silver coins are debased with base metals, it always coincides with the collapse of major empires. However, it skips the last 70 years of fiat monetary rule completely, and omits any admission of John Law, the Song dynasty’s disastrous experiments with paper money, the closing of the gold window by Nixon, hyperinflations due to paper currencies like Weimar in the 1920s, Argentina in the 1990s, and Zimbabwe today. It’s stupid conclusion:

“Yet global market mechanisms are knocking at the door: the boundaries that divide us today will seem too narrow for tomorrow’s generation. Old national currencies will seem a relic from the past. And the utopia of a universal currency will become reality.“

Always be wary when people speak of “utopia.” It would be a utopia for central bankers – a new money worldwide that they can inflate as evenly as they so please. However this misses a key fact.

Consumers, not central bankers, are the true sovereigns of market economies. The marketplace should choose the currency, and people should be free to use whatever they so wish as money. In our United States, gold and silver coins are the only forms of lawful money the government is allowed to issue, yet we trade worthless scraps of linen embedded with cyanide, arsenic and mercury, bills of credit known as Federal Reserve Notes, as if they were money when the reality is that FRNs are merely ghosts and shadows of true money.

The fact remains that there is only one surefire way of escaping the Hesperus before it wrecks. The bonds strapping you down can be cut with a blade forged of physical gold and silver. View buying a little physical gold and silver as calamity insurance because our trusty Skippers remain adamant to keep at sea as the perfect storm continues to rage.

For the Republic!

Jake Towne, the Champion of the Constitution

Special thanks to AH for the tip on United Future World Currency.

Jake Towne is running for U.S. Congress in Pennsylvania’s 15th District in the 2010 election as a citizen unaffiliated with any political parties.  Jake also writes at www.LibertyMaven.com and www.CampaignForLiberty.com.  A master campaign presentation for internet viewing is available. [Reach the Author Here!]

An interim campaign website is here while a dot com is being setup, due for release on July 15, 2009.

P.S. – The “Towne for Congress” Youtube Channel has just opened, you can view me give a speech on “Regaining Our Individual Rights” at the local July 3rd Tea Party rally here.  Text is here

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Summary of Articles and Bibliography for Jake Towne, the Champion of the Constitution (7/2/2009)

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This is not your usual Ron Paul video. He seems a bit uncomfortable being the one expected to initiate the questions, but as the discussion moves along he becomes more comfortable (or maybe it’s me that feels uncomfortable with Ron Paul in this role).

There were some fascinating moments. The discussion regarding Thomas Jefferson and how his presidency did not quite match his rhetoric was one of these moments. The discussion of Herbert Hoover and Woodrow Wilson are others. During the discussion we also find out which U.S. President Ron Paul thinks was the worst in history.

The full interview is embedded below. It is almost 60 minutes long. If you have problems with the video below you can watch it directly on youtube. There are some audio/video sync problems in part 5 (FYI).

The dollar truly is an illusion and gold is real money. Mayer’s book hammers this home in a profound way. One of the great things about the book is that it covers the fundamentals and history of money as we know it. If you ever wondered how the idea of fractional reserve banking came about then you should read this book. If you want an answer to the question, “What is money?”, then this book is for you.

Mayer utilizes several quotes from economists past and present to reinforce his points. He invokes the likes of Ron Paul, Lew Rockwell, Ludwig Von Mises, Alan Greenspan, and many others.

“The Great Credit Contraction” is a quick, educational, and enjoyable read and I highly recommend it.

I would venture to say that the book is the modern day equivalent of “Economics in One Lesson” by Henry Hazlit. While some of “Meltdown” is devoted to our current situation it is also filled with lessons in Austrian economic theory.  But it is not written for economists, it is written for you and me.

If you want to understand how we entered economic “bust” territory  it is easy to cast blame on the Federal Reserve and leave it at that. Woods does so in the book of course, but he goes farther. He refutes most, if not all, of the arguments commonly put forth against bringing back a gold or commodity standard. He successfully argues that abandoning hard money was a fundamental tectonic shift leading to the economic earthquake we are living through today.

One of the most convincing arguments (based on statistical reality) for a commodity monetary system in the book is written:

“But when Americans had a legitimate commodity standard, they had a money that held its value. In fact, it actually gained in value. An item that cost $100 in 1820 would have cost only $63.02 in 1913.” – Tom Woods

Deflation is also tackled in the guide. Woods argues that deflation is not the devil. In fact, he demonstrates that there is such a thing as “growth deflation”. Much of the book is of the “forget what you think you know” variety. Like John Stossel and Penn Jillette, Woods is a myth buster and bullshit detector. He just happens to focus on economic fallacies rather than the broad topics covered by Stossel and Jillette.

In addition to cited statistics, quotes, and facts, also lending credence to his arguments is that he casts blame not just on the Democrats for laws like the Community Reinvestment Act, but also on the big spending Republicans. There is certainly a lot of blame to go around these days, but Woods emphasizes that the real blame should be placed at the Federal Reserve’s doorsteps.

Once the Fed was born the free market in America died. It is the Fed’s job to regulate. The second you introduce regulation into the market, the free market is no longer free. Every economic decision or action from that point on becomes influenced in some way by the Federal Reserve. As Ron Paul argues with HR-1207, if we want to regulate something the target should be the Fed rather than private businesses and banks.

Tom Woods has written the perfect economic travel guide arriving on bookshelves at just the right time. This is required reading for everyone in America, so you better get started.

To understand why the bailouts and stimulus packages will not work, read it. To understand the real reason the Great Depression ended, read it. To understand economics without being an economist, read it.

This wasn’t intended to be a book review of Woods’ latest book. Look for that soon. Until then watch Tom Woods deliver another excellent speech at the Liberty Forum during CPAC 2009 below. It is in two parts. Yes, the lighting is horrid, but it is the words that count.

The book’s author David Post weaves the history of America as seen through Thomas Jefferson’s eyes tightly around the history, growth, and governance of the Internet. And what about this moose?

As David Post explains here:

I stumbled upon the story (in Daniel Boorstin’s wonderful The Lost World of Thomas Jefferson, if I recall correctly): In 1787, Jefferson had the complete skeleton and carcass (with antlers) of an American moose, 7 feet tall at the shoulders, shipped to him in Paris (where he was serving as the American Minister to the court of Louis XVI), re-assembled, and installed in the entrance hall of his residence.

Post brings together these seemingly disparate topics and does so masterfully. Jefferson is quoted within the prose to make the story more seamless. Post uses italics to denote when it is Jefferson doing the story telling. It is quite an effective technique.

Read this book. You will learn things about both Jefferson and the Internet that you didn’t know before. Post gleefully twists you toward appreciating Jefferson’s decentralized governance philosophy and happily applying it to the Internet and World Wide Web. The idea being that the very reason the ‘Net expanded so rapidly was due to a Jeffersonian and quite libertarian approach to its rules.

Perhaps we should use the Internet’s growth (and Jefferson’s decentralized philosophy) as a blueprint for rescuing our failing economy? Haven’t the Hamiltonians had enough chances to prove that they have failed?

My favorite chapter in the book compared Hamilton’s centralized power advocacy with Jefferson’s decentralized ideas. It amounts to a Cliff’s Notes version of the polar opposite ground these two great American Founders tread upon.

“What government a nation can bear depends on the condition of the general mind; if a nation expects to be ignorant and free, it expects what never was and never will be.” – Thomas Jefferson

The quote above sums up the Jeffersonian ideal pertaining to freedom and seeking knowledge. What about the knowledge that is deemed intellectual property?

Post explains that Jefferson was one of the few Founders who wrote on the subject of intellectual property and it was a truly difficult issue then as it is today.

“The perfect Jeffersonian world, then, is one that has as much protection for speech as it can have, but only as much protection for intellectual property as it needs.” – David Post

I must admit that the IP chapters in the book confused me only because it was not immediately clear what side Jefferson was taking and where the author stood on the topic. The quote above clarifies both, but comes toward the end of the IP discussion.

In the end, “In Search of Jefferson’s Moose: Notes on the State of Cyberspace” is a thoroughly educational and enjoyable book for anyone interested in the future of the Internet and the history of America.

You can catch the author, David Post, at a CATO Sponsored Book Forum on Wednesday, February 4th at Noon (EST). It will be broadcast live online. Check it out here.

Also check out Post’s own web site about the book here at JeffersonsMoose.org.

There are no better words written to help ground some of the high flying words being spouted on CNN and other media outlets over our next President Barack Obama than Gene Healy’s “The Cult of the Presidency: America’s Dangerous Devotion to Executive Power“.

I’m glad I read this book earlier this year. How glorious it would be to be handing it out to all of the Obama revelers today in DC. Since there are 2 million of them though this is an impossible task.

Instead, why not buy it for your favorite Obama dreamer today.

Of course, the critics will say that we spammed the reviews on Amazon. “Spam” may not be the correct word though. It is more the online “know how” that represented much of Ron Paul’s 2008 grassroots presidential campaign. The critics like most are merely envious.

I hope Ron Paul makes a single resolution to bring in the new year. I hope he resolves to run again in 2012 if the political climate suggests it. By then we may be begging for a President like Ron Paul.

That being said, I’ll likely be begging regardless of the political climate.

Yet the masses are moved into worshipping these men because they sought out the position of “leader of the free world.” The truth is the job of American President in this modern age is doomed no matter who sits on the Oval Office throne. One of the best books I’ve read in a long time, “The Cult of the Presidency: America’s Dangerous Devotion to Executive Power“, explores the slow development of the presidency from its humble beginnings to its godlike stature today.

The reality is that the more we expect from our President the less he is capable of delivering. This is especially true during economically calamitous times such as these. The book is a timeline of the American presidency put through the limited government microscope of author Gene Healy (CATO Institute). He celebrates the “boring” presidents like Harding and Coolidge. He hammers on the generally more popular and active presidents like Teddy Roosevelt, Woodrow Wilson, and FDR.

The book will force you to realize that our current outgoing President is not so awful on civil liberties when compared to the likes of Wilson, FDR, and even John F. Kennedy. Healy also argues that the modern machinations of the White House itself are enough to transform the president into a completely different person.

“…the environment that the modern president enters into upon assuming office virtually ensures that even a conscientious, psychologically healthy person will become increasingly disconnected from reality. The demands of the job and the conditions of White House life warp personality, distort judgment, and encourage dysfunctional behavior.”

Unfortunately, this same description can now be applied to the blind Obama believers. Didn’t you hear? Obama is going to bring health care to every American while “fixing” the economy! He’s going to eliminate racism! He’s going to bring Osama Bin Laden to justice! He’s going to lower taxes for 95% of us. He’s going to cut spending! We’ll see.

Healy’s wonderful book will make you think about our president in a new way. It should be sitting on the desk in the Oval Office for when the new president arrives. It should be required reading for every American.