Yesterday I was fortunate enough to be invited for a live interview on Russia Today, or RTAmerica.  The show aired only in metropolitan areas like NYC and Washington, DC and was shown internationally as well.  The interviewing was done remotely, so this was the first time to hear questions coming in my ear and then responding by looking into a camera, and believe me interviewing live is quite different from private conversations.

Please see the clip below, the fact that their color is green and today is St. Patty’s Day is, I am sure, purely a coincidence. The Open Office plank is here, my full stance on the Afghanistan War here, and the Iraq War here.

At Monday’s Towne Hall, a bunch of the attendees had just heard of the campaign via the front page article in the Morning Call, which was published that day.  Several commented that after meeting me, they were no longer convinced my views were “all over the map” as written in the article, particularly after reviewing my stances on the wars (above) and my income tax plank where I highlighted that not only is this tax immoral, it is also UNNECESSARY.

The mouthpiece for the incumbent Republocrat stated: “It is such a mish-mash of political philosophies, it is hard to say.  I can’t tell if he’s conservative or liberal.”

Now, I do agree that many of my positions are difficult to understand at first until one has a grasp of the facts, and the current political spectrum does not contain my views as I view the collective actions of Republocrats as TYRANNY and my stance is simply “for liberty.” For instance, understanding the facts on military spending and bases as outlined in “Guns or Health Care?” is key to understand before examining the current endless, nation-building wars aboard.

As I wrote in “An Hypocrisy of Terms: Liberal and Conservative,” Americans tend to be divided by hypocritical terms like “conservative” and “liberal.”  These terms are adjectives misused as nouns.  For instance RTAmerica, which, believe me, thoroughly researched my positions, originally called my interview with them as “Liberals make noise at the polls.”  Many apply these words as nouns to themselves, instead of using them properly as adjectives:

Conservative is derived from the Latin “conservare” – to keep, to guard, to observe, to maintain the status quo.  Perhaps where I am the most “conservative” is towards the resurrection of the rule of law and the Constitution.  Most modern-day “conservative” politicians spit upon the Constitution by their words and deeds.

Liberal is an adjective that means to favor change from the status quo.  I suppose my platform is quite “liberal” in this respect as I believe the Republocrat status quo is ruining our country and instead offer solutions.

I am very careful to not identify myself as either term, nor do I identify myself as “libertarian” which has yet another host of interpretations.  This has been a good thing for my campaign, as if you identify yourself in a conversation as a “liberal” to a “conservative” – or vice versa – the most likely result is a shouting match.  The amazing result if these silly labels are not used is often a respectful conversation with learning on both sides.

A short video entitled “The Philosophy of Liberty” was first used by the campaign last July to highlight my political philosophy, which is not a “mish-mash” by any stretch of the imagination.

Since I started writing in 2008, I’ve always simply said that I am “for liberty,” and against tyranny.   I ended my first recorded public speech with the following words:

“America was conceived in liberty, and I will not let our Republic fall to the cowards who defile her without a bitter fight. These cowards will do whatever they can to remain in power, to control us by debasing our money and throwing away our liberties as if they were garbage. Our Republic was not established by cowards, and cowards have no chance of preserving it!

Their favorite strategy is “Divide-and-Conquer.” They will prey upon our differences in Race, Skin Color, Gender, and religious creeds in attempts to turn us upon ourselves. They will try to set our Citizens Senior against our country’s young people. They will try to set the Rich, the Poor, and the Middle Class at each other’s throats for this is the ONLY way they can stay in power.

We must act together, we must recognize that we are all Americans, we are all on the SAME SIDE. As our founders signed the Declaration of Independence, Ben Franklin said, “We must, indeed, all hang together, or most assuredly we will all hang separately.”

The Republocrat Establishment must use tools to divide us since this is the only way to maintain their power over us all.  My message today is to stress that not only should our skin color not divide us, but neither should labels like progressive, liberal or conservative.

We are all Americans.  Happy St. Patty’s Day!!

In liberty,

Jake Towne

For one thing, there’s a 1998 Supreme Court ruling that says each chamber of Congress must approve the exact same wording of a bill before that bill can become law.

You wouldn’t think Congress would need a court ruling to determine this, but they are politicians, so they need lots of remedial assistance with simple logic.

We really don’t think this pig can fly. If the Democrats try to launch it, the courts will sink it. And a differently constituted Congress may also repeal it after the November election. But you never know, so we need to keep pressuring Congress to drop this bill. Please write them another letter. Remember . . .

These people work for you. They also have the power of coercion over you. You have the right to tell them what you think, as often as you want, day after day, or even several times a day. Use this right.

Every letter you send gets counted and reported up the chain of command. And some of these letters will be read by the top staff in each Congressional office. Even President Obama reads 10 letters per day. So your letters DO count. They do matter. Keep sending them. Specifically, today . . .

1. If your House Rep is a Democrat, and you haven’t called this week to tell him or her to oppose the healthcare bill, please do so today.
2. If you haven’t yet asked a friend to use our system to send Congress a letter, please do so today. You can forward them this message.
3. Send another letter of your own.

You can borrow from the following sample letter, or copy all of it . . .

This letter is mainly for my House Rep, but I’m also copying my Senators to remind them of how angry I am about this issue. Please be aware that I know how Congress has rigged the rules to hide 60% of the cost of the healthcare bill.

When President Clinton tried to pass similar legislation his budget had to show the cost of the mandates he wanted to impose on the American people. This was one of the things that caused that bill to fail. But now . . .

You politicians have changed the rules so that the Congressional Budget Office no longer has to include the costs of these mandates in its scores. This is a willful attempt to deceive the American people.

This CBO memo is the smoking gun: https://www.cbo.gov/ftpdocs/107xx/doc10731/MLR_and_budgetary_treatment.pdf

Michael Cannon, of the Cato Institute, provides a good summary here: http://www.cato-at-liberty.org/2009/12/16/bland-cbo-memo-or-smoking-gun/

Please remember, everything you do is based on coercion. If I do not submit to your dictates eventually some government official will show up at my door and point a gun at me. This healthcare bill is no different. Please stop trying to force me to do things your way. Please stop threatening to point guns at me. Please mind your own business. Please obey the limits imposed on you by the Constitution. You can start by defeating this healthcare bill.

END LETTER

You can send your letter using DownsizeDC.org’s Educate the Powerful System. https://secure.downsizedc.org/etp/campaigns/114

When you do so you’ll see your House Rep’s number, so you can follow up with a phone call.

Please also get friends to send letters opposing this bill. Time is short.

Thank you for your support, and please also consider making a contribution to expand our reach. https://secure.downsizedc.org/contribute/

Jim Babka
President
DownsizeDC.org, Inc.

D o w n s i z e r – D i s p a t c h

Official email newsletter of DownsizeDC.org, Inc. & Downsize DC Foundation.

Rand Paul is everything the Tea Partiers wanted in Scott Brown and more. He is their Reagan fantasy becoming reality. Only they don’t appear to completely realize it yet. Sarah Palin’s endorsement was huge, but the jury is still out on whether Palin is more than just a conservative “Barbie” to Scott Brown’s “Ken”.

Dropping the campaign sweat from Rand Paul’s brow on truly limited government litmus paper reveals two names that would make almost every conservative smile: Goldwater and Reagan. These two icons are at the very root of Rand Paul’s philosophy of governance.

Philosophy is nice for those of us that immerse ourselves in the issues on a daily basis, but it’s not very appealing to the large majority that catch a whiff of it on the news while stepping through the routine of their lives. To be successful politically, as much as I hate to admit it, requires more than just being right on the issues. So much more.

In today’s media-centric world it requires an attractive appearance, charm, charisma, no skeletons, and a beautiful family and articulate wife doesn’t hurt either. Rand Paul has all of these things plus he’s right on the philosophy.

Proof came recently when Rand’s wife Kelley delivered a speech on behalf of her husband to a county GOP woman’s group in Owensboro, Kentucky. She details some of her husband’s history including a story about Rand Paul attending the 1976 Republican convention with his father, Ron Paul. The younger Paul witnessed his father be one of only 4 Republicans to stand up and support Reagan against the incumbent Ford at the time.

I highly recommend you take some time and watch Kelley Paul speak in the video below (2 parts). When you are finished head over to WinRandWin.com and pledge to participate in the March 23rd money bomb. He needs help to fend off the barrage of attacks that have already started from his GOP primary opponent Trey Grayson.

I get concerned when I hear that Rand is dedicated to being a citizen legislator and that he’s not embarking on this political journey as a stepping stone to higher office. I suppose that can change like it does for many of our elected officials (including his father). I worry about this because I see potential in Rand Paul that goes beyond the title of Senator right on to the title of President.

The final quote from Rand’s brother Robert, in a recent Houston Chronicle article does provide some hope.

Rand, he said, is a good messenger for the second generation of the Paul revolution: “I think my dad has always wanted someone to take the message forward.”

And how sweet that Tea Party-Goldwater-Reagan-Paul message is. Watch Kelley Paul below.

www.youtube.com/watch?v=2F4929D571632797

This bill will . . .

* control your ability to use vitamins,
* for the benefit of the major sports leagues

The following welfare queens endorsed McCain’s bill within hours of its introduction . . .

* The National Football League
* The National Basketball Association
* Major League Baseball
* National Hockey League
* The NCAA
* The Professional Golf Association
* The U.S. Olympic Committee

Nearly all of these entities receive tax funding to build the stadiums they play in. Now they want to make your supplements more expensive so that none of their rich athletes will accidentally ingest anything banned by league rules. But you can take action to kill this bill.

It’s crucial to understand that most vitamins and supplements aren’t drugs. Your food that grows in the ground, or on the hoof, is full of these substances. That’s one reason why previous government attempts to label these nutritional supplements as drugs, and regulate them, have met with fierce public opposition. Indeed . . .

Prior to the Internet, one such government power grab generated what may have been the biggest barrage of letters to Congress in American history. That power grab failed, because public pressure works!

Instead of regulating supplements Congress passed the Dietary Supplement Health and Education Act of 1994 DSHEA).

That law states that most nutritional substances do not require FDA pre-approval before going to market, and cannot be re-classified as drugs.

Now, John McCain seeks to repeal key provisions of the DSHEA. Yet in his remarks introducing S.3002  . . .

* he provides no evidence that the relatively free-market approach of the DHSEA has failed
* he cites no evidence that dietary supplements, consumed by 150 million Americans, are unsafe or a threat to public health

And the DSSA is completely unnecessary to address the (minor) steroid problem. In fact, the problems McCain does cite were already addressed by current law, which has not been competently enforced by the FDA!

* the FDA already has authority to ban any substance containing anabolic steroids
* and products are already required to list all their ingredients

To make matters worse, “. . . the bill reverses “common law, which assumes all is legal unless restricted. DSSA would allow only what is permitted to be legal.”

The DSSA is nothing but regulatory “corporate welfare” for major sports leagues (and multi-national drug companies). It will put the FDA in the business of helping the NFL, Major League Baseball, etc. enforce their substance policies — at your expense.

This bill will deny you freedom of choice, place expensive burdens on small enterprises, and do nothing to protect your health. It will actually make you less healthy, by causing nutritional substances to be less available and more expensive.

Please use these talking points to tell your Representative and your two Senators to oppose S. 3002, John McCain’s Dietary Supplement Safety Act.

And if you’re excited about DownsizeDC.org’s work, please do one or both of the following:

1) Start a monthly pledge or make a one-time donation.
2) Commit to sharing this campaign with ten other people who would be interested in this issue.

Both methods will help grow the Downsize DC Army,

Jim Babka
President
DownsizeDC.org, Inc.

D o w n s i z e r – D i s p a t c h

Official email newsletter of DownsizeDC.org, Inc. & Downsize DC Foundation.

by Peter Schiff, president of Euro Pacific Capital and author of Crash Proof 2.0: How to Profit from the Economic Collapse

By late 2009, as the U.S. dollar flirted with multi-year lows against most foreign currencies, big investment players crowded into trades that shorted the greenback. Commentators noted that the anti-dollar momentum had taken on a life of its own and that the trade had become too crowded.  It is true that markets have a nasty tendency to move against the crowd.  When a lot of traders agree on a particular trade, it’s more likely that in the short-run the opposite trade will be a winner.

The 2008 “flight to safety” rally of the U.S. dollar was a once in a lifetime event that presented huge opportunities for aggressive currency traders. By December 2008, after rallying 25% over the previous five months, the dollar topped out. However, there were many speculators who had come somewhat late to the party, as well as many others who had ridden the dollar up and were thus sitting on huge unrealized gains.

Those technical reasons, combined with the re-emergence of strong growth in emerging markets and solid earnings from overseas companies, redirected investment flows away from the dollar. 2009 became a year of dollar weakness, with the buck giving back nearly all of its gains. At that point, most people made the reasonable conclusion that the decline would continue.

As is often the case, an unforeseen event came along that made mincemeat out of the consensus’ well-conceived strategy. Once some fiscal squabbling grabbed headlines in the eurozone, the negative sentiment that had built up on the dollar was suddenly diverted to the euro. Catalyzed by the Greek debt crisis, the greenback surged by about 8% in six weeks.

From a technical standpoint, the short dollar trade of late 2009 was too crowded; but from a fundamental standpoint, I don’t think it was crowded enough. As with stocks, there can be no long-term substitute to examining a government’s fundamentals to determine its currency’s worth. Based on the fundamentals, far too many investors remain far too confident about the greenback’s underlying viability.

In fact, I do not think I have ever seen so rapid a change in sentiment in my career. The crowd had completely switched sides, with most now betting on the demise of the euro rather than the dollar.  This is looking like July 2008 all over again, with the dollar poised to put in over-sized gains. It also presents a good opportunity for those who keep their heads.

In my opinion, the market is now perfectly positioned for a massive dollar sell-off. The fundamentals for the dollar in 2010 are so much worse than they were in 2008 that it is hard to imagine a reason for people to keep buying once a modicum of political and monetary stability can be restored in Europe. In fact, the euro has recently stabilized.

My gut is that the dollar sell-off will be sharp and swift. Once the dollar decisively breaks below last year’s lows, many of the traders who jumped ship in the recent rally will look to re-establish their positions. This will accelerate the dollar’s descent and refocus everyone’s attention back on the financial train-wreck unfolding in the United States.

Any doubts about the future of the U.S. dollar should be laid to rest by today’s announcement that San Francisco Federal Reserve President Janet Yellen has been nominated to be Vice Chair of the Fed’s Board of Governors, and thereby a voter on the interest rate-setting, seven-member Open Markets Committee. Ms. Yellen has earned a reputation for being one of the biggest inflation doves among the Fed’s top players.

Looking for an ally to paper over the administration’s gaping fiscal holes, it is not surprising that president Obama made this selection. Yellen has consistently downplayed the dangers of inflation and has made statements that indicate she views the Fed as an extension of the Labor Department, rather than a guardian of our currency. Last month, in discussing what she saw as the Fed’s obligation to promote employment, she said, “If it were possible to take interest rates into negative territory, I would be voting for that.” She may very well make Chairman Bernanke look like a tightwad by comparison.

It is anyone’s guess which sparks will be responsible for igniting the falling dollar powder keg. From a trader’s perspective, a sharp reversal in the dollar will catch many investors completely off guard. Those who stepped off the short-dollar train will be stuck on the platform as it speeds away. Those who refused to give up their seats are in for a hell of a ride.

This is uncomfortable territory for those of us who are used to being the underdogs. Rand Paul has the best chance of any liberty candidate at winning, but a 15% lead does not mean victory is assured.

The great sports teams don’t sit on a lead, they attack until the game is over.  Rand Paul, thus far, has run an excellent campaign and he has a lead according to the polls, but the game is not over.There are still many undecided voters (19% according to the poll) and once they decide, Paul needs them to decide to vote for him.

His lead makes him a target in every one of his opponent’s eyes. Their campaign strategists are sitting around a table right now trying to figure out ways to rip him apart and cut into his lead. They may not be great on the issues, but they are good on the politics, and sometimes that’s all that matters.

Money is required to beat the political strategists at their own game. It has reached the point where everyone and their brother (or son) has a money bomb. Imitation is flattering, but there’s a real sense of money bomb fatigue out there. We can’t let this fatigue be a roadblock. This is especially true in Rand Paul’s case. He’s the outsider running against a candidate the DC machine is supporting. His campaign fund intake has slowed and his opponent has caught up in the funds race.

The next Rand Paul money bomb is scheduled for March 23rd. These money bombs are usually centered around a theme or some anniversary of some liberty-linked event. This one is no different, but that doesn’t matter. What matters is doing everything we can to help Rand Paul win his race to add a true voice for liberty and limited government in the U.S. Senate.

So this “rah rah” article is my unabashed effort to help the March 23rd money bomb be a success. I hope you will join me in this endeavor. Please pledge at WinRandWin.com and donate at RandPaul2010.com on March 23rd.

Do it because Rand Paul has “it”, but hasn’t won anything yet. Back in the day eternal vigilance may have been the sole price of liberty, but these days it also costs money. It’s time to help Rand Paul win the game.

This foolish move may cost the Democrats their majority control of Congress, but it will also be hazardous to your health, if they get away with it. Here’s the key to stopping them . . .

Obama and Pelosi lack the votes they need in the House for their reconciliation scheme to work. Very few House Democrats are as suicidal as the President and the Speaker. We must keep it that way by maintaining the pressure.

We know you must be tired of this issue, but you must not relent. Temporary fatigue can lead to a permanent bad outcome. Please send Congress another letter using our quick and easy Educate the Powerful system.

Just cut and paste the following simple letter . . .

I object to the use of reconciliation to pass the healthcare bill. This bill is so hated by so many Americans, and will have such serious negative consequences, that a super-majority should actually be required in BOTH chambers, not just the Senate.

END LETTER

You can send your letter here.

Please follow-up with a phone call if your House Rep. is a Democrat. Our system will give you the phone number you need when you send your letter. You don’t need to say much. In fact, you can just read them the same words as in the sample letter above.

Please forward this message to others and ask them to also take action.

Thanks for your support.

Jim Babka
President
DownsizeDC.org, Inc.

D o w n s i z e r – D i s p a t c h

Official email newsletter of DownsizeDC.org, Inc. & Downsize DC Foundation.

by John Browne – Senior Market Strategist, Euro Pacific Capital

The bad news for Greece is that despite some help from abroad, and some attempts at internal reform, investors are still leery of the troubled state. The good news, if you can call it that, is that they will soon have company in the penalty box.

Now that investors have come face-to-face with the reality of sovereign default in the developed world, greater scrutiny will befall those countries with fiscal conditions similar to Greece. The United Kingdom is a cause of great concern, with a debt ratio rapidly approaching Greek levels. The economic challenges facing Britain are aggravated by a Labour government that is pushing the country further toward socialism. As a result, in from mid-2008 to today the pound sterling has lost some 25 percent of its value even against the US dollar. Debt and socialism are a toxic mix for investors.

When I served as a Member of Parliament, under Margaret Thatcher, freedom literally burst upon Britain. We dropped the top rate of income tax from 92 percent to 30 percent (generating far higher tax revenue); abolished foreign exchange controls overnight; and demolished socialist controls by, for example, allowing people the basic freedom to own their own telephones! A wave of enterprises sprung up and Britain once again was referred to as ‘Great,’ without causing wry smiles. Though it may be astounding by today’s standards, we instituted a public debt repayment schedule. Thereafter, sterling soared by almost 100 percent between 1985 and 1995.

Great Britain has, until the present, never experienced more than two successive socialist governments. Today, the Conservatives, who covertly support the surrender of UK sovereignty to the socialist European Union, are seen as offering little alternative to socialist Labour. Despite the appalling economic record of the current Labour government, recent polls show a serious risk of a hung parliament after this summer’s general election. Suddenly, investors face the real prospect of a fourth socialist government. This specter, combined with the massive debt and misspending of the past three administrations, has led to serious out-flows from sterling and UK government ‘gilt-edged’ bonds, or ‘Gilts.’

As in the United States, the economic problems encumbering the UK and most of Western Europe are deep-rooted. They stem from many decades of dependence on monetary expansion to ‘paper over’ fiscal irresponsibility. GDP growth has been obtained by government subsidies of consumer demand, financed by debilitating taxation of productive enterprise, unimaginable public debts and massive currency debasement.

Alas, it is also becoming painfully clear to investors that, unlike the past, the problems are now too big for the same old government remedies.

Whereas the recent first wave of recession caused individual people and companies to face bankruptcy, the looming second wave threatens entire governments. Who can bail out governments if a number of them default simultaneously? The IMF is a sort of ‘central bank of central banks,’ but it is largely backstopped by the United States. Will China, Germany, or other creditor states be willing to assume the role of global guarantor? If so, what will this mean for the sovereignty and competitiveness of the old pillars of the Atlantic?

Greece is a small economy. But its debt problems highlight fault-lines undermining the euro, and with it the socialist dream of a United States of Europe. Today, Greek ten-year bonds sell at yields north of 6 percent, nearly 300 basis points higher than similar German, Danish, or French sovereign bonds.

While Britain’s debt has become a cause for some concern, investors have drawn hope that the Conservatives would carry the coming  election and restore some semblance of fiscal order. However, recent polling has exposed the risk of a hung parliament. Suddenly, the previously unthinkable notion of a British default crossed into the realm of possibility. Ten-year British Gilts sold off to yield above four percent, a significant premium above the country’s Continental rivals.

In other words, the free market has priced in a loss of the UK’s prized ‘triple A’ credit rating, while the perennially laggard and politicized rating agencies merely issued warnings.

As we have said before, the United Kingdom, as one of the two main bulwarks of modern finance, is the figurative ‘canary in the coal mine.’ It is my belief that just as Greece preceded the UK, Britain will precede the United States along the dark and dangerous shaft of excessive debt. Although the United States is nearly five times larger than the UK, our financial difficulties are in nearly the same proportion. In many ways, problems in the U.S. may be more intractable.

Although the Federal Reserve is actively holding down the short end of the yield curve to near zero, 10-year notes are currently yielding more than 3.6 percent. If the Fed were to cease purchasing Treasuries, or the rating agencies were to become realistic, the free market would drive the 10-year into dangerous territory.

History is littered with examples showing that socialism kills enterprise. The UK and EU are largely socialist. The US is becoming increasingly so. This political trend, coinciding (unsurprisingly) with a major recession, invites catastrophe.

It is one thing for prudent, rich states like Germany to bail out small states like Greece. But few states have the ability or the will to bail out financial giants like the US, EU, or UK. If such a maneuver were attempted, it would surely drag the entire world into depression – and I don’t take the Chinese or the Germans to be that foolish. Absent a reasonable avenue for rescue, we are increasingly likely to see these formerly steady giants topple. If you’re stuck in their shadow, look out.

We have long alerted readers to the possibility and even likelihood of sovereign defaults. Once a key domino falls, collapse can be devastatingly sudden. Those heeding our warnings should be wary of socialism wherever it lurks. Be glad that darkness strikes first on the other side of the Atlantic, but be wary that are close behind.

Send your Representative and your two Senators a letter rejecting this idea.

You can copy or borrow from my letter . . .

Here’s what Steny Hoyer said at the Brookings Institution on Monday, March 1: “No one likes raising revenue (increasing taxes), and understandably so, but if you’re going to buy, you need to pay.”

I’ve got a better idea — don’t buy!

Millions of Americans have had to cut their expenses because of the economy. Their prudence is fruitless if you raise their taxes to pay for YOUR orgy of spending.

And please don’t tell me that you’re going to tax the rich, and NOT me. Rich people don’t spend most of their money — they invest it to create jobs! That’s how they got rich. So the more you tax them the fewer jobs there will be. Politicians don’t create jobs, rich people do! Instead, you destroy jobs with high taxes and wasteful spending.

Poor people always end up paying for your “tax the rich” schemes by losing their jobs.

And please don’t tell me you’re going to motivate the rich to create jobs by offering them tax credits in return for hiring new people. Raising their taxes with one hand while giving them money back with the other is just plain stupid.

The problem is that you guys think nothing can happen in this country unless you have your noses right in the middle of it. Well, I say it’s long past time for you politicians to butt out. Instead of raising taxes and cluttering the tax code with more tax credits, please do the following . . .

* Cut spending. Cut everything, including entitlements and reduce the military budget by bringing some troops home.
* Cut taxes, and keep cutting them until America has the lowest taxes in the world. Doing that will create jobs.

Any politician who talks about raising taxes, or spending, will deserve to be fired the next time they’re up for election. I’m watching what you do, and discussing it with other voters.

END LETTER

You can send your letter using DownsizeDC.org’s Educate the Powerful System.

Please forward this message to other concerned taxpayers.

Make a contribution to expand our reach.

Jim Babka
President
DownsizeDC.org, Inc.

D o w n s i z e r – D i s p a t c h

Official email newsletter of DownsizeDC.org, Inc. & Downsize DC Foundation.

Don’t Bet on a Recovery

It is astounding how many economists, government officials, and Wall Street strategists construe the current economic conditions as evidence of a bona fide recovery. It is a testament to the power of the rose colored glasses handed out by our nation’s leading universities that such a feeling could be widely held despite the clear and present danger that compounds daily. The myopia leads us to enact policies that actually exacerbate our problems. The “remedies” are postponing, perhaps indefinitely, a true recovery.

The oracles who have described the nature of this imminent recovery do so based on their conviction that consumer spending is slowly returning to levels that existed prior to the recession. New data released today seems to support this view, with consumer spending up 0.5% in January.

However, missing from their analysis is any plausible explanation as to why consumers will be able to sustain such spending given the plunge in income and credit, and the lack of available savings. In fact, the same January spending report showed that personal income increased by only 0.1%, while the savings rate slowed to the smallest since 2008.

I would challenge those who fantasize about a consumer-led recovery to describe where the spending money will come from.  Most consumers are tapped out, millions are unemployed, and home equity has been wiped out.  The only reasonable thing for them to do is to pay down debt and sock away as much money as possible to rebuild their savings.

Beyond the question of “how” the spending could be achieved, is the deeper question of “why” such activity should be sought at all. Excessive spending, fueled by an insane housing bubble and catalyzed by reckless monetary and fiscal policy, was the reason that our current recession became unavoidable. Why would we want to go down that road again?

During the run up to the crash, excess spending had created economic distortions that have yet to be resolved.  Too many resources, including land, labor, and capital, were devoted to servicing an unsustainable economic model in which Americans borrowed money to buy homes, products and services they really could not afford.  In many cases consumer behavior was influenced by overly optimistic assumptions regarding real estate related riches.

However, now that the real estate bubble has burst, Americans are coming to terms with a more sober reality. Many have cut up their credit cards, dramatically reduced their spending, and have squirreled away as much money as they can. This change in behavior should necessitate a dramatic shift in the labor market as workers move away from jobs associated with consumer spending and toward jobs associated with real production, primarily for exportable goods.

The real problem is that monetary and fiscal policy designed to re-inflate the burst spending bubble is preventing this transition from taking place. As a result we are not creating the jobs we need to replace – the ones we have lost in mortgage servicing, home improvement, and real estate sales (which we never really needed to begin with). As these jobless remain unable to find alternative employment, our economy will continue to languish.

Some will argue that the new jobs created by government stimulus spending will provide the additional purchasing power necessary to revitalize consumer spending.  There are two problems with this expectation.  First, those jobs being “created” by the government are outnumbered by those being destroyed by government domination of resources. Second, even if it were possible for job growth to return, having hopefully learned from their mistakes, workers will be far more frugal with their paychecks than they were in the past.

Others hope that rising real estate prices will give consumers more confidence to spend.  The reality is that housing prices are still too high and will likely fall further. But even if they did rise, consumers will still be reluctant to resume their shopping spree.  Home equity extraction loans, which just a few years ago turned houses into ATMs, are now much harder to come by. When it comes to spending, it’s not just about confidence; it’s about cash.

The only possible way consumers can spend is if the government gives them the money.  However, since the government cannot legitimately give money to one American without first taking it from another, the most likely means of doling out cash will be to run it off the printing presses.

That, in a nutshell, is our government’s plan for economic recovery.  Print a bunch of money and give it to consumers to spend.  This is not a plan for recovery but a recipe for disaster.  Those betting that this program can succeed in putting together a healthy and sustainable economy simply do not understand the nature of their wager.  The smart money is going the other way.

But the more Mr. Obama talks about his plans, the worse it gets for him. The problem is that he hasn’t presented it properly. As an aid to Democrats everywhere, these are the positions they should be pushing to make this dream reality:

1) Socialized Medicine is free. I don’t know how they do it, but, by golly, nobody has to pay for it. Now if they could do something about the rising cost of cigarettes, gas, sodas, and my tanning bed treatments.

2) Socialized Medicine protects medical professionals and hospitals from extraordinary lawsuits. Right now Republicans and many physicians are  pointing out that to control medical costs, tort reform needs to be initiated to rein in the runaway costs of medical malpractice lawsuits. With Socialized Medicine there would be no need for this legislation. As the government would run the health care system how would anyone be able to sue Uncle Sam? Especially if he wasn’t in the mood to be sued. Socialized Medicine means never having to say “Oops!”.

3) Socialized Medicine covers all diseases. Time and again we see insurance companies denying care for unusual diseases or treatments. Now everything will be covered up to and including euphoria, apoplexy, and miner’s squint. And you won’t have to pay for those pills and medical devices you saw advertised on late-night TV.

4) Socialized Medicine means you will be able visiting many foreign countries. Recently Danny Williams, the Newfoundland/Labrador Premier, came to the United States to get immediate treatment for a heart condition rather than wait for treatment in Canada. As we will not be allowed to visit the United States many of us may sample the medical care in India, Mexico, Argentina, and Mongolia for quick treatment of deteriorating ailments. As many of you may say, ole!

5) Socialized Medicine will give you time to think it over. Haven’t you ever done things on the spur of the moment which you ended up regretting when you sobered up? Things like getting a tattoo, buying a Hummer, or signing up for a lifetime subscription to “Boys’ Life”. Since it will take months, perhaps  years, to see a doctor or schedule a treatment, you will have plenty of time to ponder whether you really want that gallbladder surgery, that liver transplant, that hernia operation, or that brain tumor removed. No longer will we see people who rued the day they had their gallstones taken out.

6) Socialized Medicine means more jobs for the unemployed. While real doctors may become disillusioned and leave the medical profession, this only opens the door for medical school dropouts, incompetent phlebotomists, clumsy surgeons, mediocre radiologists, unskilled nurses, alcoholic anesthesiologists, and backyard mechanics to fulfill their dream of a career in medicine. No medical degree, no problem!

7) Socialized Medicine offers incentives to stay healthy. Since the average patient may be called upon to visit a doctor as described in Reason No. 6, there will be a good reason to pay attention to one’s shape. I’d start jogging right now if I were you.

8. Socialized Medicine will improve the gene pool. Death panels, natural selection, bad luck, call it what you will but the waits and overall medical incompetence associated with Socialized Medicine will mean you will die sooner, rather than later, of your genetic ailment, thus the better off mankind will be if you don’t get a chance to procreate. Future Americans will never again see people afflicted with prickly heat, vertigo, or political idiocy.

9) Socialized Medicine will give the government something to do. Rather than raise hell with the public through IRS audits, unending bureaucratic regulation, or random airport strip searches, the government will find its hands full, day and night, creating paperwork, scheduling payments, and coming up with excuses for why no one answers the medical clinic phone at 2:00 in the afternoon.

10) Socialized Medicine will come in color or black and white. No. just yanking your Obama nose ring. Actually, it won’t but I couldn’t come up with any other reason you would want Socialized Medicine.

So to Mr. Obama and the Democrat Party, instead of using the nuclear option of reconciliation or writing up an executive order, the best way to get Americans to go along with Socialized Medicine is to tell them why they need it.

And you could also tell them it’s available, for a limited time, in tan.

by John Browne – Senior Market Strategist, Euro Pacific Capital

The world is currently in the eye of an economic hurricane. The leading edge of the storm, which made landfall in the second quarter of 2008, raged until the first quarter of 2009, and nearly demolished the world’s financial system. By sand-bagging with trillions of freshly-printed paper currencies, fudging accounting rules, subsidizing key financial houses and markets, and calming the masses with half-baked rhetoric, a worldwide collapse was averted.

But the calm is deceptive.

Because of the lull, Western governments have allowed our structural deficits to fester. Now, their spokesmen are predicting sunny skies for the foreseeable future. The Federal Reserve Chairman speaks of “exit strategies” and President Obama asserts that his stimulus package has prevented a second Great Depression. This inability to see past the horizon means our politicians have squandered our final chance to build sturdier shelters in advance of the hurricane’s trailing edge.

Last week, the International Monetary Fund (IMF) announced that it would dump a further 200 metric tons of gold onto the market. With temporary strength in the U.S. dollar and economic recession still threatening in America and Europe, such news should have caused gold to break below key support levels of $1072 and $995. But the price of gold fell only slightly before resuming its upward trend. Why was the gold so resilient given the arrival of all this new supply?

As we have mentioned in previous commentaries, gold is not, as is widely believed, merely a hedge against inflation. Gold is also an insurance against catastrophe. Clearly, based on global fiscal and monetary profligacy, we all have rising consumer prices in our future. But before that gets out of hand, the Western world will be hit by the second half of the storm that struck in ‘08. Although the Associated Press has officially designated our current environment as “the Great Recession” by the end of 2010 our economy may be more accurately described as a depression. If so, gold would be expected to plummet in value (along with other asset prices). But this assumes that the economy will behave as if it were supported by a sound currency. That assumption no longer applies, so we must adjust our expectations accordingly.

On this frightening occasion, we are at sea in a currency of paper backed only by the hot air of political bluster and dishonest accounting. Today, for the first time in modern history, it is not just individuals and private companies that face destitution, it is entire nation-states. Furthermore, it is not only minor players like Greece and Italy, but major pillars of the global market like the United Kingdom and the United States.

The re-introduction of the Health Bill in the U.S. Congress, albeit amended, illustrates vividly that Washington’s entitlement regime shows no sign of corrective discipline whatsoever. If, following the papering over of the Greek problem, international investors resume their selling of U.S. dollars and the underlying Treasury securities, the U.S. dollar may lose its reserve status – and the United States will, for the first time in living memory, face the possibility of default.

It may take years for this to happen. In all probability if downgrades are forthcoming, the United Kingdom will be the ‘canary in the coal mine’ and will be marked down in advance of its larger, and more indebted, progeny across the Atlantic. It is likely that such shocks will initially trigger U.S. dollar strength before the panic selling sets in. But what are cautious investors to buy when the world’s reserve currency is no longer safe, and its chief competitors, the euro and yuan, are not stable or transparent? The answer is precious metals. Conservative investors are making this move early, beginning a secular bull market in this asset class.

On the sovereign scale, those countries, possibly including China, India and Switzerland, that are positioned to pull their wealth to the sturdy shelter of gold stand to survive the hurricane, battered but viable. Those countries, like the UK, which have squandered much of their real wealth and productive capacity, will likely subject their citizens to an era of unnecessary privation.