Economics that Preserve and Prosper

Thomas E. Woods, a gentleman that I have discoursed with briefly and found to be polite and generous, discussed distributism in 2002 in an essay entitled What's Wrong with "Distributism".  According to the title one might assume that he dismissed the entire notion in preference for the libertarian staple of free-market capitalism.  

True enough his points seems to ring true with a reasonable assessment of distributism.   But whether one accepts his arguments of the value of one system compared to the other one fact is undeniable.

We have a capitalist system and the current system can only be changed via a total collapse of the current paradigm or through massive government intervention to force a change.  Who among us is willing to consider giving more power to the government to implement an new economic system?  To even consider such would be the antithesis of good judgement.  Any power given to the for the purpose of "good" almost always turns to evil eventually.

 However Woods does acknowledge that distributism may have a place:

"Those who care to support locally based and smaller-scale agriculture have already been doing so for two decades now by means of community-supported agriculture, which is booming.  On a purely voluntary basis, people who wish to support local agriculture pay several hundred dollars at the beginning of the year to provide the farmer with the capital he needs; they then receive locally grown produce for the rest of the year. The organizers of this movement, rather than wasting their time and ours complaining about the need for state intervention, actually did something: they put together a voluntary program that has enjoyed considerable success across the country. Perhaps, if distributists feel as strongly about their position as they claim, this example can provide a model of how their time might be better spent."

And it would seem that the very answer to preserving some of what is good while securing a sustainable system. There is but one problem with this notion - the same government power we rightly fear to support distributism is currently used to protect capitalist interest.  

One recent example, and there are others very similar circumstances, involving the Hershberger family shows that the state is not ready to allow the freedom of economic choice and freedom.  

The Hershberger's ran a dairy operation, they leased cows to their customers.  State law allows farmers and farm workers to drink raw milk, one of the products the family sold in their private store open only to lessees.  Those that leased the cows obviously had a stake in the capital of the farm and according to the letter of the law should be entitled to drink raw milk.   Not so in the eyes of the state.

It seems however, that on a microeconomics scale this is exactly the sorts of endeavors we should be undertaking.   As Woods points out in his dissection of distributism not all of us are qualified in temperament, skills or patience to own our own shops, farm our own land or tend our own herds.   However a cooperative arrangement on a small scale seems a marvelous method to provide quality goods locally, preserving community and tradition. 

I think a voluntary community based collective that supports provides stability and therefore protects families and traditions is Biblical. In Acts 4:32 we see an example of such a voluntary communion.  An agrarian cooperative that shared the cost of capital (land or livestock) in order to reap the benefits of the produce of the land would something a Christian could wrap his mind around.

It is time we began acting upon our convictions.  Separation from, secession from, a system that is not designed to respect the family of advance the individual is a good thing, a thing we can do right now in our communities.  

Baltic Dry Index Falls 93%

"Great News" at Christmas

As I mentioned in a previous article my family and I were in the market for a piece of rural/farm property. I thought going into my search that I would find what we were looking for at a reasonable price. I assumed that there would not be a lot of other people competing for the land.

Several of the real estate agents I talked to told me that their phones were ringing off the hook with people calling (and buying) from out of state. I was beat out on two of the most wonderful properties by such competition. Several others disappeared over night before I had the chance to even talk to anyone about them.

I blame it on two things. First, there may be people just like me that want a place that they could live sustainably if they had to. Second, and more troubling, is the end result of our own government interfering with the free market - by lowering interest rates to reignite the mortgage boom. This article talks about the very real possibility that a vast availability of financing and low interest rates will cause property prices to increase rapidly - the same thing that caused much of this mess in the first place.

I feel personally injured by this. If the people I was "competing" with to buy this land were simply opportunist using low interest loans made available by the government using some of my own money I can only say in the simplest of terms - I was screwed.

I made an offer to buy a place yesterday that has less land than I hoped to get (but is also a lot less that what I was planning and willing to pay). It has all the things I wanted, rural, plenty of acreage, two ponds a stream, some woods, some pasture and a little cabin. It was not my first or second choice, but I am happy all the same. I am still angry at our meddling government - but that is nothing new.

Perhaps that "opportunist" that bought that piece of land adjacent to the piece I just bought will be happy to sell it to me in a few months if the bad news keeps on rolling in -perhaps I will get it pretty cheap too.

Reports on consumer spending, jobless claims, durable goods show more weakness is likely

U.S. falls deeper into recession

Protectionist dominoes are beginning to tumble across the world

From the Telegraph:

Greece has been in turmoil for 11 days. The mood seems to have turned "pre-insurrectionary" in parts of Athens - to borrow from the Marxist handbook...

We are advancing to the political stage of this global train wreck. Regimes are being tested. Those relying on perma-boom to mask a lack of democratic or ancestral legitimacy may try to gain time by the usual methods: trade barriers, saber-rattling, and barbed wire...

"... social unrest may happen in many countries, including advanced economies. We are facing an unprecedented decline in output. All around the planet, the people have reacted with feelings going from surprise to anger, and from anger to fear," he said...

This crisis has already brought us a monetary revolution as interest rates approach zero across the G10. It may overturn the "New World Order" as well, unless we move with great care in grim months ahead. This is where events turn dangerous.

The last great era of globalisation peaked just before 1914. You know the rest of the story.

And the good news just keeps rolling in.

Fire Up The Presses

We all said it and now they admit it - although I suppose there is proof that this has been going on for some time. LET THE MONEY PRINTING BEGIN.

DOLLAR TANKS AS FED SAYS IT WILL PRINT MONEY

"Since September, the Fed’s balance sheet has expanded from about $900 billion to more than $2 trillion as it lends money to new programs." (ETF Trends)

The drop to 0-5% rates it seems might have another effect (if banks use the money to lend money and reinvigorate the housing bubble). Here is one description --

Here’s something kind of funny: This current economic collapse can be largely traced back to the 2003-2004 1% Fed Rate era that fueled the housing boom by making absurdly inflated real estate prices “affordable” because these interest rates — both fixed and the evil adjustable ones — hadn’t been so low in half a century.

While it was sloppy/greedy “stated income” no-doc teaser-rate reverse-equity 105% loans that enabled Juan Drywallhanger and his old lady, Amber Asstattoo, to “buy” a 2,800-square-foot stucco monstrosity on a 3,000-square-foot lot in the Adobe Falls development behind the Sunburst Towne Center’s (now closed) Bennigan’s and Linens ‘n Things in the first place, it was the artificially cheap borrowing costs that made the option-ARM introductory payments on a $579,000 “Tuscan inspired” vulgarity briefly plausible for people making $40,000 per year and already buried in credit-card and SUV debt.

I thought that too funny of a description not to include even if I would not have articulated it just so.

So what are the results of all this printing of money (have you read about the Weimar Republic?)

According to CNN-

But there is a dark side to quantitative easing: inflation. The government has backed all of this new debt by selling Treasurys, which have been the golden asset of the credit crisis. They have been the only liquid security of late, reaching historic highs as their yields have hit all-time lows...

"The end result of all of this could be the next major problem: the crisis of confidence in the dollar," said Baumohl. "At some point, foreign investors are not going to come to the table to buy U.S. debt, leading to a dollar decline."

Of course add to all of that nonesense this - Drop in consumer prices is most since 1932.

And then the most asinie statement of a bizzare year:

"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse." Bush the Second

Doing a little (or much) evil to do a little percieved good. And this from a "conservative"

What a mess

Gerald Celente and Our Future

I am not too keen on prognosticators in general - specifically the kind that make predictions based upon "visions" such as this "prophet" that predicts disaster before Obama takes office. Perhaps this is bit hypocritical of me as it would appear most of the time that I appear to fancy myself something of a prognosticator.

Gerald Celente is a bit different in that he predicts trends rather than specific events. His trend analysis and predictions are based partly on observation and partly upon extrapolation of those observation. His previous success at predicting trends include: the 1987 stock market crash, the fall of the Soviet Union, the 1997 Asian financial crisis, and the subprime mortgage crisis. In 2007 he described 2008 as the year the economic giants would fall. His observations about what 2008 would hold are pretty dead on looking back now.

In an article by Kurt Nimmo, Truth News, Nov.24, 2007, "U.S. Dollar Will Fall By 90% ", Celente remarks on the current disaster taking place in our economy :" We are confronting " dollar plummeting hysteria, monumental levels of debt, foreclosure, bankruptcy, unemployment, energy depletion, skyrocketing gas and fuel prices, illnesses treated without medical insurance coverage- or just not treated, unprecedented levels of homelessness, and by all indications, within a few months into 2008, America will be well on the road to a re-run of 1929 - or something inconceivably worse... " "

Celente said this over a year ago ! Yikes ! What else does this modern day Nostradamas have to say ? Plenty, and it isn't pretty (Surviving Ourselves)

What does this trend predictor see next?

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts....

“We’re going to see the end of the retail Christmas….we’re going to see a fundamental shift take place….putting food on the table is going to be more important that putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression”.“America’s going to go through a transition the likes of which no one is prepared for,” said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis...

More and more economic voices are beginning to talk about depression as a possibility - not the kesynians of course, they denied we were in a recession for four quarters even though the ordinary man knew this was a fact.

“There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.”

“The first thing to do is organize with tax revolts. That’s going to be the big one because people can’t afford to pay more school tax, property tax, any kind of tax. You’re going to start seeing those kinds of protests start to develop.”“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.”

I have said many times that there are numerous groups with justifiable grievances against the current system that have gone unanswered and ignored. These provide a foundation for revolt and a catalysts for anger but will never provide the spark of revolution. The spark for a revolution can only come when the safety, security and welfare of enough people are threatened enough to turn the ideological anger from a list of grievances into man pulling triggers. There are enough men of conscience in America that are pretty mad about a lot of things the government has done or failed to do - it will only take the spark of a failing economy and a real threat to security and welfare to turn these angry men into real man of action.

“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to. It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression...

And that, my friends is sufficient fuel and spark for the embers that burn so dimly on the edges of our society right now.

Next post we will get back to talking about you and your family weathering all of this.

No Bailout, What Does It Mean?

Firstly. I must admit I am not as astute as I fancy myself. Why and how the the Senate Republicans found it within themselves to to do something right - and this was no small thing. I was certain the Federal Government would give in on this issue. I was wrong.

My thought was that this bailout was a given and would be passed - with some wringing of hands and clamoring of distaste but passed all the same. I assumed this would but one of many more such events to come over the next months or years in an effort to fight off the inevitable.

Of course these things are not "over" until they are over - there are more than one way to skin any cat. If the results of Big 3 bankruptcy gets to bad this could get another look, or perhaps the current or the new administration will find a way to move funds around to accomplish the same goal as the original bailout - time will tell.

What dies this all mean?

SEOUL (Reuters) - The collapse of a proposed bailout for U.S. automakers has raised fears of a deeper economic slowdown and further financial shocks that may jeopardize worldwide efforts to ease a global recession.

Any failure or bankruptcy of General Motors Corp, Ford Motor Co or Chrysler LLC could cost tens of thousands of jobs, hit credit markets and disrupt the auto industry's global supply chain, economists said on Friday...

Some economists warned that any failure of U.S. automakers could cause a fall in the dollar and U.S. Treasuries, further hitting the country's battered financial system and economy. "A jump in U.S. corporate bankruptcy may prompt investors to flee the dollar and U.S. Treasuries amid concerns over a bubble in Treasuries," said Park Sang-hyun, chief economist at HI Investment & Securities.

That is certainly one perspective, perhaps absolutely correct. For how long and how deep could this recession reach? Depression levels? Further opinion -

Dec. 12 (Bloomberg) -- A bankruptcy filing by General Motors Corp. or Chrysler LLC might send the U.S. economy into chaos within weeks if it led to a shutdown at the companies.

Industry experts and economists say the automakers would close plants, fire tens of thousands of workers and cut production. That would cause many of their suppliers to collapse, triggering more job losses, straining the cities and states where the car and parts companies operate, as well as federal safety-net programs...

“It would be unprecedented,” says Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. “So it’s hard to say exactly what would happen.”

Still, a GM or Chrysler bankruptcy “would be the start of a cascade of failures,” says Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Michigan. “The economy will be in chaos within weeks.”

The "trickle down" theory in reverse.

I find it hard to believe the Federal government will not do something un-Constitutional before things reached such a level. From the same article we find...

The Bush administration said today it will consider using money from the $700 billion bank-bailout fund to prevent GM and Chrysler from “collapsing.”

Of course if Bush is unwilling to violate the Constitution one more time before leaving office I suspect that Obama will do the job pretty quickly.

I believe that we should take one thing away from this - the Federal Government still can and will head this off. Moving debt and failure from one place to another is still an option. As ugly as the prospects of this collapse are it will happen someday. The more we stall it, the more the delay the bigger the eventual fall. Just pause to think what it would mean to you right now today if the chaos and turmoil predicted by a collapse of these three companies would mean to you and your family.

This will be our reality, later if not now, and when it comes it will be bad. This is why I am determined to write on the issues surrounding surviving a SHTF scenario...

More for your consideration (and to spur your desire to prepare)

Car Vote May Tip US Into Depression
U.S. weekly jobless claims jump to 26-year high
Homelessness rising as economy slides

Free Lakota Bank

From the website:

The Free Lakota Bank is the world's first non-reserve, non-fractional bank that issues, accepts for deposit, and circulates REAL money...silver and gold. All of our deposits are liquid, meaning they can be withdrawn at any time in minted rounds.

I wonder if they are getting serious up there..or if this entire sovereignty thing was a hoax? This seems for real but time will tell.

After The Fall

It seems that sometimes events conspire to occur at the same time as to force one to think again about old issues. First, over the last two weekends my wife and I watched "Jericho" season one and two. Second, a few days ago I come across an article discussing a prediction by Igor Panarin predicting that the US will collapse and fall into six parts as a result of our economic malfeasance. Third, The National Bureau of Economic Research declares what most already knew the US is in the midst of a recession. Fourth, some economists have begun to predict the possibility of a depression. And then of course there is the fact that even Icelanders are rioting over their economic woes Icelanders, good grief. Lastly, my experience with after Thanksgiving shoppers reminded me of the greed at the base of humankind, and made me wonder what these animals would do if they were hungry and not merely looking for bargains.

As a student of history I know that old orders always pass away, sometimes quietly, sometimes violently. There is no reason not to assume the current order will fare any different. The question is all about when and how.I know in the past we had a few survivalist minded folk as regular readers here and I suppose that what I am about to write will appear rather bothersome to several widely held beliefs within that community. Bear with me.

Firstly, I think Panarins predictions are a bit premature even if taken over a rather long view of say 10-15 years. Economic collapse is not something that our Federal government would accept as a verdict on its policies and ideologies. It would not simply close up shop and pass away, admitting defeat and stepping aside for a better system to replace it. No, I am afraid they will deficit spend, borrow from foreign creditors, devalue the dollar when we can no longer make good on foreign debt and exact taxes at a rate unfathomable right now simply to remain in power. The grasping at power will be a long slow death, one that shall take us all on a willy-nilly ride to the edge of the abyss. And, sadly, we will go along for the ride with only minor disruptions along the way. In such a scenario there will certainly be riots and disturbances along the way but these will not be motivated from the perspective of a desire to change the system they will rather be demands for goods and services from the government to ease the pain of the ride.

Such disturbances and cries for help will serve only to validate the tyranny that will surely become part and parcel of our daily lives. If one thinks that the patriot movementfolks have it all wrong today with their warnings of growing tyranny I suspect that in the years to come the rational man will bow his head and sign if I only knew.

Even in this most dire of situations most people will consider their current happiness, safety and comfort paramount to all else - fixing the system at its core be damned.

Such a ride could last 20-30 years or in a scale of one human lifetime a virtual eternity. A central government determined to retain power can do so, at great cost it is possible.

Many in the survivalist community foresee a future in which our government, faced with economic collapse and social turmoil simply could not stand. If only it were true, for if this worst case scenario were to play out it would be our Federal Government that has brought it about and it would not deserve to stand. But history teaches us that power vacuums never exist, governments never go quietly into the night. I have studied data collected by the Ark Two people and I am convinced that even in the event of a large scale nuclear attack on say 20 US cities the Federal Government would survive. Perhaps the scenario would play out much like in Jerichoand it would take a few months for men with guns to arrive to your town and state we are from the government and are here to help....but someone with guns would show up. So even in the worst case the power vacuum would exist for no more than a year at most, probably much less (not saying survival preparations are not important, just the notion of an end to the world and a few rugged survivors rebuilding a agrarian utopia is unrealistic).

And why do I believe that our Russian prognosticator is wrong about the US breaking up into six parts in the short-term is wrong (beyond the facts stated above that the Federal Government would cling to ever last bit of power).

Simply stated...will

There are no regions in the continental US that are homogeneous in culture and philosophy to assert themselves as a separate entity for some time. Perhaps Hawaii if the tourist dollars stopped flowing, maybe Puerto Rico if the economic benefits stopped. Who else? Not the South we have forsaken our heritage. Alaska maybe independent minded and oil-rich. New England perhaps and maybe the only candidate in the lower 48. Nobody else has the will or identity to ask to get off the ride before it stops. Put aside your hopes of a free this or that while I am still a young man. Much education and much culture building must occur first and I am not sure that the simple principles of good culture can actually compete with the illusion offered by pop-culture.

Insurgency you say surely there would be good men willing to promise their lives, liberty and sacred honor to the cause of watering the tree of liberty.

Lets talk about that. The fact is the US military has become pretty good at COIN (counterinsurgency operations). Dont believe the hype, right or wrong, we are winning the counterinsurgency fight in both Iraq and Afghanistan. Our primary problem is that new fighters keep rolling into the fight. We plugged the border pretty well in Iraq and the fight has shifted t0 the Stan with a much more porous frontier. We have even reconfigured our formations we are in fact a constabulary Army. The new brigade combat teams are agile and efficient in a low-intensity fight and police work. They would get pummeled in a high-intensity brawl but that is not the point. Ten years ago we could not spell COIN....now we are pretty good at it.

And if you are thinking that without high-tech gear and constant resupply the Army would simply stall I propose that this in not the case. To be certain operating motorized as opposed to mechanized, without many of the toys would be less efficient, but it would be effective. Even in hard times the military would still be a formidable adversary to a domestic insurgency.

That is not to say it would be unbeatable and herein is the problem. We have no basis for an insurgency in the US. In the Middle East the foe we fight has tribal and religious ties that transcend any artificial government. As a people we have little understanding of history or political philosophy - hard to build a movement without ideas.

The center of gravity of American sentiment is based upon nothing more than temporary safety, comfort and happiness. American troops in the counterinsurgency fight in the Middle East have become very adept and non-kinetic operations designed to quell a village of discontent. You would be amazed at the friendship water and power can buy. Americans with no other loyalties than to themselves would be easier to buy.The counterinsurgency fight is all about the center of gravity and Americans are too accustomed to accepting empty promises if they appear to benefit them personally. No insurgency could survive in those conditions.

In any event successful insurgencies require 10% of the populations support (if there is foreign aid) and a significantly higher percentage without foreign assistance. The American Revolutionwas supported by 25-33% of the population and tremendous support from France at the critical points at the end. Just think about that 10% of our population (30,113,994) willing to become criminals andsacrifice their welfare and safety for an ideal not going to happen I am afraid.

What to do? Stop voting for commercialized talking heads, pray, pay off your debts, learn to grow a small garden, buy a few guns, read history, learn sustainable skills and find friends in your community that get it. Basically prepare to hunker down and ride out the storm and hope that the worst case does not come to pass. I for one believe it is inevitable.

The Great Fall

Yesterday I wrote about the theory that some economist hold (few but growing) that a depression is perhaps in our future. Today two announcements:

NEW YORK (CNNMoney.com) The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

Down we go again: Fourth-worst drop ever for Dow -- The stock market suffered one of its worst days since the financial meltdown Monday, slicing 680 points off the Dow Jones industrial average as Wall Street snapped out of its daydream of a
rally and once again faced the harsh reality of a recession.

The voices for another, more robust, stimulus now clamour as loudly as ever. Such a typical Keynesian response. Deficit spending to "correct" a problem created by deficit spending and uncontrolled credit is, well simply stupid. It makes sense only in a world where people are more concerned with present and temporary safety and comfort in exchange for a long-term solution.

Then of course there is this prediction by Igor Panarin, a Russian political analyst.

Professor Igor Panarin said in an interview with the respected daily IZVESTIA published on Monday: "The dollar is not secured by anything. The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded $2 trillion. Now it is more than 11 trillion. This is a pyramid that can only collapse." ....

When asked when the U.S. economy would collapse, Panarin said: "It is already collapsing. Due to the financial crisis, three of the largest and oldest five banks on Wall Street have already ceased to exist, and two are barely surviving. Their losses are the biggest in history. Now what we will see is a change in the regulatory system on a global financial scale: America will no longer be the world's financial regulator."

He predicts a break-up into six parts but I will discuss that later, specifically what I think he got wrong and right. I think talk of a break-up is premature, even if looking at a ten-year cycle. Dragons die slow deaths and generally have one surprises in them, if history teaches us anything about these things that is a fact we know.


Talk of if we will have a robust stimulus is pointless -- we will. What does that mean? You full-well know or should know. It is in fact a step closer to tyranny for that money must eventually come from somewhere. History again teaches us of the depths that our central government will go to to in dire circumstances. Look to the depression years and the aftermath of all of those social programs and utter abandonment of solid constitutional principles. Our Federal government will do what ever is required to stem the tide of this current emergency - to hell with the long-term cost.

Occasionally systems need a natural reset, the time is now for such a reset. Painful for a while, yes. Sad for some, yes. That is the natural order of an economic system - if left alone this situation would come and go and in the end the system would be stronger - if and only if the government stayed out of it.

But as we know it will not - they will instead move us ever nearer to a bad end.

Peak Oil or Depression

Both it seems...

I have attempted to wrap my mind around the real reason that gas prices have fallen so drastically since I "left the world". It seems that the answer, or at least a reasonable theory that serves is an answer is decreased demand resulting from other economic woes. That is such a simplistic answer (albeit it is riddled with economic mysticism at its core) to be beautiful. Peak oil has not gone away you see, oh no far from it. The over all product in the ground has not increased, production facilities to suck up those pesky hard to get drops in untapped places have not been developed. Supply remains the same, demand has decreased.

Peak oil has not gone away....

But depression - that is deflation right. It is hard to see deflation in prices anywhere right? Perhaps if we look at the "good retail season" and all the deep discounts out there. Folks are rejoicing that Black Friday was a success but maybe this is a two-edged sword. If people are buying because prices are cut so deeply could that not be the initial stages of a deflationary period. What happens in Febuary or March after everyone has used up their disposable income (or last bit of their credit line) on deeply discounted merchandise? Do retailers then discount things even further? At what point are companies moving products at so deep a discount just to generate some cash flow that they cannot continue to produce/procure?

From The Automatic Earth

Thanks to a credit boom that dates back to at least the early 1980s, and which accelerated rapidly after the millennium, the vast majority of the effective money supply is credit. A credit boom can mimic currency inflation in important ways, as credit acts as a money equivalent during the expansion phase. There are, however, important differences. Whereas currency inflation divides the real wealth pie into smaller and smaller pieces, devaluing each one in a form of forced loss sharing, credit expansion creates multiple and mutually exclusive claims to the same pieces of pie. This generates the appearance of a substantial increase in real wealth through leverage, but is an illusion. The apparent wealth is virtual, and once expansion morphs into contraction, the excess claims are rapidly extinguished in a chaotic real wealth grab. It is this prospect that we are currently facing today, as credit destruction is already well underway, and the destruction of credit is hugely deflationary. As money is the lubricant in the economic engine, a shortage will cause that engine to seize up, as happened in the 1930s. An important point to remember is that demand is not what people want, it is what they are ready, willing and able to pay for. The fall in aggregate demand that characterizes a depression reflects a lack of purchasing power, not a lack of want. With very little money and no access to credit, people can starve amid plenty.

According to the author credit, or more accurately an uncontrolled credit boom is the problem. Of course at the root of that is a prevailing sense of entitlement and greed. The author is kind in their description calling it "high expectations" - perhaps - greedy and materialistic fit too I believe.

I must admit, even when I try to read and stay connected to the world I live far from it. I currently leave on a small Army post in the middle of the desert, before here I was stationed in Korea and between here and there I have been back to the middle east. I have been away from home all of my adult life - I do not really know what goes on in the lives or regular people. My wife tells me from time to time that she talked to so-and-so and that they are losing their job or that their company is cutting back etc. My mother told me on the phone the other day that our local paper back home had six pages of foreclosures. These are things I cannot connect to or understand. I do not have debt, I do not worry about losing my job, I do not know anyone who does (well I have had troops get into debt problems but that is not really what I meant - their issues are generally related to too much stereo equipment and not enough paycheck, they will still have a place to live regardless).

I do know that I have been searching very hard for a piece of land way out in the boonies. I have not been able to help but notice that land is cheap.

I suppose this is all worth watching - as I have suggested before it seems high time to prepare to secede from things because if predictions of doom and gloom are correct and deflationary times are coming the man that can provide for himself and his family will be infinitely better off. And maybe, just maybe, come March that laptop that crazy woman ripped from my hands will go on deep, deep, deep discount.....

Feds Raid Liberty Dollar

This is all over the blogsphere and I decided to copy what I posted on my personal blog here.

The FBI and Secret Service conducted a raid on the Liberty Dollar office in Evansville, Indiana. It appears that that gold, silver, and records were seized. The following is taken directly from their website:

I sincerely regret to inform you that about 8:00 this morning a dozen FBI and Secret Service agents raided the Liberty Dollar office in Evansville.

For approximately six hours they took all the gold, all the silver, all the platinum and almost two tons of Ron Paul Dollars that where just delivered last Friday. They also took all the files, all the computers and froze our bank accounts.

We have no money. We have no products. We have no records to even know what was ordered or what you are owed. We have nothing but the will to push forward and overcome this massive assault on our liberty and our right to have real money as defined by the US Constitution. We should not to be defrauded by the fake government money.

But to make matters worse, all the gold and silver that backs up the paper certificates and digital currency held in the vault at Sunshine Mint has also been confiscated. Even the dies for mint the Gold and Silver Libertys have been taken.

I surmise that Ron Paul's candidacy might have something to do with this insofar as he has finally brought monetary policy into the debates. I think that there are more of us "kooks" who demand sound money than anticipated. After all, why raid them now? They have been around since 1998. I guess they don't want any competition against the declining dollar and the forthcomming Amero.

Bond insurers set off fresh wave of panic

Don't for a second believe that just owning gold and silver will improve your quality of life from where it is right now. If you think gold and silver, by going to the moon, will reward you with many treasures, look around at your country, and you'll see otherwise. You won't be able to just dust yourself off and climb out from under a storm shelter with your gold and silver & all will be marvelously well, like you survived a hurricane, and can now look over the booty, and all will be right once again.

In a complete currency collapse with hyperinflation, what happiness do you find with your friends and family out of work? Sure, you might be easily able to afford $20 for a gallon of gas, but what if there isn't any? If there was, where would you go? Most entertainment options will not be operating. No customers, that's why. At the end of the Weimar inflation 91% of the household budgets went for food! You'll stay home or ride broken down public busses like everyone else. And then there'll be the crime. Goons from who knows where will roam. And, the worst of all - ENVY. Tell a soul how you protected yourself and you'll be the Uriah Heep for all time. You won't feel right telling your church friends to wait for the Rapture. They'll look to you for charity and you must help them. It will be YOU who will be looked to for the re-building of America. As it should be. Further federal government intrusion will make the misery far worse. In my opinion, Ron Paul is the only candidate qualified to lead us through this and emerge with our sovereignty intact.

Trade in the Americas: The Conspiratorial Urban Legend of the Evil NAFTA Superhighway

Harvesting the Enemies of America Series

*** DISINFORMATION HIT PIECE *** from: World Trade Magazine

[snippet]
Trade in the Americas: The Conspiratorial Urban Legend of the Evil NAFTA Superhighway, by Clay Risen The questions surprised even a presidential candidate as poised as Mitt Romney. A bespectacled, matronly woman at the back of the audience in Story City, Iowa, had heard news about an enormous highway being built between across the Midwest, linking Mexico and Canada.“You can find it on the Internet, a Security and Prosperity Partnership that’s been working for a while to join the United States, Canada, and Mexico, and part of it is a NAFTA superhighway,” she explained.She rejected Romney’s dismissal that the story was make-believe. “I don’t think they’re talking about it,” she retorted. Rather than argue, he offered a vague promise—“if they are building it, I’ll stop it”—and quickly took another question.The “superhighway question” recurred often on the GOP campaign trail. Rudy Giuliani got it in Concord, New Hampshire.

In Cedar Falls, Iowa, John McCain was asked what he knew about secret plans for a highway “to unite the three nations together.” According to libertarian Rep. Ron Paul, a conservative Republican Congressman from Texas running for president (and a firm opponent of the superhighway), the plans to link Mexico, the United States and Canada by a monster highway will be the sleeper issue of the 2008 election. The Concord Monitor (New Hampshire) agrees: “The road comes up at town meetings second only to immigration policy.”Reality is there’s no such highway in the works. “The U.S. government is not planning a NAFTA Super Highway,” reads a Commerce Department web page. “The U.S. government does not have the authority to designate any highway as a NAFTA Superhighway, nor has it sought such authority, nor is it planning to seek such authority.”But that inconvenient fact hasn’t quelled populist unrest.Riding well below the mainstream media’s radar, the highway is just one of the many real and imagined cross-border programs—the Security and Prosperity Partnership (real), the North American Union (imagined), the “amero” currency (also imagined)—to draw the attention of conspiracy-theory mongers over the past year. It is all over the right-wing blogosphere. And, it is the reigning issue in newsletters put out by fringe groups like the John Birch Society. Asserted CNN host Lou Dobbs last year, “The Bush White House, supported by corporate America and special interests, [is] building a
superhighway dividing this country, a superhighway that will run between Mexico and Canada.”Politicians are stoking the flames. In January, Virginia GOP Rep. Virgil Goode introduced a bill—which quickly gained 27 co-sponsors—“expressing the sense of Congress that the United States should not engage in the construction of a North American Free Trade Agreement (NAFTA) Superhighway System or enter into a North American Union with Mexico and Canada.”

Nor is this a partisan issue: In July the House approved, by an overwhelming 362-63 vote, a ban on funding for a “NAFTA superhighway.” Most recently, Goode joined 21 fellow representatives in a letter to President George W. Bush warning of “serious and growing concern in the U.S. Congress about the so-called Security and Prosperity Partnership.”Bush, speaking at a meeting with his Canadian and Mexican counterparts, laughed it off. “I’m amused by the difference between what
actually takes place in the meetings and by what some are trying to say takes place,” he said. “It’s quite comical actually, to realize the difference between reality and what some people on TV are talking about.”Such talk would be comical—superstates, evil corporations, a continental currency—if it weren’t also a potential threat to trade and economic growth. Tri-national trade has reached $700 billion annually, with the value of goods moving through the Laredo, Texas border crossing alone exceeding that of all goods coming from Great Britain. Economists predict those numbers will increase dramatically as U.S.-bound shipping moves from overburdened American ports to new and upgraded destinations along the Mexican and Canadian Pacific coasts. Indeed, tri-national trade has tripled since the signing of NAFTA, but cross-border infrastructure spending has been nearly flat. “The entire U.S. economy is going to be more and more dependent on the strength of its multimodal system,” says Frank Conde, spokesman for the North America’s SuperCorridor Coalition (NASCO), an infrastructure advocacy group. That means more efficient border crossings, regulatory harmonization, and bigger and better infrastructure projects, which will take significant political and fiscal commitment at all levels of government.So while it’s one thing for blogs and newsletters to hype the latest conspiracy theory, it’s a serious concern when politicians start listening, and advocate legislation to block needed government investments. “Everything they say about an NAU, the SPP, and a NAFTA superhighway are falsehoods,” says Conde. “The confusion caused by organizations like that harms our ability to improve trade links.” At the precise moment when we need to be moving forward as quickly as possible on international infrastructure, the conspiracy theorists are threatening to push us backward.

This latest surge in conspiracy theorizing draws on a long-running thread in American culture.“Historically, there has always been a feeling among some in the United States that we could be more secure and prosperous if we separated ourselves from the world,” notes Robert Pastor, director of the Center for North American Studies at American University. Conspiracy theory mongering around NAFTA has been churning since President Bill Clinton signed the treaty in 1993, with the John Birch Society and other far-right groups declaring it a threat to American sovereignty and jobs. But a variety of trends have combined to both ramp up the volume and spread it closer to the mainstream.The most obvious factor is a general turning away from free trade on both the right and the left. Populist politicians in both parties have lashed out at international trade deals as the product of undemocratic plutocrats and their allies in the federal government. After her anti-superhighway bill passed in July, Ohio’s Mary Kaptur declared “a victory for openness in trade negotiations, highway safety, good wages, and fair trade policies. The grip of global corporations was loosened last night.”As conservative commentator Phyllis Schlafly wrote in a recent syndicated column, “Now that the game plan is laid out, we can connect the dots: the North American Free Trade Agreement; the admission of Mexican trucks onto U.S. highways; the contract to build the TransTexas Corridor and the plans to extend it into a NAFTA Superhighway; making Kansas City an international ‘port’; the ‘totalization’ of illegal immigrants into the U.S. Social Security system; and the recently defeated Senate amnesty bill.”Ironically, many free trade advocates say that when you look at the actual state of cross-border cooperation, the problem is not that we’re doing too much. It’s that we’re not doing enough. Take the Security and Prosperity Partnership (SPP), an ongoing dialogue begun in 2005 and designed to coordinate cross-border regulatory and security policies. While conspiracy theorists depict the SPP as a way to weaken American laws, in fact it has no authority to make any changes one way or another to the regulatory regime. “The SPP conforms with existing laws,” says David Bohigan, assistant secretary of commerce for market access and compliance. Instead, he says, the goal is to harmonize existing laws and regulations between countries. Think of it as a matter of translation: Far from forcing everyone to learn Spanish, the SPP is like a Spanish-to-English dictionary, allowing English speakers to understand their neighbors without ditching their own language. A typical initiative under the framework calls for the three nations to “develop a common approach to standardize the regulatory measures taken in response to Phakopsora pachyrizi (soybean rust).”

If this is a conspiracy theory, it’s hardly the stuff of aliens and x-files. The SPP actually has a number of critics on the other side, people who say it does not go far enough in establishing a framework for discussion. “If there is anything wrong with the SPP, it is not secrecy, but the fact that it is a mishmash of disconnected and mostly trivial initiatives, lacking any organizing vision or direction,” wrote Roland Paris, a former Canadian foreign policy adviser, in the Toronto Globe and Mail.“The SPP is an important initiative,” says Pastor. “My fear is that it is too timid and too fearful of criticism from the right.”Wholly separate from the SPP are efforts to expand the transportation infrastructure that carries goods into and around the country. Rather than links in a conspiratorial plot, in fact they are uncoordinated, unrealized, and in most cases unlikely to be built. First, there is North America’s SuperCorridor Coalition, a Dallas-based nonprofit. Despite its imposing name, NASCO is nothing more than an advocacy group for better use of current trade corridors, in particular the routes running from Mexico to Canada. “What we’re trying to do is push both the private sector and the public sector to maximize the efficiency and security of the existing transportation infrastructure,” says NASCO’s Conde.Even NASCO admits that improving the efficiency of existing corridors is hardly a solution for the long term. Between now and 2025, Texas alone will see a 132 percent increase in traffic, with 260,465 trucks using its highways every day. In response, Texas Gov. Rick Perry has been pushing for what comes closest to an actual NAFTA superhighway: a new, 1,200-foot-wide toll road running from the Mexican border to Oklahoma, the centerpiece in a collection of projects known as the TransTexas Corridor (TTC).

Because the highway, estimated to take $180 billion and 50 years to build, would cut through numerous Texas communities and displace up to one million residents, the plan has drawn a fusillade of public criticism, particularly from farmers who stand to lose valuable land to the project.Handing over infrastructure management to the foreign private sector is nothing new—French firms run numerous American water districts, and an Australian-Spanish joint venture manages the Chicago Skyway. Nevertheless, the possible role of foreign business in the TTC’s construction and operation has given an added twist to fears of a NAFTA superhighway. Such opposition has already throttled Perry’s momentum toward approving the TTC, and observers say it looks increasingly unlikely that the project will get built. The controversy over the “superhighway,” the SPP, the TTC and other efforts exposes a harsh truth about the future of the American economy. While free trade agreements and World Trade Organization negotiations are vital, the means by which trade actually occurs—or, increasingly, is impeded—are the everyday pieces of the continental transportation infrastructure: highways, rails, port terminals, and regulations. And, while the United States has maintained a global leadership on writing and expanding trade deals, it has done a poor job of expanding its infrastructure to meet the demands of the resulting increases in cross-border trade.All of which means that the more the conspiracy theorists on the Internet, in the media, and in government frame the issue on their terms, the less the country will be able to make the sorts of investments necessary to assure its long-term growth—and therefore the long-term prosperity of the continent, and the world. [end snippet]

Citigroup to hold emergency weekend board meeting

Oh, oh, here we go again with the Dollar Riggin' Tag Team, Rubin & Summers. Recall Gibson's Paradox?

This meeting is highly irregular. Both CFR members, they are well connected to the top crooks. What will they be trying to put together for us Monday?
Citi to hold emergency board meeting

after reading the above story, read the CFR clip

Take note of the corporate membership roster as these will be the privileged players to reap mega profits with foreign exchange protection from any capital controls, or at the introduction of the amero. They are the Krupps, Thyssens & General Electrics of our day. They are the 21st century carpetbaggers.

Read the Story

Gold Cash Price Goes Over $800!

An expert said on CNBC this morning that he didn't anticipate the American public to rush to gold until it hits $1,500. We concur. There is absolutely no awareness by the people in my world of what's going on. A new precious metals asset class is being born.

Additionally, and most gratifying is the gold equities are now running contra trend to the Dow -Gold UP, Dow DOWN. This was the occurrence in the 1970s/80s, and so it shall be again.

Remember, the only regret you'll have at $2,000 gold is that you didn't buy more

Dollar Plunges Anew, Gold close to $780, Silver back over $14

Dollar plumbs to new all-time low of 77.03; Gold hits new recovery high of $778.30; Silver hits $14.13; Church tithings to drop; Ron Paul opens SC Hdqtrs in Spartanburg.....are you ready for the Big KA-POW?

US Heads for Recession as Foreign Investors Rush for the Exit from US Dollar Holdings

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Confederate Inflation Then - Southern Ignorance Today

We all know of our country's early experience with the "continental dollar". Some have even claimed we've "learned" something everlasting from it. I don't think so. My evidence is the southern people share no common memories of even their own currency becoming worthless, again the Yankee has them in bondage to a new paper money of their creation. It's apparent that g-granddaddies did not weave stories of horrific loss of their wealth to their descendants. If they did, my observations are that those stories never stuck as there's an equal amount of ignorance - even more - in the South about commodity money than in the North. In a community the size of Charleston, easily over 250,000, there is NOT ONE retail coin dealer. While southerners may spin their yarns of Yankee Reconstruction plunder and other atrocities, few have made preparation for the next occasion when the dollars they hold will impoverish them just as their ancestors discovered. Yes, history is to be repeated and southerners are condemned to repeat it. You know their ancestors given another chance would know better, and grab up every double eagle & silver dollar they could find. So, when you run around shouting "Freedom!" realize full well that with freedom comes individual responsibility, and that means caring for yourself and not looking to a nanny state as your agent to steal the savings of others more responsible than you.

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The Confederate Inflation

Figure 4 plots the Grayback price of a gold dollar during the Civil War. Large movements in Grayback money prices are labeled and associated with important military, fiscal, and political events to determine events important to contemporaries of the Civil War. Grayback prices depreciated following battle defeats at Antietam and Gettysburg/Vicksburg. The gold premium also rose following the passage of the US Conscription/Finance Bill that increased the North's ability to finance the war and draft soldiers. A final breakpoint occurred in late spring 1864 when the Confederate government repudiated one-third of the money supply with a currency reform act. The monetary legislation's positive effect on currency prices was short-lived, however, as the Confederacy cranked up the printing press again in the fall of 1864. Graybacks renewed their depreciation and continued to actively trade until early February 1864. At this point, many Richmond bankers and gold traders packed their wagons and left the besieged capital (Weidenmier, 2002a).

Lerner (1954, 1955, 1956) used the quantity theory of money to analyze the Confederate inflation. The quantity theory of money can be described by the following equation:

M = K*(P*Y), (1)

where P is the price level, Y is real (i.e., inflation-adjusted) output, and M is money. Equation (1) assumes that people hold some fraction, K, of their nominal income, P*Y, in the form of money. For example, if your income was $10,000 per year and K=1/5, then you would hold $2,000 in the form of money. To study inflation, it is useful to express equation (1) in growth rates, using equation (2):

p = m - y - k (2)

Lerner decomposed the influence of changes in money, velocity -- the number of times a dollar bill turns over in a year (mathematically velocity is the inverse of k) -- and real output on the inflation rate -- the rate at which prices rise. Lerner showed that the Confederate money supply increased 11.5 times between January 1861 and October 1864 while commodity prices increased 28 times in the same period (also see Godfrey, 1978). Rising velocity contributed to the runaway price level as people reduced their holdings of money balances and purchased commodities and non-monetary assets. Lerner also inferred from periodic Treasury reports that the South experienced a forty percent fall in real output during the war.

The Dollar: How Low Can It Go?

We believe the Fed is engineering this dollar drop to be confluent with the implementation of the NAU and its currency, the Amero. We see their plan as being timed so as not to upset the general election next November, but instead to be an "exciting new launching" for our elected incumbents by "restoring American competitiveness" in the globalist economic world of "free trade". If the recent past is any prelude, then Americans will be grateful for this colorful new straitjacket, and appreciative of their loss of national sovereignty. Multi-nationals, central banks, and selected other privileged entities will be sheltered from any currency losses with the new Amero.

LONDON (ResourceInvestor.com) -- Last week the dollar touched a new low, and with economic news from the U.S. not making for entirely comfortable reading, there is likely more pain to come.

The Federal Reserve is due to meet again later this month, and it would surprise no one if the outcome of that meeting were to be another rate cut – perhaps by a quarter point following last month’s drastic half point cut.

Stocks Sink on Black Monday Anniversary

NEW YORK (AP) - The Dow Jones industrial average dropped more than 360 points Friday - the 20th anniversary of the Black Monday crash - as lackluster corporate earnings, renewed credit concerns and rising oil prices spooked investors.

The major stock market indexes turned in their worst week since July after Caterpillar Inc. (CAT), one of the world's largest construction equipment makers, soured investors mood Friday with a discouraging assessment of the U.S. economy. In a week dominated by mostly negative results from banks facing difficult credit markets and rising mortgage delinquencies, investors appeared surprised that an industrial name was feeling an economic pinch, too.

Reports from Honeywell International Inc. (HON) and 3M Co. (MMM), themselves big industrial names, gave investors little incentive to take chances on the market. In one bright spot, Google Inc. (GOOG) rose after reporting stronger-than-expected profits.

Investor sentiment took another hit when Standard & Poor's downgraded another batch of residential mortgage-backed securities, adding to investor unease about credit quality. The latest reduction follows a similar move earlier in the week and affects more than 1,400 classes.

Beach was almost right...