All totalitarian ideologies are anti-gold and pro-paper money and central banks

All power to the state! – Money madness at the IMF

by DETLEV SCHLICHTER

You cannot escape an all-pervasive sense of crisis these days. Impending doom does not only announce itself in actual events but also via the proliferation of ever more hair-raising schemes that claim to solve our problems. Maybe it should not surprise us if, at a time when the world’s most powerful central banks keep interest rates at zero for years on end and keep printing quantities of money that are simply outside the facilities of human imagination (trillions? quadrillions?), bravely hoping it will end differently this time, people get the impression that economics holds no certainties, that it is merely an exercise in limitless creativity. In his excellent speech to the New York Fed, Jim Grant reminded us that when the Financial Times first explained to their readers what QE was, back in 2009, one of those readers wrote in a letter to the editor: “I can now understand the term ‘quantitative easing, but . . . realize I can no longer understand the meaning of the word ‘money’.” – This gentleman is not alone. The basics of monetary economics have been tossed out the window and a merry ‘anything goes’ of policy proposals has descended on us. Otherwise sane-looking men and women now propose that, although years of zero interest rates have not solved our problems, everything will change once interest rates are negative. We should all get checks from the central bank with free money to spend, and government bonds at the central bank should be cancelled. Grown men dream of money from helicopters and money buried in bottles in the ground.

“Whom the gods would destroy, they first make mad.”

Just when you thought it could not get any madder there comes a policy proposal that sets a new low in monetary policy discussion. Of course, in the current climate it is being hailed as ‘epic’ and ‘revolutionary’. The easily excitable Ambrose Evans-Pritchard, a tireless campaigner for man’s exploration of the unknown in the field of money, could not believe his eyes: “So there is a magic wand after all,” he writes in the Daily Telegraph, “one could eliminate the net public debt of the US at a stroke and, by implication, do the same for Britain, Germany, Italy or Japan.” It gets better all the time. No longer are we confined to debating arduous strategies for crawling slowly back to sustainable growth, no, we can now simply wipe out all our debt.

A Tale of Two Crises

Whether or not to get serious is the choice facing the electorate

By Mark Steyn

In political terms, Hurricane Sandy and the Benghazi-consulate debacle exemplify at home and abroad the fundamental unseriousness of the United States in the Obama era. In the days after Sandy hit, Barack Obama was generally agreed to have performed well. He had himself photographed in the White House Situation Room nodding thoughtfully to bureaucrats (“John Brennan, Assistant to the President for Homeland Security and Counter-terrorism  Tony Blinken, National Security Advisor to the Vice President; David Agnew, Director for Intergovernmental Affairs”) and tweeted it to his 3.2 million followers. He appeared in New Jersey wearing a bomber jacket rather than a suit to demonstrate that when the going gets tough the tough get out a monogrammed Air Force One bomber jacket. He announced that he’d instructed his officials to answer all calls within 15 minutes because in America “we leave nobody behind.” By doing all this, the president “shows” he “cares” — which is true in the sense that in Benghazi he was willing to leave the entire consulate staff behind, and nobody had their calls answered within seven hours, because presumably he didn't care. So John Brennan, the Counter-terrorism guy, and Tony Blinken, the National Security honcho, briefed the president on the stiff breeze, but on September 11, 2012, when a little counter-terrorism was called for, nobody bothered calling the Counter-terrorism Security Group, the senior U.S. counter-terrorism bureaucracy.

Meanwhile, FEMA rumbles on, the “emergency-management agency” that manages emergencies, very expensively, rather than preventing them. Late on the night Sandy made landfall, I heard on the local news that my state’s governor had asked the president to declare a federal emergency in every New Hampshire county so that federal funds could be “unlocked.” A quarter-million people in the Granite State were out of power. It was reported that, beyond our borders, 8 million people in a dozen states were out of power.

Don't cry for me, François

France no longer has its own currency and sovereign monetary control levers. It is at the mercy of others

By Ambrose Evans-Pritchard

French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.

The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.

"The election promises of the French president are going to shatter on the walls of economic reality," he said in Paris.

The backsliding in the retirement age is indefensible and "cannot be financed". Two or three more blunders of this kind and "reality will catch up with out French friends".

Mr Schröder knows what it takes to claw back competitiveness. He lost his chancellorship on the Hartz IV labour reforms.

This tale of political sacrifice can be exaggerated of course. The Hartz IV reforms are not the chief reason why Germany is super-competitive today within EMU. The country’s hiring and firing laws are among the least reformed in the OECD to this day.

The Teutonic machine regained a labour edge by screwing down wages for year after year (as companies like VW threatened to relocate plant to Eastern Europe). It was an internal devaluation. Hartz IV was the icing on the cake.

Empty Promises and Diminishing Trust

Anticipating the Devolution of Big Government

by Charles Hugh-Smith

With the US elections approaching next week, as well as the threat of another fiscal cliff showdown looming, we asked contributing editor Charles Hugh Smith to revisit his earlier work on how the expansive Central State has come to dominate both private society (i.e., the community) and the marketplace, to the detriment of the nation’s social and economic stability. In this updated installment, we will examine six critical dynamics that will lead to the devolution of Peak Government.

Massive Borrowing

In a misguided attempt to maintain an unsustainable Status Quo, the Federal government is borrowing unprecedented amounts of money that then must be serviced.  And the Federal Reserve is expanding its balance sheet by trillions of dollars (“printing money”) and intervening in stock, bond, and other markets for the purposes of managing perception (“the recovery is here!”)

These government funds are not just paying the government’s bills – they are being used to guarantee loans and mortgages that subsequently enter default, transferring what was private debt to the public and subsidizing politically powerful special interests.

Guarantees and subsidies both incentivize what is known as moral hazard: the separation of risk from consequence.  This can be summarized very simply.  People who are not exposed to risk act completely differently than those who are exposed to risk.  When risk has been transferred to the taxpayers by guarantees, give-aways, and subsidies, then speculation and mal-investment are incentivized.  If the bet pays off, I get to keep the gain, but if it loses, then I personally lose nothing, as the loss is transferred to the taxpayers.

Lonely leftists vs fantasy fascists

The far right is falling apart, but leftists keep on scaremongering about these ‘bloody nasty people’

by Patrick Hayes 

In the conclusion to his book Bloody Nasty People: The Rise of Britain’s Far Right, Daniel Trilling lists ‘10 myths about Britain’s far right’, and begins first and foremost with the ‘myth’ that ‘the threat has passed’. His attempt to puncture this myth is lame – the British National Party (BNP), he acknowledges, is now a ‘failed project’. It has been all but wiped out in elections and is riddled with internal divisions. All he can do is point to the English Defence League’s (EDL’s) declaration of support for the recently formed British Freedom Party (BFP) in April this year as evidence of a ‘new vehicle’ for the far right.

Unfortunately for Trilling, EDL leader Tommy Robinson has already quit the BFP and currently languishes in jail, accused of entering the US under a false identity. The EDL itself is now having problems mobilising more than a couple of hundred people for a demo and its central Facebook page, with its 79,000 ‘supporters’ that Trilling cites as evidence of its ascendancy, has shut down.

A reader of Trilling’s book may then be puzzled. Why is a left-wing journalist dedicating his time to writing a book subtitled ‘the rise of the far right’ at a time when the far right in Britain is in no way on the rise? The only way Trilling’s subtitle is accurate is if you see it as giving a historical account of the rise of the BNP following the collapse of the National Front. But Trilling is no historian. A far more interesting phenomenon to discuss at the moment would be the decline of far-right groups in the UK at present and their failure to gain significant purchase with the public. 

The Invisible Hand in Popular Culture

Screening Liberty

By JORDAN BLOOM

It’s easy to flip through television channels today and see a wasteland, from the redneck voyeurism of “Here Comes Honey Boo Boo” to forgettable crime shows and bad suburban comedies. Critics gush over the latest high-budget network drama, while the real heavyweight ratings battle is duked out between the likes of Merv Griffin, Judge Judy, and Dr. Phil. There’s a temptation to view television, as well as most movies, as too compromised to commercial pressure to be a legitimate artistic medium.

The critical establishment generally adopts some version of this pose. As Paul Cantor puts it in his new book, The Invisible Hand in Popular Culture, critics inside and out of the academy tend to “treat culture as a realm of unfreedom, dwelling on the constraints under which would-be creative people necessarily operate.” Or worse, they hold the view—inherited from poststructuralists or the cultural Marxists of the Frankfurt School—that pop culture is actively deceptive, giving people a false sense of satisfaction while “producing forms of debased entertainment to numb the American people into submission to their capitalist masters.”

All that is what Cantor—by day a Shakespeare scholar at the University of Virginia—seeks to refute. In addition to his literary scholarship, he’s harbored an enduring interest in Austrian Economics and libertarian thought, ever since as a young man he attended lectures by Ludwig von Mises in New York City. His latest project has been to draw these literary and libertarian pursuits together, first producing a book on television entitledGilligan Unbound and then co-writing the more highbrow Literature and the Economics of Liberty. The Invisible Hand in Popular Culture is the next step, an episodic libertarian history of film and television.

Changing the way sovereign debt works

Victory for a US vulture fund that could make solving the euro crisis even more difficult

By Tim Fernholz

When bankers and public officials huddle around tables in Brussels and Athens, trying to figure out how to keep Greece in the euro, their problems might be compounded by a lawsuit brought by an ornery US investment fund.

Whether seizing an historic Argentine naval vessel or trying to take the gold Argentina keeps in the New York Federal Reserve, the efforts of the New York hedge fund Elliott Associates and its subsidiaries  to recoup money the country owes them are relentless. Thanks to an Oct. 26 decision (pdf) in a federal circuit court, they are more likely than ever to get paid—and change the way sovereign debt works.

In 2001, Argentina defaulted on its debt. It eventually went through two restructurings, in 2005 and 2010, to begin paying consenting bond holders between 25 and 29 cents on the dollar value of its bonds (i.e., a “haircut” of up to 75%). Elliott, earning the moniker of “vulture fund,” had bought up the country’s debt on the cheap and did not participate in these restructurings, holding out and suing the country in US court for the $1.33 billion face value of its bonds.

Why is it so difficult for Greece to reform

In a Dysfunctional Status Quo, Reform Triggers Collapse

by Charles Hugh Smith

The dream of every conventional reform movement is to rid the system of its dysfunctional features while preserving the Status Quo.

But what the reformers don't understand is that the Status Quo is dysfunctional not because of bad policies or a few corrupt officials--it is corrupt and dysfunctional from the ground up.

Dismantle the dysfunctional parts and you've dismantled the entire Status Quo.

This is why it is so difficult for countries to reform their dysfunctional regimes. Consider China, everyone's favorite example that trees can indeed grow to the sky and beyond:

Reform unlikely, says China expert Roderick MacFarquhar (via Maoxian)

MacFarquhar, a professor of history and political science at Harvard University, said the vested interests of the political elite were so entrenched in a corrupt system that an overhaul would amount to dismantling the regime.

Germany's Schaeuble says debt reduction is global task

No sustainable growth can be built on a mountain of debt

By Gernot Heller

The United States and Japan must share responsibility with Europe for ensuring global economic stability, German Finance Minister Wolfgang Schaeuble said, signaling that a G20 meeting this weekend should not focus solely on the euro zone crisis.

Speaking in an interview before finance ministers and central bankers from the Group of 20 nations meet in Mexico, he said top economies must pursue structural reforms and fiscal consolidation to win back market trust and build sustainable growth.

Schaeuble also said in emailed answers to questions submitted by Reuters that he saw no danger of delay in the introduction of Basel III rules on banking capital that are due to be phased in from January.

Schaeuble does not want the two-day G20 meeting in Mexico City to concentrate exclusively on the euro zone crisis to the detriment of other urgent issues such as the "fiscal cliff" facing the United States and Japan's debt problems.

The Unadulterated Gold Standard

Free Market Gold

by Keith Weiner

The choice of the word “unadulterated” is not accidental.  There were many different kinds of gold standard, including what we now call the Classical Gold Standard, the Gold Bullion Standard, and the Gold Exchange Standard.  Each contained flaws; each was adulterated.

For example, in the Coinage Act of 1792, the government forced the price of one thing to be fixed in terms of another thing.  The mechanism was in Section 11:

“And be it further enacted, That ”the proportional value of gold to silver in all coins which shall by law be current as money within the United States, shall be as fifteen to one…”

Of course, people respond to such distortions.  When the government fixes the price of something too low, then people will hoard or export it.  If the price is fixed too high, then they will flood the market with it.

Drugs addict sons, make widows in Punjab

Punjab faces the loss an entire generation to killer drugs

By Priyanka Bhardwaj 

For once Rahul Gandhi uttered the right words when he stated an indigestible fact that human resource potential of Punjab in the northwest of India is being destroyed because seven out of every 10 young men are addicted to drugs. 

The scion of India's longest-running political dynasty had no sooner opened his mouth, at a rally organized by National Students University of India at Punjab University campus in state capital of Chandigarh, than the states' ruling Shiromani Akali Dal-Bharatiya Janata Party (BJP) alliance and sundry detractors accused him of making "derogatory, irresponsible" public statements and demanded a public apology. 

Rahul, general-secretary of the Indian National Congress party, had merely cited from a report prepared by the current state regime, and also referred to in another document of Punjab government entitled State Disaster Management Plan For 2010-11, which reads "some 73.5 per cent of state's youth between 16 and 35 years are confirmed drug addicts." 

Desperate French Government Threatens To “Requisition” Vacant Buildings

Regardless of who owns them

By Wolf Richter   

Prime Minister Jean-Marc Ayrault made it official: the government would requisition vacant buildings regardless of who owned them, including office buildings. It would then convert them to apartments and make them available to the homeless and the “badly housed.”

As a first step, he asked for “an inventory of available buildings.” That list should be on his desk in “a few weeks,” he said. He was in a rush to identify these properties “so that we can undertake at least several operations in January and February 2013.” A desperate move to halt the collapse of his numbers. And another broadside at investors.

It’s getting tough for him and President François Hollande. As France sinks deeper into its economic mire, people are losing patience: those who still have confidence in Hollande plunged to 36%, the lowest level of any president six months after taking office (the data go back to 1981). He dropped to 31% among workers —a catastrophe for a Socialist—and to 21% among shop keepers, artisans, business owners, and CEOs [they’d already stirred up the pot: A Capitalist Revolt in Socialist France].

Greek, European Officials Dispute Budget Reprieve

No End In Sight

By ALKMAN GRANITSAS And STELIOS BOURAS

Greece said Wednesday that a loan agreement it is negotiating with its creditors would give the country an additional two years to meet its budget targets in exchange for deep budget cuts and other measures.

Senior euro-zone officials, however, said no deal has been reached and no extension has been granted because a report by representatives of the country's creditors on Greece's progress on repairing its economy wasn't ready. Greece's creditors, the euro zone and the International Monetary Fund, are still at odds over how to come up with as much as €20 billion ($26 billion) necessary to finance the delay.

But a draft of the loan agreement indicated Greece would be given extra time. Under the terms of that draft, being negotiated by the Greek government and a delegation of inspectors from the so-called troika—the European Commission, the IMF and the European Central Bank—Greece would have until the end of 2016 to meet a targeted budget surplus of 4.5%, before taking into account interest payments on the national debt

Currently, Greece has until the end of 2014 to meet that target.

Will the Kurds Get Their Way?

Kurdish Nation-Building and State-Making

By OFRA BENGIO

The turn of the 21^st century marks a definite period of Kurdish awakening. This social revolution is occurring separately within each of the four communities, but also through trans-border activities that are increasingly bringing the groups’ political consciousness together. It is a revolution that is very likely to shake the geostrategic pillars of the Middle East to their foundations. 

In some ways, the rising Kurdish wave resembles the somewhat more advanced Tuareg wave in North Africa and the western Sahel. The Tuareg rising has already destroyed the territorial integrity and political order of one state, Mali, and threatens others. The Kurdish rising may very well do the same. 

Wary of Future, Professionals Leave China in Record Numbers

Some people want to live in a more transparent and democratic society

By IAN JOHNSON

BEIJING — At 30, Chen Kuo had what many Chinese dream of: her own apartment and a well-paying job at a multinational corporation. But in mid-October, Ms. Chen boarded a midnight flight for Australia to begin a new life with no sure prospects.

Like hundreds of thousands of Chinese who leave each year, she was driven by an overriding sense that she could do better outside China. Despite China’s tremendous economic successes in recent years, she was lured by Australia’s healthier environment, robust social services and the freedom to start a family in a country that guarantees religious freedoms.

“It’s very stressful in China — sometimes I was working 128 hours a week for my auditing company,” Ms. Chen said in her Beijing apartment a few hours before leaving. “And it will be easier raising my children as Christians abroad. It is more free in Australia.”

The Third Industrial Revolution

Why yesterday's plan for the economy won't work for tomorrow

BY DAVID ROTHKOPF

In the late 19th century, roughly half of Americans worked in agriculture. By 2000, that fraction had fallen to under 2 percent. During the last century alone, we have seen those involved in the production of goods (from mining to manufacturing to construction) fall from about a third of the population to just under one in five. Over the same period, the proportion of Americans involved in services more than doubled, from 31 percent in 1900 to almost 80 percent by the turn of the last century. Since 1900, the number of farms in the United States has fallen 63 percent, and the average farm size has grown by two-thirds.

The U.S. economy has, in the past 150 years, seen stunning changes. It has gone from agrarian to industrialized, from primarily rural to primarily urban and suburban -- from one in which primarily men worked to one in which by 2010 more than half of professional workers were women, from one in which most people did not complete high school to one in which 40 percent of 18- to 24-year-olds are enrolled in college, from one in which most American companies made their money in the United States to one in which about half the sales of S&P 500 companies come from other countries.

Entering the Greatest Depression in History

More Bubbles Waiting to Burst

By Andrew Gavin Marshall

Introduction

While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which dwarf the housing bubble burst of 2008. Indicators show that the next possible burst is the commercial real estate bubble. However, the main event on the horizon is the “bailout bubble” and the general world debt bubble, which will plunge the world into a Great Depression the likes of which have never before been seen.

Housing Crash Still Not Over

The housing real estate market, despite numbers indicating an upward trend, is still in trouble, as, “Houses are taking months to sell. Many buyers are having trouble getting financing as lenders and appraisers struggle to figure out what houses are really worth in the wake of the collapse.” Further, “the overall market remains very soft [...] aside from speculators and first-time buyers.” Dean Baker, co-director of the Center for Economic and Policy Research in Washington said, “It would be wrong to imagine that we have hit a turning point in the market,” as “There is still an enormous oversupply of housing, which means that the direction of house prices will almost certainly continue to be downward.” Foreclosures are still rising in many states “such as Nevada, Georgia and Utah, and economists say rising unemployment may push foreclosures higher into next year.” Clearly, the housing crisis is still not at an end.[1]

A Most Secret Tragedy

The Great Leap Forward aimed to make China an industrial giant—instead it killed 45 million

Closely monitored by the authorities Ganzu province. Yumen. 1958. Whatever the city, whatever the region, the sound of drums and cymbals announces a workers delegation marching to administration headquarters to tell of a new high in their production. Oil workers from the Petrol Combine, whose production has jumped 200% in the past ten years.

By MICHAEL FATHERS

It is difficult to look dispassionately at some 45 million dead. It was not war that produced this shocking number, nor natural disaster. It was a man. It was politics and one man's vanity. The cause was famine and violence across rural China, a result of Mao Zedong's unchecked drive to turn his country rapidly into a communist utopia and a leading industrial nation.

The dead were in effect victims of Mao's determination, at the end of the 1950s, to push the Soviet Union off its perch as leader of the world communist movement following Nikita Khrushchev's denunciation of Stalin. Khrushchev had boasted in May 1957 that the Soviet Union would overtake the United States as the world's leading industrial and agricultural power within 10 years. Mao sought a similar goal for China, but over a much shorter period. In "Tombstone," Yang Jisheng quotes the words of Mao, which became a rallying call: "go all out, aim high, and achieve greater, faster, better and more economical results in socialist construction."

Destructive Aliens

The Broken-Window Fallacy

by Robert P. Murphy

Free-market economists have triumphantly cited the broken-window fallacy whenever someone opines that a destructive act, whether a natural disaster or man-made catastrophe, is paradoxically "good for the economy." The reference is to a classic lesson given by the economist Frédéric Bastiat in 1850.

Especially after Paul Krugman went on CNN and discussed the virtues of faking an alien invasion, libertarians were having a field day with the "broken-window" charge. The so-called progressive Left have been pushing back, claiming that Krugman's critics don't really understand what Bastiat was saying.

Organised Crime Is Thriving in US

Federal & Local Law Enforcement Agencies Try to Take Family Motel from Innocent Owners

Russ Caswell and his family have owned and operated the Motel Caswell in Tewksbury, Mass., for two generations.  The Caswells may have their property taken from them by local and federal law enforcement officials through a process known as “civil forfeiture.

by The Institute of Justice

Imagine you own a million-dollar piece of property free and clear, but then the federal government and local law enforcement agents announce that they are going to take it from you, not compensate you one dime, and then use the money they get from selling your land to pad their budgets—all this even though you have never so much as been accused of a crime, let alone convicted of one.

That is the nightmare Russ Caswell and his family is now facing in Tewksbury, Mass., where they stand to lose the family-operated motel they have owned for two generations.

Markets in everything

Vintage typewriters replace computer keyboards

By Mark J. Perry

Advertised here as a:

“A groundbreaking advancement in the field of obsolescence!”

“Our USB Typewriter circuitry can transform your manual typewriter into a retro-futuristic marvel. Use a gorgeous vintage typewriter as the main keyboard for your Mac or PC, or type with ink-on-paper while electronically recording your keystrokes! The USB Typewriter also makes an outstanding keyboard dock for your iPad or tablet PC.”

European Eyes Open Wide Shut

Not Exactly The Greek Orthodox

By Mark Grant

God asked Adam, "What's wrong?" Adam replied, "I'm lonely." So God said: "Adam, I will make you a partner. She will wash and cook and clean for you, she will listen to what you have to say and never interrupt you. She won't nag you about your actions and she will even bear your children. She will stay loyal to you and never be influenced by other men." So Adam asked, "Well, what's his gonna cost me?" 

“An arm and a leg,” said God. Then Adam asked, "Well what can I get for a rib?"  And the rest is history. It is always the history that matters; if you pay attention. 

It has been almost three years since I said that Greece would go bankrupt. I first made that pronouncement on January 13, 2010 and advised exiting the credit. The yield on the Greek ten year was 4.38%. Lots of water underneath the bridge since then. Greece has made a second run at it, Portugal plunged into the rapids, Ireland grabbed its banks and headed over the falls and now Greece is about to take a third try at obliteration. I have stated and long held the view that Greece would keep on with it until the very last Euro that could be soaked from Europe was handed out and then the game would stop.

Where is the Cash ?

Spain Announces Yet Another Impossible Solution to Its Problems

By Graham Summers

Spain continues to heap one impossible idea on top of another.

The latest “plan” consists of Spain creating a bad bank called SAREB that will buy up bad assets in Spain in an effort to clean up the country’s finances.

SAREB was part of the €100 billion Spanish bailout plan which was set forth in June. Once again, none of it makes any sense.

          Spain's Bad Bank to Buy Up Assets

SAREB, which is set to begin operations on Dec. 1, will absorb soured investments that have dragged down the balance sheets of Spanish banks since the collapse of the country's housing market four years ago.

Fernando Restoy, head of Spain's bank-bailout fund, said SAREB will likely purchase about €60 billion of toxic assets using Spanish resources and some of the funds allocated under the bank-bailout agreement 

It will apply an average 63% discount on land and housing units and an average 46% discount on real estate loans, he said, and will aim to sell the assets to investors over the next 15 years, with a return on investment of at least 14% for any investors in the bad bank.

 Wait a second… isn't Spain bankrupt?

An Iceberg Called Bernanke

Manipulating interest rates is only the tip of the Federal Reserve’s agenda

By CHARLES HUGH SMITH

No wonder the policies of the Federal Reserve are so widely misunderstood: in many ways the Fed is like an iceberg, with its public pronouncements being only the visible 10 percent above water. The real mass of the Fed’s actions lies beneath the surface, invisible to us mere citizens.

Consider the Fed’s public mandate, which is to “promote stable prices, maximum sustainable output and employment.” This is solid public relations, selflessly focused on the good of the nation, but it’s also deeply disingenuous, as the Fed’s less PR-pretty agenda is rather obviously to preserve the banking sector’s profits and power.

We can find clues to the Fed’s real goals in its actions behind closed doors—the 90 percent of the iceberg that’s out of public view.

On the surface, the Fed has increased its balance sheet by about $2 trillion since the 2008 global financial crisis. This electronically created money purchased about $1.1 trillion in mortgage-backed securities (MBS) to support the housing market and $1 trillion in Treasury bonds to keep interest rates low. These two goals—super-low interest rates (also known as “zero interest rate policy,” or ZIRP) and supporting assets such as housing and stocks—are the core strategies the Fed publicly deploys to boost growth and employment.

Supporting the banks is not mentioned, for obvious PR reasons. Yet a Government Accountability Office audit found that the Fed provided $16.1 trillion in “emergency program” loans to global banks from 2007 to 2010. A Levy Institute study uncovered a total of $29 trillion in Fed support—roughly ten times larger than the Fed’s public programs. For context, the annual U.S. gross domestic product is about $15 trillion.

This suggests we should take the Fed’s assurances that its policies are all for the public good with a grain of salt roughly the size of the Fed’s D.C. headquarters at 20th and Constitution Avenue.

Who Is for Hope and Change?

A band of brethren united, no more

By PATRICK J. BUCHANAN

“Providence has been pleased to give this one connected country to one united people — a people descended from the same ancestors, speaking the same language, professing the same religion, attached to the same principles of government, very similar in their manners and customs, and who, by their joint counsels, arms, and efforts, fighting side by side throughout a long and bloody war, have nobly established general liberty and independence.”

So wrote John Jay in Federalist No. 2, wherein he describes Americans as a “band of brethren united to each other by the strongest ties.”

That “band of brethren united” no longer exists.

No longer are we “descended from the same ancestors.”

Indeed, as we are daily instructed, it is our “diversity” – our citizens can trace their ancestors to every member state of the United Nations — that “is our strength.” And this diversity makes us a stronger, better country than the America of Eisenhower and JFK.

No longer do we speak the same language. To tens of millions, Spanish is their language. Millions more do not use English in their homes. Nor are their children taught in English in the schools.

Killing Economic Prosperity

Debt And Deficits 

by Lance Robert

What is really causing the economic malaise that the U.S. faces today?  Most economists believe that it is the lack of aggregate demand that is causing the problem which can be rectified by continued deficit spending.  The current Administration believes that it is simply the lack of the "rich"  not paying their "fair share" and that a redistribution of wealth will solve the issue.  Romney believes that his 5-point plan will create 12 million jobs in the near future.  All are wrong.   

Raising Taxes Ain't Gonna Do It

First of all, as we have discussed in the past, raising taxes and redistributing wealth will impede economic growth.  Louis Woodhill put it best:  

"To 'tax' is to take away something from someone and give it to the government. 'The rich' are rich because they own a lot of assets. So, what it means to 'tax the rich' is to take assets away from rich people and transfer them to the government.

So, what are the assets that the rich own? The rich don't have money bins full of cash, like Scrooge McDuck. Rather, they own things like factories, office buildings, and oil wells, either directly or indirectly via stocks and bonds. In other words, the rich own most of the 'nonresidential fixed assets' of the nation. These assets certainly count as 'wealth', but what they are physically are the tools that workers use to produce America's GDP.”

This is critically important to understand.  By increasing taxes, to generate additional revenue for the government, you decrease the available capital that could be used for productive investments.  Since the government doesn’t want factories, office buildings, or oil wells, but rather cash, this forces the liquidation of productive investments thereby reducing capacity for economic growth.