This is what my friend and colleague Gary Gibson wrote in his own introduction to Whiskey & Gunpowder, an innovative product that began in 2005. Its mission has been to explore the outer edges of economic, financial, and political thinking.

It’s tone has been unapologetically radical. Even before I took on Laissez Faire Books in 2011, Whiskey had a great reputation on the street. “I love that newsletter,” is what I often heard.

Three years after its founding, the economy entered into its greatest depression since the 1930s, one that continues to this day. And though the politicians don’t talk about it, the link to the egregious policies of the 2000s were directly responsible in so many ways. It was a straight shot from 2001 through 2008.

But the politicians and central bankers promised to save us! They didn’t. They squandered trillions in resources, rescued failing institutions, wrapped the economy in another layer of regulations, scrambled for more power, drove interest rates to zero, and sucked the private economy dry to rescue their friends. They said that this was for the benefit of the people.

It wasn’t. Once the various tricks and rackets had run their course, the true state of the economy became obvious. It’s not just that unemployment remained high. The jobs people were getting paid less. Median income fell more after the recession was officially declared to be over. Household net worth has been wrecked and not recovered.

Prosperity and freedom are linked. Where people are free and property is secure, and where society is permitted to manage itself, prosperity flourishes. So it is not a surprise that we see too a grim picture of freedom in the United States. Under the guise of protecting our security, the state now believes it is entitled to spy on us, stop us at checkpoints, monitor our communications, and associations, and do so in brutal ways.

It sounds like a dystopian novel. We were promised one thing and given another. And it also sounds very familiar. It is the conditions that led to the great uprisings after which Whiskey & Gunpowder was named. This newsletter has been prophetic!

What is the next step? Fortuitously, Agora Financial bought Laissez Faire Books in 2010. This venerable institution was founded in 1972 to provide the crucial thing: the means to intellectual enlightenment. Ideas are the infrastructure and impetus of great social change. For this reason, Laissez Faire Books <http://lfb.org> practically built what is called the “liberty movement” as it stands today. And in November 2011, I came on board to help with reviving the institution and bringing it into the digital age.

In Laissez Faire Today, a daily newsletter that covers economics, technology, and liberty, we embrace the themes of Whiskey & Gunpowder and broaden them further.

You are not alone in the struggle to live a free life even in these times. You have like-minded friends and intellectual companions to travel with on the journey.

How will liberty be reclaimed in our time? I seriously doubt that politics is going to make it possible. The state will be outrun and overwhelmed when we build the right kind of networks of communication and learning. It will happen when the state that has strangled so much hope is revealed to be a burdensome anachronism. The force of history will sweep it away.

But it won’t happen automatically. It will happen only when we take the right steps, to educate ourselves, improve our lives, and build geographically non-contiguous communities of share interest. And it will happen when we can do this together, securely and with enlightened explorations of new approach and new ideas.

“Instead of barrels of gunpowder, we’re going to be trafficking in books and ideas,” says Gary.

If I had to choose ideas or guns, I would choose the ideas every time. It’s the ideas that build society and change history. They penetrate deeply and make the real difference. You can see in societies where states with guns rule the day: all rule by force is temporary. The hearts and minds of people at the things that are determinative of the course of history.

We don’t have much time to act. Now is the time to dig down and get serious about ideas. We invite you to join me, Gary Gibson, and so many others, in the Laissez Faire Club and start making a real difference in your own life and the future.

Whiskey & Gunpowder deserves a high place in the history of the resistance. It’s archive will remain, but now its mission is carried on by Laissez Faire.

Regards,
Jeffrey Tucker

From Whiskey to Laissez Faire was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

It seems like an odd result for a man to be in such a hurry to get, at least until you consider the alternative.

Guy had just watched his fellow English Catholic conspirators hanged until nearly dead. Then they were cut down and had their most private parts and entrails removed and burned before their eyes. Then they were beheaded.

This all happened to Guy Fawkes, too…except wily Guy made sure he was too dead to notice.

What offense warranted torture and dismemberment? The conspirators had felt that the crown was making life miserable for the Catholic minority in England…and in truth, the crown was doing exactly that. So they decided to pack a few dozen barrels of gunpowder under Parliament and blow up the king.

The conspiracy was uncovered and thwarted. Torture, confessions and painful executions followed. So ended the Gunpowder Plot.

The Whiskey Rebellion

Our own local rebellion for Independence nearly 200 years later had a much, much higher body count. By the end of it, this country’s founders got this government thing as right as any human ever had. They came up with a Constitution that’s purpose was to limit government’s reach into the life of the governed.

We only wish that Constitution hadn’t been continually ignored almost immediately after that.

The fledgling and recently united states had massive debts by the end of the Revolutionary War. The new centralized government assumed these debts, but it didn’t have any honest way to pay them off. Governments, you see, don’t actually have any money of their own; they steal it from their productive private citizens or borrow it into existence from their central banks.

Alexander Hamilton hadn’t convinced Congress to charter a central bank yet…so he instead convinced it to tax whiskey, which had become commodity money in the far reaches of the frontier.

The tax resulted in protest and revolt. Gen. Washington got back on his horse and led federal forces to Pittsburgh to put down the Whiskey Rebellion. For the first time under the new United States Constitution, the federal government used military force to impose its will over U.S. citizens.

The Constitution itself was a compromise between the much more government-restraining Articles of Confederation and the desire by some (like that Scottish bastard Hamilton) who wanted a stronger centralized government. Government would eventually break the Constitution’s boundaries anyway and ooze its way into every aspect of citizens’ lives. In truth, the process started before the ink on the new Constitution had dried.

It’s a story as old as human civilization. The humble village and modest republic eventually grows into a bumbling empire; liberty diminishes; death and taxes come along for the ride.

Anarchists and various anti-government types often appropriate a stylized simulacrum of Guy Fawkes’ face as their symbol because Guy was the one caught preparing the barrels of gunpowder. He is most closely associated with the anti-government plot in the popular imagination…

But Guy wasn’t interested in permanently or drastically reducing the reach of power of government; he merely wanted a Catholic monarch in power to persecute the Protestants, instead of the prevailing situation in which a Protestant monarch was persecuting the Catholic minority.

Guy was actually much like your garden-variety nationalist. He wanted his kind of people in power. This is not unlike the supporters of the few politicians we like — like Ron Paul.

But around this Bar, we will be raising the question of how much government is best. Maybe it’s none at all. Is it more productive to work with the existing political system to try to change it…or to put the bloated mess to a merciful end and start over?

We’re not promoting violence. No, our gunpowder is less physical, but it’s even more potent…

Instead of barrels of gunpowder, we’re going to be trafficking in books and ideas. From Adam Smith to von Mises, Rothbard, Hayek and beyond.

We’ll explore the works of the greats of the Austrian School of economics, as well as the Chicago School…and the Objectivists, paleo-conservatives, classical liberals and all those who help us question the place of the state and the far-reaching consequences of the political and economic policies we’re forced to live with.

There are the issues about taxation, central banking, fiat money, commodity money, government intervention into markets…

We have a lot to cover.

Gary Gibson
Managing editor, Whiskey & Gunpowder

Why Whiskey & Gunpowder… And Why Now? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Mr. Weldon has not written a book, so it is difficult for me to know exactly what his monetary theory is. He was the unknown Keynesian in the 2011 BBC debate between two teams of economists at the London School of Economics: The Keynes vs. Hayek debate. I assume that Robert Skidelsky, his partner, thought he was an up-and-coming economist. Skidelsky is the author of a multi-volume biography of Keynes.

I think it would be a useful exercise to go through Mr. Weldon’s case against gold. Clearly, he expects people to take it seriously. While I cannot bring myself to do this, having actually read it, I do think some editor at The Guardian took it seriously, even though he also read it.

GOLD BUGS UNDER EVERY BED

He begins with an historical statement.

“Ever since Richard Nixon ended the convertibility of the US dollar into gold in 1971, there have been calls for a return to some form of gold standard. Proponents of this view, often known as “gold bugs”, want to see an end to paper money guaranteed by promises and for currencies to once more be backed by precious metal. In the last few years as central banks around the world have engaged in quantitative easing to try and support their economies these voices have become louder.”

This is surely comforting to any gold bug who is old enough to remember Nixon’s announcement, made when Mr. Weldon’s parents were teenagers. At the time, the number of gold bugs was limited to a handful of Austrian School economists and a few elderly souls who could actually remember the pre-1933 American gold coin standard.

Over the next decade, the “hard money” newsletter industry blossomed in the United States, but the number of gold bugs who had access to the mainstream media was still not much larger than a few dozen people. I may be exaggerating these numbers. I cannot think of any gold bug in a professorial position in Great Britain.

THE RHETORIC OF CONTEMPT

Having misled the readers regarding the size and influence of the gold standard’s acolytes, he gets rolling.

“The specific appeal of gold can be hard to rationalise: it might be aesthetically pleasing, but does that make it a sound basis for a monetary system?”

I see. Aesthetically pleasing. It’s a matter of taste. Nothing substantive, you understand.

Note: as a debater for over 50 years, I recognize this tactic. When a debater indulges in the rhetoric of contempt in his opening arguments, we can be sure of three things: (1) he thinks he has the judges on his side; (2) he has not got a strong substantive case; (3) he thinks his opponent has only recently fallen off the proverbial turnip truck.

“Sometimes I wonder if gold bugs just listened to too much Spandau Ballet in the 1980s.”

I cannot say that I am familiar with the Spandau Ballet. Wikipedia informs us that it was a popular rock band in Great Britain. What it has to do with gold eludes me. The phrase “too clever by half” comes to mind.

“Robert Skidelsky argued that supporters of the gold standard have an almost atavistic belief in its powers, rooted in the age-old worship of sun gods.”

I am quite familiar with Skidelsky’s work. He is an economist-turned hagiographer. Of his eleven books listed in his Wikipedia entry, five are on Keynes. None is on any aspect of economic theory, including monetary theory.

So far, in his first two paragraphs, Mr. Weldon has used three examples of rhetorical contempt, but no substance.

This strategy plays well in the debate societies at Oxford and Cambridge, but it does not play well across the English Channel, let alone across the Atlantic. Mr. Weldon is clearly uninterested in any audience beyond Oxbridge and the Labor Party.

THE “DISASTER” OF FALLING PRICES

Here, he identifies the enemy position of all Keynesians.

“What they tend to ignore is that the world has tried the gold standard before and it was, in most respects, a disaster.”

Here is a statement. It is a conclusion. It is not an argument.

The world tried the international gold standard from 1815 until the outbreak of World War I 1914, which was the greatest period of economic growth in recorded history. The world of 1900 would have been unrecognizable in its wealth for the masses by someone getting out of a time machine activated in 1800.

“At present, as the economy grows and produces more goods the central bank can expand the money supply to keep up with output. Under the gold standard, as output increases, the money supply will be fixed and with more goods but the same amount of money, prices will tend to fall.”

So, prices tend to fall under the gold standard. The horror! Why, the whole consumer price index would begin to resemble the cost of computing: ever less expensive.

We must understand Mr. Weldon’s argument in the light of economic theory and economic history since 1800. Economic theory teaches that economic growth reduces the effects of scarcity. A world without scarcity would be a world where demand and supply balance at zero price. Therefore, when there is economic growth, we should expect to see a world in which consumer prices are falling in the direction of zero prices. The gold standard fostered a world which conforms to the traditional call of economists, who preach the doctrine of salvation by economic growth.

Mr Weldon is appalled by such a conclusion. Why? Because it points to a very great advantage of the traditional gold standard: reduced consumer prices. So, he invokes falling prices as evidence of the gold coin standard’s disaster. He therefore implicitly invokes the good old days: greater scarcity, greater poverty, and the all-round economic misery, a la 1800.

I am not using the rhetoric of contempt … yet. This really is the logic of his position.

He continues.

“Falling prices might sound like a good thing, and in individual cases they often are, but a falling general price level is usually associated with severe economic strains. Why buy anything today if it will be cheaper next week? The end result tends to be falling output, rising unemployment, falling wages and a large increase in the real burden of debt.”

When he says “usually,” he means usually since the end of World War I, in which the gold coin standard was abandoned in the West, except in the United States and the United Kingdom, 1925 to 1931, when Winston Churchill unwisely re-established the gold standard at the pre-War price, ignoring a decade of mass inflation. He did this for political reasons. The fake exchange rate maintained the convenient illusion: the fact that the men – he and his colleagues – who had taken the nation into that disastrous war and then had destroyed the pre-War pound sterling as an effect of their financing of the War through currency expansion had not in fact ruined the pound.

Most economists now accept that both the Long Depression of 1873 to 1896 and the Great Depression of the 1930s were aggravated by the gold standard. In the 1930s the sooner countries came off gold, the faster they recovered.

The period of 1873 to 1896 was the single most productive economic period of comparable length in mankind’s history. In the section of Friedman and Schwartz’s book, A Monetary History of the United States (1963), which the Keynesian economics guild never cites, they proved this with respect to the economic statistics of the United States.

As for economic recovery after 1930, the main nation to recover was Nazi Germany, which used monetary inflation, price and wage controls, rationing, and violence against trade unions as the primary policy tools of economic growth. The Nazi state held down nominal prices by the threat of violence, thereby cutting real wages, so the statistics looked like recovery. The story of this “recovery” is found in Adam Tooze’s book, The Wages of Destruction.

TWO KINDS OF DEMOCRACY

Here, he raises the issue of democracy.

“A gold standard means that monetary policy and interest rates are set to defend the value of a currency against a metal rather than to reflect economic conditions in the country. As professor Dani Rodrik argued last night, this is fundamentally undemocratic.”

Here, we get to the political heart of the debate. The traditional gold coin standard transfers power over monetary policy to the broad mass of citizens, who can start a run on the banks at any time if they suspect that the central bank – highly undemocratic – is turning to inflation as a way to fund the government’s debt. It is the democracy of the free market, and the democrats of the ballot box despise this aspect of the free market. They want monetary policy controlled by an alliance of central bankers, commercial bankers, and politicians, who all want to run larger national government deficits without raising interest rates.

The opponents of the gold standard are always defenders of the autonomy of central banks from politics. This argument is correct. These banks are indeed autonomous, or close to it. The central bank is the most undemocratic official government institution in every nation. Calling for the insulation of the central bank from politics is politically comparable to calling for the secret police to be independent from politics, except that the secret police only threaten a few thousand people. The central bank’s policies threaten the nation.

“Indeed the real reason that the gold standard could not be resurrected in a sustainable manner after its suspension [in] the first world war was the extension of the franchise to incorporate the working class. Once workers had the vote they were unlikely to support politicians who continually put defending the value of money against gold over defending the number of people in work.”

The working class, through its ownership of gold coins, and its ability to cause a run on the banks by withdrawing their money in small gold coins, was in fact disenfranchised economically after World War I began. They refused to return to the pre-War gold coin standard in 1918. Politicians and bankers did not want to transfer this power back to the masses. Once the central banks in every nation stole the gold from commercial banks, who had stolen the gold coins of the depositors by breaking the contracts of full gold coin redemption on demand, the political elite never again let the masses have their coins.

THE HIRED HELP

The central bankers have long hired bright young economics graduates of Cambridge and Oxford to persuade the middle classes that fiat money creation by a politically independent central bank was just what the nation needed. The central bankers did the same in every Western nation.

“Of course the gold standard had its beneficiaries, most notably in the financial sector. Stable international prices and a very open global capital market in the era of the classical gold standard created a great environment for international bankers.”

Here, he reverses historical causation. It was the banking establishment that opposed the re-establishment of a gold coin standard. Why? Because it reduces the ability of the financial community to make massive profits through fractional reserves. Fractional reserves provide the leverage that makes large commercial bankers rich. This is why there is no such thing as a commercial bank that has publicly promoted the gold standard. The last major economist to be employed by a large commercial bank to write in favor of the gold standard was Benjamin Anderson. Chase let him write its newsletter. He left Chase and returned to teaching before the outbreak of World War II.

“Economically, the case for the gold standard simply does not stack up and yet it still finds very vocal supporters. Fundamentally the case is political rather than financial. Gold bugs want to see golden handcuffs restraining the ability of central banks to intervene and states to spend, they want to remove any vestige of political control of the monetary system and fix it an arbitrarily chosen shiny metal in order to let free market forces take over. It is therefore no surprise that most gold bugs are to be found on the libertarian right.”

Here, he finally gets to the truth. The issue is indeed deeply political. Gold bugs do indeed want to see golden handcuffs that restrain the ability of central banks to inflate. They want to substitute economic control by the masses who own gold coins for political control by an elite. So, gold bugs are usually found on the libertarian Right.

CONCLUSION

Mr. Weldon is part of a long and distinguished tradition of economists who spend their lives at the feet of central bankers, doing their ideological work for the bankers in exchange for a few scraps that fall from the table.

If you detect the rhetoric of contempt creeping in, you are pretty observant.

These men have baptized the state and the power of monetary debasement as the way of wealth.

Every political class needs its court prophets. Every banking establishment needs politicians who do their bidding. Young men who are not good in physics or chemistry or engineering see their career opportunities at Oxford and Cambridge. They major in economics. The smart ones become bankers. The less smart ones become economists.

The ones who are not smart enough to major in economics major in politics and become politicians.

The bankers hire the economists to tell the politicians what to think.

The economics graduates who are not good enough to get hired by the big banks go into financial journalism.

Regards,

Gary North

Keynesianism Vs. The Gold Coin Standard was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

In fact, over the past few years investors have been flocking to gold and silver.

What’s going on? It’s a worldwide trend. There’s a money migration going on. And I mean BIG money is migrating. It’s like those herds of zebras or wildebeests or gazelles in Africa. When they migrate, the earth shakes and the ground is just a moving kaleidoscope of hides and footprints. The dust clouds blow high into the sky.

Yes, the world economy might be in a recession. People across the world are worried about their job and security for their family. But other people with big bucks are scooping up gold and silver. Those buyers are looking for investment safety, they want to protect and grow their wealth.

Moneyed investors don’t trust the world’s governments or paper currencies (just look what’s happened in the Eurozone in the past few years.) So they are going with gold and silver. The mines and mints are having trouble keeping up with demand. Exchange-traded funds (ETFs like, for example, SPDR Gold Shares (NYSE: GLD) and iShares Silver Trust “SLV”) are buying huge volumes of gold and silver. (And they ought to be buying more. At the margins, at least, it appears that even the ETFs are holding “paper” gold rights, as opposed to the real McCoy metal.)

Who’s Holding the Metal?

Who ever heard of a gold ETF until just a few years ago? But by the end of 2008, gold holdings of ETFs reached a record level of 1,090 tonnes. Today, according to a July report from Bloomberg that number more than doubled, to 2,188 tonnes. Thus, ETF holdings now exceed those of China, Switzerland, Russia and many other large and important nations. (Check the listing below.) These are astonishing levels of demand, where there was almost none just a few years ago.

Just for comparison, here are the approximate gold holdings of a list of major countries, plus the International Monetary Fund (IMF) and the European Central Bank (ECB). Wow!

Individual investors through the ETF’s hold more than quadruple that of the European Central Bank. To say the tides are turning is an understatement — this lends even more reason for you to get your hands on some physical metal.

Think about it. You don’t want to be the guy holding a suitcase full of U.S. bills when the government destroys purchasing power. But in the same sense you don’t want to be the guy holding a “paper” gold certificate when gold is the new world currency. You want the real McCoy metal.

Gold Holding and Gold Hoarding

Much of the gold in the vaults of the worlds’ central banks has accumulated over many decades. Much of the U.S. government gold reserve, for example, dates from the national gold confiscation of 1933 under President Franklin Roosevelt. Roosevelt had a compliant Congress to do his bidding. Eventually, even the Supreme Court backed him up. So what’s that old expression? “It CAN happen here.”

Many other countries of the world are currently buying gold, fresh from the mine. Today, China is the world’s largest gold-producing nation, and its central bank is buying and building reserves. Russia, too, has a tradition of holding gold and today is acquiring gold from its own mine output and via purchases on international markets. India is following the same uptrend. Even countries like Qatar, a small nation in the middle of the Persian Gulf are adding to their gold reserves. What do the Chinese, the Russians, Indians or the Qataris know? They know that they want gold. They can buy it. They will hold it. And they are hoarding it.

The Feel of Real Gold — Useful Weight Gain

I’ve mentioned to my readers on many occasions that I like holding precious metals.

I like holding metals as an investment and I just like the feel of the stuff. At the “elementary” level, you can hold physical metals. If you’ve never felt the coolness and heft of a shiny gold $50 Eagle or a Canadian Maple Leaf in your hand — let alone a fine old specimen of a $20 coin from the days of old in the U.S. — you’ve missed something. Really, the only thing better than holding an Eagle or Maple Leaf is holding an entire roll of 20 of them.

A few years ago, on a trip to South Africa, I visited a refining operation and actually picked up a gold brick. It was almost right out of the melting pot. The brick was still warm, and the darn thing weighed about 75 pounds. There I was, in South Africa holding over 1,000 ounces of gold fresh out of the mine.

At today’s price around $1,600, I was holding over $1.7 million. That’s what I call “useful weight gain.” Too bad I couldn’t bring it home with me (the armed guards at the refinery would have had a say, I’m sure.)

I’ve never made a formal recommendation for buying a particular kind of gold or silver coin, or ingots from this mint or that or any such thing. Those kinds of gold purchases are too hard to track in a newsletter like this.

So traditionally I’ve recommended gold and silver miners and their shares. But after reading this, I hope you have the chance to acquire some real metal for your portfolio.

Agora Financial has been banging the golden drum for at least 10 years. If you have never bought any gold, it’s still not too late. I think that the recent visit to $1,900 is just the beginning of another great wave of gold buying. I won’t be surprised to see $3,000 or even $5,000 gold.

For all the talk in Washington about getting the national economy back on track and spending under control nothing ever changes. Add in the rest of the global currency issues, namely the Euro crisis that sprouted in Greece and you’ve really got yourself some reason to hold physical gold and silver.

Then just think about the supply and demand statistics I noted above!

All told, you’ll want physical gold. Get some. Own some. Hold some.

Thanks for reading.

Regards,

Byron King

The “New” Migration To Gold And Silver was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Furthermore, if you haven’t noticed lately gold is on sale. The shiny stuff trades at a 17% discount to last year’s highs.

Today, with gold prices heading higher — $2,000, 3,000 or even $5,000 — holding the physical metal is more important than ever. That’s why I want to make sure you know the ins and outs of the physical gold market. Consider this your entry level “101” college course on gold.

Before we get to the specifics of holding physical gold, let’s take a look at the reasoning behind this trend with a brief overview of gold’s legacy…

A Brief History of Physical Gold…

Asset classes go up and down. Precious metals are, of course, another asset class. They move with the economic tides. In the past 30 years, gold has rocketed up and plummeted down.

At several points in the past 30 years, things were so bad that gold sellers were like the proverbial Maytag repairman. They led lives of quiet desperation about which no one cared. Because like the late Rodney Dangerfield, gold got no respect.

Heck, between 1999-2002, the British government sold a large amount of its national gold, nearly 395 tonnes (metric tons), for about $275 per ounce. The Bank of England used the proceeds to purchase (ahem) “high-yielding” assets, like bonds. I suppose it seemed like a good idea to somebody. But really. In hindsight, how dumb was that? The British used to fight wars for gold (remember the Boer War, anyone?) Now they’re selling gold to buy bonds? They used to hang people for lesser crimes.

Then precious metals staged a stealth rally (stealthy to the mainstream media at least.) It was not front-page news, until gold touched the $1,000 mark in March 2008. After which the price retreated 25% during that year’s market meltdown — even at this price gold was still almost three times what the Brits took in less than a decade ago.

All said, as I’m sure you know, we’ve had a 10-year bull market in gold. Take a look a gold’s massive move:

Nice chart, eh? It’s hard to argue with a chart like this. Sure, there are movements up and down. There’s the occasional pullback, such as a few tough months in 2008-09 and our current correction since 2011’s high-water mark. But the long-term trend has been up.

Just on this chart alone, there’s a case to be made for holding physical gold. In fact all you needed to do was hold the honest to goodness metal in your hands for a decade and you could have multiplied your money nearly seven times over! That’s the power of holding physical metal.

“Risky” Gold?

Still, people give me grief all the time about recommending and holding gold. “Oh, gold is risky,” they say.

“Yes, of course,” I reply. “Gold has been risky since I started buying it at $300 per ounce, back in 2001.”

Indeed, gold is risky today. From its current level gold could decline. That would be if there’s a massive market crash, and people have to sell gold to raise cash to pay off their margin calls.

Remember 2008? Gold sold down from about $1,000 to about $750. Still, that 25% haircut was mild, compared with what happened to the rest of the market. And through it all — the crash and turmoil — gold remained liquid. Somebody bought that gold. So gold is good, especially when people need fast cash.

Then again, looking ahead, gold has a huge upside. The gold price could accelerate and levitate up to $2,500 per ounce. Or maybe even $5,000. I’ll explain why in a moment.

In the here and now, all we really know is that gold has had a nice, strong long-term rise. It’s another way of saying that the dollar has had a sad, long-term decline in value.

So back to that “risk” idea. If you want real risk, just keep your wealth in pure, green-ink, paper cash. Trust the politicians and central bankers, right? No, of course not.

That decline in value of government-issued currency isn’t just a U.S. thing, either. It’s global. We’re dealing with world-spanning monetary mismanagement and stealthy inflation.

How bad is it? Last year, one senior Chinese official was caught on tape saying that “every province in China is a potential Greece,” due to overspending, bad loans and fiscal mismanagement. And that’s in China, where they shoot people for engaging in economic mismanagement.

As long as the world’s politicians spend more than their respective countries can afford, this gold-investing stuff is kind of easy — buy gold, hold gold, wait.

Supply and Demand

Through it all, the gold price is rising due to the fundamentals of supply and demand. More and more people across the world are buying.

I still recall one scene in a gold souk that I visited in Istanbul a little while ago. Men with fat wads of cash — dollars, euros, Turkish lira, etc. — were just peeling off bills and buying gold, literally with both hands. It was kind of surreal, if not medieval.

Indeed, if you’re not buying gold — or if you haven’t already bought gold (and silver) and accumulated your stash — then now’s the time to start. I don’t know how else to say it, either. If you’ve been following anything I write (in the past or today), then you have to know that owning gold has been a hammer point — especially over my five years at the helm of Outstanding Investments.

All this gold buying and demand growth is happening while global mine output — aka “supply” — is shrinking. Indeed, overall mine output may face a precipitous decline in the not-too-distant future. In other words, don’t argue with this chart, either:

It’s a busy chart, to be sure — gold mine output by region, from 1850 to 2010. Basically, the take-away point for this discussion is how precipitously South African mine output (noted in dark green at the bottom of the chart) has fallen over the past 20 years.

The famous old “big” mines of South Africa are just too deep (3 and 4 kilometers deep!) and too hard to keep running at the levels of their former glory. Not to be ghoulish, but even one major accident could cause numerous mines to shut down, and then South African gold output would fall off a cliff. If that happens, watch out. The sky is the limit for the price per ounce.

Gold Still Glittering, but Manipulated

Gold is, and always has been, the bellwether of precious metals. Sure, there are price fluctuations up and down. Most of the time, silver and platinum follow along with what’s happening in the gold pits. Not always, but most of the time. Watch gold.

Along these lines, it seems that gold is heavily manipulated by central banks. Basically, modern central bankers view gold as competition for their crummy fiat currencies. Gold takes all the fun out of both central banking and politics. That’s why central bankers and most politicians hate gold.

The good news about that central-bank bias is that gold price manipulation tends to be pretty transparent. When gold prices fall for no good reason, my spider-sense tells me that some central banker is trying to cook the books for one reason or another. Sharp price drops for gold, usually, lead to support levels and plateaus, and buying opportunities.

You can consider today one of those times.

So with all that in mind, now’s the time to take a hard look at gold. But before you run off to your local gold dealer, bear with me…there’s more to cover.

For the full wrap-up on this important physical metal discussion, I’ll stop back in tomorrow.

That’s all for now. Stay tuned.

Regards,

Byron King

Got Physical Gold? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The reality is that collapse is not a singular event, but a process. It is a symphony of doom, composed of a series of exponentially more powerful crescendos. If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood. That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled.

In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar. At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.

Last month, the Fed announced that it was formulating a plan to “expand its tool kit”. This includes an openly admitted possibility of a third round of quantitative easing starting as early as September.

This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September. In that month, EU policymakers will return from summer holiday. German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund. The Dutch, which are anti-bailout, will vote in elections. Greece will be attempting to renegotiate its financial lifeline. And, the ECB will have to assess the impending chaos in Spain and Italy.

As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT. Sorry, but central banks have only two options when attempting to shift the tide of the economy: They can lower interest rates to zero, and, they can print-print-print. That is it. We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years! These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008.

Real unemployment still stands at over 20%. The housing crisis remains an unstoppable juggernaut. Europe is on the verge of meltdown (despite the trillions in American taxpayer dollars handed to EU banks). The national debt continues to grow at a pace far beyond what the Obama Administration and mainstream economists (who should have been fired long ago) predicted in 2010. There are no secret magic tricks up the sleeve of Ben Bernanke. Even if the Fed actually wanted to save our financial system, and our currency (which they don’t), there is nothing they can do except make the situation worse. Central banks are perhaps the most useless institutions ever devised, unless, of course, their true purpose is to diminish the financial health of a country and siphon away its economic sovereignty…

Enter the death of the dollar.

The IMF has been consistently calling for the end of the dollar as the world’s reserve currency, and for its replacement by the SDR (Special Drawing Rights).

See here and here.

The new president of France, Francois Hollande, has recommended the expulsion of the dollar as the go-to reserve, a deeper relationship between France and the BRIC nations.

China has been demanding an end to dollar primacy for years.

And so has Russia…

And so has the UN…

It’s not as if it’s a big secret that the dollar is on everyone’s hit list. Until recently, alternative economists could only point out circumstantial evidence that this sentiment was a product of collusion between the world’s central banks and elements of various governments. Suggesting that China, Russia, the UN, the IMF, and the Federal Reserve were working in tandem to devalue the dollar and replace it with a global currency has always elicited at least a few jeers and the ever present standby catch-all accusation of “conspiracy theory”. However, the times they are a’ changen’…

With the exposure of the Libor Scandal, we now have definitive proof and even open confessions from international banks, the Federal Reserve, and the Treasury, admitting that the true debt problems of major institutions have been hidden, deliberately, in tandem with multiple agencies in multiple countries, from the general public, with the full knowledge of numerous governments. The most vital and shocking element of the Libor Scandal is that it shows, beyond a shadow of a doubt, that there is indeed a conspiracy which has melded the corporate world and the political world into a single ominous creature.

The collusion has become so brazen, central banks around the globe now institute policy initiatives within the same hour of each other.

Years back, I wrote an article about the most important signs to watch for when facing a heightened state of collapse. One of those signs was the advent of openly admitted corruption on the part of the banks. When criminals become absolutely transparent and nonchalant about their criminality, it is usually because they no longer fear the threat of justice or reprisal. This is exactly the atmosphere we have in 2012. But, what could possibly have made the banksters so confident that they are willing to flaunt their racket to the world? I can only surmise that an event is on the horizon. One so distracting that the hucksters believe we will forget all about them.

Looking at it from another perspective; if I was a globalist hell bent on undercutting the dollar as the world reserve and replacing it with a centralized standard while turning the U.S. into a third world pit in the process, I would probably pull the plug soon. Here are some reasons why…

Drought Crisis Provides Inflationary Cover

The drought which has struck half of the U.S. agricultural centers and which has also hit Russian production is the perfect cover event for dollar devaluation. The full view of crop production and yields will be revealed this autumn, and according to the mainstream, the numbers will be dismal. Maybe they will be, maybe they won’t, but the likelihood of inflation in food prices all over the planet is high. If the Fed announces QE3 and sets an implosion of the dollar in motion, the price spikes this will cause in commodities, especially grains and other foodstuffs, can be easily blamed on drought, rather than the destruction of the greenback. At least for a time.

Syria And Iran Theater

If the UN pulls observers from Syria, expect an attack by either the U.S., Israel, or both is on the way. Expect Russia to be quite unhappy. Expect China to respond with financial warfare. Expect Iran to fulfill its mutual defense pact with Syria and come to their aid. Expect hard core catastrophe. I have been warning about Syria as a catalyst for global crisis for quite some time. Long before anyone ever heard the name “Assad”.

Every time I catch a glimpse of the MSM, whether it be MSNBC, CNN, or FOX, they are all spewing the same rhetoric: The U.S. should have invaded Syria months ago. It would seem that the American people are being psychologically prepped for a new war, but in reality, they are being prepped to be distracted from the banking sector’s primacy in the economic calamity that is about to unfold.

European Seesaw Of Destruction

With the EU in shambles, and only getting worse, the ECB has been attempting to work around the rules of its own charter which forbid the infusion of capital directly into governments. The latest weapon in the fight against the financial stupidity of EU member countries? European stimulus! That’s right folks, the U.S. is not the only country that will be raping its own currency this year! Be sure to catch the euro-sized version of QE. (See here and here.)

I believe, in keeping with the collusion central banks have already shown, that the Federal Reserve and the ECB will announce new stimulus measures very close to each other, if not in tandem. The continued devaluation of the Euro will help to hide the effect of the falling dollar as the two currencies seesaw back and forth, allowing for a delayed reaction from the public as well as investment markets. Investors looking for a safe haven currency will be scrambling in confusion.

Stocks Ready To Bust

Finally, it is very likely that the Fed will wait for markets to dive in the wake of faltering demand for goods and raw materials in all major economies, as well as declines in manufacturing. As I have said in the past, the Fed wants us to beg for QE3. The only reason this decline has not occurred yet is because investors that are still participating are salivating for new stimulus and expect it shower them with riches soon. So, to put this in perspective, the Dow is above 13,000 right now because investors have already priced in a QE package not just in the U.S., but in the EU as well. If they do not get it fast, they will pull out, and stocks will plummet. The market addiction to fiat injection is so pervasive now, I cannot imagine how they would react if the pipeline was cut off. It would probably induce a fiscal bloodbath.

What Will Collapse Really Be Like?

I expect the event will be spectacular in some ways, but subdued and subversive in many other ways. Triggers may be swift and startling, but the reactions of the populace slow, uncertain, and presumptive. There will be fissures in our foundation, but the complete extent of the danger may take a few more years to become evident. While the public continues to maintain its fixation on some Mad Max nightmare scenario, the real collapse will be taking place right under their noses in the form of 25%-50% increases in food and fuel, tightened job availability with pensions swallowed by austerity, food lines hidden by food stamps until the government finally defaults and pulls the rug out from under entitlement programs, etc. For a time, it will look and feel like a slightly darker version of today, and not the cinematic melodrama that we have come to envision. The worst of times that we often find extolled in the pages of history books come at the cost of years of almost equal disparity, and usually, the lead up is far more difficult to handle than the finale…

Regards,

Brandon Smith

Has The Perfect Moment To Kill The Dollar Arrived? was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Your editor makes this observation after being away from his desk for two weeks. During that time, we were only intermittently in touch with hourly news flow. We didn’t miss it a bit. And it turns out we didn’t miss anything important either. The status quo prevails.

And what is the status quo? Well, for one, let’s not make the mistake of calling the market a market. It isn’t. A market is where you have a buyer and seller willing to exchange goods and money at a mutually agreed price. That price is ‘discovered’ by aggregating all the bids which buyers are willing to pay and the asks which sellers require.

Price discovery is ruined — and markets don’t function — when you have a serial intervener in the form of a central bank. That’s what we have today. For example, markets reacted in Pavlovian fashion last week when European Central Bank (ECB) President Mario Draghi said he’d do ‘whatever it takes’ to save the euro.

What does that even mean? Does it mean Draghi will print money to buy Spanish and Italian government bonds? Does it mean he will don Lycra and learn to leap tall buildings in a single bound? Does it mean anything at all when it comes to resolving Europe’s structural economic problems?

It’s a giant pile of nothing, to be frank. You should ignore it. And while you’re at it, ignore the Dow Jones Industrials index too. As we said in our remarks in Vancouver a few weeks ago, the Dow communicates no useful information about the underlying health and direction of the US economy. It’s a narrative device designed to promote stock buying to the investment public.

What is worth paying attention to? Well, the Reserve Bank of Australia (RBA) has a busy week ahead. Tomorrow, the RBA will announce any changes to short-term interest rates in Australia. On Friday, it publishes the latest Statement on Monetary Policy. You won’t want to miss that.

You should especially keep an eye on the latest index of commodity prices and the Aussie terms of trade. As commodity prices come down from all-time highs, a lot of mid-tier and small-cap miners are going to have trouble finding money for projects that only work when commodity prices are high. It’s a ‘funding hole’ that the front-page story in today’s Australian Financial Review talks about.

You can see from the RBA’s two charts below that both the terms of trade and commodity prices are coming off startling highs. If both data sets are mean reverting, then a nasty correction is ahead. For Aussie investors, that means you should be prepared for stocks making new lows. What will be the catalyst for these new lows?

Click to enlarge
Source: RBA

Well, we could be wrong about the whole thing. But after two weeks abroad, our sense is that investors are still pricing in lots of economic growth. Australia is a proxy for global growth. Finished goods can only be manufactured with raw materials. The whole chain of global value added begins here.

It’s hard to have growth when the whole economic system is burdened by debt. Until that debt is extinguished — through default, repayment, or restructuring — we have a hard time making the case for stocks (at least as an asset class, individual shares may do well as outliers). Everything done in Europe to keep government bond yields down is an exercise in avoiding the reality that debt must be repaid.

The status quo is to avoid pain by avoiding reality. How long can you live in imagination land, if you’re a central banker? Quite a while, apparently. But not forever! Let us tell you why.

Back in Colorado we visited the Flatirons Crossing mall in Broomfield. The mall is struggling as America’s consumer economy deleverages and cuts back on spending. But it’s also struggling because it was built on bad foundation. Literally.

The soil underneath the mall is bentonite clay. It’s a type of soil that expands with water. That means it’s a bit unstable. The mall owners know that now. Numerous structures throughout the 140,000 square metre facility have cracking drywall, buckling concrete, and shifting steel beams. Some of the structures have already been demolished.

This isn’t even a metaphor. If you build on shifting soil, your foundation is rubbish. An economy based on consumption through debt can’t generate wealth. A society based on satisfying all its wants and desires by accumulating debt is not a productive society that looks ahead. It’s about gratification now, the future consequences be damned.

But that attitude of consume now and pay later seems to be changing in America, at least at the household level. These social moods go in cycles. At the grassroots level, Americans are revising their expectations and living within their means. It’s the government that continues to live high on the hog.

That said, boy is America cheap. Your editor went out for a couple of pints with a friend. When the bill came, it was $18. We sent it back, sure there was an error. But there wasn’t! The same four beers in Australia would cost you $40. It’s the sort of inflation in cost of living that you only notice when you leave a place.

Regards,

Dan Denning

Cracks in the Foundation was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

It was the stupidest decision ever to nationalize airport security after Sept. 11, for doing so guaranteed this result. Security is too important to be left to government. What does the cause of security have to learn from the private sector? Plenty.

I was just at a Tiffany jewelry store. If you know these places, you know that they have a serious security issue to deal with. What is the total value of the inventory? It’s a guess. It’s in the many millions, maybe tens of millions. And it’s all on display, out in the open, in a store that lives off its reputation for high-end products.

As soon as you walk in, your eyes are drawn to astonishing gleaming, sparkling, beguiling things that seem to be nearly dancing around the room. The treasures are in glass cases, but the glass is so clean that you almost don’t see it at all. The lighting is designed to draw attention to what is in the cases, and it works. They set the heart aflutter, enticing a material impulse that might perhaps be unlike anything you have ever felt.

As you make your way around the room, you come across what seem like the biggest diamonds in the whole world. They go from big to bigger to breathtakingly gigantic. It seems like these pieces should be in museums. It nearly takes your breath away to see them there out in the open.

A security problem? I would say so! They have to protect against stupid criminals with guns and bags, but also real-life versions of brilliant criminals such as the legendary jewel thieves we meet in James Bond and Mission Impossible. This is serious business.

As you look back at where you have walked, you see a nicely dressed gentleman by the door. Oh yes, he greeted you when you came in. But there is a little transparent coiling thing sticking out of his ear and leading inside his coat. He looks like Secret Service, sort of. He is friendly, but strangely powerful. Instead of being threatening, he actually makes you feel safe.

After all, a place like this does create a certain anxiety. Goods this expensive surely attract criminal elements, and customers are aware of this. The consumer himself has the desire to settle down and not worry.

A place like Tiffany actually delivers on what the TSA only sloganizes about.

The employees are extremely nice, but formal. They want to help you shop, but there is an atmosphere in the room that seems to guide what you say and do.

I noticed that all the customers were behaving as I was. We moved slowly. We spoke softly and politely. We smiled in the most civil way possible. We were all very interested in seeming as innocent as possible. We were all happy shoppers, but also we all watched our manners and ways.

And then you wonder about the cameras. Surely, they are everywhere. But where? Oh yes, just as in the Vegas casinos, there are rounded blue balls coming out of the ceiling. They are pretty shapes, but clearly not lights or speakers. Here are the cameras. They are part of the ceiling and are scattered throughout the entire place.

We were all being watched. But again, this was not annoying, but comforting, for we all knew that if anyone were to try anything funny or behave in an odd way, that person would be instantly called out and shown the door. This was not a scary reality, but rather a comforting one.

I struck up a conversation about all the security issues with both a salesperson and the security guard. They were reluctant to talk at all, of course, and I wondered if they were taken aback by my nice, but persistent questions. I explained how impressed I was at their ability to combine surveillance, consumer service and maximum safety. They all thanked me for my kind words, but had no interest in going into any detail.

To be sure, the model at Tiffany cannot apply in every respect to places like airports or bus terminals or stadiums. Every institution and situation is different. As a private store with special needs, Tiffany set out to blend consumer service and happiness with maximum safety and security. It can be done. Only the market can truly discover the right path.

Both the critics and proponents of the TSA imagine that there is always a trade-off between security and human rights. Opponents of the TSA express disgust and outrage at invasive scanning and indecent probing, and they are right that it seems abusive.

But how would a private security company ferret out bad guys at airports? How would they discover explosives and guns? It is unclear. It is not enough just to announce that there should be no pat downs or X-rays, for it might be that a private system would be invasive too. We really don’t know.

And that’s the real tragedy of the current system. It is stupid. It can’t learn. It cares nothing for the balance of rights and responsibilities. It is all about going through the motions and doing what the regulations require.

Tiffany’s security works because the company owns property and serves the public. TSA and the entire apparatus of Homeland Security does neither.

Regards,

Jeffrey Tucker

Tiffany’s and the Problem of Security was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Putting aside all the polarizing rhetoric of opposing sides, does anyone honestly believe political leaders set out with an end goal of misery, poverty, famine, genocide, holocaust, war and atrocities?

Yet the vastly different outcomes of the life work of Marx and Mises, Lincoln and Jefferson, Obama and Ron Paul, etc. clearly demonstrate the highly consequential nature and importance of correctly discerning the best means to achieve the mutually desired ends of liberty, prosperity and peace.

Imagine spending your whole life believing you are fighting for the cause of liberty, only to realize on your deathbed that the means you chose – your life work and legacy – only resulted in advancing tyranny? Is what you’ve chosen to do with your life truly an effective means of promoting liberty? Answering this question requires some thoughtful inquiry into what creates liberty, and what destroys it.

“If there be any truth in political science, perfectly clear it is that centralized power is but another name for despotic power. Precisely in proportion as you centralize; in the same proportion do you approach absolute power. Power begets power, and a tendency to centralization, that in the long run, will reach tyranny. To render power innocuous, it must be broken up into fragments…” (1836 Congressional Debates)

If centralized power is the opposite of liberty then the pursuit of liberty is principally the fight for the decentralization of power. What then are the best means to decentralize power?

The American experiment was an attempt to maintain decentralized power by making power-holders promise to obey a power-limiting document (the Constitution) that was written by, is interpreted by, enforced by, and usually simply ignored by the very power-holders it is intended to regulate. Oh, but when those in power fail to self-regulate the people are allowed to offer pleas or threats (the political process) in hopes that power will un-corrupt! They’ve been taking oaths and getting fired for over two hundred years now, look around you. How’s it working out?

Even wild success in the political process means only that the progress of centralization has been temporarily delayed… until ‘our man’ retires or the next scheme, bill, or despot comes along. Yet we continue dumping most of our energies, monies, and lives into the political process, trying to convince ourselves that despite its dismal record of failure this means is still the appropriate path to our desired end.

We continue in the delusion that through the political process we can somehow transform the will of power towards opposing centralization. Or believing this idea that by giving power to ‘our people,’ we can negate its corrupting effects. Yet we of all people should be able to recognize and admit the incorrigibly malignant nature of power. I suggest we act accordingly by ceasing to waste our time and energy attempting to redeem it, and instead begin working to undermine power’s very ability to centralize altogether.

To undermine power’s ability to centralize, you must understand how power consolidates and centralizes. Imagine you had absolute control over every molecule of oxygen on the planet, so that every human being’s life depended on your granting him or her the use of that resource which you controlled. Your absolute monopolization of that resource would give you power like that of a god (ultimate power).

The means to power, then, simply consists of working towards monopoly control of a needed resource. The stronger the monopoly, the greater the power. The foundation of the nation state’s power over you ultimately lies in its control over resources that you need, as your only method of acquiring that resource is by subjecting yourself to its demands.

With that in mind, let’s now ask the question: what is the best means of preventing or undermining the monopolization of a resource? Despite all its promise of god-like power for whoever controls it, oxygen has never been monopolized. Why? Because its sheer abundance makes it impossible to control. The scarcer a resource, the easier it is to control. The more abundant a resource, the harder it is to control. Scarcity seems to lend itself to the centralization of power; but abundance denies the very possibility.

The best means, then, for preventing centralized power is to identify the scarce resources which it would monopolize and to make those same resources so abundant that maintaining control of them becomes practically impossible. Undermining a monopoly of resources that remain scarce simply requires the introduction of competition, which by definition results in a more decentralized control of it. Fortunately the defining characteristic and function of capitalism is to take scarce resources and make them abundant, a process fully aided and abetted by competition. No wonder the state is so hell-bent on maintaining the scarcity of its monopolized resources and will use every form of violence to crush any threat of competition.

To figure out specifically what scarce resources the nation state currently builds and centralizes its power on, imagine the absence of the state. What resources or sectors of the economy immediately come to mind? Who would build the roads? Transportation. Who would provide school for the children? Education.Who would settle disputes? Judicial system. Who would protect against aggressors? Defense. Etc.

Once you’ve identified these often state-monopolized resources, begin to brainstorm about how you could, by the nature of the capitalist process, make the resource more abundant and/or offer competition by providing it better and cheaper. Most of us spend our days complaining of the utter incompetence and ridiculously wasteful nature of the state… but from the perspective of an entrepreneur desiring to undermine a monopoly, that attribute in your competition couldn’t provide a better opportunity!

Now let’s consider some real examples of the possibilities of this approach.

Think of how the printing press and ultimately the Internet have destroyed the scarcity of information, making it super-abundant and rendering any hopes for a monopoly over the flow of information a pipe dream.

For education, imagine how the Kahn Academy with its incredible K-12 education available to anyone anywhere for absolutely free could undermine the current costly and ineffective state-run school system.

For college level there’s MIT’s OpenCourseWare, one among many programs pioneering the trend of making the most prestigious college educations available for free. As for gaining an official degree (a failed approach to credentialing,) Mozilla’s Open Badge project may present a superior model for skills-based credentialing. All these could work together to make education ubiquitous and free, putting the state out of the education business.

What about other local resources like public services and utilities? Think about the private firefighting companies like Wildland Defense Systems (hired by insurance companies), or even entirely privatized cities like Celebration, Florida. For transportation (moving beyond privatized toll roads), how about the Tokyo Expressway, a free-to-the-public, privately owned and profitable highway? Isn’t this essentially what parking lots (a substantial percentage of the paved surfaces in the US) are already?

For medicine, the Surgery Center of Oklahoma is obliterating its state-subsidized competitors by providing superior healthcare at a fraction of the cost, providing a model that could make “The Affordable Health Care Act” irrelevant. Social safety nets? Start a mutual aid society.

For trade, the Silk Road (marketplace) (a black market Amazon) is offering a marketplace with no third party limitations on voluntary transactions between individuals.

As for the state’s attempt to wield power by claiming the sole right to sanction who you hire, to limit the division of labor, to block your access to foreign talent with immigration barriers, and to subsidize inefficiency through unions (with their resulting protective tariffs and wars)…they can be easily undermined through sites like E-lance or offshore office space like the BlueSeed project.

Currency monopolies, sanctions & capital controls? No problem- BitCoin or gold-based debit cards. Looking to the future, what about a Tricorder device that helps increase the abundance of accessible diagnostics and doctors, further decentralizing control of the medical industry? Could advances in 3-D printing someday radically decentralize the production industry?

How do you compete with the state in more difficult resources like geography, dispute settlement and defense? Seasteading or free trade zones could offer an exciting alternative to the monopolization of land by nation states.

For dispute settlement, try private arbitration like Judge.me. For defense…if you concealed carry you’re already decentralizing the state’s control of defense and providing a superior alternative. Large-scale defense? How about those insurance companies, who in the face of the incompetent state, are forming private navies to protect the private property of shipping companies from pirates? Want to end war? The Middle East and Africa are a hotbed for water wars… imagine you take that scarce resource and through something like graphene desalination you make fresh water super-abundant? War’s over.

What if we did the same for energy? Imagine a scientist discovers a source of power that fits into a freezer-sized box and can independently power any home…. technology that completely makes energy abundant and decentralized. Suddenly geo-political strategic wars over scarce energy resources become pointless. The only reason wars are still fought over water or energy or anything else is because they are still scarce and therefore hold the promise of power to whoever controls them. Who’s fighting wars over oxygen (or for water in the west where it isn’t so scarce)? Why don’t we, in pursuit of liberty and peace, intentionally pursue technologies that subvert government monopolies by offering a superior, cheaper and more abundant product?

After a brief venture into electoral politics, I began to think long and hard about what a life in the political process might look like. A long life of money-grubbing, dirty-dealing, doing things I hate with people I don’t like but acting like they’re my friends anyway because I could use them politically, being backstabbed by friends who thought the same thing, spending many nights away from my family and friends attending obligatory boring meetings or parties I don’t want to be at, trying to coerce and harass everyone I know into doing things they have no interest in either, being broke and having to suck up to the highest bidder, living with a dirty conscience and making enemies at every turn, all for something I am fundamentally repulsed by anyway, and would have no part of if I thought there was any other way to preserve and advance liberty.

All that sacrifice for what, if history is any guide, would at best result in a minor slowing of tyranny. A stopgap measure. Is that really the best we can do?

The whole prospect compelled me to re-examine the efficacy of the political process as a means to liberty, and I’m beginning to think that this state sanctioned mechanism for change may not actually be the most appropriate means for our desired end. Perhaps it’s time to rethink all this- to demote on our priority list the stopgap measures of the political process and to begin fervently pouring our talents, energies and monies into a ‘targeted capitalism’, if you will. Liberty lovers everywhere intentionally targeting state-monopolized resources and disintegrating those monopolies through the capitalist process.

These means are by nature decentralizing and can be pursued while completely disregarding the will of power. Enough of this pleading with our oppressors not to oppress us so much! Let’s stop being depressed victims of the state and instead start imagining all the endless opportunities its incompetencies create! In the process, we can be around people we like, create wealth by offering real value for the masses, live adventurously, with a clean conscience, and most importantly, live free.

And that is why I’m quitting politics and starting a business.

Regards,

Kaleb Matson

Why You Should Quit Politics (And Embark On A Much More Productive Path To Liberty) was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

And, when I hear this crazy talk, I agree with them openly. “You are right. They will pry your gun from your cold dead hands,” which I often follow with the question, “And where will that leave you except face down in a pool of your own blood the middle of the street, just another dead fool resisting the State?”

This is not a question they are comfortable with, if only because the intent of their saber-rattling was to imply they would fight to keep their weapons, and win.

Nice fantasy. It’s not happening.

If the federal government decides to disarm the public, and one of these (see photo below) rolls down your street after a not-so-subtle request that you kindly turn over your firearms and ammunition “for the common good,” it will be nothing less than suicide by cop to do anything other than what you are told.

The militarization of US police forces is ongoing and escalating. Many cities and towns now own tanks, armed personnel carriers, even attack helicopters, and almost all are outfitted with military weapons not available to the general public.

And, it is not just your hometown cops who are getting new boy-toys. The military itself is buying up weaponry not just for use in the current or next scheduled war, but to deal with the likes of you, citizens who don’t seem to understand that the Bill of Rights has been overruled, and that specifically includes, but is not limited to, the right to protest and engage in civil disobedience.

Also ignored (as if it didn’t even exist) is the Posse Comitatus Act of 1878 which generally bars the military from law enforcement activities within the United States.

According to Public Intelligence:

“…for the last two years, the President’s Budget Submissions for the Department of Defense have included purchases of a significant amount of combat equipment, including armored vehicles, helicopters and even artillery, under an obscure section of the FY2008 National Defense Authorization Act (NDAA) for the purposes of “homeland defense missions, domestic emergency responses, and providing military support to civil authorities.” Items purchased under the section include combat vehicles, tanks, helicopters, artillery, mortar systems, missiles, small arms and communications equipment. Justifications for the budget items indicate that many of the purchases are part of routine resupply and maintenance, yet in each case the procurement is cited as being “necessary for use by the active and reserve components of the Armed Forces for homeland defense missions, domestic emergency responses, and providing military support to civil authorities” under section 1815 of the FY 2008 NDAA.” (Emphasis supplied.)

And, they are not just arming cops and weekend warriors for domestic purposes. Active duty Marines are now being trained for law enforcement operations all over the world (of which the US remains a part) specifically to deal with civil uprisings, and the US government knows that civil uprisings are coming to a town near you just as soon as the fantasy of a healing economy is shattered, the US dollar fails, and unemployment goes to 30%+ in real numbers.

And, to you tough-talking Neo-Cons with your AR-15 rifles and a few thousand rounds of ammo, here is reality: they will take your guns, and no, all your Second Amendment bluster aside, you are not going to do anything about it. You are not going to take on a platoon of Marines with state of the art automatic weapons and the best body armor you cannot buy protected by armed personnel carriers and attack helicopters unless you choose to die that day — for nothing.
You will either be in the country or out, and if you are in, you will stay in and you will comply.

That is your choice… for the moment.

Regards,

Jim Karger

When They Come For Your Guns, You Will Turn Them Over was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.