MIkE ALEGRIA

I need to settig the stereo clock

Honda Pilot Touring 2011

Im 42 and my wife 35,

this time we are not looking for sun and water,

She love to shop and have a nice and romantic day,

We are now being told that this recession will be the longest, deepest, and most destructive in the post-World War II era. I think this forecast is correct.

Austrian economic theory teaches that monetary inflation will disrupt the economy far more than recession will. We look at the statistics from the FED, and we see monetary inflation looming on a scale not seen in peacetime America. You can monitor this for yourself in my Website's department, "Federal Reserve Charts."

http://www.garynorth.com/public/department29.cfm

The expert forecasters are telling us that price deflation is the #1 threat facing the U.S. economy and the world.

The experts have it wrong again, and for the same reason: they reject Austrian economic theory.

Al estar dentro del agua adentro de una piscina, si cierro mi n ariz con la mano y comprimo el aire, me sale aire por el ojo derecho.

Debo de preocuparme?? Es de riesgo??

problema oseo??

http://www.lewrockwell.com/podcast/?p=episode&name...

Stop the Printing Press!

by Ron Paul

by Ron Paul

DIGG THIS

Statement before the US House of Representatives Financial Services Committee, Humphrey Hawkins Hearing on Monetary Policy, July 16, 2008

Mr. Chairman, today we find ourselves on the verge of an economic crisis the likes of which the United States has not seen in decades. Our economy is very clearly in a recession, and every time someone tells us that the worst has passed, another serious event takes place, as we saw once again last week and early this week. Everyone now realizes that the situation is dire, yet either no one understands the cause behind the credit crisis, or no one is willing to take the necessary steps to ensure as orderly an end to the crisis as possible. Instead, we hear talk of further bailouts. The Fed-brokered takeover of Bear Stearns, a supposed one-off incident, has now been joined by a potential bailout of the Government-Sponsored Enterprises, Fannie Mae and Freddie Mac.

The two GSE's have been disasters waiting to happen, as I and many others have warned over the years. It was bad enough that Fannie and Freddie were able to operate with significant advantages, such as lower borrowing costs and designation of their debt as government debt. Now, the implicit government backstop has turned out to be an explicit backstop, just as we feared. The Greenspan reflation of the economy after the dot-com bust pumped additional liquidity into an already-skewed housing market, leading to an unsustainable boom that from many accounts has only begun to unravel. With a current federal funds rate of two percent, and inflation at over four percent, the Fed is currently sowing the seeds for another economic bubble.

At the heart of this economic malaise is the Fed's poor stewardship of the dollar. The cause of the dollar's demise is not the result of a purely psychological response to public statements on US dollar policy, but is rather a reaction to a massive increase in the money supply brought about by the Federal Reserve's loose monetary policy. The policies that led to hemorrhaging of gold during the 1960's and the eventual closing of the gold standard are the same policies that are leading to the dollar's decline in international currency markets today. Foreign governments no longer wish to hold depreciating dollars, and would prefer to hold stronger currencies such as the euro. Foreign investors no longer wish to hold underperforming dollars, and seek to hold better-performing assets such as ports and beer companies.

Every government bailout or promise thereof leads to moral hazard, the likelihood that market actors will take ever riskier actions with the belief that the federal government will bail them out. Bear Stearns was bailed out, Fannie and Freddie will be bailed out, but where will the line be drawn? The precedent has been established and the taxpayers will end up footing the bill in these cases, but the federal government and the Federal Reserve lack the resources to bail out every firm that is deemed “too big to fail.” Decades of loose monetary policy will lead to a financial day of reckoning, and bailouts, liquidity injections, and lowering of the federal funds rate will only delay the inevitable and ensure that the final correction will be longer and more severe than it otherwise would. For the sake of the economy, I urge my colleagues to resist the temptation to give in to political expediency, and to oppose loose monetary policy and any further bailouts.

See the Ron Paul File

http://www.lewrockwell.com/blog/lewrw/archives/022...

Recession: With War or Without It?

by Gary North

by Gary North

DIGG THIS

The world's economy has been in growth mode at least since 1991. China has been in growth mode since 1979. The American economy had a sharp recession in 1991. Asia had a financial crisis in 1998. America had a very brief, very shallow recession in 2001. The Federal Reserve System pumped in money at an accelerating rate after mid-2000 through 2004, and did not go to tight money until the month Bernanke took over: February 2006. Inflation overcame the recession of 2001, and it overcame the crisis of 9/11, but it created the housing bubble and the commodity bubble.

The housing bubble has popped. This is going to take the price of housing in the United States lower than it is today. I think 20% lower is a conservative figure. We are nowhere near the end of this popped bubble.

The commodity bubble is still in full force. It is a worldwide bubble. The price of energy and the price of rice and other food commodities have received most of the attention.

Federal Reserve policy since early 2006 has been one of relatively stable money. There is a lot of chatter to the contrary, but if we look at the two most significant monetary indicators, the adjusted monetary base and M1, we see that there has been very little growth in either. This is why the United States is now either in a recession or is facing one in the next few months. When a period of monetary inflation ends, economies go into recession. The American economy is slowing down, and it will continue to slow down.

Both China and India have expanded their money supplies dramatically for a decade. Both countries are now facing a crisis of rising prices. Price inflation is a major threat to the continued prosperity of both countries.

China's government has begun to impose selective price controls. This is creating shortages and production bottlenecks. India's government is considering doing the same thing. What both governments need to do is to tell their central banks to cease buying all government debt and all assets of any kind. The central banks need to stop inflating the money supply. But if the banks do this, both countries will experience major recessions. The governments do not want to have major recessions, but they also do not want to experience the effects of monetary inflation: price inflation. So, both of them are tempted to go back to the traditional policy of imposing price controls. This always creates shortages, and it always reduces the rate of growth of the economy. China and India are trapped.

AN INTERNATIONAL TRAP

The United States is in the same trap. The headlines scream of the skyrocketing costs of energy and food, but the broader consumer price indexes indicate slow increases: maybe 3% a year. This is because families are readjusting their budgets. As the prices of gasoline and food rise, families are forced to cut back expenditures in other areas. So, the general price indexes are not rising dramatically, but families are struggling with their budgets.

This struggle will get much worse this winter, when the price of heating oil rises. This will exacerbate the existing economic slowdown. Furthermore, the rising price of oil means a rising balance of payments deficit for the United States. Oil-exporting countries are the main beneficiaries of the rising price of oil. This means that foreign sellers of oil will get the lion's share of the increase of the price of oil. American producers will pay for the prosperity of the oil exporting countries. They will pay in the form of reduced demand for their products.

The world is facing simultaneous recession. Meanwhile, the American financial system has absorbed hundreds of billions of dollars of IOUs from home buyers who cannot possibly pay off their debts. They are in the process of defaulting to the lenders. This has created a crisis for America's largest banks, and for several major European banks.

We all know the story by now, but psychologically, most Americans have not adjusted to the new economic reality. Most investors have not adjusted. Yes, the American stock market is down by 20% since last October. But still they think a recovery is just around the corner. The media keep saying this. American investors still have faith that the economy is essentially healthy, that there will not be a continuing fall in the stock market, and that the economy will not go into recession and stay in the recession for two or more years.

So far, I am giving you the good news. The good news is there is going to be an international recession, rising corporate bankruptcies, bank failures, and retrenchment by consumers because they can no longer pay the rising cost of energy.

Why is this good news? Because this recession is going to put a cap on the rising cost of energy. Commodity prices will fall during the recession; this includes the price of oil.

NO MORE FISCAL WIGGLE ROOM

Americans have steadily stopped saving over the last 28 years. In 1981, they saved over 11% of their discretionary income. Today, they save nothing. They are now in full spending mode. They have borrowed money against their future income, against their home equity, and on simple promises to pay (signature loans: credit cards). They have stretched themselves thin with respect to debt.

If oil goes to $400 a barrel, or $500 a barrel, and stays there for a year, American consumers will be in panic mode. They will have to cut their budgets, and they have forgotten how to cut their budgets. They have forgotten how to save.

The strategy of the optimists is to tell us that the worst is over economically. This is the government's official position. Chairman Ben Bernanke does not say this. He keeps hinting of more trouble to come. He keeps telling us that the Federal Reserve System is monitoring events. He keeps implying that there is some sort of rabbit still remaining in the Federal Reserve System's hat which they can pull out if the banking system moves into paralysis mode. But he doesn't tell us what these rabbits are, or under what conditions the FED will pull them out of its hat.

The good news regarding the economy in general is not backed up by anything specific. The government tells us that the worst is over, but there are almost no indications that the worst is over. The housing market is still in decline. Foreclosures are still rising rapidly. The lenders are not selling foreclosed properties at market prices. Instead, they keep buying back the properties. There is a growing inventory of unsold properties on the books of the lenders. Meanwhile the two major sources of liquidity for the housing market, Fannie Mae and Freddie Mac, are verging on bankruptcy. On Wednesday, July 9, the stock price of Freddie Mac dropped by 23%. Yet its stock price was down over 50% since January. These two stocks have continued to fall.

Everywhere we look on the horizon of the domestic economy, there is bad news. There is no sector of the economy that is improving, unless it is heavily funded by the Federal government. Health care has not slumped, because health care as funded by Medicare and other state and local government programs.

This means that the Federal deficit is going to get worse in any recession. Medicare and Social Security are non-discretionary spending items. The revenues will fall. So, the supposed strength sectors of the economy are in fact guarantees of a government fiscal crisis. If the general economy slumps, the Federal deficit is likely to go over $500 billion a year.

When the recession hits, commodity prices will fall. If the recession does not hit, commodity prices will continue to rise. But rising commodity prices will force bankruptcies in those firms that are not in a position to pass on increased costs to their consumers. This means industries associated with discretionary spending. If your company is dependent upon discretionary spending by the public, your job is at risk. If the recession hits, your company will suffer. If the recession doesn't hit, rising commodity prices will squeeze your company. Consumers will spend their money for gasoline and heating oil, not on the products or services your company produces.

The boom economy has not been based primarily on non-discretionary income. The boom has come at the margin: those areas of the economy in which consumers do have the option of spending their money rather than saving it.

So far, I have been giving you the good news. The good news is there is going to be an international recession, rising corporate bankruptcies, bank failures, and retrenchment by consumers because they can no longer pay the rising cost of energy.

THE BAD NEWS

The bad news is that the State of Israel is increasingly likely to launch an air strike on suspected Iranian nuclear weapons production facilities.

I have discussed this before. If this happens, the price of oil will skyrocket. This will force massive readjustments of family budgets in every country on a permanent basis. This is going to force producers to fire people out of fear of bankruptcy. Consumers are going to stop buying much in the area of discretionary income. That is, those items that can be cut back will be cut back.

This could mean you.

If the State of Israel launches an attack on Iran, the economic news will get really bad really fast all over the world. So, the most important question today is whether or not the Israeli Air Force will attack Iran. From an economic standpoint, this is the crucial question.

Here, too, the mainstream media have generally promoted optimism. They suggest that the Israelis will not attack Iran. The problem is, they can't point to anything specific that officials in the State of Israel have said that indicates that there will not be an attack. On the contrary, officials there keep saying "no comment."

Something else is really ominous. The political leaders in the countries over which Israeli bombers will have to fly are deadly silent. They are not telling Israel in full public view that if Israel sends planes over their airspace, they will go to war with Israel. They are not saying that they are preparing right now to shoot down every Israeli plane that flies over their airspace. They are saying nothing. Why? I think the main reason is that they will not back up their words with deeds. They will not shoot down Israeli planes. They say nothing in public because they will do nothing if the overflights take place. If they go public with bellicose threats today, their own people will turn on them if they fail to back up their words with deeds if the flights take place. "You said you would do something. You did nothing. Get out!" This could start internal revolutions in the overflown countries. Silence is golden. It's yellow, but it's golden.

This tells me that the overflight countries' leaders think the attack may take place. They would prefer to be accused of having been caught flat-footed by the Israeli Air Force than unwilling to back up a threat.

American officials are offering the bipartisan line: "We must settle this through diplomacy." (To which Israeli government officials can respond, Tonto-like: "Who you mean we, paleface?") They are not saying anything about what sanctions against the State of Israel that America will impose as soon as Israeli jets bomb Iran. That is because there will be no such sanctions.

Admiral Mullen supposedly sent Israel a statement in early July saying that the United States has not issued a green light for an Israeli attack on Iran. This supposedly means something important in itself. It means nothing in itself. What it means is the United States has not issued a red light against an Israeli attack on Iran. This means that there is no stop sign. There is no red light, so the absence of a green light means nothing.

Of course no one has said that the United States will help Israel in such an attack. So what? Israeli officials are not asking for a public offer of American help. If the United States and those governments over which the Israeli Air Force must fly are not issuing public statements at this time warning that there will be significant negative sanctions imposed on the State of Israel as soon as the attack is launched, then this is an implied green light.

Do we imagine that senior decision-makers in the Israeli government care a whit about the lack of an official American green light to their attack on Iran? They are as unconcerned about the lack of a green light as Iran is unconcerned about President Bush's threat of sanctions if Iran does not comply with all requirements announced by the Bush administration. Iran knows what Israel knows: the Bush administration is terminal. It will end on January 20, 2009. It has no teeth. Lame ducks don't bite. They merely squawk.

Why should we think that either Iran or Israel gives a fig about the red light/green light debate? American pundits may think this debate is important, but why should anyone with common sense think it's important?

TIMETABLES

Iraq has announced that the United States must pull out its troops. It is demanding dates for this withdrawal. The Bush administration is pooh-poohing all this, and will not under any circumstances announce such a timetable, but so what? There is a timetable for the Bush administration's withdrawal: January 20, 2009.

This means that the United States is going to be pressured by Iraq's government to leave Iraq from now on. Most of the troops will be forced to leave Iraq unless things change dramatically. Then what will be done with the 14 major military bases that have been built?

As the pressure increases to force us to leave Iraq, and as the pressure from the Taliban increases in Afghanistan, and as the pressure from voters increases to get our troops out of both countries, and as the likelihood of the election of Obama increases, decision-makers in the State of Israel are caught between the proverbial rock and a hard place.

If the United States pulls out of the region, the State of Israel will be left high and dry. But there is another possible scenario. If Iran's surrogate Shia forces in the region take on the United States troops in reaction to an Israeli attack on Iran, American public opinion will swing in favor of keeping the troops there, no matter what. "Who do those Iranians think they are? We issued no green light to the Israelis. It's not our fault." If Iran begins to supply weapons to Shia forces in Iraq and Afghanistan, and the American death rate goes up, then American voters will switch back to a pro-war position. At least, this is a possibility. Americans do not like to be pushed around.

Any escalation of war in the region will create havoc for the supply of oil. The world economy is moving into recession already; it may go into a true depression if oil goes to $500 and stays there. So, the stakes are enormous.

The outcome is no longer in the hands of the United States, Europe, Asia, or any of the other outsiders to the Middle East. The outcome, or at least the trigger, is completely in the hands of the decision-makers in the State of Israel. They hold the gun.

Unless the United States and Western Europe tell the decision-makers in the State of Israel that Europe and the United States will impose significant negative sanctions after an attack on Iran, then decision-makers there are going to make a decision based on the self-interest of the ruling party, not the self-interest of American or European voters. They are going to take care of their perceived problem, exactly as we would expect any other national political leaders would take care of their problem.

That's why all talk about war being a threat to the self-interest of the whole makes sense only if the Israelis conclude that the economic crisis will be so severe that it will take them down in the whirlpool of economic collapse. They are not afraid of military retaliation from Iran. They are also not afraid of the United States, Europe, Asia, or any other coalition that does not have the backbone to say in advance that there will be major sanctions placed on the State of Israel if there is an attack on Iran.

This is why I am concerned about the threat of an Israeli attack on Iran. I am in no way calmed by statements attributed to Admiral Mullen. When Admiral Mullen holds a press conference and says publicly that there is no green light for an attack by the Israeli Air Force on Iran, and that any flyover of Iraq by Israeli planes will lead to shoot downs of Israeli planes by American planes, then I will stop worrying about the threat of an attack on Iran by the Israeli Air Force. How likely do you think such a press conference is?

We must face reality: the decision to go to war with Iran is 100% in the hands of Israeli decision-makers. It is not in the hands of the United States, Europe, or Asia. In other words, the economic fate of the West over the next decade is now in the hands of decision-makers who are concerned about the long-term survival of their own country. They are concerned because they do not want to have Iran in the possession of nuclear weapons. Both candidates for President have said the same thing.

We have seen saber-rattling by the Iranians with the film-doctored test of the missiles this week. These missiles are militarily useless as weapons against the Israelis. They are as irrelevant militarily as Germany's V-2 missiles were in 1945. They cannot inflict enough damage to make a difference, unless they are used against Saudi Arabian oil fields. But, if they had a nuclear warhead, that would make all the difference. The Israelis know this. So, they are going to make their decision in terms of this long-term threat.

The main inhibition against an attack is the possible collapse of the Western economy, which buys Israeli-produced goods. This threat may be sufficient to keep them from attacking. I dearly hope that it is. But it is naïve to believe that they are going to make their decision because of worries about whether Admiral Mullen has issued a green light or not.

CONCLUSION

When you invest your money, do not ignore the worst-case scenario. Set aside some of your money on the assumption that the worst-case will come true. This is what any military strategist does. He makes his decisions in terms of what the enemy can do, not what it would be convenient for the enemy to do.

I suggest that you be aware of this threat. I suggest that you sit down with the family budget and outline what your response would be if the price of gasoline were $10 a gallon or $15 a gallon or $20 a gallon. What would you do? I know what you would do. You would drive less.

Ignore the happy-face assessments of the geopolitical strategists. Ignore the happy-face assessment of the Secretary of the Treasury, Henry "Goldman Sachs" Paulson. These assessments are being issued to keep panic from spreading.

I am doing my best to encourage people to take rational steps with some of their liquid assets: to hedge themselves against the possibility that there will be an attack on Iran before January 20, 2009. This doesn't mean that I think such an attack is a sure thing. Decision-makers in the State of Israel are going to have to live with $400 oil, just like all the rest of us. They may decide that this risk is too great. They may decide to put up with the threat of a future nuclear-armed Iran. I won't bet all of my money on this. I don't think you should either.

July 12, 2008

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com./

Recession: With War or Without It?

by Gary North

by Gary North

DIGG THIS

The world's economy has been in growth mode at least since 1991. China has been in growth mode since 1979. The American economy had a sharp recession in 1991. Asia had a financial crisis in 1998. America had a very brief, very shallow recession in 2001. The Federal Reserve System pumped in money at an accelerating rate after mid-2000 through 2004, and did not go to tight money until the month Bernanke took over: February 2006. Inflation overcame the recession of 2001, and it overcame the crisis of 9/11, but it created the housing bubble and the commodity bubble.

The housing bubble has popped. This is going to take the price of housing in the United States lower than it is today. I think 20% lower is a conservative figure. We are nowhere near the end of this popped bubble.

The commodity bubble is still in full force. It is a worldwide bubble. The price of energy and the price of rice and other food commodities have received most of the attention.

Federal Reserve policy since early 2006 has been one of relatively stable money. There is a lot of chatter to the contrary, but if we look at the two most significant monetary indicators, the adjusted monetary base and M1, we see that there has been very little growth in either. This is why the United States is now either in a recession or is facing one in the next few months. When a period of monetary inflation ends, economies go into recession. The American economy is slowing down, and it will continue to slow down.

Both China and India have expanded their money supplies dramatically for a decade. Both countries are now facing a crisis of rising prices. Price inflation is a major threat to the continued prosperity of both countries.

China's government has begun to impose selective price controls. This is creating shortages and production bottlenecks. India's government is considering doing the same thing. What both governments need to do is to tell their central banks to cease buying all government debt and all assets of any kind. The central banks need to stop inflating the money supply. But if the banks do this, both countries will experience major recessions. The governments do not want to have major recessions, but they also do not want to experience the effects of monetary inflation: price inflation. So, both of them are tempted to go back to the traditional policy of imposing price controls. This always creates shortages, and it always reduces the rate of growth of the economy. China and India are trapped.

AN INTERNATIONAL TRAP

The United States is in the same trap. The headlines scream of the skyrocketing costs of energy and food, but the broader consumer price indexes indicate slow increases: maybe 3% a year. This is because families are readjusting their budgets. As the prices of gasoline and food rise, families are forced to cut back expenditures in other areas. So, the general price indexes are not rising dramatically, but families are struggling with their budgets.

This struggle will get much worse this winter, when the price of heating oil rises. This will exacerbate the existing economic slowdown. Furthermore, the rising price of oil means a rising balance of payments deficit for the United States. Oil-exporting countries are the main beneficiaries of the rising price of oil. This means that foreign sellers of oil will get the lion's share of the increase of the price of oil. American producers will pay for the prosperity of the oil exporting countries. They will pay in the form of reduced demand for their products.

The world is facing simultaneous recession. Meanwhile, the American financial system has absorbed hundreds of billions of dollars of IOUs from home buyers who cannot possibly pay off their debts. They are in the process of defaulting to the lenders. This has created a crisis for America's largest banks, and for several major European banks.

We all know the story by now, but psychologically, most Americans have not adjusted to the new economic reality. Most investors have not adjusted. Yes, the American stock market is down by 20% since last October. But still they think a recovery is just around the corner. The media keep saying this. American investors still have faith that the economy is essentially healthy, that there will not be a continuing fall in the stock market, and that the economy will not go into recession and stay in the recession for two or more years.

So far, I am giving you the good news. The good news is there is going to be an international recession, rising corporate bankruptcies, bank failures, and retrenchment by consumers because they can no longer pay the rising cost of energy.

Why is this good news? Because this recession is going to put a cap on the rising cost of energy. Commodity prices will fall during the recession; this includes the price of oil.

NO MORE FISCAL WIGGLE ROOM

Americans have steadily stopped saving over the last 28 years. In 1981, they saved over 11% of their discretionary income. Today, they save nothing. They are now in full spending mode. They have borrowed money against their future income, against their home equity, and on simple promises to pay (signature loans: credit cards). They have stretched themselves thin with respect to debt.

If oil goes to $400 a barrel, or $500 a barrel, and stays there for a year, American consumers will be in panic mode. They will have to cut their budgets, and they have forgotten how to cut their budgets. They have forgotten how to save.

The strategy of the optimists is to tell us that the worst is over economically. This is the government's official position. Chairman Ben Bernanke does not say this. He keeps hinting of more trouble to come. He keeps telling us that the Federal Reserve System is monitoring events. He keeps implying that there is some sort of rabbit still remaining in the Federal Reserve System's hat which they can pull out if the banking system moves into paralysis mode. But he doesn't tell us what these rabbits are, or under what conditions the FED will pull them out of its hat.

The good news regarding the economy in general is not backed up by anything specific. The government tells us that the worst is over, but there are almost no indications that the worst is over. The housing market is still in decline. Foreclosures are still rising rapidly. The lenders are not selling foreclosed properties at market prices. Instead, they keep buying back the properties. There is a growing inventory of unsold properties on the books of the lenders. Meanwhile the two major sources of liquidity for the housing market, Fannie Mae and Freddie Mac, are verging on bankruptcy. On Wednesday, July 9, the stock price of Freddie Mac dropped by 23%. Yet its stock price was down over 50% since January. These two stocks have continued to fall.

Everywhere we look on the horizon of the domestic economy, there is bad news. There is no sector of the economy that is improving, unless it is heavily funded by the Federal government. Health care has not slumped, because health care as funded by Medicare and other state and local government programs.

This means that the Federal deficit is going to get worse in any recession. Medicare and Social Security are non-discretionary spending items. The revenues will fall. So, the supposed strength sectors of the economy are in fact guarantees of a government fiscal crisis. If the general economy slumps, the Federal deficit is likely to go over $500 billion a year.

When the recession hits, commodity prices will fall. If the recession does not hit, commodity prices will continue to rise. But rising commodity prices will force bankruptcies in those firms that are not in a position to pass on increased costs to their consumers. This means industries associated with discretionary spending. If your company is dependent upon discretionary spending by the public, your job is at risk. If the recession hits, your company will suffer. If the recession doesn't hit, rising commodity prices will squeeze your company. Consumers will spend their money for gasoline and heating oil, not on the products or services your company produces.

The boom economy has not been based primarily on non-discretionary income. The boom has come at the margin: those areas of the economy in which consumers do have the option of spending their money rather than saving it.

So far, I have been giving you the good news. The good news is there is going to be an international recession, rising corporate bankruptcies, bank failures, and retrenchment by consumers because they can no longer pay the rising cost of energy.

THE BAD NEWS

The bad news is that the State of Israel is increasingly likely to launch an air strike on suspected Iranian nuclear weapons production facilities.

I have discussed this before. If this happens, the price of oil will skyrocket. This will force massive readjustments of family budgets in every country on a permanent basis. This is going to force producers to fire people out of fear of bankruptcy. Consumers are going to stop buying much in the area of discretionary income. That is, those items that can be cut back will be cut back.

This could mean you.

If the State of Israel launches an attack on Iran, the economic news will get really bad really fast all over the world. So, the most important question today is whether or not the Israeli Air Force will attack Iran. From an economic standpoint, this is the crucial question.

Here, too, the mainstream media have generally promoted optimism. They suggest that the Israelis will not attack Iran. The problem is, they can't point to anything specific that officials in the State of Israel have said that indicates that there will not be an attack. On the contrary, officials there keep saying "no comment."

Something else is really ominous. The political leaders in the countries over which Israeli bombers will have to fly are deadly silent. They are not telling Israel in full public view that if Israel sends planes over their airspace, they will go to war with Israel. They are not saying that they are preparing right now to shoot down every Israeli plane that flies over their airspace. They are saying nothing. Why? I think the main reason is that they will not back up their words with deeds. They will not shoot down Israeli planes. They say nothing in public because they will do nothing if the overflights take place. If they go public with bellicose threats today, their own people will turn on them if they fail to back up their words with deeds if the flights take place. "You said you would do something. You did nothing. Get out!" This could start internal revolutions in the overflown countries. Silence is golden. It's yellow, but it's golden.

This tells me that the overflight countries' leaders think the attack may take place. They would prefer to be accused of having been caught flat-footed by the Israeli Air Force than unwilling to back up a threat.

American officials are offering the bipartisan line: "We must settle this through diplomacy." (To which Israeli government officials can respond, Tonto-like: "Who you mean we, paleface?") They are not saying anything about what sanctions against the State of Israel that America will impose as soon as Israeli jets bomb Iran. That is because there will be no such sanctions.

Admiral Mullen supposedly sent Israel a statement in early July saying that the United States has not issued a green light for an Israeli attack on Iran. This supposedly means something important in itself. It means nothing in itself. What it means is the United States has not issued a red light against an Israeli attack on Iran. This means that there is no stop sign. There is no red light, so the absence of a green light means nothing.

Of course no one has said that the United States will help Israel in such an attack. So what? Israeli officials are not asking for a public offer of American help. If the United States and those governments over which the Israeli Air Force must fly are not issuing public statements at this time warning that there will be significant negative sanctions imposed on the State of Israel as soon as the attack is launched, then this is an implied green light.

Do we imagine that senior decision-makers in the Israeli government care a whit about the lack of an official American green light to their attack on Iran? They are as unconcerned about the lack of a green light as Iran is unconcerned about President Bush's threat of sanctions if Iran does not comply with all requirements announced by the Bush administration. Iran knows what Israel knows: the Bush administration is terminal. It will end on January 20, 2009. It has no teeth. Lame ducks don't bite. They merely squawk.

Why should we think that either Iran or Israel gives a fig about the red light/green light debate? American pundits may think this debate is important, but why should anyone with common sense think it's important?

TIMETABLES

Iraq has announced that the United States must pull out its troops. It is demanding dates for this withdrawal. The Bush administration is pooh-poohing all this, and will not under any circumstances announce such a timetable, but so what? There is a timetable for the Bush administration's withdrawal: January 20, 2009.

This means that the United States is going to be pressured by Iraq's government to leave Iraq from now on. Most of the troops will be forced to leave Iraq unless things change dramatically. Then what will be done with the 14 major military bases that have been built?

As the pressure increases to force us to leave Iraq, and as the pressure from the Taliban increases in Afghanistan, and as the pressure from voters increases to get our troops out of both countries, and as the likelihood of the election of Obama increases, decision-makers in the State of Israel are caught between the proverbial rock and a hard place.

If the United States pulls out of the region, the State of Israel will be left high and dry. But there is another possible scenario. If Iran's surrogate Shia forces in the region take on the United States troops in reaction to an Israeli attack on Iran, American public opinion will swing in favor of keeping the troops there, no matter what. "Who do those Iranians think they are? We issued no green light to the Israelis. It's not our fault." If Iran begins to supply weapons to Shia forces in Iraq and Afghanistan, and the American death rate goes up, then American voters will switch back to a pro-war position. At least, this is a possibility. Americans do not like to be pushed around.

Any escalation of war in the region will create havoc for the supply of oil. The world economy is moving into recession already; it may go into a true depression if oil goes to $500 and stays there. So, the stakes are enormous.

The outcome is no longer in the hands of the United States, Europe, Asia, or any of the other outsiders to the Middle East. The outcome, or at least the trigger, is completely in the hands of the decision-makers in the State of Israel. They hold the gun.

Unless the United States and Western Europe tell the decision-makers in the State of Israel that Europe and the United States will impose significant negative sanctions after an attack on Iran, then decision-makers there are going to make a decision based on the self-interest of the ruling party, not the self-interest of American or European voters. They are going to take care of their perceived problem, exactly as we would expect any other national political leaders would take care of their problem.

That's why all talk about war being a threat to the self-interest of the whole makes sense only if the Israelis conclude that the economic crisis will be so severe that it will take them down in the whirlpool of economic collapse. They are not afraid of military retaliation from Iran. They are also not afraid of the United States, Europe, Asia, or any other coalition that does not have the backbone to say in advance that there will be major sanctions placed on the State of Israel if there is an attack on Iran.

This is why I am concerned about the threat of an Israeli attack on Iran. I am in no way calmed by statements attributed to Admiral Mullen. When Admiral Mullen holds a press conference and says publicly that there is no green light for an attack by the Israeli Air Force on Iran, and that any flyover of Iraq by Israeli planes will lead to shoot downs of Israeli planes by American planes, then I will stop worrying about the threat of an attack on Iran by the Israeli Air Force. How likely do you think such a press conference is?

We must face reality: the decision to go to war with Iran is 100% in the hands of Israeli decision-makers. It is not in the hands of the United States, Europe, or Asia. In other words, the economic fate of the West over the next decade is now in the hands of decision-makers who are concerned about the long-term survival of their own country. They are concerned because they do not want to have Iran in the possession of nuclear weapons. Both candidates for President have said the same thing.

We have seen saber-rattling by the Iranians with the film-doctored test of the missiles this week. These missiles are militarily useless as weapons against the Israelis. They are as irrelevant militarily as Germany's V-2 missiles were in 1945. They cannot inflict enough damage to make a difference, unless they are used against Saudi Arabian oil fields. But, if they had a nuclear warhead, that would make all the difference. The Israelis know this. So, they are going to make their decision in terms of this long-term threat.

The main inhibition against an attack is the possible collapse of the Western economy, which buys Israeli-produced goods. This threat may be sufficient to keep them from attacking. I dearly hope that it is. But it is naïve to believe that they are going to make their decision because of worries about whether Admiral Mullen has issued a green light or not.

CONCLUSION

When you invest your money, do not ignore the worst-case scenario. Set aside some of your money on the assumption that the worst-case will come true. This is what any military strategist does. He makes his decisions in terms of what the enemy can do, not what it would be convenient for the enemy to do.

I suggest that you be aware of this threat. I suggest that you sit down with the family budget and outline what your response would be if the price of gasoline were $10 a gallon or $15 a gallon or $20 a gallon. What would you do? I know what you would do. You would drive less.

Ignore the happy-face assessments of the geopolitical strategists. Ignore the happy-face assessment of the Secretary of the Treasury, Henry "Goldman Sachs" Paulson. These assessments are being issued to keep panic from spreading.

I am doing my best to encourage people to take rational steps with some of their liquid assets: to hedge themselves against the possibility that there will be an attack on Iran before January 20, 2009. This doesn't mean that I think such an attack is a sure thing. Decision-makers in the State of Israel are going to have to live with $400 oil, just like all the rest of us. They may decide that this risk is too great. They may decide to put up with the threat of a future nuclear-armed Iran. I won't bet all of my money on this. I don't think you should either.

July 12, 2008

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com./

Statement on House Congressional Resolution 362 before the US House of Representatives, June 28, 2008

Today the Dow Jones Average was down 350-some points, gold was up $32, and oil was up another $5. There is a lot of chaos out there and everyone is worried about $4 gasoline. But I don't think there is a clear understanding [of] exactly why that has occurred.

We do know that there is a supply and demand issue, but there are other reasons for the high cost of energy. One is inflation. In order to pay for the war that has been going on, and the domestic spending, we've been spending a lot more money than we have. So what do we do? We send the bills over to the Federal Reserve and they create new money, and in the last three years, our government, through the Federal Reserve and the banking system, has created $4 trillion of new money. That is one of the main reasons why we have this high cost of energy and $4 per gallon gasoline.

But there is another factor that I want to talk about tonight, and that is not only the fear of inflation and future inflation, but the fear factor dealing with our foreign policy. In the last several weeks, if not for months, we have heard a lot of talk about the potential of Israel and/or the United States bombing Iran. And it is in the marketplace. Energy prices are being bid up because of this fear. It has been predicted that if bombs start dropping, that we will see energy prices double or triple. It is just the thought of it right now that is helping to push these energy prices up. And that is a very real thing going on right now.

But to me it is almost like déjà vu all over again. We listened to the rhetoric for years and years before we went into Iraq. We did not go in the correct manner, we did not declare war, we are there and it is an endless struggle. And I cannot believe it, that we may well be on the verge of initiating the bombing of Iran!

Leaders on both sides of the aisle, and in the administration, have all said so often, "No options should be taken off the table – including a nuclear first strike on Iran." The fear is, they say, maybe someday [Iran is] going to get a nuclear weapon, even though our own CIA's National Intelligence Estimate has said that the Iranians have not been working on a nuclear weapon since 2003. They say they're enriching uranium, but they have no evidence whatsoever that they're enriching uranium for weapons purposes. They may well be enriching uranium for peaceful purposes, and that is perfectly legal. They have been a member of the non-proliferation treaties, and they are under the investigation of the IAEA, and ElBaradei has verified that in the last year there have been nine unannounced investigations and examinations of the Iranian nuclear structure and they have never been found to be in violation. And yet, this country and Israel are talking about a preventive war – starting bombing for this reason, without negotiations, without talks.

Now the one issue that I do want to mention tonight is a resolution that is about to come to this floor if our suspicions are correct, after the July 4th holiday. And this bill will probably be brought up under suspension. It is expected to pass easily. It probably will be. And it is just more war propaganda, just more preparation to go to war against Iran.

This resolution, H.J. Res 362 [listed as H. Con. Res 362 online] is a virtual war resolution. It is the declaration of tremendous sanctions, and boycotts and embargoes on the Iranians. It is very, very severe. Let me just read what is involved if this bill passes and what we're telling the President what he must do:

This demands that the President impose stringent inspection requirements on all persons, vehicles, ships, planes, trains and cargo entering or departing Iran, and prohibiting the international movement of all Iranian officials.

This is unbelievable! This is closing down Iran. Where do we have this authority? Where do we get the moral authority? Where do we get the international legality for this? Where do we get the Constitutional authority for this? This is what we did for ten years before we went into Iraq. We starved children – 500,000 individuals it was admitted probably died because of the sanctions on the Iraqis. They were incapable at the time of attacking us. And all the propaganda that was given for our need to go into Iraq was not true.

And it is not true today about the severity [of the need to attack Iran]. But they say, "Yeah, but Ahmadinejad – he's a bad guy. He's threatened violence." But you know what? Us threatening violence is very, very similar. We must – we must look at this carefully. We just can't go to war again under these careless, frivolous conditions.

See the Ron Paul File

Statement on House Congressional Resolution 362 before the US House of Representatives, June 28, 2008

Today the Dow Jones Average was down 350-some points, gold was up $32, and oil was up another $5. There is a lot of chaos out there and everyone is worried about $4 gasoline. But I don't think there is a clear understanding [of] exactly why that has occurred.

We do know that there is a supply and demand issue, but there are other reasons for the high cost of energy. One is inflation. In order to pay for the war that has been going on, and the domestic spending, we've been spending a lot more money than we have. So what do we do? We send the bills over to the Federal Reserve and they create new money, and in the last three years, our government, through the Federal Reserve and the banking system, has created $4 trillion of new money. That is one of the main reasons why we have this high cost of energy and $4 per gallon gasoline.

But there is another factor that I want to talk about tonight, and that is not only the fear of inflation and future inflation, but the fear factor dealing with our foreign policy. In the last several weeks, if not for months, we have heard a lot of talk about the potential of Israel and/or the United States bombing Iran. And it is in the marketplace. Energy prices are being bid up because of this fear. It has been predicted that if bombs start dropping, that we will see energy prices double or triple. It is just the thought of it right now that is helping to push these energy prices up. And that is a very real thing going on right now.

But to me it is almost like déjà vu all over again. We listened to the rhetoric for years and years before we went into Iraq. We did not go in the correct manner, we did not declare war, we are there and it is an endless struggle. And I cannot believe it, that we may well be on the verge of initiating the bombing of Iran!

Leaders on both sides of the aisle, and in the administration, have all said so often, "No options should be taken off the table – including a nuclear first strike on Iran." The fear is, they say, maybe someday [Iran is] going to get a nuclear weapon, even though our own CIA's National Intelligence Estimate has said that the Iranians have not been working on a nuclear weapon since 2003. They say they're enriching uranium, but they have no evidence whatsoever that they're enriching uranium for weapons purposes. They may well be enriching uranium for peaceful purposes, and that is perfectly legal. They have been a member of the non-proliferation treaties, and they are under the investigation of the IAEA, and ElBaradei has verified that in the last year there have been nine unannounced investigations and examinations of the Iranian nuclear structure and they have never been found to be in violation. And yet, this country and Israel are talking about a preventive war – starting bombing for this reason, without negotiations, without talks.

Now the one issue that I do want to mention tonight is a resolution that is about to come to this floor if our suspicions are correct, after the July 4th holiday. And this bill will probably be brought up under suspension. It is expected to pass easily. It probably will be. And it is just more war propaganda, just more preparation to go to war against Iran.

This resolution, H.J. Res 362 [listed as H. Con. Res 362 online] is a virtual war resolution. It is the declaration of tremendous sanctions, and boycotts and embargoes on the Iranians. It is very, very severe. Let me just read what is involved if this bill passes and what we're telling the President what he must do:

This demands that the President impose stringent inspection requirements on all persons, vehicles, ships, planes, trains and cargo entering or departing Iran, and prohibiting the international movement of all Iranian officials.

This is unbelievable! This is closing down Iran. Where do we have this authority? Where do we get the moral authority? Where do we get the international legality for this? Where do we get the Constitutional authority for this? This is what we did for ten years before we went into Iraq. We starved children – 500,000 individuals it was admitted probably died because of the sanctions on the Iraqis. They were incapable at the time of attacking us. And all the propaganda that was given for our need to go into Iraq was not true.

And it is not true today about the severity [of the need to attack Iran]. But they say, "Yeah, but Ahmadinejad – he's a bad guy. He's threatened violence." But you know what? Us threatening violence is very, very similar. We must – we must look at this carefully. We just can't go to war again under these careless, frivolous conditions.

My teacher toll me to change for a bigger board

and my kite most be 17

can you tell me more

im learning,

I work a lot

Some special problems with this car??

I dont now too much about cars

I work a lot

Some special problems with this car??

I dont now too much about cars

The so-called "credit crisis" is gaining momentum. Investors increasingly question the solidity of the banking system, as evidenced by banks' tumbling stock prices and rising funding costs. With bank credit supply expected to tighten, the profit outlook for the corporate sector, which has benefited greatly from "easy credit" conditions, deteriorates, pushing firms' market valuations lower. In fact, peoples' optimism has given way to fears of job losses and recession on a global scale.

Free market advocates, however, should not get carried away by the price action in the market place. In a free market, there is nothing wrong with individuals reassessing hitherto held expectations, entailing changes in relative prices. A free market is a discovery process, based on trial and error. Usually the effects of errors made by some are compensated for by the gains of successful decisions taken by others, and the economy expands.

Sometimes, however, the effects of errors dominate, and the economy experiences what people call a crisis: income growth is (feared to be) lower than what people think it should, and could, be. In that sense a crisis is a correction of bad decisions. It is an indispensable part of the free market. It pushes those producers out of business who do not satisfy the needs of their clients, and it rewards those who serve their customers well.

A crisis must be feared, however, if it has been caused by government action, and if the obvious signs of the crisis provoke ever greater doses of government intervention. In this case, the market would be prevented from doing its job properly. Bad decisions would be perpetuated, and the ultimate crisis may become nasty.

Diagnosing the Causes of the Crisis

It is against this background that one may wish to review the US central bank's series of rate cuts, the latest being a big 75-basis-points rate slash on January 22, 2008, which brought the official Fed Funds Target Rate to 3.5%.[1] While the Fed's moves were mostly hailed in public as appropriate measures to help the economy avoid recession, Austrian economists hold a completely different view.

According to the Austrian Monetary Theory of the Trade Cycle it is the government-run money-supply monopoly that has not only caused the crisis; the theory also diagnoses that rate cuts will not solve the crisis, but will make it even worse.

Central banks, the government agents holding the power over the printing press, pursue a monetary policy of "interest rate steering" or, in other words, pushing the interest rate down as much as possible by relentlessly increasing credit and money supply. It is this inflationary monetary policy that causes trouble.

Ludwig von Mises pointed out that

today credit expansion is exclusively a government practice. As far as private banks and bankers are instrumental in issuing fiduciary media, their role is merely ancillary and concerns only technicalities. The governments alone direct the course of affairs. They have attained full supremacy in all matters concerning the size of circulation credit. While the size of the credit expansion that private banks and bankers are able to engineer on an unhampered market is strictly limited, the governments aim at the greatest possible amount of credit expansion.[2]

Initially, the artificial lowering of the interest rate creates an illusion of richness and affluence. The increase in the money stock via bank credit expansion erroneously suggests that the supply of savings increases. Investment picks up, and the economy expands. The illusion of plentiful resources leads to malinvestment, and sooner or later the boom turns into a bust. While the money-fueled expansion is a manifestation of the crisis, it is actually the slump — the correction of malinvestment — that people complain about.

The alleged fight against the crisis

Once a crisis unfolds, central banks are called upon to lower interest rates — in ignorance of the fact that a monetary policy of pushing down the interest rate has caused the misery in the first place. Cheaper borrowing costs, it is believed, would revive the economy by stimulating investment and consumption, thereby adding to output and employment. Lower interest rates would raise the prices of stocks, bonds, and housing, translating into "wealth effects" which in turn strengthen demand.

The obsession with a policy of lowering the interest rate is rooted in a deep-seated ideological aversion against the interest rate. It is a destructive ideology, in particular if the government is in charge of the money supply. Because then the government central bank will lower the interest rate to whatever is deemed appropriate from the viewpoint of the government, pressure groups, and vested interest.

However, the interest rate is a reflection of peoples' "time preference": because of scarcity, people value goods and services available today ("present goods") more highly than goods and services available at a later point in time ("future goods").[3] This is why present goods trade at a premium over future goods. That premium is the interest rate, or the "time preference rate." The interest rate is a free-market phenomenon.

A policy of suppressing the market interest rate through a government-sponsored credit expansion, Mises noted, is a policy against the free market:

Credit expansion is the governments' foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.[4]

Causing Inflation

A monetary policy of lowering the interest rate via expanding credit and money corresponds to the widely held view that "some inflation" is a requisite for economic expansion. In fact, the "inflation bias" has become so widespread that nowadays inflation (the rise in the money supply) is much less feared than deflation (the decline in the money supply).

Mises was aware of what happens once the inevitable crisis caused by a manipulation of the interest rate unfolds: "In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils inflation and credit expansion have brought about."[5]

The current credit crisis is a sad case in point: with monetary policy having caused inflation and malinvestment, it is now called upon to pursue a policy that leads to even more inflation and malinvestment.

Could monetary policy become "ineffective," that is, could it fail to create inflation? For instance, the Bank of Japan's rate cuts around the beginning of the 1990s — as a reaction to falling asset prices and a growing volume of bad loans in banks' portfolio — did not succeed in bringing credit and money growth rates back to precrisis levels. Even with official rates at virtually zero, the economy remained in stagnation and the Japanese stock market continued to decline.

Against the backdrop of the Japanese experience it should be noted that there is no limit to central-bank money printing. Central banks can, at any one time, buy any assets from banks and nonbanks such as bonds, real estate, foreign currencies, etc. If a central bank buys, say, debt from the corporate sector, it increases the money stock in the hands of nonbanks directly; the commercial banking sector is not needed for increasing the money supply.

Central banks' unlimited power over the money supply has been made pretty clear by the chairman of the US Federal Reserve, Ben S. Bernanke, in November 2002:

[T]he U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.[6]

So if the government is determined to create inflation, there should be hardly any doubt that there will be inflation. The Fed's series of rate cuts suggests that the bank tries to create additional credit and money via lowering the interest rate on base money. But if such action fails to yield inflation, it does not take much to expect that the central bank may take recourse to less "regular" operations, if and when such an inflation policy is deemed necessary to solve the credit crisis.

So far, at least, US bank credit and money supply growth has remained at a very high level. In December 2007, banks' commercial and industrial loans grew at 10.9% y/y, and total bank loans and leases were up 10.8% y/y. Real estate loans — most likely as a consequence of the defaults in the subprime markets — slowed down somewhat, but were still running at 6.3% y/y. Against this background the Fed rate cuts should actually accelerate the erosion of the exchange value of money further.

Threatening Freedom

Inflation is a societal evil. It redistributes real wealth from creditors to debtors. It impairs the role of money as a means of exchange. The efficiency of the market's price mechanism is greatly reduced, encouraging bad decisions, which in turn harm peoples' economic well-being. At the end of the day, inflation is a serious threat to freedom. The majority of the people, suffering badly from inflation, would most likely blame the free market for their plight, rather than blame the central bank for the debasing of the currency.

Print $17

Audio $25

Mises noted:

Nothing harmed the cause of liberalism more than the almost regular return of feverish booms and of the dramatic breakdown of bull markets followed by lingering slumps. Public opinion has become convinced that such happenings are inevitable in the unhampered market economy. People did not conceive that what they lamented was the necessary outcome of policies directed toward a lowering of the rate of interest by means of credit expansion. They stubbornly kept to these policies and tried in vain to fight their undesired consequences by more and more government interference.[7]

From the Austrian viewpoint, the current credit crisis appears to be a precursor of great inflation. If a deliberate policy of great inflation is chosen in the United States, a monetary policy of debasing the currency would most likely also take hold in other currency areas of the world. The credit crisis has become a threat to the free societal order: as people become dispirited with the free market order, the door would be pushed open for anti–free market policies.

--------------------------------------...

Thorsten Polleit is Honorary Professor at the Frankfurt School of Finance & Management. Send him mail. See his archive. Comment on the blog.

Notes

[1] The FOMC rate cut was made "in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households." US Federal Reserve, Press Release, 22 January 2008.

[2] Mises, L. v. (1996), Human Action, p. 794.

[3] For the explanation of the Austrian theory of the interest rate, see Rothbard, M.N. (1993), Man, Economy, and State: A Treatise on Economic Principles, pp. 31

1 day ago - 2 days left to answer.

Libertarians of Austrian Scholl of economics

A LIGTH in the middle of Darkness

Now we live :

Around politicians talking lies, and Mixed economy than doesnt work, or the FED taking our adquisicion power of our money and work, politicians looking only for power and money, and warfare and wellfare (for more power and money for them),.........upside down world that we live at this time.

We want our kids to live like that???

our we like to start a Change for good.???

lewrockwell.com

Mises.com

A LIGTH in the middle of Darkness

Around politicians talking lies, and Mixed economy than doesnt work, or the FED taking our adquisicion power of our money and work, politiicians looking only for power and money, and warfare and wellfare (for more power and money for them),.........uposide down world that we live at this time.

We want our kids to live like that???

lewrockwell.com

Mises.com

Once upon a time, America was almost a mirror of Ron Paul’s vision:

There were No Infringements on States Rights, No Gun Laws, No Department of Education, No HUD, No Paper Fiat Money, No Federal Reserve Banking System, No IRS, Little to No Illegal Immigration, No TSA, No Welfare State, No Unlawful Searches and Seizures, No Wars for Profit or Empire, No Standing Army, No State Police, etcetera, etcetera, etcetera. Of course you know all this if you have ever read anything written by George Washington, Thomas Jefferson, or Ron Paul.

Our government was renowned throughout the world for how little it was doing – and with almost no money at all. We were debt free. We were a shining beacon on a mountaintop. And we were beginning to disturb some old European money and banking interests. What if this American experiment could spread throughout the rest of the world? Certainly the remaining monarchies of Europe had reason for concern.

You may think me Irrationally Exuberant, but I am not – I am well aware of the Blood, Sweat and Tears, that it will cost Us to restore Limited Constitutional Government to all the States of the Union – Yet through the Gloom I can see the Rays of ravishing Light and Glory. I can see that the End is more than worth all the Means. And that Posterity will triumph in that Day’s Transaction.

[with apologies to Abigail Adams and Blood Sweat and Tears – but Not Alan Greenspan]

The ink was still wet on the Constitution when the first acts of sedition were being undertaken; and those first few offenses were setting the stage for the major insults of the mid-1800s, yet, the whole world was marveling at the level of individual liberty that had been achieved in America. It is safe to say her Constitution was being observed a little more perfectly than it is today.

America was not perfect, but she was being governed more in line with informed consent than by fiat, sophistry, subterfuge or violence. She was already the freest place mankind had ever known with the very brief exception of the nation of Israel under some of the Judges – before they got the "brilliant" idea to demand a king so they could be like all the other nations.

Governments are instituted among Men, deriving their just powers from the consent of the governed, – That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. – The Declaration of Independence, 1776

Once again with feeling: "…Governments long established should not be changed for light and transient causes..." Add to that, that governments should not be changed through fraud, fear or mistake.

Regardless of how we got to this place where our State and Federal Governments are waging war against our Constitutions and attempting to destroy the last vestiges of free government and individual God-given rights, the way back will always be the same:

Fully Reinstate the Founding Principles – First in our own hearts and minds, and then in all of our governments.

Our Weapon of Choice: Education, Education, Education

On our way back we must not throw out the baby with the bath water – but at the same time we must be adamant about the fact that all governments must be brought all the way under the law. There must be no exceptions. Before we decide to throw off government we must do all we can to restore and preserve the fabric of lawful government that remains within the written laws of the United States made pursuant to the Constitution.

To accomplish this we will need more people in office who know and revere the Founding Principles, and more citizen sovereigns with the requisite knowledge and will to police their own government servants.

No constitution or set of governing principles will suffice if we wish to remain ignorant, wicked and lazy. "An ignorant people are easily betrayed, and a wicked people can never be ruled by the mild influence of their own laws." – Arthur J. Stansbury

Now I suppose that a baby doctor knows how to separate the baby from the bath water better than anyone. And certainly a flight surgeon will know just where to make all the right cuts. One of Ron Paul’s most important assets as president will be his comprehensive understanding of economics and how it relates to lawful money, Banking and Taxation. While it is obvious to most people that their government should not arbitrarily rob, kill or imprison them, it is the science of economics that gives us the forensic tools we need to measure the performance of our servants with precision.

"A science of economics must be developed before a science of politics can be logically formulated. Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic. This must be known before a science of politics can be formulated to determine the proper functions of government. Immediately following the development of a science of economics, and at the very beginning of the formulation of a science of politics, this all-important question must be answered: What is law? What ought it to be? What is its scope; its limits? Logically, at what point do the just powers of the legislator stop? I do not hesitate to answer: Law is the common force organized to act as an obstacle to injustice. In short, law is justice." ~ Frédéric Bastiat

Have you heard Dr. Ron in the debates [not really debates at all this time around]? When Dr. No starts talking economics the rest of them instinctively know they need to change the subject. They are over their heads before they open their mouths. Can you imagine what it might look like if each candidate had to face Dr. Paul on his/her own and argue to a true conclusion? Obviously they would rather play footsie with each other than go toe to toe with the Doctor.

As his presidency gets closer and closer there will be those in certain financial businesses who may have some trouble sleeping as they contemplate the impact of "lawfulness" on their "industries." Bankers should not be allowed to sleep. They have had a license to fleece for generations. It should worry them sick that their friends and relatives might fully comprehend the insidious nature of their craft. Ask any banker to explain the morality and ethics of being able to inflate the money supply surreptitiously for the benefit of limited or private interests – or as a covert method of taxation. They get all upset when you try to print your own money, don’t they? You go into a gas station to pay for a fill-up and some clerk swipes a special pen across the government’s counterfeit bill to make sure you are playing the game by their rules [just for fun offer to lend the clerk your own special pen].

There may be no way to avoid a crash landing for this corrupted economy. But if we have anyone ignorant of economics in the White House we run the risk of another New Deal from which we may never recover. FDR knew better – but I don’t know about his political heirs in both major parties. None of them seem to repudiate socialism in toto – and they all seem to lust after the fictional version of FDR.

Listen to the candidates when they talk about doing ANYTHING they promise. Then simply ask how they are going to pay for it. Once elected, they don’t get all that OPM just by asking for it. They take it by fraud and by force. They appropriate your money for their schemes. This may seem elementary. But millions of people still believe in them and appear to vote for them. And if promises don’t work they can always solicit the coveted Diebold Endorsement.

The period between the Declaration and the Constitution taught us many painful lessons regarding the necessity of sound money and transparent, honest banking. The Continental Dollar was a disaster. Not only did it precipitate hyperinflation, being based ultimately on nothing of substance, but it drove hard money away. Realize sound money only moves it does not vanish. It is smart enough to know where it will be properly respected. In the first few months of the Paul Administration the smart money [gold and silver] will once again be drawn toward the States of the Union just as surely as it has been chased away by the fraudulent, fiat Federal Reserve Note.

Paper Money IS War Money

The British printed counterfeit Continentals attempting to undermine the efforts of the American Patriots. This worked like a tax on the Revolution being levied by our enemies. In a sense the Revolution was an economic race as well as an armed conflict. Today, our own government servants in collusion with the Fed are making economic war against We The People.

Fiat money is a cancer that has been metastasizing to all of the major economies of the world. Electronic fiat money accelerates this disease and its effects. Compound the problem with fractional reserve banking and you have the perfect recipe for national and international financial ruin.

Dr. Ron Paul understands. He has been the watchman on the wall for several decades patiently repeating the warning: "GO BACK – YOU ARE GOING THE WRONG WAY!" The Founders and Framers of our Constitution had left clear principles that were being ignored, forgotten, or deliberately set aside. Dr. No has been watching carefully, making astute observations, speaking his mind and voting his conscience. He is uniquely qualified to be our next President because he the only candidate that takes his oath to heart – and the only one with a working grasp of economics.

Historian George Bancroft, writing in the late 1800s in his "Plea for the Constitution, Wounded in the House of its Guardians," was making the same case:

I have written because I am persuaded that a firm and right establishment of the true relations of money to labor cannot be secure in a republic except by cultivating the mind of its people, and diffusing a knowledge of the truth through all its members. The honest illusions of many men must be dispelled; and their minds, ransomed from error, will discern the truth. Paper money is a corruption of the blood. Or paper money is the dry rot, which silently and unseen consumes the beams and joists which support the house and its floors.

I am pleading the cause of industry, the cause of labor, the cause of the poor; and yet as I do not believe that the interests of the various classes of society necessarily clash with each other, I may hope that I am pleading for the welfare of society, for the rights and duties of all who in the many diversities of honorable occupation contribute to the completeness of a nation. What I have written is the fruit of many hours, employed in examining the laws of our period of colonial life, as well as in the study of our own constitution and of the corresponding history and affairs of many lands. I may utter these last words of admonition as assurances of that love of country, of liberty, and of truth that has been the rule of my life, and still glows in a heart which must so soon cease to beat [emphasis added].

In a battle against cancer it may be very important to have a biopsy. The doctor notices a lesion or a tumor and advises that certain tests be performed. Depending on the results of the tests, decisions will be made that could have grave consequences. I always say, if anyone ever asks which you would prefer, a biopsy, or an autopsy, go for the biopsy. America is at a crossroads. We can make believe everything will be all right [skip the biopsy] or we start learning how to heal the damage – before it’s too late.

I would love to think there were a million Ron Pauls. Perhaps the next best thing is for our country to be taught liberty by the example of Doctor Ron as he points us in the direction of the Founders and Framers of our Constitution. To be like Dr. Paul we must expose ourselves to the same resources and discipline that produced a Ron Paul.

Ron Paul’s model can be replicated: Govern lawfully and show everyone where you learned how to do it. Dr. Paul has been working this formula for more than 30 years in government service. Always be ready with a well-informed response – and prepared to cite authorities that will inspire and enhance the education of your students as well as your adversaries. The writings of the Founders and Framers of the Constitution are fabulous resources for anyone who wants to excel in any profession or calling. How much more are they a wellspring for those of us who yearn to breathe free!

You may have noticed that the other candidates refer to the Founders and Framers occasionally, but almost always in a symbolic way. For them, substance and context must be avoided at all cost.

This could be our last chance to revive American values and principles and avoid the post-mortem examination that has been the lot of empires. There have always been warning signs and those who were sounding the alarm. We were never meant to be an empire – only a constitutional republic – a government of laws and not of men.

Could it be Providence has determined our republic will be reborn and returned to us and our posterity by way of the gentle hands of a self-effacing country baby doctor? That would certainly confound the enemies of liberty – almost as much as they were confounded in 1781.

The Doctor will see you now. And after a comprehensive examination he will expect you to follow his recommendations if you want to regain your full health.

Get well soon America! Vote for Doctor Ron Paul!

January 30, 2008

Bill Huff [send him mail] is a Classical Libertarian and proprietor of LEXREX.com; a former public school music teacher turned home schooling advocate; a US Navy veteran, and host of WarIsARacket.com.

Ron Paul Rocks!

by Karen Kwiatkowski

by Karen Kwiatkowski

DIGG THIS

I am ashamed to admit that I’ve been watching Ron Paul’s recent political acts with fingers and toes crossed, breathless.

Seeing Ron Paul educate Wolf Blitzer earlier this week, after his astoundingly fantastic performance in the second Republican debate, makes me sorry I had lost my faith in the power of truth, the power of courage. I’m sorry that I didn’t believe in the possibility that a serious person in the American political arena would commit that most radical act of speaking truth to power.

And in doing it, not only survive, but thrive!

A famous Orwell quote captures what is happening. "In a time of universal deceit, telling the truth becomes a revolutionary act." And while many have been working to prepare ground for truth and freedom in this country, I think we will note that the first shots in this revolution have been fired by Ron Paul.

Orwell had glimpsed what would become the modern political state, globally engaged in endless wars, fighting shadowy enemies who constantly change, because they never really mattered anyway. What mattered, and what still matters, is war, with its handmaidens Fear and Public Amnesia. Without fear and amnesia, holding on to domestic political power in the American neoconservative oligarchy becomes risky, uncertain.

Ron Paul is speaking truth to the whole world, with patience and patriotism flowing in equally generous portions. Like the young David, he is received by the dogs of war with sneers, self-important snarling, threatening stares. Like David, he seems almost unarmed and even unprepared for the great battle to come. But like David, he is unafraid. Like David, he understands what he believes in and knows it to be consistent with all that is good and just.

On the other hand, his political opponents, in both parties, do not truly believe in what they are saying. The neoconservative evangelical Republican Party seeks the 2008 presidency and the neoconservative socialist Democratic Party seeks the 2008 presidency. It isn’t because they believe in something – instead, they seek to access domestic power and maintain the status quo – an enriching and profitable status quo for people and organizations in power, I might add.

I’m not just saying this because I am excited about Ron Paul’s candidacy and the possibility of his presidency. Recall if you will, the first Republican debate, when the candidates were asked about National ID cards. Some of the other candidates began to respond, clonelike, each confusing the national ID card with some vague undeveloped ideas they have about security for the country. Their reptilian brains were drumming "Security, Security, Must Look Good on Security."

Then Ron Paul gets to answer the national ID card question. It is unnecessary and would have little to nothing to offer in terms of national security. Oh, and then he firmly rejected it. Like a real man!

Immediately, the candidates – even some who had already spoken, rushed and stumbled to agree or at a minimum, move toward the Ron Paul position. I recall Giuliani saying something like he would only have a national ID card for aliens. Huh? My mother says if you can’t say anything nice, don’t say anything at all. Let me then say this: Rudy Giuliani has the biggest reptilian brain of all the candidates.

Ron Paul offers real change, and a real way ahead for America that includes not just an embrace of the original constitutional outline of small government, but something we can really partake of each day – free economics, free speech, free will. Further, Ron Paul promises something that is valuable and precious to Americans who belong to a political party – any political party. Ron Paul offers a chance to share a real sense of our country as glorious and honorable, a joyful, fearless land of opportunity and of peace.

Because make no mistake, the United States has not been glorious and wonderful, and certainly not free and peaceful, for many decades.

I am excited about Ron Paul and his campaign. I have ritualistically voted since 1978, usually as a Republican, later as a libertarian, and last fall I voted for Virginia Senator Jim Webb, a Democrat. I’ll ritualistically vote for Ron Paul in 2008, if I can. But far more than that, I am pleased to be humbled by each new day of the Ron Paul campaign – to witness the raw power of ideas and debate – after such a long hiatus of ideas and debate from the American political game.

The Greek concept of happiness, eudaimonia, keeps coming to mind whenever I think of Ron Paul as President. It is about faithful and right action, not human exultation or social extremes. It is about the happy and fulfilling marriage of knowledge and virtue. It is about reality over fantasy, faith over existentialism, doing good over doing evil.

In other words, Ron Paul rocks!