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Patriotism
and Gold Wars |
This essay comes from deep in the heart. Inner turmoil stirs my longstanding patriotism and pride for my nation. I resent challenges to my patriotism and to the patriotism of anyone who has taken antagonistic investment positions to the USDollar. Many of us are deeply committed to investment decisions predicated upon the judgment that our currency has tragically been destroyed by irresponsible and incompetent national leaders, all beyond our control. Cogent arguments can be made that the world monetary standard, a debt-based currency, will succumb to the Kondratiev Winter, which has yet to reach conclusion. In 1930, the gold standard fell. Back then, it had 100 times the strength of today’s critically sick USDollar. Its fundamentals resemble a cross between a Banana Republic and bleeding motorcycle victim in a hospital Intensive Care Unit.
I write for all the wounded soldiers in the war against the ravages of inflation and its devastating effects. So many unsuspecting victims have suffered, while maintaining their patriotism, betrayed by our leaders and system designers. Most of our current challenges stem from a sanctioned practice to attempt to “control inflation” via central planning of the bank system. In my opinion, they have failed miserably, and we are now reaping the rotten fruit after three decades of undisciplined management. I also write it for myself, as therapy, since my anger, disappointment and depression seem to dog me to this day, ever since the fateful spring and summer of 2000. In the last 18 months, a view has developed firmly, one whose landscape contains a beacon of hope, which might restore my financial health and provide some measure of emotional healing. The hope is based upon an ongoing revival story where neglected real money has begun to rise like a phoenix from the ashes — GOLD.
The wellspring of new hope is founded in GOLD due to its purity, its transportability, its permanence, its acceptance, and its verifiable capability to fortify a nation’s economy and banking system. As the USDollar continues its slow-motion plummet, as the US economy continues its shedding of jobs and reduction in income, as debt continues to accumulate and to default, as the nation’s trade deficit continues to hemorrhage our capital, gold shines brighter and rises in value. We live within a malfunctioning system whereby money is not backed by hard asset reserves, but rather by debt. This practice is lethal to the system and will eventually lead to systemic implosion. The United States is no exception to the laws of economic nature; such laws cannot be rewritten by arrogant, misguided, and uncontrollable politicians. The transition period will be excruciating.
In
the year 2002, gold outperformed stocks, bonds, and real estate — yet it
earned no respect. The unhedged gold miner index has risen over 400%
since early 2001, as measured by the HUI index (see its chart).
As investors of gold urge on their pristine metal, they have taken a
position adversarial to the system. Are they patriots? To that I say resoundingly, YES. Our nation was founded on a
currency and legal tender based on gold and silver. The current money
and legal tender have no basis in gold or any other hard asset, and even
departs from all constitutional tenets. Was Richard Nixon a patriot for
parting ways with the US Constitution? I say NO loudly, since his motives were to deny foreigners money
we owed them and to spend money we did not have. He was lauded for
stonewalling French demands for gold to satisfy trade deficits and for
enabling more liberal federal deficits. Instead of gold, he gave them
paper. Instead of guaranteeing debt holders with promises of gold, he
gave them our good word. Dishonest money was born under Nixon,
arguably the worst steward of our economy among all the presidents, past
and present. The real patriots are gold lovers, gold believers, gold
advocates, and gold investors in any form, whether coins, mining firms,
mutual funds upheld by miners, or mutual funds broadly linked to
economies which base their monetary system on gold. It takes a patriot
to be committed to sound money upheld by the U.S. Constitution, even
as our leaders universally turn their backs on this historical
foundation of our nation. Sadly, our leaders have lost their way in the
pursuit of votes and the commitment to spend recklessly.
The stock bust three years ago wrecked my finances and my emotional stability. An equally big shock was as much due to the realization that my strong educational training had not served me well in sidestepping the carnage. I vividly recall telling good friends in autumn 1999 that a painful digestion period would come sometime around the spring or summer of 2000. All too many information technology budgets would be cut back in excess of 50-60%, starting with my old Staples employer. Two fellow former Digital Equipment Corp castoffs, who had migrated to Staples as I had, kept me informed on Y2K conversions, equipment audits, and upcoming budget slashes. I knew Secy of Inflation Greenspasm would go overboard after broadcasting an easy money policy leading up to the new millennium and follow up by raising interest rates to subdue all that growth after its arrival. He hits guard rails on both sides of the road regularly. His heretical notion that growth causes inflation was all too familiar to me, when the true source of inflation is unchecked monetary output from his own printing presses and the liberal withdrawal of credit from banks.
To
my misfortune, I became caught up in the maelstrom. My vehicle Qualcomm
(QCOM) proved to be a rocket ship, whose state-of-the-art Fourier
transforms in signal processing were understandable to me in principle.
The orthogonality concept extends as one of the most beautiful concepts
in experimental design from the statistics world. But I fell victim to
the collapse of the tech stock bubble. “The Q” held up well
relatively, but my unwise extension of margin debt hurt me with other
tech stocks. I had my head handed to me and almost succumbed.
This experience was repeated by tens of thousands of Americans, Canadians, Europeans, and others. I confused a bull market with genius and paid the price. Many victims were simply following the national practice of investing their 401k or IRA funds in stocks. In the newspeak, some call it “channeled savings” erroneously. The Keynesian cancer forced unwilling and unwitting conscripts into the demolition derby arena. All around us were the Siren calls emanating from remarkable technological developments. I purchased a cell phone and use the same Qualcomm handset to this day with Sprint as my provider. I benefit from the adopted broadband internet service. I speak by telephone across oceans to fellow soldiers in the fight. My FAX is often indispensable. My laptop PC is five times more powerful with ten times the storage and 16 times the memory as my older unit. I feel like a guerrilla fighting the good fight, enlisting more troops, preaching the Gospel according to Midas.
This private war during the last 18 months has changed me as a person. It has hardened me personally and strengthened my resolve. My empathy for assisting potential future victims has diminished, since so many seem to be unteachable or choose to keep blinders installed over their eyes. Many actually revel in their ignorance and illiteracy, expressing empty trust in our leaders. All too many people are unwillingly thrust into the casino. Too many are led to gamble with their life savings and pension funds. Sadly, I perceive the entire US Economy as a bubble and the American culture as a manifestation of deep addiction. Not coming from a political animal, most of my political observations are framed within economic and financial boundaries. Politics, in and of itself, has become a wild rampaging public auction wherein one dollar owns one vote. My refusal to deal with this useless cesspool of tribal warfare has led me to closely consider its shadow cast upon our economy and financial markets. Vested interest, lobbyist subversion of the representative process, corruption, theft, ineptitude — all these have contributed to the bankruptcy of our nation. Dishonesty and corruption seem to have pervaded our entire nation and its culture. We care more about controlling the image and perception of our actions and deeds than in doing the right thing. As a nation, the ends now justify the means. As a patriot, I object to these dangerous roads and sign posts, which seem to lead more to fascism than to ongoing liberty.
My fortune was lost in 2000. My 401(k) was destroyed in the process. I started over with a new job and consulting firm in 2001. To that firm and to special friends and family, I will forever be grateful. That job enabled me to save a small fortune in over two years and to see a nut germinate, then grow under the golden sunlight. When the World Trade Center tumbled, I felt the pain and national loss, despite my Boston-bred dislike of New York City. Over a dozen friends of friends of friends perished in the rubble. My former roommate in the Boston area had a colleague at Raytheon in Lexington who is gone. A good friend in Sudbury had a neighbor who is gone. And my closest friend has a brother in Washington DC who knew several officers also gone. That event changed me, enlisting me as a soldier. But my enemy was unclear. Was it Moslem devils, or Osama Bin Laden, or Saddam Hussein? Perhaps, but only at first. I came to learn of a family link between Saddam and Hitler’s generals. Since then my real adversary has shown itself more clearly and its faceless form inhabits our nation. A roller coaster took me to heights, then cast my body financial overboard, while the elite profited. My fighting spirit has engaged a debauched and corrupted domestic system which designed the reckless ride. The system not only is flawed, but would appall our Founding Fathers. Who are the patriots? More than likely, they include the victims of the financial carnage, not our leaders.
When in Florida (after running away from home in early 2000), I made a good friend named Amer, who is half Palestinian and half Greek. What a wonderful, intelligent, warm hearted, incredibly fun fellow. We keep in touch to this day. When at my last job, I made another good friend named Ahmad, who is Pakistani. They have something else besides Moslem roots in common, as each lived for a few years in Riyadh, Saudi Arabia. They have been very adept at foreseeing the next steps in this regrettable war on terrorism, having compiled impressive track records to date. They each warn about new incursions into Iran, with nuclear threat as the next false cover for pre-emptive attack. I have predicted that new war fronts would likely coincide with the presidential primaries. The timing would be suspicious, but effective. The presidential election could easily transform into a referendum to support our troops and the battle against terrorism. In a previous article written this spring (WEIMERIKA), some striking parallels were developed between Iraq and the Weimar Republic following World War I. The hidden (absurd) threat in the 1920 decade was the Jews, with no standing army. Now the current (real) threat is Islamic Fundamentalists, who deal in terror, but have no standing army. More parallels for inciting the public to arms. However, Jews engaged in no landmark attacks on Germany.
Were Weapons of Mass Destruction the real motive behind the attack of Iraq and removal of its brutal dictator? Or were the real motives to secure oil fields, to establish military air fields, and to stem the petro sales in euro denomination? No one can deny the value of Saddam’s ouster. But I suspect the motives are more like 25% the former and 75% the latter. Further evidence is provided by protection of oil fields, but not the museum containing artifacts. More evidence comes from our expulsion from Saudi’s Prince Sultan Airbase one month later, which I believe to have been given in preliminary form, yet unannounced, before we set aim on Baghdad. Our Prince Sultan military presence since the first Gulf War has caused internal discord within Saudi Arabia. Of those who object to the apparent deceptions on evidence of WMD, and object to the killing of thousands of Iraqi civilians by our approved conventional weapons of mass destruction and object to cozy “no-bid” contracts to Halliburton, are they patriots? I lean toward yes. Or the deceptive leaders who carried out the seizure of a nation, are they patriots? I wonder. Will any promises be kept? Will reconstruction proceed to conclusion? We will see. This whole war smells worse and far more dangerous than Viet Nam ever did. With oil under the lands fought over, the potential for explosive outcomes is greater. I sense the high risk that US Forces will eventually stand in the middle of a religious civil war between Sunnis and Shi’ites. Now we are to be subjected to a Public Relations offensive by the White House and Pentagon. What a tough task in the face of bombings, sabotaged oil pipelines, low troop morale, and a steady stream of soldier deaths.
Is it a coincidence that scandalous inquiries into Halliburton and Harken Energy fizzled after Saddam was alleged in autumn 2002 to have links with terrorism and development of biological and nerve agent weapons? Or was an Iraqi invasion part of a diversion plan? Declining approval ratings of our president, resentment for additional reconstruction funding (beyond the intentional lowball initial estimates), and dogged press suspicions in new inquiries about location of WMD, these support the case for ulterior and insincere motives. I believe patriots are fighting in uniform, but I am not so sure about the commanders who issue orders. Many generals probably find themselves caught in the middle, if reports about Joints Chiefs discord are any indication. Rumsvelt might not be the patriot we think, as he uses a strong arm on Joint Chiefs, threatening their retirement for refusal to comply with his wishes and dodging responsibility for small troop counts. Former NATO chief Wesley Clark affords respect to public disagreement. I cannot see the wisdom in trampling on NATO in a rush to seize Iraq. What started as a movement to dethrone a ruthless dictator has now become a full-scale occupation of a nation and commandeering its riches. The entire principle of weakening this international treaty, which has helped to ensure security in Europe, seems unpatriotic to me. France, Germany, and Russia were no less guilty of creating the Saddam monster than the United States. These actions have divided our military brass and intelligence officers.
In the view of many observers, either our military forces could not locate Bin Laden or we were not permitted to chase him down inside Pakistan or Saudi Arabia, where he was and probably still is hiding. So our forces pursued an easier and more visible target in Saddam. Who could deny he is a diabolic influence? Our nation and our president had begun to look weak in “doing nothing” after the WTC attack in New York City. An incredibly dangerous precedent has been struck now, in the launching of pre-emptive strikes. If the American public can be convinced that Iran has embarked on a rogue nuclear program or Syria has hidden both WMD and terrorist training camps, do we launch another pre-emptive attack? I am convinced that the War on Terrorism will soon transform into a War between Islam and Christianity, despite the attempt to control its label. War invites chaos. In future years, this endless war will degrade into a world war, which I call the War for Islamic Oil. By then, China will be involved, since they will have grown into a major oil importer and claim a vested interest. We have no idea what conflict we have triggered, nor how it might ever end. Is it patriotic to ride a car with a blustery bumper sticker that has “Iraq Has My Oil” written on it? Iraq and its conflict are directly related to money. Our nation seems to be involved in a blatant land grab. Enough on politics and war. Let’s get back to money outside the specter of war.
My analysis since early in 2001 originated as a personal “post mortem” of my financial condition and of enormous losses to my contemporaries. Ruin demanded answers and effective analysis. I needed finally some solid understanding. I needed a vision of whatever dire situation we have found ourselves thrust into. I needed to know definitively whether our nation would ever right itself. My analysis of the financial markets, monetary system, and economic world has changed me, since that mission began to find answers. I had learned years ago that the bond market can trump the stock market, if they happen to disagree. Also, a nation’s currency can endanger the bond market, if it falters on the FOREX and wreak havoc on the entire economy. No economic recovery of substance has ever occurred during a currency decline. Yet legions wave the economic flag of optimism in what appears to be a pathetic rally cry. As study yielded to enlightenment, I came to learn that gold can signal dire warnings to the bond market and banking system. All these trump cards can work either positively and negatively. Disappointment has turned to hope. My anger has been redirected toward domestic villainy. The depression has not lifted very much, to be honest. The plight and challenge of the guerrilla is often shrouded in the clandestine. Many answers have come to the surface, emerging from the depths and darkness in mine shafts, a true source of wealth.
The initial epiphanies came from two writers, Jim Puplava and John Hathaway. On Financial Sense, Puplava laid out the pathogenesis which put so much of the unfinished calamity into proper perspective. Chapters 7-8-9 in “The Perfect Financial Storm” written in the spring of 2001 turned the big light bulb on inside my head. It all made sense. His several “Storm Watch Updates” continue the illumination and education process to the present day. The guy just gives it away. What a patriot, what a teacher, what a generous man. He exposes the deceit, chicanery and ongoing shell games with numbers. He preaches the case for gold, which will benefit from the never-ending and accelerated debauchery of our nation’s currency. It seems in recent years, the answer to almost every problem, every financial accident, every social need, every new police action, every new security threat, is to print more money and to give it the new name “liquidity.” In my view, the words “counterfeit” or else “hock” seem more accurate.
On
his mutual fund website, Hathaway states his case for gold. The manager
of the Tocqueville Gold Fund (TGLDX) wrote a wonderfully lucid article
about the genesis of the new commodity bull trend, in his “The
Investment Case for Gold” article
dated January 2002. His arguments echo in synchrony what Puplava
described so clearly in greater detail. It all made sense. A trend
favoring paper financial assets started in 1980 after the last gold peak
was erected. A new trend favoring commodities has started in 2001
following the stock bust. The fledgling trend will surely gather force
when the newest bond bubbles dissipate, decline, and bust. A credit bust
is written in stone. Fractures in the coiled, sprawling, and listing
Fanny Mae housemother flanks are now in the growth stage. Chairman
Greenspasm failed to cheat Mother Nature once and will fail in a more
spectacular fashion to cheat Mother Nature the second time around on a
much larger scale. Gold stands ready to benefit from the upcoming
monetary and credit crisis in progress.
I do not fall victim easily to a con game. I did buy hookline & sinker the New Economy myth and the concomitant Gilder Telecosm story. The miracle of technology has many benefits, but corporate profits and elevated stock values are not among them. Economists suffer from a massive blind spot in this regard even to this day. The inventors of clever devices and handy contraptions are to be admired and qualify as heroes. The chief beneficiaries are customers, who have low prices at their avail. Corporations have witnessed profit devastation in the process, hardly the trumpeted gains from productivity which we hear about endlessly. Firms are now forced to incur heavy costs for equipment in order to compete. Their ability to make capital investments and to recover investment costs is limited by severe pricing pressures, held constant as China acts as “the bootheel” pressed on America’s neck.
Numerous
stocks have crashed over 90% in the tech sector, yet numbnut investors
chase them again in the Bubble Echo. They once more eat from the
productivity tree, which bears no earnings fruit. NASD margin credit now
stands at $26 billion, exceeding the high point of $21.4 billion in
March 2000. Share valuations are as high as before, even if stock prices
remain less than 40% of index peaks. Many internet share prices have
doubled in this calendar year. A
close look reveals an Amazon (AMZN) balance sheet whose equity has
declined from zero in March 2000 to negative $1.25 billion as of July
2003.
We have learned nothing from the recent past. We have learned nothing after the myth of the New Economy was shattered. We noticed the shattered myth in corporate balance sheets, but have since forgotten what we learned. Desperation to see investment losses restored seems ever-present. An image comes to mind, one of a dog returning to its own vomit. In denial, it sees nourishment.
All through the 1980 and 1990 decade, the US manufacturing base was abandoned in the United States and installed in Asia. Now in the 2000 decade, the next and more dangerous phase has begun, wherein the service sector is being shipped to Asia. The products of the heralded tech revolution are now the very vehicles to outsource services to India, China, Hong Kong, and other locations. It started with low-level functions like call centers and transaction processing. Now we watch as several high-level functions ranging from software programming to electronic design to consulting services are being outsourced to Asia. US industry in all sectors is threatened by the overvalued USDollar and by the harness of technology. More importantly, global trade is in the process of delivering the United States a death blow. Its perverse battle cry is “Jobless Recovery” pathetically, even as announcements of outsourcing to Asia continue. The “Low Cost Solution” is the standing directive across industries. The new imperatives of cost control serve as the catalyst, in Roach’s words, that brings the global labor arbitrage to life. Its consequence is a rapidly escalating movement to send service jobs to Asia, completing the labor destruction following years of sending mfg jobs to Asia in the past. Stephen Roach discusses the outsourcing phenomenon and its recent acceleration, which he calls irreversible in “The Global Labor Arbitrage.”
Where is the patriotism in cutting domestic jobs and hiring foreign workers? Shareholders applaud, while our family incomes suffer. What has happened within the system to force corporate executives to betray our workers? Have our leaders made decisions which unwittingly betrayed our people, setting into motion forces which led to pervasive lack of competitiveness of our industries? Will cost cutting gather speed and turn into liquidation of the economy? Will our national response more likely be to wage economic war than to remedy the economic system? See the recent trade sanction movement in Congress, blaming China for our trade imbalance and lost jobs. Few note the fact that 65% of new Chinese exports since 1994 originate from direct foreign investment, like US-owned subsidiaries. Could the underlying problem be the “Strong Dollar Policy”? Could the abrogation of the Bretton Woods Accord, which decoupled gold from currencies, be a foundational cause of America’s lack of competitive capability? Is “Global Trade” a one-way street and thus a source of hemorrhage? Yes, many terrible decisions have been made on national planning. Did NAFTA betray American labor and the AFL/CIO just as the union forewarned? Have acts of high treason been committed on the labor front? Yes, our nation’s workers and savers have been betrayed. Just what is so great about WalMart? They pay minimum wage on jobs and stock their shelves with mountains of Chinese products. I hear that almost 40% of all WalMart inventory comes from Asian imports. Yet we admire them. Why is that? This corporation is China’s best friend and US industry’s mortal enemy.
So what am I fighting? I find myself fighting many things at once. I have lost all hostility toward Moslems, their faith, their nations, their exported terrorism. I do see their culture as a colossal failure. Since the year 1000, they have lost their edge and leadership position in education and the sciences. The name “algebra” comes from an Arab mathematician centuries ago. They suppress their women, whom they depend upon to teach children until age six — which is a travesty for the women and a stunt to child development. They have outsourced military weapon development for two centuries, only to suffer loss on battlefields and a steady carving of their empires. They have shunned foreign languages, forcing the world to come to them. Now they resent a widespread foreign presence within their lands. In recent conferences, their main spoken theme seems to be anti-Semitism.
Both friends, Amer and Ahmad, confirm the same perspective of Saudis and report an astonishing observation. Neither has ever met a Saudi man who has ever worked a single day in his life. Wow!!! Amer expects the Saudi Royal Family to vacate their capital and seek asylum in Switzerland with their confiscated hundreds of billions. Ahmad expects war to extend both to Iran and to Saudi, where he anticipates a rupture into full-blown civil war. The seculars versus the fundamentalists might battle over the remaining oil riches. These friends of mine are very smart fellows. I have broken bread with them many times. They are warm men, full of life and personality. Amer is a real character. He now lives in Dubai and boasts of his ambition to marry a Saudi princess. Ahmad recently married an immigrant American woman and is more rooted. Last year he was worried after a Karachi bombing occurred near his old neighborhood in Pakistan. A few emails and his worry faded. I have come to appreciate views of our world from both men. Each has lived in the United States and one seeks citizenship.
So what am I fighting against? What forces led to the busted bubble? Is another larger bubble soon to bust? Was a grand plot at work? Are dangerous men working with members of the USGovt for personal gain, to pilfer from our national wealth? Is something horribly wrong with the system, which indicates the worse has yet to come? Can one point to a gang of thieves or to a syndicated gang in collusion, who profited in some conspiracy against the nation? I am unsure, but I suspect some sinister powers are at work and much of our treasure has been usurped.
I love my country and resent a questioning of my patriotism. I criticize many faces and facades of this country, as I exercise my freedom of speech as an American and utilize my gift of an educated mind. During the Viet Nam era, protesters were told “America: Love it or Leave it” which was a horrible testimony to free speech. Hippies responded with “America: Fix it or Fuxx it” in a most appropriate defiant fashion. The same opposing slogans apply today.
My college years were intertwined with the conclusion of the Viet Nam War. Late in high school, the war had made some bad turns. I grew in my disgust that SAM City was off limits to our brave jet fighter pilots, thus allowing enemy surface-to-air missiles to shoot down our aircraft. I grew in my disgust that dead soldier bodies were left behind in Laos and Cambodia, so as to protect the generals who acted against pledges made to the American public. I grew in my disgust that Agent Orange maimed many soldiers, inflicted by our own generals. As a student on the Ohio State University campus, I felt tear gas and pepper gas and saw bystander students shot with rubber bullets. Our pandemonium was 50 times larger than Kent State. I watched nearby in horror as a state police bus was overturned and burned by rioters, with all passengers escaping. I saw an ROTC building burned down and felt satisfaction. Lyndon Johnson and Richard Nixon chose not to win this war, but rather to send young men into a meat grinder. Leaders called it “containment.” I left college with the heart of a distrustful warrior. The rigors of graduate school in Probability & Statistics on the Carnegie Mellon University campus represented a welcome new chapter of respite from the battleground. Little did I realize that the battleground would spread to the economic front. However, a soldier had been forged in mind and spirit. And patriotism had been challenged and redefined.
I am angry at our leaders. I am irritated at the costs of socialism and the incentives for not working. I am appalled at govt waste and pork projects. I am disappointed that our system went down disastrous paths, under the counsel of misguided economists, fully cheered by our people. I am upset that our corrupted money has led to more prevalent corruption, true to form in the annals of history. I am saddened that politics is failing us, offering a right hand or a left hand to rob from the public till. I bristle at the sheer onslaught in advertisements, urging me to borrow and spend. We are the only nation on earth whose citizens are barraged by temptations to “eat our houses” with home equity loans for everyday spending needs. I am annoyed at prevalent televised offers for me to eat bad food with the lure of a jingle. I struggle to find justice, but find little. I fight against powerful forces which might never be properly directed. Our society and entire economy are on a collision course. Our national economic and financial problems cannot be rectified without tragic numbers of bankruptcies and a long painful recession, if not depression.
Are crimes involved against citizens of the United States? Has national wealth (held in public custody) been stolen? Is our economic and financial system suffering from momentum that will tear itself apart or lead to total implosion? What is the resolution to conflicts engaged by the financial soldiers within the battle, if any? How can the soldiers win a victory? How does a lifelong American citizen reconcile patriotism against such a difficult and challenging backdrop? Have the system and its leaders betrayed the people and the system they govern and oversee? Have we been reduced to vassals and serfs? I fear most answers are not favorable, but gold offers real hope.
The real risks now are for desperate decisions to be made, which will prove to be even more disastrous than what we have seen to date. I refer to accelerated monetary expansion and currency debasement. I refer to retaliatory trade sanctions and other protectionist legislation, which although popular, will backfire on us. I refer to refusal to allow failed corporations to go bankrupt, which inhibits an economic recovery. I refer to protection of burokrats and their jobs, keeping intact people and positions which are part of the dead weight and poor policy making apparatus. I refer to allowing corrupt corporate executives to receive hand slaps for the theft of billions of dollars. All these weak responses are at our doorstep. We do not make difficult decisions that instigate corrective action. The easier choices tend to be politically popular, but ineffective economically. Social collectivist decisions may favor some people in the short-term, but they hurt the majority of the people beyond that time frame and weaken the system. Then we wonder why the economic structures do not mend. We do not study economic history in this nation. Instead, we re-write it in reckless revisionist fashion for political purpose and then inflict these empty teachings on the unsuspecting and admittedly illiterate public. Even those formally trained in economics seem to know little about economics. They often resemble equipment managers on the Titanic.
My generation was given many labels. The one that sticks in my mind is “The Me Generation” complete with social conscience, liberal sexual behavior, drug abuse, widespread hedonism, self-centeredness, and free spirits. These common themes pervaded the past three decades. They collided with pursuits of capitalist profit which identify our economic system. The playing field was inextricably altered in 1971, when money became redefined on a more liberal footing. Another defining event, the fall of the Soviet Union, changed the landscape forever, thus permitting distortions to run amok. The outcomes were seen in 2000 with a stock bust, lost life savings, vanished pensions, historic bankruptcies, an endless stream of corruption cases and a stain on our nation which easily eclipses Watergate. Much of recent policy has led our nation toward probable greater crises soon. Why? Because nothing has been rectified and all imbalances have been encouraged to extend even more dangerously. We lack courage and conscience.
So what of patriots now, who love their nation, but object to the financial situation facing the nation? Many people seem powerless or adrift. They are left stranded to make difficult choices in the battle for survival. Hope lies in joining the counter-insurgence movement led by gold. I do harbor specific complaints directed at several groups. To each I challenge their patriotism. Are they really serving the nation? Are they dedicated to remedy, recovery, and reconstruction? Or is the real pursuit more like maintaining an illusion, perpetuating systemic inertia, protecting the elite, and preserving the tax base?
I scream my patriotic cry for justice, to repudiate our leaders for their reckless policies. Since my voice is not heard, I wrap myself in golden armor and follow a golden path.
The Federal Reserve and its chairman :
This institution is an abysmal failure. I call it the Dept. of Inflation, and its chairman Mr. Greenspasm. Why such disrespect? Because of the blind unwitting admiration the institution and its chairman command and receive, in stark contrast to their incredible failure in every possible chartered responsibility. Financial spasms are the handiwork of this misguided bunch. The birth of the Federal Reserve in 1914 was followed quickly in the late 1920s by unbridled growth of debt. More mature Europeans withdrew their precious capital as they sensed danger. The combination triggered the stock market crash. Late arrival of new money worsened the situation, as the Fed was like a deer stuck in glaring headlights. The mindless Smoot-Hawley Act in 1930 sealed the deal, instituting trade protection and sanctions against foreign economies. The Great Depression followed the natural retaliations. Kick a shin and yours will be kicked right back. In time, both fall to the ground.
A
single $1 bill issued in 1914 has lost 97% of its value in today’s
terms. That is a shocking and horrendous measure of the Federal
Reserve’s failure. The Fed has fallen short of meeting its two-fold
charter in almost every single decade. First, it is to contain price
inflation. Second, it is to promote maximum employment. By inducing
economic dislocations built upon debt and financial bubbles, funded by
speculative monetary expansion, the Fed has essentially set the stage
for failure on both the inflation and job front. In fact, current Fed
actions are promoting Chinese economic growth, not American. New
Fed-created money roughly equals the amount of consumer debt extended,
which also approximates the growth in the Chinese trade surplus with the
USA. This occurs as US jobs are lost. So what exactly is the Fed
supporting, except more household debt, and more jobs for Chinese
workers? Is this desperate and inept Fed policy patriotic in nature? I think not. It is designed
to enable socialist spending, to
collude with the ruling elite, and to attack the savers among our
citizenry. Its endless urge to consume and spend is mindless and
unproductive. Savers are offered an interest rate which is below the
price inflation rate. The inability of the public to identify the
Federal Reserve as the internal enemy serves as testimony to its
ignorance and financial illiteracy.
The
Federal Reserve has dealt lethal blows to the US Economy with a constant
flood of money and totally unchecked credit supply. The Fed Chairman has
chronically misled the public, if not the world, in many respects. It
has led us to believe that improved productivity creates greater profits
and justifies higher stock valuations. Neither is true, nor is
dispensing such advice its chartered role. Besides its main role as
monetary drug dealer, it doubles as a pimp to encourage citizens to
speculate in overpriced stocks, and to draw loans against home equity.
It has argued the case for restored household balance sheets, wholly due
to inflated property values from easy mortgage funding. It has led us to
believe that price deflation is a threat which requires more money
supplied, offering up a twisted view of what constitutes
“inflation.” As debt
defaults and inventory is liquidated, all from Fed-induced
over-expansion, prices decline from structural causes. The
misallocation of resources cannot be remedied in any way by accelerated
monetary expansion. Yet the public continues to trust our myopic
reigning chairman. The enemy of sound money sits on an unelected throne.
And England dubs him a knight. His actions now coincide with his
physical image, a striking likeness to Mr. Magoo.
Inflation betrays savers. Imagine a lifetime of savings collected by a hard loyal worker, secured in bonds, under the patriotic exercise of supporting our govt. The monetary inflation perpetrated by the Fed erodes the value of hard-earned savings with each passing year. Worse still, rising interest rates to offset the risk from engrained inflation cause declines in the principal value of those bonds. A double loss. So the patriotic saver is betrayed by the system, while the beneficiaries to the inflation process are the non-workers. They are all too often politically connected to the ruling elite, able to borrow money against assets, to speculate in futures, options, and other leveraged securities. They never break a sweat. They preach of evolution, wherein smokestack industries have become passé. They depersonalize the public investor and his/her money, calling it “paper” as in “paper is coming into the market.” This is hard-earned money. I would call the Federal Reserve and its policy makers the real traitors, not those who complain about their heavy hand and destructive ways.
The Strong Dollar Policy and its architects :
Even as the Fed wrecked the monetary system, the Strong Dollar policy has ravaged our economy in a more personal manner on the labor front. It has wrecked jobs even as it has rendered our industries uncompetitive. The encouraged speculation in our stock and bond markets has provided the strong financial current necessary to attract foreign capital and elevate our USDollar beyond all appropriate value. The transition from the dominant European Deutschemark currency to the Euro left the door open for the United States currency to rise by default to a level beyond all sanity. What began as a two-fold unstated plan to encourage foreign credit supply and cheapen foreign imports, has resulted in our nation’s industries to be thoroughly hollowed out, debt at all levels to skyrocket, jobs to be sent abroad, and household income cut from job losses. Its architects and their henchmen are traitors. They profited in the billions of dollars, even as millions of jobs were wiped out. This is NOT part of natural evolution. It is a betrayal to the American system, its people, its workers, and capitalism itself. Patriots cry foul and invest in gold.
The first objective, in my opinion, was to attract foreign capital for the finance of our federal deficits. The first trillion dollars of federal debt came from the Viet Nam War. The second trillion in debt came from the 1970 decade, as a result of three recessions ensuing the extreme OPEC oil price shock. The 3rd and 4th trillions came from the Reagan Strategic Defense Initiative (SDI), together with more recession in the 1980’s. The 5th trillion came during the BushSr recession and the Gulf War. The 6th trillion came during the supposedly prosperous Clinton Administration. Although we talk about surpluses in the 1990 decade, deficits mounted every single year. We now are making strong progress on the 7th trillion. I fully expect the 8th trillion to begin very quickly and to end even more quickly. How long will Asians hand over their hard-earned savings to finance our doomed federal equation? They are the fools year after year.
The second objective was to enable foreign-made products to cost less. So their cheaper labor was augmented from our position by a controlled decline in foreign currencies. The “Manhattan Made Men” orchestrated a USDollar bull market, a clever numbers racket. The rise in its value from 1994 was given a turbo-charge by means of raiding the national gold treasure. How else can one explain steadily declining interest rates despite constant federal deficits, enormous money supply growth, inflation evident in all assets except consumer goods, and a reduction in world gold production? Sales of leased gold were used to purchase USTBonds during almost every Clinton year; gold illicitly subsidized a decade of falling interest rates. Voters did not sanction the subsidy; they did not profit from its speculation; but they will suffer the fallout. The chief beneficiaries were Robert Rubin and his elite friends. Although almost worshipped, these men are anything but patriots. A strong dollar worked all too well, resulting in financial market explosions and real economy implosions. Rubin’s resignation as Secy of Treasury in the spring of 2000 is timed suspiciously with an opportunity to profit from shorting the teetering stock market. Foreign ownership of our federal debt has risen to dangerous levels, which now threaten our national security. The architects of this insane policy have endangered our nation. Critics to the policy are the real patriots. Many elite beneficiaries are traitors.
I regard the Strong Dollar Policy as pure treason. It benefited the ruling elite and decimated the American workers. Is it unpatriotic to criticize this highly destructive policy? Should a loyal subject harshly rebuke the wealthy speculators? I believe yes. In fact, the end result of this disastrous pursuit on the currency front will inevitably lead to civil unrest. The wealthy have become more wealthy and the poor have become more poor. In fact, the number of walking bankrupt households grows annually. The middle class is shrinking—a measure of a society’s failure to promote prosperity. Combine pursuit of a strong dollar with a fiat currency lacking discipline and government invites total disaster. Our leaders have mismanaged the USDollar and our banking system. Our Congress has fostered social programs and run up huge debts. The system is failing us.
The Economist Establishment, its policy makers, and financial engineers :
The economist community has lost its way. It has no idea what money is. It cannot properly define inflation. It advises the continued abuse of currency. The result of their counsel is debt, lost jobs, systemic failure, and public confusion. Enlightened patriots point fingers at them.
The economist community sanctioned the corruption of money when it advised the disconnection of money from gold. The community has redefined credit to be liquidity, thus leading the public not to protect itself from the ravages of debt default and bubble collapse. The public still urges on more liquidity to stimulate the economy with more easy money, to restore jobs, to prevent corporate failures. They have no idea of what the foundational problems are, having been taught poorly. Economists are supposed to educate, analyze, and lead. Instead, they have resorted to become political apologists, government frontmen, brokerage whores, and clueless academic quacks. They engage in constant adulation, if not worship, of leading figures such as Greenspasm, Samuelson, and Friedman. These men have built a failed system. To those economists who know better and have sold their souls, you are traitors. You have forsaken your textbooks for promoted agendas. To the vast clan of economists who honestly cannot comprehend the situation and fake it, you need to return to school, the Austrian School, and re-learn economics. Regardless, on a collective basis, the economist community has sold out the working class in favor of the ruling elite. Promises of political appointments, committee roles, academic grants, faculty chairs, these incentives have compromised economic policy, and hence our national integrity and strength.
As manufacturing was forfeited to Asia, our national service sectors began to flourish. At the same time, financial engineering came into vogue. In my life, I have been exposed to two people who exited MBA programs. They gave reasons based upon revulsion of the training in finance, which was replete with accounting sleight of hand, deception, trickery, and other underhanded methods. They saw no added value in the finance course curriculum. Much of corporate deceit stems from accounting fraud, hidden expenses, off-shore debt, executive options, shareholder dilution, seclusion of one-time charges, and more. The USGovt offers parallel accounting fraud. They distort price inflation, productivity, income, savings rate, jobless rate, and the gross domestic product itself. In fact, I would go so far as to claim that every single national statistic is intentionally fraudulent, misrepresentative, and deceptive. Certain corporate officers face the harsh spotlight of media exposure, and possibly prison time, unless politically connected. Recent prosecutions and new ones might be intentionally timed so as to divert attention away from presidential primaries. Will Enron criminals in Texas be spared? The national bean counters who distort aggregate statistics are following orders to paint a brighter picture than what reality offers. The real patriots are those who point fingers at economists for their steadfast support of a system which has failed us and at policies which do not remedy the present condition.
Deep Inner Turmoil :
My August trip to France seems in the distant past already. The many conversations when talking with Kurt Richebächer forced me to think about my view, my relationship, my love of country. Economic perspectives surely colored the initial stated impressions. He asked tough questions, such as “Since Americans have destroyed their children’s financial future, what do Americans live for?” I defended our devotion and duty toward family, but could not excuse the burdensome mortgage to be handed down to the next generation.
Having to negotiate the physical obstacles and visual eyesores of American obesity has sickened me for years. Each “obeast” carries a litany of excuses for not committing toward weight loss and personal health. I am distressed to perceive throughout the entire nation the parallels of excessive consumption, manifested in obesity, debt accumulation, cluttered houses, and SUV urban tank guzzlers. The suburban commuter lifestyle makes the challenge all the more difficult, as does the food industry’s profit motive priority. I hope MacDonald’s, Burger King, and Wendy’s are sued out of existence. Taco Bell offers far more low-fat nutritional choices. Boston Market is my favorite. Krispy Kreme is a total joke. Deep frying is perfectly legal, but it contributes to obesity. Our young people are routinely bombarded by advertisements to buy a Happy Meal, or to obtain a Ronald MacDonald doll or toy. They are being suckered into poor eating habits and obesity. We have become a laughing stock to the world, yet are oblivious.
I have loved my country all my life. I am indebted to the many soldiers in past wars who sacrificed their lives for my freedom. I relish in my rights and open roads to several life alternatives, not available to people from other nations. I deeply admire our inventors and innovations. I marvel at our generosity to charities. I am grateful to our Founding Fathers who built a nation on a US Constitution. We are a nation of laws, not men. Or are we?
Our national condition would disappoint our Founding Fathers, especially Jefferson. The ruling elite is so established and politically connected, with ready access to money not earned. Certain corporate houses are deemed “too large to fail,” whose landlords are virtual members of the royal court. National security has allowed a broad curtain to cover clandestine illicit gold sales, in defiance of the US Congress charged with oversight. The Dept of Treasury operates secretly in currency management, even stock index support. Our money is no longer constitutionally valid. A legitimate Supreme Court challenge of our monetary platform would be denied, not on legal grounds, but on practical grounds. Merchants who sell gold coins are imprisoned on questionable grounds for refusal to pay sales taxes on the exchange of real money for phony money. Sadly, we are losing our claim of being a nation of laws. Only a patriot like Thoreau would stand firm against this dangerous trend. What’s more, our charitable organizations like the Red Cross and United Way are steeped in controversy. The cause of World Trade Center family victims has been defrauded. A few European friends tell me that our image has deteriorated into one where dishonesty has been institutionalized. Civil disobedience is fully warranted, whereby we hunker down in a golden cabin in the woods, next to a beautiful pond.
What else do I love about my country? I love our beautiful shores, where I find true peace. I love our mountains, where I see God’s signature and enjoy the exhilaration of skiing downhill. I love our vast desert plains and majestic martian-like landscapes in the southwest. I love most of our cities, dotted by skyscrapers, a sure sign of our industrious nature and ingenuity. I love our centers for learning on university campuses, where my heart still resides. I love our developed college and professional sports enterprises and especially our athletes. I marvel at our extremely talented and impressive black athletes, especially during Summer Olympic Games. I still tap my feet and rock my innards to music from the 70’s and 80’s, especially older black music. Most of the music in the last ten years seems horribly aberrant. Heavy metal and rap are travesties to the music world. I love the entrepreneurial spirit of many brave individuals, who attempt to build a business from nothing but ideas, sweaty work, and their perseverance. I love our willingness to fight for justice abroad, but only when the cause is true and just.
I both love and hate our diversity. We benefit from the diverse talents, but are separated into tribes for residence and most social gatherings. I love our innovation, but realize that a faulty economic system enables foreign economies to benefit from those same ideas more than our own. I love our flexibility of job opportunity, but protest the difficulty in forced relocations so often necessary after finding a new job in a specialty role. I love my freedom of speech, but am angry at those who accuse me of an unpatriotic attitude.
I shudder at the threat against our entire economy. It faces a slow-motion liquidation, loss of jobs, even exportation of jobs, which I expect will accelerate, not diminish. I own an Irish dual passport, thanks to my little Irish farmer’s daughter mother. If the rising tide of Fascism continues to the extent that I expect, then like a cockroach escaping a burning house, I will depart quickly. So far, our national response has drawn on all the wrong formulas, not solutions nor remedy. The current trend is for a sacrifice of individual rights, in pursuit of terrorists and the protection of our borders. With increased duress to the system, to corporations, and to households, I expect far greater state power and more loss of rights. The stage will be set for the deep claws of Fascism in the land that once knew liberty and is fast losing it. In a pure economic plane, we have already lost liberty. We are slaves inside an evil financial castle. Wealth has been seized for decades and shows no signs of abatement.
We do not understand economics and choose stubbornly to re-invent it. More flooded phony money, a measure of trade sanctions, and the blame to China will make matters much worse. We are in the process of repeating some critical errors made in 1930, such as the Smoot-Hawley Act, which ushered in the most damaging stage of the Great Depression. If a trade tariff is exacted upon Chinese imports, then politics will prevail over historical learning. Anger will result in harming ourselves, even though evidence is overwhelming that trade sanctions take economic stress to new levels. The sad irony is that such a tariff would be imposed on products built by many American subsidiaries. Our govt leaders rushed in the Most Favored Nation award a few years ago, as a political incentive to China. Now they resent the consequences, which include a corner of wealth accumulation. How incredibly shortsighted, counter-productive, and shallow. Votes will be won, but prices will rise and more jobs will be lost. As a patriot, I object to my leaders and their political grandstanding and stupidity.
I am charged with self-preservation and survival. The US economic and financial system are doomed to a gradual decline, suffering from mortal wounds. I refuse to wave a flag and turn a blind eye to the systemic attack to my financial well-being, waged by tyrannical forces. We are dealing with King George and redcoats brandishing computers. I will continue to exercise my freedom to speak against injustice and the systemic corruption of our nation. Our collectivist mindset has resulted in refusal to allow a recession, with no protection from systemic failure. We have put our nation at risk of debt suffocation, mortgage finance cave-in, and a torrent of job exodus. Few see the root of financial volatility and instability originating from the 1971 abrogation of the gold monetary standard. I see gold as a lifeline to survival, if not prosperity. I anticipate a return to gold as a foundation, standing as the only solution to mounting turmoil, which will get out of control. I believe that gold advocates are the real patriots, not those who attempt in futility to sustain this unsustainable system. They have constructed a system built upon quicksand and continue to rob those who save. The system staggers and our emperors are incapable of remedy.
To people who say I am not a patriot, I say . . . . .
“THIS NATION WAS FOUNDED UPON RESISTING TYRANNY. TRY READING SOME OF OUR NATIONAL HISTORY, OUR BILL OF RIGHTS. CITIZENS ENDURE FINANCIAL TYRANNY NOW. IF YOU CHANGE YOUR MIND, JOIN ME ON THE GOLDEN PATH TO SURVIVAL. AND IF YOU STILL FEEL THE SAME WAY,
THEN
GO PLAY WITH TRAFFIC, OR BETTER YET, GET LOST
BUT FOR SURE, GET OUT OF MY FACE
SINCE I AM BUSY EXERCISING MY RIGHTS AS AN AMERICAN
AND PLAN TO SHINE MORE LIGHT ON THE GOLDEN PATH.”
Here is an example of true generosity. A friend of mine and his Vietnamese partner live in Seattle and are doing much good. Near the city of Da Lat, in the Central Highlands of Vietnam, they were struck by the friendliness of a tribal village whose inhabitants are a minority. Inhabitants used to suffer poor health from low quality water. They felt compelled to help, and help they did. After successfully building two wells for a village, they formed a 501(c)(3) non-profit corporation named “Care to Help.” Their fifth well is now under construction, to be finished this month. Plans are underway to complete one well per month. By the end of this year, 2500 villagers will have been supplied water.
Scott and Yen have a man on the scene, Nguyen Viet Hung, who embraces the passion to help. He manages the project, knows the local authorities, has been successful, and is honest. He has compiled a solid track record with several wells, offering speed and avoidance of delays. Village health has improved; results are visible. Now local officials cooperate, since a thorn in their side has been removed. The average project construction cost is $3000 and villagers are receiving safe water at an average of $5 to $7 per head. Over 98% of donated funds are used in new water projects, after minor office supplies and shipping costs are covered. Scott and Yen donate their time and home facilities. If you find it in your heart to assist with a donation of money, please check this website, help them, and watch the results. www.caretohelp.org
© 2003 Jim Willie CB
Jim Willie CB is a statistical analyst in marketing research
and retail forecasting. He
holds a Ph.D. in Statistics. His
career has stretched over 22 years.
He aspires to one day join the financial editor world,
unencumbered by the limitations of economic credentials.
Since his trip to France, he is somewhat less a
jackass. Visit his free
website to find articles from topflight authors at
www.GoldenJackass.com
