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Are These the End Times?

[Editorial note: Doug French is co-author of this piece today]

Why all the long faces?

The election results seem to have sent many people into fits of depression, hysteria, and rage. Commentators on the right are proclaiming that the last days are here. The hordes of welfare dependents are taking over. The wealthy will be looted. Business will be destroyed. Demographics and demagoguery have at last come together to create the perfect storm for America. Socialism has at last arrived.

Well, let’s all just settle down a bit.

What was the alternative to Obama? The truth is that Romney inspired a very low level of passion among voters. No one knew for sure what he stood for. Not even his tax message was clear. He seemed to call for lower rates, but also promised to “broaden the base,” which sounds like raising taxes through the back door. His foreign policy program of protectionism against China and war with Iran actually made Obama’s stealthy warmongering seem less dangerous by comparison. All the rest was a muddle.

So in retrospect, there should be no great surprise at the outcome. The betting market called Intrade.com featured election markets that had been correct for the entire political season…

There is no more reason to be morose and maudlin about the next four years than the last four years. The last four years featured some of the worst government policy since the 1930s, most of it coming from the Federal Reserve and the Treasury Department. These policies have broken the banking system, entrenched unemployment, and stagnated middle-class incomes. That would have stayed the same regardless of who was elected.

Yet despite these policies, the market forged ahead. These last four years have seen some of the biggest advances in technology in history, including the app economy, the radical democratization of all media, and 3-D printing.

The world is connected by market networks as never before. Food is more prevalent. Housing is cheaper. The much-feared hyperinflation never arrived. Having long experience with dealing with stupid government policies, entrepreneurs and capitalists still somehow managed to keep the engines of progress rolling forward. The markets have shown themselves to be resilient beyond what most people imagined.

People in democracies tend to exaggerate the influence and effect of particular presidents. They have some power to steer policy, but nowhere near what people imagine. Most of their talk about their “visions” for bringing a new future is puffery and nonsense. The bureaucracies that make and implement the rules by which we are forced to live pay very little attention to the comings and goings of the political class. Most of what they do was not discussed in the election at all. And presidents have very little practical, day-to-day influence over their behavior.

The state that is the menace to society is not somehow recreated every four years. It is 100 years old and lives off its own momentum. It is intrusive, debilitating, invasive, and evil, but it is not sent into upheaval upon elections. Its grip grows tighter, but not mainly because of electoral politics. It runs off its own energy and tends to be impervious to political attempts to shift its direction.

That said, sometimes U.S. presidents end up making some degree of difference. But it is by no means a foregone conclusion that a second Obama term is going to be worse than a Romney term might have been. Again, Romney made some very scary noises about shutting down trade with China, raising taxes through deduction repeals, and starting wars with Iran and who knows what other countries. Based on his rhetoric alone, it’s hard to say that Obama is going to be worse.

More significantly, the biggest, for better and worse, political moves of the last half-century were made by presidents who were expected to do something completely different. No one expected, for example, that Nixon would be the man who would go off the gold standard, put in wage and price controls, and establish the EPA.

At the same time, the best thing he did in office, namely make peace with China and open trade, was the last thing anyone expected from this old-line anti-communist. And that is precisely why he was able to get away with it. It is through confounding expectations that political change happens.

We saw this with Jimmy Carter too. Here was a man everyone thought was dedicated to government control of everything. Yet he worked with Ted Kennedy in the Senate to accomplish the great deregulations of the late 1970s that changed life completely and continue to benefit everyone. He deregulated trucking, airlines, and energy. Those were surprising and amazing moves — accomplished entirely by what we now call the political left. These three moves astonished the world.

Moving forward, Reagan ran as the most libertarian-sounding president in a century, but he proceeded to balloon the budget as never before and even raise the payroll tax in a way that broke all records. On the other hand, the best thing he did in his two terms shocked the world. He sat down with the Soviet leader and agreed to the hope of eliminating all nuclear weapons. It didn’t happen, but the friendship between Reagan and Gorbachev led to an astonishing thaw that encouraged dissidents all over the communist bloc. The world that the Cold War kept alive melted with the advent of the most peculiar and implausible friendship in the history of politics.

No one thought Clinton would reform welfare, but he did it. And no one thought he would work to repeal one of the most crippling legacies of the 1970s: the 55 mph speed limit as set by the federal government. Clinton did this with very little attention given to the event. But it was a huge boon to the private sector.

The same was true of George W. Bush. He ran as a peace candidate and gave us horrible war.

The message here is that you rarely get what you expect from politicians. Sometimes — very rarely, but sometimes — they do the right thing despite every expectation to the contrary. So yes, Obama might be a socialist, but he is also a politician, and surprises can happen. And regardless of what happens, protecting your rights and liberties is ultimately up to you.

There are huge looming issues in the second term of Obama. The Keynesian path has not fixed the economy, exactly as Hayek predicted in A Tiger by the Tail. The spending boom has not stimulated anything, exactly as Henry Hazlitt said it would not, confirming the whole theory behind Economics in One Lesson. The monetary stimulus has been an incredible flop, precisely as Ron Paul said it would be in The Case for Gold. The whole claim that the government would save us has turned out to be an aspect of what Hans-Hermann Hoppe calls The Great Fiction.

This is the end of the road for the planners. The American people are extremely resistant to tax increases. Even on health care, some pullback would not be unexpected: the Obama administration does not want to be the trigger that causes more unemployment stemming from higher costs on small and medium-sized businesses.

The other legislative monster of the president’s first term was the Dodd-Frank financial overhaul, which inspired a constant battle cry for repeal from Republicans during the primary season. But while this regulatory dog may end up biting, for now only a third of the act’s required 398 rules have been finalized. The courts have struck down a few of legislation’s new provisions, and more legal challenges will follow.

The Fed is mostly out of options. The central bank can only keep doing the same old QE thing over and over. But while the Fed makes itself bigger, as Steve Hanke pointed out in an LFB interview, the biggest engine of money creation is the commercial banking system, and the banks are not creating money by lending. Dodd-Frank uncertainty and tough bank examiners are making bankers shy to lend. This has grounded, for the moment anyway, Ben Bernanke’s inflation helicopter.

The fiscal crisis cannot be solved through mere reform, but reform would help. War with anyone would break the bank completely, and the military knows this. No one is even talking about gun control anymore, thank goodness. And there is extreme grass-roots pressure for letting up on the war on drugs.

This isn’t the end of the road for the state, but it is getting close. Politicians are usually liars and thieves, but they are not entirely impractical men and women. They will try the wrong thing a thousand times before they finally relent to the obvious. But eventually, they can relent. If the economy double dips in a serious way, that could prompt a complete rethinking of the path of the last for four years of folly.

The bigger point is that the really big changes happening to the world today are taking place outside politics. Russ Roberts puts it best:

“Remember that politics is not where life happens. Policies affect our lives, but we have much to do outside that world. Yesterday, I helped my youngest son learn Python, learned some Talmud, played with my photographs on Lightroom, had dinner with my wife, and went shopping with my oldest son for his first nice blazer. Lots of satisfactions there. Nothing to do with politics.

“Put Tuesday night behind you for a while. Remember what matters. Take a walk. Read to your kids. Go out for dinner with your spouse. Read more Adam Smith and less of the Drudge Report. And smile at your neighbor. That’s always a good idea. But there’s a bonus — it might help your neighbor imagine that someone who believes in leaving things alone when it comes to the coercive power of government might actually be a decent person after all. And then maybe he’ll be a little more open to those crazy ideas you talked about at that dinner party.”

Especially considering the holidays coming up, a time when the beautiful aspects of private life are on display as never before, he is precisely right.


Jeffrey Tucker


The Anatomy of the State

commentary submitted by : Mike Mooney

“If, then, the State is not “us,” if it is not “the human family” getting together to decide mutual problems, if it is not a lodge meeting or country club, what is it?

Briefly, the State is that organization in society which attempts to maintain a monopoly of the use of force and violence in a given territorial area; in particular, it is the only organization in society that obtains its revenue not by voluntary contribution or payment for services rendered but by coercion.

While other individuals or institutions obtain their income by production of goods and services and by the peaceful and voluntary sale of these goods and services to others, the State obtains its revenue by the use of compulsion; that is, by the use and the threat of the jailhouse and the bayonet.”

The Anatomy of the State

by Murray N. Rothbard

Murray N. Rothbard (1926-1995) was the dean of the Austrian School of economics, the founder of libertarianism, and an exemplar of the Old Right. The author of thousands of articles and 25 books, he was also Lew Rockwell’s great teacher and mentor. LewRockwell.com is dedicated to Murray’s memory, and seeks to follow his fearless example.

What the State Is Not

The State is almost universally considered an institution of social service. Some theorists venerate the State as the apotheosis of society; others regard it as an amiable, though often inefficient, organization for achieving social ends; but almost all regard it as a necessary means for achieving the goals of mankind, a means to be ranged against the “private sector” and often winning in this competition of resources. With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, “we are the government.” The useful collective term “we” has enabled an ideological camouflage to be thrown over the reality of political life. If “we are the government,” then anything a government does to an individual is not only just and untyrannical but also “voluntary” on the part of the individual concerned. If the government has incurred a huge public debt which must be paid by taxing one group for the benefit of another, this reality of burden is obscured by saying that “we owe it to ourselves”; if the government conscripts a man, or throws him into jail for dissident opinion, then he is “doing it to himself” and, therefore, nothing untoward has occurred. Under this reasoning, any Jews murdered by the Nazi government were not murdered; instead, they must have “committed suicide,” since they were the government (which was democratically chosen), and, therefore, anything the government did to them was voluntary on their part. One would not think it necessary to belabor this point, and yet the overwhelming bulk of the people hold this fallacy to a greater or lesser degree.

We must, therefore, emphasize that “we” are not the government; the government is not “us.” The government does not in any accurate sense “represent” the majority of the people.[1] But, even if it did, even if 70 percent of the people decided to murder the remaining 30 percent, this would still be murder and would not be voluntary suicide on the part of the slaughtered minority.[2] No organicist metaphor, no irrelevant bromide that “we are all part of one another,” must be permitted to obscure this basic fact.

Man, Economy, and State with Power and Market
by : Murray Rothbard

If, then, the State is not “us,” if it is not “the human family” getting together to decide mutual problems, if it is not a lodge meeting or country club, what is it? Briefly, the State is that organization in society which attempts to maintain a monopoly of the use of force and violence in a given territorial area; in particular, it is the only organization in society that obtains its revenue not by voluntary contribution or payment for services rendered but by coercion. While other individuals or institutions obtain their income by production of goods and services and by the peaceful and voluntary sale of these goods and services to others, the State obtains its revenue by the use of compulsion; that is, by the use and the threat of the jailhouse and the bayonet.[3] Having used force and violence to obtain its revenue, the State generally goes on to regulate and dictate the other actions of its individual subjects. One would think that simple observation of all States through history and over the globe would be proof enough of this assertion; but the miasma of myth has lain so long over State activity that elaboration is necessary.

What the State Is

Man is born naked into the world, and needing to use his mind to learn how to take the resources given him by nature, and to transform them (for example, by investment in “capital”) into shapes and forms and places where the resources can be used for the satisfaction of his wants and the advancement of his standard of living. The only way by which man can do this is by the use of his mind and energy to transform resources (“production”) and to exchange these products for products created by others. Man has found that, through the process of voluntary, mutual exchange, the productivity and hence the living standards of all participants in exchange may increase enormously. The only “natural” course for man to survive and to attain wealth, therefore, is by using his mind and energy to engage in the production-and-exchange process. He does this, first, by finding natural resources, and then by transforming them (by “mixing his labor” with them, as Locke puts it), to make them his individual property, and then by exchanging this property for the similarly obtained property of others. The social path dictated by the requirements of man’s nature, therefore, is the path of “property rights” and the “free market” of gift or exchange of such rights. Through this path, men have learned how to avoid the “jungle” methods of fighting over scarce resources so that A can only acquire them at the expense of B and, instead, to multiply those resources enormously in peaceful and harmonious production and exchange.

Conceived in Liberty
by: Murray Rothbard

The great German sociologist Franz Oppenheimer pointed out that there are two mutually exclusive ways of acquiring wealth; one, the above way of production and exchange, he called the “economic means.” The other way is simpler in that it does not require productivity; it is the way of seizure of another’s goods or services by the use of force and violence. This is the method of one-sided confiscation, of theft of the property of others. This is the method which Oppenheimer termed “the political means” to wealth. It should be clear that the peaceful use of reason and energy in production is the “natural” path for man: the means for his survival and prosperity on this earth. It should be equally clear that the coercive, exploitative means is contrary to natural law; it is parasitic, for instead of adding to production, it subtracts from it. The “political means” siphons production off to a parasitic and destructive individual or group; and this siphoning not only subtracts from the number producing, but also lowers the producer’s incentive to produce beyond his own subsistence. In the long run, the robber destroys his own subsistence by dwindling or eliminating the source of his own supply. But not only that; even in the short run, the predator is acting contrary to his own true nature as a man.

We are now in a position to answer more fully the question: what is the State? The State, in the words of Oppenheimer, is the “organization of the political means”; it is the systematization of the predatory process over a given territory.[4] For crime, at best, is sporadic and uncertain; the parasitism is ephemeral, and the coercive, parasitic lifeline may be cut off at any time by the resistance of the victims. The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively “peaceful” the lifeline of the parasitic caste in society.[5] Since production must always precede predation, the free market is anterior to the State. The State has never been created by a “social contract”; it has always been born in conquest and exploitation. The classic paradigm was a conquering tribe pausing in its time-honored method of looting and murdering a conquered tribe, to realize that the time-span of plunder would be longer and more secure, and the situation more pleasant, if the conquered tribe were allowed to live and produce, with the conquerors settling among them as rulers exacting a steady annual tribute.[6] One method of the birth of a State may be illustrated as follows: in the hills of southern “Ruritania,” a bandit group manages to obtain physical control over the territory, and finally the bandit chieftain proclaims himself “King of the sovereign and independent government of South Ruritania”; and, if he and his men have the force to maintain this rule for a while, lo and behold! a new State has joined the “family of nations,” and the former bandit leaders have been transformed into the lawful nobility of the realm.

How the State Preserves Itself

Once a State has been established, the problem of the ruling group or “caste” is how to maintain their rule.[7] While force is their modus operandi, their basic and long-run problem is ideological. For in order to continue in office, any government (not simply a “democratic” government) must have the support of the majority of its subjects. This support, it must be noted, need not be active enthusiasm; it may well be passive resignation as if to an inevitable law of nature. But support in the sense of acceptance of some sort it must be; else the minority of State rulers would eventually be outweighed by the active resistance of the majority of the public. Since predation must be supported out of the surplus of production, it is necessarily true that the class constituting the State – the full-time bureaucracy (and nobility) – must be a rather small minority in the land, although it may, of course, purchase allies among important groups in the population. Therefore, the chief task of the rulers is always to secure the active or resigned acceptance of the majority of the citizens.[8] [9]

What Has Government Done to Our Money?
by: Murray Rothbard

Of course, one method of securing support is through the creation of vested economic interests. Therefore, the King alone cannot rule; he must have a sizable group of followers who enjoy the prerequisites of rule, for example, the members of the State apparatus, such as the full-time bureaucracy or the established nobility.[10] But this still secures only a minority of eager supporters, and even the essential purchasing of support by subsidies and other grants of privilege still does not obtain the consent of the majority. For this essential acceptance, the majority must be persuaded by ideology that their government is good, wise and, at least, inevitable, and certainly better than other conceivable alternatives. Promoting this ideology among the people is the vital social task of the “intellectuals.” For the masses of men do not create their own ideas, or indeed think through these ideas independently; they follow passively the ideas adopted and disseminated by the body of intellectuals. The intellectuals are, therefore, the “opinion-molders” in society. And since it is precisely a molding of opinion that the State most desperately needs, the basis for age-old alliance between the State and the intellectuals becomes clear.

It is evident that the State needs the intellectuals; it is not so evident why intellectuals need the State. Put simply, we may state that the intellectual’s livelihood in the free market is never too secure; for the intellectual must depend on the values and choices of the masses of his fellow men, and it is precisely characteristic of the masses that they are generally uninterested in intellectual matters. The State, on the other hand, is willing to offer the intellectuals a secure and permanent berth in the State apparatus; and thus a secure income and the panoply of prestige. For the intellectuals will be handsomely rewarded for the important function they perform for the State rulers, of which group they now become a part.[11]

The alliance between the State and the intellectuals was symbolized in the eager desire of professors at the University of Berlin in the nineteenth century to form the “intellectual bodyguard of the House of Hohenzollern.” In the present day, let us note the revealing comment of an eminent Marxist scholar concerning Professor Wittfogel’s critical study of ancient Oriental despotism: “The civilization which Professor Wittfogel is so bitterly attacking was one which could make poets and scholars into officials.”[12] Of innumerable examples, we may cite the recent development of the “science” of strategy, in the service of the government’s main violence-wielding arm, the military.[13] A venerable institution, furthermore, is the official or “court” historian, dedicated to purveying the rulers’ views of their own and their predecessors’ actions.[14]

Many and varied have been the arguments by which the State and its intellectuals have induced their subjects to support their rule. Basically, the strands of argument may be summed up as follows: (a) the State rulers are great and wise men (they “rule by divine right,” they are the “aristocracy” of men, they are the “scientific experts”), much greater and wiser than the good but rather simple subjects, and (b) rule by the extent government is inevitable, absolutely necessary, and far better, than the indescribable evils that would ensue upon its downfall. The union of Church and State was one of the oldest and most successful of these ideological devices. The ruler was either anointed by God or, in the case of the absolute rule of many Oriental despotisms, was himself God; hence, any resistance to his rule would be blasphemy. The States’ priestcraft performed the basic intellectual function of obtaining popular support and even worship for the rulers.[15]

Another successful device was to instill fear of any alternative systems of rule or nonrule. The present rulers, it was maintained, supply to the citizens an essential service for which they should be most grateful: protection against sporadic criminals and marauders. For the State, to preserve its own monopoly of predation, did indeed see to it that private and unsystematic crime was kept to a minimum; the State has always been jealous of its own preserve. Especially has the State been successful in recent centuries in instilling fear of other State rulers. Since the land area of the globe has been parceled out among particular States, one of the basic doctrines of the State was to identify itself with the territory it governed. Since most men tend to love their homeland, the identification of that land and its people with the State was a means of making natural patriotism work to the State’s advantage. If “Ruritania” was being attacked by “Walldavia,” the first task of the State and its intellectuals was to convince the people of Ruritania that the attack was really upon them and not simply upon the ruling caste. In this way, a war between rulers was converted into a war between peoples, with each people coming to the defense of its rulers in the erroneous belief that the rulers were defending them. This device of “nationalism” has only been successful, in Western civilization, in recent centuries; it was not too long ago that the mass of subjects regarded wars as irrelevant battles between various sets of nobles.

Many and subtle are the ideological weapons that the State has wielded through the centuries. One excellent weapon has been tradition. The longer that the rule of a State has been able to preserve itself, the more powerful this weapon; for then, the X Dynasty or the Y State has the seeming weight of centuries of tradition behind it.[16] Worship of one’s ancestors, then, becomes a none too subtle means of worship of one’s ancient rulers. The greatest danger to the State is independent intellectual criticism; there is no better way to stifle that criticism than to attack any isolated voice, any raiser of new doubts, as a profane violator of the wisdom of his ancestors. Another potent ideological force is to deprecate the individual and exalt the collectivity of society. For since any given rule implies majority acceptance, any ideological danger to that rule can only start from one or a few independently-thinking individuals. The new idea, much less the new critical idea, must needs begin as a small minority opinion; therefore, the State must nip the view in the bud by ridiculing any view that defies the opinions of the mass. “Listen only to your brothers” or “adjust to society” thus become ideological weapons for crushing individual dissent.[17] By such measures, the masses will never learn of the nonexistence of their Emperor’s clothes.[18] It is also important for the State to make its rule seem inevitable; even if its reign is disliked, it will then be met with passive resignation, as witness the familiar coupling of “death and taxes.” One method is to induce historiographical determinism, as opposed to individual freedom of will. If the X Dynasty rules us, this is because the Inexorable Laws of History (or the Divine Will, or the Absolute, or the Material Productive Forces) have so decreed and nothing any puny individuals may do can change this inevitable decree. It is also important for the State to inculcate in its subjects an aversion to any “conspiracy theory of history”; for a search for “conspiracies” means a search for motives and an attribution of responsibility for historical misdeeds. If, however, any tyranny imposed by the State, or venality, or aggressive war, was caused not by the State rulers but by mysterious and arcane “social forces,” or by the imperfect state of the world or, if in some way, everyone was responsible (“We Are All Murderers,” proclaims one slogan), then there is no point to the people becoming indignant or rising up against such misdeeds. Furthermore, an attack on “conspiracy theories” means that the subjects will become more gullible in believing the “general welfare” reasons that are always put forth by the State for engaging in any of its despotic actions. A “conspiracy theory” can unsettle the system by causing the public to doubt the State’s ideological propaganda.

Another tried and true method for bending subjects to the State’s will is inducing guilt. Any increase in private well-being can be attacked as “unconscionable greed,” “materialism,” or “excessive affluence,” profit-making can be attacked as “exploitation” and “usury,” mutually beneficial exchanges denounced as “selfishness,” and somehow with the conclusion always being drawn that more resources should be siphoned from the private to the “public sector.” The induced guilt makes the public more ready to do just that. For while individual persons tend to indulge in “selfish greed,” the failure of the State’s rulers to engage in exchanges is supposed to signify their devotion to higher and nobler causes – parasitic predation being apparently morally and esthetically lofty as compared to peaceful and productive work.

In the present more secular age, the divine right of the State has been supplemented by the invocation of a new god, Science. State rule is now proclaimed as being ultrascientific, as constituting planning by experts. But while “reason” is invoked more than in previous centuries, this is not the true reason of the individual and his exercise of free will; it is still collectivist and determinist, still implying holistic aggregates and coercive manipulation of passive subjects by their rulers.

The increasing use of scientific jargon has permitted the State’s intellectuals to weave obscurantist apologia for State rule that would have only met with derision by the populace of a simpler age. A robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade, would find few converts; but when this theory is clothed in Keynesian equations and impressive references to the “multiplier effect,” it unfortunately carries more conviction. And so the assault on common sense proceeds, each age performing the task in its own ways.

Thus, ideological support being vital to the State, it must unceasingly try to impress the public with its “legitimacy,” to distinguish its activities from those of mere brigands. The unremitting determination of its assaults on common sense is no accident, for as Mencken vividly maintained: The average man, whatever his errors otherwise, at least sees clearly that government is something lying outside him and outside the generality of his fellow men – that it is a separate, independent, and hostile power, only partly under his control, and capable of doing him great harm. Is it a fact of no significance that robbing the government is everywhere regarded as a crime of less magnitude than robbing an individual, or even a corporation? . . . What lies behind all this, I believe, is a deep sense of the fundamental antagonism between the government and the people it governs. It is apprehended, not as a committee of citizens chosen to carry on the communal business of the whole population, but as a separate and autonomous corporation, mainly devoted to exploiting the population for the benefit of its own members. . . . When a private citizen is robbed, a worthy man is deprived of the fruits of his industry and thrift; when the government is robbed, the worst that happens is that certain rogues and loafers have less money to play with than they had before. The notion that they have earned that money is never entertained; to most sensible men it would seem ludicrous.[19]

How the State Transcends Its Limits

The Case Against the Fed
by: Murray Rothbard

As Bertrand de Jouvenel has sagely pointed out, through the centuries men have formed concepts designed to check and limit the exercise of State rule; and, one after another, the State, using its intellectual allies, has been able to transform these concepts into intellectual rubber stamps of legitimacy and virtue to attach to its decrees and actions. Originally, in Western Europe, the concept of divine sovereignty held that the kings may rule only according to divine law; the kings turned the concept into a rubber stamp of divine approval for any of the kings’ actions. The concept of parliamentary democracy began as a popular check upon absolute monarchical rule; it ended with parliament being the essential part of the State and its every act totally sovereign. As de Jouvenel concludes:

Many writers on theories of sovereignty have worked out one . . . of these restrictive devices. But in the end every single such theory has, sooner or later, lost its original purpose, and come to act merely as a springboard to Power, by providing it with the powerful aid of an invisible sovereign with whom it could in time successfully identify itself.[20]

Similarly with more specific doctrines: the “natural rights” of the individual enshrined in John Locke and the Bill of Rights, became a statist “right to a job”; utilitarianism turned from arguments for liberty to arguments against resisting the State’s invasions of liberty, etc.

Certainly the most ambitious attempt to impose limits on the State has been the Bill of Rights and other restrictive parts of the American Constitution, in which written limits on government became the fundamental law to be interpreted by a judiciary supposedly independent of the other branches of government. All Americans are familiar with the process by which the construction of limits in the Constitution has been inexorably broadened over the last century. But few have been as keen as Professor Charles Black to see that the State has, in the process, largely transformed judicial review itself from a limiting device to yet another instrument for furnishing ideological legitimacy to the government’s actions. For if a judicial decree of “unconstitutional” is a mighty check to government power, an implicit or explicit verdict of “constitutional” is a mighty weapon for fostering public acceptance of ever-greater government power.

Professor Black begins his analysis by pointing out the crucial necessity of “legitimacy” for any government to endure, this legitimation signifying basic majority acceptance of the government and its actions.[21] Acceptance of legitimacy becomes a particular problem in a country such as the United States, where “substantive limitations are built into the theory on which the government rests.” What is needed, adds Black, is a means by which the government can assure the public that its increasing powers are, indeed, “constitutional.” And this, he concludes, has been the major historic function of judicial review.

Let Black illustrate the problem:

The supreme risk [to the government] is that of disaffection and a feeling of outrage widely disseminated throughout the population, and loss of moral authority by the government as such, however long it may be propped up by force or inertia or the lack of an appealing and immediately available alternative. Almost everybody living under a government of limited powers, must sooner or later be subjected to some governmental action which as a matter of private opinion he regards as outside the power of government or positively forbidden to government. A man is drafted, though he finds nothing in the Constitution about being drafted. . . . A farmer is told how much wheat he can raise; he believes, and he discovers that some respectable lawyers believe with him, that the government has no more right to tell him how much wheat he can grow than it has to tell his daughter whom she can marry. A man goes to the federal penitentiary for saying what he wants to, and he paces his cell reciting . . . “Congress shall make no laws abridging the freedom of speech.”. . . A businessman is told what he can ask, and must ask, for buttermilk.

The danger is real enough that each of these people (and who is not of their number?) will confront the concept of governmental limitation with the reality (as he sees it) of the flagrant overstepping of actual limits, and draw the obvious conclusion as to the status of his government with respect to legitimacy.[22]

This danger is averted by the State’s propounding the doctrine that one agency must have the ultimate decision on constitutionality and that this agency, in the last analysis, must be part of the federal government.[23] For while the seeming independence of the federal judiciary has played a vital part in making its actions virtual Holy Writ for the bulk of the people, it is also and ever true that the judiciary is part and parcel of the government apparatus and appointed by the executive and legislative branches. Black admits that this means that the State has set itself up as a judge in its own cause, thus violating a basic juridical principle for aiming at just decisions. He brusquely denies the possibility of any alternative.[24]

Black adds:

The problem, then, is to devise such governmental means of deciding as will [hopefully] reduce to a tolerable minimum the intensity of the objection that government is judge in its own cause. Having done this, you can only hope that this objection, though theoretically still tenable [italics mine], will practically lose enough of its force that the legitimating work of the deciding institution can win acceptance.[25]

In the last analysis, Black finds the achievement of justice and legitimacy from the State’s perpetual judging of its own cause as “something of a miracle.”[26]

Applying his thesis to the famous conflict between the Supreme Court and the New Deal, Professor Black keenly chides his fellow pro-New Deal colleagues for their shortsightedness in denouncing judicial obstruction:

[t]he standard version of the story of the New Deal and the Court, though accurate in its way, displaces the emphasis. . . . It concentrates on the difficulties; it almost forgets how the whole thing turned out. The upshot of the matter was [and this is what I like to emphasize] that after some twenty-four months of balking . . . the Supreme Court, without a single change in the law of its composition, or, indeed, in its actual manning, placed the affirmative stamp of legitimacy on the New Deal, and on the whole new conception of government in America.[27]

In this way, the Supreme Court was able to put the quietus on the large body of Americans who had had strong constitutional objections to the New Deal:

Of course, not everyone was satisfied. The Bonnie Prince Charlie of constitutionally commanded laissez-faire still stirs the hearts of a few zealots in the Highlands of choleric unreality. But there is no longer any significant or dangerous public doubt as to the constitutional power of Congress to deal as it does with the national economy. . . .

We had no means, other than the Supreme Court, for imparting legitimacy to the New Deal.[28]

The Mystery of Banking
by: Murray Rothbard

As Black recognizes, one major political theorist who recognized – and largely in advance – the glaring loophole in a constitutional limit on government of placing the ultimate interpreting power in the Supreme Court was John C. Calhoun. Calhoun was not content with the “miracle,” but instead proceeded to a profound analysis of the constitutional problem. In his Disquisition, Calhoun demonstrated the inherent tendency of the State to break through the limits of such a constitution:

A written constitution certainly has many and considerable advantages, but it is a great mistake to suppose that the mere insertion of provisions to restrict and limit the power of the government, without investing those for whose protection they are inserted with the means of enforcing their observance [my italics] will be sufficient to prevent the major and dominant party from abusing its powers. Being the party in possession of the government, they will, from the same constitution of man which makes government necessary to protect society, be in favor of the powers granted by the constitution and opposed to the restrictions intended to limit them. . . . The minor or weaker party, on the contrary, would take the opposite direction and regard them [the restrictions] as essential to their protection against the dominant party. . . . But where there are no means by which they could compel the major party to observe the restrictions, the only resort left them would be a strict construction of the constitution. . . . To this the major party would oppose a liberal construction. . . . It would be construction against construction – the one to contract and the other to enlarge the powers of the government to the utmost. But of what possible avail could the strict construction of the minor party be, against the liberal construction of the major, when the one would have all the power of the government to carry its construction into effect and the other be deprived of all means of enforcing its construction? In a contest so unequal, the result would not be doubtful. The party in favor of the restrictions would be overpowered. . . . The end of the contest would be the subversion of the constitution . . . the restrictions would ultimately be annulled and the government be converted into one of unlimited powers.[29]

One of the few political scientists who appreciated Calhoun’s analysis of the Constitution was Professor J. Allen Smith. Smith noted that the Constitution was designed with checks and balances to limit any one governmental power and yet had then developed a Supreme Court with the monopoly of ultimate interpreting power. If the Federal Government was created to check invasions of individual liberty by the separate states, who was to check the Federal power? Smith maintained that implicit in the check-and-balance idea of the Constitution was the concomitant view that no one branch of government may be conceded the ultimate power of interpretation: “It was assumed by the people that the new government could not be permitted to determine the limits of its own authority, since this would make it, and not the Constitution, supreme.”[30]

The solution advanced by Calhoun (and seconded, in this century, by such writers as Smith) was, of course, the famous doctrine of the “concurrent majority.” If any substantial minority interest in the country, specifically a state government, believed that the Federal Government was exceeding its powers and encroaching on that minority, the minority would have the right to veto this exercise of power as unconstitutional. Applied to state governments, this theory implied the right of “nullification” of a Federal law or ruling within a state’s jurisdiction.

In theory, the ensuing constitutional system would assure that the Federal Government check any state invasion of individual rights, while the states would check excessive Federal power over the individual. And yet, while limitations would undoubtedly be more effective than at present, there are many difficulties and problems in the Calhoun solution. If, indeed, a subordinate interest should rightfully have a veto over matters concerning it, then why stop with the states? Why not place veto power in counties, cities, wards? Furthermore, interests are not only sectional, they are also occupational, social, etc. What of bakers or taxi drivers or any other occupation? Should they not be permitted a veto power over their own lives? This brings us to the important point that the nullification theory confines its checks to agencies of government itself. Let us not forget that federal and state governments, and their respective branches, are still states, are still guided by their own state interests rather than by the interests of the private citizens. What is to prevent the Calhoun system from working in reverse, with states tyrannizing over their citizens and only vetoing the federal government when it tries to intervene to stop that state tyranny? Or for states to acquiesce in federal tyranny? What is to prevent federal and state governments from forming mutually profitable alliances for the joint exploitation of the citizenry? And even if the private occupational groupings were to be given some form of “functional” representation in government, what is to prevent them from using the State to gain subsidies and other special privileges for themselves or from imposing compulsory cartels on their own members?

Making Economic Sense
by: Murray Rothbard

In short, Calhoun does not push his pathbreaking theory on concurrence far enough: he does not push it down to the individual himself. If the individual, after all, is the one whose rights are to be protected, then a consistent theory of concurrence would imply veto power by every individual; that is, some form of “unanimity principle.” When Calhoun wrote that it should be “impossible to put or to keep it [the government] in action without the concurrent consent of all,” he was, perhaps unwittingly, implying just such a conclusion.[31] But such speculation begins to take us away from our subject, for down this path lie political systems which could hardly be called “States” at all.[32] For one thing, just as the right of nullification for a state logically implies its right of secession, so a right of individual nullification would imply the right of any individual to “secede” from the State under which he lives.[33]

Thus, the State has invariably shown a striking talent for the expansion of its powers beyond any limits that might be imposed upon it. Since the State necessarily lives by the compulsory confiscation of private capital, and since its expansion necessarily involves ever-greater incursions on private individuals and private enterprise, we must assert that the State is profoundly and inherently anticapitalist. In a sense, our position is the reverse of the Marxist dictum that the State is the “executive committee” of the ruling class in the present day, supposedly the capitalists. Instead, the State – the organization of the political means – constitutes, and is the source of, the “ruling class” (rather, ruling caste), and is in permanent opposition to genuinely private capital. We may, therefore, say with de Jouvenel:

Only those who know nothing of any time but their own, who are completely in the dark as to the manner of Power’s behaving through thousands of years, would regard these proceedings [nationalization, the income tax, etc.] as the fruit of a particular set of doctrines. They are in fact the normal manifestations of Power, and differ not at all in their nature from Henry VIII’s confiscation of the monasteries. The same principle is at work; the hunger for authority, the thirst for resources; and in all of these operations the same characteristics are present, including the rapid elevation of the dividers of the spoils. Whether it is Socialist or whether it is not, Power must always be at war with the capitalist authorities and despoil the capitalists of their accumulated wealth; in doing so it obeys the law of its nature.[34]

What the State Fears

What the State fears above all, of course, is any fundamental threat to its own power and its own existence. The death of a State can come about in two major ways: (a) through conquest by another State, or (b) through revolutionary overthrow by its own subjects – in short, by war or revolution. War and revolution, as the two basic threats, invariably arouse in the State rulers their maximum efforts and maximum propaganda among the people. As stated above, any way must always be used to mobilize the people to come to the State’s defense in the belief that they are defending themselves. The fallacy of the idea becomes evident when conscription is wielded against those who refuse to “defend” themselves and are, therefore, forced into joining the State’s military band: needless to add, no “defense” is permitted them against this act of “their own” State.

In war, State power is pushed to its ultimate, and, under the slogans of “defense” and “emergency,” it can impose a tyranny upon the public such as might be openly resisted in time of peace. War thus provides many benefits to a State, and indeed every modern war has brought to the warring peoples a permanent legacy of increased State burdens upon society. War, moreover, provides to a State tempting opportunities for conquest of land areas over which it may exercise its monopoly of force. Randolph Bourne was certainly correct when he wrote that “war is the health of the State,” but to any particular State a war may spell either health or grave injury.[35]

We may test the hypothesis that the State is largely interested in protecting itself rather than its subjects by asking: which category of crimes does the State pursue and punish most intensely – those against private citizens or those against itself? The gravest crimes in the State’s lexicon are almost invariably not invasions of private person or property, but dangers to its own contentment, for example, treason, desertion of a soldier to the enemy, failure to register for the draft, subversion and subversive conspiracy, assassination of rulers and such economic crimes against the State as counterfeiting its money or evasion of its income tax. Or compare the degree of zeal devoted to pursuing the man who assaults a policeman, with the attention that the State pays to the assault of an ordinary citizen. Yet, curiously, the State’s openly assigned priority to its own defense against the public strikes few people as inconsistent with its presumed raison d’être.[36]

How States Relate to One Another


The Origins of the Federal Reserve
by: Murray Rothbard

Since the territorial area of the earth is divided among different States, inter-State relations must occupy much of a State’s time and energy. The natural tendency of a State is to expand its power, and externally such expansion takes place by conquest of a territorial area. Unless a territory is stateless or uninhabited, any such expansion involves an inherent conflict of interest between one set of State rulers and another. Only one set of rulers can obtain a monopoly of coercion over any given territorial area at any one time: complete power over a territory by State X can only be obtained by the expulsion of State Y. War, while risky, will be an ever-present tendency of States, punctuated by periods of peace and by shifting alliances and coalitions between States.

We have seen that the “internal” or “domestic” attempt to limit the State, in the seventeenth through nineteenth centuries, reached its most notable form in constitutionalism. Its “external,” or “foreign affairs,” counterpart was the development of “international law,” especially such forms as the “laws of war” and “neutrals’ rights.”[37] Parts of international law were originally purely private, growing out of the need of merchants and traders everywhere to protect their property and adjudicate disputes. Examples are admiralty law and the law merchant. But even the governmental rules emerged voluntarily and were not imposed by any international super-State. The object of the “laws of war” was to limit inter-State destruction to the State apparatus itself, thereby preserving the innocent “civilian” public from the slaughter and devastation of war. The object of the development of neutrals’ rights was to preserve private civilian international commerce, even with “enemy” countries, from seizure by one of the warring parties. The overriding aim, then, was to limit the extent of any war, and, particularly to limit its destructive impact on the private citizens of the neutral and even the warring countries.

The jurist F.J.P. Veale charmingly describes such “civilized warfare” as it briefly flourished in fifteenth-century Italy:

the rich burghers and merchants of medieval Italy were too busy making money and enjoying life to undertake the hardships and dangers of soldiering themselves. So they adopted the practice of hiring mercenaries to do their fighting for them, and, being thrifty, businesslike folk, they dismissed their mercenaries immediately after their services could be dispensed with. Wars were, therefore, fought by armies hired for each campaign. . . . For the first time, soldiering became a reasonable and comparatively harmless profession. The generals of that period maneuvered against each other, often with consummate skill, but when one had won the advantage, his opponent generally either retreated or surrendered. It was a recognized rule that a town could only be sacked if it offered resistance: immunity could always be purchased by paying a ransom. . . . As one natural consequence, no town ever resisted, it being obvious that a government too weak to defend its citizens had forfeited their allegiance. Civilians had little to fear from the dangers of war which were the concern only of professional soldiers.[38]

The well-nigh absolute separation of the private civilian from the State’s wars in eighteenth-century Europe is highlighted by Nef:

Even postal communications were not successfully restricted for long in wartime. Letters circulated without censorship, with a freedom that astonishes the twentieth-century mind. . . . The subjects of two warring nations talked to each other if they met, and when they could not meet, corresponded, not as enemies but as friends. The modern notion hardly existed that . . . subjects of any enemy country are partly accountable for the belligerent acts of their rulers. Nor had the warring rulers any firm disposition to stop communications with subjects of the enemy. The old inquisitorial practices of espionage in connection with religious worship and belief were disappearing, and no comparable inquisition in connection with political or economic communications was even contemplated. Passports were originally created to provide safe conduct in time of war. During most of the eighteenth century it seldom occurred to Europeans to abandon their travels in a foreign country which their own was fighting.[39]

And trade being increasingly recognized as beneficial to both parties; eighteenth-century warfare also counterbalances a considerable amount of “trading with the enemy.”[40]

How far States have transcended rules of civilized warfare in this century needs no elaboration here. In the modern era of total war, combined with the technology of total destruction, the very idea of keeping war limited to the State apparati seems even more quaint and obsolete than the original Constitution of the United States.

When States are not at war, agreements are often necessary to keep frictions at a minimum. One doctrine that has gained curiously wide acceptance is the alleged “sanctity of treaties.” This concept is treated as the counterpart of the “sanctity of contract.” But a treaty and a genuine contract have nothing in common. A contract transfers, in a precise manner, titles to private property. Since a government does not, in any proper sense, “own” its territorial area, any agreements that it concludes do not confer titles to property. If, for example, Mr. Jones sells or gives his land to Mr. Smith, Jones’s heir cannot legitimately descend upon Smith’s heir and claim the land as rightfully his. The property title has already been transferred. Old Jones’s contract is automatically binding upon young Jones, because the former had already transferred the property; young Jones, therefore, has no property claim. Young Jones can only claim that which he has inherited from old Jones, and old Jones can only bequeath property which he still owns. But if, at a certain date, the government of, say, Ruritania is coerced or even bribed by the government of Waldavia into giving up some of its territory, it is absurd to claim that the governments or inhabitants of the two countries are forever barred from a claim to reunification of Ruritania on the grounds of the sanctity of a treaty. Neither the people nor the land of northwest Ruritania are owned by either of the two governments. As a corollary, one government can certainly not bind, by the dead hand of the past, a later government through treaty. A revolutionary government which overthrew the king of Ruritania could, similarly, hardly be called to account for the king’s actions or debts, for a government is not, as is a child, a true “heir” to its predecessor’s property.

History as a Race Between State Power and Social Power

Just as the two basic and mutually exclusive interrelations between men are peaceful cooperation or coercive exploitation, production or predation, so the history of mankind, particularly its economic history, may be considered as a contest between these two principles. On the one hand, there is creative productivity, peaceful exchange and cooperation; on the other, coercive dictation and predation over those social relations. Albert Jay Nock happily termed these contesting forces: “social power” and “State power.”[41] Social power is man’s power over nature, his cooperative transformation of nature’s resources and insight into nature’s laws, for the benefit of all participating individuals. Social power is the power over nature, the living standards achieved by men in mutual exchange. State power, as we have seen, is the coercive and parasitic seizure of this production – a draining of the fruits of society for the benefit of nonproductive (actually antiproductive) rulers. While social power is over nature, State power is power over man. Through history, man’s productive and creative forces have, time and again, carved out new ways of transforming nature for man’s benefit. These have been the times when social power has spurted ahead of State power, and when the degree of State encroachment over society has considerably lessened. But always, after a greater or smaller time lag, the State has moved into these new areas, to cripple and confiscate social power once more.[42] If the seventeenth through the nineteenth centuries were, in many countries of the West, times of accelerating social power, and a corollary increase in freedom, peace, and material welfare, the twentieth century has been primarily an age in which State power has been catching up – with a consequent reversion to slavery, war, and destruction.[43]

In this century, the human race faces, once again, the virulent reign of the State – of the State now armed with the fruits of man’s creative powers, confiscated and perverted to its own aims. The last few centuries were times when men tried to place constitutional and other limits on the State, only to find that such limits, as with all other attempts, have failed. Of all the numerous forms that governments have taken over the centuries, of all the concepts and institutions that have been tried, none has succeeded in keeping the State in check. The problem of the State is evidently as far from solution as ever. Perhaps new paths of inquiry must be explored, if the successful, final solution of the State question is ever to be attained.[44]

Reprinted from Mises.org.

Murray N. Rothbard (1926–1995) was the author of Man, Economy, and State, Conceived in Liberty, What Has Government Done to Our Money, For a New Liberty, The Case Against the Fed, and many other books and articles. He was also the editor – with Lew Rockwell – of The Rothbard-Rockwell Report, and academic vice president of the Ludwig von Mises Institute.


The Government Wants Your Gold

In this clip from RT’s Capital Account, federal tax practitioner, David Selig, blows the whistle on the US government’s nascent efforts to sink its talons into the gold holdings of American citizens:


The Federal Reserve Bank is NOT actually a lending operation.  IT IS A FIAT PRINTING PRESS.  It is an illegal monopoly on the power to counterfeit fiat paper, as U.S.dollars”.  That’s right, I said COUNTERFEIT.  It is an unconstitutional, and therefore illegal, monopoly on the power to counterfeit “money” into existence, in its own hands of course.  A power that has of course, been unconstitutionally granted to the bank’s owners by the morons (and traitors) in Congress.  The reason why this is all true is because the bank DOES NOT POSSESS THE MONEY THAT IT LENDS, BUT SIMPLY COUNTERFEITS IT OUT OF THIN AIR. Tell me, how do you lend to others, that which you do not actually possess yourself to lend?  Can you lend money that you do not possess to someone who asks for a loan, or for help?  HOW DOES THE FEDERAL RESERVE BANK DO IT?  (By illegal monopoly?)  You don’t really think they actually have ten trillion dollars to lend to the U.S. government, do you?  So how is it possible?  ONLY BY FRAUD AND THEFT.

Also, the Federal Reserve Bank is NOT EVEN actually part of the Federal government.  It is no more Federal than Federal Express, or Federated Department Stores.  It is a private corporation with a legislated monopoly on currency and credit that is allowed to BUY its paper currency for nothing more than the cost of the paper, ink, and labor, from the Bureau of Printing & Engraving (U.S. Treasury).  Originally this added up to about 2.3 cents per note, or $230 of cost to buy one million dollars (10,000 100 dollar bills).  Today the cost is apparently still about the same.

Because of the existence of the Federal Reserve bank and fractional reserve banking system, America is now without any permanent money supply AT ALL, and all of the paper (notes) that we now have and use as money (in place of real money) have been borrowed into existence from this monopoly.  Unfortunately, the “money” to pay the interest on this borrowing has never been created within the system. So the national debts under this system are now inextinguishable.

Also, just as the income tax is the 2nd plank, the Federal Reserve bank is the Fifth plank of the Communist Manifesto.


The Federal Reserve bank has never paid a dime in income tax and has never been audited, and a percentage of this private bank is owned (or controlled) by foreigners (or their corporate shells)!!

Can you buy your money for $230 per million ?

Whatever happened to equal opportunity ?  Why are only the Federal Reserve Bankers allowed to buy money?  Does this monopoly make them rich?

“The Federal Reserve Banks are privately owned, locally controlled corporations”
[Lewis vs. U.S., 680 F.2d 1239, 1241](1982)

“As we have advised, the Federal Reserve is currently paying the Bureau approximately $23 for each 1,000 notes printed. This does include the cost of printing, paper, ink, labor, etc. Therefore, 10,000 notes of any denomination, including the $100 note would cost the Federal Reserve $230. In addition, the Federal Reserve must secure a pledge of collateral equal to the face value of the notes.”
– William H. Ferkler (Manager Public Affairs, Dept. of Treasury, Bureau of Engraving & Printing, Wash. D.C.

“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
– Henry Ford, Founder of the Ford Motor Co.

I believe that banking institutions are more dangerous to our liberties than standing armies… if the American people ever allow private banks to control the issue of currency…the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent that their fathers conquered.” – Thomas Jefferson  (Ed. – Does this sound familiar ?)


Why are private unelected individuals controlling the American currency system ?  Virtually running the entire country, the stock market, the banks, the lending rates, nearly everything ?  Where is any of this in the Constitution?

Do you really believe they are representing We the People with their policies?

If you do, you aren’t thinking clearly!

“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.” – John Adams

Wouldn’t you like to buy your currency for $230 per million (and have the American People guarantee its full face value, with their own assets)? Well, we won’t do that for Citizens but we do it for a select group of private and foreign bankers.  And then we let them fractionalize the reserves to issue even more fiat money in the form of unbacked credit.  What, you mean your government didn’t teach you about this little arrangement in their propaganda centers (public schools). Can you guess why?

Why is a private corporation cashing your income tax check instead of the Treasury?  The money doesn’t even go to the Federal government?  That’s right, not one penny actually goes into the Treasury! It all goes straight to the Federal Reserve bank to service the debts owed to them because of this monopoly on borrowing money into existence that they use to control the money supply.  These very rich banksters are illegally and unconstitutionally attempting to usurp control and rule over America, its People and their wealth, by unlawfully controlling and manipulating our currency through their ownership of this bank, and using that power to manipulate the national policies of our government and nation !

Because of the existence of this unconstitutional bank (Federal Reserve Bank) and its fractional reserve banking system, every penny of our money supply has been borrowed into existence from this bank and its monopoly on “money” (currency and credit), which includes the sole power to issue money without backing – essentially from nothing but air.

Therefore, when the debt is repaid OUR MONEY DISAPPEARS FROM CIRCULATION, unless the bank re-lends the money BACK out into circulation.  Therefore, when ALL the debts are paid off, America will have no “money” left in circulation and will be bankrupt, or will be completely beholden to the banks for more money.  So it is not only impossible to pay off the debts, because while the principal is printed into existence the money necessary to pay the interest never is created, it is not desirable under the current so-called “money” system, because it will bankrupt the nation.  The so-called “money” system is really nothing more than a sophisticated peonage scam that keeps We the People servicing the debts of the bankers forever in order to have “money” to “use” (rent), that they are allowed to create out of thin air as their private property to lend.  What a scam. But sorry, its not available to you.

Because of this hellish system, AMERICA IS ABSOLUTELY NOW WITHOUT A PERMANENT MONEY SUPPLY (like we used to have in gold and silver coin that never disappeared from the accounting books), and the American People are forever chained and enslaved to the repayment of debts for the loans from the banks of “property” that never existed (in the bank’s name) to be borrowed in the first place!  A monopoly on the power to create “money”. WOW – where is that in the ConstitutionIsn’t that actually prohibited ?

WITHOUT A PERMANENT MONEY SUPPLY IN EXISTENCE, THE ENTIRE NATION IS BEHOLDEN TO THE BANKERS FOR ITS VIABILITY AND SOLVENCY.  AS Thomas Jefferson said: “The issuing power must be taken from the banks and returned to the People where it rightfully belongs”


Do you know what peonage is?  Do you feel like a peon?

You should, because that is the role your government has relegated you to.

The servicing of the debt.

If you are not able to understand what is written above, PLEASE READ THE INFORMATON ARTICLES BELOW UNTIL YOU GET IT !






U.S. Sues Bank of America for $1 Billion for Mortgage Fraud

NEW YORK (AP) – The top federal prosecutor in Manhattan sued Bank of America (BAC) for more than $1 billion on Wednesday for mortgage fraud against Fannie Mae and Freddie Mac during the years around the financial crisis.

U.S. Attorney Preet Bharara said Countrywide Financial, which was later bought by Bank of America, churned out mortgage loans from 2007 to 2009 without making sure that borrowers could afford them.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Bharara said in a statement. He said the suit was partly to recover money that Fannie and Freddie lost from defaulted loans.

Bank of America had no immediate comment.

Countrywide sold the loans to Fannie Mae and Freddie Mac, which were left to pay for the loans when they defaulted, according to the lawsuit. Fannie and Freddie were effectively nationalized in 2008.

According to the lawsuit, Countrywide used a process called “the Hustle,” shorthand for “High-Speed Swim Lane.” The idea was that mortgage loans, as they were being processed, would “move forward, never backward.”

The lawsuit alleged that Countrywide traded quantity for quality and eliminated underwriters, even from mortgage loans for which borrowers did not have to get their income verified.

Instead, loan processors simply entered data into an automated underwriting system, and if the system gave the go-ahead, “no underwriter would ever see the loan,” the lawsuit alleged.

With few checks and balances, there was “widespread falsification” of the data entered into the program, Bharara charged.

Loan processors were given little guidance, the suit said: Checklists for making sure that loans were compliant – for example, assessing whether the income level that a borrower listed was reasonable – were eliminated. Bonuses were based solely on how many loans an employee could process, not the quality.

The lawsuit said that Countrywide executives were aware of the dangerous path they were treading. For example, a quality review in January 2008 showed that 57 percent of Hustle loans went into default.

Instead of notifying Fannie and Freddie, Countrywide instead set about to conceal the quality of the loans it was selling them, the suit said. It said Countrywide even offered a bonus to quality-control workers who could “rebut” the default rates that the review had found.

The lawsuit didn’t give specifics, but it accused Countrywide, and later Bank of America, of selling “thousands” of Hustle loans to Fannie and Freddie. Bank of America bought Countrywide in July 2008.

Fannie and Freddie buy mortgage loans from banks, package them into securities and sell them to investors. The idea is to free up banks to make more loans. If a loan defaults, Fannie and Freddie guarantee payments to the investors.

According to the lawsuit, Fannie and Freddie don’t review the loans before they purchase them. Instead, they rely on banks’ statements that the loans meet certain qualifications.

Bharara said the lawsuit was the first civil fraud suit brought by the Justice Department concerning loans that were later sold to Fannie and Freddie.


Robust Political Economy: Classical Liberalism and the Future of Public Policy

In Robust Political Economy, Mark Pennington offers one of the best cases for classical liberalism ever presented in a single volume.  I do not exaggerate.  Pennington—professor of political economy at King’s College, University of London—here surveys fully and summarizes fairly the major objections to classical liberalism (or, if you prefer, libertarianism).  He systematically demonstrates that each of those objections fails.  The alternative social arrangements, plans, and schemes offered by opponents of classical liberalism all fall well short of dealing adequately with two eternal problems that must be dealt with if people are to enjoy peace and prosperity: the knowledge problem and the incentive problem.

Because people operating within social institutions that conform to classical-liberal tenets deal best with these two enduring problems, such institutions are more robust than their alternatives.  Pennington painstakingly shows that the further institutions are from those recommended by classical liberalism, the more their success requires that individuals perform superhuman feats of accumulating and processing information while exhibiting implausible readiness to sacrifice their personal self-interests for (what they imagine to be) the greater good.

Pennington is hardly the first scholar to identify these two problems and to explain their relevance.  The knowledge problem is most famously associated with the work of F. A. Hayek (or, more generally, Austrian economists) and the incentive problem with the work of James Buchanan and Gordon Tullock (or, more generally, Public Choice economists).  But in applying so comprehensively and powerfully the lessons drawn from a recognition of these two problems, Pennington gives us a volume that might justly be described as The Constitution of Liberty for our day.

I am aware that this praise is unusually high.  And while significant differences in both style and substance do indeed separate Pennington’s 2011 book from Hayek’s 1960 classic, the similarities are enough to justify the comparison and the praise.

As with Hayek’s work, central to Pennington’s book is a deep understanding of the knowledge problem.  This of course involves understanding that the relative values of alternative outputs that can be produced with the same set of inputs can be determined only in competitive, private-property-based markets.  But this understanding involves more; it also involves the realization that such knowledge is never and can never be “given” (as is assumed in economics textbooks).  That is, this knowledge is not simply revealed by decentralized, competitive decision-making; it is also produced by that process.

No consumer comes to market with a detailed, full, and fixed scale of values that he seeks to satisfy.  That scale takes shape only as consumers confront actual alternative opportunities in the market.  Likewise, no producer comes to market with detailed, full, and fixed plans on exactly what to produce, how to produce it, and how much of it to produce.  Those plans take operational shape, and are modified, in light of actual experience in the market—a market whose details are always changing in unanticipated ways for both consumers and producers.

The knowledge problem, though, has yet another dimension beyond the economic.  It springs from the fact that different people have different scales of ethical and political values.  Pennington shines especially brightly in showing how various proposed alternatives to a classical-liberal society are bound to fail—or at least to encounter unexpectedly rough seas—because the success of those alternative social arrangements requires far more agreement than is likely to be found on the relative weights of different ethical and political values.  Egalitarians of various stripes, “market-failure” theorists of various pedigrees, and environmentalists of various shades of green all typically base their social-engineering schemes not only on a presumed agreement on ends that is unlikely to exist, but also on the simplistic assumption that knowledge of the rankings of various ends is easily gathered and made known to government officials.

Speaking of government officials, Pennington goes well beyond repeating the fact that the incentives facing political decision-makers frequently prompt them to act in ways contrary to the best interest of society at large.  He carefully details how the many egalitarian, market-failure, and green challenges to classical liberalism overlook—each in its own uniquely careless way—the perverse incentives that their implementation would create for officials charged with intervening in market arrangements.

Pennington’s survey of the most notable challenges to classical liberalism is a tour de force of scholarship.  And his crystal-clear, fair, yet firm demonstration of the serious flaws that infect each of these challenges is not to be missed.


Lew Rockwell explains how the Federal Reserve Enables War, Empire, and Destroys the Middle Class

Welcome to Capital Account. The accused Federal Reserve bomb plotter’s home country wants details on his case. While this may make headlines, we ask Lew Rockwell of the Ludwig Von Mises Institute about one aspect of the Federal Reserve that has not made front page news: how the Fed, with its printing press, may be making war easier. After all, if the people of the United States were asked to write a check every year to the IRS in order to fund the exploding deficits and rising interest payments on the national debt, would they continue to support all these wars? Randolph Bourne may have famously quipped that “war is the health of the state,” but it isn’t the health of the economy, this is for certain. If the American people could identify their miserable economic plight with the actions of the federal reserve and with the hundreds of billions of dollars spent every year on war and defense, it is reasonable to expect that they would simply refuse the burden all together. We will ask Lew Rockwell, Chairman of the Ludwig Von Mises Institute what he thinks, and if he thinks that war is made easier by a pliant and compliant central bank.

And, sticking with this issue of the Federal Reserve as the great “enabler,” what about it’s role in “disabling” and dismembering America’s dwindling middle class? How responsible is the Federal Reserve and its quantitative easing, zero percent interest rate policy for the plight of America’s economy and its society? The two main contenders for the presidency, Barack Obama and Mitt Romney, speak often about the Fed. The candidates talk about supporting the middle class in terms of tax cuts, loopholes, and regulation but they don’t discuss the “money” in the middle class’s pockets. We ask Lew Rockwell, Chairman of the Ludwig von Mises Institute, about what happens to the middle class if you don’t address savings.

And it’s the 25-year anniversary of Black Monday, but it’s also the 1-year anniversary of Capital Account’s launch! Lauren and Demetri respond to your birthday wishes and more in viewer feedback. Plus one of the more memorable exchanges in Tuesday’s presidential debate was the back and forth over pension plans: Obama told Romney “I don’t look at my pension. It’s not as big as yours so it doesn’t take as long.” President Obama might want to take a look at his pension, as it turns out it holds shares of the Las Vegas Sands corporation, owned by Sheldon Adelson, a major Romney backer. The holdings in his pension also include Domino’s Pizza, Exxon Mobil, China Life Insurance, Halliburton, and Altria (Philip Morris USA). Lauren and Demetri discuss the political landmine in Obama’s pension fund in today’s “Loose Change.” They also discuss Social Impact Bonds and how SIBs have made it easier for businessmen to combine philanthropic goals with business. The SIBs are loans made by investors to pay for a social program, and they require a government to pay a return on their principal investment if the program meets its agreed-upon goals. Lauren and Demetri talk about how SIBs make the market incentive for philanthropy more efficient.

Nancy Pelosi’s brother-in-law is given $737m of taxpayers’ money to build giant solar power plant in middle of the desert

  • Obama administration approved $1bn in green energy loans days after failed Solyndra project due to be completed
  • $737m handed to Crescent Dunes project in Tonopah, Nevada, for 110-megawatt desert solar power plant
  • Investors include firm Minority leader’s brother-in-law and major Solyndra stakeholder
  • Republicans warn Energy Department is ‘rushing’ $5bn in loans ahead of Friday deadline

Cronyism? A solar energy project backed by Nancy Pelosi’s brother has been granted a massive government loan (file picture)


Nancy Pelosi is facing accusations of cronyism after a solar energy project, which her brother-in-law has a stake in, landed a $737 million loan guarantee from the Department of Energy, despite the growing Solyndra scandal.

The massive loan agreement is raising new concerns about the use of taxpayers’ money as vast sums are invested in technology similar to that of the doomed energy project.

The investment has intensified the debate over the effectiveness of solar energy as a major power source.

The SolarReserve project is backed by an energy investment fund where the Minority Leader’s brother-in-law Ronald Pelosi is second in command.

PCG Clean Energy & Technology Fund (East) LLC is listed as one of the investors in the project that has been given the staggering loan, which even dwarfs that given to failed company Solyndra.

Other investors include one of the major investors in Solyndra, which is run by one of the directors of Solyndra.

Steve Mitchell, who served on the board of directors at the bankrupt energy company, is also managing director of Argonaut Private Equity, which has invested in the latest project.

Since Solyndra has filed for bankruptcy has been asked to testify about the goings on at the firm by two members of the House and ‘asked to provide documents to Congress’.

Generator: Artist’s impression of the solar plant being constructed north west of Tonopah, Nevada


The artist’s impression shows the incredible size of the giant solar power plant, which is being bankrolled by President Obama’s green jobs fund.

Energy will be generated using concentrated solar power technology, in which a series of mirrors direct sunlight to a receiver at the centre of the plant.

The ‘solar tower’ in the middle, which will be taller than the Washington Monument, is the first of its kind to be built.

Stretching out across a plain in Tonopah, Nevada, the mind-bogglingly big project will generate enough electricity to power 43,000 homes.

But the joint announcement by Energy Secretary Steven Chu comes just two days after the doomed Solyndra project, which cost the taxpayer $528 million from the same cash pot, was meant to be completed.

The project approval came as part of $1 billion in new loans to green energy companies yesterday.

Republican critics of the President Obama’s solar energy program have voiced their outrage at the new loans while the Solyndra scandal is still being investigated.

They have raised concerns that the Department of Energy is rushing through the approval of loans before stimulus funds expire on Friday.

While the departments insists the projects are being properly vetted, some lawmakers have written to express concern that they vast loans are not being adequately scrutinised.

‘The administration’s flagship project Solyndra is bankrupt and being investigated by the FBI, the promised jobs never materialised, and now the Department of Energy is preparing to rush out nearly $5 billion in loans in the final 48 hours before stimulus funds expire — that’s nearly $105 million every hour that must be finalised until the deadline,’ said Florida representative Cliff Stearns, who is chairman of the investigations subcommittee of the House Committee on Energy and Commerce.

Tom Schatz, president of Washington-based advocacy group Citizens Against Government Waste, said: ‘It is time for a full audit of their activities, their management and their results.

‘Candidly, it might be time for the federal government to rethink the whole idea of loan programs.’

Energy Department spokesman Damien LaVera said the project, which was had extensive reviews that included scrutiny of the parent companies’ finances.

Investigation: Solyndra CEO Brian Harrison and Chief Financial Officer Bill Stover are sworn in at a House Oversight and Investigations subcommittee hearing


The shocking scale of spending Solyndra lavished on the factory it started building alongside Interstate 880 in Fremont, California, has been revealed.When it was completed at an estimated cost of $733 million, including proceeds from the company’s $535 million U.S. loan guarantee, it covered 300,000 sq ft, the equivalent of five football fields.It had robots that whistled Disney tunes, spa-like showers with liquid-crystal displays of the water temperature, and glass-walled conference rooms.John Pierce, 54, a San Jose resident who worked as a facilities manager at Solyndra, said: ‘The new building is like the Taj Mahal.’Designed to make far more solar panels than Solyndra got orders for, the site is now empty and U.S. taxpayers may be stuck with it.Solyndra filed for bankruptcy protection on September 6, leaving in its wake investigations by Congress and the FBI.


Mr Chu said the two projects will create about 900 construction jobs and at least 52 permanent jobs.

He added: ‘If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar.’

The 110-megawatt Crescent Dunes project will use the sun’s heat to create steam that drives a turbine, SolarReserve, which is based in Santa Monica, California.

Senate Majority Leader Harry Reid is a strong supporter of the Nevada project, which he says will help his state’s economy recover. Former Governor Jim Gibbons, a Republican, also supported the project.

Mr Pelosi is one of several controversial figures set to benefit from the huge loan agreement.

The loan approvals came just two days before the renewable energy loan program approved under the 2009 economic stimulus law is set to expire. At least seven projects worth more than $5 billion are also waiting to be approved.

California-based solar panel maker Solyndra Inc went bankrupt after receiving its money and laid off 1,100 workers. The firm is now under investigation by the FBI.

It was the first renewable-energy company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model.

President Barack Obama visited the company’s Silicon Valley headquarters last year, and Vice President Joe Biden spoke by satellite at its groundbreaking ceremony.

Since then, the company’s failure has become an embarrassment for Obama.

Nut Scott Crider, a spokesman for Sempra Generation, a Sempra Energy subsidiary that is developing the Arizona project, said its loan guarantee was not as risky as the Solyndra loan.

Most important, the project has a 20-year agreement with Pacific Gas & Electric Co. to buy power supplied by the solar plant, he said

Mr Crider claimed the purchase agreement is a key element of the project and will ‘provide assurance that there are sufficient revenues in place to support the loan guarantee’.

A similar agreement is in place in Nevada. NV Energy, the state’s largest electric utility, has agreed to buy power from the Tonopah tower, which will connect to NV Energy’s power grid.

Foreign debt now $47,495 per household

President Barack Obama and Chinese President Hu Jintao on March 26, 2012. (AP Photo/Pablo Martinez Monsivais)

(CNSNews.com) – The debt that the U.S. government owes to foreign interests now equals approximately $47,495 for each household in the United States, according to the latest data released by the U.S. Treasury and the Census Bureau.

The portion of the U.S. government’s foreign debt now owed to interests in Mainland China is about $10,090 per household.

At the end of August, the latest period reported by the U.S. Treasury, foreign interests held a total of $5,430,000,000,000 in U.S. government debt. According to the Census Bureau’s latest estimate (which was for June 2012) there were 114,328,000 households in the United States. Therefore, the total U.S. government debt held by foreign interests was about $47,494.93 per household.

Back in January 2009, foreign interests held a total of $3,071,700,000,000 in U.S. government debt. That month, according to the Census Bureau, there were 111,079,000 households in the United States. Therefore the total U.S. government debt held by foreign interests was about $27,653.29 per household.

Since January 2009, the total U.S. government debt held by foreign interests has climbed from approximately $27,653.29 per household to approximately $47,494.93 per household—an increase of about $19,841.64 per household.

Among foreign interests, those in Mainland China hold the largest share of the U.S. government’s debt. The Mainland Chinese, according to the Treasury, owned $1,153,600,000,000 in U.S. Treasury securities as of the end of August.

Back in January 2009, interests in Mainland China held only $739.6 billion in U.S. government debt. That month, the U.S. government owed about $6,658 per American household to interests in China. As of the end of August, the U.S. government owed about $10,090 per American household to interests in China—an increase since January 2009 of about $3,432 per household.


United Nations Seeks ‘Global’ Tax

Video Caption

How the Private Bankers Are Using the Financial Crisis to Reshape World Government

Archived from the live Mises.tv broadcast, this lecture was presented by Robert P. Murphy at the Mises Circle in Houston on 14 January 2012.

Rick Santelli: What the Fed Can & Cannot Print

Bill Gross ‘The US is a Debt Meth Addict’

A Major Event Could Occur during the Next Administration

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Judge Napolitano: Social Security is a Ponzi Scheme

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Ron Paul w/ Cavuto ~ “Bubbles” Come From The Federal Reserve

Ron Paul ‘Constitutionally Correct’ 2012.

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Harry Reid has promised that there will not be a vote in the Senate for ‘Audit the Fed’, despite his past support for an audit in 1995. Contact Harry Reid now, and tell him to AUDIT THE FED: 202-224-3542. In addition call your senators and tell them to vote to Audit The Fed!

Ron Paul Sound Currency Message is Resonating With Worldwide Leaders, Including China

Ron Paul Sound Currency Message is Resonating With Worldwide Leaders Including China


While doing the research for this article, it appeared the leaders of China have been listening to Ron Paul while most leaders in the U.S. continue to mock him.

Though history proves fiat currencies fail, central banks, including the Federal Reserve are bound and determined to convince the world that this time history won’t repeat itself.

So, if you were China and you owned $1.2 trillion in U.S. bills, notes, and bonds, what would you do to hedge your bets and cover your fanny? Exactly what China is doing: buying gold. In fact, they are buying so much; it appears they are preparing for a world beyond the fiat dollar. A future world in which the renminbi backed by gold could become the dominant reserve currency.

State-owned China National, CEO Sun Zhaoxue commented on the acquisition of African Barrick Gold Ltd, saying, “As gold is a currency in nature, no matter if it’s for state economic security or for the acceleration of renminbi internationalization, increasing the gold reserve should be one of the key strategies of China.” So, in spite of the fact China is the world’s largest producer of gold, it appears important enough for China to still acquire interest in mines in other countries.

And Zhaoxue sounds suspiciously like Ron Paul when he says, “Gold is currency.”

But then we hear Ben Bernanke, chairman of the Federal Reserve Bank, telling students at George Washington University how impractical a gold backed currency is, “I mean, what you have to do to have a gold standard is you have to go to South Africa or some place and dig up tons of gold and move it to New York.”

So while Bernanke is teaching students it’s too much of a problem to mine and ship gold to the U.S. to fill our void, the Chinese are buying up the mines — in Africa.

China is mining gold, buying gold, buying gold mines and encouraging its citizens to buy gold. They are even minting gold coins in various sizes to make it easier for citizens to accumulate. Maybe we need to take another look at Zhaoxue’s statement. “…for the acceleration of renminbi internationalization…” And right now the renminbi is fiat like all other currencies, right?

Reports in the past have told us it would be years before the dollars’ place, as the world reserve currency would end. At one time economists speculated if the dollar were ever replaced, it would be by the euro. Not anymore. Following the world wide financial collapse in 2008, and the stresses by such countries as Greece, the euro continues to teeter. The world watches for the impact of more Euro zone bailouts; it’s not looking good. All eyes right now are on Spain, as a not “if” but “when” bailout.

And then there is the fiscal cliff Ron Paul has warned about in the U.S. Failure by our nation’s leaders to reign in spending on domestic social issues, tighten tax loop-holes that encourage off-shore banking and investments by the rich (Hello Romney), an out of control military industrial complex pushing U.S. imperialism all over the world, and of course the Bush era tax cuts that are getting ready to expire and the now loss of the petrodollar. Add to that, the never ending Federal Reserve’s QEs. How much more can the fiat paper dollar withstand, even if stacked a billion thick?

Many people just don’t realize how aggressive the competition against the greenback has become in just the last two years by the red renminbi of China. The remnimbi is positioning itself to be viewed as a real global reserve currency alternative. China is not one to make public most of their financial plans, but let’s look at some of the stories that have made it into the mainstream media:

Russia and China in 2010 decided to do away with debt exchanges using the U.S. dollar and instead trade directly in ruble and renminbi.

In December 2011, Japan and China announced they would be promoting trades directly with each other and sidestepping the dollar. Last year’s trades were about $340 billion. At the same time China announced a direct $11 billion currency swap with Thailand.

In January 2012, Wen Jiabao, the Chinese Premier, signed a $5.5 billion currency swap with the United Arab Emirates.

Then at the end of January there is an article from Forbes answering the question “Why is China buying so much gold?” Forbes simple answer; a substitute against capital flight. What? The Chinese Premier, Wen Jiabao is the one flying all over the world setting up all these currency swaps.

In late March 2012, according to Zeebiz, “The five major emerging economies of BRICS — Brazil, Russia, India, China and South Africa — are set to inject greater economic momentum into their grouping by signing two pacts for promoting intra-BRICS trade at the fourth summit of their leaders…” And, “The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28% over the last few years, but at $230 billion, remains much below the potential of the five economic power houses.”

In March 2012, we learned Dubai-based Emirates NBD the largest bank is selling dim sum bonds, debt securities issued in the Chinese yuan.

Again in March 2012, China and Australia sign a $30+ billion swap agreement. According to the Reserve Bank of Australia, “The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial cooperation. The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make RMB-denominated investments.”

In April, we learn in a report from Forbes, that China will be avoiding U.S. financial sanctions against Iran by making oil purchases not only bartering goods, but also using gold.

So, again gold is money. And gold is as a petrocurrency as opposed to the petrodollar that may lead to more petrowars.

In late June 2012, China and Chile agreed to strengthen their ties in a strategic partnership and double their trade in three years. The leaders of the two nations, Jiabao and Pinera, also announced the completion of negotiations on investment-related supplementary deals to a bilateral free trade agreement.

Also in late June of 2012, China and Brazil agreed to a $30 billion currency swap.

Hold on a minute, what did Ron Paul say about the U.S. establishing trade around the world but keeping our noses out of other nations business? Sounds like the leader of China was listening to Ron Paul. According to Paul’s critics, what we are witnessing from Jiabao is isolationism in action. Of course, the enlightened know this isn’t so. In fact, Jiabao is a stellar example of Paul’s non-interventionist stance and is promoting trade with other countries.

Then in August 2012, Germany and China announced they are going to be doing a lot of their trade in the Euro and renminbi. The article leaves out any mention of bypassing the dollar. Maybe by now it should just be understood.

China encourages its citizens to accumulate gold. Gold coins are minted in China in varying sizes easing the way for the people to accumulate gold. China is the largest producer of gold in the world. And now as China increases trade around the world using renminbi, and it is also beginning to use gold as currency and in exchange for oil.

Ron Paul has repeatedly said the U.S. should consider gold a currency and if we are to continue printing paper dollars we need to return to a gold standard, so the dollar will have value. The Federal Reserve Bank, Obama, Romney and their supporters brush away Paul’s comments as though his warnings were gnats.

Ron Paul alerts us of a day when the dollar has no value. He warns of a day this country topples over a fiscal cliff.

On that day, don’t be surprised to look up and see the renminbi— backed by gold emerging as the world’s reserve currency.


Iran: How long can debt-laden US remain world power?

Ahmadinejad says US influence in world affairs waning due to massive debt and loss of legitimacy, adds West increasingly questioning legitimacy of “Zionist regime,” hints EU hurt more by sanctions than Iran.

Iranian President Mahmoud Ahmadinejad predicted the impending downfall of the “US empire,” blaming the collapse on a combination of the country’s massive debt and its loss of legitimacy within the international community, Iran’s official news agency IRNA reported Thursday.

“How long can a government with a $16,000 trillion foreign debt remain a world power?” he asked at a press conference with Kuwaiti media personnel. “The Americans have injected their paper wealth into the world economy and today the aftermaths and negative effects of their pseudo-wealth have plagued them.”

He added: “An empire, or a government, remains in power so long as the people under its power support it, but today the Americans have acted in a way that the world nations do not like them at all, and therefore, their international legitimacy is annihilated.”

Ahmadinejad also predicted that the West would soon drop their alliance with the “Zionist regime,” saying that Westerners and US politicians are increasingly “at a loss” as to why Israel exists.

Downplaying the effect of Western sanctions on the Iranian economy, Ahmadinejad said that the Islamic Republic would persevere. “The hegemonic powers have no way [forward], but to change the conditions.” Earlier this month, riots broke out in Tehran in protest of the collapse of the rial currency, which has lost some two-thirds of its value against the dollar in the past 15 months, stoking inflation that is now running at around 25 percent.

Despite his country’s reeling economy, Ahmadinejad questioned who was really suffering under the sanctions. “These sanctions are in fact imposed against the European countries,” he charged. “It has now been five years that they have imposed sanctions against Iran, but the question is, which one is experiencing tougher economic conditions, the EU, or the Islamic Republic?”

Earlier this week, the EU agreed to impose further sanctions against Iran’s banking, shipping, and industrial sectors, cranking up financial pressure on Tehran in the hope of drawing it into serious negotiations on its nuclear program.

Turning to his country’s illicit nuclear program, Ahmadinejad termed Western pressure as “boring,” and expressed that his country would proceed in its drive for a peacefully nuclear program. “Due to the political approach of the world oppressor powers, the Iranian nuclear issue has become a boring issue. Today everyone knows that the westerners are basically opposed to the advancement of the Iranian nation and even if the nuclear issue would be solved they would resort to another pretext, such as Iran’s manufacturing of satellites, or even production of medicines, or becoming a space power, to interfere in our internal affairs.”

Addressing increasing speculation that the Persian Gulf could become a flashpoint for violence between the West and Iran, Ahmadinejad said his country would respond to any threats posed against it. “I do not think such a war would occur, because we all contribute to the establishment of security in this region, but at any rate when the United States make some threats, Iran, too, responses to them. Everyone knows that it is not possible to urge the Iranian nation to retreat resorting to war threat.”


CME Chairman Testifies To Congress: “A Senior MF Global Employee Indicated To Us That Mr. Corzine Knew Loans Had Been Made From Customer Segregated Accounts”

This is a must see.  More evidence that Jon Corzine is guilty:

CME Group Chairman Terry Duffy tells the Senate that CEO Jon Corzine knew loans were made from customer accounts – Dec. 13, 2011.

Eric Holder: What the hell else do you need to hear?

The senior employee’s name is undoubtedly Edith O’Brien.

O’Brien is the key to this case and she’s not talking, at least publicly, but that hasn’t stopped Corzine and his lawyers from implicating her for the impermissible transfers to JPMorgan.

She’s not a lightweight:

Ms. O’Brien is considered an expert of sorts on the protection of customer money at futures firms.  In the last year and a half, Ms. O’Brien has made several appearances before the Commodity Futures Trading Commission.  On at least two occasions, she was a panelist at roundtable discussions held at the agency on the topic of safeguarding customer money, and also attended at least three meetings with agency officials, including one titled “Practicalities of Individual Customer Protection.”

Slammed by Corzine:

“I had explicit statements that we were using proper funds, both orally and in writing, to the best of my knowledge,” he told the panel. “The woman that I spoke to was a Ms. Edith O’Brien.”  But JPMorgan was not satisfied. The bank once again contacted Mr. Corzine, this time requesting a guarantee in writing. Mr. Corzine handed the request to his general counsel, Laurie Ferber. Ms. Ferber would not authorize the document, according to one of the people close to the investigation, saying the firm did not offer such special assurances.

Two days later, at about 6 p.m. on Sunday, Oct. 30, Ms. Ferber notified regulators that there was an apparent shortfall in customer money. She blamed an accounting error, according to the CME Group, the firm’s primary regulator and an exchange where it conducted business.

At about 1 a.m., Ms. O’Brien and another executive in Chicago told the exchange that the shortfall in the customer accounts was real, according to the CME.

Continue readng at Dealbook…

Janet Tavakoli adds detail:

Jon Corzine claims he didn’t know about improper transfers of customer funds and of shortfalls in customer accounts until October 30, yet on Thursday, October 27, four days before the bankruptcy and again on Friday, October 28, three days before its bankruptcy, dozens of MF Global customers asked for wire transfers when they closed accounts, and they didn’t get them. Instead, MF Global wrote paper checks and sent the checks via snail mail. The checks bounced, since customers received them after MF Global declared bankruptcy on Monday, October 31.

Clients Raise Questions About MF Global Checks – NY Times Dealbook

MF Global and the Rubber Check – Reuters

More from Janet:

On October 28, JPMorgan didn’t buy Corzine’s story, either. Having been a risk manager myself, I believe Barry Zubrow, JPMorgan’s chief risk officer, did exactly the right thing. He called Jon Corzine to get him to verify that the funds belonged to MF Global and that none of the money was customer money. Zubrow, an outsider, was well aware of the possibility that customer funds had been transferred. It’s implausible that Corzine wasn’t aware of the potential impermissible transfer of customer funds when he gave the authority to make the transfer. By doing its job, JPMorgan removed Corzine’s ability to credibly deny knowledge of the potential problem.

As for JPMorgan, it asked Jon Corzine for a signed letter stating that the transfer was legitimate. He reportedly responded: “Send me the letter and we’ll have our people look at it.” It was disingenuous of Jon Corzine to pass JPMorgan’s letter to Edith O’Brien to sign given that it asked for a sign-off that all “past, present and future” transfers complied with the law. Ms. O’Brien would have been asked to take responsibility for all transfers without having the authority over them. Jon Corzine had the broad authority to sign the letter, but by passing it on, he effectively stalled.

JPMorgan sent additional versions of this letter in response to MF Global’s requests for revisions, but JPMorgan never received a signed letter back.

Eric Holder: Appoint a Special Prosecutor Now.


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