Dealers swap sterling for Mugabe's dollar

The two-year decline of the sterling boosts exports and is therefore good news to the brain trust at England's central bank. Suffering its "biggest rout on the currency markets for more than a year," the sterling "fell by more than 1.7 per cent against Zimbabwe’s much-mocked paper, completing a decline of more than 7 per cent since the end of January." When the value of the sterling falls to zero, Bank of England Governor Mervyn King and his Keynesian pals can celebrate with the mother of all bonfires, with paper sterling as fuel.

Fed Credit Increase is Beyond Crazy

Last week's increase in Fed Credit of $5.2 billion, though slightly less than the previous week's increase, was still twice the rate of the Great Inflationist Alan Greenspan, who pumped $10 billion a month in credit then blamed market craziness on "irrational exuberance."

Keynesians and Neo-Keynesians, of course, will see nothing fundamentally wrong with creating massive amounts of credit. As renowned Fed hysteric Mogambo Guru puts it:

Interestingly, a crucial part of the stupid Keynesian nonsense holds that the government can, by virtue of borrowing the money, replace any perceived lost “consumer demand”, in any economic downturn, by merely borrowing and spending money, even if borrowing and spending money was the cause of the original downturn, and that there are no repercussions that cannot be solved by more borrowing and spending, and that inflation in prices has nothing to do with the money supply but with irrational exuberance! Which doesn’t even make any sense! Hahahah! It doesn’t even freaking make sense!!

He concludes:

The preponderance of people on this planet, and in our universities, and in our media, and in our governments, and in our central banks are BFC [Beyond Freaking Crazy] lunatics if they think that borrowing (racking up debt) and spending money will “cure” the bust of the boom produced by borrowing (racking up debt) and spending the money! Hahahaha!

FDIC: Pace of bank seizures likely to increase

Those who believe happy days are almost here again might want to reflect on the condition of the banking industry, which is afraid to do business. With bank regulators "shuttering" banks in Florida, Maryland, Illinois, and Utah, the number of bank failures in 2010 has climbed to 26, with the pace of bank seizures likely to accelerate in coming months, according to the FDIC. The total for all of 2009 was 140. According to an AP report,

As the economy has weakened, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have mounted, sapping billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

Banks, meanwhile, have tightened their lending standards. U.S. bank lending last year posted its steepest drop since World War II, as the volume of loans fell $587.3 billion, or 7.5 percent, from 2008, the FDIC reported recently.

What if all the gold mines closed?

Steve Saville tells us:

The crux of the issue is that most of the gold mined in the past has not been consumed (burnt, eaten, used-up in industrial processes or built into structures); rather, it remains available today in readily saleable form. Consequently, gold-mine supply adds only about 1.5% per year to the total supply of gold, and changes in mine supply have very little influence on gold's supply/demand equation. . . .

By way of further explanation, imagine that gold were money. In this case, the contribution to total supply made by the mining industry would be the monetary inflation rate. If the inflation rate were zero, that is, if the gold-mining industry ceased to exist, then gold's purchasing power would tend to increase over the long-term at roughly the same rate as the economy grew. For example, if, during a 20-year period, there were no money (gold) supply growth and average annual economic growth of 3% then gold's purchasing power would be expected to gain a total of about 80% (3%/year compounded for 20 years) over the course of this period. At no stage would there be a shortage of money (gold), assuming that prices were permitted to freely adjust.

Did Joe Stack read Flight?

I rather doubt it, but given what's been reported about what he did and why, there are eerie similarities to the actions of my lead character in Flight of the Barbarous Relic. Thanks to daughter Kimmi Smith for pointing this out.

Slow-frying the taxpayer, over and over

Some years ago I wrote an article about the passage of The Current Tax Payment Act of 1943, a.k.a., withholding. Even as the plan was being sold to Americans as a public benefit, their elected representatives in D.C. were gloating over how this new bill would allow them to "fry" whatever revenues they wanted out of the taxpayer. Any suggestion that this was the real motive behind the law, of course, was dismissed as a conspiracy theory, and a pernicious one at that, since the government was engaged in another war.

As insidious as withholding is, it is not without competition. In fact, it bows humbly to the true master of monetary evil, The Fed. At least withholding is done in plain sight. You can look at your paycheck stub and see how much the government has taken. We never really know how much the Fed steals since it works in secret, which it prefers to call "independence." The Fed poses as our protector against the "tax" of inflation while using monetary inflation to divert wealth to the biggest banks and the government. Most people don't understand how the Fed works or why we even have it, since the country thrived for well over a century without it. As for all those pre-1913 panics necessitating a central bank, read Rothbard (Pdf); we needed honest (full-reserve) banking, not a banking cartel.

Ron Paul is someone who certainly understands what the Fed is up to. In a recent post, he questions the ties between the new crop of defaulting governments, Goldman Sachs, and the Fed. He writes:

Greece is only the latest in a series of countries that have faced this type of crisis in recent memory. Not too long ago the same types of fears were mounting about Dubai, and before that, Iceland. Several other countries (Spain, Portugal, Ireland, Latvia) are approaching crisis levels with public debt as well. Many have strong ties to Goldman Sachs and the case could easily be made that default could have serious implications for big US banking cartels. Considering the ties between the Fed and these big banks, it is not outlandish to wonder if the US taxpayer is secretly bailing out the entire world, country by country, even as our real unemployment tops 20 percent. Unless laws are changed to allow a complete and meaningful audit of the Federal Reserve, including its agreements with foreign central banks, we might never know if this is occurring or not. . . .

Because of our globe-straddling empire and lingering reserve currency status, perhaps no one has a more vested interest in keeping this system cobbled together than our own government and the Federal Reserve. The agreements that Iceland and Dubai and Greece have negotiated can amount to little more than kicking the can down the road, as their overall spending habits remain largely intact, fiat currencies are still legal tender and more debt is issued on top of unsustainable debt. The American people have the right to know if they are going to be the ones holding the bag in the end because the Federal Reserve secretly put them on the hook for it. This knowledge would be a key factor in peacefully dismantling this immoral and unconstitutional system.

Capitalism's war against scarcity

Jeff Tucker has an insightful article on the shift from physical to digital over the last decade. He cleaned out his office recently for the first time in ten years. He writes:

Here's some of what I found: video tapes of short clips of ideas and events that are now all on YouTube; a printout of contacts generated by my own Palm Pilot, all of which are now back on a handheld device that syncs through cyberspace with any online device; my ancient Palm Pilot itself, which is about as useful as a pet rock; first print runs of legislation before Congress, now all on the Internet and searchable; two big plastic trays, one labeled "in box" and one labeled "out box," now replaced by a gargantuan archive of emails that I can access in seconds; photographs of this and that, easily scanned and posted and shared with the world; scholarly journals (say no more); pile after pile of weekly magazines and newspaper clippings, all long ago digitized; cassette recorders for doing interviews; once-treasured software packages that now seem as sophisticated as cave drawings; a "world clock"; a thermometer with a wire you stick outside the window. . . .

Somehow, the change from physical to digital strikes me as more significant than the move from iron to steel, from horses to internal combustion, or from land travel to air travel. In all other cases, the technological shift went from less- to more-efficient ways of accomplishing tasks by the use of things. But these things were still scarce. To make another book required felling another tree. To get from here to there still required fuel and everything that is associated with making it. My pile of paper could not simultaneously be your pile of paper. The space on the land on which I was driving could not be shared without causing a wreck and endangering life itself.

Eliminating scarcity in things people need and value is a good thing. Eliminating scarcity in money, another product of the central bank and the digital age, is disastrous.