JackLiberty.com

A young liberty supporter has alerted me to his blog, and I recommend checking it out. From what I see posted, he is far more advanced at 15 than I was at 30.

Quote of the Day from Ben Bernanke

Found here in footnote 9, at the bottom of the page:

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

Bernanke sees "costs and distortions" trying to maintain minimum reserves, which have shrunk to almost nothing, but fails to see any distortions caused by massive injections of that famous Fed "liquidity."

NY Post publshes story exposing gold. silver price suppression

Andrew Maguire, a former Goldman Sachs trader working at the London Bullion Market Association (LBMA), gave an exclusive interview with the NY Post recently in which he claimed that JP Morgan Chase and HSBC have been playing a key role in maintaining the illusory value of the U.S. dollar. The banks do the Federal Reserve's bidding in the precious metals market, acting to keep the prices of gold and silver down to make the Fed's paper dollar look less debauched than it really is. The Post quotes Maguire as saying:

JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer.

According to the Post,

Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he went public.

Bill Murphy, chairman of the Gold Antitrust Action Committee (GATA), believes the price of gold today would be around $2300/ounce if the price were allowed to move with inflation. "Maguire believes the price should be even higher given the fear trade that would have sent prices spiking during the financial crisis in 2008-09."

I am one of those who believes the fraud of fractional reserves, fiat paper money, and central banking will not end voluntarily. Notwithstanding Ron Paul's courageous fight against the Fed and his promotion of sound money, there is absolutely no political will to end it. It is the very core of modern politics and the source of enormous profits to the big banks. It will end when it self-destructs, which by its nature it cannot avoid. As Darryl Robert Schoon observes:

When the global economy collapsed in 2008, governments rescued the banks, the very ones responsible for the collapse. This is because without the banks’ debt-based paper money, governments could not spend the vast amounts they do not really have.

Politicians seek power and bankers seek profit and their collusion is responsible for the present crisis. Do not be surprised at the current state of affairs, the motives of the participants are clear and so are the consequences.

These are exceptional times and while we are helpless to prevent what is about to happen, so, too, are bankers and politicians. They have brought this state of affairs upon themselves and for this we should be grateful—for without their demise we would be enslaved forever.

What to expect from the FCIC

When government forms bipartisan "commissions" like the one investigating the causes of the 2008 crisis, we can expect anything but the truth to come out. Not because I'm cynical about government, but because the Federal Crisis Inquiry Commission is charged with finding truth in all the wrong places. It will look at the voluntary area of the economy - what little remains of it - and conclude there was insufficient regulation, and proceed to ramp up the power of the regulatory agencies that failed in 2008, with the promise that this time it will be different.

It's never different. The cause is not in the free market. The cause is the lack of a free market.

Ron Paul understands the issues perfectly. He writes:

The reality is that the Federal Reserve relentlessly expanded the money supply through artificially low interest rates for over two decades, and this expansion of easy money caused a wholly predictable bubble. To a myopic Keynesian regulator, the bubble may appear to be caused by greed, but in truth it is completely predictable that humans will act in their own perceived self interest. If the Fed wants to dole out artificially cheap money, people and businesses- including Wall Street businesses- will line up to take it. We can condemn this as greed, but the fundamental problem is Fed policy itself. There will always be demand for cheap money, but we should not allow the Fed to debase our currency and create bubbles of false prosperity to satisfy that demand.

What to do with your tax refund

Buy gold. Not paper gold, physical gold. Have it delivered into your hands and hide it. Hide it so that only you can find it. There are well-known historical reasons for this.

Gold's price has mostly idled the past few months, but don't fret. Over the past decade, the S&P 500 has lost 25 percent, while this time ten years ago gold was selling for around $300/ounce. Today it's up to $1,135/ounce. You can do the math.

But what about the future?

No one knows what will happen, but given that the world's economies are dominated by central banks and fiat paper money, and that both of these are simply tools for governments to take money from your pocket and put it someplace else, without telling you, and that every paper money scheme in history has ended in disaster, with the little guys taking the hit, I wouldn't be surprised if the current trends continue for a long time to come.

Don't be caught papering your walls with Bernanke's notes. Buy gold. If gold is too expensive or unavailable buy silver.

Is the money supply shrinking?

That depends on how you measure it. Using popular monetary aggregates M2, M3, or MZM, you could draw the conclusion that the money supply is stagnating. However, all three of these measures include non-monetary components that skew their results, writes Steve Saville.

Judging by M2, M3 and MZM the US is now in, or bordering on, monetary deflation. However, TMS (True Money Supply) has risen by more than 13% over the past 12 months.

He observes:

Even though the money supply is growing rapidly, if Bernanke and his cohorts believe that the money supply is growing slowly, or not at all, then they could be encouraged to double their efforts on the inflation front. Under the current monetary system, nothing promotes inflation more effectively than fear of deflation.

Gone Tomorrow?

Can a global empire like the U.S. fall overnight? According to Harvard historian Niall Ferguson, it's possible.

The challenges that face the United States are often represented as slow-burning. It is the steady march of demographics -- which is driving up the ratio of retirees to workers -- not bad policy that condemns the public finances of the United States to sink deeper into the red. It is the inexorable growth of China's economy, not American stagnation, that will make the gross domestic product of the People's Republic larger than that of the United States by 2027. . . .

But what if history is not cyclical and slow-moving but arrhythmic -- at times almost stationary but also capable of accelerating suddenly, like a sports car? What if collapse does not arrive over a number of centuries but comes suddenly, like a thief in the night?

Great powers are complex systems, made up of a very large number of interacting components that are asymmetrically organized . . . . All these complex systems share certain characteristics. A small input to such a system can produce huge, often unanticipated changes . . . .

There is no such thing as a typical or average forest fire, for example. To use the jargon of modern physics, a forest before a fire is in a state of "self-organized criticality": It is teetering on the verge of a breakdown, but the size of the breakdown is unknown. Will there be a small fire or a huge one? It is nearly impossible to predict. The key point is that in such systems, a relatively minor shock can cause a disproportionate disruption. . . .

The most recent and familiar example of precipitous decline is the collapse of the Soviet Union. . . . If ever an empire fell off a cliff, rather than gently declining, it was the one founded by Lenin. . . .

Over the last three years, the complex system of the global economy flipped from boom to bust -- all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the radical monetary and fiscal steps that were taken in response.

Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will ultimately lead to much higher inflation rates or outright default. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece.