Peter Schiff and Ron Paul

I have no doubt that in the coming months sound economists like Peter Schiff and Ron Paul will be proven right. About a month ago I posted a YouTube clip of Peter Schiff's participation in a roundtable discussion with three Keynesian, big-government shills. The three government-backers conceded that Schiff had been correct on every single one of his pedictions; namely, the dollar will continue to slide, commodity prices will rise, etc. After admitting Schiff was right, the Keynesians asked Schiff, "Where do we go from here, Peter? When will the economy recover?"

Similarly, Dr. Paul has been fighting big government-backers for years in Congress. In a legislative body comprised mostly of lawyers, perhaps it doesn't surprise many that economic ignorance runs rampant. Regardless, Paul's consistent adherence to Austrian free market principles is about to take center stage as the ruse of big government management runs out of gas.

By no means should my enthusiasm for Peter Schiff and Ron Paul be interpreted as a chance for me to yell "I told you so!" and point fingers. Rather, in the coming months when they are proven right, think of the golden opportunity available to the masses: the message of sound money will resonate with people who have heretofore remained in the dark.

First, Ron Paul squares off against Ben Bernanke:



Next, Peter Schiff (from June) is bombarded by a group of Keynesians. Note how Schiff is accused of "spreading disinformation" by the slimy, uninformed Mike Norman. Also, catch the look on the female anchor's face when Norman tells her that her dollar buys just as much today as it did months ago (at the one minute mark). Priceless!

Lew Rockwell on Market Disaster

The past week has been educational, no doubt about it. I think Lew Rockwell sums it up best in one of his blog posts today:

Stop the Rip-Off!

Posted by Lew Rockwell at 09:00 AM

It seems ironic that the announced mega-bailout of corpporatist boondoggles Fannie Mae and Freddie Mac - of the government-connected rich at the expense of the rest of us - has caused stock markets all be over the world to tank. But since the whole financial system of Fed inflation and fractional-reserve banking is fundamentally unstable - indeed, based on fraud and State counterfeiting - once it starts to go down there is probably no stopping it. The business cycle unleashed by Printing Press Alan Greenspan after 911 must run its course. Maybe Herbert Hoover Bush, Printing Press Ben Bernanke, and the pygmies in Congress can temporarily "restore confidence" (as conmen can fool the marks again) or maybe this is the big enchilada. In any event, don't trust the banks, believe the opposite of what officials tell you, stop as much spending as you can, increase your savings, and buy some gold. Oh, and get use to your house, because there will probably no selling it and moving. Instead, educate yourself about what the Fed has done to us and get angry at the criminal establishment. Stop the Rip-Off!

Lew is absolutely correct - few remember that, just prior to 9/11, the US stock market was sliding downward, and the economy was heading into the post dotcom bubble recession. Then, after the attacks, then-Fed Chairman Alan Greenspan (whom Ayn Rand referred to as "The Undertaker") lowered interest rates to unprecedented lows. The low interest rates led to the creation of a new bubble, this time in the housing market. What we are witnessing today is the collapse of another Fed-generated bubble and, because interest rates remain at ridiculously low levels, we can expect this collapse to last much longer.

And don't buy into the hype that increased regulation and bailouts will solve our problems. As a coercive body that produces nothing of value as a whole, the government's feeble efforts to revive the sinking economy can only result in increased chaos and uncertainty. The absolute worst thing the government can do right now is run the printing presses; sadly, it appears that's the course they will take.

May you Live in Interesting Times

That's one fortune cookie fortune that has come true; we are indeed living in interesting times.

It doesn't take a PhD in economics to understand the tension rippling through world markets since August 2007. Regular, almost daily appearances by Federal Reserve Chairman "Helicopter" Ben Bernanke and Treasury Secretary Hank Paulson are used to quell fears that America--and therefore the rest of the world--might be headed for prolonged depression.

As if on que, politicians are busy concocting various schemes they claim will improve our economic situation. Presidential candidates scramble to put forward the best economic plan in order to win votes, with both sides seemingly in agreement that increased regulation will help curtail economic worry.

Such was the case today with Fed Chairman Bernanke and Treasury Secretary Paulson who, in their appearance before Congress, called for financial overhaul and increased Federal Reserve oversight. Although no action is expected to be taken this year, the groundwork for increased Federal Reserve responsibility is rapidly being laid. Because central banking and fiat currencies are doomed to fail and wreck economies, we can expect increased Fed responsibility to result in prolonged economic agony when the marble palace magicians can no longer extract rabbits from their collective hats.

Before the magicians can pull out that last rabbit, though, there will be plenty of smoke and distraction. We're seeing that now. Fingers are (incorrectly) being pointed at the wrong people, from "predatory" subprime lenders to oil speculators to greedy, fatcat capitalists. The public demands a scapegoat, and our trusy elected officials are only too happy to oblige. Such is to be expected when you trust lawyers to diagnose economic problems.

Regardless of the where the finger is presently pointed, it seems nearly everyone agrees that free market capitalism is at the root of the problem. There are many myths about free market capitalism that pervert its beauty, perhaps none more prevelant than the belief that unregulated markets inevitably lead to chaos. The argument varies depending on the issue at hand, but it usually contains the following logic: In order to prevent chaos, maximize market efficiency, and assuage fears of total economic collapse, some form of a financial backstop or safety net is needed.

Such statements are, of course, complete nonsense. While I'm certain those making the argument in favor of increased regulation have the best interests of the public in mind, a crash course in Austrian Economics would greatly benefit them. The Austrian School is the biggest opponent of the central banks and their criminal practices, and her principles are about to become much more widely understood. Austrians were right about the cause(s) of America's Great Depression, and they are correct in their diagnosis of our present situation as well.

The right thing for the government to do in this situation is nothing. Same goes for the Federal Reserve (although abolishing the cartel would be nice). Let the banks fail, let inefficient businesses dry up, allow interest rates to rise. No bail outs, no subsidies, no safety nets - these practices only reward incompetence and allow the most unscrupulous individuals to rise to the top.

My recommendation is admittedly harsh, but it is the quickest way to remedy our present situation. To grant increased powers to the Federal Reserve, who can in turn bail out privileged firms (with your tax dollars), is to engage in the purest form of socialism. Whenever an institution enjoys a monopoly on the printing of a nation's money, it carries with the ability to determine the life and death of a nation's economic infrastructure...as well as the quality of life of that nation's citizens.

McCain = Bush? Not in Denver!

A 61 year old woman was issued a ticket and escorted off the premises earlier this week in Denver while waiting in line to attend a John McCain townhall meeting. Her crime? Carrying a sign that said "McCain = Bush"

I'll admit it: when I first heard about this story I thought I was going to be watching someone making the "What about the first amendment?" argument, and I was dead wrong. The woman's argument surprised me - why would any Republican who voted for George Bush be ashamed of seeing a sign equating a two term president with their presumed nominee?

The Best and the Brightest?

There's an old saying that says "You reap what you sow." In the case of the video below, it is nearly impossible to ignore the military's commitment to lowering standards in order to meet recruiting quotas. The military now offers waivers for felons, high school dropouts, and illegal aliens (who are "rewarded" with citizenship if they survive their tours as mercenaries) - and there's little doubt the guy in the video below is a byproduct of the military's latest recruiting strategy.

To be sure, the person in the video does not represent the military as a whole; I'm certain he's one of a very small minority of soldiers who would actually commit such egregious acts on other humans. Further, I realize I'm assuming the worst in believing the authenticity of the video.

Real or not, perhaps the most disturbing element in the video the soldier's apathetic, sinister attitude towards Iraqis - his salacious demeanor while recalling his Iraq experiences as well as the hollow excuses offered in his defense is beyond disgusting. Videos like this lend credence to the belief that Americans are becoming the very monsters they purportedly set out to destroy.

Peter Schiff: "I Don't Trust the Government"

Peter Schiff is often times the lone sane voice in the wilderness, and his effectiveness is amplified whenever he appears on mainstream television. In the CNBC clip below, Schiff is cornered by three smarmy pundits who begrudgingly admit all of Schiff's predictions have come true - and now they want to know when Schiff will be bullish on the market again!

Schiff's book Crash Proof: How to Profit from the Coming Economic Collapse is outstanding. He dispells conventional economic wisdom at every turn, and his advice is logical, simple, and consistent. Although he has been labeled "Dr. Doom" by his counterparts on mainstream television, Schiff's demeanor throughout the book is positive. In addition to explaining the causes of our present economic woes, Schiff also maps out a strategy for survival as well as profitability during the rough times ahead. Crash Proof and the investment advice found within is the silver lining on the omninous economic storm clouds.




The entire interview is worth watching, but the best part is near the end (around the 6:30 mark) where Schiff succinctly explains his investment strategy when he says:

"I don't trust the government. They've got an agenda, they've got a vested interest, and they're not telling the truth...I'm trying to make my clients money"

Well said, Mr. Schiff. Here's to hoping your wisdom doesn't continue to fall on deaf ears.

A Solution to the California Wildfires

For the past few years the media has celebrated two things in the otherwise mundane summer reporting season: hurricane season and wildfire season. It's almost too convenient - wildfires rage from May to September, while hurricane season picks up in late June and lasts as late as November. Without fail, a news reporter will ask the rhetorical question "What could have been done to prevent such a tragedy?"

The global warming debate aside, hurricanes are beyond human ability to control. As a byproduct of a number of environmental factors, hurricanes can only be predicated, not controlled.

Wildfires, on the other hand, are the opposite: they are completely within human ability to control, and their prevention begins with the defense of private property rights.

Consider: The government owns nearly 30% of all land within the United States, including all roadways and inland waterways. As you travel west of the Mississippi River, the statistics are even more pronounced as government land ownership increases markedly. The government owns 84.5% of Nevada, 45.3% of California, and 48.1% of Arizona. (The statistics are available here; I chose the those three states because they are most likely to experience forest fires.)

Not only does government land ownership prevent otherwise profitable land from being utilized by more efficient private owners, it also increases the likelihood of disaster. Because government owned land is immune from market forces (i.e. there is no way to determine whether or not government allocation of available resources is in tune with market demands), the incentive does not exist to ensure the land is provided with proper care and treatment. As it pertains to forest fires and the potential thereof, the government is more likely to overlook costly preventative measures needed to decrease the likelihood of disaster.

For example, consider two different landowners of 100,000 acre plots of land, one a National Park, the other a private cattle ranch. The National Park is fully staffed and run by government officials. The park's staff are paid based on funds allocated from government sources, which are dependent upon political - not market- forces. In other words, the amount of money available to pay workers, replace equipment, preserve the land, etc. is entirely dependent upon the mood in Washington. If the legislative body in Washington has money tied up in other projects like, say, the War on Terror, it's entirely possible that funding for National Parks will suffer. Less funding for National Parks means something has to be cut within the National Park budget, with the most expensive items cut first. Budget cuts inevitably affect all of the vital land management assets named above, most importantly labor. Less labor means less people available to tend to the land, thereby increasing the likelihood of a controllable disaster.

Now consider the private cattle rancher. His 100,000 acre plot of land is his lifeblood. Indeed, he depends on the land as well as his cattle for survival, hence he has a vested interested in maintaining (and improving) the quality of the land upon which his fortune lies. There is nothing the cattle rancher fears more than a disaster - especially one that he can control - therefore he or she will allocate the appropriate resources needed to prevent the occurrence of a disaster. To the cattle rancher, unsuccessful land management means certain loss of wealth as unsuccessful land managers are "weeded out" for their failure to prevent disasters from occurring.

The solution is obvious: increase the percentage of privately owned land, especially in the above named states. As long as land management depends on the whims of a detached elected body in Washington, we can expect an increase in the amount of wildfires and other natural disasters in the Western portion of the United States. Come to think of it, the government soaks private citizens twice when it comes to natural disasters: it prevents profitable land from being developed and entering the marketplace, and it demands payment from you to repair the damaged land it neglected in the first place.

Conversely, privatized land benefits everyone as productive individuals would be allowed to freely develop his or her land in order to produce needed goods and services for other individuals. Smokey the Bear is famous for saying, "Only you can prevent forest fires;" I'd like to amend that statement to read: "Only the free market and steadfast defense of property rights can prevent forest fires." Catchy? No. Correct? Absolutely.

Why are Prices so High?

From Mises.org blog: Behold, the awesome power of the printing press!


It has been said that some pictures are worth a thousand words; not nearly that many words are needed to describe the above chart. The disgustingly rapid pace at which paper money and credit has been fed into our economy since Nixon permanently severed America's ties with gold cannot be overlooked. This chart is proof positive why prices have risen - and will continue to do so in the foreseeable future.

Also on Mises.org today is an outstanding article outlining the connection between commodity prices and inflation. Mr. Frank Shostak clearly defines inflation as the increase money supply, and goes on to dispel the "conventional wisdom" of today's economists who, for one reason or another, are unable to connect the dots to reveal the root cause of today's economic problems.