Take Your Pick: Default or Hyperinflation

Here’s a fairy tale for you. Like Dorothy and her friends, the American people have made the long, desperate trip and are counting on the Great and Powerful Oz to fix things for them. And like the Scarecrow, when we got there, we got screwed. If you remember, the Scarecrow wanted brains, and the man behind the curtain couldn’t deliver but instead said, “by virtue of the authority invested in me by the Universitas Committee E Pluribus Unum, I hereby confer upon you”… paper! He gave the poor guy a piece of paper. And just like the Fed, the wizard left them stranded as he flew off in a hot air balloon (think mortgage bubble) and couldn’t come back to save them because, “I can’t, I don’t know how it works.” And like the Great and Powerful Oz, Fed wizard Ben Bernanke is probably “a very good man…just a very bad wizard.” Or perhaps the problem is actually with our current monetary concept, “I’m afraid it’s true, there’s no other wizard except me.”

Luckily and with a little help, Dorothy realized that she didn’t need the balloon ride or a wizard to get things back to normal, “you don’t need to be helped any longer, you’ve always had the power…”

And for us, what is that power? That power is “We the People” as expressed through our Congress.

But that poses another problem. That assumes the Congress is willing to click their heels and get to work. I am worried that, given their history of avoiding making tough decisions so as to not look bad, we may be in trouble. According to a number of economists (the ones that don’t follow the hot air balloon philosophy) we may be too late. The perfect storm is already here. The economy is at its worst and another “war” looms. If you want to risk looking bad as a politician, just try tackling those issues – especially if it involves cutting anything.

Congress gave us a glimmer of hope after the House voted to audit the Fed, and the Senate increased the co-sponsors (34 at last count) for their version of the bill recently. On the other hand, were the results of a less publicized vote taken late at night on Friday September 21st. Senator Rand Paul presented a bill to make any foreign aid to Libya, Egypt, and Pakistan contingent upon certain criteria (like protecting our embassies, releasing the doctor who gave us Bin Laden…). The idea was to at least show the world there would no longer be unlimited foreign aid to countries that were not clear allies. The original speech is full of detailed arguments, but this video provides a short synopsis.

Senator Paul knew the bill would fail because the Senate wasn’t willing to confront the two most controversial problems we face – unlimited spending and questionable military entanglements.

“I will probably lose this vote, but if you ask your friends. If you go home and ask your friends should we be sending money to countries that disrespect us, that burn our flag, I think you will find 80 percent to 90 percent of the American people wouldn’t send another penny…That may be why Congress has about a 10 percent approval rating.”

After John Kerry and John McCain teamed-up to argue for continued unlimited aid, the vote was taken and only Senators DeMint, Grassley, Shelby, Toomey, Moran, Lee, Roberts, Risch and Crapo joined with Paul. The vote failed 81 to 10.

Do we really believe Congress will tackle the difficult issues when it comes to debt and military spending?

If you listen to economists like Peter Schiff, Congress no longer has the luxury of kicking the can down the road. He recently delivered a chilling speech at the Mises Circle in Manhattan. “The Fiscal Cliff: How to Spot the Edge” is an easy-to-follow wake-up call about the severity of our economic crisis. His conclusion was that the Fed has become trapped and we are now faced with two options – default on our debt or hyperinflation (click here for the video). He also contends that the solution is to default on the debt before it gets worse. That means doing what had been needed all along – making dramatic cuts in everything. Because no politician wants to face that, then we are at the mercy of inevitable hyperinflation and a worse default. When that happens, that opens the door to incorrectly blame capitalism and invites more government control, regulation, and loss of freedom or worse.

So why is it that politicians from both sides have not addressed the devaluing of the dollar by the Central Bank system (Fed) over the years? In “Twin Demons,” Llewellyn H. Rockwell Jr. explains how this works. The answer is that the Central Bank system is government’s best friend and allows governments to spend money they don’t have, particularly for war. War and debt spending go hand in hand. And once the war is over, the spending continues for social programs. The Central Bank system is confusing to the average citizen and thus allows the government to expand.

“Creating money out of thin air… is preferable for governments, since the process by which the political class siphons resources from society via inflation is far less direct and obvious than in the cases of taxation and borrowing.”

He advocates for a “separation of money and state,” not unlike the pre-fed hard-money Jacksonian monetary theorists of the 1830s who coined the phrase “separation of bank and state.”

So if economists like Schiff and Rockwell are correct, what happens when the Congress actually audits the Fed and brings the Central Bank issues to the forefront of the public debate? How will they handle the decision to either dramatically balance the budget, default on the debt, or risk hyper-inflation? And why would they even tackle this problem openly? As it is now, the Fed is the mysterious man behind the curtain and all monetary evils can be blamed on him.

Originally Published on ClashDaily.com


The Crisis is Here

Viewing and sharing this masterpiece of economic education is perhaps the most important use of 41 minutes for our citizens in a long time. Peter Schiff delivers a chilling speech at the Mises Circle in Manhattan. “The Fiscal Cliff: How to Spot the Edge” is an easy-to-follow wake-up call about the severity of our economic crisis. The Fed is out of nails to hammer. Bernanke has painted us in the corner and there are two ways out: default or hyperinflation.


Our President’s Current Unconstitutional Capacity

In an interview with Face the Nation, Mitt Romney reveals that he is willing to attack Iran, without congressional approval. Romney said,

“If I’m president, the Iranians will have no question, but that I will be willing to take military action if necessary to prevent them from becoming a nuclear threat to the world. I don’t believe at this stage therefore, if I’m president, that we need to have war powers approval or a special authorization for military force. The president has that capacity now.”

The Constitution does not grant the President the power to unilaterally launch war. The President does have latitude to respond without congressional approval if we are attacked.

He is correct, however, that apparently our President “has that capacity now.” He has the capacity, not because it is constitutional, but because our Congress is spineless and more worried about getting re-elected (i.e., blaming these controversial decisions on the sitting President). See reason.tv’s great video about the history of this disturbing power shift.

Where is Our Survivor Guilt?

Here is something to think about when the hawkish rhetoric flies about our need for continued fighting in the Middle East. The video below is of the father of Lance Corporal Gregory Buckley Jr. On August 10th his son, Lance Corporal Buckley Jr., and 2 other marines were working out in the gym when they were murdered by an Afghan police officer after sharing a meal with him.

New York 4 reports, “Buckley, 21, was killed last Friday in Afghanistan. He was one of six Marines to die in two separate incidents in the Helmand province. Buckley died just before a planned surprise visit to his family and friends on Long Island.” His father said his son, “didn’t feel good over there…He was there four months and he said not once did anyone say ‘Thank you.'”

As a former Air Force Psychologist, I have worked with many depressed and suicidal war veterans.  They feel guilty that they survived when their buddies died. Their survivor guilt was unrelenting and oppressive. It was hard for them to be convinced that they, of all people, are the last ones on the face of the earth to be guilty. They risked their lives for their friends and their country.

My question is, if they feel utterly guilty and they were there, where in God’s name is our survivor guilt? And by our, I am referring to those of us over here, safe and sound, beating the war drums for a war that we don’t even know is worth fighting, is helping to destroy our economy, and certainly is not declared by our Congress.

God Bless the Buckley family, and may God have mercy on our souls.


*Note video Published on Aug 24, 2012 by  who notes ABC 7 News has NO affiliation with this footage, it was taken by an IPhone camera while numerous networks were there as well to receive the story.

Surest Roads to Sovereign Suicide

Here’s a quick quiz. Which of the following is the biggest threat to our national security, according to Admiral Mike Mullin, (former) Chairman of the Joint Chiefs of Staff?

  1. Iran
  2. al-Qaeda
  3. Taliban
  4. Our national debt

The correct answer is “D.” Admiral Mullin said, “”Our national debt is our biggest national security threat” on June the 24th, 2010 during a speech he made at a “Tribute to the Troops” breakfast. Does that alarm you? Can you ever remember a top military mind saying something like that?

Here’s another quiz. If you were our enemy planning the demise of the U.S., which of the following would be the best strategy:

  1. Institute economic policies that may appear to help in the short-term but actually involve tremendous risk of leading to an economic event even worse than the 2008 housing-bubble collapse.
  2. Engage in expensive foreign policy strategies that lead to fanning-the-flames of hatred for the U.S., do nothing to actually lead to actual democracy but embolden Islamic extremists to further organize and act-out.
  3. Go to war in the Middle East against an enemy that has allies capable of further destabilizing the U.S. economy.
  4. Place the final decision-making authority of the above in the hands of one or two men, rather than the Congress, at a time when the Congress is not in session.
  5. All of the Above.

The correct answer is “E. All of the Above.”

It is important to search for some answers to these complicated issues. Below are a few of the explanations I have found to be particularly enlightening. Please feel free to add some of your own.

QE3 won’t go to decreasing unemployment. Look just about anywhere on the web, there is a tremendous amount of negative response to the Fed’s decision to move to QE3. For example, Peter Schiff, from the Schiff Report, explains how the Fed’s recent plan to print money, decrease interest rates, and purchase mortgage-backed securities is what got us here in the first place and will be “the final nail in the U.S. dollar” and “a day that will live in infamy.”  Another great explanation is from Reason.com’s Anthony Randazzo. He said, “The fact that QE promotes activities that led to the housing bubble should have stopped its progression as an idea a long time ago, especially since these problems are greater than any gain that would come from this now perpetual pace of money creation.”

The move to Audit the Fed is gaining some steam as more co-sponsors in the Senate are adding their names to Senate Bill 202. As of Sunday evening, there are 32 co-sponsors. If you are interested in joining the cause, you can visit Audit the Fed.

Caroline Glick helps to answer the question posed by Secretary of State Hillary Clinton following the Benghazi attack. Clinton pondered, “Today, many Americans are asking – indeed, I asked myself – how could this happen? How could this happen in a country we helped liberate, in a city we helped save from destruction?” Glick explains how our government, “determined – based on nothing – that the masses of the Muslim world from Gaza to Iraq to Afghanistan and beyond were simply Jeffersonian democrats living under the jackboot. If freed from tyranny, they would become liberal democrats nearly indistinguishable from regular Americans.”

 Pat Buchanan provided a cost-benefit analysis of our involvement in the Middle East in his recent article, Is It Time To Come Home? He notes that, “In this brief century alone, we have fought the two longest wars in our history there, put our full moral authority behind an “Arab Spring” that brought down allies in Tunisia, Egypt and Yemen, and provided the air power that saved Benghazi and brought down Moammar Gadhafi… The cost of our two wars is 6,500 dead, 40,000 wounded and $2 trillion piled onto a national debt that is $16 trillion, larger than the entire U.S. economy. And what in heaven’s name do we have to show for it?”

As Julian Pecquet wrote, Defense Secretary Leon Paneta acknowledged plans to position troops in as many as 18 different locations and expressed concern that extremists would strike, “from positions of weakness,” due to the void left by the fall of dictators in the Middle East. He argued that even with damaging the al-Qaeda leadership, “We always knew that we would have to continue to confront elements of extremism elsewhere as well.” My question is, why, for how long, at what cost, and to what end?

Finally, there is a very well made video (see below) explaining the history of making the war decision and how Congress has increasingly bowed-out and left it to the Executive branch. In the intro, Nick Gillespie wrote, “As deadly and violent attacks on American embassies and consulates in Libya, Egypt, and elsewhere multiply in the Middle East, it’s vitally important to remember that foreign policy decisions – especially acts of war – are not supposed to be the province of one man.”

 As for fighting a war with Iran, the thought of the economic war options China and Russia bring to the table is frightening and should give us pause and even more reason to demand that our politicians get our country’s debt problem in order and stop allowing the Fed to devalue our own currency.

Originally Published on ClashDaily.com

If At First You Don’t Succeed, Buy Buy Again

Peter Schiff, from the Schiff Report, explains how the Fed’s recent plan to print money, decrease interest rates,  and purchase mortgage-backed securities is what got us here in the first place and will be “the final nail in the U.S. dollar” and “a day that will live in infamy.”