Bretton Woods Research suggested that action may mean the strike is unlikely, observing that gold below $1390 was “almost $30 lower than before Prime Minister Cameron’s stunning defeat at the conclusion of last Thursday’s debate in the House of Commons on UK involvement in Syria.”

If war-making is to be averted in Washington, it will have to be done in the House.  That is because members of the lower body, closer to the people and up for election every two year, are reflecting the people’s deep opposition to the opening of another front in the endless war.   The Senate, ever more remote and imperious, is on board for more war, especially after two of its own recent members, now elevated to the Cabinet, John Kerry and Chuck Hagel, made their appeal for support on Tuesday.

There is something psychologically amiss in the makeup of our elected representatives.  They have achieved their positions after having spent much of their lives in the pursuit of power.  In their appetite to rule they have had to trim their own consciences, alter their own views, and beg for money.  They have followed carefully planned trajectories to achieve office, ever hungry to wield authority and command power.

And yet, once in office they can’t wait to pass the hot potato on important issues like war off to the president.

For example Representative Peter King of New York, wildly enthusiastic for war at every turn, says President Obama doesn’t need Congress to launch a strike in Syria, and that Obama is abdicating his responsibility.  King says “The President doesn’t need 535 Members of Congress to enforce his own redline.”

Bush the Elder said much the same thing, claiming that he didn’t the permission of “a bunch of old goats in Congress” to launch the first Gulf War.

This buck-passing implies a completely authoritarian state in which the president can go about issuing ultimata and dictates on his own, with the entire nation hopelessly committed to enforcing them whatever they may be.

Of course, this impulse to establish a war-making monarchy in the executive branch is a symptom of legislative cowardice.  If the war is a success, there is plenty of room on the reviewing stand when the victors return home.  If the war goes badly, the blame is limited to the president.  It was his war.

Most of the people on Capitol Hill didn’t want have the ball kicked into their court.  That is why the Senate will do nothing to stop Obama.  They will tinker with his proposed war resolution a bit at the margins, thereby seeming to have fulfilled their legislative mandate.  But they will studiously avoid either declaring or refusing war.

Their behavior should be alarming; their unacknowledged fear should highlight the risks.  The bellicose tell us that a strike on Syria will be limited, that the operation will be over in days, and that we will administer a thumping and be done with it.   Kerry has even gone so far as to insist that the Arab states are willing to pay for the whole thing.

(If you wondering where you have heard this before, you need only think back to Iraq when leading war architect Paul Wolfowitz insisted that the war would pay for itself.  Ten years later the final bill still isn’t in and the economy has yet to recover.)

Wars are nothing if not risky enterprises.  Suppress this realization if you wish, but it cannot be changed.  If the outcomes of war were known in advance they would not be fought.  Would Napoleon have marched on Moscow 201 years ago this week if he had foreseen the calamity of his winter retreat?   With foreknowledge of Hiroshima and Nagasaki, would Japan have attacked Pearl Harbor?  Would Bush the Younger have invaded Iraq if he had known that his splendid little cakewalk war would outlast his two terms?  (Perhaps that last is not the best example since Bush, having learned nothing from history, would have been perfectly willing to even invade Moscow in the winter!)

Still, Field Marshall von Moltke famously observed that no war plan survives contact with the enemy.  And it is that unconscious prospect that doth make cowards of legislators.  For all their tough talk and bluster, an apprehension lurks deep that the action may unleash unintended and destructive consequences.    They risk uncorking forces that, like the Sorcerer’s Apprentice, they are unable to control.

Better to defy the Constitution, which indisputably lodges war-making authority with the representatives of the people who must pay for and die in such wars, and let the President decide.

We are confronting authoritarians with such an appetite for power that they become afraid to wield it for fear of losing it.  It is a subject fit for a Dostoevsky or Shakespeare.

It was a cause for rejoicing when the British Parliament refused the Queen’s Prime Minister authority to let slip the dogs of war on Syria.  It was the first such refusal since 1782 when, incidentally, Parliament voted down further war against the rebellious American colonies.

It will be a welcome sign of a dawning realization that the U.S. Empire has exhausted itself financially and in folly if the House refuses to pass Obama’s Syrian war resolution.

But if it does approve another front in the U.S. Mideast war, buy gold with both hands.

If only.

The President has been talking a lot of late about the bubble economy. Last month he mentioned “unstable bubbles” that threaten the economy, and the other day in his radio address he referred to “the bubble-and-bust mentality” that has made “a mess” of our economy.

We would feel better about Obama’s comments if there were any reason to think he has a clue about the role of the Federal Reserve in creating these bubbles and busts.

But experience teaches that the repeated use such terms and buzz phrases by party apparatchiks and presidents – Obama has talked bubbles four times in five days – means that they are nothing but focus-group tested talking points. Some research firm has been paid by the party to hook subjects up to machines and find out what words resonate with them by making their palms sweat and pupils dilate. That’s the high art of today’s politics.

Do you suppose Thomas Jefferson used a focus group to test “We hold these truths to be self-evident…”?

It’s not entirely clear what the president means anyway. Buzz phrases and sweaty palms are poor substitutes for clear thought. The bubbles are visible enough, but recently Obama said, “When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy.”

Then why has his administration driven the concentration of wealth, the bailouts of the influential, the sweetheart deals for the crony classes, and the monetary policies that have stove-piped money to Wall Street, enriching the banks while the people continue to suffer depression-era levels of unemployment and watch full-time jobs turn to part-time?

I think that Obama, as well as most Republicans, is a corporate statist, rather than a Marxist. That is the broad road to electoral success in America. But even so, the ghost of Karl Marx lurks somewhere in the president’s outlook. Marx held the view that a destructive cycle of booms and busts was inseparable from capitalism itself.

But the Austrian school economists – Mises, Hayek, Rothbard – have long since demonstrated that rather than capitalism, the boom and bust syndrome is the work of central bankers and their distortion of money and credit conditions.

Obama knows none of this.

Focus-group tested talking points aren’t the only thing self-evident in the modern political process. So, too, is the lap-dog press, always subservient to its statist masters.

The newspaper account in which I read of the president’s radio remarks about “bubbles and busts” filled out the story with reference to the likely replacements for bubbling Ben Bernanke at the Fed: Janet Yellen and Larry Summers.

For a comment on these two peas in the short-list pod it turned to – of all people – a former Fed official!

And he offered that “both candidates can claim bubble-battling expertise.”

How is it that we’ve had more bubbles than Lawrence Welk and his Champagne Music Makers, what with the president and all these bubble-battlers bustling about?

Just this week the Federal Reserve’s purchases of U.S. government debt with money it just created out of thin air has topped an unthinkable $2 trillion! Add to that the $1.3 trillion in mortgage-backed securities it has purchased, taking toxic paper off the balance sheet of the banks and transferring it onto the account of the people’s dollar.

And thus wealth concentrates at the top.

The downward movement of bonds will only be exceeded by the upward movement of gold as this biggest-of-all-bubbles plays out.

The subject of currency wars has finally hit the big time. It made it to the front page of the Drudge Report.

Drudge featured a story last week entitled “Currency Wars Return, 1930s Style.” It linked to a CNBC piece that asks who will lose out in international currency wars, and offered the opinion that Japan is inching the world closer to a monetary showdown.

“The Bank of Japan doubled its inflation target to 2 percent in January and made an open-ended commitment to continue buying assets (until) next year. This follows a leadership change, with new Prime Minister Shinzo Abe openly calling for aggressive monetary stimulus from the country’s central bank,” according to the account.

Anxious to power its crucial export manufacturers – automobiles and electronics – Japan’ s government is set to print enough yen to cheapen the currency. A cheaper yen, goes the justification, will make the price of Japanese goods more affordable. If, for example, the yen slips two percent, a Japanese automobile that today costs $40,000 U.S. dollars, suddenly becomes $800 dollars cheaper.

It’s like an manufacturer’s rebate for the foreign buyer, except that this price cut doesn’t come at the expense of the carmaker’s profit. It still sells its cars for the same number of yen.

But if the buyer is getting an $800 deal, it has to be an someone’s expense. After all, as Milton Freidman liked to say, “there ain’t no such thing as a free lunch.”

Who loses the $800 per automobile that puts a smile on the face of the buyers?

The Japanese people. To achieve its aim, their government has to surreptitiously take 2 percent of the value of every existing yen in existence. From savers, old and young, from people with bank accounts, insurance policies, annuities, and pensions. It takes the money from people with sales contracts and time deposits, from Japanese children with piggy banks, and from people with cash in their wallets.

Along the way it raises the price the people of Japan must pay to buy goods that are imported, from groceries to gasoline.

This is a form of socialism. Since it is monetary policy is service of influential corporations, favored government cronies, it is corporate socialism. The automobile makers find their profit margins squeezed, so the government steps in to make them whole by “socializing” their losses.

But don’t suppose for a minute that Japan’s carmakers send everybody in Japan a dividend check in boom times. Not at all. The profits are not socialized. Only the losses are socialized. The profits remain private. The gains belong to the shareholders.

None of this is materially different than what goes on in the United States. In boom times the crony investment banks keep their profits for themselves. When they take a loss, the government and the Federal Reserve step in to make them whole at the expense of the people.

Eventually American carmakers will respond to the sale prices of Japanese vehicles made possible by Japan’s currency depreciation, by demanding import quotas on Japanese cars. And they will demand the further depreciation of the dollar to make American cars similarly affordable to foreign buyers.

History shows that when these import restrictions and trade wars accelerate, they can bring hot wars with them.

One of the great ironies is that the two percent inflation rate the prime minister of Japan is targeting that is reported “to bring the world a step closer to a currency war,” is actually less than that intended by the Federal Reserve. Ben Bernanke intends to keep printing money until inflation hits 2½ percent.

A global race to destroy the purchasing power of the world’s major currencies is just getting started. It won’t create more prosperity; it will only redistribute a diminishing prosperity to the crony classes.

It will, however, succeed… in destroying paper money.

Recently by Charles Goyette: The Fed's Real Agenda: Wealth Among the Ruins?

The subject of currency wars has finally hit the big time. It made it to the front page of the Drudge Report.

Drudge featured a story last week entitled "Currency Wars Return, 1930s Style." It linked to a CNBC piece that asks who will lose out in international currency wars, and offered the opinion that Japan is inching the world closer to a monetary showdown.

"The Bank of Japan doubled its inflation target to 2 percent in January and made an open-ended commitment to continue buying assets (until) next year. This follows a leadership change, with new Prime Minister Shinzo Abe openly calling for aggressive monetary stimulus from the country’s central bank," according to the account.

Anxious to power its crucial export manufacturers — automobiles and electronics — Japan' s government is set to print enough yen to cheapen the currency. A cheaper yen, goes the justification, will make the price of Japanese goods more affordable. If, for example, the yen slips two percent, a Japanese automobile that today costs $40,000 U.S. dollars, suddenly becomes $800 dollars cheaper.

It's like an manufacturer's rebate for the foreign buyer, except that this price cut doesn't come at the expense of the carmaker's profit. It still sells its cars for the same number of yen.

But if the buyer is getting an $800 deal, it has to be an someone's expense. After all, as Milton Freidman liked to say, "there ain't no such thing as a free lunch."

Who loses the $800 per automobile that puts a smile on the face of the buyers?

The Japanese people. To achieve its aim, their government has to surreptitiously take 2 percent of the value of every existing yen in existence. From savers, old and young, from people with bank accounts, insurance policies, annuities, and pensions. It takes the money from people with sales contracts and time deposits, from Japanese children with piggy banks, and from people with cash in their wallets.

Along the way it raises the price the people of Japan must pay to buy goods that are imported, from groceries to gasoline.

This is a form of socialism. Since it is monetary policy is service of influential corporations, favored government cronies, it is corporate socialism. The automobile makers find their profit margins squeezed, so the government steps in to make them whole by "socializing" their losses.

But don't suppose for a minute that Japan's carmakers send everybody in Japan a dividend check in boom times. Not at all. The profits are not socialized. Only the losses are socialized. The profits remain private. The gains belong to the shareholders.

None of this is materially different than what goes on in the United States. In boom times the crony investment banks keep their profits for themselves. When they take a loss, the government and the Federal Reserve step in to make them whole at the expense of the people.

Eventually American carmakers will respond to the sale prices of Japanese vehicles made possible by Japan's currency depreciation, by demanding import quotas on Japanese cars. And they will demand the further depreciation of the dollar to make American cars similarly affordable to foreign buyers.

History shows that when these import restrictions and trade wars accelerate, they can bring hot wars with them.

One of the great ironies is that the two percent inflation rate the prime minister of Japan is targeting that is reported "to bring the world a step closer to a currency war," is actually less than that intended by the Federal Reserve. Ben Bernanke intends to keep printing money until inflation hits 2 percent.

A global race to destroy the purchasing power of the world's major currencies is just getting started. It won't create more prosperity; it will only redistribute a diminishing prosperity to the crony classes.

It will, however, succeed… in destroying paper money.

Reprinted from Weiss Research with the author’s permission.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Recently by Charles Goyette: Newton School Tragedy

If they only make us poor enough, then we’ll all be better off … if they can only make the currency that we work for, earn, save, and buy things with, worth a lot less … then we’ll be better off.

Doesn’t make a lot of sense, does it?

But it’s the kind of logic one would expect from those who believe we can spend our way to prosperity.

That logic bequeathed us a mountain of unpayable debt. The logic of trying to create prosperity by destroying the value of the money will bestow on us a worthless currency.

I spoke with Congressman Ron Paul, chairman of the Domestic Monetary Policy subcommittee shortly after the Fed announced its new initiative, Quantitative Easing IV, last month. In the context of the Fiscal Cliff debate, Dr. Paul pointed out that the Fed’s monetary policies are enablers of congressional profligacy.

It’s an important observation. With QE IV, the Fed will purchase $45 billion of long-term U.S. Treasury issues a month. Couple that with QE III, in which the Fed is buying $40 billion a month in mortgage securities. Altogether the Fed is buying $85 billion a month, over $1 trillion a year in debt instruments.

It’s an amount equal to the annual national deficit.

The Fed is funding the entire national deficit with …

Money It Just Creates Out of Thin Air!

If Congress can run trillion-dollar deficits and the Fed can cover it all by just running the printing presses in the basement that morning, why should Congress do anything different?

All the Fed asks in return is that it be protected from bothersome audits. It doesn’t want anyone peeking behind its curtains. The Congress agrees, and the Fed goes about its monetary madness.

Congress and the Fed have become dangerously destructive co-dependents.

With the announcement that it’s greeting the new year with yet another exercise in money-printing, QE IV, the Fed said in effect that QE I, QE II and QE III have failed to produce the result we expected, so let’s do it some more.

Most people, if they pay any attention to these things at all, trust that the Fed’s intentions with these policies are straight-forward … that they are derived from its dual mandate of maximum employment and stable prices.

According to the conventional view, the Fed is merely holding interest rates down, making borrowing affordable (too bad for savers) in hopes that business will borrow and grow and hire and all will be well.

But the Fed has been all about this zero interest rate policy now for four full years. It first announced a Fed Funds rate target of zero to 0.25 percent in December 2008.

And now, after four disappointing years of the interest rate policy that had such a spectacular record of failure in Japan, and after four years of serial monetary-easing initiatives, the Fed is committing to even more in 2013 and beyond.

In other words, the Fed is doing the same thing over and over and expecting different results. Is it really that insane?

Perhaps the Fed’s real objective is not what is widely believed. After all, four years is probably enough for even the most ideological Keynesians to have gotten the idea that its QE produces only diminishing returns.

But still it persists, suggesting that it has another objective. If zero interest rates aren’t enough to make business boom … if trillions in printing press money isn’t enough to spur a recovery … there is only one other possible objective.

The conclusion seems inescapable:

The Fed’s real policy is to destroy the purchasing power of the dollar. Intentionally. By design.

Why? The Fed’s policy-makers must believe that, if only its policies can make the currency weak enough, America can export its way to recovery. We have only to decimate the dollar’s purchasing power, and the rest of the world will hasten to buy our dirt-cheap products as fast as we can make them.

It’s bad enough economics to begin with, because it means that everything Americans buy from overseas – little insignificant things like food and energy and the million-and-one other things we value that depend on products and resources from around the world – will cost much more.

Keep the destruction of the currency’s purchasing up long enough and, as former Reagan Treasury official Paul Craig Roberts said, hard-pressed Americans will go to Wal-Mart and think they have walked into Neiman Marcus instead.

Destroying the value of the currency is even worse economics when countries all over the world decide to embark on the same policy. The U.S. Federal Reserve is not the only temple of monetary magic where one finds these destructive ideas and fantasies promising more prosperity by making the people poor. Other central banks are charting the same course, actively devaluing their currencies for the same reasons.

Unfortunately, when all the world’s currencies are in a race to the bottom, they are all likely to get there.

For your Freedom and Prosperity.

Reprinted from Campaign for a Sound Dollar with the author’s permission.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Recently by Charles Goyette: Ron Paul’s Farewell Address, and HisLegacy

Having a special time of year devoted to giving thanks is one of the finest traditions of the American people. I've always believed that blessings counted multiply. My wife and I make a practice of "doing our gratitude" every night, reviewing all the things for which we are grateful.

But in addition to giving thanks, it is important to be clear-eyed and realistic about the things going on in the world around us.

Let's be frank. Over the last generation, Americans have become poorer. Meanwhile, the Chinese are becoming more-prosperous.

Since the late 1970s, China's GDP has grown tenfold. But the American story is best encapsulated in a Milken Institute study.

This study revealed that, over the course of 40 years (1969–2009), the median earnings of American men with college degrees fell by 12% in constant (inflation-adjusted) dollars. For men with only a high-school diploma, earnings fell a staggering 47%.

You've probably heard it said that all life is a state of flux between opposites. Day becomes night, young becomes old and even the old eventually become, in many ways, much like infants.

As the World Turns

In the wisdom traditions of the world, such sayings are found as "every high thing shall be made low," or that yin becomes yang and yang becomes yin.

So maybe we shouldn't be surprised that America has become less-free — and, necessarily, less-prosperous.

Maybe it can simply be chalked up to the natural rhythm of things, the ebb and flow of life. Or as the old preacher Ecclesiastes (and Pete Seeger and the Byrds) put it, "To everything there is a season, turn, turn, turn."

And maybe it shouldn't be surprising that people in China and much of the rest of the world have struggled out from under the boot of the state and, becoming more-free, are also becoming more-prosperous.

Wouldn't it be a sad irony — sad for us, anyway — if the outcome of this dynamic should be that China increasingly embraces free markets and economic freedom, while the United States continues its downward spiral into statism?

That seems to be the case.

How Did This Happen?

Monetary policy remains in the hands of money-printing Keynesians like Ben Bernanke, while Americans were forced to choose between the two Keynesian presidential candidates — Barack Obama and Mitt Romney. Yet in China, policy-makers have begun welcoming and listening to a more-sensible voice.

A recent Wall Street Journal story says that — three years ago when Keynesian economic interventionism and stimulus spending was all the rage in Beijing and another predictable asset bubble was building in China — Zhang Weiying, who teaches at Peking University, was sounding like Ludwig von Mises, Murray Rothbard and F.A. Hayek and giving speeches titled "Bury Keynesianism."

Predictably, the Keynesians stimulus spending failed. The turn of events, says the Journal, was "a poster child for Mr. Zhang's Austrian theories."

" … the sheer size of the failure suddenly has people paying attention. u2018The Keynesian policy didn't deliver what it promised,' [Zhang] says, so u2018more and more people realize that … when the government makes investment [in] something that's useless, recession will come.'

"Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak.

"He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai — a fairly high-level apparatchik — told him he liked it."

The Keynesian experience has never delivered what it promised in this country, either. Not in the Great Depression of the 1930s. Not in the stagflation of the 1970s. And not now.

The Keynesian approach has, however, produced a debt colossus even as it has trashed the currency. Not quite what we would have wanted.

China still has a long way to go on the muddy road to freedom. But it has come a long way since the reformer Deng Xiaoping started making changes in 1979.

As for America?

Turn! Turn! Turn!

Reprinted from Uncommon Wisdom with permission of the author.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Recently by Charles Goyette: Is a Central Bank Gold Run at Hand?

Rep. Ron Paul gave his farewell address to Congress on Wednesday.

It was 1976, the bicentennial year, when he first took a seat in Washington. Although only one of 435 congressmen, he was distinguished from the beginning by his uncommon determination to serve the cause of peace and prosperity by championing individual liberty.

This he did with a consistency that baffled the plastic politicians of both parties.

Politics has ways of bending such lesser men, and molding even the well-intentioned to become servants of the state.

The tools are many: Congressional leadership bribes and bestows its favors, from plum committee assignments to nicer Capitol offices. Who wouldn't prefer the spacious corner office to the one more-suited to serving as the janitor's closet?

The parties reward the lockstep-marchers, too. For those who stay in step, there are endorsements and campaign funds. Meanwhile, for those who march to a different drummer, the party will recruit primary opponents — even from the other party.

And then there is the simple social pressure to which men whose eyes are not focused on a polestar of principle soon succumb. The description you've heard of Washington, that you have to go along to get along, is all too true.

A True Representative

Ron Paul never succumbed. He never sold out for a better assignment, a nicer office, lobbyist largesse, or shallow conviviality.

Nor has Congressman Paul ever taken a taxpayer-paid junket. He has never voted for a congressional pay raise. Nor has he ever voted for a tax increase or an unbalanced budget.

He does not participate in the lucrative congressional pension program. He returns a portion of his annual congressional office budget to the U.S. Treasury every year. And he has never voted for a bill that contravenes the plain language of the Constitution.

That alone is enough for him to stand apart. But my regard, born of experience, runs deeper.

Back in 1984, I arranged for Ron Paul to be a keynote speaker at a series of investment conferences. Even then he distinguished himself with his vision, clearly describing the economic course America was charting and the consequences that are beginning to unfold today.

As evidence of clarity, one can look to Congressman Paul's September 2003 remarks in the House Financial Services Committee, as he described in advance "the long-term damage to the economy inflicted by the government's interference in the housing market."

Five years to the month before the Fannie Mae and Freddie Mac bubbles popped, Paul explained:

"Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. "Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been, had government policy not actively encouraged over-investment in housing. "Perhaps the Federal Reserve can stave off the day of reckoning by purchasing (Government-Sponsored Enterprise) debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. "In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall."

What magical gift of intuition has enabled Ron Paul over the years to so accurately describe our national trajectory and its consequences?

There is no magic to it; he has simply studied the precedents.

America isn't the only country to have purchased the "let's spend our way to prosperity" snake oil. It's not the first time a nation has taken the central economic planning Kool-Aid. This isn't the world's first fiat-money rodeo. Other countries have taken the same central-bank joyride.

Do These Same Questions Puzzle You?

Congressman Paul's farewell address can — and should — be read here orviewed here. Be sure to give some thought to the long list of important questions excessive government has prompted Congressman Paul to ask as he leaves office.

Here are a representative few:

• Why are sick people who use medical marijuana put in prison?
• Why does the federal government restrict the drinking of raw milk?
• Why are Americans not allowed to use gold and silver as legal tender as mandated by the Constitution?
• Why is Germany concerned enough to consider repatriating its gold held by the Fed in New York? Is it that the trust in the U.S. and dollar supremacy is beginning to wane?
• Why do our political leaders believe it's unnecessary to thoroughly audit our own gold?
• Why can't Americans decide which type of light bulbs they can buy?
• Why have we allowed the federal government to regulate commodes in our homes?
• Why haven't we given up on the drug war since it's an obvious failure and violates the people's rights? Has nobody noticed that the authorities can't even keep drugs out of the prisons? How can making our entire society a prison solve the problem?
• Why does changing the party in power never change policy? Could it be that the views of both parties are essentially the same?
• Why did the big banks, the large corporations, foreign banks and foreign central banks get bailed out in 2008 while the middle class lost their jobs and their homes?
• Why do so many in the government (including federal officials) believe that creating money out of thin air creates wealth?
• Why can't people understand that war always destroys wealth and liberty?
• Why is there so little concern for the Executive Order that gives the president authority to establish a "kill list," including American citizens, of those targeted for assassination?
• Why is patriotism thought to be blind loyalty to the government and the politicians who run it, rather than loyalty to the principles of liberty and support for the people? Real patriotism is a willingness to challenge the government when it's wrong.
• Is there any explanation for all the deception, the unhappiness, the fear of the future, the loss of confidence in our leaders, the distrust, the anger and frustration? Yes there is, and there's a way to reverse these attitudes. The negative perceptions are logical and a consequence of bad policies bringing about our problems. Identification of the problems and recognizing the cause allow the proper changes to come easy.

u2018A Life Uncommon'

As he acknowledges, there are no federal buildings or highways or major pieces of government-growing legislation named after Congressman Ron Paul. But his impact will last and his name will be remembered long after the untold thousands of plastic politicians have been forgotten.

Indeed, the singer Jewel has a stirring song that will forever remind me of Congressman Paul's political career. She urged that if we would but lend our voices to the sound of freedom and fill our lives with love and bravery, then we shall lead lives uncommon.

Congressman Paul has inspired millions with his voice of freedom. He has led a life uncommon.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Recently by Charles Goyette: Presidential Debates, Round 2: The Third-Man Theme

On learning that French gold was being held by the U.S. Federal Reserve, French President Charles de Gaulle is reported to have said, “I could hardly sleep easily with such an arrangement.” So in 1965 he ordered French navy ships to cross the Atlantic to pick up $150 million in gold held in the Fed’s New York vaults and deliver it to the Banque de France in Paris.

It was a prudent move by de Gaulle. And it was consistent with the advice I have long given: Do not leave your gold in the care of somebody else. Take physical possession of your gold.

De Gaulle realized the United States was running an international con. It had promised that holders of U.S. dollars would always be able to redeem them for gold at the official rate of $35 per ounce. But like someone writing bad checks, it was clear that the U.S. was printing more dollars than it could possibly redeem at that rate.

De Gaulle was ahead of the pack. But before long other nations figured out the same thing and began demanding gold for the dollars they held. Soon Washington began to hemorrhage gold as it faced demands to redeem tens of billions of its paper dollars.

It was nothing less than a run on the U.S. gold bank …

On a single day in March 1971, 400 tons of gold were taken from the exchange mechanism, the London Gold Pool, forcing it to close. By August, President Nixon closed the gold window entirely, essentially defaulting on America’s explicit promise of dollar convertibility.

Germany Demands Accountability

Like France, Germany has had bitter national experience with the hyperinflation of fiat currency. It should not be surprising if both nations are sensitive bellwethers when funny money business is afoot. Now we are beginning to learn about steps Germany has been taking consistent with troubling questions today about the world’s central banks and the gold entrusted to their vaults.

In the (U.K.) Telegraph, Ambrose Evans-Pritchard reports a German court has ordered an inquiry into gold purportedly held for Germany in London, Paris, and New York:

The German Court of Auditors told legislators in a redacted report that the gold had “never been verified physically” and ordered the Bundesbank to secure access to the storage sites.

It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It said Frankfurt has no register of numbered gold bars.

The report also claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

It may be that an audit will prove all of Germany’s gold in foreign central banks can be accounted for. It may have been that France’s gold would have been safe for decades in the hands of the Federal Reserve. But an environment like ours, toxic with monetary risk, demands good stewardship.

What Have Central Banks Done with the People’s Gold?

Recently I wrote an article questioning whether or not central banks have the gold they say they do. Even if the bullion is in inventory, there are pressing questions about who may hold actual title to the gold, whether it has been loaned, pledged, swapped, or sold.

The Telegraph alludes to the issue of title as well, reporting the German court’s action “follows claims by the German civic campaign group ‘Bring Back our Gold’ and its U.S. allies in the Gold Anti-Trust Committee that official data cannot be trusted. They allege central banks have loaned out or ‘sold short’ much of their gold.”

Asking if gold bars are actually in place is a question of inventory. Questions about title are issues that should be answered by a thorough audit. But there remain equally justifiable concerns about the authenticity of the gold held by central banks, and other depositories for that matter.

Another concerning topic is fake gold. It is by no means a marginal issue, but one that is serious enough that this year, for the first time, some of the U.S. gold held by the New York Fed has been subjected to being drilled for assay samples to test for purity. No results have been released.

Closing Thoughts

Those who showed up after August 15, 1971 with U.S. dollars they hoped to exchange for gold were too late. But de Gaulle knew there was something fishy about U.S. monetary practices well before Nixon defaulted on America’s gold promises. In today’s troubled environment, Germany is acting like its monetary senses are tingling.

There are warning signs aplenty for Americans that monetary conditions are growing more fragile by the day and that the fiat dollar will not last. It would be nice to know that at least the people’s gold assets are secure.

In any case, remember this lesson:

Do not leave your gold in the care of somebody else. Take physical possession of your gold.

Reprinted from Money and Markets with permission of the author.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Maybe Tuesday night's presidential debate wasn't a game-changer, but at least Republican nominee Mitt Romney didn't get to debate Clint Eastwood's empty chair.

President Barack Obama showed up this time instead.

And while two candidates in a debate are better than one, three candidates would be a big improvement. That way, someone could hold the Republicans and Democrats accountable for generations of vote-buying and deficit spending.

The last time that happened was in 1992 when Ross Perot was the third candidate in the debates. Perot responded to attacks on his inexperience by saying, "They're right. I don't have any experience running up a $4 trillion debt."

"It's not the Republicans' fault," said Perot of the incipient debt crisis. "And it's not the Democrats' fault. What I'm looking for is, who did it?"

This year's second presidential debate was a tasty little treat for the media people, who love a good comeback story.

But for more serious people, those who understand America will be shaken to its core by economic calamity, the debates are like junk food meals of empty calories.

What About the Fed?

Once again, there was not a word about the Federal Reserve, and not a word about QE III.

This is a most-peculiar oversight.

It's like Perot's description of the crazy aunt kept down in the basement. "All the neighbors know she's there, but nobody wants to talk about her."

The country is mired in an economic malaise, and both candidates wish to be seen as holding the keys to our recovery. But neither candidate uttered a word about monetary policy or the monetary authorities.

Since money is half of every commercial transaction, the failure to address the subject is more than a casual oversight. It means that there is a taboo against addressing 50% of the nation's economic activity.

The only conclusion that can be drawn from this studious avoidance of monetary policy is that, regardless of the election's outcome, the fundamental policies that boom and bust the economy will still be decided by the Federal Reserve on behalf of the banking cartel.

So-Called Debates Yield So-Called Solutions

I watched the debate remembering the words of Ron Paul this week, when he suggested that our future could hold results more-severe than what we've seen in the streets of Greece.

That's why, Congressman Paul says, he gets so annoyed with "the so-called debates" that are going on now.

"They are not talking about anything important," said Paul. "Absolutely nothing. How often have you heard in the last couple of weeks or couple of months of the campaign about the seriousness of the debt and the debt crisis, the dollar crisis, the financial crisis?"

"We're at the end of the line when it comes to debt. When the markets recognize this, we won't be able to print money" to get out of it.

In the 1992 debates, Perot said that "giant sucking sound you hear" is jobs leaving this country. Today we have Depression-era levels of unemployment and our manufacturing base has been hollowed out.

Back then Perot was the only one of the candidates to address the nation's growing debt seriously. "The facts are," he said, "we have to fix it."

Still Broke …

That was 20 years ago. Nothing has been fixed.

Twenty years ago, Perot concluded that, since the Republicans and Democrats were both shirking and disclaiming responsibility for the nation's debt, it must all have been the doing of extra-terrestrials.

Must be. The debt has quadrupled since then and nobody else has been in charge except Republicans and Democrats.

Clearly, we need a third man in the debates again.

I nominate Ron Paul.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Is it possible that the vaults of the world's central banks, believed to be stacked with gold bullion, are really empty? Is all the gold actually there?

Something about the numbers doesn't seem to add up.

The importance of the question accelerates in the face of global money-printing, which is also accelerating. Since the start of the economic meltdown five years ago, the balance sheets of the world's central banks have been growing at a frantic pace.

The U.K. has led the pack, up 362%, followed by the United States, which is up 223% — even before QE III. China is printing money as well, up 151% during the period, the European Central Bank, 146%, and Japan, 83%.

That's a lot of money-printing.

But take heart, because while the currencies of all those countries are absolutely, 100% fiat — redeemable in nothing but more of the same paper — the world's central banks are said to have huge reserves of gold bullion. The U.S., U.K., the euro zone, Switzerland, Japan and the International Monetary Fund report having gold reserves of 23,349 tons among them.

Central banks of the world's terminally indebted countries prefer the fiction that paper money that's printed at little cost, or digital bookkeeping entries that are created at no cost, is money and therefore constitutes real wealth. However, there must be a reason that central banks universally hold gold reserves.

They don't hold pork bellies.

At this point, Eric Sprott, of the estimable Sprott Asset Management, enters the discussion, asking some inconvenient questions. Because something about the gold numbers — supply and demand — doesn't seem to add up.

Here's the mystery in brief, from the Sprott report called, "Do Western Central Banks Have Any Gold Left???"

New mine supply of gold this year is estimated to be just under 2,700 tons. But gold demand, growing rapidly over the last 12 years, amounts to an additional 2,268 tons of new gold demand a year today that didn't exist in 2000.

That number was derived from the buying of just five sources: non-western central banks (Russia, Turkey, Kazakhstan, Ukraine and the Philippines), the mints of the U.S. and Canada, ETFs, and Chinese and Indian consumption.

This increase in gold demand seems to actually understate the matter, since it doesn't include huge private investment purchases of physical gold from around the world. For example, Sprott cites China's Hong Kong gold imports, expected to reach 785 tons this year, as just one additional source of net investment that sees real total demand exceeding new mine supply.

But the private investment demand amounts to much more than the Hong Kong gold imports he cites.

Other substantial purchases of physical bullion include those by hedge funds and other institutions (the University of Texas endowment fund alone purchased and took delivery of $1 billion of physical gold in 2011), as well as purchases by Russian plutocrats and Persian Gulf petrocrats.

The bull market in gold has, after all, been a global event.

In short, Sprott concludes there is a big discrepancy between real physical gold demand (own any gold bars yourself? If so, they don't show up in the demand numbers!) and the purported supply.

Where Is All the Gold Coming from?

Who is selling the gold that fills the gap between supply and fast-growing demand? Who is releasing physical gold to the market without it being reported, Sprott asks?

"There is only one possible candidate: the Western central banks. It may very well be that a large portion of physical gold currently flowing to new buyers is actually coming from the Western central banks themselves. They are the only holders of physical gold who are capable of supplying gold in a quantity and manner that cannot be readily tracked …

"Under current reporting guidelines, therefore, central banks are permitted to continue carrying the entry of physical gold on their balance sheet even if they've swapped it or lent it out entirely. You can see this in the way Western central banks refer to their gold reserves.

"The UK government, for example, refers to its gold allocation as, u2018Gold (including gold swapped or on loan).' That's the verbatim phrase they use in their official statement.

"Same goes for the U.S. Treasury and the ECB, which report their gold holdings as u2018Gold (including gold deposits and, if appropriate, gold swapped)' and u2018Gold (including gold deposits and gold swapped),' respectively.

"Unfortunately, that's as far as their description goes, as each institution does not break down what percentage of their stated gold reserves are held in physical, versus what percentage has been loaned out or swapped for something else.

"The fact that they do not differentiate between the two is astounding."

Loans? Swaps? Repurchase agreements? A house of cards by any other name would topple as fast.

It is impossible to know exactly what shenanigans are afoot at the Federal Reserve. Have the gold reserves held by the Fed, the property of the American people, been loaned out? Have the banksters and other Fed cronies borrowed U.S. gold, sold it to China, and left an IOU in the Fed's vaults?

In an age rich with banking and other institutional, credit, and counterparty failures and frauds, such transactions are anything but prudent. Especially since whatever gold the Fed holds is not its property.

In a one-time partial audit that the Federal Reserve resisted mightily, the Government Accounting Office found that from Dec. 1, 2007, through July 21, 2010, the Federal Reserve provided more than $16 trillion — a sum equal to America's entire visible national debt — in secret loans to some of the world's most politically powerful banks and companies.

Among the major recipients of the windfall were Citigroup, Morgan Stanley, Merrill Lynch, Bank of America, Bear Stearns and Goldman Sachs. But the beneficiaries weren't just American financial institutions.

Central Banker to the World?

At one point (in October 2008), 70% of Fed loans were to foreign banks. Foreign recipients of the windfall included powerful European banks: Barclays, Royal Bank of Scotland, Deutsche Bank, UBS, Credit Suisse and others.

Among the disclosures the Fed was forced to make is that it extended 73 separate loans for an aggregate $35 billion to Arab Bank Corp., owned in substantial part by the Central Bank of Libya.

The Fed is a hot bed of cronyism: The discount window, bond purchasing, its primary dealer system and pricing structure, currency and gold swaps and repurchase agreements, Open Market Committee operations, and so on.

The light of a full and thorough audit is likely to find all kinds of cronies lurking in these dark corners of the Fed.

And with the new, third round of quantitative easing under way, it may not be long before the money-printing game collapses entirely. At that point the calamity will compound if Americans turn to the vaults where the gold was purported to be, and find that the gold has long since been loaned out or otherwise cleaned out.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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This article is an excerpt from New York Times bestselling author Charles Goyette’s new book Red and Blue and Broke All Over: Restoring America’s Free Economy.

The Republicans and Democrats of modern America — the red and blue faces of the state — have led us all down their yellow brick road of the welfare and warfare state. And now the curtain has been pulled back on the Great and Powerful Oz of Washington and its work of cheap flim-flammery has been revealed for all to see.

The roar of its might depended on the wealth it stripped from the people. Now it has no wealth left, only debt to burden the people with in their reduced circumstances. It promised to provide for the poor, but instead left the entire nation poorer. It promised to provide for the elderly in their retirement. But the only resources the Great and Powerful Oz had were the ones it took from them to begin with, and in so doing it altered the people's behavior so that they failed to provide for their own old age. It promised to provide for the general security. Instead it destroyed the people's financial security while it went abroad, propping up tyrants and meddling in affairs hither and yon. The security of the Great and Powerful Oz consists not of peace and tranquility, but in maintaining a perpetual state of alarm and making the people hated in far corners of the world.

And in a foolhardy finale, it sought to solve the problem of insurmountable debt by piling on still more debt. Now the state must stop. Let the final curtain close on the humbuggery of the red party and the bunkum of the blue.

A change in the way people think about the state is inevitable, just as it was inevitable that tribal chieftains, the divine right of kings, the mandate of heaven, and the rule of churches should yield to the spread of freedom. It stands to reason that the hollowness of the state's promises should thrust this reconsideration on this generation at this time.

But perhaps the generation is not equal to the demands of the age; perhaps we expect too much of a dependent, conditioned, and passive people. But if the people do miss the opportunity our economic distress provides to reassess the state, the opportunity of distress will be seized instead by those responsible for the calamity. They will use it to extend their authority and, yes, to increase the damage. As I described in The Dollar Meltdown, a command economy is an irresistible attraction to the power-seeking governing classes during economic distress. The hand of the state becomes a fist.

Will Americans continue to succumb to the ways of statism as modeled by the bloody French Revolution?

Or will they recall the lessons of our own revolution and seek again to secure the blessings of liberty for ourselves and our posterity?

It should be clear that the decision before us is not the one presented by the major media outlets with their breathless coverage of the election horse races. It is not the one offered by the opinion-makers with their constrained vision and tired habits of thought. It is not the choice between Republicans and Democrats that matters. It is the choice between statism and liberty.

The sound-bite commentariat would have us choose whether the red team or the blue team should manage our lives. But America is not a sporting event, and we can manage our own lives. The future we are choosing is between want and abundance. The great achievements of mankind come not from slave labor, but from the self-motivated. Except for cigars from Cuba and vodka from the Soviet Union (if even that!), nobody anywhere with a choice is ever very interested in things made by unfree people living in command economies.

Without the oxygen of freedom creativity shuts down, inventiveness suffocates. When prodded like cattle, people move and act not as inspired, but as directed. All the spontaneity that organizes new forms of production, all the unexpected ways in which human life is improved, and the serendipity that delights us with enriching new experiences and opportunities — all flourish in an environment of freedom.

Americans who know this face the task of persuading their fellows of both the self-evident moral preferability and the productive superiority of voluntary and contractual social relationships to coercive ones.

The things we have taken for granted in our material circumstances and the increase of ease in our lives — so many of the things we notice only in their absence — are the result of a free economy. So rich are its gifts, so abundant its bounty, so profuse its variety, that we have come to think of prosperity as a given. And that is a good way to think of it — as a given. Like the cornucopia, the horn of plenty that is an icon of inexhaustible abundance that seemingly springs from nowhere, prosperity is a given, coming into being in the presence of free people in a free economy.

Liberty's gifts are many. This book has focused especially on Prosperity because she appears to be slipping away from us. But Prosperity is only one of Liberty's daughters. Peace is another. And third among her daughters is Opportunity. What a plague mankind suffers in the absence of Liberty's gifts. What a cruel smothering of the human spirit to know only lack and insufficiency instead of the abundance of Prosperity; to live in a time of constant strife and war, a time without the blessings of Peace; and to experience a lifetime of frustrating limitation and futility, a world without Opportunity.

A renewed appreciation of Liberty will mean the growth of prosperity, peace, and opportunity. Her blessings await all who wish them.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Jay Leno had Ron Paul on the Tonight Show again Tuesday night. I don't know if Leno is a supporter, but he has at least figured out what most broadcasting executives don't yet get: he understands the dynamic appeal of Ron Paul and his message to the demographic groups that industry executives want.

"Unlike the Republicans," Leno told a wildly enthusiastic studio audience, "we're actually going to let him speak."

Paul recalled the way he had been booed in the Republican primaries for wanting to bring the troops home, and repeated the offending line for Leno, "We just marched in. We can just march out."

Clint Eastwood shared that thought at the Republican convention, asking of Obama "Why don't you just bring them [the troops] home tomorrow morning?"

Few Americans realize how deeply Republicans and Democrats have gotten us into this bankrupting global empire of wars. It has produced a national security state with a cost $1.2 trillion a year. It has left the country staggering on the ropes of insolvency.

It's easy to see how the spending has added up in Iraq and Afghanistan by just looking at what's involved in marching out of both countries. As a Reuters account put it, drawing down American forces in Iraq was a moving day that lasted for more than a year.

Reuters reported that, "the largest removal job in history" meant:

• Shutting down the U.S. military bases, which numbered 505 at the peak and included everything from small desert fueling depots to massive installations where Americans have been entrenched for years.
• By early November 2011, nearly 4 million items worth $390 million had been given to Iraq, including 26,000 CHUs (Containerized Housing Units) worth $124 million and 89,000 air conditioners worth $18.5 million. At large bases like Victory, buildings, mess halls, offices, water treatment and electrical plants, desks, tables and chairs, are being handed over to the Iraq government, and tons of equipment is being scrapped.
• Even the removal Saddam Hussein’s toilet from the cell where he was held, destined for display in a US military museum.

Then there is the palatial white elephant of the US Embassy in Baghdad. About the size of Vatican City, and built at a cost of $750 million, the compound was clearly designed for a very long occupation of Iraq and to be the seat of a US imperium in the region.

Now the costs of drawing down forces in Afghanistan by the end of 2014 may involve equally staggering waste and expense. According to a NATO logistics briefing, more troops will be needed in Afghanistan just to help pack up. Reporters were told that NATO will need to send home or dispose of 200,000 shipping containers and vehicles.

Nobody seems to know just how many U.S.-led International Security Assistance Force bases there are in Afghanistan. TomDispatch.com cites a source saying it's 550, but says including smaller facilities used to secure roads and villages, the number appears to climb to 750; and that counting other foreign military installations, logistical, administrative, and support facilities, the total is 1,500. In any case, it's more than the number of bases in Iraq at the height of that war.

Of course one can't ever rely on anything the state says. Does drawing down forces in a war theater really mean just replacing uniformed forces with civilian contractors? Does leaving the country really just mean moving troops to a staging area right across the border? The left hand of the state never seems to know what the right hand is doing in any case. In Iraq, the US is actually making new expansion plans for its colossal embassy, while even as bases in Afghanistan are closing and timetables proceed to draw forces down, other plans are afoot for the expansion of facilities in the country.

There's not a lot of method to the madness. One looks far and wide for any foresight on this front and finds it only from Congressman Paul. Ten years and trillions of dollars ago, advising against the ill-fated elective war about to be launched in Iraq, Paul said:

"The United States, with Tony Blair as head cheerleader, will attack Iraq without proper authority and a major war, the largest since World War II will result…. During the next decade, the American people will become poorer and less free, while they become more dependent on the government for economic security."

And so it came to pass. Americans have only themselves to blame. They should have listened to Ron Paul before they marched in.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Recently by Charles Goyette: Trampled Underfoot

We do get these buzz phrases about the economy, don’t we? A special jargon of the financial press and the commentariat, shorthand expressions intended to suggest the speaker has an especially intimate understanding of economic events.

Federal Reserve Chairman Ben Bernanke gave a little miracle-grow boost to the old expression “green shoots” on 60 Minutes in 2009, as he described signs of a recovery. And once he dropped the phrase, Scott Pelley was right there to pick up on it.

“Do you see green shoots?” Pelley asked.

“I do. I do see green shoots,” allowed the chairman.

Bernanke must have been seeing things. That was over three years ago, but Depression-era levels of unemployment persist, the latest numbers reveal that 46½ million Americans are on food stamps (up from 28 million at the start of the recession), and “60 Minutes” recently re-ran a story about all the schoolchildren who are living in cars with their families and brushing their teeth in the gas station at night before they go to sleep in the parking lot.

It isn’t the First Time Bernanke has Suffered Illusions!

In early 2007, just when the mortgage meltdown was getting going, he said the subprime housing market appeared to be “contained.”

Even more overused than “green shoots” is the expression “headwinds.” It is way past its trendy lifespan. But President Obama, seeking to lower expectations for the economy before the election, recently announced that “We’re going to have some continued headwinds over the next several months.”

These nature metaphors for the economy spread like, well, wildfire. The latest, unavoidable in the financial world, is “fiscal cliff.”

But this Is NO Illusion!

The fiscal cliff is the expiration of the Bush tax cuts at year-end, just as $110 billion in automatic defense and domestic spending cuts – part of the 2011 debt ceiling increase package – kick in with the New Year. About that time, the Federal statutory debt ceiling of $16.3 trillion will be breached as well.

Of course you can’t expect to see these issues met in advance …

After all, it’s an election year. The Republican convention is under way, and then next week it’s the Democrats’ turn to get together. So you can expect the presidential campaign to crowd out everything else until the election November 6. And then the parties start juggling for political advantage for the next election cycle.

So the delays and temporary measures that we have come to expect from legislators will be the rule of the day, because all they will do is …

Extend and Pretend

Extend the tax cuts for a short period. Kick the can down the road on spending cuts. Roll out all the old accounting gimmicks we’ve seen before to put off reality as long as possible when the debt ceiling is breached. Patch together temporary extensions in the debt ceiling as the debates and standstills continue.

It is true that the so-called “fiscal cliff” is the convergence of a lot of things at the same time. But don’t for a minute think that Washington can do anything to keep us from going over the economic edge and plunging into the abyss below.

Because we have already gone over the cliff. One simple metric makes it clear …

Last month the government released the gross domestic product numbers for the second quarter of 2012. The part of the story that didn’t make the evening news is this: The federal government added $2.33 in debt for every $1 increase in GDP.

The headwinds of debt have long since blown away the green shoots of growth. We don’t have to wait for the end of the year. We have already gone over the fiscal cliff.

But that doesn’t mean all hope is lost. Join us at the Sound Dollar Campaign in our effort to bring common sense back to Washington and take back America’s future! It’s free, and it will only take a few moments of your time. Click here to join.

Reprinted from The Campaign for a Sound Dollar.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Now that the Supreme Court has given its blessings to Obamacare, mandates included, here are six things you need to remember about where we are and how we got here.

1. Chief Justice John Roberts, the "conservative" who tipped the balance in favor of Obamacare, is Mitt Romney’s kind of Constitutionalist. From Mitt Romney’s campaign website, MittRomney.com:

"As president, Mitt will nominate judges in the mold of Chief Justice Roberts… [Roberts] hold[s] dear what the great Chief Justice John Marshall called "the basis on which the whole American fabric has been erected": a written Constitution, with real and determinate meaning. The judges that Mitt nominates will exhibit a genuine appreciation for the text, structure, and history of our Constitution and interpret the Constitution and the laws as they are written. And his nominees will possess a demonstrated record of adherence to these core principles." (Courtesy of David Kramer at LewRockwell.com/blog)

2. The very nature of government is to mandate. One who opposes mandates on principal must oppose government. As George Washington has long been reputed to have claimed, "Government is not reason, it is not eloquence – it is force! Like fire, it is a dangerous servant and a fearful master."

3. In voting to uphold Obamacare, Justice Ruth Ginsburg argued that the law should be upheld under the Commerce Clause. And she thought to remind us along the way of Mitt Romney’s role in fathering this hideous creature:

"By requiring most residents to obtain insurance, see Mass. Gen. Laws, ch. 111M, §2 (West 2011), the Commonwealth ensured that insurers would not be left with only the sick as customers. As a result, federal lawmakers observed, Massachusetts succeeded where other States had failed. See Brief for Commonwealth of Massachusetts as Amicus Curiae in No. 11–398, p. 3 (noting that the Commonwealth’s reforms reduced the number of uninsured residents to less than 2%, the lowest rate in the Nation, and cut the amount of uncompensated care by a third); 42 U. S. C. §18091(2)(D) (2006 ed., Supp. IV) (noting the success of Massachusetts’ reforms). In cou­pling the minimum coverage provision with guaranteed­ issue and community-rating prescriptions, Congress followed Massachusetts’ lead." (Courtesy of Robert Wenzel at EconomicPolicyJournal.com)

4. From Congressman Ron Paul:

"The Court has a dismal record when it comes to protecting liberty against unconstitutional excesses by Congress. Today we should remember that virtually everything government does is a ‘mandate.’ The issue is not whether Congress can compel commerce by forcing you to buy insurance, or simply compel you to pay a tax if you don’t. The issue is that this compulsion implies the use of government force against those who refuse. The fundamental hallmark of a free society should be the rejection of force. In a free society, therefore, individuals could opt out of "Obamacare" without paying a government tribute."

5. In the national debate over the Obamacare legislation before Congress in 2010, the Republicans were reduced to accepting the statist presuppositions of government interventionism. They wobbled about on their spindly little legs, as the Republican National Committee advertising called for a "responsible plan" and a "bipartisan plan." With only the visible exception of Ron Paul, Republicans were incapable of articulating an argument against accelerating American healthcare on a statist, Soviet-style trajectory.

From the 1977 Constitution of the Union of Soviet Socialist Republics:

Article 42. Citizens of the USSR have the right to health protection.

This right is ensured by free, qualified medical care provided by state health institutions.

6. And, finally, a word for Bush appointee Chief Justice Roberts who voted with the majority to uphold Obamacare. Obama had strenuously rejected any suggestion that the mandate be considered a tax, and Congress itself called the penalty a penalty. But Roberts was able to justify the law anyway, writing a hair-splitting opinion, calling a penalty clearly designed to control behavior, a penalty for not buying health insurance, a tax.

"The Affordable Care Act is constitutional in part and unconstitutional in part. The individual mandate cannot be upheld as an exercise of Congress’s power under the Commerce Clause. That Clause authorizes Congress to regulate interstate commerce, not to order individuals to engage it. In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress’s power to tax."

The applicable word for Roberts, from the American Heritage Dictionary, is "casuistry":

n. ca·su·ist·ry

1. Specious or excessively subtle reasoning intended to rationalize or mislead.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Like Alien vs. Predator, it's an epic battle of powerful forces locked in combat. Only this is a battle of economic forces. And as in the old black and white movies, when Godzilla and other monsters battle, ordinary human beings count for nothing. They are trampled underfoot.

In the same way when powerful economic forces like inflation and deflation are engaged in mortal combat.

The victims of these titanic struggles can be numbered in the millions; the hardships inflicted are incalculable. While it is a needless battle, the showdown between the forces of inflation and deflation has been fought many times.

It is a tiresomely predictable cycle. The Fed blows up a bubble. The bubble pops. To protect powerful financial interests from loss, the Fed hunkers down to either blow up a new bubble, or to try to reinflate the one that just popped.

The latest round got underway in earnest with the Federal Reserve's inflating the housing bubble. But even that had its roots in the previous round of Fed manipulations.

When Alan Greenspan at the Fed drove interest rates down sharply in the 1990s to provide cheap liquidity to the banks, he inflated the dot com bubble. When it popped, the Fed manned the money pumps, blowing up money and credit conditions again.

Between January 2001 and May 2003, Greenspan pushed the Fed funds rate all the way down from 6.5 percent to 1 percent, where it was left for a year. This time the result was the real estate bubble and trillions of dollars of debt-driven housing price inflation.

Bubbles always pop. When the housing bubble popped in a stunning deflation of home prices, the Fed did the only thing it knows how to do: Inflate. And thus the colossal battle was joined once again.

With the popping of the bubble and deflating home prices, the losses have been huge: household losses in home equity, investor losses in mortgage paper, bank losses in foreclosed homes and defaults, job losses in real estate and the construction trades. So what's the metric in terms of the deflation of money and credit conditions?

Michael Shedlock has been an astute observer of the deflationary side of the battle. He recently cited a report showing credit money contraction of $6 trillion since March 2008.

Meanwhile, on the inflation side of the battle, the Fed responded by creating trillions in new money, buying the trashed mortgage debt securities of the privileged banking cartel and the downgraded debt of the U.S. government.

Central banks around the world are no different. Europe is engaged in the same bubble/ bust cycle. Buying elections and the favor of the people, debtor governments borrowed and spent more than they could repay. The European Central Bank served the privileged banking cartel by created trillions of euros for banker bailouts and central bank bond purchases.

You will note in following the European crisis, that no matter how often the central banks extend more such credit, nothing is resolved in the process. This is understandable because — although it isn't described this way – the extension of credit is only another way of saying the creation of more debt. More debt. For a problem that consists of too much debt to begin with.

In the case of the Federal Reserve's serial bubble blowing — the dot com bubble, the housing bubble, and the current bond bubble – the central bank drives the affair with the creation of state credit and fiat money.

A healthy and sustainable boom results from the formation of new capital or net new savings. The Fed's boom is neither healthy nor sustainable. It is not driven by new savings and capital. The Fed produces only a bubble. The new money and credit rushes into one or another favored sector of the financial markets, depending on the prevailing political conditions. But eventually the bubble must burst.

And like the terrified citizens trampled underfoot as the try to flee the destruction of battling behemoths in films like King Kong vs. Godzilla, the central bank's needless cycle of inflation and deflation destroys the people's livelihoods, crushes their savings, and tramples their prosperity.

By this time the damage should be familiar:

• The median net worth of American families fell 40 percent between 2007 and 2010. Predictably, the middle class took the biggest hit, while the wealthiest families' median net worth actually rose.
• Between 10 to 11 million home mortgages are underwater; Almost seven percent of home mortgages are seriously delinquent, 90 days or more past due.
• One in seven Americans is on food stamps. The cost of the programs has exploded, up 135 percent from 2007 to 2011.
• Unemployment persists at depression-era levels.

We are victims of a needless cycle, explained Ludwig von Mises, one that is driven by politics:

Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too.

If one wants to avoid the recurrence of periods of economic depression, one must start by preventing the emergence of artificial booms. One must prevent the governments from embarking upon a policy of cheap interest rates, deficit spending, and borrowing from the commercial banks.

This is, of course, a very difficult task. Governments are in this regard very obstinate. They long for the popularity that booming business conditions seldom fail to win for the party in power. The unavoidable crash, they think, will appear only later; then the other party will be in power and will have to account to the voters for the evils which their predecessors have sown.

The governing classes, those who benefit most from inflation, keep inflating bubbles which in turn must deflate. Most people, once they understand that they are victimized by this process, will long to be freed of it. They will wish to live in an environment of stability. They will want to be free to restore prosperity for themselves and their families.

But this is a barren hope. Like collateral damage in war, ordinary human beings count for nothing. The people will be trampled as long as central banking and fiat money persist.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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While the attention of the financial world and the business press have been focused so completely on the daily developments in Europe – though there’s not a game changer among them – other economic news from around the world has been largely crowded out.

The real news is that the depression is going global.

The spreading of the slowdown can be seen in the so-called BRIC nations. Surging growth from Brazil, Russia, India, and China has helped drive some of the world’s economic vitality for a few years now. But the downturn is now taking hold in those countries, leaving little to resist the rip tide of depression.

Here are some economic highlights from each of the BRIC nations:

Brazil: Commodity exports are crucial to the Brazilian economy. China is the largest buyer of Brazil’s exports, so a slowdown in China and lower commodity prices have affected Brazil. Growth has slowed considerably there already. 2010′s 7.5% growth was sliced to only 2.7% last year. It’s a trend in force: the Brazilian economy actually contracted in April. Foreign investments in Brazil appear to have reversed and become disinvestments.

Russia: Resource revenues, primarily earned from oil and natural gas exports, have helped drive growth of the economy and the middle-class in Russia. But it is a restive middle class that has taken its anti-Putin protests to the streets. As natural gas prices have taken a big hit in the last few years, and with oil down sharply since spring, Russia will run larger deficits, financed by inflation, a policy that will create more unrest. Earlier this year, the Russian central bank, which has been a net buyer of gold, surprised many with its first gold sales in five years.

India: Consumer price inflation in India is about 10%; food prices are increasing at a rate closer to 11%. Interest rates are high, the state deficit is widening, manufacturing has turned down sharply, and GDP growth is stalling. Standard & Poor’s, which dropped the outlook for Indian debt from "stable" to "negative" in April, says the slowdown puts India’s investment grade debt rating at risk.

China: Now the second largest economy in the world, China’s demand has had a huge impact on commodity prices. Slipping commodity prices may tell more about what is going on (or not going on) in China than any official numbers, which are no more reliable than government numbers in the U.S. Besides the slowing export sector determined by conditions outside the country, China has blown up a huge real estate bubble of its own. Central economic planning, state -owned enterprises, and crony deals, all widespread in China, are no more functional there than they are anywhere else in the world.

The People’s Bank of China’s concern about a slowdown was seen earlier this month as it cut key interest rates for the first time in years.

It has become a cliché, but it is nevertheless true that we inhabit a global economy. We cannot escape the effects of slowing conditions elsewhere in the world. Thanks in part to emerging market demand, U.S. exports were up 17% last year, mostly in manufactured goods. As emerging markets slow, so do U.S. exports. China’s slowdown threatens its ability to continue sponsoring U.S. debt. And then there is the inevitable currency warfare that ensues in a slowdown, as countries "race to the bottom" in their competitive devaluation of their own currencies, in the futile hope of generating prosperity by stimulating exports at the expense of destroying the people’s purchasing power.

My local newspaper sums up the G-20 nation’s talks in Mexico with a headline that reads, "G-20 talks on Europe debt spur optimism: Obama is encouraged strong action is near." It’s like Groundhog Day. It’s no different than the news stories about the European crisis that have run for years now. But no matter how many times the scene is repeated, the crisis of sovereign nations that spend more than they produce and cannot pay their bills is not fixed by loaning them more money.

The media focuses relentlessly on re-writing old news from Europe over and over. But despite the optimistic headlines, it is a situation that worsens as the debt deepens with each new rescue plan.

Meanwhile few notice that the tide is going out on the global economy.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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Beneath a photo of Fed Chairman Ben Bernanke, the headline on the Drudge Report Wednesday read "WAITING."

On the expectation that the Fed and European central bankers would do something on the monetary front to address the condition of the economy, the Dow ran up 286 points, its best performance of the year.

What is the market saying?

That the resilience of the American economy depends upon the decisions of a handful of unelected bureaucrats made behind closed doors?

That the value of an ownership stake in American industrial companies will rise depending on the votes of a small group of people few Americans could name?

That our future prosperity is not in our hands, but determined in proverbial smoke-filled rooms?

It may be that no one has smoked cigars in Fed meetings since Paul Volcker, but the power of the Fed to boom and bust the economy with money printing continues. And so the markets, indeed the world economy, await decisions from the Fed and their Eurocratic counterparts.

What is it exactly that the markets think central banks like the Fed can do?

Print more money? The Fed has printed hundreds of billions of dollars to buy the bad assets of the money center banks. It has printed hundreds of billions more to buy the downgraded debt of the U.S. Treasury. It has been great for the banksters and their bonuses, but has done nothing for the U.S. economy.

Print more money to lower interest rates? Interest rates are already at rock bottom now. The yield on 10-year Treasuries has been down to a meager 1.5%. Lower interest rates haven’t restored the economy either. Unemployment continues at depression-era levels.

What are we to believe must have happened to enable the stock market to turn in its best day of the year, especially after the market had fallen throughout the month of May and had just given up a thousand points? Was it the lunar eclipse or the transit of Venus across the face of the Sun that had the American people awaken as one, and decide on Wednesday to buy stocks? No, in fact, the American people did not suddenly change their investment posture at all.

Such market moves aren’t suddenly driven by the phase of the moon, by "animal spirits," or by overnight turns in public confidence. These big, quick turns of the market happen at the hands of Wall Street itself. It is the work of traders and fund managers attempting to read the tea leaves of tomorrow’s action.

Now, here’s the little secret about Wall Street professionals: Some of them, a small minority, may actually understand the economy and monetary matters, and what produces wealth and what does not. Most others, perhaps more than you would want to know, do not.

But they all want to be right about what the markets perceive, about how the markets will react to the latest news. The issue for most is only rarely, and then only as an academic question, whether a new Fed initiative actually contributes to productivity and the wealth of the American people. The incentive of traders and money managers, their very livelihood is tied to anticipating what people will think, right or wrong; will people think the latest news is bullish? Or bearish? The important thing for Wall Street is not whether some initiative is wise or foolish. The important thing is to be on the right side of an ephemeral market move.

Now, whether people think some announcement or new policy is good or bad is largely determined by what they are told. And although it confounds common sense to think that the destruction of the currency, half of every commercial transaction, can be good for commerce, or that the addition of more debt in an economy already being dragged down by debt, can produce prosperity, the analysts, commentariat, and reporters, not having seriously studied the subject, simply propagate the conventional wisdom.

Here, for example, are quotes from the Associated Press account of Wednesday’s market action: "Hope that European officials would find ways to ease the continent’s debt crisis helped launch the rally." And, "A speech by a Federal Reserve official also added to speculation that the Fed may take more steps to bolster the U.S. economic recovery."

And so it is that the belief, that the Federal Reserve is about to dilute the purchasing power of the currency with Quantitative Easing III, which produced the biggest run up in stocks of the year. Elsewhere, I have recounted the reporting for years of new plans being hatched "to finally solve" the European debt crisis. In a pattern that has been repeated over and over, the news has repeatedly run the stock market up hundreds of points. But as anybody can see, there have been no such solutions. The reports have been false; the plans have all failed. And after a big jump on the news, the stock market soon gave back each of the gains it made on the naïve reports.

On Wednesday, the market was awash in talk of another such European solution: The extension of more debt to solve the continent’s debt crisis.

In the meantime, word had it that the Fed was preparing the way for QEIII. No more waiting; the Fed was ready at last to "stimulate" the economy again.

It may have been enough to goose the stock market. But more such stimulation and we will all be undone.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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With a win in the Texas Republican primary election Tuesday, Mitt Romney has clinched a spot in the November championship round. Or, so his corner tells us. Although there are some valid questions about the real delegate count, with Ron Paul having effectively conceded, it may be academic. But confidence in Romney’s victory can be seen in the repugnant spectacle of many of his recent opponents now gathering around to tell us how wonderful a leader Romney will be.

What short memories the electorate must have. Has Gingrich’s dubbing Romney “Obama light” been forgotten so soon? At the beginning of the year, Gingrich insisted that Romney was a “liar,” and a “fundamentally dishonest” tool of Wall Street. Is January so distant that it his warning has disappeared down a memory hole? Now Gingrich reports that Romney is “a lot like Eisenhower,” and “a solid conservative.” (He cannot, by the way, be both.)

A quick Google search for “Santorum criticizes Romney” spits out 2.7 million hits. But now, “Governor Romney is the candidate who will stand up for the conservative principles that we hold dear,” says Santorum.

It seems never to be asked, if his opponents were so wrong when they told us he was a candidate most foul only weeks ago, why we should rely on their fawning enthusiasm for Romney today?

It does no good to tell me “that’s just politics.” It’s all intellectually fraudulent and morally loathsome. I once had a leader of one of country’s most well-known and strict religious institutions on the air proudly explain, as though he had just discovered what every high school follower of politics knows, that his favorite candidate would run to the right in the primary, only to run to the center in the general election. “But isn’t it dishonest to represent yourself as one thing to one constituency and something else to another?” I asked this man of the cloth. “Shouldn’t we be looking for integrity and principals?”

“That’s how it’s done,” he explained indignantly. “That’s just politics.”

And so it is. They are all just Etch-A-Sketch men. Give them a good shake after the nomination.

Americans should know that Romney’s nomination means that in both the Republican and Democrat candidates we have Keynesian, spend-our-way-to- prosperity presidents. Even Paul Krugman believes Romney “is actually more of a Keynesian than he would ever let on.” We will have the choice between Obama deficits and Romney deficits, just as we will have the choice between Romney-care and Obama-care.

If there is any hope to save America from certain debt destruction, it has to start with the $1.2 trillion a year in national security state spending. It is an opportunity that will be missed under President Romney.

As often as John Kerry told us he served in Vietnam, Gingrich reminds us he was a history professor. (“I am the most seriously professorial politician since Woodrow Wilson,” he once modestly announced.) But it would be a mistake to rely on Professor Gingrich’s new slavering description of Romney as “a lot like Eisenhower.”

Seven months into his presidency, Eisenhower had ended the Korean War, just as he promised to do during the campaign. He even made an effort to moderate the Cold War and the nuclear arms race. Although he provided some support to the French early on, he avoided the substantial morass of Vietnam – unlike his successors in office. He quickly rolled back the 1956 Suez crisis. And he refused to a launch a nuclear attack on China as urged by his senior advisors.

Eisenhower was certainly not an ideal president. He approved the CIA’s United Fruit Company coup in Honduras and authorized another CIA coup to install the Shah in Iran, an act that continues to have blowback today. Eisenhower is no more deserving of a peace prize than Barack Obama, but the man who warned us about the undue influence of the military industrial complex was no Mitt Romney either.

Romney has revealed himself to be the complete captive of the military industrial complex. Despite our present economic straits, Romney is eager to “apply the full spectrum of hard and soft power to influence events,” and to that end intends to add 100,000 more people in uniform. While the U.S. spends almost as much as the rest of the world combined on warfare, Romney, who claims “this is America’s moment,” proposes to spend more.

Romney’s foreign policy posture is a continuum with that of George W. Bush. And while Romney avoids speaking Bush’s name, referring to him with the verbally clumsy term “predecessor” five times in one speech, Romney may actually exceed Bush in his unmitigated bellicosity.

He has surrounded himself with the most unhinged of the Bush neocon advisors, those who marched this country into the decade-long morass of Mideast warfare. Romney’s repeated call for a new “American century” is especially chilling since his war cabinet includes eight signatories of the Project for the New American Century, the manifesto calling for the invasion of Iraq long before 9/11/2001.

Romney joined John McCain for some saber-rattling on Memorial Day and urged the arming of Syrians. Pushing for “more assertive steps” in Syria, it may not be long before he joins McCain in urging U.S. bombing of Syria as well. He proposes to increase military training and assistance with Central Asian states. And Romney will, he tells us, “station multiple carriers and warships at Iran’s door,” apparently without regard for what our own intelligence community reports about Iran’s nuclear viability.

Romney ceaselessly rearranges his taxonomy of threats, bouncing quickly from one to another. He has identified Russia as “without question our number-one geopolitical foe”; jihadists are this century’s nightmare; North Korea is a clear and growing threat to the United States; the Iranian leadership is the biggest immediate threat; China threatens Romney’s “American century.”

So this is what Republicans offer the nation: the warfare part of Washington’s warfare/welfare state. Oh, but there will be plenty of welfare to go along with it (mostly for the crony classes), just as Obama has included plenty of warfare even as he tilted to the welfare state.

Americans are perfectly capable of buying a pig in a poke. They have done so over and over again. Even before announcing his run for the presidency, Bush was quite explicit with a biographer about the joyous prospects of invading a country like Iraq to pump up his approval numbers and build political capital. But he told the electorate just weeks before the vote that he wanted a more humble foreign policy, one without nation building.

The nomination secure, Romney may try to moderate his chest-thumping during the general election campaign, too.

But there’s a war pig in that bag.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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To hear Mitt Romney tell it, he created 100,000 jobs while he was at Bain Capital. Former Reagan budget director David Stockman, who spent years in the private equity business himself, describes Romney’s record somewhat differently.

Listen to the way Stockman’s deviation from orthodoxy has all the Fox Business panelists squawking as one.

The end of America’s current monetary system is certain, and it is approaching fast. The only question is what will replace it?

The restoration of the American dream demands sound money, so to avoid being victimized by yet another monetary flim-flam when the dollar reserve standard collapses, it is very important that the people understand our monetary history.

In my new book, Red and Blue and Broke All Over: Restoring America’s Free Economy, I told the story of our monetary system in a way that even those who would otherwise never think about the nature of money can remember, and can use it to tell others. Our monetary history – and perhaps its future – can be told in the tale of the three little pigs. Except that this version of the story is in reverse and it comes with a warning…

Once upon a time – and for a very long time – Americans lived in a solid gold monetary system. They owned gold and used it for money. The dollar was literally as good as gold. It was a monetary system so solid that it was like a house of bricks. And then, in 1933, the state decided it wanted all that gold for itself, and it demanded all the gold bricks from the monetary house. It even threatened the people with 10 years in jail if they didn’t turn over all the gold, brick by brick.

So the people were forced from their brick house and moved into something called the gold exchange system. This was a monetary system that pretended to be built of gold. It represented that the dollar was still exchangeable for gold. But it really wasn’t, at least for the people who lived in it. In fact, most gold ownership remained a crime. It was a monetary system so flimsy that you could say it was built like a house of sticks. Of course, it couldn’t hold up long. It collapsed in 1971.

When the house of sticks collapsed, the people were told that they must now move into a monetary house made of straw – the dollar reserve standard. This, they were told by the state, was even better than a house of bricks or sticks. But, of course, it wasn’t. And now the winds of economic reckoning have begun to blow. And as the straws of today’s dollar reserve system begin to be scattered to the four winds, the people must look for a new monetary home.

Will they be guided by those responsible for their rude and flimsy dwellings, the statists and Keynesians and politicians and bureaucrats who have driven them from home to home, each one more decrepit than the one that preceded it?

Some of the people have begun hoping for a return to a sound monetary system and a move into something built like a brick house, such as the solid gold one they had before.

But this tale must be accompanied by a warning. The monetary and fiscal authorities, sensing the people’s unhappiness with their diminishing circumstances and their nostalgia for the permanence of the monetary brick house of gold, are likely to offer them something that purports to be tied to gold. Instead, it will be just another contrivance, but one that is represented as somehow pegged to gold.

Robert Zoellick, the president of the World Bank, referred recently to introducing gold into the monetary system as "an international reference point of market expectations."

But if the currency is not redeemable in real gold that you can take anywhere you go and keep anytime you wish, it is not really a gold house at all, but only another monetary flim-flam by the state. It may be constructed to appear like the brick house made of gold, but it will only be a house of paper, painted to look exactly like bricks of gold.

And remember that a house of paper is even more flimsy than a house of sticks or a house of straw.

This article is adapted from New York Times bestselling author Charles Goyette’s new book Red and Blue and Broke All Over: Restoring America’s Free Economy.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

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There’s nothing funny about Mad Cow Disease.

But after the announcement this week of the discovery of an infected dairy cow in California, I couldn’t help but think of a friend of mine, a stand-up comedian, who has a line about solving the actuarial problems of Social Security and Medicare by ending the state’s "intrusive inspection of meat."

It gets a big laugh, but provokes an important question: What would happen if the state did not inspect meat – or other food products?

After the discovery of bovine spongiform encephalopathy (BSE), better known as Mad Cow Disease, in the U.S. in 2003, Japan halted the importation of American beef.

Motivated by a desire to resume selling to Japan, Creekstone Farms in Kansas invested heavily and built a testing lab so that it could independently test all of its cattle. This was a challenge to the USDA which, captured by the food industry it regulates, supports only random testing.

It should go without saying that large U.S. meatpackers opposed Creekstone’s effort to pioneer new and improved testing protocols. A meat industry spokesman insisted that any testing should only take place under government oversight. In 2006, Creekstone was forced to sue the USDA for refusing it permission to test all of its cattle. In 2008, a U.S. Court of Appeals overturned a lower court ruling that would have allowed Creekstone to proceed. "We owe the USDA a considerable degree of deference," wrote a judge in the case.

Central planning in public safety is fraught with the same shortcomings as central planning elsewhere in the economy. It stifles progress and innovation, drives up costs, and protects powerful interests from competition. These are not shortcomings of regulation; they are the intended consequences.

Economist George Stigler, a Nobel laureate, has made the case that state regulation is designed to provide special privileges to regulated industries, protect them, and raise prices on their behalf. Of course this "regulatory capture" in which the regulators actually serve their industries is exactly the opposite of what the governing classes promise the public. Instead, regulating agencies restrict competition in ways that actually victimize the public. Stigler has suggested that "every industry or occupation that has enough political power to utilize the state will seek to control entry."

What would replace the "intrusive inspection of meat" In the absence of the state? Has the state even been doing a good job in its inspections? That is a question that can only be answered by asking "compared to what?"

Would the "poke and sniff" method of feeling and smelling meat – the mainstay of USDA inspections for almost a hundred years but one that cannot detect pathogenic bacteria and microbes like E. coli – have been improved on many years earlier than it was by innovators in a free economy looking for better ways of doing the job?

It is impossible to say.

Would one uniform standard of inspection have emerged, so clearly superior that it would go unchallenged? Or would there be many means of testing for food safety, each one offering greater thoroughness and more efficient costs than the next? It is impossible to know until creative minds attack the problem, a prospect that is sharply reduced in the presence of the state’s monopoly.

If there were a widespread outbreak of Mad Cow Disease, how many would suffer needlessly because regulatory capture blocked new advances is testing? Innovations that never see the light of day, held back by the regulatory state, cannot be known. But in a free economy it is foolish to think that people wanting wholesome food will flounder about and go unsatisfied in the absence of the state.

This article is adapted from New York Times bestselling author Charles Goyette’s new book Red and Blue and Broke All Over: Restoring America’s Free Economy.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

The United States of America in 2012 exhibits the characteristics of a nation in terminal decline. Her capital city is a den of iniquity and a seat of corruption. The economy continues to wilt under a barrage of bewildering regulations, corporatist manipulation, rent seeking, and reckless government spending. Washington’s finances are in a shambles and the only way it can pay its bills is with money it conjures out of thin air. Comparisons to the last days of Rome are common.

Charles Goyette surveys this mess in his new book, Red and Blue and Broke All Over: Restoring America’s Free Economy. The book’s title pretty much sums up the author’s analysis of 21st century America. According to Goyette, the country’s bankruptcy has been a bipartisan effort.

Goyette writes:

"The inescapable conclusion is that both parties are to blame. Einstein’s oft-cited observations that no problem can be fixed from the same consciousness that created it applies to the deflating promise of America. The restoration of the American dream will not occur as long as the political discussion remains constrained by the old voices of the Republicans and Democrats who marched us into our present economic morass."

Goyette’s previous book, The Dollar Meltdown, a New York Times best seller, was primarily concerned with increasing government spending and how it is destroying the purchasing power of the dollar and thereby impoverishing the American people. In Red and Blue Goyette tackles the broader issue of long term economic decline, arguing the country’s financial problems are a symptom of the moral and intellectual bankruptcy of its political establishment. Goyette avers, "Mesmerized by state authority, and blinded by their own partisanship, few authors, analysts, and commentators active in the public debate realize that both parties worship in the same statist church and share obedience to same economic priesthood."

Red and Blue’s message is that freedom works and statism doesn’t. If left free and unmolested, people will establish spontaneous, self-organizing systems which create prosperity. This is the theory of human action which asserts people naturally seek to improve their circumstances and they don’t need to be regulated, monitored, or whipped into shape by bureaucratic overseers. Goyette writes, "Only by understanding the bankrupt philosophy of statism and replacing it with the philosophy of freedom will a return to prosperity be possible."

Political partisans may be bothered by the author’s iconoclasm, for in making his case, Goyette smashes cherished idols of both the left and right. Hawkish conservatives will likely take exception to Goyette’s criticism of the warfare state and his description of the United States as a "military empire." Bleeding heart liberals will take umbrage at his criticism of the domestic welfare state and his support for a genuine free market, which the author contends is the only true path to prosperity.

Goyette does not pull any punches in his criticism of the current economic system. He even uses the F-word: Fascism. The fascistic nature of the U.S. economy has been obvious to keen observers for decades although most have preferred not to use that word.

In a section of the book called "The Wormhole Express," Goyette details the revolving door relationship between Goldman Sachs and the U.S. Treasury. That such an arrangement is a conflict of interest is obvious but when Goldman Sachs is the beneficiary of multiple decisions taken by high level government officials who are former employees of that well-connected firm, the system’s utter corruption is laid bare.

This is not a Democratic or Republican problem. The continuity between the Bush and Obama administrations proves as much. The Bush administration waged bankrupting elective wars and arranged for the largest corporate bailout in our nation’s history. The Obama White House has pushed through its own series of corporate bailouts and continued to wage undeclared and unnecessary wars. As the rock group The Who sang, "Meet the new boss, same as the old boss."

Goyette writes:

"If Americans are serious about restoring their prosperity, they will have to take a realistic look at Republicans and Democrats, who have been managing (or mismanaging) our political and economic affairs for generations now. Economic orthodoxies have been held in common by both parties. These doctrines have advanced in Republican and Democratic administrations and prevailed despite the control of Congress and being handed back and forth."

The problem is the continual growth of the warfare/welfare state. The country’s sprawling national security apparatus costs more than $1.2 trillion per year, much of it financed by debt. The federal government’s myriad social program and transfer payment schemes are equally unsustainable and will end one way or another. In the meantime, out of control government spending stifles economic growth by wasting scarce resources and piling on more debt which is rolled over through the inflationary mechanisms of the central banking system. The whole system is based on perpetual inflation and debt.

Red and Blue is an ambitious effort, covering such varied topics as economics, history, philosophy, economics, foreign affairs, and politics. The reader is never loaded down with monotonous statistics nor is he bored with long-winded pontifications. The commentary is sharp, concise, and at times, funny. Perhaps this is where Goyette’s previous career helps. He was a successful radio personality who hosted his own drive time show until he was fired for not toning down his criticism of the George W. Bush administration. Like his late radio show, the book is informative and entertaining. It’s a veritable goldmine of witticisms such as Goyette’s quip that the term "‘jobless recovery’ falls into the same class as a lifeless resuscitation: the operation was a success, but the patient died."

Goyette provides no political solutions in Red and Blue which is consistent with overall theme of the book. There are no political quick fixes to problems that have been decades in the making. Expecting the current crop of politicians to come up with a solution is naïve if not delusional. Government can’t be the solution when it is, indeed, the problem. Goyette urges his readers to simply embrace freedom. This means rejecting the State and all of its empty promises. That is the only solution.

Reprinted with permission from American Breaking Point.

White House polling must show how badly gas prices are hurting Obama’s approval numbers. Badly enough that he’s even trying to ease up on attacking Iran.

Here’s Obama on the campaign trail: "The problem is … speculators and people make various bets, and they say, you know what, we think that maybe there’s a 20% chance that something might happen in the Middle East that might disrupt oil supply, so we’re going to bet that oil is going to go up real high. And that spikes up prices significantly."

While blaming economic conditions on speculators is the common stock in trade of demagogues and politicians of all stripes, what is the president actually saying?

People who need energy to keep their businesses working, business that make modern life possible, look around at world events and grow concerned that the U.S. government and others may conspire to interrupt the flow of oil. Behaving like good stewards of their enterprises, they and their agents seek to assure needed oil supplies in an uncertain future by contracting for tomorrow’s oil needs today.

While Obama deprecates the activity, saying that those trying to prepare for future conditions, are "betting," most oil users would actually prefer stable prices and would just as soon forego the guessing game about future prices. It’s a game that costs them if they are wrong and only allows them to stay in business if they are right. Most are happy that someone – those speculators politicians love to vilify – are willing to take on the risk of being wrong about future price movements for the rewards of being right. The real oil users can then count on liquid markets when they need them and keep their attention – and their capital – focused on delivering the blessings of modern life instead of betting on the movement of prices.

And there is something wrong with this? Hold the phone a moment!

It’s not as though those seeking to secure oil for their future needs are making something up. They’re not concerned about some fantasy development, some exogenous agent like space aliens appearing out of nowhere to suck up all of earth’s oil. This isn’t science fiction. They’re trying to keep things working in the face of very real and very familiar government threats to our way of life.

Maybe they should be praised, not condemned.

While one administration bureaucrat has claimed there is a "Wall Street premium" on the price of oil, it takes government to make a war. Speculators trying to anticipate future prices in the event of a war don’t impose embargos. Nor do they launch airstrikes.

In The Dollar Meltdown, I estimated that during the constant saber rattling and elective wars of the Bush years, the fear premium on the price of oil may have run from $20 to $40 a barrel, depending on developments. It was, in any case, a huge transfer of wealth from the American people to the oil sheikdoms, Putin’s Russia, and Chavez’s Venezuela.

If Obama is prepared to further de-capitalize the American people and deliver another blow to an economically-depressed world by supporting an Israeli strike on Iran and risking the closure of the Strait of Hormuz, isn’t it a good thing that he has to confront at least some of the cost of such recklessness?

He’s a politician. He should pay a political price.

George W. Bush never did. But we would be better off economically if he had to reckon with the price for his elective war.

Might Bush have been dissuaded from his unnecessary war if he had known that it would cost not under $50 billion, as his administration claimed, but more like $5 trillion?

Would Bush have given up plans for his counterproductive war on Iraq – a war that has only consolidated Iran’s Shi’ite power bloc in the region – if he had known that he would preside over an explosion of the nation’s visible debt from $5.7 trillion to $10.6 trillion?

Would Bush have foregone his wasteful war justified by forged documents and phony intelligence if he had known that its cost would help trigger the steepest downturn in America since the Great Depression, even as the cost of the Vietnam War helped create the stagflation decade of the 1970s?

If he had known the costs and the outcome, would Bush have been capable of better decisions?

Nah. Bush was not capable of forethought or making wise decisions. When he ran for reelection in 2004, Americans still hadn’t come to terms with the monstrosity of his bogus war. And his opponent, John Kerry ("Reporting for duty!") wasn’t willing to risk defeat by opposing the prevailing war fever. Had he done so, he would have still lost in 2004, but could have easily been elected on the "told you so" platform by the time people began seeing through Bush’s war in 2008.

Whatever Obama’s real view about war with Iran, he at least has enough foresight to know that it will result in even higher gas prices.

At his first press conference of 2012, Obama responded to a question about gas prices with a question of his own, asking the reporter, "Do you think the President of the United States going into reelection wants gas prices to go up higher? Is there anybody here who thinks that makes a lot of sense?"

Obama knows that the price at the pump can cost him the election.

If it is wariness about the political cost of higher oil prices that has Obama preferring "engagement" to bombing Iran, it is a good thing. If it is speculators buying oil against future possibilities that keep Obama from reacting as Romney and the neocon Republicans egg him to start another needless and ruinous war, then we owe speculators a debt of gratitude.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Perhaps it’s like shouting an alarm, unheard above the engine noise of two trains on a collision course. Or, screaming helplessly as a car slips its brakes and rolls toward a toddler playing at the bottom of the driveway.

It is gruesome imagery and I apologize for invoking it. But if anything, it may be inadequate to the prospect before us.

One only has to ask, "What is heading our way?"

Headline:

The Department Of Homeland Security Is Buying 450 Million New Bullets

And don’t kid yourself; they’re not for target practice. It’s .40 caliber ammunition, hollow point rounds that promise "optimum penetration for terminal performance." The department also has a bid out for up to 175 million rounds of .223 caliber ammunition.

This isn’t the flipping army, you know. This is an internal national police force, a department that didn’t even exist 10 years ago.

Headline:

Supreme Court OKs Strip Searches for Minor Offenses

It’s okay with the Supreme Court if you are detained and subjected to a demeaning strip-search for such serious offenses against the State as violating a leash law or having a headlight out.

Really, is being strip-searched and perhaps even forced to take a delousing shower for riding your bicycle without an audible bell reasonable? Of course not. So much for the 4th Amendment.

Headline:

Police Are Using Phone Tracking as a Routine Tool

Even in the absence of judicial authorization, cell phone tracking has become widespread. An ACLU report covering more than 200 police departments finds that nearly all engage in the practice, but only a few bother with a warrant.

Would you be shocked to discover that some police departments are trying to keep their activities secret because of the legal implications? Officers have even been warned to keep their cell phone tracking out of police reports. Now what was that oath about upholding the law?

Headline:

The NSA Is Building the Country’s Biggest Spy Center (Watch What You Say)

The crown jewel of Federal spying is a new $2 billion, high tech center in Utah, a million square feet devoted to data gathering and storage. "NSA has turned its surveillance apparatus on the U.S. and its citizens," reports an account of the program.

The facility will help manage information from 10 to 20 domestic telecom "listening posts." "We are, like, that far from a turnkey totalitarian state," says William Binney, a former senior NSA crypto-mathematician.

What Is heading Our Way?

These are only a few recent headlines. But the police state is growing much faster than even these stories suggest. There is the developing proliferation of domestic spy drones; a variety of so-called cyber-security bills – internet kill switches – are working their way through Congress; and, of course, there are executive power grabs like the presidential power to target American citizens for assassination found in the National Defense Authorization Act (NDAA).

Some Germans, although not all, were willing to ask what wicked thing was headed their way in the 1930s. Sebastian Haffner was a young law student and aspiring court clerk at the time. After his death at the age of 91 in 1999, his son found Haffner’s account of the era stuffed away in a drawer.

Haffner’s manuscript, which he had left unfinished in 1939, was published as Defying Hitler," and became an immediate bestseller. The book is graced by fine writing, shown in a New York Times review citing Haffner’s description of Hitler: ”… personal appearance was thoroughly repellent – the pimp’s forelock, the hoodlum’s elegance . . . the interminable speechifying, the epileptic behavior with its wild gesticulations and foaming at the mouth.”

But it is the candid search for self-knowledge, his honest inquiry of "what became of the Germans," that makes the work a place to begin answering how "it" could have happened. Haffner writes that nobody saw what was to come with any clarity in the early days of the fascist transformation of the land in 1933, but that he "had a sense of what was in the air. I felt distinctly that what had happened so far was merely disgusting and no more. But what was in the offing had something apocalyptic about it."

Haffner suggests that Germans saw in Hitler a "do-over," a chance to transform the defeat of World War I into victory. The martial mood he invoked, like that of the war, "provided far more excitement and emotional satisfaction than anything peace could offer."

A 9/11 Do-Over?

Is it possible that Americans are squandering their birthright of liberty in nostalgia for post-World War II triumphalism, a golden age myth of good wars and greatest generations? It is a myth that exaggerates our might and insists on our universal benevolence.

But it is a myth that was shattered on 9/11, when we discovered ourselves to be both vulnerable and unloved.

Like the Germans, determined to prove that history got it wrong with the Allies’ victory in November 1918, is ours an attempt to cling to an illusion about America that made us hold absurd beliefs about democratizing the Mideast and being "welcomed as liberators"?

Are Americans spending themselves into warfare-state ruin now to reenact the myth (for it is a myth) of the universally admired and invulnerable hero?

Like a middle-aged man squandering his savings on face lifts and hair plugs, on expensive sports cars, and absurdly inappropriate clothing, night clubbing with girls half his age, trying to relive a youth that was never anything like his imagination, are Americans trying to recapture a period that was nothing at all like the myth of their belief?

Is it the lingering myth of invulnerability, an unspoken promise for the storied omnipotence of skies darkened with aircraft and seas blackened with ships that has Americans spending almost as much as the rest of the world combined on warfare, and digging themselves deeper into ruin?

But we never were what the myth says we were. It is only our failure to confront who we really are and what we have been party to that makes us subject to the compulsion of myth, so that we act in unconscious and destructive ways.

We were never invulnerable before September 11, 2001.

Just ask public school children who were drilled to "duck and cover" under their desks when the sirens went off during the Cold War.

And we were never the global "Good American."

At least, the 20 million – 30 million human beings whose deaths the U.S. is responsible for since World War II would not have seen us that way. To them, we would more readily have been recognized as mighty brutes. But since we know nothing of their perception of our brutishness, and since we don’t hold ourselves morally accountable for any of the slaughter, we have combined ignorance with our brutality.

In this unawakened state, Americans stand by silently as the national security state becomes more powerful by the day. Just as only the complete totalist state could allow Hitler to assert what was to be Germany’s ultimate victory, only the unchecked might of such a state seems equal to the task of forcing reality to match the myth under which Americans labor.

The headlines tell the story … "Something wicked this way comes."

The line is from Macbeth. It is, of course, a tragedy about power and death.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

In a just world, Charles Goyette would sit atop the radio broadcasting industry as one of our most preeminent political radio personalities, where Rush Limbaugh, Sean Hannity, or Mark Levin would be fetching him coffee and the latest issue of The New American (TNA) magazine.

Goyette had a long and illustrious career in radio, where he promoted his views on limited government, individual liberty, and Austrian economics. Unfortunately for him, having viewpoints that run deeper than the talking points forwarded from Karl Rove can be a liability in a broadcasting world dominated by political pundits who march to the tune of the Republican establishment. His fatal mistake was being a principled conservative during the budget-busting, nation-invading Bush years. Talk radio is not known for being friendly territory for independent thinking. Goyette stood firm on his traditional conservative stance regarding both the immorality and idiocy of foreign wars for visions of global democracy. His reward for such disobedience was dismissal. Much to the chagrin of the neocons, Goyette did find work elsewhere and broadcasted his views for a few more years. Podcasts of some of his later interviews can still be heard over at Antiwar.com.

Goyette eventually left the world of radio and began writing. Goyette’s last book, The Dollar Meltdown, which this writer previously reviewed for TNA, became a New York Times bestseller. His latest book, entitled Red and Blue and Broke All Over: Restoring America’s Free Economy, was released in mid-March. This latest offering is an indictment of the two major parties and increasingly oppressive and destructive government actions, both foreign and domestic. The name itself, Red and Blue, is a direct shot at the bipartisan effort to create an all-powerful state and the parties’ embrace of centralized economic planning and endless interventions abroad.

Goyette argues that both parties are to blame for our predicament. Freedom, Goyette writes, “has been double-teamed by

Republicans and Democrats alike; it has been sucker-punched by the red gloves of one and has taken a hit on the blind side by the blue gloves of the other. American freedom is on the ropes.” Party loyalists might be taken aback that this book takes numerous potshots at party leaders, both past and present. In regard to the 2008 election, Goyette quips that “candidates were really just like practice squads, wearing different jerseys, one red and one blue, but playing on the same team.”

Much like his on-air radio personality, Goyette’s writing is informative yet entertaining, and the book is immensely quotable. Gems abound, such as his quip that the term “‘jobless recovery’ falls into the same class as a lifeless resuscitation: the operation was a success, but the patient died” or the “shape of our economic future can be discerned in the lengthening shadows cast by the growing intrusions of the state.”

He does an excellent job of painting a vivid picture with his words that make concepts that might be foreign to readers vibrantly come to life. For instance, he attacks our brewing debt crisis from the perspective of its impact on future generations. “Surely one must question the morality of people who would approve paying for present consumption by burdening little children and those yet to be born with a lifetime of debt.” Goyette also brings up classic works of literature like George Orwell’s 1984 and Aldous Huxley’s Brave New World to draw parallels to today.

Read the rest of the article

Patrick D. Krey, Esq. is a freelance writer who works in the corporate world and has an M.B.A., J.D. (law degree) and an L.L.M. (masters of law) from the University of Buffalo. Patrick is also a general practice Attorney admitted to the bar in New York State. His writings focus on national issues and have been published online at JBS.org, PrisonPlanet.com, Antiwar.com, Infowars.com, The Tenth Amendment Center and in The New American bi-weekly print magazine.

The below article is an excerpt from Charles Goyette’s bi-weekly Freedom & Prosperity Letter podcast, Cash for Freedom, originally published on March 22, 2012. To listen to the podcast in its entirety, click here.

The one thing about cash is that it is anonymous. And that’s the one thing that intrusive governments don’t like about it.

Governments hate that cash gives you anonymity. And they are often very anxious to track it and to control your use of it. They often attempt to criminalize the use of cash or at least criminalize having too much of it around.

Right now, 7% of the U.S. economy is cash-based. Across the Eurozone, it’s a little bit higher, 9%, but in Sweden cash transactions are falling by the wayside. You can’t use cash for buses there. A growing number of businesses are going entirely cashless. In fact, only 3% of all purchases in Sweden are transacted in cash. And some people think that 3% is too much.

Now, there are things you give up when you go cashless, and privacy is only one of them. Because you also give up a piece of every transaction to the facilitating financial institution, a state-approved financial institution that is going to take a cut one way or another of every purchase that it processes. And that cut will be paid by you.

In the United States, the government has implemented increasingly punitive and burdensome measures for those who use cash. Banks, for example, are required to file reports on the use of cash in certain circumstances, including suspicious persons reports for some cash activities. In fact, if you seem to be trying to transact in cash below the reporting threshold, that alone can trigger a suspicious persons report on you. Like a lot of the states’ heavy-handed measures, this was all targeted at getting those drug dealers.

And you see how well that worked out.

Now, there are plenty of perfectly good reasons for someone to wish to do business in cash and anonymously. This is an age of home invasions and identity thefts. So the desire to do business in cash can simply be prudent. I mean, you wouldn’t want to leave a receipt laying around in some business where you bought some expensive piece of jewelry for your wife, for example, for her birthday.

But equally important is this: In a free country, your transactions shouldn’t be anybody else’s business. And that’s the bottom line.

At least it’s the bottom line in a free country.

For a free and prosperous country, I’m Charles Goyette.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

Of course the State doesn't create any wealth. But it sure keeps busy moving it around a lot. The governing classes and bureaucracies have been doing it so long and on such a ballooning scale that by now it is inexcusable to have missed what happens when the State stovepipes money to a particular recipient group: costs go through the roof.

You may have noticed the hand of the state in blowing up the housing bubble. If you came along too late for that show, look at the education bubble instead. Student loan debt is now over a trillion dollars, even larger than total U.S. credit card debt. And it keeps growing. All that State guaranteed loan money has simply blown up the cost of higher education, transferring wealth from students to the professorial classes and education elite, and further trivializing education with silly, taxpayer-subsidized classes. (Why, really, should a university offer three credit hours to study Lady Gaga? Would it be so difficult for someone that interested to just, y'know, read a book?)

It's not so difficult to understand the impact of the State and its largesse. Imagine a law that had the state subsidizing hamburger consumption, agreeing to pay a substantial part of the cost of every hamburger eaten. Hamburger sales would skyrocket and prices would head to the moon. And then if the State capped prices too, hamburger shortages would soon become a fact of life.

Now the State, which has almost completely ruined medical care that was the envy of the world, is busy channeling more money to the industry. And all eyes are turned toward arguments before the Supreme Court that will determine just how thoroughly the State will be able to destroy the physician- patient relationship as it stovepipes money to Big Pharma and corporate medicine.

The oral arguments before the court have been characterized by typical lawyerly casuistry, arguments and inquiries which presage a hair-splitting outcome. While the court is capable of striking down the mandates in part, if it does so, it will be in a way that changes, but does not arrest, the further socialization of medicine.

After Tuesday's arguments Senator Leahy said that it would be hard to understand how the Supreme Court could strike down the health care mandates without overturning Social Security. "I don't think they are prepared to do that," he said.

He's right. Both Obamacare and Social Security rely on the same view of the State and its power to order about the affairs of the individual. And that is the real issue at hand. It is an issue the justices, themselves political appointees and servitors of the state, won't confront. In fact, even if the justices were utterly convinced that Social Security were unconstitutional, they would still leave it intact to collapse in its own ashes. There would be none of the interminable media chatter about Justice Kennedy and his swing vote.

The Supreme Court is not alone in its refusal to address the real issue of the State and its power. The Republicans, posturing as principled opponents of State mandates, won't address the power of the State either except to the extent they see it as an election year expedience. After all, the Affordable Care Act is a changeling. It may have been raised by Obama, but it is a Republican child. Its mandates sprang from the brow of Republicans. It was suckled at the breast of the Heritage Foundation. And if any final questions about its parentage remain, they can be answered by noting that Mitt Romney, the likely Republican nominee, called upon Ted Kennedy to witness the birth and even midwife his Romneycare offspring in Massachusetts.

Making medical care more expensive, regimented and regulated at the hands of Republicans or Democrats will have one unintended consequence. Just as stovepiping money into housing and educations drove the costs of both up, so too will healthcare costs rise ever higher, while attempts to put a lid on those prices will mean care that is characterized by shortages and delays. This will all conspire to help solve the actuarial problem of Social Security since people will be forced to forego needed care and leave medical maladies untreated. The American lifespan will grow shorter. In the growth of statism, America is emulating the old Soviet Union. Why then shouldn't American life expectancy emulate theirs, with longevity that bumped along at the bottom range well below that of Japan, Europe, and the United States?

For those detached from the partisan one-upmanship of the Red and Blue parties, those more interested in the preservation of our freedom and the restoration of our prosperity, the battle over healthcare highlights the absurdity of what has become of the land of the free. In a Lew Rockwell.com blog post, Thomas DiLorenzo summed it all up, concluding ironically that the main idea of the founding fathers…

". . . was that after a long and bloody revolution fought in the name of freedom and against tyranny, they would place everyone’ s freedom, and life itself, in the hands of five government lawyers with lifetime tenure. Or in some cases just one government lawyer with lifetime tenure if the nine-person Supreme Court happens to have a 4–4 ideological split on most issues."

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

by Doug French

Recently by Doug French: MF Global’s Fractional Reserves

The U.S. government has created borders within the country's borders at every airport in the country. Technologies abound in ticketing and check-in on one side of the border while commerce thrives on the other. In between is a massive government apparatus requiring that shoes be kicked off, laptops be unpacked, and less than 3.1 ounces of liquid be carried in any one container. The only technology in sight is the offensive porno scanners. And for those that refuse scanning, a brutish pat-down is administered.

These Transportation Security Agency (TSA) borders are guarded by 58,401 bureaucrats in blue, at a cost this year of $8.1 billion. The taxpayers must not spare any expense in convincing themselves that the government is making us safe.

The arbitrariness of rules at borders is brought to mind in the opening pages of Charles Goyette's sobering new book Red and Blue and Broke All Over: Restoring America's Free Economy. Viewing borders from the air, one can hardly tell where they are, these imaginary lines drawn by governments. However, while the terrain on either side of a border may be identical, satellite imagining provides a stark contrast of neighboring countries where capitalism operates on one side of a border while socialism reigns on the other.

The native culture and language may be identical, but roads that are paved on the capitalist side, turn to dirt on the socialist side. While lights burn brightly in the capitalist night, those living under socialism are shrouded in darkness.

Within its borders, America once provided an example to the world of what free markets and sound money can provide. But as Goyette painstaking points out, those days are over. Today's America is but an aging bankrupt empire. Not so different than the last days of Rome. Its armies spread thin throughout the world. Its treasure wasted long ago, government finances are in shambles, and it can only pay its promises with money it creates from nowhere.

While Republicans and Democrats bicker on Capitol Hill, each party is equally to blame. The various cable news networks root for one side or the other without realizing "that both parties worship in the same statist church and share obedience to the same economic priesthood."

In Red and Blue and Broke All Over, Goyette writes in the same dry and witty style that made his previous book, The Dollar Meltdown, a bestseller.

In the book's first of three parts, the author examines the state of freedom in America. It's not a pretty picture. Once upon a time, America had no income tax, no federal reserve, no endless list of regulatory agencies, and no involvement in foreign wars.

Now we have all of that and much, much more. The average American doesn't know what a free market looks like. "Keep the Government out of my Medicare!" read signs at 2010 Tea Party rallies. While Americans collectively spend 6.6 to 7.5 billion unpaid hours a year complying with the taxman, the government sends out 88 million checks each month. Forty-six million Americans depend on taxpayers to buy their groceries.

We hear plenty about the glories of the U.S. Constitution this campaign season, always to great cheers from hopped-up campaign workers. But the millions of square feet of Washington D.C. office space aren't needed because congress is following that sacred document, but just the opposite.

Red and Blue's Rothbardian author sees the state for what it is — the enemy of prosperity. Those on Capitol Hill honestly believe they can centrally plan our economy, at the same time lawmakers like Rep. John Conyers can't figure out why the Senate Hair Care Services (Senate barber shop) requires $300,000 in taxpayer subsidy to keep open, while the privately-owned House barber shop turns a profit and offers its members cheaper haircuts.

Goyette has the guts to use the F-word while describing the U.S. economic system — fascism. Most wavers of the red, white and blue can't bring themselves to understand that capitalism isn't what's operating in America. The author looks to John T. Flynn's As We Go Marching to describe an American economy with business carried out by private owners but under the direction of government.

What spews forth from this sort of system is the Goldman Sachs to Treasury Department pipeline that Goyette terms "The Wormhole Express." Anyone who questions how Goldman is so blatantly propped up and bailed out, must only see how many of the firm's alumni are working in government.

An especially interesting part of Red and Blue is the author's look at The Brothers Karamazov, Brave New World, and 1984 and the modern manifestations of the literary archetypes created by those three authors. Goyette shows that life has certainly imitated art.

Goyette quotes investment legend Jim Rogers. "There is nothing like crossing outlaying borders for gaining insight into a country." And while Rogers was writing about third world countries in Adventure Capitalist, Americans should travel overseas and notice how easy entry into many countries is, compared to America.

From landing to calling a cab takes no time most everywhere — except the land of the free and home of the brave. Visitors to America are fingerprinted and digitally photographed on the way in. U.S. Immigration and Customs is an ordeal that takes a couple hours if everything goes right. And the process will get more cumbersome. According to the Department of Homeland Security, "At a date to be announced in the future, all travelers who provide biometrics when entering the United States will be required to provide biometrics when departing the United States."

What has kept the American empire in operation has been the dollar's reserve currency status. Once backed by gold, the dollar is now but a flimsy promise. A promise taken seriously by those who remember America as it once was, not what it is today.

America is bankrupt, Social Security is a Ponzi scheme and the country's financial situation worsens each day. The author points out that the Federal Reserve's holdings of Treasury debt increased from $777 billion to $1.6 trillion in a year's time. America owes more to its own central bank than it does China and Japan. This should be the very definition of a banana republic.

We use the debauched dollar because we have to by law – legal tender laws. Drug dealers, who are not quite as respectful to the authorities, would rather take bottles of Tide in trade. Foreigners will follow suit, increasingly looking for alternative currencies.

Goyette provides no political solutions in Red and Blue, but instead calls for individuals to do something quite foreign to them – embrace freedom.

"The state must just stop," Goyette repeats. "The state must STOP."

Doug French [send him mail] is president of the Ludwig von Mises Institute and the author of Early Speculative Bubbles & Increases in the Money Supply. He received the Murray N. Rothbard Award from the Center for Libertarian Studies. See his tribute to Murray Rothbard.

The Best of Doug French

A koan is a Zen puzzle or riddle designed to shatter mechanical or habitual thought. For one unfamiliar with the form, a koan can appear to be nonsense, or a foolish paradox. It can provoke the same frustration with which a hard-bitten literalist might meet a poetic metaphor or a Christian parable. But at its best, a koan can trigger a sudden flash of clarity or insight: "Aha!"

One familiar Zen koan goes like this: "If you meet the Buddha on the road, kill him."

It’s easy to imagine the confusion and discomfort such sharp and unexpected advice would cause the devoted Zen student for whom the Buddha is an object of veneration and a symbol of enlightenment. But perhaps the koan can be understood to warn against accepting something outside of yourself, a substitute that may appear to represent your enlightenment; a doctrine or dogma that cuts your journey short before your own awakening is attained.

As unlikely as it may seem, I find myself thinking about the "Buddha on the road" koan often these days as I talk about my new book Red and Blue and Broke All Over: Restoring America's Free Economy. It’s really a book about freedom and the way freedom produces prosperity.

One would be obtuse indeed not to see that American freedom and prosperity are at an inflection point. It can be seen when the head of the FBI is asked in a congressional hearing if the president has the authority to order American citizens assassinated, even within our own country. To which the FBI director answered that he’d have to check.

He’d have to check?

We are headed in a whole new direction.

The inflection point can be noted in this moment of our monetary affairs. The trillions of dollars of reserves the Fed "printed" to buy worthless paper from the banking cartel and conjured up in QEII debt monetization, suddenly is no longer just quietly humming unnoticed on the Fed’s books. It is beginning to wobble, a dangerously unstable monetary mass, the breaching of its containment seen now in the rising prices of gasoline and groceries.

Seriously, the Fed thought it could create $2 trillion without consequences?

It is a point of no return.

What Can We Do?

Once I have made the case in interviews and talk shows that our freedom and prosperity are at an inflection point, a host or listener will almost invariably ask, "What is to be done?"

It’s a perfectly logical question. Since these are political problems, the habitual response is that they must demand political solutions. The questioners want to know what political steps are demanded. What petition can they sign to make things right? What kind of commission do we need? Which party or candidate can fix things? Surely, there is a proposal, program, or reform that we can implement, is there not?

I am afraid my answer frustrates the demands of such logic. Because my answer is no: There is no such mechanical solution. Instead of representing a solution, politics is the very definition of the problem. It is the Buddha on the road.

If the monetary system is failing, shall we petition the State, the corrupter of money, to restore it? If needless wars are leaving us destitute, shall we beg the State, thriving as it does on warfare, to stand down? If we are losing our liberty, shall we empower the State by asking it to grant us liberties?

I do understand how empty this leaves those conditioned (by the State) to believe there is a State solution to every problem. But I recommend that instead of turning to the State and its mechanisms, we turn instead to freedom itself. That we each conduct ourselves in ways consistent with a respect for freedom. That we improve ourselves as exemplars of freedom. That we learn more about freedom to better appreciate its virtues – and to better communicate them when called upon.

This was the approach of the late Leonard Read, who eschewed mass programs for mass movements because he knew that the many follow the few. With his approach of self- improvement, Read became a light of great importance. In 1946, he created the Foundation for Economic Education, the first modern think tank devoted to human freedom. He was able to provide some support to Mises when the academic world failed to provide him a suitable position. He had a tremendous effect on many of today’s greatest champions of liberty. And, indeed, a simple essay Read wrote more than 50 years ago called I, Pencil, has had an impact on the consciousness of many of its readers so deep and lasting that I am pleased that I am able to extend its reach by having it reprinted in Red and Blue and Broke All Over.

Read’s view of the foundational importance of consciousness to our progress in life can also be seen in John Adams’ description of the American Revolution. Writing to Thomas Jefferson in 1815, Adams asked, "What do we mean by the Revolution? The war? That was no part of the revolution; it was only an effect and consequence of it. The revolution was in the minds of the people, and this was effected from 1760–1775, in the course of fifteen years, before a drop of blood was shed at Lexington."

The Case for Freedom

Today the case for freedom must likewise be made in the minds of the people. To engage our challenge under the capitol domes only feeds the beast where it lives and thrives. The case for State power is endlessly reinforced in the marbled halls of the State to begin with. It is reiterated by the education system on a daily basis. It is regurgitated by the lapdog press. The State and its prerogatives are the default position of the American public debate. The mantra of political discourse is "mandates." Indeed, one can go through an entire American life – through public or even private schools and universities, attending to the news and the political contests of our age – without ever hearing the case for freedom explicitly made.

Thus unprepared, those who have a vestigial attraction to freedom pitch all their energy and resources into fighting the State’s serial power grabs. In case after case, they raise funds, write letters, run candidates, oppose legislation, and seek a seat at the table.

Perhaps the focus of their effort is on stopping a policy like nationalized health care. If they lose, their energy is drained, their resources are exhausted, and their ad hoc organizations fade away. If they win, it is only to be rewarded with betrayal by their allies who, too, have never encountered an explicit case for freedom and therefore accept the presupposition of the State’s preeminence. (Remember that in the fight against ObamaCare, the Republican National Committee’s advertising did not oppose the State’s hand in health care; its advertising called only for a "responsible" plan and a "bipartisan" plan.)

No matter how well-intentioned those who undertake these efforts may be, in the end they are only waylaid by the State on the road to freedom.

But when we make ourselves more effective champions of freedom, we shine a light that Read would have said cannot be extinguished by all the collective darkness of the universe.

In a dark age, with liberties being snuffed and the descending nightmare of a monetary calamity, we each must increase our own light. It is not enough to oppose the trends that rob us of our freedom and prosperity. Freedom needs new champions who know not just that the State doesn’t work, but why it doesn’t work. Why central economic planning must fail. Why government price interference makes us poorer. Why freedom creates prosperity.

It was to make the case for freedom explicit in terms of today’s events that I wrote Red and Blue and Broke All Over: Restoring America’s Free Economy. If it is successful, it will have helped in a small way to increase the candle power of new champions of freedom.

In the meantime, if you meet the State on the road, you know what to do.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette

I've begun giving radio and TV interviews across the country this week about my new book, Red and Blue and Broke All Over: Restoring America's Free Economy. And I'm especially looking forward to being on The Lew Rockwell's Show on March 21. Often these conversation begin with a question like "What made you want to write this book?" or "What inspired you to write your book?" It's a logical place to start. And the answer is:

The fading of the American Dream.

The book is really about how freedom creates prosperity. It's something so axiomatic that it should be among the Truths that Americans hold to be Self-Evident: Freedom creates Prosperity.

It is a conclusion that is unavoidable in an examination of the long sweep of history. It is obvious in looking across national borders. It is even evident in satellite imagery of the earth. The stark line of light and dark that divides the Korean peninsula at night is actually the border that divides the North, plunged into darkness when the sun goes down, from the South, visible from illumination, and both more free and prosperous.

In our present economic state, some American cities and towns have been letting their street lights go dark. But the fading of the American Dream — for many a dream that consists of home ownership, a secure retirement, and the certainty of a better future for our children — is not merely about the latest business cycle. It is about something much more profound that is happening to us.

The official designation of recessions and recoveries is so far removed from the living experience of people in the American economy that it is utterly useless except to illustrate my point about our declining prosperity. The board that watches these things says the recession that came in with the mortgage meltdown in 2007 ended in June 2009.

Could there be a more meaningless statistical abstraction? One in seven Americans, 46 million of our countrymen, are on food stamps. We still suffer depression-era levels of unemployment. And more than 6 million home mortgages are going unpaid. And yet, we're told that the recession ended almost three years ago?

The fading of the American Dream is captured in a Milken Institute study: Over last 40 years, the median earnings of men in constant (inflation adjusted) dollars has declined 12 percent for those with college degrees. For those with only high school, earnings have fallen an astonishing 47 percent.

It should not be surprising that our declining prosperity correlates with neglect of our freedom. What is surprising is that while billions of people around the world are getting the boot heel of the state off their necks, embracing freedom, and becoming more prosperous, Americans have chosen to go in the opposite direction.

My new book's title, Red and Blue and Broke All Over, is intentionally ambiguous: America is broke. The U.S. government is dependent on the kindness of strangers in places like China to keep loaning it money. But the title refers to more than just the insolvency of the state. It describes both the Red and the Blue parties, for they are bankrupt as well, intellectually and morally.

The assault on our freedom is a trend that remains in force regardless of the party in control. Both Red and Blue share the same economic priesthood (Fed chairman Greenspan was appointed by both Reagan and Clinton; chairman Bernanke by both Bush and Obama).  So even when the parties change, the real monetary policies that determine our prosperity remain the same. 

Restoring the American Dream requires more than just singing about the "land of the free" at baseball games. It requires an understanding of freedom. The book lays out in clear terms, in terms that you can even use to explain it to your brother-in-law, why freedom works. In doing so, it helps answer these questions:

• Why does government interference in the economy makes us poorer?
• Why does the government's central economic planning fail?
• Why is the government's constant price meddling a disaster?
• How are the governing classes and the crony capitalists able to get away with robbing us to enrich themselves?
• What is the dollar endgame and what can we do about it?

Once you learn why freedom creates prosperity and why the state creates poverty, it becomes clear that only a renewed appreciation for freedom can lead us out. No new governmental initiative, charismatic candidate, bipartisan commission, or mechanical solution can help.

At the time of our founding, the people were aflame in their love for liberty. They talked about it in their taverns, town squares and churches. Only if we reignite that flame can we be rid of politicians' endless mandates, their central economic planning, and their wealth destroying crony capitalism, bailout schemes, and monetary deceit.

I wrote the book to make clear that it is not the choice between the Red party and the Blue party that matters…

It is the choice between statism and Freedom.

It is the choice between poverty and prosperity.

If we chose Freedom, we can restore the American Dream.

We can have a future of opportunity, peace, and prosperity.

If we choose Freedom.

Charles Goyette [send him mail] is the author of the New York Times bestseller The Dollar Meltdown. His new book is Red and Blue and Broke All Over: Restoring America's Free Economy. He is also editor of Freedom & Prosperity Letter, a monthly political and financial newsletter dedicated to revealing the truth about the U.S.’s political scene and economic climate. To learn more, go here.

The Best of Charles Goyette