It appears that the government may have been monitoring Silk Road activity for more than a year.

What is to say that future web sites will not be monitored? Further, who can rule out the possibility that the government won’t set up its own black market web sites?

As of NOW, the use of black market online drug web sites should be considered extremely dangerous. This is especially the case for online dealers.

I am all for allowing all drugs of any kind to be sold without government interference, but the bust up of  Silk Road shows that the internet may not be the best means to get this accomplished. Anyone suggesting otherwise is probably just encouraging some rebellious youth to make a mistake and set up online—a mistake that may result in such youth eventually spending many years in prison. Don’t be one of them.

Reprinted with permission from Economic Policy Journal.

Which brings me to the case of Miriam Carey, who was gunned down by law enforcement on the streets of Washington D.C. after a car chase.

From reports, we know that Carey started acting strange after she fell, some time ago, and hurt her head. It seems as though some filter we must all have in our head to keep us relatively calm amongst an ever growing surveillance state was shut off in her mind.

According to friends and family, she was concerned that President Obama was monitoring her. Well, how could that not be true? Certainly, after the Edward Snowden leaks, we know it to be truth. And it is noteworthy that Carey visited Washington D.C. just after Obamacare was launched where even more data is being taken on all of us.

Now let’s consider the chase:

It started near the White House, which I have passed by many times. It appears close to impossible for most vehicles to penetrate the barriers that are up. It would take a very heavy vehicle, a large dump truck traveling at a high rate of speed, to break through the barriers, but an Infiniti automobile, which Carey was driving, had no chance.

But it is noteworthy as to what Secret Service police did when she was near the barriers. According to an eyewitness:

The Secret Service guys pulled a black metal gate into her path and she slowed to try to go around it, they said.  But the agent moved the gate in front of her again. At that point “she just gunned it,” B.J. said. “She ran the barricade down and the guy; knocked him up onto her hood. He rolled off into the street and she tore off down Pennsylvania Avenue.”

For a woman who was spooked by government in the first place, that must have sent her fear into overdrive. Thus, the chase towards the Capitol where guns were starting to be aimed at her, which must have spooked her even more.

In Los Angeles, car chases are a common occurrence broadcast on live television. You can even get twitter alerts that notify you to turn on your television when one is in progress. The chases occasionally go into very populated areas, the police just follow. Once a chase went right past me in downtown Los Angeles as I was walking on the sidewalk.

Usually, the chases continue until:

A.The suspect runs out of gas.

B. Spikes are laid out ahead of the car

C. A maneuver is made that  forces the car to stop.

At such times the police apprehend the suspect. The only time gun fire is exchanged is when the suspect comes out shooting, never, never have I heard of southern California police shooting at the end of a car chase if the suspect wasn’t firing at them.

Unfortunately, Carey wasn’t being pursued in Southern California, but in Washington D.C., where police are more paranoid than she likely was. You see, everyone, until proven otherwise, is considered a danger to the state and its key rulers.

Any incident in the area is considered a threat to government unless proven otherwise. A shooting many, many blocks away at the Naval Yard, resulted in the Senate going into lock down. A women, who feared the state, driving with a baby, and unarmed, caused the entire Capitol to be locked down. Who is really paranoid here, the woman who did die at the hands of the state? Or government leaders diving behind desks and sending out their hired muscle to eliminate the “threat”?

The death of Miriam Carey is a terrible tragedy. In some way that most of us can’t see, she recognized government as a threat more intensely than most of us. Her trip to Washington D.C. proved what she believed, that unarmed and travelling with nothing but a baby, government could perceive her as a major threat that had to be eliminated.

After this tragedy occurred, inside Congress, members of Congress stood to thank their private police force that “protected” them from an unarmed woman with a baby. I ask you, who really is nuts here?

Reprinted with permission from Economic Policy Journal.

Lesson 1: Outlawing Jobs: The Minimum Wage

Lesson 2: The Lure of a Stable Price Level

Lesson 3: The Case for a Genuine Gold Dollar

Lesson 4: The Myth of Efficient Government Service

Lesson 5: How the Business Cycle Happens

Lesson 6: A Note On Mathematical Economics

Lesson 7: The Myths of Reaganomics

Lesson 8: Spotlight on Keynesian Economics

Lesson 9: The Adam Smith Myth

Lesson 10: Ludwig von Mises (1881-1973)

Reprinted with permission from Economic Policy Journal.

Reprinted with permission from Economic Policy Journal.

It is generally acknowledged that the great boom of the 1920s began around July, 1921, after a year or more of sharp recession, and ended about July, 1929. Production and business activity began to decline in July, 1929, although the famous stock market crash came in October of that year. [...] the total money supply of the country, beginning with $45.3 billion on June 30,1921 and reckoning the total, along with its major constituents roughly semiannually thereafter. Over the entire period of the boom, we find that the money supply increased by $28.0 billion, a 61.8 percent increase over the eight-year period. This is an average annual increase of 7.7 percent, a very sizable degree of inflation. Total bank deposits increased by 51.1 percent, savings and  loan shares by 224.3 percent, and net life insurance policy reserves by 113.8 percent. The major increases took place in 1922–1923, late 1924, late 1925, and late 1927. The abrupt leveling off occurred precisely when we would expect—in the first half of 1929, when bank deposits declined and the total money supply remained almost constant.

The money supplied slowed before the October 1987 crash:

It slowed before the 2008 September Financial Crisis:

And it is slowing again now:

Austrian economics also teaches us that it is a very complex world and that there are many, many inputs on an economy at any one time, so just because something occurred a certain way in the past it doesn’t mean it will develop exactly that way in the future, BUT central bank money manipulation does play a big role and it is crashing once again.

Reprinted with permission from Economic Policy Journal.

The chance of a terrorist striking me is less than .000,000,0001%. However, there are things I am real concerned about:

1. Walking the streets late at night, for fear of being mugged by desperate, poorly educated public school youth, who are prevented from getting First Step jobs because of minimum wage laws.

2. Obamacare–which will  do nothing but introduce socialism to the medical sector and ultimately result in declining life expectancy in the U.S.

3. The growing surveillance state. Edward Snowden was very correct when he pointed out that what we have is a turnkey tyranny/spying state. The switch hasn’t been turned on in a fashion that impacts most of us, yet. But, it is a switch that can be turned on at any time.

4. Crony capitalist/government deals that suffocate the free market system and put more power in the hands of crony capitalists, who feed more and more off the state.

5. Active operations by government to silence whistleblowers, and other exposers of government activities (See: Bradley Manning, Edward Snowden, Julian Assange), so that it becomes more difficult to understand what the government is up to.

6. Federal Reserve money printing that can explode into very strong inflation at anytime.

7. Federal Reserve money printing which results in a manipulated economy that causes the economy to go into cyclical manic-depressive states.

These are all very real dangers created by the state. When the state warns us of a potential terrorist attack, keep in mind what the state is doing to us on a daily basis–things that have a very real impact on our daily lives. The state is much more threatening to us than the less than  .000,000,0001% chance that we will be directly impacted by a terrorist attack.

Here’s my alert: FEAR THE STATE, IT IS ATTACKING US NOW.

Reprinted with permission from Economic Policy Journal.

The research on this was done as a result of funding by the Pentagon, which Forbes writer Andy Greenberg tells us was commissioned to, ahem, “to root out security vulnerabilities”:

This fact, that a car is not a simple machine of glass and steel but a hackable network of computers, is what Miller and Valasek have spent the last year trying to demonstrate. Miller, a 40-year-old security engineer at Twitter, and Valasek, the 31-year-old director of security intelligence at the Seattle consultancy IOActive, received an $80,000-plus grant last fall from the mad-scientist research arm of the Pentagon known as the Defense Advanced Research Projects Agency to root out security vulnerabilities in automobiles.

Reprinted with permission from Economic Policy Journal.

There are very few African-American men in this country who have not had the experience of being followed when they are shopping at a department store. That includes me.

You really need to get over it. Being followed in a department store is not something limited to African-American men. When I was a young child, perhaps 11 or 12 years old, I would head into the local Kresge’s with a bunch of friends, all of us white. We weren’t up to no good.  But, it wouldn’t be long before we would be noticed by the store security, who would then follow us around the store.I have no doubt that there may be instances where blacks are more targeted by surveillance than whites, but I tell you, from what I am reading, none of this type surveillance comes anywhere near the surveillance that is being conducted on all of us, black and white, by the United States government. There isn’t a case of private sector surveillance that comes anywhere close to the data collection and storage done by the NSA. Unlike surveillance by in-house security at a department store that stops the minute we walk out of the store, your NSA snooping can not be evaded when we are even in our homes. You have the telephone numbers of every cell phone call we make from our homes and of all incoming calls to us. It appears you also monitor our emails that we write and send from our home computers. So if you really have a problem with surveillance, and you are as color blind as you say you are, why don’t you shut down the government apparatus that is snooping on hundreds of millions of Americans?In the speech, you then have the gall to say:

The African-American community is also knowledgeable that there is a history of racial disparities in the application of our criminal laws, everything from the death penalty to enforcement of our drug laws.

Yet, your  Department of Justice will have nothing to do with drug legalization, even in  the face of states that want to decriminalize drug laws (at least marijuana laws). A DOJ/DEA document states:

 The Department of Justice is committed to the enforcement of the Controlled Substances Act in all states and that this guidance does not “legalize” marijuana or provide for legal defense to a violation of federal law.

So if you really are concerned about the racial disparities in the application of criminal drug laws, why don’t you call the DOJ/DEA off drug arrests, especially for the drugs and in the cases where states have made certain drugs legal?It is perhaps time, you look in the mirror, Mr. President. You speak as though you are concerned about surveillance, but run the largest surveillance operation in the history of the world. You speak as though you are concerned about the disparities in drug busts and sentences that occur in the country, yet, via the DEA, you run the largest drug busting organization in the country.Trayvon Martin’s friend, Rachel Jeantel, told CNN’s Piers Morgan that cracka to her meant “ a person who act like they’re a police.” It sure seems you fit that definition, way beyond George Zimmerman.  If Trayvon knew the surveillance you were conducting and the drug busting you were doing, he, for sure, according to Jeantel’s definition, would consider you one major league creepy ass cracka.

Reprinted with permission from Economic Policy Journal.

(ht Travis Holte)

Reprinted with permission from Economic Policy Journal.

The libertarian creed rests upon one central axiom: that no man or group of men may aggress against the person or property of anyone else. This may be called the “nonaggression axiom.” “Aggression” is defined as the initiation of the use or threat of physical violence against the person or property of anyone else. Aggression is therefore synonymous with invasion.

Walter Block, when discussing the right to privacy recently wrote on privacy and libertarianism:

There is no right to privacy; none at all. It is not a negative right, all of which are supported by libertarian theory; e.g., the right not to be molested, murdered, raped, etc. Rather, the so called right to privacy is a so called “positive right,” as in the “right” to food, clothing, shelter, welfare, etc. That is, it is no right at all; rather the “right” to privacy is an aspect of wealth. As Murray N. Rothbard (The Ethics of Liberty, chapter 16) made clear, there is only a right to private property, not privacy[...]But suppose a private individual were to invade our privacy without violating our private property rights. Would he have a right to do that? Yes, at least insofar as I understand the libertarian perspective. The paparazzi have a right to take pictures of movie stars, professional athletes, without permission, provided only they do not violate private property rights. If the streets and sidewalks were privately owned (I make a case for that in this book, The Privatization of Roads and Highways: Human and Economic Factors; Auburn, AL: The Mises Institute; available for free here), their owners would presumably supply an environment desired by customers. If they wanted to attract famous camera-shy people to their property, it is to be expected that they would protect them from the shutterbugs.  If not, not. The market would determine these sorts of things. In a forthcoming book in my Defending the Undefendable series, the first of which is available for free here, I shall be devoting a chapter to the Peeping Tom who looks at people who would prefer not to be seen.

It may be irritating if someone, for whatever reason, watches us from afar, but, from a libertarian perspective, there is no way this activity can be stopped, as long as the person doing the watching is on land that allows such behavior. For the libertarian, the best thing to do is move to a spot where the watcher can no longer gain a sight line–or if already in a house, to close the curtains. Tayvon Martin did nothing close to this.

From the facts of the case, we know that Martin was irritated by George Zimmerman following him. From a libertarian perspective, Martin had two options, if this irritation truly bothered him: 1. Get home so that Zimmerman could no longer see him or 2. ask Zimmerman to stop following him.

From the bruises on Zimmerman’s body, it appears that Martin did neither. He physically confronted Zimmerman and his attack on Zimmerman resulted in his getting shot and killed.

Martin failed to act in a libertarian fashion. By failing to take the libertarian options available to him, he is now dead. If he had followed libertarian principle, he would be alive today. As Block makes clear, from a libertarian perspective, “there is no right to privacy; none at all.” Thus, Martin had no right, from a libertarian perspective, to physically assault Zimmerman. As I said, he could have asked Zimmerman to stop following him, but, again from a libertarian perspective, he could not go beyond a request. Once he smacked Zimmerman or even threatened Zimmerman with bodily harm, Zimmerman had the right, from a libertarian perspective, to defend himself.

In The Ethics of Liberty, Rothbard writes:

Violent defense then must be confined to violent invasion—either actually, implicitly, or by direct and overt threat. But given this principle, how far does the right of violent defense go? For one thing, it would clearly be grotesque and criminally invasive to shoot a man across the street because his angry look seemed to you to portend an invasion. The danger must be immediate and overt, we might say, “clear and present”—a criterion that properly applies not to restrictions on freedom of speech (never permissible, if we regard such freedom as a subset of the rights of person and property) but to the right to take coercive action against a supposedly imminent invader.

Libertarianism is about live and let live, and about being civil to one another. Often, especially with inner city kids, the message about civility never makes it out of first grade. Inner city public schools breed a gangsta culture. The schools don’t educate the kids, the older ones end up dealing drugs and risk long prison sentences, so they shoot their way out of tight spots. It toughens the kids up for confrontation and violence, definitely not the libertarian way—or the smart way.

As Jim Croce put it in a song that certainly has application to Martin’s lack of real street smarts:

Well a hush fell over the pool room
Jimmy come boppin’ in off the street
And when the cuttin’ were done
The only part that wasn’t bloody
Was the soles of the big man’s feet
Yeah he were cut in in bout a hundred places
And he were shot in a couple more
And you better believe
They sung a different kind of story
When big Jim hit the floor now they say

You don’t tug on Superman’s cape
You don’t spit into the wind
You don’t pull the mask off that old Lone Ranger
And you don’t mess around with Slim

Yeah, big Jim got his hat
Find out where it’s at
And it’s not hustlin’ people strange to you

Martin hustled a person strange to him, not smart. He didn’t know what he was up against. He paid with his life for the dumb move.

Those protesting the Zimmerman verdict see it as a race thing. It’s not, and that’s the sad part. As long as it is viewed as a race thing, the real core problem will not be addressed, which includes a failed government public school system, minimum wage laws, which make it difficult for unskilled black youth to find jobs, and dozens of other government interventions that make it difficult for inner city youth to get a break.

Tayvon Martin died because he didn’t have a clue about civility or libertarianism. Marching on the streets, demanding government actions (which won’t change a thing) and breaking windows and starting fires is teaching a new generation of kids lessons that will do nothing to help them understand about success and how it is achieved. For that we need to take some guidance from libertarianism. For starters, we need to close down the public schools, legalize drugs (so the drug battles will stop) and eliminate the minimum wage, so these kids can start learning what work is about and how to earn a living.

Reprinted with permission from Economic Policy Journal.

As critically injured passengers lay on the tarmac near the wreckage of Asiana Airlines Flight 214, other passengers pleaded with emergency dispatchers to send ambulances to help the victims, according to 911 tapes released Wednesday.[...]“There are no ambulances here. We’ve been on the ground 20 minutes,” one woman said on the tape, which was obtained by NBC Bay Area.”There are people laying on the tarmac with critical injuries, head injuries,” the woman continued. “We’re almost losing a woman here. We’re trying to keep her alive.”Another female passenger told a dispatcher that there were not enough medics to treat the injured.“There are a bunch of people who need help, ” the woman said, adding that one victim had severe burn injures. “She’s really burned. She will probably die soon if she doesn’t get help.”

Be careful of government officials such as Nancy Pelosi, who will spread propaganda about government operators (my bold):

 Our city is immeasurably grateful for the swift response of the flight crew who quickly evacuated passengers; for the air traffic controllers who effectively diverted traffic; for thebrave first responders and the hospital staff who are ensuring the swift recovery of the injured.  Their actions are a testament to the strength, courage, and selflessness that defines the Bay Area.

©2013 Economic Policy Journal

A true character taught about liberty in the 1990s, Andrew J. Galambos. Harry Browne wrote about him:

[H]e had a profound effect on thousands of individuals who took his courses – who in turn affected others. Undoubtedly the ripples from the stones he dropped eventually touched some of today’s leading libertarians.

He was a fascinating mixture of contrasts. He combined a brilliant mind with an ungracious personality. He was an astrophysicist who taught social science. He preached the importance of respect for intellectual property, but freely lifted the ideas of others without giving them credit. He was dishonest, but he inspired others to be more honest. He disdained the word “libertarian” while turning thousands of people into libertarians. He was an insensitive teacher, and yet he apparently changed the lives of most of the people he taught.

The entire obituary of Galambos written by Browne is must reading. Browne says a lot of negative things about Galambos, but at the end of reading the obituary, the thought lingers: Who was this guy? And the next thought is: Boy, I wish I could have sat in on one of his courses. They aren’t any notes of his class. Browne reports, Galambos was very protective of his ideas and never put anything in writing. Indeed, Browne tells us:

He required every student entering one of his courses to sign a contract agreeing not to divulge any of the course ideas without permission from Galambos – and not even to use the ideas, in business or elsewhere, without permission.

Thus, it came as a great surprise to me that one of the Galambos courses was recorded and is now online. The course was delivered in 1966 and titled The Declaration of Independence, Thomas Paine and Your Freedom.

Among many other points in the fascinating lecture series, Galambos makes clear that he believes that it was Thomas Paine not Thomas Jefferson, who wrote the Declaration of Independence. He has me convinced.

Further, Galambos makes a very strong case for Paine being the intellectual inspiration for the American revolutionists taking such a libertarian path.

The series is 3 sessions long, broken up into 7 tracks. It very much worth the time to listen to the entire series. You can find it here.

The Best of Robert Wenzel

Dangerous dogs are becoming more of a problem in parts of north St. Louis County. It’s so bad, some people say they’re afraid to go out for a morning jog, reports CBS St Louis.

CBS St Louis continues:

Resident Carolyn Immer says she was attack and now has a hole in her leg.

“I felt like I was out in the middle of nowhere and there was nobody around to help,” Immer says. “I was screaming for a long time – it seemed like a long time lets put it that way.

Another resident Faye Turner says she and her sister-in-law have had several encounters with loose dogs.

“We actually went behind someone’s house, that we don’t know, trying to get away from the animal, but they continued to follow us,” Turner says. “We called my husband and he picked us up, that’s the way we were able to get away.”

Turner says they don’t go walking anymore.

Another woman complained that she had called County Animal Control about a couple of pit bulls who followed her around outside, but nothing was done.

At a town hall meeting Thursday evening, County Animal Control recommended people go out walking with an umbrella, a cane, or a stick.

The Best of Robert Wenzel

Dear President Obama,

I note your recent comment that Fed chairman Ben Bernanke has served as chairman long beyond the period he had desired to serve. Given the erratic monetary policy that has gone on during the period he has been Fed chair, including periods of massive monetary inflation, I would argue that the ideal number of days for him to have served as Fed chair would have been zero. But that is water under the bridge or, more accurately, trillions of newly printed dollars ago.

The Bernanke era has truly set the economy up for dangerous times. If another Keynesian economist is named as Fed chair, the likelihood is that a massive price inflation may ultimately result, as they are likely to add even more fiat dollars to the trillions already outstanding. What is needed is a Fed chair of sterner stuff, a Fed chair who will say “Stop” to the printing presses and throw away the key. Having studied monetary policy through out my career, I am impressed by the work of the following and consider them among the very few who have the courage and understanding to do what is necessary and stop the current monetary policy printing madness. It is my short list of individuals I view as qualified to handle the Fed chairmanship and who I am confident would work to ultimately leave the Fed buildings to the four-legged rats.

1. Ron Paul
2. Joe Salerno
3. Lew Rockwell
4. Walter Block
5. Richard Ebeling
6. Gary North
7. Peter Klein
8. Doug Casey
9. Mark Thornton
10. Bill Anderson
11. Tom Woods
12. Karen De Coster
13. Chris Rossini
14. Bob English
15. Danny Sanchez

The Best of Robert Wenzel

55 percent of Hispanics had a negative view of capitalism, the most of any groups surveyed in a 2011 by thePew Research Center, as did 47 percent of those of all races between the ages of 18-29.

(Via Taking Hayek Seriously)

The Best of Robert Wenzel

The Not So Impressive Winklevoss Twins Presentation

I’m at the Bitcoin 2013 conference in San Jose, California. The Winklevoss twins spoke last night at the conference. They are major Bitcoin owners. They come across as pretty decent preppie guys. The type you wouldn’t mind going to a baseball game with or having a drink with, but their presentation on why bitcoins are here to stay was unimpressive.

Their presentation, and I am not exaggerating, came down to this:

1. Ghandi said that first they ignore you, then they laugh at you, then they fight you, then you win, therefore Bitcoin will succeed.

2. There was a guy who thought the automobile would never replace the horse, therefore Bitcoin will succeed.

End of presentation.

The real action was on the floor of the conference.

I ran into a number of Bitcoin entrepreneurs who left serious careers to get involved with Bitcoin, one was a medical doctor, another was a former Microsoft engineer. The ex-Microsoft engineer told me he made $30,000 last month “mining” bitcoins. The bitcoin mining process requires specialized computers calculating complex algorithms.

He said that he needs to keep his computers cooled down and so he has massive fans in the room where his computers calculate. He said he uses enough energy to run about 3 or 4 houses, he said he uses so much energy that the local police visited him because they thought he was running a pot farm in his house. I asked him about how the police knew how much electricity he was using, but he didn’t seem to understand the privacy and snooping issues the police visit raised.

The engineer said his computer was so specialized for calculating Bitcoin algorithms that it was pretty much useless for anything else. He said outside of calculating the algorithms, the computer would only be good as a boat anchor. His guess was that there were about 1,000 people around the globe who are mining bitcoins the way he is.

One thing you quickly become aware of at this conference is the number of virtual currency competitors Bitcoin has. There are many, though Bitcoin has most of the focus. I asked the Doc and the engineer which virtual currencies they were most impressed with beyond Bitcoin, The names they threw out included DevCoin, NameCoin and BitcoinX, though they emphasized that Bitcoin has about 99.9% of the virtual currency market.

Judging by this conference, the Bitcoin world is a very heavily male dominated world of the roughly 1,000 attendees, outside of women at booths working with sponsors, I saw only three females in the early going.

The sense I am getting is that the Bitcoin world is going to end up very heavily regulated. Many of those involved with Bitcoin here at the conference are talking compliance with the government. Even the Winklevoss twins brought this up as something that will be necessary. The libertarian dream of anonymity seems like a distant memory to this crowd. It will be name and social security number in the not too distant future for anyone trying to open a Bitcoin account to buy or sell bitcoins through an exchange. Thus, Bitcoin, if it is not completely closed by government, will be no more than a faster PayPal type system, with a fluctuating value. There’s pluses and minuses to a fluctuating value. During a strong price inflationary period, because of its fairly stable supply, Bitcoin could act as a virtual gold—but with the one caveat that, because accounts WILL be registered, the government will have a pretty good idea of how many bitcoins you have and be able to demand you turn it over if they so choose—something they can’t as successfully do with real gold that is buried in the backyard.

Then there is the possibility that government will attempt to shutdown Bitcoin completely. I would say about 30% of attendees fear a government shutdown, while the other 70% expect compliance with government regulations when opening an account to either buy or sell bitcoins for fiat currency. As a representative for CoinLab, an in development money- virtual exchange operator, told me, “Once we are through getting all the necessary government licenses at the state and federal levels, we will be up and running, but we won’t open any accounts until we have proof as to who the account holder is.”

All attending the first Bitcoin 2013 conference in Silicon Valley are considering it a success. There are more than 1,000 attendees and the entrance fee to the event is $350.00.Alan Safahi, CEO of Zip Zap, told me that it was important to have a conference in Silicon Valley because SV is becoming the epicenter of virtual currencies. He told me he packed up his things and moved them along with his wife to SV from Orange County. He told me that he explained to his wife, who was reluctant about the move, that if they had lived during the time of the expanding Roman Empire that they would have wanted to live in Rome and that for someone in payment systems and virtual currencies, like Zip Zap is, the place to be is Silicon Valley.The most important vibe I am picking up at the event is that there are many money players who want to get Bitcoin up and running and are willing to play by government rules, that is, register all accounts they open and take down the name, DOB and social security number of Bitcoin buyers and sellers.In this way, Bitcoin could survive, but the watchful eye of government will be there. Many of these players argue that it is impossible to battle the government, Safhai told me that “It is a period to build the baby and not send it to war [against the government.]“One major player told me that Mt. Gox, which recently head accounts seized in the US by the government, made a serious mistake by not following the guidelines that were issued by Treasury and by failing to register as a money exchange in the US.Another player, who is something of a rock star in the Bitcoin world and wanted to remain anonymous,  told me that anyone operating on Silk Road, the underground drug selling market on the internet that transacts through bitcoins, was crazy. He told me that it is very easy to track bitcoins and eventually the government will track down the major players on Silk Road and arrest them.Still others at the conference were more defiant. At one booth, Bitcoins were being sold for cash with no ID checks. Walk up to the booth lay down your money and buy your bitcoins. The money was piling up.

Those are mostly hundreds and fifties on the floor.

The less “corporate,” the more renegade seemed to be the operators and the more willing these operators seemed to be willing to challenge the government. One operator who was setting up an exchange told me he didn’t have the money to register as an exchange with the government but planned to start operating anyway. One corporate type said to me that virtual currencies are in their infancy and that lawsuits, fighting and jail time for some will occur before the crypto-currency world becomes more defined.My take at this point is that the corporate types are going to give legitimacy to the crypto-currency world. They have already formed an association, the Bitcoin Foundation. They are going to be hiring lawyers and lobbyists. I overheard Patrick Murck, the general counsel of the foundation, say that he is in a major hiring mode and that he plans to hire a combination of 6 lawyers and lobbyists in the near future.This, of course, will mean that the key players plan to set up regulations in cahoots with government. No doubt, as always, they will attempt to set up regs that will benefit them and make it difficult for competitors, but Bitcoins is a slippery animal and it will be difficult for these established operators to anticipate the best methods to regulate virtual currencies. The renegades may have a chance. Indeed, these established operators may provide cover for the more renegade operators, who will be attempting to find workarounds to government regs. The clueless regulators may think they are regulating Bitcoin but be far behind what the renegades have developed. It will be a battle and it is not clear who will win.Indeed, it is not even clear which virtual currency will end up on top. I spent quite a bit of time talking to Chris Larsen, CEO of Ripple. Ripple is an open payment system.Ripple users can trade any currency for another without requiring any broker or third-party to facilitate the trades. The process is simple: users submit buy/sell prices to the network and the Ripple protocol automatically finds the best available match and completes the trade.Ripple is also in the early stages of launching its own virtual currency XRP. They have the money and brains behind them, so it will make sense to keep an eye on them.Of note,the television network RT is way ahead of the mainstream US networks, they have a full television crew presence. I had the opportunity to spend some time with Perianne Boring (the best James Bond name in the real world) who is host of the new RT show, Prime Interest, which is being produced by former EPJ contributor, Bob English.

Robert Wenzel and Perianne Boring. Pearianne says she prefers my “nerdy glasses look.”

Boring and English managed to get interviews with most of the key players at Bitcoin 2013 and tell me they will be running segments from the event onPrime Interest for a week or so, starting Monday.

Just finished a long chat with Chad Mayer, who is one of the most knowledgeable people around when it comes to Bitcoin. A major financial globetrotter, Chad tells me that he just got back from a trip that took him to Switzerland and then Indonesia. In Switzerland, he visited a vault where among many other security measures, they weigh you before going in, to make sure you weigh the same when heading out.He tells me that Peter Theil just invested $2 million dollars in BitPay, a global peer-to-peer Bitcoin payment network. A global billionaire, who prefers to remain anonymous, also has invested in BitPay, says Chad.Chad also pointed out to me that Google has just launched an email payment service, whereby you can send payments via an email link, without going through a network such as PayPal. His point wasn’t the service that Google has set up, but that the technology is there to send money by email link and that something similar will emerge in the Bitcoin world.I also had a good talk with Steve Michaels of Keep Your Assets. He sees Bitcoin developing on a two tiered level similar to what I have discussed. He compares it to the fiat based currency system, where we have many using bank accounts that can be tracked, while other transactions are done in cash. With bitcoins, there will be a registered world and an unregistered world.Steve pointed out that most of the early developers of Bitcoin have libertarian leanings and have thought out what government moves against Bitcoin are likely to be made and they have also thought out counter-moves.Chad and Steve both pointed out that complete anonymity would be very difficult to reach using Bitcoin, but measures can be taken to make tracking extremely difficult and expensive. Open transactions  appears to be a program that can be an important tool in financial cryptography.

More than one attendee has pointed out to me that after the US Treasury made the announcement that Bitcoin exchanges must comply with money exchange money laundering rules that China seems to have started promoting Bitcoin use, even to the point of running on national television, several times, a documentary on Bitcoin.

In addition to the up and coming crypto currencies I mentioned earlier that could be competitors to Bitcoin, I heard several in the know people bring up LiteCoin and PPcoin.

One attendee tells me that Silicon Valley Bank has stopped accepting applications from new Bitcoin exchanges. This may be good news for CoinBase, which already has its foot in the SVB door, but another indication of how the shadow of government is casting a fear on banks willingness to work with exchanges. It truly is the weak spot of Bitcoin, that is, the actual exchange point between Bitcoin and fiat currency. Prior to attending this conference, I gave the edge to government, but at this conference I see there is going to be big money bringing in lawyers and lobbyists that will give Bitcoin breathing room. These big money types will play footsie with Washington D.C. and agree to register the name and other identifying information of exchange users, but as I said earlier this may well provide cover for those operating beyond the watchful eye of government. The government types may think they are regulating Bitcoin and have no awareness of how much is going on beyond their control.It will be a cat and mouse game. As I reported earlier CEO Alan Safahi of Zip Zap told me, there will be some arrests, but he also said the cat is out of the bag. Turr Demeester of MacroTrends, seemed to concur and said that a thousand heads will emerge and the government won’t be able to cut them all off. Peter Surda was reluctant to declare the government impotent and said there is a possibility that government regulation could be strong enough to suffocate what I call the second tier underground Bitcoin operators.

One of the big games at the conference has been the guessing game as to who the undercover government agents are in the crowd. Trace Mayer’s father identified a middle age woman who sat alone and didn’t meet the demographic of attendees at all.I ran into one guy, a long haired Asian, who came up to me and said, “So did you write anything up about Mt. Gox when their money was seized?”. This alone was a bit unusual since the few people who saw my name tag usually introduced themselves as EPJ readers before saying anything else. We talked for a minute and then he asked where he could read what I write, which means he wasn’t even an EPJ reader. I went back to the table I was sitting at and commented to the people at my table that I just had an unusual conversation and I thought the guy might be an agent. It turned out that everyone at the table had had been separately approached by the guy. With a crowd of around a 1,000, always be suspicious of someone who appears to be systematically approaching everyone at the conference with odd questions.

The Best of Robert Wenzel

Who knew?

The former head of Zimbabwe’s central bank, Gideon Gono, wrote a book in 2008, Zimbabwe’s Casino Economy. The book is about his running of the bank during the country’s period of hyper-inflation.

From the blurb for the book:

This is the remarkable first-hand account of the tenure of the Governor of the Reserve Bank of Zimbabwe, from December 2003 until November 2008. A close colleague of President Robert Mugabe, he explains why he cherishes that opportunity to serve him and his country. [...]  He outlines the Reserve bank response to the challenges, and concludes by mapping a socio-economic roadmap for reform and recovery. After an introductory bio-professional note, the chapters cover: The Invisible Hand’s Dirty Politics; The Market Economy as a Casino Economy; Corrupting Banking and the Stock Exchange; Illegal Sanctions as Terrorism; When Things Fell Apart; Taking a New Direction; Tackling the Casino Economy; Beyond the Casino Economy.

Here are a couple of snippets from Reuters news reports on Zimbabwe, while Gono was head of the central bank:

2006 – Zimbabwe’s annual inflation rises above 1,000 percent in April. Redenominated notes are issued in August. Inflation rises monthly.

2007 – Government institutes price freeze in June, followed two months later by wage freeze.

• There is a run on shops as goods disappear from shelves. Zimbabwe imports 60,000 tonnes of wheat to ease bread shortages after millers run out of the grain. The government said it did not meet its annual consumption requirements of between 400,000 and 450,000 tonnes of wheat.Zimbabwe announces inflation slowed to an annualized 6,592.8 percent in August from 7,634.8 percent in July. The government credits price freeze for the drop.

I just ordered the book. This may beat out Hunter S. Thompson’s Fear and Loathing in Las Vegas as my most favorite gonzo book. And it is very tough to beat Thompson. From Fear and Loathing:

Every now and then when your life gets complicated and the weasels start closing in, the only cure is to load up on heinous chemicals and then drive like a bastard from Hollywood to Las Vegas … with the music at top volume and at least a pint of ether…We had two bags of grass, seventy-five pellets of mescaline, five sheets of high powered blotter acid, a salt shaker half full of cocaine, and a whole galaxy of multi-colored uppers, downers, screamers, laughers… and also a quart of tequila, a quart of rum, a case of Budweiser, a pint of raw ether and two dozen amyls.

Not that we needed all that for the trip, but once you get locked into a serious drug collection, the tendency is to push it as far as you can…

Hallucinations are bad enough. But after awhile you learn to cope with things like seeing your dead grandmother crawling up your leg with a knife in her teeth. Most acid fanciers can handle this sort of thing. But nobody can handle that other trip-the possibility that any freak with $1.98 can walk into the Circus-Circus and suddenly appear in the sky over downtown Las Vegas twelve times the size of God, howling anything that comes into his head. No, this is not a good town for psychedelic drugs.

You better take care of me Lord, if you don’t you’re gonna have me on your hands.

The underbanked market in the United States is currently estimated at $78 billion in annual transaction fee revenue, serving 68 million consumers, according to a new study by The Center for Financial Services Innovation and Core Innovation and funded by bankster Morgan Stanley.

The study notes:

The market for products used by underserved consumers grew by 7% in 2011 alone, but many of the credit, payment, deposit, and other financial services in this marketplace fail to integrate available technology, leaving tremendous opportunity for disruption through digitization of offerings and democratization of consumer access.

Paper-based transactions, inaccessible data, high acquisition costs, and risk models unsuited to identifying attractive borrowers have historically passed high costs on to underserved consumers and kept entrepreneurs at bay.

From the above I find a particularly interesting, this observation:

[...]many of the credit, payment, deposit, and other financial services in this marketplace fail to integrate available technology

and this one:

Paper-based transactions, inaccessible data [...] have[...]kept entrepreneurs at bay.

Banksters (and the government) just hate money they can’t track and money that is difficult to track.

This may be changing. Here’s the problem:

[...]the same technologies that are driving the growth of startups from Silicon Valley to Atlanta are reinventing the marketplace of financial services for underserved consumers. Emerging companies are capitalizing on increasingly robust and inexpensive computing power, ubiquitous consumer Internet and mobile access, and growing demand for comprehensive digital networks. These companies are improving access to effective, high-quality products for underserved consumers while developing technology with broad applications beyond the underbanked market.

They are going to make a play against the untracked cash market.

The study reports:

[...] a quarter of all US retail transactions are still conducted in cash. [...]While 30% of consumers have been reducing cash usage in recent years, 20% have increased their use of cash.

Government and the banksters hate this. This is what they want:

Digital payment networks that allow easy access to cash while also encouraging long-term use of GPR cards for fund storage and transfer are increasingly vital for underserved consumers who prefer cash but are finding themselves drawn into digital payment structures by employers and government benefit offices. GPR prepaid usage volume is expected to grow to $168 billion by 2015.15 New rules now require all federal benefits to be distributed electronically to prepaid cards when direct deposit is unavailable, and private employers are also gravitating toward checkless paychecks, having loaded $31 billion in wages onto payroll cards in 2011.[...] PayPerks provides a platform for prepaid customers that encourages point-of-sale purchases using plastic through educational modules and rewards while discouraging ATM withdrawals. The company’s push to instill digital payments habits in consumers anticipates a future where paycheck or benefit deposits via check are increasingly obsolete.

They are going to pitch the tracking as an enhanced ability for the underbanked to get credit. From the study:

Big Data – that immense plethora of worldwide digital information that is now easily tracked, stored, and analyzed through increasingly powerful technology – is redefining the study of consumer behavior across the economy and raising critical questions about consumer privacy and security in its wake. The availability of digital consumer information continues to expand. The volume of the digital universe is projected to multiply 50 times between 2010 and 2020 to 40 zettabytes (ZB) of usable data.Mobile data traffic alone is currently estimated to be expanding at a compound annual growth rate of 78% through 2016.18

For the underbanked financial services market in particular, Big Data’s most profound impact lies in unlocking access to credit.

Bottom line: Tracking is going to get more intense and the push is going to develop to get more to use trackable spending technologies. One of the most dangerous things a government can do is track its subjects. The bad guys in government will always use such data for evil purposes.

On a personal level it may be wise for libertarians to use cash as much as possible and resist attempts to be pushed into using trackable money spending methods. It also makes sense for libertarians to eCommerce others enter the unbankable area, the more that are unbanked, the more difficult it will be for government to get data on these people. Less data, of course, creates a major impediment to successful government expansion.

On March 16, 2013 an alarm should have gone off in the minds of any who held money in a bank anywhere in the world. On that day, banksters attempted an unprecedented money grab of depositor money held at banks in Cyprus.

In a new plan to bail out the government of Cyprus, under the watchful eye of the European Commission, the International Monetary Fund, and the European Central Bank (the “troika”), depositors in Cypriot banks were to be hit with a one-time tax on their savings, as part of a €10 billion ($12.96 billion) bailout.

In a deal, announced early that Saturday, accounts with more than €100,000 would be taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt nation.

The eventual terms of the deal were changed and small depositors were protected against the tax, while larger depositors are now to suffer even greater losses of 40% or more; some may lose everything.

There are many questions to be asked and lessons to be learned from this event.

The first lesson to be learned is not to trust pronouncements about the safety of banks. Chris Rossini writing at EconomicPolicyJournal.com detailed pronouncements, almost up to the minute of collapse, from the global banking community that Cyprus banks were safe.

Rossini wrote, for example, that on Feb 25, 2011, The Banker magazine ranked the Bank of Cyprus among the leading banks of the world.

JPMorgan Chase and Citibank gave the Bank of Cyprus prestigious awards. In total, Rossini reports that during the years 2011 and 2012, no less than nine awards for excellence were given to the Bank of Cyprus.

A second lesson to be learned is that your money in a bank is most unsafe over a weekend, especially a long weekend. As I note above, the announcement of a depositor money grab was made on a Saturday. It also happened to be an extended weekend, with Cypriot banks closed that Monday for a holiday. That the announcement was made over a long weekend was not likely a coincidence. Government officials like to take such draconian steps when banks are closed so that they can do their taxing and freezing of accounts when most bank employees are not around, so that no one can attempt to beat the freeze.

When banks eventually re-opened, deposit accounts had already been taxed and those taxed amounts deducted, while other funds were frozen. There was nothing a junior bank employee could do for a loyal customer. There were no workarounds. The money was taken before the banks re-opened.

On another interesting note, the president of Cyprus likely tipped off his crony friends as to the deposit tax, before it was announced.

Via the UK’s MailOnline we learn this news:

Cypriot president Nikos Anastasiades “warned” close friends of the financial crisis about to engulf his country so they could move their money abroad, it was claimed on Friday. The respected Cypriot newspaper Filelftheros made the allegation which was picked up eagerly by German media.

The Cyprus newspaper did not say how much money was moved abroad but quoted sources saying the president “knew about the possible closure of the banks” and tipped off close friends who were able to move vast sums abroad.

Italian media said the 4.5 billion euros left the island in the week before the crisis.

When Leona Helmsley infamously said that, “Only little people pay taxes,” she wasn’t kidding. Crony elitists not only get tax breaks but they are often tipped off when governments are about to make moves that will result in huge losses for many. In the early 1980s, I was tipped off to the devaluation of the Mexican peso by a Mexican national who was affiliated with the Mexican mission to the United Nations. Just weeks before the devaluation of the peso was to be announced, top Mexican officials affiliated with the UN were positioning themselves to profit from the devaluation.

Another lesson to be learned is that crony government operatives have favorites. During the financial crisis, the Treasury did not come to the rescue of Lehman Bros. or Bear Stearns, but did come to the rescue of Citigroup and Goldman Sachs. In the Eurozone, we see that Cyprus bank deposits were treated differently and more harshly than deposits of Greek banks. In other words, if in the future you see a certain bank’s deposits being protected in full, don’t assume that the same will be true for your bank.

We are in an era of perpetual financial crisis, with government officials making up rules and changing them as events develop.

So much for lessons learned. As for questions that must be asked, Steve Forbes of Forbes Magazine raised an important pointabout the possibility of “emergency” rules if another crisis occurred in the United States:

Don’t put it past our politicians to try it in a financial emergency. The breaking of contracts by the U.S. government, unfortunately, has happened before, and what’s under way in Cyprus shows that feckless politicos will continue to try such things.

Thus, one question that must be asked is, was the crisis in Cyprus and the attempted across the board tax on deposit a miscalculation by the troika or is it part of a grand plan to create more crisis that will result in more global government control of the system?

The grabbing of tax money in Cyprus raises instability in the euro zone and, indeed to some degree, throughout the world.

If headlines begin to warn, again, of financial crisis heating up in, say, Spain or Italy, knowing what happened in Cyprus, will not depositors begin pulling money out of these banks?

Consider especially that depositors are faced with mainstream reports like this in the New York Times:

In a move that could set off new fears of contagion across the euro zone, anxious depositors drained cash from automated teller machines in Cyprus over the weekend, hours after European officials in Brussels required that part of a new €10 billion bailout be paid for directly from the bank accounts of ordinary savers.

The decision – a first in the three-year-old European financial crisis – raised questions about whether bank runs could be set off elsewhere in the euro zone. Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

Then you have comments like this from leading European finance officials:

“A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors,” the head of the region’s finance ministers said.

“What we’ve done last night is what I call pushing back the risks,” Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times hours after the Cyprus deal was struck.

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’ If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,” he said.

Aside from the issue of whether depositors in a fractional-reserve system should be first in line to receive a haircut, the fact that key officials are saying this, is setting the stage for bank runs, especially in the euro zone.

As Murray Rothbard pointed out many times, the fractional-reserve banking system is inherently bankrupt. It is only protected by the fact that central banks can print money to bail out weak banks in the system. That the elite have chosen, for whatever reason, not to protect some banks via money printing has resulted in a new element of confusion throughout the banking system. When will the ruling elite determine that a bank in trouble should be protected by newly printed money, and when will depositors be forced to absorb a part of the cost? The decisions on this seem to be made in ad hoc manner.

Thus, everyone needs to be on alert about their money at all times. The Cyprus crisis, and how depositors were treated, is certainly an object lesson for the observant that some money must be kept outside the banking system. Further, even money that is kept within the system should be diversified between various banks. Since rules appear to change almost randomly, it is never known what rules will apply to what financial institutions and when.

The ultimate lesson of Cyprus is not to trust the current banking system. It can surprise you at any time, but especially on long weekends.

Recently by Robert Wenzel: Fastest-Growing Jobs Pay Under $10/Hour

On March 16, 2013 an alarm should have gone off in the minds of any who held money in a bank anywhere in the world. On that day, banksters attempted an unprecedented money grab of depositor money held at banks in Cyprus.

In a new plan to bail out the government of Cyprus, under the watchful eye of the European Commission, the International Monetary Fund, and the European Central Bank (the u201Ctroikau201D), depositors in Cypriot banks were to be hit with a one-time tax on their savings, as part of a u20AC10 billion ($12.96 billion) bailout.

In a deal, announced early that Saturday, accounts with more than u20AC100,000 would be taxed at 9.9%, those with less at 6.75%, raising an expected u20AC5.8 billion for the near-bankrupt nation.

The eventual terms of the deal were changed and small depositors were protected against the tax, while larger depositors are now to suffer even greater losses of 40% or more; some may lose everything.

There are many questions to be asked and lessons to be learned from this event.

The first lesson to be learned is not to trust pronouncements about the safety of banks. Chris Rossini writing at EconomicPolicyJournal.com detailed pronouncements, almost up to the minute of collapse, from the global banking community that Cyprus banks were safe.

Rossini wrote, for example, that on Feb 25, 2011, The Banker magazine ranked the Bank of Cyprus among the leading banks of the world.

JPMorgan Chase and Citibank gave the Bank of Cyprus prestigious awards. In total, Rossini reports that during the years 2011 and 2012, no less than nine awards for excellence were given to the Bank of Cyprus.

A second lesson to be learned is that your money in a bank is most unsafe over a weekend, especially a long weekend. As I note above, the announcement of a depositor money grab was made on a Saturday. It also happened to be an extended weekend, with Cypriot banks closed that Monday for a holiday. That the announcement was made over a long weekend was not likely a coincidence. Government officials like to take such draconian steps when banks are closed so that they can do their taxing and freezing of accounts when most bank employees are not around, so that no one can attempt to beat the freeze.

When banks eventually re-opened, deposit accounts had already been taxed and those taxed amounts deducted, while other funds were frozen. There was nothing a junior bank employee could do for a loyal customer. There were no workarounds. The money was taken before the banks re-opened.

On another interesting note, the president of Cyprus likely tipped off his crony friends as to the deposit tax, before it was announced.

Via the UK’s MailOnline we learn this news:

Cypriot president Nikos Anastasiades u201Cwarnedu201D close friends of the financial crisis about to engulf his country so they could move their money abroad, it was claimed on Friday. The respected Cypriot newspaper Filelftheros made the allegation which was picked up eagerly by German media.

The Cyprus newspaper did not say how much money was moved abroad but quoted sources saying the president u201Cknew about the possible closure of the banksu201D and tipped off close friends who were able to move vast sums abroad.

Italian media said the 4.5 billion euros left the island in the week before the crisis.

When Leona Helmsley infamously said that, u201COnly little people pay taxes,u201D she wasn't kidding. Crony elitists not only get tax breaks but they are often tipped off when governments are about to make moves that will result in huge losses for many. In the early 1980s, I was tipped off to the devaluation of the Mexican peso by a Mexican national who was affiliated with the Mexican mission to the United Nations. Just weeks before the devaluation of the peso was to be announced, top Mexican officials affiliated with the UN were positioning themselves to profit from the devaluation.

Another lesson to be learned is that crony government operatives have favorites. During the financial crisis, the Treasury did not come to the rescue of Lehman Bros. or Bear Stearns, but did come to the rescue of Citigroup and Goldman Sachs. In the Eurozone, we see that Cyprus bank deposits were treated differently and more harshly than deposits of Greek banks. In other words, if in the future you see a certain bank's deposits being protected in full, don't assume that the same will be true for your bank.

We are in an era of perpetual financial crisis, with government officials making up rules and changing them as events develop.

So much for lessons learned. As for questions that must be asked, Steve Forbes of Forbes Magazine raised an important point about the possibility of u201Cemergencyu201D rules if another crisis occurred in the United States:

Don't put it past our politicians to try it in a financial emergency. The breaking of contracts by the U.S. government, unfortunately, has happened before, and what's under way in Cyprus shows that feckless politicos will continue to try such things.

Thus, one question that must be asked is, was the crisis in Cyprus and the attempted across the board tax on deposit a miscalculation by the troika or is it part of a grand plan to create more crisis that will result in more global government control of the system?

The grabbing of tax money in Cyprus raises instability in the euro zone and, indeed to some degree, throughout the world.

If headlines begin to warn, again, of financial crisis heating up in, say, Spain or Italy, knowing what happened in Cyprus, will not depositors begin pulling money out of these banks?

Consider especially that depositors are faced with mainstream reports like this in the New York Times:

In a move that could set off new fears of contagion across the euro zone, anxious depositors drained cash from automated teller machines in Cyprus over the weekend, hours after European officials in Brussels required that part of a new u20AC10 billion bailout be paid for directly from the bank accounts of ordinary savers.

The decision – a first in the three-year-old European financial crisis – raised questions about whether bank runs could be set off elsewhere in the euro zone. Jeroen Dijsselbloem, the president of the group of euro area ministers, declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

Then you have comments like this from leading European finance officials:

“A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors,” the head of the region’s finance ministers said.

“What we’ve done last night is what I call pushing back the risks,” Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times hours after the Cyprus deal was struck.

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?' If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,” he said.

Aside from the issue of whether depositors in a fractional-reserve system should be first in line to receive a haircut, the fact that key officials are saying this, is setting the stage for bank runs, especially in the euro zone.

As Murray Rothbard pointed out many times, the fractional-reserve banking system is inherently bankrupt. It is only protected by the fact that central banks can print money to bail out weak banks in the system. That the elite have chosen, for whatever reason, not to protect some banks via money printing has resulted in a new element of confusion throughout the banking system. When will the ruling elite determine that a bank in trouble should be protected by newly printed money, and when will depositors be forced to absorb a part of the cost? The decisions on this seem to be made in ad hoc manner.

Thus, everyone needs to be on alert about their money at all times. The Cyprus crisis, and how depositors were treated, is certainly an object lesson for the observant that some money must be kept outside the banking system. Further, even money that is kept within the system should be diversified between various banks. Since rules appear to change almost randomly, it is never known what rules will apply to what financial institutions and when.

The ultimate lesson of Cyprus is not to trust the current banking system. It can surprise you at any time, but especially on long weekends.

The Best of Robert Wenzel

CNN reports on the data that demonstrates this phenomena:

Some 58% of the jobs created during the recovery have been low-wage positions, according to a 2012 report by the National Employment Law Project. These low-wage jobs had a median hourly wage of $13.83 or less.

Employment & wages for largest U.S. occupations

Occupation	U.S. employment	2012 annual mean wage
Retail salesperson	4,340,000	$25,310
Cashier	3,314,010	$20,370
Food prep worker	2,943,810	$18,720
Office clerk	2,808,100	$29,270
Registered nurse	2,633,980	$67,930
Waiter	2,332,020	$20,710
Customer service representative	2,299,750	$33,110
Laborer	2,143,940	$26,410
Janitor/cleaner	2,097,380	$24,850
Secretary/administrative assistant	2,085,680	$33,560

Bottom line: The crony capitalists have built a moat around their businesses, eliminating the kind of competition that would hire high skilled labor. Obamacare, simply adds to the difficulties in hiring anything but very cheap labor. Outside of a tiny sliver of opportunity for software engineers and lawyers in Silicon Valley, you either launch something on your own or you will end up part a low paid tool for the crony machine.

Recently by Robert Wenzel: The Collapse of the Value of a College Education

This weekend, I had a discussion with a businessman, who sits on the board of a publicly traded staffing firm. He tells me that the middle class is disappearing. The country is being split into those savvy enough to survive in the overly regulated economy and everyone else.

CNN reports on the data that demonstrates this phenomena:

Some 58% of the jobs created during the recovery have been low-wage positions, according to a 2012 report by the National Employment Law Project. These low-wage jobs had a median hourly wage of $13.83 or less.

Employment & wages for largest U.S. occupations

Occupation U.S. employment  2012 annual mean wage Retail salesperson 4,340,000 $25,310 Cashier 3,314,010 $20,370 Food prep worker 2,943,810 $18,720 Office clerk 2,808,100 $29,270 Registered nurse 2,633,980 $67,930 Waiter 2,332,020 $20,710 Customer service representative 2,299,750 $33,110 Laborer 2,143,940 $26,410 Janitor/cleaner 2,097,380 $24,850 Secretary/administrative assistant 2,085,680 $33,560 Bottom line: The crony capitalists have built a moat around their businesses, eliminating the kind of competition that would hire high skilled labor. Obamacare, simply adds to the difficulties in hiring anything but very cheap labor. Outside of a tiny sliver of opportunity for software engineers and lawyers in Silicon Valley, you either launch something on your own or you will end up part a low paid tool for the crony machine.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

College education has become expensive and nearly useless. Got that? Price up, quality down. No surprise, when government gets involved. Even WSJ seems to get this (partially). In a recent article, they write:

By some measures, nearly half of employed college graduates are in jobs that don’t traditionally require a college degree.

Unfortunately, WSJ seems to blame this on robots:

Ia paper released Monday by the National Bureau of Economic Research, a team of Canadian economists argues that the U.S. faces a longer-term problem.

They found that unlike the 1990s, when companies needed hundreds of thousands of skilled workers to develop, build and install high-tech systems—everything from corporate intranets to manufacturing robots—demand for such skills has fallen in recent years, even as young people continued to flock to programs that taught them.

If it was simply a case of robots replacing workers in certain jobs, this would mean that there would be productivity gains for the economy overall, beginning and end of story. But, it is not as though we live in paradise where goods and services are so plentiful that none of us has to work. Something else is going on

The problem is that a college education for the most part does not  increase the value of a potential worker for an employer (aside from accounting and engineering degrees). The college system is far from a free market profit oriented system. Almost 100% of colleges take money from government or accept students who receive government loans. This results in colleges being required to meet government guidelines which have dramatically dumb downed the system.

The Chinese government has created 60 million vacant apartments through its central planning policies, while the U.S. government through its intervention in the education system has created tens of millions of college graduates with vacant minds.

College for most is really a waste of time, unless you want that accounting or engineering degree, or you are really sharp, can get into an Ivy League school and have a strong enough mind that you won’t be corrupted by the system. In this latter category, I suspect no more than 1 in 500,000 could pull it off. Tom Woods did it, but few others. I can think of many more that were swallowed up by the system and now spend their time justifying some intervention in the economy.

If you are interested in studying Austrian economics, just go to the Mises Institute web site and absorb that material. Studying under Professor Walter Block at Loyola University New Orleans or Richard Ebeling at Northwood University are outlier options, but that is about it. For most who want to advance, they are much better off reading James Altucher than going to college.

Recently by Robert Wenzel: Homeland Security Has Purchased 2,700 Light-Armored Tanks

College education has become expensive and nearly useless. Got that? Price up, quality down. No surprise, when government gets involved. Even WSJ seems to get this (partially). In a recent article, they write:

By some measures, nearly half of employed college graduates are in jobs that don’t traditionally require a college degree. Unfortunately, WSJ seems to blame this on robots: Ia paper released Monday by the National Bureau of Economic Research, a team of Canadian economists argues that the U.S. faces a longer-term problem.  They found that unlike the 1990s, when companies needed hundreds of thousands of skilled workers to develop, build and install high-tech systems—everything from corporate intranets to manufacturing robots—demand for such skills has fallen in recent years, even as young people continued to flock to programs that taught them.

If it was simply a case of robots replacing workers in certain jobs, this would mean that there would be productivity gains for the economy overall, beginning and end of story. But, it is not as though we live in paradise where goods and services are so plentiful that none of us has to work. Something else is going on

The problem is that a college education for the most part does not  increase the value of a potential worker for an employer (aside from accounting and engineering degrees). The college system is far from a free market profit oriented system. Almost 100% of colleges take money from government or accept students who receive government loans. This results in colleges being required to meet government guidelines which have dramatically dumb downed the system. The Chinese government has created 60 million vacant apartments through its central planning policies, while the U.S. government through its intervention in the education system has created tens of millions of college graduates with vacant minds. College for most is really a waste of time, unless you want that accounting or engineering degree, or you are really sharp, can get into an Ivy League school and have a strong enough mind that you won’t be corrupted by the system. In this latter category, I suspect no more than 1 in 500,000 could pull it off. Tom Woods did it, but few others. I can think of many more that were swallowed up by the system and now spend their time justifying some intervention in the economy. If you are interested in studying Austrian economics, just go to the Mises Institute web site and absorb that material. Studying under Professor Walter Block at Loyola University New Orleans or Richard Ebeling at Northwood University are outlier options, but that is about it. For most who want to advance, they are much better off reading James Altucher than going to college.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

Recently by Robert Wenzel: The Developing Student Loan Crisis

The Department of Homeland Security (through the U.S. Army Forces Command) recently retrofitted 2,717 of ‘Mine Resistant Protected’ vehicles for service on the streets of the United States, reports Modern Survival Blog.

Forget whatever propaganda you hear, the Department of Homeland Security is preparing for civil unrest.

Here’s a Homeland Security agent in Albuquerque, New Mexico for Law Enforcement Day, explaining the features of the vehicle.

Obviously, the United States government is quickly gearing up its firepower and other equipment to deal with average Americans. You don’t need this kind of equipment against the occasional lone nut. Keep in mind that DHS has also recently stockpiled more than 1.6 billion bullets. That’s enough to put about a million bullets into every serious nut job that has popped up in the country over the last 100 years.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

Recently by Robert Wenzel: Get Ready for Some Major Disinformation About America’sGold

Government continues to support the growth of student loans, which is a method by which government influences education. At the same time, the debt borrowed is turning students into mini-eurozone type debtors. Many have no chance of paying back what they owe.

Donghoon Lee, an economist at the New York Federal Reserve, has put together the horrifying data:

Analysis of Student Loan Debt

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

Recently by Robert Wenzel: The Truth About the InvasionofPanama

An audit of the gold held at the New York Federal Reserve has been completed and the disinformation campaign has started. Notice how LaTi reports the story:

The U.S. government’s gold in New York is safe in a vault underneath Manhattan, and some of the precious metal there is purer than previously thought.

The problem with this is that the gold held at the New York Federal Reserve is not "The U.S. government’s gold." It is gold held, for the most part, by the Federal Reserve for foreign countries.

LaTi goes on:

That’s according to a first-ever audit conducted last year by the Treasury Department of U.S. gold on deposit at Federal Reserve banks in New York and elsewhere.

This is curious because it is the government conducting the audit. That’s like having Bernie Madoff’s brother auditing Bernie’s customer accounts. Why wasn’t an independent auditing firm brought in? And since the gold is held for countries like Germany, why didn’t Germany and others who have gold on account get to pick the auditor?

Here’s more LaTi disinformation, which misdirects from the above important questions:

As part of the audit, the Treasury tested a sample of the government’s 34,021 gold bars in the New York Fed’s vault five stories below Manhattan’s financial district, according to the inspector general’s office. Auditors drilled tiny holes into the bars to remove samples that were tested for fineness in a process called assaying.

In three of the 367 tests, the gold was more pure than Treasury records indicated, according to the Treasury’s inspector general. As a result, the government notched up the value of its gold holdings by approximately 27 fine troy ounces – or about $43,500, based on gold’s market value Monday.

Then LaTi tells us this:

The audit of the Fed gold came after 2012 presidential contender and former U.S. Rep. Ron Paul (R-Texas) questioned the central bank’s gold holdings. While he was in Congress, Paul questioned whether the New York Fed had loaned or otherwise encumbered U.S. gold in financial arrangements, and he advanced a bill that would have required a full assay and audit of the country’s gold reserves.

But Dr. Paul was most concerned about "the country’s gold reserves," which is different from what is held at the Fed. The country’s gold reserves are held mostly at Fort Knox, which no one is allowed to see, much less audit.

Then we have two more paragraphs of disinformation:

The New York Fed holds 99.98% of the U.S.-owned gold bars and coins in the custody of the Federal Reserve. The rest of the gold is on display at Fed banks in cities such as Richmond, Kansas City and San Francisco.

As of Sept. 30, when the market price of gold was $1,776 an ounce, the Fed banks held $23.9 billion in U.S. gold. (Gold has since declined in value, and on Monday the precious metal was hovering around $1,610 an ounce.)

Unlike Fort Knox, the NY Fed gives tours of its vaults, so Americans can see the gold of other countries, but not US gold.

Bottom line: This audit was designed to confuse. Expect more stories about how the Treasury conducted and audit of US gold. Not true. Fort Knox gold, where America’s gold supposedly sits, is off limits to all and has never been audited.

Again, the gold held at the New York Fed is mostly gold held for foreign countries. It does not belong to the Federal Reserve or the United States government. LaTi after misdirecting throughout the full story, ends with the limited truth:

The vast majority of the country’s gold reserves is held elsewhere, in Fort Knox, West Point and Denver.

Of course, the full truth is this gold has never been audited and unlike the NY Fed, which provides tours, there are no tours of the Fort Knox gold.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

Recently by Robert Wenzel: The Killers Among Us

Just yesterday, I became aware of a documentary on the 1989 US invasion of Panama. Although I had some familiarity with the details of the invasion, it all came from MSM. I had no idea that the invasion resulted in thousands of Panamanian civilians killed by US forces.

The documentary is strong in not only providing details of the invasion and what went down, but it is also strong in detailing how the military kept the press away and how back home, Dan Rather, Tom Brokaw and Peter Jennings erroneously reported Panamanian casualties in the 50 to 250 range.

Once you see this documentary (produced in 1992), your mind will quickly turn to more recent US military actions and you will wonder what we are not being told about them.

The documentary is a must view. It is available through Amazon and also as a download via Netflix.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel

The killer of US government sniper Chris Kelly was a killer trained by the US government.

It’s not commonly understood in its simplest terms, but governments need killers, especially governments that view themselves as major players on a global scale. The US government sees itself as such a global scale player. And, thus, it needs to train many killers. It needs to rip out the civility of modern man that exists in its new soldier recruits and turn them into unquestioning killers.

The military is not successful in doing this with all. Not all brains are wired the same. Some become so revolted by what they are asked to do that they commit suicide. It happens everyday in the military.

Others, wired in a different way, take the lessons to kill and use them in unexpected ways. The killer of sniper Kelly was the US trained Marine killer, Eddie Ray Routh. His mind twisted by the stress of learning to be a killer, and killing, snapped in some unknown fashion and killed his supposed buddy, sniper Kelly.

If you go around training people to kill, some may well try and kill you with the lessons they have learned. That appears to be what Routh did. That’s a problem for governments that train killers.

As I write this, Christopher Jordan Dorner is at-large. He was trained by both the Los Angeles Police Department and the US military. He is a skilled marksman, with special abilities as a sniper and weak hand shooting. This week he turned his skill inward, against government representatives and their families. He has killed policemen and family members of police. Asked by a reporter why he should be considered extremely dangerous, the police chief of one Southern California city replied, “Because we trained him.” No truer words have ever been spoken by a government official.

If you live by training killers, you may die by those trained killers. The United States is training killers.

But there’s more.

The US government in its role as the nanny state, and in cahoots with big pharma, now doles out medications in an attempt to control the behavior of many young minds. Often the most energetic minds, and those least willing to sit still to listen to government propaganda all day long, are the ones pumped with drugs. But just as with government’s training of killers and the way the training has different impact on different minds, the medications to force students to sit still all day, doesn’t have the same impact on all the same way. The medications will turn some into killers, as witnessed by the killings at Columbine, Aurora and Newtown. Force medications on some students to make them sit still for hours, and some will find ways to break through those mental prisons, sometimes with guns blazing.

Walk into inner cities and you will find students poorly educated by government, who can’t get a job because of government minimum wage laws, who are left with few alternatives but to sell drugs. Because government bans the sale of non-prescription drugs, it is a dangerous business. If you are caught selling drugs, you will do major time, and so you will kill those who might rat on you. It creates tough young kids, who don’t put a high value on life and so it will result in gun battles for turf.

Yes, he who lives by the sword dies by the sword. And the government of any nation that lives by preventing youth from getting jobs may likely see death as blowback on that nation and that government. The government of any nation that lives by attempting to drug up its youth should not be surprised when a few react with super aggressiveness against that drugging. And a government that trains many, many, many killers, should not be surprised when a few of those government trained killers turn their killing inward inside the nation.

This type killing won’t stop until killers are no longer trained by government, until big pharma drugs are no longer forced upon youth and until the inner youth are free to seek jobs and apprenticeships at any any wage.

Until current government policies are changed in a major way, the government will create killers, in one fashion or another. These killers will roam among us and they will continue to kill.

Recently by Robert Wenzel: Robert Ringer’s StrawmanAnarchist

      Ron Paul was condemned by the usual suspects when he tweeted in the aftermath of the killing of Chris Kyle: "He who lives by the sword dies by the sword." But the words tweeted by Dr. Paul have a much deeper meaning than appreciated by those who attacked him. Indeed, they have very important meaning in the United States, where government plays such a major role.

The words, of course, were originally spoken by Jesus, but regardless of the religious views or beliefs one holds, the deep meaning of the words should not be ignored. If you go around punching people, you are likely to get punched. If you go around slashing people with a sword, there is a chance you are going to slashed.

The killer of US government sniper Chris Kelly was a killer trained by the US government.

It’s not commonly understood in its simplest terms, but governments need killers, especially governments that view themselves as major players on a global scale. The US government sees itself as such a global scale player. And, thus, it needs to train many killers. It needs to rip out the civility of modern man that exists in its new soldier recruits and turn them into unquestioning killers.

The military is not successful in doing this with all. Not all brains are wired the same. Some become so revolted by what they are asked to do that they commit suicide. It happens everyday in the military.

Others, wired in a different way, take the lessons to kill and use them in unexpected ways. The killer of sniper Kelly was the US trained Marine killer, Eddie Ray Routh. His mind twisted by the stress of learning to be a killer, and killing, snapped in some unknown fashion and killed his supposed buddy, sniper Kelly.

If you go around training people to kill, some may well try and kill you with the lessons they have learned. That appears to be what Routh did. That’s a problem for governments that train killers.

As I write this, Christopher Jordan Dorner is at-large. He was trained by both the Los Angeles Police Department and the US military. He is a skilled marksman, with special abilities as a sniper and weak hand shooting. This week he turned his skill inward, against government representatives and their families. He has killed policemen and family members of police. Asked by a reporter why he should be considered extremely dangerous, the police chief of one Southern California city replied, "Because we trained him." No truer words have ever been spoken by a government official.

If you live by training killers, you may die by those trained killers. The United States is training killers.

But there’s more.

The US government in its role as the nanny state, and in cahoots with big pharma, now doles out medications in an attempt to control the behavior of many young minds. Often the most energetic minds, and those least willing to sit still to listen to government propaganda all day long, are the ones pumped with drugs. But just as with government’s training of killers and the way the training has different impact on different minds, the medications to force students to sit still all day, doesn’t have the same impact on all the same way. The medications will turn some into killers, as witnessed by the killings at Columbine, Aurora and Newtown. Force medications on some students to make them sit still for hours, and some will find ways to break through those mental prisons, sometimes with guns blazing.

Walk into inner cities and you will find students poorly educated by government, who can’t get a job because of government minimum wage laws, who are left with few alternatives but to sell drugs. Because government bans the sale of non-prescription drugs, it is a dangerous business. If you are caught selling drugs, you will do major time, and so you will kill those who might rat on you. It creates tough young kids, who don’t put a high value on life and so it will result in gun battles for turf.

Yes, he who lives by the sword dies by the sword. And the government of any nation that lives by preventing youth from getting jobs may likely see death as blowback on that nation and that government. The government of any nation that lives by attempting to drug up its youth should not be surprised when a few react with super aggressiveness against that drugging. And a government that trains many, many, many killers, should not be surprised when a few of those government trained killers turn their killing inward inside the nation.

This type killing won’t stop until killers are no longer trained by government, until big pharma drugs are no longer forced upon youth and until the inner youth are free to seek jobs and apprenticeships at any any wage.

Until current government policies are changed in a major way, the government will create killers, in one fashion or another. These killers will roam among us and they will continue to kill.

Reprinted with permission from Economic Policy Journal.

2013 Economic Policy Journal

The Best of Robert Wenzel