Sunday, January 25, 2009

Will Private Gold Be Confiscated?

“Inflation” is “an increase in the supply of currency . . . relative to the availability of goods and services, resulting in higher prices and a decrease in the purchasing power of money” (Encarta Dictionary; my emphasis.) According to Webster’s Dictionary of the American Language, inflation is “an increase in the amount of money in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices.” (My emphasis.)

Ultimately, there is only one actor who can “increase” “the supply of currency” or “the amount of money” and only one way it can be done: a government, which possesses a monopoly on the “creation” of money, literally prints more paper currency and moves it into the stream of commerce.

If on Monday the money supply is X, and if on Tuesday the government doubles the amount in circulation, Monday’s and Tuesday's money is worth ½ X.

Historical examples of runaway inflation abound: the German mark after World War I, when postage stamps cost millions; the Chinese currency during the civil war in the 1940s, when it literally took a wheelbarrow full of paper money to buy a loaf of bread. Today one need look only at the once-prosperous Zimbabwe, where the Mugabe government has printed so much money that it’s worth less than the paper it’s printed on.

The late classical economist Ludwig von Mises wrote in his On the Manipulation of Money and Credit that “[i]nflationism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with [classical] liberalism, free trade, capitalism and peace, so is inflationism part and parcel of imperialism, militarism, protectionism, statism and socialism.”

Thanks to the credulousness of our recent “compassionate conservative” president and a compliant, if not complicit, Congress, who handed nearly a trillion taxpayer dollars to his lame-duck, unelected treasury secretary with unchecked power to dispense it any way he wished, and the advent of the Obama Administration with its own grandiose plans to spend trillions more trying to spend their way out of this recession, we are facing serious, perhaps devastating, inflation— because there’s only one way the now-in-charge collectivists/statists/socialists can get that kind of money: print it!

Typically, one way to hedge rampant inflation, some believe the only way, is through ownership of gold, either physically or through enforceable claims on gold.

However, gold and the gold standard has long been maligned by the supporters of fiat money because it is an existential threat to government induced inflation. Indeed, its current quasi-free market price reflects serious concern about inflation.

But not all is well with gold, especially gold ownership.

Unfortunately, most Americas are under the illusion that they have a right to own gold. They are mistaken. America’s history, and the financial situation today, proves that our government has usurped omnipotent power over monetary affairs, one major consequence being that private ownership of gold has never been a right, and remains today a mere privilege revocable at will.

For a thorough historical discussion, see the 1973 Brooklyn Law Review article “How Americans Lost the Right to Own Gold, and Became Criminals in the Process,” by Henry Mark Holzer:

Thursday, January 8, 2009

Today's Cultural Barometer

Here's today's Cultural Barometer:
CBS NEWS of January 1, 2009 Evening Edition


The subtitle is "In Midst of Crisis, President-Elect Urges Quick Action; Focuses on Job Creation; Clean Energy"

The following three "top stories" about Bernard Madoff-Ponzi, dead bodies on the Gaza battlefield, and Hamas's rejection of the Egypt cease-fire plan--all legitimate news stories, given America's economic problems and our foreign policy interests.

The next category is "CBS News Programs" (my emphasis).

And under that--the first big "news" story that Americans need to know about, one that greatly affects our domestic and international security-- is what?: "Brad [Pitt]: I Didn't Cheat On Jen [Aniston]With Angelina [Jolie]. Tells W Magazine He Didn't Start Seeing Angelina Until He And Jen Broke Up."

CBS runs this superficial silliness because doing so brings in advertising dollars, which sponsors pay because they sell their wares to the public--too many members of which care little about what the Madoff swindle signifies, or about what Gaza means for Israel and America, but instead hang on every word about little people who recite, for millions of dollars, words written by someone else.

To paraphrase a sometimes-seen bumper sticker: "I'm stupid, and I vote."

Sunday, January 4, 2009

Adam Clayton Powell, Jr. and Roland Burris

Adam Clayton Powell, Jr., the Kingfish of Harlem, was a playboy masquerading as a Member of the United States House of Representatives.

Roland Burris—by all accounts a reputable lawyer, and former Attorney General of the State of Illinois—is Governor Rod Blagojevich’s appointee to fill the now-vacant United States Senate seat from that state.

In early 1967 the House finally had enough of Powell’s absenteeism, bimbo chasing, and financially dubious conduct. It refused to seat him.

Now—although Blagojevich is still governor of Illinois, has not been impeached let alone removed from office, and was unarguably within his constitutional power to appoint Burris—United States Senate Majority Leader holier-than-thou Harry [Reid], has taken it upon himself to anticipatorily deny Burris his seat.

As with too many events in the past, and doubtless many more to come (at least in the next two years), Reid has proved that as a lawyer, let alone a constitutional scholar, he gets an “F” (recall his criticism of Justice Thomas’s opinions, which Reid later admitted he had not read).

There is no constitutional way for Reid and his democrats (including the vaunted constitutional scholar and former KKK member, Robert Byrd) to deny Burris his seat.

The 1969 case of Powell v. McCormack—decided only a few years after Reid finished law school and much in the news today, and which Reid apparently also has not read—makes the Majority Leader’s anti-Burris ranting utterly irrelevant.

Powell was an 8-1 decision of the Supreme Court (Justice Stewart’s dissent was on a technical point, not on the merits).

Writing for the Court, Chief Justice Warren’s lengthy majority opinion concludes with these words: “A fundamental principle of our representative democracy is, in Hamilton’s words, ‘that the people should choose whom they please to govern them.' [Citation omitted] As Madison pointed out at the [Constitutional] Convention, this principle is undermined as much by limiting whom the people can select as by limiting the franchise itself. * * * . . . since Adam Clayton Powell, Jr., was duly elected by the voters of the 18th Congressional District of New York [as Burris was duly appointed by Blagojevich] and was not ineligible to serve under any provision of the Constitution [as Burris is not], the House [here, the Senate] was without power to exclude him from its membership.”

So to the list of what Harry Reid has not read, we can add Founding Father Alexander Hamilton, co-author of The Federalist with John Jay and James Madison—the latter’s efforts including the Constitution of the United States and the Bill of Rights.

Thursday, January 1, 2009

The "Anti-Capitalist "Capitalists"

A “contradiction” is “something illogical,” “something that has aspects that are illogical or inconsistent with each other.” (Encarta Dictionary.)

Drawing on the Law of Identity, Ayn Rand wrote in Atlas Shrugged that “[a] contradiction cannot exist. An atom is itself, and so is the universe; neither can contradict its own identity; nor can a part contradict the whole. No concept man forms is valid unless he integrates it without contradiction into the total sum of his knowledge. To arrive at a contradiction is to confess an error in one’s thinking; to maintain a contradiction is to abdicate one’s mind and to evict oneself from the realm of reality.”

“[That] Law of Identity (A is A) is a rational man’s paramount consideration in the process of determining his interests. He knows that the contradictory is impossible, that a contradiction cannot be achieved in reality and that the attempt to achieve it can lead only to disaster and destruction. Therefore, he does not permit himself to hold contradictory values, to pursue contradictory goals, or to imagine that the pursuit of a contradiction can ever be in his interest.” (Ayn Rand, “The ‘Conflicts’ of Men’s Interests,” The Virtue of Selfishness.)

Sadly, last week we saw two more examples of dangerous contradictions proudly held and announced by one of America’s leading bankers and by the President of the United States.

John Allison, Chairman of BB&T Corp which owns the largest bank in West Virginia, has been a strong voice for the free market and a significant supporter of Rand’s economic ideas. As the Charleston Daily Mail reported, “[w]ithin the past two years, BB&T has made contributions from its charitable foundation to West Virginia University ($1.75 million), Marshall University ($1 million), Wheeling Jesuit University ($700,000) and the University of Charleston ($350,000). Most of the money involves an agreement by the schools to at least review the free market principles set forth in Rand’s book, ‘Atlas Shrugged’.” (My emphasis.)

Yet, according to a BB&T spokesman, although “the company doesn’t like the federal government’s $700 billion financial rescue plan and didn’t want to participate [it] took $3.1 billion because the U.S. Treasury urged it to and some competitors are participating.”

Apparently, the otherwise free-market Mr. Ellison was against the money when he took the money—folding in the face of government pressure and banking competition.

The noise you hear is Ayn Rand spinning in her grave—because the heroes of her Atlas Shrugged would never have capitulated to either threat.

Which brings us to President George W. Bush, now too well know for his own contradictions: e.g., compassionate conservatism, entitlements and fiscal responsibility.

Recently, Mr. Bush told CNN, in defense of his end-run around Congress by bequeathing some $17 billion of taxpayer money to the Big Three automakers, that “I’ve abandoned free-market principles to save the free-market system.”

The other sound you hear is Milton Friedman spinning in his grave.

Rand was correct: “the contradictory is impossible, that a contradiction cannot be achieved in reality and that the attempt to achieve it can lead only to disaster and destruction.”

Capitalism has more than enough enemies: politicians, academics, media, writers, socialists, collectivists, statists—and their enablers, co-conspirators, and the many others who aid and abet them.

But it is appalling when the road to disaster and destruction is paved not by socialista and communists, but by anti-capitalist “capitalists” like John Ellison and George W. Bush.