The Only Thing Constant is Change: Money Edition

Sovereign Man’s Simon Black gives a terse but incisive account of the evolution of money in the perspective of  reserve currency and its lessons.

For hundreds of years the Byzantine Empire coined the most popular reserve currency in the history of the world.

Merchants all over Europe, the Mediterranean, the Middle East, and further, used it in trade for centuries.

It was called the solidus, and was introduced by Constantine I in 312 AD.

The solidus held steady at 4.5 grams of 24-carat gold for nearly seven centuries. Hence its Latin name – ‘solid’. The durability of its purity is nearly unprecedented in the history of money.

Its weight, dimensions and purity remained constant until the 10th century when the government began to debase it.

The debasement was gradual at first, then accelerated rapidly.

In a matter of decades its gold content was reduced to almost zero as the Byzantine Empire was scrambling for cash to finance its numerous wars.

Consequently, Emperor Alexios I Komenos drastically overhauled the Byzantine coinage system in 1092 and introduced a new gold coin, the hyperpyron.

It too was soon subject to gradual debasement. And by the mid 1200s the hyperpyron’s gold content fell drastically again.

As the saying goes, fool me once, shame on you. Fool me twice, shame on me.

The rest of Europe had seen this movie before. And when they saw the gold content in the hyperpyron fall, they quickly lost confidence.

By that time, the Byzantine Empire was weak—a shadow of its former power.

Meanwhile, several small kingdoms in Italy were rising in prosperity, especially Florence, Genoa, and Venice.

The Florentines and the Genoese took up the task and minted a new gold coin called the florin, which at 3.5 grams of pure gold was the most wildly circulated trade currency in Europe and around the Mediterranean for a while.

The Venetian ducat gained wide international acceptance in the 1400s. The ducat contained 99.47% of fine gold—the highest metallurgical purity possible at the time.

As the Venetian merchants traveled far and wide the ducat became an internationally accepted trade currency throughout the world.

Even though he didn’t live in Venice, for example, Leonardo da Vinci was paid by the King of France in Venetian ducats—exactly 400 ducats per year, which in today’s dollars equals to roughly $56,000 (and he didn’t pay any tax…)

The ducat was ultimately supplanted by the Spanish dollar (real de a ocho, or Pieces of Eight) with the onset of the Age of Exploration.

Pieces of Eight became so widespread in international trade that they were legal tender in the United States until the mid 19th century.

The clear lesson here is that this stuff changes.

It’s common for the world’s most powerful country to issue a currency that becomes adopted around the world as the standard for international trade.

But whenever that country reaches a point of epic, terminal decline, and especially when it rapidly debases its currency, the rest of the world seeks an alternative.

The US has been enjoying this special privilege for decades now.

With the way the US government has been imposing imperial policies from geopolitics to trade and even to finance, which has recently sown the seeds of global factionalism, the US dollar’s reserve currency status is clearly in jeopardy. Compounding on this has been the Fed's bubble blowing that has been embraced as standard by today’s central banks. Such bubble policies have raised the specter of instability and crisis across the globe.

As the great Ron Paul recently wrote:

US policymakers fail to realize that the United States is not the global hegemon it was after World War II. They fail to understand that their overbearing actions toward other countries, even those considered friends, have severely eroded any good will that might previously have existed. And they fail to appreciate that more than 70 years of devaluing the dollar has put the rest of the world on edge. There is a reason the euro was created, a reason that China is moving to internationalize its currency, and a reason that other countries around the world seek to negotiate monetary and trade compacts. The rest of the world is tired of subsidizing the United States government's enormous debts, and tired of producing and exporting trillions of dollars of goods to the US, only to receive increasingly worthless dollars in return.

The US government has always relied on the cooperation of other countries to maintain the dollar's preeminent position. But international patience is wearing thin, especially as the carrot-and-stick approach of recent decades has become all stick and no carrot. If President Obama and his successors continue with their heavy-handed approach of levying sanctions against every country that does something US policymakers don’t like, it will only lead to more countries shunning the dollar and accelerating the dollar's slide into irrelevance.

Ron Paul: What the Media Won’t Report About Malaysian Airlines Flight MH17

Ron Paul explains the propaganda behind the downing of the MH17

As published from the Ron Paul Institute (bold mine)

Just days after the tragic crash of a Malaysian Airlines flight over eastern Ukraine, Western politicians and media joined together to gain the maximum propaganda value from the disaster. It had to be Russia; it had to be Putin, they said. President Obama held a press conference to claim – even before an investigation – that it was pro-Russian rebels in the region who were responsible. His ambassador to the UN, Samantha Power, did the same at the UN Security Council – just one day after the crash!

While western media outlets rush to repeat government propaganda on the event, there are a few things they will not report.

They will not report that the crisis in Ukraine started late last year, when EU and US-supported protesters plotted the overthrow of the elected Ukrainian president, Viktor Yanukovych. Without US-sponsored “regime change,” it is unlikely that hundreds would have been killed in the unrest that followed. Nor would the Malaysian Airlines crash have happened.

The media has reported that the plane must have been shot down by Russian forces or Russian-backed separatists, because the missile that reportedly brought down the plane was Russian made. But they will not report that the Ukrainian government also uses the exact same Russian-made weapons.

They will not report that the post-coup government in Kiev has, according to OSCE monitors, killed 250 people in the breakaway Lugansk region since June, including 20 killed as government forces bombed the city center the day after the plane crash! Most of these are civilians and together they roughly equal the number killed in the plane crash. By contrast, Russia has killed no one in Ukraine, and the separatists have struck largely military, not civilian, targets.

They will not report that the US has strongly backed the Ukrainian government in these attacks on civilians, which a State Department spokeswoman called “measured and moderate.”
 

They will not report that neither Russia nor the separatists in eastern Ukraine have anything to gain but everything to lose by shooting down a passenger liner full of civilians.

They will not report that the Ukrainian government has much to gain by pinning the attack on Russia, and that the Ukrainian prime minister has already expressed his pleasure that Russia is being blamed for the attack.

They will not report that the missile that apparently shot down the plane was from a sophisticated surface-to-air missile system that requires a good deal of training that the separatists do not have.

They will not report that the separatists in eastern Ukraine have inflicted considerable losses on the Ukrainian government in the week before the plane was downed.

They will not report how similar this is to last summer’s US claim that the Assad government in Syria had used poison gas against civilians in Ghouta. Assad was also gaining the upper hand in his struggle with US-backed rebels and the US claimed that the attack came from Syrian government positions. Then, US claims led us to the brink of another war in the Middle East. At the last minute public opposition forced Obama to back down – and we have learned since then that US claims about the gas attack were false.

Of course it is entirely possible that the Obama administration and the US media has it right this time, and Russia or the separatists in eastern Ukraine either purposely or inadvertently shot down this aircraft. The real point is, it's very difficult to get accurate information so everybody engages in propaganda. At this point it would be unwise to say the Russians did it, the Ukrainian government did it, or the rebels did it. Is it so hard to simply demand a real investigation?

As Josph Goebbels, Nazi propaganda minister was once quoted: It is the absolute right of the State to supervise the formation of public opinion.

China’s 2nd Bond Default, EU and US imposes Sanctions on Russian Officials

China’s first bond default occurred just about 2 weeks back.

Today the Bloomberg reports a second company to declare a bond default. (hat tip zero hedge)

A closely held Chinese real estate developer with 3.5 billion yuan ($566.6 million) of debt has collapsed and its largest shareholder was detained, said government officials familiar with the matter.

Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay creditors that include more than 15 banks, with China Construction Bank Corp. (939) holding more than 1 billion yuan of its debt, according to the officials, who asked not to be named because they weren’t authorized to discuss the matter. The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.

The collapse of the company, based in the eastern town of Fenghua, adds to concern of strains in the nation’s real estate sector and comes less than two weeks after the first bond default by a Chinese company. Shanghai Chaori Solar Energy Science & Technology Co.’s inability to repay its debt may become China's own “Bear Stearns moment,” prompting investors to reassess credit risks as they did after the U.S. securities firm was rescued in 2008, Bank of America Corp. said March 5. 

The second incident in just two weeks with much more to come.

But China’s stock markets looked the other way and instead zoomed ahead. Why? Because of reports of a government stimulus (again)

From another Bloomberg report  (bold mine) 

China’s stocks rose to the highest level in a week, led by property, auto and cement companies, after the government outlined urbanization plans.

China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, advanced more than 1 percent, while Anhui Conch Cement Co. gained the most in a month. SAIC Motor Corp. led a rally for automakers. China will invest more than 1 trillion yuan ($163 billion) redeveloping shantytowns this year, state broadcaster China Central Television reported yesterday.

Have a debt problem? Easy, for modern day government the solution has just been to borrow and spend. Problem solved.

How many more stimulus in the face of waves of debt defaults just to boost the markets? Interesting stuff.

Now to the Ukraine political crisis.

In a referendum recently held, people from Crimea voted overwhelmingly (96%) to secede from Ukraine and join Russia. But the Western government refused to acknowledge the outcome and instead imposed sanction on Russian officials.

From Reuters:

The European Union is to impose sanctions including asset freezes and travel bans on 21 officials from Russia and Ukraine after Crimea applied to join Russia on Monday following a weekend referendum, Lithuania's foreign minister said.

Crimea's leaders declared a Soviet-style 97-percent result in favor of seceding from Ukraine in a vote condemned as illegal by Kiev and the West.

After a meeting lasting around three hours, the EU's 28 foreign ministers agreed on a list of those to be sanctioned for their part in Russia's seizure of Crimea and Sunday's referendum on joining Russia.

The US have joined the EU. From the CNBC

U.S. President Barack Obama imposed sanctions on 11 Russians and Ukrainians on Monday blamed for Russia's military incursion into Crimea, including two top aides to Russian President Vladimir Putin.

Obama's order freezes any assets in the United States and bans travel into the country of 11 people named as responsible for the Russian move into Ukraine's Crimea region.

Among those sanctioned were ousted Ukraine President Viktor Yanukovich and Putin aides Vladislav Surkov and Sergei Glazyev.

And I thought the West has been about promoting 'democracy'?

As the former US congressman Ron Paul wrote,

The Obama Administration’s policy toward Ukraine is hypocritical. The overthrow of the government in Kiev by violent street protests was called a triumph of democracy, but when the elected parliament in autonomous Crimea voted last week to hold a referendum to decide its future, President Obama condemned it as a violation of international law. What about the principle of self-determination, which is also enshrined in international law

So democracy seem as really about whose nests are being feathered.

So far, sanctions has been directed only to officials. But one thing can lead to another. The question now is how will the Russian leadership react? What if Putin and co. retaliates?  Will this not lead to an escalation? Will this not bring about greater risks of a collapse in global trade, and worse, war? 

Again Dr. Ron Paul (from the same article) echoing the great French classical liberal Frederic Bastiat

Though many mistakenly believe that sanctions are a relatively harmless way of forcing foreign countries to do what we say, we should be clear: sanctions are an act of war.

Don’t worry be happy. 

US and European stock markets seem to have discounted the above risks and appear to be relishing the moment by markedly bidding up equity assets. 

In today's central bank supported equity markets which looks like a Truman Show, Bad news is good news.

Video: Ron Paul on the Fed's Untaper: Prepare for the destruction of the US dollar and crash of the bond markets

The great Ron Paul interviewed by Fox Business (hat tip Lew Rockwell Blog)

The untaper says Dr. Paul is a "bad sign" and that the "Fed is really worried about the economy", despite the "deception out there that everything is doing good". But "markets like it". 

In view of rising markets, Dr. Paul further asks why does the Fed have "to punish the elderly who save money?"

Asked about what to expect from Bernanke's replacement Janet Yellen, Dr Paul's response "Just prepare for the destruction of the US dollar and crash of the bond market one day" (1:48) 

He says that the "bond bubble is already weakening" and that interest rates will go up, the dollar is going to weaken, prices are going up and standard of living is going down. 

Dr. Paul also says that the "worse political problem" is the growing "discrepancy between the poor and the middle class"

Asked about housing as beneficiary of Fed Policies, Dr. Paul responds, "as long as the interest rates are artificial I think you are going to get malinvestments misdirected investments and people are going to make mistakes and you don’t when they are until the correction has to come"

It's not all bad news though, Dr. Paul is optimistic over the long term: "I think there is a lot to be optimistic about on the long run, but on the short run I think we are gonna have to go through some tough times"

Ron Paul: Planned war against Syria is merely the next step to take on the Iranian government

In the halls of US congress in June 19th 2012, the great Ron Paul exposes on the motivations behind the planned attack on Syria 

Transcript from RonPaul.com

Plans, rumors, and war propaganda for attacking Syria and deposing Assad have been around for many months.

This past week however, it was reported that the Pentagon indeed has finalized plans to do just that. In my opinion, all the evidence to justify this attack is bogus. It is no more credible than the pretext given for the 2003 invasion of Iraq or the 2011 attack on Libya.

The total waste of those wars should cause us to pause before this all-out effort at occupation and regime change is initiated against Syria.

There are no national security concerns that require such a foolish escalation of violence in the Middle East. There should be no doubt that our security interests are best served by completely staying out of the internal strife now raging in Syria.

We are already too much involved in supporting the forces within Syria anxious to overthrow the current government. Without outside interference, the strife—now characterized as a civil war—would likely be non-existent.

Whether or not we attack yet another country, occupying it and setting up a new regime that we hope we can control poses a serious Constitutional question: From where does a president get such authority?

Since World War II the proper authority to go to war has been ignored. It has been replaced by international entities like the United Nations and NATO, or the President himself, while ignoring the Congress. And sadly, the people don’t object.

Our recent presidents explicitly maintain that the authority to go to war is not the U.S. Congress. This has been the case since 1950 when we were taken into war in Korea under UN Resolution and without Congressional approval.

And once again, we are about to engage in military action against Syria and at the same time irresponsibly reactivating the Cold War with Russia. We’re now engaged in a game of “chicken” with Russia which presents a much greater threat to our security than does Syria.

How would we tolerate Russia in Mexico demanding a humanitarian solution to the violence on the U.S.-Mexican border? We would consider that a legitimate concern for us. But, for us to be engaged in Syria, where the Russian have a legal naval base, is equivalent to the Russians being in our backyard in Mexico.

We are hypocritical when we condemn Russian for protecting their neighborhood interests for exactly what we have been doing ourselves, thousands of miles away from our shores. There’s no benefit for us to be picking sides, secretly providing assistance and encouraging civil strife in an effort to effect regime change in Syria.

Falsely charging the Russians with supplying military helicopters to Assad is an unnecessary provocation. Falsely blaming the Assad government for a so-called massacre perpetrated by a violent warring rebel faction is nothing more than war propaganda.

Most knowledgeable people now recognize that the planned war against Syria is merely the next step to take on the Iranian government, something the neo-cons openly admit.

Controlling Iranian oil, just as we have done in Saudi Arabia and are attempting to do in Iraq, is the real goal of the neo-conservatives who have been in charge of our foreign policy for the past couple of decades.

War is inevitable without a significant change in our foreign policy, and soon. Disagreements between our two political parties are minor. Both agree the sequestration of any war funds must be canceled. Neither side wants to abandon our aggressive and growing presence in the Middle East and South Asia.

This crisis building can easily get out of control and become a much bigger war than just another routine occupation and regime change that the American people have grown to accept or ignore.

It’s time the United States tried a policy of diplomacy, seeking peace, trade, and friendship. We must abandon our military effort to promote and secure an American empire.

Besides, we’re broke, we can’t afford it, and worst of all, we’re fulfilling the strategy laid out by Osama bin Laden whose goal had always been to bog us down in the Middle East and bring on our bankruptcy here at home.

It’s time to bring our troops home and establish a non-interventionist foreign policy, which is the only road to peace and prosperity.

This week I am introducing legislation to prohibit the Administration, absent a declaration of war by Congress, from supporting — directly or indirectly — any military or paramilitary operations in Syria. I hope my colleagues will join me in this effort.

Ron Paul: Bernanke’s Farewell Tour

Ron Paul at the Free Foundation.org (bold mine)

Last week Federal Reserve Chairman Ben Bernanke delivered what may well be his last Congressional testimony before leaving the Federal Reserve in 2014. Unfortunately, his farewell performance was full of contradictory comments about the state of the economy and the effects of Fed policies on the market. One thing Bernanke inadvertently made clear was that the needs of Wall Street trump Main street, the economy, and sound money.

Quantitative easing (QE) and effectively zero interest rates have created paper prosperity, but now the Fed must continuously assure Wall Street that the QE spigot will not be turned off. Otherwise even the illusion of recovery will disappear. So Bernanke made every effort to emphasize that the economy was not doing well enough to end QE, while lauding the success of Fed policies in improving the economy.

Bernanke was also intent on denying that Fed policies directly boost financial markets. However, the money the Fed creates out of nothing in order to buy mortgage-backed securities and government debt for the QE3 program, benefits first and foremost the big banks and the financial class — those people who are invited to the Fed auctions. This new money then fuels stock bubbles, bond bubbles, agricultural land bubbles, and others. The consequences of this are felt by ordinary savers, investors, and retirees whose savings lose value because of the Fed’s zero interest rate policy.

As if Wall Street favoritism and zero returns for savers isn’t bad enough, the Fed wants the rest of America to bear a greater inflation burden. The Fed thinks you should lose two percent of the value of your dollar this year. But Bernanke is not satisfied with having reduced purchasing power by ten percent since the 2008 recession. The inflation picture is actually much worse if we look at the old consumer price index —the one that did not assume that ground beef is a perfect substitute for steak.

Using the old CPI metric, as calculated by John Williams at Shadow Government Statistics, we’ve lost close to 50 percent of the purchasing power of our money in just the last five years. So what you were able to buy with the $20 in your pocket before the financial crisis costs more than $30 today. That might be peanuts to Wall Street, but that’s real money for working Americans. And it’s theft by the Fed. It is a direct consequence of the trillions of new dollars the Fed has “not literally” printed—as Bernanke put it.

Bernanke’s final testimony before Congress confirms that the Fed has blatant disregard for the extra costs and the new bubbles it is creating. The Fed only understands paper prosperity, not how middle class Americans and the poor suffer the consequences of higher prices, resources misallocations, and distortionary bubbles as well as insidious unemployment.

The only way out of this tailspin of monetary favoritism is to restore sound money, which would end the Fed’s ability to manipulate currency and put Wall Street first. The Fed has proven over and over again that it has no respect for the real money that preserves the value of people’s labor, their wealth, and their ability to live free and prosperous lives. It is beyond time for the Fed, Wall Street, and the federal government to stop manipulating money and stealing from the American people under the false guise of paper prosperity.

If indeed this is the farewell tour, then Dr. Bernanke will have done a great escape act.  Whoever his successor is, he/she would need to deal with the chaotic legacies created by Mr. Bernanke and Mr. Greenspan

Ron Paul: Obama’s Syria Policy Looks a Lot Like Bush’s Iraq Policy

As the civil war in Syria escalates (which risks becoming a regional or global conflagration), former US Congressman Ron Paul slams the Obama administration for assimilating the deception employed by Bush administration in justifying the Iraq war.

Here is Ron Paul (from Ron Paul’s Texas Straight Talk)

President Obama announced late last week that the US intelligence community had just determined that the Syrian government had used poison gas on a small scale, killing some 100 people in a civil conflict that has claimed an estimated 100,000 lives. Because of this use of gas, the president claimed, Syria had crossed his “red line” and the US must begin to arm the rebels fighting to overthrow the Syrian government.

Setting aside the question of why 100 killed by gas is somehow more important than 99,900 killed by other means, the fact is his above explanation is full of holes. The Washington Post reported this week that the decision to overtly arm the Syrian rebels was made “weeks ago” – in other words, it was made at a time when the intelligence community did not believe “with high confidence” that the Syrian government had used chemical weapons.

Further, this plan to transfer weapons to the Syrian rebels had become policy much earlier than that, as the Washington Post reported that the CIA had expanded over the past year its secret bases in Jordan to prepare for the transfer of weapons to the rebels in Syria.

The process was identical to the massive deception campaign that led us into the Iraq war. Remember the famous quote from the leaked “Downing Street Memo,” where representatives of British Prime Minister Tony Blair’s administration discussed Washington’s push for war on Iraq?

Here the head of British intelligence was reporting back to his government after a trip to Washington in the summer of 2002:

“Military action was now seen as inevitable. Bush wanted to remove Saddam, through military action, justified by the conjunction of terrorism and WMD. But the intelligence and facts were being fixed around the policy.”

That is exactly what the Obama Administration is doing with Syria: fixing the intelligence and facts around the already determined policy. And Congress just goes along, just as they did the last time.

We found out shortly after the Iraq war started that the facts and intelligence being fixed around the policy were nothing but lies put forth by the neo-con warmongers and the paid informants, like the infamous and admitted liar known as “Curveball.” But we seem to have learned nothing from being fooled before.

So Obama now plans to send even more weapons to the Syrian rebels even though his administration is aware that the main rebel factions have pledged their loyalty to al-Qaeda. Does anyone else see the irony? After 12 years of the “war on terror” and the struggle against al-Qaeda, the US decided to provide weapons to the allies of al-Qaeda. Does anyone really think this is a good idea?

The Obama administration promises us that this is to be a very limited operation, providing small arms only, with no plans for a no-fly zone or American boots on the ground. That sounds an awful lot like how Vietnam started. Just a few advisors. When these few small arms do not achieve the pre-determined US policy of regime change in Syria what is the administration going to do? Admit failure and pull the troops out, or escalate? History suggests the answer and it now appears to be repeating itself once again.

The president has opened a can of worms that will destroy his presidency and possibly destroy this country. Another multi-billion dollar war has begun.

By the way, news reports say that Iran will be sending 4,000 troops to fight alongside Bashar al-Assad's forces

The above only shows how arbitrary policies such as "war on terror" can be conveniently used to advance agendas of vested interest groups, and of the opaqueness of such policies, as seen through the alliance between the Obama administration and alleged terror groups in seeking to attain another political objective: the ouster of the Syrian government. The world of politics is all about smoke and mirrors.

Video: In 1984 The Prescient Ron Paul Warned of US Government Computer Surveillance

Something special with 1984? 1984 was the title of George Orwell's classic book about big brother dystopia.

In 1984, a video of Ron Paul's speech at the US house of representatives admonished of the use of computer or electronic surveillance by US government to attack on civil liberties. 

The latest whistleblowing of former insider Edward Snowden on the massive NSA spying serves as a validation of Ron Paul (hat tip Zero Hedge)

Ron Paul on Government Spying: Should We Be Shocked?

Given the furor over the NSA spying exposé by whistleblower Edward Snowden, former US congressman Ron Paul says that spying is supposed to be expected from an increasingly desperate government. 

From the great Ron Paul (Ron Paul Institute)

Last week we saw dramatic new evidence of illegal government surveillance of our telephone calls, and of the National Security Agency’s deep penetration into American companies such as Facebook and Microsoft to spy on us. The media seemed shocked.

Many of us are not so surprised.

Some of us were arguing back in 2001 with the introduction of the so-called PATRIOT Act that it would pave the way for massive US government surveillance—not targeting terrorists but rather aimed against American citizens. We were told we must accept this temporary measure to provide government the tools to catch those responsible for 9/11. That was nearly twelve years and at least four wars ago.

We should know by now that when it comes to government power-grabs, we never go back to the status quo even when the “crisis” has passed. That part of our freedom and civil liberties once lost is never regained. How many times did the PATRIOT Act need renewed? How many times did FISA authority need expanded? Why did we have to pass a law to grant immunity to companies who hand over our personal information to the government?

It was all a build-up of the government’s capacity to monitor us.

The reaction of some in Congress and the Administration to last week’s leak was predictable. Knee-jerk defenders of the police state such as Senator Lindsey Graham declared that he was “glad” the government was collecting Verizon phone records—including his own—because the government needs to know what the enemy is up to. Those who take an oath to defend the Constitution from its enemies both foreign and domestic should worry about such statements.

House Intelligence Committee Chairman Mike Rogers tells us of the tremendous benefits of this Big Brother-like program. He promises us that domestic terrorism plots were thwarted, but he cannot tell us about them because they are classified. I am a bit skeptical, however. In April, the New York Times reported that most of these domestic plots were actually elaborate sting operations developed and pushed by the FBI. According to the Times report, “of the 22 most frightening plans for attacks since 9/11 on American soil, 14 were developed in sting operations.”

Even if Chairman Rogers is right, though, and the program caught someone up to no good, we have to ask ourselves whether even such a result justifies trashing the Constitution. Here is what I said on the floor of the House when the PATRIOT Act was up for renewal back in 2011:

“If you want to be perfectly safe from child abuse and wife beating, the government could put a camera in every one of our houses and our bedrooms, and maybe there would be somebody made safer this way, but what would you be giving up? Perfect safety is not the purpose of government. What we want from government is to enforce the law to protect our liberties.”

What most undermines the claims of the Administration and its defenders about this surveillance program is the process itself. First the government listens in on all of our telephone calls without a warrant and then if it finds something it goes to a FISA court and get an illegal approval for what it has already done! This turns the rule of law and due process on its head.

The government does not need to know more about what we are doing. We need to know more about what the government is doing. We need to turn the cameras on the police and on the government, not the other way around. We should be thankful for writers like Glenn Greenwald, who broke last week’s story, for taking risks to let us know what the government is doing. There are calls for the persecution of Greenwald and the other whistle-blowers and reporters. They should be defended, as their work defends our freedom.

Shades of George Orwell’s 1984?

Video: Ron Paul: NSA Seizing Phone Records Symptom of Failure of The State

Former Congressman Ron Paul interviewed by Fox's Neil Cavuto on the intensifying spying by the US government on her constituencies.

Austrian economist Gary North on the public's backlash from the fast expanding Orwellian Big Brother state (hat tip Bob Wenzel) (bold original)

This will in no way reverse the process. The cost of monitoring everyone continues to fall. Economics teaches that when the price of anything falls, more is demanded.

Only one thing can reverse this: budget cuts for the offending agencies. Congress never imposes budget cuts, especially on the NSA (No Such Agency).

Most voters know that this invasion of their privacy is illegitimate. They also know that Congress will do nothing about it. It will hold hearings — maybe even closed-door hearings. But nothing will change.

Nevertheless, headlines like these are always positive. They help lower the public’s assessment of the federal government’s legitimacy. Ultimately, civil government is about power, but legitimacy increases voluntary compliance by the public. Every time the government loses a little legitimacy, it’s positive.

Ron Paul: Federal Reserve Blows More Bubbles

From the great Ron Paul at the Free Foundation.org 

Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.

The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.

Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.

With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal.

In the meantime, real families are suffering. While Wall Street and the government take advantage of access to the Fed’s new “free” money, the Fed claims there is no inflation. But who hasn’t paid higher prices at the grocery store, the gas pump, for tuition, for insurance? It’s bad enough that household incomes have stagnated, but real purchasing power has declined so much that one in seven Americans, 47.3 million people, are on food stamps. Five million are collecting unemployment insurance with 21.5 million afflicted by unemployment according to the government’s own figures. That’s 13.9 percent -- close to double the 7.5 percent unemployment number reported last week.

We are certainly not in a recovery. We don’t see the long unemployment and soup kitchen lines like in the Great Depression, but that’s just because the lines are electronic now.

It is not surprising the Fed has decided to hand the American people more of the same failed policies. But it is disappointing. We know what the real solution is: allow the marketplace to work. Allow entrepreneurs the chance to create instead of stifling innovation with arbitrary regulations. Allow interest rates to rise to equal the risks in the economy. Allow bad debts to be liquidated so we can build on a firm foundation. Stop printing money to benefit the government and big banks. Restore sound money to the economy and the American people. Sound money is the bedrock for prosperity and the best check on big government and crony capitalism.

There is no such thing as an “exit”. The US political economy is hooked on the inflation drug.

Worst, Fed policies are not only harming Americans but everyone else in this world, as bubbles have become a global phenomenon.

Yet the Fed and central banks will keep blowing bubbles until the markets pricks them or until there will be a run on paper money.

Video: Ron Paul and Jim Rogers on bankrupt governments: They will use intimidation, force and guns

At the recent Sovereign Man Workshop, former US congressman Ron Paul together with the legendary investor Jim Rogers talks about what to expect from desperate bankrupt governments 

Some noteworthy quotes: (video courtesy of the Sovereign Man)

Ron Paul: I would expect that there would a lot more chaos to come and it will not be limited to Europe. I think it will be a worldwide phenomenon 

Jim Rogers: They won’t take our bank accounts…they will take our retirement accounts.

Ron Paul: They will do what I think is necessary, they will use force and they will use intimidation, they will use guns because you can’t challenge the state’s right to control the money

Video: Ron Paul on the Gold Crash and Bitcoins

Former US Congressman and presidential aspirant Ron Paul eloquently handles objections on gold posed by Bloomberg newscasters.

Some excerpt of the interview, courtesy of Zero Hedge (bold original)

Paul on whether he's concerned about the drop in gold:

"I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no, I say it is something wrong with the dollar. People have been expressing concerns over the past couple of months about gold, but compared to what?

Compared to where gold went from when the Fed took over where it was $20 per ounce compared to what has happened in the past?...

I remember in the 1970's when they finally allow people to own gold and it went from $35 to $200 rather rapidly, and then it lost 50%. Then it went up to $800.

To compare a couple of months or a couple of weeks and forget about a bull market in gold price in relationship to the dollar for 12 years. I would say the comparison is not an authentic comparison. What you have to look at is the inflation. Inflation is an increased supply of money.

Since 2008 they have quadrupled the supply of Federal Reserve credit and are buying $85 billion per month of treasury bills. At the same time last week they bought $60 billion. That is the inflation. That is the distortion of the market and that's why we're not getting economic growth."

On whether we're seeing the opposite of inflation right now:

"It depends on how you define it. Inflation is when you increase the supply of money. Bond prices go up. Stocks are going up. Housing prices are starting to go back up again. Education costs are going up, but the gross distortion is the effect that the inflation of the money does on the price of money and interest rates and how it causes economic problems and why you don't get economic growth.

You have to look at the malinvestment and destruction that occurs when you mess around with the price of money. It's not just the CPI because the CPI is not reliable. The government fudges that as well. They change the way they measure it. Free-market economists say it is going up about 8%. A lot of deception going on out there. I was just talking to someone on getting social security, they're not happy with the purchasing power of the dollar and you can't tell me there is no inflation."

On what the real value of gold is:

"No one knows it other than what is happening at that moment. The Supply and demand of gold is very important. That is why it is money, because gold is used elsewhere and it is commodity. The supply and money of paper is the culprit. That is the one that is causing all the trouble. People ignore the supply and demand of paper. Yes, paper goes up and goes down, but look at the long term purchasing power of the dollar. It has been devastating. At the rate they are printing the money, you will see a continual devastation of the value of the dollar.

You will not see economic growth until you liquidate the debt and liquidate the malinvestment out there. Sure, you will see housing go up again, but you will see more bubble formation because prices go up does not mean there is economic growth. We are a long way from the correction, mainly because they ignore the definition of inflation and ignore the need to liquidate debt and the need to liquidate and get rid of all the malinvestment.

One good comparison is look at the price of stocks and gold. Although in the past couple of weeks it has changed a bit. The price of the stock market has crashed, because you used to be able to buy the Dow with 44 ounces of gold. Now it is under 10 ounces of gold. It will probably go a lot lower."

"I think the way gold is acting it acts like a market does. You get ahead of itself, there has to be a correction. The amazing thing is not the correction, the amazing thing is the biggest bull market of the century when one commodity went up for 12 years straight. You cannot ignore that. To say, well there has to be an adjustment because prices are subjectively decided by many factors so you cannot predict exactly where the money will go. Unfortunately right now the money that the Fed creates goes into reserves, further distorting the markets and pumping up prices of bonds, further building a bubble that will burst because our economic growth is not there and we are in every bit as much trouble of Europe and Greece.

Someday there will be a lack of confidence in our dollar and you will see the correction in the paper a lot more severe than you see the correction in the dollar-gold ratio."

On Bitcoin:

"To tell you the truth, it's little bit too complicated. If I can't put it in my pocket, I have some reservations about that. But it has been designed in the free market. If it is a means of exchange, it would not ever be illegal. You shouldn't regulate it in the free market, but I do not think it fits the definition of money, which has been around for 6000 years.

People want to see something they can know what it is, they can define it, touch it and put in their pocket. If you do not have a computer and someone running the computer and calculations, you don't have it. I am not a big supporter of that, but I am not opposed to it. I admit, I do not fully understand what is going on with it."

On whether the Boston marathon tragedy is an opportunity to fix immigration:

"There is always an opportunity because there is a need for it, but I do not think they will solve any problems at all because they are too big and complicated and very much involved with economics. I don't think you can deal with immigration unless you deal with the welfare state. It is an incentive for people not to work. It is an incentive for others to come and get free services. Also, I think it is more important that we look at our work permit, letting people come in and work, and put aside the idea of how we will give automatic citizenship.

That becomes a political football because everyone is lining up. Who is going to get the vote? One side says that we are going to get all the votes -- we want them all to be legalized. I think you have to deal with the economic policy and really open up the opportunities for people to come back and forth and to work, but not to insist everyone will become a citizen because I do not think that will work under these circumstances."

On how Republicans will win the next election if there is no solidarity:

"I think the solidarity is the same problem in Republican and Democratic parties. It's ongoing. There's always factions. Of course, I want to unify everyone in the belief and the cause of liberty. Sound money, balanced budget, the constitution. So yes, there's a good way to unify them, but unity for the sake of unity makes no sense whatever. The old guard are losing their way. The party is getting smaller. It is splintered. They will have to face up to the fact that if they talk about limited government and personal liberties, they have to believe in it and do something about it because the young people will not be fooled. If this continues, the party will become smaller."

On whether Rand Paul will run for president in 2016:

"You'll have to ask him. I have no idea what he wants to do."

Quote of the Day: To Achieve Liberty, Envy and Intolerance have to be Overcome

To achieve liberty and peace, two powerful human emotions have to be overcome. Number one is "envy" which leads to hate and class warfare. Number two is "intolerance" which leads to bigoted and judgmental policies. These emotions must be replaced with a much better understanding of love, compassion, tolerance, and free market economics. Freedom, when understood, brings people together. When tried, freedom is popular.

The problem we have faced over the years has been that economic interventionists are swayed by envy, whereas social interventionists are swayed by intolerance of habits and lifestyles. The misunderstanding that tolerance is an endorsement of certain activities, motivates many to legislate moral standards which should only be set by individuals making their own choices. Both sides use force to deal with these misplaced emotions. Both are authoritarians. Neither endorses voluntarism. Both views ought to be rejected.

I have come to one firm conviction after these many years of trying to figure out "the plain truth of things." The best chance for achieving peace and prosperity, for the maximum number of people world-wide, is to pursue the cause of LIBERTY.

If you find this to be a worthwhile message, spread it throughout the land.

This excerpt is from the stirring farewell speech by Ron Paul at the US Congress

Ron Paul’s Suggested Book Read List

Retired US Congressman Mr. Ron Paul recommends some 50 books that expounds on the ideas of Freedom. You may want to consider them (some of them are available online via pdf) 

From LewRockwell.com

In Ron Paul's latest best-seller, Liberty Defined: 50 Essential Issues That Affect Our Freedom, he offers us his thoughts on a series of controversial topics, from Abortion to Zionism. His purpose is to inspire serious, critical, and independent thinking. Here are the books he cites for further study. Read 1, 2, or more:

Anderson, Terry. Free Market Environmentalism

Belfield, Richard. The Assassination Business: A History of State-Sponsored Murder

Burleigh, Anne Husted. Education in a Free Society

Caplan, Bryan. The Myth of the Rational Voter

Carter, Jimmy. Palestine: Peace Not Apartheid

Chodorov, Frank. The Income Tax: The Root of All Evil

De Jouvenal, Bertrand. The Ethics of Redistribution

Denson, John. A Century of War

___ Reassessing the Presidency:The Rise of the Executive State and the Decline of Freedom

Epstein, Richard. Forbidden Grounds: The Case Against Employment Discrimination

___ Takings: Private Property and the Power of Eminent Domain

Faddis, Charles S. Beyond Repair: The Decline and Fall of the CIA

Fisher, Louis. Presidential War Power

Fridson, Martin. Unwarranted Intrusions: The Case Against Government Interventions in the Marketplace

Flynn, John T. As We Go Marching

___ The Roosevelt Myth

Grant, James. Money of the Mind

Higgs, Robert. Crisis and Leviathan: Critical Episodes in the Growth of American Government

___ Depression, War and Cold War: Studies in Political Economy

Hoppe, Hans-Hermann. Democracy: The God That Failed

Horner, Christopher. The Politically Incorrect Guide to Global Warming

King, Martin Luther, Jr. The Autobiography of Martin Luther King

La Boétie, Etienne de. The Politics of Obedience: The Discourse of Voluntary Servitude

Larson, Edward J. The Creation-Evolution Debate: Historical Perspectives

Lott, John. More Guns, Less Crime

Mann, Vivian. Convivencia: Jews, Muslims, and Christians in Medieval Spain

Mencken, H. L. Notes on Democracy

Mises, Ludwig Von. Human Action: The Scholars Edition

___ The Theory of Money and Credit

___ Omnipotent Government

___ Nation, State and Economy

___ Theory and History

Morley, Felix. Freedom and Federalism

Napolitano, Andrew. The Constitution in Exile: How the Federal Government Has Seized Power by Rewriting the Supreme Law of the Land

Paterson, Isabel. The God of the Machine

Paul, Ron. Mises and Austrian Economics: A Personal View

___ The Case for Gold

___ A Foreign Policy of Freedom

Petro, Sylvester. The Labor Policy of a Free Society

Rockwell, Llewellyn H., Jr. The Left, the Right, and the State

Rothbard, Murray. An Austrian Perspective on the History of Economic Thought

___ For a New Liberty

___ Education: Free and Compulsory

Saenz-Baillos, Angel. A History of the Hebrew Language

Savage, Charlie. Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy

Schoeck, Helmut. Envy: A Theory of Social Behavior

Slezkine, Yuri. The Jewish Century

Spooner, Lysander. Let's Abolish Government

Sowell, Thomas. Race and Culture

Thompson, C. Bradley. Neoconservatism: An Obituary for an Idea

Thornton, Mark. The Economics of Prohibition

Thoreau, Henry David, Civil Disobedience

Weiner, Tim. Legacy of Ashes: The History of the CIA

West, E. G. Education and the State: A Study in Political Economy

Woods, Thomas. Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked and Government Bailouts Will Make Thing Worse

___ Nullification: How to Resist Tyranny in the 21st Century