Archive | March, 2014

The Evil of NATO

23 Mar


NATO has always been a tool of US imperialism, for the military occupation and control of Western Europe. That is why Sen. Bob Taft opposed it. With the collapse of the economically pathetic USSR, the US has pushed its occupation closer and closer to Russia, as part of the continuing Cold War. (Imagine the reaction if Russia were seeking to include Canada and Mexico in a “defensive” alliance.) Bush has been temporarily stymied in his latest NATO expansion-aggression, but got the OK to install more of the rotten products of the military-industrial complex. Poor Europe–still under the US thumb after all these years.

But aren’t these anti-missile systems “defensive”? Think of it this way: if the neighborhood bully, who is always beating people up, comes out one Saturday morning dressed from head to toe in body armor, does anyone think this is “defensive”? If retaliation is made more difficult, a first-strike is far easier. (Link via Drudge)

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Freedom for Me, but Not for Thee

23 Mar

March 20, 2014

Initially, I was gratified to learn that Sen. Dianne Feinstein, D-Calif., the chair of the Senate Intelligence Committee, was unafraid to take on the Central Intelligence Agency (CIA) over the issue of domestic spying.

The CIA is limited by its charter to stealing secrets from foreigners outside the U.S. However, in a recent dust-up, Feinstein took to the Senate floor to accuse the CIA of spying on staff members of her committee while they were examining CIA documents in Virginia. This may be the first acknowledgment by any senior government official who walks the halls of the intelligence community that the CIA engages in domestic spying.

For five years, the Senate Intelligence Committee has been examining classified CIA materials involving CIA use of torture during the Bush administration. It is doing so because a now retired CIA official admitted destroying evidence of torture. We may never know what torture the CIA was authorized to engage in, but we can conclude that along with its counterpart in the House, the Senate Intelligence Committee has either looked the other way or expressly approved CIA behavior that well transcends its charter. This unlawful behavior includes not only torture, but also killing Americans via the use of drones, and small-scale unpublicized warfare.

So, you can imagine the glee this defender of personal freedom and the rule of law initially felt when I learned that the CIA’s erstwhile champion had had what appeared to be a change of heart. Feinstein surely is the most effective defender of the intelligence community on Capitol Hill. Until last week, she publicly supported and shielded but never criticized the massive spying on Americans by the National Security Agency (NSA), the CIA’s cousin. She must have supported the CIA’s torture, killings and warfare — but something about the torture caused her to induce her committee to engage in a full-scale investigation of the Bush-era torture her committee must have approved.

I say “must have” because, in this weird post-9/11 world, Congress does not review the CIA’s behavior or expand its powers; these two congressional committees do. Because Congress chartered the CIA, and because the CIA charter does not contemplate behavior beyond stealing foreign secrets, and because only Congress can change federal laws, any expansion of the CIA’s duties not authorized by Congress is unconstitutional — and yet aside from the point I address here.

The point I address here is that Feinstein’s outrage was directed at CIA domestic spying for the wrong reasons. She not only expressed no outrage over NSA spying, including upon her 37 million California constituents, but she approved it. The CIA behavior that she condemns is the unapproved or unreported torture and the domestic spying on a dozen persons in another branch of government. The NSA behavior that she approves is spying on all Americans all the time. All of this behavior goes to the heart of personal liberty in a free society.

At that heart is the principle of personal sovereignty — the idea that individuals are sovereign and the state is merely one instrument with which to protect that sovereignty.

Yet the government of which Feinstein approves has been assaulting personal sovereignty by destroying personal privacy. Privacy is not only a natural right — it exists by virtue of our humanity — but it has sound historical and textual roots. A natural right is an area or zone of personal behavior that may not be interfered with by the government, no matter whose good that interference might serve.

The historical roots of privacy are the now well-known numerous instances of colonial antipathy toward the British practice of general warrants. General warrants were issued by British judges to British agents in London in secret, and they permitted and authorized British agents in America to search wherever they wished for whatever they sought. Sound familiar? The textual roots of privacy have been identified by the Supreme Court in numerous places in the Constitution, not the least of which is the Fourth Amendment prohibition of searches and seizures without warrants that identify the target and that are based on the probable cause of criminal behavior of the target.

Feinstein’s farrago against the CIA was forceful yet personal. She has defended certain forms of torture when employed by the CIA to obtain intelligence from the victims of the torture. Yet she has deplored certain forms of torture — without identifying them — because the CIA apparently did not seek the permission of the congressional committees in advance or misrepresented the nature and severity of the torture to the committees afterward.

Her committee was undertaking an investigation into this unreported or under-reported torture when it noticed that the CIA had hacked into its computers. That hacking, which the CIA has denied, caused her to rip into the CIA on the Senate floor.

Do you see where Feinstein and her colleagues have taken us? They have taken us to a secret government willing to crush natural rights to privacy and bodily integrity — but only if Feinstein and her dozen or so congressional colleagues approve.

Is she seeking to expose torture because it is immoral, unlawful, unconstitutional and un-American or because she had not approved of it? Is she angry because the CIA illegally spied in the U.S. or because the CIA illegally spied in the U.S. on her staff? Who can be intellectually honest about anger over spying on a handful of colleagues and indifferent to or even supportive of spying on hundreds of millions of Americans?

You get the picture. She has no problem with experiments with our liberties, unless she and her staff are the victims.

If the government truly derives its powers from the consent of the governed, it must recognize that in areas of natural rights — speech, press, worship, self-defense, travel, bodily integrity, privacy, etc. — no one, not even a well-intended majority, can consent to their surrender for us. James Madison knew this when he argued that experiments with our liberties would be the beginning of the end of personal freedom.

We are now well beyond that beginning.

Reprinted with the author’s permission.





Andrew P. Napolitano [send him mail], a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. Judge Napolitano has written seven books on the U.S. Constitution. The most recent is Theodore and Woodrow: How Two American Presidents Destroyed Constitutional Freedom. To find out more about Judge Napolitano and to read features by other Creators Syndicate writers and cartoonists, visit

Copyright © 2014 Andrew P. Napolitano

Mother Russia?

23 Mar

March 17, 2014


The U.S. Global Empire is rotting at its core, disintegrating, destroying the heart of America–the love of freedom and the Constitution, and dying worldwide.

The rulers in D.C. are trying desperately to pump the U.S. up with paper money and paper assets, but it rushing toward the Black Hole of bad debt and bankruptcy and implosion.

The U.S. Empire is desperately expropriating assets worldwide through immense dollar inflation and outright seizures of goods, trying to stop the rush to the Black Hole.

The reported, secret shipping of the gold out of Kiev to the  U.S. may be one more such imperial robbery.

But, regardless of such imperialist moves or Ukrainian robber baron greed, if the Ukrainian revolutionaries are cooperating in sending the nation’s gold to the U.S. or other Western nations, it has the more immediate significance of showing they are preparing to flee the Ukraine as Russia begins moving into Eastern Russian Ukrainia with vast forces.

The Ukrainians, especially the totally anti-Russian ones, understand the Russians from a thousand years of common history.

The Ukrainians know that Putin is not a typical American Big Bank Robber or oil tycoon or petty thief or corrupt front man.

They know Putin and his forces see themselves as the sons of Holy Mother Russia, rescuing her from the Evil Empire and Evil Witches of the West. 

He takes Peter the Great more seriously than he does Obama the Front Man of the U.S. Big Bank Robbers, fracking tycoons, and secret police [which is how most of the world now sees the U.S. and Russians do  overwhelmingly with a sense of rage at the Evil Empire].

If you read the Western journalists visiting the Crimea on this historic day, you will even find an occasional quote from Russian Crimeans saying things like, “Mother Russia is coming to our rescue, taking us in her arms to protect us.”

Western journalists probably think that is “Russian propaganda,” since they are so used to the total lies and propaganda BS pouring out of D.C. and the U.S. Big Media.

That is a grave mistake that our Robber Barons in D.C. made when they helped to start this revolution against the elected government in Kiev.

They made the same mistake in Vietnam sending “messages” of vast attacks killing and maiming millions of North Vietnamese, assuming they would get “the message” and surrender their ancient fight for cultural freedom and integrity.

The Russians are not thinking in “practical terms” like “gold bullion theft.”

The Russians are fighting a Holy War for Mother Russia, rescuing and rebuilding Mother Russia.

I see this as a form of social-culturalf insanity, as I see all such Holy War ideas, but I know it is very dangerous for us as the insanely greedy and power-hungry imperialists in the U.S. once more stumble blindly into a bottomless quagmire.

Jack D. Douglas [send him mail] is a retired professor of sociology from the University of California at San Diego. He has published widely on all major aspects of human beings, most notably The Myth of the Welfare State.

Copyright © 2014 by Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.


Public School Maven Predicts Public School-Free Cities in Ten Years

23 Mar

Gary North – March 18, 2014

Diane Ravitch says that America’s urban public schools are about to go belly-up, killed by the Right (charter schools) and the Left (the Common Core curriculum).

I dearly hope she is correct.

Ravitch is the #1 maven of public education. She loves the system. She believes that badges and guns are crucial for education, as well as for democracy. She assures us that we cannot have education without badges and guns. She says: “Public education is one of the foundational institutions for a democracy.” She is this generation’s #1 defender of the messianic character of American public education. You can read about her here.

She earned a Ph.D. from the academic institution which, more than any other, gave us progressive education: Columbia University.

George H. W. Bush appointed her to a high office. So did Bill Clinton. So did George W. Bush.

Now she says the whole system is at risk. We read on the liberal Salon site:

Once a George H.W. Bush education official and an advocate for greater testing-based accountability, Diane Ravitch has in recent years become the nation’s highest-profile opponent of Michelle Rhee’s style of charter-based education reform (one also espoused by Barack Obama).In a wide-ranging conversation last week, Ravitch spoke with Salon about new data touted by charter school supporters, progressive divisions over Common Core, and Chris Christie’s ed agenda. “There are cities where there’s not going to be public education 10 years from now,” Ravitch warned.

Ravitch is the consummate public education weather vane. She gets on board one fad after another, only to be left in the dust when it fails. They all fail.

“No Child Left Behind” is clearly a failure. Ravitch supported it. Now she opposes it.

These well-paid bureaucrats become cheerleaders for one reform after another. But their team — tax-funded education — has not had a winning season since 1940.

Dr. Ravitch was Assistant Secretary of Education when the Department’s report was published, 120 Years of American Education: A Statistical Portrait. She wrote the introduction. Most Americans are unaware of these facts:

In 1940, more than half of the U.S. population had completed no more than an eighth grade education. Only 6 percent of males and 4 percent of females had completed 4 years of college (table 4). The median years of school attained by the adult population, 25 years old and over, had registered only a scant rise from 8.1 to 8.6 years over a 30-year period from 1910 to 1940 (p. 7).

Look-say reading techniques of the 1940’s have produced millions of functional illiterates. Dick and Jane can’t read. One estimate is that 20% of Americans cannot read.

No major national educational reform has worked since the post-Sputnik reforms, which were supposed to create a nation of scientists and engineers. Today, over half of all Ph.D students in engineering are foreign students. American taxpayers are educating the world’s best graduate students in science and engineering.

The new math was a bust in the late 1960’s.

One after another, reforms are heralded as the solution to declining student test scores. None of them ever produces the promised successes.

The SAT scores started falling in 1963, and they have not reversed. Other tests showed similar declines.

Ravitch continues:

There are many states that are cutting the budget for public schools at the same time that they’re paying a lot out for testing… Texas, for example, a couple of years ago… cut $5.3 billion out of the public schools, and at the same time gave Pearson a contract for almost $500 million… They said that there would be 15 end-of-course exams in order to graduate high school and caused a parent rebellion: There were so many angry moms, they organized a group called TAMSA — Texans Advocating for Meaningful Student Assessment — better known as Moms Against Drunk Testing…

Look at what schools are buying.

Los Angeles just made a deal a few months ago to spend $1 billion to equip every student and staff member with an iPad. The money was taken from a 25-year bond for school construction, to buy disposable equipment. The iPads will be obsolete in three or four years… Meanwhile, the schools have unmet repair dates…

It’s great for Apple. Meanwhile, school buildings rot.

Buying iPads for students is just another fad. New school construction is an old fad. It has been discarded. Fads come and go. This is constant: Test scores decline.

What about Common Core?

The fact is, we have no evidence that the Common Core standards are what we say they are until we’ve tried them. They haven’t been tried anywhere, they’ve been tested — and we know that where they’re tested, they cause massive failure. So I would say we need to have more time before we can reach any judgment that they have some miracle cure embedded in them.

When she says “massive failure,” what does she have in mind? This:

In New York State when they gave the Common Core testing last spring, 3 percent of the English [language] learners passed it. 97 percent failed it…

I say this. Let’s call Common Core what it really is: “Most Children Left Behind . . . Asians Excepted.”

Common Core will fail. The politicians who promoted it will find themselves in another line of work if they don’t abandon the experiment. Moms Against Drunk Testing will vote them out of office.

Teachers are being blamed for the failures. Well, what else would they expect? The system has been in decline since 1940. But Ravitch refuses to blame them.

The teachers across America are being crushed… Experienced teachers, veteran teachers, excellent teachers, are feeling that it’s not a profession anymore — it’s just become a testing technician. It’s not the job they signed on for.I was in North Carolina a couple of weeks ago — they’re having a massive brain drain of teachers. Florida just released the results of their teacher evaluations, and almost half of their Teachers of the Year were called “ineffective teachers.” I mean, there comes a point where, who would want to be a teacher in this country?

If the teachers are not to blame, then who is? She did not say.

I have two suggestions: (1) the system of tax funding; (2) the system of compulsory attendance.

In other words, blame the system as a whole, not just one component. Stop calling for reforms. The reforms do not work.

I have a slogan: “If it ain’t broke, don’t fix it. It is broke, fix it. If it can’t be fixed, stop funding it.”

She hates charter schools. She does not mention the #1 fact of charter schools: They are funded by taxes. So, she targets this practice: they kick out rotten students.

Charter schools [are] allowed to throw out the kids they don’t want. They’re allowed to throw out the kids with low scores. They’re allowed to exclude the kids who have severe disabilities. They’re allowed to not accept the kids that don’t speak English. And then you’re going to compare them to… the schools that take all those kids? I mean, really — this is ridiculous.

In short, charter schools raise the lowest common denominator. This is elitist, she says.

…This is trending toward a dual school system: One school system for the privileged kids, or the kids who don’t have big problems… the charters, that are allowed to choose their students and exclude those they don’t want. And the other one, that’s required to take everyone.

What is the solution? You already know her answer: more tax money. Subsidize failure.

To insist that every school offer children a full education that includes not only the basics of reading and writing and mathematics, but science and the arts, and for language and history and civics. Make sure that every school in this country is appropriately funded. That is, that it has the resources that it needs for the children it enrolls. That’s just basic. We don’t do that now.

I see. There has never been enough funding.

When you subsidize failure, but you promise success, there cannot be enough money.

There are schools that are being starved of funding, and more and more of the funding is being directed to vendors. And there are cities where there’s not going to be public education 10 years from now. That’s not good. Public education is one of the foundational institutions for a democracy. And yet there will be cities without public education. Their schools will be run by private management. And the private managers will be free to choose their students and exclude ones they don’t want.

Then the charter high schools will adopt the Khan Academy, which is free. They could then decide to have classes with 80 students, one low-paid 25-year-old with a B.A., and one high school graduate to help her keep order. They will be profitable. Khan is self-teaching, which is the way to do an online curriculum. It is what the Ron Paul Curriculum uses.

Teachers are leaving the profession in large numbers… Back in the 1980s, the modal year of teaching was 15. It’s down to one to two years… The research is very clear that first-year teachers are not the strongest teachers…

But they’re cheap! And with Khan Academy, they will be good enough.

She ends with this:

Why destroy public education so that a handful of people can boast they have a charter school in addition to their yacht?

This is the rhetoric of political envy.

This is the rhetoric of a defender of a failed system.

Common Core is dead in the water. But it is going to take a decade to kill it. It will tear up the public schools. It will undermine support for the public schools. It will divide the bureaucrats.

Meanwhile, “There are cities where there’s not going to be public education 10 years from now.”

Then there will be private education for parents who want it for their children.

We are seeing the death throes of the messianic character of American education.

© 2014, Inc., 2014 All Rights Reserved. 


23 Mar

Posted on March 18, 2014 by Liberty Staff


Image by William Banzai

“Banking was conceived in iniquity and was born in sin. The Bankers own the Earth…If you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits (fractional reserve lending/fiat money].”

What a chilling indictment of the banking system! Quite harsh, don’t you think? Surely this kind of scurrilous accusation had to be uttered by some disgruntled socialist, or by a diehard Marxist anti-capitalist, or by an Occupy Wall Street anarchist protester. However, if you thought it was any one of these, you would be 100% dead wrong.

This little pearl of wisdom was expressed in the 1920s by none other than Sir Joseph Stamp, the second richest man in Britain and, as President of The Bank of England, the most powerful and influential banker in the world at that time.

In this stunning revelation of his own industry, Joseph Stamp dared to suggest that the world banking system of which he was such an integral part, was actually a dastardly criminal enterprise that was designed to rob the citizens of the participating nations of their hard earned wealth and security.

Thanks to the relatively new internet alternate media, the public awareness of the ongoing criminality of worldwide banking is finally creeping its way into mainstream consciousness. It is at last becoming public knowledge that nearly twenty major global banks, including Barclays, JP Morgan Chase, Deutsche Bank, Lloyd’s Banking Group, and a host of others, are being investigated for criminal conspiracy in the three most important areas of global finance – the FOREX (the $25 trillion per week foreign currency exchange), the multi-trillion dollar LIBOR interest rate market, and the international Gold Fix. Nothing serious here, just a strong assertion that the international banking cartel has been robbing us of trillions of dollars; and this didn’t just happen last week, it has been going on for a very, very long time.

The conspiracies and crimes committed by this cheery group of global elitists makes the criminal machinations of the likes of the Mafia and the Mexican drug cartels seem benevolent by comparison. And just like with the Mafia and the drug lords south of the border, there will be inevitable human sacrifice. When serious criminal money is at stake, death and destruction are not far behind. Those are only some of the nasty karmic consequences associated with a mega-trillion dollar criminal enterprise. As the saying goes, “When you lie down with pigs, expect to get dirty.” There have been a lot of dirty bankers dying here over the last several months. We referred to them in our last blog . They have been “throwing” themselves off bank towers from London to Hong Kong and getting inconveniently “suicided” by shooting themselves in the head over ten times with a nail gun (try doing that some time).

But this is not at all a new phenomenon. Key players in world banking and corporate finance have been dying untimely and exotic deaths for many decades. Some of these individuals were multi-billionaires and all of them were involved with a variety of nefarious financial activities. Listed below are our top seven banker deaths of the modern era:

1       Roberto Calvi – JUNE, 1982 Calvi, the chairman of Italy’s second largest bank, Banco Ambrosiano, which went bankrupt in 1982, was closely tied to the Pope John Paul II and the Vatican banking scandals of the 1980s. Banco Ambrosiano collapsed in the summer of 1982 with losses approaching $1.5 US billion, much of which had been siphoned off via the Vatican Bank. Calvi found hanged from scaffolding beneath Blackfriars Bridge on the edge of London’s financial district, The City. Calvi’s clothing was stuffed with bricks and he was carrying over $15,000 of cash in three different currencies. Calvi was a member of illegal Italian Masonic lodge known as Propaganda Due (P2), known as a frati neri or black friars. This led to the suggestion that Calvi was murdered as a Masonic warning because of the symbolism associated with the words black friars.

2       Michele Sindona – March, 1986 Known as “The Shark,” Sindona is alleged to have had ties with the Gambino family and had been a top tax lawyer and accountant with the top Italian real estate investment firm, Societa Generale Immobillari. Through his holding company, Fasco, he acquired controlling interest in a number of prominent Italian banks, and by 1969, had developed strong connections with the Vatican Bank and prominent Swiss banks, with which he was involved in large scale major currency speculation. The Shark was finally convicted on sixty-five counts of fraud and perjury in US courts and twenty-five years in Italian prison for conspiracy to commit murder. On March 18, 1986, he was poisoned with cyanide in his coffee at his cell in the prison, Voghera, while serving a life sentence for murder.

3       Amschel Rothschild – July, 1996 Amschel Rothschild, a direct heir to the Rothschild banking dynasty, reputed to own or secretly control a multi-trillion dollar fortune, was found hanged in his room at the Bristol Hotel in Paris. Previously, Amschel had split with his half brother, Lord Rothschild, and his cousin, Sir Evelyn Rothschild. Amschel was athletic and in excellent health, married and with a happy family that included three children. The billionaire investment banker’s death, according to well placed European sources, was not suicide as the world press reported, but rather, murder. Rothschild had been strangled with the heavy cord of his own bath robe, one end of which was attached to a towel rack, as if to suggest that his violent death was self-inflicted. After photographing the body, one of the investigators gave the towel rack a slight tug and it fell easily out of the wall. The unpublished conclusion was that Rothschild was definitely murdered.

4       Edmond J. Safra – December, 1999 Multi-billionaire banker, Edmond J. Safra, died of asphyxiation in a locked, bunker like bathroom in a fire that engulfed his magnificent penthouse apartment in Monaco, atop a building housing the Republic National of New York. Safra, the prime stockholder of the bank, had just made final arrangements to sell his interests in the bank a few days previously. Safra, whose specialty was private banking for wealthy clients, was reputed to know “all the secrets of the financial planet.” He was accused of laundering money for Panamanian dictator, Manuel Noriega, and was rumored to have had connections with the Iran Contra scandal. But Safra’s death may have been directly associated with a secretive international financial empire, active in clandestine gold trading. Safra’s banking and precious metals empire was founded and built primarily after the creation of the State of Israel, by Safra acting as a savvy money laundering expert for wealthy Sephardic Jews. Safra was allegedly an expert in gold smuggling and the use of gold in secret financing of covert operations, including assassinations, by intelligence agencies such as the CIA.

5       J. Clifford Baxter – January, 2002 A former top executive of scandal plagued Enron, Baxter was reputed to have shot himself in his Mercedes Benz, parked in a cul-de-sac near his Houston home. Baxter had already cashed in $35 million of his soon to be worthless Enron shares before the company collapsed and had received a subpoena from the Senate Government Affairs Subcommittee on Permanent Oversight and Investigation. The highest levels of the Bush administration were said to be implicated in the financial and political corruption involving Enron. If he had lived, Baxter’s testimony could have shed major light on the very top of the Enron fraud.

6       Alex Widmer – December, 2008 Widmer, a prominent Swiss private banker, at Julius Baer Holding, was reportedly found dead in Zurich. Confusingly, his death was ascribed to both illness and suicide. Widmer’s death came at a volatile time in Swiss banking. Swiss bank, UBS, had been investigated in a US tax evasion scandal and had reported $46 billion in write down losses. Baer had been accused of poaching high ranking bank officers from larger Swiss rival, UBS.

7       James McDonald – September, 2009 McDonald, prominent adviser to wealthy families and chief executive of investment management group, Rockefeller and Company, was found dead with a single gunshot wound in his car in Dartmouth, Massachusetts. Preliminary investigation indicated that it was an “apparent” suicide. McDonald was credited with helping to grow Rockefeller and Company, the New York based family business established by John D. Rockefeller in 1882, to manage that dynasty’s assets, into a much broader investment management company, with nearly $30 billion in assets.

Playing the international bankster game does indeed have serious consequences, not only for the perpetrators but for the millions of citizens who fall victim to the unscrupulous market manipulations that have been carried out by the world’s banking cartel. The boom and bust cycle of loose credit/tight credit engineered by the central banks is legendary. Add to this the massive illegal manipulations of currencies, interest rates, and precious metals markets, we find ourselves right on the verge of a world economic Armageddon. But it is not just the economy that is in danger. Lead by the IMF and World Bank, the secret banking alliance has declared war on a host of victimized nations’ economies. Widespread social disintegration in places such as Venezuela, Syria, and Libya are just the beginning. Next up on the bankers’ intervention menu is Ukraine. However, with Putin and Russia stepping forward boldly to confront the world banking cartel, this may prove to be a seminal event with a possible outcome of world war in the offing.

It is getting to the point that it very dangerous for the average citizen or investor to trust his wealth to the convoluted criminality that is international banking. Our advice is to remove as much as possible of your liquid assets from the clutches of the banksters. One of the best ways to do that, we feel, is to invest in gold and silver.

To learn more about the rewards of precious metals investing, including how to fund your existing IRA with gold or silver, call Liberty Gold and Silver seven days a week at 888.751.3330. To learn about the most generous affiliate marketing program in the precious metals industry, please visit the Liberty Gold and Silver Affiliate Marketing Program. We’re happy to spend as much time as you need to discuss the details with you.

© Copyright 2013 Liberty Gold and Silver, All rights Reserved.
Written For: Liberty Gold and Silver News Blog

Yellenomics: The Folly of Free Money

23 Mar


The Fed and the other major central banks have been planting time bombs all over the global financial system for years, but especially since their post-crisis money printing spree incepted in the fall of 2008.  Now comes a new leader to the Eccles Building who is not only bubble-blind like her two predecessors, but is also apparently bubble-mute. Janet Yellen is pleased to speak of financial bubbles as a “misalignment of asset prices,” and professes not to espy any on the horizon.

Let’s see. The Russell 2000 is trading at 85X actual earnings and that’s apparently “within normal valuation parameters.”  Likewise, the social media stocks are replicating the eyeballs and clicks based valuation madness of Greenspan’s dot-com bubble.  But there is nothing to see there, either–not even Twitter at 35X its current run-rate of sales or the $19 billion WhatsApp deal. Given the latter’s lack of revenues, patents and entry barriers to the red hot business of free texting, its key valuation metric reduces to market cap per employee–which  computes out to a cool $350 million for each of its 55 payrollers.   Never before has QuickBooks for startups listed, apparently, so many geniuses on a single page of spreadsheet.

Tesla: Valuation Lunacy Straight From the Goldman IPO Hatchery

Indeed, as during the prior two Fed-inspired bubbles of this century, the stock market is riddled with white-hot mo-mo plays which amount to lunatic speculations.  Tesla, for example, has sold exactly 27,000 cars since its 2010 birth in Goldman’s IPO hatchery and has generated $1 billion in cumulative losses over the last six years—–a flood of red ink that would actually be far greater without the book income from its huge “green” tax credits which, of course, are completely unrelated to making cars. Yet it is valued at $31 billion or more than the born-again General Motors, which sells about 27,000 autos every day counting weekends.

Even the “big cap” multiple embedded in the S&P500 is stretched to nearly 19X trailing GAAP earnings—the exact top-of-the-range where it peaked out in October 2007.  And that lofty PE isn’t about any late blooming earnings surge.  At year-end 2011, the latest twelve months (LTM) reported profit for the S&P 500 was $90 per share, and during the two years since then it has crawled ahead at a tepid 5 percent annual rate to $100.

So now the index precariously sits 20% higher than ever before. Yet embedded in that 19X multiple are composite profit margins at the tippy-top of the historical range. Moreover, the S&P 500 companies now carry an elephantine load of debt—$3.2 trillion to be exact (ex-financials). But since our monetary politburo has chosen to peg interest rates at a pittance, the reported $100 per share of net income may not be all that. We are to believe that interest rates will never normalize, of course,  but in the off-chance that 300 basis points of economic reality creeps back into the debt markets, that alone would reduce S&P profits by upwards of $10 per share.

America’s already five-year old business recovery  has also apparently discovered the fountain of youth, meaning that recessions have been abolished forever. Accordingly, the forward-year EPS hockey sticks touted by the sell-side can rise to the wild blue yonder—even beyond the $120 per share “ex-items” mark that the Street’s S&P500 forecasts briefly tagged a good while back. In fact, that was the late 2007 expectation for 2008—a year notable for its proof that the Great Moderation wasn’t all that; that recessions still do happen; and that rot builds up on business balance sheets during the Fed’s bubble phase, as attested to by that year’s massive write-offs and restructurings which caused actual earnings to come in on the short side at about $15!

In short, recent US history signifies nothing except that the sudden financial and economic paroxysm of 2008-2009 arrived, apparently, on a comet from deep space and shortly returned whence it came. Nor are there any headwinds from abroad. The eventual thundering crash of China’s debt pyramids is no sweat because the carnage will stay wholly inside the Great Wall; and even as Japan sinks into old-age bankruptcy, its demise will occur silently within the boundaries of its archipelago. No roiling waters from across the Atlantic are in store, either: Europe’s 500 million citizens will simply endure stoically and indefinitely the endless stream of phony fixes and self-serving lies emanating from their overlords in Brussels.

Meanwhile, what hasn’t been creeping along is the Fed’s balance sheet, which has exploded by $1.2 trillion or 41 percent versus two years ago and the S&P price index, which is up 47 percent in that span. Likewise, the NASDAQ index is up 60 percent compared to earnings growth that languishes in single digits.

Not Even Orange?

Still, Dr.Yellen recently told a credulous Congressman that “I can’t see threats to financial stability that have built to the point of flashing orange or red.”

Not even orange? Apparently, green is the new orange. The truth is, the monetary central planners ensconced in the Eccles Building are terrified of another Wall Street hissy-fit. So they strive by word cloud and liquidity deed to satisfy the petulant credo of the fast money gamblers—namely, that the stock indices remain planted firmly in the green on any day the market’s open.  It is not a dearth of clairvoyance, then, but a surfeit of mendacity which causes our mad money printers to ignore the multitude of bubbles in plain sight.

Actually, the Fed’s bubble blindness stems from even worse than servility. The problem is an irredeemably flawed monetary doctrine that tracks, targets and aims to goose Keynesian GDP flows using the crude tools of central banking. Yet these tools of choice— pegged interest rates and stock market puts—actually result not in jobs and income for Main Street but ZERO-COGS for Wall Street. And the latter is an incendiary, avarice-inducing financial stimulant that enables speculators to chase the price of financial assets to the mountain tops and beyond. So at the heart of our drastically over-financialized, bubble-ridden economy is this appalling truth: the speculator’s COGS—that is, his entire “cost of goods”—consists of the funding expense of carried assets, and the Fed’s prevailing doctrine is to price that at near zero for at least seven years running through 2015.

Pricing anything at zero is a recipe for trouble, but the last thing on earth that should deliberately be made free is the credit lines of gamblers and speculators. That is especially so when the free stuff—-repo, short-term unsecured paper, the embedded carry cost in options, futures and OTC derivatives—-is guaranteed to remain free through a extended time horizon by the central banking branch of the state. In that respect and even with tapering having allegedly commenced, just look at the two-year treasury benchmark. In the world of fast money speculation the latter time horizon is about as far as the eye can see, but the cost to play amounts to a paltry 37 basis points.

Even J.M. Keynes Knew Better

Once upon a time traders confronted reasonably honest two-way money markets. When they woke up in the morning in 1980-1981 they most definitely did not believe that the money market rate was pegged even for the day–let alone seven years. Instead, by allowing short rates to soar to market-clearing levels, the Volcker Fed laid low the carry trade in commodities, thereby reminding speculators that spreads can go negative suddenly, sharply and even catastrophically

Owing to the reasonably honest money markets of the Volcker era, the leading edge of inflation–soaring commodity prices—was decisively crushed and the inflationary fevers were quickly drained from the system. But more importantly, the vastly swollen level of capital pulled into the carry trades during the 1970s Great Inflation was reduced to its natural minimum—that is, to the amount needed by professional market-makers to arbitrage-out imbalances in the term structure of interest rates. Under those conditions, fund managers made a living actually investing capital, not chasing carry.

But nowadays, by contrast, the central bank’s free money guarantee nullifies all that and induces massive inflows to speculative positions in any and all financial assets that can generate either a yield or an appreciation rate slightly north of zero. To adapt Professor Keynes’ famous aphorism, the Fed’s quasi-permanent regime of ZERO-COGS  “engages all of the hidden forces of economic law on the side of [speculation], and does it in a manner that not one in [nineteen members of the Fed] is able to diagnose”.

Indeed, no less an authority on the great game of central bank front-running than Pimco’s Bill Gross trenchantly observed last week: “Our entire finance-based system….is based on carry and the ability to earn it.”

Stated differently, the preponderant effect of the Fed’s horribly misguided ZIRP has been to unleash a global horde of financial engineers, buccaneers and plain old punters who ceaselessly troll for carry. The spreads they pursue may be derived from momentum-driven stock appreciation and credit risk premiums or, as Bill Gross further observed, they may be “duration, curve, volatility or even currency related…..but it must out-carry its bogey until the system itself breaks down.”

Not surprisingly, therefore, our monetary central planners are always, well, surprised, when financial fire storms break-out. Even now, after more than a half-dozen collapses since the Greenspan era of Bubble Finance incepted in 1987, they don’t recognize that it is they who are carrying what amounts to monetary gas cans. Having no doctrine at all about ZERO-COGS, they pour on the fuel completely oblivious to its contagious, destabilizing and perilous properties. Nor is recognition likely at any time soon. After all, ZERO-COGS is an artificial step-child of central bankers’ writ; it’s what they do, not a natural condition on the free market.

The Prehistoric Era of Volcker the Great vs. Bathtub Economics

When money market yields and the term structure of interest rates are not pegged by the Fed but cleared by the market balance between the supply of economic savings and the demand for borrowed funds, the profit in the carry trades is rapidly arbitraged away—as last demonstrated during the pre-historic era of Volcker the Great. So the way back home is clear: liberate interest rates from the destructive embrace of the FOMC and presently money markets would gyrate energetically and the global horde of carry-seekers would shrink to a corporals’ guard. Pimco’s mighty balance sheet would also end-up nowhere near $2 trillion gross, if it survived at all.

By contrast, as we approach the bursting of the third central banking bubble of this century, the fates have saddled the world with the most oblivious and therefore dangerous Keynesian Fed-head yet. Not only does Yellen not have the slightest clue that ZERO-COGS is a financial time-bomb, she is actually so invested in the archaic catechism of the 1960s New Economics that she mistakes today’s screaming malinvestments and economic deformations for “recovery.”

In that regard, the ballyhooed housing recovery in the former sub-prime disaster zones is not exactly all that. Instead, the housing price indices in Phoenix, Los Vegas, Sacramento, the Inland Empire and Florida went screaming higher in 2011-2013 due to speculator carry trades.

Stated differently, the 29-year olds in $5,000 suits riding into Scottsdale AZ on the back of John Deere lawnmowers are not there owing to their acumen as landlords of single-family, detached homes, nor do they bring competitively unique skills at managing crab-grass in the lawns, insect infestations in the trees and mold in the basement. What they bring is cheap funding for the carry. They will be gone as soon as housing prices stop climbing, which in many of these precincts has already happened.

Similarly, the auto sector has rebounded smartly, but the catalyst there is not hard to spot either—namely, the re-eruption of auto debt and especially of the sub-prime kind. The latter specie of dopey credit had almost been killed off by the financial crisis—when issuance plummeted by 90%, and properly so.  After all, sub-prime “ride” loans had been mainly issued against rapidly depreciating used cars and down-market new vehicles at 115% loan-to-value ratios for seven year terms to borrowers living paycheck-to-paycheck, meaning that they had an excellent chance of defaulting if the Fed’s GDP levitation game failed and their temp jobs vanished.

All the forgoing transpired in 2008-2009, of course, but that is ancient credit market history that has now been forgiven and forgotten. Since those clarifying moments, sub-prime car loans have soared 10X—-rising from $2 billion to $22 billion last year, when issuance clocked in above the frenzied level of 2007. Sub-prime loans now fund a record 55% of used car loans and 30% of new car loans, but there’s more. The Wall Street meth labs have already produced a credit mutant called “deep sub-prime” which now account for one-in-eight car loans. Borrowers able to post a shot-gun or PlayStation as downpayment can get a loan even with credit scores below 580.

In short, even as real wage and salary incomes grew by less than 1% last year, new vehicle sales boomed by 25% during the last two years to nearly the pre-crisis level of 16 million units. The yawning disconnect between stagnant incomes and soaring car sales is readily explained, of course, by the usual suspect in our debt-besotted economy—namely, auto loans, which were up 25% since the post-crisis bottom and now at an all-time high.

This reversion to borrowing our way to prosperity also highlights the untoward pathways through which the Fed’s toxic medicine of cheap debt disperses through the body economic. Much of the dodgy auto paper now flowing out of dealer showrooms is not coming from Dodd-Frank disabled banks, but from non-banks like Exeter Finance and Santander Consumer USA that have a tell-tale capital structure. They are funded with a dollop of “private equity” from the likes of Blackstone and KKR and tons of junk bonds that have been voraciously devoured by yield hungry money managers who have been flushed out of safer fixed income investments by the monetary central planners in the Eccles building.

The Financial Crime of ZERO-COGS

At the end of the day, the financial crime of ZERO-COGS is a product of the primitive 1960s ”bathtub economics” of the New Keynesians. Not coincidentally, their leading light was professor James Tobin, who was not only the architect of the disastrous Kennedy-Johnson fiscal and financial policies that caused the breakdown of Bretton Woods and its serviceably stable global monetary order, but who was also PhD advisor to Janet Yellen. To this day Tobin’s protégé ritually incants all the Keynesian hokum about slack aggregate demand, potential GDP growth shortfalls and central bank monetary “accommodation” designed to guide GDP and jobs toward full capacity.

In more graphic terms, however, the fancy theories of Tobin-Yellen reduce to this: the $17 trillion US economy amounts to a giant bathtub that must be filled to the brim at all times in order to insure full employment and maximum societal bliss. But it is only the deft management of the fiscal and monetary dials by enlightened PhDs that can that can keep the water line snuff with the brim–otherwise known as potential GDP. Indeed, left to its own devices, market capitalism tends in the opposite direction—that is, a circling motion toward the port at the bottom.

For nigh onto fifty years, however, it has been evident that the bathtub economics of the New Keynesians was fundamentally flawed. It incorrectly  assumes the US economy is a closed system and that artificial demand induced by the fiscal or monetary authorities will cause idle domestic labor and productive assets to be mobilized. Well, we now have $8 trillion of cumulative and chronic current account deficits that prove the opposite—that is, the relevant labor supply is the 2 billion or so workers who have come out of the EM rice paddies and the relevant industrial capacity is the massive excess supply of steel mills, shipyards, bulk-carriers and iron ore mines that have been built all over the planet based on export demand originating in the borrowed  prosperity of the West and ultra-cheap capital flowing from central bank printing presses around the world.

The truth is, pumping up the American ”demand” mobilizes lower cost factors of production abroad in a great economic swapping game. Exchange rate-pegging, mercantilist-oriented central banks in the EM swap the sweat of their domestic workers and the resource endowments of their lands for the paper emissions of the US and other DM treasuries.  And the $5.7 trillion of USTs held abroad, mostly by central banks, proves that proposition, as well. In any event, it is not Uncle Sam’s fiscal rectitude that has created the EMs’ ginormous appetite for pint-sized yields on America’s swelling debts.

So through all the twists and turns of Keynesian demand management since the days when Tobin and his successors and assigns supplanted the four-square orthodoxy of President Dwight Eisenhower and Chairman William McChesney Martin, what really happened was not the triumph of modern policy science or economic enlightenment in Washington, as Kennedy’s arrogant PhD’s then averred. Instead, “policy” spent nearly a half-century using up the balance sheet of the American economy and all its components on a one-time basis.  Total credit market debt—-including business, household, financial and government–went  from its historic ratio of 1.5X GDP  to 3.5X at the crisis peak in 2007—where it remains until this day.

The $30 Trillion Rebuke To Keynesian ProfessorsHousehold Leverage Ratio - Click to enlargeThose extra two turns of aggregate debt amount to $30 trillion—a one time exploitation of American balance sheets that did seemingly accommodate Keynesian miracles of demand management. GDP was boosted by households that were enabled to spend more than they earned and a national economy that was empowered to consume more than it produced.But there was nothing enlightened about the rolling national LBO over the decades since Professor Tobin’s unfortunate arrival in Washington. It was then—and always has been—just a cheap debt trick. During each successive business cycle’s stimulus phase, debt ratios were ratcheted up to higher and higher levels. But now we have hit peak debt in both the public and private sectors, and there is no ratchet left because balance sheets have been exhausted.The household sector data tell the story of the cheap debt trick which is now over. The relevant leverage ratio here is household debt towage and salary income, because the NIPA “personal income” metric is now massively bloated by $2.5 trillion of transfer payments—-flows which come from debt and taxes, not production and supply.As shown below, the ratchet was powerful. During the 1980-1985 cycle, the household debt ratio jumped from 105% to 117% of wage and salary income; then it ratcheted from 130% to 147% during the 1990-1995 cycle; thereafter it climbed from 160% to 190% during 2000-2005; and it finally peaked out at almost 210% at the 2007 peak. 

That’s the Keynesian cheap debt trick in a nutshell: it does not describe a timeless science that can be applied over and over again, but merely a one-time party that is over. As shown below, the ratio has now retraced to the 180s, but that’s still high by historic standards, and more importantly, is the reason that Professor Larry Summers can be seen on most days sucking his thumb, looking for “escape velocity” that can’t happen.

headshotThe up-ratchet in private and public leverage ratios is over, and that means that the Keynesian monetary policy is done, too. It worked for a few decades thru the credit transmission mechanism to the household sector, but one thing is now certain: the only part of household debt that is growing is NINJA loans to students and what amounts to de facto rent-a-car deals in autos, which in due course will lead to a new pile-up of defaulted paper and acres of repossessed used cars.

Meanwhile, Yellen and her mad money printers keep “accommodating”  as they try to fill to the brim an imaginary bathtub of potential GDP. The exercise would be laughable, even stupid, if it were not for its true impact, which is ZERO-COGS. The latter, unfortunately, is fueling the mother of all bubbles here and abroad; crushing savers and fixed income retirees; showering the fast money traders and 1% with unspeakable windfalls of ill-gotten “trickle-down”; and placing control of the very warp and woof of our $17 trillion national economy in the hands of unelected, academic zealots.

The worst thing is that Yellenomics is just getting started because the whole crony capitalist dystopia that has become America can not function for more than a few days without another dose of its deadly monetary heroin.

Reprinted with permission from David Stockman.


23 Mar

Posted on March 4, 2014 by Liberty Staff

BankerExecRunningThe alternate financial media has been abuzz of late with bizarre stories of the alleged suicides of prominent members of world banking and finance. Over recent weeks, between eight and twelve (some say as many as twenty) successful traders and managers involved with FOREX trading and other derivative currency speculation, have conveniently “decided” to throw themselves from the roof tops of a variety of JP Morgan Chase banks in London, Hong Kong, and New York. Another top banking official, William Broeksmit, former executive at Deutsche Bank, was found hanged in his London home.

And others with strong connections to investment banking and the Federal Reserve itself have likewise met unusual deaths. Michael Dueker, former vice president of the St. Louis branch of the Federal Reserve, was found at the bottom of a fifty foot embankment below where he had just parked his car in Tacoma, Washington. The cause of death is still undetermined. The strangest of these deaths was Richard Talley, a former investment banker with Drexel Burnham Lambert who was alleged to have shot himself with a nail gun at least ten times in his Centennial, Colorado, home.

The keen observer will note that a great number of these deaths have occurred in tandem with the extensive multinational regulatory agency investigations of egregious fraud, price fixing, and “front run” trading in the FOREX markets and in the LIBOR index. These markets are gigantic and it is hard for the novice to comprehend the magnitude of money that is involved in daily transactions for both of these. The weekly volume on the FOREX market alone is excess of $20 trillion.

As of two weeks ago, no less than ten global banking giants including JP Morgan Chase, Royal Bank of Scotland, Deutsche Bank, Goldman Sachs, Credit Suisse, Lloyds Banking Group, and others, have found themselves the object of a litany of criminal probes that undoubtedly have created tension and fear, bordering on “flight or fight” panic within these banking conglomerates. Only the extremely naïve could find it hard to believe that the banking world, in order to cover up and protect itself from prosecution of the greatest financial crimes and frauds in history, would not resort to measures of extreme prejudice to eliminate potential material witnesses.

The key point to understand here, however, is that this is not at all a new phenomenon. The history of banking in the modern era (since the establishment of the Bank of England in the late 17th century), has been nothing but an ugly cavalcade of theft of sovereign national treasuries too vast to calculate. From the beginning, these large private central banks (the Bank of England, the Federal Reserve, the Bank of Japan, etc.), were intentionally designed to operate freely above the rule of law in their respective nations. They have been the financiers of most of the conflicts and wars in the last two centuries and are continuing to do so unabated to the present. Countless millions have died in these bankers’ wars in service to the unbridled greed of these financiers.

Through the massive inflation of each nation’s currency they dominate, the bankers have robbed the citizens of the purchasing power of their money and with it, their life savings. Since the establishment of the Federal Reserve in 1913, for example, the purchasing power of the US dollar has been eroded to nearly 1/100th of its original value. This has not been accidental. This was planned from the beginning. Private fractional reserve central banking is the greatest criminal conspiracy that continues to this day to hide in plain sight.

But please, don’t just think this is only our opinion. Fascinatingly, the bankers themselves have throughout the decades, clearly revealed their purpose and intent. At this juncture, we would like to offer some quotes for you by the highest ranking members of the banking elite, past and present.

“The bank hath benefit of interest on all moneys which it creates out of nothing.”
William Paterson, founder of the Bank of England in 1694

“Let me issue and control a nation’s money and I care not who writes the laws.”
Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

“If my sons did not want wars, there would be none.”
Gutle Schnaper, wife of Mayer Amschel Rothschild and mother of his five sons

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” 
The Rothschild brothers of London writing to associates in New York, 1863

 “Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits.”
Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain

“When you or I write a check, there must be sufficient funds in our account to cover the check; but when the Federal Reserve writes a check, there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”
From the Boston Federal Reserve Bank pamphlet, “Putting it Simply.”

“Neither paper currency nor deposits have value as commodities. Intrinsically, a ‘dollar’ bill is just a piece of paper. Deposits are merely book entries.”
“Modern Money Mechanics Workbook” – Federal Reserve of Chicago, 1975

 “I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people.”
Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924

“I am just a banker doing God’s work.”
Lloyd Blankfein, CEO, Goldman Sachs, 2009

“Banks do not have an obligation to promote the public good.”
Alexander Dielius, CEO, Germany, Austrian, Eastern Europe Goldman Sachs, 2010

So there it is in their own words. The arrogance, elitism, and condescension of bankers towards the common citizen are starkly revealed. These brilliant criminals have created the Ponzi scheme of all Ponzi schemes and so far, protected it from any form of criminal prosecution. However, that might be about to change. Awareness of their criminality is growing throughout the world at a rapid pace but never doubt that this group will fight tenaciously and be willing to go to any extremes to protect their centuries’ old scam. We predict there will undoubtedly be more strange banker deaths ahead of us in the ensuing weeks, months, and years.

The next time you walk into your local bank, please ask yourself this question, “Do I really want to entrust my hard earned wages and savings to a centuries’ old criminal scheme?” If you don’t, please consider gold and silver for protection of your wealth.”

To learn more about the rewards of precious metals investing, including how to fund your existing IRA with gold or silver, call Liberty Gold and Silver seven days a week at 888.751.3330. To learn about the most generous affiliate marketing program in the precious metals industry, please visit the Liberty Gold and Silver Affiliate Marketing Program. We’re happy to spend as much time as you need to discuss the details with you.

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Written For: Liberty Gold and Silver News Blog