The Freedom Factory

Politicians love to preach about the virtues of an industrial base. They do it for three reasons: Industrial firms are great sources of subsidies and political patronage, such patronage buys support from organized labor union voting blocks, and it actually does make sense for countries to produce real things of value. Since WWII America’s industry has steadily declined as a percentage of GDP, but the winds of change are blowing. Continue Reading

The shackles of serfdom are being silently fastened to America. Every dollar Congress spends beyond its budget, every Federal Reserve Note printed, every tax, regulation, and government intrusion into our lives renders us less free. Ever wonder why it feels like it’s increasingly difficult to make ends meet? Remember the days when one spouse could work, the other raise the kids, and still save for a comfortable retirement? Those days are gone, but why? What’s next? The 5 Steps to Freedom: How To Cut Your Dependence On Institutions And Escape Financial Slavery, by Jeff Nabers explains what happened to our once prosperous society and how we can all take definite steps to escape what is to come. Continue Reading

HUD program turns out to benefit contractors and not the poor…go figure! China cranks up its printing presses-expect global inflation, Peter Schiff (“Dr. Doom”) discusses his book “Crash Proof”, Goldman Sachs plans to sell billions in stock to pay off government aid ASAP, gas prices up 5% in 3 weeks…inflation? Top U.S. general says we’ll be out of Iraq by 2011, and 75% of Americans want to lift Cuba embargo… Continue Reading

We are moving closer towards a political economy every day. Every dollar borrowed, taxed, printed, and spent by government really comes from the private sector.  Trillions of dollars of national resources are being allocated by politicians and bureaucrats towards things they claim will benefit our economy. Congress just passed a $3.6 trillion budget ($1.2 trillion in deficit), and combined the Federal Reserve and Treasury have dumped $13 trillion into the economy in the last 16 months. What we must all ask ourselves right now is whether or not we trust government with our money? Continue Reading

China and Argentina strike currency swap deal to reduce reliance on U.S. dollar, the tax man cometh…be prepared, Obama plans to ‘ease’ GM into bankruptcy, California able to raise more money than expected in debt market; $44 billion a year, trillions over decades, and tens of thousands killed to fight drugs…worth it? Mexican police convoy ambushed-4 dead, U.S. home prices crash over 19% in January… Continue Reading

The Mustache Revolution is brewing. It is not a fashion statement; it does not even involve hair. It is the revolution that is happening in America, Right Under Our Noses. It fits right in between Marx’s model of government overthrow and Bernstein’s democratic socialism. This is elected officials distracting the electorate that begs them to act unconstitutionally. Here is how it was done.

A Little History
Karl Marx advocated a violent revolution to nationalize industry, redistribute wealth, and create a proletarian dictatorship. This would be very difficult for the American left, since they are anti-gun, anti-violence, and tend to dislike noncompliance. Edward Bernstein came around after Marx’s death and advocated democratic socialism. His goal was still to nationalize industry, but to accomplish it democratically. What is happening today is the Mustache Revolution; it meets the standards of both socialist ideologies. The US has elected our President and Congress democratically; most of the legislation has come about democratically; the problem is that the boundaries set by the constitution, make the process too slow. Therefore, in the name of Crises, Necessity, or Protection the limits on government are quickly removed.

Bailout Big Banks
Step one, use tax dollars to keep private businesses afloat. This gives government, not total control, but the ability to regulate finance in order to protect the interest of the people. Step two, make an enormous legislative blunder, and blame it on the banking industry. Let us not forget that the clause about the executive bonuses was removed, not forgotten, not left out, but removed. After there is a huge public outcry over executive bonuses, the next step is to levy a 90% tax. This tax of course is not limited to the bank that gave the bonuses, nor is it limited to the banking industry; the plan is to levy a tax on all executives who have a high salary and receive bonuses.

Stress Test
Of course, the wealth redistribution is not enough. The remaining step is to take major services, such as banking, health care, or auto manufacturers, and make them national industries. The first and most important of these is to take over the financial industry. The Financial industry is essential, because all businesses run off of the availability of credit (hence capitalism). Once all industries are getting their loans from the government, their nationalization will happen quickly and with little protest. So, after bailing out the banking industry, the next step is to create a stress test; this serves two purposes; 1) it asserts government power over the industry (no other industry needs to be deemed “strong enough to survive” in order to exist in the US economy), and 2) it makes people think that the government should step in when the test is not passed. Third, after the failure of the stress tests, the government will claim that the banks need to come under temporary government control. Since government has never improved a business after taking it over, temporary can be a very long time.

Not Under My Nose!
Things that stink are not meant to pass under your nose without notice! This revolution cannot continue to be ignored simply because we are in an economic downturn. Recession is not an excuse to jump from crises to crises without thinking out the political consequences of our actions. The hardest thing to regain, once it is lost, is freedom. And freedom is blindfolded on its knees in front of a gun named socialism.

The verdict is not yet out as to whether we will experience inflation or deflation in the near term. The argument has been raging with pundits on both sides clinging to data they claim supports their guesses. Today marks a big day in the debate, however, with two critical pieces of news:

1) Consumer price index (CPI) rises more than expected, up 0.4% in Feb. following a 0.3% gain in Jan. This represents at 4.8% annualized inflation rate.

2) Federal Reserve committed to buying $300 billion in long-term Treasuries as part of its plan to drive consumer borrowing costs lower.

The immediate fallout can be seen in Gold, the U.S. dollar, and Treasuries today. Both pieces of news are inflationary. Rather than the feared ‘deflationary spiral’ we’re starting to see consumer prices heat up, albeit not appreciately just yet. The Fed buying Treasuries amounts to them printing $300 billion in new currency. This money is created out of thin air.

Most telling on inflationary fears is the Market Vectors Gold Miners ETF (GDX), up over 10% today, while the SPDR Gold Shares ETF (GLD) approached a 4% gain. PowerShares US Dollar Index (UUP) dropped over 3%, and the 30-Year Treasury yield fell to a low of 3.37% after the Fed announcement, settling higher at 3.57% later in the day.

In Checkmate: How the Federal Government Will Lose in 2009 I argued that our leaders were backing public finances into a predictable corner. With $2-3 trillion in budget deficit for 2009, alone, with more planned in coming years, government will be forced to increase borrowing or printing. Today’s news supports the ‘printing’ hypothesis, but I suspect this is just the beginning. The big game unfolding will be the Treasury issuing bonds to raise funds and the Fed turning around and buying them. This is a scam that will either lead to increasing bond yields or increasing inflation. There are no other options.

Inflation has long been a contentious topic in the U.S., not really abating at any point since the 1960′s. President Johnson’s “Guns & Butter” policies of the Vietnam war era sparked a good deal of money printing, inflation, and debate. Since then the Federal Reserve, Congress, and every President have gone on spending binges, rampant borrowing, and always increasing money supply. These are the tools of macro-economics, in which central decision authorities nationalize resources to socially engineer what they think will be perpetual prosperity. The results are debatable, but the consequences clear: Continue Reading

China launching massive domestic stimulus, details on the $275 billion homeowner bailout, landmark Supreme Court ruling for drug makers, Chavez declares war on opposition media and nationalizes a U.S.-based company, lawmakers defend 9,000 earmarks including “swine odor research”, and a Russian economist predicts civil war in U.S. in 2009…just the latest in your Freedom Under Fire Report! Continue Reading