Spanish-Style Riots Coming To A Country Near You

Screams and sirens pierce the air as rocks, firecrackers and sharp glass go flying in every direction. Police try to beat back the hordes of protesters by smashing indiscriminately into the crowd with their billy clubs.

This was the scene recently in Madrid, Spain, as tens of thousands of people took to the streets to fight against the budget cuts and tax increases put into place by Mariano Rajoy, the current Prime Minister of Spain. The protesters chanted “no more cuts” as they demolished storefronts and threw firecrackers at police.

The march was organized by the group Marcha de la Dignidad (M-22), which also had the support of the labor unions. You can read the demands of this organization on its own website. They consist of:

  • A law establishing a basic income for every citizen.
  • Universal, free and high-quality public services for all.
  • Making eviction illegal and establishing water and energy as a human right.
  • Nationalization of all banks along with all “strategic” sectors.

As you can see from these demands, the M-22, along with their labor union allies, are outright communists. They block public venues to voice their impossible demands. Once the demands are not met, violence and destruction of private property ensue. The results are realized the next day when those who live in or are visiting the historic city wake up to the formerly beautiful streets being littered with piles of trash and graffiti; others who are not so lucky wake up in a jail cell or hospital gurney.

Some of the protesters’ complaints are well-taken. They point out that the euro was forced upon them without their consent, which has now resulted in their country’s loss of economic competitiveness. The euro has indeed caused disruptions that have been thoroughly analyzed in books such as The Tragedy of the Euro by economist Philip Bagus.

He shows how the Spanish have been able to borrow at the same rate as the more thrifty cultures such as Germany. This has created a free-for-all, where countries with less overall saved capital are incentivized to take advantage of the low interest rate provided by the saved capital of individuals in the core. This has created a spending binge in peripheral countries that is now coming to a head.

The answer to this problem given by the M-22 crowd is that the debt is not legitimate and should be defaulted on. They claim that the debt is being forced upon them and that they should not have to suffer for the government’s mismanagement of the economy. I find this argument to be sound overall. From an ethical standpoint, individuals should not be born into the world with a giant albatross of debt piled up by past generations.

These arguments become disingenuous, however, if you are then out of the other side of your mouth demanding higher government spending for public services. These protesters are not adverse to government debt; in fact, the foundation of their entire platform is government debt. They have been the ones screaming for higher government spending, which has now put the government in this precarious position. Now the bills have come due, and they are accusing the ones who’s saving they have squandered of predatory lending.

This leads to the false communist/fascist dichotomy, which the world has been plagued with for the past century. As a private business owner, you have no choice but to hope that the police will protect you from the mass of lunatics who have no respect for property rights or the operation of your business. Many pray for a strong man to come in and bring back order with an iron fist. They reminisce of the 1960s and the dictatorial rule of Francisco Franco, when Spain had one of the lowest unemployment rates in the world.

spain unemployment graphic

Although this is a temping trap to fall into, it is only one of many choices that there are. In fact, both sides of this struggle are collectivist in nature and based on one group’s forcing its opinion on the other. They are both culpable for the current mess that the country is in, and it is dangerous for citizens to feel obliged to pledge allegiance to either side.

The current turmoil is much like what was predicted in Atlas Shrugged: the world’s economy in shambles, as the citizenry clamor for more and more control by the government. The difference is that in reality there is no Galt’s Gulch to escape to, as each economy comes apart at the seams.

The global economy is now so intertwined that disruptions in one part of the world inevitably affect us all. What many people think of as “sustainable” or “living off the grid” is in fact just a justification for lowering your standard of living. Our current luxurious way of life is impossible without free international trade.

While many in the United States see this as a far-off country without much in common with the U.S., I would beg to differ. Union power is growing in the United States, and their demands are getting more and more ludicrous. We have recently seen the union backed “fight for 15″ rallies harassing fast food chains and other major U.S. employers. And the United States has not yet seen the budget cuts that other countries have been forced to endure, but it will.

What will happen on the inevitable day that the government is forced to announce cuts to Social Security or food stamps?

What will the people do as medical costs continue to spiral out of control and the Affordable Care Act turns out not to provide the cornucopia of medical services they were promised?

If you really want to know the answer to that question, take a look at the riots in Spain.

Join the discussion at The Dollar Vigilante.

–James Guzman

James Guzman is the manager of TDV Groups and a real estate agent with Coldwell Banker, Smart based out of San Miguel de Allende, Guanajuato. He specializes in helping international clients buy and sell property in all of Mexico. 

Note: The Dollar Vigilante will be hosting The TDV Wealth Management Crisis Conference in Cabo San Lucas later this month. Click here to find out more.

Obama’s U.S. Is Starting To Look Like The Early Days Of Mao’s Communist China

Many people like to watch movies or read novels as a way to relax and get away from work and other stresses of day-to-day life. I, on the other hand, find nonfiction to be much more interesting than almost anything dreamed up by a fiction writer. So when I want to relax and get away from things, I like to read nonfiction books and documentaries.

Given what is going on in China lately, I have been nearly obsessed with learning about China’s history. It is easily one of the most interesting cultures on Earth, with thousands of years of dynasties, warlords, communism, capitalism, wars and atrocities.

Of all the atrocities, the worst by far was committed during Mao Zedong’s Communist China revolution and the typically Orwellian-named, “The Great Leap Forward.”

That leap eventually ended up with the deaths and starvation of somewhere between 20 million and 45 million people. Despite this devastation, American oligarch David Rockefeller said this of the period: “Whatever the price of the Chinese revolution, it has obviously succeeded not only in producing more efficient and dedicated administration, but also in fostering high morale and community of purpose. The social experiment in China under Chairman Mao’s leadership is one of the most important and successful in human history.”

As I watched a recent documentary on this period, it struck me how eerily similar the early years of Mao, leading to those deaths, were to today’s United States and Obama.

The Similarities

Hope and change: As with Obama, Mao was swept into power under great fanfare as a savior by a society of people who had been so impoverished and war-torn that they put their faith in this man with his ideas. As with Obama, the first few years didn’t go too terribly, giving some people hope. But soon after taking power in 1950, Mao quickly got China involved in the Korean War.

Land reform: During that same period, Mao went to work on taking land away from landowners and giving it to the people. Done differently, but with the same end goal, the U.S. has been decimating small-farm owners through regulations, taxes and even armed raids, ending up with large corporations owning more and more of the productive land. The large corporations, through the U.S. blend of fascism and socialism, end up owning more and more of the land. According to the U.S. Department of Agriculture, the number of farms in the United States has fallen from about 6.8 million in 1935 to only about 2 million today. According to Farm Aid, every week some 330 farmers leave their land for good. This isn’t done as overtly as it was during Mao’s time of just killing landowners, as the U.S. government has perfected propaganda; but the end result is essentially the same.

Suicides: In Shanghai during that time, suicide by jumping from tall buildings became so commonplace that residents avoided walking on the pavement near skyscrapers for fear that suicides might land on them. In the U.S. today, even The New Yorker writes about the “suicide epidemic.” Between 1999 and 2010, the number of Americans between the ages of 35 and 64 who took their own lives rose by almost 30 percent. Among young people in the United States, suicide is the third most common cause of death; among all Americans, suicide claims more lives than car accidents, which were previously the leading cause of injury-related death.

Media suppression and targeting: Mao launched the “Hundred Flowers Campaign” urging all those with different opinions to express themselves. It was a ruse, however; and he used this to target opponents, eventually killing 500,000 landowners. In the United States it is done differently; but groups, like the Tea Party, have been targeted by the Internal Revenue Service for having opposing views. And it is well known in the mainstream media that you cannot speak out against the current regime. Journalist Abdulelah Haider Shaye was imprisoned under Obama’s orders for speaking out about U.S. involvement in the Mideast. And, currently, according to Reporters Without Borders, the U.S. stands at No. 46 on the World Press Freedom Index, just after Romania and one ahead of Haiti.

Only those in government prospered: During Mao’s time, it was said that only those in government and those in the capital cities connected to the government prospered. This is very similar to what is happening today in the United States. Government workers currently get paid 45 percent more than their counterparts in the private market. And while most of the country languishes in depression-level conditions, Washington, D.C., is flourishing. The Washington metro area includes a whopping six of the 10 most affluent counties in the Nation.

Lies and statistics: As things got worse in Mao’s China, the government took to overtly lying about nearly every statistic. It lied egregiously about crop production and the number of deaths due to starvation. Doctors were not allowed to list “starvation” as a cause of death. In the United States it is similar in that nearly all government statistics are heavily manipulated to paint a better picture of what is really going on. Unemployment figures, for one, are adjusted so that if people give up looking for work they are not counted as being “unemployed” anymore. The U.S. government currently says that the rate of unemployment is 7.3 percent. However, the percentage of the population that is employed is at lows not seen in 40 years. And computing the unemployment numbers the way they were computed prior to 1994 (before they took out “long-term discouraged workers” from the figures), as computed by, shows an unemployment rate of 23 percent.

Famine and starvation: As things got worse, by the end of the 1950s, tens of millions of Chinese died of starvation. The United States has much more past wealth to live upon and still has the printing of the U.S. dollar to keep things more afloat temporarily; but even with these advantages, one in six Americans is on food stamps. And 1 in 4 children in the United States is on food stamps. In other words, already, a very large percentage of the population cannot even afford food to eat without assistance. Without government assistance, they would starve.

The Differences

It should be said that China in the mid-20th century and the United States in the early 21st century are two very different places. China, at that time, was a very poor and backward place, whereas the United States — due to semi-free markets for centuries — is incredibly advanced and has built up a lot of wealth.

As well, communication technologies such as the Internet do not allow most government’s today to wholesale slaughter people. In the United States today, these same goals are undertaken through fines, taxation, regulation, inflation and criminalizing nearly every human activity. Nearly half of all people under the age of 23 in the United States today have been arrested, and the U.S. has the world’s largest prison population (25 percent of the prisoners, yet only 5 percent of the world population). Through these means, the U.S. government can look to be less heinous than it would by outright murdering thousands or millions of people but essentially with the same results.

Because of these differences, we should not expect to see the United States follow the exact same path of Mao’s China. But the similarities of the two times are striking.

The Dollar Vigilante has published this cartoon from the Chicago Tribune in 1934 on numerous occasions because it so perfectly explains what is going on in the U.S. today.

1934 Chicago Tribune cartoon

Spend! Spend! Spend!: The U.S. government has been spending and going into deficits at rates that would have shocked people even 15 years ago. The debt of the U.S. government has increased $6.666 trillion since Obama took office. When Obama was first inaugurated on Jan. 20, 2009, the debt of the U.S. government was $10,626,877,048,913.08, according to the Treasury Department’s Bureau of the Public Debt. As of Jan. 31, the latest day reported, the debt was $17,293,019,654,983.61 — an increase of $6,666,142,606,070.53. The total debt of the United States did not exceed $6.666 trillion until July 2003. In the little more than five years of the Obama Presidency, the U.S. has accumulated as much new debt as it did in its first 227 years.

Blame the capitalists: Fomenting a class war, the heavily socialist-indoctrinated youth and poor are constantly told “greedy corporations” are causing their problems. This can be seen clearly in all the recent minimum wage rhetoric.

Junk the constitution: The Constitution and the Bill of Rights have been all but ransacked in recent years — specifically since 9/11 and the Patriot Act. People collecting rainwater or building a pond on their own property or living sustainably off the grid have been deluged by Federal agencies threatening them with massive fines or jail time. And the rising police state and the endless accounts of police brutality are just other examples of this.

Declare a dictatorship: Obama continues to wage wars without approval from Congress, issue executive order edicts and create kill lists. And in his most recent State of the Union address, he even went so far as to say that he was going to go around Congress to get things done… all to wild applause. That is a dictatorship.

The Fall Of America

Those plans, as laid out in the Chicago Tribune cartoon from 1934 are falling exactly into place. That, combined with the fact that Obama’s U.S. is following a very similar path to Mao’s China should be enough to make the hairs on the back of your neck stand up.

Unfortunately, it only keeps getting worse. Capital controls are coming into effect in July under the Foreign Account Tax Compliance Act (FATCA); so if you don’t have yourself or your wealth well outside of the United States by this point, your time is running out.

For this reason, The Dollar Vigilante has set up an urgent conference called the Crisis Conference, scheduled for April 30  to May 4 in Cabo San Lucas, Mexico. If you still have significant assets inside the United States, I urge you to seriously considering attending.

The U.S. is currently similar to the early days of Mao. How it ends up is anyone’s guess, but it isn’t going to be pretty.

– Jeff Berwick

30 Predictions For 2014 You Must Know About… And What You Can Do To Prepare

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness… it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…” — Charles Dickens, A Tale of Two Cities

I cannot shake a sticky feeling of optimism about 2014.

It rose in me for the strangest reason yesterday. CNN was providing background noise when a term caught my ear: “bug out bag.” This is a portable kit of the items you need to survive for 72 hours. The Red Cross suggests keeping one on hand in case it is necessary to quickly evacuate your home due to a disaster. But the term “bug out bag” is most often associated with survivalist “cranks” who are prepping for when TSHTF (the sh** hits the fan). That is, they are preparing for an economic and social collapse.

CNN was discussing bug out bags because respected financial guru David John Marotta had advised his wealthy clients to prepare one against “the possibility of a precipitous decline.” In short, he warned against a collapse from which city-dwelling clients should flee. Marotta wrote, “Firearms are the last item on the list, but they are on the list.” The broadcasters seemed dumbfounded by the words coming out of their own mouths. They hastily assured listeners that Marotta was not predicting a financial apocalypse. Rather he thought a slow European-style decline was more likely. That’s the reassuring news?

Well, actually it is. “Slow” means there is still time to make preparations. And if figures like Marotta are recommending “prepping,” then the reality of the economic situation is going mainstream.

To make preparations, however, it is useful to have a sense of what to expect. This leads directly to my predictions for 2014, which I introduce by three caveats. First, predictions are a territory into which financial guru Doug Casey says people should not wander if they intend to include an event and a time; I recklessly include both. Second, predictions should be made vague in a manner perfected by psychics who proclaim “you will meet a stranger…”; I offer specifics. Third, the next year will be volatile and largely defined by unintended consequences and unexpected reactions; 2014 is not the raw material required for accurate predictions.

Yet there are specific events that I think are more likely than not to occur within the next 12 months. The year 2014 is likely to resemble the opening sentence of Dickens’ A Tale of Two Cities. It will be a wild mixture of both the best and the worst of times. The ratio of good to bad that impacts people’s lives depends largely on whether they are ready to embrace the best and marginalize the worst. Happiness and liberty are similar to luck; they tend to favor the prepared.

30 Possibilities For 2014

Here are some of the “best of times” that I expect in 2014:

  1. More individuals wake up and take control of their lives. (A large rise in subscribers recently at The Dollar Vigilante shows this.)
  2. Edward Snowden continues to make opposing the state look trendy.
  3. Libertarianism swells in popularity, as evidenced by media attacks.
  4. Biotech “miracles,” including the reversal of aging, edge toward being real.
  5. Ditto on tech breakthroughs, including robots and self-driving cars.
  6. 3-D printing creates a cornucopia of cheap and accessible goods.
  7. The correction in gold prices ends.
  8. More States legalize marijuana; a crack in the drug war spreads.
  9. Bitcoins stabilize and are more accepted by the mainstream.
  10. Republicans win the House but not the Senate; bipartanship deepens.
  11. Virgin Galactic begins space tourism flights in August, on schedule.
  12. The dollar fades as the world’s reserve currency; the Yuan fills the void.
  13. The use of cash increases due to concern over ID theft and privacy.
  14. The Supreme Court rules against Obamacare in at least one key case.
  15. The backlash against “global warming” grows, led by Canada and Australia.

Here are some of the “worst of times” that I expect in 2014:

  1. True U.S. unemployment rises, despite what is officially reported. The housing market crashes again, especially in Canada.
  2. Israel attacks Iran’s nuclear facilities, perhaps covertly.
  3. New minimum wage laws sweep America, driven by Democrats.
  4. The 29-hour week is standard for most new employees due to Obamacare.
  5. The American economy lumbers into zombie mode, similar to that of Japan.
  6. The 1 percent is richer; the middle class is poorer; the poor… don’t go there!
  7. A terrorist attack occurs somewhere in Russia during Olympics.
  8. The prices of food and energy soar.
  9. A series of American cities declare bankruptcy.
  10. Snowden is still in Russia; Julian Assange is still at Ecuadorian embassy.
  11. Social unrest grows worldwide, including racial unrest in America.
  12. Obamacare is a train wreck; insurance companies balk at paying claims.
  13. Quantitative easing continues worldwide.
  14. The Taliban control most of Afghanistan; the United States does not remove all troops.
  15. “Lone shooter” events occur increasingly throughout the United States.

My synopsis for optimism ensues:

  • In terms of prosperity: The innovation and energy of individuals is driving the economy, despite the desperate effort of governments to clamp down and to control. We live in an age of miracles, wrought not by religion but by science and technology — that is to say, by the mind of man. Our species deserves a standing ovation.
  • In terms of politics: Decent and productive people are waking up to the corruption and thievery that is the state. They are becoming independent enough to weather economic and social hardships that could otherwise break them in two.
  • In terms of liberty: The key factor in how freely people live is how thoroughly they reject the state from their lives and deal with it only under duress. I see this happening everywhere. It is in the air, like ozone before a storm.

Your personal choices have never been more important. And there is still time, but time is shrinking.

Every day you’re alive to fight the good fight is a good day. But time is of the essence if you’re going to continue leading a semi-free life. With mainstream financial advisers now telling clients to organize “bug out bags” in case major cities become uninhabitable, there can be little doubt in the thinking man’s mind that these might just be the worst of times. When you realize that the Federal Emergency Management Agency and local news channels are beginning to parrot the same theme, you might begin to wonder: “Why is it exactly that I am still here?”

As you can see, as Jeff Berwick often says, things are moving quickly. The worst thing we could do as individuals is panic. Remember: It is also the best of times. By figuring out and focusing on clear goals designed to protect ourselves and our families financially (and physically, etc.), we can lead the happy and secure lives we deserve.

The Dollar Vigilante offers a range of services to help individuals survive The End Of The Monetary System As We Know It, such as the weekly paid newsletter and above-board second citizenship programs.

For TDV’s high-net-worth clients, the TDV Wealth Management Crisis Conference — to be held Feb. 5-9 in Panama — will place participants on a clear footing towards financial independence. Not your typical conference, the Crisis Conference will give you the tools you need to benefit from a common-sense international strategy tailored to your needs.

For 2014, it simply makes sense to ensure your future today.

–Wendy McElroy

Wendy McElroy is a renowned individualist anarchist and individualist feminist (not the kind of feminist you are used to) and now a staple at The Dollar Vigilante. She was a co-founder of The Voluntaryist in 1982, and is the author/editor of 12 books, the latest of which is The Art of Being Free. Follow her work at

Is The NSA Changing Bank Accounts?

Has the National Security Administration (NSA) been changing the amounts held in the financial accounts of people it targets?

The question would seem absurd if it were not for a 308-page report on the NSA that was released on Dec. 12 by an official White House panel. Recommendation 31, “Institutional Measures for Cyberspace,” on page 37 and repeated on page 221 reads:

(1) Governments should not use surveillance to steal industry secrets to advantage their domestic industry;

(2) Governments should not use their offensive cyber capabilities to change the amounts held in financial accounts or otherwise manipulate the financial systems.

Upon reading the panels’ report, Trevor Timm (a surveillance expert from the Electronic Frontier Foundation) sent a tweet; it was retweeted by Glenn Greenwald, the journalist who originally leaked documents from Edward Snowden.

Does it imply that the NSA is or has been altering the financial data of targeted individuals or agencies?

The NSA certainly has the ability to do so, because it has the information to do so. The German news source Der Spiegel reported Sept. 15 on an internal NSA branch known as “Follow the Money” (FTM). The branch monitors “international payments, banking and credit card transactions.” In a responsive statement, the NSA admitted to tracking financial information but only as it related to terrorist financing and terror networks. It states, “This information is collected through regulatory, law enforcement, diplomatic, and intelligence channels, as well as through undertakings with cooperating foreign allies and partners.”

One “cooperating” ally is apparently the international bank messaging system Society for Worldwide Interbank Financial Telecommunication or SWIFT. The system promotes itself as a financial service “with speed, certainty and confidence.” More than 10,000 banking organizations in 212 countries use SWIFT. In a carefully worded statement, SWIFT’s chief information officer Mike Fish indicated that the agency had “no evidence to suggest” there had been “any unauthorized access.” The key word is, of course, “unauthorized.”

The NSA stores the financial information in a databank called Tracfin. (An identically named database was created in France in 1990 with the stated goal of tracking illegal financial transactions; it is not clear if the database used by the NSA is somehow connected.) According to Der Spiegel, Tracfin “in 2011 contained 180 million records. Some 84 percent of the data is from credit card transactions.”

If the NSA is monitoring transactions in the Mideast and Germany, then how likely is it to be tracking money within U.S. borders? This is especially likely given that leaked documents from Snowden indicate the NSA has been tracking the Visa credit card system. Visa offered a carefully worded response in which it claimed not to know of any “unauthorized” access to its database. As for other large U.S. financial institutions, it would be surprising if they refused to share information with a government responsible for their economic dominance.

The only assurance of financial privacy is the NSA’s claim that it is not monitoring American transactions. There are at least three reasons why the assurance is not credible:

  1. The tracking of financial transactions within America has been documented for years. In 2008, The Wall Street Journal reported on “so-called ‘black programs’ whose existence is undisclosed.” Many of them “began years before the 9/11 attacks but have since been given greater reach. Among them, current and former intelligence officials say, is a longstanding Treasury Department program to collect individual financial data including wire transfers and credit-card transactions.” If one government agency has the data, then they all do.
  2. In 2006, when NSA was discovered using SWIFT data, there was a political uproar in the EU; the U.S. agreed to safeguards and to limit its surveillance in exchange for access. Agreements from the NSA are apparently worthless, as the backdoor access continues.
  3. What the NSA says varies from moment to moment, person to person. For example, the agency has repeatedly denied that its surveillance is conducted to commercially benefit American companies. Nevertheless, Bloomberg on Sept. 9 reported on the NSA surveillance of Brazil’s state-controlled oil company, Petrobras. Documents released by Snowden included a 2012 NSA slide show presentation “that explained the agency’s capability to penetrate private networks of companies such as Petrobras. … One slide in the presentation listed “economic” as an intention for spying.”

In his recent “open letter to the people of Brazil,” Snowden asked that government for political asylum. Of the NSA surveillance, he stated: “These programs were never about terrorism: they’re about economic spying, social control, and diplomatic manipulation. They’re about power.”

The foregoing is not surprising or even new, except for one detail. No government body has previously implied that the NSA might be now or in the future altering the information stored by financial institutions. No official has previously suggested that the NSA could bankrupt or lock up the finances of targeted individuals. It is a haunting question: Why would the panel explicitly tell the NSA, “Don’t do this!” if the agency weren’t doing it already or planning to do so?

The panels’ recommendations are heartening because they are overwhelmingly critical of the NSA; the panel went so far as to unanimously call for splitting up the agency and for safeguards such as transparency. This is another surprise because the panel was handpicked by Obama and included the die-hard loyalist Cass Sunstein and former CIA deputy director Michael J. Morell.

Obama quickly indicated his rejection of some of the panels’ recommendations. Watching him deal with the rest of them will make for entertaining popcorn moments.

Meanwhile, everyone should make sure they have a print copy and a screenshot of their latest financial statements on hand. People should consider holding assets in a less conventional place than large and “trusted” financial institutions. The advice sounds paranoid. But as paranoid as you get, it is difficult to keep up with the U.S. government.

–Wendy McElroy

Wendy McElroy is a renowned individualist anarchist and individualist feminist (not the kind of feminist you are used to) and now a staple at The Dollar Vigilante. She was a co-founder of The Voluntaryist in 1982, and is the author/editor of 12 books, the latest of which is “The Art of Being Free.”  Follow her work at

Lies, Damned Lies And Government Statistics

“There are three kinds of lies: lies, damned lies and statistics.” — Mark Twain

With all due respect to Twain, he did not extend the thought far enough; government statistics trump all lies. But then again, the government’s role as both pre-eminent statistics gatherer and manipulator is a phenomenon more applicable to our time. Today, various U.S. bureaus and agencies monkey with every key macroeconomic indicator: most notably, inflation, production (gross domestic product) and unemployment.


Since the early 1980s, the Bureau of Labor Statistics (BLS) has engineered a lower “inflation” rate in the consumer price index (CPI) with such maneuvers as:

  • Accounting for “quality” improvements in goods (“hedonic adjustments”),
  • Replacing items in the basket of goods measured with lower-price items (“substitution”),
  • Decreasing the impact of rising prices by any particular good within the basket (“geometric weighting”),
  • And changing how rents are measured (“imputation”).

The results? According to ShadowStats, which calculates inflation with the previous CPI methodology, inflation has been understated by 5 to 6 percentage points over recent years.

Gross Domestic Product

GDP, to the extent it is relevant at all, must be assessed in real terms (discounting the effects of inflation). Otherwise, how else could you discern economic growth from a mere rise in prices? Therefore, economists “deflate” GDP statistics by the rate of inflation to determine real changes in economic output. Curiously, instead of using the CPI in such calculations, the government uses a different price index, entitled personal consumption expenditures (PCE). Why? As the PCE index is chronically lower than the CPI, real economic growth appears higher than if the CPI were used. Not content with just this trick, the Bureau of Economic Analysis (there are a number of U.S. agencies which compile economic statistics) rolled out new guidelines for GDP calculation on July 31: Henceforth, expenses paid for research and development will be included to “capture” the benefits of intangible assets. GDP jumped 2.7 percent with the addition (every little bit helps), and future growth is projected to be higher with the change.


As of October, unemployment stood at 7.3 percent. Notwithstanding the previous month’s rate of 7.2 percent, this represented its lowest level since December 2008 (7.3 percent), which appears an impressive rebound given its peak of 10 percent (October 2009). But the labor force participation rate, the statistic that measures the actively employed percentage of an economy’s workforce, stands at a mere 62.8 percent (October) — a level not observed since 1978. The discrepancy? Literally millions of discouraged unemployed workers having ceased looking for work. In BLS calculations, if you do not have a job, you are unemployed. If you have been looking for years and have become so disillusioned as to end your efforts, you are no longer unemployed — but you still do not have a job.

We understand that many areas of the economy cannot be measured with any precision. In fact, the Austrian school of economics, to which we subscribe, was the first to point out the difficulties of measuring something as seemingly innocuous as the price level.

Because of such difficulties, it is reasonable to believe economists seek to improve their accuracy and worth. But when do refinement and improvement become, not a purpose, but a pretense for goosing the numbers? The aforementioned machinations prove we are already there.

However, worse than the manipulation of statistics to placate the populace and the financial markets is the reason the government is so interested in statistics. In his book Statistics: Achilles’ Heel of Government, noted economist Murray Rothbard explained:

Statistics are the eyes and ears of the bureaucrat, the politician, the socialistic reformer. Only by statistics can they know, or at least have any idea about, what is going on in the economy. Only by statistics can they find out . . . who “needs” what throughout the economy, and how much federal money should be channeled in what directions.

Statistics are the critical tools of the central planners. Their growth in usage tracks the retrenchment of free markets from the economic landscape. Their manipulation reflects the deterioration of an economy.

Twain may have been a great author of fiction, but the U.S. government wins the Pulitzer.

–Christopher P. Casey

Christopher P. Casey, CFA®, CPA is a Managing Director at WindRock Wealth Management ( Using Austrian economic theory, Mr. Casey advises wealthy individuals on their investment portfolios to maximize their returns and minimize risk in today’s world of significant government intervention. Mr. Casey can be reached at 312-650-9602 or at

The Alarming Lack Of Pretense In Politics

One of the most alarming trends in American politics is the lack of pretense being displayed by authority. Like a ravening beast that loses its fear of humans, government becomes more dangerous when it loses the need to pose as a public servant that performs legitimate tasks. In short, government becomes more dangerous when it doesn’t care what you think of it. The sentence-long version of the argument for pretense is this: The need to pretend is a restraint upon authority.

Libertarian icon Murray Rothbard used to chuckle gleefully over the statements and antics of the notoriously corrupt politician Boss Tweed (1823-1878) of Tammany Hall. Murray loved the blatant quality of the man’s corruption. “Those were the days before politicians had PR agents, and a crook was a crook,” Murray would declare. He found the transparent corruption to be charming because it was non-hypocritical and it publicly revealed the ugly face of politics.

I disagree.

The government is a band of organized thugs who steal wealth and impose social control. Every “legitimate” function government provides — such as the construction of roads — would be better provided by a free market that does not steal and does not control behavior. But if there must be a government, then I want it filled with pretense.

Modern politics is the art of PR or smoke and mirrors. Politicians steal a fortune in salaries, hidden perks, pensions and benefits. This is on top of the ego-bulging power they enjoy. But politicians also want the populace to believe they are public servants who are humbled by power. They deny praxeology. This Misesean theory states that human beings act to achieve goals that benefit them. “Not so!” claim politicians. “Our actions are for the greater good, from pure altruism, for the children, an expression of public service, to stave off climate warming, for global peace, to advance women’s rights.”

The mask is falling. America is returning to the Boss Tweed approach in which blatantly self-serving motives are hardly concealed.

I remember vividly a news item from December 2012. It was the moment at which I realized the police in the United States no longer feel any need to pretend. They have become blatant thugs who will brutalize or kill anyone who defies or annoys them.

The news item? A Texas high school student was arrested; the arrest was allegedly to prevent the boy from harming himself due to depression. He was searched, his hands were cuffed behind his back, and he was placed into a police vehicle. The official version of what happened next: He shot himself to death with a hidden gun. Police claimed the T-shirted teen must have hidden the gun “really well,” and investigators backed up their account. No explanation of how the handcuffed teen retrieved a weapon was offered. The underlying message is that the police no longer need to pretend that they protect rather than victimize people.

Imagine an associate who has the goal of victimizing you at every turn while, at the same time, he deceives you into calling him a friend. As long as the pretense is in place, he cannot commit acts that are glaringly antithetical to friendship. If he beats you up in an alley, you will compare his actions to his words and conclude he is an enemy. The need to float an illusion of friendship is a restraint upon his actions. He needs to maintain the illusion because it is your belief in the friendship that gives him access to your life. He wants you to cooperate in your own victimization.

Government is that associate. The American government has pretended to be a friend and partner of “the people” since its inception. “Government of the people, by the people, and for the people” were words spoken by President Abraham Lincoln at a time when he presided over the greatest slaughter of Americans in history: the Civil War. The President uttered noble words and young men died in fields filled with corpses rather than grain. Such is the way of government “for the people.”

Nevertheless, the need for pretense generally restrains government in much the same manner as it used to restrain the police. Before the militarization of the police in the wake of 9-11, officers perpetuated the lie of “to serve and protect” by presenting a comparatively benign face to the public. This required some level of good behavior. Brutality occurred behind closed doors and it was largely inflicted on those who had no voice in society. Today, the police no longer close the door. They police use SWAT teams to raid organic farms, holding residents at gun point while they destroy okra plants. They kill harmless family pets as a routine part of intimidating harmless people. The mask has fallen.

The war against Syria that wasn’t is instructive. When Syria allegedly crossed an arbitrary “red line” that had been defined by Barack Obama, the President was unilaterally ready to attack, without diplomatic foreplay, without Congressional approval, without U.N. support, with nothing but his signature on a piece of paper. It would have been a war for one man’s credibility. The legacy of the Nobel Peace Prize-winning President required the murder of Syrians.

Then a series of PR setbacks occurred: The British parliament prevented the U.K. from joining in, the American public rebelled, international opinion backfired and Congress demanded a voice. Suddenly, Obama began to pretend. “I honor the opinion of the American people,” he claimed. “I will ask Congress,” he vowed. “I will consult with international powers,” he announced. And so war with Syria was prevented by the need for pretense.

When a government no longer cares how people view it, what results is the Soviet Union of the 1980s. A government that does not seek your consent to being victimized is a transparently totalitarian one that uses brutality as a default policy. People in the Soviet Union did not have the illusion of “we are the government” or “the police are there to help you.” They knew government was the enemy and the police were its agents.

The American government is abandoning pretense. Murray would applaud. I see it as a final sign to either get out or prepare to seriously shelter in place. A government that is indifferent to public good will is openly hostile to human survival. A government that does not pretend is terrifying.

–Wendy McElroy

Wendy McElroy is a renowned individualist anarchist and individualist feminist. She was a co-founder along with Carl Watner and George H. Smith of The Voluntaryist in 1982, and is the author/editor of 12 books, the latest of which is “The Art of Being Free”. Follow her work at

The Federal Reserve’s War On Seniors

The Federal Reserve’s zero interest rate policy (ZIRP) of the past half dozen years or so has been a financial act of war on the country’s seniors and, for that matter, on all savers. Under ZIRP, interest rates are artificially lowered through the Fed’s monetary policy popularly known as “QE,” quantitative easing.

The primary reason for this is twofold: first, to allow the Federal government to borrow money at next to nothing in order to maintain its current gargantuan level of spending; and, second, to prop up the Nation’s insolvent banking system, which can continue to engage in all sorts of reckless speculations.

ZIRP is extremely hard on seniors who, for the most part, can no longer rely on earnings through employment income, but have to live on their accumulated wealth. Instead of reaping the rewards for a lifetime of frugal behavior, seniors are being systematically fleeced by the Fed’s action.

ZIRP is actually “class warfare” — not in the Marxist/socialist sense of “labor versus capital,” but in its surreptitious redistribution of wealth from savers (retirees) to the government and politically well-connected financial elites. Moreover, the Fed’s action is turning seniors into a dependent class whose members are no longer able to sustain a reasonable standard of living.

Not only are retirees and savers punished by ZIRP, but the policy is quite destructive to the entire economy since low interest rates discourage savings, which are key to economic growth. Savings provide the means (capital) for production. Without savings, lengthier and more complex production processes will not take place. The personal saving rate in the United States has plummeted for years, with the current level at about 4 percent of disposable income.

The amount of savings is also crucial for the level of employment and wage rates. Greater savings allows entrepreneurs to hire additional labor plus offer higher wage rates. Policies such as ZIRP have destroyed the savings pool not only in the United States but throughout the Western world, which explains, in part, the persistent high levels of unemployment and stagnating wages. Organized labor should be at the forefront in opposing ZIRP.

ZIRP reduces seniors’ standard of living in another devastating sense. To keep interest rates below market levels, the Fed has to purchase larger and larger amounts of U.S. government bonds. Since the Fed has no assets of its own, it must create money to buy the debt (“monetizing the debt”). This, of course, is inflation, the nasty consequence of which is a rise in the price of consumer goods.

For seniors, not only are they receiving little reward for saving which diminishes their capacity to remain self-sufficient, but the money they do have, because of the Fed’s policy, is worth less and less. John Williams of Shadow Statistics has shown that consumer price inflation over the past year has ranged between 5 percent and 10 percent, far above the government’s estimates.

ZIRP and other such measures are the reasons for the creation of a dependent society where reward for hard work and thrift is being systematically undermined for the benefit of a Leviathan state and the financially privileged. The policy has other societal repercussions as younger generations are coming to realize that since prudent behavior will not be rewarded, they will engage in more present-oriented lifestyles. Can there be any doubt that contemporary America’s hedonistic society has resulted, in part, from the punishment of future-oriented behavior.

Less than the abolition of the Fed and a return to a commodity-based monetary order, the solution to the current financial plight of seniors and the economy in general is for the Fed to immediately suspend ZIRP, which would allow interest rates to rise to “normal levels.” Not only would retirees benefit, but the higher rates would induce greater savings, which would eventually spur real and sustainable economic growth.

Unfortunately for seniors, until the Fed’s interest rate policy is reversed, their retirement will be a lot less prosperous than anticipated, as the years of toil and sacrifice will have been for naught. As with so many aspects of the American dream, the golden years are becoming a thing of the past.

–Antonius J. Patrick

Antonius J. Patrick is a Washington, D.C.-based writer who reports on culture- and religion-related issues for American Free Press.

Editor’s note: For help in building a new dream even as the old one dies, click here.

Just Who Are We Radicals And Reactionaries?

“The notion that a radical is one who hates his country is naïve and usually idiotic. He is, more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime; he is a good citizen driven to despair.” — H.L. Mencken

I have often considered the possibility that I am the guy that Mencken described. But for those involved in the traditional political realm of left and right, I am simply delusional, labeled a “radical” by those on the right and a “reactionary” by those on the left. In fact, I am neither. Rather, I am the dreaded Libertarian who believes that government, if it must exist at all, must be structurally limited. And it is clear that in that belief I am a part of a small minority.

To suggest to the majority (who remain emotionally invested in the pseudo left-right paradigm) that democracy is perhaps the worst form of government will get you written off quickly. To most, such an assertion is worse than delusional. It is traitorous. Most members of the herd don’t understand that the Founding Fathers likewise believed democracies were doomed to failure and that, left unchecked, ended up as nothing more than another form of tyranny: the tyranny of the majority. Everything they read and studied taught them that pure democracies:

…have . . . been spectacles of turbulence and contention; have ever been found compatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. (The Federalist, No. 10)

It results in a deep and angry consternation that such a radical notion, an indictment of the revered democracy that America now exports at the end of a gun, was not suggested by the likes of radicals or reactionaries, but by James Madison, the U.S. President referred to on the White House’s own website as the “Father of the Constitution.” Few people believe he was radical or reactionary. Even fewer people know of his disdain for unfettered democracy. And that is unfortunate.

Democracy, as a form of government, is like a ship without a rudder. It will move, but it is impossible to determine a direction. Each of the individual liberties so many Americans are proud of come from a republic with a constitution firmly protecting individual rights against intrusion by government, not a democracy that fundamentally assumes that 51 percent of the people are correct 100 percent of the time. In a pure democracy, if 51 percent of the people want to enslave a group or steal their personal property, they have the legal (and moral) right to do so. No property rights, no personal freedoms and no individual rights, regardless of genesis, are immune to a majority wanting to eliminate them. As did Madison, Ayn Rand, the often-reviled objectivist philosopher and novelist, railed against such tyranny, saying that individual rights should not be subject to a public vote and that the political function of rights is precisely to protect minorities from oppression by majorities, noting that the smallest minority on Earth is the individual. Simply put, without effective structural limitation, the majority in a democracy can (and will) oppress the minority by simply having or buying more votes. The irony of a democracy is that it functions only if it can be restrained from actually being one. Such was the idea of the framers of the United States Constitution, and they were right.

Where they got it wrong was to assume a determined majority could not and would not trample the structural hurdles put in front of them. They will and they have. A good example is the 2nd Amendment, simple in its wording, clear in its intent:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

The anti-gun minority — or majority, or whatever the current polls shows them to be — argues that the words do not mean what they say. In a disgraceful and intellectually deceitful rewriting of history, they suggest that the Founders meant the right to have a hunting rifle, since so many people hunted for food at that time in history.

But, in fact, history tells a different story. To wit, the 2nd Amendment’s purpose was to ensure that if and when another government needed to be overthrown, the people would have the armament to get it done.

Such clarity is lost on those with an agenda to rewrite the 2nd Amendment, and so they do. Recently, a textbook in the state of Texas for students in Advanced Placement programs quoted a new version of the old 2nd Amendment:

The people have a right to keep and bear arms in a state militia.

Such difference is not a simple oversight. An oversight is leaving out a marginally important phrase or a misspelling a word, not a dramatic sentence restructuring that changes the entire meaning of the sentence. And it is not as if there is any historical support for that revised language.

To the contrary, Thomas Jefferson wrote: “The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.” And, if that wasn’t clear enough, he left no doubt of the Framers’ intent when he wrote:

And what country can preserve its liberties, if its rulers are not warned from time to time, that this people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to the facts, pardon and pacify them. What signify a few lives lost in a century or two? The tree of liberty must be refreshed from time to time, with the blood of patriots and tyrants.

“Arms” meant then (and still mean today) everything necessary to fight a war against a tyrannical government, not necessarily to overthrow it but to protect oneself from its abuses. Any comment to the contrary is merely ignorance of history or the worst form of disingenuous historical revisionism. To that end, I am reminded of former Senator Daniel Moynihan’s admonishment: “You are entitled to your own viewpoint, just not to your own facts.”

The ability to protect oneself from government is best evidenced in modernity by the increasingly frequent abuses of citizens by government agents. An elderly man in my hometown of Fort Worth, Texas, was killed when a half dozen police broke into his house and he pointed a gun at what he believed to be intruders. Indeed, they were intruders; but they wore badges and bulletproof vests. It turns out they had the wrong address, which government writes off as merely being a mistake and which resulted in his being killed. Murdered is a better term, if only because it is more accurate.

Last week, cops killed a Florida State athlete when he ran to their car trying to get help. They shot him 11 times and used a Taser on him. A few months ago, police in Los Angeles shot up a truck carrying two women delivering newspapers. Officers riddled the pickup with bullets and shot the women because their truck was similar to a fugitive’s truck. In the minds of government officials, that gave the police the right to do what they did: open fire without warning.

These are but examples among dozens from a rapidly growing police state — the very kind the Framers worried would one day grow out of a failed Republic and a successful democracy. Rarely are the agents of government punished. The message of government is clear: We will protect our own, no matter how egregious their acts.

Just as the 2nd Amendment isn’t about hunting, it likewise isn’t about protecting ourselves from the bad guys. Rather, it is to protect ourselves from the good guys who become bad guys, which is the eventuality of any democracy, the regrettable, but necessary, end game.

–Dr. Kenneth Karger

Dr. Kenneth Karger lives with his wife in Fort Worth, Texas, and Chetumal, Mexico. He is the brother of Jim Karger, a frequent contributor to The Dollar Vigilante and TDV’s concierge in San Miguel de Allende, Mexico.

What About the Roads? The Folly of Socialism

By their fruits ye shall know them. Do [men] gather grapes of thorns, or figs of thistles? Even so every good tree bringeth forth good fruit; but the corrupt tree bringeth forth evil fruit. A good tree cannot bring forth evil fruit, neither can a corrupt tree bring forth good fruit. — Matthew 7:16-18

Whenever people talk about anarchy, the two straw men arguments that people present are: “What about the roads?” and “What about the poor?” Generally, liberals use a number of logical fallacies when talking about free markets. They love to use arguments that appeal to emotions such as: appeal to pity, appeal to spite and wishful thinking. On one hand, they assume that they are correct, because they view themselves as the most virtuous people. On the other hand, they think that free market proponents are evil and selfish, but they don’t present any proof for these assumptions.

Hence, we end up with the popular tactic called the false dilemma, which essentially boils down to some argument “what about the …” and using that appeal to excuse the violence. In these state religions there is no real contemplation; rather any argument or appeal is used to excuse or initiate violence against those who do not agree.

As anarcho-capitalists (ancaps) we reason that the initiation of violence is morally wrong. Furthermore, if a system is created and enforced with violence, it is necessarily evil, no matter what its stated ideals. Social safety nets and charity that rely on violence, theft, laziness and dishonesty are evil. If such systems are evil, how much good can you create with evil?

Stop Aid And Institutionalized Charity

Most of what passes for aid and charity is a state-run con job that steals money and gives it to the people administering the system. In many cases, the results are extremely negative; it destroys the lives of the people that it is trying to help.

The most egregious example of this scam is international aid. Or, as Doug Casey so eminently said, “Foreign aid might be defined as a transfer from poor people in rich countries to rich people in poor countries.”

To further define, first the money is stolen from taxpayers in a “richer” country and then is “given” to a “poor” country. They cannot actually use this money, and the money almost never enters the country (usually siphoned off by that government that people keep saying we need). Rather, they are forced to buy services and equipment from the donor country that they do not need or cannot use — usually further distorting the economy of that country. A few years ago, I worked on a project involving European foreign aid and a few African countries. The money came from European taxpayers, but most of it ended up at an American University and at the private consulting company of a lecturer at said American university.

For a while, it looked like most of the money would end up there and with a few multinational IT companies. I know someone who pointed out these facts to some of the donors; it caused a minor diplomatic incident. In other cases, foreign aid is used to dump grains in poor countries. When that happens, it pushes the price of grains to below their production cost. This forces more farmers to stop farming. Usually, the grains rot or are used to produce cheap alcohol. So International aid is a scam deliberately created to make the sheeple feel virtuous, steal money and funnel it into politically connected businesses.

All of the stolen money being forced into charity has become profitable for narcissistic do-gooders as it prolongs the problems they are claiming to solve. In the worst cases, NGOs are either fronts for intelligence agencies or lobbyists. In the late 90s in South Africa, a lot of foreign NGOs arrived and set up shop. The problem was that they were lobbyists. At a critical time, they were able to influence a lot of laws or, more importantly, the interpretation of them.

Government Involvement In The Economy Never Helps

Johannesburg still has a big problem with murder, and most murders are done with unlicensed guns that were dumped by foreign governments during the various wars.

Due to the action of the magical-minded anti-gun brigade, it is now almost impossible to own a gun; and if you use one and kill in self-defense, you go to jail for murder. Another big scandal during the early 90s involved money donated by the Swedes to anti-apartheid campaigners; most of the “aid” helped a small-time politician live the life of a rock star. In the worst cases, the aid money was donated to violent criminals who loved killing people and putting bombs in public places. In more benign cases, NGO money is used to give spoiled rich kids time to slum it in Third World countries, giving all of their valuable life experience to the poor. Those are the lucky ones. Most people who work for charities are in fact slave laborers, doing all the hard work while the directors and managers live the life of ease.

End Welfare…To Help People

Another social safety scam is welfare, known colloquially in the United Kingdom as “the dole.” Besides the moral issue, where money is stolen from hard-working people and is given to lazy f**kwits who have never tried to find a job; the system does not work. The state is essentially incentivizing and paying people to become poor. Due to the bureaucratic incentives, it actually pays more to be more in debt and have more children and never get a job. The net result has been a massive increase in poverty within the U.K. Yes, everyone can afford to eat and watch reality television for the moment, but there are large parts of the country functioning like the dystopian future of Idiocracy. It is the one of many major failings of the anti-individual and anti-freedom concept of democracy, that those who live off welfare and have never earned an honest cent in their lives, are actually encouraged to vote. It is no surprise that nothing actually changes, particularly when the parasites outnumber the productive (as they currently do in 11 of the 50 States in the U.S. where there are more on welfare than who have jobs).

When anarcho-capitalists mention the problems of the state enforced monopoly of welfare, they are accused of being heartless; those who accuse us of being greedy have not even spent five minutes contemplating ethics. They just want to feel secure and self-righteous without the discomfort of self-examination. How can it even be called charity when the money is stolen under the threat of violence?

So are there any free-market, voluntary alternatives that encourage capital formation and help the poor?

Free-Market Solutions

Of course. There are actually several: Some are not known; others get more bad publicity.

One of my favorites is called a stokvel; it has a long history in the place of my birth, South Africa, and was very popular during the apartheid era, as many people could not open bank accounts. It is a type of informal, invitation-only investment club or rotating credit union. It generally needs more than 12 members to function. In its simplest form, members contribute on a weekly, fortnightly or monthly basis. At each meeting and on a rotating basis, a different member receives all of the contributions. They are free to use the money for whatever they want. Besides the financial aspect, the stokvel operates like a support group or a home church. The members are friends and family; the meetings have a social aspect where they eat drink, dance and sing together. It is almost like a church, but not like this kind of church in the United States (You won’t believe what you see in the video below.)

Thankfully, things like that don’t exist outside of the United States (or on a much smaller level).

But with stovkels, few people steal from the members. The best part of this system is that it works without banks, and the members are able to leverage much greater amounts of capital.

Another free-market alternative is grouped under the umbrella term “microfinance.” Essentially, these are relationship-based banking and financial services for those who do not have access to banks. Through the financiers, poor or nearly poor people have access to loans, savings, insurance and fund transfers. By using these services, a “community” is able to leverage greater amounts of its own capital. By using the capital to expand their business, everyone becomes richer. The lender earns money by lending his savings to responsible people, and the borrower is able to expand his business and earn more money. Everyone gets richer, which puts more money in the community that can be used for further expansion.

People are poor because of a variety of reasons. One reason that is rarely mentioned is that without capital, it is extremely difficult to start new businesses, which are used to leverage the local resources (and why TDV often features tremendous business opportunities in foreign, developing countries). By pooling local capital together and keeping the free-market incentive of profit, even poor communities can bootstrap themselves to greater wealth. Unfortunately, a lot of these hero financiers are depicted as loan sharks in popular culture (run by the financial elites).

Thanks to the Internet, most people are familiar with similar business models. Thanks to sites like Kickstarter and Indiegogo, the crowd funding model has become a very popular method to create start-ups. People with ideas can use a site’s platform to create a campaign to find funding. If they meet or exceed their funding requirements, they receive the money. Those who contribute will receive various rewards based on how much they donated. Unfortunately, due to the success of this model, the state and patent trolls have gotten involved. They will eventually legislate it and litigate it out of existence (or herd it into the Bitcoin economy).

Keynes: Destroy Savings For Prosperity!

One of the fallacies promoted by the Keynesian consumerists is that savings are harmful to the economy, because the money sits in the banks and does nothing and, therefore, the gross domestic product (another macro-economic fallacy) does not grow. Anyone with a little knowledge of fractional reserve banking will know that this is patently untrue. With more free market models, previously mentioned, poor or nearly poor communities can concentrate and leverage what sparse capital that is available to them. By following profit incentives and providing a useful good or service, these entrepreneurs will enrich their own lives, the lives of their customers and the community. Forced charity has the opposite effect; no one grows wealthy, except the people prolonging the problem. The time preferences of the recipients shortens and capital within the community is misallocated, resulting in greater impoverishment and poverty. Besides, stealing money at gunpoint and giving it to others is, to any thinking individual, just wrong.

(As part of Darth Monti’s save Italy plan, a lot of stolen money was forced into a start-up fund in the south of Italy. They are now having trouble finding where all of the funds were sent; only the state can turn a winning business model into a vehicle of theft and corruption.)

–Alexander Jousse
The Dollar Vigilante

Commemoration Of A Canard

“I have directed Secretary Connelly to suspend temporarily the convertibility of the dollar into gold.” — Richard M. Nixon, Aug. 15, 1971

In the spirit of commemoration, we cannot allow the 42nd anniversary of Nixon’s speech go without comment. Addressing the Nation to “outline a new economic policy,” he failed to disappoint: Wage and price controls were instituted, the automobile industry was browbeaten into reducing prices and a 10 percent tariff was assessed on all imports. All this occurred before Nixon announced his grandest exploit: the termination of U.S. commitments to exchange gold for dollars with foreign governments.


Previously, the Federal Reserve’s ability to issue new money was limited by the threat of depleting the government’s gold reserves. Printing too many dollars led foreign governments to start favoring gold over holding depreciating U.S. dollars. Nixon’s actions (which proved not to be temporary) ended the last vestige of a gold standard, erased all limits on the unchecked printing of money and effectively ended the world’s currency system (known as Bretton Woods) in place since World War II.

Whether Nixon was sincere in his belief that these actions would truly, to use his terms, “nurture and stimulate” the economy or if, perchance, he knew better and deceived the American people, we have no comment. We reserve our commentary not to purpose, but to effect.

And the effect was an unmitigated disaster. Nixon promised Americans that any talk of inflation with an unconstrained Federal Reserve was a “bugaboo” and that his actions would actually “stabilize the dollar.” (If you wish to listen to Nixon in his own words, the latter part of his speech can be viewed here.) According to him, the risk of Americans paying higher prices was extremely limited:

If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.

Despite these assurances, inflation became a hallmark of the 1970s as the unimpeded Federal Reserve zealously increased the money supply. The year 1973 experienced inflation of 9 percent, 1974 brought 12 percent, and the decade was closed out with a peak inflation rate of 14 percent in 1979. Since the date of Nixon’s speech, the dollar has lost 83 percent of its value. One dollar then is worth 17 cents today. What will it be worth tomorrow?

We cannot say with certainty, for while the creation of money causes inflation, the effect does not correspond fully in magnitude. Nor is it immediate. In fact, the lag between the expansion of the money supply and the onset of inflation could be years. If so, what expectations are reasonable based upon the Federal Reserve’s actions since 2008? The scary answer can be found in this chart depicting U.S. monetary growth.

[Editor's Note: If inflation's effects were immediate, people would catch on pretty quickly and they wouldn't stand for it. The average American is a little too dim on real economics to understand why creating new money from nothing is a horrible idea, and the political class is far too evil not to exploit this ignorance so they can rip off dollar holders. The dollar will continue on its accelerated slide to zero while gold will go up. So keep trading those Federal Reserve Notes for gold, but be sure to internationalize your gold holdings. Click here to learn more about how TDV can help.]

To tweak a famous quote by Winston Churchill, wiping away the last traces of the gold standard was not a new beginning for U.S. monetary policy. It was not even the end of the beginning. But it was, perhaps, the beginning of the end.

-Christopher P. Casey

Christopher P. Casey, CFA®, CPA is a Managing Director at WindRock Wealth Management (  Using Austrian economic theory, Mr. Casey advises wealthy individuals on their investment portfolios to maximize their returns and minimize risk in today’s world of significant government intervention.  Mr. Casey can be reached at 312-650-9602 or at