While it has been well-documented by now, that even as the campaign of Mitt Romney continues to be funded exclusively by Wall Street legacy firms, that of Ron Paul is largely in the hands of the US military. Yet when it comes to the recently infamous SuperPAC, things have changed. Because as Politico reports, of the roughly $3.4 million total in cash raised by the pro-Paul group Endorse Liberty since its founding on December 20, none other than PayPal cofounder and Clarium Capital chief Peter Thiel has donated $2.6 million. So as the renegade financier, whose opinion on Ben Bernanke and the gold standard is well-known to Zero Hedge regulars emerges as a primary backer of all that is wrong with the status quo, and the Ben Bernanke way of monetary suicide, we wonder who is next? Actually, scratch that: Bill Gross has already made his opinion well known vis-a-vis Ron Paul's candidacy. Isn't it about time the Newport Beach multibillionaire reached into his back pocket and put his money where his mouth is, especially following his tongue in cheek endorsement of Ron Paul for president?
PayPal co-founder Peter Thiel donated another $1.7 million in January to the super PAC supporting Ron Paul’s presidential bid, according to documents released Monday.
Theil, a billionaire who runs the hedge fund Clarium Capital, has donated a total of $2.6 million to the pro-Paul group Endorse Liberty since it was founded on Dec. 20.
The full document can be found here (10MB pdf, take some time to load).
As for Clarium, which as recently as 2009 was exposing the sham that is the modern monetary and fiscal ponzi, here is a must read letter from the hedge fund from early that year, with a choice extract below:
Frank Baum wrote an illustrated children’s novel called The Wonderful Wizard of Oz in 1900. It captured the popular imagination and was turned into a movie in 1939. Today the book and the movie are remembered for the entertaining story, the iconic characters, and the imaginative fantasy world of Oz. Less appreciated are the historical context and political overtones of the story dealing with the struggle around the gold standard and the battle between inflation and deflation.
The yellow brick road is an obvious reference to the gold standard: a golden path that keeps one safe and delivers one to the prosperity of the Emerald City so long as it is faithfully followed. In the section, “Follow the Yellow Brick Road,” this essay describes how Ben Bernanke has carefully designed the policy response to avoid inflation. One can fancifully think of it as a twenty-first century version of a “fiat money gold standard” that attempts to solve our economic crisis and deliver us to prosperity by staying on a path of monetary responsibility.
At the start of her journey on the yellow brick road, Dorothy describes the dreary poverty of her home in Kansas to the Scarecrow. Upon hearing her description he tells her he can’t understand why she would want to leave Oz and return to “the dry, gray place you call Kansas.” Dorothy replies, “That is because you have no brains. No matter how dreary and gray our homes are, we people of flesh and blood would rather live there than in any other country, be it ever so beautiful. There is no place like home.” Popular culture remembers the final sentence, but forgets the context. Baum was poking fun at Midwesterners who idealized farm life even though the future lay in the migration to the cities. In the section, “There’s No Place like Home,” this essay explains why repairing the financial system will not lead back to Goldilocks. The previous Goldilocks regime was not a happy equilibrium, but instead a highly leveraged and indebted state of affairs. Even a complete restoration of the supply of credit will not forestall a deflationary contraction in its demand. Wherever the path of policy and events will take us, it will not be the “home” of an untenable prosperity where private credit grows faster than our economy.
When Dorothy and her companions arrive at the Emerald City, it appears at first that they have found a utopia of prosperity and good governance. Eventually, however, they learn that the Emerald City is based on lies. The city is not really made of emerald; it only appears green and sparkling because everyone in the city wears goggles that distort their view. Furthermore, the Wizard lies about his abilities in order to maintain power. He means well, but he is a fraud. Nevertheless, so long as everyone goes along with the charade life is generally good for its inhabitants. The Emerald City represents Washington, DC. In the section, “The Emerald City,” this essay describes the political challenges of changing the policy to be more inflationary. Even if the fear of deflation widens the ideological perspective, politics both at home and abroad may limit what can be done. An angry middle class will demand that Congress tighten its purse strings, while America’s largest foreign creditor will strive to protect its dollar assets.
By 1900, Baum was able to satirize the politics and economics of the 1890s lightheartedly. When William Jennings Bryan gave his famous speech, the nation had given up any hope of reaching a state of Goldilocks and was instead locked in a struggle between choosing inflation or deflation. Because Bryan lost his presidential bid in 1896, the US stayed on the gold standard. Yet to everyone’s surprise, after 1897 adherence to the gold standard was no longer deflationary and instead began a period of mild inflation that lasted until World War I. New gold discoveries combined with improvements in mining and refining technology enabled the gold supply to expand steadily, which caused prices in the United States to rise between 2% and 2.5% per year from 1897 until 1914. Baum published his novel at the beginning of a new Goldilocks regime. Unfortunately, the situation in 2009 is the mirror image of 1900. We are at the end of a long Goldilocks regime that has led to substantial imbalances and indebtedness, and we are only beginning to come to grips with the new economic and political realities.
One final parallel with the novel is worth noting. Although the character of the Wizard is probably meant to represent President McKinley, in today’s context it is easy to reinterpret him as Ben Bernanke. In the novel, the Wizard could give Dorothy’s companions what they sought – brains for the Scarecrow, a heart for the Tin Man, and courage for the Cowardly Lion – because they already had those qualities. Much like a central banker in normal times, the Wizard mainly needed to supply confidence. But Dorothy’s case was different. When Dorothy asked the Wizard to send her home, he was unable to help her. Unlike the Wizard, Bernanke is honest and capable. But like the Wizard, what is required may lie beyond his abilities. Who today will provide Bernanke with the magic he needs?