Stranger than fiction perhaps but the FT is reporting that the gold standard has returned to mainstream US politics for the first time in 30 years with a 'gold commission' set to become part of official Republican party policy. While this could simply be a reach for as many Ron Paul marginal voters as possible (with the view that the GOP would never really go for it); it appears drafts of the party platform from the forthcoming rain-soaked convention call for an audit of the Fed and a commission to look at restoring the link between the dollar and gold. The FT, citing a spokesperson, adds that "There is a growing recognition within the Republican party and in America more generally that we’re not going to be able to print our way to prosperity," but "We’re not going to go from a standing start to the gold standard," although it would provide a chance to educate politicians and the public about the merits of a return to gold. Interestingly, the Republican platform in 1980 referred to "restoration of a dependable monetary standard", while the 1984 platform said that "the gold standard may be a useful mechanism."
Major General: Why Are Domestic Government Agencies Purchashing Enough Lethal Ammunition to Put 5 Rounds In Every American?Submitted by George Washington on 08/20/2012 10:40 -0500
Why Do They Need So Much Ammunition?
"Personally, I look at the Americans and I see a people who have been very effectively brainwashed, or who simply have given in to the entirely human tendency to shuffle unquestioningly onto the path of least resistance and let themselves go. I see a people who, on a wholesale basis, have consciously or unconsciously decided to trade the idea of America for the false security of a totalitarian state."
And the hard reality is that the vast majority would raise their hands in favor of the current system that has the state deeply involved in pretty much every aspect of the economy and society at large. The level of support for the very same tangled body of state-controlled handouts, regulations and central economic planning now choking the last gasps of life out of the body politic is obvious and overwhelming. The champions of liberty are fighting against a very entrenched and increasingly dangerous public mindset. Today the enemy (of true freedom) is within. In fact, the nation is overrun by them... they dominate in most every community, in most businesses and even in most families.
Scandal after scandal – but the Fed just doesn’t want to be audited. Period.
Alas, the devil is in the details for Europe’s latest attempt at financial alchemy. Much to the investment world’s apparent dismay yesterday, it turned out that the ECB’s Draghi had nothing very specific in mind when he pledged last week to defend Europe’s monetary union by any means necessary. In theory, and most immediately, such a rescue would entail using printing-press money to mop up Spain’s leprous bonds, lest rates push above 7%.
When we started reading the LA Times article reporting that "the federal government has quietly been completing an audit of U.S. gold stored at the New York Fed" we couldn't help but wonder when the gotcha moment would appear. It was about 15 paragraphs in that we stumbled upon what we were waiting for: "The process involved about half a dozen employees of the Mint, the Treasury inspector general's office and the New York Fed. It was monitored by employees of the Government Accountability Office, Congress' investigative arm." In other words the Fed's gold is being audited... by the Treasury. Now our history may be a little rusty, but as far as we can remember, the last time the Fed was actually independent of the Treasury then-president Harry Truman fired not one but two Fed Chairmen including both Thomas McCabe as well as the man after whom the Fed's current residence is named: Marriner Eccles, culminating with the Fed-Treasury "Accord" of March 3, 1951 which effectively fused the two entities into one - a quasi independent branch of the US government, which would do the bidding of its "political", who in turn has always been merely a proxy for wherever the money came from (historically, and primarily, from Wall Street), which can pretend it is a "private bank" yet which is entirely subjugated to the crony interests funding US politicians (more on that below). But in a nutshell, the irony of the Treasury auditing the fed is like asking Libor Trade A to confirm that Libor Trader B was not only "fixing" the Libor rate correctly and accurately, but that there is no champagne involved for anyone who could misrepresent it the best within the cabal of manipulation in which the Nash Equilibrium was for everyone to commit fraud.
Ron Paul’s signature Audit the Fed legislation finally passed the House; on July 25, the House bill was passed 327 to 98. But the chances of a comprehensive audit of monetary policy — including the specifics of the 2008 bailouts — remain distant. All that the current state of secrecy does is encourage conspiracy theories. What is the FOMC trying to hide? Are they making decisions that they think would prove unpopular or inexplicable? We can’t have a real debate about policy unless we have access to all the data about decisions. Those who believe the Fed’s monetary policy has worked should welcome transparency just as much as those who believe the Fed’s monetary policy has not worked. If the Fed’s actions have been beneficial, then transparency will shine kindly on it. If not, then transparency will help us have a better debate about the road forward.
What Would Jesus – Or the Rabbis of Old – Do?
As markets continue to yo-yo and commentators deliver mixed forecasts, investors are faced with some tough decisions and have a number of important questions that need answering. On a daily basis we are asked what’s happening with oil prices alongside questions on China’s slowdown, why global trade will collapse if Romney wins, why investors should get out of stocks, why the Eurozone is doomed, and why we need to get rid of fractional reserve lending. Answering these and more, Mike Shedlock's in-depth interview concludes: "The gold standard did one thing for sure. It limited trade imbalances. Once Nixon took the United States off the gold standard, the U.S. trade deficit soared (along with the exportation of manufacturing jobs). To fix the problems of the U.S. losing jobs to China, to South Korea, to India, and other places, we need to put a gold standard back in place, not enact tariffs."
To some, Paul’s stubborn persistence in the campaign has been just that: a stubborn unwillingness to lie down and die despite evidence of sure defeat. But what they have missed is a common misperception of a subtle yet powerful age-old strategy at play - the archetypal shi (pronounced “sure”) strategy expounded and employed by Chinese philosophers and military strategists for thousands of years. More than anything else, we can see Paul’s greatest shi advantage in his outsized support among the young. In this society of immediate gratification and winning right now at all cost we need to ask ourselves: why should future elections and platforms matter so much less than the current ones? There are powerful cognitive biases at work - among them the temporal myopia of hyperbolic discounting, or excessively undervaluing the future, while focusing on the nearer term - which make fuzzy in our minds the importance of victories in the years ahead (a view that is promulgated by the media). The ultimate war is against intrusive, burgeoning government, in the ongoing insurgencies of the battles yet to come—Ron Paul’s grand shi strategy.
There are only three words that send a chill down the spine of Ben Bernanke - Ron, Paul, and Deflation. His life's work is devoted to the avoidance-at-all-costs of the latter (and probably the former in reality). As we discussed here two weeks ago, his actions in extreme monetary policy have all occurred at periods when the market's expectations of future rapid de- or dis-inflation have increased rapidly. As we noted then: without inflation break-evens dropping, the Bernanke put will not arrive; but the market in its infinitely efficient wisdom has created a self-defeating spiral of BTFD reflexive front-running on any rapid spike down in future inflation expectations - which implicitly sparks a non-dis-inflationary reaction and removes Bernanke's punchbowl for another day. This has occurred 4 times this year - with this week's early plunge being caught by Draghi and Hilsenrath - and with inflation break-evens almost at their highest in 10 months, it would appear the 'desperate-not-to-miss-the-life-giving-rally' market just removed its own blood supply.
When Paul first introduced his bill a decade ago, it was written off as another piece of his far-flung libertarian worldview is how Politico juxtaposes today's (now successful) vote on Ron Paul's Fed Transparency Bill. "I want to appreciate and congratulate Dr. Ron Paul for his tireless pursuit of openness and transparency," said Rep. Jason Chaffetz (R-Utah). "Without his leadership, we wouldn’t be at this point today." Via Bloomberg:
- *FED AUDIT BILL OPPOSED BY BERNANKE GAINS APPROVAL BY U.S. HOUSE
- *FED AUDIT BILL NEEDS SENATE APPROVAL, PRESIDENT'S SIGNATURE
- *FED AUDIT BILL SPONSORED BY REPRESENTATIVE RON PAUL OF TEXAS
"I’m pleased. It’s something I’ve worked on for a long time, and it’s a good first step," Paul told POLITICO. "It’s coming to the floor as a response to the American people, because I don’t have a whole lot of clout around here." Never mind that the Fed audit is dead in the Senate — Majority Leader Harry Reid’s office has said he won’t bring it up.
Independent from Congress … or from the American People?
The World Gold Council have just published their commentary on gold’s price performance in various currencies, its volatility statistics and correlation to other assets in the quarter - Gold Q2, 2012 - Investment Statistics and Commentary. It provides macroeconomic context to the investment statistics published at the end of each quarter and highlights emerging themes relevant to gold’s future development. One of their key findings is that gold will act as hedge against possible coming dollar weakness and gold will act as a "currency hedge in the international monetary system." The key findings of the World Gold Council’s report are presented inside.
What's Ben gonna do?