Time Off

I've decided to take this week off from posting. Enjoy your life, you only have one!

What Americans Want Part II

Yesterday, I discussed how the captains of industry have used the school system to create an environment of an endless supply of simple docile workers for their businesses. Whenever anyone creates wealth, it is from leverage. This comes from using other resources such as other people's time, energy, money, skills, or even looks.

Some people call this exploitation. Wikipedia defines this with two distinct meanings.

1. The act of utilizing something for any purpose. In this case, exploit is a synonym for use.
2. The act of utilizing something in an unjust or cruel manner.

The second definition gets discussed further as involving a persistent social relationship in which certain persons are being mistreated or unfairly used for the benefit of others, or treating others as mere "objects" with little or no consideration for their well-being. This can take the following basic forms.

• taking something off a person or group that rightfully belongs to them
• short-changing people in trade
• directly or indirectly forcing somebody to work
• using somebody against his will, or without his consent or knowledge
• imposing an arbitrary differential treatment of people to the advantage of some and the disadvantage of others

Most often, the word exploitation is used to refer to economic exploitation; that is, the act of using another person's labor without offering them an adequate compensation. Of course, it depends on which perspective you have to whether this is moral, efficient, intelligent, or good business sense.

This is the backdrop that most Americans today define their lives. Are they getting enough pay for the job they do? Do they get respect and gratitude for their work, or are they just an expendable company asset with a number?

Beyond this, most do not think about the bigger picture of this leverage, about Marxist theory (primarily concerned with the exploitation of an entire segment or class of society by another), or Neoclassical economics (organizational exploitation, whether as an employee is being abused as an asset or conversely as a free loader on the system). Is capitalism just a inherent breeding ground for exploitation?

No, generally Americans do not think about this. Besides the groups fighting for rights of workers, whether here or in third world countries, this does not come up. Is it morally right for global corporate conglomerates to have sweat shops that hire children? The corporate perspective is that they are improving the economic structure of the third world country allowing the employee to have jobs to pay for food for their families. Obviously, the employees may have a different perspective or they may be grateful for the chance at continued existence.

In America today, things are not quite so extreme, but the question still remains. Most do not like their job, their boss, their working conditions, etc., but continue to work their job out of necessity. Do they agree with the idea that America is still the "Land of Opportunity"? Not likely.

In order to numb these thoughts, they seek escape in a variety of forms. TV, movies, sports, travel, vacations, etc. because they lack the resources, skills, or desire to change things. They simply want to forget about the drudgery of their lives by indulging in entertainment. They want to live their lives vicariously through the drama and excitement of others with no risk to themselves. Did you ever think about why the entertainment and sporting industries are so large?

Americas love to immerse themselves in inane but hilarious sitcoms and movies telling themselves that they could not be so silly. They love to root for their favorite team or person in sports at any level of competition, because their livelihood are not on the line if they win or lose. There are even parents that drive their kids relentlessly to achieve the things that they never could. Subconsciously, it's saying "let someone else take the risk and time of developing excellence".

Employees rarely have the power or resources to change things. Employees by definition leave the risk and decisions to others. They offer their time and skill to others for hopefully enough compensation. Is this exploitation or continued existence?

Some attempt to change things, but usually have a number of friends and relatives that discourage them from trying saying it is too risky or doomed to failure. You know the cliche - 'misery loves company'.

Successful entrepreneurs know that failure is a big part of success. You must be willing to fail to achieve success. Success is a process that learns from failure until the right conditions are met.

This is why there are so few that succeed to the upper levels of anything. Most are comfortable in their lives of mediocrity, the norm. There is nothing wrong with this as long as it is economically sustainable.

The problem today is that the middle class of America is being eliminated. People will not go to movies and sporting events if they can't pay their rent or mortgage. Many have been using credit to enjoy these temporary indulgences, always hoping that they will be able to pay for it later. Well, the credit is drying up because the banks can't afford to give any out to people who can't pay it back. Too many financial institutions are failing or starting to become insolvent. Also, all the money printed by the Federal Reserve to keep the economy going is becoming worth less and less due to inflation.

The lesson here is that all things come to an end. The Roman empire didn't last forever. Neither has any other dynasty. American capitalism will end too. The replacement will not be pretty.

So, as to what Americans want will definitely change as conditions change. However, it will likely take drastic times before most will realize that they had chances to change or prevent disaster. Some will never realize the opportunity was within their reach. Others will blame their favorite scapegoat.

Think about it.

As always, the choice is yours.

As with all Saturdays, I will recap the key financial indicators that drive the markets. Precious metals rebounded slightly this week from more than eight month lows. Gold closed on Friday at $824.20 per ounce from $786.00 per ounce last week. Silver also closed higher at $13.41 per ounce from $12.70 per ounce last week. The price of oil closed slightly higher at $114.78 per barrel from last week before retreating after nearly hitting $122 per barrel on Thursday. The US dollar index closed slightly lower at 76.74. Oil has driven these other prices dramatically over the last several weeks. This should not come as a surprise to regular readers.

Do not exploit the poor because they are poor
and do not crush the needy in court,

for the LORD will take up their case
and will plunder those who plunder them. Proverbs 22:22-23 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

What Americans Want

For the past ten months, I've done what I could to help make a difference in the lives of others. There are many topics on this blog that are about the financial markets and what makes them work, and why things are the way they are. Part of the problem with this, most Americans do not understand finances. This is mostly because the basics financial concepts are not taught in schools. Thus, people tend to gloss over or ignore things that they really don't understand.

As I have pointed out many times in this blog, this is by design. The manipulators want the general population to be uneducated about finances. It makes it easier to change conditions in their favor to gather more of the population's money and thus more control over their lives.

Let's look at this for a moment. A hundred and twenty years ago, most Americans were self-employed. Many were farmers, shopkeepers, tradesmen, etc. They all picked a business that they had interest in and tried to make a living at it. Many of these people were immigrants from other countries who came here because America was the "Land of Opportunity". It was the chance to start over and form a new life for themselves in the manner they chose. They wanted freedom, a chance at financial independence, autonomy. In Europe, everything was controlled by the monarchies and the ruling class.

America became strong because of these independent entrepreneurs. The captains of industry in the 19th century and early 20th century knew that this would not do. Thus, the families of the Rockefellers, Carnegies, Morgans, Harrimans, Vanderbilts, Astors, Hills, Fords, etc. wanted to create an environment that would produce many simple docile workers for the many factories that were going up around America. They knew it would take time, but they knew that success would happen if they were patient. They chose the school system to do this. If they would teach the children to be intimidated by math and finances, they would ignore these subjects later in life. They will want others to make decisions in these areas for them.

This plan has worked with extraordinary success. The current recipe for success is "go to school, get good grades, get a good job". How much autonomy do you have in your job? How much of a chance at financial independence do you have? What kind of security do you have with a job, especially during uncertain financial times rife with lay offs and downsizing?

Now, think about for a minute that the average credit card debt is well over $8,000 per person. Bankruptcies are at an all time high. Foreclosures are at a record pace. The main stream financial markets are all producing dismal investment results. Everyone is feeling the pinch in their wallet. Is this no longer the "Land of Opportunity"?

Today, Federal Reserve chairman Ben Bernanke said that inflation will come under control now that the dollar is stronger and commodity prices are down. He also reiterated that he wants more power for the Federal Reserve to help resolve failing investment banks and a new comprehensive supervision of systemic risk. What total BS! It's like putting the fox in charge of the hen house. The Fed is responsible for the conditions that caused the subprime mortgage crisis to begin with, along with the ailing dollar, and the highly leverage mortgage derivatives that Fannie Mae and Freddie Mac have that put the real estate industry in panic mode.

Tomorrow, I will get more into how this all affects the daily decisions of Americans. Stay tuned ...

The lot is cast into the lap,
but its every decision is from the LORD. Proverbs 16:33 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Fabrication Bottleneck Part II

Today, I will share the conclusion to James Turk's article titled "A Fabrication Bottleneck or Something More" published on August 17, 2008. James is the founder of www.GoldMoney.com.

Incidentally, though GoldMoney - like many other companies - had a record week, GoldMoney has not experienced any shortages of metal because we transact only in large bars, namely, those that meet the standards of the London Bullion Market Association (LBMA). These bars come into the market daily from refiners and existing stocks, such as those held by central banks. But the shortage of fabricated product has caused me to ponder whether a shortage of LBMA-sized bars might also develop at these low prices. In other words, could gold go into backwardation, meaning the spot month (i.e., physical metal) trades at a premium to future months (i.e., paper promises to pay metal in the future)? A backwardation would be unthinkable in normal times, but these are not normal times.

The extraordinary demand for coins and small bars can be viewed as an early sign that the market is moving into backwardation. In other words, the backwardation is in effect being reflected by higher premiums above spot for physical metal, rather than spot itself rising and going into backwardation.

Central banks do not transact in small bars and their coin transactions are inconsequential compared to the size of the market. So the market for fabricated product is relatively free from government influence. But central banks of course exert a dominant influence on the market for LBMA-sized bars by using their existing gold stocks, and they can keep the spot price for gold (which is determined by the buying/selling of LBMA-sized bars) artificially low by dishoarding gold from their vaults.

So my thought is that if gold does not climb back above at least $900 quickly, a shortage of LBMA-sized bars will develop unless central banks allow their vaults to be cleaned out, much like Ft. Knox was drained in the weeks leading up to the 2-tiered London gold price created in March 1968, with an official price at $35 per ounce and a free-market price well above that level. If central banks allow their vaults to be cleaned out at these current low prices, then look for some contrived government imposed dictum on the gold market, just like they did in March 1968. Price controls would be one possible dictum.

To conclude, the present situation reminds me of August 1976, just weeks before the Democratic Convention confirmed Jimmy Carter as that party's presidential candidate. Gold slid down to $100 per ounce even as the inflation and economic outlooks were worsening. Gold looked dirt-cheap back then even though its price had risen three-fold from just a few years before.

By the end of 1976, gold had climbed 32.3% from its August low. By the end of Carter's presidency four years later, gold climbed more than eight-fold. I wonder where gold will be at the end of the next president's first term in office?

Importantly, the precious metals remain within the clear uptrends. For the past twelve months ending Friday, August 15th, gold is up 17.5% and 7.8% against the US dollar and euro respectively. Silver, however, during the past twelve months is down -6.2% against the euro, but up 2.3% against the US dollar. And while silver's performance may look bad, it is worthwhile keeping in mind that the Dow Jones Industrial Average during this same period is down -9.3%.

James Turk, August 17, 2008

If you would like more detail and to see the historical price charts James is referring to, go to his website at www.GoldMoney.com.

Incidentally, just within the last couple days since August 15, gold rose from $772 per ounce to its current level of $835. Silver also rose from $12.11 per ounce on the 15th to its current level of $13.89.

I personally ran into this situation with Kitco the last couple weeks. I was helping someone purchase silver on August 5th. Today, Kitco claims that they are backlogged with orders and cannot confirm receipt of payment, thus they can not ship the physical silver bars and coins. As alluded to in this article, this is just a made up excuse to give Kitco time to try and find the inventory to fill the demand.

Needless to say, I am not very happy with them, but there is little I can do about it.

These are historic times, whether you realize it now or not. Protect yourself and take the needed steps. If you need assistance in analyzing your options, please contact me.


A good name is more desirable than great riches;
to be esteemed is better than silver or gold.

Rich and poor have this in common:
The LORD is the Maker of them all.

A prudent man sees danger and takes refuge,
but the simple keep going and suffer for it. Proverbs 22:1-3 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Fabrication Bottleneck

With all of the recent startling market moves and huge other world events such as the attack on Georgia and the Olympics, people are looking for a safe haven. However, there are very few out there. The major financial markets are deeply in the red this year. The traditional safe haven in times of economic uncertainty are precious metals and real estate. Real estate has been brutally beaten down the last year or more. With the sudden dollar rebound, precious metals are at 12 month or more lows. This makes precious metals at "super saver prices" on sale the day after Christmas when shoppers are out in force.

Considering this, I will share the beginning of an article published on August 17, 2008 by James Turk, founder of www.GoldMoney.com. James discusses how precious metal dealers are dealing with the sudden rush of customers when they may not have inventory to satisfy the demand.

A Fabrication Bottleneck or Something More

The Internet is abuzz with reports that precious metal dealers have stopped selling coins and small bars because they have run out of inventory.

For example, Franklin Sanders reports on goldprice.org that his inability to purchase product from his suppliers is something that he has never seen before in his "twenty-eight years of brokering silver and gold." On Friday afternoon, Kitco posted the following notice: "Due to market volatility and higher demand in the entire industry, we are anticipating delays in supply of all bullion products."

The rush out of fiat currency and into precious metals on this latest drop in prices is not just a North American phenomenon. The Times of India reports: "There is a shortage of the yellow metal in the bullion banks and traders."

The bottom line is that it is difficult, if not impossible, to buy coins and small bars. Mints and refiners are back-ordered. Dealer shelves are bare. But the question is, why? Is it just a fabrication bottleneck, or is something else happening?

When I see or hear that store "shelves are bare", my first reaction is that government price controls have been imposed. Price controls always create shortages. But there are no price controls on the precious metals - at least not yet anyway. So absent price controls, the answer to dealer shortages is simply that the price of gold and silver is just too cheap.

To explain this point, there are two different gold markets - the physical market where real bullion is exchanged between hands. And the paper market, where people buy and sell pieces of paper purportedly backed by gold, much of which is highly leveraged. The selling carnage in the paper market from over-leveraged hedge funds has created a buying frenzy by retail investors for fabricated product in the physical market, with many dealers reporting that they have sold out and cannot get their hands on coins and small bars, particularly silver.

In other words, there is presently a huge disconnect between the paper market and the physical market. The demand for physical metal is soaring.

Normally the market is supplied by new material being fabricated and existing products being sold back into the market, but no old products are being sold. In contrast to the paper market where over-leveraged positions have caused distressed and forced selling, existing fabricated product is in strong hands, and unlikely to be dislodged except at much higher prices.

I suspect that this disconnect between the paper market and the physical market means that gold will climb back as rapidly as it fell, creating a "V" bottom. Consequently, the precious metals are likely to snap back as rapidly as they dropped. After all, inflation is a growing problem everywhere, the US federal deficit is ballooning, the global banking system is imploding from losses, inflation-adjusted interest rates in every major currency remain negative, and the euro is reeling because of massive current account gaps in Spain, Portugal and Greece. All of these factors are very gold bullish.

To give you a true picture of just how bad inflation has become, here is what John Williams of Shadow Government Statistics reports in his latest newsletter: "The SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to a 28-year high of roughly 13.4% in July, up from 12.6% in June." It's no wonder that the demand for precious metal coins and small bars is so strong.

Tomorrow, we will conclude with James Turk's article and how the precious metal dealers are responding to the huge demand.

Listen, for I have worthy things to say;
I open my lips to speak what is right.

My mouth speaks what is true,
for my lips detest wickedness.

All the words of my mouth are just;
none of them is crooked or perverse.

To the discerning all of them are right;
they are faultless to those who have knowledge.

Choose my instruction instead of silver,
knowledge rather than choice gold,

for wisdom is more precious than rubies,
and nothing you desire can compare with her.

"I, wisdom, dwell together with prudence;
I possess knowledge and discretion. Proverbs 8:6-12 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Wag the Dog Part II

Today, we will continue with Ellen Brown's article titled "Wag the Dog: How to Conceal Massive Economic Collapse". As usual, the manipulation going on is far beyond just the financial markets. Money is one thing, total control is another.

"There’s a crisis in the White House, and to save the election, they’d have to fake a war."

Perhaps that explains the sudden breakout of war in the Eurasian country of Georgia on August 8, just 3 months before the November elections. August 8 was the day the Olympic Games began in Beijing, a distraction that may have been timed to keep China from intervening on Russia’s behalf. The mainstream media version of events is that Russia, the bully on the block, invaded its tiny neighbor Georgia; but not all commentators agree. Mikhail Gorbachev, writing in The Washington Post on August 12, observed:

"What happened on the night of Aug. 7 is beyond comprehension. The Georgian military attacked the South Ossetian capital of Tskhinvali with multiple rocket launchers designed to devastate large areas. Russia had to respond. To accuse it of aggression against "small, defenseless Georgia" is not just hypocritical but shows a lack of humanity. . . . The Georgian leadership could do this only with the perceived support and encouragement of a much more powerful force."

Bruce Gagnon, coordinator of the Global Network against Weapons and Nuclear Power, commented in OpEdNews on August 11:

"The U.S. has long been involved in supporting ‘freedom movements’ throughout this region that have been attempting to replace Russian influence with U.S. corporate control. The CIA, National Endowment for Democracy . . . , and Freedom House (includes Zbigniew Brzezinski, former CIA director James Woolsey, and Obama foreign policy adviser Anthony Lake) have been key funders and supporters of placing politicians in power throughout Central Asia that would play ball with ‘our side’. . . . None of this is about the good guys versus the bad guys. It is power bloc politics . . . . Big money is at stake . . . . [B]oth parties (Republican and Democrat) share a bi-partisan history and agenda of advancing corporate interests in this part of the world. Obama’s advisers, just like McCain’s (one of his top advisers was recently a lobbyist for the current government in Georgia) are thick in this stew."

Brzezinski, who is now Obama’s adviser, was Jimmy Carter’s foreign policy adviser in the 1970s. He also served in the 1970s as director of the Trilateral Commission, which he co-founded with David Rockefeller Sr., considered by some to be the "master spider" of the Wall Street banking network. Brzezinski later boasted of drawing Russia into war with Afghanistan in 1979, "giving to the Soviet Union its Vietnam War." Is the Georgia affair an attempted repeat of that coup? Mike Whitney, a popular Internet commentator, observed on August 11:

"Washington’s bloody fingerprints are all over the invasion of South Ossetia. Georgia President Mikhail Saakashvili would never dream of launching a massive military attack unless he got explicit orders from his bosses at 1600 Pennsylvania Ave. After all, Saakashvili owes his entire political career to American power-brokers and US intelligence agencies. If he disobeyed them, he’d be gone in a fortnight. Besides an operation like this takes months of planning and logistical support; especially if it’s perfectly timed to coincide with the beginning of the Olympic games. (another petty neocon touch) That means Pentagon planners must have been working hand in hand with Georgian generals for months in advance. Nothing was left to chance."

Part of that careful planning may have been the unprecedented propping up of the dollar and bombing of gold and oil the week before the curtain opened on the scene. Gold and oil had to be pushed down hard to give them room to rise before anyone shouted "hyperinflation!" As we watch the curtain rise on war in Eurasia, it is well to remember that things are not always as they seem. Markets are manipulated and wars are staged by Grand Chessmen behind the scenes.

Ellen Brown, August 14, 2008

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, and Forbidden Medicine.

Ellen Brown is a frequent contributor to Global Research.

This is all pretty heavy stuff. But, unfortunately business as usual for the Grand Chessmen. Starting wars and profiting from them is as old as war itself.

Are you still psyched about getting a new President this fall? Think again. Whomever replaces Bush will have the same agenda and the same orders from the same small group of Grand Chessmen.

Are you ready for a change? Take a look at Ron Paul. Ron Paul wants to eliminate the Federal Reserve and unlock the hold these money trust people have on America.

Rescue me, O LORD, from evil men;
protect me from men of violence,

who devise evil plans in their hearts
and stir up war every day.

They make their tongues as sharp as a serpent's;
the poison of vipers is on their lips. Psalm 140:1-3 (NIV)


If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Wag the Dog

I'm glad to be back from my trip. I hope that my time away was not missed too much.

Unfortunately, nothing much has changed in the financial markets since last week. The price of oil has been mainly hovering, edging slightly lower several days. This continues to keep the US dollar artificially stronger for the moment.

News for Freddie Mac and Fannie Mae continue to be bleak. Bloomberg reported today that the two government-chartered companies will fail to raise the equity they need to offset credit losses, prompting the U.S. Treasury to bail out the mortgage behemoths at taxpayer expense. The two tumbled in New York trading to their lowest levels in more than 17 years on concern of the likely government bail out which will wipe out common stockholders. A rescue of the companies, which own or guarantee 42 percent of the $12 trillion in U.S. home loans, would include preferred stock with a seniority, dividend preference and convertibility that would wipe out common stockholders, Barron's reported.

Today, we will begin an article published on August 14, 2008 by Ellen Brown, author of the book "Web of Debt". In this article titled "Wag the Dog: How to Conceal Massive Economic Collapse", she explore how the "Grand Chessmen of the Money Trust" control these market moves from behind the scenes.

Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?

It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue. Formally known as the President’s Working Group on Financial Markets, the PPT was once concealed and its very existence denied as if it were a matter of strict national security. But the PPT has now come out of the closet. What was once a legally questionable "manipulator" of markets has become a sanctioned stabilizer and protector of markets. The new tone was set in January 2008, when global markets took their worst tumble since September 11, 2001. Senator Hillary Clinton said in a statement reported by the State News Service:

"I think it’s imperative that the following step be taken. The President should have already and should do so very quickly, convene the President’s Working Group on Financial Markets. That’s something that he can ask the Secretary of the Treasury to do. . . . This has to be coordinated across markets with the regulators here and obviously with regulators and central banks around the world."

The mystery over what was going on with the dollar the first week in August was solved by James Turk, founder of GoldMoney, who wrote on August 7:

"The banking problems in the United States continue to mount, while the federal government’s deficit continues to soar out of control. . . . So what happened to cause the dollar to rally over the past three weeks? In a word, intervention. Central banks have propped up the dollar, and here’s the proof."

"When central banks intervene in the currency markets, they exchange their currency for dollars. Central banks then use the dollars they acquire to buy US government debt instruments so that they can earn interest on their money. The debt instruments central banks acquire are held in custody for them at the Federal Reserve, which reports this amount weekly."

"On July 16, 2008 . . . , the Federal Reserve reported holding $2,349 billion of US government paper in custody for central banks. In its report released today, this amount had grown over the past three weeks to $2,401 billion, a 38.4% annual rate of growth. . . So central banks were accumulating dollars over the past three weeks at a rate far above what one would expect as a result of the US trade deficit. The logical conclusion is that they were intervening in currency markets. They were buying dollars for the purpose of propping it up, to keep the dollar from falling off the edge of the cliff and doing so ignited a short covering rally, which is not too difficult to do given the leverage employed in the markets these days by hedge funds and others."

Just as central banks manipulate currencies in concert, so gold can be manipulated by massive selling of central bank reserves. Oil and any other market can be manipulated as well. But markets can be manipulated by only so much and for only so long without fixing the underlying problem. There is more bad news coming down the pike, news of such magnitude that no amount of ordinary manipulation is liable to conceal it.

For one thing, roughly $400 billion in ARMs (adjustable rate mortgages) have or will reset between March and October of this year. Assuming 3 to 6 months for strapped debtors to actually hit the wall with their payments, a huge wave of defaults is about to strike, continuing through March 2009 – just in time for the next huge wave of resets, in option ARMs.³ Option ARMs are loans with the option to pay even less than just the interest on the loan monthly, increasing the loan balance until the loan reaches a certain amount (typically 110% to 125% of the original loan balance), when it resets. The $800 billion credit line recently opened to Fannie Mae and Freddie Mac may be not only tapped but tapped out, at taxpayer expense. The underlying problem is little discussed but impossible to repair – a one quadrillion dollar derivatives scheme that is now imploding. Banks everywhere are facing massive writeoffs, putting the whole banking system on the brink of collapse. Only public bailouts will save it, but they could bankrupt the nation.

What to do? War and threats of war have been used historically to distract the population and deflect public scrutiny from economic calamity. As the scheme was summed up in the trailer to the 1997 movie "Wag the Dog".

"There’s a crisis in the White House, and to save the election, they’d have to fake a war."


Tomorrow, there will be more from Ellen Brown's article and how the government continues to use misdirection to accomplish their means. Stay tuned ...

My companion attacks his friends;
he violates his covenant.

His speech is smooth as butter,
yet war is in his heart;
his words are more soothing than oil,
yet they are drawn swords.

Cast your cares on the LORD
and he will sustain you;
he will never let the righteous fall.

But you, O God, will bring down the wicked
into the pit of corruption;
bloodthirsty and deceitful men
will not live out half their days.
But as for me, I trust in you. Psalm 55:20-23 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

The Dollar Rebound

The last couple weeks have seen some extraordinary moves in the financial markets. Analysts are all over the board in trying to explain the movements. Depending on what camp they are in, there are a myriad of data to support whatever angle they are trying to prove.

I simply have no angle to promote or any ax to grind. I simply want to educate and help prepare those who see that there is very dark economic times ahead, times that will forever change history. Some may think that is melodramatic or alarmist, but the facts don't lie.

No one can deny the existence of the subprime mortgage collapse and the huge ripple effects it created and still is creating.

[Banks' losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types.

The International Monetary Fund in an April report estimated banks' losses at $510 billion, about half its forecast of $1 trillion for all companies. Predictions have crept up since then, with New York University economist Nouriel Roubini predicting losses to reach $2 trillion.]

No one can deny the price of oil rose to a record $147.27 on July 11, 2008, causing inflationary pressures on goods and services combined both now and well into the future. Estimates on real inflation prior to the record price were already in excess of 14% for 2008 and growing.

No one can deny the real estate market is in serious trouble and looking to get worse before it gets better. This includes the much tougher lending requirements across the board and the financial insolvency trouble facing Freddie Mac and Fannie Mae.

[Fannie Mae, the largest U.S. mortgage- finance company, cut its dividend 86 percent after posting a loss that was more than three times analysts' estimates and said the worst housing slump since the Great Depression is deepening.

Fannie, which owns or insures about 25 percent of all U.S. mortgages, said credit losses rose 66 percent to $5.3 billion as delinquencies rose. Chief Executive Officer Daniel Mudd forecast a "significant'' increase in reserves for the rest of the year as the housing market deteriorates. Fannie's results, combined with a loss by Freddie Mac that was also wider than analysts anticipated, may boost the need for Treasury Secretary Henry Paulson's bailout plan announced last month.

Fannie Mae, will stop buying or guaranteeing Alt-A home loans, such as those that require little or no documentation of borrower incomes or assets, by yearend.

Freddie Mac, which reported an $821 million quarterly loss Aug. 6th, said that Alt-A mortgages were the biggest reason for a surge in its foreclosure losses. The delinquency rate for the $190 billion of the loans owned by Freddie Mac or underlying the bonds the company guarantees jumped to 3.7 percent on June 30, from 1.8 percent on Dec. 31.]

No one can deny that the US dollar index slumped to a near record low of 71.87 on July 15, 2008, the lowest since the all time low previously set in April. Since then, the dollar has staged a remarkable turnaround and have gained for the last 9 consecutive days closing today at 76.39.

Many factors have contributed to that. Oil has dropped more than $30 a barrel in the last 3 weeks. There are a number of reports indicating weak economic data from Europe and the European Central Bank saying that economic results will be weak well through the third quarter of 2008 and hinting that they will likely lower interest rates sooner rather than later.

Also, the United Kingdom reported today that claims for jobless benefits climbed 20,100 in July to 864,700, the biggest increase since December 1992. Unemployment grew for the sixth straight month. The Bank of England signaled it could cut interest rates sooner rather than later. The pound sterling's trade-weighted index hit its lowest since January 1997. The pound dropped more than 3 cents against the dollar today to a 21 month low.

All of these factors provide some relief for the dollar, but none of them have changed the economic conditions in the US except for the decrease in the price of oil. Thus, the recent rebound of the dollar will very likely be short lived.

No one can deny that there are many banks and financial institutions in trouble. From Bear Stearns, IndyMac, Freddie Mac and Fannie Mae as previously mentioned, Wachovia, and more than 90 other banks have very precarious balance sheets due to bad credit risks. The FDIC is there to bail out troubled institutions, but how long can $49 billion in insurance funds insure more than $3 trillion in deposits if many institutions start failing?

I could certainly go on and on, but I think you get the point. All of these occurrences are leading to a 'perfect economic storm' that we will have to reckon with sooner or later. For those who ignore these warnings will simply be one of the nameless masses that are swept away.

So, will you heed the warnings and take steps to be prepared?

As always, the choice is yours.

As mentioned yesterday, I will not post any more entries the rest of the week due to travel plans.

then if anyone hears the trumpet but does not take warning and the sword comes and takes his life, his blood will be on his own head. Since he heard the sound of the trumpet but did not take warning, his blood will be on his own head. If he had taken warning, he would have saved himself. Ezekiel 33:4-5 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Market Movers

The last couple days I've focused on the reasons for the extraordinary gains the US dollar has made the last week and a half. Today, we will get another perspective on what has transpired to fuel the moves.

The following alert is from John Williams (www.shadowstats.com) who comprises analysis and data behind and beyond government economic reporting. John has a annual subscription service available.

U.S. Dollar Strength Has No Fundamental Basis Other Than Temporary War Effects
U.S. Dollar Has Not Bottomed
Gold and Oil Prices Have Not Topped

The ongoing powerful rally in the U.S. Dollar and related heavy sell-offs in the oil and precious metals markets have no basis in the underlying fundamentals that usually drive activity in those arenas. Accordingly, irrespective of extreme near-term volatility in the various markets, the broad long-term outlook remains unchanged: along with further intensification of the inflationary recession and a deepening systemic and banking solvency crisis, the U.S. dollar, equities and bonds should suffer terribly, while gold and silver prices should boom. As with the longer range outlook for the markets, however, key to the current circumstance is the performance of the U.S. dollar.

Despite orchestrated media and market hype to the contrary, there has been absolutely no positive shift in underlying fundamentals driving the still-unfolding economic, financial-market and systemic-stability crises. The U.S. dollar's sharp gains reflect instead uncertainties tied to the outbreak of and rapid intensification in war in the Caucasus, with the greenback taking on its traditional flight-to-safety role. Those effects should be relatively short-lived, shy of the circumstance evolving into World War III. If anything, the slightly longer-term impact of that conflict should be bullish for both oil and gold.

Per the financial media, though, the dollar's strength reflects improving economic conditions in the United States versus the rest of the world. That is nonsense. Shy of gimmicked GDP reporting that few believe, the U.S. continues to see a deepening recession as evidenced in most other economic reporting. Usually, when the U.S. economy contracts the rest of the world follows. There is little news there.

The other factor at play is related, seen in the nature of finance ministers and central bankers to lie. There has been some heavy, but effective, spinmeistering and jawboning and possibly supportive covert intervention in support of the dollar. Central banks often do their best to trigger or enhance a desired move in currencies. Such factors exaggerate near-term volatility but do not have lasting impact.

Not reflecting any lasting change in real-world conditions, the dollar's happy gains should prove to be fleeting. Related to dollar buying has been the heavy selling of oil and gold, which also has not been driven by fundamental changes. Oil markets are volatile by nature, and, despite recent sharp swings, prices remain highly inflationary at current levels. The markets and financial system remain vulnerable to the least surprise and are highly unstable, at present. The inflationary recession continues to intensify, and gold remains the best long-term hedge against all the real risks facing investors and the system.

These matters are discussed more completely in the full newsletter, which is near going to press. The markets are moving faster than my writing, which is being finished here at the Outer Banks of North Carolina, hence this quick update in an Alert. Posting of the newsletter will be within the next day or so and will be advised by e-mail.

Best wishes to all,

John Williams

Based on the last couple posts in this blog, none of this information should surprise anyone. However, it is always helpful to get others' view of situations. There will be more tomorrow. Stay tuned ...

Special thanks go to John Williams and his insight on these extraordinary moves in the last couple weeks.

Please note that I will be out of town later this week and will not post after tomorrow for the remainder of the week.

"You live in the midst of deception;
in their deceit they refuse to acknowledge me,"
declares the LORD. Jeremiah 9:6 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

Spreading Global Economic Weakness

To continue on with the market analysis presented here on Saturday, today we will look at the situation from a slightly different perspective. Is it possible that are sub-prime mortgage fiasco and US bank failures are impacting the global economy? If it is, could those problems experienced elsewhere in the global community actually improve the situation in the US?

Jack Crooks explores that possibility in an article published on August 10, 2008 titled "Spreading Global Economic Weakness Is Positive for US Dollar".

Here are excerpts from the article.

Yesterday, the dollar rallied hard against the euro. And today I want to tell you what I think is happening. Let's start with a question ...

What happened to decoupling, the idea that other economies were immune to weakness in the U.S.?

Well, it seems as though the subprime fiasco has created bigger problems for the U.S. financial system than most people anticipated. And now we're seeing this economic virus spread across other areas of the globe.

If you want some evidence of contagion in other developed economies, look no further than these recent news items ...

• German industrial orders dropped sharply — by 2.9% in June. What's most disconcerting is that Germany's economy makes up one-third of total Eurozone output. And speaking of the rest of the Eurozone, many of those economies are bogged down by housing busts.
• The International Monetary Fund (IMF) called out the U.K. economy. Predictions for economic growth in the UK for 2008 and 2009 stood at 1.8% and 1.7%, respectively. Kiss those numbers goodbye. The IMF's latest forecast calls for a seriously lower 1.4% in 2008 and 1.1% in 2009.
• Australia is battling sluggish household spending and their financial sector is being challenged. The National Bank of Australia recently reported a huge second quarter write down which it attributed to massive holdings of CDOs.
• And the New Zealand Treasury anticipates a second consecutive quarter of negative GDP growth. By definition, New Zealand will have entered recession once official numbers are released. They'd be the second OECD-member country since Denmark to sink to official recessionary status.

The reality is that the big three in the developed world — the U.S. the U.K., and the Eurozone — are staring into the face of recession.

For All These Reasons, We Should Revisit The Commodities-Currencies Connection

If the global economy is slowing, and China is forced to work through excess inventory, demand for commodities will be impacted. My bet is that crude oil prices, in particular, will suffer from the realities I just described.

And remember, commodity prices and currencies influence each other in a self-feeding circle.

For example, falling crude prices may be the one force that allows central banks in the U.K. and Europe to begin lowering their interest rates.

If and when that occurs, the dollar will become more attractive relative to those currencies.

It wouldn't take a bold move on the part of the U.S. Federal Reserve, either. (Nor do I expect one.)

A narrowing interest rate disadvantage between the dollar and euro — or the dollar and the pound — would be hugely supportive for the greenback.

In fact, this may very well be why the dollar HAS ALREADY been holding up given such incredibly dismal news day after day from the U.S. economy.

Over the last year or so almost everyone's been pointing to the inverse relationship between the U.S. dollar and crude oil.

[During March through mid July], that's when the dollar bounced higher from its all-time low. Crude soared well beyond its record high at the same time.

Crude rallying and the dollar drifting slowly higher simultaneously? That was certainly no inverse correlation.

[However in the last month], this is where the tight inverse correlation has resumed. Only this time, the direction is in favor of the dollar . And it comes exactly after a new all-time high for crude prices.

Translation: The buck could be back.

The dollar has been able to continue its rally this week, even amidst a blitzkrieg of central bank announcements. While it has a long way to go — and recovery may not be swift — I think it's time to keep the dollar rally scenarios in clear sight. Especially now that other economies are catching the bug.

Jack Crooks


Although I don't agree with everything Jack states, it is true that our financial problems will affect other financial markets. If those markets are affected seriously, that may give our feeble dollar a little strength, however long that may last. It doesn't change our situation at all, but the focus is temporarily adverted to other problems. Notice that all the statistics sited were from the IMF or from the central banks of countries. These are the people that control the markets. This is a case for classic misdirection to obscure other moves. Be aware and prepared.

There will be more on the current financial market moves this week. Stay tuned ...

For the foolishness of God is wiser than man's wisdom, and the weakness of God is stronger than man's strength. I Corinthians 1:25 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

A New Trick

This week the focus has been about the road to Socialism, a disastrous ride from a free market system to one that only a very small group of people have control over everything. Everyone else is there to work the system. As part of this, there is no more ownership of private property. Americans, whether they are aware or not, are well on their way down this road. The internet has certainly changed the way society works, because information passes much more freely than corporate controlled media. This may be the only vehicle left to stop the US from going down that road to Socialism.

That being said, the manipulators do not want a total breakdown of the system. If that happens, too many things are unpredictable such as a revolution. They slowly and methodically control the movements of the economies in their favor, so that they can reap the benefits and have more power and control.

This week has seen some truly remarkable occurrences in the financial markets. To me, this is clear evidence that the manipulators are still calling the shots. Going back to the post on Friday, August 1, 2008 (The Government's Answer), the US banking industry is on the brink of financial collapse. With the bank failure of IndyMac, the insolvency pressures on Fannie Mae and Freddie Mac, and the SEC's decision to prohibit the naked short selling of 17 high profile financial institutions, all of these factors signify that they are losing control on the system. The financial 'wind shear' of inflation (rising prices) and deflation (shortage of liquidity due to the credit crunch) was threatening to tear the economy to pieces.

So, they come up with a new trick. No longer can they play games with the federal funds interest rate by the Federal Reserve (currently at 2%, the lowest since 2004), they began to play more with the price of oil to affect the economy and the global currencies. I ask you, what has transpired in the last three weeks that would cause oil to drop from $147 all the way to $115?

[If the Fed lowers the interest rate, that would bring more inflationary pressures on the economy. If the Fed raises the interest rate, the decreased liquidity could stall the economy completely, compounded with the credit crunch and the depressed real estate market.]

Crude oil fell to a three-month low, dropping to $115.15 per barrel. This eases the inflationary pressures on the economy and in effect, offers all mobile Americans an incentive stimulus package to continue spending. Crude oil, precious metals and crop prices all fell yesterday as the dollar climbed, reducing the appeal of commodities as a currency hedge. Oil dropped to a low of $115.06 a barrel since touching the record of $147.27 on July 11. Gold fell to $857.50 per ounce, Silver dropped all the way to $15.37 per ounce from $17.53 last week.

Meanwhile, the European Central Bank (ECB) also does not change their interest rates but ECB's President Jean-Claude Trichet said Aug. 7 economic growth will be "particularly weak'' through the third quarter. This had a disastrous effect on the value of the euro, which dropped the most in more than three years this week, pushing the currency to a six-month low against the U.S. dollar, as traders pared bets the European Central bank will raise interest rates as the economy slows. The currency fell the most in almost eight years on Friday, dropping below $1.50 for the first time since February. The currency tumbled 2.08 percent yesterday, from $1.5336 touching $1.499, in what the second biggest one-day decline since the introduction for the euro in 1999.

Since reaching a record high of $1.6038 on July 15, the euro has dropped 6.4 percent. The so-called trading envelopes, which measure how far from the mean a price has strayed, show the euro's decline has doubled the typical changes versus the dollar in the past 20 days. This is truly a remarkable occurrence.

"The most important aspect of the dramatic collapse in the euro dollar is the absence of confirmation from other markets,'' said David Woo, global head of currency strategy at Barclays Capital Inc. in London yesterday. "None of the typical drivers of the euro-dollar in the past couple of years could have accounted for the magnitude of this move, which leads one to conclude that this is a technical-driven (controlled) move. From that point of view, we do not think that this move is sustainable.''

So between the drop in the price of oil and the weakening of the European currencies, the US dollar rose remarkably in strength reaching 75.90 yesterday, a gain of 2.5 index points, the highest since Feb. 21. This is steepest weekly rally by the US Dollar Index since January 2005. This action spurred the S&P 500 to its biggest weekly gain since April. The S&P added 2.9 percent to 1,296.32, the highest since June 25. The Dow Jones Industrial Average increased 3.6 percent to 11,734.32.

Every American is starting to breathe a little easier at the news and will likely resume their spending habits, exactly as the manipulators expected.

Do you feel more relieved because of the lower prices? Or, do you feel more manipulated than ever and want things to change? Are you just a cog in the system, or do you want economic and political freedom that this country was founded on?

As always, the choice is yours.

They dress the wound of my people
as though it were not serious.
"Peace, peace," they say,
when there is no peace.

Are they ashamed of their loathsome conduct?
No, they have no shame at all;
they do not even know how to blush.
So they will fall among the fallen;
they will be brought down when they are punished,
says the LORD.

" 'I will take away their harvest,
declares the LORD.
There will be no grapes on the vine.
There will be no figs on the tree,
and their leaves will wither.
What I have given them
will be taken from them. Jeremiah 8:11-13 (NIV)


If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

What Will Stop It?

This week, I've shared a very insightful article from John Loeffler about the very dangerous road to socialism. Americans are well on their way going down this road. Today, I will share some additional insights from John Loeffler in excerpts from another article titled "What Will Stop It?".

What Will Stop It?
Lesson #1 en Route to the Gulag

Americans have enjoyed so much freedom for so long, they have forgotten that freedom is a fluke in the history of the world; not the norm. Our freedoms were hard-won over hundreds of years of human tears. The current view that freedoms are somehow self-sustaining and "obvious" ignores a primary rule of the political universe, well established in human history: governments and those in them always gravitate toward power, money and control; power for themselves, confiscating money and property from their people, who then have to be controlled lest they protest too much.

The founding fathers thoroughly understood this, having experienced a lack of protections first hand. They understood that government is a necessary evil, not a paternalistic good. In assembling the Constitution, they knew that only a clear statement of citizens' rights would prevent power money and control from having their way.

Every one of our rights was established to protect individual citizens, the minority against the majority and to block abuse of power. "Shall not be infringed" was designed to prevent government encroachment; not as a guide for a "delicate balance" between "liberty" and "security." Delicate balances always collapse uni-directionally toward power, money and control and away from individual freedom!

Witness the worldview changes that have occurred since the radical left flower child revolution of 1960s. Americans have experienced such historical revisionism in schools that few can tell you what the Bill of Rights contains and why those rights are so important. America has been in a constant state of self-demonization to the extent that Constitutional rights are viewed as the obsolete product of dead white slave owners.

Americans have come to accept the core belief of Postmodernism; that there is no such thing as absolute truth or morals. Since there is no such thing as absolute truth, there is no such thing as absolute law. It all depends on what your definition of "is" is and the law can be tortured to say what we want it to say. As such, it can be used to convict anyone who needs to be convicted, since their rights can be defined away because it's all a matter of definition. Besides, many Americans believe that rights are something that are "deserved" rather than inalienable. And, after all, politically incorrect people don't deserve rights.

The Bill of Rights itself is under severe attack by means of thousands of laws which curtail the exercise of the rights or end run its prohibitions. The Bush administration seems determined to abolish habeas corpus and to suspend individual rights at will, merely by definition of an enemy combatant. The list of abuses is virtually endless. Every day, American citizens are routinely having their rights violated thanks to some legal precedent, which was established early on - usually leaving them little recourse because the law has been distorted so badly and the system has been rigged against them. The slide towards money, power and control is proceeding virtually unabated.

In a free society, rights protect the individual from the government. In a dictatorship, rights protect the government from the people. If enough legal precedents for end-runs of all the protections contained in the Bill of Rights are allowed to continue unchecked, where will those precedents be taken by future leaders when all protections have been dismantled? What will stop the tyranny that will invariably follow? Nothing.

John Loeffler

This gives us all something to think about. Do we take for granted the freedoms that our forefathers of our country fought and won a war for? Do we ever consider the possibilities of living in a socialistic state?

The point is that unless we change things, and soon, we will lose all our rights, including the ones guaranteed in the Bill of Rights. Are we not concerned enough to take action?

As always, the choice is yours.

"Therefore, this is what the LORD says: You have not obeyed me; you have not proclaimed freedom for your fellow countrymen. So I now proclaim 'freedom' for you, declares the LORD -'freedom' to fall by the sword, plague and famine. I will make you abhorrent to all the kingdoms of the earth. Jeremiah 34:17 (NIV)

If you have comments or questions, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

The Sad Road to Socialism Part IV

Today, we will conclude with John Loeffler's article titled "The Sad Road to Socialism - What happens When Private Property is No Longer a Right". This will be Stage Three of the steps leading to Socialism and the dire consequences.

Stage Three: Dies Irae: A Day of Wrath and Mourning

Ultimately the dragon cannot keep its promises. This last stage is where events turn nasty and chaotic. It is a dangerous time. It is a time no country should ever wish to reach.

Politicians are perceived as ravenous wolves. Blame and finger-pointing frenzies among politicians erupt to deflect responsibility for the chaos they have caused as they attempt to hold onto their privileged status.

Faith in government dissolves along with faith in the currency. Widespread flouting of law is common and tax payments quit. If it gets bad enough, crime flourishes, both organized and random. The domestic economy collapses into a depression and the currency just collapses.

By this time there are several violently outraged groups of people: the first group consists of those who have been dependent on the dragon for their free programs, and once the dragon reneges on its promises to provide these, they are outraged at the violation of their imagined rights to a free lunch. This group can include pensioners who paid the dragon money but discover the dragon spent it all before they retired.

The second group is the middle class, who have been beaten to death to feed the dragon and his cronies. They have lost all their livelihood and property. This is the point where many revolutions occur. Sometimes the revolutions are non-bloody and occur only at the voting booths; sometimes they are bloody and violent. It is a dangerous time because the chaos caused by the breakdown of economic and political order coupled with the collapse of morality often requires brute force to restore order, and brute force is the fertile ground for dictators and the destruction of rights.

One of the great ironies of history is that those who started the mess and benefitted greatly from it are rarely ever called to pay for the crimes and carnage they caused.

Finally the dragon dies.

Conclusion

No country trapped in socialism goes through all the events described above, which is a composite of past histories. It can turn itself at any time providing it is prepared to discipline itself the undergo the pain required to get off the public dole, much like coming off an addiction. Few societies ever want to face that, so they condemn themselves to all three stages. And the longer they wait to enact the necessary changes, the worse the pain becomes.

From currency, to energy to property rights, issues today are clouded with so much static and partisan bickering that the average person has little real comprehension of what is happening. Frequently Democrats and Republicans blame each other when often they’re both responsible and fiddle while Rome burns.

America is truly at an economic and moral crossroad, having already started into Stage Two of the sad road to socialism. Whether or not we plow through all three stages remains to be seen. It takes great moral courage to prevent this but politicians tend to be neither moral or courageous.

Thus it is up to what actions are moral, legal and necessary to see us, our families and friends safely through the tempest. But as a ray of hope, it is here where Americans in times past have always shown themselves most noble.

John Loeffler, July 23, 2008

John Loeffler is 40-year broadcast news veteran and host of the nationally syndicated talk show on the IRN/USA Radio Network, Steel on Steel (www.steelonsteel.com) and co-host of The Financial Sense Newshour (www.financialsense.com).

Special thanks go to John Loeffler and his great description of the cycle that leads to Socialism. As John pointed out, no country goes through every scenario depicted here, but the lesson is crystal clear - the road ahead will be very painful. If we do not turn the tide now, there will be no country left to be proud of. Many have already fled (expatriated to another country) and moved their assets to other safe harbors.

What will you do? Will you be one of the nameless victims of the dragon? Will you succumb to having all your work, livelihood, and possessions stripped away for nothing?

As always, the choice is yours.

He seized the dragon, that ancient serpent, who is the devil, or Satan, and bound him for a thousand years. He threw him into the Abyss, and locked and sealed it over him, to keep him from deceiving the nations anymore until the thousand years were ended. After that, he must be set free for a short time. Revelation 20:2-3 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

The Sad Road to Socialism Part III

Today, we will continue on with Part III of John Loeffler's article titled "The Sad Road to Socialism - What happens When Private Property is No Longer a Right". This is the second part of Stage Two when things start to really escalate.

The second half of Stage Two of the war kicks into gear as the dragon responds to the rising opposition and imposes a growing panoply of laws and regulations with increasing fines, penalties and prison sentences. To block the rampant flouting of law, the dragon wants to monitor everything the citizens do in order to assure that plunder shall be paid, all in the name of the rule of law, public order and morality. (Can you say Patriot Act and public eavesdropping on Americans?) Civil rights break down, all in the name of morality and public security.

Every once in a while the beleaguered middle class pleads with the gentle politicians to fix the problem, unaware that it was the gentle politicians, who created it all in the first place. But politicians are more than happy to be seen as dragon slayers, and create a series of scapegoats for the problem, transferring blame for the mess and enacting a new series of programs to supposedly fix the problem. In reality, they just delay the pain, put the dragon on steroids and making the problem far worse.

The war is not without casualties. As it becomes ever more difficult for small businesses to function in the poisoned atmosphere of taxes, fees, fines, regulations and prosecutions, more of the middle class throws up its hands and goes elsewhere or becomes part of the the dependent poor. Small business goes out of business or operates illegally. As inflation devours life savings, people are wiped out. Retirees have a difficult time getting on as their lifetime achievements are destroyed. Most of the middle class slides inexorably down the slope into poverty.

There is a moral consequence as scandals erupt in the politico and monied classes. Disrespect of law is common. In the free-for-all, everyone is in it for himself and no one can afford to obey the law. Jails swell with those unfortunate enough to get caught. As more complex laws are steadily passed, finally all citizens become law-breakers.

This enables the dragon to seek pretexts for seizing the assets of citizens. Businesses are nationalized. Wage and price controls are instituted. Property ownership is forcibly transferred from those who oppose the dragon to those who support it. Retirement plans are brought under the “protection” of government and their owners left with government-issued IOUs. Assets are seized on the mere allegation of criminal activity. Indeed, law enforcement agencies encourage their members to plunder. They even make arrangements with organized crime at times. The list of plunder-and-defend possibilities is astounding.

In an effort to stem the hemorrhage, the middle class starts throwing out the rascal politicians, only to elect another group of rascals. This has little effect, since the dragon is now a self-existing monster that doesn’t require gentle politicians. By this stage it’s clear: Small and middle class businesses, ranchers and farmers all know who the enemy is: the dragon. There is no illusion that the politicians are gentle or acting in their best interests.

As the security of property ownership declines, investments flee and the economic environment becomes unstable, no one wants to invest where earnings will be heavily taxed, or even the possibility of direct confiscation on the allegation of having violated a plethora of unknowable, unobservable laws. Doing business is just too dangerous.

As doing business becomes dangerous, investments die, jobs go out of existence, increasing the pain of the working lower and middle classes. Small business is always the primary creator of employment and it is the most abused. In the end, the rich are never soaked, the middle class is destroyed and the poor discover that there is no free lunch.

Tomorrow, we will continue with Stage III and the drastic implications of the cumulative deceit and horrendous appetite of the dragon. Stay tuned ...

And I saw a beast coming out of the sea. He had ten horns and seven heads, with ten crowns on his horns, and on each head a blasphemous name. The beast I saw resembled a leopard, but had feet like those of a bear and a mouth like that of a lion. The dragon gave the beast his power and his throne and great authority. One of the heads of the beast seemed to have had a fatal wound, but the fatal wound had been healed. The whole world was astonished and followed the beast. Men worshiped the dragon because he had given authority to the beast, and they also worshiped the beast and asked, "Who is like the beast? Who can make war against him?" Revelation 13:1-4 (NIV)

If you have questions or comments, please feel free to contact me at the address below.
Email: DeltaInspire@panama-vo.com

The Sad Road to Socialism Part II

Today, we will continue with John Loeffler's article titled "The Sad Road to Socialism - What happens When Private Property is No Longer a Right".

The Magic Dragon Isn’t Cute Anymore

Somewhere along the line, the gentle legislators discover that their baby dragon has grown and it’s snarling at them a lot. It wants much food. They’re not controlling it; it’s controlling them. However, in order to retain their prestigious position, ever-increasing sources must be found to feed their growing rapacious raptor.

The food source (tax burden) shifts rapidly downward into the middle class, as the gentle politicians coo that only the rich are being soaked. Concomitant with the increase of taxation, the miracle of hidden taxation through monetary inflation is discovered as central banks print more and more money to allow the good times to continue over and above what direct taxation will allow.

This process of monetary inflation results in debasement of the currency, causing the citizens to work harder and harder and run faster and faster to keep up with the loss of their currency’s value and the concomitant rise of prices. It’s slow at first but accelerates along an insidious exponential path. Ultimately it destroys everything the middle class works for.

Additional reptilian food sources called “revenue streams” are created. More fees, fines, “mitigation payments” and permits are required to do almost anything, driving the cost of doing everything upwards. Coupled with this is a bewildering array of regulation and laws making the business of life more and more difficult to accomplish. Big businesses can absorb this but the middle class ultimately buckles under the strain. The dragon is never satisfied.

Stage 2: Silent War Between Government and Its Citizens

At some point, the unwashed masses suspect their politicians aren’t really gentle any more much less benevolent. This is where a silent war between government and people erupts. It’s a blurry transition through never-never land when the politicians still claim to be gentle but the people sense that they have gone from being protectors of the public good and private property to a plunderers of it; from morality to immorality.

The “Bastiat” transition doesn’t take place all at once but, one by one, members of the working class realize they’re toiling like mad and getting nowhere. What they do make is confiscated in taxes or destroyed in inflation. They have little left over and their life’s savings are being destroyed while the politicians tell them all is just fine, creating cognitive dissonance between the hardship workers experience and the good times the politicians promise.

But those friends of the dragon on the dole still insist the dragon’s intentions are moral, even if its methods are not. As tax rates push ever higher into confiscatory ranges, self-preservation kicks in and the people take defensive action against what they no longer perceive as moral duty but legally-sanctioned plunder. They do this at the same time they pretend the gentle politicians are correct even though they know better.

The rich catch on and move their assets offshore and sometimes themselves out of the reach of the dragon; they expatriate. They have the means to structure their finances in such as way as preserve wealth. Besides, the politicians are frequently among this class so they aren’t about to let the dragon loose on themselves.

Unfortunately, the middle class doesn’t have this option, so it fights the dragon by engaging in evasive maneuvers. Citizens cheat on taxes, and seek to conceal taxable assets. Whenever possible transactions are shielded from the ever-prying eyes of the hungry dragon.

As the ravages of taxation and inflation eat out the middle class’s substance, a vibrant underground economy springs up, utilizing barter, cash, foreign currencies, precious metals or other means to conceal taxable activity. Regulatory laws are flouted as people try to “see what they can get away with.” Often times this underground economy has an organized crime component vis a vis the former Soviet Union.


Tomorrow, we will continue with John's article and find out the scary, unsatiable appetite of the dragon during the second half of Stage Two. Stay tuned ...

Then another sign appeared in heaven: an enormous red dragon with seven heads and ten horns and seven crowns on his heads. His tail swept a third of the stars out of the sky and flung them to the earth. Revelation 12:3-4 (NIV)

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