THE LIBERTARIAN ENTERPRISE
Number 475, July 6, 2008
"What was left to celebrate?"
Speculators, Regulators, Militarists, and Money Masters
Special to The Libertarian Enterprise
Senator Joe Lieberman, who used to be a Democrat from Connecticut and is ... something else now ... says that speculating on food and fuel is very hurtful. He's completely wrong. Speculators are currently being witch hunted by a Congress that doesn't wish to deal with the real sources of high food and fuel prices. Which is sad, because speculators provide an extremely valuable service by directing capital toward scarce resources, thereby reducing scarcity over the long term.
Speculators are not responsible for high gold, silver, fuel, nor food prices. They are simply taking positions in these commodities because of a generally rising price trend. If a price rises within certain boundaries for several months, this trend is likely to continue. Investors who ignore trends because goofs in Congress tell them they are hurtful would not be effective investors.
Regulators, on the other hand, are responsible for high prices in some commodities. Regulations encouraging the use of food as fuel, regulations making it possible to get money from taxpayers by not growing food, regulations which limit who can use what substances on his own property, regulations which limit and control the markets for food all hurt consumers at the stores.
The same is much more extensively true in fuel prices, where every aspect of production from exploration to gasoline in your tank is highly regulated, and even the gas tank is constrained by design limitations imposed from afar. The cost of regulations may be as much as $2 of a gallon of gasoline.
Not only is your fuel tank regulated, but also the extent to which your car uses fuel is regulated. You cannot get a 60 mile per gallon vehicle in this country any longer, because regulators are protecting the domestic industry from competitors who are able to produce such wonders. You cannot get into the car making business easily, although the technology is about 130 years old, because of regulatory barriers meant to protect the wealthy owners of the big auto companies.
There is an obvious source of high fuel prices. War. A war in and around the major fuel producing regions of this planet is causing high oil prices. The Unocal pipeline proposed to cross Afghanistan in 1998 to bring Caspian Sea crude, especially from places like Uzbekistan, to the Persian Gulf oil terminals is still not operational. And if you believe that the war to change the government of Afghanistan in 2001 was planned between 1998 and 2001 entirely as a Pentagon exercise, you may be interested in buying the Brooklyn Bridge.
The war in Iraq has not been paid for with oil from Iraq. Huh. Go figure. The Bush administration lied about that one. A war with Iran, which certain militarists in Israel seem determined to startand which American politicians seem unable to preventis not going to reduce the price of oil, either.
War is inflationary. It is often paid for by inflating the currency. A number of authors have been evaluating the rate of inflation using the original series data and calculations. The information is still published, and inflation would be reported at about 14% per year if the government didn't keep changing what it was reporting.
Why does the meaning of the term consumer price inflation change? Well, because it is a difficulty for the government to admit that food and fuel costs are part of core inflation, so they are set aside. They change products in the "basket" of goods and services being purchased to do what they can to avoid reporting high inflation. And what motivates this behavior?
Simple. The income taxes are tied to inflation. Brackets are determined in part by inflation rates. Exemptions and standard deductions are determined by inflation. Cost of living adjustments to benefit payments, Social Security, pensions, and everything else are tied to the rate of inflation. So, with higher inflation the amount of money the government brings in is less, the amount they pay out is more. Duh, of course they lie about it.
But the ultimate source of inflation is monetary policy. The government has allowed the Federal Reserve System to have control over the money supply. And Bernanke is robbing everyone of their savings by inflating as fast as he can. So, ultimately, the prices of food, fuel, and other things are going to rise due to the fact that there are so many more dollars chasing the same amount of goods and services every day. Supply and demand works the same with money as it does with anything else. More money has less value, so its purchase power is lower.
Congress is holding hearings to attack speculators. But where are the hearings to attack regulators? Where are the hearings to attack the militarists for getting us into these crazy wars we cannot afford, which are killing our young men and women? where are the hearings to attack the money masters who are inflating the dollar beyond recognition?
Congress is filled with people who have no integrity. Of course they don't want you to look at the problems that the regulatory agencies they authorized have caused. Of course they don't want you to understand that the war in Afghanistan and the war in Iraq have been paid for in blood, in treasure, and in suffering at the gas pump, as well as in many other ways. Of course they don't want to admit that the Federal Reserve is an unconstitutional outrage which steals from your savings account, and from your wallet, every time more money is printed.
What to do about it? It seems clear that for this year, the time left to do anything about the presidential election is over. Ron Paul made a good run, but he lost the nomination. John McCain is a thoroughly evil, arrogant, and hateful man, who is going to lose the election. And Barack Obama is not going to change very muchor he lied to the American Israeli political action group.
However, every seat in Congress is up for grabs this year. A third of the Senate is up for grabs. And there are candidates in all of those races who can make a difference. Where the incumbent is a Republican, supporting the Libertarian Party's candidate may change the outcome. Where the incumbent is a Democrat, various strategies may change the outcome. And, where a good person is running on the LP or Boston Tea Party ticket, do your part to help win that election.
The Boston Tea Party has the ability to endorse good candidates from other parties who support our smaller government platform. That's true of Libertarians, Republicans, Greens, Democrats, anyone. I would urge the state affiliates to consider the candidates in races in their states for Senate, for Congress, and for the statehouse.
We cannot change everything this year. But we can make an issue of hyperinflation, war, and regulatory madness. And if we aren't very careful, we might see some libertarians elected to office.
Of course, many in Congress think they have plenary powers because of elastic clauses like the commerce clause. I disagree. At the same time, I'm quite prepared to amend the constitution to eliminate the commerce clause, given the vast extent to which Congress has abused its presumed powers in this area.
Central banks, banksters, and some regulators have been successful in suppressing the gold price over periods of days or weeks. They have obviously not been successful over years, since the price of gold is much higher today ($926) compared with Summer 1999 ($252). Unfortunately, the same arguments that apply to "market manipulators" are also applicable to speculators. If those who are stewards for a large supply of publicly owned gold in the national treasury are determined to sell it, that's probably a good thing over the long term, since private ownership is a better result.
Article one, section nine of the constitution for these united States of America does contain the admonition, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time." Clearly, the gold in the Treasury is public Money, and equally clear, we have had no audit of the public Money since roughly Eisenhower's day. Which means that Congress is in violation of the constitution. Which would be mildly interesting if anyone had standing to demand Congress uphold the constitutional obligation to provide a regular statement and account of these receipts and expenditures.
It occurs to me that one of the states might have standing, since the constitution is arguably a compact among the states. Maybe the folks in Montana or Arizona could take on the task of having their state demand an audit. At least then the refusal to audit the gold would be more widely known.
If, as some suspect, the gold in the Treasury is vastly greater than reported, due to the recovery of gold stolen by the Japanese empire between 1895 and 1945, and never returned to the victims of those war crimes, we may never see a proper accounting. If, as others suspect, notably the GATA.org people, that the gold in inventory is much less, we may never see a proper accounting.
War as it is currently practiced is necessarily inflationary. It was the inflation of the Vietnam war, the "war on poverty" and the space race which caused the Johnson administration to inflate the dollar to the point where he had to take the silver out of the coins. The French noticed this fact and began to redeem their dollars for gold, which led to a crisis which ultimately caused the fiend Nixon to stop redeeming dollars for gold.
War would not be inflationary if taxes were raised to pay for the war effort. Such has not been done in quite a long time.
Like a compulsory draft to provide the cannon fodder needed to feed the IEDs in Iraq and Afghanistan, taxes to fund the war effort would be hugely unpopular.
As long as the national debt is around ten trillion dollars, and as long as the annual budget deficit is on the order of a third of a trillion more, it is nothing but evil machination to try to put high oil prices on speculators working to make the economy more efficient. The fault rests firmly with the government, with its monetary policy, fiscal policy, trade policies, and war policy.