Gold & Economic Freedom

…by Alan Greenspan

Published in Ayn Rand’s ‘Objectivist’ newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.
In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.
Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.
The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

This post was published at Zero Hedge on 11/08/2014 –.

As Luxembourg Takes the Heat, the World’s Worst Tax Haven – the City of London – Remains Hidden in Plain Sight

There are a lot of tax havens in Europe. But they pale against the City of London.
By Don Quijones, freelance writer, translator in Barcelona, Spain. Editor at WOLF STREET. Mexico is his country-in-law. Raging Bull-Shit is his modest attempt to scrub away the lathers of soft soap peddled by political and business leaders and their loyal mainstream media. This article is a Wolf Street exclusive.
For a tiny country of just 500,000 inhabitants, the Grand Duchy of Luxembourg is getting a heck of a lot of international attention these days. And certainly not of the welcome kind. At the beginning of this week, the Washington-based International Consortium of Investigative Journalists (ICIJ) published tens of thousands of documents that finally shed light on one of the world’s most important and most secretive tax havens – at least until now.
The picture that emerges is one of endemic tax avoidance and evasion that has helped transform Luxembourg into the world’s richest country on a per capita basis. The country also boasts the world’s highest ratio of bankers to inhabitants – a staggering 1:21.
Thanks to the revelations, we have learned that:
Hundreds of European and global transnationals, including Accenture (the former auditing arm of Arthur Andersen), IKEA, Burberry, FedEx, Blackstone, Deutsche Bank, H. J. Heinz, JP Morgan Chase, Procter & Gamble and HSBC, have signed sweetheart deals (endearingly titled comfort letters) with Luxembourg’s tax authorities that effectively allow them to avoid taxes in the countries where they rack up their profits. In some cases they have paid tax on profits of just 1%.

This post was published at Wolf Street by Don Quijones ‘ November 8, 2014.


[The Following post is by the Hard Metals Team] Since writing last month that inflation was on the rise, things have taken an abrupt turn. Look at the deflationary actions that have recently taken place:
The US dollar has shot up The US bond market has rallied Precious metals prices have collapsed Base metal prices have fallen Stock markets have declined Oil and other commodities have fallen. Further, just last week the International Monetary Fund cut its global economic growth forecast for the third time this year. Why? It doubts how quickly “rich countries will be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.”
It’s hard to argue that high debt levels are deflationary. And with the current expansion based largely on debt, we can’t expect sustainably higher economic activity to be generated.
So what happens if deflation wins? Even if we eventually get inflation, what happens to our gold investments if we first go through a deflationary bust?
There aren’t a lot of modern-day examples of deflation. The Consumer Price Index (CPI), as faulty as it may be, has registered only three declines since 2000, and all were short-lived. The CPI fell:
August to October, 2006 July to December, 2008 March and April, 2009.

This post was published at Dollar Vigilante on November 8, 2014.

John Hussman: The Stock Market Is Overvalued By 100%

John Hussman is highly respected for his prodigious use of data and adherence to what it tells him about the state of the financial markets. His regular weekly market commentary is widely regarded as one of the best-researched, best-articulated publications available to money managers.
John’s public appearances are rare, so we’re especially grateful he made time to speak with us yesterday about the precarious state in which he sees global markets. Based on historical norms and averages, he calculates that the ZIRP and QE policies of the Fed and other world central banks have led to an overvaluation in the stock market where prices are 2 times higher than they should be:
John Hussman: What’s interesting here is that if you think about equities, they’re not a claim on next year’s prediction of earnings by Wall Street analysts. A stock, in fact any security, is a claim on any long-term stream of cash flows that investors can expect to be delivered to them over a very long period of time.
When you look at equities you can calculate something called duration. It’s essentially the effective life of a security over which you are collecting cash flows in return for the amount you pay. For the S&P 500 the duration is about 50 years. In other words it is a very, very long-term asset. The only reason you would want to price that asset based on your estimate of next year’s earnings is if you were convinced that next year’s earnings are actually representative of the very, very long-term stream — and I’m talking 50 years or so of earnings that you’re likely to get — that those earnings are in a sense accurately proportional to the whole long-term stream.
What’s amazing about that is that is it has never been true. It has never been true historically. If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.

This post was published at PeakProsperity on Saturday, November 8, 2014,.

Weapons are easily concealed from TSA’s X-ray body scanners

The Transportation Security Administration (TSA) has been under plentiful scrutiny since installing X-ray scanners back in 2007. These new scanners replaced metal detectors at a cost of more than $1 billion across 160 American airports. The cost is exorbitant, and there is also the worry of radiation. Some individuals opt out, choosing to receive a pat down instead of walking through the X-ray scanner. The majority of Americans, however, have resigned themselves to this newer technology, thinking that this is a small price to pay for improved national security. It’s a small inconvenience, but it’s improving our safety and making our country more a more secure place to live, right? Not necessarily. It may be time to rethink this security measure.
TSA scanners are easily fooled A couple of years ago, Jonathan Corbett, made a YouTube video depicting a simple way to sneak metal objects through an X-ray scanner in two different airports. The method is so simple that it makes one wonder if the TSA could really be that oblivious. In the video, Jonathan Corbett states that the TSA “arrogantly decided to disregard our safety: anything to force Americans to give up our liberty to the federal government and our tax dollars to companies that are in bed with that government.” New research shows these scanners can be easily fooled in a number of ways.
New studies not only found that Corbett’s weapon-hiding strategy worked but also found a number of other ways to easily conceal weapons from the X-ray scanner. The research comes from a team of security researchers from the University of California at San Diego, Johns Hopkins and the University of Michigan. The Rapiscan Secure 1000 scanner was tested in the new research and is the same model as the one that Corbett used in his study. While this model was replaced by millimeter wave scanners last year, they are still in place around the country inside courthouses, jails and other government security checkpoints.

This post was published at Natural News on Saturday, November 08, 2014.

Majorities In Several States Vote To Punish Low-Skill Workers

Submitted by Ryan McMaken via The Mises Economic Blog,
My anti-democracy critics will shake their heads in dismay at me, but I’ve been forced to come to the conclusion that there’s no reason to believe that plebiscitary democracy is any worse than the usual kind. Indeed, in American states that must hold plebiscites to authorize tax increases, one hears regular howls from the pro-tax crowd about how ‘direct democracy’ is awful and that ‘representative democracy’ is so much better. There’s even this federal lawsuit by pro-tax groups claiming that Colorado’s requirement that voters approve tax increases is unconstitutional. In other words, those who favor tax increases hate voter referendums and initiatives. Internationally, of course, there are the secession votes and the upcoming vote on gold in Switzerland. I have a hard time coming up with a reason why such things are comparatively bad (compared to an alternative in which everything is up to the elected elites).
That said, the news isn’t always good with such voter-approved measures. A majority of voters in four states voted to raise the minimum wage:
If there was upsets and contention in much of midterm voting, there was one topic on which the electorate was largely united: raising the minimum wage. Alaska, Arkansas, Nebraska, and South Dakota all had ballot measures on raising state minimum wages above both their current levels and the federal $7.25 an hour figure.

This post was published at Zero Hedge on 11/08/2014.

US Economy Shudders: East Coast Set To Freeze As Polar Vortex 2 Arrives

Remember when last December, a bout of cold weather crushed the US economy for the next 3 months, and subtracted about $100 billion from trendline growth, and when one after another economist (who were then predicting the yield on the 10 Year would “greatly rotate” to 4% by right about now, and who expected the US economy to have reached escape velocity in the second half only to see a 2014 GDP trendline as follows Q2: 4.6%, Q3: 3.5% (soon to be reviser lower), and Q4 now estimated just about2.0%) blamed the then -3.0% GDP print on snow in the winter? Well here comes round two, because asCBS reports, “prepare for an invasion from the north. A blast of polar air is about to send temperatures plunging in the heart of America.”
The polar vortex is back, and this time it means even less business: A mass of whirling cold air will dip southward this weekend, sending the mercury plunging. As the cold air moves south and east, it has the potential to affect as many as 243 million people with wind chills in the single digits in some places and snow.
Of course, the implication is that Q4 GDP is about to have its lights out moment. Either that, or if Q4 GDP mysteriously does not collapse, then scapegoating the weather for what was a fundamental flaw with the economy (and subsequent definitional revisions to GDP were the primary source of “economic growth” in 2014), will be just that.
According to CBS, the cause of the latest and greatest bout of abnormally cold winter weather is not “global warming” but a Supertyphoon named Nuri, currently located above the North Pacific.

This post was published at Zero Hedge on 11/08/2014 –.

Reader Question on Greenspan and Gold: “No Fiat Currency Can Match It”

Reader Stephen is wondering about Greenspan’s Stunning Admission: “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It”.

It seems the Council on Foreign Affairs left out some key sentences in its transcript of A Conversation With Alan Greenspan.
The conversation is between Alan Greenspan and Gillian Tett, U. S. Managing Editor, Financial Times.
Missing Snip
Tett: Do you think that gold is currently a good investment?
Greenspan: Yes… Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.

This post was published at Global Economic Analysis on Friday, November 07, 2014.

Climate Model Predicts Very Cold Winter in Northern Hemisphere; Another Record Breaker?

There is a huge buildup up snow in Siberia this year like last. Meteorologists believe that portends another brutal winter.
Bloomberg reports Climate Model Predicts Very Cold Winter in Northern Hemisphere.
About 14.1 million square kilometers of snow blanketed Siberia at the end of October, the second most in records going back to 1967, according to Rutgers University’s Global Snow Lab. The record was in 1976, which broke a streak of mild winters in the eastern U. S. In addition, the speed at which snow has covered the region is the fastest since at least 1998.
Taken together they signal greater chances for frigid air to spill out of the Arctic into more temperate regions of North America, Europe and Asia, said Judah Cohen, director of seasonal forecasting at Atmospheric and Environmental Research in Lexington, Massachusetts, who developed the theory linking Siberian snow with winter weather.

This post was published at Global Economic Analysis on Saturday, November 08, 2014.

Gold price rallies as safe haven buying returns

After six straight days of declines, the gold market finally clawed back some lost ground on Friday after jobs data out of the U.S. disappointed and safe haven buying returned on rising tensions in Eastern Europe.
In late afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,178.50 an ounce, up $35.90 or 3.1% from Thursday's close.
In early trade the metal fell to a day low of $1,130.40, levels last seen April 2010. Trading volumes were heavy once again with the most active contract trading the equivalent of 28.7 million ounces, double the three-month average.
U.S. non-farm payroll data released on Friday showed the economy added 214,000 jobs in October, below the 255,000 expected. The unemployment rate fell to 5.8% and when the numbers are not seasonally adjusted, October 2014 comes out as the best employment gain for the month ever.

This post was published at

The International Man: Rulers Seek to Rule

Rulers seek to rule. Well, that seems a bit obvious, doesn’t it? And yet, time after time, we elect new leaders, imagining that, “This new group will be better—they’ll represent us as they promised.”
Unfortunately, the democratic system doesn’t really work very well at all. The idea is supposed to be that if old leaders overstep their bounds, new candidates may come forth who promise a reversal of the autocracy of the previous group, and we elect them. They will then proceed to implement that reversal.
Of course, we all know that it’s this last bit that consistently fails to happen. The new group does not fulfill its promises to the electorate—in fact, it almost invariably seeks to increase its power over them. And as each group assumes greater power than the previous one, the country slowly declines, until ultimately, it reaches the state of tyranny.

This post was published at International Man

Doug Noland: Back to the Nineties

From the perspective of my macro Credit analytical framework, history’s greatest Credit Bubble advances almost methodically toward the worst-case scenario.
After more than two decades, the Bubble has gone to the heart of contemporary “money” and perceived safe government debt. The Bubble has fully encompassed the world – economies as well as securities and asset markets. And we now have the world’s major central banks all trapped in desperate “nuclear-option” “money”-printing operations. Moreover, serious cracks at the “periphery” of the global Bubble now feed “terminal phase” Bubble excess at the “core.”
Indeed, “hot money” finance exits faltering periphery markets to play Bubbling king dollar securities markets. Euphoria reigns. In many ways, the Bubble that gathered powerful momentum in the Nineties (with king dollar) has come full circle.

This post was published at Prudent Bear

Home Depot: Hackers Also Stole 53 Million E-mail Addresses

The nation's largest home improvement chain had disclosed the massive, months-long breach of 56 million debit and credit cards in September.
Home Depot's breach surpassed Target's pre-Christmas 2013 data theft, which compromised 40 million credit and debit cards and hurt sales and profits. Since late last year, Michaels, SuperValu and Neiman Marcus have been among a string of retailers that have also reported breaches, though they were smaller.
While shoppers appear to have grown numb to the hacks, the breaches have forcing changes in retailing. Target's breach pushed banks, retailers and card companies to increase security by speeding the adoption of microchips in U.S. credit and debit cards, which supporters say are more secure. Home Depot reiterated Thursday that it will be activating chip-enabled checkout terminals at all of its U.S. stores by the end of the year.
The file containing the email addresses did not contain passwords or other sensitive personal information, according to Home Depot. However, it said that customers should be on guard against phishing scams. Phishing attacks are sent through texts or emails and try to trap you into disclosing personal information.

This post was published at ABC News

Gold Investors Weekly Review – November 7th

In his weekly market review, Frank Holmes of the summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,177.98 up $4.50 per ounce (0.38%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 5.94%. The U. S. Trade-Weighted Dollar Index climbed 0.73% for the week.
Gold Market Strengths One-month gold lease rates in London, the cost to borrow bullion, soared to 0.3405 percent on Thursday vs. 0.001 percent in September, reaching a high not seen since December 2008. Reasons cited for the rate upswing ranged from supply/demand imbalances to borrowing by traders in order to short the metal.
Gold futures headed for the biggest gain since June after the U. S. September jobs report came in lighter than expected on Friday, 214,000 vs. 230,000 forecasts. The jobs report supported ongoing speculation that the Federal Reserve will continue to hold interest rates low amid tepid global growth.
The U. S. Mint has temporarily run out of American Eagle Silver coins after October sales jumped 40 percent to 5.79 million ounces from a month earlier.
Gold Market Weaknesses Holdings in the SPDR Gold Trust slid 0.3 percent to 738.8 metric tons on Tuesday to the lowest amount since September 2008. A confluence of factors has influenced the flight from the metal held my some investors as a safe haven. First, there is a mistakenly held notion in the markets that gold is one of the most volatile asset classes. In actuality, the return on equities as measured by the S&P 500 is typically twice as volatile as the return on gold bullion. Second, low gold prices have prompted some investment advisors to recommend a zero allocation to gold. Third, new highs in the equity market continue to increase investor appetite for risk assets.
Lower oil prices create a headwind for gold as inflation expectations are pushed down. This reduces the inflation hedge demand for the metal.
There was a selloff in gold stocks amid a broad based de-rating in the gold sector. The selloff brought a slew of gold miners near to, or below, decade lows. Among them were Barrick, Goldcorp, Newmont, Kinross and Yamana.

This post was published at GoldSilverWorlds on November 8, 2014.

QE is simply a form of zombie capitalism.

The dead areas of the global economy – businesses which are to all intents and purposes already bust – are dragged from their deathbeds and their depleted value – their ‘lifeblood’ if you will which has bled away through loses – is being replaced with QE zombie blood.
The replacing of ‘real blood’ by QE ‘zombie blood’ matters because it amounts to the socialisation of loses by inventing new money, but the whole basis if capitalism is that money has value because there is only so much of it and that the world economy trusts currencies to be managed according to a fixed set of rules – QE pretends to be within the rules because theoretically it can be reversed.
The argument is that all those assets purchased using QE money could be resold back into the free market and the QE money returned to central banks, then it would be destroyed, so unravelling the QE process back to the previous state of the currency in terms of the amount of money in the system, so restoring the amount of currency in the system to what it was before QE happened.
There are several fundamental problems with this.
Firstly, much QE liquidity has been soaked up in buying government debt, debt which looks increasingly unlikely to ever be paid off, whilst through the slight of hand of recovering the interest paid by treasuries to central banks, so in effect borrowing for nothing, it is becoming increasingly plain that in the UK for example, without this ‘free transfusion’, the ‘government zombie’ would starve.

This post was published at Investment WatchBlog on November 8th, 2014.

The Silver Lining Of Stagnant US Incomes: Half-Price Hookers

This week’s ‘shellacking’ of the administration suggests all is not well among the people of the Land of the Free. While headlines crow of plunging unemployment rates and record high stock prices, middle-class incomes remain stagnant at best (and sliding in most cases) and job quality continues to tumble. There is, however, a silver lining… as Bloomberg reports, “in a sign of lower income and middle income consumer stress, some prostitutes are dropping prices.” Of course, this is terrible news for GDP (now what happens if the price of ‘blow’ also drops). This confirms our previous note on the deflation of prices in the oldest profession in the world… question is, will Yellen abhor this price drop too?

This post was published at Zero Hedge on 11/08/2014.

Healthy Returns From the Healthcare Sector

Healthcare stocks, along with the stocks of food and drink companies are often recommended as defensive holdings for bear markets, on the premise that no matter what happens people will always have to eat, drink, and take their medicine.
The other side of that thought is that sectors seen as defensive may not be the best holdings in a bull market, when techs, industrials, and speculative stocks of the latest new fad (dot coms, social networking?) are hot and leading the way.
That may be true for some individual food and drink company stocks. Campbell Soup, Coca Cola, Conagra Foods, Hershey Foods, Kellogg, McDonald’s, Yum Brands, still below their levels of mid-2013, come to mind.
However, the healthcare sector has been much more than a ‘defensive’ holding. It has handily outperformed the S&P 500. That can be seen in the performance of the SPDR Healthcare etf, symbol XLV.

This post was published at FinancialSense on 11/07/2014.