Britannia Radio

The Daily Reckoning U.S. Edition

Home . Archives . Unsubscribe

The Daily Reckoning | Tuesday, August 14, 2012 Adjusting our focus to incorporate the full breadth of various cycles... From nadir to zenith...and to which we are currently approaching... Plus, Byron King examines the Whiskey Rebellion, and plenty more... ------------------------------------------------------ Finally! An Options Research Service So Simple and Accurate You’ll Have a Chance to Profit on Your Very First Play! Here are true stories from readers who hauled in big profits on their very first trades... 750% GAIN! “My first trade was a 50% GAIN. My second trade is hard to believe — a 750% GAIN in one working day!” — Eddie L. 200% GAIN! “I pulled out of Bank of America with a 200% gain. It was actually my first profit [with Options Hotline]. It felt like a great accomplishment.” — Rick T. $6,540 Profits! “My first trade... made me $6,540 profits! You are the first newsletter that I have tried out of hundreds that actually delivers what it promises.” — Robert N. Learn how to join first-time traders like Eddie, Rick and Rob who scored wins on their very first trades right here. Quote of the Day... If this is the price to be paid for an idea, then let us pay. There is no need of being troubled about it, afraid, or ashamed. This is the time to boldly say, “Yes, I believe in the displacement of this system of injustice by a just one; I believe in the end of starvation, exposure, and the crimes caused by them; I believe in the human soul regnant over all laws which man has made or will make; I believe there is no peace now, and there will never be peace, so long as one rules over another; I believe in the total disintegration and dissolution of the principle and practice of authority; I am an Anarchist, and if for this you condemn me, I stand ready to receive your condemnation.” — Voltairine de Cleyre, Exquisite Rebel: The Essays of Voltairine de Cleyre-Anarchist, Feminist, Genius History, All Over Again (Again...or “Part II”) Joel Bowman Reckoning today from Paris, France... We left off last week wondering where we are. The fresh, countryside air was playing tricks with our head...the kind of tricks that lead one to a quiet riverbank, dog-eared book in hand and staring at the sky, ruminating in terms and scales ordinarily discouraged by the workaday drudgery of city living. The subject at hand was cycles. Short ones...Long ones...Fat ones...Skinny ones... We spoke about immediate cycles, the day-to- day, year-to-year variety, ones you can see by enlarging the font on your computer screen, by turning up the volume on the nightly news, or picking up the daily newspaper. Election cycles, say, during which time prestidigitating pontificators of every stripe bamboozle mobjorities with an endless litany of dot.gov statistics, shamelessly propagandizing young men and women into thinking “enemies” of foreign nations are deserved of immediate and ruthless military misadventurism. Though relatively short, these cycles can, with the help of aforementioned Newspeak, appear to drag on and on, as George Orwell captured in his dystopian classic, 1984: “Oceania was at war with Eurasia; therefore Oceania had always been at war with Eurasia.” The cast of characters occupying central roles in these presidential/prime ministerial/dictatorial cycles reads like a who’s-who of regrettably-promoted sociopaths. They are the Clintons, Bushs and Obamas...the Blairs and Browns, the Putins, Sarkozys, Rudds and Draghis...the Alis, Mubaraks, and Gaddafis...Chavez and Morales, the Peróns and the Kirchners...and a colossal archive of jabbering, human-shaped embarrassments besides. Pan out, however, and these names begin to fade into a washed, slate grey background. True, this or that decision might have seemed pivotal in the color of the moment, with magnified font and front page coverage, but engage a wider perspective and one comes to realize that these individuals no more guide the hand of history than a single lump of coal shoveled into the midnight furnace guides a steamship across the Atlantic. Caution: Political figures in the rearview mirror of time are often closer than they appear. The cycles of history must be ready to carry one or the other leader to the fore. They must coincide, just at the right moment. Without this near-imperceptible collusion, the most prominent (and repugnant) leaders might simply rot on the vine. The German post-war twenties, for example, were not ready for the upstart nuisance of one Adolf Hitler. Such was the prevailing mood of the time, in fact, that following his failed Beer Hall Putsch coup d’état, in Munich, Hitler was thrown headlong into the slammer...an unthinkable proposition just ten years later, when, in 1933, the formidable orator was appointed chancellor and immediately set about transforming the battered Weimar Republic into the single-party dictatorship that would go on to ride a horrifying crest of centralized power for the next twelve years. Same heinous man...from prisoner to leader in the flash of a decade. Pull the camera still further back and we begin to notice the slow undulations not just of decadal or even generational cycles, but of the expansion and contraction of broader, more sweeping historical trends. In Part I of this bitty missive, we described these movements, broadly, as centralization and decentralization...the inhalation and exhalation of history, whereupon political power flows from the many to the few...then back again. The post-Renaissance cycle of centralization, for example, witnessed an era tending generally toward political coalescence. “During this period,” we observed, “stronger principalities, those that had prospered in trade and were therefore better equipped to withstand military attacks and plagues, started working together and expanding their territories. Once again began a cycle of centralization, of disparate states coagulating into a mass of cells, fused together by broader, overarching legal and political systems, trade agreements and strategic alliances... “By the 18th and, especially, the 19th century, principalities had fallen almost entirely out of favor...and the world witnessed the birth of the modern nation state.” By and large, the trend toward centralization withstood a great many attacks from those arguing against it, from intellectuals and idiots alike. When Mikhail Bakunin, a not-insignificant Russian philosopher and theorist of collectivist anarchism, broached the subject of political decentralization with one Friedrich Engels, co-author of The Communist Manifesto, the latter famously retorted: “how these people propose to run a factory, operate a railway or steer a ship without having in the last resort one deciding will, without single management, they of course do not tell us.” The cycle of history did not then agree with Bukunin’s desire for (albeit collectivist) anarchism, for decentralization...just as the roaring twenties were not yet ready to inflict a curiously- moustachioed Führer und Reichskanzler on the unsuspecting peoples of Europe. The tides were against him. Elsewhere too, the trend of centralization held sway. In North America, federal power was gradually ceded, though not without resistance, to Washington, DC. On the European continent, borders bled into one another, with power centers for 27 different countries eventually coming to rest in three relatively tiny capitals — Brussels, Luxembourg and Strasbourg. But the nature of cycles is such that their trends can seem at once both inexorable and untenable. It is often immensely difficult, for example, to imagine a reversal of this great super cycle...an historical exhalation...a new dawn of political decentralization, where individual nodes become empowered unto themselves, freed from the central planners and world-improvers who have enjoyed so long a run. And yet, the escalating concentration of power in the European and American capitals cannot go on forever, in large part because of the enormous amount of debt these power structures require to “keep the show going.” Many thousands of words have been devoted to this subject in these here pages. The empires are collapsing as we type this very line... Could we, in fact, be witnessing the modern day zenith for centralized power? And if so, what lurking catalysts might disrupt the future most people are softly, passively expecting? More on this later in the week. Stay tuned... In today’s guest essay, Outstanding Investments editor and resident belletrist, Byron King, recounts the seminal role the Whiskey Tax and subsequent Whiskey Rebellion played in American history — how this “minor event” helped to define the role and powers of the federal government. Please enjoy Part I of his essay piece, below... P.S. Speaking of anarchy...of decentralization...and of freedom in general...We’re proud to announce: Anarchy Starts Friday! You read that right, Fellow Reckoner. The team over at Laissez-Faire Books, spearheaded by Jeffrey Tucker, will be releasing Mr. Tucker’s newest book, A Beautiful Anarchy, in just four days. Get all the information from the LFB page right here. Better yet, you could just JOIN the Laissez-Faire Club, where members enjoy one brand new book release per week. Membership includes Jeffrey’s new book (out Friday), plus a rapidly-growing archive of books, video presentations of each release, a 20% store discount, member forums and myriad other benefits. The Laissez-Faire team is adding to the Club structure each day, with the goal of making it the place to be for all lovers of ideas and the liberty that is their precondition. Join the Club here. The “Perpetual Income Machine” is Alive... A simple strategy for you to create your very own “perpetual income machine” right from your home office... And guess what? It only takes you about $50 to start the engine... Once up and running, all you do is sit back and collect “paycheck” after “paycheck” sent straight to your mailbox. It’s so easy a 16-year old girl’s been generating 18% gains a year, on average. Click here to see it in action... The Daily Reckoning Presents The Whiskey Rebellion Byron King [Nota Bene: This essay first ran in Whiskey & Gunpowder on Dec 17th, 2004.] This could very well have been the Province of Westsylvania, part of British Imperial Canada. To the east, along a line of demarcation that follows the northeasterly arc of the Alleghenies, would be what was left of the United States of America, a collection of small, Northeastern coastal states that rely for survival on their wits as traders and seafaring merchants. To the south would be the Confederated States, an amalgamation of political jurisdictions that had long ago seceded from the failed Constitutional Compact of 1789. To the west of this spot would be the very large Province of Ohio, another jurisdiction of Canada, extending all the way to the Mississippi River. Abutting the west bank of the mighty Father of Waters would lie the French Department of Louisiana. West and southwest of the French possession would be the United States of Mexico, extending across the high plains and Rocky Mountains to the Pacific Ocean and bordering Canada to the north. Mexico would encompass the territory of Texas and extend far down through the old land of the Aztecs and well into the lands of the lost Maya. Yes, indeed, things could be very different. Except that Mr. Alexander Hamilton, first Secretary of the Treasury of the United States, levied a tax on whiskey. If you taste the whiskey first, it helps to understand (and at the end of this article, I will tell you how to do just that...). Dark amber in color, not unlike some varieties of that fine Pennsylvania crude oil that seeps from the cracks in the Devonian shale and Carboniferous sandstone that make up the bedrock in these parts, the whiskey has a dry taste and is certainly not to be confused with those better-advertised, rather fruity beverages that are but sweetened imitations of the real thing. Pennsylvania rye whiskey goes down straight and warm, not quite bypassing the taste buds, but it hits you hard from the inside out. In its own inimitable way, this whiskey is rough and strong and uncompromising, like the men who first distilled it on the western frontiers of the British Empire in North America in the 1700s. In 1768 one man of the cloth called it “a perfect beverage, and a blessing from God for which people would take to arms.” He was prescient, this pastor. In retrospect, the rye whiskey of the western frontier was a beverage that defined a fresh-born nation. And if nothing else, the whiskey and those who consumed it forced the nascent government of the United States to govern wisely, and even to issue honest money. Well, at least for a while. The Whiskey Rebellion: A Staple of the Frontier Economy Brewed and fermented spirits were a staple of the frontier economy of colonial America. Beer, for example, was available in almost all households and consumed at almost every meal. Beer-making provided a use for surplus grain, which could not otherwise be transported for sale in distant markets over the primitive roads of the time. Beer was safer to drink than most of the water that one could obtain from wells and streams. Beer had nutritional value, and in a world where most everything was scarce, one did not allow good carbohydrates to go to waste. Thus beer was a routine part of the diet of frontier families and a vital source of nutrition. If it made you feel better during the hard times, that was also a good thing. Whiskey as well became a staple of frontier life and diet. Like beer, it was made from the surplus grain that was not consumed locally and could not otherwise be transported any great distance for sale. Whiskey served as a medicine, a tonic, and an anesthetic in a time and place where there was no alternative. And distilled whiskey had commercial value, such that it was worth a man’s while to transport it over the mountains, where it sold in Philadelphia for a price in colonial times that was the equivalent of about $25 per gallon today. In an environment in which money was scarce, whiskey not surprisingly became a store of value on the frontier. In western Pennsylvania, one estimate from the 1780s states that there was one still for every 15 residents. People used whiskey to pay bills and local taxes, and even to compensate their school teachers and clergy. Hence whiskey evolved into a form of currency in its own right, at least west of the Alleghenies. The Revolutionary War had left the American national government broke and insolvent, with a reputation for having issued worthless paper currency, called “Continentals. Congress passed laws that forced people to use these notes literally at the point of a soldier’s gun. Inflation and bad debt, both of pandemic proportions, were ruinous to any semblance of a post-Revolutionary national economy. The Articles of Confederation, which lasted from 1777-1789, did little to remedy the sad state of monetary affairs in the young nation. The members of the Constitutional Convention of 1787 were forced of absolute necessity to address monetary affairs. The U.S. Constitution, finally ratified in 1789, specifically made provision for a currency based on gold and silver, as well as for a national bankruptcy law in order to address the oceans of bad debt that permeated every level of colonial society. But it was one thing for the Constitution to declare, as it did, that no “Thing but gold and silver Coin” could be used as legal “Tender in Payment of Debts.” It was quite another for this sovereign edict to become reality. In the earliest days of the federal government under the new Constitution, Secretary of the Treasury Alexander Hamilton proposed that the national government raise its revenue by levying excise taxes. Among Hamilton’s proposals for raising revenue was a tax on whiskey, that staple of life along the western frontier. For a variety of reasons, this “whiskey tax” immediately aroused the sentiment of many people that the new federal government was simply the replacement of the British King by swindling, moneyed, East Coast speculators and tyrants. The legislation that enabled the whiskey tax was reflective of the goals of Alexander Hamilton, with his desire to create a strong central government and a nation of industry. The tax placed the levy on the point of distillation, not at the point of sale. Hence many farmers and small-businessmen found themselves taxed on the capacity of their stills, which included the amounts of whiskey they consumed personally, let alone what they discarded due to waste or spoilage. The federal tax rate was lower on larger stills, thus favoring bigger businesses at the expense of small, family-run operations. And the federal tax had to be paid in, of all things, gold or silver coin, of which there were precious few during the best of times on the frontier. As a result, the new tax almost immediately destroyed the value of whiskey as a form of barter currency in its own right. But without whiskey to lubricate the wheels of commerce, the frontier economy soon began to grind to a standstill. Stay tuned for Part II, tomorrow... Byron King, for The Daily Reckoning Joel’s Note: By now you’ve probably heard that the unabashedly irreverent Whiskey & Gunpowder publication, Agora Financial’s “rough and tumble” idea crucible, is joining forces with Laissez-Faire Books. This change will occur next Monday. To be absolutely clear, the Whiskey name isn’t going anywhere. Nor is the website. Nor is the indomitable spirit of Whiskey. The idea behind this “free-market marriage” is to combine the refined, intellectual sensibilities of Laissez-Faire Books with the bare-knuckled, editorial gumption ofWhiskey. The team is excited and looking forward to fulfilling all your “Salon-meets-Saloon” liberty-minded needs. So, what does this all mean? If you’re an existing Whiskey reader, you don’t need to do a thing. Your Laissez-Faire Today subscription, and all the goodies that entails, will begin automatically next Monday. If you are not an LF Today or Whiskey reader, we invite you to either sign up for LF Today (it’s free at) Lfb.org...or proceed directly to Club membership, here. --------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com