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The Daily Reckoning | Friday, November 25, 2011 Kicking the can until you kick the bucket... Reevaluating liberty in the “land of the free”... Plus, Bill Bonner on giving thanks for the under-appreciated 1%, and more... ------------------------------------------------------- Congress Caught Red-handed Legally Raiding the Markets With “Insider Trades” Would you ever spend a million dollars to get a job that pays a fraction of that per year? New information proves that’s exactly what your elected “officials” are doing... on a regular basis... and with good reason. Click here to find out more. The Modern Government Fallacy Fulfilling Empty Promises by Turning on the Printing Press Bill Bonner Reckoning today from Baltimore, Maryland... We were too busy yesterday to pay much attention to the markets. Besides, markets in the US were closed. Overseas, investors held their breath and their money. Merkel, Sarkozy and Monti were meeting to try to decide what dumb thing to do next. They’ve already hemmed and hawed. They’ve delayed and procrastinated. They’ve kicked the can down the road several times. And now it looks like they’ve come upon the can again...with no more road left. Now, it’s time to kick the bucket. Yes, dear reader. All debt must die. Sooner or later, all debt expires. Either it is paid off as planned. Or not. Since ‘not’ is the order of the day, everyone waits to find out who will not get what is coming to him... ..the millions of lumpen voters who believed that they could get something for nothing? ..or the few bankers, speculators, and risk-takers — the upper 1% — who saw an opportunity to make some money? The whole idea of modern government has been to promise the voters things you can’t afford to give them...and then borrow money to fill the gap. Eventually, as any fool could see, you’d run out of willing lenders and the jig would be up. But lenders are either surprisingly generous or amazingly stupid. Colleague Joel Bowman tells us that lenders to Argentina are more on the ball. He quotes a resident of Buenos Aires, explaining the difference between government in the developed world...and government on the pampas: “In your country, it probably takes months, or maybe even years for politicians to break their promises. Here, they do so within weeks.” Everything seemed to be going along fine in America and Europe...until the private sector got into trouble. Then, the banks were in trouble too...because they had lent money to private lenders who couldn’t pay them back. In America, the feds stepped in. After Lehman Bros. collapsed, they made it clear that the money would be there to bail out any major lender. As for the government itself, there was never any question that its credits were good; after all, it has a printing press! In Europe, things are not so simple. Because neither Spain, nor Ireland, nor Italy, nor Greece has a printing press. Collectively, Europe has a printing press, of course. But it’s under the control of German bankers. And so far, the Germans have as much as said that if there are any printing press bailouts it will be over their dead bodies... ..which is the way the Greeks, Italians, Spanish, Irish, and all the rest of Europe would prefer it... ..But as of today, the Germans are still among the quick and the printing presses are still not running red hot. As for tomorrow...anything could happen! But a couple things are clear. First, the debt won’t go away...it can’t be paid off...and — barring some growth breakthrough — neither Europe, America, nor Japan can “grow its way out.” Second, people in all three major developed economies are going to have to accept lower standards of living. In America, real, disposable household incomes — after energy and food costs, taxes, and debt-service — are going down. And people must now stop spending so much and save for their retirements — leading to less consumer spending, high unemployment and a more sluggish economy. In Europe, government-provided benefits must be curtailed. In Europe and America people have been living beyond their means for many years, financed by going deeper and deeper into debt. The end of that cycle seems to have arrived in Europe...and, for the private sector, in America. The US public sector, on the other hand, still finds it easier to borrow than to cut spending. This will allow it to buy some more rope with which to hang itself later. Special Daily Reckoning Holiday Gift Set: One Ounce of Gold, Ten Ounces of Silver As a special thanks for being a long-suffering Dear Reader, the DR team wants to give you a special Holiday Gift set. It contains an ounce of 99.99% pure gold and ten ounces of pure silver. Go here to see what the catch is as soon as you can... The Daily Reckoning Presents The Idea of America Jeffrey Tucker There are occasions in American life — and they come too often these days — when you want to scream: “what the heck has happened to this country?!” Everyone encounters events that strike a particular nerve, some egregious violations of the norms for a free country that cut very deeply and personally. We wonder: do we even remember what it means to be free? If not — and I think not — The Idea of America: What It Was and How It Was Lost (hardcover and Kindle), a collection of bracing reminders from our past, as edited by William Bonner and Pierre Lemieux, is the essential book of our time. I’ll just mention two outrages that occur first to me. In the last six months, I came back to the country twice from international travel, once by plane and once by car. The car scene shocked me. The lines were ridiculously long and border control agents, clad in dark glasses and boots and wearing enough weaponry to fight an invading army, run up and down the lines with large dogs. Periodically, US border control would throw open doors of cars and vans and let the dogs run through, while the driver sits there poker faced and trying to stay calm and pretending not to object. When I finally got to the customs window, I was questioned not like a citizen of the country but like a likely terrorist. The agent wanted to know everything about me: home, work, where I had been and why, and whether I will stay somewhere before getting to my destination, family composition, and other matters that just creeped me out. I realized immediately that there was no question he could ask me that I could refuse to answer, and I had to do this politely. That’s power. The second time I entered the country was by plane, and there were two full rescans of bags on the way in, in addition to the passport check, and a long round of questioning. There were no running dogs this time; the passengers were the dogs and we were all on the agents’ leashes. Whatever they ordered us to do, we did, no matter how irrational. We moved here and there in locked step and total silence. One step out of line and you are guaranteed to be yelled at. At one point, an armed agent began to talk loudly and with a sense of ridicule about the clothes I was wearing, and went out of his way to make sure everyone else heard him. I could do nothing but smile as if I were being complimented by a friend. That’s power. Of course these cases are nothing like the reports you hear almost daily about the abuse and outrages from domestic travel, which now routinely requires everyone to submit to digital strip searches. We have come to expect this. We can hardly escape the presence of the police in our lives. I vaguely remember when I was young that I thought of the police as servants of the people. Now their presence strikes fear in the heart, and they are everywhere, always operating under the presumption that they have total power and you and I have absolutely none. You hear slogans about the “land of the free” and we still sing patriotic songs at the ballpark and even at church on Sunday, and these songs are always about our blessed liberty, the battles of our ancestors against tyranny, the special love of liberty that animates our heritage and national self identity. The contrast with reality grows starker by the day. And it isn’t just about our personal liberty and our freedom to move about with a sense that we are exercising our rights. It hits us in the economic realm, where no goods or services change hands that aren’t subject to the total control of the leviathan state. No business is really safe from being bludgeoned by legislatures, regulators, and the tax police, while objecting only makes you more of a target. Few dare say it publicly: America has become a police state. All the signs are in place, among which is the world’s largest prison population. If we are not a police state, one must ask, what are the indicators that will tell us that we’ve crossed the line? What are signs we haven’t yet seen? We can debate that all day about when, precisely, the descent began but there can be no doubt when the slide into the despotic abyss became precipitous. It was after the terrorists hit on 9/11 in 2001. The terrorists wanted to deliver a blow to freedom. Our national leaders swore the terrorists would never win, and then spent the following ten years delivering relentless and massive blows to liberty as we had known it. The decline has been fast but not fast enough for people to be as shocked as they should be. Freedom is a state of being that is difficult to recall once it is gone. We adapt to the new reality, the way people adapt to degenerative diseases, grateful for slight respites from pain and completely despairing of ever feeling healthy and well again. What’s more, all the time we spend obeying, complying, and pretending to be malleable in order to stay out of trouble ends up socializing us and even changing our outlook on life. As in the Orwell novel, we have adjusted to government control as the new normal. The loudspeakers blared that all of this is in the interest of our security and well being. These people who are stripping us, robbing us, humiliating us, impoverishing us are doing it all for our own good. We never fully believe it but the message still affects our outlook. The editors of The Idea of America are urging a serious national self assessment. They argue that freedom is the only theme that fully and truly animates the traditional American spirit. We are not united in religion, race, and creed, but we do have this wonderful history of rebellion against power in favor of human rights and freedom from tyranny. For this reason the book begins with the essential founding documents, which, if taken seriously, make a case for radical freedom not as something granted by government but as something that we possess as a matter of right. The love of liberty is rooted in our Colonial past, and it is thrilling to see Murray Rothbard’s excellent account of the pre- revolutionary past printed here, with followups to make the point by Patrick Henry and Thomas Paine. Lord Acton makes the next appearance with a clarifying essay about the whole point of the American Revolution, which was not independence as such but liberty. He forcefully argues that the right of secession, the right to annul laws, the right to say no to the tyrant, the right to leave the system, constitute great contribution of America to political history. As you read, you wonder where these voices are today, and what would happen to them if they spoke up in modern versions of the same thoughts. These revolutionaries are pushing ideas that the modern regime seeks to bury and even criminalize. The voice of the new country and its voluntaristic themes is provided by Alexis de Tocqueville, along with the writings of James Madison. As Bonner and Lemieux argue in their own contributions, the idea of anarchism, that is, living without a state, has always been just beneath the surface of American ideology. Here they bring it to the surface with an essay by proto-anarchist J. Hector St. John Crevecoeur, who said of America: “we have no princes for whom we toil, starve, and bleed: we are the most perfect society now existing in the world.” The anarchist strain continues with marvelous writings by Thomas Jefferson, Henry David Thoreau, Volairine de Cleyre, plus some court decisions reinforcing gun rights. The book ends with another reminder that America is an open society that is welcoming to newcomers. The final choice of Rose Wilder Lane’s “Give Me Liberty” is inspired. The value of this book is dramatically heightened by the additional material from Bonner, whose clear prose and incisive intellect is on display here both in the foreword and the afterword, as well as Lemieux, whose introduction made my blood boil with all his examples of government gone mad in our time. Bonner in particular offers an intriguing possibility that the future of the true America has nothing to do with geography; it exists where the free minds and free hearts exist. The digitization of the world opens up new opportunities for just this. The contrast is stark: what America was meant to be and what it has become. It is hard to take this kind of careful look. Truly honest appraisals of this sort are rare. Adapting, going along, pretending not to notice are all easier strategies to deal with the grim situation we face. But this is not the way America’s founders dealt with their problems. This book might inspire us to think and act more like we should. We should prepare. In the words of Thomas Paine: O ye that love mankind! Ye that dare oppose, not only the tyranny, but the tyrant, stand forth! Every spot of the old world is overrun with oppression. Freedom hath been hunted round the globe. Asia, and Africa, have long expelled her. — Europe regards her like a stranger, and England hath given her warning to depart. O! receive the fugitive, and prepare in time an asylum for mankind. Regards, Jeffrey Tucker, for The Daily Reckoning Let Ronald Reagan Save Your Retirement Who knew a “loophole” Ronald Reagan signed into law way back in 1986... Might one day save your retirement? Click here now for all the details. Bill Bonner Long Live the 1% Bill Bonner What did you give thanks for, Dear Reader? Our thoughts turned to house, hearth, family, friends... ..and to rich people. Yes, dear reader, we gave thanks for the wretched 1% of the population that has made such spectacular financial progress over the last 10 to 20 years. They are reviled. They are hated. They are criticized and blamed. Poor things! What have they done to deserve it? The typical working stiff earns less real money today than he did 40 years ago. And as for the poor...their lot in life is even worse. When we drove down to Woodbine, Virginia...on our way to a family gathering...we were surprised to find a corner where there were dozens of Latin Americans, all hoping for work. They sat under a tree. They stood on the sidewalk. There were groups of them. Even though it was raining, lightly, they kept their vigil...a few raised their hands as we drove by in a pick-up truck. What a life! These poor fellows must turn out every day...hoping that someone will pick them up...put them to work...and pay them in cash. No health care insurance. No pension. No paid holidays. No nothing. And then...what about the middle classes? Even high-earning two- income professional couples find it hard to make ends meet. Taxes take a big chunk of their income. And then transportation takes out another bite. Send a child or two to college...have an accident...get divorced...fall ill — it doesn’t take much of a set- back to tilt a middle-class family back below the poverty line. And even when things go well, the middle classes have a rough time of it. They earn enough to live well...but they struggle to keep up with it. Two cars...two jobs...two children...sometimes two mortgages — and only 24 hours in a day. The poor...the middle class...the proletariat in all its forms...is barely staying even. Can it invest money to build more wealth in the future? Can it power the economy to greater output with more demand for services and stuff? Can it take the time to discover new things...to explore new ideas...to follow up on its artistic, philosophic, religious or scientific hunches? Nope. The lower and middle classes are spent out. Used up. Exhausted. Their houses have lost value. Their real incomes are falling. They’re out of luck. But what about the 1%? Thank God for the rich! They may be greedy...or not. They may be conniving, underhanded and manipulative...or not. They may be zombie insiders who have worked the system for their own benefit...or not. But they’ve surely made it big. And now the nation turns its tired eyes to them. It is up to them now. They must invest in new factories and new businesses; who else has the money? They must spend...spend...spend to keep the wheels of commerce turning; who else can afford to? And they must also pay the taxes necessary to keep the zombies going. They already pay more than the bottom 95% of taxpayers combined. They already pay 40% of all the taxes collected by the feds. Each one of the 1% already carries 10 to 20 zombies on his back. Yes, dear reader, yesterday, we did not curse the 1%. We gave thanks for them. Long may they live! And we hope the b*****ds will remember this if we need to borrow money from them. Regards, Bill Bonner, for The Daily Reckoning