Topic: Gold and Silver
Save Ron Paul's Voice - A Money Matrix Addendum

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Learn how by reading. Article is intended as a poke-in-the-eye for members of the Ron Paul Revolution who complain about the bailouts and the financial, banking, and housing crises and do not realize that they may in fact be hypocrites.

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by Jake Towne, the Champion of the Constitution
(libertarian)
Sunday, September 28, 2008

I think recent interviews on the antics of the federal government are making our fearless grandfather quite hoarse.  The fairly dire economic and monetary faultlines and consequences Congressman Ron Paul has predicted for the past thirty (30) years are now evident even to the masses in the American (and global) financial system.  All members of the Revolution and the Campaign for Liberty have a stark choice.  Listen to him in between the lines and heed his advice. Or listen to the siren song of Bernanke, Bush, and Paulson. Your choice. Let me explain.

Listen to Bernanke, Bush, and Paulson?

It is interesting to hear the pro-bailout talk these days from the likes of our modern-day Roman triumvirate of Bernanke, Bush, and Paulson. Per the very latest from Bloomberg, the latest $700 billion bailout will pass shortly, possibly on Monday, September 29.

Whereas Bush remarked last week that "we must act now to protect our nation's economic health from serious risk" at the start of this year he had (the entire triumvirate actually) adamantly claimed that the economy was healthy, see below excerpt from January 4, 2008:

"The financial markets are strong and solid. And I want to thank [Paulson and his President's Working Group on Financial Markets] for being diligent. This economy of ours is on a solid foundation, but we can't take economic growth for granted."

Paulson's backtracking (check out this article Henry Paulson - A Quick Look at the Man) has been even more entertaining to watch.

"If you've got a squirt gun in your pocket you may have to take it out. If you've got a bazooka, and people know you've got it, you may not have to take it out."

Well, Paulson did take out his pocket 'Bazooka Policy' weapon and fire, nationalizing Fannie and Freddie into "conservatorships" earlier this year and in the process introducing this brand-new term to the Marxist dictionary. However, the continued need for the $700 billion Paulson Plan confirmed what I already suspected and now is plain to the entire world. Paulson is not packing a bazooka; he is packing a squirt gun.

Bernanke spends most of his time in Congress as a whipping boy like usual, trying to leave before he has to answer actual questions. When Congressman Paul recently asked him where in the Constitution does it give the Federal Reserve the power to create credit, Bernanke did not even come close to addressing this topic in his response.

Even Sarah Palin, the Washington, economics, and foreign policy newbie and possible soon-to-be-heartbeat-away-from-POTUS, even committed a faux pax by dropping the D-word in this full interview clip where Katie Couric, in my humble opinion, ripped her to pieces and left her for the crows.  Jack Cafferty of CNN agrees here.

Couric: If doesn't pass do you think there is a risk of another Great Depression?

Palin: "Unfortunately that is the road that America may find itself on.  Not necessarily this as it's been proposed, has to pass or we're gonna find ourselves in another Great Depression.  But there has got to be action taken., bi-partisan effort..."

The strange thing is that most Americans believe the latest $700 billion bailout is designed to help assuage the financial pains of common Americans with credit or mortgage problems. Besides assigning Paulson as unquestionable financial dictator, the bailout is aimed at soothing the pain of our investment bankers, those Wall Street geniuses who manage to contribute very little actual economic growth theirs is a realm of financial capitalism, not the layman's idea of traditional production capitalism. Both the bill's sponsor, Senator Christopher Dodd (D-CT) and Paulson have agreed that "the proposal will not help a single family save their home." Perhaps the bailout can help these Wall Street geniuses bring home their six-plus-figure bonuses to their families for Christmas this year. However, I do have to admit that others besides Dr. Paul appear to understand some of the basics. Here is a speech I mostly agree with from Representative Marcy Kaptur (D-OH) entitled "They Want Mama to Make It Better."

Or Listen to Ron Paul and I...

Ron Paul, as one of the few lucid voices in Congress, is finding that it was a good thing he decided to not completely burn his bridges with the mainstream media. Below is an excerpt from the end of a recent 10-minute video with Fox News. My gripe is only now when the country is gripped by the very situation Paul predicted earlier this year (and indeed, for the past 20+ years), ONLY NOW, do they give him a whole 10 minutes when they would not even give him the time of day or even invite him to the NH debate when he was a presidential candidate.

Fox Talking Head: "Why shouldn't we take [Bernanke and Paulson] for what they are telling us if we don't do this, we are going to be in a lot of trouble?"

Ron Paul: Well, some people believe that but not many people in the country believe it and not a whole lot of congressmen are believing it right now. But they may well have their arms twisted out of fear and vote for it, but illiquid assets are illiquid because the prices are too high. So to dump that on the taxpayer makes no sense! You want the prices [to go] down.

FTH: "...If it's not that dire, why would they be here testifying yesterday and today making such a case for [the $700 billion bailout]?

RP: "Well they believe it, they believe it. But I don't think they have a clear shot at being credible. I mean they've been involved with Wall Street, they've been involved with Goldman Sachs for a long time. But they've studied different economics. They haven't studied Austrian free market sound money economics. They are all Keynesians. They believe in intervention and planning and regulating and inflation. A system that is not viable. And this fiat system been around only since 1971. A fiat monetary system never lasts, it always ends! Gold and Silver money is the only thing that lasts for the ages. We are seeing the ends of Bretton Woods Two. Bretton Woods [One] was predicted to end even as early in 1946, it ended in 1971. Others have predicted that Bretton Woods Two is a pseudo-paper standard and is a dollar standard. We have lived way beyond our means because we got to create all this reserve currency that we didn't have to work for. But now the dollar system is going to be rejected. Everything we are doing right now will be a burden and weight placed on the dollar."

Contained within many of Paul's clips is usually an inference to buy gold and silver, but this seems to be lost on the deaf ears on many of Paul's supporters. Many columns at this site and others, as well as in mainstream media, speak of the conventional wisdom of the moment. The conventional wisdom right now is overall apprehension and a "flight to quality" which is apparently to buy short-term US treasuries with miniscule yields approaching zero.

Don't Americans see the trap? Forget the fact that the "full faith and credit" of the United States dollar is under a grievous assault by Bernanke, Bush, and Paulson. Forget the fact that inflation, stagflation, and possibly even hyperinflation long-term are likely. My fellow Americans, my fellow Revolutionaries, the game is rigged, and a trap is set.  Expecting a dollar crash? Actually, I allege this probably will not occur, at least not in the sense that most dollar collapse theorists expect.  Follow my Money Matrix series, in the near future I will publish my thinking. The last few months I have been studying economics as if I had a final exam on the morrow. Although I ultimately in theory side with Paul, Rothbard and Mises, I agree with plenty of ideas from Hayek, even Quigley, Greenspan and Keynes. Although I strongly disagree with Keynesian principle of central banking and state-controlled economics, I do agree with these statements from its founder:

"If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has."

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

- Lord John Maynard Keynes, 1919, The Economic Consequences of Peace, pages 103-104

Decide for yourself if you want to ignore Ron Paul and me. We are driving ourselves hoarse trying to explain this to you, but if you want to ignore us, go ahead.  Look again at what I bolded above from Paul:

"A fiat monetary system never lasts, it always ends!  Gold and Silver money is the only thing that lasts for the ages."

Paul will rarely come right out and say it directly, but he is not going to kick you in the face.  Instead you have me writing to you trying to punch you in the brain. If you look up his economic writings, Congressional honest money bills, and stock portfolio, you will notice that he has acted on his principles. Paul is a strong proponent of owning physical gold and silver bullion.

[Aside: Purchasing ETF's such as GLD and SLV is a bad idea since you actually never own the metal and they may default or become frozen by governments at any moment. Think I am overstating the risk from your government? Study the FDR confiscation of the American public's gold in the 1930s and the recent ban on short selling about 800 financial stocks. Or ask a Frenchman, they are banned from crossing their nation's borders carrying any gold.]

[Also, on retrospect, I did not quite mean for this article to rant so militantly pro-gold and -silver, which it certainly does.  Note that I do not advocate putting all of your eggs in the precious metal basket, and I also really do not care how much you have - 1 oz., 2oz, or a lot more, principally speaking its all the same to me.  Again, my key point that I am trying to support here is that if you support Ron Paul and the Campaign for Liberty but do not own any precious metals, I view it as hypocritical.  That said, do whatever you want with your money :)  However, I will comment that its interesting that if you browse conservative saving and investing literature from the 1990s, many recommend holding 5% gold.  In the 2000s, the typical strategy  does not mention gold, and just recommends owning some real estate, 80% stocks and index mutual funds/ETFs and 20% bonds.]

To wring your hands, moan about the government powers that be that will "bailout" and "protect" our financial system without believing and possessing honest money, primarily gold but also silver, is the hypocrisy of the weak.  C'mon! Gold and silver are even enshrined in our constitution as the very definition of money in Article 1, Section 10. I seriously do not want to read another unprincipled bailout article that portrays its author as shivering in fear without a clue instead of recommending honest money or something likewise sensible like the Monetary Reform Act or at least buying a g**damn assault rifle to protect their family.

That said, as I write here, the gold market (and also silver) are artificially suppressed by the central banks, so the spot prices could easily drop precipitously or rise 10% in one day as they did earlier this month. However, that does not change the fact that contemporary global fiat currencies must inflate or die.  Concentrate not on the price of the metals, but on how many grams you physically control remember the true unit of an honest currency is mass not bucks and cents. Furthermore, there is no telling exactly what will happen if the price of gold and silver take off I suspect the central banks may quickly create and then spend their fiat money to purchase all available metal on the market while governments pass laws designed to block or inhibit precious metal ownership.

We must help force the debate on monetary policy. Ownership of physical gold and silver in the hands of We the People is crucial. Here is a checklist in case you agree with what I just wrote. I do realize I have ranted a bit here, sorry. If anyone wants to post either additional sources, or better yet, counter-arguments, please paste in below. I have tried to make it up to you with a list of educational (but yes, dominantly pro-gold and pro-silver) source list below.  Let me stress here though to make up your own mind.

1. Get Physical Gold and Silver. Visit a US Mint authorized dealer near you and buy Silver or Gold American Eagles. Or Canadian Maple Leafs. Or South African Gold Kruggerands. Except they might not have any. In that case, buying Bag Silver' or pre-1964 silver coins (Halves, Quarters, Dimes) that are 90% silver by mass is your best bet. For the troy ounce (31.1 grams) they will be about the spot price of silver and so will be cheaper than Silver Eagles. (The easiest way to remember this is that $1 of Face Value = approx 0.725 TOz silver, but its typically sold at 0.715 TOz to account for wear and tear.) At this point, buying gold or 10, 100, or 1000 oz. silver bars is fine too. Do note that if you do ever decide to sell, capital gain taxes will wipe away 28% of your profits until we get that unconstitutional law repealed.
2. If gold and silver is not available locally, the next place is a spot dealer, of which you need to search for one, or if you have large sums of money you could try buying paper contracts and taking delivery (I am no help in either case). For a spot dealer that will act as a warehouse I can only recommend one, which is www.goldmoney.com. You can create an account for free, but need to pay for the postage to send in an application which takes about a week. The site's idea of being an insured money warehouse or electronic debit card backed by physical gold or silver may well be our next monetary system. The owner is James Turk, an ex-banker of the "Atlas Shrugged"-mold who is a board member of GATA. Research him and www.GATA.org. Since GoldMoney deals in London Good Delivery Bars, they are able to procure bars on the same scale as central banks and major exchanges. [Unless you have an extra $350K for gold or $135K for silver lying around, you are locked out of the market without a spot dealer too.]  To date, there have not been shortages in these banking bars, just in the much smaller coins. The key risks are that if the company ever fails you may be paid in crappy fiat currency instead of metal, the metal is not in your physical possession, and you never have perfect certainty the vaults indeed have the metal. I believe the latter to be negligible due to independent and frequent internal audits, security setup and the published bar lists. The site claims absolute ownership and no counterparty risk. This is just my humble opinion, so decide for yourself. This is no substitute for physical ownership but is a nice way to diversify.
3. Don't have much money? Just buy a few ounces of silver at $14/oz or so and I will shut up.
4. Please join our 111,200+ force at www.CampaignForLiberty.com. We are looking for more savers, libertarians, constitutionalists, fiscal conservatives, real republicans, and antiwars.
5. You can also send a note to your Congress representatives to enact Ron Paul's Honest Money initiatives. Join this www.DownsizeDC.org campaign.
6. My father would want me to add here that, while you are at it, buy a gun. I think you can figure out why.

For Honest Money and the Restoration of the Republic!

Jake, the Champion of the Constitution

[Reach the Author Here!]

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

"You can’t quit until you try!
You can’t live until you die!

You can’t breathe until you choke!
You gotta laugh when you’re the joke!
There’s nothing like a funeral to make you feel alive!
Just open your eyes and see that life is beautiful!

... No one will cry at my funeral!

There’s nothing like a trail of blood
to find your way back home "

 - from Sixx A.M. "Life is Beautiful." I agree.  The central banks are dripping blood.  Get home and protect your family before they arrive.

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Gold and Silver Investigation Source List

A Quick History of Gold

GO GATA! The premise of the Gold Anti-Trust Action Committee that the world gold market is artificially suppressed by central banks in order to make their currencies look stronger.

www.GoldMoney.com - See my comments above, GoldMoney is an international gold and silver warehouse with insured vaults in London and Zurich.  Ability to hold and pay interest on four major fiat currencies, issue payments in goldgrams, etc. Again, I trust them as an alternative way to diversify where and how my physical metal is stored, but I urge you to be wary and thoroughly investigate this and ANY method where someone else holds your metal for you before investing.  The best is always physical possession although you should always be creative with your storage locations :)

The World Gold Council - A wealth of information on central bank holding, gold derivatives, supply and demand statistics and more.  Free login required.

Rothbard, Murray N. "What has the Government Done with Our Money?" (1990) A 50-page document that describes Austrian economics. This is the critical key to everything in this series. Rothbard has written a host of other great sources as well, like the 1994 work "The Case Against the Fed."

www.jsmineset.com  Expert Jim Sinclair shares his thoughts on gold investing, financial markets, and trading.  For free!

www.DollarCollapse.com This site's main use is as a newsfeed for dollar, gold, and housing market current events.  They explain their dollar collapse theory here, which I partly agree with.

www.SilverSeek.com I particularly enjoy reading the columns of Theodore Butler and Jason Hommel

www.GoldSeek.com  The sister site of SilverSeek.  The Mogambu Guru's (aka Richard Daughty) column has tunnel vision but hilarious and educational..

www.professorfekete.com A seriously pro-gold scholar.

www.lemetropolecafe.com Offers timely gold market advice and a daily "Midas" column.  Try the 2-week free trial.

Paul, Ron. "Pillars of Prosperity." (2008) A 400+ page compilation of Dr. Paul's writings. After reading these, one realizes that Dr. Paul did very little recent work in putting together his best-selling "The Revolution" as most of this book was written 20+ years ago.

Millar, Peter. "The Relevance and Importance of Gold in the World Monetary System." (2006). Self-explanatory title. Understanding Graph 2 on page 3 is key.

Greenspan, Alan. "Gold and Economic Freedom." (1966) Interesting work from the Maestro prior to his conversion to inflationary Keynesian theory.

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The Money Matrix Series

America, Were Michael Phelps' Eight Olympic Gold Medals Worth Winning?
Published: August 24, 2008
Michael Phelps and other American athletes are bringing back loads of Gold, Silver, and Bronze Medals from the Beijing Olympics. A young libertarian economist asks if it was worth it.

The Money Matrix - Prelude (PART 1/15)
Published: August 1, 2008
Prelude and Source List to a Series on Global Monetary Policy of Control and Explaining Big Government's Finances

The Money Matrix - What is a Dollar Bill Worth? (PART 2/15)
Published: August 2, 2008
"Living so free is a tragedy when you can't see what you need to see!" - Powerman 5000 'Free'

The Money Matrix - What Makes Money Money? (PART 3/15)
Published: August 3, 2008
A quick history of money per Rothbard followed by the properties of money per Ron Paul

The Money Matrix - If You Don't Know Who the Sucker Is, Then It's You! (PART 4/15)
Published: August 7, 2008
The Money Matrix series rolls on by asking 'What are the Types of Money?' and 'What is the "Best" Currency and Why?'

The Money Matrix Explores Seigniorage - Do not give in to evil, but proceed ever more boldly against it. (PART 5/15)
Published: August 24, 2008
The Money Matrix explores Seigniorage as Legalized Silent Plunder with an introduction into medieval and modern banking.

A Money Matrix Addendum: Citigroup and GATA Call for an End to the Suppression of the Gold Market
Published: September 22, 2008
The Suppression of the Gold Market Goes Mainstream, Thanks to Citigroup. And a few interesting back-of-envelope calculations about where the price of gold could go.

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 Other Honest Money Articles by the Author

Henry Paulson - A Quick Look at the Man
Published: September 27, 2008
Everyone in the country is talking about the Paulson Plan, wherein one clause would make Paulson de-facto financial dictator of the United States, accountable to no one. The article is a summary of my brief investigation and asks for help in finding out WHO IS THIS GUY?

WaMu Gets the FDIC WHAM-O!
Published: September 26, 2008
The Seattle-based Washington Mutual Bank is shut down by the FDIC. The Raiders from the last Great Depression, JP Morgan, Strike Again. Have you protected yourself?

US Treasury Seizes Fannie Mae and Freddie Mac! And What It Means
Published: September 8, 2008
"You poor kid, there have been centuries of philosophers plotting to turn the world into just that - to destroy people's minds by making them believe that that's what they are seeing. But you don't have to accept it. You don't have to see through the eyes of others, hold on to yours, stand on your own judgment, you know what that is, IS - say it aloud, like the holiest of prayers, and don't let anyone tell you otherwise." - Ayn Rand

Bob Barr, What is the Cost of Money? Because Ron Paul and I think you Don't Know (PART 4/6)
Published: June 6, 2008
A Ron Paul Revolutionary asks Bob Barr if he knows how much a Steel Penny is worth.

Dear Bob Barr, Ron Paul Knows where the "Road to Roota" Leads, Do You? (PART 5/6)
Published: June 6, 2008
Bob Barr, relax for a bit and read a lovely Federal Reserve state-sponsored comic book for schoolchildren. Then tell me what it means.

Billionaires for the Ron Paul Revolution (PART 6/6)
Published: June 6, 2008
Bob Barr, where are the Billionaires that Support You? Jim Rogers, Axel Merk, Peter Schiff all support Ron Paul.

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The "Pssssst.... We Live in a Police State!" Collection

Spill a Soda, Go to Jail for a Year
Published: September 27, 2008
The latest strange-but-true antics of oppression from our dear Police State. Check out the story of the infamous soda-spiller at a Veteran's Affairs Hospital in Idaho.

Police State Invades Mayor's Home & Kills His Dogs (UPDATED)
Published: August 1, 2008
"It was inconceivable to me that my government would be coming through my door." - the Mayor of Berwyn Heights, Maryland, or a recent police raid on his residence

We the People versus the Might of the US Government
Published: March 2, 2008
What do the experiences of SAS trooper Ben Griffin, Hope Steffey, and Jose Padilla all have in common? They show the Might of Government is overwhelming Right. We the People want Justice!

Tortured Twins: John McCain and the Trial of Khaled Sheikh Mohammed
Published: September 2, 2008
To very little public fanfare from my beloved American media, a Mockery of a Trial of Khaled Sheikh Mohammed, alleged al-Qaeda mastermind, is getting underway in Guantanamo Bay, Cuba. Is John McCain losing any sleep over it? Doubt it.

US Military Draft Creeps Closer - Ron Paul and I Defy Senators "Barackcuda" Obama and "Just-Bomb-It" McCain
Published: July 21, 2008
Gaze ye at the Face of Evil and know it for what it truly is. America, Have No Fear.

Death, Taxes, War, and Heroes
Published: February 22, 2008
The Fight for Freedom in America - The Death of Joe Louis's Sister, the IRS, the Iraq War, Ron Paul, Mike Gravel, and the Brown Bomber

Ron Paul Reports - The "Mother of All Bailouts" Bill
Published: July 24, 2008
The "Mother of All Bailouts" Bill. And the IRS will now access all your credit card transactions. Really.

©2008 Jake Towne, the Champion of the Constitution, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Sunday, September 28, 2008
Last modified: Thursday, October 30, 2008

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