Gore Vidal on The Erosion of the Constitution in the Wake of Terrorist Attacks

From a fascinating 2001 essay on Timothy McVeigh. In apologia, I neither condone nor advocate violence, except in self defense. My own personal philosophy of violence, which I half jokingly refer to as militant pacifism, is “Cause me no harm (and I shall do likewise) or else”. In a later essay I will examine the strategic error of political violence in the united States. For now, please enjoy some choice excerpts from Vidal’s essay.

As for “the purposes of state police power,” after the bombing, Clinton signed into law orders allowing the police to commit all sorts of crimes against the Constitution in the interest of combating terrorism. On April 20, 1996 (Hitler’s birthday of golden memory, at least for the producers of The Producers), President Clinton signed the Anti-Terrorism Act (“for the protection of the people and the state”—the emphasis, of course, is on the second noun), while, a month earlier, the mysterious Louis Freeh had informed Congress of his plans for expanded wiretapping by his secret police. Clinton described his Anti-Terrorism Act in familiar language (March 1, 1993, USA Today): “We can’t be so fixated on our desire to preserve the rights of ordinary Americans.” A year later (April 19, 1994, on MTV): “A lot of people say there’s too much personal freedom. When personal freedom’s being abused, you have to move to limit it.” On that plangent note he graduated cum laud from the Newt Gingrich Academy.

——————————————————————————

Shortly after McVeigh’s conviction, Director Freeh soothed the Senate Judiciary Committee: “Most of the militia organizations around the country are not, in our view, threatening or dangerous.” But earlier, before the Senate Appropriations Committee, he had “confessed” that his bureau was troubled by “various individuals, as well as organizations, some having an ideology which suspects government of world-order conspiracies—individuals who have organized themselves against the United States.” In sum, this bureaucrat who does God’s Work regards as a threat those “individuals who espouse ideologies inconsistent with principles of Federal Government.” Oddly, for a former judge, Freeh seems not to recognize how chilling this last phrase is.

——————————————————————————-

The C.I.A.’s former director William Colby is also made nervous by the disaffected. In a chat with Nebraska state senator John DeCamp (shortly before the Oklahoma City bombing), he mused, “I watched as the Anti-War movement rendered it impossible for this country to conduct or win the Viet Nam War.… This Militia and Patriot movement … is far more significant and far more dangerous for Americans than the Anti-War movement ever was, if it is not intelligently dealt with.… It is not because these people are armed that America need be concerned.” Colby continues, “They are dangerous because there are so many of them. It is one thing to have a few nuts or dissidents. They can be dealt with, justly or otherwise [my emphasis] so that they do not pose a danger to the system. It is quite another situation when you have a true movement—millions of citizens believing something, particularly when the movement is made up of society’s average, successful citizens.” Presumably one “otherwise” way of handling such a movement is—when it elects a president by a half-million votes—to call in a like-minded Supreme Court majority to stop a state’s recounts, create arbitrary deadlines, and invent delays until our ancient electoral system, by default, must give the presidency to the “system’s” candidate as opposed to the one the people voted for.

PATRIOT ACT Renewel

Cogent and succinct analysis from Green Mountains Homesteading

The USA PATRIOT Act was first enacted in October 2001, and was reauthorized in 2006. Three provisions in the Act are set to expire this year, including the authorizations for roving wiretaps, the “lone wolf” measure, and Section 215 orders for tangible things, commonly referred to as the “library records” provision. The proposed legislation extends the sunset of these three provisions, expands reporting requirements to allow Congress and the public to monitor the use of the authorities, and adds more exacting standards and court review for these information-gathering powers. “

Bill Buppert Podcast Interview on Why the Constitution is a Big Government Blueprint

From the Cochise Talk website:

The Constitution of the United States of America is “the” document upon which our ship-of-state navigates. We think of our “rights” as coming from “the Constitution”. But, do they really? Does the Constitution really give us protection, and if so, from what? And, what do we know about the process that eventually produced a ratified document? And how much do we really know about its authors’ mind sets at the time. And, has the “bible” of our legal and other systems held up over time? We think of a “scholar” as a person who’s study, knowledge and understanding of a subject runs deep. Such a person may not always be met with agreement, but no one can take away from the commitment such a so-called “expert” makes to research, and to digging “even deeper”. So, are you ready for a rare and captivating discussion of our Constitution? If you want to know something more than you do right now, if you are ready to have your own thought process challenged, and if you want to do it in less than an hour (that goes by like 20 minutes), listen to local retired military man and now government contractor Bill Buppert DOIN’ LUNCH with Dan Abrams on Cochise Talk. This discussion might well be censored were it held in some other countries. Not in the U.S. and not on CochiseTalk.com We especially appreciate your feedback on this exclusive and timely interview conducted just one week after Constitution Day on September 17th. Write us at: info@CochiseTalk.com Note: Mr. Buppert’s papers are frequently published on www.lewrockwell.com.

See:

http://cochisetalk.com/index.php?d1=Gov-Politics&p=206

And “They” Wonder Why We Seem Paranoid

“The latest crime prevention project by Toronto police took aim at registered gun owners who opted to give up their firearms.

Police have seized about 400 guns since March after knocking on the doors of registered firearm owners.

Many of these owners had their guns stashed in the closet or in a drawer though a condition of their registration mandates that all firearms are securely stored.

Police did not lay any charges but seized hundreds of weapons.”

More Here:  http://toronto.ctv.ca/servlet/an/local/CTVNews/20090922/gun_seizures_090922/20090922/?hub=TorontoNewHome

Census Worker Hanged in KY

He was found dead in Daniel Boone National Forest. Many a Federal revenuer met a similar fate in the backwoods of the Southland.  Royal authority can be both a blessing and a burden.  Update:  His death has now been determined to be a suicide.  See: http://en.wikipedia.org/wiki/Death_of_Bill_Sparkman -BB

WASHINGTON — The FBI is investigating the hanging death of a U.S. Census worker near a Kentucky cemetery, and a law enforcement official told The Associated Press the word ‘fed” was scrawled on the dead man’s chest.

The body of Bill Sparkman, a 51-year-old part-time Census field worker and occasional teacher, was found Sept. 12 in a remote patch of the Daniel Boone National Forest in rural southeast Kentucky. The Census has suspended door-to-door interviews in rural Clay County, where the body was found, pending the outcome of the investigation.

Investigators are still trying to determine whether the death was a killing or a suicide, and if a killing, whether the motive was related to his government job or to anti-government sentiment.

Investigators have said little about the case. The law enforcement official, who was not authorized to discuss the case and requested anonymity, said Wednesday the man was found hanging from a tree and the word “fed” was written on the dead man’s chest. The official did not say what type of instrument was used to write the word.

FBI spokesman David Beyer said the bureau is helping state police with the case.

“Our job is to determine if there was foul play involved – and that’s part of the investigation – and if there was foul play involved, whether that is related to his employment as a census worker,” said Beyer.

Beyer declined to confirm or discuss any details about the crime scene.

Lucindia Scurry-Johnson, assistant director of the Census Bureau’s southern office in Charlotte, N.C., said law enforcement officers have told the agency the matter is “an apparent homicide” but nothing else.

Census employees were told Sparkman’s truck was found nearby, and a computer he was using for work was found inside it, she said. He worked part-time for the Census, usually conducting interviews once or twice a month.

Sparkman has worked for the Census since 2003, spanning five counties in the surrounding area. Much of his recent work had been in Clay County, officials said.

Door-to-door operations have been suspended in Clay County pending a resolution of the investigation, Scurry-Johnson said.

The U.S. Census Bureau is overseen by the Commerce Department.

“We are deeply saddened by the loss of our co-worker,” Commerce Secretary Gary Locke said in a statement. “Our thoughts and prayers are with William Sparkman’s son, other family and friends.”

Locke called him “a shining example of the hardworking men and women employed by the Census Bureau.”

Read more at: http://www.huffingtonpost.com/2009/09/23/census-worker-hanged-with_n_297114.html

Village Praxis Series: The Hez’s Practical Tips: “Accurizing” the FN FAL

Attribution: I am indebted to my good friend Skip who has guided me through a FAL kit build and has patiently answered my numerous questions along the way. This article is as much his as mine.

I would like to begin with stating that accurizing is in quotes. The FAL, unlike its contemporary, the M-14, was developed from a different philosophy regarding the inherent accuracy of the MBR. Whereas the M-14 is a “product improved” version of the M-1 Garand, the FAL was developed with the intent of putting an MBR in the hands of a European conscript with little to no prior shooting experience. In contrast, the M-14 and its predecessor the M-1 were built with the somewhat unique American tradition of highly accurate battle rifles. To back up this claim, please refer to the 1912 edition of the USMC marksmanship manual where a 600 yard shot is considered “medium range”. It is more than likely that a stock, as issued, M-14 will outshoot a stock, as issued, FAL every time. It is also worth noting that “accuracy” as a concept is a completely human construct and not an objective standard, and the gulf between measuring groups punched out on a paper target and using a rifle in a high stress environment where the targets are shooting back is a wide one indeed. The FAL was designed to be “minute of a man” at 500 meters and that should be enough for practical applications.

That being said, there are modifications that can be made to the FAL to improve its accuracy. We’ll examine options for three assemblies, which are the barrel, trigger group, front and rear sight and what can be done to improve them.

The Barrel: A good barrel, properly timed and head spaced will do more to improve accuracy than almost any other assembly on the rifle. Without getting into the inch (UK, Australia, Canada, New Zealand) and metric (everyone else except the Israelis) variations, there are two basic types of barrels, chrome lined and non-chrome lined. Chrome offers outstanding corrosion resistance and longer life, but the plating process leaves microscopic variations in the thickness of the plating, affecting the overall diameter of the barrel, hence, affecting accuracy. Non-lined barrels have a more consistent diameter, but will wear faster and not offer as much resistance to corrosion. Surplus barrels that have reputations for accuracy are STG (Austrian made and found in the chrome and plain flavors), Imbel (Brazilian and chrome lined) and Argentine (chrome lined and plain).

If you are going to purchase a surplus barrel, I highly advise either you or the seller to check muzzle and throat erosion with the appropriate gauges.  If the seller is gauging the barrel, please ask for photos to confirm the readings. The barrel that is listed for sale that looks in great shape could be almost shot out and the Imbel with the finish worn off may be practically new in terms of muzzle and throat erosion (Imbels are often referred to as “carried much, shot little” rifles). Once you have a barrel that gauges acceptably, you will now have to properly time the barrel to the upper. If this is your first attempt at building a FAL, I recommend finding a gunsmith in your area who is knowledgeable about FAL construction or another homebuilder who has built a few. It takes an experienced eye to determine TDC and if the barrel is not timed correctly it will shoot left (too loose) or right (too tight) since the front sight will be canted. If you are working on an already built rifle, it may pay off to gauge the barrel and check the timing, especially if it is a home build or a build from a less than reputable manufacturer.

Another import aspect to examine is the barrel’s crown. This usually involves removing the flash hider but is well worth the time. If the crown is nicked or otherwise damaged, there are several methods to correct this problem. For minor imperfections and nicks, the use of a marble and 800 grit valve lapping compound can be used to remove the defects and polish the crown. Apply a thin coating of lapping compound to the marble, place the marble on the crown and use your palm to rotate and spin the marble in place with a somewhat random motion akin to a random orbital palm sander. This simple (and cheap!) method can go a long ways toward improving a slightly damaged crown. For more extensive damage that cannot be corrected by the above method, I recommend having a gunsmith re-crown the barrel.

Trigger Group: The FAL trigger assembly is a marvel of simplicity. It is also a perfect example of why military match shooters do not use stock trigger assemblies. Unlike the M1, M-14 and AR family, there really is no “match grade” trigger assembly for the FAL. There are several steps you can take to improve the trigger pull, but breaking the proverbial “glass rod” is out of reach. In keeping with my inherent tinkering philosophy of working on the cheapest part first, I would start with replacing the springs in the assembly. For around $20-$30 one can order a complete spring replacement set for the entire rifle (and if you are going to replace the trigger assembly springs, you might as well replace all the springs while the rifle is apart).

If this did not enhance your trigger experience, the next incremental step would be to replace the new “stock” springs with a set of “Trigger Pull Reduction Springs” from Falcon Arms. As a caveat, I have found no need to do this after installing new “stock” springs, however you may have your own preference.

If either of these methods does not improve things to your liking, a Google search on “FAL Trigger Job” is the ticket. I won’t talk about those methods here since I have not used them but you are free to try if you so care. Just remember that altering the geometry of how the hammer, trigger and sear connect and function can lead to malfunctions and an unsafe rifle. I may add that an alternative to a trigger job, a nice break-in compound for new or mismatched H/T/S sets is to use a pumice product such as Gogo mixed with some Lucas Oil Stabilizer to lap the trigger group. It is likely that lapping it with pumice really won’t wear the parts at a rapid rate, unlike sand paper or, God forbid, a belt sander. A simple washing with Powder Blast (degreaser) clears the pumice away from the lower after the individual is satisfied they have broken in the trigger group after repeated trigger pulls against the palm of their hand.

Front and Rear Sights: If there is one single improvement that can drastically improve your FAL it is definitely replacing the rear sight with a Hampton Lower from DSA. It replaces the somewhat inadequate stock rear sight with an M16A2 rear sight. If you plan on replacing your trigger springs, you can swap out the lowers at the same time. As a caveat, DSA is extremely slow to ship and the wait times for the Hampton seem to average about 4-6 months. You can try searching on the second hand market for used Hamptons and Kaiserworks (which also made the FAL lower with an M16A2 rear sight) although not many people seem to sell them after using them.

Front sight posts for the FAL come in multiple heights, usually identified by white dots on the base of the post (1 dot, 2 dot, etc). If after zeroing, your rifle is shooting high or low after maxing out the front sight’s elevation adjustments, replace the existing post with one of a higher or lower dot count. DSA is not the sole source for the front sight posts, but I have linked to their offering as an example.

The Constitution: The God That Failed (To Liberate Us From Big Government) by Bill Buppert

“By rendering the labor of one, the property of the other, they cherish pride, luxury, and vanity on one side; on the other, vice and servility, or hatred and revolt.”

- James Madison

“But whether the Constitution really be one thing, or another, this much is certain – that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist.”

-Lysander Spooner

Today, 17 September 2009, is Constitution Day. There will be paeans, abundant commentary and church-like observances of the glories of this document in making us the most blessed nation on planet earth.  This essay suggests a contrarian thesis. The Constitution is an enabling document for big government.  Much like the Wizard of Oz, the man behind the curtain is a fraud.  In this case, for all the sanctimonious handwringing and the obsequious idolatry of the parchment, it sealed the fate of our liberties and freedoms and has operated for more than 200 years as a cover for massive expansion of the tools and infrastructure of statist expansion and oppression.  Among the many intellectual travels I have undertaken, this is one of the most heart-breaking I have ventured on.  I want to acknowledge the compass-bearers who sent me on this journey:  Kenneth W. Royce (aka Boston T. Party) and his seminal book, The Hologram of Liberty and and Kevin Gutzman’s Politically Incorrect Guide to the Constitution.  For most of the political spectrum in America, the document represents their interpretation of how to make the this mortal coil paradise.  Even in libertarian circles, it is taken as an article of faith the Constitution is a brilliant mechanism to enlarge liberty and keep government at bay.  That is a lie.

The document was drafted in the summer of 1787 behind closed doors in tremendous secrecy because if word leaked out of the actual contents and intent, the revolution that had just concluded would have been set ablaze again. They were in a race against time and did everything in their power to ensure that the adoption took place as quickly as possible to avoid reflection and contemplation in the public square that would kill the proposal once the consequences of its agenda became apparent.  They were insisting that the states ratify first and then propose amendments later. It was a political coup d’état.  It was nothing less than an oligarchal coup to ensure that the moneyed interests, banksters and aristocrats could cement their positions and mimic the United Kingdom from which they had been recently divorced.

The original charter of the drafters was to pen improvements to the existing Articles of Confederation.  Instead, they chose to hijack the process and create a document which enslaved the nation.  Federalist in the old parlance meant states rights and subsidiarity but the three authors of the fabled Federalist Papers supported everything but that.  Their intent and commitment was to create a National government with the ability to make war on its constituent parts if these states failed to submit themselves to the central government.

As Austrian economists have discovered, bigger is not necessarily better.  The brilliant and oft-dismissed Articles of Confederation (AoC) and Perpetual Union are a testament to voluntarism and cooperation through persuasion that the Constitution disposed of with its adoption.  Penned in 1776 and ratified in 1781, the spirit and context of the Articles live on in the Swiss canton system and are everywhere evident in the marketplace where confederationist sentiments are practiced daily.  The confederation’s design divines its mechanism from what an unfettered market does everyday:  voluntary cooperation, spontaneous information signals and the parts always being smarter than the sum   A confederation according to the Webster’s 1828 dictionary is:

  1. 1.      The act of confederating; a league; a compact for mutual support; alliance; particularly of princes, nations or states.

I would advise the readership to use the 1828 Webster’s dictionary to accompany any primary source research you may undertake to understand American (& British) letters in the eighteenth century.  It is the source for the contemporary lexicon.  It is even available online now.

Here is a simple comparison of the two organizing documents:

Articles of Confederation

Constitution

Levying taxes

Congress could request states to pay taxes

Congress has right to levy taxes on individuals

Federal courts

No system of federal courts

Court system created to deal with issues between citizens, states

Regulation of trade

No provision to regulate interstate trade

Congress has right to regulate trade between states

Executive

No executive with power. President of U.S. merely presided over Congress

Executive branch headed by President who chooses Cabinet and has checks on power of judiciary and legislature

Amending document

13/13 needed to amend Articles

2/3 of both houses of Congress plus 3/4 of state legislatures or national convention

Representation of states

Each state received 1 vote regardless of size

Upper house (Senate) with 2 votes; lower house (House of Representatives) based on population

Raising an army

Congress could not draft troops, dependent on states to contribute forces

Congress can raise an army to deal with military situations

Interstate commerce

No control of trade between states

Interstate commerce controlled by Congress

Disputes between states

Complicated system of arbitration

Federal court system to handle disputes

Sovereignty

Sovereignty resides in states

Constitution the supreme law of the land

Passing laws

9/13 needed to approve legislation

50%+1 of both houses plus signature of President

Note that the precept of individual taxation was an end-run against state sovereignty from the very beginning.  If the Congress does not wish to violate state sovereignty, then they will simply prey on the individuals in the states.  It should be obvious that the AoC was not a recipe for government employees from top to bottom to use the office to enrich themselves so a scheme was afoot to precipitate and manufacture dissent over the present configuration of the central government apparatus which for all intents and purposes barely existed.  The AoC was intolerable to a narrow panoply of interests and the Federalist Papers appeared between October 1787 and August 1788 to plead the case for a newer form of “Republic” authored by three individuals: James Madison, John Jay, and Alexander Hamilton. The British had sued for peace in 1783 and the AoC were still in effect until 1790.  Time was ticking to erect the new government apparatus that would strengthen the central government to eventually mimic the very tyranny which caused British North America to put the English Crown in the hazard.  The Anti-Federalists rose up in response and provided what I consider one of the most splendid and eloquent defenses of small government penned in our history.

When the Constitutional Convention convened on 1787, 55 delegates came but 14 later quit as the Convention eventually abused its mandate and scrapped the AoC instead of revising it.  The notes and proceedings of the cloistered meeting were to be secret as long as 53 years later when Madison’s edited notes were published in 1840.

The Anti-Federalist Brutus avers in Essay I in October 1787:

“But what is meant is, that the legislature of the United States are vested with the great and uncontroulable powers, of laying and collecting taxes, duties, imposts, and excises; of regulating trade, raising and supporting armies, organizing, arming, and disciplining the militia, instituting courts, and other general powers. And are by this clause invested with the power of making all laws, proper and necessary, for carrying all these into execution; and they may so exercise this power as entirely to annihilate all the state governments, and reduce this country to one single government. And if they may do it, it is pretty certain they will; for it will be found that the power retained by individual states, small as it is, will be a clog upon the wheels of the government of the United States; the latter therefore will be naturally inclined to remove it out of the way. Besides, it is a truth confirmed by the unerring experience of ages, that every man, and every body of men, invested with power, are ever disposed to increase it, and to acquire a superiority over every thing that stands in their way.”

The conflict was brewing between the Jeffersonians among the individualists and the Hamiltonian collectivists.  The rhetorical lines were drawn and the fate of the nation eventually slid into the camp of the Nationalists.

George Washington wrote to John Jay on 1 August 1786:

“Many are of opinion that Congress have too frequently made use of the suppliant humble tone of requisition, in applications to the States, when they had a right to assume their imperial dignity and command obedience. Be that as it may, requisitions are a perfect nihility, where thirteen sovereign, independent[,] disunited States are in the habit of discussing & refusing compliance with them at their option. Requisitions are actually little better than a jest and a bye word through out the Land. If you tell the Legislatures they have violated the treaty of peace and invaded the prerogatives of the confederacy they will laugh in your face. What then is to be done? Things cannot go on in the same train forever. It is much to be feared, as you observe, that the better kind of people being disgusted with the circumstances will have their minds prepared for any revolution whatever. We are apt to run from one extreme into another. To anticipate & prevent disasterous contingencies would be the part of wisdom & patriotism.”

It appears even the much admired Washington was having none of the talk of independence and wanted a firm hand on the yoke of the states to make them obey their masters on high.  Washington’s behavior in the Whiskey Rebellion cast away any doubts of the imperious behavior of the central government a mere four year after the adoption of the Constitution.

Patrick Henry gave the firmest defense of the skeptical posture when he questioned the precarious position the Constitution put to the state’s sovereignty on 5 June 1788 at the Virginia Ratifying Convention (the savvy Founding Lawyers ensured that the process of ratification was sped along by bypassing the bicameral house requirements and simply asking the states to conduct ratifying conventions):

“How were the Congressional rights defined when the people of America united by a confederacy to defend their liberties and rights against the tyrannical attempts of Great-Britain? The States were not then contented with implied reservation. No, Mr. Chairman. It was expressly declared in our Confederation that every right was retained by the States respectively, which was not given up to the Government of the United States. But there is no such thing here. You therefore by a natural and unavoidable implication, give up your rights to the General Government. Your own example furnishes an argument against it. If you give up these powers, without a Bill of Rights, you will exhibit the most absurd thing to mankind that ever the world saw–A Government that has abandoned all its powers–The powers of direct taxation, the sword, and the purse. You have disposed of them to Congress, without a Bill of Rights–without check, limitation, or controul. And still you have checks and guards–still you keep barriers–pointed where? Pointed against your weakened, prostrated, enervated State Government! You have a Bill of Rights to defend you against the State Government, which is bereaved of all power; and yet you have none against Congress, though in full and exclusive possession of all power! You arm youselves against the weak and defenceless, and expose yourselves naked to the armed and powerful. Is not this a conduct of unexampled absurdity? What barriers have you to oppose to this most strong energetic Government? To that Government you have nothing to oppose. All your defence is given up. This is a real actual defect. . . “

The Bill of Rights as we know them today were first introduced by James Madison in 1789 in response to the fears the emerging Constitution caused among the free men in these united States.  They eventually came into effect on December 15, 1791.  The Federalists were desperately opposed to the adoption of the Bill of Rights being insisted upon by Patrick Henry, Thomas Jefferson and other skeptics of central governance. As Brutus again so cleverly pointed out in the Anti-Federalist papers #84:

“ This will appear the more necessary, when it is considered, that not only the Constitution and laws made in pursuance thereof, but alt treaties made, under the authority of the United States, are the supreme law of the land, and supersede the Constitutions of all the States. The power to make treaties, is vested in the president, by and with the advice and consent of two-thirds of the senate. I do not find any limitation or restriction to the exercise of this power. The most important article in any Constitution may therefore be repealed, even without a legislative act. Ought not a government, vested with such extensive and indefinite authority, to have been restricted by a declaration of rights? It certainly ought.

So clear a point is this, that I cannot help suspecting that persons who attempt to persuade people that such reservations were less necessary under this Constitution than under those of the States, are wilfully endeavoring to deceive, and to lead you into an absolute state of vassalage (emphasis mine).”

The Bill of Rights nominations from the respective sovereign states originally numbered near 200 and the Founding Lawyers saw fit to include twelve (the two concerning apportionment and Congressional pay failed to pass) after much bickering especially by the most monstrous worthy of the time, Alexander Hamilton.  A brilliant mind coupled with all the political knife-fighting skills needed to dominate the proceedings, Hamilton made sure that the tools of oppression and a financial yoke would be decorating our necks in perpetuity.  Small solace can be taken in the aftermath of the duel between Hamilton and Burr on 11 July 1804 in that it took him close to a day to die.

Alexander Hamilton tipped his intellectual hand in a speech to the Constitutional Convention concerning the United States Senate, 06/18/1787 (quoted in the notes of Judge Yates):

“All communities divide themselves into the few and the many. The first are the rich and the well-born; the other the mass of the people … turbulent and changing, they seldom judge or determine right.  Give therefore to the first class a distinct, permanent share in the Government … Nothing but a permanent body can check the imprudence of democracy.”

I am no fan of democracy as I see it as nothing more than a transformational accommodation to tyranny over time but one can infer from this quote that Hamilton fancied a class of people more equal than others who would have a disproportionate access to the levers of power over the great unwashed.  Again, I am suggesting that the Constitution was a document designed from the beginning as a means to rob constituent and subsidiary parts of sovereignty and subject these subordinate elements to a national framework which made their position subservient to the Federal government. The desire of the Federalists was to install a national framework and cement the structure through the machinations of national banking, franking of a currency and debt creation.  Keep in mind that all of the nattering on about the Federal Reserve today is a complaint against a Constitutional Frankenstein monster in its fourth iteration since the other attempts at national banks failed.  You can guess who picked up the tab.

The Bill of Rights was finally passed on 15 December 1791 but it was much diluted and purposefully weaker and more ambiguous about the central government’s implied and explicit powers.

The Constitution took effect on 4 March 1789 with 11 states under it and two states not submitting ratification.  North Carolina did ratify it when a promise of a future Bill of Rights was assured.  Rhode Island refused and was the only state to put the Constitution to a popular vote where it failed on 24 March 1788 by an 11-1 margin.  They eventually ratified it.

Hamilton now had the ways and means to make real his storied dream:  “A national debt, if it is not excessive, will be to us a national blessing.”  The moneyed interests saw the advantage of monetizing the debt. By assuming the state’s debts at the national government level, a means of controlling commerce and taxation became an implied task of the central government.  This may have been the first incident of the debtors from the Revolutionary War convincing their Hamiltonian allies that if they had the national government bear the debt and relieve them of responsibility, this could be used as the means to establish the coveted national bank to start the issuance of government currency not to mention the driver for increased taxation.

All the puzzle pieces had finally locked into place.  Royce eloquently explains what has transpired in Hologram of Liberty: “To put a “gun” in the hands of the new national government was the primary object, the great sine qua non, of the Constitution.  A comprehensive de jure authority of Congress backed with de facto guns.”  The Confederation is defeated and the long train of usurpation, centralization and tyranny leaves the station for what has become American history.

Hamilton’s machinations and influence probably single-handedly turned the product of this secret confab into one of the most successful instruments of political oppression before even the creation of the USSR.  What makes it even more sublime as a tool of big government is the sophisticated propaganda and hagiographic enterprise which has both spontaneously and through careful planning suborned the public’s skepticism of the nature of the machine erected to control their behavior which has resulted in an almost religious observance of all things Constitutional.  Carefully cultivated over two hundred years, this religious idolatry had certainly fogged the thinking of this writer for most of his adult life.  This sleeper has awakened.

Ask yourself this question:  have the robed government employees who read the Constitutional tea leaves for the most part defended individual liberty or have they rubber-stamped the exponential growth of power and control of the colossus that sits astride the Potomac?

“Our constitutions purport to be established by ‘the people,’ and, in theory, ‘all the people’ consent to such government as the constitutions authorize. But this consent of ‘the people’ exists only in theory. It has no existence in fact. Government is in reality  established by the few; and these few assume the consent of all the rest, without any such consent being actually given.”

-Lysander Spooner

THE SOUTHERN NATIONAL COVENANT SIGNED 12 SEP 2009

We are a Confederate household and it is great to see my brethren grab a pair and make a declaration of rights.  Let us sound a loud rebel yell for disunion.   Deo Vindice! -BB

The undersigned Men and Women of the South to our fellow Southerners and on their behalf.

Our forefathers’ worst nightmare has now come upon us. They created a free government, limited in its powers and a servant to the people. But today the United States has become an empire, fast decaying into tyranny; and we their children have become strangers and subjects in the land our fathers won. Instead of a free and just social and political order, today we are threatened by a godless national culture and a corrupt, despotic federal government that knows no limits to its power.

Our political leaders, setting themselves above the law, have forged an unholy alliance with large corporations and the international money cartel. These elites have purchased the law-makers who are sworn to serve the People, enabling them to expropriate our wealth in the greatest act of plunder in human history. Through threat of force, government seizes half of all we make for taxes, yet it is still not enough to satisfy the vaulting greed of our rulers. Thus government spends staggering sums above its revenues, saddling our People with debt so colossal that it cannot be repaid to the fifth generation. To service this debt, the government-banking alliance has stolen our Constitutional and God-ordained right to sound money and has given the power to create money out of nothing to corrupt, private banking interests. Federal law forces us to use only this bank-created money; and because it must be borrowed into existence, our once free people have become enslaved to debt. The burden of confiscatory taxation, combined with runaway federal spending and a currency manipulated to benefit the ruling elites, has brought our country to the brink of bankruptcy and economic collapse, with all the political and social turmoil that must inevitably follow.

The federal regime has loosed upon us floods of immigrants, strangers to our laws and language, who are displacing us on the soil our fathers won with their sweat and blood. Fomenting hostility between the races and regions, our rulers have destroyed hope and spread despair. Injustice, tyranny, corruption, and deceit are the hallmarks of their governing. They call good evil and evil good, the recompense for which is divine judgment. Accelerated by dishonesty and corruption at every level of society and swept along by daily torrent of official lies, America is plunging toward the abyss. We watch transfixed with horror at the destruction of a once free and prosperous country and are forced to acknowledge the American political and economic system is no longer sustainable. It cannot be redeemed, only replaced.

We Southerners proclaim our right to be free of these evils our ancestors warned against and shed their blood to prevent. The seeds of our deliverance remain alive within our faith, culture, and historic principles of governance. Southern culture is founded on the enduring and permanent: trust in God, family, tradition, manners, property, community, loyalty, courage, and honour. We know that free and just government cannot grow from laws, regulations, bureaucracies, and ideologies. It grows only from the soil of faith and love, watered by struggle and sacrifice, and the harvest of which is liberty, justice, prosperity, and peace.

Before all the nations of the earth we affirm that we are a separate and distinct People, with an honourable heritage worthy of the respect of all mankind. Bound together by a shared history and faith, we have endured hardship and tragedy but have also enjoyed the fruits of Christian civilisation built by God’s grace and the works of our hands. Under heaven, we possess the right to govern ourselves in our own land under our own laws, customs, and religion.

With more sadness than anger we recognize that the country our forebears bequeathed to us no longer exists. To hug to our breasts the delusion of reform is to commit suicide. By depending on the central government’s increasingly worthless currency, its loans, subsidies, and payments, its putrescent schools, and its false promises of security, we have forged our own chains. But if we have forged our chains, we can also unforge them.

We are left with no recourse but to look to our own counsel to secure our welfare. We must “abjure the realm,” withdrawing our support from the tyrannical government and corporate institutions created for our enslavement. Then we must work to restore the power of our States, the first bulwark of freedom, self-government, and Southern identity. As our forefathers did, we must establish a new foundation for law and government by all lawful and ethical means available to free men.

Therefore, with humble trust in the Sovereign Lord of Nations, and in the name of the Southern Nation and People whom we serve, we the Delegates of the Fourteen Southern States, in Congress assembled September 12, 2009 in Delta, Alabama, make and publish this Covenant, and to which we invite all Southerners who yearn for liberty and justice to join us in subscribing.

By this Covenant we corporately pledge ourselves to the protection of our Southern cultural heritage and to the defence of liberty and justice for the Southern People and States. We bind and oblige ourselves, as we are by God and nature tied, with our lives, fortunes, and sacred honour to stand in defence of our native soil and People, contrary to this perverse and infamous regime now arrayed against the South. We swear that we will be ever ready to use all our best endeavours for her preservation, and that we will not cravenly and shamefully bow the knee to tyrants. By this bond, each of us faithfully promises to assist one another as the need demands. All of which before God we most solemnly vow and promise to adhere to and never to turn from, all the days of our lives.

In mutual support of one another as Christian Southerners, we covenant together

To renounce the evils of corrupt government that our forebears warned against, and to resist by all lawful and ethical means every act of federal tyranny.

To seek to revive our local economies, working together to promote every one’s prosperity as our own and toward freeing ourselves from the snare the Empire’s worthless money and perpetual debt which are the lifeblood of tyranny, and seeking a return to honest public money in daily use — gold and silver coin or currency backed by gold and silver.

To support every measure which restores the sovereignty of our State and local governments, and the sovereignty of the Southern people.

To obey no Federal executive order or statute that threatens our fundamental freedoms of speech, worship, assembly, and petition for redress, freedom from illegal search and seizure, and the right of due process under law.

Never to allow ourselves willingly to be disarmed nor submit to the confiscation of our means of lawful self defence; nor comply with any national firearms registration scheme, which is the certain precursor to confiscation.

We declare before God and men that we earnestly desire to restore a Godly order in our respective States by peaceful means. We seek only that which may turn to the honour of God and the increase of peace and justice in our States and communities. Yet the growing evils of the time may not grant us the choice of peaceful means of redress. In such a pass, when criminal violence may be directed against any of us by the state, our fortunes shall be as their fortunes, his their wives or husbands as our wives and husbands, their children as our children, their losses as our losses, and injuries done them as injuries to our own persons; and we shall not rest till they be delivered.

IN WITNESS WHEREOF to the God of heaven, to all Southern People, to all powers, nations, and states, and to all mankind, we affix our names to this Covenant, beseeching the favour of Almighty God on a just cause. May God bless our Covenant and keep us faithful to perform all we have covenanted together to do.

_______________

Subscribed by the undersigned Citizens of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas, and Virginia

See:

http://southernnationalcongress.org/covenantprint.html

How to Prepare For China’s Coming Derivative Default

If you have not read Nassim Taleb’s book, “The Black Swan: The Impact of the Highly Improbable”, you need to get the book soonest. It goes far in explaining the perilous times we live in. The derivatives crisis is a massive black swan and an extinction event for certain governments. Of course, this article gives you yet another reason to press forward with your preps for Ragnarok. The end is nigh and the government will not help you but it will hurt you. BB

In case you have not heard the news, China has announced that it will be instructing its state-owned enterprises to potentially default on their derivatives contracts. As I have written extensively in the past, the derivatives market is a massive time bomb just waiting to go off. China’s latest move may be the match that lights the fuse.

All told, US Commercial banks own $202 trillion in derivatives in notional value. To put that number into perspective, it’s roughly four times the global GDP. And 96% of this exposure sits on five banks’ balance sheets. I’ve shown the below chart before, but it’s worth re-visiting (chart is denominated in TRILLIONS).

Of course, not ALL of the $202 trillion these guys own is “at risk.” As their name implies, derivatives are “derived” from underlying assets (homes, debt, etc). The actual “at risk” money can be far FAR smaller than the “notional” value of derivatives outstanding.

However, when you’re talking about $200+ trillion, even a marginal amount of “at risk” money can mean ENORMOUS losses. Consider, if 1% of that $200 trillion were at risk, you’re talking about $2 trillion in capital. Now, if even 10% of those bets go bad, you’re talking about $200 billion in losses.

Now consider that, combined, the top five banks (JP Morgan, Goldman, BofA, Citi, and HSBC) have roughly $700 billion in equity.

And that’s it only 1% of the derivatives outstanding are actually “at risk.” Given the over-leveraged, stupid plays Wall Street made on mortgage-backed securities and credit default swaps (both investments that had SOME degree of oversight, even if it were paltry), as well as the fact that derivatives are COMPLETELY unregulated, I would argue it’s quite possible that as much as 5% or even 10% of the derivatives outstanding could be “at risk.”

In that case, we’re talking about $10-$20 trillion in “at risk” capital. If even 10% of these bets go wrong, you’ve wiped out ALL the equity at all five banks AND THEN SOME.

As I mentioned just now (and before many times), the primary problem with derivatives is that they are COMPLETELY TOTALLY unregulated. NO ONE has any idea what’s “at risk” or who owns what or who’s betting against who.

But we may be about to find out.

I’ve detailed the ongoing conflict between China and the US regarding monetary policies on these pages before. The brief overview is that China owns $800+ billion (by some accounts $1.3 trillion or more) of our Treasuries (debt) and is not too happy about Ben Bernanke and other US monetary figures throwing trillions around in bailouts and emergency measures to counteract the financial crisis.

China has fired a couple of “warning” shots already, mainly in the form of various Chinese diplomats expressing concern and frustration with the US’s monetary policies. They even flew China’s Vice Premiere to an unscheduled talk with US monetary officials back in July.

No one knows what was said during the talks, but given that Ben Bernanke is extended Quantitative Easing to October and has shown little signs of reversing his current “anti-dollar” policies, it’s pretty clear China didn’t get what they wanted.

I’ve often wondered what China would do if push came to shove. Their decision to have their state-owned enterprises default or renege on their derivatives contracts may be the answer.

Let me explain.

As I’ve stated on these pages before, I view the “bailouts” as nothing more than an attempt to funnel taxpayer money to the large US banks so they can raise capital to avoid insolvency. It was essentially a “re-capitalization” effort using public funds. And it came at the expense of the dollar and Treasuries.

China, who owns more Treasuries and dollar-denominated assets than anyone, was obviously not too pleased about this. They’ve asked time and time again for the US to stop what it is doing. However, Geithner, Bernanke, et al, simply plowed ahead ignoring their requests (Geithner actually told a group of students in China that the math behind the US’s policies were solid which resulted in the students laughing at him).

China’s decision to default on its commodity derivatives is a very clever means of slapping the US Federal Reserve in the face without “going nuclear” by selling Treasuries outright.

Commodities account for the smallest portion of derivatives on US commercial bank balance sheets ($938 billion out of $200 trillion). A default here would trigger a chain reaction that could essentially wipe out the Fed’s attempts are re-capitalization (the US banks would suddenly be on the hook for billions in losses that they didn’t expect). It’s a very serious indirect way of China saying, “if you want to continue screwing around, we’ll simply walk away from the table.” But they’re doing it in a select asset class that no one but Wall Street engages in (derivatives).

The primary issues now are:

Whether China WILL actually begin defaulting (remember, so far it’s just a threat).
Whether or not China’s decision would trigger a larger chain reaction in the derivatives markets.
How the US will respond to China’s threat.
I do not know the answer to these issues. No one does.

I DO know, however, that a derivative chain reaction throughout the financial system could cause a full-blown implosion like September-November 2008. We’re talking about massive volatility (2%+ swing days) and a stock market collapse of 20-30% within a matter of weeks.

Remember, computers account for 70% of the market’s volume. And they can simply walk away OR even worse, start driving the market lower as they adjust to trading in the new environment. These are not sensible, brain driven, investors who can make qualitative judgments. They are computers trading based on algorithms that track various metrics. If we get a black swan even (and China defaulting on derivatives would be one) these computers could go completely haywire and instigate a repeat of the ’87 Crash.

I am not saying that this WILL happen, but mention all of this to remind you of the investing environment we’re in. Pull the plug on the computers and you’ve got panicked selling galore and a repeat of October 2008 if not 1987.

I’m preparing our portfolio for this eventuality this week (more on this in a minute) with a number of trades that should prove extremely profitable if the Crash I’ve been predicting for months comes to fruition.

However, we also need to consider the socio-economic implications of what could happen should China start defaulting on its derivative contracts with the US. If China chooses that route, the US could choose to default on its debt to China. At that point we would be in a full-scale economic war and potentially on our way to military conflict.

The fact that Japan’s new leadership has also expressed displeasure with the US’s monetary policy adds to the mix. This creates additional issues that I do not know the outcome of (Japan and China are our largest creditor nations).

I am not saying any of this to be “scary” or “doom and gloom.” But things are coming to a head in a very REAL way on the global stage. And it is not looking good at all. This financial crisis is nowhere near over. If anything we’re at the end of the beginning. Many, many more banks will go under. We can and will see a lot more volatility in the bond and currency markets (a bear market in bonds would be a nightmare we haven’t seen in 30 odd years). And stocks (already overbought and propped up via manipulation and accounting gimmicks) are primed to take a full-scale nosedive (more on this in a minute).

My Personal Message: BE PREPARED

In light of this, and on a more personal note, I am suggesting you prepare for the WORST if you are in the US. This means stockpiling food, and having enough cash on hand to survive an economic shutdown if it happens. We came close to such an event last fall (the story was not widely spread but banks in US and UK considered shutting down ATMs and having a holiday).

I can tell you that I personally have stockpiled food (3 months’ worth) and am telling my family and friends to do the same. After all, what’s the worst that could come from doing this? If I’m totally wrong and everything gets better, you simply eat the food just like you would anyway.

But if I am right, and things do get MESSY, then stockpiling now means you’ve got food on the table later. Again, we have the making of several black swan events that could push an already weak economy into SERIOUS trouble. Among them are:

China defaulting on derivatives (triggering a chain reaction in the financial markets)
China selling Treasuries (flight from the dollar and all paper money)
Japan sell Treasuries (ditto)
The $7 trillion commercial real estate market (as bad if not worse that the US residential market)
Some other chain reaction event in the $1 QUADRILLION derivative market
The H1N1 virus (a major flu pandemic would stop all economic growth in its tracks)
A major bank failure (rumors of Wells Fargo or someone else are swirling)
Some other item no one sees coming (e.g. Gmail shut down for an hour a few weeks ago, imagine if the NYSE’s servers did the same thing).
All of these could portend another crisis for the US economy and stock market. I put the likelihood that we are out of the Crisis and the Great Depression II (it is a DEPRESSION, not a RECESSION), at less than 5%. Even if we go the route Japan did in the ‘80s instead of a full-blown black swan induced meltdown, then we’re talking about weak economic growth for a two decades with high unemployment, lower quality of life, and the stock market slowly losing 80% of its value.

I believe the market is already sensing a crisis which explains the recent spike in gold prices. We know for a fact that China is instructing its investors to buy gold. The fact that they might potentially default on their derivative contracts¾ a move that potentially could wipe out all the Fed’s recapitalization efforts with the large banks (which would prompting more pumping of the system and massive dollar devaluation)¾ might also be leading investors to distrust paper money and seek safe haven in a currency that CANNOT be devalued: GOLD.

Good Investing!

Graham Summers

See:

http://www.kitco.com/ind/Summers/sep142009.html

Free Lunches, Money from Nothing and Limits to Government Theft by Linda Brady Traynham

I am proud to say that Linda and I are friends. We correspond every now & again and she is an avid prepper getting ready for the final gift from the FedGod: complete systemic collapse which I am hoping will lead to a divorce and a renaissance in the western states of what was once America. Please enjoy her latest insightful analysis of why the nation is doomed.  -BB

Consider economics and governments as resembling a restaurant.

In order for there to be a restaurant at all some entrepreneur has to put his money and vision on the line and open it. He has a thing called “overhead,” which is irreducible on-going expenses whether he has any customers at all or not. The rent, utilities, taxes, staff, laundry, raw ingredients, and so forth are constants. He is harried by assorted inspectors, frequently with conflicting demands.

In order for a meal to be put on the table once Joe Entrepreneur reaches that point the cooks have to prepare it and somebody has to serve it.

The diner has to have both the inclination to eat there and the wherewithal to pay for the meal and tip the waiter.

When government becomes the restaurant the system flies apart in many ways. Governments do not worry about overheads; indeed, it is an essential function of government to grow. The gang in DC has no concept of being able to “afford” the expenses they occasion. Money isn’t real to them. Other people’s money rarely is. They print some more any time they want to knowing that it reduces the value of the dollars we hold. They hire staff which always turns out to be permanent with reckless abandon.

Back in the real world government makes everything more expensive and more difficult. In our example, the minimum wage concept makes labor more expensive for the business owner. He has his choice of taking less profit, reducing staff, not expanding, or cutting quality. All of those will damage his enterprise. For over two decades I have been listening to small business owners say that they had the business to expand, but that between ludicrous restrictions, regulations, and taxes it simply was not worth their while to do so.

Cap and Trade will make energy far more expensive, and do so by design. Does the restaurateur reduce the fourteen ounce Angus strip to ten ounces? Raise prices? Charge for parking? Use frozen french fries instead of hand cut ones from fresh potatoes? It does not matter which unpleasant choice he makes he will be obliged to offer less to customers who are under the same constraints with their work and family expenses. Every time one of them decides that dinner out is an expense he cannot justify the restaurant suffers.

The waiters are damaged by the harm done by government to the owner and the customers, and so is the cook, so is the busboy, and so is the bartender.

The diner, at least, still has the choice of whether or not to patronize the restaurant, although he has to eat somewhere, whether at home or out. This is where we get into taxation policies.

Statists and, indeed, politicians in general, rarely know anything about where money comes from. They seem to think that “made,” “earned,” “produced,” and “printed” all mean the same thing. They really cannot tell the difference between a US savings bond and gold. They think borrowed money is real and does not actually have to be paid back.

They appear to believe that incomes are immutable, that if you make $200,000 this year that you will continue to make at least that much every year until you retire no matter what else changes. They speak blithely of your electrical bill doubling, not seeing that as causing you to spend less elsewhere because you have a ludicrous fondness for heat and light in your home. They even think you should run automobiles on the stuff. Some of them probably even believe that you can charge the ten thousand dollar battery on a Volt with twenty-five cents’ worth of electricity, as advertised.

They think that burger-flippers will always flip burgers, and their lot will improve only if Congress mandates higher wages for them.

Governments understand only fear, force, and how to use the public treasury to buy votes. Congress fails to grasp the very simple fact that everything is interconnected. In one sense it does not matter who, other than those with Pelosi-like incomes, has his or her light bill doubled, the money that will be allocated for electricity can no longer be spent in another area. If Hal’s discretionary income is $500/month and he has to give $167 of that to Brazos Power and Light, one out of every three dollars that he had previously to spend in restaurants, or to have carpets cleaned, or to buy a new fishing rod is gone forever, vanished into the insatiable maw of government. If Susie, the single mom teacher loses a third of her discretionary income, she will have to do without a washing machine, painting her house, or as many school clothes for her child. There is no way, short of a second job, to replace the money which has been stolen by government action, or that stolen by inflation which was caused by printing of fiat money.

I suppose I sound as though I am speaking to a sixth grade civics class, although most kids have allowances or parents who utter the foulest three words in the English language, “We can’t afford…” One wonders if the constantly increasing out of control “budgets” at local, state, and national levels are caused in part by a system that requires great wealth to be elected to public office, and great dependence on funds gathered by those who demand political favors in return. I live near Bryan, a town of 55,000 people. Can someone explain to me why Bryan needs to spend nine million dollars a year? All of it extorted from local property owners?

You may wonder why I am covering anything this basic here on Whiskey & Gunpowder! Surely you Shooters, of all others, understand the basic principles of business, budgets, and von Mises. One would have thought so–right up to the point where the Editor was deluged with letters asserting that pie in the sky “health care” is a “right” and expressing their sentiments in language unbefitting ladies, gentlemen, and civilized debate. If you understand why we cannot have “single payer” health insurance, fine, pass this on to some child who needs to know.

The basic fact is that there is only so much “money” in the world, when we see “money” as a medium of exchange, which it is. I need a better way to induce the cobbler to make me a pair of shoes than offering him twenty dozen eggs he can’t eat before they spoil, although we might agree that I would deliver a dozen a week until the debt was paid. He, in turn, needs cow hide to make shoes, and I have cows, but I don’t want to skin one just to get shoes…at any rate, it worked better when we all exchanged little slugs of silver or gold for each others’ labor and production. The balance gets destroyed when the government creates “fiat” money and expects us to accept their fairy not-gold at the same value as shimmering silver ingots. We won’t do it. We also know that every time more money is cranked out of thin air every dollar we have is worth less because there is no way to differentiate between the dollar we had when there were only ten in the world and that same dollar when suddenly there are a hundred.

The Statists’ theory is that there is no limit to how much money they can “create,” just as there is no limit to how much milk the cow can give. There really are limits to how much moo-juice Bossy will produce, including her heritage, her age, how good her feed is, and whether or not she has had a calf recently. Even cows want a break after being milked for 300 days. It takes nine months to produce another calf and “freshen,” or begin producing more rich, creamy milk.

My darling Charles and I sent Asia, our Segundo, off to pick up a cow and her week old bull calf today. Mathilda, as we have named her, is three-quarters Jersey and a quarter Black Angus, both animals are black, and they will fit in beautifully with the Black Dexters. Mathilda will handle our milk and cream needs for the next three hundred days, more time than it takes for the goats to reproduce (210 days.) The funny part is that the owner didn’t want to milk her so he has been underfeeding her deliberately so that she won’t produce more milk than the calf can drink! How about that, Shooters, when a “simple farmer” in “flyover country” knows that to get less out of the cow you provide less sustenance than she needs. (We gave her a whole bale of first class hay and a big container of clear water for tonight.) Why can’t all those Ivy League economists and lawyers see that when they take too much of our money we produce far less taxes?

There really are practical limits to how many taxes can be extracted from most of us. Particularly in a land where nearly half of the people pay no taxes at all and a lot of them get “earned income credits” for doing one day’s work a year. There is a large class of people that is paid to do one simple chore: vote for the Statists. I suppose it is nice work if one can stomach it. I don’t know, since no government has ever bought my food, shelter, utilities, and medical care. Given my choice I would prefer to be a slum landlord, but the government beat me to it.

There are two points here that the DC gang had better grasp quickly. The first is that no matter how you jigger the figures, jobless people aren’t making money and they aren’t paying taxes on the money they didn’t earn. Just because they aren’t counted officially doesn’t mean that they aren’t out there, as increased robberies, claims for unemployment, and appeals to churches show. Those who are losing more of their income to higher taxes and utility bills are not purchasing as much, which means that the stores they once patronized are no longer making as much money, so they don’t pay as many taxes.

The Statist solution is automatic: “Oh, we’ll just tax the rich!” “Rich” is a relative term but our dear leader defines it at a quarter of a million dollars a year. Their problem is that if they confiscate all of the earnings of every person in America who makes $250,000 a year or more it won’t be more than a drop in the bucket they have to fill to cover their expenditures. It can’t be done. According to the most recent analysis available, 2006, the “richest” ten per cent. paid fifty-five per cent. of all taxes. Statists think that is “fair,” but what they had better start thinking is that pulling that much money out of those who produce jobs, start new businesses, invest in others, or even play the stock market slows everything down. Charity? When you filter money through the government over ninety per cent. of it is spent as salaries and overhead or disappears from graft or theft. Good private charities more than reverse that ratio.

How many families do you suppose there are with incomes of two hundred thousand dollars a year or more? I’ll tell you, since Newsweek kindly told me: 3.4%. That is 34 out of 1000 families, or 340 out of 10,000 families, or 3400 out of 100,000 families, or 34,000 out of a million families. Those are the ones who pay more than half of the taxes. I’m not among them, but I understand the frustration and annoyance such a state of affairs must cause.

The really fun statistic is this one: those 3.4% do 14% of the consumer spending and they are the ones who create and sustain businesses, which is where jobs come from. When the top five per cent. bears the greatest burden of onerous taxes, sooner or later not only does commerce decline but at least some of them ask why they are bothering. That is one of the difficulties with the proposed health “care” legislation, the bizarre proposition that doctors will submit to a 15% pay cut at the government’s whim. No, they won’t. Those who are old enough will retire. Young people who were planning on enrolling in medical school will think of something else to do.

The best solution I can see is to do the John Galt thing. Quit. If you cannot afford to quit your job literally, stop your consumer spending to the greatest extent that you can.

Put the money into commodities for your family’s use or into chunks of silver. Some of you may shake your heads in bewilderment and ask, “Isn’t that consumer spending?” Well…yes, and no. If you spend a hundred dollars taking your family out for pizza and a movie, that money (minus taxes) goes back into the economy to be taxed again and again in every hand that holds it, and you have nothing to show for it beyond a few memories. If you buy a case of MREs (ugh), your money has gone to an individual who will do whatever with it, but you have taken it out of circulation. You are storing value in the form of food that you can eat during the coming Greater Depression. If you wear the clothing you have now and do not visit Macy’s or Dillards, the shock of what you do not spend ripples through the economy. A nice blouse costs a couple of hundred dollars and you may wear it two years. That money goes to pay those who manufactured, shipped, and sold the blouse. If you turn that money into a dozen ounces of silver you have pulled that value out of circulation. You are richer for having “savings” that cannot be lost through devaluation. You have turned the value of your fiat dollars at present into a metal which will preserve it. You have also hit the tax-and-spenders where they live…

A great many stores and firms are going out of business and this trend will gain momentum. You’re smart. You can figure out for yourself which businesses will not make it through a deepening depression and what you should stock now. Only the big, the smart, and the connected will survive, and the myriad choices you have now will be a distant dream perhaps five years from now. Perhaps in less.

Big government turns you into lunch. Most of us cannot afford to be the owner. Our choice is whether to be the waiter, who may lose his job and will surely see his customers and his tips diminish, or to be the diner. It isn’t too late to do the Joseph thing and stock up for the future, and emulating John Galt and Midas Mulligan will shorten the time until the whole rotten system collapses. Too many carpenter ants have been nibbling at the foundations of our financial structure.

John Galt said to withdraw our minds. The current system doesn’t want those and doesn’t want us to use them. Take away what they do want, an endless stream of tax revenues.

See:

http://whiskeyandgunpowder.com/free-lunches-money-from-nothing-and-limits-to-government-theft/

A Study in Courage: Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave

I have always considered all US banks and financial institutions to be non-funded IRS field offices which survive at the pleasure of the US counterfeiting operations at the Treasury and the IRS. Now these goblins are trying to extend their reach into extraterritorial financial concerns. Bravo for this Swiss bank which had the temerity to say hell no to the intrusive tentacles of the FedGod. If you have any doubt of this, ask yourself this question: Does your CPA work for you or the IRS?  -BB

Sept. 2 (Bloomberg) — Wegelin & Co., Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the world’s biggest economy.

U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.

“We came to the conclusion that it’s a threat to our clients,” Hummler, who is also president of the Swiss Private Bankers Association, said in an interview yesterday during a conference in Zurich. “It’s also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever.”

Hummler said he plans to raise the subject today at a meeting of the Private Bankers Association, which counts Pictet & Cie., Lombard Odier & Cie. and Mirabaud & Cie. among its members. Swiss banks, which manage $2 trillion, or 27 percent, of the world’s privately held offshore wealth, are struggling to protect bank secrecy after the government agreed to hand over the names of 4,450 UBS AG clients to U.S. tax authorities.

Hummler said he wouldn’t ask other association members to follow Wegelin’s lead. Wegelin, founded in 1741, manages more than 20 billion Swiss francs ($18.7 billion) in client assets.

“Every member is free to decide and act on their own,” he said.

HSBC Studies

Alexandre Zeller, head of HSBC Holdings Plc’s private bank in Switzerland, said his company is still studying the new rules for qualified intermediaries and will do everything it can to comply with them.

“Often in these agreements you have to understand how this will be applied, and it would be premature, especially for an international bank, to take such a decision,” he said today, referring to Wegelin’s position. “It’s not on the agenda for the moment.”

The U.S. has proposed increasing reporting and oversight requirements for so-called qualified intermediaries — foreign banks that withhold taxes on behalf of the Internal Revenue Service. In addition, new rules may mean that people who spend limited periods of time in the U.S. acquire tax obligations, including estate taxes, creating an unacceptable risk for Wegelin’s clients, Hummler said.

If a client decides to keep his U.S. investments, “then finally he has to change banks,” Hummler said.

“We’re talking about probabilities,” Hummler said. “My responsibility toward clients has to include any kind of probability, and if I see a real threat then we have to act.”

U.S. Alternatives

Wegelin is finding alternative ways of investing in the U.S. that won’t impose reporting requirements on the bank or tax liabilities on clients, Hummler said.

“The good thing is that in today’s world you can build up U.S. exposure in equities and as well in bonds through derivatives and index funds and so on, so we are switching to a European-made American exposure.”

Germany and France have also sought to weaken Swiss secrecy laws as they crack down on tax evaders.

The French government, which signed a double-taxation treaty with Switzerland on Aug. 27, obtained the names of 3,000 people suspected of tax fraud and holding accounts at three Swiss banks, French Budget Minister Eric Woerth, said Aug. 30 in an interview with the newspaper Journal du Dimanche.

“It’s not credible,” Hummler said. “The U.S. had a hard time getting these 4,450 names, then the French come and say we have 3,000? I cannot believe it, but they’re trying it on.”

See:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aJstU9MVcYSg