Unlike libertarians, most conservatives simply don’t want small government. They want their own version of big government. Of course, they have done a pretty good job of fooling American voters for decades by repeating the phrases “limited government” and “small government” like a hypnotic chant.

It’s interesting that conservatives only notice “big government” when it’s something their political enemies want. When conservatives want it, apparently it doesn’t count.

- If a conservative wants a trillion-dollar foreign war, that doesn’t count.

- If a conservative wants a 700-billion-dollar bank bailout, that doesn’t count.

- If a conservative wants to spend billions fighting a needless and destructive War on Drugs, that doesn’t count.

- If a conservative wants to spend billions building border fences, that doesn’t count.

- If a conservative wants to “protect” the huge, unjust, and terribly inefficient Social Security and Medicare programs, that doesn’t count.

- If a conservative wants billions in farm subsidies, that doesn’t count.

It’s truly amazing how many things “don’t count.”

Benedict went on to point out the lack of concern these same people had with the government expansion of President Bush and the health care mandates of another CPAC favorite – Mitt Romney.

While I’m by no means a supporter of the Obama Administration, the idea that many Conservatives seem to have that all the problems we are faced with started on January 20, 2009 is completely ludicrous**.

These are the same people who would gladly support Sarah ‘the Quitter’ Palin, ‘Mandate’ Mitt Romney, or ‘Tax Hike Mike’ Huckabee – none are what I would call ‘limited government’ by any stretch of the imagination.

*And even the anarchists among us who oppose all government regardless of size

**Ditto for those Bush haters of the left who believes every problem we face now began 8 years prior. If we are honest, the problems we face today go back at least as far back as Woodrow Wilson (and probably even before him)

Enjoy.

from RJ Matson, NY Observer

Hat Tip: Ritholtz, The Big Picture

So no, the central banks can’t just dump their gold onto the market. Yet they have serious fears that the public senses the inflationary forces in the world and are looking for a hedge. And they REALLY don’t want the gold price to spike and fuel those fears.

So what if they created a scare in the gold market about purity? Instead of giving people trust in their own currencies, what if they tried to impugn trust in the ability to buy real gold?

The initial discovery was something like four gold bars, which the Hong Kong bankers drilled invasively to test the contents. Reminds me of drilling the earth and measuring how many grams of gold per tonne. The HK bankers hoped to have 99% gold yield in their drill program for the resident bars. They found something like 1% instead and 99% tungsten. By the way, tungsten sells for less than $70 per ton, which makes its swaps for gold to be 60x more profitable than silver bar swaps. Another handy usage for the Gold/Silver ratio in calculations. The hunt was on. Now not a single assayer on the planet is available, as all are tied up. They have been commissioned to test the gold bars shipped from the United States of Fraudulent Banker America in their own bullion vaults. They use basic methods of four drill holes with direct assay of shavings, but also less invasive methods like electro-magnetic waves to examine the metal lattice structure. When highest level methods are needed, they turn to mass spectrometry. NOW ALMOST NO GOLD BARS WILL LEAVE THE LONDON OR NEW YORK METALS EXCHANGES WITHOUT SOME AUTHENTICATION, AS DISTRUST IS WIDESPREAD.

Think, for a second, what a diabolical scheme this would be, if perpetrated by central banks.

In a move they can blame on simple counterfeiters (trying to pass off the tungsten as if it were gold at a huge profit), they can paralyze the entire gold market in a fear that if you buy gold, it won’t be real. They can try to destroy demand for gold in such a way that — if undiscovered — would never be traced to them. All this while keeping all their gold safely in their vaults and devaluing their fiat currencies.

Now, I’m not going to up and claim that such a scheme is being perpetrated. But would you put it past the central bankers, a group of people desperate to keep faith in their own fiat currencies — since faith is the only thing that backs them?

It’s another record-high for the U.S. National Debt which today topped the $12-trillion mark. Divided evenly among the U.S. population, it amounts to $38,974.34 for every man, woman and child.

Technically, the debt hit the new high yesterday, but it was posted on the Treasury Department website just after 3:00 p.m. ET today. The exact calculation of the debt is a 16-digit tongue-twister and red-ink tsunami: $12,031,299,186,290.07

This latest milestone in the ever-rising journey of the National Debt comes less than eight months after it hit $11 trillion for the first time. The latest high-point is not unexpected, considering the federal deficit for the just-ended 2009 fiscal year hit an all-time high at $1.42-trillion – more than triple the previous year’s record high.

Much of the increase in the deficit and debt is attributed to government spending outpacing revenue – both exacerbated by the recession and the government response to it – including hundreds of billions in bailouts and stimulus spending and tax cuts along with decreased tax revenues due to rising unemployment.

In recent days, President Obama has spoken of the need to bring the rising deficit and debt under control.

“I intend to take serious steps to reduce America’s long-term deficit – because debt-driven growth cannot fuel America’s long-term prosperity,” he said in remarks prepared for delivery to the leader’s meeting last Sunday at the Asia Pacific Economic Cooperation summit.

The National Debt has increased about $1.6 trillion on Mr. Obama’s watch, though less than $4.9 trillion run up during the presidency of George W. Bush.

Of course, Obama has only been in office ten months, not eight years.

Since Barack Obama took the Oath of Office, the national debt has increased from $ 10,626,877,048,913.08 to $ 12,031,299,186,290.07. That’s an increase of $ 1,404,422,137,376.99 over 302 days, or $ 4,650,404,428.40 per day, $ 193,766,851.18 per hour, $ 3,229,447.52 per minute, and $ 53,824.13 per second.

Anyone want to bet how long it will take to get to $ 13 trillion ?

My guess is August 15, 2010.

When Ludwig von Mises first arrived in the United States after escaping from Nazi Europe, and pretty much up until the present day, he was essentially ignored by the mainstream economics community in the United States. It was only through the assistance of American businessmen that he was able to get a job teaching at New York University, and, even then, the work he did had nothing to do with official university activities because he was, effectively, shunned for his uncompromising defense of the free-market.

Earlier this week in The Wall Street Journal, though, Mises is given credit for being one of the few economists in the 1920s to foresee the impending Great Depression:

Mises’s ideas on business cycles were spelled out in his 1912 tome “Theorie des Geldes und der Umlaufsmittel” (“The Theory of Money and Credit”). Not surprisingly few people noticed, as it was published only in German and wasn’t exactly a beach read at that.

Taking his cue from David Hume and David Ricardo, Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen.

Government-imposed expansion of bank credit distorts our “time preferences,” or our desire for saving versus consumption. Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption.

Ordinarily, any random spikes in credit would be quickly absorbed by the system—the pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.

The system is dramatically susceptible to errors, both on the policy side and on the entrepreneurial side. Government expansion of credit takes a system otherwise capable of adjustment and resilience and transforms it into one with tremendous cyclical volatility.

(…)

We all know what happened next. Pretty much right out of Mises’s script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed. The brittle tree snapped. Following Mises’s logic, was this a failure of capitalism, or a failure of hubris?

Mises’s solution follows logically from his warnings. You can’t fix what’s broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don’t encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I’m going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher.

That was Mises’ argument in The Theory Of Money And Credit, but he did so much more than that. In Socialism, first published in 1921, Mises laid out in detail the reasons why the centrally planned economy of nations like the USSR could never produce a rational economy and were doomed to failure. He was, of course, proven right in that regard as we learned only twenty years ago. Mises’ magnum opus is Human Action: A Treatise on Economics and while it’s not easy reading it is well worth consuming for even the amateur student of economics.

Here’s hoping people will start taking Mises’ lessons to heart before we make the same mistakes all over again.

I believe that all citizens should become involved in the legislative process by letting their voices be heard, and I appreciate the time and effort that you took to share your thoughts with me. One of the most important aspects of my job is keeping informed about the views of my constituents, and I welcome your comments so that I may continue to represent California to the best of my ability. Should I have the opportunity to consider legislation on this or similar issues, I will keep your views in mind.

Great… You thank me for sharing my thoughts. I feel empowered!

What you don’t say is anything whatsoever regarding your opinion on the legislation (at least Feinstein gave me *something*). So how do I interpret your letter?

‘I’m gonna put my finger up in the air and see which way the wind blows, because I have a vulnerable seat in 2010 and I don’t want to piss anyone off. If I see any benefit to myself, I might at some point take a position on this legislation.’

So, today, when I was reading United Liberty, I was reminded of S.604, and decided to check to see if there were any surprises. And to my astonishment, there was! Barbara Boxer actually co-sponsored S.604!!

Do I think she’s really all that interested in an audit of the Federal Reserve? Not from the email response I received. But hey, she knows a populist wave when she sees one, and she’s gonna ride this one to Nov 2010.

There are a lot of forces assembling behind the Audit the Fed movement. Those forces are having traction. Enough traction, in fact, to get a California Democratic Senator to fall into line. It may be a political calculation, but if someone like Boxer has to make that calculation, it proves that there’s actually some real mojo here. Congratulations are due to Ron Paul, because without his tireless work in the House, we wouldn’t be this close to a serious review of what goes on at the Fed.

Letter from Boxer:

Dear Mr. Warbiany:

Thank you for contacting my office to express your views on S.604, the Federal Reserve Sunshine Act of 2009, which would require the Comptroller General to conduct an audit of the Board of Governors of the Federal Reserve and its banks before the end of 2010 and to report its detailed findings to Congress.

I believe that all citizens should become involved in the legislative process by letting their voices be heard, and I appreciate the time and effort that you took to share your thoughts with me. One of the most important aspects of my job is keeping informed about the views of my constituents, and I welcome your comments so that I may continue to represent California to the best of my ability. Should I have the opportunity to consider legislation on this or similar issues, I will keep your views in mind.

For additional information about my activities in the U.S. Senate, please visit my website, http://boxer.senate.gov. From this site, you can access statements and press releases that I have issued about current events and pending legislation, request copies of legislation and government reports, and receive detailed information about the many services that I am privileged to provide for my constituents. You may also wish to visit http://thomas.loc.gov to track current and past legislation.

Again, thank you for taking the time to share your thoughts with me. I appreciate hearing from you.

Barbara Boxer
United States Senator

Letter from Feinstein:

Dear Mr. Warbiany:

Thank you for contacting me to express support for legislation to increase transparency at the Federal Reserve. I appreciate your interest in monetary policy and welcome the opportunity to respond.

The Federal Reserve was originally established in response to the country’s need for a sound and independent central bank to manage decisions relating to U.S. monetary policy. I understand your concern with some of the unprecedented steps that the Federal Reserve has taken recently to ease the flow of credit and stabilize financial markets.

On March 16, 2009, Senator Bernard Sanders (I-VT) introduced the “Federal Reserve Sunshine Act of 2009″ (S. 604), which would require the U.S. Comptroller General to audit the Federal Reserve System before the end of 2010. This bill has been referred to the Senate Banking, Housing, and Urban Affairs Committee. Representative Ron Paul (R-TX) has introduced a similar bill (H.R. 1207) in the House of Representatives. Please know that I will keep your support for this legislation in mind should it come before the full Senate.

While I recognize the importance of accountability in the operations of the Federal Reserve, I strongly believe that monetary decisions should be made independent of political influence or motives. You may be interested to learn that I supported an amendment to the Congressional Budget Resolution (S. Con. Res. 13) offered by Senator Sanders requiring the Federal Reserve to disclose how it has disbursed emergency economic assistance to financial institutions during this severe economic crisis. Be assured that I am carefully monitoring the actions taken by the Federal Reserve to help stimulate our economy and unfreeze credit for businesses and homeowners.

Once again, thank you for writing. I hope that you will continue to share your views with me. If I can be of any further assistance, please contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours, Dianne Feinstein
United States Senator

In his new book End the Fed, though, Paul provides a clear, concise explanation for why we all need to be worried about the fiat paper money system that we’ve lived under for decades. As Paul says, the system itself is unsustainable over the long term, and Federal Reserve itself has contributed to economic instability in the 96 years since it’s founding.

This isn’t a detailed economic treatise, it’s a call to political action, and Paul does an excellent job of making his case for the argument that we need to bring an end to the monetary system that is, slowly but surely and inevitably, destroying us and destroying freedom. Instead, he argues that we need to return to the days of the Gold Standard, which doesn’t even need a central bank to function properly. You may disagree with the end scenario that Paul proposes, but it’s hard to disagree with his assertion that liberty in money is as necessary for a free society as liberty in thought or property.

Paul’s most important insight in this book, though, comes in his concise demonstration of how the “magical printing press” monetary system that we have today makes possible the leviathan state that is threatening to bankrupt us. Without a central bank with the ability to create money at will and in secret, it’s highly unlikely that the welfare-warfare state would be able to exist. Without free money, the state would be forced to either raise taxes or borrow money to finance it’s ventures and adventures and it’s unlikely that either taxpayers or bondholders the kind of unlimited spending that fiat money makes possible.

What this means is this — you’ll never have a truly limited government as long as you have a central bank with the power to create “money” at will.

That’s why it’s important to End the Fed, and that’s why this book is one that everyone should read.

Particularly irksome when we’re talking about an audit is the fact that they’ve just admitted to engaging in gold swaps, influencing the gold price, in opposition to past denials and with the assertion that they should be able to continue hiding the specifics:

The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. that it has gold swap arrangements with foreign banks that it does not want the public to know about.

The disclosure, GATA says, contradicts denials provided by the Fed to GATA in 2001 and suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

The Fed’s disclosure came this week in a letter to GATA’s Washington-area lawyer, William J. Olson of Vienna, Virginia (http://www.lawandfreedom.com/), denying GATA’s administrative appeal of a freedom-of-information request to the Fed for information about gold swaps, transactions in which monetary gold is temporarily exchanged between central banks or between central banks and bullion banks. (See the International Monetary Fund’s treatise on gold swaps here: http://www.imf.org/external/bopage/pdf/99-10.pdf.)

Gold has been flirting with the $1000/oz level for several weeks (topping it a few times). Those in the gold market have long believed that central banks are suppressing the price to keep fears of inflation from hitting the roof.

How much longer do we have to allow the fed to lie to us, and then when we catch them red-handed, assert that they know well enough that we have to let them hide details on top of their lies?

I say we audit the fed. Then End The Fed.

And yet, there was budget director Peter Orszag rushing to a lunch with Chinese bureaucrats on a Monday in late July. To his surprise, when Orszag arrived at the site of the annual U.S.-China Strategic and Economic Dialogue (S&ED), the Chinese didn’t dwell on the Wall Street meltdown or the global recession. The bureaucrats at his table mostly wanted to know about health care reform, which Orszag has helped shepherd. “They were intrigued by the most recent legislative developments,” Orszag says. “It was like, ‘You’re fresh from the field, what can you tell us?’?”

As it happens, health care is much on the minds of the Chinese these days. Over the last few years, as China has become the world’s largest purchaser of Treasury bonds, the government has grown increasingly sophisticated in its understanding of U.S. budget deficits. The issue has become all the more pressing in recent months, as the financial crisis and recession pushed the deficit to record levels. With nearly half of their $2 trillion in foreign currency reserves invested in U.S. bonds alone, the Chinese are understandably concerned about our creditworthiness. And this concern has brought them ineluctably to the issue of health care. “At some point, if you refuse to contain health care costs, you’ll go bankrupt,” says Andy Xie, a prominent Shanghai-based economist, formerly of Morgan Stanley. “It’s widely known among [Chinese] policymakers.” Xie himself wrote a much-read piece on the subject in 2007 for Caijing magazine–kind of the Chinese version of Fortune.

The Chinese, unfortunately for them, have worked their way into a suicide pact with America. They are simply too heavily invested here to see any serious problems with our economy, government, or monetary base. Had they not spent the last decade buying up enormous Treasury holdings, they could let us implode our economy and “fix” our debt/spending issues through debasing our currency, and then swoop in to buy assets on the cheap once we hit bottom. But that’s not on the agenda. If we take the low road, we’re towing them along for the ride.

Obama says he won’t accept a bill that adds to the deficit. I don’t believe him, since I’ve already seen him fail to live up to his promises on taxes and legislative transparency. Even worse, though, he’s got the folks who plan to finance that deficit worried. And the last group you want to scare are the ones you’re trying to get to lend you money.

Hat Tip: Ezra Klein

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren, America has a debt problem and a failure of leadership.”

— Senator Barack Obama (Ill), 2006

We need to raised the debt ceiling above $ 12 Trillion.

— President Barack Obama, 2009.

Many auto industry analysts and dealers expect sales volumes to fall now that the program is over. They worry that many people who took advantage of the program were merely accelerating purchases they would have made later in the year.

If that’s true, the premature sales could hurt automakers, which increased production in the third quarter to replenish clunker-depleted inventories that had already grown low because of factory shutdowns over the summer.

Cash for Clunkers is essentially an inflationary policy. This is a policy well described by Adam Smith Milton Friedman, with the exact same consequence:

In a dynamic world demands are always shifting, some prices going up, some going down. The general signal of increasing demand will be confused with the specific signals reflecting changes in relative demands. That is why the initial side of faster monetary growth is an appearance of prosperity and greater employment. But sooner or later the signal will get through.

As it does, workers, manufacturers, retailers will discover that they have been fooled. They reacted to higher demand for the small number of things they sell in the mistaken belief that the higher demand was special to them and hence would not much affect the prices of the many things they buy.

The government has arbitrarily and falsely increased demand for a specific good (new cars). They’ve done so by throwing money at it (a locally inflationary policy) and the automakers are ramping up production in response to what they THINK is a more stable recovery. But they may soon find, as Adam Smith Friedman predicted, that they have been fooled.

Here’s what Obama had to say:

Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and outside-the-box thinking that has helped put the brakes on our economic freefall

I thought it might be useful to take a look at some highlights of this Solon, this central – planner whom George Bush put in charge of the money supply:

Of course, as usual, Obama is dead wrong: the Federal Reserve’s actions have actually prolonged the downturn, made it worse, and have laid the foundations for an even bigger crash down the road.

In the days before the election, I told many of my fellow Massachusetts residents that Obama was not so much a break from George Bush as a continuation of his worst policies. I am sorry to say that he has been proving me right since. And this is yet another nail in the coffin of an administration that is showing itself to be even more incompetent than the Bush presidency.

Biden: We need to put more on our national credit card to keep from going bankrupt

CNS News provides the following quote (emphasis added) from Vice President Joe Biden:

“And folks look, AARP knows and the people with me here today know, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it now. It can’t do it financially.”

“We’re going to go bankrupt as a nation,” Biden said.

“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’” Biden said. “The answer is yes, that’s what I’m telling you.”

My response is simple enough even for Twitter:

Earth to Joe Biden: Spending to avoid bankruptcy is like f***ing for virginity.

Considering the way Congress spends our money, perhaps ” orgy for sexual abstinence” may have been a better analogy.

Insert joke about stimulating the economy below.