Yup, pretty sleazy. It's also a matter of perspective; I think this calls for a quote from one of the greats:
It used to be thought that heroism and "courage" meant being willing to go out into the lists, candidly and unafraid, to battle the mighty and despotic powers-that-be. Can we really call it "courage" when a [Walter] Mondale or a [Bruce] Babbitt frankly calls upon the eager state apparatus to increase still further its already outrageous and parasitic plunder of the hard-earned money of honest and productive American citizens? Whooping it up for higher taxes is the moral equivalent of some Ugandan theoretician of a few years ago publicly urging Idi Amin to pile on his looting and despotism still further, or of a Mafia consiligieri advising the capo to add an extra ten percent to the "protection fees" imposed on neighborhood stores. We can think of many names for this sort of activity, but "courage" is surely not one of them.
It might be objected that, after all, a politician who urges higher taxes is not only imposing suffering on other people; he himself as a taxpayer will also have to bear the same deprivations as other citizens. Isn't there, then, a kind of nobility, even if misguided, in his plea for "belt-tightening" common sacrifice?
To meet this question, we must realize a vital truth that has long remained discreetly veiled to the tax-burdened citizenry. And that is: contrary to carefully instilled myth, politicians and bureaucrats pay no taxes. Take, for example, a politician who receives a salary of, say, $80,000; assume he duly files his income tax return, and pays $20,000. We must realize that he does not in reality pay $20,000 in taxes; instead, he is simply a net tax-receiver of $60,000. The notion that he pays taxes is simply an accounting fiction, designed to bamboozle the citizenry into believing that he and the rest of us are on the same moral and financial footing before the law. He pays nothing; he is simply extracting $60,000 per annum from our pockets. The only virtue of the United Nations' employees is that they are frankly and openly exempt from all taxes levied by any nation-state - which simply makes their position the same as other national bureaucrats, except uncamouflaged and unadorned.
The same principle, too, applies to sales or property or any other tax. Bureaucrats and politicians do not pay them; they are simply subtracted from the net transfer to themselves from the body of taxpayers.
~Murray N. Rothbard,
Making Economic Sense, pp. 222-223, "Babbity and Taxes: A Profile in Courage?"
With that in mind, Eurocrats simply take the full "voluntary donation" that's been confiscated from taxpayers without even offering the illusion that they contribute anything in return, other than
demagoguery. Which is worse?
I also
really like the idea that taxation is a "voluntary" agreement between a government and its citizens when any government is a monopoly on the services it dominates, and prevents all possibility of alternatives to
voluntarily choose from. You can have any color car you want, as long as the color is black.
Of course, without control over a universally-accepted money, both bankers and politicians are powerless. This has been a key factor for history favoring gold and silver over any other form of money - there can be concentrations of it in the hands of a few, but then it is no longer universal for lack of circulating availability (i.e. liquidity). Without liquidity, an alternative will be spontaneously chosen or the metals will be forcibly liberated through either market forces or physical violence. We know liquidity can be provided by distributing more paper, but the illusion keeps spreading thinner until alternatives are sought.
The very same principles are why Bitcoin and crypto-currency systems derived from it are so strongly supportive of free markets over central authorities - and why
governments are becoming so desperate for measures to
stamp out the possibility of their very existence.
i just got done listening to Bernankes Q&A after the FOMC announcement. he's fully prepared to support the eCONomy with more liquidity at the drop of a hat. he revealed, as well, that they have been buying MORE MBS's on the open mkt pumping more USD's into the mortgage mkt.
some economic indicators are slowly improving as well. imagine that.
It isn't a comforting thought that there's been such important activity going on for a while without being disclosed. Same with MF Global - I wonder what else isn't being announced.
Rogers is deserving of kudos, although I think it's less a case of Bernanke only knowing how to print as one of printing being the only realistic option given the circumstances. We've already begun to see what austerity measures will do, and things haven't even gotten very violent in the US...
yet.
@miscreanity: As you say the COMEX markets will get hit in December with actual delivery requests, what do you predict will happen to the prices and will there be more backwardation or/and defaults?
Okay, here's the opinion (and the usual heap of reasoning behind it):
Silver has recently been flirting with backwardation and there will definitely be a full shift in the immediate future; a primary spike should occur this month (bigger & faster than the July-August rise) and a similar one by mid-December. My targets for the end of the year are still a minimum range of gold at $2,000-2,400/oz up to ~$3,000/oz and silver between $70-90/oz with potential for a
very brief breach of $100. Those upper marks are getting into truly scary realms, indicating that the financial system is bordering on being exposed for the sham it is; the same goes for extreme lows.
Bank defaults have been ridiculously modest for a long time; no more than 3-4 per week when we should be seeing multiples of that; with major events, there's a bell curve of results, not a linear progression (the majority of defaults will hit all at once). Sovereign defaults probably won't ever occur
officially, but as many have written: practical defaults have already happened. The big players won't fall for a long time yet, if ever.
And now the explanation of why (it's not as entertaining as accusing the Illuminati):
From my political perspective, a crisis now and into early 2012 gives the current administration time to set up an
appearance of being the entire
world's savior. In order to get Obama re-elected, saving just the country from imminent disaster isn't enough. By mid-2012 American politicians will be able to point at Europe as the fall-guy, suggesting that the US was being dragged down and had to step in as a good socialist neighbor to help the rest of the world prevent fire & brimstone that would've dragged everyone down. European pols will be able to say they did what they had to do in order to protect Europe while making much ado about the nothing recovery that will take place, just like the US after both major rounds of QE. The Japanese will be able to point to an uptick in manufacturing and exports to the nations they help to bail out, even though most of the recovery is due to rebuilding that would've been undertaken in any case post-Tohoku/2011.
Never let a serious crisis go to waste; the bigger, the better.
As the extra government-supplied zeros funnel into the major collaborating financial institutions around the world, there will be an abundance of ammunition with which to persist in the controlling actions they're accustomed to. In particular, an inordinate amount of wealth will be flooded into the long side of stock markets and dumped on the short side of precious metals and commodities in general - greater than any amount seen to date. That is what will crush the commodity sector back down near current levels from the new highs. It will take several months for the real assets to recover after that, and it is those numbers that pols will point to again as "evidence" of success. By then, people will be wising up in greater numbers than now with the
transfer of funds advocated by Occupy Wall Street, so stricter capital controls will be implemented almost overnight; this will gradually lead to an increase in adoption of alternative means of wealth storage, including Bitcoin.
Most of the world (Africa, Asia, Middle East, South America) outside of western nations will continue to see through the smoke & mirrors and keep accumulating/cultivating real assets as though they caught
Saci. This will maintain a steadily accelerating rise in the bottom level of price ranges for everything tangible, especially gold and silver. I also think everything is in place on the western front and the straw-man catalyst will be proposed via the
G-20 meeting this week.
Looking at the COMEX gold & silver contracts, January and/or February are often large delivery months as well. Typically, for book squaring at year-end, a good amount of metal supply will be sold into the market so money managers can show a profit to their clients. This supply makes it easy for the shorts to pound the price and make it past another significant hurdle (by forcing leveraged contract holders to close or scaring them out), after which the rest of the year is mostly gearing up for the big December contract again. With their backs against the wall, I expect the big shorts to make a final assault in the low-liquidity last week or so of 2011 or early January. Watch for a delay in CFTC position limits from January 1
st, 2012 - if that happens, the shorts will pull out all the stops.
If you see anything questionable, please point it out and state a case for an alternative. We can all thrive from the mess that's building and prepare for what's coming by making use of the banks' & governments' openly-available playbook and history. I know
my money would be better spent on green energy companies and a graduate degree in engineering than bank and nation bailouts.
Something that I've been doing with forex (yes, using leverage - my disposable fund) is accumulating the Australian dollar against the Canadian, Hong-Kong, Singaporean dollars. It's been a good carry trade, maintaining a wide but stable range for over a year now. Since the range is well-defined, it's been easy to scale in and out for both profit-taking near the highs and accumulation near the lows, not to mention the interest income at a modest (for these days) 25:1. There's increasing potential for an Aussie rate drop, so mind your stops and/or hedge (preferably against the New Zealand dollar) if using this technique - remember: there's
always another good deal.
