Keynesian Economics

This is a video on Keynesian Economics I wanted to share with you. The speaker is Daniel J. Mitchell, Ph.D, a senior fellow at the Cato Institute, former employee of the Heritage Foundation, and co-author (with Chris Edwards) of "Global Tax Revolution: The Rise of Tax Competition and the Battle to Defend It"

He's got a funny voice, but I think the video is still a good explanation of President Obama's basic economic strategy, which he in fact shares a lot in common with President George W. Bush.

In Liberty,

Christopher D. Osborn
Bergen, Hordaland, Norge

Our Economic Iceberg

Heritage Chart of the previous stimulus.

Here's a neat chart done by the Heritage Foundation showing how stimulus checks last year hardly did anything. They echo what DownSizeDC has said. One time boosts to income don't make people feel comfortable about spending more. It's only a permanent increase in income that makes people feel more like spending. That's why permanent tax cuts for all people paying income taxes is the best way to encourage spending and investment.

Below is their chart showing statistics about the 2003 tax cuts.


As a related side note, I just want to reiterate that the results of the Revanue Act of 1932 shows that higher taxes hurt the economy. Click here for a history of the Great Depression, which shows that while there was slow sustained growth up until 1937, the economy had another recession and only picked up more perminantly when the conservatives got rid of most of the "New Deal" and finally got rid of all of it accept Social Security by 1947.

Also interesting: click here for a relatively short history on how the United States income tax came to be.

In Love and Liberty,
from Bergen, Hordaland, Norge,

Christopher D. Osborn

NoStimulus.com petitions

Here's a message from NoStimulus.com which is of utmost importance if you want to the United States to have a chance at stopping the "stimulus" bill. It is followed by an email I sent to Congressman Bill Delahunt.

Dear Friend,

At 2PM tomorrow afternoon, your NoStimulus.com petitions (which at the moment number 395,047) will be officially presented to the United States Senate in an event at the Capitol. Later in the day, the Senate is expected to make the final vote on the Pelosi/Reid/Obama trillion dollar spending bill.

You're invited to join us for this presentation if you are in or near Washington. It will be held in Upper Senate Park at 2PM tomorrow. I'm sorry we couldn't give you more notice, but moving the vote up to tomorrow was a surprise move by Nancy Pelosi and Harry Reid to try to jam this disastrous bill through before folks can even read the bill.

If someone tells you this fight is over think about this for a moment. Last Friday, I stood at the Capitol with a band of AFP staff, interns and volunteers as we presented our petitions to Senator Jim DeMint -- our free market leader in the Senate. At that time, we had 69,487 petitions.

Tomorrow, we will present your more than 400,000 petitions and -- if you can help us make a final push by sending the site to your friends in next couple of hours – it can be more than 500,000 petitions to the Senate telling them to vote NO on this outrageous spending bill.

Here's the update on where the battle stands.

Senate and House negotiators are set to agree tonight on a $789 billion bill. Here's what we know about the deal:

• This conference report provides the least tax relief of any version yet, even cutting President Obama’s signature middle class tax cut from $500 per individual and $1000 per couple to $400 and $800. That takes money out the pockets of regular Americans to pay for more wasteful spending.

• This conference report gives away as "tax cuts" tens-of-billions of dollars to people WHO DO NOT PAY INCOME TAXES.

• This conference report, by all accounts, still funds the stealth imposition of health care rationing via so-called “Comparative Evaluation Research,” that would let bureaucrats decides whether people are too old or too sick to receive a treatment.

• The price tag is still astonishing. $789 billion might be less than the Senate’s $838 billion, but it’s massively more than the $300 billion this bill originally was proposed at, and still tops a trillion dollars when interest is included. There's still $50 million for the National Endowment for the Arts, $600 million to buy cars for government workers, $88 million for ATV and bike trails and so much more waste. And, go to stimuluswatch.org to see the wish list of earmarks for cities and counties in your area. It will blow your mind.

With a likely Senate vote tomorrow, time is of the essence. These are the key action items that could lead to victory tomorrow:

1. Get at least 3 more people to sign the NoStimulus.com petition. If we have a huge final push we could reach an astonishing half-million signers -- or more -- before our presentation event tomorrow.

2. Make 1 last call to your senator. Many of you have done this and we're so thankful for your standing up. But, we have just 24 hours to make our final push. Call the Senate switchboard at 202-224-3121 or better yet go on-line and call your Senator's local offices. If you need talking points go to NoStimulus.com and we've got plenty.

3. Consider making a special financial contribution to Americans for Prosperity today. Help us continue to get the word out about the dangers of this no-stimulus bill to literally millions more Americans around the country. Your support will provide resources to ramp up our "No Stimulus" advertising and outreach on websites like the Drudge Report, FoxNews.com, Townhall.com and others for the final day of this fight so we can generate thousands upon thousands of phone calls into Senate offices. A gift of $10, $25, $50 - or any amount you could afford - would go a long way toward reaching even more people with our No Stimulus message and mobilizing them to make a difference alongside you and me to STOP the Pelosi/Reid/Obama boondoggle.

You're making a huge difference. Yesterday, “Americans for Prosperity” and “No Stimulus Petition” were the top two searches in the nation on Google, and your efforts to drive literally hundreds of thousands of people to our NoStimulus.com website was a featured story on the Yahoo! front page. Additionally, today you may have seen the number of petition signers ticking upward along the bottom line of the Fox News “ticker.” You have literally flooded Senate offices with your calls and most of Washington is now going to NoStimulus.com site to view the counter to find out how many folks have signed the petition.

I know the pundits are political prognosticators are saying it's over and the Pelosi\Reid\Obama trillion dollar bill is a done deal.

But, don't be discouraged. Instead, keep fighting. One petition signer from Wisconsin, Carla, sent me an email that says exactly why we should keep fighting. She wrote:

"Tim,

For a week I've been so frustrated over this terrible Stimulus bill. Then in the last day I've called both my senators and my congressman. I've signed the NoStimulus.com petition and then forwarded it to my entire email list. For the first time in my life I even called a local talk radio show to tell people why the bill is so bad.

And you something, I feel so much better because I'm doing all I can do."

Carla is right. We can just be frustrated over what these politicians are trying to do to our nation and our economic freedoms. Or, we can do "all we can do" for our nation.

Thanks and if you are in the area please join us tomorrow, 2PM, Upper Senate Park for the presentation of your petitions to the Senate!!

Sincerely,

Tim Phillips
President, Americans for Prosperity

Here's the bulk of the email I just sent:

Mr. Delahunt, I know you're a Democrat and really want to believe in our new presidents plan to recover our economy, but please listen to reason! The economic recovery plan about to go up for vote will not save our country. All it will do is put is more into debt. There are three ways the Federal Government can pay for the stimulus, and all of them are bad for our economy.

This is coming from a Conservative Libertarian from our dear Massachusetts 10th district. Specifically, the town of Tisbury. If you want to check my voting status before you read on, my name is Christopher David Osborn and my last U.S. address was zipcode 02568, the hamlet of Vineyard Haven in the town of Tisbury in the county of Dukes County.

The first, taxes, takes away money from the people who would otherwise save, spend, or invest it. In an economic crisis higher taxes (for anybody, including the big corporations nobody likes) should be unthinkable. The Revenue Act of 1932 was one of the major reasons the economic problems at the time deepened and lengthened into the Great Depression.

The second, government borrowing, is just as bad! It also takes money out of the private economy - the money that bond purchasers hand over to the government in exchange for bonds. The money people use to buy bonds could be much better served either investing in American businesses, buying American products, or saving in American banks to increase their value.
Also, if the funds are borrowed, we eventually have to pay it back, creating the same tax problems for the next generation - only worse because of interest. Excessive borrowing may also increase interests rates, furthering our credit problem.

The final way to pay for it, without a tax and without borrowing, is to have the Federal Reserve just print more money. This is perhaps the very worst option of all. We cannot just create money out of thin our without it coming back to byte us. Printing more money means the bills and coins we have in our wallets and savings account will be worth less and less. The devaluation of the dollar will eventually lead to us having push wheelbarrows of money to the grocery store just to buy a loaf of bread!
Inflation is the worst thing you could possibly cause! Do you know that the Germans tried to use inflation as a method of war? They attempted to print fraudulent pounds and ship them to the U.K. in order to collapse their economy.

Another reason for you not to pass the bill is for what the money is being spent on. I don't know what it is exactly, but I keep hearing that the massive amount of it is going to buy condoms or some other sex-related thing. One website talks of some kind of adult sex workshop.

There is also supposedly going to be spending by the Department of Agriculture on broadband Internet services in rural areas. First of all, the Ag department has no business dealing with broadband Internet access - my grandfather (the late Rodman F. Backus Jr., founder of Rod's Flowershop & Nursery and Rod's Landscaping on Martha's Vineyard) went to an Ag school and while he was a great and intelligent man he new nothing about computers. Second of all, that the heck is the government doing giving people free Internet?! Sure, it's a good business and educational resource, but do you realise how much of it is just used for porn? I am ashamed to admit this, but honestly, it was not too many years ago when I was one of those porn-addicted teenagers. If rural schools, libraries, and businesses are having problems getting Internet access that's one thing, but I don't want the general public being given free broadband access.

Please, read the bill. If you haven't had time to read the whole thing, demand to be given the time to read it. Once you read it, do not give in if you see anything that's unnecessary. You can do it! If you see something you think is inappropriate for the government to be spending money on, that shout it out and tell the others that you will be voting no unless it is taken out! Stand up for what you know is right and against what you know is wrong! Be the patriot I know you can be!

In Liberty,

Christopher D. Osborn
fipher.blogspot.com
http://www.downsizedc.org
battleforheaven.blogspot.com
http://www.upf.org

Here's hoping for a miracle for our country,

from Bergen, Hordaland, Norge,

Christopher D. Osborn

Are we turning Japanese?

A recent Downsizer Dispatch mentioned a New York Times article about how a 1980's housing bubbler burst in Japan cuase economic turmoil that lead to huge domestic government spending - just as is happen in the United States today. So what happened in Japan? It seems that the spending gave Japan a HUGE debt. The economy was lifted too, but not by all the spending on construction projects and the like. It was instead lifted by an expensive cleanup of their debt-ridden banking system and increased export to to the U.S. and China which did the trick.

So if we are to learn from the Japaniese example, we should not pass these infrastructure spending bills - they will do nothing but create debt, and increased taxes for the next generation, which is myself and my kids and grandkids. We should instead stop barrowing money, pay off all our debts, and pass laws that make in much easier and cheaper for Americans to make things and export them to other countries.

In Liberty from Bergen, Hordaland, Norge,

Christopher D. Osborn

Sourse:

Are We Turning Japanese? - DownsizeDC
Can We Learn from Japan? - Cafe Hayek
Japan's Big-Works Stimulus Lesson - NY Times

How to Protect Yourself from the End of America

The latest Daily Wealth newletter is all doom and gloom.  Here's a quote from Porter Stansberry that summs up their worries:

This is how America ends – with the lie that we all can live at the expense of our neighbor and borrow endlessly. Rather than simply face a downturn in the economy, we plan to borrow trillions of dollars our children and grandchildren will be forced to repay. Rather than let all those people and institutions that took on too much debt (like GM) be liquidated and restructured, we plan to risk a hyperinflation. Rather than insist homeowners who can't afford their mortgages lose their homes, we would jeopardize the credit rating of the country.

It is all madness. None of the government's bailout plans will solve any of the problems. The government can only shift the burden of the failures. Instead of bondholders and shareholders being wiped out, taxpayers are put on the hook. These actions will temporarily resuscitate the economy – but cause a permanent decline in the value of the dollar.

I'm sure I've posted about this theory before.  Anyway, he does have a few idea's of hour to prepare. Unfortunatly many of us, such as myself, don't even have the money to take up his suggestions.  Oh well, it'll be alright, 'cause I have theory.

It may very well be that the United States of America as we know it will come to an end.  However, I think it'll be alright.  There is still war out there, but I really think the human family has evolved so very much, that by the time the U.S. starts to crumble, it won't matter.  

Don't get me wrong, I love my country dearly, and I would ber very sad to see it's end.  However, more and more people are sayign "world peace," more and more are saying "live for the sake of others."  I think that while President Obama's stratagy of saving our economy now will distroy it in the future - he helping to push for a culture of service in this country will make it alright.  Nobody will have any money, but everyone will be helping eahcother out for free anyway!  I don't mean to say we'll have communism nessiserily.  Instead, we'll have Libertarian socialism - that is, everyone living for the sake of the whole, and soing so in free will, without any forceful government persuasion.

We will have the same capitalist society that we love, accept that the culture of service will compensate for the fast that nobody has anything.  In the past, if nobody has any money, either everyone starves because everyone is looking out for themselves, a totalitarian regime comes about and forces change, or both.  However, and the global culture continues to be pushed towards a "let's all hold hands" kind of world, people won't suffer as much as they did in past depressions, nor will we cry of for some Hitlar, Stalin, or Kim-Il-Sung.

From bergen, Hordaland, Norge,

Christopher D. Osborn

Below is a messege from the Heritage Foundation that gives conservatives hope.

January 22, 2009 | By Nathaniel Ward

Heritage on the inauguration of President Obama

Although conservatives ought to remain on their guard over the next four years, Heritage vice-president Mike Franc makes a case for cautious conservative optimism on National Review Online.

Just as only President Nixon could go to China, he suggests, perhaps only President Obama can tackle serious entitlement reform and foreign policy objectives. Perhaps "oenly a man with our new president's liberal pedigree will possess the sort of political capital required to tackle our nation's most pressing and foreseeable challenge," writes Franc.

On the economy, the new administration will have to face the coming spending tsunami as Baby Boomers increasingly qualify for the big three entitlement programs, Medicare, Medicaid, and Social Security. President Obama will have to make the difficult choice between tax hikes, which may be politically harmful, and a real effort to rein in spending.

And on foreign policy and national security, Franc argues that "with intelligence briefings comes maturity." The campaign trail asks candidates to hold up high ideals, but the Oval Office demands prudence, and the President may even embrace a number of positions he derided as a candidate. "If and when he does, the mainstream media will revisit these issues in a more understanding way and begin to explain the tough trade-offs that are required to defend America's interests."

Heritage foreign policy expert Helle Dale puts the new presidency in historical perspective. Other new Presidents —Bush, Reagan, Nixon, and Truman — faced "raging storms, far more worthy of the name than the clouds under which Obama's presidency begins," says Dale.

She continues:

The world Obama inherits today is clearly complex, but thanks to the tireless efforts of his predecessor, far less dangerous than the impression created [in his inaugural address on Tuesday]. Indeed, Obama owes a debt of gratitude to Bush for the tough decisions he has taken to keep this country safe and the sacrifices he made in political capital and personal popularity to do so. Bush may be vilified, even booed by the crowd of Obama supporters on the Mall, but he kept each and every one of them safe from terrorist attacks for seven years…Obama of course questioned those very policies during the campaign and indeed in his speech [Tuesday], postulating a false dichotomy between our safety and our ideals.

Dale concludes that Obama obviously differs from Bush philosophically, but that "how far world events will allow the Obama foreign policy to diverge from that of the Bush years remains to be seen."

Meanwhile, on WorldNetDaily, former Congressman and Heritage distinguished fellow Ernest Istook discusses President Obama's unique position to end race-based victimhood.

Though Barack Obama's election was a watershed in many respects, "America's laws and regulations don't reflect that sense of accomplishment. They remain mired in 1960s thinking and prejudices about race," Istook pointed out. 

Hard choices don't get any tougher than race relations and affirmative action. This certainly meets Obama's inaugural address standard of tackling long-avoided problems.

We have a chance at change for the better. For decades, a catchphrase has been, "If we can put a man on the moon, then why can't we ..." The new version will be, "If we can elect a black president, then why can't we ..."

If President Obama is willing to provide leadership of the right sort, we can heal many of America's racial tensions and still improve upward mobility for Americans of all races and backgrounds. Yes we can.

Finally, Heritage's Foundry blog linked to a humorous but very telling video clip demonstrating how conservativecertain parts of Obama's speech sounded.

— David Talbot

Beach proposes 'stimulus' alternative to Congress

Heritage Foundation economist Bill Beach testified last week before the Economic Recovery Working Group on Capitol Hill about an alternative to the Left's big-government economic "stimulus" package.

Beach suggested an alternative to the Left's plan to spend $850 billion on economic recovery:

1. Extend the 2001 and 2003 tax reductions for as long as possible -- at least through 2013 -- to prevent tax increases. Better yet, make the tax cuts permanent.

2. Reduce tax rates on individuals, small businesses and corporations through 2013 by lowering the top rate by 10 percentage points and reducing rates by similar amounts for taxpayers with lower income levels.

This would give employers the incentive to invest money and create genuinely new jobs.

Heritage's Rob Bluey reports that "the hearing came a week after President-elect Barack Obama invited alternative suggestions for promoting economic growth."

» Read more about the case for a conservative stimulus on MyHeritage.org

From Bergen, Hordaland, Norge,

Christopher D. Osborn

"The Politician Who Loves the Crisis" from D o w n s i z e r - D i s p a t c h

D o w n s i z e r - D i s p a t c h

---

Quote of the Day: "You never want a serious crisis to go to waste." - Rahm Emmanuel, Barack Obama's Chief of Staff

Subject: The politician who loves the crisis

Rahm Emmanuel loves the financial crisis. He sees it as an opportunity. His admission of this fact, which we've used as our quote of the day, is breathtaking. 

Mr. Emmanuel tried to moderate his enthusiasm for exploiting the crisis by claiming that his desire wasn't for big government, but for good government. But has Mr. Emmanuel ever acted as if good government was consistent with smaller government? We doubt it. 

Mr. Emmanuel isn't alone in seeing crisis as an opportunity to make government "gooder" by making it bigger. Donald Rumsfeld famously wanted to exploit the 9-11 attack by "roping in everything," including Iraq. And that is what they did.

One "crisis" event was used to create another crisis. Now it's happening again.

Consider what this means: What do the politicians think of you? They think you aren't wise enough to accept their grand plans for remaking the world, so you have to be scared into doing the right thing. Their grand plans require crisis to be implemented. This way of thinking also implies that only the politicians know what the right thing is.

Your plans and my plans, and all the individual plans of 300 million Americans, must be superseded by the plans of the politicians and their court intellectuals. But what's the likelihood that such a small group of people really knows how 300 million individuals should live -- how their affairs should be regulated and their money spent?

And what happens when they're wrong? If you and I make mistakes in our small plans for our own lives, the consequences effect only ourselves and maybe a few people around us. But when the politicians' grand plans go wrong, millions, perhaps everyone, is harmed in a grand way.

But isn't this very nearly the definition of a crisis -- something that harms everyone?

If politicians have the power to help everyone, then they also have the power to harm everyone. But what they can never have is enough knowledge to predict the full consequences of their grand, universal "do-gooder" plans.

Knowledge is decentralized. All of us have pieces of the puzzle. This is why small, decentralized plans tend to work, creating massive progress from the bottom-up. It's also why grand plans, from the top-down, blow-up.

Here at DownsizeDC.org we think we need to have a few, bottom-up plans of our own. We need to figure out how to stop the politicians from creating and exploiting crises. But, unlike the politicians, our plans must not be grand and universal. They should be humble and flexible, capable of being implemented in small increments.

We can't pretend to know, in advance, all the steps needed to curtail the politicians' power to create and exploit crises. No one one bill, by itself, will stop political opportunism and meddling. But we can know the rough dimensions of what our plan must achieve. Above all, we can be fairly certain of the need to make our ideas heard at the same volume as the grand claims of the crisis exploiters.

Some would attempt to accomplish this from the top-down, by finding a few large donors, and then buying lots of advertising with their donations. But large donors can change their minds or even pass on, and any plan based on them risks a large collapse at almost any moment -- kind of like the plans the politicians prefer. We take the opposite approach . . .

* We want to fund our plan from the bottom-up, with lots of small and average donations, especially monthly pledges.
* We'll then use our success in building this base of monthly pledgers to attract larger donors who will be the icing on the cake, rather than the cake itself.

It's working.

Our ability to attract a stable base of monthly pledgers is what earned us the support of the major donors who gave us the financial lever we needed to pre-fund all of our basic operations for all of 2009.

We're now in a position to spend nearly all the additional money we raise in 2009 to do outreach and recruitment. No other organization I'm aware of is in such a position. Think of what this means to you . . .

Nearly every additional dollar we raise will fund outreach that will recruit new people who will exert more pressure on Congress and fund still more outreach to recruit still more people. We're now at the point where we can create an ever growing spiral of outreach, education, recruitment, and direct pressure on Congress.

Already this month, we've added a couple of new pledgers and raised more than $1,200. This money is accumulating, and will soon amount to something that can accomplish something. Here's what we need to move forward EACH MONTH this year: 

* Just $6,000 a month (beyond reoccurring pledges)
* Just 20 new monthly pledgers each month -- less than one a day

This message is going out to more than 24,000 people. These targets seem quite doable.

We'll be presenting the first phase of our outreach plan to you in just a few weeks. We anticipate investing $50-60,000 throughout this year -- eight to ten times what we've spent on direct outreach in our four year history. Could you help make this happen by making . . . 

a) a generous one-time contribution or,
b) becoming a monthly pledger

The size and impact DC Downsizers can have is a matter of funds. The growth of the army depends on you.

Thank you,

Jim Babka
President
DownsizeDC.org, Inc.        

P.S. This afternoon (Friday) Jim Babka is scheduled to be on Straight Talk w/ Jerry Hughes on the Accent Radio Network. Details are available in this October DownsizeDC.org blog post.

D o w n s i z e r - D i s p a t c h
is the official email list of DownsizeDC.org, Inc. & Downsize DC Foundation

CONTRIBUTE to the Electronic Lobbyist project

http://www.DownsizeDC.org is sponsored by DownsizeDC.org, Inc. -- a non-profit educational organization promoting the ideas of individual liberty, personal responsibility, free markets, and small government.

You are encouraged to forward this message to friends and business associates, and permission is hereby granted to reproduce any items herein as long as attribution is provided for articles and the subscription instructions above are included.

Why Gold Could Fall 50% from its Highs

Below is a messege fro Dr. Steve Sjuggerud from DailyWealth.  It has an alarming title, especially considering how much he and his team have been recomending gold lately.  However, this isn't a worry for long-term investors. He says at the end of the article that DailyWealth is still in a long-run bull market.  They're just warning people not to expect short-term gains and thereby recomends against investing in gold for the short term.

This really isn't anything new for them, actually, which makes me feel really good about them.  DailyWealth has Always generaly recomended against short-term investing, and for long-temr investing.  They also always recomend a varied investment portfolio.  Don't just invest in gold, invest in other things like options on the Japanies Yen Trust (FXY), they say.

Anyway, have a good read.

From Bergen, Hordaland, Norge,

Christopher D. Osborn 

Why Gold Could Fall 50% from 
its Highs
By Dr. Steve Sjuggerud
January 13, 2008

Who's bearish on gold?

I dare you... Name one analyst who thinks gold could crash now.

What, you don't know any? That's what scares me... Everyone I know is bullish on gold... Everyone but my friend Jack Crooks.

I've mentioned Jack once or twice in DailyWealth as a true, successful contrarian. Over the summer, Jack was the only man I knew who was bullish on the U.S. dollar. He essentially said everything keeps getting worse, but the dollar has stopped going down, so it's bottomed. He nailed it. The Dollar Index soared from 72 when he wrote that to a peak around 88 a few months later.

He's at it again, this time on gold... with similar reasoning. Yesterday, he pointed out several circumstances that should cause gold to go up... but haven't lately:

How much more stimulus is possible to pump out and cheapen paper currency the world over? How much closer can we get to all out war in the Middle East? How much more dangerous can the Pakistan-India on-going quagmire become?

This is nasty stuff...Yet the supposed supreme safe haven – gold – continues to fade [fall] on all this stuff.

Jack says gold investors have gotten the exact circumstances they want for higher gold prices... and yet gold keeps falling. This is not a good sign.

Here's another ominous sign: Gold is breaking down.

In worse news for gold prices, gold broke below its key long-term moving averages. Jack points out that the recent highs have been lower and lower – another bad sign.

You may not put much faith in technical indicators like these. But some actually work...

I ran the numbers today. I use a 45-week moving average as a signal of general uptrends or downtrends (above the moving-average line is a bull market, below is a bear market).

Since late 1970, gold has risen at about 6% a year, compounded. But amazingly, when the price of gold is above its moving average, it compounds at a double-digit annualized rate. And when it is below the moving average, you lose money. That is a huge difference.

We at DailyWealth do believe gold is in a long-run bull market. But the near term could be difficult...

Gold jumped from $35 to $850 from January 1970 to January 1980. That sounds like a rip-roaring bear market. But did you know, from March 1974 to September 1975, the price of gold fell by half? We could see that again. We're already down about 20% from the highs... and nobody is even particularly worried yet.

Look, my friend Jack Crooks is good at what he does. Between Jack and the current downtrend, I wouldn't make big bets buying gold right at this moment.

In short... own gold for the long run. But don't take big risks speculating on it in the short run – it could cost you.

Good investing,

Steve

P.S. I've known Jack since we worked 15 feet away from each other at a firm specializing in international investing. That was more than a decade ago. I can tell you Jack is a smart, uncompromising currency trader who knows his financial history and knows the markets. You can click here to learn more about his work.

Editor's note: Dr. Steve Sjuggerud writes True Wealth, one of the top five financial newsletters in the world. Steve's investment philosophy is simple: Buy assets of great value when no one else wants them, and sell them when others will pay any price. 

Recently, Steve uncovered a "glitch" in his favorite gold investment¦ This anomaly allows investors to make up to 665% after gold prices rise. Click here to learn more.

I.O.U.S.A. on CNN; Downsize D.C. Has a Plan.

Hello there everybody!  Have I told you about I.O.U.S.A. yet?  Well, if I haven't, it's a fantastic documentary showing that the U.S. is way more in debt than most think it it, how we got there, and why we MUST fix it ASAP.  Below is a trailor for it, but you can also see the 30 minut version on the I.O.U.S.A. Website.

In addition, the full movie will be airing on CNN on the following dates and times:

Saturday the 10th of January 2009, 2 PM Eastern Standard Time

Sunday the 11th of January 2009, 3 PM Eastern Standard Time

I encurage every single American to watch this movie, and act on it NOW.  But what should you do, becides save money, pay off your debt, and stop spending money you don't have?  Well, I beleive I.O.U.S.A has a Take Action page.  other than that, here's Downsize D.C.'s take on what we should do.

How to Stimulate the Economy

Categories: Wealth & Poverty, Downsizer-Dispatch

Quote of the Day: "The permanent income hypothesis (PIH) is a theory of consumption that was developed by the American economist Milton Friedman. In its simplest form, PIH states that the choices made by consumers regarding their consumption patterns are determined not by current income but by their longer-term income expectations." -- from Wikipedia

Subject: How to stimulate the economy

The President-elect wants the proposed stimulus bill to be 40% tax cuts. That's good. But he wants those cuts to be one-time reductions. That's bad.

The politicians want to prop up businesses by stimulating consumer spending. One-time tax cuts will not accomplish this.

Milton Friedman won the Nobel Prize for showing that consumers don't spend based on short terms gains, but only on expectations of what their long-term income will be. This fact was validated yet again by the fate of the recent "stimulus" checks the government mailed to everyone. Most people did not spend this money, they saved it or used it to pay down debt.

If the politicians really want to stimulate spending they should passpermanent tax reductions.

The politicians claim this would add too much to the deficit. They could solve this problem by cutting spending -- by Downsizing DC. But the politicians claim we need increased government spending to substitute for reduced consumer spending. Several recent studies indicate that there's little evidence to support this theory.

The politicians promise that this stimulus program will be different. They're going to focus on building productive new infrastructure that will aid economic growth. But how do politicians know what will be productive and what will not? And why should we believe that this massive spending won't be junked up with pork and corporate welfare?

Daniel J Mitchell of Cato Institute makes the following points . . .

* The jobs the stimulus package is supposed to create will cost about $280,000 each, assuming the jobs materialize (this is according to the calculations of Greg Mankiw at Harvard)
* The true cost of these jobs will be even higher because we must also include the "opportunity costs" of what could have been done with the money instead
* To the extent the new jobs are government jobs the cost could be even higher. The Bureau of Economic Analysis calculates that federal employees earn nearly twice as much as private sector workers.

In addition, the money for the stimulus package must be borrowed, which will add long-term interest costs. 

All of these concerns disappear if the government doesn't spend the money, and instead leaves it in the private sector.

The politicians could stimulate businesses to use this money to create new goods and services, and consumers to feel confident about being able to afford these goods and services, by cutting regressive forms of taxation permanently. The politicians should immediately eliminate the . . .

* Capital gains tax (which discourages investment), 
* Corporate tax (which is merely passed on to consumers), 
* And reduce the regressive payroll tax, which does not need to be so high in order to pay for current entitlement expenses

Permanent tax reductions would . . .

* Make new investments and businesses profitable
* Convince consumers that their incomes will be higher for the long run
* Increase investment, job creation, and consumer confidence

Please send Congress the following messages . . .

Ask them to oppose so-called stimulus spending. Use your personal comments to point out the lack of evidence that government spending stimulates the economy.

Then, please also ask for permanent tax reductions. Use your personal comments to point out Milton Friedman's findings that only permanent changes in income stimulate consumer spending. Ask Congress to repeal the capital gains tax and the corporate tax in order to boost employment, and to reduce the payroll tax so as to increase consumer confidence.

After you've sent these messages please think of at least two people who would really like and agree with this message. Forward it to them, one at a time (instead of to your entire address book), with a personal note telling them why you thought of them when you read this message. Encourage each of them to join you in sending a message to their representatives in Congress. If everyone reading this list did that, we could wake up to find our Downsize DC army doubled in size!

Thank you for being a part of the growing Downsize DC Army.

Perry Willis
Communications Director
DownsizeDC.org, Inc.

P.S.  Not all new office holders have Internet contact pages yet. We are updating our system as the new contact pages come on line. Your message will go through to any of your representatives that remain the same, or for which we've received new information. Don't let this transition slow you down. Your message will get through to someone. It will make a difference. Take action!

From Bergen, Hordaland, Norge,

Christopher D. Osborn

P.S.

As a side note, I'd like you guys to check these things out and see what you think.  It's about supposed plans by the U.S. Government to slowly turn our country into a Millitary state, ignoring Posse Comitatus and other Federal, State, Local, and Constitutional laws which protect our freedoms.  It seems to me that Miss. Wolf and her collueges may be overreacting, especially after reading the Posse Comitatus wikipedia article above, but just in case I want to share this stuff with you anyway.

http://bbvm.wordpress.com/2008/12/14/domestic-militarization-comes-to-san-bernardino-county/

http://bbvm.wordpress.com/2008/12/03/washington-post-20000-more-us-troops-to-be-deployed-for-“domestic-security”/

http://naomiwolf.org/

Newly Educated Fred Thompson?

Here we have a fairly new video of Fred Thompson mocking the liberal idea that spending and printing money and not saving will save us all:

On the other hand, we have him below mocking Ron Paul on these very same issues.  



I want to know, is Sen. Thompson newly educated, or is he just acting?  If it's not just acting, I would love to see him join Ron Paul's Campaign for Liberty, or perhaps donate to Downsize D.C.

Also, here's a messege from Tom Dyson of Daily Wealth:

The Stupidity of Government Intervention
By Tom Dyson

The only other time I'd ever seen this was in my school history books, learning about the Great Depression...

In September 2007, Britain's most overleveraged mortgage bank – Northern Rock – asked the government for an emergency loan. When its customers heard the news, they rushed to the nearest branch of Northern Rock to withdraw their savings. They formed queues around the block.

The next day, the government announced it was guaranteeing Northern Rock's deposits, and the panic went away. Then a funny thing happened...

Suddenly, people started draining money from all the other banks in Britain and depositing it at Northern Rock!

The government intended to make the financial system stronger by shoring up Northern Rock. But it made the financial system weaker by undermining the financial strength of all other banks. In the end, the government ended up nationalizing the whole system.

The same thing happened in Ireland. It was the weakest financial system in the euro-zone. Then it guaranteed all its deposits. All the money in Europe started flowing into Ireland. This weakened the banking systems in the other European countries, and they had to guarantee their bank accounts, too.

In the United States, the government is doing everything it can to help homeowners stay in their houses. These people couldn't afford their houses in the first place, but the government wants to keep them happy. So it won't let the banks foreclose their properties, and it's making banks reduce the principal on the loans.

Would you lend money to a home buyer knowing the government won't let you take the house if he doesn't pay you... or that the borrower doesn't have to pay the whole loan back? No way. Not unless you could charge an astronomical interest rate. The government won't let you do that either. Government regulations cap the interest rates you can charge on a mortgage.

So the government thinks it's helping unfreeze the credit markets. But it's actually making them worse.

Here's the point: Government intervention makes the whole system weaker.

Intervention kidnaps money that would otherwise be available to businesspeople and entrepreneurs... and it invests it in places that businesspeople and entrepreneurs would never put their money... like uncompetitive car companies or failed banks. Then it creates unintended consequences that make everyone poorer.

Government stimulus does not stimulate, it stifles. So when you look at the current levels of government intervention all around the world... India, Australia, China, Taiwan, Britain, Europe, and the biggest of all in America... you have to conclude it will lead to the biggest loss of productivity ever.

When the government controls an economy's financial decision-making, no one makes any money. This is why the government interventions haven't had any effect so far. It's also why stock prices will fall to valuations far lower than at normal bear-market bottoms of the past few decades.

So I'm not ready to call a bottom in the stock market. I'm only willing to buy a stock if it has a balance sheet with no debt, it generates tons of cash flow from selling a simple product, and it pays a dividend I know cannot be cut under any circumstance.

Besides that, I'm sticking to gold and cash.

Good investing,

Tom

Happy New Year Everybody!

From Bergen, Norge,

Christopher D. osborn

Chris Weber predicts a return to the Gold Standard

The following is Daily Wealth's latest advice on Gold. It start's with a scary question: "Will the government confiscate my gold?" and goes on to explain why it won't happen.

Will the Government Confiscate
My Gold?
By Chris Weber
December 4, 2008

I get this question from time to time, and I suspect that it is something many people worry about.

After all, gold was confiscated back in the 1930s. Why couldn't it happen again? To answer this, we have to go back a few years to show how different things are now.

First, gold was money back then and had been money for thousands of years. In the U.S., that practice went back to the Constitution. The founders had lived through the ruinous paper money inflation of the American Revolution and were resolved that the printing of paper money unbacked by gold or silver would never happen again.

Now, fast forward to America's biggest economic crisis, the Great Depression. When it started, the U.S. was still on the gold standard. People could take their paper money to banks and convert it into gold coin or bars at the old price of $20.67 per ounce.

But this put a crimp on the government's ability to inflate. And the new president, Franklin Roosevelt, came into office believing that massive new paper money and credit creation was the way to get the country out of the depression.

So he believed that gold would have to be removed as money. On March 6, 1933, just two days after he came into office, he barred banks from paying gold to depositors. One month later, on April 5, he outlawed what he called "hoarding" of gold. All gold coins had to be taken to banks and exchanged for paper money, at the price of $20.67 per ounce, with two exceptions – each person was allowed to keep no more than $100 in gold coins, and rare coins were not included.

So now we come to the situation today. Gold is no longer regarded as money in any legal sense. Almost no one has even seen or held a gold coin, or certainly less than 5% of the population. Since 1933, money is whatever paper value either the market says it is or the government says it is. There is no more legal tie to gold.

This is a first in human history. Earlier suspensions of the link between gold and money were short and to be gotten over with as soon as possible. But when the world went off the gold standard in the 1930s, it never went back on. Needless to say, inflation has soared since then. The paper dollar has lost over 95% of its value.

Today, however, unlike 1933, there is no reason for the government to confiscate gold. Indeed, the government is even minting it and selling it. It can't sell gold fast enough, and there are shortages.

(If, for some crazy reason, the government decided to confiscate gold, I doubt many people would comply. The gold would go into hiding and trade in an underground economy, the way illegal drugs do today.)

Gold was confiscated in 1933 because everyone thought of it as money. They used gold as money, and this situation made it impossible for the government to inflate, because you can't print gold.

Now, nothing stands in the way of the government's ability to inflate. The central banks have been doing it at record rates during the last few weeks in order to avoid deflation.

But I think future inflation will so ravage the value of the U.S. dollar, as it did during the American Revolution and the Civil War, people will demand that once again the dollar be backed by gold.

In the world economy I see emerging today, income and cash are going to continue to be sought after. Short-term interest rates will eventually rise, giving your cash a better return. But particularly, you'll be happy to have your gold and precious metals.

Good investing,

Chris Weber

Press Release for END THE FED in DC, Please Help Circulate

MEDIA ADVISORY
FOR IMMEDIATE RELEASE: November 18, 2008
CONTACT:
Debbie Krueger not12submit@gmail.com
Jordan Page jordanpagemusic@gmail.com
Adam Kokesh adam.kokesh@gmail.com

Growing Movement Strikes at Fed in Washington, DC

National “END THE FED” day of protest calls for sound monetary policy and an end to bailouts

On November 22nd, commemorating the secretive conception of the Federal Reserve System, a growing movement of citizens concerned with this country's fiscal policies will gather in 39 cities nationwide at each Federal Reserve location to demand an end to the Fed, return to sound monetary policy, and an end to corporate bailouts. In Washington, DC, they will gather across the street from the Board of Governors of the Fed at 20th and Constitution at 1pm. Denied a permit to protest on Federal Reserve grounds by the Fed's Public Affairs Office on the basis that it is private property, the rally with a stage and amplification system will be held across the street with a permit granted by the Parks Department. National coordination is being provided by Aaron Russo's Restore the Republic (restoretherepublic.net) and more information can be found at endthefed.us.

Speakers will include Gary Franchi of Restore the Republic to discuss his organizational plans for furthering this issue and the duty of all patriotic Americans to get involved. Kevin Zeese, former US Senate candidate, current Executive Director of Break the Bailout, (breakthebailout.com) will talk about building a broad coalition to stop further “theft from the taxpayers.” Anthony Teolis, veteran of the First Gulf War, member of Veterans For Peace (veteransforpeace.org) will show how the Fed is the primary enabler of our destructive interventionist foreign policy. Rick Williams is a founder of BreakTheMatrix, (breakthematrix.com) and serves as Chairman and Chief Executive Officer of Basic Media, Inc. From the Center for Economic and Social Justice, (cesj.org) Norman G. Kurland, President of the Board of Directors, and former Congressman, the Hon. Rev. Walter E. Fauntroy will outline an alternative just economic system. Paul-Martin Foss, Legislative Assistant to Congressman Ron Paul, will explain pending legislation H.R. 2755 and what the movement can do to support it.

Organizer Debbie Krueger is a former Marine, and a mother of 5, living in Delaware. She was a real estate agent, when she witnessed the bottom dropping out of the housing markets across the country, and decided something needed to be done. Her research led her to the conclusion that the Federal Reserve System is at the heart of the crisis. “I am devoting my time to help shed light on the Federal Reserve, and to find solutions that will bring us back to financial policies that will benefit Americans the most."

Co-organizer and performer for the rally Jordan Page is a young poet, singer/songwriter, guitarist, political activist, and social commentator who has become an outspoken voice promoting freedom and liberty. The hyper-inflation of American currency, the funding of worldwide interventionist military policies, the unconstitutional income tax, the recent bailout, and the engineered economic depressions the Fed causes have all motivated Jordan's involvement in this most historic citizens' movement. “Please stand up for the Constitution on November 22nd and help us to support HR 2755 calling for the abolition of the Federal Reserve.”

Adam Kokesh will serve as master of ceremonies at the rally. He is from Santa Fe, NM and served in Fallujah, Iraq in 2004 and has been a vocal critic of the war since leaving the US Marines. He has continued to honor his oath to support and defend the Constitution by taking on those he sees as its domestic enemies, especially the Federal Reserve System. He has also advocated various forms of nonviolent resistance including not paying taxes. “As long as the Federal Reserver System has the power to create money from nothing, the individual income tax is nothing more than a means to oppress and enslave the American people. As with all forms of tyranny, Americans have a duty to resist this injustice.”

# # #

History Rymes

---------- Forwarded message ----------
From: Downsizer Dispatch <downsizer-dispatch@downsizedc.org>
Date: Thu, Nov 13, 2008 at 6:57 PM
Subject: Mark Twain was right
To: mvfipher@gmail.com

D o w n s i z e r - D i s p a t c h

---

Quote of the Day: "History doesn't repeat itself, but it does rhyme." -- Mark Twain

Subject: Educate the Powerful!

Mark Twain was right. History doesn't repeat itself, exactly, but often the present does rhyme with the past.

Sadly, the evidence for this is now all around us.

Too much of what the politicians are currently doing rhymes too well with what the politicians did during the Great Depression.

Then, as now, the politicians blamed the economic downturn on the free market. They were wrong then, and they are wrong now.

The government caused the Great Depression. Even Ben Bernanke, the Chairman of the Federal Reserve, agrees. Here's what he said at the celebration of Milton Friedman's 90th birthday in 2002 . ."I would like to say to Milton (Friedman) and Anna (Schwarz): Regarding the Great Depression. You're right, we did it."

Predictably, government schools don't teach this view. Instead, they teach that . . .

The depression became Great because President Hoover was an advocate of laissez-faire economics who did nothing to intervene. In fact, Hoover was the first president to ever make major interventions in the economy.

The economist Bryan Caplan lists 21 Hoover interventions.

Another economist, Murray Rothbard, has described how President Hoover was the true creator of the "New Deal" approach for which FDR later claimed dubious credit.

Caplan and Rothbard are not alone in this. Roosevelt aid Rexford Guy Tugwell was to say years later . . .

"We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started." (Source: Paul Johnson, A History of the American People -- New York: HarperCollins Publishers, 1997, p. 741)

Even FDR himself agreed that Hoover had intervened, he just disagreed with the interventions. During the 1932 presidential campaign Roosevelt repudiated Hoover's meddling, saying . . ."The doctrine of regulation and legislation by 'masterminds' ... has been too glaringly apparent at Washington during the ."

And during the 1932 presdiential campaign Roosevelt constantly criticized Hoover for his huge deficits, promising instead . . .

* "immediate and drastic reductions of all public expenditures"
* "abolishing useless commissions and offices, consolidating bureaus and eliminating extravagances"
* "reductions in bureaucracy"
* Implied tax cuts
* And a "sound currency to be maintained at all hazards."

We aren't taught that Roosevelt promised these things. Instead, we're taught that FDR's heroic interventions saved the free market from itself.

But what did his interventions actually achieve?

* The depression became Great under FDR's guidance.
* It lasted more than a decade.
* Prosperity never returned while he was President.
* The economy only recovered after Roosevelt was dead and buried

Even FDR's own economic team knew that his New Deal interventions had been a complete failure. Here's what FDR's Treasury Secretary, Henry Morganthau, admitted to Congress in May, 1939 . . .

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"

It's significant that Hoover and Roosevelt were the first to intervene in the economy. Previous downturns had always been allowed to run their course, lasting from a few months to a couple of years. But the first one the politicians tried to stop is the one that lasted more than a decade, and that really hit hard.

If government intervention worked, then why did the 1929 depression become Great, when none had before?

It ought to make you angry. The injustice is so clear. The politicians caused the problem, blamed it on the free market, and then benefited from the disaster they had created by grabbing vast amounts of power and money.

And now it's happening again. History, sadly, is rhyming.

We're being told that the economic downturn resulting from the housing bubble is a market failure, and that massive government intervention is needed in all directions. But the truth is this . . .

* Government housing policies and easy credit from the Federal Reserve caused the housing bubble.
* Companies and individuals who made bad decisions based on these policies should pay the full price for their mistakes
* None of them should be rescued
* The politicians should not intervene

In short, the politicians should stop pursuing policies that rhyme with those pursued during the Great Depression.

In addition, the advocates of Big Government should be asked . . .

* Why, precisely, was the first economic downturn in which the government intervened the only one that became so bad that it earned the name of the Great Depression?
* And why is it, precisely, that the major areas of American life where the government has intervened to make things more affordable -- such as health care, higher education, and housing -- are exactly those areas where costs have risen the most?

Government intervention does not work. It does not make things more affordable, it makes them more expensive. It does not prevent economic downturns, it causes them, and deepens them.

Please use our Educate the Powerful System to tell your elected representatives to stop the bailouts, NOW.

And then do something to make them smarter . . .

Paste this Dispatch into the section for your personal comments and send it to them. Maybe there are a few Congressional staffers who will learn something.

Thank you for being a part of the growing Downsize DC Army.

Perry Willis
Communications Director
DownsizeDC.org, Inc.

D o w n s i z e r - D i s p a t c h
is the official email list of DownsizeDC.org, Inc. & Downsize DC Foundation

CONTRIBUTE to the Electronic Lobbyist project

http://www.DownsizeDC.org is sponsored by DownsizeDC.org, Inc. -- a non-profit educational organization promoting the ideas of individual liberty, personal responsibility, free markets, and small government.

You are encouraged to forward this message to friends and business associates, and permission is hereby granted to reproduce any items herein as long as attribution is provided for articles and the subscription instructions above are included.