Brazil: at Cusp of Monetary Apocalypse

Brazil: Victim of Vulgar Keynesianism

• 

March 27, 2015 Antony P. Mueller

All Keynesian roads lead to stagflation. That was the case in Europe and in the United States in the 1970s when both stagnation and inflation hit the economies at the same time. Currently, this is the case in Brazil.

Since coming into power in 2003, the Brazilian labor government has religiously implemented the economic policy doctrine of growth by spending. Now, the country has fallen into stagnation with a recession looming while inflation is on the rise. All economic indicators flash red lights: from economic growth to inflation and the exchange rate, from productivity to investment and industrial production.

Booms and Bubbles, Brazilian Style

Once again, Keynesian policies have led to stagflation. Reality has finally set in. The illusion of easy wealth is shattered. The Keynesian wonder weapon has become impotent. The economic policy teams at the Ministry of Finance and the Central Bank have no notion what to do now. After all, they know of no other economic policy doctrine than to stimulate the economy by spending ever more. Yet with the government’s coffers empty and inflation high and rising, the policy tools of deficit spending and monetary expansion have run out of fuel. Favorable external conditions such as the China boom and high demand for commodities had benefited the Brazilian economy during the presidency of Luiz Inácio “Lula” da Silva. These external factors together with massive internal stimuli accelerated economic growth. With the end of the commodities boom and the slowing of economic growth in China, the external environment factors no longer helped when at the same time internal consumption hit the wall, as consumers had to scale back along with the government as the debt burden approaches its limit.

In early 2015, it became obvious that the country has lived in an illusionary world under the Labor Party over the past twelve years. Now it seems like a joke that President Lula once announced that Brazil’s economy was about to overtake that of the United Kingdom and from then on move upward on the ladder of the large economies. Yet when it was announced in 2007 that Brazil was to host the Soccer World Championship in 2014 and when in 2009 the Olympic Committee selected Rio de Janeiro for the Olympic Games in 2016, it seemed that the much-wanted international recognition of the president’s achievements had arrived. The jubilation at home was fully matched by the exuberance abroad about how Lula would lead Brazil into the twenty-first century.

Just as much as many Brazilians did not want to recognize, foreign observers, too, shut their eyes to the fact that the Brazilian Labor Party has been practicing one of the crudest forms of Keynesianism. The Brazilian kind of Keynesianism is deeply mixed with the Marxism of Michal Kalecki. In Europe and the United States remnants of sound economics survived at the onset of the “new economics,” and later on partially recovered classical and neoclassical principles. In Brazil there has been an almost complete victory of “Kaleckian Keynesianism” with most other types of macroeconomics cast aside.

Can the Government Turn Stones into Bread?

Even today, the Polish economist Kalecki is still held in high esteem at some of the most prominent Brazilian universities. The version of “Keynesianism” that he developed in the 1930s has become the leading paradigm for economic policymaking albeit this type of macroeconomics lacks any micro-foundation and is largely void of realistic content. The Kaleckian version of Keynesianism takes the macroeconomic symbols for real and by moving them around according to the basic rules of algebra, the model finally is brought to the conclusion that “workers spend what they earn,” while “capitalists earn what they spend” (as this theory was once summarized by Kaldor).

Kalecki and his Marxist followers consequently decided that when the state assumes the capitalist function, government could spend the country to wealth while workers would get their fair share as consumers. Even more so than Keynes, Kalecki’s gospel preached that its believers could turn stones into bread. Government spending for whatever purpose combined with mass consumption promised a most pleasurable way to prosperity. This promise has been the economic policy principle of the Brazilian Labor Party government over the past twelve years.

During much of the two presidential periods of da Silva from the beginning of 2003 to the end of 2010, the Kaleckian-Keynesian recipe seemed to work. The Brazilian government under the former trade union leader spent, the consumers consumed, and the economy grew. All the while, price inflation remained subdued and the unemployment rate fell. No wonder that President Lula enjoyed immense popularity during his two terms and that Lula’s Labor Party would remain in power when his handpicked successor won the elections for presidency in 2010 and in 2014.

Dilma Rousseff, however, a politician by trade and former urban guerilla fighter, had a hard time winning the elections. When running for her second mandate, dark clouds began to overshadow the still blatant optimism of the ruling party. In 2011, the economic growth rate began to fall. The government first brushed it away as a temporary dip, yet when the rate continued to decline even more in 2012, the government began to panic. With the election coming up in 2014, the government did what the Kaleckian-Keynesian recipe prescribes and accelerated even more its expansive policies. This may have won the election for her, but the price to pay came in high later on.

Disillusion Sets In

Now, in early 2015, disillusion has fully set in. People feel cheated by the false optimism of the government. The corruption scandal of the Brazilian oil company Petrobras together with the rapidly deteriorating economic conditions drove over a million of Brazilians to the streets on March 15 in protest against the government.

What many of the protesters fail to see, however, is that Brazil needs more than just a change of government. The country needs a change of mind. In order to get on to the path of prosperity, Brazil has to discard its prevalent economic ideology. Brazil has to get rid of its tradition of profligate government spending and easy money, Marxist-inspired state involvement in the economy, and the protectionism that had come with the adoption of Cepalism (the economic policy concept of the Economic Commission of Latin America). Not special circumstances lie at the heart of the current malaise, but wrong ideas about economic policy.

Brazil needs a huge dosage of economic liberalization to find its way out of the current crisis. Less state intervention and much more freedom of doing business must be the first steps. For this to happen a change of mind is needed. Brazilians must open up to an alternative beyond state capitalism. Brazil must embrace laissez-faire in order to prosper.

This task is tremendous and not much different from earlier elections, almost all parties currently represented in the Brazilian Congress belong to the left and the extreme left. There is neither a truly conservative nor an authentic pro-market political party. This situation is more than peculiar because, as surveys consistently show, most of the Brazilians locate their political orientation at the center-right and in favor of free markets.

Marxism Still Dominates the Universities

The reason for this discrepancy lies in the fact that the left dominates higher education, particularly in the social sciences, economics, and law. It is from this group that most political activists come. When the military dictatorship ended in 1984, the university system fell under almost complete control by leftists of all kinds. This way, academic life is ideologically very different from the rest of the Brazilian society where common sense still has prevailed.

Fortunately, intellectual evolution is no longer largely dependent on academia. While the Kaleckian brand of Keynesianism and Marxism still dominates the universities, a strong libertarian movement is on the rise spearheaded by the Brazilian Mises Institute. Young people in particular flock to this site like the proverbial wanderer in the desert in the search for water. In the past, changes of mentality took decades and even centuries in order to unfold.

Nowadays, with the internet, ideas have a market place of their own with free access for all. It should be easy for the Brazilians to learn that it is not enough to be fed up with the present government, but it is high time to transform the country’s state capitalism into a free market system in order to prosper.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

Every Breath You Take - Federal Reserve Parody Video

1st. pub here April 11, 2011 
 

Parody. Accomplished by Columbia Business School (CBS) students.

How Long Has the Socialist Movement Been Going On?

The eye-opener book for me was FABIAN FREEWAY by Rose Lee Martin >>> the spawning nest for pedophile John Maynard Keynes

Written by Sam Blumenfeld

Friday, 02 September 2011 09:27

The other day I came across a book buried in my library for years, H. G. Wells' The Open Conspiracy: Blue Prints for a World Revolution, published in 1928. Considering that I’ve been writing about the conspiracy for world government for decades, I wondered “how long has this been going on?” Of course, that’s the title of one of George and Ira Gershwin’s immortal popular songs, written in 1927 for a Broadway musical called Smarty. And wouldn’t you know that it is the smarty insiders who have been promoting this world revolution since the late 19th century. (And some conspiracy historians say much longer.)

The fact is that I am tired of writing about socialist utopians taking over America when the American people should have been smart enough long ago to reject the socialists and their insider promoters. How long is it going to keep going on? How long will it take for the world’s greatest capitalist nation to learn that socialism doesn’t work?

The lyrics to the Gershwin tune are quite apt. Here are a few of its lines:

I could cry salty tears;
Where have I been all these years?
Little wow, tell me now
How long has this been going on?

I’m sure that some readers in my age group will even remember the tune. How long has this been going on? As long as I can remember. The modern Western socialist movement began with the formation of The Fabian Society in 1884 by young English utopians who wanted to replace capitalism and private property with socialism and communal property. They assumed that all of the ills of society were created by the competitive capitalist system in which some people, through efforts of their own, became enormously successful and rich while most of the working class simply managed to survive.

SUGAR KEYNES: The Darkside of John Maynard Keynes, Architect of the US Federal Reserve, His Perversion & Pedophelia

Is Fed chairman-now incumbent Janet Yellen a bi-Keynesian, too?

Does she have what it takes to carry on the threads set by  the Fed's founder, JM Keynes, the ... Bolshevik, Lavender, Pervert, Pedophile
John Maynard Keynes gave us more than just an immoral economic system......he passed on his life of degeneracy, perversion and pedophilia....

Convicted Soviet Spy Harry Dexter White
(left) and John Maynard Keynes (right)
at the Bretton Woods Conference

 

SUGAR KEYNES 
 by Zygmund Dobbs

Reprinted from The Review of the News, June 23, 1971

Related: Online free 

book: KEYNES AT HARVARD,

Zygmund Dobbs 

---

John Maynard Keynes
  [1883-1946] 

Lytton Strachey
[1880-1932]

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

Singing the Red Flag, the highborn sons of the British upper-class lay on the carpeted floor spinning out socialist schemes in homosexual intermission. Sometimes, one of the participants would shout out an obscenity - then, as if on signal, the entire group would join in a frenzied babble of profanity. Here and there individuals would smoke or chew hashish. Most had unkempt long hair, and some sported beards.

The attitude in such gatherings was anti-establishmentarian. To them the older generation was horribly out of date; even superfluous. The capitalist system was declared obsolete, and revolution was proclaimed as the only solution. Christianity was pronounced an enemy force, and the worst sort of depravities were eulogized as “that love which passes all Christian understanding.”

The year was 1904, and the participants were destined to become the intellectual and political leaders of the British Empire.

Chief of this ring of homosexual revolutionaries was John Maynard Keynes, who eventually became the economic architect of English socialism and gravedigger for the British Empire. The chief American Fabians, acting as carriers of the Keynesian sickness, were Felix Frankfurter and Walter Lippmann. Covertly, they mobilized their Leftist comrades to spread this pollution in America also. So successful were they that on January 4, 1971, President Nixon announced: “I am now a Keynesian in economics.” What does that mean?

Keynes was characterized by his male sweetheart, Lytton Strachey, as “A liberal and a sodomite, an atheist and a statistician.” His particular depravity was the sexual abuse of little boys. In communications to his homosexual friends, Keynes advised that they go to Tunis, “where bed and boy were also not expensive.” As a sodomistic pedophiliac, he ranged throughout the Mediterranean area in search of boys for himself and his fellow socialists. Taking full advantage of the bitter poverty and abysmal ignorance in North Africa, the Middle East, and Italy, he purchased the bodies of children prostituted for English shillings[See Lytton Strachey, A Critical Biography, Michael Holyroyd, Holt, Rinehart and Winston, two volumes].

Such Leftist hypocrites then, as now, issued loud denunciations against poverty, imperialism, and capitalist immorality. However, for their own degenerate purposes, they eagerly sought out the worst pockets of destitution and backwardness to satisfy their perverted purposes through sexual enslavement of youngsters. While traveling in France and the United States they complained among themselves of the harassment by the police of practicing homosexuals. In degenerate areas of the Mediterranean, on the other hand, they found a pervert’s Utopia where the bodies of children could be purchased as part of a cultured socialist’s holiday.

These Leftist degenerates began to scheme over sixty years ago to secure public acceptance of their depravity. Havelock Ellis, a founder of the Fabian Society, compiled a massive erotic work entitled, Studies In The Psychology Of Sex. Ellis was a sexual pervert and drug user. He and a group of fellow Leftists even pioneered in the experimental use of hallucinogens in private orgies. Ellis was definitely a pathological case. He drove his wife into Lesbianism and drug addiction, securing additional erotic excitement by urging her to recite her Lesbian experiences. Mrs. Ellis eventually went insane and died in utmost misery after denouncing her husband as a sexual monster.

The Fabian socialists used the writings of Ellis as a wedge for sex education in the schools. They started in the colleges and gradually eased into the high school level.

Ellis complained to his fellow socialists fifty-five years ago that he found wider acceptance for his books in the United States than he did in England. In fact, he was arrested and tried for obscenity in England, whereas his books were sold here without serious interference by the authorities. Today, his perversions are standard reference material for the sex educators, and Havelock Ellis is popularly called “the father of social psychology.”

Keynes and his cohorts seized upon the works of Ellis as justification for their depravities. They were also greatly bolstered in their campaign by the theories of an Austrian Leftist named Sigmund Freud. Dr. Freud acknowledged in private correspondence that he copied the thesis of sex as the central determinant in human action from Havelock Ellis. Echoing Ellis, he laid down the premise that homosexuality and carnal depravities are not a matter of abnormality, but merely a case of personal preference. This, plus his declaration of atheism, overjoyed the socialist Keynesian crowd. John Maynard Keynes audaciously proclaimed, “Sex Questions are about to enter the political arena.” He inveighed against “the treatment of sexual offense and abnormalities,” adding the charge that “the existing state of the Law and of orthodoxy is still Mediaeval - altogether out of touch with civilized opinion and civilized practice and with what individuals, educated and uneducated alike, say to one another in private.”

During the same period (1925) Keynes struck out against drug control. He laid down the line which has been pursued by Leftists to the present day in demanding that distribution of narcotics be unrestricted. Homosexuals find drugs a useful adjunct in loosening moral inhibitions to perversion. And this ravisher of little boys feigned sympathy for the masses by urging universal rights for users of narcotics. He declared: “how far is bored and suffering humanity to be allowed, from time to time, an escape, an excitement, a stimulus, a possibility of change?”

Keynes and his conspirators projected homosexuality and drug addiction as an intrinsic part of their collectivist society of the future. His male sweetheart, Lytton Strachey, wrote privately that they would corrupt the whole population, “subtly, through literature, into the bloodstream of the people, and in such a way that they accepted it all naturally, if need be without at first realizing what it was to which they were agreeing.” He boasted that he intended “to seduce his readers to tolerance through laughter and sheer entertainment.” He pointed out that the object was “to write in a way that would contribute to an eventual change in our ethical and sexual mores - a change that couldn’t be done in a minute, but would unobtrusively permeate the more flexible minds of young people.” J. M. Keynes put it in the terms of Marxist economics:

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many pseudo-moral principles which have hagridden us for two hundred years....”

Keynes and Strachey used their malignant writings to help contaminate the entire English-speaking world. In the United States they both found expression in the New Republic, the New York Times, and the Saturday Review Of Literature.

In 1939, a comrade of Keynes and Strachey named Bertrand Russell came to America to push their obscenitarian socialism and was (he says in his Autobiography) legally charged as “lecherous, libidinous, lustful, venerous, erotomaniac, aphrodisiac, irreverent, narrow-minded, untruthful, and bereft of moral fiber.” His aborted object had been to permeate the College of the City of New York with the corruption of the British Fabians. Immediately, John Dewey and other American Fabians organized to cry that “Academic Freedom” was under attack. The National Education Association (NEA) and the whole Leftist educational complex began to percolate pervasive degeneracies as being “Liberal” and “progressive.”

The works of Keynes, Lytton Strachey, and Bertrand Russell have been, and are today, required reading in almost every college and university in the United States and Canada.

In the spring of 1905 Keynes and his lavender cohorts had been thrilled by a conference of Russian revolutionaries in London. British Fabians and Joseph Fels, an American soap manufacturer who was also a Fabian, had financed the Russian gathering and furnished them a hall in a Christian church. Key revolutionaries at this London conference included Nikolai Lenin, Leon Trotsky, and Joseph Stalin. The future slaughter of fifty million civilians, and the conquest of one-third of the earth’s surface. rested within the shelter of this gathering. Shivers of excitement rippled down the spines of the socialist homosexuals when they heard that Lenin had openly defended the slaughter of bank guards and stealing of bank funds for the bolshevik coffers. During this time Strachey wrote to one of his intimates: “At this moment Keynes is lying on a rug beside me.”

Keynes and his fellow debauchees became active pacifists and conscientious objectors during World War I. The socialist position against military service dovetailed perfectly with the homosexual aversion to any kind of physical danger and the manly requirements of military training. Yet, in spite of Keynes’ sheltering of “queer conchies,” and his own refusal to serve his country, he was made the head of an important division of the British Treasury. During March of 1917 he confided privately that he supported the bolshevik group among the Russian socialists after the overthrow of Czar Nicholas.

The seizure of power by the bolsheviks in November of 1917 elated Keynes and the rest of the Fabian coterie. At Leftist parties in London, Keynes and his fellow perverts celebrated by dressing in women’s clothes and performing lewd dances. He had as his consort an eighteen-year-old-boy who was ensconced as his assistant in the Treasury Department.

Just before the Bolshevik Revolution, Keynes had made a hurried trip to the United States for the British Government. Here he had a chance to make contact with the American Fabians who were similarly entrenched, via the Frankfurter-Lippmann group, in key positions of the Wilson Administration.

Even the House of Morgan in New York City’s financial district trotted out its sissies to welcome Keynes to this country, and gave him an office just for himself. The international grapevine had established the nature of his proclivities. The urbane air of Keynes sent thrills of excitement through the ranks of the financial “giggle gang.”

Keynes’ deviate socialist circle was almost completely pro-bolshevik. One month after the Revolution, J.M. Keynes wrote his mother”

“Well, the only course open to me is to be buoyantly bolshevik; and as I lie in bed in the morning I reflect with a good deal of satisfaction that, because our rulers are as incompetent as they are mad and wicked, one particular era of a particular kind of civilization is very nearly over.”

On February 22, 1918, Keynes proudly boasted of “being a bolshevik.” Yet the British Government blindly sent Keynes to the Versailles peace talks. There he joined forces with his Fabian American comrade, Walter Lippmann, who was among those representing the equally blind U.S. Government. The ensuing pro-bolshevik and anti-American machinations were largely responsible not only for laying the basis for continuing Red victories, but also for setting off the chain of events that eventually brought Hitler to power.

In 1919 Keynes authored The Economic Consequences Of The Peace, which was promptly acclaimed from Moscow by Nikolai Lenin, himself. The Red dictator declared: “Nowhere has the Versailles treaty been described so well as in the book by Keynes.” A special edition of The Economic Consequences was printed under the label of the Fabian Society; and, Frankfurter and Lippmann brought the manuscript to the United States and arranged with Harcourt and Brace to publish it here. The volume became required reading among American socialists and Communists.

However, Keynes’ value as a hidden Red was in danger. The Fabians had developed the posture of “respectability” to a fine art and the value of Keynes’ book as an “impartial work” was in jeopardy. With Keynes’ future usefulness in upper-class circles at stake, Lenin had personally come to the rescue. He pulled the classic Leftist double-twist, praising Keynes’ book as a model for Communist revolutionaries and at the same time covering for Keynes by labeling him as “anti-bolshevik.” Nikolai Lenin rose before the Second Congress of the Communist International and declared:

“I will quote another economic source which assumes particularly great significance, the British diplomat Keynes, the author of The Economic Consequences Of The Peace, who on the instructions of his government, took part in the Versailles peace negotiations, watched them directly from the purely bourgeois point of view, studied the subject step by step, and took part in the conference as an economist. He arrived at conclusions which are stronger, more striking and more instructive than any a Communist revolutionary could advance, because they are conclusions drawn by an acknowledged bourgeois....”

Thus was launched the career of Fabian leader Keynes as a “non-Leftist” and “non-Communist.”

In 1925, John Maynard Keynes was married. It was a bizarre performance. His best “man” was Duncan Grant, his male lover for many years, and initiates swear that Keynes held Duncan’s hand as the marriage vows were spoken. But, the background of the bride was equally odd. She was Lydia Lopokova, the premiere ballerina of the Diaghilev Ballet. She was an habitué of Leftist circles, and had at one time been engaged to Heywood Broun, the well known socialist and confidant of Leon Trotsky, but had broken the engagement to marry a dwarf named Barocchi. In 1917 Lydia had disappeared in Paris with the top Cossack general of the White Army, returning to the ballet when the general returned to lead his troops against the bolsheviks. The bolsheviki had by now, however, acquired advance information and used it to defeat the Cossacks.

Following the wedding to Comrade Lydia, Mr. and Mrs. Keynes were the special guests of the Soviet Government. He and his Russian wife were allowed free access to the Soviet hinterland, even to the extent of visiting her relatives. This was a privilege unheard of at the time, since even members of the Communist International were not then allowed such unlimited travel. It was a time of mass killing of civilians, and ordinarily a Russian national traveling with an Englishman would have been arrested and shot. But, Soviet officials were effusive in their thanks to Keynes for designing the first Soviet currency for them while he was still a member of the British Treasury.

The marriage was definitely an “arrangement,” as Keynes continued to enjoy his amours with men. This was often the case with upper-class homosexuals who needed a legal wife as a facade. They both had separate living quarters, and did not interfere with the personal lives of one another. Lydia was very useful as a go-between since Keynes was in frequent contact with Soviet officials both in Britain and the United States.

Meanwhile, the perversion continued apace. It was quite a pace. As I have noted in the new edition of Keynes At Harvard:

Keynes had relations with Strachey; Strachey had affairs with Duncan Grant; Keynes stole Grant from Strachey; Lytton’s brother James Strachey adored Rupert Brooks but so did Keynes; Strachey reports to G.E. Moore on seduction of new boys; Keynes steals Edgar Duckworth from Lytton; Keynes and Lytton agree that homosexuality is, “that love which passes all Christian understanding”; Strachey emulates Oscar Wilde with absinthe and drugs; He also declares that, “the whole truth is the Devil”; He predicts that in one hundred years, “everyone will be converted,” to homosexuality; Strachey and Keynes promote obscenitarian talk in colleges; Lytton lives with Dora Carrington, a Lesbian; Carrington solicits homosexual partners for Lytton; Keynes, Lytton and Carrington have orgies involving Lesbian and sodomistic interchanges; Keynes and Strachey dress in women’s clothes and dance; Keynes and Strachey give a sanctuary to homosexual objectors to military service thus frustrating the authorities; Keynes defends the use of drugs and Strachey smokes hashish; Carrington married several men so they could be Strachey’s boy-friends; Lytton stole Sebastian Sprott from Keynes (the tables were turned); Lytton excuses his drug taking as a liberation from, “this wrong world.” Finally, there are engrossments by Keynes and Strachey with sadistic beating of young boys, “compulsive pre-occupation with male reproductive and excretory organs” and voyages to the most depraved dens of perversion throughout Europe, North Africa and Asia.

The Fabian homosexual circle was incredibly successful in gaining influence and control in a wide area of activity. They staked out the entire British Empire and the United States as well. Lytton Strachey wrote to Keynes:

“Oh dear me!, when will my heaven be realized? - My Castle in Spain? Rooms, you know, for you, Duncan and Swithin, as fixtures - Woolf of course, too, if we can lure him from Ceylon; and several suites for guests. Can you conceive anything more supreme! I should write tragedies; you would revolutionize political economy, Swithin would compose French poetry, Duncan would paint our portraits in every conceivable combination and permutation, and Woolf would criticize us and our works without remorse.”

This projection was incredibly prophetic. J. M. Keynes became the mastermind behind the economic structure of British and American socialism. Strachey was responsible for writing books that undermined the Christian ethic of the Nineteenth Century and set the tone for the pornographic and depraved literature of today. Leonard Woolf worked out the details of the socialist drive for World Government. He was not only the architect of the League of Nations but outlined the structure of the United Nations.

Others of this perverted group of Keynesians have set the tone in art, music, education, and religion. Today [1971], alas, even the President of the United States says: “I am now a Keynesian in economics.” It is disgusting!

The Unwinding of Western Economies and the Next Golden Bull

Jay Taylor

Jay Taylor on the Unwinding of Western Economies and the Next Golden Bull

With Anthony Wile - August 17, 2014

The Daily Bell is pleased to present this exclusive interview with Jay Taylor

Daily Bell: Hi, Jay. Thanks for sitting down with us again. What's new with you? Any publications or conferences you want to mention or special appearances? What are you focusing on in your radio show lately?

Jay Taylor: I am now more focused on the gold and silver mining sector than I have been in a long time because I believe this is the most exciting time to pick up junior gold and silver mining stocks that I have seen since I began covering this sector back in 1981. 

The perfect storm for gold is very near, as many decades of lethal socialist economics is destroying capital and capitalism. When the fragility of the global monetary system is recognized by all, value will rapidly flee fiat currencies and return to gold. Thus, the holders of gold will hold true capital in the form of honest money, namely gold and to a lesser extent, silver. We are in a process of massive deleveraging of the financial system and historically, we know from over the past 300 years that when that takes place, the real value of gold rises dramatically and with that the gold mining industry enters a prolonged gold bull market. We are nearing the final leg up in the gold bull market, which I believe will take place over the next five years. With that, I believe fortunes will be made by those invested in gold and silver mining shares.

So given this view, I am staying focused on the gold and silver mining sector and I'm also using my web-based radio show, "Turning Hard Times into Good Times," to try to help as many people as possible learn about what the real reasons for our economic malaise is and what is actually true about American foreign policy. Both economic and foreign policy are so afflicted by an Orwellian fog that most American voters at best have the IQ of a moron when it comes to understanding the important issues – which is by the design of our establishment. So with the help of countless fabulous guests the message is getting across not only in America but around the world. My show can be listened to live on the Voice America Business channel every Tuesday between 3:00 and 4:00 PM and you can download each show the following day at JayTaylorMedia.com. I have a long list of amazing guests like Jimmy Rogers, David Stockman, Ron Paul, Marc Faber, Doug Casey, Eric Sprott, John Hathaway, Edward Griffin, Howard Davidowitz, Ian McAvity, James Turk, Mish Shedlock, Richard Maybury, Rick Rule, Robert Prechter, and Lewis Lehrman to name a few.

To help on the geopolitical side in terms of what is actually happening, as opposed to the mainstream media version, I have Daniel McAdams of the Ron Paul Institute for Peace and Prosperity with me almost every week. But aside from Daniel, other outstanding guests along those lines have included the likes of John Perkins and Daniel Estulin. And I also frequently have the GATA guys on my show because I think there is little doubt but that the gold markets are being capped to keep a frenzy out of paper into real money because the day that happens, it will be the end of the Anglo-American empire.

Given my extreme bullishness on the mining shares that is, of course, the main focus of my newsletter, "J Taylor's Gold, Energy & Tech Stocks," which can be accessed here.

As far as appearances are concerned, most of the venues where I had been speaking have either shut down or have cut back so my traveling and public speaking has been significantly reduced. The reason the venues have shut down is that the gold mining industry has been in a depression starting mid-2011 so junior mining companies do not have funding available for the various mining show conferences. I take that as one sign that the bottom is all but in for the junior gold and silver mining sector.

Daily Bell: Okay, some nuts and bolts. Is there more deflation in store for the US? Have the imbalances been wrung out?

Jay Taylor: What we have had is a massive inflation of what I call "debt money" because actually, debt is the raw material from which fiat money is manufactured. You can see from this Debt/GDP chart below that there has been a very modest reversal of total debt (public and private) to GDP in the U.S. post-Lehman Brothers, but it still remains north of 340%. That is far greater than the previous extreme during 1932 of 295% and hugely out of line with a range from 1870 to the mid-1980s of between 120% and 180%. If this isn't a picture of growing insolvency, I don't know what is.


(Click on chart to enlarge. Source: GlobalEconomicAnalysis.com)

The problem is that we have all been brought up on the Keynesian lie that all we need for progress is excessive spending and "animal spirits." No need to save or delay any consumption your little heart desires. No need to worry about balance sheets. Just spend, spend, spend even if it means debt is growing exponentially while income is stagnant or declining. I guess we have come to this point because somehow humankind loves the big lie. I guess many people simply command themselves to ignore reality and believe in fairytales. 

Believing in Keynesian economics is akin to believing in the tooth fairy.

Daily Bell: You once told us the West is on a steep and slippery slope. Now mainstream economists speak of a recovery. Were you wrong?

Jay Taylor: Yes, they speak of a recovery just like they think animal spirits and excess spending funding by excessive printing press money is all you need for prosperity. Unfortunately, nothing was learned from the 2008-09 experience. No, the West continues on a steep and slippery slope. Some, like Robert Prechter, think we are approaching another Dark Age. We can only hope and pray he is wrong but I fear he may be right.

Daily Bell: Is reflation working? Is the Fed going to tighten? Is QE really over?

Jay Taylor: Reflation is working only to the extent it is holding back powerful forces of deflation caused by the creation of debt money. The system if left alone would implode into a deflationary insolvency the likes of which the world has never seen before. The Fed is fighting against that powerful force by creating more money but the problem is that what we have is not simply printing press money, but money that is manufactured by debt, and debt is growing much more rapidly than the income they hope to create by printing more money.

Daily Bell: Are we still headed away from a democratic environment, as you have indicated in the past, especially in the US?

Jay Taylor: No question about it. You and many people who read this excellent format may not agree, but I think we are losing our liberties because our statist educational system, in a very self-serving way, has eliminated from the minds and hearts of Westerners the notion of a Creator or Supreme Being. If the universe was not designed with a purpose and self-sustaining balance by an intelligent designer then we turn to Caesar, Bush, Obama, Putin or Stalin for answers to life's burdens. Creating the myth of evolution across speciation is a very clever but total falsehood that has convinced most Americans, especially those with higher degrees, that there was no intelligent designer and that there is nothing higher than man in charge of our fate. That was a very clever design of our statist politicians.

"Trust in me," Obama says, and so the people willingly give up a voice in government. Americans don't even seem to care that everything they say and do now is recorded by our government and can be used against us if we disagree with policy. The misplaced logic seems to be, "I'm not a terrorist so I have nothing to worry about." Trouble is, by assuming humans possess attributes like omniscience and omnipotence, you pave the way for dictators. Of course, we now know that Big Brother's cousin, NSA, has one godly attribute, namely omnipresence. So he knows what you are thinking and doing, and depending on the definition of a "terrorist" you may just be one by virtue of opposing your government's policies.

Daily Bell: Give us an update on the euro. Is the EU going to split up or has the crisis been weathered?

Jay Taylor: It's all about how much longer the existing ruling elite can hold the existing global monetary system together. Of course, all the currencies these days are counterfeit but as long as the U.S. military remains supreme, I suspect the dollar will be the last one to go. However, as the parasites that run American continue to consume all the remaining capital, I think the Anglo-American Empire is now approaching desperation, which is why all manner of false flags are being used to con Americans and Europeans to beat the hell out of any country that doesn't want to use the dollar. 

At some point there will be a tipping point. I thought the Ukrainian conflict might pull Europe away from the U.S. but then, just like a false flag last year in Syria, I suspect we just witnessed another in the Ukraine with the downed Malaysian airliner. Only NATO and the puppet government established in Ukraine by the U.S. intelligence operation stood to benefit from such a tragedy. 

Whether we witnessed a false flag or not, the outcome was the same.

But as the global economy continues to contract we will see how long the geopolitical winds favor the U.S. and NATO. Indeed, Mario Draghi just noted that sanctions against the Ukraine are helping to push Europe into a recession. At some point, it's hard to see how the financially and morally bankrupt Western world won't implode or explode with nations seeking to look out for their own interests in defiance of the move toward a one-world government. 

But until that day arrives, I think the dollar remains the strongest currency and the linchpin and support of the Euro.

But as economic problems become more acute in Europe, we may very well see the Eurozone yet pull apart. Or perhaps the Fed will continue printing money to fund Europe, as it did in the recent past. 

That way, Europe will continue to be indebted to the U.S. What better way for the Anglo-American empire to lord it over Europe? 

The cracks are there to drive the Eurozone apart and to drive Europe from the U.S. But it's impossible to say when a tectonic shift will occur or what will be the catalyst that results in more decentralization around the globe. The powers that be are leaning hard against it because they are parasitically feeding off of what is left of the middle classes.

Daily Bell: Where is Britain headed? Out of the EU?

​Read more from Daily Bell

If you don't have a clue, Get it here!▶ Gold Standards: True and False | Joseph T. Salerno - YouTube

Published on Jul 29, 2014

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 25 July 2014.

How Central Banks Are Waging War on Your Savings - Mark Thornton

Mises Daily: Wednesday, May 21, 2014 by Mark Thornton

 

Martin Wolf is the chief economics commentator at the influential Financial Times. He has received numerous honorary awards, positions, and degrees. My first knowledge of him came from a friend who had attended a lecture where Mr. Wolf mentioned that the best research on real estate economics was being done in Auburn, Alabama. I was quite shocked that Mr. Wolf was following our work here at the Mises Institute.

However, Mr. Wolf has only deteriorated in my estimation over time. He has reached an all time low with his recent editorial (“Wipe out Rentiers with Cheap Money,” 5/6/14), where he argues that the cheap money policy used by central banks was here to stay, so get used to it. What makes his conclusion so tainted is that he understands the consequences of this policy. He even invokes the famous remark of Keynes regarding the “euthanasia of the rentier” where he supported the ruination of people who earn interest on their savings.

He sees the problem as insufficient aggregate demand. Wolf considers the pre-2007 unsustainable credit boom a temporary fix, rather than the cause of the crisis brought about by central banks. His argument is that low interest rates and quantitative easing policy has been an insufficient policy response. His preferred solution is some type of massive public works program financed by government deficits. However, he believes that governments will refuse to borrow in order to build “productive assets.”

This is classic Keynesian logic: solve the problems of debt and monetary expansion by engaging in more debt and monetary expansion. With governments reluctant to expand spending further he concludes that we are stuck with the second-best solution of a cheap money policy consisting of ultra low interest rates and quantitative easing. Besides, he notes, the “cautious rentier no longer serves a useful purpose.”

Wolf is the unabashed mouthpiece for the ruling power elite. He clearly and correctly describes what this policy actually accomplishes — cheap monetary policy hurts most people in the economy, particularly workers and savers and redistributes wealth to the ruling elites. The losers from easy credit policy include the broad categories of insurance, pensions, and households. This long known result was recently confirmed in a study, referenced by Wolf, by the McKinsey Global Institute.

Insurance is far more important than most people think. Insurance protects us against the loss of life (life insurance), our health (medical insurance), our homes (home, flood, and fire insurance), and our vehicles (car insurance). There is also general liability insurance and various types of business insurance. Insurance companies even offer incentives to be better drivers, to maintain safer homes, and to live healthier lifestyles, and they strive to eliminate moral hazard. 

Insurance companies are hurt by cheap money policies because their interest return on investments are now lower than required to meet their payout obligations. This hurts the companies and their policyholders because it requires higher premiums and raises the possibility of bankrupting insurance companies.

Pensions and retirement savings accounts are also hurt by easy credit policies. 

These institutions arose to address the problems associated with increased longevity brought about by increased prosperity. By saving during your working career you provide income for your retirement. Cheap money policy and low interest rates discourage saving and also makes it more difficult for pensions to earn returns on their investments necessary to make future payouts to retirees. The same is true for individuals who have retirement savings accounts.

In order to achieve higher returns, pension funds and people saving for retirement have been forced into more risky investments. Savings accounts, money market mutual funds, certificates of deposit, and short-term government bonds earn less than 1 percent, and after taxes and inflation they are losing purchasing power. Hence, central banks have been forcing these people to invest in the stock markets and junk bonds and the possibility of large loses in the future.

The class labeled “households” is basically everyone except the small number of people who benefit from cheap money policy. Households are harmed in a variety of ways, including the weak job market, declining real wages, and the negative impact on savings. It has also harmed them by encouraging households to take on extremely high amounts of debt, much of which comes with much higher interest rates.

The winners from cheap money policy are the government, large corporations, and large banks in the US. Low interest rates clearly benefit borrowers with lower interest rates and governments, banks, and corporations are the biggest borrowers. In general, artificially low interest rates benefit capital and hurt labor. Cheap money policy by central banks helps banks, like subsidized flour policies would help bakeries. Banks are also helped by most forms of government bailouts.

The easy money policy makes it easy for large corporations to borrow large amounts of credit at very low interest rates. It also forces stock prices up as alternative forms of savings, such as certificates of deposits, yield a real negative return. It has also made it very cheap for corporations to buy back their stock and to leverage their balance sheets. The stock market bubble is the direct effect of the cheap money policy of the central bank.

Mr. Wolf and central bankers around the world have the idea that cheap money policies can increase stock prices and that this will lead to sustainable increases in investment, consumer spending, and increased aggregate demand. In reality, cheap money policies cause economic bubbles that are inherently unstable and subject to crash. It should be obvious that harming the workers and savers of society to benefit the wealthy ruling class is no way to get the economy back on track. Therefore, cheap money policy is a scam of gigantic global proportions.

Achieving economic recovery and growth requires first knowing what caused the problem in the first place. A lack of aggregate demand is the effect, not the cause. A lack of aggregate demand is the crisis, not the cause of it. The cause of the crisis is easy money policy and runaway government spending and debt. Continued easy money policy and government spending will only make the negative consequences of the crisis even worse.

The solution consists of: 1. Central banks should have no monetary policy and they should not interfere with interest rates. 2. Government budgets should be balanced and reduced over time. 3. Government regulations, subsidies, and taxes should be eliminated. 4. Land, labor, and capital should be transferred from the public sector to the private sector. And, 5. Programs that burden future generations should be ended.

The horrible irony here is that when Keynes wrote approvingly of the euthanasia of the rentier class, he was speaking of a powerful class of monopoly capitalists and aristocrats. When Mr. Wolf speaks of the euthanasia of the rentier he is actually targeting “insurance, pensions, and households,” with a policy that has enormous financial benefits to the class of people that Keynes was targeting for extinction!

In 1789 Marie Antoinette said “let them eat cake.” In 2014, Mr. Martin Wolf tells us to eat “cheap money.”

Note: The views expressed in Daily Articles on Mises.org are not necessarily those of the Mises Institute.

Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the book review editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition, coauthor of Tariffs, Blockades, and Inflation: The Economics of the Civil War, and the editor of The Quotable Mises, The Bastiat Collection, and An Essay on Economic Theory. Send him mail. See Mark Thornton's article archives.

Gold Versus Bitcoin: An Unnecessary Argument

By Staff Report - March 17, 2014

via dailybell

Gold is king, but there may be a better way to store wealth ... A great investing mistake is to try to predict the future. Really, an investment decision is more about the price you pay and whether you can afford to be wrong ... Bitcoin needs to move past its current use as a payments processing tool to a realistic medium-term store of value. Its chief competitor is clearly gold. – Sydney Morning Herald

Dominant Social Theme: Maybe, just maybe, bitcoin can take the place of gold, spelling an end, finally, to the yellow metal's allure.

Free-Market Analysis: This article is an overt statement of a subterranean argument about gold. It encapsulates arguments regarding bitcoin versus gold that only add to the confusion.

Bitcoin proponents often seem driven by a barely concealed contempt for gold – and even hatred. Yet gold persists. It has value as a money metal because people have bestowed value on it.

People have seen gold's value probably for tens of thousands of years. 

They've supposedly found gold mines in South Africa that may be 100,000 years old. That's a good run when it comes to allure and utility.

And so ... the idea that an electronic currency can come along and simply knock gold off its perch strikes us as muddled.

Yet here, again, in this article posted at the Sydney Morning Herald we find the same confusion:

Gold is loved the world over for its unparalleled ability to keep governments at bay; after all, not even the US Fed can print gold, no matter how useful this might be for quantitative easing. Combined with gold's innate ability to endure, this is what continues to draw investors to confidently buy and hold gold for the long term.

But it's not without problems. As Warren Buffet said, gold "gets dug out of the ground, ... we melt it down, dig another hole, bury it again and pay people to stand around guarding it ... Anyone watching from Mars would be scratching their head."

It is these qualities - the heaviness, the clumsiness, the expense to protect and to move - that makes some believe our millenniums-long love affair with the yellow metal should stop. What though might replace it? What if there was a currency mathematically guaranteed to have a fixed quantity (preventing inflation), eminently storable, perfectly protectable and costless to transfer? 

Bitcoin offers these possibilities.

These analyses inevitably begin with a determined apologia – gold is good! – before proposing the writer's real sentiments, which is that it is NOT.

Gold (and silver), as we can see in this article, simply seem to bring out these deep seated resentments, especially in the chattering classes that have been much influenced, at least subconsciously, by John Maynard Keynes.

It was Keynes who formulated the proposal that gold was a "barbaric" metal, not fit to be circulated in modern times. Yet it seems to us a reasonable proposition that if something has been seen as valuable for millennia that whatever modernity we are familiar with cannot and will not render it suddenly valueless.

This article, however, advances all the weary arguments about gold's demise. It states that government interference can be prevented by the system's governing algorithms, "which allow you to create an account in private with no connection with your personal information."

It also makes the point that "bitcoins can be transferred at no cost and can be secured either digitally or on paper (or even in your head, if your memory is good enough)."

What's the conclusion? "Not only does this open up the possibility of replacing gold, it also poses a solution for large and small savings, allowing the entire world to participate, not just the relatively rich."

And the article closes this with this last irrelevancy: "Should this occur, gold's unrivaled reign may finally be at an end."

This is idiocy. Bitcoin can prove to be the most efficient purchasing agent ever created and it will not put gold out of business. Yet it's open season in the mainstream media and even in various elements of the alternative media.

Anti-gold critics of late have taken to predicting that gold is owned by elite banks and bankers who can control the price and thus render it unsuitable for ordinary people to hold. But this is simply disinformation. Tens and even hundreds of millions own gold around the world.

To discourage people from owning gold in this day and age is a kind of malicious error. When fiat currencies collapse, as all fiat currencies inevitably do, gold and silver will retain value and utility.

And even if bitcoin thrives, somehow – and it may – it will not take the place of gold but act as an adjunct to it. Gold's anonymity and longevity as a money metal will surely continue. Its only competitor is silver.

So hold bitcoin and other kinds of electronic coins if you wish. But don't forget that gold and silver are evidently the oldest forms of money on Earth. And there's a reason for that.