Posted by Gary Howard on 11/23/09 3:13 PM Last updated 11/24/09 09:11 AM   [Newer: The Fed's PR War ] [Older: Audit the Fed News Coverage]

Continuing reports of gold reaching new record highs on practically a daily basis, is probably all the indication we need to realize that the economy is not as close to "recovery" as some would like us to think. Gold's rise is the mirror image of the dollar's drop. This is only good news to: 1) Those smart enough to have stocked up on gold years ago. 2) The Wall Street types who bet on a Fed that's determined to devalue the dollar.

The New York Times:

Since the beginning of a rally in March, the weak dollar has emerged as one of the stock market's best allies. Low interest rates in the United States have led many normally risk-shy traders to jettison their reservations and turn to the stock markets in hopes of high returns.

Gold, which tends to rise as the dollar weakens, reached $1,167 an ounce, a record.

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In addition to all that cheery-ness, the interest alone on U.S. debt is expected to reach $700 billion, which is an initial estimate. Following its usual mode of political calculating, the Obama administration seems to be considering another stimulus. Of course, because the last one is working so well.

The Wall Street Journal:

The jobless rate, which hit 10.2% in October, has continued to climb despite the implementation of a $787 billion stimulus package in February.

Democrats' fates in 2010 midterm elections could hinge in part on the success of their efforts to curb unemployment. Recessions historically have cost incumbents in an election year. Heavy losses could threaten Democratic majorities in the House and Senate, and affect the party's chances of passing legislation addressing President Barack Obama's priorities.

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As if our nation hurdling toward bankruptcy with socialized medicine, cap and tax, and two wars and counting isn't enough to worry about. What happens when those looming debts come calling, who knows what other bad ideas will be offered for relief. Another government offered/taxpayer sponsored stimulus (aka - stolen money used for political favors) could break our econmy's back. Gloom and doom anyone? Audit the Fed.

Posted 11/23/09 3:56 PM larry101 New York, NY

Since you are so worried about deficits and a falling dollar, are you suggesting we raise taxes and raise interest rates? Is that the solution to fix the economy?

Posted 11/23/09 4:43 PM PruneJuice Richmond, VA

Larry- I cannot comment on what the writer is suggesting but as Ron Paul has repeatedly said, we need to substantially cut spending and allow the free market to set interest rates instead of allowing the Federal Reserve to artificially decide what the nation's interest rates ought to be. If we continue to attempt to fix the economy by devaluing currency and driving up debt, it will only make for a worse economic recession/depression down the road.

Posted 11/23/09 5:19 PM larry101 New York, NY

PruneJuice - sure this sounds great in theory but in the real world spending can never be cut enough to eliminate the deficit and the Fed is not going any where. So what's the real world solution? Higher taxes.

Posted 11/23/09 7:03 PM galtgulch9 Southborough, MA

Only answer is for us to double our membership each week. At that rate we would have 100 million members in ten weeks! Enough to replace the oath breakers with oath keepers.

Posted 11/23/09 7:22 PM Anthony Gregory Berkeley, CA

larry101, raising taxes is not nearly as realistic as cutting spending. Get rid of the American empire and we can save over half a trillion a year. Then phase out Social Security and slash the rest of the bureaucracy. You can't raise taxes to keep up with the growing government. Raise them too much higher and revenues will shrink.

Posted 11/23/09 9:29 PM jwfox1965 Las Vegas, NV

@larry101 "spending can never be cut enough to eliminate the deficit" Wanna bet? either we do it voluntarily or financial reality will do it for us. Either way spending WILL be cut, just a question of do we want to do the easy way or the hard way.

Posted 11/23/09 10:28 PM PruneJuice Richmond, VA

Larry- Thank you for your comments. Most of the members of this site have very similar views and it is educational for everyone to have these views challenged. I hope you will continue to challenge us and also hope that you will keep an open mind in these discussions. If you are really looking to educate yourself on these views, I would encourage you to read Ron Paul's "The Revolution" (an obvious choice I know) as it responds to many of the questions you've been asking and gives a good overview of Austrian economics and libertarian views.

Posted 11/23/09 10:50 PM BruceKoerber Cedar Rapids, IA

http://classicalliberalismprotection.blogspot.com/ Monday, November 23, 2009 The Economy Is Indestructable But Can Be Hampered. It is actually impossible to destroy the economy since it is a divine institution. That said, it is possible to hamper the economy in such a way that it can no longer generate prosperity, which for all intents and purposes may make it seem like the economy is destroyed. Hampering the economy is what is the inevitable outcome of all ego-driven intervention. The U.S. economy (and its world-felt repercussions because the dollar had a stint as the reserve currency) is being massively hampered by the economic terrorism orchestrated by the unConstitutional coup. So, yes, I agree that the 'stimulus' was, and another one will be, destructive and motivated by a corrupt mindset. But ultimately the ego-driven interventionists will be cast ashore like dead bodies by the surging of equilibrium forces.

Posted 11/24/09 06:42 AM MichaelBarry Sebring, FL

The US economy is now (and has been for many months) in a state of structural failure. We have a rendezvous with destiny. This destiny will involve the complete collapse of the US economy caused by irresponsible fiscal and monetary policy in Washington. These policies have been driven by an ideological globalism which has failed. The average person...the barber, the welder, the builder, are all destined to what is yet an unimaginable poverty to Americans. No tweaking of the system, no fiddling around the edges can save us from the catastrophe to which our elected officials intend to subject us.

Posted 11/24/09 09:25 AM larry101 New York, NY

Thanks JustinMurray, you proved my point. There is exactly $520B in spending that can be cut. Social Security and Medicare will never get cut. Whether we like it or not, this is a social contract made with a generation, and in a capitalistic society, we don't break contracts. And I know this may be hard to believe for most libertarians, but the majority of the voting population want to keep Medicare. It's not going anywhere; in fact, be ready for a tax increase to keep benefits flowing. Republicans won't allow defense spending to get and if democrats tried you would have every Dick Cheney, Glenn Beck and Sarah Palin loon raising hell and for some reason these people have a voice. So there you have it, cut $500B in spending annually. The fact is we had a chance to completely re-tool our economy and tax system in 2000 when we had a budget surplus. Thank you Mr. Bush and fellow Replicans for squandering an opportunity of a lifetime.

Posted 11/24/09 10:04 AM landlease Sandusky, OH

This is a wonderful discussion. As I see it, our choices are raise taxes or cut spending since our days of printing money or borrowing money are limited. To implement any of these choices will require political action in which a consensus is a necessity. Most likely, gridlock is all that is possible. The most likely result is a severe economic contraction which makes everybody in the discussion correct in some way. This makes looking forward to an economic collapse comforting.

Posted 11/24/09 10:30 AM Gary Howard Arlington, VA

larry101, To answer the questions in your first comments post,NO on raising taxes or interest rates. Since I support ending the Fed, I suggest letting the market set interest rates, which is the only way to get a true rate. Additionally, income taxes are theft, so I surely wouldn't suggest raising taxes. I suggest shrinking the federal government as much as possible, cutting spending and the budget. Agreeing with Anthony, ending our overseas military bases and other commitments is also necessary...

Posted 11/24/09 11:51 AM larry101 New York, NY

Gary Howard - based on your response, I can only assume you are in favor of letting the deficit spiral out of control, and are in favor of runaway inflation. Shrink the government? I'm all for it. Sounds great on paper, but reality is the 'starve the beast' theory has been wrong again and again. You can call taxes theft all you like, but the fact of the matter is they need to go higher. As I pointed out above, about $500B in expenses can be cut, tops. Cutting entitlements are off limits. Look at the stir Obama caused just when he said he wanted to suck $200B in 'waste' out of Medicare. You want to cut defense spending I'm all for it but fact is that isn't happening either. Look at the fight Republicans put up when Obama wanted to discontinue an obsolete fighter jet program. Reality is we can sit here and complain about taxes, socialized medicine and the loss of liberty all day but the fact of the matter is Bush robbed us and future generations of massive amounts of money and liberty with his economic 'policies'. He could of fixed Medicare and SS, but instead he robbed 90% of us and stole from the future of this country. He started two wars that has cost $2 trillion and counting. Instead of posting scare articles like the one above, why not post some articles or open up debate on how we are going to dig ourselves out of this debt mess? The reality is we can't 'starve the beast' back to economic prosperity; revenues need to be raised, and we should be focused on what is the fairest, most efficient way for this to happen and how entitlement programs can be made more efficient. It's been proven time and again this country is incapable of cutting revenues first then expecting expense to fall. Bruce Bartlett, the Reagan economist and one of the designers of the most sensible economic policies we have ever seen, recognizes this. You should read his new book…you won't like the conclusion, but it's based on the reality of the current situation, and unfortunately he is 100% correct. Try posting one his articles…

Posted 11/24/09 12:49 PM take your stand Carlsbad, CA

You can say that taxes need to go higher all you want, but the fact of the matter is there is a limit to how much you can tax people. The "fact of the matter is" people already think they are taxed too high, the "fact of the matter" is people are not happy with their government, and when that government that has caused such complete blundering mistakes as getting ITSELF (not me, and not you, itself) into massive amounts of debt to the point of being on the brink of default, in imperialistic wars and ridiculous unsustainable social programs, people are going to do more than "sit and complain" about taxes. They are going to stop paying them.

Posted 11/24/09 2:40 PM Gary Howard Arlington, VA

larry101, All points taken, however I am dealing with reality. When we do the things it takes to get our economy on the right track, it will hurt for a little while, but better to deal with that hurt now rather than propping up what we have now that we know is not working-- and trying to put off an inevitable hurt that will be much worse, go much deeper, and last much longer. I am not posting things there to scare anyone, those are the facts and they should scare everyone. As far as offering solutions, I do and I just restated them in my reply to your first comment. However we already know the solutions, first stop doing what we're doing, Audit then End the Fed, Cut spending, Cut taxes, Shrink the federal government, end our overseas military commitments, allow the market to operate freely. Allow people to operate more freely in the market. Like I said, we will go through pain, but it will not last forever. Then we can move on to a better and freer economic situation. Those who say things like "it's not realistic" to cut this or end that, can sit on the sidelines and continue doubting what's possible. While those who want to do something about the future are busy doing it.

Posted 11/24/09 2:50 PM Gary Howard Arlington, VA

...Also, I never advocated "starving the beast" as a strategy. (I want to kill the beast) "Starving the beast" implies deficit spending, which does not make sense. I am not for sleight of hand tricks, I am for straight up cutting, frugality, and freedom. Base our currency on a standard of value, no easy credit, no printing of money out of thin air, no policies that take from some to give to others, no government collusion with big companies to ensure that they don't face competition, no financing of pointless foreign adventures on the backs of taxpayers. This may sound "unrealistic" to some, but it sounds like common sense to me.

Posted 11/24/09 3:37 PM BillNM Carlsbad, NM

Let's see; we have this huge debt. What caused it? Could it be that we spent too much? And, what did we spend it on? Not on production because that would not result in debt. So, I guess we spent it on non-productive activities; war, social programs; bailing out buddies; etc. Then how did China come up with the dollars to go to the auction and buy that debt? Hmmm, must be a balance of trade problem. China gets stuck with a bunch of dollars and the easy thing to do is just go to the auction and buy U.S. bonds. Now, if there was no auction what would they do with the dollars? Maybe they would be forced into reciprocal trade; ya think? Government represents a drain on any economy. Ours has taken on the role of parent and moved millions of our people from the productive to the non-productive sector. (Vote buying.) Stop the spending and those people will be forced to return to the productive sector. Now we are talking about serious dislocations. But, this will be the solution, one way or the other. And the best way to pay for the past sins is to work our way out. Obviously, standards of living will have to change. As long as the government has a fiat currency they cannot be controlled. They do whatever they want; print or borrow enough money to pay for it; and stick the people with the bill through inflation and rising prices. Get rid of the FED; return to sound money; and you give the people a voice again. It is the old proverb; pay me now or pay me later.

Posted 11/24/09 3:55 PM landlease Sandusky, OH

This has been a great discussion. I will add that I agree with shrinking government that kills health insurance reform, audits and ends the Fed, brings the troops home and ends our imperialistic empire but who will implement it? In my opinion, this is the liberty movement but can a consensus of this emerge between the 9/12 groups and the Ron Paul revolution to affect such political action? This would be ideal but I fear it will take a "credit event" before they come together. Let's hope it comes in 2010.

Posted 11/24/09 7:55 PM take your stand Carlsbad, CA

Economics and natural forces will end it at the bottom line, the only question is when. When the actions are unsustainable, by definition they can not be sustained. We can try to wind it down through political means for the least turbulence, but these actions will collapse even if we don't, because they are fundamentally unsound. Above all else our top priority should be to educate ourselves so that we will understand the causes and to spread this education so the same mistakes will not be made in the future, and so that there will be an alternative, sound solution ready to be implemented when a change inevitably becomes required. And that solution stands in the Austrian School of economics and liberty.

Posted 11/25/09 09:33 AM larry101 New York, NY

"However we already know the solutions, first stop doing what we're doing, Audit then End the Fed, Cut spending, Cut taxes, Shrink the federal government, end our overseas military commitments, allow the market to operate freely" This is what bothers about most of the posters on this site. Where were you in 2000? We had a chance to do all these things in the 2000. The economy was strong. We had a budget surplus. And we were not involved in any major war. So what did we do? We fell in line behind a war mongering thief who did nothing but buy votes and spend money on who knows what. You want to audit the Fed? Audit spending under Bush first. And when independents like me tried to protest the war, protest the spending, and protest the idiocy, we were called traitors and shunned by Republicans. Now all of a sudden your worried about liberty? Why? Because you're no longer benefiting from the Bush tax cuts and we have a democrat in office? Give me a break. Bush and the Republican party too away more liberty and was more a fascist then Obama ever will be. You're so worried about liberty? Dick Cheney is a liberty thief. Audit Dick Cheney. Punish him for his crimes. I know it's trendy to read a few books by a few Austrians and jump on the Ron Paul bandwagon but sorry you're a hypocrite if you have been quiet for the last 10 years.

Posted 11/25/09 12:42 PM BillNM Carlsbad, NM

Larry101, you're generalizing. You won't find folks around here supportive of Bush and we were talking. I personally argued End the Fed back in 1962 and have supported Dr. Paul for at least 15 years, probably long before you even knew he existed. OK, you hate Bush, but the problem is systemic and can't be laid at the feet of any one individual. It simply comes down to self interest. The net effect of that self interest is that people were moved from the productive sector of our economy to the non-productive sector. Now the non-productive sector has grown to the breaking point. Bush did not live up to his promises; Obama will not either.