Posted by in omnibus libertas on 09/08/10
Last updated 09/08/10

Today I had a meeting with Mike Doyle (PA-14), my (Democratic) Representative in the United States Congress.

I’ll give Doyle credit for agreeing to meet with me, as I was perfectly honest with his assistant/scheduler that the only reason I wanted to meet with him was to tell him why I disagreed with practically every vote he’s made, and why I wouldn’t be voting for him.

Our Talking Points

Town Hall Meetings: I asked Doyle why he hasn’t held any town hall meetings this summer. Doyle said that he did hold them during his first few terms, but gave up on them because they were rarely productive. The majority of attendees were usually a combination of press, his own staff, or an opponent’s staff; the remaining people usually came not to ask honest questions, but to promote agendas. Instead, Doyle tries to spend as much time as possible meeting with constituents one-on-one.

Election Debates: Doyle would be happy to debate either of the challengers for the PA-14 seat (Melissa Haluszczak, Republican; Ed Bortz, Green).

Interestingly, Doyle said that he took a pay cut to become a member of Congress (leaving a private sector job), and that he will receive a pay raise when he quits Congress and goes back to the private sector. Doyle serves in Congress because he enjoys doing so.

The DISCLOSE Act: Doyle said he supported the DISCLOSE act because he wanted to know “who was behind the groups” who run campaign ads. I pointed out that advertisements already are required to name the group that funds them, and plugging a group’s name into any search engine will quickly reveal the people or organizations behind it. Furthermore, I mentioned that Senator Charles Schumer was quoted as saying he hoped the bill would make groups “think twice” before spending on political advertisements, clarifying, “the deterrent effect should not be underestimated.” Furthermore, in the House debate, Hank Johnson (GA-4) took some time from worrying whether Guam could tip over to argue that unless Congress passed the DISCLOSE Act, “we’ll see more Republicans getting elected, both local, State, and Federal.” In other words, the point of the DISCLOSE Act is to silence critics of incumbents, and to attack Republicans.

Doyle expressed disbelief that either Schumer or Johnson said such things, and said that he did not support those motives. I insisted that Schumer and Johnson did indeed say those things—Schumer’s comments are here and here; Johnson’s comments are here and here (video).

I asked Doyle whether he was concerned that the DISCLOSE Act was Unconstitutional, given that it was essentially an attempt to reinstate restrictions that the Supreme Court had already struck down. To my surprise, Doyle replied that he wasn’t really concerned whether the DISCLOSE Act was Constitutional, clarifying that (in essence) he sees it as the job of the Courts to strike down laws that violate the Constitution. Doyle maintained that stance even when I reminded him that he had sworn an oath to uphold the Constitution when he become a member of Congress.

Economy: Doyle supported the TARP—and every stimulus measure since then—because (in his words) one of his strongest priorities is to help his constituents, and he didn’t want them to be hurt by a recession. Doyle was unfamiliar with the Austrian business cycle theory, which states (in essence) that a recession results when a credit-induced boom ends. (Per the metaphor in Fear the Boom and Bust, just as binging on alcohol results in a painful hangover once you stop drinking, stimulating the economy results in a painful recession once the stimulus stops.)

I’m not convinced whether Doyle completely understood my explanation of ABCT. But since Doyle is convinced that the economy is recovering (based on GDP and jobs data that he had), he rejects ABCT. I asked him point-blank what economic results we would have to see for him to believe that the “stimulus” approach harms the economy instead of helping, but he didn’t give me a clear answer (except to suggest we have the same conversation again in the future.)

Doyle was unconvinced that Congress listens only to Keynesian, interventionist economists—the same ones who could not see the biggest financial crash since the Great Depression coming. Doyle pointed out that a diverse set of people regularly speak at Congressional hearings. I disagreed, responding that I knew of no Austrian economists who have spoken to Congress anytime recently. (In retrospect, I was incorrect: Thomas Woods recently spoke to Congress, urging them to pass H.R.1207. But that was the only counterexample I could find—and Congress ignored his advice anyway.)

Deficits and the Debt: Doyle said many things to make me believe that on a personal level, he and his family are very financially responsible. This surprised me, given that Doyle has voted for trillions of dollars of spending and other stimulus that adds to the deficit/debt. Doyle stated (in essence) that although he was concerned about the debt, and thought it was a problem that we would need to address soon, he wasn’t willing to forgo current spending that he felt was necessary to help his constituents (e.g., stimulus).

In response, I pointed out that we will never reduce the debt as long as today’s politicians can rationalize the debt as a problem for tomorrow’s politicians; that every politician who just kicks the can further down the road does so because he truly believes that today’s problems are too urgent to take a backseat to reducing the debt. But that didn’t sway him.

Watching His Opponents: as I was leaving his office, Doyle chided me over something unflattering I had written about him on Melissa for Congress’s Facebook page (although he did so graciously and good-naturedly). So, Melissa supporters, take note: although Doyle might not acknowledge Melissa in public, we’ve gotten his attention to the point where he’s instructed his staff to watch Melissa.

(Of course, that makes me wonder: did my comments—and the fact that I support Melissa—affect Doyle's decision to meet with me? Or did I simply happen to be next in the line of requests?)

Final Thoughts

I had no expectation that my meeting with Doyle would change his mind on any of the issues I discussed, and I was correct. (In fairness, though, I had no expectation that Doyle would change my mind, either—and he didn’t.)

Doyle’s stance on the DISCLOSE Act reminds me of the old adage: where you stand depends on where you sit. Doyle insists that he supports the DISCLOSE Act because he wants openness, but I think he is turning a (willingly) blind eye to his colleagues who outright admit that they intend for the DISCLOSE Act to stifle political speech—especially speech attacking Democrats and incumbents. And out of all the various forms of speech, the form the Founders of the United States were most concerned with protecting was political speech.

By his own admission, Doyle values expediency and “helping people” over adhering to the Constitution. By doing so, he trivializes the Oath of Office he swore to uphold.

Economically, Doyle appears committed to his bailout ideology, arguing that conditions would have been far worse without the bailout. There is no way to disprove Doyle’s assertion, any more than Doyle can disprove my assertion that interfering with the correction only makes it worse. Distant history and recent history are on my side, but Doyle chooses to believe otherwise.

Doyle would frustrate me a lot less if he actually were a mustache-twirling villain, scheming to bring economic calamity to the United States. But he isn’t. He has good intentions, but disregards the warnings from Austrian economists where the road he is building with his good intentions leads.

For those of us who value individual liberty, constitutional government, sound money, free markets, and a noninterventionist foreign policy, Doyle is unfortunately our enemy. I say unfortunately because he is not an enemy in the sense of, say, a petty street robber. Rather, for those of us in PA-14, if Ron Paul is Sherlock Holmes, Congressman Doyle is Professor Moriarty. You can have a perfectly polite and amicable conversation with both; both will let you know exactly where they stand. Doyle will cheerfully explain to you, without rancor, why he will vote against your wishes—just as Paul would do with someone on the far Left. Both would rather be defeated in a primary or general election than change their underlying voting philosophies.

If we don’t like the way Doyle votes, we must use first the soap box, then the ballot box.

Posted by in omnibus libertas on 06/24/10

The purpose of the latest attack on our liberties, the DISCLOSE Act (H. R. 5175), is to “undo” the Citizens United decision (which was a great victory for free speech, as I previously discussed) by rigging campaign finance laws to favor incumbents in general and Democrats in particular.

The travesty that is the DISCLOSE Act is discussed at length here, here, and here, as well as elsewhere here on the Campaign For Liberty website.

But what I haven’t seen discussed is the NRA’s motives for cutting their backroom deal to exempt themselves from the DISCLOSE Act. And I’ve seen more than a few people wondering why the NRA would do such a thing.

After all, Democrats have essentially admitted that NRA opposition would have killed the DISCLOSE Act, and even a member of the NRA’s board of directors has blasted the NRA exemption. So why hasn’t the NRA simply flexed its political muscle and killed the bill?

Well, as both an NRA and Gun Owners of America (GOA) Life member, I can tell you exactly what the NRA’s motivation is. And you’re not going to like it.

The reason why the NRA cut their deal is simple: the NRA squabbles—often bitterly—with other Second Amendment advocacy groups, and wouldn’t mind one bit seeing them labor under the draconian provisions of the DISCLOSE Act while the NRA is permitted to operate largely unfettered.

To understand why the NRA would act so vindictively, one needs to consider the history of other pro-gun groups and the NRA.

To a significant degree, other pro-gun groups exist as a reaction not to anti-gun groups, but to the NRA itself.

For example, the motto of the Jews for the Preservation of Firearms Ownership (JPFO), “America’s Most Aggressive Defender of Firearms Ownership,” is a direct challenge to the NRA, whether intended that way or not (and bluntly, I think it probably is). And GOA was actually founded by a former NRA board member (H. L. Richardson), because he felt that the NRA was focusing too much on conservation and sports shooting instead of on politics.

Moreover, there is a very good reason why Ron Paul’s quote, “The only no-compromise gun lobby in Washington,” appears on GOA’s home page. In this extensive 1997 exchange between the NRA and GOA Directors, we find these snippets (emphasis mine):

In 1996, GOA strongly supported Ron Paul in the Republican primary. The NRA-ILA supported the incumbent Rep. Greg Laughlin (TX-14). Again, GOA’s decision was not based on anything other than the records of the two candidates. Rep. Paul had shown himself to be a 100% pro-gun legislator in his previous service in Congress.

Rep. Paul’s victory has been one of the bright spots in the 105th Congress. He has shown his dedication to the Second Amendment by introducing legislation to repeal the ban on semi-automatic firearms and has cosponsored every pro-gun piece of legislation as well.

Mrs. Metaksa says we try to get to the “right” of NRA on any issue or on any political race, “regardless of their chance of producing any positive result.” I would strongly disagree. I think the service of Roscoe Bartlett, Steve Stockman, Joe Scarborough, Carol Martin and Ron Paul have been very beneficial to this country. Clearly, there was no intention of being divisive. Our intent is to support the best candidate, and I think the leadership records of these legislators demonstrate the wisdom of having supported them in their initial races.

Read that again, folks. If the NRA had gotten its way, Ron Paul would have been defeated in his 1996 primary bid. If not for GOA, Ron Paul might be living in obscurity right now, and the Campaign For Liberty might not exist.

If there is any more sobering example of just how important it is to refuse to compromise when liberty is at stake, I know not what it is.

This is why the NRA’s position on the DISCLOSE Act is inexcusable:

We told Congress we opposed the bill. Consequently, congressional leaders announced they would exempt us from its draconian restrictions on political speech. If that happens, we will not be involved in final consideration of this bill in the House. If it doesn’t, we will strongly oppose the bill.

The NRA is a non-partisan, single-issue organization made up of millions of individual members dedicated to the protection of the Second Amendment. We do not represent the interests of other organizations. That’s their responsibility.

The NRA can attempt to spin this all they want, but the bottom line is, by not killing this bill when they have the power to do so, they are engaging in an astoundingly pretty and short-sighted attack against perceived rivals at the expense of not just the Second Amendment, but the entire Bill of Rights.

It is sad that we have to do this, but we need to turn up the heat on the NRA. And the way to do that is to hit them in their wallet: call the NRA ILA (Institute for Legislative Action) at +1 800 392 8683 and explain that if the NRA does not oppose the DISCLOSE Act, you will donate exclusively to GOA, the JPFO, etc. in the future.

(If you are a NRA Life member, I would recommend against threatening to resign, because you can influence the NRA as a Life member (e.g., you can vote for the board of directors) without having to give the NRA any additional money.)

And don’t forget to keep calling your members of Congress to oppose the DISCLOSE Act, too!

Posted 06/24/10 Willij4lib Monroe, WA

Thank you for this insight, excellent.

Posted by in omnibus libertas on 03/10/10
Last updated 03/11/10

Scarcely a day goes by where I don’t see someone blaming the Great Financial Meltdown of 2008 on the “free market.”

Today’s example is this letter to the editor of the Pittsburgh Post-Gazette, in which the author vilifies the free market in order to buttress his case for a government takeover of health care:

The current debate over health care reform in this country reflects a basic philosophical difference between (a) those who believe in a totally unfettered “free market” economy (notwithstanding the most recent disaster that such a market has inflicted upon us), and (b) those of us who believe that health care is not a market “commodity” from which the rapacious insurance industry should be able to reap exorbitant profits but should be a fundamental, universal right of all citizens.

If the free market really did cause the financial meltdown, then the author’s point might be valid.

But did it?

Well, let’s find out! I proudly present the free market versus government quiz. Let’s begin...

1. What entity has given us 10,000+ pages of regulations, none of which prevented the meltdown?

A. government
B. the free market

2. What entity failed to see Bernie Madoff running a huge pyramid scheme right under its nose?

A. government
B. the free market

3. What entity altered banking regulations to permit the commingling of commercial banking activities and investment banking?

A. government
B. the free market

4. What entity created the Community Reinvestment Act, which encouraged lenders to originate higher-risk loans than they otherwise would have chosen to originate?

A. government
B. the free market

5. What entity created Fannie Mae and Freddie Mac, organizations which took risks that ordinary mortgage lenders could not?

A. government
B. the free market

6. What entity stood ready to nationalize Fannie Mae and Freddie Mac should their risky lending backfire?

A. government
B. the free market

7. What entity resisted auditing or regulating Fannie Mae and Freddie Mac?

A. government
B. the free market

8. What entity controls the money supply?

A. government
B. the free market

9. What entity has flooded the economy with money and credit and bailed out every economic crisis since 1987?

A. government
B. the free market

10. What entity determines interest rates?

A. government
B. the free market

11. What entity, from late 2001 through early 2004, cut interest rates so low that after adjusting for inflation, interest rates were actually negative?

A. government
B. the free market

12. Throughout history, what entity has acted as the best shelter for the greedy, incompetent, and the corrupt?

A. government
B. the free market

13. Which statement best describes the current U.S. economy:

A. a free-market system where good business decisions are rewarded with profit and bad decisions are rewarded with failure

B. a system centrally-planned by a handful of government apparatchiks and plutocrats, wherein the competent are plundered to reward the incompetent but politically-connected

14. What entity has done the greatest damage to our economy?

A. government
B. the free market

15. What entity is ultimately responsible for the financial meltdown?

A. government
B. the free market

(Hint: the correct answers are in bold.)

Now, some might be tempted to argue that the answer to question 8 is “the free market”: after all, the Federal Reserve controls the money supply, and the Federal Reserve is a private agency, right?

In a word: no. The Federal Reserve exists because an act of Congress chartered it. The seven members of the Federal Reserve’s Board of Governors are nominated by the President and confirmed by the Senate. And there is a giant revolving door between the Federal Reserve and government—the most recent example being Obama’s tapping Tim Geithner (the then-current President of the New York Fed) to be the new Treasury Secretary.

(Yes, in theory, the Federal Reserve is a private institution. But in any practical sense, the Federal Reserve is merely another branch of government.)

So, in conclusion, when we get down to the facts, we see that government—not the free market—is what caused the financial meltdown.

The reason why government made a giant expensive mess out of our economy (and for that matter, health care) is simple: that’s what government does best. Jaw-dropping incompetence—such as leaving thousands to die in the aftermath of Hurricane Katrina, or granting two of the 9-11 hijackers student visas for U.S. flight school six months after their deaths—is the one shining, consistent characteristic of government. We should expect nothing less.

In both health care and the overall economy, many people with good intentions are calling for more government intervention to combat the deficiencies/evils of the free market. But tragically, this is exactly backwards: asking government to fix the economy or fix health care is like asking an arsonist to put out the fire that he himself caused.

Posted by in omnibus libertas on 01/23/10
Last updated 01/23/10

On Thursday, the United States Supreme Court issued its ruling on the Citizens United v. Federal Election Commission case. In essence, the Court struck down the sections of the Bipartisan Campaign Reform Act that banned election-related advertisements by corporations or unions immediately preceding an election.

As a defender of liberty, I welcomed and cheered the decision.

But to my surprise, many people who also claim to be defenders of liberty denounced the decision. For example, in one of the comments on the C4L blog post about the decision, RonPaul-aholic wrote:

We’re coming to the point where civil liberties won’t exist for the individual, but will exist for corporations. Wonderful.

But RonPaul-aholic is wrong, and I’ll explain why.

An incumbent politician has an advantage over his challenger, because people have a natural tendency to choose the devil they know than the devil they don’t know. Additionally, while the incumbent is well-known to the voters, the challenger might be completely unknown to most voters.

Because of this, a candidate challenging an incumbent must campaign significantly harder than the incumbent: he must make more appearances, run more advertisements, and work harder to raise his awareness with the voters. To do this effectively requires money (as Campaign for Liberty members who are currently donating to various campaigns can attest).

And this is why incumbent politicians—in the guise of fighting corruption, mind you—inevitably seek to restrict campaign spending. Simply speaking, the stricter the limits on campaign spending, the more the playing field is tilted in favor of incumbents.

(For a deeper examination of how “campaign finance reform” benefits incumbents over challengers, see the discussion in John Lott's Freedomnomics.)

Of all the various forms of speech, the form the Founding Fathers were most concerned with protecting was political speech. They understood that politicians would inevitably seek to muzzle political speech to protect themselves from criticism.

The average person can’t afford to purchase a full-page ad in the New York Times, or purchase a 30-second TV commercial, or print thousands of professionally-typeset pamphlets. But when someone pools his time and money with hundreds or thousands of other like-minded individuals, the resulting organization can speak with a voice that can be heard loud and clear in the political arena.

(Campaign for Liberty members: does this remind you of an organization you’re familiar with?)

Our Founding Fathers understood that the ability to pool resources is a tremendously powerful defense of liberty. This is why the First Amendment specifically affirms the freedom of speech in totality, instead of the freedom of the people to speak.

This is why the speech restrictions in the BCRA were a travesty. Not only did the BCRA ban political speech—the most important kind of speech—but it did so during the exact time window during which political speech has its maximum power: directly before an election.

Just as the PATRIOT Act attacked our liberties in the guise of fighting terrorism by playing on our fear, the Bipartisan Campaign Reform Act attacked our liberties in the guise of fighting corruption by playing on the reflexive dislike many people have towards corporations.

After Bush signed the BCRA into law, many speculated that the Supreme Court would strike down the free speech restrictions it contained. In April 2007, the Supreme Court heard Federal Election Commission v. Wisconsin Right to Life, Inc., which was a direct challenge to the constitutionality of the free speech restrictions of the BCRA. An incredibly disparate set of groups—including such strange bedfellows as the American Civil Liberties Union, the National Rifle Association, NARAL Pro-Choice America, Focus on the Family, the AFL-CIO, and the Cato Institute—filed amici curiae briefs urging the Court to strike down the BCRA’s free speech restrictions as unconstitutional, to no avail: in June 2007, the Supreme Court upheld virtually all of the speech restrictions contained in the BCRA.

But on Thursday, the Supreme Court finally broke the BCRA’s shackles on free speech. All defenders of liberty should rejoice.

Some people aren’t rejoicing, of course. From an LA Times article:

President Obama called the ruling “a major victory for Big Oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans.” He promised to seek “a forceful response to this decision” from Congress.

The New York Times was, predictably, frothing:

Congress must act immediately to limit the damage of this radical decision, which strikes at the heart of democracy.

Of course, keep in mind that Obama is an incumbent (and potentially a worried one, after Republican Scott Brown stunned Democrats by winning the Senate seat formerly held by Ted Kennedy). And that the New York Times, as a “media outlet,” was specifically exempted from the free speech restrictions in the BCRA. (And that the United States is a republic, not a democracy.)

In contrast, here’s an excerpt from Justice Scalia’s concurring opinion:

But to return to, and summarize, my principal point, which is the conformity of today’s opinion with the original meaning of the First Amendment. The Amendment is written in terms of “speech,” not speakers. Its text offers no foothold for excluding any category of speaker, from single individuals to partnerships of individuals, to unincorporated associations of individuals, to incorporated associations of individuals—and the dissent offers no evidence about the original meaning of the text to support any such exclusion. We are therefore simply left with the question whether the speech at issue in this case is “speech” covered by the First Amendment. No one says otherwise. A documentary film critical of a potential Presidential candidate is core political speech, and its nature as such does not change simply because it was funded by a corporation. Nor does the character of that funding produce any reduction whatever in the “inherent worth of the speech” and “its capacity for informing the public.” Indeed, to exclude or impede corporate speech is to muzzle the principal agents of the modern free economy. We should celebrate rather than condemn the addition of this speech to the public debate.

Justice Roberts’ concurring opinion is also stirring:

The Government urges us in this case to uphold a direct prohibition on political speech. It asks us to embrace a theory of the First Amendment that would allow censorship not only of television and radio broadcasts, but of pamphlets, posters, the Internet, and virtually any other medium that corporations and unions might find useful in expressing their views on matters of public concern. Its theory, if accepted, would empower the Government to prohibit newspapers from running editorials or opinion pieces supporting or opposing candidates for office, so long as the newspapers were owned by corporations—as the major ones are. First Amendment rights could be confined to individuals, subverting the vibrant public discourse that is at the foundation of our democracy.

The Court properly rejects that theory, and I join its opinion in full. The First Amendment protects more than just the individual on a soapbox and the lonely pamphleteer...

We have had two rounds of briefing in this case, two oral arguments, and 54 amicus briefs to help us carry out our obligation to decide the necessary constitutional questions according to law. We have also had the benefit of a comprehensive dissent that has helped ensure that the Court has considered all the relevant issues. This careful consideration convinces me that Congress violates the First Amendment when it decrees that some speakers may not engage in political speech at election time, when it matters most.

This is not a victory for evil corporations; this is a victory for liberty, plain and simple.

Yes, with this Supreme Court ruling, corporations like Lockheed-Martin and Goldman Sachs can now take out political ads before elections. But so can The World Wildlife Fund, the NRA, the Brady Campaign, and the ACLU, just to name a few. I am once again free to empower any of these organizations, and countless more, to speak politically on my behalf—and so are you. The ability of incumbents to use disingenuous tactics to hamstring challengers has been greatly nullified.

The only thing that distresses me about the Court’s decision is the knee-jerk reaction against it from people who should know better. This tells me that in terms of educating people as to what freedom and liberty truly are, the Campaign for Liberty has a long way to go.

Posted 01/25/10 icehcky8 Fenton, MO

Thanks for the insight. I had been looking around the internet as well as this site in an attempt to figure out the positives and negatives of the situation. Your commentary is the best I've come across so far.

Posted 04/19/10 mountaindesert Bloomington, IN

I know I'm a bit late to the discussion, but I enjoyed your post. I have been surprised at how confused people are about the Citizens United decision. After running a search on this site for commentary, I was disappointed to discover that even in this online community the reaction to the Citizens United decision was mostly negative.

Posted by in omnibus libertas on 01/06/10
Last updated 01/06/10

In this blog post, Matt Holdridge quotes an article by Robert Kneisley that ponders whether an asset bubble might be forming in the gold market.

Matt then asks:

So my question is, if Austrian Economics holds true, wouldn’t the Fed have the ability to not only create a “bubble” in housing but also in any market, even precious metals?

If this is the case, are we caught up in what Alan Greenspan memorably referred to as “irrational exuberance,” but instead of housing, it’s gold this time?

For whatever my opinion’s worth, I'll attempt to answer Matt’s questions.

First, though, I think that Mr. Kneisley is confusing investing with saving.

Saving is when you set aside some of your money instead of using all of it for consumption.

Investing is when you loan some of the money you have saved to someone who uses it to produce something of value, thereby making a profit. With the profit, he repays the money he borrowed from you, plus a fee (an interest rate) that you charge him for the loan.

(The fee exists because with investing, there is a risk that the person who takes your loan will fail to make a profit and therefore be unable to repay you. The fee entices a lender to make the loan despite the risk. The riskier the loan, the higher the fee that a lender will demand.)

In these terms, you cannot “invest” in gold, because gold doesn’t produce anything. People who think they’re “investing” in gold are simply engaging in commodity speculating: they’re buying a commodity (gold) and gambling that in the future, the demand for that commodity will be higher, which will permit them to sell the commodity at the higher price and make a profit. But since commodity prices are notoriously difficult to predict, unless you’re an expert at it, you’re far more likely to loose money instead of make money. (And even experts seem to get burned on a regular basis.)

However, gold (and silver) have several important properties that most commodities do not: they are durable, they are divisible, and they are rare enough that they have high value-to-weight ratios (gold more than silver). These qualities are why gold and silver have been used as a medium of exchange—that is, money—throughout human history.

United States dollars are lousy vehicles for saving: when the government creates new money out of thin air (as the Federal Reserve continually does for United States dollars), it devalues all of the money already in circulation. This devaluation robs savers of the value of their savings, even though the amount of money the saver has in his possession doesn’t change.

This is the real reason to purchase gold and silver: not to invest in them, but to save in them. The government cannot inflate away the value of your savings if you save in gold and silver.

So, finally, to answer the questions Matt raised...

No, I don’t think the Federal Reserve can create a gold bubble—at least not easily. The reason why the bubble from all the new money the Fed was creating from 2002 to 2007 or so formed in the housing market was because that market was grossly distorted by government intervention: the government was giving people tax-exempt loans to go purchase a commodity (a house) at an artificially low interest rate, and then guaranteeing to repay the loan if the loanees defaulted!

And no, I don’t think we’re caught up in “irrational exuberance.” There are some speculators along for the ride, of course, but speculators tend to run for the exits when a big correction happens. I doubt that the savers—the people who are buying a little gold and silver every month—will be deterred, because savers are long, long on gold.

Could a gold bubble happen? Yes, it could. But it if does, it will be obvious. To illustrate, I now present the Top Ten Ways To Spot a Gold Bubble:

1. Rappers switch to purchasing ostentatious jewelry out of platinum instead of gold, complaining that all the people who are buying gold are “dilutin’ our flava.”
2. Congress laments that more people can’t realize the “American dream” of owning their own gold bar.
3. Hosts of gold parties start selling gold instead of buying gold.
4. Congress changes the tax code to make interest paid on loans used to purchase a gold bar deductible.
5. Cities and towns across the nation pass zoning laws limiting gold dealers to no more than 30 per square block.
6. Cash4gold changes its name to Gold4Cash.
7. Jim Cramer devotes half of every “Mad Money” show to discussing the best ways to buy gold.
8. Congress creates an agency to underwrite loans to people who otherwise couldn’t afford to purchase a gold bar.
9. The average Joe on the street thinks that only kooks don’t buy gold.
10. Gold prices double every few months or weeks relative to the prices of other commodities.

(The “relative to other commodities” part of #10 is important, because if we see massive inflation or hyperinflation, the price of gold will rise rapidly. But so will other commodities, because the last thing anyone will want to be stuck holding is dollars.)

The bottom line: when everyone “knows” that buying gold is a sure way to make a fast buck, that’s when we’ll see a gold bubble.