Restore The Constitution

The Bryant Park Project, March 14, 2008 · Contradicting the Bush administration’s main case for the war in Iraq, the Defense Department for the first time has formally concluded that Saddam Hussein had no direct ties to al-Qaida. The Pentagon now says the former Iraqi president’s regime sheltered and supported terrorist groups, but Osama bin Laden’s al-Qaida was not among them.

The report is significant because it is based on the Pentagon’s own review of 600,000 pages of original documents seized in Iraq after the United States-led coalition invaded the country in 2003, says Warren Strobel, a foreign affairs reporter for McClatchy newspapers.

Strobel says the report is not the first to state definitively that there was no operational link between Saddam and al-Qaida — a 2005 C.I.A. report came to a similar conclusion. But Strobel stresses that the Pentagon’s own reporting probed giant Iraqi treasure trove of source material. He says that after years of statements by influential military leaders — including former Secretary of Defense Donald Rumsfeld, who once suggested there was “bulletproof evidence” for an Iraq-al-Qaeda link — the military apparatus has discredited the thinking that helped lead America into war.

“It’s there in black and white,” Strobel says. “If there was [a connection], they would have found a hint of it in 600,000 pages.” MORE

By Dave Lindorff
3-15-8

(This Can’t Be Happening) — Every horror movie has that “Oh Shit!” moment, when the hero or heroes are huddled in some creepy hideout, and suddenly something happens that tells you that the monster is just around the corner, or just about to attack. In “Jurassic Park” it was the pulsing ripples in a cup of water, heralding the arrival of a T-Rex. In “Jaws” it was the deep base music, letting you know that a monstrous shark was about to attack.

Well, we just got our “Oh Shit!” moment with the just-announced resignation of Admiral William J. Fallon, the military commander of US Middle East operations.

Adm. Fallon, 63, famously said that an attack on Iran would not happen “on my watch,” and is widely believed to have already threatened, along with a number of other top generals and admirals, to quit the service if the Bush administration were to launch an air attack on Iran.

Put the pieces together. We know that the vice president is obsessed with a desire to attack Iran, and has been since before he even took office. Bush has repeatedly stressed that Iran cannot be permitted to continue with its nuclear processing (he calls it their “nukular” bomb program, though there is no evidence that the country has a nuclear bomb development program, and in fact the last National Intelligence Estimate on Iran said there was not and hadn’t been since 2003). And Fallon has now quit.

The Eisenhower nuclear aircraft carrier strike force has departed for stationing off Iran, joining forces already in place there, and loaded to the brim with strike aircraft, Tomahawk missiles, and even nuclear weapons. It was long ago reported that stealth bombers had been put in place in come of the countries of the old Soviet Union north of Iran, as well as on the island of Diego Garcia in the Indian Ocean.

All the elements, that is to say, are in place for a massive air assault on Iranian targets, designed to destroy its nuclear program, cripple its military command and control, and–at least this is a stated Cheney goal–to lead to the overthrow of the Iranian government by its own people.

It is, of course, the strategy of madmen.

The US has no forces to send into Iran. All they can do is bomb it. And bombing a country doesn’t lead its people to rise up. It leads them to rally ’round the flag. Especially when the civilian casualties of our not-so-”smart” bombs start to soar.

If such an attack were to happen, we can kiss goodbye to six years of domestic peace, such as we’ve had. The Iranians have considerable capability to inflict damage on US targets of interest, both overseas and here in the domestic US using assymetrical warfare techniques. The worse part is, they’d be completely justified in doing so, since any attack on them would be a crime against peace–the gravest of all international crimes.

American troops already mired and pinned down in a war in Iraq, would find themselves suddenly under attack by Shia forces there, who for several years now have been largely leaving them alone.

And oil, which just bumped up against $110 a barrel, an all-time record, will double in price overnight, as the whole Persian Gulf becomes a war zone.

We can expect massive launches of small boats armed with missiles and torpedoes, as well as sophisticated anti-ship missiles from shore batteries, all fired at US ships in the Gulf, and it would be astounding if some or even many vessels of the US fleet weren’t sunk.

Meanwhile, tanker traffic in the Gulf, which accounts for 20% or more of the world’s oil, will cease as insurance rates for those vessels goes through the roof.

The monster of war will be unleashed, and will not easily be defeated. That’s why Adm. Fallon was so opposed to the whole idea. He knows that it will be a disaster for the US militarily, economically and politically.

The worst part is that Cheney knows this, too. He just doesn’t care. This is the man’s parting shot as he leaves office–to put the country into the throes of a war so vicious that no one will think of pursuing him for his long list of crimes against the nation and the Constitution.

He is guessing–and he may be right–that the American public will, sheep-like as always, rally to the cause, with a new round of yellow magnet “ribbons” on their cars. He is hoping–and he may be right– that war will be a boon for the candidacy of Republican John McCain and for embattled Republicans running for Congress.

It’s a kind of political Hail Mary.

Oh Shit! Here it comes… Source

Ron Paul
At home the war on poverty, terrorism, drugs, or foreign rulers provides an opportunity for authoritarians to rise to power, individuals who think nothing of violating the people’s rights to privacy and freedom of speech. They believe their role is to protect the secrecy of government, rather than protect the privacy of citizens. Unfortunately, that is the atmosphere under which we live today, with essentially no respect for the Bill of Rights.

Though great economic harm comes from a government monopoly fiat monetary system, the loss of liberty associated with it is equally troubling. Just as empires are self-limiting in terms of money and manpower, so too is a monetary system based on illusion and fraud. When the end comes we will be given an opportunity to choose once again between honest money and liberty on one hand; chaos, poverty, and authoritarianism on the other.

The economic harm done by a fiat monetary system is pervasive, dangerous, and unfair. Though runaway inflation is injurious to almost everyone, it is more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. Small businesses and individual enterprises suffer more than the financial elite, who borrow large sums before the money loses value. Those who are on the receiving end of government contracts – especially in the military industrial complex during wartime – receive undeserved benefits.

It’s a mistake to blame high gasoline and oil prices on price gouging. If we impose new taxes or fix prices, while ignoring monetary inflation, corporate subsidies, and excessive regulations, shortages will result. The market is the only way to determine the best price for any commodity. The law of supply and demand cannot be repealed. The real problems arise when government planners give subsidies to energy companies and favor one form of energy over another.

Energy prices are rising for many reasons: Inflation; increased demand from China and India; decreased supply resulting from our invasion of Iraq; anticipated disruption of supply as we push regime change in Iran; regulatory restrictions on gasoline production; government interference in the free market development of alternative fuels; and subsidies to big oil such as free leases and grants for research and development.

Interestingly, the cost of oil and gas is actually much higher than we pay at the retail level. Much of the DOD budget is spent protecting “our” oil supplies, and if such spending is factored in, gasoline probably costs us more than $5 a gallon. The sad irony is that this military effort to secure cheap oil supplies inevitably backfires, and actually curtails supplies and boosts prices at the pump. The waste and fraud in issuing contracts to large corporations for work in Iraq only add to price increases.

When problems arise under conditions that exist today, it’s a serious error to blame the little bit of the free market that still functions. Last summer the market worked efficiently after Katrina – gas hit $3 a gallon, but soon supplies increased, usage went down, and the price returned to $2. In the 1980s, market forces took oil from $40 per barrel to $10 per barrel, and no one cried for the oil companies that went bankrupt. Today’s increases are for the reasons mentioned above. It’s natural for labor to seek its highest wage, and businesses to strive for the greatest profit. That’s the way the market works. When the free market is allowed to work, it’s the consumer who ultimately determines price and quality, with labor and business accommodating consumer choices. Once this process is distorted by government, prices rise excessively, labor costs and profits are negatively affected, and problems emerge. Instead of fixing the problem, politicians and demagogues respond by demanding windfall profits taxes and price controls, while never questioning how previous government interference caused the whole mess in the first place. Never let it be said that higher oil prices and profits cause inflation; inflation of the money supply causes higher prices!

Since keeping interest rates below market levels is synonymous with new money creation by the Fed, the resulting business cycle, higher cost of living, and job losses all can be laid at the doorstep of the Fed. This burden hits the poor the most, making Fed taxation by inflation the worst of all regressive taxes. Statistics about revenues generated by the income tax are grossly misleading; in reality much harm is done by our welfare/warfare system supposedly designed to help the poor and tax the rich. Only sound money can rectify the blatant injustice of this destructive system.

The Founders understood this great danger, and voted overwhelmingly to reject “emitting bills of credit,” the term they used for paper or fiat money. It’s too bad the knowledge and advice of our founders, and their mandate in the Constitution, are ignored today at our great peril. The current surge in gold prices – which reflects our dollar’s devaluation – is warning us to pay closer attention to our fiscal, monetary, entitlement, and foreign policy.

Meaning of the Gold Price – Summation

A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil prices higher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.

Certainly geo-political events in the Middle East under a gold standard would not alter its price, though they could affect the supply of oil and cause oil prices to rise. Only under conditions created by excessive paper money would one expect all or most prices to rise. This is a mere reflection of the devaluation of the dollar.

Particular things to remember:

* If one endorses small government and maximum liberty, one must support commodity money.
* One of the strongest restraints against unnecessary war is a gold standard.
* Deficit financing by government is severely restricted by sound money.
* The harmful effects of the business cycle are virtually eliminated with an honest gold standard.
* Saving and thrift are encouraged by a gold standard; and discouraged by paper money.
* Price inflation, with generally rising price levels, is characteristic of paper money. Reports that the consumer price index and the producer price index are rising are distractions: the real cause of inflation is the Fed’s creation of new money.
* Interest rate manipulation by central bank helps the rich, the banks, the government, and the politicians.
* Paper money permits the regressive inflation tax to be passed off on the poor and the middle class.
* Speculative financial bubbles are characteristic of paper money – not gold.
* Paper money encourages economic and political chaos, which subsequently causes a search for scapegoats rather than blaming the central bank.
* Dangerous protectionist measures frequently are implemented to compensate for the dislocations caused by fiat money.
* Paper money, inflation, and the conditions they create contribute to the problems of illegal immigration.
* The value of gold is remarkably stable.
* The dollar price of gold reflects dollar depreciation.
* Holding gold helps preserve and store wealth, but technically gold is not a true investment.
* Since 2001 the dollar has been devalued by 60%.
* In 1934 FDR devalued the dollar by 41%.
* In 1971 Nixon devalued the dollar by 7.9%.
* In 1973 Nixon devalued the dollar by 10%.

These were momentous monetary events, and every knowledgeable person worldwide paid close attention. Major changes were endured in 1979 and 1980 to save the dollar from disintegration. This involved a severe recession, interest rates over 21%, and general price inflation of 15%.

Today we face a 60% devaluation and counting, yet no one seems to care. It’s of greater significance than the three events mentioned above. And yet the one measurement that best reflects the degree of inflation, the Fed and our government deny us. Since March, M3 reporting has been discontinued. For starters, I’d like to see Congress demand that this report be resumed. I fully believe the American people and Congress are entitled to this information. Will we one day complain about false intelligence, as we have with the Iraq war? Will we complain about not having enough information to address monetary policy after it’s too late?

If ever there was a time to get a handle on what sound money is and what it means, that time is today.

Inflation, as exposed by high gold prices, transfers wealth from the middle class to the rich, as real wages decline while the salaries of CEOs, movie stars, and athletes skyrocket – along with the profits of the military industrial complex, the oil industry, and other special interests.

A sharply rising gold price is a vote of “no confidence” in Congress’ ability to control the budget, the Fed’s ability to control the money supply, and the administration’s ability to bring stability to the Middle East.

Ultimately, the gold price is a measurement of trust in the currency and the politicians who run the country. It’s been that way for a long time, and is not about to change.

If we care about the financial system, the tax system, and the monumental debt we’re accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money – money the government and central banks absolutely cannot create out of thin air.

Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Runaway inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it. Source

It’s more accurate to say that one might invest in a gold or silver mining company, where management, labor costs, and the nature of new discoveries all play a vital role in determining the quality of the investment and the profits made.

Buying gold and holding it is somewhat analogous to converting one’s savings into one hundred dollar bills and hiding them under the mattress – yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There’s a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, i.e. gold, however, goes up if the government devalues the circulating fiat currency.

Holding gold is protection or insurance against government’s proclivity to debase its currency. The purchasing power of gold goes up not because it’s a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.

One of the characteristics of commodity money – one that originated naturally in the marketplace – is that it must serve as a store of value. Gold and silver meet that test – paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It’s more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.

The point is that most who buy gold do so to protect against a depreciating currency rather than as an investment in the classical sense. Americans understand this less than citizens of other countries; some nations have suffered from severe monetary inflation that literally led to the destruction of their national currency. Though our inflation – i.e., the depreciation of the U.S. dollar – has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and our political system. The belief that money created out of thin air can work economic miracles, if only properly “managed,” is pervasive in D.C.

In many ways we shouldn’t be surprised about this trust in such an unsound system. For at least four generations our government-run universities have systematically preached a monetary doctrine justifying the so-called wisdom of paper money over the “foolishness” of sound money. Not only that, paper money has worked surprisingly well in the past 35 years – the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these several decades have gained the knowledge necessary to make paper money respond as if it were gold. This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.

Many central bankers in the last 15 years became so confident they had achieved this milestone that they sold off large hoards of their gold reserves. At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing market gold prices. This recent deception failed just as it did in the 1960s, when our government tried to hold gold artificially low at $35 an ounce. But since they could not truly repeal the economic laws regarding money, just as many central bankers sold, others bought. It’s fascinating that the European central banks sold gold while Asian central banks bought it over the last several years.

Since gold has proven to be the real money of the ages, we see once again a shift in wealth from the West to the East, just as we saw a loss of our industrial base in the same direction. Though Treasury officials deny any U.S. sales or loans of our official gold holdings, no audits are permitted so no one can be certain.

The special nature of the dollar as the reserve currency of the world has allowed this game to last longer than it would have otherwise. But the fact that gold has gone from $252 per ounce to over $1000 means there is concern about the future of the dollar. The higher the price for gold, the greater the concern for the dollar. Instead of dwelling on the dollar price of gold, we should be talking about the depreciation of the dollar. In 1934 a dollar was worth 1/20th of an ounce of gold; $20 bought an ounce of gold. Today a dollar is worth 1/1000th of an ounce of gold, meaning it takes $1000 to buy one ounce of gold.

The number of dollars created by the Federal Reserve, and through the fractional reserve banking system, is crucial in determining how the market assesses the relationship of the dollar and gold. Though there’s a strong correlation, it’s not instantaneous or perfectly predictable. There are many variables to consider, but in the long term the dollar price of gold represents past inflation of the money supply. Equally important, it represents the anticipation of how much new money will be created in the future. This introduces the factor of trust and confidence in our monetary authorities and our politicians. And these days the American people are casting a vote of “no confidence” in this regard, and for good reasons.

The incentive for central bankers to create new money out of thin air is twofold. One is to practice central economic planning through the manipulation of interest rates. The second is to monetize the escalating federal debt politicians create and thrive on.

Today no one in Washington believes for a minute that runaway deficits are going to be curtailed. In March alone, the federal government created an historic $85 billion deficit. The current supplemental bill going through Congress has grown from $92 billion to over $106 billion, and everyone knows it will not draw President Bush’s first veto. Most knowledgeable people therefore assume that inflation of the money supply is not only going to continue, but accelerate. This anticipation, plus the fact that many new dollars have been created over the past 15 years that have not yet been fully discounted, guarantees the further depreciation of the dollar in terms of gold.

There’s no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it’s about to do in the future. Forget about the lip service given to transparency by new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community, and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply.

Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting the monetary aggregate known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us and Congress makes no demands to receive it.

Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed’s inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments, and other central bankers will act accordingly. The fact that our money supply is rising significantly cannot be hidden from the markets.

The response in time will drive the dollar down, while driving interest rates and commodity prices up. Already we see this trend developing, which surely will accelerate in the not too distant future. Part of this reaction will be from those who seek a haven to protect their wealth – not invest – by treating gold and silver as universal and historic money. This means holding fewer dollars that are decreasing in value while holding gold as it increases in value.

A soaring gold price is a vote of “no confidence” in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to rein in runaway spending.

Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won’t help in the long run. If the markets are fooled short term, it only means the adjustments will be much more dramatic later on. And in the meantime, other market imbalances develop.

The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock markets bubbles and housing bubbles. When these distortions run their course and are discovered, the corrections will be quite painful.

Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations. This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.

Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold – since it serves as a check on government size and power. This is a sad commentary on the politics of today. The best analogy to our affinity for government spending, borrowing, and inflating is that of a drug addict who knows if he doesn’t quit he’ll die; yet he can’t quit because of the heavy price required to overcome the dependency. The right choice is very difficult, but remaining addicted to drugs guarantees the death of the patient, while our addiction to deficit spending, debt, and inflation guarantees the collapse of our economy.

Special interest groups, who vigorously compete for federal dollars, want to perpetuate the system rather than admit to a dangerous addiction. Those who champion welfare for the poor, entitlements for the middle class, or war contracts for the military industrial corporations, all agree on the so-called benefits bestowed by the Fed’s power to counterfeit fiat money. Bankers, who benefit from our fractional reserve system, likewise never criticize the Fed, especially since it’s the lender of last resort that bails out financial institutions when crises arise. And it’s true, special interests and bankers do benefit from the Fed, and may well get bailed out – just as we saw with the Long-Term Capital Management fund crisis a few years ago. In the past, companies like Lockheed and Chrysler benefited as well. But what the Fed cannot do is guarantee the market will maintain trust in the worthiness of the dollar. Current policy guarantees that the integrity of the dollar will be undermined. Exactly when this will occur, and the extent of the resulting damage to the financial system, cannot be known for sure – but it is coming. There are plenty of indications already on the horizon.

Foreign policy plays a significant role in the economy and the value of the dollar. A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency – especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.

The cost of war is enormously detrimental; it significantly contributes to the economic instability of the nation by boosting spending, deficits, and inflation. Funds used for war are funds that could have remained in the productive economy to raise the standard of living of Americans now unemployed, underemployed, or barely living on the margin.

Yet even these costs may be preferable to paying for war with huge tax increases. This is because although fiat dollars are theoretically worthless, value is imbued by the trust placed in them by the world’s financial community. Subjective trust in a currency can override objective knowledge about government policies, but only for a limited time.

Economic strength and military power contribute to the trust in a currency; in today’s world, trust in the U.S. dollar is not earned and therefore fragile. The history of the dollar, being as good as gold up until 1971, is helpful in maintaining an artificially higher value for the dollar than deserved.

Foreign policy contributes to the crisis when the spending to maintain our worldwide military commitments becomes prohibitive, and inflationary pressures accelerate. But the real crisis hits when the world realizes the king has no clothes, in that the dollar has no backing, and we face a military setback even greater than we already are experiencing in Iraq. Our token friends may quickly transform into vocal enemies once the attack on the dollar begins.

False trust placed in the dollar once was helpful to us, but panic and rejection of the dollar will develop into a real financial crisis. Then we will have no other option but to tighten our belts, go back to work, stop borrowing, start saving, and rebuild our industrial base, while adjusting to a lower standard of living for most Americans.

Counterfeiting the nation’s money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That’s why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency. Too bad they weren’t explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar.

In wartime, many nations actually operated counterfeiting programs to undermine our dollar, but never to a disastrous level. The enemy knew how harmful excessive creation of new money could be to the dollar and our economy. But it seems we never learned the dangers of creating new money out of thin air. We don’t need an Arab nation or the Chinese to undermine our system with a counterfeiting operation. We do it ourselves, with all the disadvantages that would occur if others did it to us. Today we hear threats from some Arab, Muslim, and far Eastern countries about undermining the dollar system- not by dishonest counterfeiting, but by initiating an alternative monetary system based on gold. Wouldn’t that be ironic? Such an event theoretically could do great harm to us. This day may well come, not so much as a direct political attack on the dollar system but out of necessity to restore confidence in money once again.

Historically, paper money never has lasted for long periods of time, while gold has survived thousands of years of attacks by political interests and big government. In time, the world once again will restore trust in the monetary system by making some currency as good as gold.

Gold, or any acceptable market commodity money, is required to preserve liberty. Monopoly control by government of a system that creates fiat money out of thin air guarantees the loss of liberty. No matter how well-intended our militarism is portrayed, or how happily the promises of wonderful programs for the poor are promoted, inflating the money supply to pay these bills makes government bigger. Empires always fail, and expenses always exceed projections. Harmful unintended consequences are the rule, not the exception. Welfare for the poor is inefficient and wasteful. The beneficiaries are rarely the poor themselves, but instead the politicians, bureaucrats, or the wealthy. The same is true of all foreign aid – it’s nothing more than a program that steals from the poor in a rich country and gives to the rich leaders of a poor country. Whether it’s war or welfare payments, it always means higher taxes, inflation, and debt. Whether it’s the extraction of wealth from the productive economy, the distortion of the market by interest rate manipulation, or spending for war and welfare, it can’t happen without infringing upon personal liberty. Source

Ron Paul
Saturday January 19, 2008

This paper was originally delivered at the Mises Institute’s 1985 conference on the gold standard. It later appeared as the final chapter in The Gold Standard: Perspectives in the Austrian School.

One of the basic insights of the great Austrian economists, both Carl Menger and Ludwig von Mises, is that money emerged by evolution from the market process. It was not invented by governments. There are basic economic forces today that are contributing to the further evolution of the monetary system, and there is a political strategy that I believe will make it possible to liberate those forces and restore the monetary role for gold. Because of the current economic and political climate, it is important to understand what we can do � and what we cannot hope to do in the short run.

The Political Climate for Reform

In his 1952 epilogue to The Theory of Money and Credit, Mises included a section with the title, “The United States’ Return to a Sound Currency.”[1] The Korean War inflation was fresh in most people’s minds that year, when Mises prepared his proposal. Food prices in 1951 had jumped 11.1 percent, with consumer prices in general jumping 7.9 percent. Yet by the mid-1950s, the public interest in monetary reform seemed to abate. Changes in the consumer price index were in the vicinity of 1 percent per year for the next decade, and food prices even declined in 1952�53.

The political and economic agenda for creating a real gold standard in the United States � a new international gold standard led by monetary reform in this country � depends very much upon the climate of political and economic opinion. If the Korean War inflation had continued, I believe Ludwig von Mises’s proposal would have received much wider attention.

My belief that periods of monetary disorder always focus attention on gold as the solution is strengthened by the recent occasion of a congressionally mandated Gold Commission, on which I was proud to serve. It was created in response to the high rates of inflation in the late 1970s and a rising cry from the general public to restore gold to its rightful monetary role.

Most people know of the Gold Commission merely what the press reported � that it rejected a return to the gold standard. I believe the true significance of the Gold Commission is that the politicians and central bankers were so alarmed at such a thing that they made sure it was packed by an array of Keynesians and monetarists. These advocates of the established institutions and arrangements certainly don’t want any role for gold to threaten their cozy theories about scientific monetary management and macroeconomic planning.

The dramatic reduction in average price increases during the recent recession has once again diverted attention from fundamental monetary reform, but it is clear to me that our present unstable arrangement will break down once more, and there will be another Gold Commission in the future.

The Mises Proposal

I want briefly to review the plan Mises described, and then set down the steps I believe would achieve his goal. Any differences in the proposals I am supporting in Congress from the plan he described in 1952 are based on my judgments about the progressive deterioration in our monetary and fiscal system during the intervening thirty years and the politics of the task today.

In The Theory of Money and Credit, Mises wrote, “The first step must be a radical and unconditional abandonment of any further inflation.”[2] Although I strongly support this objective, I do not believe it would ever be possible to achieve such a requirement if we place it as “the first step.”

Banishing inflation is, in fact, the ultimate objective we expect to achieve by creating a new gold standard. The US government has moved so far in the direction of fiscal irresponsibility that the reform of our basic monetary and financial institutions has become much more complex. For political reasons, ending inflation cannot be the “first” step. We must subdivide it into many smaller preparatory steps even to approach the task.

Happily, the second step that Mises described has already been achieved: “All restrictions on trading and holding gold must be repealed.”[3]

In January 1975 it became legal for Americans to own and trade gold, and in 1977 the remaining prohibitions on gold clauses in contracts were repealed. In my view, this restoration of liberty is the most important change in circumstances since 1952, and the one condition that is today most favorable to the restoration of gold to its proper monetary role.

One of the points on which Mises was adamant is the role of the Federal Reserve System: “It is essential for the reform suggested that the Federal Reserve System should be kept out of its way.”[4] Mises advocated the creation of a “Conversion Agency” that would be responsible for issuing gold coins and bullion to the public, and redeeming excess quantities of gold in circulation if the public should choose to exchange gold for paper. The Federal Reserve would continue to have some responsibility under his plan, as a fiscal agent for the Treasury in managing the national debt, but the Conversion Agency would maintain the domestic and international exchange value of the dollar.

This is one of the most distinctive differences between Mises and other advocates of the gold standard, who want the Federal Reserve to buy and sell gold at a fixed conversion for dollars. The government’s fiscal agent necessarily performs a banking function as it collects and disburses tax money. It would have to be separate from a conversion agency that would function more like an office of the National Bureau of Standards than like a bank. Mises’s analysis of financial institutions and the market process led him to favor free, decentralized banking.[5] He was thus a consistent advocate of a separation of powers.

Ludwig von Mises understood that the problem with monetary institutions is first of all a political problem. By proposing this separation of powers between the central bank and a conversion agency, he was an early proponent of an institutionalized competition in currency. Even the government of a constitutional republic like the United States could not be trusted with discretionary monetary power:

The President, Congress, and the Supreme Court have clearly proved their inability or unwillingness to protect the common man, the voter, from being victimized by inflationary machinations. The function of securing a sound currency must pass into new hands, into those of the whole nation.[6]

Restoring the monetary role for gold must become a popular crusade in the United States. In the political sphere, popular crusades require tangible � as opposed to ideological or intellectual � benefits that people can recognize and subscribe to.

The First Step: Gold Coinage

The heart of Mises’s proposal to restore gold to our monetary system is a gold coinage. He wrote,

Gold must be in the cash holdings of everyone. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck, and to spending gold coins when he buys in a store.[7]

In this one detail � the critical importance of the gold coinage � I believe lies the key to establishing a new gold standard.

We should make no mistake about it: the more progress we make toward reestablishing the gold standard, the more aggressive our opposition will become. Some vested interests, as you know, have a lot to lose if we succeed in getting the monetary system reconstructed on a gold basis. The first political step is, therefore, to get the coinage into circulation.

One objective might be to aim for every American to become a gold owner. We must encourage a broader base of political support for gold ownership and the availability of gold for personal economic objectives. Certainly a broader base of gold ownership in the country would help to reduce the threats of discriminatory taxation or regulation of gold ownership and gold coin transactions, which are seriously favored in Congress today.

Ludwig von Mises and most advocates of a gold-coin standard have understood the coinage as something similar to what we had in the 19th century, until 1933. Under this concept, coins would be various sizes, with face values in “dollars” but not exact sizes in any system of weights. We could advocate a coinage of $50.00 denominations, about one-eleventh of an ounce, or $100.00 denominations, about one-fifth ounce; but that would start the process of rebuilding the gold monetary system at the wrong end. It would require, first, a majority in Congress to vote to establish a new par value for the dollar.

By starting with the necessity for a congressional majority to decide on the sizes and weights of gold coins, we must presume in advance that we know the “correct” par value for the dollar. We must presume that a majority of the public already supports the restoration of a gold standard. The political task becomes a gigantic educational problem. Before anything constructive could be accomplished, millions of people who understand nothing about the causes of inflation or the advantage of a free-market monetary system would have to be persuaded to join a political movement. All the misconceptions that are propounded today by academic economists, all the mysticism of the central bankers, all the objections of the politicians would have to be expunged from the popular mind. I do not believe this would be an efficient way to approach the problem.

What we must first do is get the coinage into circulation, and then build the political base to lock the government’s fiscal folly with golden handcuffs. People have always understood the tangible value of gold coins in circulation. They don’t need to agree or even understand the fine points of monetary theory to own gold coins, trade gold coins, or use gold coins to satisfy part of their marginal-utility demand for cash balances.

Most people understand very little about economics or monetary theory. When they see supposed experts in disagreement, the status quo wins by default, because nobody with the power to change it has the courage of conviction. The majority of voters see the debate among experts and hesitate to support any leaders with comprehensive reform schemes. This is why all efforts to rebuild a gold monetary system have met with frustration and stalemate in the past.

The demonstrated popularity in the United States of Krugerrand coins, and all the imitators of the Krugerrand (Maple Leaf, Panda, Onza, and the US Gold medallions) have shown us that it is possible to adopt another tactic, that of getting gold coins into circulation prior to setting a new par value for the dollar. Indeed, the only affirmative recommendation of the Gold Commission was to create a new US gold coinage in units of weight.

I would love to see a purely private, free-market monetary system with any honest manufacturer able to produce coins, as Americans saw in California from 1849 to 1864. There must certainly be no restrictions on the private production of coins, but I believe that getting the US Mint further into the act, producing a gold coinage with some of the mystique of the government, will be useful in the further political stages of monetary reform. Honest money, after all, is a political objective; it is fitting that people should demand honesty from their government, as well as an economic policy that permits individuals to compete honestly. An official coinage that reflects honest bullion weights is a powerful symbol of the gold standard we support.

The Transition to a Gold Standard

The coinage should be based on exact units of bullion weight. The coins should be denominated in troy ounces, half-ounces, and smaller sizes if feasible. The denomination of the coinage is the secret to our success in the later stages of the political agenda, so let me take a few moments to explain the central importance of the denominations.

There are several important advantages to starting with a gold coinage denominated in troy ounce and fractional units of an ounce. Since the unit of money should be defined as a definite weight of bullion, a coinage denominated by units of troy weight contributes significantly to the reeducation of the public. This knowledge, which is now almost completely lost to three generations of Americans, must be reimplanted.

Murray N. Rothbard has made this point most forcefully:

The transition from gold to fiat money will be greatly smoothed if the State has previously abandoned ounces, grams, grains, and other units of weight in naming its monetary units and substituted unique names, such as dollar, mark, franc, etc. It will then be far easier to eliminate the public’s association of monetary units with weight and to teach the public to value the names themselves. Furthermore, if each national government sponsors its own unique name, it will be far easier for each State to control its own fiat issue absolutely.[8]

Some writers have resisted the suggestion of a coinage denominated only by units of weight, arguing that the “dollar” was originally a unit of weight; but I think this is a misstatement. “Dollar” was the name of a coin that had a definite weight, but it was not a “unit” of weight. Adopting the name of the standard unit of bullion weight as the denomination of the coinage will bring together two important concepts about money that we must actively teach to a majority of Americans if we are ever going to restore a gold standard. The educational job becomes that much easier.

Second, as Mises understood, the Federal Reserve and existing banks have to be kept separate from the remonetization of gold until the progress of popular support is broad and deep enough that special interest lobbying will not pervert the system. By avoiding any use of a dollar denomination on the coins, the Federal Reserve System is automatically kept out of the picture during this developmental period. The dollar denomination is today a monopoly trademark for the Federal Reserve System.

Third, when the date finally arrives, at the end of the transition period, to provide the US dollar with a fixed definition in terms of gold, it will be a very easy detail to announce to the public that the conversion agency stipulated by Mises is starting to buy and resell the troy-ounce coins at a fixed price. The dollar was defined as 25.8 grains of standard gold in 1900. Today it might be defined as one grain of standard 0.900 gold. There is nothing inconsistent with this requirement if the coins are denominated in troy ounce, half-ounce, or quarter-ounce sizes.

In Mises’s monetary reform proposal, and under the classical gold standard, the various substitutes for coin � bank notes, bank drafts and acceptances, and demand deposits � are supposed to be fixed in value to the underlying coin and exchangeable for it. The conversion agency would function as a resale buyer and wholesale distributor of the coins, and equally as a buyer of last resort for the paper money of the Federal Reserve.

The question that is most difficult to answer about the transition to a new gold standard is how long it should take. The transition plan envisioned by Mises called for a period of time in which the free market in gold discovered the new parity rate that would produce neither inflation nor deflation.

It is probable that the price of gold established after some oscillations on the American market will be higher than $35 per ounce … maybe somewhere between $36 and $38, perhaps even somewhat higher. Once the market price has attained some stability, the time has come to decree this market rate as the new legal parity of the dollar and to secure its unconditional convertibility at this parity.[9]

Mises did not discuss how long this transition period should last before fixing the new par value for the dollar, but it would have to last as long as it might take to build a political majority. This is almost a truism, because Congress would have to enact legislation to fix the gold weight of the US dollar.

The choice for advocates of a gold-coin monetary system, therefore, is straightforward: either we move ahead with a program for US gold coins denominated by weight, with no face value in terms of dollars � thereby starting the transition period immediately � or we sit on our hands, perhaps for decades, debating the fine points of banking theory, until the paper money system collapses around us. Even then, it is not obvious that the collapse of the paper money system would bring about the political pressure necessary to restore a gold standard. We might end up with controls on wages, prices, credit, and exchange controls instead of a gold-coin standard.

Longer-Term Benefits of Bullion-Weight Coinage

Over the longer term, assuming the transition to a new gold standard is successful (with Congress enacting a gold value for the dollar and fiscal policy disciplined by monetary convertibility), there are still distinct advantages to retaining the coinage in units of troy weight rather than assigning an official, stamped dollar value on the face of the coins.

First, Gresham’s law � Bad money drives out good � tends to affect even the most perfect gold-coin standard. If we want gold coins to circulate freely in an economy where all prices are quoted in dollars, the coins themselves should not be denominated in dollars. Gresham’s law operates even when bank notes are 100 percent warehouse receipts for gold. People might be able to trust that bank notes are fully backed by gold, but given the choice of which to spend and which to keep in the cash box, the paper will be spent and the coin will be saved because each monetary instrument has its own subjective value qualities.

The mere fact that honest coins are more secure than even the most secure paper is a sufficient qualitative difference to give them a premium value. The subjective evaluation of every person in the free-market economy must be employed to help keep the monetary system honest and noninflationary. To assure that gold coins move in active commerce, rather than sitting in vaults, we must let free-market pricing operate. Let the coins command a slight premium everywhere except at the conversion agency, which would have to redeem any excess Federal Reserve dollar bank notes (token money) for honest coin at the par value in response to public demand.

Gresham’s law is a natural consequence of price fixing, mandating the exchange of items with different marginal utilities at a ratio not determined by the free market. It is, in fact, a special case of setting a price by law slightly too low for gold coins, the preferred form of money for long-term savings. Only the conversion agency should be mandated by law to exchange genuine coin for paper dollars at the par value. There are costs in terms of real resources, opportunity costs in the operations of a gold coin monetary system. These costs are worth paying; they must be paid to have an operational monetary constitution that prevents financial exploitation, but the issue of “Who pays?” must also be considered.

Most economists who support a gold-coin standard do not recognize the importance of distributing the marginal costs of coinage throughout the entire spectrum of the monetary economy. In the 19th century, this system of fixing the face value of gold coins in terms of paper bank notes, rather than by units of weight, led to the centralization of gold hoards in bank vaults, which made it all the easier for governments to confiscate them. The simple confusion of the coin and the denomination of the money produced the effect of Gresham’s law during the classical period. If it is left up to the government, the central bank, or the banking system to absorb the costs of having coin always on hand to redeem bank notes at face value, the managers at each stage will attempt to economize these costs, rather than charging the consumer for them, and there will be a constant pressure to take coins out of circulation and replace them with substitutes: paper bank notes and demand deposits.

If the coinage is denominated only in terms of troy ounces and fractions of an ounce, the free-market pricing structure takes care of this problem instantly and effortlessly. The official conversion agency must redeem Federal Reserve notes at par, but others should be free to charge a competitive premium for gold coins (that is, to discount Federal Reserve notes). This would tend to assure a continuing flow of gold coins into private ownership.

Ludwig von Mises proposed to solve this problem by forcing the circulation of gold coins by prohibiting any paper bank notes in the $5, $10, and $20 denominations. In 1952 it seemed reasonable to him that the dollar might be worth something nearer l/40th ounce, so gold coins could replace those denominations. Today only the $100 bill would be affected by this proposal, since gold coins now would be too tiny for most commercial transactions. Where they would find most popular utility would be in financial transactions and in the purchase of consumer durables, because of the generally higher prices. Over time, the Federal Reserve dollar will come to be recognized as a form of token money that is just a tiny fraction of a gold ounce.

We can only make political use of the fact that the public treasures hard money over paper money if we make it clear that there is a difference. A different denomination for each form � “dollars” for paper and “troy ounces” for coin � is the easiest and most obvious way to achieve this objective. There is a specious similarity in this proposal to the gold exchange standard of the 1920s, but the active circulation of small-denomination gold coins would defeat any such criticism. The denial of any small-denomination coins was the distinguishing feature of the pseudo–gold standard adopted in the 1920s and perpetuated under the Bretton Woods arrangement in 1944.

So long as the conversion agency performed its role, it would also be impossible for the Federal Reserve System to produce a monetary inflation because the conversion agency, which would be completely separate from the government’s banking activities, would be engaged in the process of absorbing excess dollars from circulation, in exchange for the troy-ounce coins that it issues. If the Federal Reserve made the opposite mistake, as it has often done in the past, of overly restricting the money supply, the market could always sell coins to the conversion agency to obtain any dollars demanded. A precise balance would be achieved between the general public’s demand for money in the form of coin and its demand in the form of bank notes or deposit accounts with banks by the existence of the conversion agency as something separate from the Federal Reserve.

Agenda for Monetary Reform

The genius of Ludwig von Mises was his profound insight into the free-market process, the science of catallactics. The most important thing I have learned from his work is that the achievement of a new gold standard in our society will have to come from the free market itself. This is why I believe the first step must be a new troy-ounce gold coinage, even without any legal tender qualities or special tax treatment. As we have found in recent banking deregulation, the market develops new procedures and techniques in the monetary and financial system, and Congress follows with repeal of old, restrictive laws. This is the political and economic dynamic process that we also can harness to restore gold to its proper monetary role.

All the government needs to do is to get out of the way. The political and economic agenda for monetary reform, therefore, consists of the following steps:

1.

Congress must adopt the legislation recommended by the Gold Commission to bring a new US gold coinage into circulation, denominated only in troy-ounce units and fractions thereof.
2.

Advocates of the remonetization of gold must work both in the political arena and in the marketplace to get as many of these new coins into the possession of the public as possible. Politically, this means resisting taxation or any regulations on the utility of the new gold coins for purposes of exchange either for other goods and services or for dollars. As Ludwig von Mises demonstrated in his Theory of Money and Credit,[10] it is the marketability of a good that gives it a monetary character. The more easily recognized and marketable the new gold coinage becomes, the more it will be recognized as genuine pieces of money.
3.

The fact that the troy ounce of gold is well defined and the paper dollar has no fixed referent at all should be made the focus of continued education and debate, just as we are now doing. The continuing academic work by students of Carl Menger and Ludwig von Mises in monetary and financial theory is vitally important, particularly to expose the fallacies of centralized macroeconomic planning and the failure of “managed money.” The acquiescence of the economics profession, which is today disdainful of gold, will have to be secured. Serious academic work will stimulate interest in a new Gold Commission, which would be able to focus this research in economic theory on the political issue of monetary reform. It is essential to move the center of monetary debate from the question of how the central bank should perform monetary management to the more general question of managed money versus market-process money.
4.

The objective would remain to persuade a majority of Congress to enact a new par value for the US dollar in terms of gold. When every American family is familiar with gold coins and understands the intrinsic defects in a managed paper standard, a majority in Congress can be persuaded by the demands of voters to enact a new par value for the US dollar and to establish the conversion agency described by Mises.

Except for random shocks in the financial markets, due to Federal Reserve central-planning mistakes, and occasional political disturbances, such as a Middle East war or troubles in South Africa, the dollar value of the troy-ounce coins should stabilize, just as we saw in 1984. The old myth that “gold is too unstable to serve as money” will be disproven by the common popular experience.

The strategy set forth in these four steps, I believe, is the only politically feasible way it can be done. All of the wishful thinking about restoring the gold standard by electing the “right person” to be president, or by attempting to educate the general public, will fail without first making available a tangible gold coinage as something they can see, touch, use for a portion of their savings, and become accustomed to using for many kinds of transactions. Public opinion polls have shown strong support for monetary stability. There is substantial support for a gold standard among the American public, yet the various proposals for enacting a par value for the dollar are dismissed by congressmen, the financial and business press, and “experts” of all stripes.

The task at hand, therefore, is to remove every roadblock to the realization of the will of the majority. The sentiment for gold must be mobilized. The question is no longer “Why do we need a gold standard?” but “How do we get it enacted?” To restore the gold standard to its central role in our system of constitutional government, we must lead a second kind of American revolution, a popular movement for honest money.

As Mises wrote, “Without such a check all other constitutional safeguards can be rendered vain.”[11]

The gold standard as a constitutional restraint on our government was abolished in the United States, not in 1934 nor in 1971, but in 1819 with the US Supreme Court case of McCulloch v. Maryland.[12] With this famous Supreme Court interpretation of the Constitution, the federal government acquired the sovereign power to manipulate the nation’s money, from which the legal tender laws of the Civil War, the central-banking powers of the Federal Reserve System, and the ultimate prohibition on any private use of gold as money in 1934 derived. This link between sovereignty and currency manipulation has been ably argued by Henry Mark Holzer.[13]

The key to the government’s power to manipulate money is its control over the definition of the word “dollar.” A troy ounce coinage in widespread circulation would significantly alter the public’s perception of the government’s monetary role. If the Congress should ever attempt to change the par value of the dollar in terms of the gold coinage, the holders of coins would be fully protected. Financial promises to pay coins would be protected, in a way that promises to pay dollars would not be. Best of all, as a result of the separation of currency and coin denominations, there would be no public purpose served by asking citizens to turn in old coins for new ones; the crime of January 1934 would not be repeated.

Restoring a gold coinage is also the highest duty we now face, as citizens of this country. We no longer live in a world where the free market is taken for granted. On the contrary, most people assume government must control and guide the economic system for the benefit of all. Ludwig von Mises suffered during most of his career because he understood too well the stakes of this ideological conflict:

“Cynics dispose of the advocacy of the restitution of the gold standard by calling it Utopian. Yet we have only the choice between two Utopias: the Utopia of a market economy, not paralysed by government sabotage, on the one hand, and the Utopia of totalitarian all-round planning on the other hand. The choice of the first alternative implies the decision in favour of the gold standard.”[14]

I believe the goal of a market economy, not paralyzed by government sabotage on behalf of vested interests and pressure groups is an ideal worth fighting for. This is why I first ran for Congress, and it is the only reason I believe justifies political action. Source

Notes

[1] Ludwig von Mises [1952], The Theory of Money and Credit (Irvington-on-Hudson, New York: Foundation for Economic Education, 1971), pp. 448–52.

Adm. William Fallon, the head of the US Central Command, may lose his job for opposing President Bush’s plans to wage war against Iran.

According to a new Esquire article by Thomas Barnett; Admiral Fallon may be prematurely ‘relieved of his command’ as soon as this summer to be replaced with a more ‘pliable’ commander.

“If that were to happen, it may well mean that the president and vice-president intend to take military action against Iran before the end of this year and don’t want a commander standing in their way,” says the article which will be published on March 12.

Admiral Fallon, who has been named as ‘one of the best strategic thinkers in uniform today’ by Defense Secretary Robert Gates, opposed the troops surge in Iraq and has consistently battled with President George W. Bush to avert confrontation with Iran.

The Navy admiral has vowed that an attack on Iran would ‘not happen on his watch’, calling the White House warmongering echelons ‘not helpful’.

Washington and its allies are at loggerheads with the Islamic Republic over the country’s nuclear standoff with the West.

The Bush administration accuses Iran of pursuing nuclear weaponry, while Tehran maintains its uranium enrichment will only provide fuel for the country’s under-construction nuclear power plants.

President Bush insists the military option against Iran remains on the table, while his top military experts, including Admiral Fallon, urge the White House to choose a diplomatic approach towards Tehran.

In a Thursday White House press briefing, spokeswoman Dana Perino was asked about the Esquire piece and refused to confirm whether Fallon’s position is secure until the end of his tenure. Source
Here is the spin, according to other Military sources, there will be No War in Iran and George Bush is no longer in control. The Office of Naval Intelligence is now in control of the U.S. government, they will uphold their Oath of Office to defend America against enemies foreign and Domestic. There is a major battle ensuing internally for control of the remnants of the scarred American Republic. The Navy is not in control of the media and they know the American people would not understand a Coup by the U.S. Military; actually a counter Coup. The first Coup d’etat, being the takeover of the U.S. government by the Neo-Cons with the Sept. 11th black flag attack on America by Mossad and Traitors within the U.S. government. The source is definitely not the N.Y. Times.

By DAVID CAY JOHNSTON NY Times

Published: August 21, 2004
The law licenses of two former Internal Revenue Service lawyers have been suspended for two years after a federal court ruling last year that they defrauded the courts so that the I.R.S. could win 1,300 tax shelter cases. W. Kenneth McWade was suspended by the Oregon Supreme Court in an order dated Aug. 10 and released yesterday by the Oregon State Bar. Four months ago Arkansas officials suspended the license of William A. Sims. The United States Tax Court has also suspended both lawyers for two years, and the I.R.S. director of practice has suspended them indefinitely.
The suspensions followed complaints brought by Michael Louis Minns, a Houston lawyer who represented 124 of the tax shelter buyers, most of them airline pilots. One buyer is seeking a $6 million refund.
The Federal Court of Appeals for the Ninth Circuit in San Francisco found in January 2003 that the lawyers had defrauded the court by making a corrupt deal with a few of the pilots who bought tax shelters in the 1970’s and 1980’s. Under the deal, no tax-collection actions in regard to the shelters would be taken against these pilots in return for testimony that would hurt the others.
The court called this “extreme misconduct” and asked why the I.R.S. had not disciplined the lawyers, each of whom was paid a $1,000 bonus for his work on the cases.
Mr. Minns then asked the I.R.S. in which state each was licensed so that he could seek their disbarment. The I.R.S. refused, saying disclosure of their law licenses would violate their confidentiality.
In fighting suspension, the two lawyers filed papers contending that they had acted properly. Mr. McWade, reached at home in Hawaii, said, “I guess the court has decided that Oregon lawyers are not entitled to due process.” Mr. Sims did not respond to voice mail and e-mail messages. The two men left the I.R.S. after their conduct came under scrutiny.
Source

On August 11, nearly eighteen months after IRS attorneys Kenneth W. McWade and Richard A. Sims were sited by the 9th Circuit Court of Appeals in San Francisco for deception, misconduct, withholding evidence, and defrauding the court (read the Appelate Ruling) the two attorneys have been suspended by their state bars, and the IRS has suspended them indefinitely.
This is the first time in US history that IRS attorneys have been suspended by the tax court and their state bar (see NY Times article below).
Had it not been for the Herculean efforts of Houston Appellate attorney, Michael Louis Minns, Sims and McWade’s actions would have gone unpunished.
After winning the 9th Circuit’s ruling for 1,300 airline pilots, Minns contacted the US Tax Court to demand disciplinary action. After several months of letter writing and phone calls the US Tax Court did not respond, so Minns contacted each of the fifty state bar associations to determine where the two attorneys were licensed. He discovered that Sims was licensed in Arkansas and McWade was licensed in Oregon. After being advised of the 9th Circuit’s ruling, both states immediately launched investigations, and Minns was named as the lead witness in the Arkansas case. Oregon advised Minns of their ruling on August 11th against McWade.
On January 17, 2003, the Ninth Circuit handed down its ruling to overturn a 1991 Federal Tax Court ruling, whereby 1,300 airline pilots had been assessed more than $10.2 billion in back taxes, penalties and interest. The IRS case surrounded a tax-sheltered trust they the pilots has established for their children and their own retirement.
These latest actions will prompt the largest refunds ever in IRS history, totaling in excess of $2.6 billion.Source

I am posting this Mar. 6, 2008. My name is Bruce Bolock and I live in Lake Jackson, Texas. I have been a dedicated Ron Paul supporter and campaigner for more than 11 years. I am writing this on my wife’s computer. With three other dedicated supporter’s of Dr. Paul we met Sunday, March 2, 2008 for approximately 1 hour. Dr. Paul stated he is looking forward to campaigning in Pennsylvania (his birth state), North Carolina, and other primary states as the primary season winds down. He will enthusiatically go anywhere he is asked. He is in it as long as the funding continues to come in. Immediately before writing this I had a discussion with Carol Paul to confirm my understanding. Carol validated our understanding of the Sunday conversation. Earlier she had discussed this over the phone with Ron.
We have an excellent opportunity before us. Let’s not blow it!!!Those voters for McCain will now NOT turn out to vote as they see it unnecessary to go vote (based on the false, misleading information from the MSM). Or, they may switch over to vote against Hillary or Obama. The Ron Paul supporters can win the popular vote in these primaries and win the delegates. There is no other viable choice. It would be wise for the supporters of Ron Paul to continue to contribute to the campaign so that Ron can ride tihis all the way to the national convention. I am involved here and I am a delegate to the state senatorial convention. John McCain currently has ZERO committed delegates from Texas. That’s right—ZERO!!! The MSM has told you he has won the convention based on the delegates he won in Texas. Let me repeat, John McCain currently has ZERO delegates from Texas. We have the state senatorial convention and the Texas State convention to determine the delegates to go to the National Convention. They quite well may all be Ron Paul delegates.
Hence, we the supporters of Ron Paul need to cease and desist sending out these false rumors! They don’t help Ron, they demoralize his supporters. Please stop this nonsense, this only helps the establishment further control us. The establishment fears Ron Paul and a brokered convention. Don’t help them destroy this great opportunity. Source