Tuesday, October 20, 2009

Protection Windows

They can close in different ways:

The Convention decreed that any person selling gold or silver coin, or making any difference in any transaction between paper banknotes (assignats), and precious metal coin (specie) should be imprisoned in irons for six years; that anyone who refused to accept a payment in assignats, or accepted assignats at a discount, should pay a fine of 3,000 francs; and that anyone committing this crime a second time should pay a fine of 6,000 francs and suffer imprisonment 20 years in irons. Later, on 8 September, 1793, the penalty for such offences was made death, with confiscation of the property of the heirs, and a reward offered to any person informing the authorities regarding any such transaction. The Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of 'having asked, before a bargain was concluded, in what money payment was to be made".

Georges Couthon, in August 1793, proposed and won passage of a law punishing any person who should sell assignats at less than their fixed value with imprisonment for 20 years in chains, and later passed a law making investment in foreign countries punishable by death. Prisons, guillotines, enactments inflicting 20 years' imprisonment in chains upon persons twice convicted of buying or selling paper money at less than its nominal value, and death upon investors in foreign securities, still did not stop people from procuring the necessities of life by bargaining and exchange; on 1 August, 1795, the gold louis of 25 francs was worth in paper, 920 francs; on 1 September, 1,200 francs; on 1 November, 2,600 francs; on 1 December, 3,050 francs. In February 1796, it was worth 7,200 francs or one franc in gold was worth 288 francs in paper. Prices of all commodities went up nearly in proportion.

As the Fed goes all out to inflate another stock market bubble and punish the prudent, one thing is almost certain: sooner or later the window to protect oneself will be closed. Alan Greenspan explains why in the last two paragraphs.


Blogger Vijay said...

I always find posts like this a little incongruous with your support for Obama. How do you resolve the anti-statism inherent in the advocacy of a hard currency (note the last paragraph in Greenspan's essay about gold preventing the plans of the welfarists), while you support[ed] an avowed welfarist in Obama.

Color me confused.

10/20/2009 1:34 AM  
Anonymous Anonymous said...

Wouldn't this confiscation of wealth, especially with *very* high inflation, end up requiring additional state subsidies to the poor and middle class, with the effect of reducing the inequality (over 10-20 years)?

10/20/2009 7:29 AM  
Anonymous Anonymous said...

CR has written about protecting ourselves often. He has also told us repeatedly that he is not at liberty to tell us how to protect ourselves. He throws out hints and we are supposed to fill in the pieces. But who can do that, and how do they know they got it? I am an IRS enrolled agent, so I am fairly knowledgeable, but I don't get it. If someone like me get grasp the hints, my less knowledgeable clients are sitting ducks. These kinds of posts are really scary and I'm begging for direction. I'm not worried about protecting my "wealth," since I don't have any wealth to protect, but I am worried about protecting what little I have. At least I am debt-free.

10/20/2009 12:03 PM  
Anonymous Pete said...

Anonymous, perhaps you should be more frightened of The Fair Tax. When passed into law, you will need to refresh your resume.

10/20/2009 7:15 PM  
Anonymous Anonymous said...

"The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." - Wall Street seems to be doing a good job of confiscating and protecting themselves. ;-)

"There is no safe store of value" - And the alternative.. Before most Americans hoard/buy gold, they'll barter. We will look like any other country with black markets.

"Deficit spending is simply a scheme for the confiscation of wealth" - Why do Conservatives fawn over Reagan then? And Cheney repeated, "Reagan proved deficits don't matter". Didn't a Conservative end the Gold standard.

When I belonged to an investment club, there was a person that kept saying they invested in the stock market to stay ahead of inflation. In today's world I don't see the distinguish between money inflation or stock inflation. Stocks/bonds are sort of the new currency. With government insurance too. Well, for some.

"After all, the boom that had ballooned both companies to fantastic heights was basically a counterfeit economy, a mountain of paste that Wall Street had built to replace the legitimate business it no longer had." Wall Street's Naked Swindle, Matt Taibbi. - Too bad for the real economy and real jobs. "Counterfeit" is an applicable word for so much on Wall Street and the Fed. Wall Street and the Fed are pretty much interchangeable these days.

"The problem is that national economies are subject to boom-and-bust cycles. These can be mitigated by printing more money during the busts and by taking bills out of circulation during the booms. The advantages of being able to do this under a paper-based monetary system far outweigh the attendant inflationary tendencies of a paper-money system." William Bernstein, Efficient Frontier, "Four Pillars of Investing". - This seemed like a nice idea, but they forgot to stop printing. And if they aren't printing money, corporations are "printing" stocks and paying their execs with stock options. They manipulate their numbers to get stock, sell it/exhchange it, and buy real assets.

Frontline, The Warning. - The transcript isn't available yet, but they quoted Greenspan as saying he doesn't believe in regulations; "free" (gamed?) markets fix everything. Nothing new, I know. Greenspan, Summers, Rubin are very dangerous men to our financial well-being, our general welfare, and do harm to our ability to secure the blessings of liberty and justice.

Most Americans believe financial markets are regulated (and the Fed, SEC, CFTC... are doing their jobs so we can do ours and be productive in society). They may not know it (remember the guy that said the government should keep their hands off his medicare). We trust our food is safe, there are standards for utilities and automobiles. We trust our currency, those that manage it, because it represents us and our abilities (our currency wouldn't lie - "in god we trust" ;-|). By law, we require disclaimers and notifications on all sorts of things to keep people informed. I bet if brokers and bankers were required to print a statement like, "we do not regulate" or "unregulated market", on contracts and statements, the financial markets would tank very quickly. The only reason people with their 401k's are in the market is because their is some level of trust that our government of, by the people, for the people, are doing their fiduciary responsibilities. Same with our currency. We would not have an economy, not to mention country, if there was not trust.

Maybe Greenspan and his cronies are understood by Wall Street, but he has shown he is not trustworthy, so it's hard to take anything he says seriously.

10/21/2009 3:33 PM  
Anonymous Anonymous said...

Anon 3:30 on Greenspan's trustworthiness - remember, he wrote that article in the 1960's, long before he became a policymaker.

10/21/2009 5:52 PM  
Anonymous b. said...

"Alan Greenspan explains why in the last two paragraphs."

Quotation of last resort?

Asymptotically, there is no safe store of wealth. At the end of the day, neither the wealthy nor anybody else "owns" anything. The whole idea of "gold as the safe storage" is a myth, attemting to replace the need for the benign "Other" - for a functioning society - with a monadic existence of a man and his precious metal.

Inbred wealth leads to inherited cognitive deficiency, and it manifests itself in the belief that you can exist on your own, and that "wealth" is anything but what you find inside yourself. Materially, you have what others let you have. If you piss on society, you will only get away with it for a while. If you run society, you might last for generations.

Gold is for the garden gnomes of imagined wealth, those that know that the system is rigged to shaft them, those who desperately try to opt out of breathing. The elites have rigged the system for them, and they are using it to protect their "wealth". Wealth is a consequence of power, and you can't stuff power into your sock or hide it in your mattress.

By all means, send in your tooth gold for assessment - saves them from having to collect it. If you actually are in a position to "protect your wealth" and shove it up your storage, then most likely you are part of the problem.

10/26/2009 12:09 PM  
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