Link: http://www.mindfully.org/Farm/2003/Everything-Is-Illegal1esp03.htm

Richard Nikoley pointed me to this excellent essay by Polyface Farm’s Joel Salatin. It is one of the best things I’ve read in quite some time – a complete indictment of government interference with just wanting to be free. Joel suggests that eventually the noose will tighten too much and a cycle will assert itself once more, throwing off these heinous chains to freedom, individuality, diversity and independence. I hope he is right.

Look, if I want to build a yurt of rabbit skins and go to the bathroom in a compost pile, why is it any of the government’s business? Bureaucrats bend over back-wards to accredit, tax credit, and offer money to people wanting to build pig city-factories or bigger airports. But let a guy go to his woods, cut down some trees, and build himself a home, and a plethora of regulatory tyrants descend on the project to complicate, obfuscate, irritate, frustrate, and virtually terminate. I think it’s time to eradicate some of these laws and the piranhas who administer them.

Link: http://www.zerohedge.com/article/martin-armstrongs-latest-real-dark-pools

Martin Armstrong continues writing his typewritten letters (from a detention center in New Jersey) regarding ongoing economic and political events. I’m no expert on Armstrong though if you’ve not heard of him, he was detained (imprisoned) for some seven years for contempt of court and only went to trial when the judge who had been detaining him was removed from the case by the NY Court of Appeals (source: wiki). There’s a pretty reasonable chance that Armstrong did nothing wrong other than crossing the State.

Oh and Armstrong had a number of models and forecasts he used to predict the market, some of which were apparently amazingly accurate. Who knows.

Armstrong’s latest letter is available on ZeroHedge, a finance-centered blog that has quickly become one of the most cited and popular finance blogs out there. Interestingly, the ZH writers are anonymous, taking on the names of various characters in Chuck Palahniuk’s Fight Club. Recently, ZH took their site off of blogspot.com and moved it to offshore servers to further protect their anonymity and the site’s often whistleblowing content.

Getting to the point. The letter is about Goldman Sachs and what Martin calls the “club” on Wall Street. The “club” is a group of extremely powerful individuals who are out to make massive amounts of money via the financial system. Importantly, the “club” attempts to do this not by making better bets (as in, speculating), but essentially by rigging the system and creating the perfect trades. The “club” accomplishes this goal by controlling inside information.

The letter is pretty lucid and provides an interesting glimpse into what goes on behind-the-curtains of Wall Street. What struck me most about the letter is that Armstrong works to dispel the notion that there is some conspiracy theory across all central banks to control the world. What’s really going on is that the central bankers are trying to do their jobs and maintain economic and monetary order. Unfortunately, they are clueless academics. Martin realized just how impotent and lost the powers-that-be were back during the 1989 crash:

It had dawned on me perhaps when there was the 19889 Crash. I had carried two cell phones many times when the model was reaching critical turning points as it did in 1989. The markets were going nuts, and my one cell phone ran[g] that was used primarily for very special clients. it was one of the G5 Central Banks asking me outright what the model was showing and did I think they needed to intervene? As I was explaining the focus was in Japan and that there would not be any abnormal correction and thus there should not be concern about intervention, my regular cell phone rang. It was another G5 member asking the same questions.

What became very clear to me, was they truly had no idea what was taking place any more than the rest of the world. Everyone was struggling to comprehend the new world that was emerging. Communism seemed defeated, markets were crashing, and the general expectation was - Should we be rejoicing?

Most of the central banks have a lot of PHDs, with no real world experience. They have read books, but have not been in the trench to “feel” what it is truly like. This is why government employees rarely have anything worthwhile that will ever contribute to society. …

Armstrong has seen behind the curtain and knows that the authorities (in this case the central banks) are clueless, self-interested, and incapable of working together to effect change. Often, outsiders see these authorities and point out their ineptitude, understanding they are clueless academics. And that’s where outsiders go from insightful to crazy – they go on to conjure up theories of impossibly coordinated efforts by the same incompetent authorities.

In other words, it’s just like the South Park episode – Mystery of the Urinal Deuce.

So what is going on when we see Goldman Sachs making money hand over fist? Simple: they’re doing what they do best, exploiting their inside information, political connections, and their current monopolistic status on Wall Street. Is it all that surprising?

Peter Thiel, the founder of Paypal and the major donor behind Seasteading, responds to Patri Friedman’s article on “Folk Activism” (See here).

It’s always reassuring to find yourself in good company, and in Thiel’s response, he hits on the three frontiers I blogged about back on Freedom is Found at the Frontier. Yeah, it’s not like it’s hard to figure out where there’s no government, but then again, not many people are pointing this out, so I’m going to take this opportunity to pat myself on the back.

Now that I’ve done that, there’s one frontier that isn’t being talked about, and that is the frontier of day-to-day life that transpires outside the purveyance of Big Brother. Indeed, that is most of our lives, so this frontier is immensely important. Indeed, many, many people live most of their lives incredibly freely beyond the view of government. It should go without saying that one of the preeminent goals of any liberty-minded person would be to advance ways to expand this frontier and further shield life from government. And yeah, cyberspace can help do that, but we need more realspace solutions.

Day-to-day-life-steading?

(1) Cyberspace. As an entrepreneur and investor, I have focused my efforts on the Internet. In the late 1990s, the founding vision of PayPal centered on the creation of a new world currency, free from all government control and dilution — the end of monetary sovereignty, as it were. In the 2000s, companies like Facebook create the space for new modes of dissent and new ways to form communities not bounded by historical nation-states. By starting a new Internet business, an entrepreneur may create a new world. The hope of the Internet is that these new worlds will impact and force change on the existing social and political order. The limitation of the Internet is that these new worlds are virtual and that any escape may be more imaginary than real. The open question, which will not be resolved for many years, centers on which of these accounts of the Internet proves true.

(2) Outer space. Because the vast reaches of outer space represent a limitless frontier, they also represent a limitless possibility for escape from world politics. But the final frontier still has a barrier to entry: Rocket technologies have seen only modest advances since the 1960s, so that outer space still remains almost impossibly far away. We must redouble the efforts to commercialize space, but we also must be realistic about the time horizons involved. The libertarian future of classic science fiction, à la Heinlein, will not happen before the second half of the 21st century.

(3) Seasteading. Between cyberspace and outer space lies the possibility of settling the oceans. To my mind, the questions about whether people will live there (answer: enough will) are secondary to the questions about whether seasteading technology is imminent. From my vantage point, the technology involved is more tentative than the Internet, but much more realistic than space travel. We may have reached the stage at which it is economically feasible, or where it soon will be feasible. It is a realistic risk, and for this reason I eagerly support this initiative.

Link: http://www.ft.com/cms/s/0/5d5aa24e-23a4-11de-996a-00144feabdc0.html?nclick_check=1

Nassim Taleb’s latest from the Financial Times titled Ten principles for a Black Swan-proof world provides a brief insight into what Taleb believes caused our current financial crisis and what might prevent a similar crisis going forward.

I’ve excerpted those principles below (pushing the fair-use envelope a bit, perhaps). All italics are NNT’s.

Before delving into Taleb’s ten, I’d like to suggest that NNT’s principles can be (and should be) boiled down to more simpler structural problems/observations. Taleb’s folksy expressions make for useful analogies, but they needlessly complicate some simpler realities:

• Government-made negative externalities [1, 2, 7] — Legal constructs like corporations and limited liability companies are exploited to offload risk to the public. This subsidizes risks resulting in agents (CEOs, Managers, etc.) taking more and more chances with other people’s money. This is related to the principle-agent problem, which Taleb indicts in [4]. The Ponzi aspect of all of this is intrinsically tied to our leveraged financial system, which is inextricably tied to our centralized, fiat-"money” banking system. To me, this is the biggest point that I’ve yet to see Taleb make — centralized fiat currency is a fragile entity that is inherently leveraged (out of thin air) but can be used to build complex systems of finance. This won’t tend to break early (as we’ve seen). To kill the leverage you have to kill the source of it, which is our centralized non-robust banking system!
• The Authority Complex [3, 4, 6, 9] — we need a great deal more skepticism in our system and we should not have such centralized power. The problem here is the authority complex — the so-called experts all pontificate to the “ignorant” masses. The masses are too busy or too confused by the magical words of the experts to deduce that the experts don’t know what they are talking about. And like any good con, the con-artistsexperts are able to trick the masses into giving them all the power. I would argue that NNT’s #9, which more or less argues that we should question authority and not trust experts, completely negates NNT’s #6, which suggest that we should be protected from ourselves. Well who is going to protect us when we can’t trust the would-be protectors? That is a problem.

• Robust complex systems have simple base units that scale [5, 8, 10] — This is the biology angle that is exemplified by metabolic rate scaling over 27 orders of magnitude. A robust system requires simplicity at it’s base. Accounting is a good example of this. Accounting can get incredibly nuanced and complex but can always be brought back to debits and credits. The simplicity of this fundamental rule still enables incredibly complex book-keeping, but puts a governor on the system. You can’t make up assets without creating corresponding credits to the books.

  Compare this to our non-simple, non-robust banking system that holds as it’s core principle the notion of stability in prices and jobs while allowing for unlimited credit (money creation). Not simple.

  Simplicity lends itself to ease of understanding and puts a governor on shenanigans. It’s this fundamental simplicity that enables massive scalability and the emergence of complex systems that are robust.

I’m afraid I might have gotten overly complex in the above. I think what Taleb wants is an organic financial system, one that starts from real economic transactions between human beings and scales upwards from there. Thus, the solution is pretty simple. The base unit is the individual. Fictitious business entities that exist apart from owners are made illegal. No systemic credit structures, which fundamentally follows from the base unit being limited to the individual. This is because such a system would have decentralized banking that would evolve out of whatever needs such an organic economy would require.

This would be the (completely free) market solution, which incidentally most closely mimics biological systems. After all, where in biology do you see stuff created out of thin air (like Corporations or fiat currency)?

And life has been getting along fine for untold millions of years with a simple base units that are the molecules that make up DNA.

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. …

2. No socialisation of losses and privatisation of gains. …

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. …

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. …

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. …

6. Do not give children sticks of dynamite, even if they come with a warning . … Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. …

8. Do not give an addict more drugs if he has withdrawal pains. …

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. …

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. …

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

Link: http://www.cracked.com/article_15231_7-reasons-21st-century-making-you-miserable.html

An article surfaced on Cracked.com sometime in February (I think based on comment dates) by David Wong titled “7 Reasons the 21st Century is Making You Miserable“. It’s since made the top of Digg as well as making the rounds throughout the blogosphere. The premise of the article is that modern technology is making us miserable, lonely people. Despite the sad subject matter, it’s humorously written and worth the read.

Overall, I think Wong makes some good points. The overarching theme is one of technological isolation.

Captured in Wong’s “#3. Texting is a shitty way to communicate.” the Internet creates the tendency to rely on text-based communication over communicating by phone (better) or in-person (best). This is likely due to the control text-based communication affords — if someone calls you and you answer, you fit your life to their demands. If they email you, you can email them back whenever and put their demands on your schedule. Additionally, we have greater control over what we say in a text-based world, which means that we can shield our emotions better (among other things). Ironically, despite the care people put into wording emails and text-based communication to only say so much, the article goes on to point out how terribly inefficient text-based communication is. I can’t argue with this in the least as I’m daily confronted with my own preference of email over phone calls (even when I recognize the inefficiency) and see horrendous miscommunications resulting from loss of tone, misreading, etc. As Wong notes in his related “#4. Online company only makes us lonelier.":

There’s a weird side effect to [living in Text World], too: absent a sense of the other person’s mood [experienced through body language and tone of voice], every line we read gets filtered through our own mood instead.

As I’m learning right now in Daniel Gilbert’s Stumbling on Happiness, our brains inevitably filter feelings about the past or present (or whatever) based on our current mood. How much more amplified is this when the only communication inputs we receive are text-based?

Continuing my out-of-order analysis, Wong lists the related problems of “#1. We don’t have enough annoying strangers in our lives.", “#2. We don’t have enough annoying friends, either.", and “#5. We don’t get criticized enough.” These all relate to our enhanced ability to pick and choose the people with whom we associate over the Internet. The Internet has an amazing power to bring like-minded individuals to the same table where they all reinforce each other’s beliefs, congratulate themselves on their insights, and chide anyone who disagrees with them. This happens big-time in the blogosphere from what I’ve seen. For examples, just find any established political, health, or finance blog. The problem here is that we are empowered to surround ourselves with people who never challenge our beliefs or make us uncomfortable. Change is uncomfortable and the price of sound ideas is constantly holding them to the fire to be tested. How do you do that if you effectively surround yourself with yes-men?

The flip-side benefit, of course, is immense: the Internet enables people with uncommon beliefs to find other like-minded folks.

Also, anyone who has spent any measured time on Internet forums can attest to the wide abundance of annoying people that you simply cannot escape. If you spend any time on forums (and even if you generally avoid them, they are still a fact of Internet life you’ll inevitably encouter), you will encounter annoying people who are nothing like you. Even when you can mute certain forum members, you still can’t completely isolate yourself from people you don’t like.

I’ve got little to say about “#6. We’re victims of the Outrate Machine.” It is probably part of the human condition for us to want to see/read about misery. It makes us feel better about our lives, after all. Sad, but true. So that we see all sorts of gloom and doom sites on the Internet? That’s just par for the course. The only difference is that people with crazy ideas (Conspiracy theorists) are now empowered to find each other and then self-reinforce within their group their own bizarre viewpoints. But perhaps like the abundance of porn apparently reducing violent sex crimes, maybe the ability for wackos to find each other and exchange high-fives about their strange theories will reduce the likelihood of domestic terrorism. Hard to say.

Finally, Wong’s “#7. We feel worthleses, because we actually are worth less.” reminds me of this huge graphical “how to” guide titled “How to not fail at life.” The gist of both Wong’s observation and the humorous graphic guide is that human beings are not hardwired to exist in isolation, doing everything for ourselves, and nothing for our friends. When our friends only exist in digital form, there’s just only so much we can do to engage them. It’s like the 20 birthday messages you get via Facebook. All these people see it’s your birthday and write on your wall. Does it make us feel better? Maybe. It’s possible it makes us feel worse — after all, this sort of communication takes so little effort and is so transparently prescribed as to feel hollow and worthless.

There is probably more to say here, and I’m very skeptical that overall we aren’t incredibly better off thanks to the communication empowered through the Internet. However, Wong’s points are well taken and stark reminders that technology affords us the ability to isolate ourselves, be lazy friends, and pretend to have a “real” life and “real” friends, when in the end, most of our online buddies will disappear just as soon as we stop posting on our forums or blogs or facebook pages. A balance needs to be struck between realspace and our virtual worlds.

Here’s Wong’s conclusion:

It ain’t rocket science; you are a social animal and thus you are born with little happiness hormones that are released into your bloodstream when you see a physical benefit to your actions. Think about all those teenagers in their dark rooms, glued to their PC’s, turning every life problem into ridiculous melodrama. Why do they make those cuts on their arms? It’s because making the pain-and subsequent healing-tangible releases endorphins they don’t get otherwise. It’s pain, but at least it’s real.

That form of stress relief via mild discomfort used to be part of our daily lives, via our routine of hunting gazelles and gathering berries and climbing rocks and fighting bears. No more. This is why office jobs make so many of us miserable; we don’t get any physical, tangible result from our work. But do construction out in the hot sun for two months, and for the rest of your life you can drive past a certain house and say, “Holy shit, I built that.” Maybe that’s why mass shootings are more common in offices than construction sites.

It’s the kind of physical, dirt-under-your-nails satisfaction that you can only get by turning off the computer, going outdoors and re-connecting with the real world. That feeling, that “I built that” or “I grew that” or “I fed that guy” or “I made these pants” feeling, can’t be matched by anything the internet has to offer.

(H/T Patri)

Link: http://www.blog.sethroberts.net/2009/03/17/ode-to-trader-joes-update/

The cheap ability to publish offered by the Internet is incredibly powerful (I wrote at lengthad nauseam about this yesterday in my The Power of Blogging post). In my analysis on blogging, I honed in on the ability of blogging to prevent idea obscurity, encourage idea generation, and amplify the spreading of good ideas. Substitute the word “truth” for “good ideas” and I think Seth Roberts is after the same point, when he discusses how a homemade Trader Joe’s ad posted on YouTube became wildly popular because it tapped into the truth. It captured the widespread feelings Trader Joe’s shoppers have about the positive experience they associate with the grocery store.

You just can’t buy that kind of advertising.

Every publishing mechanism (Twitter, YouTube, Reddit, blogging) that is catching on over the Internet is powerful because it amplifies the ability for good ideas/truth to spread.

Seth’s point about “when science was young” reminds me of what I took from reading Bill Bryson’s A Short History of Nearly Everything; namely, that some of the greatest discoveries in science came at the hands of enthusiasts/hobbyists who were just following their own interests. The decentralization and ease of publishing the Internet provides is bringing that sort of incentive structure back. Corporate-cronies and information protectionistas best take heed.

Here is Roberts’ take. Note the tie-in for self-experimentation:

I think Carl’s commercial is very important as a glimpse of the future. Long ago, only the powerful could speak to a mass audience — and they couldn’t tell the truth, for fear of losing their power. Then cheap books came along. Instantly a much larger group of people could speak to a mass audience — and, having little to lose, they could tell the truth. The truth, being rare, was an advantage. When science was young and many scientists were amateurs — Darwin, Mendel — they could tell the truth. As science became a job, a source of income and status that you could lose, scientists lost the ability to say what they really thought. For example, David Healy lost a job because he told the truth about anti-depressants. Self-experimentation is a way around this problem because, as I’ve said, no matter how crazy my conclusions I can keep doing it. I don’t need a grant so I don’t need to worry about offending grant givers.

Link: http://www.nakedcapitalism.com/2009/03/on-traders-behaving-badly-and-cognitive.html

Yves Smith of Naked Capitalism is doing “the Lord’s work” and asking for traders who have specifics on the various market manipulations shady trading behaviors perpetrated by Wall St. funds, banks, etc. to come forward and blow the whistle. The timing of her request is somewhat an effect of Jon Stewart’s recent battle with Cramer (See the more recent appearance and discussion from Jon Stewart vs Jim Cramer or the original Stewart spat against CNBC that started it all), which made very public an interview Cramer had done back in 2007 where he talks frankly (and yet not specifically enough as Smith points out below) about how funds would manipulate markets for profit.

Very interesting stuff, and since we’ve seen no successful persecution of this behavior, I have little reason to believe that future regulations will stop it. What does that mean? It means that investing in the markets is an incredibly risky business for laypeople as you are unavoidably swimming with the sharks.

The Jim Cramer chatter precipitated by his Daily Show appearance included some links to an infamous interview Cramer gave in 2007, where he discussed how he would, as a hedge fund manager, push the prices of stocks he was short down via the futures market. It was arguably a public admission of market manipulation.

What was most striking about this incident was how quickly it was forgotten.

Now, of course, one can cynically say, that’s what traders do. And there have been times when I’ve had the vast misfortune to be watching the ticks (I hate trading, I put on very few trades, and I sweat them all and second guess myself hugely) and have seen more than once some end of day action that was clearly tape painting (and my pro investor buddies saw it the same way).

But nobody seems offended at the notion that the markets aren’t safe for mere mortals, just the sharks, even the whole US investing mythology touts how transparent, open, and well policed US securities markets are.

That’s one level of heinousness.

…

As long as banks are playing with other people’s money, and the higher ups have plausible deniability, they have no incentive to rein this stuff in, save maybe a token case here and there so they can pretend they really were on top of things. And I’m being charitable and assuming the higher ups were not actively enabling it.

…

So why isn’t there more understanding of and outrage about this? After all, this is the heart of the looting that went on. If firms will tolerate (or even encourage) overly aggressive behavior that appears to generate profit, it isn’t just the nominal miscreants that are at fault, but the whole chain of command all the way to the top (after all, just as in the Jett case, they profited and therefore had reason not to probe too hard).

…

So here is my theory: the details are not specific enough for the public to see it as real. And if they can’t formulate a picture, they can’t believe it happens all that often (after all, if it did, surely it would be in the Wall Street Journal).

That is an example of a cognitive bias called the availability heuristic. If we can have examples, the more concrete the better, the more likely we are to believe that a phenomenon is valid (that is why anecdotal evidence is more persuasive than it ought to be).

Go back and look at the Cramer tape. It’s actually brilliant. He is not very specific! There is no “when I was short X stock in 2004, I did F, T, and H and the price fell by $Z and I made $100,000 in two days.” It’s all murky, to the point where Henry Blodgett, in parsing the transcript, had to insert words at quite a few junctures to make what Cramer say make sense to him (and note I in reading the transcript would have inserted different words). That’s why this incident never really stuck to Cramer. It all came off like knowing innuendo, but he didn’t present a smoking gun.

So unless we have a Pecora commission, or a lot of ex-traders and trading managers coming forth with particulars, the great unwashed public is not going to know enough of what happened to know where to direct its diffuse but well warranted anger over having been had.

Link: http://mangans.blogspot.com/2009/02/vitamin-c-abolishes-endurance-traning.html

Via a Google Reader shared item from Patri Friedman titled Vitamin C Abolishes Endurance Training Effects. The post is just a synopsis of a study that demonstrated that Vitamin C has a negative impact on training for endurance. That we should be training for endurance at all is a topic often derided by various paleo gurus, but the somewhat tangential snippet below is what really caught my eye. It immediately makes me wonder, how much Vitamin C should we be consuming in our diets? Fruits and vegetables are frequently touted as the end-all be-all of nutrition, but most all of those foods have a lot of Vitamin C, which is an antioxident we arguably don’t need much of.

A mere cup of chopped broccoli has 135% of the daily recommendation, which is 90 mg, so 120 mg (Vit C rec. info). And who eats just a cup of broccoli? Further, what about all the other sources we’d get C from in a day?

Who would have thought maybe the colorful fruits and veggies are actually harming our health? Maybe Peter at Hyperlipid has it right. It’s worth further investigation.

Here’s the bit from the Mangans blog:

As noted before on this blog, glutathione is by far the most important antioxidant, and it’s made internally from amino acids. Other antioxidants, as can be seen here, can hamper its production.

Our paleolithic ancestors would probably have been ingesting only small amounts of vitamin C, so any dose larger than say, 100 mg, must be considered quite unnatural. That is not to say that megadoses of vitamin C may not be useful in certain medical conditions, but overall it seems best to avoid that. Many holistic practitioners recommend doses of several grams a day, which could be positively harmful to health. At the least, we can say that athletes should take small doses if any.

Link: http://www.ritholtz.com/blog/2009/03/adults-wanted/

photo credit: Martin Deutsch

As somewhat of a goldbug, I can’t help but enjoy reading the following updated article (See the original gold peg call from QB Partners posted in December 2008) from Paul Brodsky and Lee Quaintance, who run investment fund QB Partners. The article is posted on Barry Ritholtz’s Big Picture.

Gold at $3K/oz would be pretty incredible for current precious metal holders. Gold at $9,000? That is hard to imagine.

Yet if history is any guide, when we start seeing gold make a serious run up and everybody starts diving into the asset class, we could easily see some unbelievable prices reached.

The rebuttal is that all of this deleveraging will result in deflation, which will take down commodities and gold. With the Fed pulling all the stops, I don’t see that happening. They’ll overshoot on monetary policy (as always) and the resultant rice in prices will mean hell to pay (to buy anything!).

In our papers last year we established that an equilibrium price of gold (our “Shadow Gold Price”) would be something north of $9000/oz today. We used simple, Bretton Woods-model math (Federal Reserve Bank liabilities divided by US official gold holdings). To save the US and European banking systems and stabilize western economies we believe the US dollar peg to gold should be implemented at a much lower conversion price than its equilibrium price. The following actions should be taken:

1)The Fed announces a public tender for any/all outstanding private gold holdings at $3,000/oz.

2)The Fed prints Federal Reserve Notes (aka US dollars) to fund these purchases

3)As once privately-held gold flows into the Fed, the Fed’s balance sheet de-levers in gold terms

4)The Fed would soon own enough gold to credibly support the newly-designated peg

5)The Fed would also purchase the “people’s gold” currently held by the Treasury Department at the $3,000/oz clearing auction price (Treasury is carrying gold on its books at $42.22/oz.)

Bang - the soundness of the dollar suddenly becomes unquestioned because it has scarcity value. Its hegemony is protected and its status as global reserve currency is solidified.

A three-fold increase in the gold price should be enough to guarantee that the “free market” would drive asset prices up to the point that all toxic and opaquely-marked paper is once more reserved by banks at ratios greater than one. The loss that JP Morgan et al would suffer in their gold/silver short positions (yes we know about those) should be more than offset by the move to Par in all their respective paper assets. In fact, given the current interest rate structure of sovereign yield curves, we would argue that most dubiously-priced paper held by banks would be valued well in excess of Par, as credit spreads would collapse to reflect sharply higher asset collateral coverage ratios.

On an ongoing basis, the Fed would hold public auctions (as a buyer/seller) to maintain the $3,000/oz. peg. The gold market would become the new outlet for the Fed’s open market operations. Other economies would have to follow suit and devalue their currencies to preserve trade relationships (particularly net exporters to the US). This would be a huge transfer of wealth to the US, particularly from China and Japan. No doubt the US would have to negotiate terms with these exporters.

Link: http://ml-implode.com/sfdpacampaign.html

While flying the flag of “helping” would-be homebuyers in lower income brackets, “seller funded downpayment assistance” inflates the home price via “laundering” a downpayment from seller to buyer in order to get the homebuyer in an FHA approved loan. This process instantly puts the house into negative equity.

Not surprisingly, “SFDPA” is very profitable in fees to the companies who make it possible while stacking the cards against the “assisted” homebuyer, who research has shown, is considerably more likely to go into foreclosure.

As if putting homebuyers into instantly underwater homes that are much more likely to go into foreclosure under the “auspices” of helping them out wasn’t bad enough, when the loans default, they dump back onto the FHA and thereby the taxpayer.

So who wins in this mess of “charity?” The companies lobbying for its re-legalization via H.R. 600.

And if H.R. 600 gets passed, let there be no doubt, our elected officials have learned nothing from the credit collapse.

More on Seller Funded Downpayment Assistance and HR 600 at ML-Implode.com:

This practice has been criticized or ruled against by the FHA, the GAO, the IRS, the FBI, and even US Congress itself, which outlawed it (for the time being) in the 2008 Housing Bill. Yet those who profit off the practice are trying to revive it.

So What is it??

The contentious practice is called “seller-funded downpayment assistance” (SFDPA). It is used to allow home buyers getting Federally-backed mortgages to bypass the need for a downpayment, supposedly for charitable reasons.

On the surface, it sounds benign, but it is actually fraud and money laundering inflicted on the Federal Housing Administration (that is, taxpayers), the housing market in general, and in a sense, even the buyers!

One of these companies, Global Direct Sales (which runs the “Grant America Program") has sued us in an attempt to stop us from revealing the existence of SFDPA and discussing it frankly. SO FAR A FEDERAL JUDGE HAS BLOCKED THEIR ATTEMPTS TO SILENCE US. (Read More about our battle here. Help us to fight this NUISANCE lawsuit which is a blatant attack on free speech!)