August 9, 2012
By Kevin Michael Grace
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Gold was down (at press time) $4.80 (-0.3%) for the fortnight to $1,615, and silver was up $0.49 (+1.8%) to $27.94. According to GoldCore, “Recent dollar strength and a lack of clarity in the minds of many market participants regarding whether the [European Central Bank] or the US Federal Reserve Bank will employ more quantitative easing to prevent double-dip recessions and even depressions may be partly to blame for gold’s lack of gains recently.”
However, “The dollar is set to weaken again due to the appalling US fiscal situation, and further quantitative easing and money printing on behalf of the Fed, ECB and [Bank of England] is almost inevitable.” We shall see.
The planted axiom in all such predictions is that the State has the power to compel the economy to do its bidding. One wonders for how long the State, as currently constituted, will be able to presume to hold such power.
Reuters reports August 7, “Italy shrank further into recession in the second quarter for a 2.5% yearly decline, data showed on Tuesday, threatening attempts by Mario Monti’s technocrat government to control a debt crisis that is undermining the whole Eurozone.” What does “technocrat government” mean?
Wikipedia explains that on November 16, 2011, Monti, an unelected Senator for life, “was officially sworn in as Prime Minister of Italy, after unveiling a technocratic cabinet composed entirely of unelected professionals.” It would appear then that Monti is a dictator, and his cabinet ministers are consuls. That’s the Old Roman way, but it’s not what we understand as constitutional democracy.
Why the European Union expects Monti’s diktaks to be obeyed by the Italian people is anyone’s guess. The EU has not yet appointed a dictator for Spain, but the same problem applies. Mario “Batman” Draghi is now the Pontifex Maximus of the Church of Europe, just as Benedict XVI is the Pontiff of the Roman Catholic Church. They were both elected solely by their peers, but the difference is that no one is compelled to remain a Catholic, while apostasy from the European Church is not an option.
Peter Schiff, the prophet of the housing collapse, declaims, “Two-thousand and eight was just an overture. The opera is coming. The real financial crisis is coming in 2013, 2014. And so, we’ll get a real choice, a fork in the road. One way is going to lead toward complete authoritarianism, complete totalitarian government, and the other way is going to lead back to freedom.” Unfortunately, Schiff does not specify the means by which the road to freedom will be constructed.
At the Automatic Earth, Raúl Ilargi Meijer argues, “Here’s your key: It’s the people, stupid! Not the economy; it’s only the economy if that economy can actually be resurrected. The future of Spain and Europe will be decided in streets and kitchens and living rooms, not in bank vaults and boardrooms. You can only squeeze the people so far. That’s not some political statement, nothing to do with socialism or anticapitalism; it’s just a basic fact. Apparently, it’s going to take a brush with reality for many loud-mouthed pundits and politicians to figure that one out. So be it.”
Call him hysterical or dangerous, but he could be right. It is a commonplace in the West that political violence is “unthinkable.” But this is merely a shibboleth of our post-1945 regime. Not for the first time (and not for the last), this space defers to James Burnham’s (1943) The Machiavellians, which could have been titled, The Way The World Really Works. Here he paraphrases the French syndicalist Georges Sorel: “The lessening of overt acts of violence in social relationships is merely the correlative of an increase in fraud and corruption. Fraud, rather than violence, has become the more usual road to success and privilege. Naturally, therefore, those who are more adept at fraud than at force take kindly to humanitarian ideals. Crimes of fraud excite no such moral horror as acts of violence.”
Burnham then quotes Sorel directly, “We have finally come to believe that it would be extremely unjust to condemn bankrupt merchants and lawyers who retire after moderate catastrophes, while the princes of financial swindling continue to lead gay lives. Gradually the new industrial system has created a new and extraordinary indulgence for all crimes of fraud in the great capitalist societies.” Remarkably prescient for a book published in 1906.
Ilargi contends, “The ‘resolution’ of the LIBOR scandal (which will probably never be completed) will show us once again that we have a choice to make between either saving the banks or saving our economies and societies. We can’t do both. But in all honesty, I doubt that the prospect of such a choice is real. It looks to me like the choice has long since been made by a succession of unrepresentative representatives we elected with our empty votes, and who have left us with a runaway crossover between Frankenstein and the Sorcerer’s Apprentice. I wasn’t kidding when I said the other day that if you want your vote to count, you’ll have to get out into the streets to do so.”
Again, we shall see. As for QE3 being “almost inevitable,” Peter Schiff dispenses with the “almost.” “When Ben Bernanke says we’re only going to give the economy more stimulus if it needs it, it’s like telling a heroin addict, ‘We’ll only give you more heroin if you need it.’ The economy is going to need it, because without it, it’s going to collapse. But it’s not right to give a heroin addict more heroin just because it’ll keep him high.” Not right but certainly good for gold.
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