The Daily Reckoning November 6th


This Way to the Slaughterhouse

Madison, Wis., was in lockdown mode last night, a day before the visit by the president of the United States. It is Obama’s last stop before Election Day. It just so happened that he and I were in town on the same day to speak to students, faculty, and residents.

My host, Young Americans for Liberty organizer Joseph Diedrich, and I were leaving the restaurant above the Museum of Contemporary Art and walking to a cigar bar on the other side of the Capitol building to meet other student and faculty for late-evening conversation.


We had to go the long way because of all the barricades and equipment.

Crowds were milling about everywhere, and some people were sitting on risers listening to someone giving them instructions on a bullhorn. They sat there all fresh-faced and eager — anticipating the great moment when Il Duce would pay them a visit. I asked someone who these people were.


“What are they volunteering for?”

“To help with tomorrow’s event.”

“And they do this because… they love Obama?”

The guy nodded but detected skepticism in my voice. His face darkened into a scowl. I could imagine these words going through his head: If you see something, say something.

It was time for me and Joseph to get going. We walked on rather hurriedly, and every third or fourth step I turned back to look at the guy. His eyes were following us very carefully, and I kept looking to see if he would whip out his cellphone and call some official thugs to give us the “what for.” He didn’t, but the escape seemed uncomfortably narrow.

Who were all these people? They could have been home surfing the Web, playing with kids, reading a book, watching television. But no. They are dedicating their time to re electing Obama. Why? My own theory comes from a book by Chris Hedges called War Is a Force That Gives Us Meaning. His thesis is summed up in the title. But his thesis can be broadened.

Politics is the force that gives life meaning. It is what people do in order to convince themselves that they are making a difference in the world, that their lives are not petty and useless, but big and important. It is an illusion. They are dupes of a process. But they do it anyway because they want to affirm their own significance in the course of human events.

Sadly, political activism typically requires brains to be in the off position. And I’m not just picking on these nice people. You would find the same at a Romney rally — though my sense is that his backers are not quite as devoted.

This doesn’t make these people bad. The guy who shot me and my friend the evil eye is probably a nice fellow otherwise. Had he been serving drinks at the local bar, we would have been on great terms. It’s the venue that extracts the suspicion and hate. Politics turn nice guys into thugs.

It’s a microcosm of what democracy does to the whole of society. And where is the payoff? For most people, there is none. What is truly at stake is much smaller than what people believe.


For months on end, I’ve heard people tell me what Romney or Obama is likely to do if elected, and, therefore, why, in the scheme of things, it would be better if one or the other were elected.

And how do people know what either is going to do once in office? Their suppositions are based on an assembly of passing data: what they have said on the campaign trail, their intellectual and personal backgrounds, what the party platform says, who their biggest financial backers are, what kind of people are voting for them, and so on.

But here’s the truth: No one knows for sure what a newly elected politician will do. Intellectual or professional background counts for little when a person is suddenly flush with power, slammed with daily duties, bound by institutional expectations, surrounded by people who know far more about nearly everything related to the affairs of state, and overwhelmed by suddenly being the chief executive of history’s largest and most astonishing complex power apparatus.

The same is true about what was said on the campaign trail. By the time they are sworn in, it’s all ancient history, just data points in the process that got them where they want to be.

Party platforms? Those are as binding as yesterday’s editorial page of the local newspaper. Platforms are pressure valves for chumps, worthless documents that provide a means to convince the party regulars that it really does matter what the workers and peasants in the party believe, even though it doesn’t matter at all, since they’ve already performed the essential service of giving money, making calls, passing out leaflets, and holding approved signs at the conventions.

Financial backers might be the best predictor of future actions of presidents, but even here, the guidance is vague. It’s not even entirely clear to what extent the person of the president himself really possesses the control that American political culture assumes he has. People complain about how politicians betray the people every single time. But what if betrayal is inevitable and all the promises and claims are nothing more than propaganda just to get one gang into power instead of another?

People like to assume that we are voting on issues. The media hector politicians to “stick to the issues.” We are supposed to do our civic duty and bone up on the “issues.” But when you get to the voting booth, there are no issues on the ballot on the federal level. There are only people’s names. That’s what we are voting for: person x or person y. All the rest is guesswork based on fleeting, gassy words in the air. All the talk about issues only distracts from this devastating reality that no one has a clue what this or that elected official is going to do in reality.

And consider the claim that candidate x would be better than candidate y for a variety of reasons. This is non verifiable. You can’t run an experiment. It’s not like the natural sciences. A person who said the following would be considered a lunatic: “Let’s try four years with Obama and then try the same four years with Romney and see which turns out best.”

Yet that’s precisely what we would have to do in order to make any truly valid claims about who would be better. Nor can we tell after the fact that the person who lost the election would have been better or worse.

All we really know is that every president makes a terrible mess. Even the few that do something good or do as little as possible leave a terrible mess in their wake. That’s been true… well… pretty much without exception since the beginning. The ones who make the smallest messes you never hear of, while the ones who make the biggest messes make the history books and, if they are lucky, get their picture put on some paper money.

All of this extremely strange stuff in an election makes for a dramatic contrast with the free market. If you want shoes, you can buy shoes. If the shoes don’t fit, you can take them back. The company that makes the best shoes at the best prices tends to advance itself in the marketplace, and those who do not tend to fall back. At any time, the buying or the abstention from buying determines the outcome, and there is a direct link between what is produced and what is consumed. It’s simplicity itself.

In the marketplace, we are voting every day — without the national psychodrama, divisive frenzy, and astonishing expense, not to mention the lies, graft, and betrayals. Thus do I renew my call for us all to rally around those who truly do serve us and try our best not to get sucked into a racket in which you will certainly be betrayed.

The topic of my speech tonight is the history of ownership and commerce. It is a magnificent history full of drama and meaning. In this way, it is far more rewarding than politics.

Laissez Faire Books has published some extremely important books this year — all of them valuable in their own way. But the book that today stands out to me as having massive explanatory power is Beyond Democracy. This is a book that can liberate your mind. It can keep you out of the slaughterhouse.

Jeffrey Tucker

Original article posted on Laissez-Faire Today 

This Way to the Slaughterhouse appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

Advance Auction Day

Heh. You thought we were daft. But our argument against voting has turned into a meme among mainstream sources.

Staying away from the polling place “feels like a third choice,” a Wisconsin librarian told NBC News recently. “We tend to think we have two choices because third parties are not viable. But there is a third choice — to let other people decide because sometimes either choice goes against everything we believe in.”


What happens when the political class destroys confidence in the very system they game?

“Just shut up, Sophia,” a commenter at the celebrity dish site TMZ put it more bluntly.

Sophia Bush: I’m, like, so pissed off about Mitt Romney…

“Tabloid Diva” is fed up with the actress Sophia Bush telling nonvoters they should be ashamed. “Shut up, Sophia… and everyone else talking crap about nonvoters. I have always voted since I was 18, but this year, I’m not. I can’t pick a candidate I don’t believe in.”

National Public Radio (NPR) put out a query on its Facebook page, asking nonvoters why they abstain. “Answers — and answerers — were all over the map. Conservative voters in predominantly liberal states — and vice versa — just didn’t see the point.”

“It is not rational for the average citizen to vote,” said Philip Husom, a grad student from Minnesota. “The amount of time and energy required to make oneself a truly informed voter is not worth the minuscule benefit gained.”

Here in Maryland, we haven’t seen one presidential campaign ad. Given its proximity to Washington, D.C., it’s as blue a state as you can find in the union. No need for either party to spend a dime here.

Last Friday, the Pew Research Center released a survey revealing 43% of voting-age Americans in 2008 didn’t bother going to the polls. Or perhaps actively stayed away.

“For the first time in my life,” Kevin Mathews, a writer at the do-gooding social network site, “I didn’t view it as an irresponsible mind-set.” Mr. Mathews came to his conclusion after sitting down with about 30 self-described activists. “The activists argued that voting was a form of legitimizing the corruption,” he says, “When they cast a vote, they feel it gives the impression that they had a say when they really did not.”

Not that the sentiment is a new in American politics:

H.L. Mencken: The Sage Of Baltimore, 1919

Either way, we’re sure you’re going to do today what you were going to do anyway.

Addison Wiggin

Advance Auction Day appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

Land of the (Less) Free

James Madison of Virginia, the fourth US President, one the Founding Fathers and the leading proponent of the Bill of Rights, may have anticipated better than anyone the processes that destroy liberty when he said:

I believe there are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.

The 2012 Economic Freedom of the World report was released recently by the Cato Institute and Canada’s Fraser Institute. In just a few years, the US ranking has plummeted from No. 2 in 2000 (behind the city-states of Hong Kong and Singapore) to 18th place, trailing such countries as Estonia, Taiwan, and Qatar.

Finland, Denmark and Canada now also have freer economies than the United States.

Americans will ignore this report at their peril; this is not something thrown together by ivory tower eggheads. The godfather of the Economic Freedom of the World report was the late, great Milton Friedman who suggested its need as a measure of liberty.

The comprehensive index covers the size of government (taxing and spending), legal systems, property rights, sound money, free international trade and regulation (including credit markets, labor and business regulations).

Reading this alarming report, I was reminded of a point Ronald Reagan made in many of his public addresses — that the average republic in history lasted just over 200 years, citing Edward Gibbon’s 1787 work The Decline and Fall of the Roman Empire.

On July 4, 2012 the United States celebrated the 236th anniversary of its independence as a nation…

According to the report, in 2005 the US ranked 45th in overall size of government among 144 nations surveyed. Today, government has ballooned in size and the US rank has fallen to 61st place.

Other areas of lost freedom include a substantial increase in stifling business regulations, labor-market restrictions, and barriers to trade. The US standing fell in all those categories, and there was also a long-term deterioration in ranking on property rights as well. No doubt these disastrous developments serve as roadblocks to recovery from the continuing recession that began in 2008.

Cato’s Richard W. Rahn observes: “Worse yet, the US decline continues and in next year’s ranking it is almost certain to be lower.”

If ever there was a concentrated compilation of facts urging Americans to “go offshore,’ the Economic Freedom of the World report is it.


Robert Bauman
for The Daily Reckoning

Land of the (Less) Free appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.


Gold’s Recent Drop Explained!

Over the past 28 trading days gold dropped more weight than a Jenny Craig model.

Sure, the shiny stuff can probably fit into a smaller pant size. But the bigger problem, when it comes to apparel, is the shiver this recent pullback has sent down the britches of gold bugs – indeed, gold’s $100-move in a month is nothing to sniff at!

Today we’ll look at three possible explanations for this downward movement – and some added insight for gold’s next move…

There are plenty viable reasons why gold is pulling back, today we’ll cover the three most pressing…

Gold’s Technical drop

Back on May 16th of this year the outlook for gold didn’t look good on a chart. After hitting an all-time high above $1,900 in August 2011, gold started on a descending journey – settling in May below $1,550.

From there, prices consolidated and traded in a tight window around $1,600. That’s when the recent rubber band “snapback” rally kicked in and propelled the metal towards $1,800 – hitting a high of $1,791 just last month.

Prices have since pulled back.

To a chart-watcher this could signal trouble. Since hitting a high over $1,900 in 2011, gold has made three subsequent runs at the $1,800 mark. Each time failing to break above the psychological threshold (on a daily close basis.)

If you look at the one-year gold chart you’d see this triple try. Each time the metal failed to break through the $1,800-mark it was punished with a subsequent $100 downturn.

Nov 2011: Rally to $1,795, Subsequent drop to $1,598
Feb 2012: Rally to $1,781, drop to $1,540
Oct 2012: Rally to $1,791, drop to today’s price $1,680

Looking at the most recent downturn on a 30-day gold chart, there was a methodical stair-step lower.

With each passing day, traders discounted gold’s probability to head higher and thus, on a short-term basis, gold sold off. After all, traders want short-term profits and if it’s not likely that gold will bust above $1,800 and on to higher-highs…they head to greener pastures.

That’s where things stand today. So from a technical, chart-watching standpoint gold’s dip could be as simple as that. I can hear it now in the pit… “Three strikes and you’re out!”

Gold’s Election Bugaboo

Caveat: the next explanation for gold’s drop is a stretch.

With that said, there could be some election implication built in to gold’s recent downturn.

Although your editor isn’t sold on the idea that either candidate will cut government spending, the gold market could be discounted on increased probability that Romney will win today’s election.

A few months ago, most polls showed president Obama with a solid margin over Romney. Today – especially in the past few weeks – that margin and the likeliness of an Obama runaway win has dropped.

Crunching the numbers on a potential Romney win, the number-crunchers could have shaved a few points off the price of gold. The idea is that Romney’s administration would, in fact, steer the ship closer to fiscal sanity. Whether or not that would actually be the case isn’t the point. But if speculators think it could happen, the price of gold could be reflecting that probability.

There’s actually a pretty easy way to tell if we’re right on this one, too. If Obama remains in office, gold prices should rally late today through Wednesday.

Hey, your guess is as good as mine, but it would be interesting to see a big jump on an Obama win ($20, $30, $50?) At that point we’d know what the number-crunchers think of another four years of the same.

Gold’s Nasty Relationship With The U.S. Dollar…

The last explanation for gold’s recent downturn is your editor’s favorite.

In the past six months gold has been controlled by the movement of the U.S. dollar.

See, like all other staple commodities, gold is bought and sold in U.S. dollars, the world’s reserve currency. We’re not talking about manipulation here. Instead, it’s just the direct relationship that the dollar and gold share.

With trouble looming for the global economy and currency woes plaguing the Eurozone, there’s been a lot of support for the dollar. And if you didn’t notice lately (I can’t fault you) the dollar recently broke above its sideways trading pattern – which propped the dollar index back above 80. This is a significant move.

It’s not out of the question to see another short-term run for the dollar, either. Looking at the fundamentals, the Eurozone doesn’t seem to be fixing itself anytime soon. And to be sure, any weakness in the Euro makes for a stronger dollar.

Add in the fact that the U.S. is having a little rebound in energy production and manufacturing (both positive for the dollar) and you’ll see that the short-term outlook for the dollar could be up — even in the face of some Bernanke push-button, money-printing economics!

Time will tell on this last point. But just remember that the U.S. dollar is in control here. Whereas we’re used to a weak dollar and inflationary measures by the Federal Reserve, a short-term bounce could create more headwind for gold. It’s sad but true.

The Overall Gold Trend, Is Still Our Friend…

The U.S. dollar helps explain gold’s short-term pullback, but it can also give us a good idea as to where the metal may be headed.

You see, regardless of Eurozone worries and a bump in U.S. manufacturing, the Federal Reserve has yet to show ANY ability to stop adding more dollars to its inventory. This is the same “dollar be damned” trend that took gold prices from $300 to today’s price near $1,700.

And remember what Frank Holmes wrote to us last week? Don’t fear a normal gold correction. All of the long-term fundamentals that lead us to buy gold – including the last point about the Fed — are still intact.


If you’re into gold for the short-term trading action, today’s market presents a tricky proposition. But if you’re in it for the long-haul, like me, the recent pullback is nothing more than market noise in gold’s eventual move higher. Stay tuned.

Keep your boots muddy,

Matt Insley

Original article posted on Daily Resource Hunter

Gold’s Recent Drop Explained! appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.

avatarThe Daily Reckoning - The Daily Reckoning posted Tuesday, November 6th, 2012.

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