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L. Neil Smith's
Number 630, July 31, 2011

"These are the times that try men's souls"

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Next Week's Adventure in Sovereign Debt
by Jim Davidson

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Special to L. Neil Smith's The Libertarian Enterprise

Political brinksmanship with the economy? Devaluation of the world's reserve currency? An onslaught of inflation? What's next? One thing that might be "next" is a deflationary shock as about 36% of the USA economy doesn't show up on the 3rd of August in 2011. The tax dodger and sycophant of the banking gangsters, Timothy Geithner, and the mass murderer of children and authoriser of the execution of American citizens without trial, Barack Obama, tyrant, have said that 80 million cheques won't go out on 3 Aug 2011. Why not? Oh, boo hoo, the Congress keeps pretending that it has to authorise an increase in the debt limit.

Those of you who can remember the Gramm Rudman Hollings act may recall the words Phil Gramm said about it. He claimed it was, "the first binding constraint imposed on federal spending, and its spending caps have become part of every subsequent U.S. budget. Together with a rapidly growing economy it produced the first balanced federal budget in a quarter of a century." Personally, I don't think the balanced federal budgets were actually in balance. Although budget surpluses were declared for a couple of years at the end of the Clinton administration, in fact the national debt increased in each of those years.

More likely, the rapidly growing economy of 1982 to 1999 was responsible for the substantial growth in federal revenues. A much higher payroll tax burden was also in part responsible. And who was responsible for the rapid growth in the economy during those years? Mostly it was entrepreneurs in the computer businesses. There were essentially no regulations on micro-computers when they were first developed in 1975, and none on software for a great many years. There were no regulations and hardly any taxes on web sites for many years. So much of the growth of that period resulted from the shift from mainframe computers to personal computers, from klunky software to desktop applications, from there to the mobile devices everyone seems to carry and the app stores. Digitising the world was fun and profitable, and continues to be somewhat profitable despite a large number of taxes now imposed. And an increasing burden of regulation meant to make over these industries into the oligopolies seen in auto making and railways.

Now, of course, there is a rapidly shrinking economy. In a recent essay, I mentioned that the Federal Reserve has dramatically increased the money supply several times. You can keep track of that number by visiting this site.

The policy seems to be to continue to throw new money into the economy. By some estimates, as much as $16 trillion has been paid over, mostly to foreign banks, domestic banks, and big companies like GM and McDonald's, both by the national government and by the Feral Reserveless Scheme. And all that has been having a direct effect on the price of gold, which I track using this page. Though when that is busy, I go to or or something.

Today, Friday 29 July 2011, the gold price reached a peak intra-day ask high of $1,633.80. And that's so far, at the time I'm writing, about 11 a.m. in the central zone. (Yes, time zones are a legacy of the national regulation of the railway industry. In the future, everyone is going to be able to keep their own time, use their own standards of measurement, and communicate that information to others who won't perceive it in the sender's system of units but in their own, because their phones and computers will simply convert behind the scenes to the receivers preferred units. Standardisation and centralisation are abominations we won't have to suffer much longer.)

What is the price of gold telling us? It is telling us several things. First, the record high in the midst of what is usually a dull Summer season for gold tells us that the national government is run by incompetent fools in both parties. Gold's high price also tells us that the dollar is crashing due to poor monetary policies of the Feral Reserveless. Further, gold can be used to price the Dow, which tells us that the peak price for the Dow in real terms came in 1999. Then, it took something over 42 ounces of gold to buy the Dow. Today it takes about 7.45 ounces of gold to buy the Dow.

Is the sovereign debt crisis about to be resolved? No. That's why it continues to be an adventure, rather than an incident. And what is an adventure? Over the fire place at the Royal Geographical Society in London is a slogan, "An adventure is an expedition gone awry." And that's what is going on here.

Is it an isolated problem that only the USA is having? No. The USA government is having a very large national debt and is considering some austerity measures, some cutbacks in this and that. Portugal, Greece, Ireleand, Iceland, Italy, and Spain all have substantial problems with sovereign debt. The inflation of the USA dollar has mostly been felt overseas where it has been used as the alternative to local inflationary currencies. But Tunisia's government fell when prices of basic food items skyrocketed. Egypt, Libya, Syria, Yemen, and Algeria seem destined to have ongoing problems as a result of their despotic governments and poor monetary policies. Then again, the USA government is a despotic tyranny with horrid monetary policies. Takes one to know one.

What should you expect? I think that Obama is a liar as well as a mass murderer, tyrant, dictator, traitor to his oath to uphold the constitution, and a violent thug. So when he says that no cheques will go out, I believe he is lying. I believe that Obama would send out the money to government contractors who have paid campaign contributions ($46 million or so for his 2012 campaign, quite a lot more for 2008) or kickbacks or payoffs or lobbying expenses or whatever they are calling the unwarranted influence of the military industrial financial complex of which Eisenhower warned. Yes, I'm saying that he's corrupt in my opinion.

So at least hundreds of thousands of cheques, or direct deposits, are likely to go out, anyway. But yes, I suspect that Obama and Geithner are the kind of people who would refuse to distribute money to the elderly and handicapped. They are, after all, hateful, corrupt, and vicious. So when they hold those people hostage, as it were, when they renege on the promise made when those people were working and having money extracted forcibly from their pay packets, they do so in the expectation that elderly people would clamour for succour from the very Congress now debating raising the debt ceiling.

Politics in the USA has become a process of seeking the vote of the last frightened old person. But it was always, to one extent or another, the process of generating hobgoblins, all of them imaginary, and shaking them at the people to frighten them into following fascist-corporatist politicians into slavery. Yes, HL Mencken wrote about those hobgoblins. In his day it was the global communist conspiracy or "red menace." These days it seems to be the global Islamic conspiracy, or sand menace, perhaps. It is, after all, simply the excuse the espionage agencies use to demand control, and the excuse the military uses to demand a bigger budget, and simply the defence contractors, prison industry contractors, and financiers being evil. Which is what they do.

They slaughter children in foreign countries and put your neighbours in cages. They don't care how many of you get hurt, tasered, tortured, imprisoned, nor executed. All they care about is their profits.

Personally, I'm not sure you don't deserve it. Two years ago I started blogging about Divest from Death on a Wordpress site by that name which I created. More recently I started a university association to attempt to address the real limitations I see in fighting against the system of caging people for profit. I have not been impressed with the response to either initiative. It seems to me that people don't want to be free, to be self-responsible. Maybe I'm mistaken in my understanding of what appears to be hesitation and caution.

What should you do? I think you should have some of your money with you. Pull some from the bank. Have some in gold and silver coins. Be prepared for deflationary shocks if those cheques don't go out, if the direct deposit money doesn't show up. Be prepared for inflationary pressures if the debt ceiling is raised. Stop borrowing money from the banks. Pay off your credit cards and chop them up, or simply abandon the unsecured debt. Fight foreclosure by not paying on your mortgage, demand that the bank show where the mortgage was properly bought by them (and not robo-signed over), and use your mortgage payments to fight in court over the issue. Attack the banks in the ways that Anonymous has been doing. Expose their lies. Bring down the system that chains and cages you.

What are you going to do? Not much.

Jim Davidson is an author, entrepreneur, and anti-war activist. His 1990 venture to offer a sweepstakes trip into space was destroyed by government action as was his free port and prospective space port in Somalia in 2001. His 2002-2007 venture in free market money and private stock exchange was destroyed by government action in 2007. He's going to Mars if he has to walk. His second book, Being Sovereign is now availble from Lulu and Amazon. He is currently working on a book about travel to Mars with John Wayne Smith, a book with international fugitive Chad Z. Hower on his story, a book on sovereign self-defence, and a book compiling his letters and essays in The Libertarian Enterprise from 1995 to 2010. Contact him at or Come visit IndSovU teams at gatherings in September 2011 in Montana, December 2011 in Florida, and March 2012 in Austin, Texas. Or join State Busters (no URL as yet).

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