Happy BiCentenario TDV’ers,
I am sitting on my balcony in Acapulco, Mexico as I write to you. I’ve been watching the fireworks and festivities as Mexico celebrates it’s 200th anniversary of its Independence Day. Or, as most people here call it, la Revolucion!
In other news in Mexico, it has been an eventful week in the disastrous US-led “war on drugs”. First, a few days ago the Mexican government announced they had apprehended Edgar Valdez “The Barbie” Villareal, a very successful narcotics entrepreneur who based some of his operations out of Acapulco.
Then two days ago the Mexican authorities announced they had dealt “another serious blow to one of the country’s biggest drug cartels” by announcing the arrest of another highly successful narcotics entrepreneur, Sergio Villareal Barragan, also known as “El Grande”.
Unbelievably, many of the population are holding their breath yet again that capturing two high level narcotics suppliers will end the use of all drugs on earth and no one will ever want these drugs again. Of course, that will never happen. What will happen is there will now be a violent struggle for power as the next “Barbie” and “El Grande”-to-be’s fight it out over who gets the multi-hundred-million dollar profits.
I let out a sigh as I think about the stupidity of it all. Ah Mexico, open your eyes and legalize all drugs for purchase, sale and consumption and watch your country become yet again very peaceful and idyllic. Then back the Mexican Peso with silver and watch capital flood into the country and Mexico would be a rich nation inside of 5 years. Backing the peso with silver is a natural for Mexico, the second largest silver producing country in the world (after Peru).
Thinking about the sale and use of marijuana and cocaine stopping completely after the apprehension of The Barbie or El Grande made me ponder somewhat on the heads of other criminal instutitions such as the Federal Reserve.
Alan Greenspan, for example, was very anti-Fed prior to becoming the Chairman of the Fed. As example, in 1966, at the age of 40, Greenspan wrote the following:
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
However, as Chairman of the Fed, he took a nice big paycheck to do everything the “welfare statists” do. Interestingly, now that he no longer takes payments from the Federal Reserve he appears to be reverting to his roots.
As example, John Paulson runs a multi-billion dollar hedge fund run that has a huge position in gold. The following is an excerpt from a letter sent to shareholders where Paulson explains who is advising them to buy so much gold:
Lastly, and perhaps most important, from a monetary policy perspective in developing an ability to forecast the timing and future price of gold we believe we have an unparalleled team. Former Federal Reserve Chairman Alan Greenspan has been extremely helpful to us in understanding the relationship between the monetary base, the money supply, inflation and gold prices.
And so, I find myself hating Alan Greenspan a little less this week. He obviously sold out. But at least he didn’t actually believe all the BS he mumbled.
Ben Bernanke, on the other hand, actually appears to believe all the things he says! Now that is scary.
But, just like the apprehension of The Barbie and El Grande will not stop millions of people from wanting drugs and countless others willing to provide it to them, so too it is basically irrelevant who is actually the Chairman of the Federal Reserve.
Whether it is Greenspan or Bernanke or someone else it doesn’t really matter. The fiat currency based central banking financial system is a non-free market system that will continue to distort the economy, destroy wealth and use inflation as another way to tax people until finally it all collapses as all unnatural artificial systems must.
And so, as I sit here tonight, I remind myself not to hate the players too much… it is the game, the system itself, that deserves our wrath.
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And with that I will venture out into the streets of Acapulco and enjoy the festivities. Our full subscribers just received our latest stock recommendation in their email box. It is a well-positioned gold miner based in Ghana and our enigmatic Senior Analyst, Ed Bugos, has it pegged for a 100% gain within 6-12 months. That sure beats T-Bonds at 2%!