Genetic Engineering Anyone?

Blade New World
“What man has joined, nature is powerless to put asunder.”
— Aldous Huxley, Brave New World, Chapter 2
“My friends are toys. I make them. It’s a hobby. I’m a genetic designer.”
— J.F. Sebastian (William Sanderson), Blade Runner, 1982
ONE OF THE GREAT HIGHLIGHTS of my 2007 was the night in December when I finally got to see a favorite film of mine on the silver screen at the cinematic venue close to my house. That film: The “Final Cut” of Ridley Scott’s 1982 sci-fi/noir classic Blade Runner.
Blade Runner is a favorite of mine for a bunch of reasons. First, it’s the finest example I’ve ever seen of the seamless integration of script and cinematography. Unlike with so many others of the science fiction genre, the special effects — though incredible for their time and for the budget from which they were created — don’t overpower the story, but complement it in a sublime symphony of storytelling excellence.
In fact, Blade Runner’s symbiosis of story and effect is so elaborate and well-conceived that it almost literally transports you to a future America that seems as plausible and palpable as the hustle, bustle and daily grind you left outside the theater. The primary reason for this isn’t Ridley Scott’s renowned movie-making wizardry, which has given us such indelible classics as Alien, Gladiator and what is almost universally acknowledged as one of the greatest commercials of all time — Apple’s famous “1984” Super Bowl ad for the then-new Macintosh computer…

In my opinion, it’s because of co-screenwriters’ Hampton Fancher and David Peoples’ inspired and ingenious re-envisioning of the equally ingenious source material: Sci-fi master Philip K. Dick’s 1968 novel, Do Androids Dream of Electric Sheep? Beyond being an intense, nuanced, visually arresting, near-perfectly realized exercise of the cinematic art (I believe it’s filmmaker Scott’s high-watermark as a director thus far), what truly makes Blade Runner great is its uncannily prophetic story.
A story that becomes more relevant with every passing day.
The Blade Runner Prophecies
Blade Runner is set in the year 2019, in Los Angeles. For those of you who don’t know the story, it’s basically a cop drama about a police assassin whose job it is to track down and kill genetically engineered and organically manufactured super-humans (called replicants ) on Earth. Replicants are superior to ordinary people in strength and at least equal in intelligence — and are indistinguishable from the natural-born without detailed tests of emotional responses. Bred for slave labor, combat or dangerous jobs in the “off-world colonies,” replicants are illegal on Earth, under penalty of death…
This fact does not stop some of them from coming to Earth incognito. Enter assassin Rick Deckard (Harrison Ford at the peak of his early fame). He’s semi-retired, but pressured back into service by his old boss to eliminate an especially deadly group of four replicants who’ve returned to Earth bent on infiltrating the company that manufactured them, the Tyrell Corporation, in hopes of finding a way to extend their lives beyond their built-in four-year life spans…
The movie illustrates how this infiltration attempt plays out (violently), how these replicants struggle with their own mortality and emotional under-development, how Deckard “retires” these pseudo-humans and comes to grips with the guilt of killing them — and deals with the fact that he may indeed be a replicant himself…
It’s a great story, and extraordinarily well told. But what’s so prophetic about the movie isn’t the plotline so much as the vision of 2019 America that Dick, Fancher, Peoples and Scott created during Blade Runner’s production in the early 1980s. In their Los Angeles of 37 years later:
The language spoken on the street is not English, but a mish-mosh of several languages. The floating sky-billboards alternate the languages they entice people with, and generally feature Asian-looking faces. Most of the people seen on the street are non-whites. Ethnic foods, especially Asian varieties like sushi, seem to be the kinds most consumed. These things imply a huge, unchecked influx of immigrants into the U.S., and an aggressively globalized economy — with resulting changes in the culture…
The L.A. cityscape is vast and towering. It’s a dirty, gritty mix of industrial structures, futuristic architecture and dilapidated old apartment buildings. The night sky is illuminated violently with flaming natural gas blow-off from high discharge stacks. Also, it’s almost constantly raining. Clearly, the U.S. (and presumably, the world) is still dependant on fossil fuels for much of its energy, and the global climate has changed as a result…
If the size, prominence and extravagance of their corporate headquarters is any indication, one of the most influential and profitable businesses in Los Angeles is the Tyrell Corporation — manufacturers of 100% organic, genetically engineered replicants (and other man-made duplicate organisms, the script implies). Their motto is “More Human than Human.” It seems that a sizeable amount of people are employed in this industry, or subcontracted by the Tyrell Corporation…
Clearly, Blade Runner’s masterminds spent considerable time and effort to imagine what the U.S. would be like in four decades time. And judging by where we are in 2008, they’re not far from the mark on a lot of things: Globalization, immigration, America’s changing cultural identity, climate change theory and the rise of genetic engineering.
It’s this last element, genetic engineering, that I want talk about a bit more today…
Children of a Transgressor “God”
In Blade Runner, the replicants locate and force one of the Tyrell Corporation’s genetic engineers, J.F. Sebastian, to arrange a meeting with the company’s master designer and patriarch, Dr. Eldon Tyrell. What transpires at that meeting, I won’t spoil here. But what I will mention is what Sebastian has surrounded himself with in his own home. Being a genetic designer, Sebastian has created a spacious apartment full of genetically aberrant pseudo-humans whose only purpose in life is to amuse and befriend him…
They’re like pets. And they are engineered not to be free of defect — but to be more entertaining or endearing than typical humans by virtue of their defects. They are abnormally sized, have abnormal voices and mannerisms, and are clearly less intelligent and coordinated than typical humans. Sebastian dresses them up in cute little costumes, teaches them to say trite catchphrases in greeting as he comes home from work each day, and poses them around his home like stuffed animals.
This, in my opinion, is the most terrifyingly prophetic aspect of Blade Runner: The notion that needy, greedy, maladjusted, corrupt, agenda-driven or just plain lonely people could one day implement the awesome power of genetic creation on a whim and without due concern for its ramifications — like a kid who finds his dad’s pistol in the bedside table and shoots up the neighborhood just to hear it go “bang.”
Think this couldn’t happen? Think the sole purpose of human genetic engineering science is to accelerate evolution, prevent chromosomal imperfections, ensure better health and eradicate disease? Think we humans are too moral and noble of spirit to intentionally create less-than-perfect children?
Think again.
Right now, in the U.K., a pair of deaf-rights organizations — the Royal National Institute for Deaf and Hard of Hearing People and the British Deaf Association — are lobbying to give deaf prospective parents (and presumably, hearing parents as well) the right to genetically engineer deaf children. Their efforts are focused on amending a bill currently passing through the legislative process in the House of Lords, the Human Tissue and Embryos Bill, which currently would prohibit the screening of embryos for the purpose of choosing one with an abnormality. According to the U.K.’s The Sunday Times, a broader coalition of organizations representing people with disabilities will also begin campaigning for this amendment to the bill, starting this month.

This kind of stuff isn’t just happening in merry old England, either. According to an Associated Press report from December 21, 2006, 3% of the 137 surveyed U.S. clinics that offer genetic embryo screening have provided the service to families intent on creating disabilities in their children…
The arguments on both sides of this issue are, in their own ways, persuasive. And they starkly illustrate just how slippery a slope human genetic engineering will be in the future. Groups that support the right of parents to choose disabilities in their children are concerned that the genetic eradication of conditions like dwarfism or deafness would be tantamount to the eradication of valuable cultural identities — and would weaken the bond parents and kids with similar disabilities share. And they’re right, sort of…
Opponents of giving parents the ability to choose disabled children say it subverts the cardinal rule of medicine — to heal, not harm. They equate the practice to the intentional crippling of kids. And they’re right, too.
Consider this as well: If the engineering of disabilities becomes OK at the genetic level before birth, how would this be any different from the infliction of the same disabilities after birth? If, say, deafness or blindness were to somehow become the right of parents to design into their kids at the embryonic level, wouldn’t it also be their right to simply wait until the child is born, then deafen it with repeated gunshots close to the ears — or blind it by poking its eyes out? Other than a little pain, what’s the difference? Kids live through circumcision, right?
Arguably, most forms of post-birth disabling would be better than genetically engineering the same thing. Unlike embryonic screening, post-birth deafening or blinding of a child, for example, would be 100% reliable — and it would surely be a lot cheaper than paying $15,000 or more for gen-gineering procedures…
Which would mean more money left over to make a kid’s home deaf- or blind-friendly!
Also, when would the Statute of Limitations end on disabling kids? If a single father, for example, were to be deafened by an explosion at work, could he then come home and deafen his nine-year-old daughter to buttress his own cultural identity or/and strengthen his family unit?
Beyond this, if the right to genetically design children were to reside wholly with parents, what would stop some maladjusted parents (see also Spears, Britney ) from designing kids that are entirely dependant on them? If parents with low self-esteem see the nurturing of their children as a way to validate their own lives or restore their own sense of worth, what better way to ensure a lifetime of this than to create a mentally or motor-challenged child that can never leave the nest?
Extrapolations and suppositions (absurd or otherwise) aside, someone’s going to be playing God here any way you cut it. Either the government and medical establishment will do it by determining where the lines are in terms of what “designer” features we can and can’t build into our children — or disabled parents will by creating kids in their own defective images, or for their own sick validation…
Bottom Lines: Is it fair to children to engineer them deaf, blind, dwarfed or otherwise challenged to ensure the survival of their parents’ cultural identity? Is it fair to children if they’re intentionally bred inferior as therapy for, or enablement of, their parents’ neuroses?
But here’s the most disturbing aspect to this equation: As scary as offering the power of genetic engineering to parents might be, it could become even more dicey to invest the government with that authority…
Grave New World
In Aldous Huxley’s classic 1932 novel Brave New World, the vast majority of people (those who are part of the World State) are sterile, marriage and parenting and family are obsolete among them and children are purpose-bred and lab-reared by the government to meet society’s needs. In the World State, there are five classes of genetically engineered humans. In descending order of intelligence, they are: Alphas, betas, gammas, deltas and epsilons. Each has their own skill set and societal roles that suit it (alphas are the thinkers, epsilons the menial laborers) — and everyone is medicated by the government into blissful acceptance of their place in the scheme of things.
Here’s why I mention this: No matter how much moralizing we do here in America, human gen-gineering is coming to this world. It is already here in the form of “prenatal health screenings” — and it won’t be long before more and more of the traits of our children will be things we can decide for them. So let’s think down the road a bit…
Let’s say that by 2019, we can more or less order our children from a catalog. A couple can provide the DNA raw materials, and science can add positive traits, subtract negative traits, dial up intelligence, build in immunity and splice in hair color, eye color, height, metabolic rate, sexual preference, etc. Now, how many people in this brave new Utopia would opt for average, natural kids instead of gen-gineered, hyper-smart, disease-proof “super-kids?”
Not many, I’m betting.
And that means that over the span of a single generation, the natural Darwinistic Yin and Yang between bright and dim, strong and weak, hardy and vulnerable, beautiful and plain people would be unnaturally skewed to the “perfect” side of the spectrum. Instead of an America in which people run the gamut of all shapes, sizes, appeals and skill sets to fit every job and need in our society — from physicist to ditch-digger — we’ll have a glut of smart, fit, hardy, beautiful people perfectly suited to the most intellectually high-minded work, and a dearth of those suited to more menial, yet no less necessary, posts.
The dirty little secret of American society is that no matter how much rhetoric about opportunity and achievement our schools, parents, after-school specials, movies, therapists and self-help gurus sling at us, the brutal reality is that we need only so many supermodels, professors, lawyers, doctors, artists and Supreme Court Justices. For every one of these, we must need 100 ditch-diggers, pipe-fitters, welders, bricklayers, car mechanics, farmhands, cabbies, truckers and port-a-pot cleaner-outers. The vast majority of jobs and duties in America (and in any country, for that matter) fall on the less desirable, least glamorous and modestly remunerative side of the spectrum…
There are two very likely ways these needs would be met in a future America of lopsidedly perfect people: We’d either import an underclass to do these things for us (we’re already doing this), or we’d regulate who can have what kinds of kids — a la` Brave New World. Or both.
Bottom line: If we’re not mindful of how we apply this inevitable human genetic engineering technology, we’ll end up handing the government the power to tell US what kind of kids we’ll be having, based on societal needs.
Like the Office of the Handicapper General in Vonnegut’s Harrison Bergeron, we could end up with the Department of Equity in Breeding, or some such. Like applying for credit or a loan, maybe we’ll have to prove our suitability before we can order up our perfect bundles of joy. Or maybe there will be a Breeding Lottery, and we’ll have to be happy giving birth and raising whatever kind of kid we pick. Becoming parents — and being happy and grateful to the state for whatever kind of child they allow us to have — could simply become one more duty of a Proper Citizen, like paying taxes.
Think I’m being absurd with all this? Keep reading…
One Fish, Two Fish, Red Fish, NEW Fish
If you think the urge to tamper with nature isn’t pervasive among humans, consider what we do to ourselves in the name of individuality. We dye and curl our hair, trowel on makeup, pierce our skin, wear contact lenses (in colors, no less), tattoo ourselves — and go under the knife for bigger boobs, trimmer bellies and slimmer noses. We spend endless hours and countless dollars shopping for clothes, shoes and makeup to further enhance and call attention to our uniqueness. We do the same thing with our cars and homes. We customize them, because we aren’t happy with them as they are…
Don’t misunderstand me here — I’m not being critical of this tendency toward the improvement of all things. I do these kinds of things, too. We all do. I’m simply saying that it’s human nature to modify one’s self and one’s possessions (a lot of people view kids as these) to more closely fit some inner ideal of ME-ness. Do you really think we would resist this tendency when it comes to our children? Look at how we name our kids; many couples intentionally pick odd or unique names — or even make them up — to give their children a head-start toward individuality…
Do you really think parents — had they the power — wouldn’t do the same with how a kid looks? Do you really think you wouldn’t see young punk-rocker parents designing babies with hot-pink hair? Do you really think you wouldn’t see bodybuilding types lumbering down the street with blockish, sculpted kids trundling after them?
For those of you with doubts that this all is coming, consider the GloFish.
Marketed in the U.S. since December 2003, GloFish are genetically modified zebrafish (native to India and Bangladesh). By inserting genes from jellyfish, sea corals and other sources into the zebrafish’s genome, designers of the GloFish have succeeded in making them glow brightly in green, red and orange. The FDA, after study and risk assessment, found no public health reason to regulate these fish beyond what regulations are in place for normal zebrafish. Yes, they can breed — and yes, they continue to be strong sellers…
Also, consider the case of LifeStyle Pets — a new line of genetically modified, hypo-allergenic cats and dogs. All the pleasure, none of the sneezing.
Perhaps coming soon to a pet store near you: GloDogs — harder to lose and easier for cars to avoid…
Maybe soon thereafter: GloKids?
Trying to be brave in a grave new world..............................................

Mogambo Goes..............

Keynesian Quackery

By: Richard Daughty, The Mogambo Guru - I get a real laugh ("Hahaha!") out of the emergency stimulus program of just giving away $150 billion dollars in $800 increments to various citizens, who total, I assume, 18,750,000 people at 800 clams apiece. Hahaha! Free money! We have now reached the point where the economy is so screwed up from the Federal Reserve's neo-Keynesian econometric stupidities that they are reduced to urging the Congress to give money away to keep the economy from imploding because they can't find people to loan money to at interest rates that are less than the rate of inflation? Hahaha! We're doomed!
And now, when every measure of inflation everywhere is higher than even profligate, lying bankers will admit is above their "comfort level" because they have flooded the economy with so much money for so long, the Federal Reserve is again advocating that more money and more debt flood into the economy by reducing the Fed Funds rate, in an emergency move, by a whopping 0.75% (18%!), taking the rate down to 3.5%! Wow!
Bob Wood of Kaizen Managed Assets opines that, "The amazing thing is that not a day goes by that either my local newspaper or the FT isn't filled with stories about rapidly rising consumer prices. The last thing any central bank should be doing is trying to inflate an economy already burdened by rapidly rising prices. And that is exactly what they want to do now! If this is not madness, nothing else is."
In case you were wondering, $150 billion is actually chump change. Hell, the federal deficit alone is over $600 a year! So $150 billion merely matches 3-month's worth of federal borrowing due to their overspending! Hahaha!
And the federal budget is about $3.4 trillion a year, resulting in federal spending (when actual deficits from "supplemental appropriations" are included) of more than $4 trillion a year! For crying out loud, total GDP, which is the total of all the goods and services created (and consumed) by the United States in an entire year, is only about $14 trillion!
And if that is not enough to make you gag up blood, when unfunded liabilities are accrued and added, the federal deficit alone, according to the GAO, was $4.5 trillion last year! The actual deficit was bigger than the budget itself! Yow!
Then we come to the startling realization that federal government spending is about $8 trillion, more than half of GDP! And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending!
And now some piddly $150 billion is going to make a big difference in preventing the overdue bust at the end of the biggest boom the world has ever seen? Hahahaha! Stop! I'm laughing so hard my stomach hurts! Hahahaha! Stop! Stop! Hahahaha!
Wiping my snotty nose with one hand, with the other hand I turn to Mike Whitney, writing at InformationClearingHouse.info, who writes, "The Bush 'Stimulus Package' is the biggest and most obscene hyper-inflationary swindle ever perpetrated on the American people. It's a $100 billion, taxpayer-funded bailout that is being slapped together at breakneck-speed to forestall a collapse in consumer spending, an exodus of foreign capital, and a painful slide into recession."
Naturally, you immediately think of gold at a time like this, and how you don't have enough, and how you wish, wish, wish you had picked up a few more ounces. But if you did not, then you were not alone, as Rick Ackerman of Rick's Picks newsletter had been skeptical of gold, too, but started his latest column with the headline "Zealous Deflationist Sheds Gold Doubts." He writes, "Gold at $10,000 an ounce? Gurus and hard-money advocates have been predicting it for decades, ever since currencies began to seriously decouple from bullion in the 1930s. I've been skeptical of such forecasts myself, mainly because my deflationist imagination has always envisioned a world in which public and private bankruptcy had become pervasive. With credit unavailable, cash in extremely limited supply, and asset values wiped out by forced liquidations, who, I asked, would supply the bidding power to push bullion quotes into the stratosphere?"
Now, I figure, he knows the ugly truth; governments will create and spend as much money as they can, and there is the money he was looking for. And for proof of that, and all we have to do is look at the Bush "stimulus plan" to give away free money, or look at Zimbabwe to see how it can be done, as that godforsaken country has by now printed so much money and created so much price inflation that they were forced to now issue a $200,000 bill, worth about $4 or so. (Well, it must be a lot less by now, since it has been a few days since the news of the new money came out; price inflation in Zimbabwe is running at about 50,000% a year).
Perhaps because of this stimulus plan thing, or perhaps because of the Zimbabwe thing, or because of something else, like maybe how the CIA was controlling his brain with some kind of neural neutralizer ray gun or something and now their budget has been cut and the agents are reassigned to the "war on terror" or something, but whatever it was, Mr. Ackerman now says, "But that doesn't mean an ounce of gold cannot get bid up in the meantime to $10,000, however fleetingly, before the fiat money that is still accepted in exchange for gold has been exposed as a fraud."
Making up for lost time, perhaps, you can almost hear new-found enthusiasm in his voice when he says, "Take it from a deflationist who once scoffed at the notion of $10,000 gold: This rally is the real deal, and the $1,000 supposed 'barrier' is looking more and more to me like a launching pad."
Then, my Acute Mogambo Senses (AMS) detected a voice tremor, suggesting that maybe his mind was rebelling against the sheer intellectual corruption and desperation of the coming "tax rebate" giveaway, and it shocked him back into the gold camp. Well, this is my interpretation of why he hints, "Deflation might eventually knock gold back down to earth, so that bullion will have 'merely' retained its purchasing power in spades, but there is a lot of inflating to be attempted (futilely) by the central banks before that is likely to occur."
Then I knew I was right about it being the stimulus program that has unnerved him when he went on to say, "the chicken-in-every-pot that the U.S. government is about to offer Americans via a tax rebate is so puny and belated a 'solution' as to be laughable. Even if such Keynesian quackery could work, and even if the government were to enact a big enough giveaway to thwart deflation for perhaps a year or two - say, by offering every household a new Chevy Tahoe or a kitchen-remodel - it would only put us that much deeper in debt, since Congress would be spending money created from thin air rather than raised through taxes."
I love it! "Keynesian quackery"! Hahaha! The perfect phrase! I leap to my feet and shout "Bravo! Well said, young sir! Bravo!"
Well, Mr. Ackerman may have changed his mind about gold, but he has not changed it about giving me the slightest opportunity to run my Stupid Mogambo Mouth (SMM) about how wonderful gold is, and how "preserving wealth" is exactly what gold does, when all around it, things are losing their measure of "wealth", and I get more and more worked up until I am demanding that you immediately get up off of your dead, fat butt and go out and buy some gold right now. And silver, too!
To prevent this, he immediately goes on to say, "If you think the stimulus measures being promoted by the government will help restore the U.S. economy to health, then by all means, sell your gold assets and buy shares in Chrysler. For our part, we will reiterate our belief that gold has been, and will continue to be - at least for the foreseeable future -- the no-brainer investment of our lifetime."
No-brainer investment! That's the kind of thing I need, as I have no smarts of my own! Then I hear Ted Butler saying the same thing about silver, and I am confused, and I want to buy some of each. And a pizza. A big one.

Anti-Gold? Are You High?!

The Anti-Gold Gospel According to Kaletsky
Antal E. FeketeGold Standard Universityemail: aefekete@hotmail.comJan 28, 2008
Anatole Kaletsky is the author of the most recent Anti-Gold Gospel (http://www.gavekal.com/, January 21, 2008.) He is an establishment journalist, Associate Editor (formerly Economics Editor) of The Times. He says that he instinctively dislikes gold because "historically gold has been a terrible investment and, even in the short term, gold has failed as a store of value." I am satisfied to leave this statement to stand on its own, and wish Kaletsky good luck in seeking a better store of value in fiat currencies.
It is patently disingenuous and unfair to compare the gold price to stock indexes. It would be fairer to compare stashed-away gold to passbook savings. A portfolio of equities takes managing. It may be beyond the reach of most wage-earners and pensioners while their savings is the main target of the pilferers who run the nation's banks and monetary system. Who said pilferers were after wealth invested in the stock market?
I strongly object to the idea that "gold is an investment". Gold is better described as a non-investment, more precisely a place where you park your savings when you cannot find satisfactory investment outlets either because interest rates are too low, or because the risk of holding equities is too high, e.g., after a bull run of the stock market driven by printing-press money. Gold is not an investment any more than a fire-insurance policy is. Governments have a sacred duty to protect the value of funds of the weak, who cannot fend for themselves in the investment arena. Without protection their funds would melt away like butter left in the blazing sun. Governments have failed miserably in discharging this sacred duty. The Biblical curse is upon them for "tormenting widows and orphans".
Kaletsky, like everyone before him preaching the Anti-Gold Gospel, studiously avoids the question why the Treasury and the Federal Reserve should have the privilege of issuing obligations that they have neither the means nor the intention to honor. If anyone else tried to run a business on that basis, he would land in jail like Charles Ponzi did in the 1920's.
Kaletsky also dodges the fact that gold is the only balancing item in the asset column that has no countervailing liability in the balance sheet of someone else. It is this feature that makes gold impervious to defaults, devaluations, and deliberate debasement of the currency. For this reason gold is universally sought after as a safe haven, especially when the seas get rough. There is simply no substitute for gold in this regard.
Gold is the indispensable regulator of debt in society. Kaletsky apparently believes that government bureaucrats should determine how much debt society is able safely to carry, and they should regulate the level of debt accordingly. Well, we have just tried this and found that whenever irredeemable promises are to be liquidated by issuing more irredeemable promises, debt proliferates beyond any limit. The derivatives monster and its bastard offspring, "bond insurance," is the beacon luring the boat of the national economy to its doom on the reefs. Clearly, debt existing in the world today will never be liquidated through the normal processes of debt-retirement, that is, without detours into deflationary or inflationary territory (i.e., through default or depreciation). It is lunacy to think that the debt pyramid can continue to grow indefinitely without causing a major catastrophe further down the line. All debt will be liquidated in the same way as subprime mortgages: through default - or else, it will be inflated away.
By the way, did it ever occur to Kaletsky that there is absolutely no need for bond insurance under a gold standard? The reason is that interest rates and, hence, bond prices are confined to such a narrow range that bond speculation becomes unprofitable. Under a gold standard capital and talent are freed to pursue socially desirable goals.
Kaletsky's argument that there is not enough gold in the world to serve as a means of exchange in our sophisticated global economy is the old war-horse of the Anti-Gold Gospel. All the output of the gold mines for the past half-century, plus all the monetary gold disgorged by the central banks in a futile effort to contain the gold price, has been gobbled up by gold hoarding. This is an unmistakable sign that people do not trust the integrity of government promises, nor do they buy the academic claptrap about gold being a barren asset and a barbarous relic. Obituaries of gold money have been premature. The golden corpse still stirs. People who sought refuge in gold have been amply rewarded for their foresight. More rewards are on the way. Others who did not avail themselves of the opportunity will have occasion to regret it. They are to be victimized by the welfare-warfare state and its unconstitutional power-grab in issuing irredeemable dollars. These dollars could not have been issued under a system of government of limited and enumerated powers. All present dollars have been issued unconstitutionally. They are the corpus delicti: proof of usurpation of unlimited power.
If constitutional money were re-established, then gold would come out of hiding and make itself available as a means of exchange. There is plenty of gold in existence to support a gold standard, provided that confidence in promises is re-established. There is no rigid rule limiting the amount of sound credit that can be safely built upon a given gold base, especially in this age of instantaneous and free communication. However, multiple credit construction and borrowing short to lend long as a banking technique must be renounced.
The last word whether gold is destined once again to become the pivot of the international monetary system, or whether it is hopelessly antediluvian and incompatible with economic progress, will not be pronounced by detractors of gold and devotees of fast-depreciating fiat money. Their time is up. Their schemes and nostrums have been tried. Now it is the turn of their victims to have their day in court to pass judgment on the fiat money experiment. "He laughs who laughs last". The annals of monetary history do not know one single instance in which irredeemable currency survived the test of times. Either the currency was returned to its gold anchor in good time and its value stabilized, or it plunged to worthlessness within a generation. We are skirting these limits right now. The present experiment with the irredeemable dollar has been going on for just about a generation. You will not have to wait decades to witness the failure of this experiment.
The dollar is hemorrhaging on two counts: one is the trade deficit, and the other is the budget deficit. Both the political will and the economic know-how are missing to stop the bleeding. The U.S. is borrowing $800 billion annually from foreigners to fund its consumption of foreign-produced goods and commodities. The federal government is running an annual budget deficit of almost $600 billion. At one point foreigners will refuse to finance the burgeoning twin deficit, forcing the Federal Reserve to monetize all the additional debt. The danger is real that the value of the dollar, both international and domestic, will collapse at that point.
Kaletsky says that the gold standard is totally anachronistic in our age of rapidly advancing technology and growing populations. He might as well say that good faith behind promises has been rendered obsolete by technological progress, and the more people there are the more the government is justified to cheat them out of their savings through currency debasement. Kaletsky is entitled to his belief that people will meekly continue in their assigned role of being victimized by spendthrift governments. However, the New Year 2008 brought with it signs aplenty that the open season of governments' preying upon savers and producers of real goods and real services is coming to an end. People wake up and realize that they are surrendering real goods and real services in exchange for irredeemable promises.
The consequences of this awakening will be most painful. The responsibility for the coming credit collapse in the wake of the unconstitutional paper dollar rests with the U.S. Treasury, and its partner-in-crime (partner-in-check-kiting if you will) the Federal Reserve. It may serve as a useful reminder to recall that the French, some seventy years before their bloody revolution, experimented with irredeemable currency under the management of the Scottish adventurer, John Law of Lariston. When Law's system unraveled people wanted to lynch him. He had to leave Paris in a hurry. Under the cover of night. In a disguise. Disguised as a woman.
The finance capital of the world, denominated as it is in dollars, is in danger of being wiped out. There is only one way to take out insurance against this contingency: buying gold. As I have explained above, the reason can be found in the balance-sheet concept of gold. The only financial asset that will survive any consolidation of balance sheets, any default, any devaluation, any depreciation is gold.
Gold holdings are the most negatively-correlated asset class to traditional financial assets. Portfolio-diversification can be achieved by balancing financial assets such as bonds, equities, and currencies by holding gold. The best timing to set up a gold hedge is when cyclical trends change, as they do right now. The Dow/gold ratio is presently indicating a change. It has turned from increasing to declining mode, which is a red-alarm signal warning wealth-holders that it is time to hedge financial assets and even to go overweight in gold.
The rising gold price and its implications have been largely ignored by the financial press and the investing public so far. The proposition that gold is still a monetary metal and still has a monetary role to play is ridiculed, while some central banks around the globe (e.g., that of Russia, China, India, Argentina, Brazil, to mention but the most important ones) are quietly remonetizing gold as they diversify out of dollars and build gold reserves from scratch. They keep this activity under cover as much as possible since it is not their intention to upset the golden apple-cart.
It is not too late to set up gold hedges as portfolio insurance. Private and institutional investors (including pension funds and insurance companies) have investments to protect worth some $180 trillion. Not more than $600 billion worth of gold bullion is presently earmarked as hedges for portfolio insurance. (Note that gold-mining shares are not eligible for this purpose.*) In other words, only about one-third of one percent of all the investments is protected by gold hedges while more than 99 percent is unprotected. Even this is a gross overestimate because most of the hedged portfolios are heavily overweight in gold, leaving that much less gold for the unprotected and thinly-protected ones. Be that as it may, if global investors decided to allocate even a modest three percent of their assets to purchase portfolio insurance, the consequence would be that $6 trillion paper assets would be chasing gold bullion worth $0.6 trillion, or one-tenth, at the present price of gold. This means ten bidders for every ounce of gold available. Portfolio insurance is still cheap, but the cost may quickly go up ten-fold or more, once the stampede starts.
Kaletsky would serve his readership better if he advised caution at this juncture. It is still too early to dismiss the possibility that the Titanic of the world economy, having collided with the derivatives iceberg tearing a subprime hole in the hull, may go down. Golden life-savers may yet come handy.

Wouldn't Bet Against Gold

TAKING GOLD IN THE INFLATION OLYMPICS

Friday, February 01, 2008 - FreeMarketNews.com
We still don't know which way this thing is going - the battle between greed and fear, that is. Stocks held steady yesterday. Oil too. The commodity index remains almost right on the 500 mark. Gold is sticking about $920. And yesterday, the Fed lowered its key lending rate another 50 basis points to 3%. At that level, it is substantially below the nation's inflation rate. The official inflation rate was last clocked at a little over 4%. Then, the government helpfully takes out the things that matter most - food and fuel - and comes up with a "core" rate of inflation, which is much lower. How much are consumer prices actually rising? Nobody really knows. Occasionally an economist or a newspaper will go out and buy things and then figure out how much they've gone up in price. Usually, they come up with "inflation" numbers closer to 10%. Naturally, results vary, depending on where you are and what you are buying.

I'd Add A Few Reasons To Why Bush Failed

Bush's failed Presidency
February 1, 2008 - 6:51am
He had a chance to lead: He blew that chance

By ANN McFEATTERS
President Bush is a forgotten man. Giving his last State of the Union speech, he was overshadowed by a tempest in a teapot. (Did Barack Obama snub Hillary Clinton or merely turn to talk with another senator?)
We need a breather from the campaign, so we will focus on why history is likely to record George W. Bush's eight years in office as a failed presidency.
Ideology has nothing to do with it; Bush had the opportunity to be a great president.
Former President Clinton famously complained that his term could never be acclaimed as "great" because he never presided over a war. (Instead he had peace and prosperity and squandered them, accomplishing little of moment.)
After 9/11, Bush could have become a great leader. But the very day that hell spewed from the skies, Bush did not know whether or not to return from Florida to Washington. His eventual leadership in those terrible weeks was steadfast but he used up the good will of most of the world by pushing his doctrine of preemption. Invading Iraq on false pretenses, he has overseen a war that has lasted longer than our participation in World War II with far less to show for it.
Bush's contribution to education (aside from mangled syntax) has been the No Child Left Behind Act. But it has amounted to an unfunded mandate on the states and embroiled thousands in angry confrontation by making teachers teach only what children need to pass tests and forcing cutbacks in such subjects as art and music.
Bush leaves the country with a $9.2 trillion debt, largely because of the war in Iraq, which he defends against all criticism. In an infuriating gesture, he waited until this month -- seven years too late -- to declare war on earmarks, the congressional practice of quietly tucking money away in the budget for special home-state projects.
He espoused the philosophy of "compassionate conservatism" but then abandoned it, leaving a few desultory "faith-based initiatives" and a larger gap between rich and poor. Not a thing has been done to help people with no health insurance, but he vetoed a plan to expand children's access to health care. He vows to cut out 151 popular programs to save $18 billion but has spent $609 billion on Iraq and Afghanistan.
He demanded that Social Security be privatized, but when the country vigorously protested, he gave up trying to keep entitlements from eventual meltdown.
With the nation fighting to stave off recession as food and energy prices soar and home foreclosures mount, he didn't have his own stimulus plan but endorsed a too-little-too-late plan devised in the House to give taxpayers rebate checks and incentives to businesses. He vowed to veto one-time checks for seniors dependent on Social Security or extension of unemployment assistance for the jobless. And how did his administration miss the signs that financial institutions were in crisis over sub-prime mortgages?
Bush's foreign policy dissolved into gauzy nothingness, victim of the endless war in Iraq. His legacy will be insisting, without factual basis, that democracy would spring "sui generis" to life in the Middle East and that Iran, Iraq and North Korea were an "axis of evil."
With evidence indisputable that the world faces a serious challenge in global warming, Bush abrogated what should have been U.S. leadership to deflect tomorrow's catastrophe. As for pursuing energy independence, for years he gave little but lip service.
Federal agencies are in disarray. Those supposed to guard the public's health, including the Environmental Protection Agency, Consumer Product Safety Administration and Food and Drug Administration, are widely conceded to be broken.
With debate raging over immigration, Bush could not even stake out a leadership position in his own party. Having stirred up a hornet's nest on the issue, he went inside the house and left it to others to deal with the stingers.
Hurricane Katrina and the bridge collapse in Minneapolis were stark testimony to the nation's crumbling infrastructure. But Bush had no plan to prepare the country to face fixing its roads, bridges and levees or care for its victims.
After the exhausting Clinton presidency, Bush had a strong economy and Americans' good will. The last eight years have been tumultuous, marked by arrogance, Bush's refusal to listen to the oldest and wisest in his own party and staggering incompetence.
It is difficult to believe that the e-mails the White House purposefully deleted, or the thoughtful letters Bush never wrote or the memoirs of disdained members of his Cabinet, such as Donald Rumsfeld and Dick Cheney, will cause historians to reverse that assessment.
There is good reason why the president's disapproval rating has been over 50 percent for longer than that of any other president in half a century. There is good reason why the GOP candidates almost never mention his name.
As Bush's would-be successors bark and bicker, joust and jostle, it is useful not to forget Bush or why we stage this contest every four years and what is at stake.

US On The Downside Of Economic Power

Newsday.com
U.S. loses its status as economic world power
BY TRUDY RUBIN
Trudy Rubin is a columnist and editorial board member of The Philadelphia Inquirer, where this first appeared.
January 31, 2008

DAVOS, SwitzerlandThe World Economic Forum has proved to be an uncanny barometer of global trends. Over the past decade, the United States has been lionized as world leader, economic giant and home of high-tech wizards such as Bill Gates.When the high-tech bubble burst, when deficits rose, when the Iraq war went sour, the shine on the American model dimmed. But, despite widespread dismay over U.S. foreign policy, few here used to question America's role as the world's unipolar power.What a difference a year makes. Davos 2008 has laid bare a world in which no superpower seems to be in charge. The unipolar American moment is deemed over, in part a casualty of the Bush administration's political and economic policies, in larger part the result of global economic changes that are shifting wealth elsewhere.But we have not entered a multipolar world: China and India, though on the rise, aren't ready to take the global lead, nor can Europe do so. The consensus at Davos seems to be that we now live in a "nonpolar" world, with America too strong to stand on the sidelines, but too weak to implement its agenda alone.The metaphor for Davos 2008 came when its executive chairman, Klaus Schwab, suggested onstage to Condoleezza Rice that America was a piano and the world the orchestra. Playing metaphorically on the secretary of state's talents as a pianist, Schwab asked whether the piano and orchestra could play together in harmony.Rice asked whether Schwab wanted to be the conductor. But among the 2,500 top chief executives, politicians and intellectuals at the meeting, many believe there is no conductor at all.The U.S. financial crisis grew out of years of massive lending for subprime mortgages during a housing bubble. The collapse of the bubble has undercut banks and revealed serious flaws in the entire U.S. financial system. Added to American foreign policy failures like Iraq and debacles like the response to Hurricane Katrina, this creates an image of American incompetence. What makes the American case so acute, in foreign eyes, is that it comes at a time when the United States is massively in debt to China and oil-rich countries like Russia and the nations of the Arab gulf. As America cuts interest rates to keep banks solvent, the dollar becomes less attractive to those countries who are keeping America afloat. Yet we need their capital to keep our ailing banks afloat.What was also stunning at this year's Davos was the growing self-confidence of Asian nations (except for Japan, which stayed much on the sidelines). China now sends large numbers of English-speaking entrepreneurs to Davos who are investing globally and mix on equal footing with top Western executives. All the panels on Asia were oversubscribed."It's remarkable how few have noticed we are entering an entirely new era of history - the rise of Asia," says Kishore Mahbubani, dean of Singapore's Lee Kuan Yew School of Public Policy. "By 2050," he adds, "the world's four largest economies will be China, the United States, India and Japan" - in that order.He also talks of an Asian continent where young people "are convinced they will do much better than their parents" - which used to be the American mantra.Yet, for the most part, I heard little triumphalism about America's dimming role. Just the opposite. None of the rising powers is ready for a global leadership role. International institutions have little power. And without a conductor to lead the global orchestra, there will be no concert.Davos 2008 was adrift as its members tried to figure out who might become that global conductor and handle the orchestra in the collegial manner suggested by Schwab. Most attendees were casting an anxious eye on the upcoming U.S. election.

Nicely Said.....................

"Abuses of civil liberties by the police, prosecutors, and courts do little to keep criminals off the streets. But they could turn your life into a nigh! tmare if you're falsely accused of a crime." -Harry Browne