Friday, December 27, 2013
“If you like your health plan, you can keep it,” is the lie of the year, according to Politi-Fact. But Barrack Obama has been operating under an even more momentous lie for his entire presidency, from the day he took the oath of office. With that oath, he swore to “faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
The Constitution states the president “shall take Care that the Laws be faithfully executed.” This is a duty, not a discretionary power. The president must enforce the laws as written. He has no authority to rewrite, amend, suspend, grant waivers to, or decide not to enforce them, but Obama has done all these. John Yoo, a professor of law (U. of Calif., Berkeley), writes, “Obama has pursued a dangerous change in powers of his office that disregards the Constitution's separation of powers between the branches of the federal government.”
On December 3, 2013, Jonathan Turley, a law professor at George Washington University, presented a written testimony to the House Judiciary Committee stating: “When a president claims the inherent power of both legislation and enforcement, he becomes a virtual government unto himself. He is not simply posing a danger to the constitutional system; he becomes the very danger that the Constitution was designed to avoid.”
One of Obama's first acts as president—only a month since he took the oath of office—was to announce his elimination of the Yucca Mountain site in Nevada for storing highly radioactive nuclear waste. He flouted decades of scientific study and countermanded the explicit decisions of Congress set forth in duly-enacted laws over many years. In 1982 Congress directed the government to assume responsibility for commercial nuclear waste. In 1987 it singled out Yucca Mountain for evaluation as the repository because of its remote and dry location. After years of research, Congress in 2002 endorsed the Yucca Mountain site. Between 1987 and 2009, when Obama put himself above the law by effectively revoking it, $13.5 billion was spent on the program; a five-mile tunnel was bored into the mountain, and hundreds of studies determined the safety of the site for thousands of years. The nuclear industry was also forced to pay $22 billion to the Energy Department for establishment of the repository. Obama is not a scientist, and his decision was not made from a review of the scientific research. But that is not the point, nor is the billions of dollars of taxpayer money that went down the drain. The point is that Obama had no authority to violate the law rather than faithfully execute it. He called for more study of the issue, which he had no power to authorize. (More than 20 years of study already was not enough?) He said nuclear power still had a place in the U.S. and his administration would be quick to offer an alternative. With no alternative suggested after almost five years now, it is apparent he had no intention of providing any. In his 2008 presidential campaign, Obama told Nevadans that if elected he would not allow nuclear wastes to be stored in Nevada. End of story. So much for his oath of office and the constitutional requirement he “take care that the Laws be faithfully executed.”
That was only Obama's opening shot against the Constitution. It was followed by a barrage of others.
The GM and Chrysler bankruptcies of 2009 were directed by a White House task force that upended established bankruptcy procedures. A major element of a bankruptcy is that debtors similarly situated get treated the same, but Obama violated this several ways, always to the benefit of unions. Under terms of the bailouts, Chrysler’s unsecured union benefit trust fund got paid instead of Chrysler’s secured creditors, and GM was required to pay parts manufacturer Delphi's union retirees $1 billion while its non-union retirees got nothing. What legal authority did Obama have for rewriting almost of a century of bankruptcy law as payback for political support from the United Auto Workers? None.
In the case of the BP oil spill in the Gulf of Mexico, Obama bypassed the courts and himself decreed the fine for BP. He also unlawfully imposed a moratorium on oil drilling, which drew a rebuke by the court–in vain.
Obama decreed “recess” appointments to the National Labor Relations Board and the Consumer Financial Protection Bureau by claiming the Senate was not in session, meaning no Senate confirmation was required. However, the Senate was not in recess but merely taking a break within a session. Two federal courts subsequently held these Obama appointments were unconstitutional usurpations and voided them.
Professor Yoo states, “Obama is the first chief executive since Richard Nixon to ignore a duly-enacted law simply because he disagrees with it.” Obama instructed his justice department to cease enforcement of immigration laws against certain illegal immigrants. By executive order he adopted the very conditions allowing immigrants to remain in the U.S. that Congress rejected by refusing to enact the Dream Act. Before Congress' rejection, Obama himself had repeatedly stated the Constitution forbade him from taking these actions without Congress.
Under an executive order by Obama, attorney general Eric Holder ordered U.S. attorneys to stop prosecuting certain drug defendants for crimes that carry mandatory sentences. This is certainly contrary to the U.S. Supreme Court in Kendall v. United States, 1938, which said allowing the president to refuse to enforce laws “would be clothing the president with a power to control the legislation of Congress, and paralyze the administration of justice.”
The president replaced congressional requirements for state compliance with the No Child Left Behind Act with new ones crafted by his administration. His administration also provided waivers to 42 states, Washington D.C., and Puerto Rico even though the law contained no provision for waivers.
Though the 1996 Welfare Programs Act required people on welfare to work or prepare for a job in order to receive federal benefits, the Obama administration waived the requirement.
There is no constitutional authority to order private companies to provide free services, but Obama's Department of Health and Human Services regulations require private insurers to provide free contraceptives to employees of objecting religious institutions.
According to our Constitution, only Congress can declare war. In a 2007 interview Obama said, “The president does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.” Yet he ordered airstrikes against Libya though that country had neither attacked nor threatened us. Similarly, he asserted he didn't need Congressional approval for taking military action against Syria because it had used chemical weapons. But Syria neither attacked us nor threatened to do so. Obama claimed his proposed military action against Syria was authorized by the War Powers Resolution, passed in 1973 as a result of the Viet Nam experience. But the WPR specifically states that it applies to cases where the U.S. is attacked or is threatened with attack.
Federal law requires the president every year to submit a budget to Congress by the first Monday in February in order to start the congressional budgeting process. In four years Obama failed to meet this requirement. Congress also failed to adopt a budget for four years, thereby allowing the president great leeway in allocating funds within each department of the executive branch. Before this year, the last thing Congress passed that resembled a budget was a 2009 spending bill that combined nine normal separate bills.
Obama violated the law in numerous ways regarding his signature act, the Affordable Care Act (Obamacare). That law specifically says it “shall apply to months beginning after December 31, 2013.” There is no provision for allowing the president to suspend or delay any part of it. Writing for the U.S. Supreme Court in 1998, Justice John Paul Stevens wrote: “There is no provision in the Constitution that authorizes a president to enact, to amend, or to repeal statutes.” So Obama was violating the law and the Constitution when he changed to 2015 the Obamacare requirement of 2014 as the year employers with 50 full-time workers must offer health-care coverage or pay fines. He also violated the law by suspending the requirement that individuals seeking subsidized health insurance prove their eligibility. He violated again when his Health and Human Services Secretary granted some 1,200 waivers from Obamacare requirements for hundreds of unions, companies and special interests.
In December 2013 syndicated columnist Charles Krauthammer wrote, “HHS...asked insurance providers to start covering people on January 1 even if they signed up as late as the day before and even if they hadn't paid their premiums. And it is 'strongly encouraging' them to pay for the transition for doctor visits not covered in their current plans (if covered in the patient's previous—canceled—plan). On what authority does a Cabinet secretary tell private companies to pay for services not in their plans and cover people not on their rolls?” Is this America?
Krauthammer also notes that the phrase “strongly encouraging” is an offer the insurers can't refuse. “Disappoint your federal master and he has the power to kick you off the exchanges, where the health insurance business of the future is supposed to be conducted.” Again, is this America?
Obama ignores the separation of powers and fails to respect Congress as an equal branch of government. At one point he famously even refused to negotiate with it. Rather than working with Congress, he told an audience in Denver that his administration will "look every single day to figure out what we can do, without Congress.” He treats Congress like a second class department of which he is the superior to determine whether or not it is doing its job. “We can't wait for Congress to do its job, so where they won't act, I will,” he said regarding his Jobs Bill. “It is the belief of this administration ... that we can't wait for action on the Hill," Obama said when signing an executive order regarding the FDA. “If Congress won't act soon to protect future generations, I will," Obama pledged. "I will direct my cabinet to come up with executive actions we can take ....” He ought to know—but apparently doesn't—that the executive branch must work with the Congress, not evade it, and it is not the president's role to determine what Congress' job is and whether or not it is doing that job. The Constitution determines what Congress' job is, and the voters are the ones to determine whether or not their representatives are doing their job.
In 1868 the House impeached President Andrew Johnson for defying the Tenure of Office Act, which prohibited him from firing anyone in Lincoln's cabinet. Johnson fired Secretary of War Edwin Stanton anyway. The Senate failed to convict him by a single vote.
Andrew Johnson committed a single violation of one law. Obama has committed multiple violations of multiple laws. Of course, with a Democratic majority in the Senate, Obama would never be convicted if impeached, and today there is far less concern about a president violating the law than when Johnson was president. It shows the pitiful, lawless, degradation of our once free country resulting from Obama “fundamentally transforming” America.
Wednesday, November 27, 2013
President Obama has failed to learn the simple basic lesson that the Pilgrims, who established the tradition of Thanksgiving Day in 1623 (not 1621, as often claimed), learned the hard way. The bounteous harvest they were gratefully celebrating on that day was preceded by years of starvation. They arrived in mid-December 1620, and half of them died the first year. Though the Indians helped them survive, the colonists were chronically short of food, and their numbers continued to dwindle.
Under the Mayflower Compact, which governed the colony, “all profits and benefits that are got by trade, working, fishing or any other means” were community property in the “common stock” of the colony. And “all such persons as are of this colony are to have their meat, drink, apparel and all provisions out of this common stock.” People were required to put in everything they could—they were forbidden from growing their own food—and to take out only what they needed. It was a policy of “from each according to his ability, to each according to his need,” centuries before Karl Marx seduced millions of people with those words.
The communal system was such a failure that in the spring of 1623 the Pilgrims feared they would not survive another poor harvest. “So they began to think,” wrote the colony's governor William Bradford, “how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves....And so assigned to every family a parcel of land.....This had very good success; for it made all hands very industrious, so as much more corn was planted then otherwise would have been by any other means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content.”
Far from making the people “happy and flourishing,” the communal system, wrote Bradford, “was found to breed confusion and discontent, and retard much employment that would have been to their benefit and comfort.” Not surprisingly,“young men that were able and fit did repine [complain] that they should spend their time and strength to work for other men's wives and children, without recompense. The strong, or men of parts, had no more division of food, clothes, etc. than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labor, and food, clothes, etc. with the meaner and younger sort, thought it some indignity and disrespect unto them.”
Under the circumstances, there was little incentive to produce food. Severe whippings were tried to induce greater production, but they did little more than increase discontent.
The social disharmony, along with the food shortages, disappeared once the concept of private property was introduced and people could keep whatever they produced, or trade it away as they saw fit. In 1647 Bradford was able to write “any general want or famine hath not been amongst them since to this day.” Such was the success of the new system that in 1624 the colonists began to export corn, trading it for beaver pelts, other furs, and meat.
In 1624 the Pilgrims took a further step in property rights. The system of assigning land “to every man for his own particular” had certainly increased the production of corn, but the assignment was drawn by lot yearly. Thus there was not much incentive for making improvements to one's tillage when someone else might draw that land next year. The men requested of the Governor “to have some portion of the land given them for continuance, and not by yearly lot....Which being well considered, their request was granted.”
Jamestown, the first permanent English colony in America, established in Virginia in 1607, had an experience similar to the Pilgrims at Plymouth. Early years of starvation were followed by converting to a system of property rights and a free market, which brought abundance. Under collectivism, less than half of every shipload of settlers survived the first twelve months at Jamestown. Most of the work was done by only one-fifth of the men, to whom the socialist system gave the same rations as to the others. During the winter 1609-10, called “The Starving Time,” the population fell from 500 to 60.
But when Jamestown converted to a free market, there was “plenty of food, which every man by his own industry may easily and doth procure,” wrote the colony secretary Ralph Hamor in 1614. Under the previous system, he said, “we reaped not so much corn from the labors of thirty men as three men have done for themselves now.”
We should not underestimate the significance of the experiences at Plymouth and Jamestown. Property rights and free markets were truly revolutionary and fundamental to capitalism. Without them, all the wealth, progress and human betterment that followed could not have occurred. According to Sartell Prentice, “In England, meanwhile, farming 'in common' continued to be the general practice for another hundred years. Not until the second decade of the seventeen hundreds did 'setting crops for their particular' begin to be slowly accepted in England—and decades were to pass before the new practice became sufficiently widespread to provide an adequate food supply for the population.”
Even today, centuries later, there is still inadequate understanding of the importance of property rights and free markets. A recent BBC poll of 29,000 people worldwide found only 11 percent think free-market capitalism is a good thing. One-quarter of those polled said capitalism is “fatally flawed.”
There is no shortage of people who want a political system that gives them the fruits of other men's labors, as at Plymouth and Jamestown. And there is an abundance of politicians willing to accommodate them at the expense of other men's property. The result is repetition of the collectivist systems (socialism, fascism) that have failed in the past, and no end to the discontent and resentment they engender. But people can be seduced to try them again and again by lofty idealistic statements, eloquent messages of hope, and promises that can never be kept. All of which allow the covetousness of other people's property—whether for personal gain or altruistic, collectivist aims—to masquerade under noble-sounding phrases.
When Barrack Obama was campaigning for the presidency, he promised to redistribute other people's wealth for the collective good. In a short but spirited dialog with a small businessman, “Joe the plumber,” Obama argued that society would be better off if Joe's taxes were increased and the money distributed more widely to those less well off. What is this but a denial of Joe's property right to his own money and a repetition of the socialist distribution schemes that were so disastrous at Plymouth and Jamestown?
Once he was president, Obama came up with a health plan that would require everyone to buy health insurance—as though people's money was not theirs by right but, rather, was part of the “common stock” of community property, to be allocated by the leader for the collective good! And, just as at Plymouth, people who did not cooperate would be punished—not by severe whippings as was done there, but by the more civilized penalty of seizing their property (money) through fines if they refused to buy health insurance.
Contrast the government inflicting pain and penalty to force compliance compared to the benefit and satisfaction—even happiness—from market transactions, which people undertake without force or penalty in order to enhance their lives and are far more effective than socialistic distributions. Obama said, "We are fundamentally transforming the United States of America." He is indeed, wiping out the fundamental principles that allowed America to prosper.
Obama claimed, "This is our moment, this is our time to turn the page on the policies of the past, to offer a new direction." Yes, he is “turning the page on the policies” of property rights and free markets. But the direction he is offering is not new but old. It is the ancient system of four centuries ago, before property rights, those basic rights which are still denied in varying degrees in many countries that have never discovered free-market capitalism, much less embraced it—and whose standard of living reflects that fact. And those countries comprise a large share of the 89 percent of the world's people who do not think capitalism is a good thing—but who look with envy on America's success and demand we redistribute a share of our wealth to them.
Friday, November 08, 2013
The bumpy downward action of gold prices since the first of the year has led to increased skepticism, at least in the West, about about the metal's future. Last week the Wall Street Journal ran an article titled “Gold Fades From Investment Picture.” It cited a sale of 12,000 ounces of gold by the Russian central bank. That may sound like a lot, but let's put it in perspective. 12,000 ounces is less than one-half (0.37) of a metric tonne—but Russia has been regularly buying about 100 tonnes every year. In the last 4 and 1/2 years, it bought 477 tonnes of the metal. So the sale of less than a half tonne is certainly not disturbing. That sale followed 11 consecutive months of Russian purchases, totaling 12.722 tonnes in 2013, including 6.3 tonnes in July alone.
Central banks are still buying gold, but perhaps less of it. Through August of this year, they added 6.2 million ounces, compared to 9.6 million ounces for the same period in 2012. Significantly, the report that central banks are buying less gold does not include China's central bank. The central banks of Canada, Denmark and Mexico were among the few who sold small amounts of gold so far in 2013, but at least 15 central banks bought gold, including Turkey's, which bought 82 tonnes.
China has not disclosed its central bank gold purchases since 2009, but it is known to have been buying from, among other sources, mines within the country. These include mines owned by the Chinese as well as those owned by foreign companies who must sell to the government at market prices. China is the top gold producing nation in the world. It is also the top consuming nation as the public as well as the central bank are avid buyers. The government encourages people to buy gold as part of its goal to “store wealth among the people” and makes it easy for them to do so. They can buy it at any bank or at gold stores throughout the country. These look like jewelry stores, but they exist to sell gold. The government even runs TV ads encouraging people to buy gold.
Vast amounts of gold enter China, mainly from Hong Kong, which is a Special Administrative Region that operates under different rules from the rest of China, and is the most significant supplier of the coins and bars the public buys.
Vast amounts of gold enter China, mainly from Hong Kong, which is a Special Administrative Region that operates under different rules from the rest of China, and is the most significant supplier of the coins and bars the public buys.
This chart illustrates four important things: (1) the steady upward trend in Shanghai gold deliveries throughout the period and the surge in 2013, (2) Shanghai's decline in the last month is tiny compared not only to the previous month but to many larger declines throughout the chart which did not reverse the long uptrend, (3) the short vertical black lines accompanying each red line on the chart show that gold deliveries on New York's Comex are very minor compared to Shanghai's and, moreover, that Comex's decline last month was several-fold larger than occurred on the Shanghai exchange, and (4) that Shanghai's physical delivery is almost equal to the gold production of the entire world. This year the SGE is on track to deliver 2125 tons of gold this year, 87 % more than in 2012.
Western media and other information sources concentrate on what is happening in U.S. markets and seldom enlighten Americans about what is happening in Shanghai, Hong Kong and other Asian markets, which in this case tell a vastly different story. After the $200 drop in the gold price in April, Americans were told of the drop in the gold price and mass selling of gold ETFs and gold mining shares in the U.S., but few were made aware of the upsurge in physical gold buying in Asia. For example, “buyers outnumbered sellers by a huge margin.” according to Reuters. “At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction.” Bullion traders reported trading volumes doubled and the buy/sell ratio was 95 to 1. Premiums for physical delivery in Shanghai jumped to an unheard of $34.82 per ounce. Japanese individual investors doubled gold purchases on April 17 at Tokuriki Honten, the country’s second-largest retailer of the precious metal. In Australia, “the volume of business… is way in excess of double what we did last week,… there’s been people running through the gate,” said Nigel Moffatt, treasurer of Australia’s Perth Mint. In Bangkok, Thailand, crowds filled the stores and eagerly waited in multiple lines to buy gold jewelry and coins. Merchants in Macau and Hong Kong reported 150 percent increase in sales in late April. Chinese gold imports from Hong Kong more than tripled since 2012, from 62.5 metric tonnes to 223.5 tonnes. On April 26, the Chinese Gold & Silver Society in Hong Kong reported it had sold out all its inventory and placed orders in Switzerland four times larger than normal in response to demand. According to Economic Times, India imported 142.5 tonnes in April and 162 tonnes in May, compared with an average monthly rate of 86 tonnes in the first quarter 2013.
Koos Jansen [link] is one of the best sources for information on China. Here is one of his charts, which shows the phenomenal growth in Chinese gold buying:
This year an unprecedented amount of gold has been distributed in a historic transfer of wealth from the West to the East. It came mostly from the United Kingdom. As of October 10, 2013, 1137 tonnes of gold were exported so far this year from the UK with 1002 tonnes going to Switzerland, 101 tonnes to Hong Kong and 89 to Dubai. These exports came mostly from ETF sales of gold stored in the UK and from the London Bullion Market Association. Four of the largest gold refineries in the world are in Switzerland. They have been recasting some of the 400-oz gold bars into smaller, more convenient sizes and exporting them to Hong Kong, which serves as an outlet not only to China but to Taiwan, Thailand and other Asian countries.
Data from the Hong Kong Census and Statistics Department show the phenomenal increase in Hong Kong-Switzerland gold commerce, which is a conduit for the massive transfer of wealth to the East.
After WWII when there were fears of an invasion from the Soviet Union, Germany stored much of its gold in the U.S., London, and France. In 2012 the federal audit office, the Bundesrechnungshof, told legislators that Germany's gold in foreign storage had never been audited and ordered that this to be corrected. In October 2012 the government requested the return of all of Germany's 1,500 tonnes of gold stored in the U.S. The Fed, according to NSNBC.me, said “that isn’t possible to do.” The Fed refused to allow the Germans to even see their gold, citing “security” and “no room for visitors”
Later a few German representatives were allowed only into an anteroom, not an actual storage area, below the New York Federal Reserve Bank, where the gold was said to be stored. They were shown 5 or 6 gold bars and told these were “representative for Germany's holdings.” But if gold bars are not numbered and allocated, they can be shown to any number of banks as “their” gold. Apparently there later was a second visit, when the Germans were allows to “look into” one of nine storage rooms but were not allowed to enter the room or touch the gold.
Three months later, in January 2013, it was announced that the U.S. and Germany agreed the U.S. would return 300 tonnes of gold to Germany in a series of shipments that would take until 2020 to complete. The U.S. would continue to store the remaining 1,200 tonnes of Germany's gold.
All this certainly gives the appearance the New York Fed did not actually have the gold. If the bank had it, why not give it to Germany? Why would it return only 300 tonnes? And why would that take 7 years to accomplish this? People who know more about transporting such cargo than I do say it could be done in a week if necessary; certainly several weeks or even months would be more than adequate—but 7 years? Germany had previously repatriated 940 tons of its gold from the Bank of England without undue delay. If the New York bank did not have the gold, it would have to buy it to repay Germany, and a large purchase would push up the price, which the bank certainly did not want. The needed gold would have to be bought in small amounts over an extended time. Alternatively, and more likely, the bank may have the gold, but it may have been leased, hypothecated or encumbered in some manner so that it could not be transferred to Germany. These possibilities, too, would require additional time to unwind.
Now let's examine the big drop in the gold price in April. It began on April 12 when 400 tons of gold were offered for sale immediately on the opening of the market. Such a large sale on the opening was obviously an intent to panic the market, which happened. If an investor had a large amount of gold to sell, you would expect he'd want the best possible price. Instead of selling the full amount immediately, he would have split it into several smaller orders fed in throughout the trading day, or perhaps several days, in order to minimize the downward impact on the price. Also, many traders take their clues from what happens on the open before they place their own orders. The huge sale of 400 tons on the open immediately set a downward tone for the market. And as prices plummeted, stop-loss orders were hit, adding more selling pressure and further depressing prices.
The sale of 400 tons was so large it almost certainly came from a central bank. The Fed was an obvious choice. Of course, the Fed would not place such an order itself; it would be done through one of the Fed's bullion banks (those “too big to fail”) such as Goldman Sachs or J.P. Morgan. A large drop in the gold price would present an opportunity to acquire gold at bargain prices and help the Fed out of the bind it had created for itself in the shortages in German and other central bank accounts. Of course, it would also create a profit opportunity for the bullion banks themselves.
Most Americans find it incredulous that the Fed would be involved in manipulations that left it unable to honor its custodial agreement with Germany. But the European Central Bank website states, regarding statistical treatment of Eurosystem's International Reserves: “reversible transactions in gold do not have any effect on the level of monetary gold regardless of the type of transaction (i.e. gold swaps, repos, deposits or loans), in line with the recommendations contained in the IMF guidelines.”6 (Emphasis theirs). Thus central banks are permitted to carry physical gold on their balance sheet even if they've swapped it or lent it out entirely.
It is also significant that back in 1999 a study by the International Monetary Fund found that central banks of 80 nations were lending out their gold reserves. The loans amounted to 15 percent of their gold. The central banks were operating as fractional reserve banks.
In May 2013 a research assistant for Stansberry & Associates visited the Federal Reserve's gold vault in downtown Manhattan. He was surprised how tiny it was, only about the size of a locker room at his high school. From his estimated size of the vault, he calculated it could hold 615,000 bars of gold. He was told there were 533,000 bars there—but the vault was no more than half full, at best. He calculated a discrepancy of 106 million ounces, equal to $169 billion.
In 1998 Fed chairman Alan Greenspan testified at a House Banking Committee, “Central banks stand ready to lease gold in increasing quantities, should the price of gold rise.” In other words, if gold prices go up, the Fed would make sure they come back down. Why? Apparently because of fear a rising gold price would weaken the dollar's exchange rate and the Fed's control of interest rates, but it would also discourage people from buying gold as an investment. In 2013, gold prices were much higher than in 1998, giving the Fed a stronger reason for knocking down the gold price.
Solid gold serves as a basis for the “paper gold” of futures contracts and creates a multiplier effect in the process. Here's how it works. Big bullion banks borrow gold from central banks and then bring the leased gold to market. They sell the same gold to multiple parties and use the cash to buy something (e.g. bonds) and use a portion of the proceeds to hedge their future exposure through futures contracts. Leased gold must eventually be returned to the central banks because the leases have time limits. The time limit is the window of opportunity for the buyer of the lease, but it is also a window of risk that the gold price may rise and eventually force the bullion bank to buy at a loss in order to be able to return the leased gold to the central bank. The solution is to go into the futures market and buy for delivery of gold at a specific suitable price on a specific date in the future. Then the bullion bank is assured of a future profit and doesn't care whether the price goes up or down in the meantime.
New York's Comex is the leader in gold futures contracts, accounting for 82 percent of the world trade in them. But the overwhelming majority of these do not involve any physical exchange of the metal; they are simply paper trades—or now, digital ones—because most positions are closed out before the delivery date. A buyer will almost always sell his contract before delivery is due, and a short seller will do just the opposite. Neither trader will see the gold, and the Comex will have exactly the same amount of gold in storage as before those traders participated. Physical delivery is a very small part of Comex business. The Comex warehouses gold to back its contracts and offer a delivery option, though some concerns have been raised about its adequacy of the metal in the event of a large increase in delivery requests.
The volume of physical deliveries from the London Bullion Market is nine times larger than that of the Comex. The LBM is the center for a very large majority of the leasing operations I have just described. Many members of the Comex exchange are also members of the LBM.
Decades of excessive U.S. government spending—which has accelerated under President Obama—has created doubts about the future of the dollar. In his first term of office, he added as much to the national debt as all the presidents from George Washington through George W. Bush combined. In the fifteen months following collapse of the housing/mortgage bubble in 2008, the Fed created more money than in all the years combined since 1913 when it was founded. Because the dollar is the reserve currency of the world's monetary system and 85 percent of foreign exchange transactions are denominated in dollars, distrust has grown worldwide about not only the dollar but the international monetary system itself. The uncertainty about how all this will end—which must happen—has led people to turn increasingly to possession of physical gold. ETFs, gold mining stocks, mutual funds, and commercial custodial accounts of gold all depend on a counterparty, which may fail in a time of turmoil.
Distrust will continue to grow as it becomes increasingly evident that the dollar's situation is hopeless, that government policies are not working as promised, that one must find a refuge from the dollar—and that gold is the best option. Here are some facts to consider, which point to further distrust—and ultimate demise—of the dollar:
(1) the federal debt, now at $17 trillion, is greater than everything being produced in the country. The gross national product (GDP) of the U.S. was $15.89 trillion in 2012 ($15.97 trillion in Q3 estimate for 2013).
(2) The $17 trillion debt does not include future costs of Social Security, Medicare and Medicaid, which run $55 trillion, bringing the total to $72 trillion. Government Medicare and Medicaid costs, even without ObamaCare, will rise 5 times faster than Social Security costs in the future. Even more with ObamaCare.
(3) Total net household wealth in the U.S. (including real estate, durable goods, deposits, pensions, mutual funds, corporate equities and “other”) is $74.82 trillion. Thus what the U.S. government owes roughly equals everything in the country owned by everyone.
(4)The GDP of the entire world is estimated at $72 trillion. Thus the U.S. with 4 and 1/2 percent of the world's population owes roughly what the entire world (including the U.S.) produces.
(5) Several economists project far greater future federal government costs. For example, Laurence Kotlikoff, a Professor of Economics at Boston University, a Fellow at the American Academy of Arts and Sciences, a Fellow of the Econometric Society, and a member of President Reagan's Council of Economic Advisers, puts the cost of the federal government's unfunded obligations at $202 trillion, almost 3 times the GDP of the entire world.
The economy in the U.S. added an average of only 143,000 jobs monthly in the third quarter of 2013, not enough to equal population growth. That's down from 182,000 in the second quarter and 207,000 in the first quarter. Unemployment remains stubbornly above 7 percent. The labor force participation rate, which is the number employed plus those looking for work, has fallen since Obama became president in January 2009. The rate then was 65.7%. By the end of Sept. 2013, it had fallen to 63.2%, as the number of Americans not participating in the labor force increased by more than 11 million people. Massive government spending and interventionism by the administration has failed to stimulate economic growth. That requires free markets and sound money.
The situation in Europe is also discouraging. Despite bailouts of Greece and several other countries and massive loans totaling a trillion euros by the European Central Bank to 521(!) banks in December 2011 and to 800(!) banks in February 2012, the promised results have not occurred. The European Union on November 5, 2013, downgraded its expectations for euro-zone growth next year and said the unemployment rate will probably stay near record high levels through 2015. France received two extra years to bring its deficit under 3% of GDP as required by EU rules. Spain is forecast to miss its budget target by a wide margin. The latest government plan, negotiated with the EU, called for a deficit cut to 4.1% of GDP, but the European Commission now forecasts the Spanish deficit at 6.6% in 2015. And Spain, Portugal and Greece could be left with unemployment rates above 15% for years. The international inspectors say Greece must take further measures to cover a projected failure to meet its target for next year and will require additional aid in mid-2014, when the current aid package expires. But Greece has refused any further across-the-board budget cuts or tax increases. So what will happen?
The grand worldwide experiment with fiat money has failed. It will come to an end. The world has never experienced such a lengthy period as we have now seen without a money backed by precious metal. That will change. If the U.S. and the rest of the Western world do not return to gold-backed money, some other country will. Think China. A gold-backed Chinese currency would attract wide support in Asia and perhaps from countries like Russia and Germany.
One way or another, the world will return to gold because it is necessary for a sound monetary system, which, in turn, is necessary for economic growth and the exercise of individual rights. That is what freedom means and what it requires.
“Gold is money. Everything else is credit.”--John Pierpont Morgan.
Monday, October 14, 2013
Hundreds of thousands of government workers have been laid off. National parks, monuments and other federal tourist attractions have been closed, veterans have been shortchanged, etc. All because the Republicans in the House of Representatives didn't vote the necessary money for them, right? Wrong! The House voted for all the money to keep all government activities going—except for Obamacare. Except for federal employees involved in Obamacare, all the other layoffs and closure of the 401 national parks, etc. were not done for lack of funds but for dishonest political policy. That policy was to create unnecessary costs and inconveniences—and blame the Republicans—so people would be angry and clamor for Republicans to approve Obamacare to end the artificial hardships the administration has imposed on them.
Last week the eminent scholar, and author of more than 40 books, Thomas Sowell wrote in his syndicated column: “If [Senate Majority Leader] Reid and President Obama refuse to accept money required to run the government, because it leaves out the money they want to run Obamacare, that is their right. But that is also their responsibility. You cannot blame other people for not giving you everything you want. And it is fraud to blame them when you refuse to use the money they did vote, even when it is ample to run everything else in government.”
Furthermore, Sowell went on to say, “When Obama keeps claiming that it is some new outrage for those who control the money to try to change government policy by granting or withholding money, that is simply a bald-faced lie. You can check the history of other examples of 'legislation by appropriations,' as it used to be called.” Obama now denigrates this historically accepted process by calling it “extortion” and “ransom” and utilization of it as “irresponsible.”
Last week Ron Allen reported in the Washington Examiner that the White House Office of Management and Budget ordered National Parks Director Jonathon Jarvis to close the parks. A national park ranger said he and his colleagues had been told “to make life as difficult for people as we can.” Allen writes, "Jarvis and his Park Service rangers have even closed off access roads and parking lots at Mount Vernon and the Claude Moore Colonial Farm Park in Virginia, just outside Washington. These are privately owned sites that get no federal money and depend on tourism and special events to keep their doors open and serve the American public. October is their busiest month, and they will lose tens of thousands of dollars because of these perverse lockouts. They will likely never replace that money....
“The furloughed federal workers will eventually get paid. The tourists Jarvis, Obama and Senate Majority Leader Harry Reid are shafting will never get their money back for flights and fees already paid; hotel and concession operators will never be able to recoup money they lost because the public was barred from their events and facilities....
“Hunters were barred from U.S. Fish and Wildlife Service lands in Alaska, after spending thousands of dollars, and without being given any notice of the closures until they arrived. This outrage violates laws that require notice before areas can be closed to the public.”
“[R]ecreationists are being turned away at popular sites that support thriving local economies from the Oregon Dunes National Recreation Area to the Gulf Islands National Seashore off Florida and Mississippi, and Vermont’s snowmobiling favorite, White Rocks National Recreation Area....
“Groups of Grand Canyon river rafters are being stopped at Lee’s Ferry, Arizona, by armed park rangers and banned from floating down the Colorado River through the national park. One group from Philadelphia spent over $30,000 for the non-adventure and faces hundreds of dollars more for flight-change fees, to go home angry and disappointed.”
Don Amador, a promoter of motorized outdoor recreation and founder of TrailPAC, says, “National Forest Service and Bureau of Land Management lands are likewise closed. Hunters are finding their expensive permits and tags are worthless in the middle of deer season. Some of my friends have been booted out of Forest Service campgrounds. Public land volunteer cleanups by the Off Highway Vehicle community have been cancelled. Rangers are giving tickets to recreationists on roads that have not been gated.”
The specter of government default because of failure to raise the debt ceiling has caused an even greater scare than the shutdown over Obamacare. But Sowell calls this “perhaps the biggest of the big lies” of government. He says, “Tax money keeps coming into the Treasury during the shutdown, and it vastly exceeds the interest that has to be paid on the national debt. Even if the debt ceiling is not lifted, that only means that the government is not allowed to run up new debt. But it does not mean that it is unable to pay the interest on existing debt.”
Moody's, a major credit agency, supports Sowell. In a memo dated October 7, it states: "We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving the creditworthiness intact. The debt limit restricts government expenditures to the amount of its incoming revenue; it does not prohibit government from servicing its debt.” So Obama is simply engaging in fear mongering in order to authorize more spending and an even larger debt.
Thursday, September 12, 2013
A general optimism prevails in the United States and Europe that the economies have finally turned the corner and growth is resuming. In the U.S., automobile sales are up and the housing industry has been improving, but there are many negatives which show overall optimism is unwarranted. In Europe, too, there have been modest improvements—some negative growth factors have become less negative—and there is a general feeling that the bailouts of Greece and other countries are working well. Below we explain some less favorable facts about the U.S. and Europe which cannot be ignored. They pose continuing problems.
The rate of economic growth declined over the past year to 1.6% from 2.8%. The employment figures released on September 6 showed August added 169,000 jobs, not enough to keep up with the growth in population. Moreover, the figures for June and July were revised downward by 74,000 jobs. June figures were also revised downward a month ago as were those for May. At the recent rate of hiring, employment won't get back to pre-recession levels for more than eight years. Of the new jobs created in August, a disproportionate number were low-paying ones in retail sales and restaurants.
Unemployment declined in August from 7.4% to 7.3%, but this was mostly due to the increase in the number of people who had stopped looking for work because they don't believe they can find a job. If they were counted as unemployed, the unemployment rate would be near 10%. There were also 7.9 million Americans who wanted full-time work but could only obtain part-time work. If these were included with those who have stopped looking for work, the rate would be 13.7%.
August was the 40th consecutive month in which more unemployed workers left the labor market than found jobs. Should we be asking “Is the economy going up or down?” In August the number of people reporting they had jobs—a separate survey from the payroll calculations of employment—fell by 115,000. Four years after the official end of the recession, in 2009, there are still 1.9 million fewer jobs than at the peak in 2008. And even though price inflation is now very low, workers' pay still isn't keeping up with it. According to Labor Department data, the average hourly pay for a non-government, non-supervisory worker, adjusted for price increases, declined to $8.77 from $8.85 at the end of the recession in 2009.
The labor participation rate includes those working plus those looking for work. In August this measurement was the lowest since 1978. This number has continued to decline throughout the so-called recovery from the recession. This recovery has been the slowest and longest from any recession in our history—in spite of the $831 billion stimulus program which was supposed to create economic growth.
One must question whether that stimulus program aided growth or retarded it. According to the Congressional Budget Office, every job created by the stimulus program cost the taxpayers between $500,000 and $4 million. Not only was the stimulus program ineffective, it added to the national debt, which retards future economic growth.
The euro-zone economy in the second quarter grew at a rate of 0.3%, compared to the previous quarter, ending six consecutive quarters of contraction. That is far too sluggish to overcome still-rising debts and massive unemployment, which is still over 12%. Charles Wyplosz, economics professor at the Graduate Institute, Geneva, says, “If we had 3 or 4 years of growth at 2% to 3% annually then we would probably get out of the woods...But I don't know where such growth would be coming from.”
The euro-zone economy is still 3% smaller than in early 2008 when the economic crisis hit. In many countries far more businesses are failing than are being founded, and there is more firing than hiring. And countries who received bailouts are not doing as well as anticipated and may require further aid, adding to their debts, as we explain below.
In August, Greece reported budget data showing a surplus compared to last year's steep budget deficit. But the economy contracted by 4.6% in the second quarter, and unemployment was still over 27%. The country's GPD has declined for 20 straight quarters as the nation's recession drags on for six years.
German Finance Minister Wolfgang Schauble said Greece will need a third bailout in order to avert bankruptcy. Der Spiegel reported the German central bank expects new outside financial aid will be necessary for Greece by the beginning of 2014 at the latest.
Greece's debt-to-GDP ratio is expected to reach 176% this year, far above the 120% the International Monetary Fund accepted as “sustainable.” But even the 120% level is double that of the European Union's monetary pact, which states member nations must limit their debt-to-GDP ratios to 60%.
The 120% level is highly suspect. As we pointed out in our book The Impending Monetary Revolution, the Dollar and Gold an IMF report in December 2011 said that a small shock to this “accident prone” program could send “debt on an ever increasing trajectory.” A lower growth rate, smaller privatization receipts, higher interest rates than assumed, or a worse budget performance could leave Greece's debt-to-GDP at 159% in 2020, said the IMF. A report in 2011 by three economist at the Bank for International Settlements concluded that the threshold for sustainable debt was a debt-to-GDP ratio of 85%—not 120%—based on studies of 18 countries from 1980 to 2010. Remember, too, that it was the revelation that the Greek ratio had gone to 113.4% in 2009 that triggered the Greek crisis.
The IMF engaged in “arithmetical gymnastics” to arrive at a debt-to-GDP for Greece of 120% for 2020. The Wall Street Journal has noted that it is only because the IMF “accepted these mostly fictional debt outlooks” that it and the other contributors to the Greek bailout now stand to lose money. The IMF even tossed out its own rule against lending to countries whose debt isn't “sustainable in the medium term.”
The IMF worries that without another bailout, Greece will be unable to repay what it owes the IMF from the previous bailout. The IMF now says Greece's longer-term debt targets cannot be met without forgiveness of some of the nation's debts. It insists it will not forgive any repayment of its loans to Greece but is pushing for the European countries who were partners in the bailout to do so—so that Greece will have enough money to repay the IMF's portion of the bailout! You can imagine how that has gone over with those countries! Germany, Finland, Austria and others have stated the IMF should take its share of any losses along with the euro-zone governments.
After declaring the need for additional debt relief for Greece, the recent IMF report noted: “Risks remain to the downside, mainly from lower growth and potential fiscal and privatization slippages.” It emphasizes that the Greek government has failed in almost every instance to hold up its end of the bailout bargain. For example, privatization of state assets is now expected to yield €22 billion through 2020, less than half what was predicted in March 2012.
Greece's debt and growth problems are too big to ignore for long, notes Gabriel Sterne, senior economist at Exotix investment banks. “These are a couple of cans that are perhaps too heavy to kick down the road.”
While Greece and other troubled countries have undertaken austerity measures that cut spending and reduce social benefits in order to salvage their economies, France's socialist President Hollande has done just the opposite. He increased the government budget deficit, raised the minimum wage, and lowered the minimum retirement age from 62 to 60, reversing the raise by former president Nicolas Sarkozy.
Hollande's government increased taxes by over €7 billion euros ($9.3 billion) and added €20 billion to the budget while cutting spending by only half that amount. Next year's budget proposes €6 billion in new taxes. Business investment has fallen every month since Hollande took office 15 months ago. A Markit Purchasing Managers Index over 50 shows economic growth, below 50 shows contraction. France's PMI dropped further, to 47.9 from 49.1. French unemployment, now above 10%, has increased for the 23rd month in a row. France's debt-to-GDP ratio, which was 31% in 1980, 57% in 1994 is now over 90%, the highest of any European country not receiving a bailout.
The IMF in August urged Hollande to scrap the new taxes, saying France's failure to grow the economy will have “significant outward spillovers” into other euro-zone economies.
Spain's GDP declined 0.1% in the second quarter. Though modest, this was the eighth consecutive quarterly contraction.
Spain's unemployment rate fell for the first time in two years. But the drop of almost a percentage point still leaves the rate above 26%—well over twice the euro-zone average. Furthermore, the decline doesn't really indicate an upturn in the economy because more people stopped looking for work than found jobs. Almost all the jobs created came from coastal areas where summer vacation jobs are concentrated. Jobs continued to be lost in sectors like manufacturing and construction.
Spain's debt-to-GDP ratio—which was only 36% in 2007 and Spain had a triple-A credit rating—is expected to be over 100% by 2015, according to the IMF.
Italy's debt-to-GDP ratio is on course to be over 130% for 2013. The nation would need an annual average economic growth of around 3% over the next 20 years just to reduce its debt-to-GDP ratio to 90%. How can this be done in a nation that since 1999 has averaged only 0.5% growth annually?
The number of Italians living below the poverty level has increased by 14% in the last two years.
Portugal would have to increase its average economic growth to as much as 6%—nine times its average since 1999—in order to cut its debt ratio to 90%.
Portugal needs €14 billion in 2013 and €15 billion in 2014 to repay creditors, according to the “troika” managing the bailout (the European Central Bank, the European Commission and the IMF). Portugal will need a second bailout on top of the original €78 billion of the first bailout.
Cyprus is widely expected to need more money. It's economy is in a free fall despite its €10 billion bailout. Analysts say the bailout forecast of an economic contraction of 8.7% this year is far too optimistic. Unemployment is already at 17.3%, well above the bailout forecast of 15.5%. While people are allowed to make limited cash withdrawals, 90% of the deposits at the nation's largest bank are frozen during restructuring. Capital controls isolate the country from the rest of the euro zone. Most small businesses are operating on a cash-only basis.
Why National Deficits Matter
Nobody can ever get out of debt by borrowing successively larger sums to cover successively larger debts. Neither can governments. Eventually debts are repaid or the borrower goes bankrupt. In the U.S. the Federal Reserve prints money enabling the federal government to spend it today by borrowing from our children and grandchildren. They will be obligated to pay it, but they will never be able to do so. The federal gross national debt is now approaching $17 trillion. (It is projected to be $17.2 trillion by the end of 2013.) At $17 trillion, the U.S. debt-to-GDP ratio is 106%. According to the IMF, meeting America's obligations will require an immediate and permanent 35% increase in all taxes and a 35% cut in all government benefits. That's not going to happen. It can't happen. Instead America will be bankrupt. By 2025, entitlement spending and debt payments are projected to consume all federal revenue. And having the Fed print vastly more money to pay our obligations will not solve the problem; it will merely bring inflation that destroys the value of the dollar.
What about more stimulus spending? Politicians will certainly clamor for this as a solution, but it won't work. Obama's colossal $831 billion stimulus bill didn't work; it made the problem worse by further ballooning the national debt. More and larger stimulus programs would do the same. Economist John Maynard Keynes claimed spending—for anything—was the driver of the economy and that government spending produced a multiplier effect as dollars were, in turn, spent over and over throughout the economy. But Hunter Lewis, Keynes biographer, says, “There is no evidence” that spending ever cured a recession, and Keynes “wasn't particularly interested in evidence.”
Harvard Professor Robert Barro, who has done extensive research on Keynesian multipliers, has written, “What few know is that there is no meaningful theoretical or empirical support for the Keynesian position.” Obama's stimulus bill was based on a Keynesian multiplier of 1.5, meaning the GDP will increase by $1.5 for every dollar of additional government spending. This multiplier was stated by administration officials trying to sell the stimulus bill to Congress and the public, and it is stated specifically in the First Quarterly Report by the Council of Economic Advisors on the subject; but there is no evidence that multiplier is valid. Among other research on this subject, my book cites the work of Barro and Redlick, who found a multiplier effect of 0.4 to 0.7, and of Professor Gerald Scully, who found a multiplier of 0.46 in his analysis of 60 years of federal outlays. If the multiplier really were larger than 1.0, the GDP would rise even more than the rise in government spending! The U.S., Greece and other spendthrift countries wouldn't be going broke, they'd be getting richer the more they spent! The reality is that the multiplier is always less than 1.0. The money that is spent over and over again in the private sector from government programs always adds less to the GDP than the cost of the programs. If that money were not preempted by government stimulus spending, it would be spent (or saved/invested) multiple times in the private sector, too—and more effectively.
Hunter Lewis says, “Keynes completely ignores the issue of how you are investing. For him, not only is any investment equivalent to any other investment, but spending is equivalent to investment.” You can see why this is appealing to Barrack Obama as it was to Franklin Roosevelt, who popularized Keynes' ideas.
The great economist Ludwig von Mises wrote way back in 1944, in his book Omnipotent Government,
“All governments are firmly resolved not to relinquish inflation and credit expansion. They have all sold their souls to the devil of easy money. It is a great comfort to every administration to be able to make its citizens happy by spending. For public opinion will then attribute the resulting boom to its current rulers. The inevitable slump will occur later and burden their successors....Lord Keynes, the champion of this policy, says: 'In the long run we are all dead.' But unfortunately nearly all of us outlive the short run. We are destined to spend decades paying for the easy money orgy of a few years.”
All the world's central banks now operate on Keynesian principles. The Fed, the European Central Bank, and the central banks of Japan, Switzerland and China have printed an astounding $10 trillion since 2007, tripling the size of their combined balance sheets.
With uncertainty plaguing national economies and the future value of their money, people are continuing to turn to gold as a way for safeguarding their future. Two important trends in this are evident in the second quarter. The first, which is a continuation of a trend evident for some time, is a desire for the buyers of gold to take physical possession of it. This means a preference for physical possession of jewelry, coins and bars rather than holding gold ETFs, shares in gold mining companies, or coins or bars held in financial accounts. The second is the way increased private buying has more than made up for a decline in central bank buying.
After the sharp decline in April, gold prices seem to have bottomed. On balance, the second quarter showed very positive signs. Jewelry showed a multi-year high as lower prices generated a surge of demand from consumers, particularly in China and India. In China, demand hit a record 385.5 metric tons in the second quarter. That was double the figure from a year earlier and well above the 294.3 metric tons of the first quarter, which occurred before the big price drop in April. Overall, world gold jewelry demand increased 37% and reached 575.5t, the highest volume in five years and in value terms 20% higher than the second quarter 2012.
Gold demand in India in the second quarter was up 70% year on year to 310t despite continued government efforts to curb enthusiasm for the metal. Jewelry was up 52% to 188t, and retail bar and coin sales set a record at 122t, up 116%.
Worldwide, the second quarter showed record demand for coins and bars to 508t, up 56% in value terms. Counter to this, there were outflows from ETFs; however, SPDR Gold Trust, the largest gold ETF, in August reported the first net increase in purchases in two months.
The world's central banks' purchases of gold slowed to 71.1t, down 56% on the previous year but nevertheless marking the tenth consecutive quarter of purchases. I would have expected more central bank buying; however, it must be noted that China has not reported its central bank purchases of gold since 2009. Despite its silence, China is known to have added gold to its central bank holdings from mines it owns within the country as well as from foreign countries allowed to operate gold mines in China.
Friday, August 23, 2013
We think you will be interested in an interview earlier this summer by Feathered Quill Book Reviews. It came after a wonderful review of our recent book, The Impending Monetary Revolution, the Dollar and Gold. The interviewer posed some very interesting questions for the author. The interview will be posted soon on the American Liberty Publishers website, but you can see it now at:
Here is the Feathered Quill review of the book:
Here is the Feathered Quill review of the book:
The book, of course, is available from www.amlibpub.com.
Friday, July 26, 2013
Recently a local Minneapolis newspaper, the Northeaster, published a lengthy piece by state Senator John Marty calling on the state government to take measures to replace fossil fuels with solar and wind energy “very quickly, or our children and their children will face catastrophic changes in the environment.”
He did not quote any scientists or scientific studies. He cited a lobbyist for an insurance federation, who blamed a doubling of insurance premiums in the last decade “primarily due to an increase in tornadoes, floods, and other catastrophic weather events,” implying they are due to the burning of fossil fuels. But if either Marty or the lobbyist had checked the facts, they would find that tornadoes, floods, hurricanes, etc. have been decreasing. The increase in insurance premiums is due entirely to greater real estate development in those areas as more people have chosen to live where those dangers occur, not to an increase in the burning of fossil fuels.
Striving to limit my reply to a length comparable to Sen. Marty's piece, I did not comment on some other questionable things he said, but the following is what I sent the Northeaster:
“Senator Marty's comments on climate show ignorance of scientific facts and historical perspective. He said the earth's temperature rose 0.8 degree Celsius—but didn't mention that most of this occurred before 1940, while most of the fossil fuel burning occurred after that, due to global industrialization.
“He cites Arctic ice melting and [Arctic explorer and nonscientist] Will Steger's blaming fossil fuels. But the ice Steger laments about losing was open water in the early 1900s. We know because Roald Amundsen and other explorers sailed there ships in these waters, which later froze but have now melted. The Arctic Ice Cap has completely disappeared many times but always returned.
“Arctic temperatures fluctuate because the earth wobbles on its axis, and there is more water in the southern hemisphere and more land in the north. So, as meterologist Joe Bastardi explains, 'there is an eternal search for a balance that can never be attained. It can only go back and forth...[This ice melting] occurs every time the Pacific Decadal Oscillation has been warm...Over the next 20 years southern hemisphere ice will retreat and the northern hemisphere will advance once the Atlantic Multidecadal Oscillation turns cold.'
“For 95% of the last 100 million years the earth was warmer than now. It was warmer 1,000, 3,000 and 10,000 years ago. 10,000 years ago atmospheric carbon dioxide was about the same as now, but temperatures rose as much as 6 degrees Celsius in decade—100 times faster than the past century!
“Computer models based on the greenhouse theory have never been verified by temperature records and been unable to predict the future. There's been no global warming now for 17 years and four months despite huge increases in CO2 emissions. The world added about 100 billion tonnes of carbon to the atmosphere just from 2000 to 2010. Yet no warming. If a theory contradicts reality, the theory must be wrong.
“The longer historical record also does not agree with warming from carbon dioxide. We are told the earth will overheat if atmospheric carbon dioxide doubles. But in the Ordovician Period, the CO2 level was 12 times what it is today, and the world was in an Ice Age.
“Water vapor is the most important greenhouse gas, accounting for 96 to 99% of any greenhouse effect. Of the small remainder, which includes CO2, 97% of that is due to nature, not man. The equatorial Pacific Ocean alone produces 72% of the earth's emissions of CO2. Joe Bastardi again: 'Oceans have 1,000 times the heat capacity of the atmosphere, CO2 1/2500 of the gas blanket that makes our earth livable, man—according to the US Dept. of Energy—is only responsible for 1/20th of that, meaning 1/50,000 of the air is 'man-made.' Are we to believe that tiny fraction is the problem? Volcanoes, swamps, rice paddies, fallen leaves, even insects and bacteria produce CO2 as well as methane. Termites alone emit ten times more CO2 than all the factories and automobiles in the world (See Science Nov. 5, 1982.) Natural wetlands emit more greenhouse gases than all human activities combined.
“All the computer models projecting global warming are based on the theory that even small warming from CO2 will be amplified by water vapor, causing 'runaway' global warming. But such an amplification has never occurred even with much higher levels of CO2. Again, if the theory contradicts reality, the theory must be wrong.
“The key to the earth's climate is the sun, not CO2.. Mars, Neptune, Jupiter, Saturn and even distant Pluto are all experiencing global warming. Is the sun warming them while our warming is due to CO2?
“The sun's radiation is varied by 'sunspot cycles.' Magnetic fields rip through the sun's surface, producing violent disturbances and changes in the 'solar wind,' the stream of charged particles emanating from the sun. The solar wind, by modulating the galactic cosmic rays which reach the earth, determines both the formation of clouds and the carbon dioxide level in the earth's atmosphere. Sunspot cycles cause only slight changes in the sun's radiation, but these changes are amplified many fold by interaction 1) with ozone in the upper stratosphere, and 2) with clouds in the lower troposphere. Clouds have a hundred times greater impact on climate and temperature than CO2. When the solar wind is strong and cosmic rays are weak, the global cloud cover shrinks. It expands when cosmic rays are strong because the solar wind is weak. In other words, the sun opens and closes a climate-controlling umbrella of clouds over our heads.
Retired environmental consultant
As Reid Bryson, founding chairman of the Department of Meteorology at the University of Wisconsin said, “You can go outside and spit and have the same effect as a doubling of carbon dioxide.”