SERFDOM, REVOLUTION, OR SOUTHERN INDEPENDENCE

As the boot of centralized fascist-socialist tyranny pushes harder on our necks, we have three choices: 1) serfdom; 2) revolution; or 3) Southern independence. I would hope those reading this would have already omitted option number one from consideration.

However, serfdom will likely be the choice of the majority of Americans (and maybe even of Southerners). Why? It is the easiest path. It requires one to do nothing out of the ordinary, to take no risks nor face any danger. Because most people like their bread and circuses and don’t want to be taken out of their comfortable day-to-day existence, they will chose serfdom and convince themselves it is the reasonable and even the patriotic thing to do. Others who might know better will choose this path because of fear.

The revolution option is infinitely better than serfdom, but it has its downside, too. Most revolutions, historically speaking, are bloody affairs that often, as it is said, “devour their own children.” Before you remind me of the successful American Revolution, please remember that that event was a secession movement against the British Empire and not a turning of the world upside down as was the French Revolution. Modern revolutions normally degenerate very quickly into chaos. Before you advocate letting the revolution genie out of her bottle, know this: the Feds may be inept at most things, but they have proven themselves expert at killing people and destroying things. Yes, it may have to come down to an armed stand off; however, there is a better way than out-and-out revolution that leads to this point.

I prefer option three: Southern independence. Our States are historically the loci of ultimate temporal sovereignty within our federated, constitutional republic. The Founders intended it to be that way. Any of the Southern States (or any of the fifty) can assert that sovereignty anytime it wishes by withdrawing from the voluntary union of the States united. By withdrawing (or seceding) through the action of its legislature or another body elected for that specific purpose, the State is on solid legal and moral ground. Our lesser magistrates would be doing exactly what they should to protect the lives, liberty, and property of the State’s citizens against the encroachment of tyranny.

A proper prelude to secession might be Nullification and Interposition. If the federal Congress, the President, or the federal courts (or any combination of the three) should commit unconstitutional acts against the States and the citizens thereof, a State could simply declare that action, be it a law, an executive order, or a legal ruling, to be of no effect within the State’s borders. Should the feds press the issue (which they likely would), then the State government (again, the lesser magistrate) would have the duty to interpose itself between its citizens and the federal forces arrayed against them. This might take the form of the mobilization of a true State Militia (not the National Guard, which can be “federalized”). This is why you should take the right to keep and bear arms seriously.

The use of Nullification and Interposition (and a subsequent secession) might, it is true, lead to armed conflict just as revolution would. However, the former would have the force of history and law on its side whereas the latter, though justifiable, would be more desultory, disorganized, and chaotic. I think it’s always better, at least for as long as possible, to have some lawful and time-honored precedents on your side.

Under present circumstances, brought upon us by both major political parties and our own lack of vigilance, I don’t see any other options but the three I’ve briefly outlined above. Because serfdom is out for most of those who will read this, we had better think long and hard about the other two options. We will have to choose one. I pray we choose wisely. Live well . . .

Audemus jura nostra Defendere!

BUY! BUY! BUY!

I am no investment adviser, but I do have some good investment advice: Buy bullets, NOW! A good place from which to buy is Georgia Arms (1-888-623-6861). They are good folks who'll serve you quite well. Also, they sell high quality ammo at fair prices. Check them out! You can find them on-line at www.georgiaarms.com.

Live well . . .

Audemus jura nostra Defendere!

THINGS ARE NOT WHAT THEY SEEM

The Obama regime seems a bit itchy to get some sort of Health Care Reform passed by Easter. We are told that his compassion for the American people compels him to act now. But would these health care reform provisions kick in immediately? No, it would actually be several years before anything happens to effect your physical health. However, something would begin right away to effect your financial health--the new taxes contained in the overall plan.

What are we to make of this? First, that "health care" is not the central focus of the Obama regime's efforts. Second, that they need money (i.e. your taxes) and they need them . . . yesterday. In other words, this is not about health; it is about money in a hurry. And why is this? Because the US government is broke and desperate.

As I (and many others) have said before, it is an alarming state of affairs when the US government is buying massive amounts of its own debt to keep things afloat. The bubble-blowing charade known as Quantitative Easing may last for a while, as it is not yet common knowledge among the people. However, math always trumps politics. And there is the equivalent of a weapon of mass financial destruction ticking closer and closer to detonation--the bond market. And no one--not even the President--can mess with the bond market and win.

To prevent an utter collapse in bond prices, the Fed will find it necessary to significantly increase its buying of US debt (i.e blowing the bubble bigger and bigger). And when (not if) the bond market bubble bursts, it will be the US government itself that will need the grandfather of all bailouts. If US taxpayers or foreign creditors are unwilling or unable to pay up (and they will be unable), and if massive hyperinflation is to be avoided, a US government default will be the only option. At that point, the dollar dies, as do all other paper fiat currencies. What then happens to all those Credit Default Swaps and other derivatives taken out as insurance against such a calamity? They, like the dollar, become meaningless. Chaos reigns.

When this happens, you must have land, food, water, and the three precious metals--gold, silver, and lead--if you expect any chance of survival. Currency and things denominated in such terms will be worth less than the paper they're printed on. At that point, we and the elites who brought on this hell will finally understand what is real wealth and what is merely a mirage. We'll also understand who has been producing that wealth for the last 30 years--the lowly farmer or the high and mighty Goldman Sachs trader.

Live well . . .

Audemus jura nostra Defendere!

WHAT THE HELL IS A CDS?

Ever wondered what a CDS is? First, CDS actually stand for "Credit Default Swap." We are told that the purpose of a CDS is to provide insurance against investor risk. So how could this be a bad thing? Don't most people buy insurance on their homes, cars, lives, etc.?

But a CDS is not your normal form of insurance. Historically, folks who purchase insurance have been required to have what is called an "insurable interest." In other words, you must own or at least have a legally binding interest in whatever it is that you choose to insure. You cannot buy insurance on your neighbor's house because you have no insurable interest in it. If you were allowed to do this, you might be tempted to burn you neighbor's house to collect on the policy. This would not be good for neighborhood relations, to say the least.

But things changed in the 1990s. At that time, Wall Street introduced the CDS market and pretty much ditched the concept of insurable interest. Why, you could now bet on anything by taking out an "insurance policy" on it! Want to see a company fail and profit in the bargain--no problem. There was a bet out there just waiting for you. Wall Street, with DC's compliance, had legitimized a new game: "Let's Burn Down Our Neighbor's House And Profit From His Misfortune." Smell the smoke in your town yet? You will . . .

Continue to live well . . .

Audemus jura nostra Defendere!

S%$T ABOUT TO HIT THE FAN?

Goldman Sachs in trouble? Check out what Porter Stansberry has to say below:

By Porter Stansberry in the S&A Digest:

One of the best lessons I've learned over my career as an investment analyst is the myth of excellent management or "great execution" is really just that – a myth.

When I see companies in troubled industries reporting quarter after quarter of great results, while all of their peers are getting killed, I know a fraud is going on. I remember in the early 2000s, WorldCom kept reporting profits when all of the other long-distance carriers were getting killed. I knew it couldn't last. And it didn't. WorldCom's accounting was revealed to be a fraud – the company was counting its network access costs as capital expenses. Once the real numbers came out, the company collapsed in what was the largest bankruptcy in American history at that point.

About three years ago, I saw Goldman Sachs reporting quarter after quarter of unbelievable results when all of the other investment banks were hurting. I spent a lot of time looking at its numbers – which didn't make any sense. It reminded me of Enron. It kept reporting bigger and bigger profits, but lost more money every year in cash. And its debt balances kept growing.

I wrote a lot about this in The Digest, but I never officially recommended shorting Goldman in my newsletter because I literally couldn't figure out how Goldman Sachs was doing it. I couldn't find the smoking gun... but I knew a giant fraud would be discovered there, eventually.

In October 2008, I figured out part of the big secret: Goldman had insured all of its subprime exposure via AIG. This allowed it to book huge profits on its subprime investments long before they were actually paid off because the bonds were insured. Of course, it was all a sham – AIG didn't have nearly enough money to pay off any of the insurance. (See the October issue of PSIA for more details.) A source close to the company even told me how big the exposure to AIG really was – $20 billion. That's roughly 100% of the profit Goldman claimed in 2006 and 2007, at the height of the credit bubble. Goldman completely denied my report and claimed it had zero exposure to AIG.

As was subsequently revealed in the spring of 2009, my report was right on the money. Goldman had roughly $20 billion in exposure to AIG and received roughly $14 billion of money the federal government used to bail out AIG.

But I completely missed one big part of the story... And once this fact becomes common knowledge, it will probably mean jail time for several leading Goldman executives and the end of the firm. What did I miss? The entire Goldman-AIG relationship was a complete sham. Let me explain...

Goldman eventually admitted it had insured roughly $20 billion worth of subprime CDOs with AIG and had major exposure to the firm. But the New York Federal Reserve and Goldman Sachs never revealed this critical fact: Goldman didn't merely buy insurance on a bunch of random subprime CDOs. It actually bought insurance on special CDOs it had put together and sold to its own clients. In other words, Goldman knew more about these CDOs than anyone else. Goldman bought insurance on these CDOs because it knew they'd collapse.

This is tantamount to building a house, planting a bomb in it, selling it to an unsuspecting buyer, and buying $20 billion worth of life insurance on the homeowner – who you know is going to die!

These facts all came to light because of research done by the office of Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform. These new documents will certainly lead to a full investigation of the Goldman-AIG dealings and the subsequent $180 billion bailout led by the New York Federal Reserve. My bet? Heads will roll. If you own Goldman Sachs, you'd better sell.

Crux Note: The S&A Digest comes FREE with a subscription to Porter Stansberry's Investment Advisory. In just the past few years, Porter has shown readers how to make huge gains in gold stocks... how to profit from the demise of Freddie Mac, Fannie Mae, and General Motors... and the best ways to protect themselves from inflation and the unavoidable collapse of the dollar. You can learn more about a subscription here.

LIARS ALL

The US government is broke. For that matter, so are the big banks. Why doesn’t the general public know this? It’s simple—they have been lied to about the real situation.

What they’ve not been told is this: 1) that the Fed is buying virtually all of the US bond auction offering through a scam known as “Indirect Participation.” IP is designed to cover the fact that off shore purchases of US Treasury debt are being done with US dollars sent abroad for that specific purpose. This covers the hard fact that there are no takers for US debt and that the US is now forced to finance its own doomed spending spree. 2) The acknowledged national debt is somewhere near $14 trillion; the “off the books” national debt is several times that amount. Our rulers say that the national deficits for 2010 and 2011 will be between $1.6 and $1.8 trillion. That would be bad enough if it were true. But it, too, is a lie. The real budget deficits will be at least twice that large. Where is the money coming from to pay these deficits? Washington and Wall Street have three options, the first two of which are a) Continued borrowing (mainly from ourselves, however much sense that makes). Needless to say, this policy of creating money through the issuance of debt is highly inflationary. When this “money” finally hits Main Street we are likely to see hyperinflation; b) Much higher taxes and reduced services. Option c) is simply to default on the debt, partially (e.g. China) or completely.

Those options all will be painful, especially when the real unemployment and under-employment figures are nearer to 25% than to the officially acknowledged 10%. Moreover, nearly all the States are facing severe budget crises, and the States can’t print their own money like the Feds can.

The banks (and other big corporations) are in bad shape, too. But because they have been allowed by Federal regulators and ratings agencies to “cook their books,” this is not yet apparent to their customers, clients, investors, and the general public. One example will suffice to prove just how bad off the big banks are: the rationalization for the bailouts was to allow the banks to improve liquidity in order to get the Main Street economy moving again. But the big banks have hoarded these taxpayer funds rather than loan them out to intermediate and small businesses. Why is this? Simply put, it is because the banks needed every bit of that money in 2008-2009 to keep their balance sheets solvent. They were (and are), by any rational accounting standards, broke.

As long as the US government and the big banks can continue to lie their way through this crisis, things will hold together to some degree. There may be lots of angry rhetoric from spokesmen for the public and an occasional violent act of desperation. But things will hold together. As Mr. Jefferson told us, people are prone to bear up under abuses until they become unbearable. But when the truth comes out and things hold no longer, the breaking will be hard.

I have been told by some reliable sources that the Feds and their minions at the State and local levels are taking this “breaking hard” scenario pretty seriously. In other words, they are planning for the contingency that their illegitimate power will be challenged when things indeed become unbearable to the general populace. Because they are making plans to keep themselves in power and not take responsibility for their criminal lies and actions, I would suggest that you do the same in the name of preserving your lives, liberty, and property from the hand of this organized criminal enterprise. Oh, and help your friends and neighbors see through all the lies and obfuscation before it’s too late for them to prepare.

Audemus jura nostra Defendere! Live well . . .

IS THIS REAL WEALTH?

Hedge funds and the purveyors of other such arcane financial instruments are "making a killing" off the upswings and dips in the markets. With the estimate of over a quadrillion dollars worth of these financial instruments in existence, it boggles the mind how much "money" can be "made" by playing the roller coaster markets with super-fast computers and inside information.

But what does in mean to "make money" in this sense? All you have is a bunch of fancy pencil-pushers doing the equivalent of casino gambling (and they are the insiders, the House, as it were); nobody is actually creating any tangible wealth. Farmers produce crops, manufacturing plants make finished goods, and miners dig coal and iron ore. But these financial big-wigs spend their days accumulating large numbers of electronic "dollars" that are linked to nothing we can actually hold in our hands or put to any practical use. Yet they are considered the wealthy among us, the self-proclaimed "best and brightest."

But the day is coming when they will in vain try and trade some of those trillions of electrons for something tangible, say, a loaf of bread. Then we'll see if they're really The Masters of the Universe they claim to be. At that point, I'd say that the plain old farmer might have a bit of advantage on them.

I must admit that I'll relish seeing the "suits" squirm. Too bad a lot of innocent folks will probably go down with them. Live well . . .