LIBERTARIAN TIMES – ISSUE #9, JUNE 5, 2009

Editorial





This week’s issue of LT is sent from Dubai, where the restaurants are still empty (I was the only customer in my favorite Italian eat-out last night), the traffic on Sheikh Zayed Road is flowing freely, taxis are plentiful, inflation dropped to an annualized 4.94% (the lowest in years), the stock market reached a 24-week high on Wednesday, and the newspapers are telling us that “the worst is over”. In the car park of the apartment where I’m staying are 2 BMW 5-Series cars (one about 5 years old, the other 10), covered in thick dust, each with a sticker from the Dubai City Council saying “would the owner of this car please remove it within a week, otherwise it will be taken to the scrap yard”.



None of the above could have been written about Dubai just 9 months ago. Times have surely changed. Will they change more or is the worst really over? More on that below.



Last week we discussed why Freedom was so great, at least for Libertarians. That it is not so great for the majority of people living in the democratic countries of the “West” (many are in the “East” as well now) was reinforced again recently when a group of people in the Netherlands, one of the “freest” countries in the West, was campaigning for a reduction of freedoms, as part of the European Union elections this month.



It is perplexing to us why some people would want to reduce the liberty they “enjoy”. Obviously, they are not enjoying it so much, otherwise they would value it more. However, we need to understand their mindset as we will be facing an increasing number of such folks in future.



In the past few weeks, we have also seen France and Germany introduce legislation to curb freedom on the Internet. Now it is no longer just China, Pakistan, Singapore and the UAE that are restricting Internet usage, the “western” countries are moving in this direction too. Iran briefly banned “Facebook” last week, as one of the presidential candidates was using it to get his message across to a younger audience. Even the “mullahs” have to come to grips with the Internet and its appeal to young people of all cultures.



It won’t be long now before we will have to pay taxes for Internet usage as more and more commerce moves to an electronic platform and as governments everywhere are scrambling to raise income.



As I reminded readers a few issues ago, the Internet is still the freest place on Earth and Libertarians should make full use of it while we can.



The message of Freedom will probably have greater appeal to a younger audience, especially late teens and early twenties, before they get “sucked in” to the “normal” life of jobs, mortgages, car loans, credit card debts, marriage and children, and the resulting daily grind. Once they are in the grip of “normality” (as defined by the societies they live in) it gets harder and harder to make Freedom attractive. It is one reason why we focus on this age group in our Liberty Camps organized by the Language of Liberty Institute (LLI). BTW, the camps are starting this month again, the first one being in Slovakia.



Governments know this “normality” only too well and make full use of this fact. People with mortgages and debt are only too willing to accept any government “favors” and incentives that come along. Australians rejoiced recently when they got a 900 AUD cheque in the mail from the government as part of its stimulus package. Nobody asks where this money is coming from. I pay my taxes, so I am “entitled” to get something back from the government. This pretty much sums up the attitude of the majority and the government loves it. The relationship is established. Government plays a real role in the lives of all citizens and this role is accepted as necessary, even though they may not agree every time and with everything the government says or does. That’s why we have elections. If we don’t like the guys in power now, we can always change them next time around. Never mind that nothing much changes even when we do have elections!



In times of crisis, especially a “big” one such as at the moment, the people look to the government to “do something” and to get us out of the crisis and back to “normality”. Government is only too happy to oblige.



Will government action get us out of this mess? If they do, the cause for Freedom will suffer a major setback. But if they don’t, if they “mess up” themselves, we Libertarians face a unique opportunity in our life times to make the case for Freedom and all that it implies.



What are the chances that governments will “mess up”?



In my opinion, the probability that government will fail in its effort to clean up the crisis mess is far greater than the probability that it will succeed. I am of course not the only one sharing this opinion and thanks to the Internet we can hear the voices of the skeptics loud and clear, even though they are largely drowned out by the “official” media pushing the government propaganda line.



Libertarians should be happy if governments fail as it will prove our point. On the other hand, I am not so sure that a failure will be good for us, let alone the rest of the world.



What would a failure look like?



First, let’s see what “success” would look like. I won’t dwell too much on this because to me “success” will mean a return to the status quo we had before the crisis and life will continue as “normal”. We go back to our jobs, our mortgages, our families, our debts and our daily grind. Boring!



Failure would be much more interesting but it could also be much more dangerous.



Failure will come about as a result of “printing” too much money. While the USA probably leads this group of “printers”, governments everywhere are engaging in this trick in order to pay for all the bailouts and stimulus packages they have “sold” to their electors. The USA has a greater advantage due to the fact that the US Dollar (still) is the world’s reserve currency and this gives them a “liberty” to really get the printing presses going. Of course, in our electronic age, “printing” money is merely an entry in a computer system and it doesn’t take long to fabricate extra money.



I won’t go into the nature and history of “money” here; there is plenty of excellent material available in books and on the Net on this subject and anyone interested to learn more on this topic is strongly advised and encouraged to do so.



For our purposes today, it is “merely” enough to understand that the reckless “printing” of money (today it is euphemistically known as “quantitative easing” or Q.E.) can only have one possible outcome: hyper-inflation! And what does hyper-inflation look like? Just look at Zimbabwe, where Gideon Gono, Governor of the Central Bank, has entered the history books as the first man to print the 100 Trillion Dollar bank note. If it buys you a loaf of bread, you are one of the lucky ones.



Now, Ben “Gono” “Helicopter” Bernanke, chairman of the US Federal Reserve Bank, is proposing the same route as Mr Gono in Zimbabwe, even though he warned Congress just 2 days ago about addressing “fiscal imbalances” and a future debt trap for the USA. Throughout history, there have been plenty of examples of what happens when governments print too much money. I still have notes of billions of Marks from the Weimar Republic around the time when my mother was born in the early 1920’s. Workers were paid twice a day, so that their wives could come and collect the money at lunch time and spend it before it lost its value by dinner time.



Is it really possible, thinkable, or feasible, that we could see this happening in the USA, let alone other western countries? Not many people are asking the question and government officials, from the Treasurer to the Central Bank Governors will assure you that everything is “under control” and it won’t happen this time. Our problem right now is Deflation, not Inflation, they will tell you, so that a bit of quantitative easing will not hurt but will be necessary to provide the “liquidity” to get the economy moving again.



If you believe this, you will also believe a lot of other fairy tales.



As we know, Zimbabwe is in a real mess and, ironically, many workers including government soldiers I am told insist on being paid in US dollars or “hard currency”. Wait till they realize that the US dollar is going the same way as the Zimbabwe dollar!



If hyper-inflation is a real possibility for the USD (and possibly other currencies), what should we do to protect ourselves? Buying gold and silver and getting out of USD-denominated assets are the obvious moves – are there any others?



Will we see a collapse of American (western) society as we have seen in Zimbabwe? If yes, how do we protect ourselves against such a collapse? In the USA, you can still buy a gun; in other countries this is no longer an option for most people. Do we join Doug Casey and his friends in Argentina? Or start our own “Gulch”?



Is the Libertarian Diaspora prepared for such an event as hyper-inflation coupled with massive social unrest and a possible collapse of society as we know it? Even if it does not come to that drastic an event, is there something Libertarians could do today to minimize the impact of whatever consequences the current reaction of governments to the crisis (primarily the creation of inflation and debt) will inevitably have?



As I have mentioned in almost every issue of LT, I believe the answer is yes and the time is now for Libertarians to start collaborative ventures that allow us to create real assets and protection and that will ensure that we will not be dependent on governments or jobs or other people for our survival, be it physical or financial. The window of opportunity is still open. Let me hear your views! Do you think hyper-inflation is a real possibility? What about social unrest on an unprecedented scale since WWII? Zimbabwe-style living under Mugabe and Gono in the USA under Obama and Bernanke? Will current government bailouts and stimulus packages get us back to the status quo before the crisis?



Andy