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Gold Commentary - October 20, 2006


The Most Important US Elections EVER - Week Three

As we say here in Australia, the Republican party is "on the nose" as the US elections draw ever closer. The desperation of the Republicans is reaching tragi-comic proportions, as best illustrated (so far) by an election ad they are running beginning this weekend on US TV.

The ad is called "The Stakes". It is simply a montage of the various threats Osama bin Laden has publicly issued against the United States going back to 1998. It concludes with these words" "These are the stakes - Vote November 7"

The tragic part of this farce is the fact that the American people are presented with this type of "choice" as to who will represent them in government. Last Tuesday (October 17), George W Bush signed into law the "Military Commissions Act", passed by majority vote by both the House and the Senate in the final days before they decided to leave Washington DC (a week early) and get home for their real jobs - getting re-elected.

In this context, it should be stated that while Republican support for the bill was all but unanimous (218 to 7 in the House and 53 to 1 in the Senate), the majority of Democrats voted against the bill (162 to 32 in the House and 33 to 12 in the Senate).

This act destroys every political (not to mention legal) premise and principle which had been gained with great effort and strife since the thirteenth century in Great Britain and upon which the United States was founded and built. Remember Mr Bush's "explanation" for the 9/11 attack and his litany while his Administration cobbled together the "misinformation" leading up to their attack on Iraq. He invoked it at every opportunity - "They hate us for our freedom!"

Ask almost anyone outside the US and a large and growing number of Americans themselves this question: Who has done more to destroy the legacy of freedom in the US - Osama bin Laden or the Bush Administration AND the US Congress? The question would be greeted with incredulity, because the answer is so obvious. If any further evidence was needed by anyone, the "Military Commissions Act" provides it in full and odious measure.

It is in this context that the Republican party is now once again trotting out the old and shop-worn "appeal" to hysteria so ignobly preceded by the duct tape and the "anthrax white powder" and the "colour-coded threat warnings" from the Department of Homeland Security. The pious hope is, of course, that the repeated sensationalism of "the enemy without" can blind the populace to the enemy within.

In an recent article in The Independent eloquently bemoaning the evisceration of freedom and liberty as practiced by the Blair government in the UK, Henry Porter mentions a work by Alan Bennett in which a character states that there is no period so remote in history as the recent past. Depending on the age of the person looking back, the "recent past" is relative. A 20 year old can look back maybe five years in personal experience of the world. A 60 year old can look back nearly half a century. The fact is that by the end of the Bush Administration's second term in January 2009, few Americans under the age of thirty will have anything else to compare the country they live in to.

That quote from the character in Mr Porter's work goes a long way to explain the pervasive attitude of "it can't happen here" which has been shared by so many people at so many political turning points in the history of so many countries. The attitude towards the totalitarian excesses and trampling on freedoms and rights committed by historical figures and regimes is almost universal. One would be hard pressed to find an American who would not condemn the actions of the despotic Roman Emperors, or English Kings, or Prussian Militarists, or Bolsheviks, or members of the National Socialist German Workers Party. But when these same Americans watch the EXACT same invasions of liberty and rights invoked by their own government in the present, the parallel simply does not register.

At least it doesn't register for a long time. But the "remoteness of the recent past" is slowly becoming less remote in the US and other nations which still pay lip service to what was once called the "coalition of the willing".

By their nature, politics and economics will always be intertwined. One is the study of the art of living together in harmony. The other is the study of the exchange of the fruits of that labour which reaches its highest and most developed degree where there is a nation living together in harmony.

In politics, the only ultimate safeguard is a codified respect for individual rights (life, liberty, property) backed up by a respected institution whose sole purpose is to protect those rights. In economics, the only ultimate safeguard is a medium of exchange NOT subject to alteration by the whim or edict of anyone.

There has never been an approach to true freedom and liberty in a nation in which individual rights were not respected and upheld - and where Gold (and/or silver) was not the accepted and freely exchanged medium of exchange.

The tragic fact about the modern world is that nowhere in it is Gold used as money. This is one of the most telling facts about the world we live in, and one of the most fundamental explanations as to why freedom, liberty, and indivdual rights are held in such contempt by those who would and do rule and viewed with such apathy by those who keep trying, with diminishing success, to convince themselves that they are still "free".

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©2006 The Privateer Market Letter

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