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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Bill Buckler
July 26, 2011
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As is often the case, Ludwig von Mises stated the fundamentals as well as anyone has: “There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of population, the more and better goods can be produced and consumed.”

The word “capital” here does NOT refer to money or to any type of financial instrument denominated in money. It means economic GOODS - consumer goods but especially producer goods. Production must continue to come before and to outstrip consumption. The more that is produced, the better and faster it is produced and the more efficiently it is produced, the more there will be to consume and the more prosperous the nation will be. This is not rocket science. If a farmer consumes his entire production he will have nothing with which to plant his next crop. Eating the seed corn is capital consumption. It is fatal to prosperity and it is what the world has been doing for decades now.

A sound money is one which retains its purchasing power over LONG periods of time, periods which stretch well beyond a human lifetime. A medium of exchange is essential for the division of labour which makes economic prosperity possible because it allows specialisation. This specialisation leads to the most efficient use of scarce factors of production - including the scarcest factor of all which is time.

Money is also essential to this process because it can be saved to be used for future exchanges. But this is only true if it has been obtained in exchange for REAL economic goods and/or services. Money is saved under almost any circumstances because it is the best means to acquire the necessaries of life in the future. A money which retains its purchasing power is saved much more eagerly because the savers are confident that it will command in exchange as much or even more than was the case when it was first put aside. In the late nineteenth century in the US and many other advanced nations, the purchasing power of money increased steadily - prices went DOWN. This is a natural result of sound money and of saving. It allows faster capital accumulation which in turn makes production cheaper.

Today, money everywhere is losing its purchasing power with ever increasing speed while returns on savings are kept at levels which do not compensate. Today, money is literally not worth saving. . .

According to the official figures put out by the US government, the economic “recovery” in the US celebrated its second anniversary on June 30, 2011. The “fuel” burned in this “recovery” is immense. Mr Obama’s presidency has ushered in the era of $US 1 TRILLION plus annual deficits riding on top of 0.00 percent controlling interest rates from the Fed. It has also ushered in the era in which almost nothing is traded on the paper markets which is not - explicitly or implicitly - guaranteed by the government.

The fuel to keep the global financial system functioning does not stop at the borders of the US. The “Dodd-Frank Wall Street Reform and Consumer Protection Act” has just produced the first ever “audit” of the US central bank. It reveals that in the period between December 2007 and July 2010, the Fed parcelled out $US 16.1 TRILLION in emergency loans to financial entities all over the world. Almost half of this - a total of $US 7.75 TRILLION - was loaned to four US banks. They were Citigroup, Morgan Stanley, Merrill Lynch and the Bank of America. In July 2010 (the cut off date for this “audit”), total US stock market capitalisation was $US 15 TRILLION. The Fed provided about half of that.

This inflationary explosion is unprecedented in any era. It represents the biggest ever effort to rescue a debt-based system from the ravages caused by its own debt issuing excesses. It has, at best, provided a “remission” for global paper markets. The cost has been devastating for REAL economies everywhere.

A cancer patient who goes under the knife gets the malignant disease physically removed. If all traces of the malignancy are removed, the patient will recover. If all goes well, the recovery will be permanent with no “remissions”. A life-threatening malignancy is NOT fought or cured by doing everything possible to increase its power and potency. Yet that is what financial authorities in the US and everywhere else have been doing in regard to the life blood of their economies. As this stark fact becomes ever clearer, Washington DC and Wall Street stand helpless before the fact that they can only cure the economy at the cost of killing the financial system which is feeding on it. It’s that simple.


.Ó 2009 – The Privateer

(reproduced with permission)


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