More On Gold

Nothing much to blog about today, and I am not really in the mood either.

However, in the debate over gold, Meghnad, Lord Desai has pitched in his bit. His Sunday column is titled “The Golden Hindustan,” and he says this of the RBI’s decision to buy 200 tonnes of gold from the IMF:

It was India’s gentle way of saying that the dollar was on a downslide and indeed needed a healthy devaluation in the interests of the global economy. But it also gave notice to the G20 and the IMF that if the global economy was to wean itself off the dollar as the sole key currency, there was no viable substitute in sight except for gold.

I also found an excellent feature story on Rediff.com listing out the world’s largest gold hoards. India is now 11th on the list. Do click right through to India, where they say:

Analysts feel that it is a very smart move as by buying IMF gold, New Delhi is shoring up its bullion reserves and slowly trying to hedge its bets on the US dollar which has been losing value against other currencies.

So much for ET.

Gold Is Our Saviour

It was just the other day that I commented on an editorial in the Economic Times which opined that the Reserve Bank of India’s purchase of 200 tonnes of gold from the IMF was “no big deal.” It was in this editorial that ET called gold a “barbarous metal.”

We are indeed fortunate that LewRockwell.com has published an excellent article today on the RBI’s gold purchase. The article, by Michael S Rozeff, a retired professor of finance, compliments the RBI for buying gold. Indeed, Rozeff goes further – he says that RBI will make profits from such transactions by which it replaces dollars with gold. I quote:

This transaction has a significant meaning that goes well beyond the dollar amounts involved, which are not that large. It means that a major central bank has actually disposed of dollar assets and prefers gold instead. It means that it regarded its dollar holdings as excessive. There are more central banks in the same position. They may do the same. China had been suggested again and again as the potential buyer of the 403 tonnes of gold to be offered by the IMF. India’s purchase was a surprise.

In financial terms, RBI is not simply adjusting its reserve position. It is arbitraging. It has a profit incentive to sell dollars and buy gold.

As I surfed through ET today, I found this Reuters story on central banks and gold, a report that suggests Asian central banks are “wary of rushing into gold.” Let them be as wary as they like, but our RBI has done well to buy gold. It should buy even more. The IMF is selling off another 400 tonnes of gold – and the RBI should bid for this too.

At the core of the matter is the status of the US dollar as the world’s reserve currency. This is now over. Rozeff puts it well:

There is no run on the dollar, but there is a steady movement away from dollars as a reserve asset in the coffers of central banks. A stroll on the dollar has become a brisk walk on the dollar, and there is a threat that this will become a trot on the dollar.

Oddly enough, it is our sedate RBI that is leading the charge. Rozeff says how RBI will profit from this move:

RBI and other central banks hold dollars whose nominal gold backing is about 15 percent of the FED’s monetary base liabilities (currency plus reserves). RBI sells $1,000 worth of U.S. securities and gets 1 oz. of gold. The $1,000 that it gives up have only $150 worth of gold behind them. RBI profits by $850…. this arbitrage is an economic incentive or force for selling of dollars and buying of gold. RBI has availed itself of this opportunity.

This, while ET calls it “no big deal.” Rozeff is quick to compliment the RBI for its decision, and he points out that the mistake made by central bankers in the past has been to support the US Fed, instead of competing with it:

Many foreign central banks have done the opposite. They sometimes have sold gold. They have usually accumulated dollars in substantial amounts in the form of dollar loans. They have not only not competed with the FED and taken advantage of this arbitrage opportunity, they have gone the other way and supported the FED and the U.S. government by their loans. This was one part of the financial side of government-run economic policies.

So, once again, ET bites the dust, and the Ganja Flag flies high.

And talking about “high” reminds me: Hey! Where’s my smoke? Hey! Joint Secretary, roll me a big joint, will you?

For All Our Tribal Chiefs

While looking at our “tribals” revolting, it might be pertinent to point out that the white people also began as tribes. Further, their tribes were never at peace with one another; wars were perpetual. Ancient English kings, who were nothing but warlords, could never defeat the Danes in battle, and it is on record that these kings had to pay taxes to the Danes – what was called “danegeld.”

Scotland, in the time of Adam Smith (5 June 1723 – 17 July 1790), exhibited many traces of tribal culture. There is the curious incident of a visitor from France dropping by at Glasgow to meet Smith. The visitor was invited by Smith to a music concert. However, when 100 bagpipers started playing their martial tunes, this visitor could scarcely comprehend that this too was “music.” Note that the tunes were martial: the first part was a “call to arms”; the second, the music of the battlefield; and the final part was the wailing over the dead. This is their history, this is their culture, this is their music. The story of Scotland is but a story of battles, battles and more battles.

How did these tribes get civilized? Simple, by preferring to live via The Market. No more looting and plunder. Unfortunately, the gora has still not been able to shake off his tribalism – both “welfare” and “warfare” are atavistic ideas. The welfare is like the chief doling out portions of the kill; and warfare is what gora tribals expect from their king.

It was Adam Smith who informed the people of the then world that civilization and progress lie in The Free Market. Further, that all moral virtues are also inculcated in this market. Smith despised war, the “game of kings.”

Note that Scotland in Smith’s time was extremely backward, way behind England. But the enlightenment of the English happened because of a pucca Scot. Adam Smith complained that he learnt nothing in his 7 years at Oxford. And this view was seconded by many other great men, including Gibbon and Bentham. When the Honourable East India Company set up their Haileybury College to train recruits to the Indian civil services, the greatest emphasis was given to teaching the principles of classical political economy – and the great guru was none other than the long-deceased Adam Smith. The EIC, of course, had to set up this college only because neither Oxford nor Cambridge taught this subject then.

I have no doubt that India’s backward people, including all our indigenous tribes, can speedily proceed on the path of progress and civilization – exactly as the Scots did. Today, on LRC, there is an excellent article by Professor Walter Williams on the decline in education in the USSA. The West is in decline on several fronts – all because of their tribalism. Civilization and free markets are where people become Individuals, where group culture does not exist. It is unfortunate that all our “State politics” focuses on groups – as in the case of caste. This, too, is atavistic. Modernity, free markets, cities and civilization – these are for Individuals. It is here that the need for a warlord is dispensed with. No Big Chief at all. Just a friendly Mayor.

Our poor, oppressed tribals, long treated as anthropological specimens, need to hear this other message – which is all about Liberty, Justice, Peace, Trade, Cities and all the good things of life. They need this enlightenment. As with the Scots in the 18th century, I am confident that these people can progress to great heights. Perhaps, some of them might try and emulate Adam Smith and become a great economist. And I wish them luck.

Reads Like A Constitutional Crisis

Thank you, PTI, for an excellent report on our great prime minister Chacha Manmohan S Gandhi’s speech at the opening of a conference of tribal development ministers; and thank you, Mint, for publishing this in full. At a time when our poor forest dwellers are up in revolt, this speech is a historic document.

Before getting into what Chacha said, let us look at what appears at the bottom of this report, which is what the tribal affairs minister said:

Tribal affairs minister Kantilal Bhuria, in his address, said there was need for bringing amendment in forest laws and pointed that “innocent” tribals are now taking route to the naxalism as hundreds of them are being “harrassed” under the Forest Act.

Now, let us look at what Chacha said towards the middle of his address:

Singh said administrative machinery in some of such areas is “either weak or virtually non-existent”, the “heavy hand of criminal justice system has become a source of harassment and exploitation” and over the years, a large number of cases have been registered against the tribals…

THIS IS A PREDATORY STATE

Q. E. D.

Chacha goes on to damn his Chacha State further:

“It is clear that we need to reflect on how to improve the laws and mechanisms through which we provide compensation to displaced tribals. The tribals must benefit from the projects for which they have been displaced,” the Prime Minister said.

This is their misuse of “eminent domain.” This is “legal plunder.” This is barbarism – the disrespect for Property. This is Predation.

Our great Chacha, of course, will try and plug in his State “education” at every opportunity, so here is what he said on that:

“The lack of quality education and vocational opportunities for tribals need immediate attention.”

Actually, they can distil mahua; they can brew handia; they can also play their jungle drums; they can dance. Inside the Palamau National Park, now in Jharkhand, an important centre of the Maoist-Naxal uprising, where I lived in 1982, I found that tribal communities were shunning State schools, preferring missionary schools. This applied not only to primary schools, but also to “adult education.”

At this point, let us look at how Chacha began his great speech:

In a clear message to Maoists, Prime Minister Manmohan Singh on Wednesday said no sustained economic activity is possible under the shadow of gun in tribal areas where decades of alienation is taking a “dangerous” turn.

He said there has been a “systemic failure” in giving tribals a stake in the modern economic processes and emphasised that the “systematic exploitation and social and economic abuse of our tribal communities can no longer be tolerated.”

Now, do you see why there is a mass uprising in our jungles? They have taken to arms to battle the lawless guns of The Chacha State. It is our The State that is “lawless.” Not these tribals.

Chacha speaks of a solution: The “distribution of land titles.” My suggestion is that our tribals set up local governments and issue themselves their own land titles that are freely transferable and, without which, no land transfers are possible. They must issue themselves gun licenses as well.

Anyway, gotta end this post now. My new-found chillum-yaar, Bablu Das, is coming with some local ganja for me. He is a most peculiar fellow, this Bablu, a property dealer without property. Yes, he survives by arranging rentals and sales of titled properties in Chittaranjan Park, New Delhi. But he lives in Tughlaqabad, in a typical New Delhi slum, where he, and millions like him, possess no property titles.

All these dispossessed people of our cities must join cause with the Maoists and Naxalites from our deep and dark jungles – and the great cause must be Property.

And Liberty.

Magna Carta time, folks.

Respect & Disrespect - for Gold

Today, Mint has published my column titled “The Case for Private Money.” This must be read along with my previous column, titled “A Return to the Gold Standard.”

I am proudly on the side of gold and private money, totally opposed to the fiat currency system. And gold is in the news today: Our central banksters have just bought 200 tonnes of gold from the IMF.

Now, the editors of the Economic Times declaim that this is “no big deal.” The language used by ET is also revealing. They actually use the word “barbaric” to describe gold – â la their evil mentor, John Maynard Keynes. These eminent editors write that in the past:

“…the barbaric metal commanded a respect quite out of proportion to either its intrinsic value or the return it yielded as an asset class….”

Frankly, I sincerely doubt whether anyone who invested in gold over the last 30 years of a global pure fiat money system has lost money. Gold was some $30 an ounce when Nixon de-linked the dollar from gold, in the early 70s, thereby putting the entire world on a purely fiat money system. Gold has shot over $1000 an ounce now. This is why ordinary common people “respect” gold. These editors worship State-issued papers with Gandhi’s photu on them.

They doubt whether gold possesses “intrinsic value.” Actually, nothing has “intrinsic value,” not even gold. All “value” lies in the minds of valuers. Value is “subjective.” The common people who are buying gold “respect” the value of gold. What, indeed, is respect? The first article of mine ET ever published was titled “Respect Must Be Earned.”

The editors of ET then go on to say that, since the dollar is in terminal decline, and the bulk of RBI’s “reserves” are held in US dollars:

“…gold is a poor alternative. The RBI should, instead, be buying other currencies like, say, the euro or maybe even the Chinese yuan.”

They use the word “currencies.” I would prefer to use the term “fiat papers” – all this funny munny.

Yet, it is their concluding remarks that really take the cake, and the cake-shop as well:

"Total central bank holdings of gold is around 30,000 tonnes, the same level as 60 years ago, over which period world output has grown some 13 times. The relative decline of gold in the affairs of the world, we hope, will have some influence on Indians’ collective craving for gold.”

The editors have just unwittingly disclosed figures that reveal, to me at least, how much funny money has been pumped into each and every national economy by central "banksters," with no link to gold, which was the money people freely chose to use throughout the then world, right upto the time when central banks arose in every nation. Indeed, humanity has chosen gold as money throughout the history of civilization. The classical liberal / libertarian / Austrian conception of The Market is individualistic in its methodology – so people like me merely attempt to predict what these individuals would choose as money. We do not say, “Impose gold as money.” Fiat money is IMPOSED upon us. These editors worship central banks - who wield vast coercive powers.

Further, they are lying baldly when they say that there has been “a relative decline of gold in the affairs of the world.” Their very own newspaper reports almost every day how much gold our common people are buying. Just the other day I read in an ET report that rural post offices in Karnataka have taken to selling gold coins, and business is booming. Indeed, right as we speak, gold prices have surged to over $1000 per ounce. People, and more and more people, are choosing gold. Gold ETFs are doing brisk business. In the “natural order” of a free market society, it is obvious gold would become the chosen money. Our worthy editors have their minds set upon an “artificial order,” where coercion replaces co-operation – and wee, the sheeple are "fleeced" as well.

Why do so many people fall prey to such erroneous thinking? In my view, the critical error in ET’s thinking lies in the false concept of “national economy.” It is this dangerously false idea that is the guiding philosophy of central state control over an economy. In short, it is the guiding philosophy of those who support tyrannies. Never fall prey to this error, my dear reader.

In the world of free markets, there is no “national economy.” Rather, there are millions and millions of “individual economies,” of which each and every individual is the Sole Proprietor. Just as I am the Sole Proprietor of The Antidote Blog. All these individual economies are "private economies."

We are all sailing our little boats on a mighty wide and placid lake, and each is the Captain of his own boat. We are all “minding our own business.” We are “trying to keep the customer satisfied.” And all we do is “row, row, row our boats, gently down the stream.” Merrily, of course.

On Mining, Property, IAS and HEICS

Mining – this is the sector in the news today, with two editorials on it. The context is political corruption and subversion of democracy. I recommend both: Mint, here; and the Express, here.

What I would like to add to these learned opinions is something my father once told me. He said, “Son, in the USA if there is oil or gold under your property, then this belongs to you and you are rich. But here in India everything belongs to The State.”

True, isn’t it? The millionaires of Texas made their millions by striking oil. They had a California Gold Rush.

About mineral resources, a wise man once told me that it was perhaps the greatest curse to ever befall a people: Look at Africa, with vast quantities of mineral wealth. And look at Hong Kong and Singapore, without any such wealth at all.

As the Express editorial rightly points out, mining is a “primary sector” activity, there along with agriculture. There are many books and ballads about the hard life in mining towns. In our own country, mining towns are the most miserable of towns. As with agriculture, so with mining, it would be preferable if other economic activities are allowed to flourish, and less and less people work in the primary sector. All along the Western Ghats, including in sunny Goa, iron ore mining rules the roost. Entire mountainsides, which could be great real estate, are being exported. Every port there is engaged in iron ore exports – export everything, import nothing: the Kamal D Nutt theory of international trade.

What is the solution? Once again, it is Property. This is a function of the local civilian administration. If they apply this Principle to their work, they can solve the problem. As Leon Louw once told me, “Even if your Constitution does not protect property, the government can.”

In other words, the civil administration has some “work” to do. In British times, the average district was three or four times larger than they are today. And there were no satellite maps. The basic task of land administration appeared to them as daunting as “mapping the waves of the great oceans.” But they did it. Mason’s great book has pictures of their rough, hand-drawn maps. There is another picture of a district officer, smoking his pipe under a tree, talking to the villagers, and sorting out land disputes on the spot: “finding” the Law, not “making” it. Those days, a good district officer was known by the wear on the seat of his pants. He spent much of his time on horseback. The entire mess in India today is only because socialists don’t believe in the Principle of Property. And they have destroyed the entire civilian administration with foolish ideas.

I have done my bit to inform India’s elite administrators of their grave philosophical errors. It must be more than a decade since I first lectured in their Mussoorie academy, accompanied by Parth Shah of the Centre for Civil Society and Yazad Jal of the Association of Youth for a Better India. I lectured there again some years later, this time accompanied by Barun Mitra of Liberty Institute. I smoked a joint or two with Yaduvendra Mathur, then deputy director of the academy. I met Wajahat Habibullah, then director, and we presented him with many of our books. I personally told Habibullah, a Doon School product, that it was ridiculous to have a Marxist professor of economics at this academy after a decade of “liberalization.” Teach them Liberalism, I told him. And it must be 10 years since I appeared on the Barkha Dutt show along with very senior IAS men – Abid Hussain, N Vittal and others. I told them on prime time television that nonsense is being taught in the IAS academy.

How were British administrators taught? It was not too long after the Wealth of Nations came out that the Honourable East India Company established their college at Haileybury to train recruits. The biggest component of their training was Classical Liberal Political Economy – then not taught in either Oxford or Cambridge. Haileybury was in operation right through to 1857, after which the Crown took over India. Hundreds of great HEICS officers were produced by Haileybury. The acronym stands for Honourable East India Company Service, the precursors of the ICS. It is they who "founded" British administration in India.

One IAS man, though, told me something wise: “We are knowledge-proof,” he said.

“Bravo,” I replied.

A Tribute To John Wilkes

“It was the best of times, and it was the worst of times” – these are the words Dickens employed to describe the French Revolution. Such times are indeed great in the manner in which oppressive regimes are overthrown, but they are often horrible as well. The French people have had many revolutions and installed many republics – and they are still unfree. India too fought for the goal of “freedom” from British rule. And this revolution too did not succeed.

In such difficult times, what I would like to offer my reader is a glimpse of history, for they say “history is a guide.” And history offers us an excellent example of an English politician, a phenomenal libertarian: John Wilkes (1725-1797). It is because of Wilkes that the press is now free. They should erect his statue on Fleet Street. Bahadur Shah Zafar Marg should be renamed after John Wilkes. People indeed named their children after him, as in the case of John Wilkes Booth, Lincoln’s assassin. The libertarian publishers Fox & Wilkes keep his name alive.

What needs to be emphasized about John Wilkes is his great love for Freedom. He was a man who lived life to the hilt. He was a known “rake,” having fathered half-a-dozen illegitimate children. The club he founded was the Hellfire Club – and their headquarters were in a monastery, of all places. This was on the banks of the Thames, and finds mention in Jerome’s Three Men in a Boat. This wonderful book also contains an excellent description of the signing of the Magna Carta – a peaceful revolution. But we were discussing John Wilkes.

As a politician, John Wilkes was primarily a journalist. It is his journalism, which included some pornography, that won him the support of the people; in particular, the London mob. In those happy days, there were no policemen in London. And Wilkes had the mob on his side. The King hated him, referring to him always as “that devil Wilkes.” Even the House of Commons hated him, and expelled him many times. It is only because of John Wilkes that the proceedings of parliament are now reported to the people. Till then, they were kept secret. It is indeed noteworthy that John Wilkes crowned his political career by becoming Lord Mayor of London, second only to The King, and therefore far, far above parliament.

John Wilkes also did not do it for the money. It is recorded that his great political battles ruined him financially. It is also recorded that he happily spent whatever he had living up to the standards befitting London’s Lord Mayor, which has never been an “office of profit.” I strongly suspect that Wilkes did all he did merely for the fuck of it; for fun. Politics, to English people then, was the great game. And he played this great game extremely well.

It should also be noted that John Wilkes enjoyed mob support in a City. Posters saying "Wilkes & Liberty" were put up all over London. History says that when he was elected Lord Mayor, jubiliant crowds unhitched the horses from his grand carriage and dragged it through the City streets.

Why did I suddenly think of John Wilkes? B’coz this meaningless Indian “democracy” does not offer us a single real “politician.” I am writing this from South Delhi, where Chacha Manmohan S Gandhi lost the election. In India, what we call “politics” is not the great civilizing activity that the great philosophers of ancient Greece wrote about. This particular word, “politics,” born in ancient Greece, is floating around the world completely devoid of its original meaning. There is another word that has suffered a similar fate: the word “villain,” which originally meant a simple farmhand, an agricultural worker, a serf, one who lived in a “vill,” a villager. As in the case of “politics,” so too in the case of “villain,” words have acquired sinister meanings on their own.

John Wilkes was no villain. He was a great hero of his times. And he was a City Politician. Think about that…