classical economics
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Government Power and You

Lessons from Cyprus and the Homeland
By Wayne Jett © March 30, 2013

       Cyprus teaches the wisdom of limits on government power. Lucky for Americans, Framers of the U. S. Constitution understood this and wrote into the Bill of Rights specific things the government is prohibited from doing. But words on paper cannot restrain governments. Only daily, vigorous actions to protect and extend human liberty can do so. Otherwise, governments will grind into dust every claim of right made by aliens or its own citizens.

       The European Central Bank and Germany’s government pressured Cyprus to seize money in private bank accounts and give it to certain banks. Why they did so is not as important as the act itself. Governments exult in taking property and using it as they see fit. They prefer to call it taxation, but will take it however they can get it. This is the mindset of government operatives globally. They see assets belonging to others and take as much as possible for their own use – by force and violence, if necessary.

        In Cyprus and elsewhere, bank troubles often center around banks’ relations with government. In most countries, if a bank wishes to get along with its government, they must willingly lend it. Most governments since World War II have slipped into the Keynesian camouflage that insists modern regimes must borrow and spend to stimulate economic growth. Who will lend beyond the limits of taxation? Why, banks within the government’s power to regulate, of course.

      The Cyprus crisis is easily within government’s ability to rationalize. The crisis is the fault of Cypriots, who (it can be asserted) received benefits beyond their willingness to pay taxes. Now, they must pay up. Money poured by government into nooks and crannies which make billionaires twice over of supposedly elected leaders, not to mention their influential friends, winds up edited out of most media discourse. The people must pay. Certain banks must be blameless because government will still wish to borrow from them when the crisis is past.

                                                                            Dear Ol’ Uncle Sam

     In 1798, the U. S. Supreme Court ruled that a law which takes private property from one party and gives it to another “is against all reason and justice.” In the 20th Century, the Court allowed precisely that without dissent. Despite limits imposed by the Founders and the ratifying States, the U. S. government over 200-plus years has taxed and grown powerful.

     Now a congressional leader ridicules suggestions that the Constitution limits federal power to control access to health care. A Supreme Court justice publicly recommends that other nations should not use the U. S. Constitution as a pattern for new governments.

      So far, unlike Cyprus, the U. S. Treasury has not resorted to seizing private assets to pay its bills, preferring to borrow more dollars from the international banks and the Federal Reserve. The dollar retains some value because most countries still use it in foreign trade. The dollar became the international reserve currency at the end of World War II because the U. S. owned more gold than all other trading countries combined. The U. S. gained that powerful position by buying gold in prodigious amounts during the Great Depression, while millions of its citizens suffered in joblessness, starvation and poverty. See The Fruits of Graft - Great Depressions Then and Now (Launfal Press, Los Angeles: 2011) on the Home page linked above.

       But the days of dollar preeminence are numbered. The Fed has abused its authority to create dollars. Far too many dollars have been created, so the dollar's value has fallen sharply. The Fed and its accolytes spread the word that this "devaluation" is very wise because it helps American producers sell goods and services abroad. They say it is really okay - even smart - to cheat foreigners who take dollars, but fail to mention that all Americans who have earned, saved and invested dollars also are cheated in the same way.

       More importantly, the real reasons the Fed has created trillions too many dollars is to enable the U. S. Treasury to create more debt of historic proportions, in line with interests of the international banks which own and control the Fed. In brief, the Fed articulates monetary policy as necessary to serve the international banks, while seeming to address domestic political interests. Particularly since 2003, other trading countries have become convinced the Fed's practices are unfair and inconsistent with their own economic aspirations.

      What do U. S. officials do when other countries no longer want dollars; when newly created dollars have little or no value, and even existing dollars lose value to such an extent that economic production stalls? Like Cyprus, the U. S. might have to grab assets rather than borrow them.
      In 2013, do not expect the Fifth Amendment’s prohibition against taking private property except for public use and with just compensation to inhibit exertions of federal power - unless the people muster the will to enforce their constitutional rights. The Department of Homeland Security recently notified banks all safety deposit boxes are subject to search and seizure of contents without warrant, including gold bars and coins, plus anything suspected of being contraband.

                                                           Worrisome Signs of Approaching Conflict

       The U. S. president says “I am not a dictator” as if he wishes his supporters to demand that he should be. He signs international agreements even if they require violation of constitutional rights without submitting them to Senate ratification. One such instance is the United Nations treaty on small arms control. He acts as if constitutional limits undercut his “standing” among other governments whose officials are more authoritarian.

     No natural emergency in U. S. history has required response by heavily armed troops mobilized by armored transports. So, why is DHS recruiting and arming “domestic security” forces potentially more threatening to American liberty than any foreign standing army?   

     Yet FEMA, the bureaucracy whose blunders during natural disasters are legendary, has built a network of internment camps to confine Americans. FEMA is training battalions of young men in the use of automatic weapons to shoot “non-traditional” targets – women, children, elderly and other “potential terrorists” such as conservative Christians, Tea Party activists and military veterans.

                                                                       Potential Provocations

       A government which prepares to use significant force against its own people may envision one or more events likely to make those people very angry. What might those events be? Here are possibilities, perhaps in combination:

•    damage or destroy the power grid
•    shut down internet communications
•    declare martial law
•    gun registration or confiscation
•    sharply higher energy prices
•    weather modification causing drought and food shortages
•    environmental terrorism by spraying metallic aerosols
•    creating and guiding destructive storms
•    suppression of cures or treatments for major diseases
•    spreading infectious disease or disability

      A second list may include actions in the financial sector, such as:
•    Federal Reserve destroys dollar as international reserve currency 
•    fraudulent trading crashes stock markets, destroys jobs
•    inflation and interest rate manipulation crashes bond markets
•    private bank accounts seized
•    IRA and 401(k) retirement assets seized
•    private pension plan assets seized
•    privately owned precious metals seized

     These lists are not predictions. The issue under examination is why the federal government is acquiring so much firepower and force for potential use against its own people. Has the U. S. government done something, or what might it do, to cause Americans to revolt?
      Former Texas governor and U. S. Treasury secretary John B. Connolly said 20 years ago, not long before his death, Americans would revolt overnight if they knew what their government was doing. If this is so, facts remain well hidden, because no general revolt appears imminent.

     Will the federal government provoke a target group to revolt and provide an excuse for a forceful crackdown? The destabilization of American society by the ruling elite appears to be approaching a climax, though the course of events remains highly uncertain.   ~