Solar Flares and Government's Greedy Hand

Published: Fri, 03/09/12

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In This Issue:

Encounter with Andrei Illarionov, Former Senior Economic Advisor to Vladimir Putin By Richard C. Young
The Doomsday Bill By E.J. Smith
Trench Warfare The Editors
VIDEO: Milton Friedman: Why Soaking the Rich Won’t Work The Editors
U.S. Plans Unmanned A-10 Warthog The Editors
Solar Flares and Government’s Greedy Hand By E.J. Smith
Save Cato The Editors

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With the Federal Reserve pumping trillions of dollars into a global monetary system already soaked with liquidity, inflation is and will continue to be the result. For retired and soon-to-be-retired investors, the future inflation outlook should be alarming. Inflation is a destroyer of wealth—it’s compound interest in reverse. Owning commodities and hard assets that increase in value along with inflation may help. Read about Young Investment’s strategies in the new February client letter by clicking here .

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My Encounter with Andrei Illarionov, Former Senior Economic Advisor to Vladimir Putin

Debbie and I were visiting West Palm Beach’s Anne Norton Sculpture Garden with fellow attendees at Cato Institute’s February Benefactor summit. It turns out that Debbie’s mom had stayed there when a good friend of hers from Newport had been curator for the Sculpture Garden a few years ago. Small world, is it not? On the tour with us was Andrei Illarionov, who I was much looking forward to hearing speak at the Cato Summit the next day.

Andrei spoke on “American Adversaries Big and Small.” Attendees were quickly informed that the word to use in Russia is not election, rather it is selection. And unlike what is frequently portrayed in the media, the selection of a Russian president is hardly free and fair. In 2005, Illarionov, who had assumed office as senior economic advisor to Russian President Vladimir Putin in 2000, was the central figure in introducing the 13% flat income tax in Russia. Unfortunately In 2006, conditions in Russia had deteriorated to the point that Andrei no longer considered Russia to be a democratic or free country. The following year, Mr. Illarionov joined Cato.

Andrei is one of 34 first signatories of the online anti-Putin manifesto “Putin Must Go.” After his excellent Cato presentation and rousing thank you from a jam-packed ballroom, I was able to spend a few minutes with a most gracious, warm and open Andrei Illarionov. I asked if he could come and go freely today from Russia and whether he and Mr. Putin were likely to get together for lunch on a visit to his homeland. I got a smile on my first question and another smile and a shake of the head no, not surprisingly, on my second question. I asked if Vladimir would win the up coming “selection.” Yes, advised Andrei, but with perhaps a 30-32% real headcount, not the 58% headcount that will get fed to the public. Andrei told me that Putin today must pay for support demonstrations. Much like here in the U.S.A., wouldn’t you say? Mr. Illarionov also informed me that Americans should be prepared for a ramping up of anti-American rhetoric and a massive build up in Russian defense spending as a % of GDP.

For two days, Debbie and I spent from 7:45 AM to 9:00 PM attending presentations, workshops and first-rate breakfast/lunch/dinner gatherings. The entire Breakers’ staff did a fabulous job. If you have not been to the Breakers, I cannot imagine a more wonderful estate/hotel/resort for a family visit.

Over the almost three days I spent with Cato scholars, staff and attendees I was able to ask many questions on a variety of subjects. Debbie and I, as Cato Benefactors, are regulars at Cato events, and I never cease to be amazed at both the quality of Cato’s policy team and the well-informed, focused and committed nature of attendees. I ask often what makes Cato click. What is Cato’s glue? Not surprising to me is the universal positive comments on Cato President Ed Crane and Chairman Bob Levy. I have gotten to know Ed pretty well and agree that Ed’s dominant personality and leadership key the Cato effort. It turns out that Bob and I go back to the early 70s when we both had an association with New York/Boston institutional research and trading firm Hoenig & Co. I knew Bob as a sharp and positive individual back then. In ensuing years, Bob has only advanced his status as Cato’s highly effective chairman. Bob was responsible for the groundbreaking Heller (Washington 2nd Amendment gun rights) Supreme Court victory. So when you think Cato, think Ed Crane and Bob Levy, and you will be off on the right track.

OK, so there’s a lot to learn and much to benefit from any Cato conclave. Here are a few items I took away from the Cato/Breakers event. First off, Cato is not a political beast and neither supports nor endorses presidential candidates. That said, I did not hear from attendees so much as a single word of support for Barack Obama. And almost without exception, attendees were horrified that such a background-free, income redistributionist lives in the White House. As for Republican candidates, I heard few if any positive comments. This fall, Americans will go to the polls to vote for a Marxist-influenced, central-government expander or a caretaker to the big government/military/industrial complex. Both horrible choices.

The two-party system in America no longer represents a big percentage of Americans. It is long past the time America advances to a multi-party system where all Americans feel well represented. I have taken a shot at how such a system might lay out and lay it out for you here . You may like to tinker with my associations and percentages as you think best. No matter how you finalize you’re thinking, however, I believe that you will conclude as I have that the party rules must change. A multi-party system would allow all Americans to select a party that would indeed represent each of our individual interests. Under such a system, I am confident that neither President Obama nor any of the current Republican frontrunners would have a prayer of winning the presidency. As a final note, I would add that when she was asked about her constitutional concerns for Obamacare, Nancy Pelosi responded, “Are You Serious?”

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The Doomsday Bill

You’ve probably had your credit card rejected at the checkout station once or twice. It’s not fun, especially after you’ve unloaded a week’s worth of food and need to leave it all behind.

A phone call usually puts you back online, but it’s a hassle you could do without. And when disaster strikes—let’s say from an electromagnetic pulse attack or solar flare—then you can kiss your credit card goodbye.

Are you prepared for such an event?

This type of stuff is what legislators in the Wyoming House of Representatives are kicking around. Last week, they introduced a bill to help the state prepare for a collapse of the U.S. government and economy. It was narrowly defeated. Detractors suggested the state buy an aircraft carrier.

“I guess a lot of people think if you’re trying to prepare for a disaster, it makes you seem crazy,” cosponsor Kendell Kroeker said. “I was interested in it mainly because I don’t think there’s any harm in being well prepared.”

Wyoming is in great shape fiscally. In addition to its $14 billion in savings and assets, it has a low unemployment rate of 5.8%, and over $1 billion in a rainy-day fund. As you can see on Richard Young’s Liberty and Freedom map, there’s a lot to like about the Cowboy State.

Rather than being foolish, you’d be smart to think of your household as a mini-Wyoming. There is no harm in being well prepared. Start with this question: Do you have adequate cash on hand in case your credit cards don’t work or your bank can’t open?

Dedicating 1% of your investable assets to disaster prep would put you 1,000% ahead of your neighbors. Plus, what’s the downside of having cash on hand? Personally, I like silver coins and Canadian dollars mixed in with my greenbacks.

Having some hard assets stashed away can make all the difference in the world. If you had to leave town, you could be a welcome guest rather than an unwanted liability.

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Trench Warfare

null Few surprises came out of Super Tuesday. GOP primary voters in each state continued to pull the lever for big government Republicans. The big news is that Mitt Romney won Ohio, a must if he is to have any chance for a win against Barack Obama in November. Ron Paul struck out on Super Tuesday, indicating GOP voters are ready for a return to the Bush-era policies of preemptive war, expansions of “compassionate” government, and borrowing from China to pay for it all.

According to CNN, Mitt Romney has accumulated more delegates than all other candidates combined. But the next set of primaries may be hard on the former governor. Primaries in Kansas, Alabama, Mississippi and Missouri will all test Romney’s appeal among more conservative GOP primary voters. Newt Gingrich has a “Southern” strategy—an attempt to repeat his victory in Georgia. Surely Rick Santorum is confident about these more conservative states after his wins in Tennessee, Oklahoma, and North Dakota yesterday.

The GOP primary is turning into trench warfare. The way the race is going, whoever wins could face Barack Obama as either a battle-hardened warrior or as a wounded soldier with little fight left in him.

The Persistent Close Air Support (PCAS) program will allow the joint tactical air controller the ability to rapidly engage multiple, moving and simultaneous targets within his area of responsibility. PCAS’s ability to digitally task a close air support (CAS) platform to attack multiple/ simultaneous targets would clearly improve the operations of U.S. ground forces and increase speed of attack. PCAS will significantly increase CAS capabilities by developing a system that provides continuous CAS availability and lethality to the supported ground commander. PCAS will be a ‘system-of-systems’ approach demonstrating the ability to digitally task a CAS platform from the ground. The system will be designed to reduce collateral damage and potential fratricide to friendly forces. Enabling technologies are: manned/unmanned airborne platforms, next generation graphical user interfaces, data links, digital guidance and control, and advanced targeting and visualization tools.

Source: DARPA

DARPA, Raytheon, Aurora, and Northrop Grumman are hoping to demonstrate an unmanned twin engine A-10 Warthog as part of the PCAS program. The goal of the PCAS program aims to give the joint terminal attack controller (JTAC) on the ground a point, click, and kill technology inevitably cutting out the middle man. DARPA thinks its On-Demand airstrike capability will help eliminate the current painstakingly slow process of permissions and clearances that can bring air support to a crawl. DARPA hopes to have the close air support (CAS) aircraft deliver multiple weapons within six minutes of a JTAC request. If DARPA is successful, the PCAS program and the unmanned A-10, could revolutionize the battlefield giving troops on the ground On-Demand technology and control of a new class of unmanned combat aerial vehicles (UCAV’s). Darpa plans a live-fire demonstration of PCAS at the end of Fiscal 2014.

Recent News: Aurora Selected by Raytheon for DARPA PCAS Program – February 16th, 2012

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Save Cato

From Save Cato:

On March 1 Charles G. Koch and David H. Koch filed suit in a Kansas court, with the goal of taking control of the Cato Institute board of directors under Cato’s long-dormant shareholder agreement.

The Cato community believes that if this suit succeeds, it would swiftly and irrevocably damage the Cato Institute’s credibility as a non-partisan, independent advocate for free markets, individual liberty, and peace.

We are heartened by the public support that immediately emerged, and continues to come forward, for the Cato Institute, and have, in addition to statements from principals, legal filings, fact sheets, and more, posted some of these expressions below.

We will continue to update this site as the events go forward and as often as the litigation proceedings permit. We are grateful to those who share our commitment to libertarian principles, and to the integrity, independence, and nonpartisanship of the Cato Institute.

The Facts

Charles and David Koch have filed suit in a Kansas court asking to be given control of the Cato Institute.
They have also used their existing power under Cato’s long-dormant shareholder agreement to place several major shareholders, employees, and consultants of Koch Industries and the Koch Foundation on Cato’s Board of Directors, removing several directors who have been among the organization’s largest and most steadfast financial contributors. Some of the new directors are Republican operatives and social conservatives, a poor fit for the board of an independent libertarian think tank.
The Cato Institute’s success rests on its independence, integrity, nonpartisanship, and commitment to libertarian principles.
The officers and all the non-Koch directors of the Cato Institute are determined to resist this takeover attempt and preserve the independence of the Institute.
We are confident that under the shareholder agreement and Kansas law William Niskanen’s shares are properly under the control of Kathryn Washburn, his widow and executor. We expect the Koch lawsuit to be unsuccessful because it rests on a misrepresentation of the law and the contracts.
The Kochs have not been open and transparent about their intentions. They cite no criticism of the Cato Institute or its management, and yet they have told Cato chairman Robert A. Levy that they insist on removing Cato’s co-founder and president, Edward H. Crane.
The Kochs’ goal is not to improve the stature nor effectiveness of the organization, but rather, to turn a venerable, independent and effective nonpartisan institution into yet another political arm of their vast empire. They told Levy that they wanted Cato to work more closely with their organization Americans for Prosperity. As the New York Times reported on October 30, 2011, AFP works closely with Karl Rove’s American Crossroads and American Action Network and with official Republican organizations “to make further gains in the Congressional elections next year and defeat President Obama …they collaborate and divide up duties where possible.”
The non-Koch-related directors of the Cato Institute feel strongly that an independent, nonpartisan think tank should steer clear of such associations and activities.
This takeover attempt began immediately after the death last fall of Cato chairman William A. Niskanen, when the Kochs wrongly believed that his death gave them control of the organization through the shareholder arrangement.
The takeover attempt also comes just as Cato concludes a $50 million capital campaign and the doubling of its headquarters building, making Cato a more valuable asset than at any point in history.
The Kochs want to acquire Cato’s reputation for independence and thoughtful policy analysis. But they cannot acquire this. A personal, partisan, corporate takeover of Cato will destroy the reputation the Institute has built up over 35 years.
All of the non-Koch directors of Cato are determined to preserve Cato’s independence. They ask friends of Cato and friends of independent policy analysis to join them in persuading the Kochs to drop this takeover attempt.