If Keynesian economics worked, this would be a perfect world


1:07a ET Wednesday, June 1, 2011

Dear Friend of GATA and Gold (and Silver):

Back in June 2004 the deputy chairman of the Bank of Russia, Oleg V. Mozhaiskov, addressed the London Bullion Market Association conference at the Kempinsky Hotel in Moscow and let the bullion bankers know that he and the Russian government were on to their tricks, thanks to "the group of economists who came together in the society known as the Gold Anti-Trust Action Committee":


Mozhaiskov's speech is still timely for perceiving the manipulation of the gold market that had been achieved by derivatives, whereby paper overwhelmed real metal. In regard to the currency and financial markets Mozhaiskov observed: "The volatility of these indicators directly influences investors' interest in gold. Since this interest is realised not through operations with physical metal but through deals with gold derivatives on stock-exchange and non-stock-exchange markets (where gold is mentioned only as a base asset), the volume of these deals can exceed the volume of trade in physical metal dozens of times. Last year turnover with gold derivatives was about 4,000 million ounces (or 129,000 tonnes), but physical metal actually sold totalled 120 million ounces or some 3,860 tonnes. As it is said: Feel the difference!"

Glad as GATA was to have gotten the attention of Mozhaiskov and the Bank of Russia, only a couple of GATA's 10 or so officers and consultants at that time might have plausibly claimed the profession or even the avocation of economist. The remainder often took what pride they could in their ability to dress themselves in the morning. Indeed, they were less interested in theorizing or philosophizing about what should be in economics than in simply discovering what is -- discovering particularly what governments and their agents were doing in the gold market, and why.

... Dispatch continues below ...


Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon

Company Press Release, January 18, 2011

VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.

PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.

Following the transaction:

-- Prophecy will own approximately 90 percent of PCNC.

-- PCNC will consolidate its share capital on a 10 old for one new basis.

-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.

-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.

Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.

For the complete announcement, please visit:


Of course any survey of GATA's officers and consultants then and today probably would find a fairly strong inclination toward what is known as the Austrian School of economics, insofar as that school seems to insist on a closer reading reality than is accepted by the dominant school of economics, the Keynesian School, whose dreamy imaginings quickly lead to unlimited government power and concealment. Or maybe GATA's preference is largely a matter of ordinary dissatisfaction with the current regime and a rooting interest for fellow outs against the ins.

This rooting interest seems amply justified by a brilliant essay published in the April 18 edition of National Review and written by the magazine's deputy managing editor, Kevin D. Williamson: "Judge, Jury, and Economist: The Keynesians vs. the Entrepreneurs." Williamson's key point may be this:

"Between the theory and the policy lies the shadow: History suggests strongly that Keynesian management of aggregate demand is not translated effectively into public policy -- if it worked, we would never have a recession -- and its loudest contemporary champions, men such as the aforementioned Mr. [Robert] Reich" -- the former U.S. labor secretary -- "have a transparently different set of interests than can be justified by mere economics, chief among them moral concerns about income inequality."

That is, one can't blame the Austrians for the financial disaster the world is in. That disaster is almost entirely the product of Western central bankers, politicians, and hangers-on who consider or considered themselves Keynesians.

Of course even Lord Keynes himself likely would dispute his supposed modern disciples in important respects, and he is no longer around to defend himself. But as Williamson suggests, this is an imperfect world mainly because people are imperfect and because the extraordinary power Keynesianism claims for government can be abused and, indeed, has been abused enormously and inevitably will be abused to infinity.

That is, if an economic theory can work in practice only if it is implemented by incorruptible people, it can't work in this world. And if it can be pursued only through secret or largely surreptitious means -- as GATA considers its long research to have demonstrated (http://www.gata.org/taxonomy/term/21) -- it's nothing a free people should want any part of. If they accept it in its entirety, they become slaves.

Apart from being profound, Williamson's essay is a great read and lots of fun and you can find it at the National Review Internet site here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Sunday-Monday, June 5-6, 2011
Vancouver Convention Centre East
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Lewis E. Lehrman on How to Solve the U.S. Debt Problem

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program.

Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust.

Lehrman says: "Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy.

"We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals and working people, 0 percent at the bank, you are not going to encourage them
to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust."

To read more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: