Hi! Gary North sends out an investment advice letter in which I have little interest for I'm not an investor.
However, his musings are usually good and often excellent. He writes well and insightfully. You'll the way "Preparation X" can cure hemorrhoids but can't tell you about it. The first part of this one tells how Congress keeps the Great Unwashed from hurting themselves, while allowing the washed and perfumed to make a killing. The second part shows how the very rich create enclaves where the aforementioned Great Unwashed are allowed in only as servants. I have never before wondered why Greenspan goes to Jackson Hole to make his pronouncements and Clinton visits there so often. This column suggests why. He provides a way to receive his stuff via E-Mail. Harry ******************************** Henry George School of Social Science of Los Angeles Box 655 Tujunga CA 91042 818 352-4141 ******************************** > -----Original Message----- > From: Gary North's Reality Check > [mailto:[EMAIL PROTECTED] > Sent: Thursday, October 13, 2005 6:29 AM > To: [EMAIL PROTECTED] > Subject: Reality Check - Keeping Out The Likes Of You > > Gary North's REALITY CHECK > [EMAIL PROTECTED] > > Issue 490 October 14, 2005 > > > KEEPING OUT THE LIKES OF YOU > > The central economic fact of the free market is this: > it gives the average Joe the power to shape production. He > does so as a consumer. His dollar counts for as much as > the rich man's dollar. > > But, say capitalism's critics, the rich have so much > money that the average Joe is locked out of the really > prime markets. This is true of a single average Joe. But > there is an amazing fact about the average Joe. He is > average because there are so many Joes just like him. > Together, they can outbid anyone. > > This is why the rich must resort to a strategy to keep > the likes of you from gaining too much influence when > buying key assets -- assets favored by the rich. This > strategy is simple: make it illegal for the average Joe to > buy whatever it is that the rich want to own. > > To do this, they need a cover. They can't very well > go to Congress and say, "Pass special-interest legislation > to keep the average guy out of our markets." So, they do > what is required. They suggest to Congress the following: > "To save the average Joe from himself, pass legislation > keeping him out of our markets." Congress does it. The > average Joe thinks it's a great idea. "Congress is here to > protect me." Suuuuuure it is. > > These controls begin with information. The strategy > is to keep average people from learning the truth. The > Federal government often makes it illegal to tell people > the truth. They will prosecute firms that tell the truth > but do not prove it in ways that the Feds mandate. > > Let's begin with an example that I was recently > reminded of: health care. I had a problem. I also knew of > a solution. But you probably don't. > > > HEALTH CARE > > In the medical field, controls on information are a > way of life. Let me provide a recent example. For 35 > years, I have known of a treatment for hemorrhoids. It's > fast (48 hours), pain-free, and cheap. It's available as > an over-the-counter product. But the product cannot > legally be advertised as offering a cure for hemorrhoids. > Let's call it Preparation X. > > Individuals are legally allowed to say that they found > relief by using it, but they had better not be associated > with the product financially. Individuals' free speech is > protected by the first amendment, but not when money is > involved. Paid testimonials can result in a company's > getting prosecuted. Only when the testimonial is free can > it be broadcast, but not by the company. > > So, there is no systematic way to get the story to > people who can be helped. Only if they find out almost > randomly -- on in a third-party newsletter -- will they > find out. But, in the case of "Preparation X," most people > don't want to say anything in public about their > hemorrhoids. I'm an exception. After you read the > following, I suggest that every time you think of the > phrase "Federal government," you think "hemorrhoids." > > http://shurl.org/preparation-x > > Let's consider another example. I have mentioned the > "black box" on occasion. It cured my wife's chronic > fatigue syndrome in three days. She had been a near- > invalid at age 38 because of CFS. Later, I learned that > actor James Coburn's crippling arthritis was controlled by > treatments. He did a taped interview with me about this. > > The inventor was driven out of the United States by > the Federal government. He made too many public claims for > his invention. In private, he told me that the machine > worked by killing viruses when they divided. He told > others the same thing. > > If avian flu ever becomes a pandemic, and millions of > people start dying, this machine -- if it works in the way > that inventor said it works -- could save lives that would > otherwise be lost to the viruses. But how many lives? A > few dozen. Why so few? Because it was illegal to > manufacture and make claims for the machine when the > inventor was still alive. Now only three of the machines > remain. Only a handful of people know about the source of > treatment. Almost no one contacted me when I first wrote > about it, although tens of thousands of people read about > it. The information did not register mentally. > Information usually doesn't unless it is part of an ad > campaign. If the bird flu hits, people will start > contacting me, but by then the number of patients will be > lined up to gain access to the three machines. Too late. > > This is how it goes when the government makes it > illegal to tell the truth or imposes such enormous costs > for proving claims that the truth does not get out. In the > name of limiting the spread of false information -- as > defined by a regulatory agency's staff -- the agency limits > the spread of the truth. The consumer is not allowed to > make up his own mind. > > This allows a virus to make up the host's mind for him > . . . just before it kills him. > > > QUALIFIED INVESTORS > > The government prohibits most investors from taking > advantage of high-risk, high-return investments. These are > investments that return 15% to 20% per annum consistently. > These are not available to "widows and orphans," unless the > widow has a net worth of a million dollars. That's the > definition of a qualified investor. > > Why do these restrictions exist? The official > explanation is that people who don't have a million dollars > of net worth will fall prey to unscrupulous con men who > will get them into high-risk ventures. They will put these > naive, unsuspecting investors into investments that these > unsophisticated people do not understand. To protect these > people, the government makes it illegal for Americans to > invest. > > Give some thought to the effects of this law. Say > that you were rich. Say that you wanted to invest in > ventures with an above-average rate of return, year after > year. You would have a problem. Word would get out. Fund > managers would rush in and buy up the shares, raising their > price, thereby lowering the rate of return. > > This is what capital markets do. They equalize rates > or return, discounted for levels of risk. > > The rich man thinks: "Darn! All those fund managers > will rush in and spoil the deals." > > But wait! What if the government makes it illegal for > fund managers to do this unless they are acting on behalf > of small groups (say, 99 investors) of people with a net > worth of a million dollars? That would keep out the > rabble! It would keep the rate of return above market. > > Cynics -- of whom I am chief -- might conclude that > the law protecting people with a net worth of under a > million dollars from entering a particular capital market > is in fact a law protecting above-average rates of return > for people worth over a million dollars. > > Cynics could then draw a broader conclusion: "Almost > any law to protect the common man is in fact a law to > protect the rich from the competitive bidding of a whole > lot of common men." > > Let's move on. > > > LAND USE PLANNING > > What if you were very rich? One of the things that > rich people buy is pristine land in environmentally > gorgeous locations. They love the wide open spaces. They > define "wide open spaces" as "spaces where the likes of you > can't easily gain access to." > > Their big problem is land developers who sell condos > to upper-middle-class people, or worse, sell time-shares to > middle-class people. By pooling their assets, non-rich > people who are willing to settle for far less open spaces > can outbid rich people who want to own wide open spaces. > > So, rich people become big supporters of land > conservation. Land conservation is best defined as "a > government program to lock up beautiful land that is > located next door to enclaves of high-priced land owned by > rich people." > > The original enclave of America's ruling families was > Mount Desert Island in Maine. As church historian William > Hutchison has described it, "On Mount Desert, year after > year, Browns and Peabodys of the religious establishment > vacationed with Eliots, Rockefellers, and Peppers that is, > with education, business, and political leadership." > > American church historian George Marsden hints at its > existence and importance: "The major university founders, > such as White [Cornell], Gilman [California, Johns > Hopkins], Angell [Michigan], and Eliot [Harvard], kept in > close touch and sometimes vacationed in the same vicinity > in Maine." > > The man known in the 1950's as the Chairman of the > American Establishment, John J. McCloy, spent his middle- > class youth on the island prior to World War I, where his > mother was the favored hairdresser of the elite. From that > crucial geographical entry point, he made the personal > contacts that led to his becoming the most influential > private citizen in the United States, and presumably the > world, from 1949 to at least 1970, and possibly into the > early 1980's. Geography has consequences. > > We could use detailed studies of the well-connected > residents of the three Island enclaves of the American > Establishment: prior to World War II, Mount Desert and > Jekyll [Georgia]; beginning in the early 1930's and > accelerating after 1945, Jupiter, located in Florida's Hobe > Sound.) Jekyll Island, where J. P. Morgan had a home, as > did William Rockefeller, John D's brother, was where the > secret meeting -- first names only -- was held in 1910 to > plan the Federal Reserve System. This important meeting is > rarely mentioned in history textbooks. > > Mount Desert Island was the prototype Establishment > enclave. In 1910, the year that he served as foreman of the > grand jury in New York, Rockefeller bought a 104-room > granite mansion there, importing tiles from the Great Wall > of China. He used Mount Desert Island as his first great > experiment in permanently sequestering property away from > the free market, which develops properties aimed for sale > to middle-class buyers. He and his elite neighbors were > concerned about "overdevelopment." > > This is an elitist code word for "real estate sales to > the upper middle class." They created an association and > donated 5,000 acres to it; then they gave it to the Federal > government. President Wilson used executive authority in > 1916 to create a special monument; in 1919, Congress passed > a law making it Lafayette National Park. Junior bought more > land and donated it to the government; this is now Acadia > National Park. > > He and his heirs have repeated this lock-out, using > tax-deductible money, to remove prime real estate from the > market in wilderness areas surrounding elite enclaves. This > raises the value of the remaining properties, and it > secures an insulated social world for them. The area around > Jackson Hole, Wyoming, is one of the prime areas where the > Rockefellers own large tracts. This area has long been the > focus of a Rockefeller-inspired lock-out, beginning in > 1919. Land values there reflect this: astronomical. But the > original model was Mount Desert Island. One Rockefeller > family biographer's say of Junior's role: "Very shortly, he > became a towering figure, the greatest ally the National > Park Service ever had." The assistance was mutual. The > National Park Service provides the authority to keep the > rest of us out of these areas on a permanent basis. > > This program to seal off wilderness areas from > development had its origins in the special role of > wilderness in the coming of age for the sons of the rich. > It is one of the three ordeals of youth and early manhood: > the wilderness summer (wealthy scion Teddy Roosevelt is the > most famous exemplar); the academy (Exeter, Groton, etc.), > and military service in wartime (again, Roosevelt the > "Rough Rider" is most famous). > > Mount Desert Island has been a big part of this. > Nelson Aldrich IV, as part of the Old Money Establishment, > is quite forthright about its political implications: "The > social religion of Nature, which began with rich kids going > outdoors for their health, ends in political action against > the market, the condo developers, the shopping-mall > impresarios, the army of entrepreneurs whom Old Money (and > not Old Money alone imagines despoiling Arcadia." > > Have you ever noticed how many Presidents visit Jackson Hole? Bill > Clinton remains a frequent visitor. > > http://shurl.org/bcjacksonhole > > > Have you ever noticed that Alan Greenspan delivers an > annual speech at Jackson Hole? Check it out. Go to the > Federal Reserve Board's page for speeches of Board members. > > http://shurl.org/frbjacksonhole > > Click any year. Then look for "Jackson Hole." (I use the > search feature in the Google toolbar.) You will find that > there is a Greenspan speech, sponsored by the Federal > Reserve Bank of Kansas City. Kansas City? Where > everything's up to date? Odd that they need to meet in > Jackson Hole. > > I first learned of Jackson Hole when I worked for > Howard Ruff. In early 1977, I was at his California > headquarters. One of the men on his staff had a relative > who did construction work in Jackson Hole. He told Howard, > who told me that the Rockefellers were building extensively > in the area. > > CONCLUSION > > The Web has been a great means of getting previously > restricted information to people. It is getting more > difficult for governments to restrict the flow of > information. As investing goes international, and as the > Web lets Americans buy from off-shore brokerage houses that > are not registered in the United States, the investment > playing field will be leveled. > > But governments still do a great job of restricting > access to pristine land. The super-rich line up political > support from the tree-huggers to get the likes of you > blocked out. > > As for me, I regard a postcard as a good substitute > for actually visiting anywhere but a library or a museum -- > both of which are basically large collections of postcards. > But I still think a time-share complex in the Rockefellers' > back yard at Jackson Hole would be a great thing. It would > remind them that the average Joe's money is as good as > theirs is, as long as Congress stays out of it. > > The trouble is, Congress refuses to stay out of it. > > ---------------------------------------------------------- > > -- Been to the Daily Reckoning Marketplace Yet? -- > > If not, you ought to see what you've been missing. > > Want to read more from our regular contributors? This > is the place to find it. > > We've collected some of the best financial advice and > commentary available anywhere and presented it to you > all in one place. Take a look: > > http://www.dailyreckoning.com/MarketPlace/Newsletters.html > > ------------- > > If you enjoy Reality Check and would like to read more > of Gary's writing please visit his website: > > http://garynorth.com > > ------------- > > If you'd like to suggest Reality Check to a friend, > please forward this letter to them or point them to: > > http://www.dailyreckoning.com/sub/GetReality.cfm > > > ------------------------------------------------------ > The Daily Reckoning is a free, daily e-mail service > brought to you by the authors of the NY Times Business > Bestseller "Financial Reckoning Day". > > To learn more or subscribe, see: > http://www.dailyreckoning.com > > ------------------------------------------------------ _______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
