Gary North on Gold Confiscation, Eventual Capital Controls, and Why Ron Paul is Winning the GOP Primary

Gary North has an interesting article out today on the non-likelihood of a future gold confiscation by the federal government a la Roosevelt and Executive Order 6102.  In response to an article by some dude named Jeff Thomas about the probability that the federal government could once again force the public to forcibly sell their gold, North goes on to demolish the argument.  In short, North agrees with the basic mainstream view on why gold confiscation is highly unlikely:

1. "Confiscation would mean the government acknowledges the reality of the value of gold."

Yes, this is quite so. They would be changing their official view… which, of course, they do all the time. But I submit that all that they need to do is put the proper spin on it.

2. "They would meet greater resistance than they did back in '33."

I expect that this is also true, but that a plan will be put in place to deal with that resistance.

I agree completely, there is no way in hell the public would even think about giving up their gold.  This is due to those such as Ron Paul, Glenn Beck, and even Gordon Liddy who have continually outlined the importance of precious metals in lieu of continual money printing.

North also points out that the government couldn't necessarily offset the purchase of the entire population's gold:

Where will the government get the money to buy the gold? It is running a $1.3 trillion deficit as it is. How will the President and/or Congress justify this added expense? How will this create jobs?
If the Federal Reserve System buys the gold from the government at (say) $1800 an ounce, it will be paying $1800 for an asset kept on its books at $42.22. How will the FED handle the bookkeeping? By listing the newly confiscated gold at $42.22, or by revaluing the existing gold at $1800? Then what? Sell assets equal to the new official value of the gold? Or just add the newly created digital money to the monetary base?
There might be renewed calls for an audit of the government's holdings of gold. Why would the President risk this?
Problems! Problems! For what?

North may not know this, but he presents a nice chart showing precisely why gold isn't in a bubble:

Funny, I am not seeing a bubble judging by this chart.  North touches on another point a little bit but doesn't give it enough attention.  While gold may have been worth confiscating under the gold standard (in order to massively devalue the dollar to finance spending schemes of course) the dollar is no longer linked to gold.  If the government wants massive spending plans, the Fed is more than happy to oblige.

So while North does a decent job showing the absurdity of speculating about future gold confiscation, there should be caution about what might occur: capital controls.  About a month ago, Doug Casey speculated on the possibility of capital controls coming as the government struggles to for more revenue.  In Wendy McElroy's recent Mises Daily, she outlined a lot of recent efforts by the IRS in retrieving tax dollars from U.S. citizens abroad, even if they are unaware of their citizenship status.  The desire for more revenue is only going to grow as the U.S. continues to spend itself to kingdom come.  Capital controls, like interning innocent Japanese citizens or murdering massive amounts of Native Americans, will be seen as necessary for national security.  What it will really be securing is congressional seats for politicians.

I am watching the GOP debate right now and it's pathetic as usual (with the exception of Ron Paul of course).  It's nice seeing Gary Johnson get some limelight though.  Dana Milbank had an interesting article in the Washington Post asserting that Ron Paul is winning the GOP primary right now:

Just 15 seconds into a question-and-answer session with reporters Wednesday morning, Ron Paul found a way to work in a mention of the Austrian School of economics.
From there, he moved inexorably through the Paul oeuvre: the need for the gold standard, the problem with energy-efficient light bulbs, why Greece should declare bankruptcy, why Grover Cleveland was his favorite president, and how our economy is collapsing “just like the Soviet system.”

“I mean, how many people have read ‘Human Action’?” the Republican presidential candidate asked, referring to an economic treatise from the 1940s by one Ludwig von Mises. “How many people have studied Mises and Hayek and Rothbard and Sennholz? … A lot of people just flat out don’t understand what I’m talking about.”
He’s right about that. Rarely does a man go far in public life hawking the sort of oddities that the gadfly from Texas does. And yet, in a sense, Ron Paul is winning the 2012 Republican presidential primary.
Paul won’t be the president, or even the party nominee, but that was never his goal. He aimed to shift the debate toward his exotic economic theories, and by that standard he has prevailed.

Well, I am not sure about Milbank's assumption that Paul won't get the nomination or will be president, but he is correct.  Paul's desire was to change the debate and he has succeeded in spades.  Check out this tweet from Newt Gingrich:

“@David_Kretzmann there is no question ron paul was the first serious national leader to take on federal reserve history will recognize him”

History is going to recognize Paul for a lot more than bringing the Fed into mainstream debate, but Gingrich (or his assistant) is completely right.

I just wanted to end with a big shout out to William Banzai who continually posts some of the most brilliantly hilarious images on Zerohedge.  Check out his newest masterpieces:

I also want to point out this fantastic comment on immigration from Richard W. Fulmer on Cafe Hayek:

When an immigrant crosses the border with nothing but the clothes on his back, populists see him as a threat to American jobs, conservatives see him as another mouth is at the trough, liberals see him as proof that there are “two Americas” – one for the rich and one for the poor, and libertarians celebrate him as another mind and another pair of hands.

Update- Debate is over, Gary Johnson said he wants Ron Paul as his Vice President (Paul won't take it but it was nice) and line of the night definitely went to Johnson when he said his neighbor's dogs have created more shovel ready jobs than Obama.  For something enraging, besides the blatant disregard for Paul during the after-debate analysis, see this:

A retired Chicago labor leader secured a $158,000 public pension — roughly five times greater than what a typical retired public-service worker in the Windy City receives — after being rehired for just one day of active duty on the city payroll, local news reports said.

According to The Chicago Tribune, Dennis Gannon stands to collect approximately $5 million in city pension funds during his lifetime. He now draws the pension while working for a hedge fund, the Tribune reported.

Maybe I should go to Chicago for a job.