• Team Freedom vs. Team State…Choose your side carefully,
• Jeffery Tucker talks Brazil and all things freedom!
• Plus, Bill Bonner gets out the old Crash Alert Flag and plenty more…

——————————————————-

$1.82 Stock About To Make History!

This little-known stock is set to shock the world and win the global race to rare earth production outside China.

This could be the market story of the century and your shot at life- altering profits.

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Run, Saverin! Run!

Were it not for the fact that you’d still have to suffer the eternal torment of actually living with your wicked, miserable little self, life as a willing and active member of The State might be pretty tempting. After all, Team State — operating in direct competition with Team Freedom — enjoys some rather significant advantages, both on and off the field.

For one thing, Team State writes the rules of the game…rules it claims the right to change at any time and for any reason. It can choose to make Team Freedom’s goal the size of a pea, for example, and its own goal the size of…well…whatever it wants. It can recruit a million, steroid-jacked players to wear its own colors, and limit Team Freedom’s membership to a couple of wimpy, though doggedly irreverent, newsletter writers. Who listens to those guys, anyway? Pshhh…

Off the field, Team State may choose to sequester part or all of Team Freedom’s funding. And if Team Freedom doesn’t like it, Team State — reading again from its own rulebook — can choose to simply begin kidnapping members of Team Freedom at gunpoint and locking them up in cages.

More troubling still, Team Freedom suffers the added disadvantage of large scale defection and even of outright collusion with the enemy. In other words, many of Team Freedom’s players are really (whether knowingly or not) playing for the other team…using morally malleable catchphrases like “fair share,” “civic duty” and “social contract” as a way to distract and bamboozle some of Team Freedom’s star players. They read aloud and with unashamed authority from Team State’s own rulebook, exclaiming with sweaty excitement, “But it’s the law! Look, Team State wrote it down, right here!”

And what can Team Freedom do about all this, other than vote for another member of Team State to act as game referee every four years or so? Nothing. Or so it would seem…

Fellow Reckoners will by now be aware of the latest scheme by Team State to encroach on the lives of those they clearly consider to be “their property.” Sens. Chuck Schumer and Bob Casey, two of the more…er…“active” members of Team State, held a press conference Thursday morning on Capitol Hill where they outlined legislation that would prevent Eduardo Saverin, the Brazilian-born, Singapore residing co-founder of FaceBook, from ever returning to the United States.

Now, why would these senators do such a thing, you ask? What do a couple of freeloading, career barnacles have against the entrepreneurial spirits of a go-getting, 30-year-old success story?

Turns out that, back in September of last year, Saverin decided he didn’t want to be considered a US tax slave anymore…a move 1,700 other now-freer people also made during the same year. Abiding by the law, as decreed by members of Schumer and Casey’s Team State, Saverin relinquished his citizenship and moved to Singapore back in 2010, a place where he (and his property) are treated in less of a “gun-in-your-face, gimme-all-your-money” manner.

According to industry estimates, the move should “allow” Saverin to keep about $67 million more of his own money than he would have otherwise been “entitled to” were he still officially a US resident when Facebook makes its IPO, tomorrow.

Of course, the fact that he followed the law, to the letter, wasn’t enough for the senators. Why? Put simply, they didn’t get (what they saw as) their cut. Curiously, Schumer claims Saverin somehow owes “the country” something…beyond the hundreds of millions of dollars he must — and does — already pay.

“Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire,” Schumer said at the conference. “This is a great American success story gone horribly wrong.”

Apparently, helping to found a free product that serves 901 million voluntary users is not enough for Schumer and Casey. Of course, the Senators are not in the business of voluntary transactions, so we can see how this achievement might be lost on them. After all, their own transactions are made not with a handshake, but looking down the barrel of a gun.

So what’s their beef, specifically, this time?

Facebook today serves approximately 180 million people in the US alone…including both Sens. Schumer and Casey. One might think that, if the Senators were so upset with Saverin, as they piously claim, they would take down their own Facebook pages. Since they have not, we encourage Fellow Reckoners to swing by and leave them a warm and fuzzy message. (See links above.)

Clearly not embarrassed to showcase their own conspicuous lack of real world marketing skills, Schumer and Casey are calling their little bill the “Ex-PATRIOT — Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy — Act.” Seriously. Who, besides Team State, would even let these guys play for their side?

The proposal targets wealthy Americans who seek to renounce their citizenship — and, along with it, their tax slave status — unless the unfortunate, would be escapee can convince the IRS they are not leaving the country “for tax purposes.”

In other words, individuals looking to protect their property must first convince the thieves that they are seeking to do so for reasons other than protecting their property. Yes, you read that correctly. If the person is unable to prove the “innocence of their intent” to the IRS — just imagine! — they will be subject to a 30% capital gains tax on all future US investments…regardless of where they live…and assuming they still want to invest in their former jailer’s country at all.

Stranger still, the newly emancipated individuals will not be allowed back into their cell. Said Schumer: “They could not set foot in this country again.”

The battle line has been redrawn again, Fellow Reckoner. But as always, where the state exists, freedom does not. And where freedom exists, the state does not.

Choose your team wisely.

P.S. As always, we encourage our readers to “pirate” any and all of our material. Feel free to share and “like” this article…especially, today, on Facebook.

P.P.S. And while you’re there, be sure to check out Addison Wiggin’s newly revamped “Little Book of the Shrinking Dollar” page, here.

Brazil is a marvelous and massive country where private wealth thrives without embarrassment, where well-protected and healthy familial dynasties form the infrastructure of social and economic life, where technology is popular and beloved by everyone, where the police leave you alone and where Americans can feel right at home.

The world is changing fast. Freedom in America is slipping away so quickly that we are already seeing a wave of young people leaving in search of new opportunities, just as people from around the world once came to America to live the dream. Brazil is one of many countries benefiting from the generational emigration from the US.

Discovering this rattled me more than I might have expected. But the young people themselves are not unhappy, and I can see why. They are valued. They are earning good money doing interesting things. They have access to one of the most beautiful and exotic and friendly places on Earth. They eat well, live well and have rich social lives.

More than anything else, they have the sense of freedom.

Now, you might wonder how it is that people have to leave the “home of the free” to find freedom. Over the last 10 years, something horrible has happened to the United States. The police state has cracked down hard, not so much on “terrorists” or real criminals, but on regular citizens. The news items spill out of my feed on an hourly basis, things that just shock and alarm those who are paying attention.

Maybe it is not so surprising. The US military is larger than most of the world’s militaries combined. We have the largest prison population on the planet, and most are locked up for nonviolent crimes. The political culture focuses more on the need for security than for freedom. Add it all up and you have the perfect recipe for the emergence of a police state.

But most Americans are not entirely conscious of the change. It has been fast, but slow enough not to cause alarm. It hits you only once you leave. This happened to me two years ago when I went to Spain. I could move about and do what I wanted without bumping into authority at every turn. I felt it again in Austria last year. It is not something you can quite put your finger on, just a sense that you are not under constant surveillance in suspicion. You can breathe easily.

It was the same in Sao Paulo, Brazil, a happy and prosperous land of exotic fruits, thriving markets, consumer products that actually work and are not depreciated by regulatory mandates, and polite and warm people.

I received a very generous invitation to be a main speaker at the third conference on Austrian economics sponsored by Mises Brasil, a young organization with a very bright future. It was founded only four years ago. Yet today, it has a gigantic presence in Brazilian intellectual life. The hunger for the intellectual basis of freedom is palpable.

Three hundred or more people were here to listen to lectures and engage in debates on ideas. The audience was a sea of young people, most everyone under 30. They were students, professionals, traders and workers of all sorts, all passionate about freedom and the economic answers provided by the Austrian tradition of Ludwig von Mises, F.A. Hayek and Murray Rothbard.

What most excited them was the classic idea of laissez faire — that is, the idea that society can thrive on its own in the absence of central management and that the government operates as a drain on society. The culture of the group was certainly more intellectual and educational than political. They were invigorated by ideas and given hope by the idea of freedom. Apparently, nothing like this organization existed in Brazil until recently. Now the group’s website is one of the most heavily trafficked in the country.

My hosts were enormously generous with their time, and they knew exactly what I really wanted to do on the first day: see the delights of the open-air markets. I was told they are in the center of town. If you had seen a map of Sao Paulo, you would know just how odd it is even to imagine such a thing. The city seems to be everywhere in sight, everywhere you turn, going on forever. It is like 100 New Yorks.

Driving here is not for the faint of heart. The street layout makes no rational sense at all. I could have been driven the short distance between the hotel and the conference center a hundred times and still not have had the slightest clue about the layout. I was told that it would take at least two years of living here to gain a sense that you really know the place.

Go to a high spot in the center of town and look around on all sides. Everywhere you see a beautiful thing, a world built by millions of human hands. No central plan could have made this. No single mind could have conceived of it. To anyone who is intellectually curious, the obvious questions are how does this place work? How is order achieved? The answer is one that few people in the United States seem to care about today. The miracle is obtained through the coordinating forces of the market itself, of millions of free people interacting in small ways toward their mutual self-betterment. This is the answer that inspires a lifetime of intellectual curiosity.

On the first lunch on my first day, my hosts took me to a place like I had never seen, and they are as unconscious of its significance as Americans would be startled by its very existence. Again, it seemed to be in the center of town. To obtain entry requires extensive security checks. But once you are in, a new world emerges: restaurants, soccer fields, gigantic swimming pools of many varieties and delights as far as the eye can see.

This is a city within a city. But it is entirely private, what Americans would call a “country club,” but of a particularly elaborate type. It is not hidden away in some alcove on the outskirts of town. It is right there in the city for everyone to see — something nonmembers can also take pride in. It is marvelous in every way, a living monument to the possibility of orderly, privately owned anarchist communities.

One thing kept gnawing at me during my entire visit. I kept coming across people who were members of large and extended families with roots very far back in Brazilian history. They were impressive entrepreneurs, but the wealth was more robust than you would find in a place like Silicon Valley. It reminded more of Gilded Age families in the United States, people who carried themselves with grace and confidence born of excellent breeding and material security.

As I thought about it more, the ingredients were unusual by American standards: large and extended families, protected wealth, well-bred youths, a predominantly young population. What was the reason for this? I developed a quick, back-of-the-napkin theory. It had something to do with the inheritance tax. So I asked my hosts, “What are estate taxes like in this country?” The answer came fast: There are none. Some areas charge 3%, maybe 6%, but it is rather easy to escape even those minimal charges.

This contrasts with the United States, where estate taxes can be as high as 35%. We’ve been looting our best families for 100 years. We’ve gouged and smashed the richest generations of American capitalists upon death ever since the Progressive Era. We’ve been living one generation at a time. Time horizons have fallen. Large-scale, privately held capital accumulation has been discouraged, even made illegal. Families have shrunk in size. The population has become ever more aged.

This tax policy has eaten the heart out of the desire of a free people to create dynasties. So our wealthy have to hide. They are encouraged to give their money away to causes, rather than to children. We live one generation to the next. Children are perceived of as an economic burden, rather than a path to immortalizing a legacy.

In Brazil, the time horizon extends beyond the single lifetime. And this is what has given rise to the dramatic cultural, social and economic differences between our countries. These dynasties serve as robust intermediating institutions between the individual and the state. We have ever fewer such things in the United States. Maybe this is what accounts for the incoherent sense that this is a freer country than the US.

There are other factors, too. The military consumes only a tiny percentage of wealth, and Brazilians dread wars because they know that they will be roped into supporting whatever wacky war the US starts. What’s more, the police are well-known to be as likely to commit as prevent or punish crime, so they are not trusted. Security is extremely important in Brazil, but everyone knows that it is a private function and not anything anyone would entrust to the state.

The beautiful thing about Mises Brazil as an organization is that it is working to further encourage these instincts and to spread an intellectual culture that openly embraces liberty as a model of life itself. They publish books and monographs, hold conferences and spread the liberal tradition far and wide among an idea-hungry generation. This is all about the future, and Mises Brazil is right to have confidence in it.

As I waited in the customs line to enter the US again, we were all shown a film designed to introduce America to new visitors. The film featured kids in ballet class, people riding horses, barn raisings, people water surfing, dances from coast to coast, smiling people of all ages, all against the backdrop of an exciting Coplandesque musical score. It ended with the Statue of Liberty. It was wholly inspiring, but there was something missing: The government was nowhere to be seen.

How I wish this film were the whole truth about our country. It once was. But the American dream is not about geography; the American dream is an idea that moves like a spirit around the world, landing wherever people are willing to embrace it and confess it as creed. That spirit has landed in Brazil, and it was a great honor to be witness to it.

Regards,

Jeffrey Tucker,
for The Daily Reckoning

Joel’s Note: Your managing editor was lucky enough to catch Jeffrey speak at the recent Mises Brazil conference in São Paulo over the weekend. As we remarked in yesterday’s issue, the audience was on its feet and in ovation mode before Jeffrey could even turn off his mic.

An avid champion of freedom, wherever he finds it, Jeffrey pours himself into the work he does promoting it. The case is no different with the Laissez-Faire Club, the first truly digital club dedicated to publishing the great works of freedom and spreading the ideas therein.

As soon as you sign up, you’ll get:

• A free book, every week, delivered to your inbox in an easily downloadable e-book form. (This Friday members will receive Tax Haven Tales by Charles Adams…for free.)
• A private networking community where members can discuss, discover and debate issues in a private setting.
• Free video book reviews called Tucker’s Takes. These are 7-10 minute videos where Jeffrey gives members the core take away from the book.
• Free reports beginning with Hack Your Showerhead: Plus, Nine Other Ways To Get Big Government Out of Your Home.
• Live Web Interviews with Authors
• A printed edition of Economics in One Library…and plenty more…

It may just be the next best thing to seeing Mr. Tucker present live! Catch all thedetails here.

Dow down.

Oil down.

Yields down.

Gold down.

What’s going on?

Yesterday, we drove into Washington, DC, to the Argentine embassy. Friends from Salta were hosting a wine-tasting. It seemed strange to see our Argentine friends — who live in a remote corner of the country — in our nation’s capital. But it was a pleasure to see them…and taste their very strong, high altitude malbecs.

Washington has largely escaped the financial crisis. There is plenty of money in the city, but hardly anyone in town knows anything about economics or finance. It is politics they care about. That’s how they get money, in the old fashioned way — by taking it away from someone else. So, it is only natural that they believe the world of economics should be approached in the same way — by brute force. Command, control, and central planning…that is Washington’s method. That’s what politics is all about.

Of course, politics and economics are natural enemies, not natural friends. An economy works best when willing buyers and sellers, investors and entrepreneurs, consumers and producers are able to get together on their own terms. As Adam Smith explained it, they all look out for themselves…and are all guided, as if by an “invisible hand” towards an outcome that is best for the group. Hayek described it in more detail. Willing buyers and sellers set prices freely. Those prices are rich in information. They tell investors where to invest…and shoppers where to shop…and businessmen where to apply themselves.

The more you interfere with this process, the more screwed up things get. Artificial prices — such as the price of credit set by the Fed — send the wrong signal. Investors make mistakes. Resources are misallocated. Bubbles are pumped up…and then, blown up.

But Washington doesn’t care. It’s not really the gross welfare or wealth of the people it worries about, but the relative wealth. “Fairness” they call it. And relative to the rest of the nation, Washingtonians are getting richer. That’s fair, isn’t it?

Washington is a bad place to run over a pedestrian. If he is a white male, he is almost certainly a lawyer. So, if you run over him…our advice is to back up quickly and run over him again. Finish him off. Otherwise he’ll sue you.

The houses in Georgetown and the Northwest section of the city are handsome. They have carefully-tended lawns and gardens…and a Prius or Volvo parked in front. DC residents — at least those in the Northwest of the city and the Virginia suburbs — are conscious of their ‘carbon footprint.’ They recycle. They are well-meaning, earnest and public spirited… Just the sort of people you would like to run over, in other words.

Driving on Massachusetts Avenue…then up Wisconsin Avenue…and then along MacArthur Blvd…we passed many of the places we’ve heard so much about over the years. Fannie Mae’s huge headquarters…Homeland Security…the Brookings Institution…SAIS…the White House…the Capitol…the US Treasury…the Eccles Building, where the Fed is headquartered… It’s all there.

“It’s amazing how much damage has been done from such a little geographic area,” Elizabeth remarked.

And more thoughts…

The question we have been asking ourselves for the last 5 years.

Which way will America go? To Tokyo or Buenos Aires? To deflation…or to inflation? To a long, cold drawn-out slump…or a fiery blow-up?

Mr. Market is pushing the US towards Japan. No question about that. After 60 years of credit expansion we now have a natural credit contraction. Households and businesses are paying down…and defaulting on…debt. They’re hoarding cash rather than splashing it around.

For example, young people are driving less…and buying fewer ‘starter houses.’ Gasoline use in America is going down. So are housing prices.

Part of the reason young people are buying fewer houses is that they can’t afford them.The Financial Times reports:

“Young put off buying homes under weight of student debt.”

Yes, dear reader, the feds practically force-fed young people student loans. Like shyster subprime lenders, the feds offered students money at low teaser rates. Now, the rates are supposed to double.

Of course, the poor student thought he would be in fat city when he got out of school. He thought he’d have a well-paying job!

Now, he’ll be lucky to have any job at all…

It looked for a while as if the economy really were recovering. At least, that’s what everybody said. But now Mr. Market has asserted himself again.

Yesterday, US stocks fell again. Oil, copper, Treasury bond yields…everything is going down.

Truck buyers were canceling orders at the fastest rate in two years.

As to housing prices, the FT continues:

Is there any fed policy that hasn’t backfired? Not that we know of. And the biggest fed policy now — aside from world domination — is the attempt to hijack Mr. Market’s plane, en route to Tokyo, and force it to Buenos Aires.

The feds have put their hearts and souls into this effort. Too bad they haven’t put their brains to it too!

Regards,

Bill Bonner
for The Daily Reckoning

——————————————————-

Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com

• Team Freedom vs. Team State…Choose your side carefully,
• Jeffery Tucker talks Brazil and all things freedom!
• Plus, Bill Bonner gets out the old Crash Alert Flag and plenty more…

——————————————————-

$1.82 Stock About To Make History!

This little-known stock is set to shock the world and win the global race to rare earth production outside China.

This could be the market story of the century and your shot at life- altering profits.

Click here for the full details.

Run, Saverin! Run!

Were it not for the fact that you’d still have to suffer the eternal torment of actually living with your wicked, miserable little self, life as a willing and active member of The State might be pretty tempting. After all, Team State — operating in direct competition with Team Freedom — enjoys some rather significant advantages, both on and off the field.

For one thing, Team State writes the rules of the game…rules it claims the right to change at any time and for any reason. It can choose to make Team Freedom’s goal the size of a pea, for example, and its own goal the size of…well…whatever it wants. It can recruit a million, steroid-jacked players to wear its own colors, and limit Team Freedom’s membership to a couple of wimpy, though doggedly irreverent, newsletter writers. Who listens to those guys, anyway? Pshhh…

Off the field, Team State may choose to sequester part or all of Team Freedom’s funding. And if Team Freedom doesn’t like it, Team State — reading again from its own rulebook — can choose to simply begin kidnapping members of Team Freedom at gunpoint and locking them up in cages.

More troubling still, Team Freedom suffers the added disadvantage of large scale defection and even of outright collusion with the enemy. In other words, many of Team Freedom’s players are really (whether knowingly or not) playing for the other team…using morally malleable catchphrases like “fair share,” “civic duty” and “social contract” as a way to distract and bamboozle some of Team Freedom’s star players. They read aloud and with unashamed authority from Team State’s own rulebook, exclaiming with sweaty excitement, “But it’s the law! Look, Team State wrote it down, right here!”

And what can Team Freedom do about all this, other than vote for another member of Team State to act as game referee every four years or so? Nothing. Or so it would seem…

Fellow Reckoners will by now be aware of the latest scheme by Team State to encroach on the lives of those they clearly consider to be “their property.” Sens. Chuck Schumer and Bob Casey, two of the more…er…“active” members of Team State, held a press conference Thursday morning on Capitol Hill where they outlined legislation that would prevent Eduardo Saverin, the Brazilian-born, Singapore residing co-founder of FaceBook, from ever returning to the United States.

Now, why would these senators do such a thing, you ask? What do a couple of freeloading, career barnacles have against the entrepreneurial spirits of a go-getting, 30-year-old success story?

Turns out that, back in September of last year, Saverin decided he didn’t want to be considered a US tax slave anymore…a move 1,700 other now-freer people also made during the same year. Abiding by the law, as decreed by members of Schumer and Casey’s Team State, Saverin relinquished his citizenship and moved to Singapore back in 2010, a place where he (and his property) are treated in less of a “gun-in-your-face, gimme-all-your-money” manner.

According to industry estimates, the move should “allow” Saverin to keep about $67 million more of his own money than he would have otherwise been “entitled to” were he still officially a US resident when Facebook makes its IPO, tomorrow.

Of course, the fact that he followed the law, to the letter, wasn’t enough for the senators. Why? Put simply, they didn’t get (what they saw as) their cut. Curiously, Schumer claims Saverin somehow owes “the country” something…beyond the hundreds of millions of dollars he must — and does — already pay.

“Saverin has turned his back on the country that welcomed him and kept him safe, educated him, and helped him become a billionaire,” Schumer said at the conference. “This is a great American success story gone horribly wrong.”

Apparently, helping to found a free product that serves 901 million voluntary users is not enough for Schumer and Casey. Of course, the Senators are not in the business of voluntary transactions, so we can see how this achievement might be lost on them. After all, their own transactions are made not with a handshake, but looking down the barrel of a gun.

So what’s their beef, specifically, this time?

Facebook today serves approximately 180 million people in the US alone…including both Sens. Schumer and Casey. One might think that, if the Senators were so upset with Saverin, as they piously claim, they would take down their own Facebook pages. Since they have not, we encourage Fellow Reckoners to swing by and leave them a warm and fuzzy message. (See links above.)

Clearly not embarrassed to showcase their own conspicuous lack of real world marketing skills, Schumer and Casey are calling their little bill the “Ex-PATRIOT — Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy — Act.” Seriously. Who, besides Team State, would even let these guys play for their side?

The proposal targets wealthy Americans who seek to renounce their citizenship — and, along with it, their tax slave status — unless the unfortunate, would be escapee can convince the IRS they are not leaving the country “for tax purposes.”

In other words, individuals looking to protect their property must first convince the thieves that they are seeking to do so for reasons other than protecting their property. Yes, you read that correctly. If the person is unable to prove the “innocence of their intent” to the IRS — just imagine! — they will be subject to a 30% capital gains tax on all future US investments…regardless of where they live…and assuming they still want to invest in their former jailer’s country at all.

Stranger still, the newly emancipated individuals will not be allowed back into their cell. Said Schumer: “They could not set foot in this country again.”

The battle line has been redrawn again, Fellow Reckoner. But as always, where the state exists, freedom does not. And where freedom exists, the state does not.

Choose your team wisely.

P.S. As always, we encourage our readers to “pirate” any and all of our material. Feel free to share and “like” this article…especially, today, on Facebook.

P.P.S. And while you’re there, be sure to check out Addison Wiggin’s newly revamped “Little Book of the Shrinking Dollar” page, here.

Brazil is a marvelous and massive country where private wealth thrives without embarrassment, where well-protected and healthy familial dynasties form the infrastructure of social and economic life, where technology is popular and beloved by everyone, where the police leave you alone and where Americans can feel right at home.

The world is changing fast. Freedom in America is slipping away so quickly that we are already seeing a wave of young people leaving in search of new opportunities, just as people from around the world once came to America to live the dream. Brazil is one of many countries benefiting from the generational emigration from the US.

Discovering this rattled me more than I might have expected. But the young people themselves are not unhappy, and I can see why. They are valued. They are earning good money doing interesting things. They have access to one of the most beautiful and exotic and friendly places on Earth. They eat well, live well and have rich social lives.

More than anything else, they have the sense of freedom.

Now, you might wonder how it is that people have to leave the “home of the free” to find freedom. Over the last 10 years, something horrible has happened to the United States. The police state has cracked down hard, not so much on “terrorists” or real criminals, but on regular citizens. The news items spill out of my feed on an hourly basis, things that just shock and alarm those who are paying attention.

Maybe it is not so surprising. The US military is larger than most of the world’s militaries combined. We have the largest prison population on the planet, and most are locked up for nonviolent crimes. The political culture focuses more on the need for security than for freedom. Add it all up and you have the perfect recipe for the emergence of a police state.

But most Americans are not entirely conscious of the change. It has been fast, but slow enough not to cause alarm. It hits you only once you leave. This happened to me two years ago when I went to Spain. I could move about and do what I wanted without bumping into authority at every turn. I felt it again in Austria last year. It is not something you can quite put your finger on, just a sense that you are not under constant surveillance in suspicion. You can breathe easily.

It was the same in Sao Paulo, Brazil, a happy and prosperous land of exotic fruits, thriving markets, consumer products that actually work and are not depreciated by regulatory mandates, and polite and warm people.

I received a very generous invitation to be a main speaker at the third conference on Austrian economics sponsored by Mises Brasil, a young organization with a very bright future. It was founded only four years ago. Yet today, it has a gigantic presence in Brazilian intellectual life. The hunger for the intellectual basis of freedom is palpable.

Three hundred or more people were here to listen to lectures and engage in debates on ideas. The audience was a sea of young people, most everyone under 30. They were students, professionals, traders and workers of all sorts, all passionate about freedom and the economic answers provided by the Austrian tradition of Ludwig von Mises, F.A. Hayek and Murray Rothbard.

What most excited them was the classic idea of laissez faire — that is, the idea that society can thrive on its own in the absence of central management and that the government operates as a drain on society. The culture of the group was certainly more intellectual and educational than political. They were invigorated by ideas and given hope by the idea of freedom. Apparently, nothing like this organization existed in Brazil until recently. Now the group’s website is one of the most heavily trafficked in the country.

My hosts were enormously generous with their time, and they knew exactly what I really wanted to do on the first day: see the delights of the open-air markets. I was told they are in the center of town. If you had seen a map of Sao Paulo, you would know just how odd it is even to imagine such a thing. The city seems to be everywhere in sight, everywhere you turn, going on forever. It is like 100 New Yorks.

Driving here is not for the faint of heart. The street layout makes no rational sense at all. I could have been driven the short distance between the hotel and the conference center a hundred times and still not have had the slightest clue about the layout. I was told that it would take at least two years of living here to gain a sense that you really know the place.

Go to a high spot in the center of town and look around on all sides. Everywhere you see a beautiful thing, a world built by millions of human hands. No central plan could have made this. No single mind could have conceived of it. To anyone who is intellectually curious, the obvious questions are how does this place work? How is order achieved? The answer is one that few people in the United States seem to care about today. The miracle is obtained through the coordinating forces of the market itself, of millions of free people interacting in small ways toward their mutual self-betterment. This is the answer that inspires a lifetime of intellectual curiosity.

On the first lunch on my first day, my hosts took me to a place like I had never seen, and they are as unconscious of its significance as Americans would be startled by its very existence. Again, it seemed to be in the center of town. To obtain entry requires extensive security checks. But once you are in, a new world emerges: restaurants, soccer fields, gigantic swimming pools of many varieties and delights as far as the eye can see.

This is a city within a city. But it is entirely private, what Americans would call a “country club,” but of a particularly elaborate type. It is not hidden away in some alcove on the outskirts of town. It is right there in the city for everyone to see — something nonmembers can also take pride in. It is marvelous in every way, a living monument to the possibility of orderly, privately owned anarchist communities.

One thing kept gnawing at me during my entire visit. I kept coming across people who were members of large and extended families with roots very far back in Brazilian history. They were impressive entrepreneurs, but the wealth was more robust than you would find in a place like Silicon Valley. It reminded more of Gilded Age families in the United States, people who carried themselves with grace and confidence born of excellent breeding and material security.

As I thought about it more, the ingredients were unusual by American standards: large and extended families, protected wealth, well-bred youths, a predominantly young population. What was the reason for this? I developed a quick, back-of-the-napkin theory. It had something to do with the inheritance tax. So I asked my hosts, “What are estate taxes like in this country?” The answer came fast: There are none. Some areas charge 3%, maybe 6%, but it is rather easy to escape even those minimal charges.

This contrasts with the United States, where estate taxes can be as high as 35%. We’ve been looting our best families for 100 years. We’ve gouged and smashed the richest generations of American capitalists upon death ever since the Progressive Era. We’ve been living one generation at a time. Time horizons have fallen. Large-scale, privately held capital accumulation has been discouraged, even made illegal. Families have shrunk in size. The population has become ever more aged.

This tax policy has eaten the heart out of the desire of a free people to create dynasties. So our wealthy have to hide. They are encouraged to give their money away to causes, rather than to children. We live one generation to the next. Children are perceived of as an economic burden, rather than a path to immortalizing a legacy.

In Brazil, the time horizon extends beyond the single lifetime. And this is what has given rise to the dramatic cultural, social and economic differences between our countries. These dynasties serve as robust intermediating institutions between the individual and the state. We have ever fewer such things in the United States. Maybe this is what accounts for the incoherent sense that this is a freer country than the US.

There are other factors, too. The military consumes only a tiny percentage of wealth, and Brazilians dread wars because they know that they will be roped into supporting whatever wacky war the US starts. What’s more, the police are well-known to be as likely to commit as prevent or punish crime, so they are not trusted. Security is extremely important in Brazil, but everyone knows that it is a private function and not anything anyone would entrust to the state.

The beautiful thing about Mises Brazil as an organization is that it is working to further encourage these instincts and to spread an intellectual culture that openly embraces liberty as a model of life itself. They publish books and monographs, hold conferences and spread the liberal tradition far and wide among an idea-hungry generation. This is all about the future, and Mises Brazil is right to have confidence in it.

As I waited in the customs line to enter the US again, we were all shown a film designed to introduce America to new visitors. The film featured kids in ballet class, people riding horses, barn raisings, people water surfing, dances from coast to coast, smiling people of all ages, all against the backdrop of an exciting Coplandesque musical score. It ended with the Statue of Liberty. It was wholly inspiring, but there was something missing: The government was nowhere to be seen.

How I wish this film were the whole truth about our country. It once was. But the American dream is not about geography; the American dream is an idea that moves like a spirit around the world, landing wherever people are willing to embrace it and confess it as creed. That spirit has landed in Brazil, and it was a great honor to be witness to it.

Regards,

Jeffrey Tucker,
for The Daily Reckoning

Joel’s Note: Your managing editor was lucky enough to catch Jeffrey speak at the recent Mises Brazil conference in São Paulo over the weekend. As we remarked in yesterday’s issue, the audience was on its feet and in ovation mode before Jeffrey could even turn off his mic.

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Dow down.

Oil down.

Yields down.

Gold down.

What’s going on?

Yesterday, we drove into Washington, DC, to the Argentine embassy. Friends from Salta were hosting a wine-tasting. It seemed strange to see our Argentine friends — who live in a remote corner of the country — in our nation’s capital. But it was a pleasure to see them…and taste their very strong, high altitude malbecs.

Washington has largely escaped the financial crisis. There is plenty of money in the city, but hardly anyone in town knows anything about economics or finance. It is politics they care about. That’s how they get money, in the old fashioned way — by taking it away from someone else. So, it is only natural that they believe the world of economics should be approached in the same way — by brute force. Command, control, and central planning…that is Washington’s method. That’s what politics is all about.

Of course, politics and economics are natural enemies, not natural friends. An economy works best when willing buyers and sellers, investors and entrepreneurs, consumers and producers are able to get together on their own terms. As Adam Smith explained it, they all look out for themselves…and are all guided, as if by an “invisible hand” towards an outcome that is best for the group. Hayek described it in more detail. Willing buyers and sellers set prices freely. Those prices are rich in information. They tell investors where to invest…and shoppers where to shop…and businessmen where to apply themselves.

The more you interfere with this process, the more screwed up things get. Artificial prices — such as the price of credit set by the Fed — send the wrong signal. Investors make mistakes. Resources are misallocated. Bubbles are pumped up…and then, blown up.

But Washington doesn’t care. It’s not really the gross welfare or wealth of the people it worries about, but the relative wealth. “Fairness” they call it. And relative to the rest of the nation, Washingtonians are getting richer. That’s fair, isn’t it?

Washington is a bad place to run over a pedestrian. If he is a white male, he is almost certainly a lawyer. So, if you run over him…our advice is to back up quickly and run over him again. Finish him off. Otherwise he’ll sue you.

The houses in Georgetown and the Northwest section of the city are handsome. They have carefully-tended lawns and gardens…and a Prius or Volvo parked in front. DC residents — at least those in the Northwest of the city and the Virginia suburbs — are conscious of their ‘carbon footprint.’ They recycle. They are well-meaning, earnest and public spirited… Just the sort of people you would like to run over, in other words.

Driving on Massachusetts Avenue…then up Wisconsin Avenue…and then along MacArthur Blvd…we passed many of the places we’ve heard so much about over the years. Fannie Mae’s huge headquarters…Homeland Security…the Brookings Institution…SAIS…the White House…the Capitol…the US Treasury…the Eccles Building, where the Fed is headquartered… It’s all there.

“It’s amazing how much damage has been done from such a little geographic area,” Elizabeth remarked.

And more thoughts…

The question we have been asking ourselves for the last 5 years.

Which way will America go? To Tokyo or Buenos Aires? To deflation…or to inflation? To a long, cold drawn-out slump…or a fiery blow-up?

Mr. Market is pushing the US towards Japan. No question about that. After 60 years of credit expansion we now have a natural credit contraction. Households and businesses are paying down…and defaulting on…debt. They’re hoarding cash rather than splashing it around.

For example, young people are driving less…and buying fewer ‘starter houses.’ Gasoline use in America is going down. So are housing prices.

Part of the reason young people are buying fewer houses is that they can’t afford them.The Financial Times reports:

“Young put off buying homes under weight of student debt.”

Yes, dear reader, the feds practically force-fed young people student loans. Like shyster subprime lenders, the feds offered students money at low teaser rates. Now, the rates are supposed to double.

Of course, the poor student thought he would be in fat city when he got out of school. He thought he’d have a well-paying job!

Now, he’ll be lucky to have any job at all…

It looked for a while as if the economy really were recovering. At least, that’s what everybody said. But now Mr. Market has asserted himself again.

Yesterday, US stocks fell again. Oil, copper, Treasury bond yields…everything is going down.

Truck buyers were canceling orders at the fastest rate in two years.

As to housing prices, the FT continues:

Is there any fed policy that hasn’t backfired? Not that we know of. And the biggest fed policy now — aside from world domination — is the attempt to hijack Mr. Market’s plane, en route to Tokyo, and force it to Buenos Aires.

The feds have put their hearts and souls into this effort. Too bad they haven’t put their brains to it too!

Regards,

Bill Bonner
for The Daily Reckoning

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