Investor CAFÉ

Skousen CAFE: The Rise of Interest Rates: What it Really Means

The Federal Reserve controls interest rates, right? Not so fast. Ben Bernanke and Co. set the Discount Rate, the interest rate that banks pay to the Fed to borrow money short term. But they have a much harder time controlling long-term rates.

Short-term rates are still low (less than 1%), but long-term rates recently have risen dramatically. The 10-year note has gone from 1.7% to 2.25%, and the 30-year Treasuries have gone from 2.7% to 3.37%. That’s a 20% increase in long-term interest rates, and mortgage rates are approaching 4%.

The yield curve (something that Austrian economists watch closely) has suddenly become much more positive. What does it suggest? More inflation down the road! The Fed has engaged in cheap money for so long that it’s finally catching up with higher prices for real estate, food, education, etc.

Supply-side economist George Gilder has just released a revolutionary new book, “Knowledge and Power” that focuses on the creative entrepreneur, capitalist, consumer and investor. For investors, he has a whole chapter on “The Black Swans of Investment.” He rejects the “random walk” or efficient market theory of finance, because he knows that entrepreneurs are always alert to new information and can beat the market if they are ahead of the crowd.

Gilder Wins Leonard E. Read Book Award

I’m happy to announce that George Gilder just has won the Leonard E. Read Book Award for his new book. This annual award is granted by FreedomFest to the “libertarian book of the year” which best advances the principles of liberty.

“Knowledge and Power” is a revolutionary work in the tradition of Hayek’s famous essay “The Use of Knowledge in Society” and Thomas Sowell’s influential book “Knowledge and Decisions.” Gilder makes the argument that decision-makers must reject the deterministic/mechanistic systems of human behavior and build their policies and economic models on the concepts of human creativity, free will and the unexpected. His entire book is built around his thesis that “the freer an economy is, the more this human diversity of knowledge will be manifested… Capitalism is not chiefly an incentive system but an information system.”

The Read Book Award will be presented to Mr. Gilder at this year’s FreedomFest, July 10-13, 2013, at Planet Hollywood in Las Vegas. The award also comes with a gift of a one-ounce American eagle gold coin, valued at approximately $1,500. For more information on the annual conference, which attracts more than 2,000 attendees each year, go to www.freedomfest.com.

Special Alert: FreedomFest Changes Hotels!

Since so many of you are joining me next month in Las Vegas for FreedomFest, I want to alert you that we are changing hotels from Caesars Palace to Planet Hollywood. To see why, read the announcement here: http://freedomfest.com/important-announcement-hotel-change/.

As part of the new deal with Caesars, we are getting super-discounted rates (only $89 a night) for you at Planet Hollywood, but you need to act quickly to take advantage. If you already have a reservation at Caesars, you can make the switch to Planet Hollywood by calling 1-800/223-7277 to receive the discount.

If you haven’t signed up yet for our big show, but would like to join us, I suggest you call 1-800/223-7277 to get the special discount of $89 a night. And go to www.freedomfest.com to register for the conference (or call Tami Holland at 1-866/266-5101). But hurry. Rates go up on July 1, and our new room block at Planet Hollywood is likely to fill up quickly.

And don’t forget, if you are driving to Las Vegas, parking at the hotel is FREE for the entire conference.

See you next month in Vegas!

You Blew It! The Government’s Secret Kill Lists, Wire Taps and Private Data Mining

“They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”
– Ben Franklin, 1775

I’m always amazed how many so-called defenders of liberty and the U.S. Constitution support government policies that are a clear violation of the letter and spirit of the Fourth Amendment (and probably other amendments as well) — your right to be left alone. Even the Wall Street Journal recently editorialized in favor of the National Security Agency (NSA) building a huge facility in Bluffdale, Utah, to mine “big data,” including emails and telephone records of everyone, including American citizens.

The Fourth Amendment states simply, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

In other words, the government needs “probable cause” to search your house, and your private correspondence (including email), to avoid “unreasonable” invasions of your personal and financial privacy. The Supreme Court has even wisely ruled that your car is also subject to the Fourth Amendment, and the police need probable cause to inspect it.

For those who respond, “I have nothing to hide — if the government wants to check out my home, my emails, etc., let them.” You’re in for a rude awakening, my friend. You’d be surprised how the government can find you violated some law after inspecting your home or misreading your intentions in a private email. When you know Big Brother is looking over your shoulder, it affects the way you act or write.

One of our experts at FreedomFest is Warren Coats, an economist and former International Monetary Fund (IMF) official who has spent years in the Middle East and around the world. He has just written an excellent assessment of the danger to our privacy and liberty with the recent exposes about the NSA big data collecting, the IRS scandals and the killing of an American citizen without due process. Read it here: http://wcoats.wordpress.com/2013/06/11/government-surveillance-and-the-right-to-privacy/.

To read my e-letter from last week’s Eagle Daily Investor, please click here. I also invite you to comment about my column in the space provided below my Eagle Daily Investor commentary.

Gloria libertas, AEIOU,

Mark
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