Agora Financial’s Rude Awakening

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Laguna Beach, California

Eric Fry, waving a sparkler for economic liberty, reports…

First and foremost, your editors here at the Rude Awakening would like to wish all Rude readers a very happy and safe Fourth of July. And we would also like to urge all readers to savor the various liberties – conventional or otherwise – that trace their birth to Independence Day, 1776.

We are referring mostly to precious freedoms like hugging your kids, eating a fresh peach, smelling a newly mowed lawn, swaying in a porch swing while a hometown parade streams past or watching an entire 4th of July fireworks display without getting a single mosquito bite.

But we are also referring to precious freedoms like grilling carcinogenic foods in environmentally unfriendly ways, consuming alcohol irresponsibly in your own backyard and/or conducting a bottle-rocket war at close range (and, preferably, lighting the bottle rockets with the red glow of cigarettes that dangle from your mouth).

The list of precious freedoms is as lengthy as it is diverse. Whatever is on your list, indulge it…provided it is legal (or almost legal) and lightly taxed.

Personal liberty, like life itself, can vanish in the twinkling of an eye…although, also like life, liberty usually erodes slowly over time. Either way, it is precious, as America’s Founding Fathers well understood.

“Give me liberty or give me death,” Patrick Henry famously declared. Like all the other Founding Fathers, Henry understood that liberty was not a middle-of-the-road quality of life. It was an EXTREME quality that did not comfortably coexist with a “little oppression” or a “bit of taxation” or a “modicum of regulation.”

In the Declaration of Independence, America distinguished itself by establishing the inalienable right of all citizens to “life, liberty and the pursuit of happiness.” Everyone understood that these “rights” occupied an extreme location in the spectrum of human experience. These were rare and precious rights…and throughout the sweep of human history very few individuals enjoyed them, mostly because very few civilizations promoted them.

But even though these rights have been enshrined in the Declaration of Independence for 233 years, they have never been more at risk than they are today – not because an external enemy will steal them from us, but because a compliant populace will simply give them away.

Inconveniently for most of us, a new generation of Americans has risen to positions of prominence and influence. This elite believes passionately in “life, liberty and the pursuit of happiness” for itself. But couldn’t care less about life, liberty or happiness for the other 300 million Americans.

Importantly, this elite does not acknowledge that true liberty includes the freedom to fail, even to fail in spectacular fashion. Nor does the elite acknowledge that true liberty includes the risk that an immensely wealthy employee of a public company might become very poor.

The Declaration of Independence identifies only the “pursuit” of happiness as an inalienable right, not happiness itself. Likewise, the traditional spirit of American capitalism is one that provides opportunity, but never guarantees success.

But that was before the credit crisis of 2008 – a year that may go down in history as one that eroded more personal liberties than any other year, decade or century in the nation’s past. In 2008, every leading regulatory, congressional, judicial, executive, monetary, corporate and fiscal authority in the land advanced liberty-eroding policies…all in the name of “national emergency.”

The only real emergency, of course, was that Lady Liberty was under assault…and no one bothered to defend her.

Generations of Americans have understood very well that each of life’s virtues possesses an undesirable counterpart. Liberty has its slavery; prosperity its poverty; democracy its totalitarianism; happiness its misery; love its contempt; success its failure. Generations of Americans have also understood that the only way to safeguard life’s virtuous qualities is to continuously defend against life’s undesirable qualities.

But America’s ascendant elite seem determined to defend only RESULTS, not principles, not the rule of law and certainly not the inalienable right of every citizen to life, liberty and the pursuit of happiness.

Instead, the elite seem determined to “smooth the volatilities” of life’s opposing experiences…at least for themselves. According to the new rules – still under development – the opposite of success (for well-connected individuals) is highly-compensated failure; the opposite of private wealth accumulation is government-subsidized wealth accumulation; the opposite of oppressively high taxation is oppressively high taxation that finances bailouts for the corporate elite; the opposite of real GDP growth is nominal GDP growth (achieved by debasing the currency).

These characteristics will not promote long-term economic vitality. National prosperity does not arise from coddling a select minority, while simultaneously burdening the vast majority. But this is the exact path America’s current corporate and political leaders are pursuing.

What does this lamentable trend mean for the rest of us?

First: Be vigilant.

Second: Be skeptical.

Third: Diversify into non-dollar assets, preferably non-paper-currency assets.

Fourth: Exercise your right to free speech by urging your elected officials to reinstate the right of ALL individuals to fail, not just those of us who lack access to a credit facility at the Federal Reserve.

Fifth: Enjoy the liberties that remain…each and everyday. Appreciate the simple joys these liberties bestow…each and everyday.

Have a wonderful Fourth of July!

Sincerely,

Eric Fry and Joel Bowman