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Gold Commentary - April 11, 2003


"Stuff Happens"

That was the eloquent response given by Defence Secretary Rumsfeld to a question about the orgy of looting which has now been going on for days in Bahgdad and in all the other Iraqi cities "liberated" by the US and its allies. Here is a further quote from Mr Rumsfeld which literally has to be read (or heard) to be believed:

"Freedom's untidy, and free people are free to make mistakes and commit crimes and do bad things. They're also free to live their lives and do wonderful things. And that's what's going to happen here."

Awesome, isn't it? Let's get one thing straight. A long-repressed people (as the Iraqis most certainly were) which frees itself THROUGH ITS OWN EFFORTS does not indulge in an orgy of mindless irresponsibility which results in, amongst other things, the theft of every item not too heavy to be hauled away and the wanton destruction of almost everything else. A nation which is "liberated" by an outside force DOES. Sadly, history contains more examples of the second type of public response than the first.

While many Americans (and other Westerners, including Brits and Aussies) may have forgotten the fact, it is a safe bet that there are few if any adult Iraqis who do not know that Saddam Hussein was a creation of the US, was an ally of the US for more than a decade, and would in all likelihood STILL by an ally of the US had he not miscalculated and invaded Kuwait in mid 1990. They know that the US and many European nations sold him actual "Weapons of Mass Destruction" (WMD) and the means to produce his own WMD for years. They know that the US sided with Iraq throughout the Iran/Iraq war in which well over a million Iraqis died.

The vast majority of Iraqis do not labor under the misapprehension that they have been "liberated". They expect to exchange one repressive regime for another, perhaps just a bit less overbearing than was Saddam, at least at first. But in the interim, while the present civil structure has been destroyed and no replacement structure is yet in place, they find themselves in a state of anarchy. They have decided to take advantage of it, while it lasts. Most don't expect it to last long. What we are seeing in Iraq is a classic variation on the theme of the old phrase: "Eat, drink, and be merry - for tomorrow we ????"

In the Saturday, April 12 edition of the Brisbane (Australia) Courier Mail, (the author's local newspaper), there is an editorial cartoon. Shown in the midst of a happy smiling throng of looters in downtown Bahgdad are President Bush clutching an oil well and Prime Ministers Blair (of Great Britain) and Howard (of Australia) clutching large boxes labelled "rebuilding contracts". All three have big grins on their faces. Sometimes, a picture is indeed worth any number of words.

Of course, if measured against the scale of looting which was necessary to finance the military machine which has triumphed in Iraq and the scale of looting which will ensue once the "protected" oil fields come back into production, what is happening in the cities of Iraq hardly registers at all. It is, nonetheless, both sobering and disheartening to see in Iraq a large part of the population who have so little hope for the future that they have succumbed to the impulse to pull their nation down around their own ears.

And what does one of the chief architects of this war, Donald Rumsfeld, make of it all? "Stuff happens."

If anyone is still under the misapprehension that this war was fought for the "liberation" of Iraq, he or she should take another look at what is now taking place inside Iraq. If anyone still thinks that this war was fought to defend "freedom" inside the US, he or she should take a look at "Patriot Act II" - look it up on Google under the heading: Domestic Security Enhancement Act of 2003.

In our previous Gold commentary we said this:

"There are three fundamental turning points in US history which mark its devolution from being the global exemplar of freedom and liberty to the latest in a long line of empire-building nations. These three are:"

We could and probably should have added a fourth one, and that fourth event would be 9/11.

Between 1989 and 1991, the shadow of a HUGE tyranny was lifted from the earth as first the East Bloc and then the USSR collapsed. If you watched the memorable events of the collapse of East Germany as seen in Berlin, you could see that the only "vandalism" being done was being done to the Berlin Wall, to the tune of immense waves of cheering from huge crowds on BOTH sides of the wall. How long ago that seems now. How tragic does the waste of what was a huge global opportunity to reestablish freedom EVERYWHERE seem now?

The true measure of the tragedy is seen in two contexts. First, in Iraq, a nation demonstrates that it has, with honorable exceptions, given up on its future. Second, their "liberators" stand back and watch them do it, all the while trying to pretend that what they have brought to Iraq is freedom instead of wanton destruction.

Gold? Well, it's up a little bit in $US terms this week. That's the only change. Gold remains what it has always been, the money of a FREE people. The extent of the efforts made to "control" Gold and of the ridicule heaped upon the notion of Gold as money are directly proportional to the extent to which freedom has been eroded and the extent to which those in power wish to futher erode it. We repeat here what we say elsewhere on this website: "... because the money you use is totally controlled by your government, dear reader, so are you. That is the case for Gold as money.".

Freedom has not been "gained" in Iraq, it is being lost all over the world, and nowhere as fast or as tragically as it is being lost in the US. In his autobiographical work Notes and Recollections, the great Austrian economist Ludwig von Mises said this: "I have come to realise that my theories explain the degeneration of a great civilization, but they do not prevent it. I set out to be a reformer, but only became an historian of decline."

When a leading political figure in what was once the world exemplar of freedom, liberty and human dignity can look at the results of his efforts to "liberate" a nation and then dismiss it with the phrase - "stuff happens" or "Freedom's untidy" - then one may know that the decline has gone a very long way. Financially, a personal Gold holding represents one of the very few ways to protect oneself from the end result of such an attitude. Politically, a rebirth of Gold as MONEY is what it is going to take to rekindle GENUINE freedom.

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©2003 The Privateer Market Letter

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