Creative destruction: our economic crisis was wholly predictable: Keynes, Hobson, Marx - and the crisis of capitalism. Is it to the wrong ideas of economists or to the interests of the power-holders that we should turn to explain the "Great Contraction" of 2008-2009? John Maynard Keynes believed that the Great Depression of 1929-32 was caused by the wrong theory of how the economy worked in the minds of policymakers – the remedy for which was to equip them with the right theory. But this ignored one thing: that the reigning ideas are, more often than not, the product of the dominant power structures. – New Statesman

Dominant Social Theme: Keynes got it right for the right reasons.

Free-Market Analysis: This article gives us a concise insight into the theories of three great minds regarding the much discussed and maligned business cycle. Of course, these minds are "great" in a historical context. We don't consider any of them great within the context of free-market thinking.

Let's look at J.A. Hobson and Karl Marx first. Hobson was a Fabian socialist and Marx, of course, was a communist theorist. Both believed in international government activism to relieve the perceived problems inherent in the operation of the Invisible Hand.

Reuters: 'An Increasingly Polarized Washington Is Devouring Its Own' ... Unprecedented Justice Department searches of journalists' phone records. IRS targeting of conservative political groups. Spiraling sexual assault rates in the military. And the downplaying of the first killing of an American ambassador in 30 years. But Obama's failings are only part of the problem. An increasingly polarized Washington is devouring its own. Ceaseless, take-no-prisoners political warfare, not nefarious White House plots, ravages government. – Reuters

Dominant Social Theme: Government needs to work better to avoid crises and scandals.

Free-Market Analysis: On Saturday, we published an editorial with a title very similar to the one in this current Reuters editorial: "Scandal: And They Shall Eat Their Own ... "

The difference between the Daily Bell editorial and the Reuters editorial is instructive. In our editorial, we posited that a reason for the scandals might have to do with the ubiquitous nature of the modern Internet. This was not the only possibility but it was one Anthony Wile found feasible.

Beijing has long maintained control in part by tacitly promising that over time everyone will benefit from the country's new wealth. Rampant corruption and the garish displays of affluence by senior officials and their families strike at the heart of Beijing's promise that it is working to make life better for all. Ordinary Chinese, often through microblogs and other social media, have increasingly lashed out at what they see as a privileged class of political elites. – LA Times

Dominant Social Theme: When it comes to Leviathan, nothing will change because nothing can change.

Free-Market Analysis: This article tells of changes in China based in part on Internet exposure. It has become ubiquitous in the alternative media community to explain that the Internet is merely buttressing authoritarianism and making governments more efficient when it comes to repression. This article provides us with a stated antidote.

Two-speed Britain as London soars away from the rest ... In London, there are more cranes on the skyline than in the rest of the country put together. Evidence is growing that a recovery is under way, but there are now fears that only the south-east is benefiting, leaving the nation more divided. – The Guardian

Dominant Social Theme: This is an unpredictable element of the recovery.

Free-Market Analysis: Since it has been speculated that Britain is headed back into a recession, this article raises questions for us. At the same time, it is quite predictable. Let's look at why.

First of all, we don't think that Britain is anywhere near a "recovery," nor are we certain what a recovery would look like at this point in Britain, in the US or throughout Europe.

The problems are similar throughout the West. Higher taxes and price inflation, coupled with increased regulation and bureaucratic authoritarianism, provide a kind of job-sapping austerity that produces low growth or no growth.

"What do you expect when you target the President?" This is what an Internal Revenue Service (IRS) agent allegedly said to the head of a conservative organization that was being audited after calling for the impeachment of then-President Clinton. Recent revelations that IRS agents gave "special scrutiny" to organizations opposed to the current administration's policies suggest that many in the IRS still believe harassing the president's opponents is part of their job.

As troubling as these recent reports are, it would be a grave mistake to think that IRS harassment of opponents of the incumbent president is a modern, or a partisan, phenomenon. As scholar Burton Folsom pointed out in his book New Deal or Raw Deal, IRS agents in the 1930s were essentially "hit squads" against opponents of the New Deal. It is well-known that the administrations of John F. Kennedy and Lyndon Johnson used the IRS to silence their critics. One of the articles of impeachment drawn up against Richard Nixon dealt with his use of the IRS to harass his political enemies. Allegations of IRS abuses were common during the Clinton administration, and just this week some of the current administration's defenders recalled that antiwar and progressive groups alleged harassment by the IRS during the Bush presidency.

Listening to the White House on the Benghazi attack, the IRS scandal on targeting conservative groups and the Justice Department's snooping into AP reporters' emails, we can reasonably ask of another President of the United States: What did he not know, and when did he not know it?

Or worse, maybe he did not know it, which would suggest gross incompetence on the part of the president and his senior staff.

But either way, what may have motivated those farther down the bureaucratic chain to undertake and initiate the particular acts they are now accused of, especially in the case of the IRS agents in Washington and at least three IRS offices around the country?

The good (and career-successful) government servant often attempts to anticipate the wishes of his superior and to start trying to achieve the goal before actually instructed to do so.

In Nazi Germany, this was called "working towards the Fuhrer." In 1934, a senior Nazi government official told his subordinates, "It is the duty of every single person to attempt, in the spirit of the Fuhrer, to work towards him." And, "the one who works correctly towards the Fuhrer along his lines and toward his aim will in future as previously have the finest reward . . . "

The Daily Bell is pleased to present this exclusive interview with Doug Casey.

Introduction: Doug Casey has appeared on hundreds of radio and TV shows and has been the subject of articles in People, US, Time, Forbes, The Washington Post and numerous other publications. His books include The International Man, Crisis Investing (17 weeks at #1 on the New York Times Bestseller list), Strategic Investing (seven weeks on the NYT list) and, most recently Totally Incorrect. He's the Chairman of Casey Research (caseyresearch.com), which publishes about two dozen newsletters and numerous special reports. Doug Casey, who's travelled to over 175 countries, and his team have been correctly predicting major budding trends in the overall economy and commodity markets for over three decades.

And I will cause them to eat the flesh of their sons and the flesh of their daughters, and they shall eat every one the flesh of his friend in the siege and straitness ... – King James Bible (Cambridge Ed.)

Commentator Peggy Noonan has written a Wall Street Journal editorial entitled, "This Is No Ordinary Scandal: Political abuse of the IRS threatens the basic integrity of our government."

Noonan is often, or at least occasionally, insightful, and in this case, I was pleased to see her sentiment conforms to an editorial I wrote last Saturday:

This is a big deal. Unlike other IRS problems throughout the years, this one features not just individual "enemies" but also a broad cross section of US citizens that are concerned about the growing unconstitutional actions of their government.

But Noonan neglects to make an important point that I will mention toward the end of this article.

Let's look at the broader picture first. The US is supposedly engaged in something like 75 wars and skirmishes abroad and the invasions of privacy taking place on the home front are equally startling.

Introducing The Daily Bell's weekly Luxury Living segment... because Memento Mori is a way of life.

This week ... Wiesmann ... "They stick to the road like geckos stick to the wall"

"Wiesmann is the leading manufacturer of puristic sports cars. The name is well established in the luxury market and there are more than a thousand good reasons for that: Until today more than 1,500 handcrafteded cars left the Wiesmann factory. The company currently utilises dealership bases in Europe, the Middle East and Asia. With a bit of luck you might not only spot a Wiesmann in the Münsterland but also on the Champs Elysées in Paris or in front of the Burj Al Arab in Dubai.

"Those fortunate enough to hear, see or even drive a Wiesmann sports car will soon realise that there are more powers involved than just a strong engine: an equally strong idea to develop fascinating sports cars combining timeless design and modern technology, hand-manufactured to customer specifications reflecting the highest individual demands – this is the trademark of the company founded in 1988 by the engineers and brothers Friedhelm and Martin Wiesmann. This is the idea that finds perfection in every Wiesmann sports car.

Gen X Has New Reason to Resent Boomers as Retirement Looks Bleak ... Generation X, the unlucky cohort of Americans who became young adults during the boom years of the 1990s only to suffer a midlife bust, is facing bleak retirement prospects, according to a study. The Pew Charitable Trusts said the typical Gen X couple, born between 1966 and 1975, only has enough savings to replace half of its pre-retirement earnings. Married Americans born during the first part of the baby boom, from 1946 to 1955, can expect to retire with about 82 percent of their income. The younger boomers, born between 1956 and 1964, can expect to quit work and make about 59 percent of pre-retirement earnings. – Bloomberg

Dominant Social Theme: The generations will have to do better ... and fight for their own. The heck with other generations.

Free-Market Analysis: In the dominant social theme, above, we've tried to illustrate the animosity that often accompanies the analysis of the "generations" in the US and abroad.

House lawmakers reach tentative deal to revamp immigration ... Prospects for passage of a major immigration bill improved on Thursday when a bipartisan group of lawmakers in the House of Representatives declared they had reached a tentative deal, resolving disputes that had threatened to torpedo negotiations. The breakthrough came at the end of a two-hour private meeting of seven Republican and Democratic negotiators. The eighth negotiator in this so-called House Gang of Eight was unavailable after undergoing surgery on Wednesday. – Reuters

Dominant Social Theme: Welcome this rationalization of a difficult problem. Congress shall decide.

Free-Market Analysis: In the US legislative system, elected officials decide who comes and goes throughout the country. It didn't used to be this way, though. The passport and visa system is only a post-War one. It seems strange but travel was a lot freer a century ago.

Credit Suisse: 'Gold Is Going To Get Crushed' ... Bearish sentiment toward gold has prices for the yellow metal tumbling again. On Wednesday, George Soros revealed through a regulatory filing that he cut his gold exposure during the first quarter. In a new note to clients, Credit Suisse's Ric Deverall forecasted that gold would plunge to $1,100 this year and eventually to $1,000 within five years. This according to Bloomberg's Maria Kolesnikova. – Business Insider

Dominant Social Theme: There is nothing positive in the gold story. Get out while you can – and never buy it again. It's just ... barbaric.

Free-Market Analysis: The repression of the gold price has turned into a timely dominant social theme, in our view. The lines are clearly drawn and insiders are signaling that the trend is down.

They are talking it down, pushing it down and forecasting further down markets.

LONG before Baobab became a lowly journalist he scraped a living as a lowly academic. "If you're so clever why aren't you rich?" was a favourite tease of his less bookish but better-paid peers. The Africa Progress Report, prepared by an expert panel led by Kofi Annan, a former UN secretary-general, was unveiled last week at the World Economic Forum conference in Cape Town, and deals with a more wounding provocation. If Africa is so resource-rich, it asks, why are its people not better educated, its children well nourished and its adults longer-lived? – The Economist

Dominant Social Theme: Africa suffers from too many resources and doesn't tax enough – and that's why it is poor.

Free-Market Analysis: In the pantheon of absurd Economist articles, this has to rank as one of the most ridiculous. There is a reason why Africa is poor but it has little to do with this outrageous and misguided analysis.

This article just appearing in The Economist is one of a series of articles that is apparently intended to form the basis of a much larger African promotion.

The financial news is getting boring. The Dow goes only one way – up. But gold fell below $1,400 per ounce yesterday.

Rather than trying to figure it out, yesterday evening we drove down to Zombietown. A friend in Washington had promised to introduce us to Neil Barofsky, inspector general of the TARP program.

You remember TARP? It was the feds' $700 billion program to rescue the US economy from a correction. Neil Barofsky was in charge of it. So we decided to go down and ask him how it turned out...

Meanwhile, in yesterday's International Herald Tribune was a small note: "Economists agree that spending cuts and tax increases have slowed the US recovery."

Readers will recognize this as the usual claptrap.

Government spending does not bring a genuine "recovery."

There are many signs of gangster state America. One is the collusion between federal authorities and banksters in a criminal conspiracy to rig the markets for gold and silver.

My explanation that the sudden appearance of an unprecedented 400 ton short sale of gold on the COMEX in April was a manipulation designed to protect the dollar from the Federal Reserve's quantitative easing policy has found acceptance among gold investors and hedge fund managers.

The sale was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery. No one but the Federal Reserve could have placed such an order, and the order came from one of the Fed's bullion banks, one of the entities "too big to fail."

Bill Kaye of the Greater Asian Hedge Fund in Hong Kong and Dave Kranzler of Golden Returns Capital have filled in the details of how the manipulation worked. Being sophisticated investors of many years of experience, both Kaye and Kranzler understand that the financial press runs with the authorized story planted to serve the agenda that has been put into play.