The ineffectiveness of government

September 10, 2011

Click download link to listen on this device: Download Show

In this show Al discusses:

  • Segment 1 – Al and Peter Grandich look at, what they believe is,  the ineffectiveness of government.
  • Segment 2 – Currency expert Sean Hyman discuss how currencies can provide valuable diversification for investors.
  • Segment 3 – Mike Larson, from Weiss Research, discusses politics and investing.
  • Segment 4 – David McAlvany tells why he believes investors should be focusing on gold.
  • Segment 5 – Larry Reaugh, President of American Manganese, discusses his  company and the role of manganese in our world.
  • Segment 6 – Craig Lindsay, President of Otis Gold Corp., provides an update on his company.
  • Segment 7 – Unable to give it up, Al and Trader Roger talk, for one last time, about the President’s speech last Thursday.
  • Segment 8 – Al believes that Formation Metals has one of the most important strategic metal assets in the U.S. He discusses  this  with Rick Honsinger.

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

Click download link to listen on this device: Download Show

    Sep 10, 2011 10:10 AM

    Segment 8
    The Formation Metals (FCO.TO) is interesting. They’re trading around their yearly low now around .76, with a high of 2.72 last December. I’m still checking it out but it looks interesting. And Karen…you’re famous now.

      Sep 10, 2011 10:08 AM

      Hi John,

      Yep, it is interesting.

      I have known Scott and May Ann almost since day 1. They along with Rick are quality people who never give up.

      For me, it is a great company.

      Big Al

    Sep 10, 2011 10:30 AM

    You found David McAlvany just as I did. If I may plug for him, his weekly commentary podcast is great.
    Obama is the Worst President Ever. It is not because he has no experience, it is because he is a Marxist, european-style socialist. Americans are already paying ~65% top marginal tax rates in tax heavy areas like New York City, and their President says they are not ‘paying their fair share’.
    Love your guys show.
    Today you show discusses a run on the Euro…this worldwide financial depression won’t be over until there is a run on the Dollar, in my opinion.

      Sep 10, 2011 10:12 AM

      Hi Andrew,

      David is a valuable and interesting guest. Look for him to be on our show more often.

      The 65% you are talking about, I assume, is an “all-in number” which includes country and state income taxes. (Guess why we live in Washington state?)

      I agree with you regarding our President I am just a little kinder in my description.

      Many thanks for your comments.

      Best and have a great weekend,

      Big Al

    […] Listen (Also segment 8 is interview of Formation Metals). […]

    Sep 10, 2011 10:44 AM

    I agree with you, the President said nothing concrete in his speech. Sure he had a bunch of “Talking Points” that sound OK, but there were no details that proved to me that his ideas can be paid for without adding to our debt. He mentioned that his plan would help small businesses many times (which sounds great), but there too, I don’t believe tax credits & $4000 incentives for hiring (when it costs businesses about $85,000 on average to keep an employee per year) will cause hurting small businesses to hire. A real growth plan needs to help promote and incentivise demand for products and services which will help our country produce goods, services, technologies, etc that the world wants to buy. We need real growth not short term patches.

    Maybe B.O. will surprise me and come up with details I can believe in a couple of weeks from now. In the mean time, I hope Congress will not pass something without knowing the details.


      Sep 10, 2011 10:02 PM

      Hi Rich,

      I share your thoughts exactly.i

      I hope that the government does come up with something that is yet another band aid.

      We really, in my opinion need to get back to basic pure capitalism.


      Big All

    Sep 10, 2011 10:49 AM

    Formation has an interesting property with the cobalt mine. However the stock performance has been awful and there is no end in sight. I think the concern is the 2nd phase of financing and how much debt and dilution it will do to the stock. An 80 million equity placement diluted the stock and production is still at least a year away. I’m not sure the big risk is out of the stock at this price yet.
    Al, what do you think about the stock performance and the future financing needs?

      Sep 10, 2011 10:01 PM

      Here is what I think: I am going to buy some stock because, for me it is a solid investment. Not telling you what to do. Just telling you what I am doing.

      Big Al

        Sep 12, 2011 12:19 PM

        What worries me is it will get bought out for next-to-nothing.

          Sep 13, 2011 13:58 AM

          Hi Sandrina,

          I don’t believe for a minute that will be the case. I would suggest that you call the company and talk with Rick on this issue.


          Big Al

    Sep 10, 2011 10:44 PM

    Hi Big Al…
    here are some links to explain how tax rates are destroying the incentive to work

    here is a Peter Schiff article that describes perfectly how Obama’s latest plan will be abused/misused…

    Apologize in advance for diverting readers to other web sites, but I get the strong impression you and your readers will agree with these viewpoints..

    Sep 10, 2011 10:26 PM

    Hello Al and Peter,
    Just a word of caution about interpreting what liberals are saying about Obama. They like what he has done. He has destroyed all of the US allies in the mid-east, strengthened our enemies, humiliated Israel, massively grown our debt, taken control of major banks and businesses. They are only disappointed that he can not be re-elected. At the appropriate time the liberal media will in a sustained and coordinated effort declare Obama unsuitable for reelection and support a replacement such as Hillary Clinton.

      Sep 11, 2011 11:31 AM

      HI Dale,

      You have an interesting theory. I have noticed that the support in the media for the president is waning a bit now that you mention it.

      I agree with your comments regarding our support of Israel going down. Regarding the banks, it is not an obvious control issue by the government, but it is certainly a close relationship. That is scary to me. Regarding control of business, same feeling on my part.

      I will say that the issue regarding Israel, in my opinion, did occur during this administration. The movement away from capitalism; however, occurred before this administration.

      We live in very interesting and frightening times, my friend.


      Big Al

    Sep 10, 2011 10:37 PM


    I realize that this is not a religious forum, I

      Sep 10, 2011 10:39 PM

      OOPS — Let me try again — I realize that this is not a religious forum, but I found the following clip awesome and wanted to share it — not trying to offend anyone.

      God Bless

        Sep 11, 2011 11:39 AM

        Thanks Mr. Bentnail,

        Here is another one that I found very interesting and thought provoking:

        What do you all think of this one?

        Big Al

          Feb 03, 2014 03:27 AM

          Oh, man, I don’t know how to thank your work But I have a problem I got the Umineko no Naku Koro ni PS3 Version (JAP) but I don’t know how to exarctt de data from it.I downloaded the ps3umi.exe to do it but the application couldn’t open because I needed the msvcr100.dll .I downloaded the .dll file, I installed it in my system, and I tried to open again the ps3umi.exe, but although it doesn’t appear the error telling me I need the .dll file, it still doesn’t work.BEATORICHEEE, WHY DID YOU DO THIS TO ME!!!!!!11P.D.: Sorry for my bad English, I’m from Spain and I’m 15 years old yet! Don’t expect me to be high leveled at English, please! xDDD

          Feb 03, 2014 03:55 PM

          I have been exploring for a litlte for any high quality articles or blog posts in this sort of area . Exploring in Yahoo I eventually stumbled upon this site. Reading this info So i’m happy to show that I have a very just right uncanny feeling I discovered just what I needed. I most undoubtedly will make certain to do not disregard this website and give it a glance regularly.

    Sep 10, 2011 10:29 PM

    Government can be effective as it was in the global Great Depression which did not fully end in the U.S. until Uncle Sam spent massive amounts of borrowed money to build the Arsenal of Democracy and employ millions of young men to win WWII. If anything, the government did not spend enough to stimulate the economy before 1940 when consumers and business were unable to do it.

      Sep 11, 2011 11:48 AM

      That’s always the excuse – not spending enough. Too bad it isn’t true. The economy didn’t recover until after 1946, a time when the government shrunk.

        Sep 11, 2011 11:14 PM

        Tell that to all of the Americans who found work from 1941 to 1945 including Rosie the Riveter. Anyway, it’s all good. I am looking forward to the next Republican president and Congress to reduce spending severely, if they are true to their word, while individuals and business do the same. The economic contraction and negative GDP should be phenomenal.

          Sep 12, 2011 12:37 AM

          Good Morning Charles,

          There are two very different solutions to our problem as you are aware.

          One side is saying that government spending (stimulus) is the answer and the other side is saying that lower taxation will result in the needed job growth.

          I really believe that the answer, as it always seems to, will come from somewhere in the middle.

          My fear right now stems from the extreme polarity that is existing in our country. I believe that as long as that polarity exists, we will not move from this terrible position that we are in.

          Agree or disagree?

          Big Al

            Sep 12, 2011 12:11 PM

            FDR’s own appointed Sec of Treasury, Henry Morgenthau Jr, felt the New Deal spending was not worthwhile, as he said in interviews during 1940-1942. Mind you, even though Roosevelt picked him, he was never that much committed to New Deal in the first place.

            I don’t know. I’ve toured the Hoover Dam from the inside — by the way, it’s worth the $28 if anyone’s driving by and wondering…talk about a time machine trip back into the 1930’s. But without the New Deal, we wouldn’t have that asset and a handful of other lasting ones like it. We could say the same for the Mercury through Apollo space program, which obviously aren’t considered New Deal but were done in a very similar manner. As a taxpayer, I can see reasons why government might be the ones who have to launch a program with extremely high capital costs and/or technological barriers, because they have the ability to set their own borrowing rate and can absorb longer time frames for the projects to pay themselves back which private industry sometimes cannot or will not do. Note that my analysis of New Deal is the lasting capital plant it created, not just the relatively short-term jobs that went with it.

            In today’s modern world, government is usually going to have to make some kind of contribution to what would otherwise be considered private industry. For example, the EU subsidizes its farmers so much (up to 90% for some crops), one could argue that farming in Europe is a government entity. Something similar could be said for EADS (Airbus). As much as I understand the harm of subsidies to long-term economic efficiency, how can we expect farmers in the United States to compete with exports from Europe if they are being dumped cheaply because of EU subsidies? We could say that, on a purely economic basis, US farmers should go out of business, re-train, and do something different for a living. But what would happen if the situation changes…and Europe restricts exports? Would we be able to grow enough food once again, and in time after years of dormant farms?? I realize I’m sounding pro-government here…I’m really generally not, but this is the type of pro-con analysis we do in our consulting. There have to be answers to these questions before recommending a certain course of action.

            So I think Charles brings up some good points…so does Lew Rockwell from Von Mises when he’s on. I’m not sure there’s an absolute answer.

    Sep 10, 2011 10:15 PM

    Hello Bentnail,
    Beautiful video and Awesome Truth!! A friend sent me that video about 2 months ago, but I had forgotten it, so it was a real treat to see it again. It was no less spectacular the second time. Thank you!
    ….”the heavens declare the Glory of God, and the earth shows His handiwork.”
    Romans 1: 19, ” since what may be known about GOD is plain to them, because GOD has made it plain to them. (20) For since the creation of the world GOD’s invisible qualities—HIS eternal power and divine nature—have been clearly seen, being understood from what has been made, so that people are without excuse.”
    That poor soul who does not hold, at a minimum, a cursory acknowledgment of the existence of the Creator, is lacking a major portion of the understanding needed with which to make a reasoned and rational coherence of life.
    God Bless,

      Sep 10, 2011 10:37 PM


      Very well stated — I agree wholeheartedly!!!

      Sep 11, 2011 11:40 AM

      Good morning Mr. C,

      What do you think of the youtube video that I posted in my response to Mr. Bentnail?

      Big Al

    Sep 10, 2011 10:22 PM

    Al and all of you, please read this article.

    I know of only one presidential candidate who would end this madness. I think you know who that candidate is.

      Sep 10, 2011 10:38 PM

      Mitt Romney? Ha Ha Ha (Sarcasm)

        Sep 11, 2011 11:44 AM


        Please resend me your address.

        Misplaced the first one you sent.



      Sep 11, 2011 11:56 AM

      Hi Ken,

      I just read the article and found it to be very interesting. Interesting enough that I have posted it here. Thanks for the heads-up.

      As a point I want to say that this article was taken from POLITICO.

      Big Al

      Post-9/11, NSA ‘enemies’ include us
      By: James Bamford
      September 8, 2011 09:34 PM EDT

      Somewhere between Sept. 11 and today, the enemy morphed from a handful of terrorists to the American population at large, leaving us nowhere to run and no place to hide.

      Within weeks of the attacks, the giant ears of the National Security Agency, always pointed outward toward potential enemies, turned inward on the American public itself. The Foreign Intelligence Surveillance Court, established 23 years before to ensure that only suspected foreign agents and terrorists were targeted by the NSA, would be bypassed. Telecom companies, required by law to keep the computerized phone records of their customers confidential unless presented with a warrant, would secretly turn them over in bulk to the NSA without ever asking for a warrant.

      Around the country, in tall, windowless telecom company buildings known as switches, NSA technicians quietly began installing beam-splitters to redirect duplicate copies of all phone calls and email messages to secret rooms behind electronic cipher locks.

      There, NSA software and hardware designed for “deep packet inspection” filtered through the billions of email messages looking for key names, words, phrases and addresses. The equipment also monitored phone conversations and even what pages people view on the Web — the porn sites they visit, the books they buy on Amazon, the social networks they interact with and the text messages they send and receive.

      Because the information is collected in real time, attempting to delete history caches from a computer is useless.

      At the NSA, thousands of analysts who once eavesdropped on troop movements of enemy soldiers in distant countries were now listening in on the bedroom conversations of innocent Americans in nearby states.

      “We were told that we were to listen to all conversations that were intercepted, to include those of Americans,” Adrienne Kinne, a former NSA “voice interceptor,” told me. She was recalled to active duty after Sept. 11.

      “Some of those conversations are personal,” she said. “Some even intimate. … I had a real problem with the fact that people were listening to it and that I was listening to it. … When I was on active duty in ’94 to ’98, we would never collect on an American.”

      Despite his hollow campaign protests, President Barack Obama has greatly expanded what President George W. Bush began. And through amendments to the Foreign Intelligence Surveillance Act, Congress largely ratified the secret Bush program.

      So much intercepted information is now being collected from “enemies” at home and abroad that, in order to store it all, the agency last year began constructing the ultimate monument to eavesdropping. Rising in a remote corner of Utah, the agency’s gargantuan data storage center will be 1 million square feet, cost nearly $2 billion and likely be capable of eventually holding more than a yottabyte of data — equal to about a septillion (1,000,000,000,000,000,000,000,000) pages of text.

      By Sept. 11, 2011, the words of George Orwell in his novel “1984” will have become prophetic. “Any sound that Winston made, above the level of a very low whisper, would be picked up by it,” he wrote in 1949, long before the Internet. “You have to live — did live, from habit that became instinct — in the assumption that every sound you made was overheard.”

      On Sept. 10, 2001, however, Winston would have found a radically different society. The NSA, the surveillance equivalent of a nuclear bomb, was allowed to point its massive antennas and satellites only away from the country. Before an American could be targeted, a judge from the Foreign Intelligence Surveillance Court would first have to find a link to terrorism or espionage in order to issue a warrant. And installing permanent taps on all of the country’s major communications links would have been impossible.

      More than 35 years earlier, one person warned of such a possibility. On Aug. 17, 1975, as America was enjoying a lazy summer watching “Jaws” and “The Exorcist” at the movies, Idaho Sen. Frank Church took his seat on “Meet the Press.” For months, as the first chairman of the Senate Intelligence Committee, Church had been conducting the first in-depth investigation of America’s growing intelligence community.

      When he looked into the NSA, he came away shocked by its potential for abuse. Without mentioning the agency’s name — almost forbidden at the time — he nonetheless offered an unsolicited but grave warning:

      “That capability at any time could be turned around on the American people and no American would have any privacy left, such [is] the capability to monitor everything: telephone conversations, telegrams, it doesn’t matter,” Church said. “There would be no place to hide. If this government ever became a tyrant, if a dictator ever took charge in this country, the technological capacity that the intelligence community has given the government could enable it to impose total tyranny, and there would be no way to fight back because the most careful effort to combine together in resistance to the government, no matter how privately it was done, is within the reach of the government to know. Such is the capability of this technology.

      “I don’t want to see this country ever go across the bridge. I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision so that we never cross over that abyss. That is the abyss from which there is no return.”

      Church’s warning then has even more resonance today. In 1975, most people communicated only by telephone and the mail. While the NSA had the technical capability back then to intercept the limited telephone calls sent by satellite, it lacked the capability to monitor the millions of calls transmitted around the country over wires, the predominant method used, or anything sent through the mail.

      Today, with everyone constantly communicating over cellphones and email, and spending hours on the Internet, the agency has the ability not just to hear and read what someone says but even to understand what and how they think.

      America crossed Church’s proverbial bridge not because of the attacks. It’s been clearly shown that Sept. 11 could have easily been prevented with just the technology at hand — it was caused by human failure, not technological failure.

      Rather, it was years of fearmongering that sent everyone rushing across the bridge. Without these draconian measures, we were told, we were in imminent danger of death by terrorist. For the Bush administration, the constant drumbeat of fear was necessary to launch and support the war in Iraq since no real danger existed.

      From the outside, America began resembling Deputy Barney Fife from “The Andy Griffith Show,” shaking and trembling and constantly pointing a gun in every direction. There was Homeland Security with its rainbow of colors for security alerts; the weekly warnings of dire attacks, with no indication of time or location, none of which ever turned out to be credible; messages plastered on buses and billboards warning members of the public to keep a close eye on their neighbors and even their family; and body frisks at airports by security thugs looking for forbidden tubes of toothpaste.

      Church was also right in his warning that once over the abyss, there is no return. Laws put in place stay in place — even if the reason for the fear is gone or never existed in the first place. And technology always moves forward; it never recedes.

      A surveillance system capable of monitoring 10 million people simultaneously this year will be able to monitor 100 million the next year — at probably half the cost. And every time new communications technology appears on the market, rest assured that someone at the NSA has already found a way to monitor it. It’s what the NSA does.

      What Church likely never anticipated was the rise of the security-industrial complex, a revolving door between those generating the fears and those profiting from them.

      When warning the country of the dangers of an unchained NSA, Church may have been thinking of a passage from Friedrich Nietzsche when he spoke of the abyss:

      “Whoever fights monsters should see to it that

      In the process he does not become a monster

      And when you look long into the abyss

      The abyss also looks into you.”

      James Bamford writes frequently on intelligence and produces documentaries for PBS. His latest book is “The Shadow Factory: The Ultra-Secret NSA from 9/11 to the Eavesdropping on America.”

    Sep 11, 2011 11:43 AM

    Hello Everyone,

    Here is an editorial that recently appeared in The Washington Post. Please give me your valuable opinions.


    Big Al

    WASHINGTON —” After we honor the 10th anniversary of the attacks of Sept. 11, 2001, we need to leave the day behind. As a nation we have looked back for too long. We learned lessons from the attacks, but so many of them were wrong. The last decade was a detour that left our nation weaker, more divided and less certain of itself.
    Reflections on the meaning of the horror and the years that followed are inevitably inflected by our own political or philosophical leanings. It’s a critique that no doubt applies to my thoughts as well. We see what we choose to see and use the event as we want to use it.
    This does nothing to honor those who died and those who sacrificed to prevent even more suffering. In the future, the anniversary will best be reserved as a simple day of remembrance in which all of us humbly offer our respect for the anguish and the heroism of those individuals and their families.
    But if we continue to place 9/11 at the center of our national consciousness, we will keep making the same mistakes. Our nation’s future depended on far more than the outcome of a vaguely defined “war on terrorism,” and still does. Al-Qaida is a dangerous enemy. But our country and the world were never threatened by the caliphate of its mad fantasies, and never were.
    We asked for great sacrifice over the last decade from the very small portion of our population who wear the country’s uniform, particularly the men and women of the Army and the Marine Corps. We should honor them, too. And, yes, we should pay tribute to those in the intelligence services, the FBI and our police forces who have done such painstaking work to thwart another attack.
    It was often said that terrorism could not be dealt with through “police work,” as if the difficult and unheralded labor involved was not grand or bold enough to satisfy our longing for clarity in what was largely a struggle in the shadows.
    Forgive me, but I find it hard to forget former President George W. Bush’s 2004 response to Sen. John Kerry’s comment that “the war on terror is less of a military operation, and far more of an intelligence-gathering and law-enforcement operation.”
    Bush retorted: “I disagree — strongly disagree. … After the chaos and carnage of September the 11th, it is not enough to serve our enemies with legal papers. With those attacks, the terrorists and their supporters declared war on the United States of America, and war is what they got.” What The Washington Post called “an era of endless war” is what we got, too.
    Bush, of course, understood the importance of “intelligence gathering” and “law enforcement.” His administration presided over a great deal of both, and his supporters spoke, with justice, of his success in staving off further acts of terror. Yet he could not resist the temptation to turn on Kerry’s statement of the obvious. Thus was an event that initially united the nation used, over and over, to aggravate our political disharmony. This is also why we must put it behind us.
    In the flood of anniversary commentary, notice how often the term “the lost decade” has been invoked. We know now, as we should have known all along, that American strength always depends first on our strength at home — on a vibrant, innovative and sensibly regulated economy, on levelheaded fiscal policies, on the ability of our citizens to find useful work, on the justice of our social arrangements.
    This is not “isolationism.” It is a common sense that was pushed aside by the talk of “glory” and “honor,” by utopian schemes to transform the world by abruptly reordering the Middle East — and by our fears. While we worried that we would be destroyed by terrorists, we ignored the larger danger of weakening ourselves by forgetting what made us great.
    We have no alternative from now on but to look forward and not back. This does not dishonor the fallen heroes, and Lincoln explained why at Gettysburg. “We cannot dedicate — we cannot consecrate — we cannot hallow — this ground,” he said. “The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract.” The best we could do, Lincoln declared, was to commit ourselves to “a new birth of freedom.” This is still our calling.”
    E.J. Dionne Jr.’s column appears regularly on editorial pages of The Times. His email address

    Sep 11, 2011 11:43 PM

    Thanks for posting the articles. I think the wor on terror will continue as is because there’s just too much money to be made from it. That is until the Chinese stop loaning this country money.

    Here are some gems:

    On this tenth anniversary of the 9/11 attacks, here are a few epigrams plucked from Terrorism & Tyranny: Trampling Freedom, Justice, and Peace to Rid the World of Evil (Palgrave, 2003):

    Nothing happened on 9/11 that made the federal government more trustworthy.

    The Patriot Act treats every citizen like a suspected terrorist and every federal agent like a proven angel.

    The worse government fails, the less privacy citizens supposedly deserve.

    There is no technological magic bullet that will make the government as smart as it is powerful.

    The U.S. government is far more efficient at making enemies than at defending Americans.

    Killing foreigners is no substitute for protecting Americans.

    Perpetual war inevitably begets perpetual repression. It is impossible to destroy all alleged enemies of freedom everywhere without also destroying freedom in the United States.

    A lie that is accepted by a sufficient number of ignorant voters becomes a political truth.

    Citizens should distrust politicians who distrust freedom.

    In the long run, people have more to fear from governments than from terrorists. Terrorists come and go, but power-hungry politicians will always be with us.

    Habeas corpus is an insurance policy to prevent governments from going berserk.

      Sep 12, 2011 12:50 AM

      Many thanks Ken,

      I just watched the video with the judge. I had the privilege of meeting with him when I was in Washington DC visiting Congressman Paul a number of years ago. He is a brilliant man who certainly opened my wife’s eyes to some of our problems. We both have autographed copies of one of his books (Constitutional Crisis) which I would recommend to anyone who has not read it.


      Big Al

    Sep 11, 2011 11:11 PM

    Hello Big Al,
    The link you posted was the same one as Bentnail’s. Repost and I will gladly take a look at it. Thanks.

    Feb 02, 2014 02:55 AM

    Interesting that you should use the imeragy that there are sockets without the light bulbs in them. This is close the imeragy of the electric grid in which there are some vital hubs that need to be accessed (although there may be multiple paths to get to those hubs). Interestingly enough, I went through a similar search this year when I was updating my speech presentation course. I had the same end results (creating a schema about professional speech giving) with totally different paths to get there. Every source you named was new to me!I have been doing a lot of reading lately about organizational knowledge building. Much of the literature distinguishes between knowledge (having access to content or information about a topic) and knowing (having a schema or “apprehesive” or implicit knowledge within which to make sense of the content). It sounds to me like you and I have different ways of knowing about the topic, which points us in different direction when seeking knowledge about the topic. You come from this as a speaker/business professional whereas I come from it as a communicator/instructor. This is not to say that in discussing this we can’t begin to share a common understanding (thus creating a new way of knowing).