Sunday, October 31, 2010

The amazing Chinese growth story you've heard nothing about

By Doug Hornig, Editor, Casey’s Extraordinary Technology:

Developing nations are playing technological leapfrog.

In the developed world, when we think of technology, the roots of much of what we do today were born decades, or even a century, ago. While the evolution has been fast paced, the progression from there through today is a straight line from the technologies that preceded them. A television program is still a television program. A phone call is still a phone call. The devices might look different and certainly do more, but the lineage is obvious.

But what happens when your starting point isn’t the invention of the phone or the first personal desktop computer? What happens when you start from today?

In many parts of the world, most of the people still have never had a telephone conversation...

Read full article...

More on China:

A Chinese state newspaper just guaranteed gold will go higher

Frank Curzio: This tiny stock could solve China's biggest problem

Another essential commodity is set to surge on exploding Chinese demand


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Mining Stocks, Silver Set for Short-Term Correction

Mining Stocks, Silver Set for Short-Term CorrectionWhether you call it a recession, or depression, or deflation, or recovery, for tens of millions of Americans, there’s little difference. With the Mid-term elections upon us the odds are that the voters might make the new Congress more conservative.

Generally, it is believed that a more conservative government might lean towards self-control in spending (yeah, right), restraint in Keynesian stimulus policies, which means moderating the quantitative easing.

In the short term that could be good for the dollar and a near-term risk for gold. As the inflation worries could cease for some time, which would help the dollar and at the same time it could cause gold's gleam to fade temporarily as some people would believe that the inflationary period is over.

And then there is the so-called Presidential Election Year Cycle to take into consideration. The theory is based on the powerful incentives presidents have to get the economy looking ship-shape at the time of the next election. In other words, immediately after assuming office, presidents take whatever tough economic measures are necessary in order to set the stage for the recovery and good times. The tendency is for the market to outperform in the 3rd year after the election of the president.

Historical data seems to provide strong support for this theory.

Of course one could argue that the government's stimulus program in effect turned last year into the de facto equivalent of the third year of a president's term. What will happen next depends on how much longer and further the government will extend its stimulus. We believe that any quantitative easing and the printing of new dollars will only make precious metals a more attractive investment

Silver

This week’s long-term chart for silver shows that the recent daily price increase has been accompanied by huge volume (charts courtesy by http://stockcharts.com.)  Note that in the past, when a spike was seen in daily trading volume above the 20M level, a price decline followed shortly thereafter in five of the six examples seen since the beginning of 2009. Such a volume level has been seen in recent days (marked with red and black arrows) and for this reason, a sharp decline in the coming days will not be very surprising and is, in fact, expected.

Based on past trends for similar length rallies, there is a good chance we will see a sharp decline in silver’s price very soon given volume this big. A likely target level for this decline will be in the $20 to $21 range for the SLV ETF, slightly higher than we have stated last week.

There are few bullish signals at this time except for silver’s price action itself. The bearish influences of the USD and the general stock market cannot be overlooked. As we stated in our pre-update message this week, “Silver is two days after its “close to the top” territory and slightly above the level created as target based on post-breakout-rallies. The deviations are not big enough for us to consider them as invalidating points made earlier.”

Mining Stocks

The XAU Index relates to gold and silver mining stocks and has many, many years of history. It is an important factor to consider because of its long-term resistance level - perfectly visible on the chart above. In recent days, the XAU Index approached its profound 2008 high. This is an important development especially in view of the rapid rise seen in mining stocks' prices recently (from the long-term point of view).

Two important declining resistance lines have been broken and will likely provide support in the not-too-distant future - they are marked with black thin lines on the chart above. Additionally, the lower border of the rising trend channel could coincide with one of the abovementioned resistance lines, close to the 170 level. It seems likely that a period of consolidation will be seen soon as the 2008 high level appears likely to provide strong resistance.

Indications from this chart have strong bearish implications in short term, even considered apart from other signals.

The past week saw gold mining stocks surpass their 2008 high but they did not get much above this level and thus this breakout is not really significant yet. The performance of gold itself was much stronger and on Thursday the mining stocks actually declined on a day when gold prices moved higher. Anomalies such as this are often seen around local tops and this is yet another sign supporting the likelihood that gold’s rally may be coming to a close.

Summing up, multiple signs point to a consolidation period in the near-term for mining stocks. This is consistent with expectations in the gold and silver markets.

At Sunshine Profits we are constantly researching and creating new tools to help investors maximize profits. This week, Subscribers got a sneak preview of our useful new charts on stock options expirations. With stock options expiring on the 3rd Friday each month, Subscribers focused on daily trades can greatly benefit from these charts. This new tool is of even more significance - we’d even go so far as to say, a whole lot more significant - for shot term traders in mining stocks options.

To make sure that you are notified once the new features are implemented, and get immediate access to my free thoughts on the market, including information not available publicly, I urge you to sign up for my free e-mail list. Sign up today and you'll also get free, 7-day access to the Premium Sections on my website, including valuable tools and charts dedicated to serious PM Investors and Speculators. It's free and you may unsubscribe at any time.

Thank you for reading. Have a great and profitable week!

Przemyslaw Radomski

Editor, www.sunshineprofits.com

Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author. Disclaimer

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Silver Daily Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Wed Oct 20 10 07:10 ET

While the retreat from 24.95 was deep, silver is still holding above 22.945 support and then, outlook remains unchanged. Recent rally is still expected to continue further. Break of 24.95 will bring rise resumption to 161.8% projection of 14.65 to 19.845 from 17.735 at 26.14 next. On the downside, though, break of 22.945 will indicate that a short term top is formed and bring deeper correction first.

In the bigger picture, silver's long term up trend has resumed and is showing sign of accelerating after taking out the medium term channel. Next medium term target is now on 100% projection of 4.01 to 21.44 from 8.4, which is at 25.8 level. And break will target 161.8% projection at 36.60. On the downside, break of 19.845 support is needed to be the first sign of reversal. Otherwise, outlook will remain bullish.

Comex Silver Continuous Contract 4 Hours Chart

Comex Silver Continuous Contract 4 Hours Chart

Comex Silver Continuous Contract Daily Chart

Comex Silver Continuous Contract Daily Chart

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

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Silver Weekly Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Sat Oct 23 10 01:30 ET

Silver's correction from 24.95 extended further last week and the break of 22.945 support confirmed that a short term top is formed. Initial bias will remain on the downside this week and further fall should be seen to 38.2% retracement of 17.735 to 24.95 at 22.194 and below. On the upside, above 24.075 minor resistance will indicate that correction from 24.95 is possibly completed and will flip bias back to the upside for 24.95 and above.

In the bigger picture, silver's long term up trend has resumed and is showing sign of acceleration after taking out the medium term channel. Next medium term target is now on 100% projection of 4.01 to 21.44 from 8.4, which is at 25.8 level. And break will target 161.8% projection at 36.60. On the downside, break of 19.845 support is needed to be the first sign of reversal. Otherwise, outlook will remain bullish.

Comex Silver Continuous Contract 4 Hours Chart

Comex Silver Continuous Contract Daily Chart

Comex Silver Continuous Contract Weekly Chart

Comex Silver Continuous Contract Monthly Chart

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Silver Weekly Technical Outlook

ONG Focus | Technical | Written by Oil N' Gold | Sat Oct 23 10 01:30 ET

Silver's correction from 24.95 extended further last week and the break of 22.945 support confirmed that a short term top is formed. Initial bias will remain on the downside this week and further fall should be seen to 38.2% retracement of 17.735 to 24.95 at 22.194 and below. On the upside, above 24.075 minor resistance will indicate that correction from 24.95 is possibly completed and will flip bias back to the upside for 24.95 and above.

In the bigger picture, silver's long term up trend has resumed and is showing sign of acceleration after taking out the medium term channel. Next medium term target is now on 100% projection of 4.01 to 21.44 from 8.4, which is at 25.8 level. And break will target 161.8% projection at 36.60. On the downside, break of 19.845 support is needed to be the first sign of reversal. Otherwise, outlook will remain bullish.

Comex Silver Continuous Contract 4 Hours Chart

Comex Silver Continuous Contract Daily Chart

Comex Silver Continuous Contract Weekly Chart

Comex Silver Continuous Contract Monthly Chart

 

Latest Analysis from this Author

Economic Calendar 11/1/10 (Sunday, 31 October 2010 14:44 ET)Weekly Fundamentals - QE2 Decisions the Key Event ... (Saturday, 30 October 2010 12:11 ET)Gold Weekly Technical Outlook (Friday, 29 October 2010 18:03 ET)Silver Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Crude Oil Weekly Technical Outlook (Friday, 29 October 2010 18:02 ET)Natural Gas Weekly Technical Outlook (Friday, 29 October 2010 18:01 ET)Sentiment Sours ahead of US GDP (Friday, 29 October 2010 07:07 ET)Gold Soars as ECB Policymakers Warn about Currency... (Friday, 29 October 2010 00:39 ET)Economic Calendar 10/29/10 (Thursday, 28 October 2010 11:43 ET)Gold Daily Technical Outlook (Thursday, 28 October 2010 07:14 ET)

View the original article here

Thomas Paine, Libertys Hated Torchbearer

When Thomas Paine's ship pulled into Baltimore harbor on October 30, 1802, a large gathering of friends and admirers were waiting at dockside to welcome him back. Others stood by as well, some filled with loathing, merely to observe a famous figure. Since leaving the United States in 1787 to find a builder for his iron bridge, Paine had authored some of the most incendiary tracts of the 18th century, had been imprisoned and narrowly escaped Robespierre's guillotine, and was widely reported to be a drunk and an atheist.

When he journeyed to Federal City on November 5 to pay his respects to the country's third president, he found that he needed an alias and help from a presidential aide to get a room at Lovell's, the city's only hotel. As he later wrote a friend and future biographer, Thomas Clio Rickman,

You can have no idea of the agitation which my arrival occasioned. From New Hampshire to Georgia (an extent of 1,500 miles), every newspaper was filled with applause or abuse.[1]

The source of the abuse was the Federalist press, a collection of newspaper editors and writers who were the big-government allies of Alexander Hamilton and his Federalist Party. Thomas Jefferson, the new president, had unseated Federalist John Adams and many of his congressional cohorts in what Jefferson called the "Revolution of 1800."

The party of war, taxes, and privileges for the rich, coupled with a strong loyalty to England — which it sought to emulate in all its corrupt glory — had been thrown out in favor of one promising to be bound by the "chains of the Constitution." The Democratic-Republicans (or simply the Republicans, as Jefferson's party was called) sought to disentangle government from people's lives, both within the country and abroad.

Paine had been staying in France since his release from prison in late 1794 and had been frustrated in his wish to return to America by the possibility of capture by British warships. The English had convicted him in absentia of seditious libel for Rights of Man, Part the Second and other political writings, and they were determined to intercept and hang him if he ever set sail again. When England and France signed the Treaty of Amiens on March 25, 1802, inaugurating a year's respite from war, it was once again safe for Paine to be at sea, and he left Le Havre on September 1.

Contrary to Federalist rumors that Jefferson wanted Paine back in the states to help defend his administration from Federalist attacks, Paine himself apparently saw his return as a well-earned retirement opportunity.[2] He had turned 65 in 1802 and still suffered lingering bouts of pain and fever from his ten-month incarceration under Robespierre.[3] As the 18th century's most influential political pamphleteer, Paine's reputation was born with the American Revolution he was largely responsible for creating, and he wanted to spend his last years among people with whom he shared a passion for liberty.

But there was never to be any lasting peace for a firebrand like Paine, whose immense popularity with commoners made life uncomfortable for politicians, priests, and pundits everywhere.

The Struggle to Find Home

Paine grew up in mid-18th century England under "a criminal code that would hang a ten-year-old boy for stealing a penknife or permit women to be stoned to death in the pillory."[4] The thatched cottage in Thetford, where he was born in 1737, stood near one of the execution sites, a wind-swept hill known locally as the Wilderness. There, each spring, convicted peasants were hung with great ceremony under the direction of a pompous hypocrite from Cambridge known as the Lord Chief Justice.

Murder among the poor was uncommon; the offenses usually involved crimes against property, such as stealing a bushel of wheat or purchasing a stolen horse. The courts viewed the well-to-do quite differently. Even in cases of homicide, they were often acquitted or given nominal sentences.[5] One of Paine's first written works was a poem satirizing the decision of a Sussex court to hang a dog named Porter because its owner had voted for a member of Parliament the judges didn't like.[6]

Enclosure laws had long since driven small farmers off their land and into the cities, where the more-adaptable ones became factory workers.[7] Others turned to begging, thievery, or worse, all of which Paine witnessed in the first half of his life.

The son of a Quaker father and an Anglican mother, Paine attended school until he was 12, never learned Latin or any language other than English, worked at various odd jobs in his youth, was married twice, and finally during a period of utter despair met Benjamin Franklin in London, who was so impressed with Paine's intellectual fire that he recommended Paine seek deliverance in the American colonies.

Paine had recently been dismissed as a tax collector, for leaving his post for three months to petition Parliament for better pay for his fellow excise officers. The loss of his job led to the breakup of his second marriage. At 37, with little left to lose, Paine took Franklin's letter of recommendation to Philadelphia in late 1774 and found work writing for and editing a new magazine.

His first published article, "The Magazine in America," appeared on January 24, 1775, and included a special tribute. Foreign vices, he wrote, engaging his poetic flair, should they survive the voyage from Europe,

either expire on their arrival, or linger away in an incurable consumption. There is a happy something in the climate of America, which disarms them of all their power both of infection and attraction.[8]

As Paine biographer Jack Fruchtman, Jr. observes, "This was the beginning of Paine's long love affair with America."[9]

"Other than the Bible, The Rights of Man outsold all other books in English history."

On March 8, 1775 Paine published "African Slavery in America," in which he not only condemned slavery ("Certainly one may, with as much reason and decency, plead for murder, robbery, lewdness, and barbarity, as for this practice") but offered his thoughts on how to abolish it humanely. In a much shorter piece ("A Serious Thought"), published on October 18, Paine again expressed his hatred of slavery along with the manner in which so-called Christians treated American Indians, and concluded that

When I reflect on these [injustices], I hesitate not for a moment to believe that the Almighty will finally separate America from Britain. Call it independence or what you will, if it is the cause of God and humanity it will go on.[10]

Though the seeds of American independence were imported "with the troops from Britain," as one contemporary writer observed, it was Paine's 77-page pamphlet Common Sense, published anonymously on January 10, 1776, that imparted passion and urgency to the movement. It argued persuasively that the choice for Americans was independence or slavery, that King George, far from deserving unconditional loyalty, was in truth "the Royal Brute of Great Britain" and the one chiefly responsible for the oppressive measures imposed on the colonists.

Paine's irreverent polemics made the pamphlet a huge success, with an estimated 120,000 copies sold in three months, reaching tradesmen and statesmen alike. Later editions featured his name on the cover to dispel rumors that John Adams had written it. He asked printers to sell it for an affordable two shillings and, in a futile gesture, directed his share of the profits to the American military cause. With the publication of Common Sense, Rothbard tells us that

Tom Paine had, at a single blow, become the voice of the American Revolution and the greatest single force in propelling it to completion and independence.[11]

John Adams, whose hatred for Paine grew stronger with each passing year, later conceded that "Without the pen of the author of Common Sense, the sword of Washington would have been raised in vain." He described the pamphlet as "a poor, ignorant, Malicious, short-sighted, Crapulous Mass."

Sometime after July 4, 1776, Paine joined the Continental Army and served as General Nathaniel Greene's aide-de-camp. Shortly before Washington crossed the Delaware on Christmas night for an early morning attack on a Hessian garrison at Trenton, Paine penned the first of a series of essays known as "The American Crisis." It is said that Washington ordered the essay read to his demoralized and ill-clad troops during a sleet storm before making the crossing. The essay, immortalized in American history with its opening words — "These are the times that try men's souls" — may or may not have inspired the men, but it did boost the spirits of patriot civilians when they heard news of the Americans' decisive victory.[12]

When the war ended, Paine had time to pursue his interests in natural science and designed a single-span iron bridge that he tried to get constructed. When no one in Philadelphia would build it, he left the country on April 26, 1787, at age 50, to present a model of his design to the French Academy of Sciences. The Academy liked it, but the country was too much in debt to build it, so Paine took his model to Britain's Royal Society. Again, no one was interested in constructing it.

As biographer Craig Nelson writes, over the following years Paine "would migrate constantly between London and Paris, enjoying the company and admiration of some of Europe's most charismatic figures," as he looked for someone to build his bridge. In England he came to know such people as Whig leader Charles James Fox, playwright Richard Brinsley Sheridan, preacher Richard Price, educator William Godwin, and author Mary Wollstonecraft.[13]

Though surrounded by such illustrious figures, Paine had mixed feelings about leaving America, as he explained in a letter to a newly married friend, Kitty Nicholson Few, in January 1789:

Though I am in as elegant style of acquaintance here as any American that ever came over, my heart and myself are 3,000 miles apart; and I had rather see my horse Button in his own stable … than see all the pomp and show of Europe.

A thousand years hence (for I must indulge in a few thoughts), perhaps in less, America may be what England now is! The innocence of her character that won the hearts of all nations in her favor may sound like a romance, and her inimitable virtue as if it had never been. The ruins of that liberty which thousands bled for, or suffered to obtain, may just furnish materials for a village tale or extort a sigh from rustic sensibility, while the fashionable of that day, enveloped in dissipation, shall deride the principle and deny the fact.[14]

Paine managed to get a 90-foot experimental version of his bridge erected across the Don River in England, and one of the visitors to the site was the liberal Whig and member of Parliament, Edmund Burke. Paine and Burke became friends, and while living within a short stroll of each other in London found numerous occasions to engage in lengthy political discussions.

Revolutionary Fever in France

While in London, Paine would receive letters from Jefferson in France telling him

how firmly the American experiment [the French Revolution] was taking root in Paris …. He shared each of Jefferson's letters with Edmund Burke, expecting that the Whig deputy would also be pleased. Burke, however, was very much not pleased.[15]

"The London Times editorialized that Paine ought to go to France to join 'the regular confusion of democracy,' and on September 13, 1792, after receiving word he was about to be murdered, that's exactly what he did."

If France could be become a republic, Paine reasoned, then any country in Europe could become one, and the modern principles of liberty "would not begin and end in the New World." In November 1789 he sailed to Paris to see this dream evolve. He met with Lafayette and the new American emissary, Gouverneur Morris, who concealed his low opinion of him. In his diary, Morris wrote, "I tell [Lafayette] that Paine can do him no good, for that, although he has an excellent pen to write, he has but an indifferent head to think."[16]

When Paine returned to London, he brought with him the key to the Bastille Lafayette had entrusted to his care to send to George Washington. In his cover letter to Washington, Paine said

That the principles of America opened the Bastille is not to be doubted; and therefore the key comes to the right place.[17]

On January 17, 1790, Paine began drafting an essay on the principles embodied in the French Revolution. Those very principles horrified Burke, who set about "to expose them to the hatred, ridicule, and contempt of the whole world."[18] Paine learned of Burke's forthcoming pamphlet from a bookseller in Piccadilly, who also told him of how Burke was struggling to finish it. Paine decided not to call on his friend until either it came out or he gave it up.

The suspense ended on November 1, 1790, when Burke's Reflections on the Revolution in France appeared at booksellers. It attacked the idea of republican self-government, saying the people of England looked upon

the legal hereditary succession of the crown as among their rights, not as among their wrongs; as a benefit, not as a grievance; as a security for their liberty, not as a badge of servitude.

Englishmen "fear God," they "look up with awe to kings; with affection to parliaments; with duty to magistrates; with reverence to priests; and with respect to nobility."[19]

Burke continues:

Society is indeed a contract … [but] as the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.

Changing the state as often as there are floating fancies [would mean that] … no one generation could link with the other. Men would be little better than the flies of a summer.[20]

Countering a major tenet of the Enlightenment, Reflections held that human reason was weak, and custom, tradition, and religion gave life real meaning. The "swinish multitude" of English workingmen had no business conducting the complex affairs of state, which should be left in the hands of their betters. The state should not oppress the workers, Burke said, but the state would suffer oppression if "they, either individually or collectively, are permitted to rule." Burke wanted neither tyrants nor mobs. He correctly predicted the French Revolution would end in a military dictatorship.[21]

Rights of Man

Paine's rebuttal, Rights of Man, Part the First, appeared on February 22, 1791, to coincide with the birthday of George Washington — to whom he dedicated it — and the opening of Parliament. Joseph Johnson, the publisher, became so frightened after a few unbound copies were printed that he refused to continue publishing it. A second publisher, J.S. Jordan, soon picked it up, a French translation was issued, and an American edition included a letter of praise from Thomas Jefferson that Jefferson had never intended for publication.

"While Paine, the world's most famous antimonarchist, was defending the life of the king of France, he was being tried in absentia for his own life in England."

When Rights I came out, the British population numbered ten million, with a 40 percent literacy rate. British novels typically sold 1,250 copies, and nonfiction works sold 750 copies. In its first three months, Rights I sold 50,000 copies in its official version alone. As with Common Sense, Paine wanted the pamphlet sold at the cheapest possible price to reach the widest possible audience.[22] Yet, it initially sold for three shillings — the same price as Burke's — a high price for that day, which might explain why it was pirated so heavily. By contrast, Reflections sold 5,500 copies in its first seventeen days and 19,000 within the first year. It too was translated into other languages, including French, Italian, and German.[23]

Contrary to Burke's position on inherited social contracts, Paine said that

Every age and generation must be as free to act for itself, in all cases, as the ages and generation which preceded it. The vanity and presumption of governing beyond the grave, is the most ridiculous and insolent of all tyrannies.

As Paine sees it, Burke tells both his readers and

the world to come, that a certain body of men, who existed a hundred years ago, made a law; and that there does not now exist in the nation, nor ever will, nor ever can, a power to alter it.

Furthermore, Paine argues that the idea of government originating as a social contract between governors and governed fails the test of logic. He wrote,

It has been thought a considerable advance toward establishing the principles of freedom, to say, that government is a compact between those who govern and those who are governed: but this cannot be true, because it is putting the effect before the cause; for as a man must have existed before governments existed, there necessarily was a time when governments did not exist, and consequently there could originally exist no governors to form such a compact with.

The fact therefore must be, that the individuals themselves, each in his own personal and sovereign right, entered into a compact with each other to produce a government; and this is the only mode in which governments have a right to arise, and the only principle on which they have a right to exist.[24]

Unable to find a chargeable offense in Rights I, the government of William Pitt the Younger instead paid a Scots lawyer and former Maryland resident, George Chalmers, 500 pounds sterling to write a hostile biography of Paine. Chalmers, a biographer of Daniel Defoe, wrote under the pseudonym Francis Oldys.

The government also circulated a counterfeit letter alleged to have been written by Paine's mother in which she complained of his debts, his mistreatment of his wife, and his lack of respect for his parents. Another writer accused Paine of having carnal relations with a cat.[25] Dedicating Rights I to Washington helped protect Paine from the British because of the American president's international stature, and also because both governments were at the time secretly engaged in negotiations that would end in the Jay Treaty. Prosecuting the author might have disrupted their attempts at securing an agreement.[26]

Rights of Man, Part the Second, dedicated to Lafayette, appeared in March 1792 as an answer to some of the attacks Burke and others made on Rights I. This time, both publishers Johnson and Jordan considered it too dangerous to print. Thomas Chapman agreed to publish it but wanted to own the copyright and offered Paine one thousand guineas for it. When Paine refused, Chapman decided the book was too libelous to publish.

"His widely published 'Letter to Washington' described the party of Hamilton as 'disguised traitors' who were 'rushing as fast as they could venture, without awakening the jealousy of America, into all the vices and corruptions of the British Government'."

After providing an explicit indemnity in which he proclaimed himself as author and publisher of the work, and would therefore answer to it if the government came calling, Paine convinced Johnson and Jordan to undertake publication. Other than the Bible, it outsold all other books in English history.[27]

Rights II became the bible for numerous political clubs that arose across England calling for a national assembly to draft a written constitution. At meetings, many of those in attendance could neither read nor write, and a reader was elected to read Paine's pamphlet to them. Thomas Hardy formed one of the better-known clubs, which reached 2,000 members after six months.

Members had one thing in common: none owned property, and thus according to English law could not vote. Rights II, Hardy said, "seemed to electrify the nation, and terrified the imbecile government of the day into the most desperate and unjustifiable measures." Burke referred to the clubs as "loathsome insects that might, if they were allowed, grow into giant spiders as large as oxen."[28]

The British government, fearing their poor and wretched would catch the revolutionary disease from across the channel, and seeing the widespread popularity of Paine's Rights II among their destitute, launched an aggressive public relations campaign and combined it with a series of draconian laws that came to be known as "Pitt's reign of terror." The Federalist Adams administration would copy the Pitt campaign almost point for point. Concluding that civil war was imminent because of "the seditious doctrines of Thomas Paine," the government issued a royal proclamation in May, 1792 specifically targeting Paine. Rights II was considered seditious because it was being ushered into the hands of the underclass — "even children's sweetmeats [were] being wrapped in it."[29]

On May 14, publisher J.S. Jordan was ordered into court, and on May 21 a 41-page summons for Paine was left at Clio Rickman's house, where he had been staying, charging him with seditious libel for bringing "the constitution, legislation, and government of [the English kingdom] into hatred and contempt with his Majesty's subjects."[30] Paine went to court on June 8 and was ordered to return in December.

In the meantime, Pitt's agents continued their crackdown on Paine and his book. One bookseller was sentenced to 18 months in jail for selling Rights II, while another man received the same punishment for saying, "I am for equality. Why, no kings!" in a coffeehouse. Paine had government spies on his trail everywhere he went. Across England the government incited riots and public protests against Rights II through a national society called the Association for Preserving Liberty and Property Against Republicans and Levellers. "Effigies of Paine were hanged and then incinerated along with copies of his books to shouts of 'God Save the King!'" All of this, and more, came before Paine's Age of Reason entered the world.[31]

The government truly feared prosecuting Paine because of his popularity with commoners. Throwing him in jail or hanging him would almost certainly incite his growing followers into open revolt. The London Times editorialized that Paine ought to go to France to join "the regular confusion of democracy," and on September 13, 1792, after receiving word he was about to be murdered, that's exactly what he did. Paine and two other radical writers left that night for Dover, where they stayed at a hotel until the next boat sailed in the morning. Paine had carried his papers and letters in a big trunk, and the customs agents wasted no time reading them for incendiary offenses. A hostile crowd had gathered outside to hurl insults at Paine and his friends as they boarded the boat at daybreak. He was never again to return to his country of birth.

Prosecuting a King and a Firebrand

In France, he arrived to a hero's welcome in Calais, and as their representative he took his seat at the Convention in Paris on September 19, 1792. Two days later the legislature formally abolished royalty in France. In the two months following, the Convention discussed what to do about their former king, Louis XVI. Paine rose to argue against executing him, saying the new French republic had an opportunity to inspire the world with its noble republican government. On January 15, Paine spoke again to the assembly, reminding them of Robespierre's address two years earlier condemning capital punishment. He recommended sending the king and family into exile, where they would eventually be forgotten.

Two days later the legislature voted narrowly in favor of death. Once again, Paine spoke to condemn this decision. The guillotine, he said, rose "from a spirit of revenge rather than from a spirit of justice." Paine's Convention enemies were already shouting their disapproval, but he refused to back down, saying,

If after my return to America, I should employ myself in writing the history of the French Revolution, I had rather record a thousand errors on the side of mercy than be obliged to tell one act of severe justice.

While Paine, the world's most famous antimonarchist, was defending the life of the king of France, he was being tried in absentia for his own life in England. In mid-December 1792, the charge against Paine of propagating "seditious libel" was introduced to the court by the prosecuting attorney, Spencer Perceval, who 17 years later would become Britain's Prime Minister. As biographer John Keane writes,

The Crown had handpicked a special jury — all wealthy, plump, and respectable men filled with icy hostility toward Paine. The recent revolutionary events in France had left them in a state of deep shock.[32]

Perceval accused Paine of being a traitor to his country and a drunken roisterer who had vilified Parliament and king. Defending Paine was Thomas Erskine, attorney general to the Prince of Wales, a renowned criminal lawyer, and one of Paine's associates. The prince had threatened to remove Erskine from his royal sinecure if he defended Paine. He kept his promise.[33]

The prosecution began by showing how Rights II was scurrilous and seditious, then presented the jury with a letter Paine had written to the attorney general, Archibald MacDonald, on November 11, 1792. Paine told MacDonald that

If you obtain [a guilty verdict], it cannot affect me either in person, property, or reputation, otherwise than to increase the latter; and with respect to yourself, it is as consistent that you obtain a verdict against the Man in the Moon as against me. …

My necessary absence from your country affords the opportunity of knowing whether the prosecution was intended against Thomas Paine, or against the right of the people of England to investigate systems and principles of government; for as I cannot now be the object of the prosecution, the going on with the prosecution will show that something else was the object, and that something else can be no other than the people of England, for it is against their rights, and not against me, that a verdict or sentence can operate, if it can operate at all. …

That the Government of England is as great, if not the greatest, perfection of fraud and corruption that ever took place since governments began, is what you cannot be a stranger to, unless the constant habit of seeing it has blinded your senses; but though you may not choose to see it, the people are seeing it very fast, and the progress is beyond what you may choose to believe.[34]

In defense, Erskine spent four hours arguing that Paine was innocent by virtue of the freedom of the press. He even quoted Paine in denying that freedom of expression would lead to civil unrest. It was not civil disputes conducted in the press that provoked armed rebellion, but the rapacious acts of governments.

When the prosecution rose to reply, the jury foreman interrupted and told the court not to bother. He and the other jurors had already reached a verdict: guilty. Erskine's friends in court, fearing for his safety, hustled him outside, where several thousand supporters cheered him and his missing client. Against his wishes, his horses were unhitched from the carriage, and Erskine was borne aloft in his carriage and shouldered through the streets to his home, amid cries of support along the way.

Within days of the trial, English aristocrats were entertaining themselves by wearing shoe nails inscribed with the initials "TP," so they could crush Paine and his ideas simply by putting a foot down.[35]

Before exiling himself to France, Paine had told a friend that "if the French kill their king, it will be a signal for my departure, for I will not abide among such sanguinary men." When his efforts to save the king ended with Louis XVI's execution on January 21, 1793, Paine and others who had opposed the death sentence began fearing for their own lives. The violence and pace of events quickened in the following days, and French political leaders decided to step up their war activities. On February 1, 1793, France declared war on England, giving the Pitt government and its subjects a common enemy and purpose.

"As Jefferson's close friend of some 26 years, Paine saw no reason to show him a sense of deference just because he was president."

Once again, war came to the rescue of a state losing its grip on its citizens. Constitutional reform and lower taxes could wait; of more immediate importance was preparing for the planned invasion of the savages from across the channel. The British navy began patrolling the Atlantic shipping lanes ready to board any French or American ship they encountered. Any traitors they captured would be slapped in chains and brought back to England for a swift hanging. Thus, Paine had little choice but to remain among the "sanguinary men" he could no longer abide.

Seeking a lower political profile, he and six colleagues moved to a stately old house in the village of Saint-Denis, about nine kilometers north of Paris. Though Paine still attended the Convention, he was far more subdued. Saint-Denis provided a much-needed haven for relaxation and recuperation.

In the evenings, he would go to White's Hotel and enjoy conversations with like-minded expatriates. He spent the day at his wall-enclosed house, where he had access to an acre of garden that was "stocked with excellent fruit trees" and a farmyard that was "stocked with fowls, ducks, turkeys, and geese." For amusement he and the others used to feed the birds from the parlor window on the ground floor. As summer arrived, they would pass the time in childish amusements, such as "marbles, scotch-hops, battledores, etc., at which [they] were all pretty expert."[36] At 56, Thomas Paine was still young enough to enjoy children's games.

Terror and Incarceration

France, however, was self-destructing. In addition to wars with Austria, Prussia, and England, the central government found itself in a civil war with various French départements over the economy and the draft. The Girondists, once the leading faction in the legislature and Convention, lost power to the Jacobins, who inaugurated a "spirit of denunciation" in a move to eliminate all opposition. After June 2, 1793, when the Jacobin takeover was complete, Paine no longer attended the Convention.

With the assassination of Jacobin leader Jean-Paul Marat on July 13, terror became the order of the day. Anyone who the magistrates deemed an "enemy of liberty" was incarcerated, and during the 13-month Terror over 200,000 people suffered this fate. Roughly 10,000 of them died.

On October 3, Paine's name was added to the official list of traitors to the republic.[37] By the end of October nearly all of Paine's friends were either in prison waiting to be guillotined or trying desperately to leave France. The shattering of any hope for a republic in France or elsewhere in Europe depressed Paine, and as he admitted to Clio Rickman, he was "driven to excesses in Paris." This is the origin of Paine's centuries-long reputation as a drunkard, with additional evidence coming near the end of his life when he took alcohol to moderate his physical discomfort. Feelings of helplessness pervaded his thoughts:

Pen and ink were then of no use to me: no good could be done by writing, and no printer dared to print; and whatever I might have written for my private amusement, as anecdotes of the times, would have been continually exposed to be examined, and tortured into any meaning that the rage of party might fix upon it; and as to softer subjects, my heart was in distress at the fate of my friends.[38]

It was during this period of utter despair — when Paine "expected, every day, the same fate" as his friends — that he turned to God. Specifically, he applied what he considered his God-given reason to a searing critique of the popular views of God, taking special aim at the Bible. Reflecting Kant's motto of the Enlightenment — "Sapere aude!" [Dare to know!] — Paine titled his critique The Age of Reason. Published in two parts, it would ruin his reputation among many admirers.

As Paine was drafting his case for deism in the fall of 1793, the French government, headed by Robespierre, was conducting a process of dechristianization. "The true priest of the Supreme Being is Nature itself," he proclaimed.

Jacques René Hébert led the extreme anti-Christian attack. Church bells were melted into artillery; the length of a week was changed from seven days to ten; priests were murdered, cathedrals and cemeteries were looted and vandalized. Hébert even had the Notre Dame Cathedral renamed to the Temple of Reason.[39] Robespierre eventually accused Hébert of counterrevolutionary atheism and had him guillotined on March 24, 1794.

Paine offered Age of Reason in part as an antidote to the government's campaign. He feared the French were in danger of losing their spiritual sense, that the carnage wrought by Robespierre and his followers would cause them to "lose sight of morality, of humanity, and of the theology that is true."

Though today considered a radical work, Age was within the bounds of contemporary intellectual discourse. John Adams, for example, had privately written that the Bible was "full of whole cartloads of trumpery." James Madison said the fruits of Christianity were

pride and indolence in the clergy, ignorance and servility in the laity.… Religious bondage shackles and debilitates the mind and unfits it for every noble enterprise.

In 1787 Jefferson had advised his nephew, Peter Carr, to "Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear." Later in life, Jefferson produced an edited version of the New Testament with the supernatural elements removed, though he would not permit it to be published in his lifetime. Some Unitarian ministers used Age as a basis for sermons, and Unitarian ministers in England considered Age merely a variation on ideas they had been writing about for decades.[40]

When Paine was arrested in the predawn hours of December 28, 1793, on the charge of being a foreigner, Age was still unpublished. He managed to pass the manuscript to his friend Joel Barlow, who handled its publication, before being taken to his eight-by-ten cell at the Luxembourg prison. When Barlow's efforts to get Paine released failed, Paine turned to American minister Gouverneur Morris, who stonewalled, claiming to American officials that pushing Paine's case might hasten his trial and bring about his execution.

In addition, negotiations with the British over the Jay Treaty were still ongoing, and it is quite plausible Morris and the rest of the Washington administration wanted to keep Pitt's foremost critic locked up. And shut up as well. Sometime in late February, 1794 Luxembourg inmates were denied all communication with the outside world.

Shortly after, Paine was struck with typhus and in June was moved to a larger cell with three Belgians. At times his temperature would spike so high he couldn't remain conscious for more than a few minutes. On July 24, a bureaucratic blunder spared their lives when all four were scheduled for execution but failed to get collected that night when the death squad cart rolled through, picking up the condemned.

Two days later, on July 26, Robespierre announced he had uncovered yet another group conspiring to overthrow the republic, but by this time his deputies, feeling the blade about to fall on their necks, decided to bring an end to the Terror. Beginning on July 28, Robespierre and 108 of his followers were guillotined.[41]

In late August Virginia senator James Monroe replaced Morris, and Paine wasted no time getting a note to the new minister pleading for his release. Monroe was startled to find the author in jail and promised Paine he would work for his release. On November 6, 1794, after ten months in prison, Paine was freed.

His incarceration, and his abandonment by the Washington administration, left Paine physically and spiritually deteriorated. As biographer Nelson writes,

His bountiful Enlightenment optimism and his boyish good-naturedness were now all but extinguished into bitterness and parsimony, and to medicate his physical and emotional suffering he started drinking again. … In many respects, the great Thomas Paine of Common Sense and Rights of Man had been done away with as effectively as if he had been guillotined.[42]

Paine stayed with Monroe for 18 months while he recovered and wrote Age of Reason Part II, Agrarian Justice, and The Decline and Fall of the English System of Finance during this period. In the latter work he predicted England's constant warmongering would push its national debt so high the Bank of England would suspend gold payments. On February 26, 1797, his prediction became reality and the government prohibited the bank from making payments in gold until 1821.

Finally, on July 30, 1796, after moving out of Monroe's home, Paine sent his "Letter to Washington" to Benny Bache, who published it in Philadelphia on October 17 to coincide with the national elections.

The United States of Great Britain

By the time Paine arrived in the United States six years later, he had provoked too many people to expect a comfortable retirement. His widely published "Letter to Washington" described the party of Hamilton as "disguised traitors" who were "rushing as fast as they could venture, without awakening the jealousy of America, into all the vices and corruptions of the British Government."[43] As to Washington himself, Paine said "the world will be puzzled to decide whether you are an apostate or an impostor; whether you have abandoned good principles, or whether you ever had any."

"But Paine was well aware of the eternal hostility to liberty. His country of birth had corrupted it beyond recognition, he had seen it collapse in France, and he feared that one or the other would strike his adopted country."

To Federalists eager to smear the Jeffersonians, Paine's outspoken attacks on Washington and the Bible, combined with his reported drunkenness, relieved them of the need for rationality. Why engage in civil debates with a debaucher who questions the morality of the Redemption? As Paine wrote,

I moreover believe, that any system of religion that has any thing in it that shocks the mind of a child, cannot be a true system.…

[T]he Christian story of God the Father putting his son to death, or employing people to do it … cannot be told by a parent to a child; and to tell him that it was done to make mankind happier and better is making the story still worse, as if mankind could be improved by the example of murder; and to tell him that all this is a mystery, is only making an excuse for the incredibility of it.[44]

Furthermore, for Paine the Word of God is not to be found in the Bible or any other written work, but in nature, which he refers to as the Creation:

The Creation speaks a universal language, independently of human speech or human language, multiplied and various as they be. It is an ever-existing original, which every man can read. It cannot be forged; it cannot be counterfeited; it cannot be lost; it cannot be altered; it cannot be suppressed. It does not depend upon the will of man whether it shall be published or not; it publishes itself from one end of the earth to the other.[45]

To Federalists bleeding from their election defeats, what could be sweeter than having a "monster" like Paine take up the banner of limited government?

The Federalist press had a field day. The General Advertiser referred to him as "that living opprobrium of humanity … the infamous scavenger of all the filth which could be raked from the dirty paths which have been hitherto trodden by all the revilers of Christianity." The Philadelphia Port Folio called him "a drunken atheist, and the scavenger of faction." Boston's Mercury and New England Palladium saw fit to label him a "lying, drunken brutal infidel, who rejoiced in the opportunity of basking and wallowing in the confusion, devastation, bloodshed, rapine, and murder, in which his soul delights."

Meanwhile, the National Intelligencer, a republican newspaper, quietly urged its readers to show Paine "a sentiment of gratitude for his eminent revolutionary services."[46]

Jefferson showed great political courage by frequently inviting Paine to dine with him at the presidential mansion, telling his devout Episcopalian daughters on one occasion that Mr. Paine "is too well entitled to the hospitality of every American, not to cheerfully receive mine." After spending an evening listening to Paine regale them with worldly tales, his daughters softened their opinion of him somewhat.[47]

But his socializing with Paine only gave Federalists another fat target. As Jefferson's close friend of some 26 years, Paine saw no reason to show him a sense of deference just because he was president. William Plumer, a Federalist senator from New Hampshire, recalled in jaw-dropping amazement a dinner he attended at the presidential mansion in which Paine "seated himself at the side of the President, and conversed and behaved towards him with the familiarity of an intimate and an equal!"[48] Such an observation, of course, was also meant to implicate Jefferson for failing to behave "presidentially."

The "two Toms" were often seen together strolling the roads around the capital, waving their arms in visibly animated conversation, prompting one Federalist paper to say, "Our stomachs … nauseate at the sight of their affectionate embraces, and we entertain no doubt that you, as well as we, have become impatient to get out of such impious company."[49]

Such repeated slurs kept the public distracted. While the readers of such comments might have nodded in agreement, left unaddressed was the question of what kind of government they would have. It was clear to Paine, Jefferson, and other republicans that there were two kinds of patriots. One took the words of the Declaration of Independence to heart and fought to establish a new government that would secure man's inalienable rights. The others regarded the Declaration as convenient cover for an entirely different kind of government and did everything in their power to create another England over here.

Hamilton's Road to Despotism

For the first 12 years of its existence, the federal government had been in control of the Hamilton-led nationalists, who pushed hard to reinterpret the Constitution in a way that imparted more "energy" to the government. In stark contrast to Jefferson's view that the Constitution was a set of limitations, Hamilton saw it as a grant of powers, both explicit and implied. Under Hamilton's interpretation there would be virtually nothing the government could undertake that would be considered unconstitutional.

"To Paine, America 'represented liberal Utopia, the triumph of civil society over government,' and the Federalists were attempting to reverse it."

In his "Report on Manufactures" of December 5, 1791, for example, Hamilton wrote that "the power [granted to Congress] to raise money is plenary, and indefinite; and the objects to which it may be appropriated are no less comprehensive." This, he argued, was the real meaning of the general welfare clause. The phrase "General Welfare … necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition."

Likewise, the Commerce Clause, which was intended to regulate commerce between states to promote free trade, became inclusive of all commerce under Hamilton's interpretation. And as taxes need tax collectors, and none are more effective than armed ones, he took the "war powers" clause and extended it to mean a standing army in peacetime. Under the constitutional power to "provide for the common Defence," Congress has no restraints in providing resources to the military, or as he put it in Federalist No. 23,

These powers ought to exist without limitation, because it is impossible to foresee or define the extent and variety of national exigencies, or the correspondent extent and variety of the means which may be necessary to satisfy them.

But even the argument from "exigencies" was deceitful. Hamilton "justified" the Whiskey Act of March 3, 1791, as a means of servicing the national debt, but then qualified his statement by saying the tax would be more useful as "a measure of social discipline than as a source of revenue." When citizens compared the hated tax to the British Stamp Act of 1765 and began tarring and feathering tax collectors, he personally accompanied a 13,000-man federal army of conscripts to western Pennsylvania to show the rebellious small distillers, who bore a disproportionate share of the tax, what he meant by "social discipline." As Charles Adams notes, however, Hamilton's dreams of glory were frustrated, because

The rebels had already capitulated before the army took to the field. Of the twenty rebels who were brought back to Philadelphia to face treason charges, only two were convicted, and they were pardoned by Washington.

But the invasion proved fruitful to land speculators. As Thomas P. Slaughter explains in The Whiskey Rebellion,

The government spent huge sums in western Pennsylvania to supply the soldiers with food and whiskey. This brought the largest injection of specie that the region had ever experienced. Cash-poor farmers had money to spend, and they spent it on land.[50]

One of those speculators was the president himself, George Washington, who saw the value of his properties rise by about 50 percent.[51]

Government "energy" also brought about a quasi war with France, as well as the Alien and Sedition Acts of 1798. The Alien Acts made it legal to ship aliens out of the country without due process of law, while the Sedition Acts gave the Federalists the power to arrest their critics, which they promptly did. Among those convicted were numerous anti-Federalist newspaper editors and Vermont congressman Matthew Lyon. Lyon won reelection while serving his sentence and cast the deciding vote in favor of Jefferson after the election of 1800 produced an electoral tie that was decided in the House of Representatives.

When the government expanded the army and navy in anticipation of full-scale war with France, it passed a $2 million tax on houses and slaves to fund the additional expenses, prompting another armed tax revolt in Pennsylvania called the Fries Rebellion. Even the Federalists' defeat at the polls in 1800 didn't stop their drive for a court-government: outgoing Federalist president John Adams appointed hundreds of "midnight judges" during the last days of his administration in an effort to subvert Jefferson's strict construction of the Constitution.[52] During his presidency, Jefferson removed many of the midnight appointments, repealed taxes, and pardoned all those who were imprisoned or accused under the Sedition Act, which expired in 1801. He even located and repaid with interest those who had been fined under the Act.[53]

Paine's Letters to US Citizens

Superficially, it might appear that Paine had returned to the United States at just the right time if his intention was to enjoy a quiet retirement among friends. Jefferson was in office, and "Prime Minister" Hamilton had managed to split the Federalist Party with his intriguing against both Jefferson and Adams in the election of 1800.

But Paine was well aware of the eternal hostility to liberty. His country of birth had corrupted it beyond recognition, he had seen it collapse in France, and he feared that one or the other would strike his adopted country. The "happy something in the climate of America" had been polluted by the Federalist program of war, debt, taxes, and lies. Could the author of Common Sense and Rights of Man restore the values so boldly asserted in the Declaration of Independence?

He certainly tried. He wrote a series of articles called To the Citizens of the United States and Particularly to the Leaders of the Federal Faction, in which he attacked the Federalist Party as "a nominal nothing without principles."[54] To Paine, America "represented liberal Utopia, the triumph of civil society over government," and the Federalists were attempting to reverse it.[55] A new generation of self-made men had grown up since the Revolution, and he needed to connect to them.

It's true that Paine, in 1783, was one of the first to call for a stronger central government. But his idea of strengthening the Articles of Confederation was to "add a Continental legislature to Congress, to be elected by the several States." When he was asked to propose his suggestion in a newspaper article, he declined, saying he "did not think the country was quite wrong enough to be put right."[56] It would require a dexterous feat of magic to make Paine out as a friend of big government.

Paine engaged in a good deal of political bashing in his Citizen letters — for example, when he refers to "the consummate vanity of John Adams, and the shallowness of his judgment" in Letter II. He also augmented his arguments with self-serving background material, such as the story of his incarceration at the Luxembourg in Letter III. Interwoven with these elements, though, were timeless political insights, perhaps none better than the following from Letter VIII, published on June 7, 1805:

It requires only a prudent and honest administration to preserve America always in peace. Her distance from the European world frees her from its intrigues. …

The independence of America would have added but little to her own happiness, and been of no benefit to the world, if her government had been formed on the corrupt models of the old world. It was the opportunity of beginning the world anew, as it were; and of bringing forward a new system of government in which the rights of all men should be preserved that gave value to independence. …

It is by keeping a country well informed upon its affairs, and discarding from its councils every thing of mystery, that harmony is preserved or restored among the people, and confidence reposed in the government.

Paine's health continued to deteriorate, and he died in Greenwich Village, New York, on the morning of June 8, 1809. The man who inspired the country to secede from a corrupt state had six people in attendance at his funeral, none of whom were dignitaries.

 Notes

[1] Thomas Paine, "Letter to Thomas Clio Rickman" in Philip S. Foner ed., The Complete Writings of Thomas Paine in Two Volumes (New York: The Citadel Press, 1945), p. 1,439. [Hereafter Complete Writings.]

[2] John Keane, Tom Paine: A Political Life (New York: Grove Press, 1995), p. 471.

[3] Craig Nelson, Thomas Paine: Enlightenment, Revolution, and the Birth of Modern Nations (New York: Viking Penguin, 2006), p. 307.

[4] Richard M. Ketchum, The Winter Soldiers: The Battles for Trenton and Princeton (New York: Owl Books, 1999), p. 4.

[5] Keane, pp. 4–9.

[6] Ibid., p. 70.

[7] Ludwig von Mises, Human Action: A Treatise on Economics (Auburn: Ludwig von Mises Institute 2008), pp. 615–16.

[8] Complete Writings, Vol. 2, p. 1,110.

[9] Jack Fruchtman, Thomas Paine: Apostle of Freedom (New York: Four Walls Eight Windows, 1994), p. 44.

[10] Complete Writings, Vol. 2, p. 20.

[11] Murray Rothbard, Conceived in Liberty, Volume IV: The Revolutionary War, 1775–1784 (Auburn: Ludwig von Mises Institute, 1999), p. 137.

[12] See George Smith, Eyes of Fire: Thomas Paine and the American Revolution for a variation on the alleged reading of Paine's essay.

[13] Nelson, p. 176.

[14] Complete Writings, Vol. 2, p. 1,276.

[15] Nelson, p. 189.

[16] Ibid., pp. 190, 191.

[17] Ibid., p. 191.

[18] Ibid., p. 192.

[19] Keane., p. 294.

[20] Nelson, p. 195.

[21] Ibid., pp. 196–199.

[22] Ibid., p. 202.

[23] Keane, p. 289.

[24] Complete Writings, Vol. 1, pp. 251, 252, 277–78.

[25] Nelson, p. 203.

[26] Keane, p. 309.

[27] Nelson, pp. 219–220.

[28] Ibid., p. 221.

[29] Ibid., pp. 226-227.

[30] Ibid., p. 228.

[31] Ibid., pp. 228–29.

[32] Keane, p. 346.

[33] Nelson, p. 245.

[34] Complete Writings, Vol. 2, pp. 512–13.

[35] Nelson, p. 246.

[36] Ibid. See also "Forgetfulness" in Complete Writings, p. 1,124.

[37] Keane, p. 386.

[38] "Forgetfulness" in Complete Writings, Vol. 2, p. 1,124.

[39] Nelson, p. 263.

[40] Ibid., pp. 268, 269.

[41] Ibid., p. 283.

[42] Ibid., p. 286.

[43] "Letter to George Washington," Complete Writings, Vol. 2, p. 700.

[44] "The Age of Reason, Part First," Complete Writings, Vol. 1, pp. 497–98.

[45] Ibid., p. 483.

[46] Nelson, p. 306.

[47] Keane, p. 470.

[48] Ibid.

[49] Ibid., p. 471.

[50] Thomas P. Slaughter, The Whiskey Rebellion: Frontier Epilogue to the American Revolution (New York: Oxford University Press, 1986), p. 224.

[51] Ibid.

[52] Thomas J. DiLorenzo, Hamilton's Curse: How Jefferson's Archenemy Betrayed the American Revolution — and What It Means for America Today (New York: Crown Forum, 2008), p. 27.

[53] Thomas Woods and Kevin Gutzman, Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush (New York: Crown Forum, 2008), p. 6.

[54] Complete Writings, Vol. 2, p. 949.

[55] Michael Foot and Isaac Kramnick eds., Thomas Paine Reader (New York: Penguin Books, 1987), p. 25.

[56] Complete Writings, Vol. 2, p. 914.

George F. Smith

Read  his book : The Flight of the Barbarous Relic

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George F. Smith is the author of The Flight of the Barbarous Relic, a novel about a renegade Fed chairman and the editor of Barbarous Relic.com.


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How To Buy Gold And Silver Bullion

How To Buy Gold And Silver Bullion

BULLION BARS AND COINS

How To Buy Gold And Silver Bullion, Part One (of Three)

Bron Suchecki, The Perth Mint’s Manager, Analysis and Strategy, presents a beginner’s guide to buying gold and silver bullion in this three-part series recorded at the 2010 ANDA Coin Show in Sydney. Bron begins with a brief look at why investors buy precious metals before discussing the benefits of bullion bars with some great advice on how to check the best brands.


How To Buy Gold And Silver Bullion, Part Two (of Three)

In the second instalment of his presentation at the 2010 Sydney ANDA Coin Show, The Perth Mint’s Bron Suchecki reviews what qualities you should consider when looking to buy gold and silver bullion coins for investment. Bron also clarifies some critical issues that every new precious metal investor needs to know about tax and GST.


How To Buy Gold And Silver Bullion, Part Three (of Three)

In this final episode from his presentation at the 2010 Sydney ANDA Coin Show, The Perth Mint’s Bron Suchecki discusses how to invest in gold and silver using Certificate Programs, Account-based services, and a choice of Stock Exchange-listed products. The three-part series wraps up with some excellent guidance on how to store your physical precious metals securely.

Bron Suchecki                                               

Bron Suchecki has worked in the precious metals markets since 1994, when he joined the Perth Mint as an Administration Officer in their Sydney retail outlet. In 1998 he moved to Perth to work in the then fledgling Depository division. He has held a number of roles since then in the treasury, risk and governance areas of the Mint.

Originally posted on www.perthmintbullion.com/Blog
By Bron Suchecki, Manager Analysis and Strategy, The Perth Mint.

Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author. Disclaimer

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Fantastic insight from legendary trader Paul Tudor Jones

From Pragmatic Capitalism:

World-renowned hedge fund manager Paul Tudor Jones says global imbalances are causing extreme problems in the USA and that the Fed’s response is ultimately creating an environment exactly like the late 90s when the Fed bailed out LTCM...

... He believes the Fed is responding to this structural deficiency via QE and it reminds him an awful lot of 1999...

... Using the 1999 template, his conclusion is simple...

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Gold is the ultimate insurance against economic and financial difficulties

The words credit crunch send shivers racing down the spines of the majority of the developed world. Whether rich or poor, the fact of the matter is that we are all affected, and entering into financial investments at this tumultuous time can be risky business.

But while most investors reel in anger as their bricks and mortar dwindle into negative equity and their stocks lose value quicker than an ice sculpture in Thailand, those who have turned their cash into gold are laughing all the way to the bank.

Gold and Silver Investments are dedicated to assisting those who are searching for a more stable mode of asset protection as an alternative to the more commonly sought after property and stocks. They do this by offering their clientele gold coins, gold bars and government gold certificates.

Gold is a substance which like oil, is non-replenishable. As such, Gold bullion production is declining and increasingly smaller amounts of Gold bullion is mined each year. The country that has produced more gold that any other throughout history, South Africa, produced over 1000 tonnes of the sought after substance back in 1970. Demonstrating the incredible decline in Gold production, the region produced less than 260 tonnes last year. As such, perhaps sooner that we think, the value of Gold will likely be considerably higher than it is today.

In this same period of thirty-seven years; a blimp on the radar of this earth?s lifespan, the population of our precious planet has more than doubled. Inducing a huge strain on our limited resources, the value of non-renewable substances, such as gold, can likely only head in one direction. So long as there is demand; and demand is likely to increase as supplies head the opposite direction, gold will be of greater and of ever-increasing value and as such will remain as a very reliable source of wealth preservation.

Executive director of Gold and Silver Investments, Stephen Flood, said, ?Unlike paper investments such as bonds and equities whose value is dependent on the performance of governments, banks, corporations and the global economy - not the most reassuring of propositions at this moment in time - gold is a hard, tangible, very limited in supply asset whose value is intrinsic to nature. It is estimated that if all the gold in the world was refined and made 0.9999 pure, then compressed into one very large bar it would be only the size of a 25 square metre cube, meaning it could be placed neatly on the centre court at Wimbledon.?

Gold remains a fringe investment and the preserve of the ?smart money? who have been diversifying into gold in recent years. A distinct lack of knowledge and information regarding investing in Gold means that now remains an excellent time for prudently diversifying with a precious metal investment. Every man and his dog is attempting to protect their assets in property, stocks and increasingly cash; however gold is the forgotten investment and remains taboo in much of the media. Pushed to the side and disregarded as a possible safety net for future cash crises, those who do invest in gold are in possession of a significant advantage over those who choose more common investment schemes for asset protection.

Mr Flood added, ?Gold is the ultimate insurance against economic and financial difficulties. One purchases health insurance for one's family and oneself not in anticipation of severe health problems but simply in case of that eventuality. Similarly one should invest in or save in gold not in anticipation of economic or financial difficulties but simply in case of them.

?When we buy home insurance or car insurance we are acting out the old proverb of ?hoping for the best and preparing for the worst?, similarly gold is not the preserve of doom and gloom merchants, but rather prudent individuals who hope to protect, preserve and grow what wealth they have been fortunate enough to gain through their hard work or financial acumen. One does this through diversifying it into the safest asset known to man - gold. ?

With no end in sight to the fog of the global credit crisis, the value of paper money is increasingly unstable; just observe the recent fall in value of the pound versus gold, the dollar, euro and other currencies to glimpse proof of this. The end result of a decline in the value of paper pounds is unpredictable but by investing in gold, investors can rest assured that through prudent asset diversification and asset protection their assets and wealth remains secure whilst simultaneously growing.

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Be Careful What Geithner Wishes For…

"There are more tears shed over answered prayers than over unanswered prayers..."

- Teresa of Ávila, patron saint of headache sufferers

IT'S FIVE YEARS and $1.7 trillion of Chinese foreign reserves since the People's Bank of China ended its decade-long peg to the Dollar - the one at CNY8.3 which it had defended through the late '90s Asian Crisis and again as the Dollar first began its long decline in the early Noughties.

Back then however, as today, China refused to even begin make the Yuan freely convertible - and thus accessible to foreign investment - but for very different reasons. The fear in 2005 was of foreign speculators driving the Yuan lower. Whereas in 2010, it's got the opposite problem.

Grabbing export share (and that mountain of foreign-exchange reserves) by suppressing its currency, Beijing clearly fears a repeat of the Japanese bubble-and-bust that followed 1985's Dollar-weakening Plaza Accord. And since first loosening the Yuan's Dollar peg (if only a little) half-a-decade ago, China has overtaken Japan as the world's No.2 economy, and become the world's top importer of copper, biggest user of cement, No.1 consumer of energy, edible oils, soybeans, rice and wheat, and the No.2 destination for physical gold bullion.

Yes, China's currency should reflect this growth, at least as far as Western economists and other Asian central-bank reserve managers can see. But if US Treasury Secretary Tim Geithner gets his wish at the G20 meeting this weekend - and the Chinese Yuan bears a greater share of the Dollar's global devaluation - Beijing's purchasing power in the food, energy and mineral markets will only grow greater.

And where Timmy might want to watch out is that the growth must come at the expense of today's freely convertible currencies.

First, Beijing likely holds some $2 trillion or more of the "big four" reserve currencies - Dollars, Euros, Sterling and Yen. Gresham's Law says it's more likely to spend those holdings ahead of its own, increasingly valuable money, as it hoards ever-more food, energy and mineral resources.

Second, and should the Yuan extend its global usage from this year's McDonalds' bond float to central-banking reserves, the relative loss of purchasing power in Dollars, Euros, Sterling and Yen will only accelerate further. Together, the Big Four account for 96% of forex reserves according to the IMF, but that's the lowest proportion since before the late '90s Asian Crisis - a crisis which Beijing managed to avoid but remembers all too well.

Third, and most critically amid the global currency war - a war which will not be settled over the conference table for as long as Western central-bank policy remains fixated on currency inflation - flows of "hot money" are rightly expected, not least from US, UK and Japanese wealth fleeing zero-per-cent rates at home.

As it is, China is gently loosening controls on money outflows, but only a little, and actual outflows of Yuan remain blocked. So trying to preserve its global value, retained wealth in the West cannot get direct exposure to the currency (nor the equities at present) which will increasingly put a price on the biggest trend of the 21st century - the Eastward shift of global demand and consumption.

Even if China does liberalize (which it won't any time soon) retail investors will be last in the queue. So a fair proxy, meantime, remains buying hard assets and natural resources. It also gets to the heart of the problem, because living standards in the West (by way of our global purchasing power) are certain to fall long-term. Asia's growing use of world resources must come at our expense, in just the same way as the Pound Sterling's first fall from top-dog currency status - starting some seven decades ago, and running pretty much ever since - made for a relative loss of wealth to the United States.

Most clearly amid the currency turmoil only just getting started, China's ever-growing demand for physical gold and silver highlight that big, fat 21st century trend in action. By the time (if ever) that Yuan deposits become widely available through retail banking in the US, Eurozone, UK or Japan, this morning's $1319 price-tag on gold might look a great bargain.

Adrian Ash

Head of Research

Bullionvault.com

You can also Receive your first gram of Gold free by opening an account with Bullion Vault : Click here.

City correspondent for The Daily Reckoning in London, Adrian Ash is head of research at BullionVault.com – giving you direct access to investment gold, vaulted in Zurich, on $3 spreads and 0.8% dealing fees.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


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Saturday, October 30, 2010

This green energy is set to soar next year

From OilPrice.com:

The U.S. geothermal power sector is poised for significant growth in 2011, thanks to the economic stimulus package.

Approximately 500MW to 700MW of geothermal power projects will enter the final construction phase next year, an increase from 162MW in 2010 and 125MW in 2009, according to the Geothermal Energy Association's (GEA) market update.

Many of these projects would not have proceeded without government stimulus because of the recession, said Karl Gawell, GEA’s executive director. "Stimulus has been good news for geothermal energy," he added.

The Treasury grant provisions of the stimulus bill have...

Read full article...

More on green energy:

Why T. Boone Pickens' wind plan was a disaster

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The remarkable new car that could blow away traditional hybrids


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"Aggressive Investors" Target $1400 Gold and $25 Silver as Global Currency Crisis "Is Upon Us"

"Aggressive Investors" Target $1400 Gold and $25 Silver as Global Currency Crisis "Is Upon Us"London Gold Market Report

THE WHOLESALE PRICE of gold and silver bullion retreated from fresh record highs against the Dollar early Thursday afternoon in London, slipping back from overnight jumps of 1.3% and 4.5% respectively as the US currency's latest plunge paused.


European stock markets reversed early gains, but Asian stocks ended the day more than 1.5% higher on the MSCI index, as the Japanese Yen squashed the Dollar to a new 15-year low beneath ¥81 and the Euro leapt above $1.41.

"It is no wonder the rally of precious metals has been relentless," said a Hong Kong dealer of Thursday's Asian trade. "Silver led the pack higher...Then gold took over.

"[Platinum and palladium] have been relatively tame...failing to hurdle last week's highs."

With crude oil rising back above $83.50 per barrel today, the Canadian Dollar broke above parity to the US currency – only the second time since 1977.

But gold rose faster still, setting new record highs vs. the Loonie at C$1385 per ounce. Priced in US Dollars, gold and silver bullion hit $1387 and $24.90 at Thursday morning's peak.

There are "large [numbers of] December option strikes at $1400 and $25," notes one London dealer.

"Aggressive investor buying is pushing gold towards the next major resistance level of $1400," agrees Walter de Wet at Standard Bank.

"Expectations of further quantitative easing by the Fed, continues to dominate precious metals markets. [But] the physical market remains weak, with gold scrap availability remaining high."

Wednesday's slump in the Dollar – and concomitant rise in gold and silver – came after European Central Bank policy-maker Axel Weber told a conference that the ECB should halt its government-bond buying program, and start raising interest rates "before the phasing out" of the exceptional banking support offered since 2007.

"This statement had more effect on the market than the [US Federal Reserve] minutes," notes MKS Finance, a division of the Swiss refinery group.

"The cracks are getting wider, the crisis is upon us," says Marc Ostwald, strategist at Monument Securities in London.

Warning clients to pay attention to "the rifts that are opening up within Asia" over the US Dollar's six-month tumble, Ostwald points to unilateral controls on foreign-investment flows and exchange rates by Russia, Singapore and Taiwan.

Bank of Korea chief Kim Choong-Soo today rebuffed comments from a "certain country" – Japan's finance minister Yoshihiko Noda – questioning Seoul's ability to lead next month's G20 summit of advanced and emerging economies because of its repeated interventions in the currency market.

Tokyo meantime confirmed that it spent ¥2.1 trillion ($25bn) last month buying US Dollars to try and halt the Yen's rise.

"We believe many hedge funds may have enjoyed [in Sept.] their highest earnings for the past year," says a report from Japanese bank Nomura, quoted by the Financial Times' Alpha blog, pointing to the slumping-Dollar-led surge in bonds, equities and commodity prices.

"Accordingly, we now expect those hedge funds to lock in those profits ahead of their year-end book closing in November."

Noting that Fed chairman Ben Bernanke is due to speak on monetary policy Friday, "The main risk [to silver and Gold Prices] is that he might...reign in expectations of quantitative easing," says Standard Bank's Walter de Wet.

"This could prompt a pull back in precious metals, possibly amplified by profit taking ahead of the weekend...[But] we anticipate some seasonal jewelry demand to prompt some buying into dips."

Currently moving towards the peak of its post-harvest buying season, Indian gold demand will see the Hindu festival of Diwali end on 5th Nov

Adrian Ash

Head of Research

Bullionvault.com

You can also Receive your first gram of Gold free by opening an account with Bullion Vault : Click here.

City correspondent for The Daily Reckoning in London, Adrian Ash is head of research at BullionVault.com – giving you direct access to investment gold, vaulted in Zurich, on $3 spreads and 0.8% dealing fees.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed herein are those of the author and are subject to change without notice. The information herein may become outdated and there is no obligation to update any such information. The author, 24hGold, entities in which they have an interest, family and associates may from time to time have positions in the securities or commodities discussed. No part of this publication can be reproduced without the written consent of the author. Disclaimer

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