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One of the reasons to be interested in free market money is because of the difficulties with fiat money inflation. There has recently been some analysis of a critical period in the history of the Federal Reserve note which should be of great interest to all free market money enthusiasts. The paper by Robert Landis describes the period from 1979 to 1987 when inflation had been expected (by observers in 1978-79) to be very high, but was not.

What saved the system? Landis makes the case that several factors entirely beyond the control of the Federal Reserve system worked in its favor. Among these was a dramatic rise in the demand for money, especially overseas where the US dollar was being used to hold value for those with even worse inflationary currencies in their local economy. Deregulation also created a rising demand for money that allowed the tremendous increases in supply to take place without hyperinflation. As well, very high commodity prices in the late 1970s had resulted in new supplies being discovered, which led to dramatic reductions in commodity prices during a secular bear market.

Landis concludes: "In this essay, we have attempted to lay out in some detail the confluence of factors that came together to save the system in the 1980’s. We think it clear from this exercise that this was a one-off event, an historical accident that could not be repeated even if there were an identical threat, a common understanding of the nature of that threat, and the political will to implement a solution. ...No, the die is cast: we shall have the catastrophe. Our fiat monetary system got a reprieve in the 1980's, not a deliverance. All that has happened since, with the fantastic mispricing of credit the Greenspan Fed has engineered, and the massive global malinvestment this has engendered, is that the dimensions of the unraveling have become more dire."

When? No one knows. But, aren't you glad you have free market money alternatives, now?

As Doug says, it is sort of a no-brainer. Newmont Mining is NEM on the NYSE. Currently the share price is 43.3. Newmont is engaged in gold production worldwide. Newmont also has base metal operations in copper and zinc production. It has mining operations in the United States, Australia, Peru, Indonesia, Canada, Uzbekistan, Turkey, Bolivia, New Zealand and Mexico. Note that it has no mining operations in South Africa. As of 31 December 2003 it had gold reserves of 91.3 million ounces and an aggregate land position of approximately 60,000 square miles.

Key statistics on Newmont are available from Yahoo Finance. Total market capitalization is listed at $19.2 billion. The value of the gold reserves alone is $36.7 billion. Put another way, with 443.37 million shares outstanding, the value of the gold reserves alone at today's price of gold ($401.50) implies a share value of $82.68. In addition, there's $3.78 of cash per share on the balance sheet. Assuming zero value for the rest of the company's assets and operations, including all that land, just looking at gold and cash, things look pretty good. It isn't often you are offered something worth $86 for $43. So, get after it.

Free Market Money

From time to time we're asked about various free market money ventures. OSGold was the subject of many inquiries during its heyday in 2002. Of course, it proved to have no gold, and much of its operation was not offshore. More recently, "FreeLandOpps" has been the subject of much discussion. Apparently, one of their servers has been seized by authorities, if we are to believe their recent announcement, and they are taking their other servers offline.

FreeLandOpps appears to us to be a classic Ponzi scheme with all the usual earmarks. Very high returns are offered. No information on the principals involved is available. Things proceed well for a few months while new victims are rounded up by the first in line. Then, suddenly, the program ends and payments are suspended. Various excuses are provided.

Do these scams take place more often in the realm of free market money? Certainly not. There are far more frauds perpetrated with fiat money, with counterfeit fiat money, or with money substitutes such as credit cards than with free market money. The size and quality of scams is often much higher outside the free market money realm.

So why are so many online currencies now plagued with these scams? CostaGold, OSGold, FreeLandOpps and others are just the tip of the iceberg. There are entire discussion lists devoted to the topic of "high yield income programs" or HYIPs and other euphemisms for Ponzi schemes. Many of these involve e-gold, which, as first mover has always had a large number of account holders. Other online currencies have also been used by the promoters of various of these scams. We even encountered a pyramid "gift" scheme at a recent conference on the Liberty Dollar - all gifts to be made and received in silver Liberty pieces.

One of the reasons free market money is attractive to such promoters is because it is unregulated. While existing laws governing fraud do apply, the unwary often are unaware (hence the term!) of the principles which should be applied.

Caveat emptor and caveat vendor apply. In fact, caveat omni.

Just because something may claim to be gold, such as OSGold or more recently INTGold, does not mean that there is any gold to it. It may be a fractional reserve system. It may be a scam without even a fraction of reserves. How do you tell?

Our standard is redemption. If the online currency or paper currency may be redeemed for silver or gold, then it is real money. If there is no way to gain redemption, or if it is "backed" by some quasi-conceptual nonsense like Ithaca hours or assignat land, then it is not real money. If the currency is specie, gold or silver coins, then it is real money. If you cannot get back to metal, you should be very wary.

It happens that we've redeemed the currencies we work with. We've performed bailment in several cases. (Bailment is the opposite of redemption, where one places bullion into the vaults of the currency operator and receives currency on account.) And we've taken a hard look at audits where these are available.

Currencies like Pecunix and GoldMoney go to extra lengths to establish verifiable balances of circulating currency. We're very comfortable with their assertions as to value in circulation. Audits of the gold in inventory are reassuring, though, it should be admitted that audits of Enron were also widely available at one time.

When in doubt, check it out. By all means feel free to contact us about the online currency you are investigating, or the online "investment opportunity" you are considering.

– From a Cato Institute Handbook for Congress

Well, there they go again, wasting more taxpayer money with their hare-brained schemes. This time NASA has ditched in a Utah desert some $264 million of funds used to collect information about the Sun. Good work on the parachute, guys.

Maybe they'll salvage some of the payload. Then again, maybe they'll carve into an asteroid that's been in Antarctica for 13,000 years and claim they've discovered life on Mars.

It is long past time for the end of NASA. Obviously, Congress has no will to end any pork barrel project which has activities in every Congressional district. So, the end of NASA must await the demise of the American Empire. Look for that to start unwinding around 2010, starting with a rebellion that will end badly for its participants.

Meanwhile, anyone looking for real space activities is looking to the private sector. After all, NASA hasn't been able to keep its space station oxygen generators operational after numerous attempts to fix them. Previously, the clever boyz at NASA burned three astronauts to death in their Apollo capsule with a pure oxygen atmosphere and some carelessness. Since 1986 began, two full crews of seven shuttle astronauts have been demolished by NASA incompetence.

If any of this seems harsh or bitter, you should talk to some of the space entrepreneurs who've been trying to keep the dream alive. Dozens of them have had their careers destroyed by government intervention and at least two that we know of have been killed, one by Mossad agents.

One company that has made some headway against these difficulties, though not without numerous reversals, is Spacehab The company is listed on NASDAQ as SPAB with a recent close of $2.47 per share. Their 2004 revenues of $78 million yielded earnings of $2.1 million. Not bad for a bunch of wild-eyed schemers who founded the company in 1984 hoping to put passengers in a pressurized module in the shuttle payload bay. Key stats here.

While the company is now rather far afield of the vision of its founder Bob Citron, having acquired a NASA contractor (Johnson Engineering, now Spacehab Government Services), a payload processing company (Astrotech), and having formed an "edutainment" unit (Space Media), it is an indication that persistence can occasionally pay off in the space business. In particular, Spacehab, like Orbital Sciences, is an indication of the "co-opted" path to success. Rather than continue to pursue truly commercial space projects, Spacehab has become much like other NASA contractors, fitting in rather than fulfilling its potential.

Interorbital Systems joined the X-prize competition in 2003. Previously they completed a spaceport contract for the Texas Aerospace Commission, a site survey for "Spaceport Tonga" in the South Pacific, and provided a tankage and fuel delivery system for Dick Rutan's Global Hilton balloon flight. Subsequently, they have developed designs for two and three-stage launch vehicles, with plans to orbit a satellite in 2005. The company's web site is interorbital.com For the X-prize they plan to fly their Solaris X burning white fuming nitric acid, launching vertically from the ocean and returning on a parachute. (There were some sounding rockets developed in the 1950s using inhibited red fuming nitric acid as a propellant. An effective propellant but difficult to handle.)

ILAT, an Israeli company is developing their Negev launch vehicle for the X-prize competition. Their web site is ilat.net. Their business plan was a finalist in a Wharton business plan competition, and they actively seek investors. Their solid fuel rocket burns ammonium perchlorate with aluminium and HTPB binder using liquid oxygen as an oxidizer. The Negev is balloon launched with a parachute landing over water.

Lone Star Space Access is led by Dr. Norman LaFave. Their Cosmos Mariner employs air breathing jet propulsion for take-off and landing, rocket propulsion for ascent to 40 nautical miles. Their web site is lonestarspace.com. While the company has many good ideas, we were unable to convince ourselves that they have anything but excellent computer graphics of their vehicle and newsstories from 1997 to 2000.

Micro Space of Colorado is developing the Crusader X to burn methyl alcohol in "to be determined" engines. Their site at micro-space.com was largely under construction on our recent visit. They seem to have had some success with smaller sounding rockets.

Pablo de Leon & Associates of Argentina are developing a system which burns polyester resin in liquid oxygen. Their web site at pablodeleon.com shows a graphic we saw many years ago (roughly the time of their X-prize entry in 1997) and few details. We did learn of a successful test of the escape tower for their Gauchito rocket as of August 2004.

PanAero is the latest from Len Cormier and his "Third Millennium" team. Len has been involved in space development since 1956 and was a guest at the Russian Embassy when Sputnik was launched. He saw the light early on and formed a commercial space transportation company in 1967. About their X-prize attempt, he says, "We have not been successful with respect to raising significant outside funds through investment or sponsorships. Accordingly, most of our work has gone into conceptual system design...." Their web site at tour2space.com is about what you'd expect. On the other hand, Len has assembled an impressive team. If anyone can take conceptual designs beyond vaporware and get to metal bending, Len's the man.

Rocketplane of Oklahoma is Mitchell Burnside Clapp, a test pilot and MIT educated rocket pioneer. He led the design effort at the Air Force's Phillips Lab to develop the Black Horse rocketplane. Their XP vehicle burns kerosene in liquid oxygen. Their web site at rocketplane.com is impressive. The company held a groundbreaking ceremony in January 2004 for their Oklahoma City operations center, and hopes to begin flights in 2006. What we didn't find was much in the way of technology, although their propulsion contractor Orbitec.com does have some depth of experience.

Scaled Composites of California was reviewed in last week's report. See their web site at scaled.com.

Space Transport of Washington state is an oft-mentioned longshot in the X-prize competition. Their Rubicon 1 crashed in early August 2004. Eric Meier and Phillip Storm believe they can still field a manned flight by year's end. Their web site is space-transport.com Their vehicle uses solid fuel and a parachute for re-entry. Their plan to raise $420,000 has been more than halfway met, with $250K raised to date. Whether their plans are realized remains to be seen, but producing and launching test vehicles is an impressive accomplishment among a field of mostly conceptual art and vaporware.

Starchaser Industrial Ltd is a British company and their web site starchaser.co.uk was "down for routine maintenance" on our visit. Their Churchill bi-liquid (kerosene, liquid oxygen) engine appears to be real hardware with a combustion chamber in final development.

Suborbital Corporation is based outside Moscow. Their C-21 spacecraft takes off on a conventional runway atop a modified M-55 aircraft. After 40 minutes or so, the vehicles separate and the C-21 climbs vertically with solid rocket power for 80 seconds. We found no web site, a two-person team, and a surprise quote from Dr. LaFave on their X-prize team page.

TGV Rockets, Inc. also features Len Cormier as chief engineer for their X-prize page, but he doesn't show up on their web site. CEO Pat Bahn says the team's name comes from "two guys and a van" which is the level of complexity they seek to have. In other words, simplified operations, a very good idea for commercial space enterprises. (A study performed in the 1980s suggests that up to 80% of launch costs is in operations rather than hardware.) We didn't see any indication of active hardware development, but we do find them actively seeking investor capital.

Vanguard Spacecraft is a Massachusetts based company planning to fly a vehicle burning hydrazine in nitrogen tetroxide. Their web site is vanguardspace.com and shows a series of conceptual designs for vehicles, with a nice rendition of Mr. Clean for scale. The team page shows a half dozen dedicated space launch enthusiasts of varying qualifications. Their news page shows their first test rocket launched and recovered sucessfully on 21 September 2002, their Vx2 rocket after its successful flight 28 June 2003, and static test firing of an 18-inch rocket motor by Wickman Spacecraft, a partner to Vanguard. Also, apparently, Estes has created a series of model rockets based on X-prize vehicles. The Vanguard site includes a link to Tripoli, the high-powered rocketry society. While we don't expect these guys to win the X-prize, we would not be surprised to hear more from them in coming years.

Tom Lehrer used to sing a song about it:

Oh the Catholics hate the Protestants
And the Protestants hate the Catholics
The Christians hate the Muslims
And everybody hates the Jews
But during...National Brotherhood Week
National Brotherhood Week
Jerry Falwell and Barney Frank are dancing cheek-to-cheek.

Oh the black folks hate the white folks
And the white folks hate the black folks
All of my folks hate all of your folks
It's American as apple pie...

Mind you, the fun and excitement of religious controversy was so alluring that many brought the tradition to the New World. So, Catholics in central and South America would persecute various natives, Jews, and Protestants. Protestants in Massachusetts would persecute witches, Catholics, and anyone else they viewed with intolerance.

However, there was something of a filter. Those who were unwilling to work hard and respect private property often didn't begin the voyage West. Those who arrived and took to stealing were often killed. Those who sought to have excessive power over their neighbors were not well tolerated in many of the colonies. And those who couldn't put up with whatever "civilizing influences" did manage to seep through the filter were often wont to walk into the West, further out toward the frontier.

Places like Wyoming, Idaho, Montana, Alberta, "British" Columbia, the Yukon, Alaska, and Jefferson are populated by those who went as far West as they could get. To some extent, they were filtered twice. First, the Atlantic ocean selected those willing to take risks and head West. Then the frontier territory selected those willing to work hard and respect private property. Those who preferred a life of ease stayed in Europe or back east. Those who preferred a life of theft often ended up hanging at the end of a rope.

While those filters no longer operate to limit who reaches Wyoming, the attitudes and the prevailing culture remain quite independent. People in Wyoming understand not only their freedoms but also their sovereignty.

Wyoming has other advantages. It has a small population. It is mountainous. Even the so-called "hills" of the Black Hills are actually mountains. It is heavily wooded. The land is dense with resources in coal, timber, uranium, and metals.

One of the projects we promised to discuss this week is the Free State Wyoming or FSW. To really get a sense of this project and its potential, you should read the book Molon Labe by Ken Royce (also known as Boston T. Party). The book is available from JavelinPress.com.

The title is taken from the Greek phrase by Leonidas of Sparta, responding to a request by Xerxes of Persia that the Spartans throw down their arms. The reply translates as, "Come and take them." It is a fitting book title for a novel about the people of Wyoming and some who choose to move there who are fed up with overreaching federal power. In order to maximize the effects of their movement, the freedom enthusiasts move to the lowest population counties in Wyoming first, filling them up one after another "like an ice cube tray," and voting in sheriffs and county officials with similar points of view. Control of the county governments and the statehouse leads to the reform of Wyoming's constitution and the eventual establishment of a definite home for freedom.

Another project built around a book is Limon REAL by Rigoberto Stewart. The English language version was translated in part by Spencer MacCallum, one of the old hands from the Atlantis Project of the 1960s. Spencer and Rigo's mutual friend John Kingman (prominent in Laissez Faire City) has also been involved in the development of this project.

Limon is a province in Costa Rica. It is on the Atlantic coast, and is ethnically diverse. Many of those who immigrated to Costa Rica from other cultures ended up in Limon. Its population includes blacks, Protestants, Asians, English speakers, and others who have not always been welcomed by the majority Catholic and Spanish speaking elite of the capital district.

The book is Limon REAL and discusses forming an autonomous region in Limon province. It is available from the project web site limonreal.com.

The book describes a largely political process which includes many gradual steps toward increasing autonomy for the province. Under many circumstances, it might seem naive or unworkable, but Costa Rica is an exceptional place. Right now, a growing minority party with libertarian views is filling seats in parliament. The Moviemiento Libertario won eleven seats in the last election, and may win more in the near future.

Longevity

If you find these topics interesting, we recommend you consider a subscription to Life Extension News from the Life Extension Foundation lef.org or the Life Enhancement newsletter from life-enhancement.com. Both organizations also sell quality supplements and work in the fight against FDA foolishness.

As always, none of the statements we've made have been approved by your doctor, the FDA, the government, the banking cartel, nor the military industrial complex. If that sort of thing matters to you, The Indomitus Report may not be the right newsletter for you.