A Time to Kill
Barbarous Relic 
Screenwriting Sanctuary
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A Time to Kill
Barbarous Relic
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By George
Articles
Demagogue's Survival
Guide
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By George F. Smith As George Bush and the Republicans prepare their “agenda” for America, the impulse is to grab our wallets and hold tight. But like master magicians, politicians of both parties can swipe wealth from our possession without touching our billfolds. They use an old trick that in modern guise is so effective it passes for sophisticated monetary policy. The federal government gets revenue by borrowing, taxing, or inflating. Of the two coercive methods, taxation is fairly visible and thus somewhat under our control. But inflation, for most people, is steeped in mystery. It needn’t be. If we look at the charter of the Federal Reserve System we’ll see that one of its goals is “to provide for an elastic currency.” It doesn’t explain what an elastic currency is or who will reap the benefits, but since we’re talking about a law that abridges economic freedom, we already know Fed “elasticity” won’t bless most people. In the days when gold was money, banks were often the source of financial calamity for issuing receipts (paper money) to gold they didn’t have in their vaults. Though by definition such institutions were bankrupt, it usually took a bank run to expose their insolvency. Were their banking practices at fault? No, said the bankers; it was that “inelastic” metal, gold. What they wanted was money that didn’t have to be redeemed. Bankers and politicians have always found each other useful. During the 19th century, government had routinely rescued bankers from bank runs by allowing them to suspend gold redemption, and bankers had bailed out political pals with timely loans during crises. This cozy relationship eventually produced the cartelization of banking under the Federal Reserve Act, passed on December 23, 1913. The Federal Reserve’s overriding purpose was and is to inflate the money supply. Imagine a printer with a legal monopoly on the issue of money, with limitless supplies of ink and paper. Add an aura of reverence and inscrutability, and that’s the Fed, the gift Americans found under their Christmas trees in 1913. Because of the Federal Reserve, the U.S. was able to enter World War I, “the war to end all wars,” and finance not only its own efforts but those of its allies. It doubled the money supply and pushed prices up twofold as a consequence. U.S. entry in the war forced Germany into an unconditional surrender, which fostered the movement that brought Hitler to power. During the 1920s the Fed continued to inflate, fueling speculation in real estate and the stock market. When the market crashed, few people blamed the Fed because prices had generally remained stable during the boom. Productivity improvements had kept prices from rising, masking the effects of monetary expansion. The economy struggled to recover. What it needed was freedom. What it got was more government – though often to the applause of business leaders. Hoover’s interventions from 1929 to 1933 turned a mild recession into a deep depression. Promising a return to something resembling a free market, FDR took over and made intervention government’s calling card. The man revered for saving capitalism drove a stake through its heart by taking America off the gold standard. This was a critical move if government was to seize the additional wealth it needed for massive expenditures. Americans would revolt if government tried to get it by increasing taxes. It had to be done behind their backs, and simply printing money with no gold supporting it was the answer. Foreigners could still redeem their dollars for gold until 1971, when President Nixon cut them off. With gold swept aside, bankers, at long last, had their “elastic currency,” while politicians had surreptitious access to our resources. Increasing the money supply pushes prices higher, but cheap imports have offset that trend somewhat. When prices do rise, it’s no problem laying the blame on business. From 1789 until 1913, the gold dollar actually increased in buying power. Since the Fed took over, the dollar has lost 95% of its purchasing power, as a visit to the Bureau of Labor Statistics web site will confirm. In 2002 Fed Governor Ben Bernanke reassured an audience that “the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Apparently Mr. Bernanke doesn’t include as costs the wars, recessions, and a dying dollar. Rep. Ron Paul (R-TX) has called the Fed “a giant fog machine, designed to fool the victims of its policies, i.e., most of us.” What’s good for politicians rarely promotes “the General Welfare.” We need to kill the Fed and turn money back over to the market. |
Other Interesting Sites
Ron Paul's Classics of Libertarian Thought Greenspan's 1966 "Gold and Economic Freedom"
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