This is where I want to scream. The argument is moot. Capitalism does not exist. The economies of the world range on a scale from light socialism to communism. As it has been said many times before, capitalism or free markets become extinct the moment a central bank is created. The Federal Reserve practices a price manipulation for money (interest rates) that benefits one party while having a negative impact on another. Free markets are based on the premise of mutual benefit. Price rigging of any good, including money, interferes with the necessary signals between buyers and sellers that allow them to mutually gain.

Secondly, an exchange governed by regulation under the threat of penalty for non-compliance cannot be considered free and voluntary. It is hard to think of one transaction in this country that does come under a maze of bureaucratic rule. Even the products exchanged at a garage sale or Tupperware party must at some stage be approved regulators. Children selling lemonade on the sidewalk are now under government harassment for not having a business license or health inspection.

The following article by James Miller is one of the best I have come across that succinctly describes capitalism.

Capitalism

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Share It.

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More government

Of course like most government solutions, this idea completely misses the mark on several fronts. First and foremost, searches conducted by the TSA violate the Fourth and Fifth Amendments to the Constitution. You cannot solve the inherent problems of an unconstitutional government arm with another unconstitutional government arm. It is akin to one thief overseeing the actions of another thief. The question always with government advocates is what side they will be advocating for. One thing I can say for certain is that their concerns will not involve the US Constitution.

Fourth Amendment
Secondly, TSA personnel are not professionals in any meaning of the word. Most have little more law enforcement experience than a night security guard at the lumber yard. I would suspect that for many receiving a government check for non-work is quite common. The bottom line is that the people working for the TSA are not the brightest bulbs on the tree.

The real answer to airport security is to follow the path of private property and the free markets. The airlines should handle their own security issues. If passengers feel a particular carrier is not adequately promoting the safety of customers, than the flying public travel with another airline that will. The consequence of bad experiences will be customers taking their business to a competitor. The free market is the only advocate a customer needs; an idea that government does not advocate for.

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As noted many times before, the argument for government intervention in the free market is of course based on a fallacy. You cannot logically blame something that does not exist in the first place. Free markets do not include a central bank manipulating the cost of money. Free markets do not include bureaucrats telling a producer the minimum amount to pay their employees or what benefits they must offer. The free market does not have government reaching into the pockets of people and extracting a chunk of their wealth. The free market does not have government subsidizing housing, medicine, education, agriculture, energy, and hundreds of other industries. Backstops against failure are not part of the free market playbook. For at least the past hundred years, the government at all levels has increasingly molded private transactions into a form that looks nothing like a society based on voluntary exchange.

The governments of Europe and their central banking partners are rapidly crumbling. The extent of the damage is so great that trillions of dollars are needed to just keep the boat floating for a few more months. Across the United States the roll of municipalities declaring bankruptcy grows daily. The accumulated debt of numerous states like Illinois and California makes Greece look frugal. The total liability of the federal government that includes Medicare and Social Security dwarfs the world’s wealth. Individuals around the globe are in danger of being swept out into a sea of financial ruin by the massive government debt wave circling the earth.

What is to blame for all of this? Not the free market, it does not exist. When the Federal Reserve set out on a course of bailing out Europe yesterday in a clandestine operation, Ron Paul summed it up best. According to Paul, the action by the Federal Reserve essentially bailed out socialism.

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Nationalizing Yields

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George Bush ignorantly summed up the present mess several years by stating that Wall Street got drunk. The question never asked or answered by elected officials and bureaucratic lifers is who served all the free booze to the underage drinkers. Why did the Congress not revoke the bartender’s license? A true free market would never allow underage drinking. The person serving the booze would have been thrown out into the gutter. And the juveniles would have been left alone to throw up. Instead the government bailed the Wall Street kids out with more booze.

The massive debt piling up in country after country and now threatening to crush Europe was not a result of free market failings. Free markets never make promises to fund pension accounts at payout rates nearly equal to one’s income. Government debt, including the liabilities of state governments in this country, came about because of…. government. Today the US debt crossed the $15,000,000,000,000.

Demanding more government solutions to solve government caused problems is akin to hammering a square peg into a round hole. The continued pounding is sure to result in one of three outcomes: The pegs splits apart, or the hammer cracks, or the peg board smashes apart, or maybe all three happen. What we are observing in the world today is an economic peg board cracking into pieces.

Real political will means government putting the hammer down and walking away. The Federal Reserve, the Congress, the President, and all the bureaucrats need to walk away forever. Getting out of the way of the free markets is a true mark of political resolve.

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Does He understand

The best description of our current economic environment would be fascism where government and business partner in policy decisions that help the latter protect its fiefdoms. In return government officials enrich their personal wealth through increased power and graft. Fascism gives the illusion of a capitalist system gone awry, which according to the power brokers even more government regulation. The result is what we are experiencing today where wealth shifts toward a few at the top in government and business. The middle class is wiped out through direct taxation and the hidden tax of inflation.

The other evil spinning the economy into a death spiral is the Federal Reserve along with the component of fractional reserve banking that flourishes by turning money into debt. Yes, the banks are responsible for this mess. The banking systems manipulation of interest rates for the intention of nudging individuals from savers to debtors for profit borders on criminal. And when the debt goes bad, banks come to government for a taxpayer financed handout. I say bordering on because the individual has the freedom to say no just like the students that find themselves hopelessly indebted for life in order to pay for higher education.

Speaking of education debt, how come no one has fingered the state university systems colleges and easy government loans for embellishing a myth on the youth? Get a degree, any degree, to acquire a good income. Your debt is an investment that will pay a return of a hundred-fold they tell the ignorant. While graduates scrape to get by under the yoke of student loans, university Presidents and administration dine on white linen and drink fine wine. The present day education system is just another fascist face to the economy.

It is time for a candidate running for any office, especially President of the United States, to bluntly state the facts. Ron Paul with his Austrian philosophy has for many years. Herman Cain shows some promise, but does he understand what is really going on.

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The other morning while driving to work I listened to a segment of the Davis-Emmer show on Twin Cities Talk Radio. Bob Davis cut his co-host off in mid-sentence when Tom Emmer was trying to make the case for the economy being in a serious downturn. Davis claimed the objective definition of a recession as created by the National Bureau of Economic research has not been met ( two negative quarters in a row for GDP). What is objective about a group developing a subjective measurement. Furthermore, the calculation for GDP (C+I+G+X) includes government spending. When the “G” spends at light speed, then it is hard for GDP not to grow. With real unemployment hovering in the mid-teens along with stagnating wealth and production, does not one of the media parrots consider the possibility that the “objective yardstick” is out of calibration.

In 2008, I warned about the historical characteristics of financial bubbles and depressions. After the initial crash, an economic aberration makes it appear like the full blown calamity has been averted when the house of cards is reshuffled. But the debt that caused the calamity has not disappeared; it has only switched hands. Debt cannot be resolved with more debt. Central banks and Treasury Departments can only delay the economic inevitable.

At this point in time, one can only hope for a recession, which is a vast improvement from where we are headed.

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Higgs is obviously right, but WE know that. The question is, how do we get back (can we get back)? Point being, you can lead a horse to water but if the horse refuses to drink for long enough … he dies.

Higgs’ careful look at the data on the Great Depression and World War II convinced him that (1) a U.S. economy producing genuine prosperity wasn’t restored until 1946, and (2) investors hunkered down, especially from 1935-40, because New Deal regulations — along with President Franklin Roosevelt’s increasingly vocal hostility to enterprise and successful risk-takers — created too much uncertainty about how government would treat profits and wealth accumulation.

The “regime uncertainty” — described by Higgs as “a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns” — unleashed by actual and threatened New Deal interventions made private innovation and entrepreneurial effort simply too unattractive. So private investment spending largely ground to a halt during FDR’s reign.

The “Great” was thus put into the Great Depression

Full Article

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When the Federal Reserve Chairman uses terms like “the natural recovery process” is he referring to an economy free from monetary manipulation and government intervention into every aspect of economic exchange. As the Depression of 1921 and the economic panics of the 19th century demonstrated, the corrective forces of the free market will make quick work of downturns in the economy.

As the Austrian Business Cycle Theory has pointed out, the natural recovery process that Ben Bernanke refers to is exactly what ails us. It is his natural process of rigging interest rates through monetary expansion combined with the government’s meddling into private transactions.

Bernanke has always championed himself as a scholar on the Great Depression. He obviously learned his lessons well.

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In a move mimicking Ben Bernanke and company, the European Central Bank in early August began purchasing Spanish and Italian bonds at rates lower than offered by the market. With a no confidence vote looming in Germany, banks in Deutschland may no longer finance European debt, which means increased easing by the ECB. Eurozone decimation results in further Euro printing that eventually drags the Swiss Franc down in the whirlpool of a sinking ship. The history of monetary intervention never ends well.

But like all economic actions, currency transactions are not a static equation. A rapid appreciation in the Yen may force the Japanese Central Bank to take steps toward further easing. In addition, a spike in the dollar may cause Bernanke to accelerate QE3 or whatever the Federal Reserve wishes to call it. What we may be witnessing is the beginning of a currency war.

Where does one put their money since the Swiss removed the Franc from the safe-haven list? Countries rich in resources will likely gain the most from a monetary tit-for-tat. Over the last couple of months I have been moving money into the Aussie Dollar and buying Australian Certificates of Deposits. The Canadian Dollar still remains a harbor of safety.

As some of the world’s major currencies swirl down the toilet, gold and silver are gaining as an alternative to debasing monetary units. Gold and silver are also the currency of liberty.

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