Tea Party Heroes Ron And Rand Paul Make For A Bitter Brew; Sixth Response

Tea Party Heroes Ron And Rand Paul Make For A Bitter Brew; Sixth Response.

The following is the sixth paragraph of Barry Germansky’s op-ed Tea Party Heroes Ron and Rand Paul Make for a Bitter Brew, from earlier this year, interspersed with my rebuttals from within the last few days.

BARRY GERMANSKY: Naturally, the Pauls’ preference for putting economic values first – by believing in free market libertarianism, which uses economics in totalitarian fashion to run society – caters to big businesses far more than the average citizen.

HENRY MOORE: Free Market Libertarianism no more uses “economics,” regardless of how that word is defined, to run society, than any other system does. In fact, as I have argued and will continue to argue elsewhere, it is less likely to do so. Is free market libertarianism the only system that seeks to apply its economic principles to society? Or do other ideologies also seek to apply aspects of their ideology, for good or bad, to society? It is clearly the latter. Or at least it would be to someone who didn’t confuse the term “free market” with the term “economics,” which is at the root of your mistake in the above sentence. And there is nothing inherently totalitarian about it either. That goes for any system, let alone one whose actual principles are the definition of totalitarianism’s opposite! Not unless actual force is involved, which you have yet to reliably point to in any manner. So now you are stretching the term “totalitarian” to mean “anything Barry Germanksy doesn’t like.”

However, a system that throws you in jail for not letting the government steal from you (through taxation, inflation, and regulatory costs) necessarily involves force. And that is just its economic side. Just imagine what this same society does in other sectors! Have you heard of wars of aggression and victimless crimes, for example? What is it about the type of system you advocate, where all is arbitrary, all is tailored to the lowest common denominator, that prevents these other totalitarian (by definition) measures from taking place? I put it to you that the system you advocate is no different than the one already in place (and opposed by the Pauls), where the totalitarian crimes I mentioned are widely practiced and sanctified through the supposedly democratic means by which they are implemented, save only by degree.

Government shouldn’t “cater” to anyone. Not big business. Not small business. And not special interest groups masquerading as advocates of the average citizen.

BARRY GERMANSKY: Perhaps this is best demonstrated by Ron and Rand’s constant support for the abolition of government-issued money in favor of currency minted by private banks. As is commonplace with the Pauls, they choose to ignore history or simply distort it.

HENRY MOORE: The government does not issue the money. This is false. If government issued the money the monetary system would have collapsed a long time ago, because a bureaucracy does not have, and therefore cannot respond to, the various incentives and disincentives, associated with actually seeking a profit.  The current monetary system is a hybrid of both the public and the private sectors. They remain private in the sense that they are not democratically elected nor accountable to the people they purport to serve, and public in the sense that they are protected and artificially propped up, primarily through various types of fraud and force.

This is fascism. And here you are, a leftist of sorts, defending it as though a monetary cartel was somehow a friend to the common folk. With inflation, anyone living on a fixed income is negatively impacted. It is true, at least in the short term, that an inflationary currency regime helps debtors, but it is equally true and equally important that not all debtors are the poor and downtrodden, and that not all the poor and downtrodden are debtors. In fact, the less “fair lending” regulations there are, the less likely lenders are to “take advantage” of people who cannot repay loans, because there is simply no incentive to do so. Loan sharks who do see incentives are far more common in systems that regulate legitimate lending practices to the point of making it overly costly for most people to operate with them.

So, the Federal Reserve Bank, is a private system reorganized by the state into a quasi-private monopoly. By way of illustration, consider two competing car lots whose salesmen decide they can get more profits by cooperating than they can by competing. So they both agree to raise the price of a vehicle on their lot to the same exorbitant price. Assuming there are no other car lots around within a distance that would make it cost effective to just buy a car out of town, anybody in the area who needs a new vehicle will have no choice but to buy a car from one of the two lots at the exorbitant price. Sure, this is price-gouging, but unless they figure out a way to ban new competitors, it is not yet a cartel. So say there is another salesman who sees the need for, as well as profit in, setting up his own lot and charging significantly less for his vehicles. Free Market. Problem solved. But before he can even get his inventory in, the local sheriff (one of the two cooperating salesmen’s cousin perhaps) comes up with some excuse to shut him down and run him out of town (through threats or bribery or blackmail, etc.). Well, this is exactly how the Federal Reserve, and in fact the entire financial system operates. Only the two price-gouging salesmen are the private banks and institutions who already have connections to government (and no, the root of the problem is not private banking, but a government susceptible to nepotism and corruption), the local sheriff is the government, and the competing salesmen are smaller, less favored banks, who may be even more capable and efficient than the major banks, but are starting at a distinct disadvantage. And yet you defend this system and would seek to create microcosms of it in every sector?

As for history, competing banks and commodity standards have been more efficient and less predisposed to severe downturns than national/central banks have. Unfortunately, even with a great many private banks there has been government manipulation and fraud, or government aiding in or covering up private sector fraud. This is not dissimilar to the more institutionalized manipulation and fraud now an accepted (but not well understood by the average person, nor fully transparent as to the specifics) part of the financial sector thanks to the Federal Reserve and various government regulatory agencies.

Such interference (sometimes initiated by government out of hysteria or motive, sometimes by the private banks themselves to increase their own gain, but remember, government is still the problem here because it made itself responsive to corrupting influences), has at times resulted in panics and runs and recessions and Depressions that have later been blamed on private banking, in general, rather than on the specific administration and the specific banks. But none of these downturns were anywhere near as severe or long lasting (save one, the Long Depression, which was only a depression in terms of decreasing prices, not in terms of a weak, anemic, struggling economy) as those that occurred in the era of, and as a result of, the Federal Reserve System.

BARRY GERMANSKY: Their plan to abolish the Federal Reserve has already been tried to varying degrees, and does not lead to utopian freedom. Instead, it creates an influx of fraud and currency debasement, followed by the concentration of financial power in the few banks that survive the ensuing “big fish versus little fish gladiatorial match”.

HENRY MOORE: The Federal Reserve System has been around for almost 100 years. Not once in that period of time has there ever been an attempt to abolish it. At least not an attempt that had any economic impact. Again your ignorance of history, which you project onto others, I am forced to deal with.

There were two national banks, neither of which were ever referred to as “the Federal Reserve” that had each been abolished. Perhaps that is what you are alluding to. But how could that be? Fully abolishing two banks are not “various degrees” of abolishing a bank. Abolishment is abolishment. Furthermore, the periods of these banks were replete with the problems you mention, though when the government does it they are not referred to as “fraud and debasement” because they are “legal,” while the periods where there was no central bank had less of these things. All of these periods had their fair share of panics, but panics are almost always overreactions to minor inconsistencies. If they are blown too far out of proportion the government steps in to “save the day.” What this usually means is they bail out their cronies (some of whom were just on the wrong end of a risk, others which were defrauding depositors), or where there is a genuine instance of good intentions on its part, wide scale distortions, leading to another round of blame, intervention, and yes, more reason to panic.

Now, there have been attempts to limit its policies, but the one time (1920/1921) where this had any meaningful impact it, a) had a good impact, and b) merely limited it to its original duties, those which it had just three short years prior (1917). Hardly an attempt to abolish it. And if you are referring to more recent history, something under FDR (confiscation of gold) or Kennedy (elimination of silver certificates) or Johnson (profligate spending) or Nixon (ending Bretton Woods) or Reagan (appointing supposed goldbug Greenspan) or whatever you are must be willfully ignorant, because the changes these men made were either attempts to strengthen the Federal Reserve or the equivalent of rearranging the deck chairs on the Titanic.

Concentration of power in already exists. Indeed, it flourishes under central banking. And not just in the finance industry. Central banks are already privately owned cartels. And as if that wasn’t bad enough, they don’t always (if ever) use this power for the public benefit. Crony capitalism (I’ll wager you’d hate that even more than you do free market capitalism, if you knew the difference, that is) is what ensues. Favorites and those owed a favor get bailed out and subsidized. Those to whom this money “trickles down” eventually, as the economy reacts, lose the value that it initially had. This loss of value is always faster than the value gained in interest by saving money in a bank taking its orders from the Fed.

By the way, your metaphor really sucks. It conveys a false message and it is mixed.

BARRY GERMANSKY: Without government regulation to protect the country, individual autonomy among the masses becomes victimized by those with greater influence. The rich and powerful, who account for a small percentage of the country’s total population, have more wealth than the majority.

So now you are a nationalist? Protect the country? From what? The free society that made it great in the first place? The audacity!

What part of individual autonomy don’t you understand? Do I take it the phrase “Don’t Tread on Me” has no value to you? Because if I took your word for it “autonomy” is the right to steal and to kidnap or kill those who resist the theft.

And if you are worried about oppression by the rich and powerful, turn your eyes first to the policies you yourself advocate (or at least defend) that actually facilitate the oppression by the rich and the powerful. And who is this “majority?” Do you mean just anybody who you don’t arbitrarily classify as rich and powerful? Or like a true democrat do you mean 50.1% or more of the people with a minority of 49.9% or less? Or will either one do, depending on the situation? What about those that don’t care that some people have more money and more power? Shouldn’t you subtract them from your “majority?” And if you do, who then will be the majority? If it is the rich and the powerful and their less rich, less powerful allies, will their right to oppress become all of the sudden sacred because at least they are going about it democratically?

BARRY GERMANSKY: In a free market, some unfortunate people – for example, those who are physically disabled or grew up in poverty – will automatically be disadvantaged and have no assistance from society to overcome these factors (which the current system tries its best to accommodate).

HENRY MOORE: Yes, there are such people. But haven’t you heard of “community” or “family” or “charity”? Don’t you have any faith in humanity? None of these things are absent in a free market system. They and their proper functioning are all subject to risk in the free market’s absence, however.

Poverty exists, but like most other things it is exaggerated. For every genuinely distraught person there may be a handful of people who, for lack of better words, are just lazy bums. The average American household under the “poverty line” is in better shape today than all but the richest of the rich were 100 years ago. A rising tide lifts all boats. Poor people today have cable TV, multiple vehicles, washing machines, cell phones, computers, etc. That doesn’t mean we should let people who don’t fit this description fall through the cracks, but there are better ways than bankrupting the country and debasing the currency.

And what is to blame for a lot of this poverty? Minimum wage laws, welfare for the able-bodied, taxation, inflation, regulations, takings, prisons filled with nonviolent criminals, public schools (but then I already listed prisons). In a word, the state.

BARRY GERMANSKY: For these simple reasons, corporate monopolies would be even more widespread without government intervention. The little fish would have no chance.

HENRY MOORE: To recap: big government and big business go hand in hand. They are not foes. They are the best of friends. We are not talking about a little fish fleeing a big fish or a little fish competing for food against the big fish. No, we are talking about two enormous fish surrounding an unsuspecting little fish and tearing him to shreds before he even has a chance to realize what is going on.

Remember, Remember! and Don’t Forget: Just Who is Co-Opting the Liberty Movement?

Remember, Remember! and Don’t Forget: Just Who is Co-Opting the Liberty Movement?.

“Remember, remember

The fifth of November
The gunpowder treason and plot.
I know of no reason
Why the gunpowder treason
Should ever be forgot.”

That was technically yesterday (Mountain Standard Time), though I when I started this piece I hadn’t gone to bed yet. Today is officially election day. This post is intended to bring a few things to everyone’s attention. Many people already know these things. Some don’t. Either way, as usual, I will put a little of my own spin on it.

First on the election.

On the presidential elections (I still have not voted yet today, but I think I will make it to the polls before they close), voting doesn’t really effect the election outcome unless you are in a battleground state. So I hope most people will be voting their consciences. Voting, however, does send a message, and that message for each voting block is the same REGARDLESS of the outcome. What I mean by this is, if you support someone but vote for someone else, odds are that not only will that vote have no effect on the outcome (unless, as I said, it is a tight race) in terms of who the next president is, but you are also keeping people from knowing what you truly believe. Voting to send a message therefore has much more of an impact than voting to put someone in power.

And now, the rest of the post on ongoing and attempted takeovers of the liberty movement by 1) Occupy Wall Street (this was only a minor and unintended offense on their part), 2) the rank and file of the Tea Party (originally a good thing, but now more or less synonymous with the GOP), and 3) the Kochtopus (who in my conspiratorial mind own Jesse Benton, Paul Ryan, Mitt Romney, and a good portion of many Republican, Tea Party, and Libertarian groups, organizations, and individuals, though I do not allege that everyone employed are receiving funds from the Koch Brothers is automatically a blind tool).

407 years ago this night was the Gun Powder plot where a group of English Catholics attempted to Assassinate James I of England. All religious considerations aside (I am not a Catholic), it was an act against oppression and thus a tradition has come down to us today, mainly in England, to celebrate the anniversary. I won’t go into any details about how the Fifth of November, AKA Guy Fawkes Day is traditionally celebrated, but I do want to call attention to the man it was named after. But not the historical man because that is fairly boring. It is to the fictionalized, mythologized, romanticized, and later Hollywoodified version that I will point you. Guy Fawkes is a Robin Hood-like hero in these later accounts, and much the same he has captured many hearts and minds. Like Robin of Loxley, he stands against the existing order, the status quo, and evades the unjust authorities, but perhaps unlike him, the whole idea of tyranny. What more could I ask for?

We’ve all seen the Guy Fawkes masks, the ones that come from the movie V for Vendetta. The first people that used them as activists, perhaps to the surprise of many, were in fact Ron Paul supporters. Not the hackers group Anonymous, and not the Occupy Wall Street movement. Just like with the Tea Party movement.

Speaking of Anonymous, Guy Fawkes, and Ron Paul, check out this “leak” and the video below.

https://cdn.anonfiles.com/1351956247586.pdf

Ron Paul raised $4.3 Million on Guy Fawkes Day in 2007. Why a similar money bomb didn’t occur in 2011 is probably due to former Campaign Manager Jesse Benton’s fear and loathing of anything resembling disorder or fringe or passion.

Most Ron Paul supporters had their suspicions of Jesse Benton. Some smelled a rat early on. Other reserved judgement until it was too late.

Adam Kokesh was one in the former category. [Warning: Foul Language!]

He regarded Jesse Benton and Campaign for Liberty (under Benton’s leadership at the time) with disdain from early one, at first for what seemed to be personal reasons, but later what turned out to be a dead-on instinct.

This all reminds me of an historical episode that occurred between another Jesse Benton, and a man who might be considered Ron Paul’s role model against the Central Bank, President Andrew Jackson.

Campaign for Liberty was perhaps the first real Tea Party organization, although in a sense Dick Armey’s Freedom Works (2004), the Koch Brothers’ Americans for Prosperity (2004) Grover Norquist’s Americans for Tax Reform 1985), and the Koch Brothers’ Citizens for a Sounds Economy (1984) all deserve honorable mention.

Even Murray Rothbard can be said to have had a role, albeit a small one.

The New Boston Tea Party – Murray Rothbard

And speaking of Murray Rothbard and the Kochtopus, I suggest you read some of these links I have done many hours worth of research looking for. I have read a number of them myself. There is some really juicy stuff in there. And it should be required reading for any liberty minded person worried about the corrupting influences to be found in politics, even in the libertarian movement. I don’t know entirely what to make of it all other than that the Koch brothers have done many great deeds for which they should be praised, but all for what appear to be the wrong reasons, reasons, which have also caused them to do a great deal of  more sinister things. Perhaps enough to outshine their more praiseworthy endeavors. They are corporate fascists and elitists no less than George Soros and Warren Buffet. They just have a different strategy. Perhaps the most clever and dangerous.

1969

Libertarian Cover for the Corporate State by Murray N. Rothbard

1980

The Clark Campaign: Never Again by Murray N. Rothbard

1981

http://mises.org/journals/lf/1981/1981_01-04.pdf

Konkin on Libertarian Strategy – Murray N. Rothbard – Mises Daily

Samuel Edward Konkin III “Reply to Rothbard”

http://mises.org/journals/lf/1981/1981_06-07.pdf

1993

WHY THE PRO-NAFTA HYSTERIA?

May 28, 2007

Conference on Austrian Economics and the Firm « Organizations and Markets

March 25, 2008

How Libertarian Is the Kochtopus? « LewRockwell.com Blog

April 22, 2008

The Kochtopus vs. Murray N. Rothbard by David Gordon

May 12, 2008

The Kochtopus vs. Murray N. Rothbard, Part II by David Gordon

October 22, 2008

The Board Game of Libertarian Public Policy

January 2, 2009

Tyler Cowen: Statist, anti-Rothbardian agent of the Kochtopus | TIME.com

March 2, 2009

The Kochtopus and Power « LewRockwell.com Blog

March 6, 2009

‘Libertarian’ Hero « LewRockwell.com Blog

August 28, 2009

Cowenian Second-Bestism Smackdown

Good for Pete Boettke « LewRockwell.com Blog

March 30, 2010

Koch Brothers Fund Trey Grayson’s Campaign « LewRockwell.com Blog

re: Koch Brothers Finance Trey Grayson’s Campaign « LewRockwell.com Blog

April 22, 2008

The Kochtopus vs. Murray N. Rothbard by David Gordon

April 16, 2008

‘Reason’-Funder To Host Cheney « LewRockwell.com Blog

August 4, 2010

Radical Roots of Libertarianism by Samuel E. Konkin III | JustLive

August 30, 2010

The Billionaire Koch Brothers’ War Against Obama : The New Yorker

In Defense of the Kochtopus by Justin Raimondo — Antiwar.com

August 31, 2010

Austrians Again « LewRockwell.com Blog

September 3, 2010

David Koch Attacks Alan Grayson « LewRockwell.com Blog

September 15, 2010

“Who’s Funding This?!”

October 25, 2010

Good for the Cato Institute « LewRockwell.com Blog

November 24, 2010

Liberty Central: Repo’d by the Koch brothers? | Smart v. Stupid

November 26, 2010

Libertarians Against the Regime by Justin Raimondo — Antiwar.com

January 26, 2011

Koch Brothers Feel the Heat In DC, as Broad Coalition Readies Creative Action to Quarantine the Billionaires Gathering in California Desert | Alternet

January 27, 2011

‘Koch Brothers Trot Out Ed Meese To Defend Them’ « LewRockwell.com Blog

EconomicPolicyJournal.com: Koch Brothers Trot Out Ed Meese to Defend Them

Koch conference under scrutiny – Kenneth P. Vogel and Simmi Aujla – POLITICO.com

February 2, 2011

EconomicPolicyJournal.com: Koch Brothers Hire Arnold Schwarzenegger’s PR Operative

February 3, 2011

More Adventures With the Kochs « LewRockwell.com Blog

February 6, 2011

EconomicPolicyJournal.com: Americans for [Koch] Prosperity

February 9, 2011

Monetary Policy Hearing Today: Ron Paul Versus the Kochtopus | Next New Deal

February 24, 2011

Why the Evil Koch Brothers Must Be Stopped: They Support Drug Legalization, Gay Marriage, Reduced Defense Spending | Peace . Gold . Liberty

February 26, 2011

Wisconsin, Reason, and the National Conversation

March 2, 2011

On Koch Supported Herman Cain by Robert Wenzel

The Koch Bros. Love Herman Cain & Hate Ron Paul | Peace . Gold . Liberty

March 10, 2011

Murray Rothbard on the Kochtopus by David Gordon

April 22, 2011

Gary Johnson: Caveat Emptor by Justin Raimondo — Antiwar.com

May 6, 2011

The Proto-Koch « LewRockwell.com Blog

May 9, 2011

Utah Court Strikes Blow for Free Speech, Dismisses Trademark and CFAA Claims Against Political Activists | Electronic Frontier Foundation

July 3, 2011

The Caravan Keeps Rolling « LewRockwell.com Blog

Their Master’s Voice | Lew Rockwell’s Political Theatre

July 8, 2011

Koch Brothers to Democrats: Stop Asking us For Money

July 22, 2011

Koch Bros. for Higher Taxes (on Their Competitors) | Lew Rockwell’s Political Theatre

July 25, 2011

Do the Koch Bros. Own Bachmann, Too? | Lew Rockwell’s Political Theatre

September 6, 2011

EconomicPolicyJournal.com: HOT: Mother Jones Releases Secret Koch Brothers Tapes

September 29, 2011

EconomicPolicyJournal.com: Oh Geez, Charles Koch Advised Friedrich Hayek to Sign Up for Social Security

October 3, 2011

Update: Austrian economics program denied at Loyola New Orleans

October 13, 2011

Could a Tea Party Occupy Wall Street? by Addison Wiggin

November 6, 2011

That 3rd Koch Brother | Lew Rockwell’s Political Theatre

November 16, 2011

MF Global and the Koch Bros. « LewRockwell.com Blog

January 1, 2012

From Vienna With Love: The Kochtopus Warms Up to Ron Paul

January 31, 2012

What’s wrong with the Cato institute? | Peace . Gold . Liberty

February 16, 2012

“History of the Libertarian Movement” by Samuel Edward Konkin III | Left-Liberty.net

March 1, 2012

Kochs launch court fight over Cato – Mike Allen – POLITICO.com

Koch Brothers sue Cato Institute, president – Think Tanked – The Washington Post

Cato says Koch engaged in “a hostile takeover” of the think tank – Think Tanked – The Washington Post

EconomicPolicyJournal.com: Billionaire Koch Brothers Sic Super Lawyer on Widow

Koch Bros. Sue Ed Crane, Cato Institute « LewRockwell.com Blog

The Kochs vs. Cato : The New Yorker

March 2, 2012

EconomicPolicyJournal.com: Will Lew Rockwell Show at the Next Meeting of the Cato Board?

The Volokh Conspiracy » Koch v. Cato

The Cato Putsch | The American Conservative

March 3, 2012

‘Cato Putsch’? « LewRockwell.com Blog

Brad DeLong: Ed Crane and the Cato Institute vs. the Kochtopus!

EconomicPolicyJournal.com: Beltarians versus WaPoists on Koch-Cato

The Volokh Conspiracy » Koch v. Cato — A View from Cato

March 4, 2012

EconomicPolicyJournal.com: Murray Rothbard Haunts Koch-Cato from the Grave

Justin Raimondo on the Latest Cato Broadside « LewRockwell.com Blog

Bob Wenzel on the Lineage of the Cato Shares « LewRockwell.com Blog

March 5, 2012

Libertarian Ed Crane Decides to Act Like a Liberal. Will It Destroy the Cato Institute? | RedState

Koch Brothers, Worth $50 Billion, Sue Widow Over $16.00 of Nonprofit’s Stock » Counterpunch: Tells the Facts, Names the Names

What Goes Around Comes Around by Skip Oliva

EconomicPolicyJournal.com: What It Takes to Get Big Support from the Koch Brothers

CATO: From Libertarian to Republican? | The American Conservative

March 6, 2012

Is It Charles Koch’s Moral Duty . . . « LewRockwell.com Blog

Charles Koch Makes a Good Point by Thomas DiLorenzo

Cato and the Kochs | The Moral Sciences Club | Big Think

March 7, 2012

EconomicPolicyJournal.com: Where’s LewRockwell.com?

March 8, 2012

Charles Koch: I Am Not Backing Down « LewRockwell.com Blog

Koch vs. Cato — A Guest Post by Brink Lindsey | Bleeding Heart Libertarians

The Battle for Cato « ThinkMarkets

EconomicPolicyJournal.com: MIT Prof: The Kochs Will Not Takeover the World

March 12, 2012

Cato’s Amazing Hypocrisy as It Battles the Kochtopus » Counterpunch: Tells the Facts, Names the Names

March 19, 2012

EconomicPolicyJournal.com: For the Neocons, It’s Crane over Koch

March 22, 2012

Robert Lawson on Koch ‘n Cato « LewRockwell.com Blog

EconomicPolicyJournal.com: David Koch Gives Ed Crane an Employment Review

March 26, 2012

Family Feud | The Weekly Standard

April 11, 2012

Judge Napolitano Visits Cato

April 16, 2012

The Libertarian Challenge to Charles Murray’s Position on Property Rights and Homesteading by Walter Block

April 20, 2012

Digging the Hole Deeper « LewRockwell.com Blog

Independent and Principled? Behind the Cato Myth | The Nation

April 24, 2012

How Not To Change America’s Politics: Set Up a Public Policy Think Tank by Gary North

April 27, 2012

The Think-Tank Mentality by Skip Oliva

July 7, 2012

» Lessons from the UVA, Cato Wars Kleptarchy

August 17, 2012

The Paul Ryan Selection: The Koch Brothers Get Their Man – Roger Stone: The Stone Zone

August 30, 2012

Plutocrat David Koch Not a Libertarian « LewRockwell.com Blog

Two Additional Links I can’t put in the chronology:

Kochtopus

Interview With Samuel Edward Konkin III

One of the most interesting things (and there were many) I garnered from reading these is the Kochtopus’ love for Central Banking, despite their roots in Austrian Economics. Evokes memories of Alan Greenspan. And why the Koch Brothers put stock in Herman Cain. And why Rick Perry was derided by so-called conservatives when he called Ben Bernanke a traitor. And why their oh so brief ally Ron Paul is so hated by them and theirs anymore.

And it reminds me further of several graphics I have seen floating around on the various End the Fed sites and blogs. A stream of consciousness post like this would be seriously remiss without tying everything together with a few related images.

Do I need to spell out the connection?

Hydra/Kraken/Squid/Octopus/Kochtopus/Leviathon/Federal Government/Federal Reserve/National Bank/Petrodollar/Koch Industries/Corporations/Military Industrial Complex/Fascism Hello?!?!

Please don’t think I’m going all occult on you or anything (I do admit that I came across some pretty dubious sites looking for some of these images). I just really like mythology and history and metaphors and analogies.

Does This Commenter Want To Revive Bimetallism? Greenbackism?

Does This Commenter Want To Revive Bimetallism? Greenbackism?.

I have had someone called “Silver Account” posting on some of my articles recently. I want to post their comments and my replies, all of which have to do with the Gold Standard and the Federal Reserve. Judging from their chosen username and what they said, I would say they are somewhere slightly to the left of William Jennings Bryan on more than a few issues. That’s just fine by me, home grown American Leftism is usually preferable to most imported varieties, although I have developed a soft spot for mutualists of late.

Comment from my piece Why I Am Writing In Paul And Not Voting For Johnson:

She [a voter quoted in my article] should stay in it [voting this election] and vote for the president [Obama]. Real people know the repubs are being swayed by the racist teabags. Paul has a good idea, but the resultant people elected (repubs) would be a disaster for working folks.The banks would take your houses like in the 1890′s, women and blacks would not be able to vote. And the copper(aka, robber)-barons would be back in charge of owning (stealing) stuff. And the ignorant south would be worse-off than they are now. There would be no subsidies the blue states are giving them.

My response:

For Obama? I doubt she would even consider it. If only the Republicans WERE being swayed by the Tea Partiers! All they are doing is using empty rhetoric to get the Tea Party to vote for them. The Republicans were listening to half of what the Tea Party was saying, they would at least have some credibility. But even if they did all of what the Tea Party wanted, it wouldn’t truly be enough in my opinion.

I take it you are referring to the Long Depression (1873-1896) and the ill effects of the hastily adopted Gold Standard? The Gold Standard actually improved the overall economic situation, and this period was the best, economically that the country had ever known. Unfortunately, the implementation of the Gold Standard after so many years of fiat greenbacks made the situation of debtors even worse. This was unjust. But what bimetallists and silverites won’t tell you is that the same thing would have happened with a silver standard or a gold-silver standard, just to a lesser degree.

In any case, no Gold Standard (see this post) should be implemented from on high. Not only does this grant a monopoly to those who already have the most gold, but you may see a repeat of some of the goings on in the 1890s. You are correct on that count. That is why I support competition in currencies. Those whose debts are in fiat dollars won’t be forced into harder to pay off debts because they won’t be forced to use a gold standard currency. Commodity backed currencies will eventually beat out fiat currencies, but ideally at a slow enough rate that debtors in the fiat system won’t have their situation worsened. Everyone wins. No one is pitted against somebody else. Debtors, industrialists, lenders, depositors, etc. It is not a zero sum game.

And the women and blacks statement is absurd. No one jumps all over themselves, disgustingly so, to appease women and blacks more than the Republican party. Real racists and sexists will never have a real voice in the GOP. They can’t afford to be bludgeoned by the Democratic party. Besides, it was historically the Republican party that stood for equal rights for all races and genders, at the same time that they were the party of corporatism and corruption.

And for your information, the robber barons of today are much worse than the ones around the turn of the last century, and they are already in control. Most of the robber barons were monopolists and thugs, but at the same time, they brought many good things to this country, to all classes, races, and genders. Maybe not as good or as cheap as a more free system would have, but still faster than bureaucrats, populists, proletarian revolutionaries, or simply “nobody” could have.

The South is full of ignorant people to be sure, but no more so than most other regions. But you are on shaky ground to label an entire region or its entire population ignorant. The patronizing collectivism inherent in your statement is in fact responsible for most of the ignorance you allude to. Do you know why the South needs subsidies? Because it STILL hasn’t recovered from the Civil War. White and black alike are still suffering from Reconstruction, and exploitation from Carpetbagging Yankees. They are both kept on the two-party plantation. They have both been utterly destroyed by the public school system, in both the segregation and integration eras.

Comment from my piece Let Us Not Be Crucified Upon A Cross Of Gold:

The Fed’s performance since 1991 has been unquestionably superior to its record at any time since 1913. However, the larger, long-run question remains: Can the Fed as an “independent” central bank maintain price stability contrary to the wishes of an executive branch that seeks to use its fiscal powers to manage the federal government’s burgeoning long-term debt?

My response:

I am not sure what metric you are using to say the Fed is doing a good job, but I really beg to differ.

From 1913 (actually 1915) to 1917 was the Fed’s best era. This was before they were allowed to trade bonds, which is when the fiat currency really got off the ground.

Its policies from 1917 to 1919 led to two depressions, one lasting from 1920-1921 and the other 1929-1945. This latter Depression was the worse of the two, and obviously worse than anything we have experienced since. Having said this, the Fed’s main role was to trigger it. The length was more the result of the Federal Government’s reaction to the Depression, though the Fed did have something to do with it as well. Keynesians and Monetarists claim that the Fed didn’t expand the money supply enough. They are wrong. While contracting the supply of money would have its own problems, expanding it was what caused the problems in the first place. The best thing to have done would have been nothing, whether by the Federal Reserve or the Federal Government. During this period, the price of gold was fixed. One of the reasons the dollar didn’t collapse in this period is because gold (including that which was stolen from the American public) was used to prop it up.

But because price fixing eventually leads to shortages, this arrangement couldn’t last either. Hence Bretton Woods, which increased the flow of and access to gold. But just as before, this could only last so long. Shortage was still inevitable. At the same time the money supply was increasing. Hence the Nixon Shock.

As if the money supply wasn’t increasing at an insane rate before, taking the dollar completely off of gold only accelerated the process. Now the only thing holding the dollar up is its reserve status, something which coincided with the period between 1945 and now because of the United States’ increased influence after World War Two, which had greatly diminished the other powers.

Fed Policy didn’t really change much in these early years. But as it was no longer constrained by a scarce commodity, it could let lose. We saw the effects of this with stagflation, the dot com crash, and the housing crash. I put it to you that the Fed actions that caused these three things have only gotten worse since 1991, and continue to go down that path.

Price stability is only good in the short run or relative to increased prices. Decreased prices are not evidence of a recession, they are the result of deflation, which is a natural economic trend that has nothing to do with monetary policy.

The debt can not be managed. It can only grow until default. Default will occur whether hyperinflation happens or not. So you either have a default without Fed involvement (the better option) or default with Fed involvement (instead of just “austerity”, it will be austerity AFTER currency collapse).

A Debate On Usury As A Rough-And-Tumble

A Debate On Usury As A Rough-And-Tumble.

One day, maybe a half-dozen weeks back, I was reading up on a group of people I was up till then unfamiliar with. I thought they had died out in the late 1880s. They are the Greenbackers. I was checking out some blogs, of their proponents and of their detractors. On one Greenbacker blog (and these guys were frigging nuts, downright slanderous, so I won’t give the specific site, here on WordPress, any extra publicity, by linking to it), they were getting all worked up on the subject of interest, which they like to refer to as “usury”. I just couldn’t help myself. I had to throw down the gauntlet:

Hey guys, interesting stuff.

Here you are talking about interest seemingly rejecting the notion (unless it never even crossed your minds) that it is no different than any other price paid to use someone else’s property.

Why is it not arbitrary to decry interest but ignore all other charges?

Why is it not arbitrary to consider money as somehow different than any other useful tool?

If you want to use my hammer I should be able to ask for something in return. If you want to use it indefinitely, I should be able to charge more or raise the price.

Why is it somehow different or immoral when you want to use my money?

I ask these rhetorically, but if there is some non-arbitrary reason why charging a fee for the use of money but not the use of a hammer, I would greatly appreciate it if someone gave it to me.

I am not saying that interest and fraud never overlap, but this is true with any economic transaction.

Sure enough, before I could make my escape, somebody took a swing at me:

Usury in the “scriptures” is considered stealing. It is considered unjust gain. And if you think about it, interest steals from a man’s future earnings. So not only is the usurer committing the crime, but you could say that a man steals from himself by compromising the profit from his future work.

If usury is unjust gain, then it is stealing. Stealing violates God’s commandments so it should never be a part of any economy. If we removed usury from all economic systems, things would work just fine.

And since most economic systems use interest, you can see the failure. You don’t need to analyze it too much, because it was the interest that brought upon the ruin. This is why we have so many boom and bust cycles. Interest destabilizes everything in an economy. It is evil, and it get evil results.

At this point, it would seem this guy had the upper hand. I mean, he’s going back to the scriptures! How could I, a man of faith myself, wriggle out of this choke-hold? Well, turns out he didn’t actually quote the Bible. And a good thing, too, because he would have had little to nothing to back him up. Knowing this, I came down hard on him:

How is it stealing if the person in debt entered the contract voluntarily?

Say I voluntarily decide to give all my food and money and shelter away. Then say I die of exposure and starvation. Are the people I gave my stuff to guilty of theft and murder?

Let’s look at Leviticus 25:35-37.

“If your brother becomes poor and cannot maintain himself with you, you shall support him as though he were a stranger and a sojourner, and he shall live with you. Take no interest from him or profit, but fear your God, that your brother may live beside you. You shall not lend him your money at interest, nor give him your food for profit.”

Seems like a there is caveat (he must be poor, unable to maintain himself, and a “brother”) on interest, not a prohibition on it.

But if I interpret it rather as a broad prohibition, I must interpret the rest of the passage in the same manner. Therefore, it must be criminal to sell food to not just poor people, but to anyone that is hungry.

How about Exodus 22:25-27?

“If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him. If ever you take your neighbor’s cloak in pledge, you shall return it to him before the sun goes down, for that is his only covering, and it is his cloak for his body; in what else shall he sleep? And if he cries to me, I will hear, for I am compassionate.”

More caveats. “My people” and “who is poor”. And how about the cloak. What if he has more than one?

And Deuteronomy 23:19-21

“You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.”

Interest sounds perfectly legal to me. And we could argue all day about who constitutes a brother, and who a foreigner in the modern era.

Nehemiah 5: 6-13

“Now there arose a great outcry of the people and of their wives against their Jewish brothers. For there were those who said, “With our sons and our daughters, we are many. So let us get grain, that we may eat and keep alive.” There were also those who said, “We are mortgaging our fields, our vineyards, and our houses to get grain because of the famine.” And there were those who said, “We have borrowed money for the king’s tax on our fields and our vineyards. Now our flesh is as the flesh of our brothers, our children are as their children. Yet we are forcing our sons and our daughters to be slaves, and some of our daughters have already been enslaved, but it is not in our power to help it, for other men have our fields and our vineyards.”

“I was very angry when I heard their outcry and these words. I took counsel with myself, and I brought charges against the nobles and the officials. I said to them, “You are exacting interest, each from his brother.” And I held a great assembly against them and said to them, “We, as far as we are able, have bought back our Jewish brothers who have been sold to the nations, but you even sell your brothers that they may be sold to us!” They were silent and could not find a word to say. So I said, “The thing that you are doing is not good. Ought you not to walk in the fear of our God to prevent the taunts of the nations our enemies? Moreover, I and my brothers and my servants are lending them money and grain. Let us abandon this exacting of interest. Return to them this very day their fields, their vineyards, their olive orchards, and their houses, and the percentage of money, grain, wine, and oil that you have been exacting from them.” Then they said, “We will restore these and require nothing from them. We will do as you say.” And I called the priests and made them swear to do as they had promised. I also shook out the fold[a] of my garment and said, “So may God shake out every man from his house and from his labor who does not keep this promise. So may he be shaken out and emptied.” And all the assembly said “Amen” and praised the Lord. And the people did as they had promised.”

This has a bit more detail. It definitely comes down a lot harder on interest and mortgages. But it is still within the context of “brotherhood” not only in lineage but in faith. It also speaks literally of slavery. Are debtors enslaved today? Surely in a sense they are, but not in a truly “biblical sense”. Also notice the purpose of these mortgages. They were taken out to pay the king’s tax. So is the root of the evil in question interest or taxation (which is real theft)?

And Ezekiel 18:5-9.

“If a man is righteous and does what is just and right—if he does not eat upon the mountains or lift up his eyes to the idols of the house of Israel, does not defile his neighbor’s wife or approach a woman in her time of menstrual impurity, does not oppress anyone, but restores to the debtor his pledge, commits no robbery, gives his bread to the hungry and covers the naked with a garment, does not lend at interest or take any profit, withholds his hand from injustice, executes true justice between man and man, walks in my statutes, and keeps my rules by acting faithfully—he is righteous; he shall surely live, declares the Lord God.”

This may be ideal. But it is still a tall order. The command to feed the hungry and clothe the naked comes before the prohibition against charging interest. If it should be illegal to charge interest, should it not also be illegal to NOT share every spare piece of bread and article of clothing you have with every hungry and naked person one comes across?

But then another one came at me from behind:

Your argument makes sense if money is one commodity among all other commodities. But if money is a convention to mediate the exchange of favors, IOUs for favors owed – then to allow a banking authority to monopolize it (either by tying it to a monopolized metal or by monopolizing the issue of special paper money or electronic data entry of number magnitude creating deposits of certain numerical amount) is inefficient and unreasonable. No one should charge for the simple recording of a tally of favors owed, of favor units owed. Rather than a commodity I believe society benefits when money is viewed as an exchange mediation token — rather worthless in and of itself — that should be supplied to facilitate the most mutually beneficial exchanges that are possible. Deflation is harmful and keeping exchange mediation tokens too scarce so one can exact rent from the private arranging of an artificial scarcity is wrong. That said, I favor banks lending money, as long as there is someones unspent money backing the loan — interest to the savings depositor and greater interest paid by the borrower from the bank — as long as fractional reserve banking is not going on. But lenders should not be the suppliers of new money. They should only lend what they have saved, not what they pull out of thin air. The “thin air trick” should be a public utility delivered at cost.

Luckily, I was ready for him. So I gave him the old one-two:

If the exchange of money is nothing more than a tally, isn’t there a simpler way to do it? Like actually using a pen and ledger?

I agree with you that monopolization is harmful. Can we accept that premise and have you address what I said again? Why is money a convention? Who gets to decide whether it is or not and then enforce that decision without monopoly powers? Why is convention any different than the arbitrariness I mentioned earlier?

Is all deflation harmful? You seem to be talking about deflation originating from removing money from the economy, but what about deflation associated with increased productive capacity within the economy?

Why is the scarcity you mention artificial? Why are other levels of scarcity or abundance, whether they deflate, inflate, or cause stability not artificial?

As of yet, there is no counterpunch. I really didn’t think I hit them that hard. Perhaps they are unable to answer my last questions. Or perhaps they just prefer to agree to disagree. Either way, they are down for the count.

Okay. For this next one, I’ll dispense with the cheesy fight metaphors. I have this online friend that I met through our mutual support for Ron Paul’s candidacy. He’s all for ending the police state, repealing big government, and altering/abolishing the Federal Reserve. But he approaches things from a more progressive-populist stance. He’s always on about the big banks, and would like to see what they are doing over in Iceland be done here. (This goes back to the whole Socialist versus Neoliberal versus Free Market debate I touched on about two weeks ago) This time, his target was the charging of interest (AKA usury, to him). In an attempt (which was well received, despite his lack of a thorough response) to set him straight, I wrote:

Usury is charging your “brother”, who is in need, interest for a loan. It has nothing to do with loaning money to people who are not in need but just want to consume more or build up their productive capacity. The one is charity, and should not be done for profit. The other is sound business practice that increases both production and efficiency. Read the texts carefully. I oppose usury by this more narrow definition, but I do not oppose the concept of interest. Cheap credit (engendered by fiat currencies) is a separate issue that in my book is even worse than usury. The Bible also addresses this. I wouldn’t be surprised if the Koran did as well.

Please understand that just because I am a man of faith and that the scriptures define usury, however narrowly defined, as a sin, it does not mean I think that banks should be prevented from loaning money to the poor. I think Banks should only look at the risk/reward ratio when loaning money. If they were truly allowed to do this, without the perverse incentives and moral hazard present as they are in todays financial system, there is no reason to believe that they would make loans to people that can’t pay them back, i.e., the poor, in the first place. Even though loaning money to those that can’t pay back could conceivably give you power over them, it is also an incredibly risky venture to embark on while trying to stay solvent and thus attractive to other customers, be they depositors, borrowers, or investors.

On the other hand, I think that “brothers”, be they co-religionists, friends, neighbors, or simply like minded persons should be all too willing to make a loan to someone in need, interest free. Perhaps without ever getting paid back. Not that there should be some sort of law regulating it one way or the other. And guess what we call this?

Charity.