"The Great Escape from the Great Depression" by Robert Higgs
Questions about the Great Depression may be usefully framed as pertaining to three distinct issues: the Great Contraction, the extraordinarily severe economic decline from 1929 to 1933; the Great Duration, the persistence of sub par economic performance for more than a decade; and the Great Escape, the ultimate recovery from this uniquely deep and long depression. Although economists continue to debate the causes of the Great Contraction and the Great Duration, a rough consensus has emerged that major policy blunders of various sorts deserve most of the blame for these calamities. With regard to the Great Escape, economists have also reached substantial agreement, but unfortunately they have come to agree on an interpretation that is almost completely wrong.read the rest here
From AntiWar.Com
"The American Empire, RIP" by Justin Raimondo
...Huntington denies that military spending is a drain on the economy, and blames 'consumerism, not militarism,' for America's status as the world's number one debtor. Yet how does he imagine we financed the biggest military build-up in world history? How did we manage to bloat our military budget until it grew larger than the defense expenditures of all the rest of the world combined?read the rest here
We rang it up on our national credit card. We built an empire on a mountain of debt, and now it's all come tumbling down. Yet it's more than an economic debacle: the Greenspan Bubble was made possible by a certain kind of psychology, a cultural ethos that gave little thought to the long-term consequences of US monetary and military policy, and lived only in the here-and-now. The Bubble pumped up not just the stock market, but also our pretensions, our hubris, our sense of entitlement -- not only to big overpriced homes and a dozen different credit cards, but also to our global preeminence as world policeman. If pride really does cometh before a fall, then one can only observe that we had plenty of warning.
From LewRockwell.Com
"Blame the government" by Murray Sabrin
As Rothbard documents in his 1963 study, the financial bubble of the 1920s was caused by the Federal Reserve's easy money policy that pumped up real estate and stock market prices. When the bubble burst in 1929, Hoover did all he could to prop up prices in the name of stability and recovery.read the rest here
All his efforts failed.
The economy continued to spiral downward. Hoover's legacy was sealed.
However, court historians and mainstream economists have been blaming Hoover's 'inaction' for nearly eight decades instead of his big government policies that turned a much needed correction into a full-scale panic and massive depression.
This should be painfully evident to every American. As we have seen, even when the opposition is as high as 300 to 1, Senators and Representatives will do what they want to do.
My carefully constructed arguments and quotations from Founding Fathers and founding documents were wasted. Why? Because, by and large, Senators and Representatives are illiterate. After all, why should they be literate? They have aids for such menial tasks. And those aids scanned my carefully constructed messages, and to the best of their abilities, correctly or incorrectly, entered "Yea" or "Nay" into a database of constituent opinions.
I do not need to write carefully constructed messages to my "representatives" (I use that term loosely) anymore. I merely need to say something to the effect:
"Please vote NO on the latest $700 billion Wall Street bailout bill."
As you can see, this is courteous, I said, "please." My opinion is highlighted, "NO" is in all caps. And I briefly reference the bill in question. Had I known the number, for example, I could have written:
"Please vote NO on S.2433, Obama's Global Poverty Act of 2007."
But what about those carefully constructed letters I so enjoy preparing? Well, that's the best part of this new strategy. Not only did the recent bailout blunder reveal the incompetence of our elected officials, it also revealed the competence of as much as 99.66% of the American people (or, at least of the American people who contact their elected officials.)
So those carefully crafted letters will now be going to the editors of papers and magazines. Liberty must be built from the ground up, so I will begin informing the literate of the issues that matter to me and should matter to them.
Of course, all such letters will also appear here.
After 1933...
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Letter to the Secretary of the Treasury Albert Gallatin (1802)
"Banking was conceived in iniquity and born in sin. Bankers own the earth; take it away from them but leave them with the power to create credit; and, with a flick of a pen, they will create enough money to buy it back again. Take this power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this world would be a happier and better world to live in. But if you want to be slaves of bankers and pay the cost of your own slavery, then let the bankers control money and control credit."
Director, Bank of England, c. 1940
What Has Government Done to Our Money? by Murray N. Rothbard
For a New Liberty by Murray N. Rothbard
The Law by Frederic Bastiat
Economics in One Lesson by Henry Hazlitt (part 1) (part 2)
Of course, I cannot recommend highly enough the video The Philosophy of Liberty. Watch it regularly.
Yes, I'd say Order 66 has been executed. No, they're not purging the Jedi. But they are purging all semblance of a free market from America.
As Biggs (a.k.a., "Red Three") told Luke Skywalker, "What good's all your uncle's work if the Empire takes it over? You know they've already started to nationalize commerce in the central systems? It won't be long before your uncle is just a tenant, slaving for the greater glory of the Empire."
Today the House passed the unconstitutional, socialist bailout.
United States House of Representatives
Ron Paul's Statement on HR 1424
October 3, 2008
Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes. That this bailout was initially defeated was a welcome surprise, but the power-brokers in Washington and on Wall Street could not allow that defeat to be permanent. It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass.
The Federal Reserve has already injected hundreds of billions of dollars into US and world credit markets. The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks. Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse. This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails.
One of the most dangerous effects of this bailout is the incredibly elevated risk of moral hazard in the future. The worst performing financial services firms, even those who have been taken over by the government or have filed for bankruptcy, will find all of their poor decision-making rewarded. What incentive do Wall Street firms or any other large concerns have to make sound financial decisions, now that they see the federal government bailing out private companies to the tune of trillions of dollars? As Congress did with the legislation authorizing the Fannie and Freddie bailout, it proposes a solution that exacerbates and encourages the problematic behavior that led to this crisis in the first place.
With deposit insurance increasing to $250,000 and banks able to set their reserves to zero, we will undoubtedly see future increases in unsound lending. No one in our society seems to understand that wealth is not created by government fiat, is not created by banks, and is not created through the manipulation of interest rates and provision of easy credit. A debt-based society cannot prosper and is doomed to fail, as debts must either be defaulted on or repaid, neither resolution of which presents this country with a pleasant view of the future. True wealth can only come about through savings, the deferral of present consumption in order to provide for a higher level of future consumption. Instead, our government through its own behavior and through its policies encourages us to live beyond our means, reducing existing capital and mortgaging our future to pay for present consumption.
The money for this bailout does not just materialize out of thin air. The entire burden will be borne by the taxpayers, not now, because that is politically unacceptable, but in the future. This bailout will be paid for through the issuance of debt which we can only hope will be purchased by foreign creditors. The interest payments on that debt, which already take up a sizeable portion of federal expenditures, will rise, and our children and grandchildren will be burdened with increased taxes in order to pay that increased debt.
As usual, Congress has show itself to be reactive rather than proactive. For years, many people have been warning about the housing bubble and the inevitable bust. Congress ignored the impending storm, and responded to this crisis with a poorly thought-out piece of legislation that will only further harm the economy. We ought to be ashamed.
"The last remnants of the Old Republic have been swept away." - Grand Moff Tarkin
But why does this matter at "Growing Vertical." After all, as the name of my blog indicates, this is supposed to be about growing vertically, growing towards God, or sanctification. (The name is a spin on the old Mountain Dew ad about "going vertical with Dew.") So, what does the bailout or the price of gold have to do with sanctification?
I would say everything.
Our Lord said in Luke 14, "For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it-- lest, after he has laid the foundation, and is not able to finish, all who see it begin to mock him, saying, "This man began to build and was not able to finish.'" (v. 28-30)
When we set out to follow Christ, we must count the cost. Following Christ entails many things. One of those very important principles is honesty.
If I sell you a box of jewelry and you open it only to find that it is full of corn flakes, I have been dishonest with you. I have sinned.
In Leviticus 19:35-36, the Lord said, "You shall do no injustice in judgment, in measurement of length, weight, or volume. You shall have honest scales, honest weights, an honest ephah, and an honest hin: I am the LORD your God, who brought you out of the land of Egypt."
In Exodus 22:10-12, the Lord said, "If a man delivers to his neighbor a donkey, an ox, a sheep, or any animal to keep, and it dies, is hurt, or driven away, no one seeing it, then an oath of the LORD shall be between them both, that he has not put his hand into his neighbor's goods; and the owner of it shall accept that, and he shall not make it good. But if, in fact, it is stolen from him, he shall make restitution to the owner of it."
The 8th commandment clearly states, "Thou shalt not steal."
So, if I make a gold coin that is only 50% gold, and sell it to you as if it were 100% gold, I have stolen from you. If I counterfeit a gold coin with brass, I have stolen from you.
If a government counterfeits its own money by printing more of it than there is precious metal on reserve, it has stolen from you.
When a counterfeit is initially made, the counterfeiter prospers. But as that counterfeit makes its way into circulation, everyone begins to suffer as the exchange rate is effected. We call it inflation.
As Murray Rothbard said in What Has Government Done to our Money?
Inflation, then, confers no general social benefit; instead, it redistributes the wealth in favor of the first-comers and at the expense of the laggards in the race. And inflation is, in effect, a race—to see who can get the new money earliest. The latecomers—the ones stuck with the loss—are often called the "fixed income groups." Ministers, teachers, people on salaries, lag notoriously behind other groups in acquiring the new money. Particular sufferers will be those depending on fixed money contracts—contracts made in the days before the inflationary rise in prices. Life insurance beneficiaries and annuitants, retired persons living off pensions, landlords with long term leases, bondholders and other creditors, those holding cash, all will bear the brunt of the inflation. They will be the ones who are "taxed."
And yet the Bible tells us to care for the widows and orphans. "You shall not afflict any widow or fatherless child. If you afflict them in any way, and they cry at all to Me, I will surely hear their cry; and My wrath will become hot, and I will kill you with the sword; your wives shall be widows, and your children fatherless." (Exodus 22:22-24)
What about price controls? That trickles down, too. If you can't raise the price of a product, you have to cut the quality. Ever notice how much smaller Little Debbie cakes are now than when you were a kid? Soon you won't know the difference between a snack cake and a Tic Tac.
Those who still believe in honest money and are willing to take the risk, sell their products in an alternative market, also known as the "black market."
I'm not going to take the time now to get into the sins of fractional reserve banking. Read Rothbard.
I just pray that the Church in America will wake up, and with the rest of America, stop drinking the Kool-Aid.
From Murray N. Rothbard's What Has Government Done to Our Money?
Since the U.S. went completely off gold in August 1971 and established the Friedmanite fluctuating fiat system in March 1973, the United States and the world have suffered the most intense and most sustained bout of peacetime inflation in the history of the world. It should be clear by now that this is scarcely a coincidence. Before the dollar was cut loose from gold, keynesians and Friedmanites, each in their own way devoted to fiat paper money, confidently predicted that when fiat money was established, the market price of gold would fall promptly to its non-monetary level, then estimated at about $8 an ounce. In their scorn of gold, both groups maintained that it was the mighty dollar that was propping up the price of gold, and not vice versa. Since 1971, the market price of gold has never been below the old fixed price of $35 an ounce, and has almost always been enormously higher. When, during the 1950s and 1960s, economists such as Jacques Rueff were calling for a gold standard at a price of $70 an ounce, the price was considered absurdly high. It is now even more absurdly low. The far higher gold price is an indication of the calamitous deterioration of the dollar since "modern" economists had their way and all gold backing was removed.
It is now all too clear that the world has become fed up with the unprecedented inflation, in the U.S. and throughout the world, that has been sparked by the fluctuating fiat currency era inaugurated in 1973. We are also weary of the extreme volatility and unpredictability of currency exchange rates. This volatility is the consequence of the national fiat money system, which fragmented the world's money and added artificial political instability to the natural uncertainty in the free market price system. The Friedmanite dream of fluctuating fiat money lies in ashes, and there is an understandable yearning to return to an international money with fixed exchange rates.
Unfortunately, the classical gold standard lies forgotten, and the ultimate goal of most American and world leaders is the old Keynesian vision of a one-world fiat paper standard, a new currency unit issued by a World Reserve Bank (WRB). Whether the new currency be termed "the bancor" (offered by Keynes), the "unita" (proposed by World War II U.S. Treasury official Harry Dexter White), or the "phoenix" (suggested by The Economist) is unimportant. The vital point is that such an international paper currency, while indeed free of balance-of-payment crises (since the WRB could issue as much bancors as it wished and supply them to its country of choice, would provide for an open channel for unlimited world-wide inflation, unchecked by either balance-of-payment crises or by declines in exchange rates. The WRB would then be the all-powerful determinant of the world's money supply and its national distribution. The WRB could and would subject the world to what it believes will be a wisely-controlled inflation. Unfortunately, there would then be nothing standing in the way of the unimaginably catastrophic economic holocaust of world-wide runaway inflation, nothing, that is, except the dubious capacity of the WRB to fine-tune the world economy.
While a world-wide paper unit and central bank remain the ultimate goal of world's Keynesian-oriented leaders, the more realistic and proximate goal is a return to a glorified Bretton Woods scheme, except this time without the check of any backing in gold. Already the world's major central banks are attempting to "coordinate" monetary and economic policies, harmonize rates of inflation, and fix exchange rates. The militant drive for a European paper currency issued by a European central bank seems on the verge of success. This goal is being sold to the gullible public by the fallacious claim that a free-trade European Economic Community (EEC) necessarily requires an overarching European bureaucracy, a uniformity of taxation throughout the EEC, and, in particular, a European central bank and paper unit. Once that is achieved, closer coordination with the Federal Reserve and other major central banks will follow immediately. And then, could a World Central Bank be far behind? Short of that ultimate goal, however, we may soon be plunged into yet another Bretton Woods, with all the attendant crises of the balance-of-payments and Gresham's Law that follow from fixed exchange rates in a world of fiat moneys.
As we face the future, the prognosis for the dollar and for the international monetary system is grim indeed. Until and unless we return to the classical gold standard at a realistic gold price, the international money system is fated to shift back and forth between fixed and fluctuating exchange rate,s with each system posing unsolved problems, working badly, and finally disintegrating. And fueling this disintegration will be the continued inflation of the supply of dollars and hence of American prices which show no sign of abating. The prospect for the future is accelerating and eventually runaway inflation at home, accompanied by monetary breakdown and economic warfare abroad. This prognosis can only be changed by a drastic alteration of the American and world monetary system: by the return to a free market commodity money such as gold, and by removing government totally from the monetary scene.
