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This post was edited by Transhumanist at 2012-2-8 04:20|
005—In October 2008 three economists for the Federal Reserve Bank of Minneapolis released a study showing that four major scare claims that had been advanced on behalf of the bailout were false. First, it was not true that bank lending across the board had declined sharply. Wall Street firms had trouble borrowing (except from the government), but not the rest of us. As of October 8, the data showed no decline in business and consumer loans. Second, interbank lending, which was being described as essentially nonexistent, was in fact “healthy” according to the data. Third, non-financial businesses showed no sharp decline in their ability to secure short-term loans (called “commercial paper”). Although commercial paper issued by financial institutions had declined, commercial paper issued by nonfinancial institutions showed essentially no change during the crisis. Interest rates on commercial paper rose for financial institutions, but not for everybody else (and even the rate for financial institutions was still considerably lower than it had been from 2006 through mid-2007). Finally, even if banks were lending less, that didn’t spell doom for businesses hoping to borrow; the study found that about 80 percent of business borrowing took place outside the banking system.
006—Meanwhile, the problems created by government’s monopoly powers and its central bank’s manipulation of money and interest rates are, hilariously enough, blamed on the “free market.”
007—This is what sensible economists mean when they say credit has to be based on real savings and cannot be created out of thin air. You can print up all the dollars you want, the Fed can give the banks as much money created out of thin air as it likes, but there is no avoiding the simple fact that there are only eight loaves of bread in existence. Ben Bernanke doesn’t have any loaves of bread, and none of the financial tools at his disposal can produce any, either. All the monetary manipulation in the world cannot defy the constraints mercilessly imposed by reality.
008—You do not win friends in the political and media establishments by proposing a monetary system that cannot be exploited by governments to enrich their friends, enable their addiction to spending and looting, and fund their bailouts. But when you ask a question that sends respectable opinion into hysterics, that’s often a sign you’re on the right track.
009—The executive branch first seized Fannie and Freddie, and Congress then increased the amount of money they could spend on mortgages. These zombie companies have already drawn enough of the mortgage market away from where truly free-market channels, unencumbered by firms with state-granted monopoly privileges like Fannie and Freddie, would have taken it. “The fact that government bears such a huge responsibility for the current mess,” argues Harvard’s Jeffrey Miron, “means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.” That means, at a minimum, “getting rid of Fannie Mae and Freddie Mac.” Miron is right: Fannie and Freddie should be put into bankruptcy receivership, and their assets auctioned off to private mortgage guarantors. Certainly its mortgage-reduction program, with all its unfairness and moral hazard, should be discontinued immediately.
People who disbelieved Barack Obama’s rhetoric about “change” were sternly lectured for their supposedly undue cynicism. But early indications are that the cynics were right: “change” means more bailouts and a less free market—the very same economic program of the presidential administration Obama so sharply criticized—and government personnel drawn from the same revolving-door pool of New York and Washington insiders who were blindsided by the crisis, including (as chief of staff) a former director of Freddie Mac. If Obama wants to prove he is serious about change and that his presidential tenure will be truly historic, he will pledge that under his watch there will be no bailouts of any private company for any reason.
010—As Ludwig von Mises once said, the history of money is the history of government efforts to destroy money. If ever there was a monopoly with which government could not be trusted, this is it. The temptation to debase the money and impoverish the people in order to benefit favored constituencies, hoping most people won’t know the source of their declining standard of living, is too great. The present monetary system encourages risk and recklessness, with financial firms accumulating ever-higher pyramids of debt on top of a small sliver of equity—just the opposite of the much higher equity ratios banks maintained even in the imperfect nineteenth century. And as we have seen, the central bank’s inflation of the money supply by its increases in bank reserves is responsible for the boom-bust cycle.
011—It has always, since the privilege of issuing money was first explicitly represented as a Royal prerogative, been advocated because the power to issue money was essential for the finance of the government—not in order to give us good money, but in order to give to government access to the tap where it can draw the money it needs by manufacturing it. That, ladies and gentlemen, is not a method by which we can hope ever to get good money. To put it into the hands of an institution which is protected against competition, which can force us to accept the money, which is subject to incessant political pressure, such an authority will not ever again give us good money.
012—Mises put it this way: “Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping toward destruction. Therefore, everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interest of everyone hangs on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.”
Transtopia.org,Eugenics.net,Amren.com,Vdare.com, Lef.org,Neoeugenics.com,Mankindquarterly.org, Gfactor.blogspot.com,Psychology.uwo.ca/faculty/rushton_pubs.htm,www.udel.edu/educ/gottfredson/reprints