Author: White Whale

I have said that our purchasing power should be 20x what it is. As I ponder this further, I think a more accurate way of putting it is that we should have 20x the money in the bank that we do.

Inflation is like taking taxpayer money and depositing it in an interest bearing account which belongs to someone plugged into the system. That account is jointly owned, in my view, by Wall Street and the Federal Government. Internationally, it is co-owned by international Wall Street equivalents, our Federal Government, and its counterparts, mainly in Europe.

This deposit was made some 100 years ago. Each year, it accrues interest in an amount equal to the inflation rate. My math may be a bit off–since I know from practical experience that markup and Gross Margin are related, but two different calculations–but it is close. Let us say it is 3%.

That is now money which is growing, but which we the people who provided it can’t touch. That is money that would have been used by our grandparents to pay off loans, and invest in real estate. It would have been used by our parents to create a nest egg to pass on to us, their children.

It is hard for many of us to imagine, but there are a not inconsiderable number of people in this world who have millions of dollars in reserve. Most of them live like the rest of us, but when they need money, they have it. Most of us live on the edge. It has not always been thus. Everyone in America should have a large savings account.

Our net worth should be 20x what it is. I think that is a better and more accurate way of putting it, although this remains a work in progress.

I will comment editorially, though, that from what I can tell professional economists likely do a decent job of describing theoretically what IS happening, but a horrible job of describing what COULD have happened, or what SHOULD happen, within a radically different system, based on real money.

As far as I can tell, no one has proposed a truly fixed money supply based on gold. Of course, it may well have happened, and the author laughed out of the academy. It is a radical idea, but our straights are increasingly and unnecessarily dire.

It seems to me that our current system of “Capitalism” is in fact drawing us ever nearer an autocratic socialism, and that the only secure means forward to a socialism that would improve the world is through more complete capitalism.

Our markets are not free. Big Money, in partnership with Big Government, has the power to levy almost unlimited taxes–in the form of wealth redistribution called inflation–with NO regulatory checks whatsoever. This is the state of affairs. Taxes are levied both domestically, through deficit spending, which necessarily involves money creation, since money is spent that we don’t have; and internationally, where MORE money is spent on our behalf–for example the bailout of the Euro–that we don’t have.

Now, one fact that is easy to miss is that inflation can happen without prices increasing here in the United States. The value of money only diminishes when it is competing with other money, which for our purposes would mean money that was being circulated in the United States.

What happens, though, when dollars flow out to, say, the Chinese, in exchange for goods, and stay there, in effect hoarded? Those dollars represent real buying power, and hence a real net transfer of our wealth. Yes, we get in the exchange real goods, but in the process–since that was fiat money–our net wealth decreases invisibly. If the Chinese dumped their dollar holdings, in the form of securities and actual dollars, the hidden wealth transfer would become obvious in the fact that our money would no longer be worth anything. That transfer happened with the dollar transfer, and is merely hidden, for now. It may remain hidden for the foreseeable future, since China will not for some years be in a position to challenge us directly; yet things are flowing, for them, in a positive direction. We are bleeding, and the more debt we incur, the faster the blood loss.

I believe that one can infer economics is not a science from the mere fact that diverse opinions exist among equally intelligent and erudite men (and presumably women, although I know of no major female economists).

In point of fact, I believe it is not only possible to be a complete idiot in the field of economics, but that this is the most common condition. Look at our current state of affairs. If we were to evaluate our economic situation through the lens of private enterprise, it is in horrible shape. Our balance sheets are filled with debt, our assets are shrinking, and revenues are shrinking as well. We carry on through hard work, creativity, and the sheer tenacity borne of necessity.

Consider Keynes. It is quite possible to paint him as a socialist. He was a member of the Bloomsbury group (where he was a bisexual), and palled around with Fabians.

No one can be so stupid as to miss the fact that deficit spending in the present leads to taxes in the future: in actual taxes, interest payments, and inflation. Thus, you are borrowing, at a disadvantage, money from the future, and using it to fund, today, enterprises which will not be self sustaining, which will not move an inch once the money is gone. This is absolute idiocy, yet trillions of dollars have gone and continue to go into such projects. During the Great Depression, it literally would have cost less simply to pay unemployment than to build the roads and bridges they did.

What such “Keynsian” spending DOES do, however, is discourage private enterprise. Who creates sustainable jobs, in ANY economy? The private sector. If you have no private sector–as in Communist nations–you have no real jobs, and no wealth. You sink into poverty almost immediately. If you like, it might be useful to think of Cuba as a nation that went into a Great Depression, and never exited.

In our own case, FDR did NOTHING to build the faith and trust of private enterprise, and virtually everything in his power–including exorbitant, ridiculous tax rates–to discourage it.

“Keynsian” economics is good at moving capital from the private sector to the public sector, with all the shift in political power that implies.

And when one considers that what the IMF does internationally is implement Keynsian spending in developing nations by loaning the money (which we financed with deficit spending) which is used to build things like dams and highways, you realize that perhaps Keynes was no fool in economics; he was a fool in politics, for thinking any good could come from squelching the desires of individuals the world over for political freedom, and economic self reliance.

I am often tempted to pretend that the horrors of Communism never happened. The history is so nauseating that it is quite impossible for me to see any possible motivation other than garden variety sadism. Millions killed, for the rest to live in chains under tyrannical despots.

Yet, for the same reason one cannot reject this history–patently, it happened–I cannot reject out of hand that all of the negative consequences that flow, inevitably and invariably, from implementing the supposedly “counter-cyclical” (where the “cycle” itself is a function of fiat money) policies of government make-work projects, were not precisely those intended by Keynes himself. He was–along with Soviet agent Harry Dexter White–a “fountainhead” of the bad ideas that flowed from Bretton Woods, and which went on to cause so much hunger, poverty, despotism, and terror.

Can one not accede some merit to the Christian idea that this world is ruled by forces of darkness? It does sometimes seem that way. Still, we all get a voice, don’t we? We know the terrors of history must, in some infinite expanse of time, end. Perhaps one is even justified in hoping it will be sooner rather than later.

Subject: Federal Reserve/IMF

Yes, I know this is the province of the “right wing crazies”. The principle lecture series on it on YouTube ends with an endorsement of the John Birch Society.

Please hear me out, though. I have studied this topic carefully, and come to the conclusion that it literally doesn’t matter who we elect, in the long run, as long as unelected people have the power to devalue our currency through inflation.

You don’t often see it stated this way, but inflation is WEALTH TRANSFER, and it is my contention, which I can and will argue in the piece, that our purchasing power as a nation should be many times what it actually is.

For most people, inflation is something you see out of your intellectual peripheral vision. You know it’s there, but if it’s in the “normal” range of 2-4% or so, you don’t pay attention. Most of us graduate school with this vague notion that growth in production leads to higher prices, and that’s just how it works. Sometimes the Fed has to pull money out, sometimes put it in, to keep things growing steadily. This is the received wisdom, that the Fed is sort of like the regulating rods in a nuclear reactor, keeping things from getting too hot or too cold.

This isn’t right. Prices should be DROPPING, with constant wages. Let us posit that there is, for simplicities sake, $10 trillion in “dollars”, which is to say money held in banks and in paper and coin. 3% of that is $300 billion created out of thin air every year. Somebody gets that. That is now buying power the rest of us don’t have.

The trick is to keep it low enough that nobody asks too many questions.

This is the most important issue facing us. Nothing else is close. All the problems of wealth and poverty can be solved, if we just grasp this one fact. And if we don’t, it doesn’t matter in the slightest, in the long run, who gets elected in November.

I would appreciate a shot at writing a piece on this.

Profit is nothing more or less than motivation. Why did I make that widget? To earn a return. Why did you paint that picture? I was hoping to make my living as an artist. Why did you open that trendy East Village boutique/CD Store/sex shop/Communist bar? I was hoping to make a living at it.

There are no leftists writing today who did not at some point benefit from the profit motive, and very few who pay their bills who do not currently benefit from the profit motive.

Why do people do anything? BECAUSE THEY WANT TO.

What is the proposed motivational structure in a socialist utopia? That people make things for others for no profit because they want to contribute. They want to do the right thing. They want the social order as a whole to do well, and they thus act selflessly. Socialism depends, therefore, on considerable moral development.

Yet, most socialists have no developed moral sense. They are quite good at pointing to what they see as the inequities of the Capitalist system, but Marx himself had nothing to say about morality, and Lenin rejected the concept altogether.

Logically, if one wanted to build a paradise where everyone was nice, and produced just out of their love of their fellow man–a condition I will not reject out of hand as impossible–the ONLY POSSIBLE WAY to get there is through fostering genuine altruism, which in turn depends on a coherent and replicable moral code.

Where is the evidence of efforts in this direction? From where I sit, what I see are people obsessing about presumed affronts to notions of cultural, racial, social and moral uniformity, but who offer no POSITIVE, actionable set of thoughts for moving forward.

This is a massive structural deficit. Let us posit that many of these people are in fact well-meaning. Let us further observe, as historical fact, that into their midst invariably fall people (like Mao, Lenin, Pol Pot) who are NOT well-meaning. How can they fight them, when they lack a positive moral code?

Practically, this defect gets expressed as people being FORCED to produce for others at pain of hunger or worse. This does not build morality; rather, it destroys it. It teaches people to be crafty, dishonest, mistrustful, and lazy.

The ONLY way forward for people who advocate a reduction in the importance of the profit motive is moral education. This requires the development of a coherent moral system, that is not relativistic, and in which certain core truths are unimpeachable. That is what I myself am trying to develop, a project in which I have in large measure succeeded. See my other blog to learn more.

It really seems to me that there are two principle motivations: rhetorical dominance, and a desire for reasoned consensus. In the first, “winning” is the primary goal. Typically, the tactics used are derision, partial and decontextualized use of facts, and repetition. The growth that happens in the use of such rhetoric is in the direction of conformity or exclusion. You have to pick sides, since there is no movement in the direction of compromise.

In the second, it will optimally begin with a shared goal, say world peace. It will then define that goal, such that you know when you have reached it. It will then discuss methods by which that aim can be achieved. This is where genuine difference can be a factor in generating an optimal solution, since varied perspectives tend, in aggregate, to scope out various pathways well, determine their relative merits and dangers, and include differing factual accounts of present reality, which can be researched and debated.

As I have argued elsewhere, the transition from liberal to leftist, and from reasoned debate to rhetorical duels, happens when you NO LONGER CARE about the actual consequences of your actions.

Take the issue of race, for example. It would seem to me that the shared goal would be the thriving of the African American (among others) community within the United States. Success would be defined as full employment in jobs which pay reasonably well, educational attainments on par with everyone else, rates of criminality on par with everyone else, and rates of family success and failure on par with everyone else.

Patently, none of those outcomes have been achieved in the last 50 years. Rather, what we have seen–as a direct result of leftist policies–is an eradication of most good jobs from inner cities, exceedingly high failure rates in high school, rates of crime that are astronomical, and the virtually complete eradication of the nuclear family in the inner cities.

These are problems, and to claim otherwise is to show a cynical disregard for the suffering that underlies these facts.

Is anything solved by calling anyone who suggests these might be problems a racist? Is it helpful for comfortable white suburbanites to spend enormous energies figuring out who the “racists” are, and dedicating NO serious thought to how we might address these problems?

If you look at Al Sharpton, or Jesse Jackson, or Jerry Wright, you aren’t looking at people trying to solve the problem: they ARE the problem. They act as if the African American community HAS to rely on them, and on the government programs they get funded, and that they should play NO role, as individuals, in trying to solve these problems.

This is bullshit. Until leftists got that community addicted to getting money for nothing, all of those communities–take Harlem as an example–were growing in wealth, serious about education, and dedicated to the nuclear family and church. Their streets were not crime ridden, and they had self respect that did not come from some preacher telling them “black is beautiful”. They had self respect because they EARNED it.

It is not conservatives who are polarizing. We want government to do nothing but not get in our way. It is the LEFT who has a political interest in permanent dependency.

If you look at Greece, today, what you see is that they are failing because they thought that public sector jobs were sustainable. They thought the credit cards would last forever. Yet ALL public sector expense and all government money that is handed out represents a current or future tax. As such, it represents a drag on the only jobs that are SUSTAINABLE, which are those in the private sector.

To be clear, if you borrow money to fund such programs, they are inflationary, and inflation is a regressive tax that takes from the poor and gives to the rich. If you take the money in actual taxes, you provoke the flight of capital, which is what has happened in so many large urban areas. New York actually, in effect, went broke, in much the same way Greece is today. Detroit is a “failed state”.

I see clear parallels between the actions of the IMF and the actions of the Left in the so-called “War on Poverty”. What you do is take a group of people who are maybe not doing great, but who are growing, and give them money with no strings attached. If you do it in the developing world, you give it to the government. They then take that money and promise their nation the moon and the stars. Everyone is getting rich, at least those who are connected. Whatever business ventures they had, they give up, since the money is so easy. This derails private enterprise in a big way.

One day, the money runs out. All the private infrastructure that had been there, is gone. And people are addicted, as fully as if the substance were crack cocaine. They want more, more, more. So they get more, in exchange for some part of their personal or national sovereignty. They now DEPEND on that supply of money, they can’t imagine living without it.

How else can you explain people thinking Barack Obama was going to pay their mortgage, or that all healthcare was now free? Many generations have been taught that the way to get ahead is to trust people like Jesse Jackson, who would FIGHT for them. But how much can they get? You can only draw out without paying in so long.

The IMF says it is for development, but it simply props up dictators, and facilitates corruption and the flight of capital from the industrialized democracies to the developing world.

The Democrats say they want to help African Americans, but all they seem able to propose are programs that don’t work, and larger social aid packages.

Clearly, if we want to develop the world, we need to loan to enterpreneurs and capitalists. Clearly, if we want to develop the inner cities, we need to do the same.

What I think would work would be, first, educational vouchers, such that the parents of the children can pick the schools their kids go to. Schools need to be developed that brook no violence or disrespect, and which enforce discipline, and the self respect and self possession that goes with it. Graduates of such schools can be enrolled in a microloan database, such that business start-up ventures can be funded by private capital.

When you say to someone “go create something”, good things flow. When you say to people “do as I say”, you disempower them. The irony is thick that leftists think that it empowers anyone to presume to speak for them.

I have faith that most people, if you expect them to succeed, will. I likewise think that if you expect people to fail, they will likewise often accomodate you.

All of these problems can be solved, but you must begin with the goal in mind, not a preoccupation with “message management”. If your sole focus is on how these things are TALKED about–not end results–you are complicit in the pain you claim motivates you; you are not compassionate: you are a self important bully.

It is worth exploring a bit how banks work, for those unfamiliar with it. As I understand the matter, all banks are required by law to keep in reserve a certain amount of “hard” currency. That amount is determined by the Federal Reserve. This is interesting, since no one at the Fed answers to Congress directly, yet they directly control the cost of our money.

Be that as it may, if you deposit $100 at your bank, they have to keep $10 of that in reserve, and can loan the rest. What actually seems to happen, though, is they keep your $100, and loan $900 against it. That $900 comes out of thin air. Their “reserves” are actually the only hard currency they have. They may own securities, which count in my mind as money, but the loans they make do not.

When I go to the bank to take out, say, a home mortgage, the bank writes the seller of the house a check, say for $100,000. What happens is they put that loan down on both sides of the ledger, as both a debit and a credit. It is a liability, and an asset. It is a liability, since they wrote the check, and since they have to keep $10,000 around (in the vault or deposited at the Fed) to “secure” it. It is an asset, since the borrower signed a promissory note–a mortgage, if my legal terminology is right–to pay the money back. It is money owed the bank.

If the borrower defaults, even though most of the money was created from thin air, it still shows as a debt owed. This is how the accounting is done, I’m sure per some formalized system of accounting. Thus, too many defaults, and you go bankrupt, even though you don’t actually owe the money to anyone, since you created most of it. This is logical, since otherwise banks could just loan money to anyone, and just make it vanish if the borrower defaults through the same feat of magic by which the loan was created. This would be massively inflationary. The vulnerability to bankruptcy for bankers is, then, a partial check on what is still a bad system.

If the system were fair, anyone could create money, but that isn’t the case. You have to get a charter, and presumably mass a certain quantity of actual assets. In most cases, this is likely the personal assets of those who create the bank in the first place. Those assets are “real”, and in my proposed solution to our monetary problems they would of course be paid in full for those.

We would simply wipe clean both the liability and the asset sides of the ledger for loans which were based on “unreal” money. It would seem reasonable, as well, that to the extent real money was in the loan, that that part would be retained.

What is at issue is the long term viability of a system in which loans are used as collateral for futher loans, and in which the whole thing is underwritten by the taxpayers–not just here, but in almost all industrialized nations–but the profits, when they occur are private.

That will have to do for now. Things to do. I will add to this over the next few days.

Facebook isn’t working, so I’m posting this here. It’s a response to some comments made there.

Well, we may not see eye to eye on the inflation issue. As I see it, money can flow in different quantities to different places, but never alter in total quantity unless more is “printed”. As an example, just picture that there were only 1 million dollar bill in existence. You can pay $500,000 for a coke, but that does not cause any more bills to come into existence. Most of the “bubbles” are financed, which means money was made from nothing, and was hence inflationary. I literally think automobiles should cost $500.

As far as the role of government, once you realize that the greatest current existential threat to our national sovereignty is the on-going assault on our money supply–as enabled by the Fed and the IMF–then you realize that PROTECTING it is one of our most pressing national security issues, and thus a role properly assumed by the Federal government, and implemented by the States.

As far as mining gold, I am not against that at all. I am proposing two types of gold: gold we say is SPECIAL, and normal gold. SPECIAL gold sits in State vaults, and is worth EXACTLY as much as was paid for it. Normal gold is mined and used and traded on open markets like it always has been, as bullion, jewelry, and any other form it might take.

Bottom line, though, I see no more pressing national security matter than sorting this thing out. Once you sort through the details, you see why George Soros does what he does. People get bored with these details, which is how and why this assault–not just on our own sovereignty, but that of all other nations as well–has been able to continue for so long, and enjoy so much success.

I am going to quote Dumbledore and say “This is one of my more brilliant ideas–and between you and I that is saying something.” Now the obvious caveat applies that I am perhaps being stupid with confidence, but I think this will work:

A few posts back I posted some ideas on how to abolish the Fed. We need to apply this to the whole world. Let me explain.

One thing I was wondering about, was what happens with loans banks made. Main Street Savings and Loan loaned John Smith $250,000 to build a house, and collects say $2,500 a month on it. It’s not in default. It’s fine and a source of profit. It shows as both an asset and a liability on the books. If it goes into default, it shows only as a liability, which in enough quantities will either bring the bank down, or get it a bailout, depending on the size of the bank.

Here is my proposal: those loans are forgiven. They are marked paid in full. Now wait, you say, how is that not socialism or Communism. How is that not a patent abrogation of the right private property. Simple: THAT BANK NEVER HAD THAT MONEY TO BEGIN WITH. They loan money they haven’t earned. That’s how inflation happens in the first place. You can’t steal something somebody never earned. Frankly, they stole it from us in the first place, using the coercive police power of the State.

What do they keep? Their REAL assets, which is that money they hold at the Fed, or in their vaults. They get that cash, and can then make loans on that. Most of the employees at most of the banks in the country lose their jobs, but most of the home mortgages and other DEBTS disappear, freeing up an ENORMOUS amount of cash. The Federal debt disappears, since most of it was created through money manipulation, too. The creditors are paid. The carpenters and plumbers who worked on, say, the Federal Reserve building have all been paid. Nobody who made anything gets stiffed.

But what about foreign creditors? What about the Chinese? Here’s where it gets interesting. What we have to understand is THEY HAVE A CENTRAL BANK TOO. Much of the money they “gave” us was undervalued, for two reasons: one, they print money to fund the on-going expansion of their State; and two they artificially undervalue the yuan–I call them Mao’s, since as I understand it his picture is on them–to increase the amount of goods a dollar will buy.

We give them an ultimatum: switch to our gold backed system, or we default. Now, they can dump their dollars, and cause mass inflation. Provided we have this system already in the works, we can manage inflation, since it won’t matter what a dollar actually buys once we switch to a static currency. Maybe it takes $50 to buy a Coke: we shrug, raise wages, and deal with it. Bit of pain in the middle, but permanent freedom.

And if they play with us, they do the same thing. They switch to a static currency–which will still be the yuan, and under their “control”–and money is now real.

Same thing with Europe. They all have central banks, that have abused them the way the Fed has here. Greece’s debts are forgiven, and she has to behave in the future, which obviously would include not paying the huge benefits she has been paying. Austerity is forced on them, but without their debts.

So much horror has happened in the last century. Surely at some point the thugs who preach peace and freedom can, on balance, realize they have been speaking for and acting as Nazis, and let go.

One added thought: to keep gold speculators from making too much money from nothing, we could actually state something like: in the next month we will switch to gold, silver, or platinum, and pay whatever the rate is AT THAT MOMENT. There is no reason to use this as a wealth transfer mechanism between those who don’t have money and those who do.

Or we could simply say: we will pay X plus 10% for gold, where X is what the investor can prove they paid. That might work best. They make money–they already had X, so they would have needed to get reimbursed anyway, and they are thereby incented to sell–and we get the gold without a huge transfer of wealth.

A golden age ensues. Again, I may be missing something, but I think this will work.

Consider the following shocking claims:

Every day the Federal Reserve exists, we work a bit harder, and earn a bit less.

Since the Fed is a key backer of the IMF and World Bank, every day the Federal Reserve exists, we lose a bit of our national sovereignty, move closer to global currency, and move closer to global government.

If the Fed did not exist, our actual purchasing power would be 5 times or more what it is today.

If the Fed did not exist, we would have little or no national debt, and would instead be a nation of savers.

Coming to these conclusions made my jaw drop, but they appear unassailable.

Consider our productivity gains in the last century. Can we not suppose at a bare minimum a 3% annual improvement? That every year, we make 3% more with the same resources and same effort? This seems low, but reasonable. Why don’t we live better? Our grandparents had houses. They had savings. They may not have gone out to eat every night, but they didn’t go hungry. Most of them had a car. They lived much like we do, and owned what they had.

Today, we are a nation of debtors, that by and large own nothing, have no savings, and will be paying the company store all of our lives, as will our children and grandchildren. Our collected debt just for the national government is $12 trillion–some $40,000 per person–and climbing steadily. How is this possible?

It is inflation that took this wealth from us. Now, we are told 3% or so inflation every year is “normal”. It isn’t. It is completely unnecessary. It is a gash below the surface of the water that is slowly sinking the boat of our economy. It is the direct result of the Federal Reserve.

What is inflation? It is an inflation—increase–of the money supply. Whenever more dollars are “printed”, they decrease the value of every other dollar in existence. There is no way for inflation to occur unless more money is created.

How is this done?

Primarily by writing checks that are backed by nothing. You read that right. The Fed can, for example, buy securities in any amount it likes, with no money. It could write a $1 trillion check if it wanted to. It could write a $10 trillion check. There are no limits, although those things would have immediate inflationary consequences, and shine a light on them they have spent nearly a century avoiding. When you read some nation, like Zimbabwe, is enduring massive inflation, what has happened is somebody had a night on the town by writing themselves checks based on nothing.

The Fed can “loan” money in any amount it wants, backed by nothing. As an example, when Bear Stearns first got in trouble, the Fed bought billions of dollars of mortgage backed securities, since nobody else wanted to. They write the check, against which Bear Stearns cashes checks, and thus the money is created out of nothing. In our digital age, obviously physical, cash money is relatively unimportant, but as inflation increases, they do consistently need to print more.

How does this hurt us? Consider the following thought experiment. Let us put on one side of a table a dollar bill, that stands in for all the dollars in existence–in banks, wallets, and coded as 0’s and 1’s in computers around the world. Let us put on the other side a teacup, that stands for all the material goods in existence, the cars, houses, highways, electronics, watches, and actual teacups.

Common sense tells us that if we are making more stuff with the same amount of effort, that the price of that stuff ought to be dropping. Yes, we add bells and whistles to cars, and houses seem to be getting bigger, but not to the tune of the 3% per year I am here positing. What should be happening is that for every dollar, we get—for simplicities sake—TWO teacups. Material wealth should be inflating, while the dollar stays constant. Why is this not happening?

What is happening is a second dollar is being placed next to ours. This dollar was created out of nothing. It did not exist, then through a feat of accounting magic, suddenly it did. The person who got this dollar—a large commercial bank on Wall Street, nine times out of ten—now has purchasing power with it, despite having done nothing to earn it. Our wealth—our actual purchasing power—has thus been diluted. It has gone to build a house on Long Island sound, or lined the pocket of an African dictator, or facilitated the expansion of the Federal Government.

The game is not keeping up with the Consumer Price Index. This is a fool’s game. Prices on everything should be DROPPING. We should be working 10 hours a week and living as well as we are currently. We should have, for that reason, full employment, and no poverty. This is what a purely Capitalistic system, based on real money, would have won for us. There would be no need for our current conflict between the Left and the Right, at least over anti-poverty programs. We are fighting over crumbs.

To be clear, we have done this experiment: in the 19th Century, after Jackson broke the Second Bank of the US, purchasing power increased substantially. What cost a dollar in 1800 could be had for 66 cents in 1900, despite the fact that wages remained the same or increased. It was, by and large, a time of steady economic expansion. This is what happens without a Central Bank. Given the HUGE strides we have made in the 20th and 21st centuries in technology, that effect should have been multiplied many times over, probably exponentially.

This fact is so large it is missed. Economists spend so much of their time trying to use complex formulas that relate employment, inflation, productivity and the like that they miss the forest for the trees. Economists nearly ALWAYS miss what OUGHT to have been, but wasn’t. They fail either to see the big picture, or the long haul, usually both. You can always help the few at the expense of the many, or the present at the cost of the future. That doesn’t take any brainpower. We have, at this very moment, a Nobel Prize winning economist writing regular pieces for the New York Times, in which he argues we can borrow our way into prosperity, and that increasing the costs of our healthcare will lower the costs of our healthcare.

It gets worse: the International Monetary Fund and World Bank do what the Fed does, but internationally. They loan, in effect, money they don’t have to developing nations. Curiously, they don’t loan it to CAPITALISTS, which is what one would expect if increasing wealth were the goal. In the limited experiments which have been tried, microloan programs work exceedingly well to fund economic growth, and larger loans to startups ought to work yet better. This would be the actual path to world economic development.

Instead what happens is they loan money to GOVERNMENTS, in what amount to New Deal sorts of public works projects that generate no sustainable jobs, no new business, and quite often economic impoverishment, since the projects yield debts with no corresponding business profits. It’s the equivalent internationally to what was done to Detroit: you get people addicted to easy money, ruin what businesses already exist, then withdraw most of the money, and make them beg for the rest. It works great for those at the top–the Mugabes, and the Detroit City Halls–but creates great suffering for those it was supposed to help.

The principle architect of the IMF and World Bank—Assistant Secretary of the Treasure Harry Dexter White—was unambiguously an agent of the Soviet empire. We have the wire intercepts. There is no doubt about this. What would his game have been?

Simple: ruin American money through inflationary dilution, support the development of dictatorships in the Third World, discourage actual Capitalism, and set the stage for a global government to be administered by the UN, and controlled by the Soviets. If this sounds ridiculous, consider that that was in fact the stated goal of the Soviets, and that the conference in San Francisco that created the UN was itself chaired by another Soviet agent, Alger Hiss–whose title was Secretary General at the meeting–who in fact went to jail for espionage later. Again, the Venona wire intercepts—in addition to the physical evidence that put him in jail–permit no doubt as to his loyalties.

Now, this was not the goal of the founders of the Federal Reserve. What they wanted was simply to keep financial power on Wall Street, to make money from nothing, and to have some mechanism by which to pass bad loans off to taxpayers, all of which they got. Yet, history is clear that any concentration of power can be turned in any direction, once it is in place. A bad king can replace a good king. Our Wall Street bankers want continued economic growth, since they get a percentage of everything that is done. They have no desire to see the system go down in flames. Yet, if other people push the situation far enough, collapse is inevitable. They have set us up to fall.

Look at our current situation. What is the debt Obama is rapidly amassing doing? Setting the stage for a collapse of our currency, economic disaster, and correspondingly desperate circumstances in which calls for a global currency—to “solve” the problem—will look reasonable. To cede our money is to cede our sovereignty. If you doubt that, look at Europe today, and the trouble the Greeks are causing everyone else. If the Chinese dumped all the dollars they hold tomorrow, the value of our money would disappear almost overnight. That would kill their exports–so they are unlikely to do it–but the fact remains we are in a very, very precarious position, AND IT IS GETTING WORSE DAILY.

Here is what we need to do: the moderate Left (those who don’t oppose profit, per se) and the Right need to put aside our differences, and realize that if we had a real currency–one in which money could not be created at the whim of an unelected elite–all the problems of development would disappear. This problem is not just an American problem, but truly a global problem. Every nation on the planet is affected in a negative way by the status quo.

The Fed hurts everyone but the very rich, here and abroad. Leftists already hate the rich, so they should be supportive of ending it.

Conservatives hate anything that curtails our liberty, and the Fed definitely does that. It answers to no one but the “club” of bankers who run it in their own interest. There are no elections where We the People can apply pressure, and no rules by which Congress can insert its voice. It is literally an agency that is damaging our democracy, about which we can do nothing but get rid of it. It started with a Congressional charter, and can be ended the same way.

As far as details, here is one concrete proposal: http://moderatesunited.blogspot.com/2010/05/abolishing-fed.html

And to be clear, the supposed “financial reform” bill will actually play to the hands of the very banks it purports to regulate, by supporting the process by which we the taxpayers clean up the messes created by bankers who have no incentive not to take large risks. They keep the money when they win, and get us to pay when they lose. This is the worst possible situation for everyone BUT the bankers.

ALL AMERICANS HAVE A VITAL STAKE IN THIS ISSUE, UPON WHICH OUR VERY FUTURE AS A DEMOCRATIC REPUBLIC DEPENDS. Please forward this link to everyone you can think of who even possibly might read it, particularly any friends you may have on the political left.