Shout It Out

In violent times
You shouldn't have to sell your soul
In black and white
They really really ought to know
--Tears for Fears

In a Buzz post this morning, Mr P leveraged a fine essay by another smart cookie, Walter Williams of George Mason University.

I'm going to quote his entire 9:35 am post here. Re-read until you master the thought behind it. If you do, you'll grasp a root cause of our current problems.

Socialism

The following is from an editorial written by Walter Williams of George Mason University:

"Knowing the dangers posed by central banks, we might ask whether our country needs the Federal Reserve Bank. Whenever I am told that we need this or we need that government program, I always ask what we did before. It turns out that we did without a central bank from 1836, when President Andrew Jackson closed the Second Bank of the United States, to 1913, when the Federal Reserve Act was written. During that interval, we prospered and became one of the world's major economic powers.

The justifications for the Federal Reserve Act of 1913 were to prevent bank failure and maintain price stability. Simple before-and-after analysis demonstrates that the Federal Reserve Bank has been a failure. In the century before the Federal Reserve Act, wholesale prices fell by 6 percent (prices normally fall as production increases); in the century after they rose by 1,300 percent. Maximum bank failures in one year before 1913 were 496 and afterward 4,400. During the 1930s, inept money supply management by the Federal Reserve Bank was partially responsible for both the depth and duration of the Great Depression.

It is not wise for us to permit a few people on the Federal Reserve Board to have life and death power over our economy. My recommendation for reducing some of that power is to repeal legal tender laws and eliminate all taxes on gold, silver, and platinum transactions. That way there would be money substitutes and the government money monopoly would be reduced and hence the ability to tax--some people would say steal--from us through inflation.

I could not have said anything better myself, and of course agree. Mr Williams' last statement I have referred to before. By devaluing a currency over long periods of time (which every central bank does), a nation effectively makes the rich more wealthy and the middle class and poor less. This occurs because the rich own assets that rise in price and therefore hold their value relative to money while income is devalued. A middle class wage earner makes less each year without even knowing it.

Of course, government is coming to our rescue with bailout after bailout; it makes their power grow. The Federal Reserve, by driving real interest rates to negative levels for years knowingly provided the fuel to create a massive real estate bubble, is itself the greatest socialist institution ever created. Companies that are too big to fail by definition illustrate socialism.

The U.S. is rapidly becoming socialist where government will become a larger and larger part of the economy and our lives and make more and more poorly thought out decisions. This will over time decrease productivity and profits.

Risk is high, but only the government knows how high.

positions in gold and silver