Home > Uncategorized > Time for Economic Liberty

Time for Economic Liberty

Back on July 11, 2010 I wrote a blog post "We Need an Economic Liberty Party". Karl Denninger over at the Market Ticker always has very insightful articles regarding the U.S. economy. His recent article, "Krugman's Insantity, and The Hard Mathematical Truth", makes the case for why the current stimulus was destined to fail. It appears incredible to me that anyone buys into any of these faux Keynesian schemes, but they do. Many people are wedded to the major political parties and won't let go, no matter how badly they are abused and neglected. Why do people stay in these bad political marriages. I'm not sure. Increasingly both parties have ignored the concerns of their supposed constituents and served only the special interests. Crony capitalism is rampant and every day citizens are locked out of the political process. This, in part, is what has fueled the outpouring of anger by citizens aimed at government. Government, at every level – local, state, and national – has proven to be incompetent. Sadly, many mistakes that government makes are due to widespread ignorance, or willfully ignoring basic economics and math.

Year after year, the national government transfers vast sums of wealth from one group to another. This "redistribution" does absolutely nothing but destroy wealth. Taking a dollar from you and giving it to me (minus government waste and inefficiency) creates nothing and destroys much. In fact, government schemes to "redistribute" wealth misallocate resources – transferring valuable capital from those who produce it to those who consume it. Both parties engage in this sort of activity – rewarding their political supporters and punishing out groups that they don't favor. This, of course, appeals to the supporters of the political party in power. Increasingly, government is buying citizens off with their own money, but acting as if wealth creation emanates from politicians and bureaucrats rather than from inventors, entrepreneurs, risk takers, etc.

While President Eisenhower famously warned about the military-industrial complex in his Farewell Speech, there now seems to be a political-military-banking complex which has the nation and its people in a stranglehold. Our economic and political systems are more corrupt by the day. Central banks have created a fiat currency and fractional reserve banking system where money no longer represents any value. The video "Money as Debt", does an excellent job explaining the fractional reserve banking.

http://video.google.com/googleplayer.swf?docid=-2550156453790090544&hl=en&fs=true

Our fiat currency declines in value over time. Money is not created unless debt is created. If this sounds absurd, it is. Banks literally create money out of thin air by electronically transferring money into your account when they make you a loan. This explains a great deal why government keeps bailing out banks and attempting to reflate the declining housing market. Without debt creation, our economy will ultimately collapse. This leads to a whole corrupt web of relationships between politicians, banks, etc.

Fractional Reserve Banking and the political-military-banking complex are polar opposites of economic liberty. Powerful interests want you and government to be indebted on a permanent basis. Simply put, the powers that be need you to be a debt slave. Remember that every time the government politicians offer up some new, shiny program they promise will fix our problems and make your life better. Remember that when some politician offers up a new scheme to jump start spending and the economy. Remember that when the politicians say that government needs to make up the demand gap until consumers are healthy enough to spend at previous levels.

If you don't want to be a debt slave, you need to have economic liberty. This means you have to have a government that is radically reduced in size. My opinion if that government needs to be reduced in size by 90%. Unless it is reduced by this much, it will always find a way to increase in size. Even if government is cut by 90%, it will try to re-assume its old ways of "redistributing" wealth.

What would economic liberty look like?

  • There would be no central bank
  • Fractional Reserve Banking would be eliminated or severely reduced
  • Banks would exist to loan businesses needed capital and return a fair rate of interest to encourage saving
  • There would be competition in currency, rather than the Federal Reserve Bank's monopoly
  • The official currency would be redeemable for something (a commodity) of value
  • States would have their own official banks to loan businesses needed capital and return a fair rate of interest to encourage saving
  • Our current leviathan tax system would be eliminated and replaced by a tariff or some other minimal tax not tied to income that would have a negligible effect on the widest range of persons possible
  • Redistributive schemes would end. Individuals and businesses would stand and fall on their own merit. Private charities would assist individuals in need. Each state could, if it chose, establish agencies to assist individuals in need of assistance.

This doesn't look like anything either of the major political parties is advocating does it? While some minor parties may advocate some of these items, none of those parties is a viable alternative. That is why we are in desperate need of a political party dedicated to economic liberty. Such a party may or may not appeal to those focused on social, religious or other issues. However, arguing about these other issues (even though they are important) is akin to rearranging deck chairs on the Titanic. We can debate left-right, Republican-Democrat, Socialist-Capitalist, Progressive-Conservative all day long. For better or worse, we're all in the same boat together. Our debt-based system is getting ready to implode. Unless enough people wake up and see that our current system is not economically viable, then our entire system and way of life are doomed. It's that simple, and that important.

Change. That oft-abused, much maligned, retread word has become the brunt of many a joke. But, at the end of the day, we need real, radical change if our country is to survive. A new party, dedicated to educating, advocating, and bringing about needed systemic change is what is needed. What do you think?
 

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