“Economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups… The economic goal of any nation, as of any individual, is to get the greatest results with the least effort.” - economist Henry Hazlitt, Economics in One Lesson
Not only has the government and the Federal Reserve caused the financial crisis with excessive money-printing, reckless spending, bailouts and corporatism, but the government is fully responsible for the rampant unemployment we see in our country today. While the newspaper headlines of 10% use the Bureau of Labor and Statistics U-3 figure. However, the government’s broadest indicator of unemployment, the U-6 figure which includes ‘discouraged’ and ‘marginally attached’ workers plus part-time workers who desire a full-time job is currently over 17%. However, the U-6 does not account for long-term discouraged workers who have not been able to find a job, and economist John Williams estimates true employment to be 22% as seen below.
Ron Paul, who seems to be everywhere in the media these days, appeared on Neil Cavuto’s Fox Business show earlier this evening. They discussed Obama’s spending “freeze” fallacy.
Ron Paul appeared on Larry King earlier this evening to discuss the effectiveness of Obama’s stimulus package. The discussion was quite good until the end when Reich used the final opportunity to speak to attack Ron Paul as being like “Hoover” and then praising FDR and “the war” for getting us out of the Great Depression.
I really wish Ron Paul (I’m sure he does too) had time to refute those fallacies, but as is often the case with these appearances, he ran out of time. If you don’t understand why Reich’s statements are incorrect take some time to read some of Robert Higgs work on the same topic.
Ron Paul appeared on CNBC this morning for a long segment focused on economics and the Federal Reserve. Paul Kanjorski appears with Paul and plays the part of the Fed apologist in the segment. Ron Paul gets pretty feisty during his arguments, in a good way. Thanks to Minnesota Chris for the video.
Watching the world’s leaders stumble their way through the economic crisis, it often feels as if political success and economic understanding are mutually exclusive. Even the Chinese, who over the past generation have engineered a dramatic turnaround from their Maoist economic nightmare, show a remarkable willingness to pursue a monetary policy (a currency peg to the U.S. dollar) that yields no benefit to their citizens. Amid this morass of economic quackery, it is refreshing to see a clear ray of sanity emanating from one country: Poland.
Last summer, I was invited to speak at the Economic Forum in Krynica, a resort town in Southern Poland. I was amazed at the level of economic activity and civic spirit that was on display throughout the country. I also was fairly surprised that my economic views, which are routinely ridiculed at home, have much wider support among the Polish economic officials who presented at the conference.
This common sense understanding was showcased in an opinion piece published this week in the Financial Times by Polish Finance Minister Jacek Rostowski. Contrary to the public flogging of the free market currently underway in Washington, under the auspices of the Financial Crisis Inquiry Commission, Rostowski explains how governments caused the Crash of 2008 by removing the necessary element of fear from the markets. He states that this was symptomatic of the “deep Keynesian project,” in which governments over the last half century have looked to smooth the economic cycle through periodic floods of monetary expansion and government spending. I couldn’t have said it better myself.
Today, Venezuela’s Hugo Chavez announced it has devalued the bolivar against the dollar by 50%, despite recent highs of $84 in the oil market per Bloomberg. Chavez’s United Socialist Party is struggling to maintain its reckless spending. In 2009, Venezuela reported an inflation rate of 27%. Despite the historical angst between America and Venezuela, the country remains a key exporter of oil to the United States. (Photo courtesy Kevin Hotaling)
Americans should realize that our country is not immune to a massive currency devaluation. In fact, the last one took place during the middle of the Great Depression when FDR stole the people’s gold and devalued the dollar by almost 70% overnight. It is obvious that the central bank and Congress prefer reckless spending if it can be managed with a slow but accelerating depletion in purchasing power from 1980-2009 as I demonstrated in “The Real Interest Rate” so the populace does not notice the extent of the theft.
Money is an invention of mankind. Our society refers to the irredeemable scraps of linen and ink as “money,” but in truth the dollar is no such thing. It is merely a currency, a medium of exchange, created by fiat – by government decree and force. The dollar is a phantom I.O.U. note. It is a Ponzi scheme and the central banking system issues new dollar currency whenever it wishes.
Dollars are toxic waste in the literal and fiscal sense. Literally, each dollar bill contains arsenic, cadmium, mercury, thallium, and cyanide and generates dumpster upon dumpster of hazardous waste every day. Fiscally, the dollar has lost 98.3% of its value as of January 1, 2010 since the creation of the central bank known as the Federal Reserve in 1913. (Note 1) Many Americans are unaware that the electrons and scraps of linen we trade around as currency are mere shadows of sound money.
To see the shadows in our money, we have only to look at it. Look at this old quarter. The one I have is a little worn but it still has a silvery glisten to it and rings when you drop it. Now look at the rim of any current quarter – it is a cheap copper sandwich with a thin plating of nickel on top to make it appear like silver. It makes an annoying tinny sound when you drop it. The quarter was exchangeable in 1916 for about 0.012 troy ounces of gold, or over $13 modern-day dollars. Today it is still exchangeable for over $3just for its silver content. The modern quarter? The “melt” value of its copper and nickel is worth less than 5 cents.
Ponzi scheme - a fraudulent investment operation that returns assets to the defrauded from assets they previously loaned to the scheme’s operators or assets paid by subsequent newer “investors” rather than from any actual profit earned
While it is (comparatively) well-known that the US dollar, while a currency, is a solely an instrument of credit issued by the Federal Reserve. All holders of dollars – including myself and most readers of this article – are in debt to the Federal Reserve. Now, this debt is really phantom debt, but the key really is printed on each dollar, more properly known as a Federal Reserve Note: ”This note is legal tender for all debts, public and private.” (1)
The total federal debt issued was $11.933 trillion dollars at the end of fiscal year 2009 in September per the Treasury Department, an increase of $1.9 trillion from 2008. (page 37/123) This debt will continue to increase every year until the monetary system collapses due (just in part) to the compounding “miracle” of interest rates. Federal debt is bought at auction by primary dealers (Goldman Sachs, JP Morgan Chase, etc.) and “resold” to the FED, which then inflates the money supply by creating new dollars, or “injecting liquidity.” The FED can also “inject liquidity” by purchasing assets, such as toxic mortgage debt or even company stock like AIG or GM. Individual community banks, whether Citibank, Bank of America, or small local banks and credit unions, can also create new dollars with the fractional reserve system, which is can be viewed graphically here. However, a proof I wrote demonstrates that fractional reserve banking broke down years ago, and can be more aptly named as the “no-reserve lending” system.
Today, GATA (the Gold Anti-Trust Action Committee) filed a lawsuit suing the Federal Reserveafter its separate FOIA request was denied. For a decade, GATA has amassed enormous amounts of evidence that charges that the FED colludes with other central banks and bullion dealers to secretly suppress the market price of gold in order to make their own paper currencies look better. The last time the central banks secretly manipulated the gold price was from 1961 to 1968, and ended with the violent collapse of the London Gold Pool and the bankruptcy of the post-WWII Bretton Woods global monetary system.
A year ago, Bloomberg L.P., a major financial news firm, filed a FOIA (Freedom of Information Request) from the Federal Reserve to disclose over $2 trillion in off-the-balance sheet emergency loans – funds that Congress and the President to this day have no idea how the nation’s quasi-private central bank spent. Despite a momentary court ruling commanding the FED to release this information to the public, the FED has effectively evaded the motion. Read More »
In its recent look back on the first ten years of the century, Time Magazine proclaimed the period to be “the decade from hell.” The editors made their case based on what they saw as the signature events of the last ten years, notably the ravages of terrorism, failed wars, and a global financial crisis. Taken together, these factors produced an era that Time is convinced will be remembered as one of the low points in our history.
As the media hates to dwell on the negative, the commentary was rife with notes of optimism about pending recovery. It could hardly be accidental that in the very next issue, Fed Chairman Ben Bernanke was named “Man of the Year” for his supposedly Herculean efforts to keep the economy afloat as we departed the Naughty Aughties. Although Time takes pains that to point out that the “Person of the Year” honor reflects impact rather than adulation, its profile of the Chairman was triumphant.
Even if you believe the “survived the worst/turned the corner” narrative offered by Time, it still should strike anyone as ironic that Chairman Bernanke, a chief architect of the economic problems that surfaced in 2007, should be held in such high esteem.
Apart from its misplaced reverence for the Fed Chairman, I would take issue with Time’s entire characterization of what has now become history.
Liberty Maven
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Dollars are toxic waste in the literal and fiscal sense. Literally, each 
To see the shadows in our money, we have only to look at it. Look at this .jpg)
The total federal debt issued was $11.933 trillion dollars at the end of fiscal year 2009 in September per the Treasury Department, an increase of $1.9 trillion from 2008. (
