Why the Federal Reserve Exists

Here we go with the vocabulary thing again.  I promise to make this easier than your last root canal.  The Federal Reserve Bank is a central bank.  Central banks are created to control and manipulate the money supply.  The money supply is the aggregate total of all the money in circulation in an economy.  It is often referred to in the media and the industry as M.  Controlling the money supply frees governments from the responsibility of living within their means.  It makes it possible for them to counterfeit money.  All governments have laws making counterfeiting their currency illegal.  That is because all governments have a monopoly on counterfeiting and do not tolerate competition in the business.

Governments counterfeit money in the exact same way all counterfeiters do; they print it, and slip it into circulation into the economy.  They spend it.  They spend more money than the economy produces because they do not want to live within their means.  They do not want to live within their means because they use money to buy votes.  They give out goodies in return for favors; favors in the form of legislation that promotes the welfare of one group over another group; favors that line their individual pockets, reward their friends, punish their enemies, and above all, favors that get them re-elected.

Other reasons are given, of course, for the existence of the Fed.  But it is axiomatic that all governments seek continual expansion of their powers, and control of the public purse and the power to tax is the Holy Grail for power seekers.  The founding fathers of this country feared government more than anything, and the Constitution they framed was to protect us, not from foreigners, and not from each other, so much as from our elected government itself.  The debates about economic policies are a sideshow and a distraction; the main event is the relentless expansion of executive power and the quiet transfer, not only of wealth, but of personal liberties as well.  Without economic freedom based on individual rights, private property, and the right to keep and dispose of our earnings as we choose, there is no freedom at all. Read more..

Money and the Battle for your Mind

Everyone out there is pursuing their own interests, and sometimes that will include attempts at separating you from your money.  If it is a voluntary trade between both parties, you both win.  If you do not understand what is going on, you will lose.  Knowledge is power, and ignorance is poverty.  You choose.

 We all live by trading with others.   Everyone is selling something.  For a long time we engaged in trade through barter.  One person raised chickens, another made furniture.  Barter became quite complicated because of what came to be called the double coincidence of wants.  In other words, if you raised chickens and I made wooden chairs, we could trade if you wanted chairs and I wanted chickens.  But what to do if either of us wanted something the other didn’t have?  Modern society and trade on a larger scale was not possible without a universal means of exchange.   Sometimes in ancient societies salt was used because everyone needed it to preserve their food.  So people would trade goods and services by using salt as a store of value.  Your chickens would be traded for X amount of salt, and my chairs would be traded for Y amount of salt, and we both could use the salt received to trade for any other commodities we needed to survive.  Salt represented, or was a symbol, of the value each of us brought to the exchange.  Salt became a primitive form of money.  Anything being traded could be redeemed in salt. 

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Did Capitalism Fail?

The global economic crisis now in play is being universally touted as the failure and collapse of capitalism.  The cover of the February 16, 2009 edition of Newsweek ecstatically proclaimed “WE ARE ALL SOCIALISTS NOW”.  The documented collapse of Wall St. institutions and international banking is being gleefully interpreted as the failure of capitalism itself.  In the furious debate that has ensued, the arguments for and against capitalism have focused entirely on the causes of various recent economic phenomena, such as Wall St. greed, the failure of regulators, the incompetence of one or another administration, and the complexity of derivatives that were both unheard of and technically impossible only twenty years ago.  All of them have totally missed the point.  Capitalism has not failed, because capitalism was not practiced to begin with.  Pure capitalism has never been practiced because it is philosophically unacceptable in our culture.  What is called capitalism today is a hybrid political philosophy so filled with contradictions, it is unable to defend itself.  To answer the question in the title of this article, we have to begin at the beginning. Read more..