The Failure Reserve Bank

The Austrian School of Economics

Mises.org is the digital home for the Ludwig von Mises Institute of the Austrian School of economics.  The Austrian school is the champion of a truly free market economic system.

The current economic crisis is being blamed on the ‘free market’,  but we know that this is false.  With the Federal Reserve fixing interest rates and fudging the numbers for ‘prices’ (i.e. – the CPI does not include the costs of food and energy), our economy is anything but free or honest.  Additionally, the subsidized housing boom, conducted mostly by Fannie and Freddie have created this centrally planned economic bubble.

The Austrian theory rings true for two reasons.  The first is that it espouses true freedom for the individual to participate in a fair and honest economy – prices and interest rates are determined by the market, and the currency is backed by wealth.  Freedom is always right.

The second is that it opposes centrally planned and managed economies.  We know that no ‘expert’ or group of experts is smart enough to effectively and accurately plan an entire economy or an entire society.  The world is too complex, and the temptation for corruption in such a powerful position is too strong.

Revolutionary is still learning economics according to the Austrian school, but because of their emphasis on personal freedom and their opposition to centrally planned societies, we feel that they are most definitely on our side.  They are also our neighbors – their offices in Auburn, Alabama are not far from Revolutionary’s home in Atlanta, Georgia.  They have our full support, and we leave you with a quote from their About page.

“Everyone carries a part of society on his shoulders,” wrote Ludwig von Mises, “no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle.”

From Socialism to….more Socialism?!

The current economic crisis in the Unites States and around the world is the failure of Keynesian and Marxist economic systems.

That is to say, deficit spending by the government to ’stimulate’ economic activity and, more importantly, a centrally managed economy via the Federal Reserve.

The United States’ central bank, the unconstitutional Federal Reserve System, has set critical banking interest rates artificially low for many years – to the tune of 1-2%.  This is the primary cause of the excessive lending, debt, and credit in the market!  Both the government’s and the banking industry’s excessive debts are the primary causes of inflation and the mal-investment that has poisoned our economy.

Because the Federal Reserve currency, the U.S. Dollar, has no wealth to back it up (the gold standard was abandoned in the 1930’s), there is nothing to prevent money from being ‘created out of thin air’.

WHEN MONEY IS CREATED VIA DEBT, INFLATION OCCURS.  INFLATION STRIPS ALL DOLLAR HOLDERS OF THEIR WEALTH AND SAVINGS.

These are the ultimate totalitarian economic mechanisms.

So the presented solution to these failed Socialist/Marxist systems is what?  More government debt and more government intervention in markets; throwing taxpayer liability at failed banks, creating more debt and more inflation; nationalizing banks and centralizing economic power on top of our already totalitarian and criminal Federal Reserve System.

The level of ignorance displayed in the media, the Congress, and the Executive branch can hardly be believed.  I can only come to one logical conclusion:

We are being taken for fools.  And it’s working.

Ron Paul’s Federal Reserve Board Abolition Act

From the outstanding NaturalNews.com:

This legislation introduced by Congressman Ron Paul in June, 2007 would kill the Federal Reserve Act and would then phase out the Federal Reserve altogether one year after the bill becomes law.

That link actually takes you to their generic legislation page.  Here is the link to Ron Paul’s Federal Reserve Board Abolition Act, H.R. 2755.  The article continues:

What the Federal Reserve is all about

The Federal Reserve is called that to fool you. It is actually a private corporation run by bankers dedicated to controlling the nation’s money supply for the benefit of themselves and other wealthy and powerful people. Its mandate is to control the rest of the people by controlling their access to money and credit.

Since the creation of the Federal Reserve in 1913, the American middle and working classes have been victimized by boom and bust monetary policy. Most Americans have suffered steady erosion of purchasing power at the hands of the Fed’s inflationary policies. The result of these policies represents an insidious and onerous tax imposed on the people on top of their already burdensome overt taxation.

The heavy hand of the Fed can be seen by any student of the Great Depression, the torturous stagflation of the 1970’s, the dotcom bubble, the housing bubble, and today’s financial panic and collapse. Its hand print is on every economic downturn that has robbed American’s of their money for the past 80 years, as the Fed has followed a policy of flooding the economy with their easy money and credit. When everyone is in debt up to their eyeballs, the bubble bursts and is followed by a painful recession or depression. To save us from the total devastation they have created, the Fed then rides to our rescue with its printing press causing excessive inflation and the erosion of the purchasing power of the dollar. These policies have made slaves of us all with the exception of the power elite.

A dollar created during the birth of the Fed in 1913 is now worth about a penny thanks to the policies of the Fed.

Searching the Internet Increases Brain Function

We found this outstanding article linked at the  exceptional alternative news site WhatReallyHappened.com.

Study finds that searching the Internet increases brain function

(Image: Miranda KnoxSTOCK.XCHNG)

Morgan Stanley and Uncle Sam

Image reposted from kenny’s sideshow.

Banking Campaign Contributions

The top 10 PAC campaign contributors to John McCain and Barack Obama, reposted from The Campaign for Liberty. Something seems fishy about this list!

Obama:
Goldman Sachs $739,521
UBS AG $419,550
Lehman Brothers $391,774
Citigroup Inc $492,548
Morgan Stanley $341,380
Latham & Watkins $328,879
Google Inc $487,355
JPMorgan Chase & Co $475,112
Sidley Austin LLP $370,916
Skadden, Arps et al $360,409

McCain:
Merrill Lynch $349,170
Citigroup Inc $287,801
Morgan Stanley $249,377
Wachovia Corp $147,456
Goldman Sachs $220,045
Lehman Brothers $115,707
Bear Stearns $108,000
JPMorgan Chase & Co $206,392
Bank of America $133,975
Credit Suisse Group $175,503

Letters to Congress!

Here is what I wrote to my Georgia Senators, Chambliss and Isakson, following their pathetic sellout votes Wednesday night:

Congratulations, you have joined in the long and despicable history of frauds perpetrated by Central Banks and Governments!

Your vote was a disgrace to the country, and to the good people you purport to represent.  You disgust me.

Signed,

My name

This happens to be the 100th post here at Revolutionary – very appropriate, we think.  Thank you for reading.

Economic Depressions: Their Cause and Cure

More exceptional economic lessons at The Mises Insitute:

Without bank credit expansion, supply and demand tend to be equilibrated through the free price system, and no cumulative booms or busts can then develop. But then government through its central bank stimulates bank credit expansion by expanding central bank liabilities and therefore the cash reserves of all the nation’s commercial banks. The banks then proceed to expand credit and hence the nation’s money supply in the form of check deposits. As the Ricardians saw, this expansion of bank money drives up the prices of goods and hence causes inflation. But, Mises showed, it does something else, and something even more sinister. Bank credit expansion, by pouring new loan funds into the business world, artificially lowers the rate of interest in the economy below its free market level.

…

Businesses, in short, happily borrow the newly expanded bank money that is coming to them at cheaper rates; they use the money to invest in capital goods, and eventually this money gets paid out in higher rents to land, and higher wages to workers in the capital goods industries. The increased business demand bids up labor costs, but businesses think they can pay these higher costs because they have been fooled by the government-and-bank intervention in the loan market and its decisively important tampering with the interest-rate signal of the marketplace.

…

The inflationary boom thus leads to distortions of the pricing and production system. Prices of labor and raw materials in the capital goods industries had been bid up during the boom too high to be profitable once the consumers reassert their old consumption/investment preferences.

…

Mises, then, pinpoints the blame for the cycle on inflationary bank credit expansion propelled by the intervention of government and its central bank. What does Mises say should be done, say by government, once the depression arrives? What is the governmental role in the cure of depression? In the first place, government must cease inflating as soon as possible. It is true that this will, inevitably, bring the inflationary boom abruptly to an end, and commence the inevitable recession or depression. But the longer the government waits for this, the worse the necessary readjustments will have to be. The sooner the depression-readjustment is gotten over with, the better. This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease. The government must never try to prop up wage rates or prices of producers’ goods; doing so will prolong and delay indefinitely the completion of the depression-adjustment process; it will cause indefinite and prolonged depression and mass unemployment in the vital capital goods industries. The government must not try to inflate again, in order to get out of the depression. For even if this reinflation succeeds, it will only sow greater trouble later on. The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio. In fact, cutting the government budget will improve the ratio. What the economy needs is not more consumption spending but more saving, in order to validate some of the excessive investments of the boom.

Thus, what the government should do, according to the Misesian analysis of the depression, is absolutely nothing.

Please do visit The Mises Institute and read the entire article.  I suggest reading as much of the site as possible, and passing the information on to friends and family.

Dead Men Walking by Floy Lilley

From the outstanding LewRockwell.com:

Pull the plugs.  Let the dead men be buried. Trying to keep insolvent bad deals alive uses all the scarce resources that newborn good deals need. This produces staggering costs of lost opportunity. Like Japan, we might not recover for a very long time if we think we can keep dead men walking. Let necessary liquidation happen. Recession is the mandatory painful reality of clearing markets in order to regain a recovering economy. Booms and busts will happen as long as the money system we have in place is such an unsound one.

But, within the reality of the money system we do have, happy days can not be here again by propping up the corpses of all the bad stuff that was birthed by reckless Federal policy. Greenspan and Bernanke deliberately drove interest rates from 6% to 1% and deliberately reduced the purchasing power of each unit of money by flooding the money supply by a 9% increase. It was boom time. Credit was thrown at everybody. Debt was the name of Nirvana, while savings were taxed. Everyone was high on a wealth effect that came from the effervescent bubbles. Our homes became our ATM machines. We were never as rich as the boom times led any of us to believe.

Don’t adopt the corpses through bailout deals. They will not revive. Ever. Bury them properly through liquidation. Return them to dust. Hunker down. Stop spending beyond means. Save.