Time to Bring Back the Gold Standard?
By John Frary for U.S. Congress Professor John Frary
FARMINGTON (Oct 6): My comments on the bailout bill evoked a firestorm of commentary, which is my specialty, but one nugget of advice came through from a newspaper editor I trust. He asked "Why would you say you would vote for a bill you haven't read?".I'm sure my staff has wondered the same thing on more than one occasion, but it comes down to this: I am not a politician! If asked a reasonable question, I do my level best to answer it. When I was asked about the bailout, based on the four page bill that was put forth by the Administration I answered that it seemed necessary to avert a financial panic. Being a student of history I know how devastating these panics can be, and reasoned that immediate action, if the world economy was on the brink, was warranted.But I admit that I had not read the final bill that had ballooned to 400 pages, being just a bit preoccupied with a campaign covering 11 counties, so I set out to do so.I'm not done yet, but on the provisions of the bill I have read, I realized opponents of this stopgap measure were barking up the wrong tree. The problem isn't putting the Secretary of the Treasury in charge of selling the assets - he at least can be fired by an elected official. The problem is the overweening power of the Federal Reserve - a nearly 100 year experiment in elitism and chicanery that will bring down our entire financial structure in time. It is the Federal Reserve system that has made possible the financial sleights of hand of that burgeoning ponzi scheme known as the Welfare State into the cancerous mechanism of the easy buck, instant gratification society we have become.And how did the Federal Reserve defy the laws of Economic Gravity and pump the balloon of easy credit into the crisis we face today? They de-linked the currency from gold. We have now suffered through a nearly 100 year experiment on the question of whether men can resist the temptations of inflation, and the verdict is clear: the men have failed. The Byzantine Empire maintained the purity of their gold coinage for 800 years, a record in the annals of mankind, and we should not have thought ourselves immune to the forces every great commercial nation faces.It is no accident that FDR, the architect of the Bread and Circus era, first fixed his attention on destroying the Gold Standard, and the check of an external market on the fiscal policies of government that gold represented. Few remember that FDR not only took us off the Gold Standard, but OUTLAWED private ownership of gold, SEIZING without market compensation all gold in private hands in then United States. But I remembered - the actual Executive Order, a high handed, extra constitutional and tyrannical measure if there ever was one, was posted on my website 7 months ago. You can marvel at its arrogance on my Libertarian Impulse page.Von Mises and Hayek explained the road to serfdom more than 60 years ago, and we are far down that path. I remind you that Reagan was for returning to a modified gold standard and had Mundell and Kemp draw up a plan for transitioning back to gold. I don't need to talk about the fiscal follies that Mike Michaud types have used in conjunction with the Fed to fleece the entire populace for years, etc. The netire fundament of the Welfare State is built on an ever expanding circle of cheap credit and deficit financing. The people would not vote for their own serfdom if the cost could be seen - so the cost must be obscured by deficits and inflation and now, by a bailout of the entire system on the collapse of the housing bubble.Were there panics before the Fed? Of course, but their record has been even worse. They turned a panic they had caused by inflating the dollar supply in 1929 into a decade long depression. The European countries that did not have central banks actually recovered earlier. Any purely market economy would have recovered long before that. There are of course other examples, the Savings and Loan scandal, etc.So now that I have read most of the bill, would I have still voted for it? I must admit I actually approved of a few of the add on provisions, like the Alternative Tax rollback which saved 85,000 Mainers thousands of dollars each. But I did find a little poison pill in section 112 that I find very suspicious. This provision authorizes the Secretary of the Treasury to purchase the assets of FOREIGN banks that are holding mortgage backed assets. This gives me great pause, even knowing what happened in Japan when they did not write down their bank debt after their real estate bubble burst, about whether I would have been able to vote for the bailout after all. It is my hope that the reasoning I have displayed for you here will enable you to understand how I will vote in Congress when the time comes to reform the emergency legislation. We are not out of the woods yet on this crisis.
By John Frary for U.S. Congress Professor John Frary
FARMINGTON (Oct 6): My comments on the bailout bill evoked a firestorm of commentary, which is my specialty, but one nugget of advice came through from a newspaper editor I trust. He asked "Why would you say you would vote for a bill you haven't read?".I'm sure my staff has wondered the same thing on more than one occasion, but it comes down to this: I am not a politician! If asked a reasonable question, I do my level best to answer it. When I was asked about the bailout, based on the four page bill that was put forth by the Administration I answered that it seemed necessary to avert a financial panic. Being a student of history I know how devastating these panics can be, and reasoned that immediate action, if the world economy was on the brink, was warranted.But I admit that I had not read the final bill that had ballooned to 400 pages, being just a bit preoccupied with a campaign covering 11 counties, so I set out to do so.I'm not done yet, but on the provisions of the bill I have read, I realized opponents of this stopgap measure were barking up the wrong tree. The problem isn't putting the Secretary of the Treasury in charge of selling the assets - he at least can be fired by an elected official. The problem is the overweening power of the Federal Reserve - a nearly 100 year experiment in elitism and chicanery that will bring down our entire financial structure in time. It is the Federal Reserve system that has made possible the financial sleights of hand of that burgeoning ponzi scheme known as the Welfare State into the cancerous mechanism of the easy buck, instant gratification society we have become.And how did the Federal Reserve defy the laws of Economic Gravity and pump the balloon of easy credit into the crisis we face today? They de-linked the currency from gold. We have now suffered through a nearly 100 year experiment on the question of whether men can resist the temptations of inflation, and the verdict is clear: the men have failed. The Byzantine Empire maintained the purity of their gold coinage for 800 years, a record in the annals of mankind, and we should not have thought ourselves immune to the forces every great commercial nation faces.It is no accident that FDR, the architect of the Bread and Circus era, first fixed his attention on destroying the Gold Standard, and the check of an external market on the fiscal policies of government that gold represented. Few remember that FDR not only took us off the Gold Standard, but OUTLAWED private ownership of gold, SEIZING without market compensation all gold in private hands in then United States. But I remembered - the actual Executive Order, a high handed, extra constitutional and tyrannical measure if there ever was one, was posted on my website 7 months ago. You can marvel at its arrogance on my Libertarian Impulse page.Von Mises and Hayek explained the road to serfdom more than 60 years ago, and we are far down that path. I remind you that Reagan was for returning to a modified gold standard and had Mundell and Kemp draw up a plan for transitioning back to gold. I don't need to talk about the fiscal follies that Mike Michaud types have used in conjunction with the Fed to fleece the entire populace for years, etc. The netire fundament of the Welfare State is built on an ever expanding circle of cheap credit and deficit financing. The people would not vote for their own serfdom if the cost could be seen - so the cost must be obscured by deficits and inflation and now, by a bailout of the entire system on the collapse of the housing bubble.Were there panics before the Fed? Of course, but their record has been even worse. They turned a panic they had caused by inflating the dollar supply in 1929 into a decade long depression. The European countries that did not have central banks actually recovered earlier. Any purely market economy would have recovered long before that. There are of course other examples, the Savings and Loan scandal, etc.So now that I have read most of the bill, would I have still voted for it? I must admit I actually approved of a few of the add on provisions, like the Alternative Tax rollback which saved 85,000 Mainers thousands of dollars each. But I did find a little poison pill in section 112 that I find very suspicious. This provision authorizes the Secretary of the Treasury to purchase the assets of FOREIGN banks that are holding mortgage backed assets. This gives me great pause, even knowing what happened in Japan when they did not write down their bank debt after their real estate bubble burst, about whether I would have been able to vote for the bailout after all. It is my hope that the reasoning I have displayed for you here will enable you to understand how I will vote in Congress when the time comes to reform the emergency legislation. We are not out of the woods yet on this crisis.
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