Guerilla: Some time ago you requested I respond to Korr....so I thought I would. The article I referenced suggested that current schools of Austrian economics are financed by a very few particular wealthy families. I suspect that the broad scope of so many people that contribute to so many universities, including the ones you reference and hundreds more make the argument somewhat specious. Broad and huge support versus narrow support. One might also find that the very few folks that support these few institutions are dramatically politically conservative. I think there is a difference in scope and breadth that your suggestion of a comparison has no merit. In today's environment it is always brings notice when one or just a couple of wealthy folks support or underwrite a particular philosophy. George Soros takes a beating for supporting Moveon.org. It's not George Soros and 5,000 other well off backers. Virtually, if not all of the great fortunes that were developed during the period of pre early 1900's or pre Federal Reserve time, were built with 0 govt involvement. None. Incidentally, there were recessions, financial crises during those times....and as Guerilla reminds us these were periods of virtually no govt. involvement. If there are lots of fortunes buildt on the back of govt subsidies name 10. Make em ones where the majority of the fortune was built on govt subsidy....not a small teensy percentage. For every one of those 10 one could probably name 20 built w/out govt involvement. Okay: When I see libertarians/RP/Austrian economists argue their points I see two main themes: Eliminate most of govt. Set up a gold standard//or a modified gold standard. Take the 2nd point first. The underlying claimed benefit of a gold standard or something like it would be three-fold; one that there would be a hard value connected to currency; two that it would create tight limits on printing currency; and 3 that it would tighten credit by virtue of the above 2 actions. In some regard I favor the idea of tightening credit. Libertarians argue that this methodology would be natural and market driven as opposed to "decided by some unfunctional entity that screws it up" (my words). Frankly, any mechanism to tighten credit will run into problems and issues. The natural business cycle will rebel against it. Financial institutions make money on moving/lending money. They are built to do so. They have a natural inclination to do so. Supposedly Bear Stearns collapsed in part because it was leveraged at roughly 33 times its loans and commitments. When its clients/partners/customers were calling for cash or wanted to sell those bad loans Bear Stearns didn't have the capacity to meet those demands. Leveraged at 33 times the entirety of its assets. That means it essentially carried 3% of the value of its assets. That is pretty close to a no deposit down mortgage. Cr@p. When things go bad investors of that ilk get killed. ALWAYS. But by leveraging itself to that level isn't Bear Stearns essentially "creating liquidity." The markets can and always have overextended themselves at times. They did it while there was a gold standard, they have done it now, and they have done it in the recent past. Its a function of the market. Who is to say how to control these things. Govt. or no govt. It literally doesn't seem to matter. The business cycle creates overexpansion at times and that leads to problems. Just as you don't see a single gold standard as being the key, I don't see eliminating govt as being the key
Gold and silver (metallism) has always been popular with small government types. I probably argue a lot for no government, but I'm not an anarchist. I just believe in a government that is subservient to the will of the people, and places the greatest possible value on protecting the liberty of every single individual. Black, white, man, woman, christian, muslim, jew, atheist, everyone receiving equal treatment based upon the self-evident natural rights. Does anyone really think the government is subservient or ven responsive to the people today? Do we really think you can take the government on, and the Constitution will protect us? And hence why I rail against the state so much. Thanks for replying.
Actually the monopolies were built during the National Banking period after the Civil War. Nationally chartered banks were subsidized at a 10% rate as a means of eliminating state chartered banks from the system and centralize more legislative power in D.C. National banks were regulated, the government set reserve ratios, and yes, there were panics & bank runs - not because of a lack of regulation, but rather despite the regulation. Well, obvious ones off the top of my head: Standard oil (which was split up into 30 some companies like Chevron, Exxon, Mobile but the stocks of all companies were kept in the family), JP Morgan bank, Chase-Rockefeller bank, The "Bell" companies, General Electric for the last 50 years, and pretty much every defense contractor, or private prison... In a free market, everyone plays business by the same rules. In a corrupt socialist economy, some people pay more taxes so that others can receive taxes. Case in point: America is near Japan and close to having the world's highest corporate tax rate. Many companies that invest in political lobbying get what amounts to a negative tax rate, or they receive more than they pay each year. While it doesn't guarantee total market dominance, it is virtually impossible to compete with an entrenched corporation that also gets a 30-40% income advantage. Some companies like GE/NBC are really good at this and often get out of paying state and local taxes while collecting federal subsidy and shipping jobs overseas to places with cheaper labor. Regulation has the effect also of creating an artificial barrier to entry: a price floor that has to be achieved for any new business trying to enter an industry. You're right. Thank God it hasn't gotten so bad yet! I think the best solution to the government question is to de-centralize. Government is more representative, responsive, and efficient at the state or semi-regional level. Competing currencies yield market-set interest rates. Competing independent currencies have been used in American history long before digital conversions and transactions were possible. The new technology would just make this monetary system work better - imho. Right, there's a boom and a bust and at the end of the day the speculators who bet wrong get burnt. The problem is, government intervention doesn't stop this from happening. Central banking is a big part of the problem because it allows politicians to skip public debates and it allows bankers (and now investment firms) to collect subsidy directly from the printing presses - no Congress, no President, no tax-payer approval. The central bank has also been complicit in fostering asset bubbles, artificially expanding boom periods or attempting to over-write busts with more inflation. You can avoid a recession or two, but the long-term effect is just a lot of inflation - and this is why the first two central banks went bankrupt: Corruption, inflation, and ultimately hurting the economy by manipulating the natural cycle. Good post btw thank ya. I don't know if we disagree too much, I'm just focused in on who is specifically getting these hundreds of billions of dollars and how they're connected to the political scene and the Federal Reserve - which does, literally, act as a shadow government.
Hunh? IIRC, Gold hit an overseas high of $1030, I saw it trading at $900 yesterday. And rising. That was just a clear out of speculators, it's normal to see minor regressions as it rises. Very little moves in a straight line. Besides, all of the conditions that brought gold to record highs still exist. In fact, those conditions may be even more dire.