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you i would say that we’re fortunate to be living in these times for we’re seeing the unfolding of events long explained and predicted by the austrian tradition now maybe that sounds implausible what’s fortunate about our times the economy is tanking stocks have tumbled unemployment is rising Washington is pursuing the worst combination of economic policies since Hoover and Franklin Roosevelt wrote as the guy in charge now seem to have a clue about the limits of what government can do consider what it means however to live through our times in the light of economic understanding even in the face of calamity there is no mystery and hence fear is reduced you look at department stores going belly-up and you know why you see empty mall parking lots and you know the reason you see people losing their jobs and there is clarity concerning the cause you see depositors and failing banks lose some of their money and you’re not surprised prices behave in ways that shock and surprise everyone else but you know what’s what in many ways it’s like watching the movement of the planets with scientific knowledge provided by astronomy or preserving the effects of a plague with medical knowledge without that understanding the events look mysterious like a curse from the gods and their patterns appear random with the knowledge with the understanding we can make sense of the events patterns of cause and effect emerge you see events before they happen like turning the pages of a script before the movie catches up to you this gives you a sense of intellectual coherence and some inner peace even in the midst of calamity if you read what meeses wrote during the Great Depression in World War two you can see firmness of conviction and said fast calm even though the World War was going nuts intellectual clarity is the key to seeing the right things and doing the right things it is a matter of knowing the shape of things even before things take shape knowledge provides a means as well of curing the ill it provides a way out an answer that gives hope this is a major reason by people with an Austrian understanding in the midst of financial meltdown keep their wits about them yes it is frustrating beyond belief to see people in Washington spending trillions in a futile effort to repeal economic law it is sheer madness they are creating vast quantities of new dollars by means of the feds power even with evidence from the whole of human history the new money only waters down the value of the old and does nothing provide a long-term boost to the economy and rather only further distorts economic structures it’s like watching barbers bleed patients in the name of during them or bringing in the witch doctor to cast out demons from people who were sick but even if our knowledge of events cannot stop what people are doing for now it provides us with a sense of solace in the face of disaster we can keep our heads even as others around us act as if there’s have been cut off in order to understand events there is no substitute for doing what the media and indeed most economists refuse to do which is to look at the big picture and the long view over decades it is a matter of applying the rule that Henry Hazlitt brings home so clearly in economics in one lesson economics consists in looking at the effects of policies not only on one group but in all groups not only in the short run but in the long run from the long run point of view we observed an intriguing illustration of the Austrian warning against ever attempting to bail out an economy that is pushing towards recession in 2001 the economy wanted to

go under session but the government wouldn’t let it happen it was the first stimulus package of the new millennium consisting of vast new funding and vast money creation with the Fed driving down rates and keeping them at rock bottom if you look to just the short run it seems that this worked but looking at the long run we can see that the attempt to forestall recession only ended in creating a much greater disaster down the line something very similar happened in 1991 Clinton came to power and shorten the recession which only created another bubble and financials that broke and so on until we are where we are today arguably the last time that a recession was permitted to run its course appeared following the crack of boom at the end of the Carter years as a result of the inflation under richard nixon reagan came to power with Volcker at the Fed Volcker had been appointed by Carter Reagan doggedly refused to listen to the screaming and the crying from Congress and the press he held the line he let interest rates rise the federal funds rate was twenty percent prime was 21.5 percent in 1982 unemployment reached nearly eleven percent inflation however fell from 13.5 percent in 1980 three-point-two percent in 1983 if we include the SNL debacle this was a nearly total blowout and if Reagan had left it at that it would have been a model for how to deal with recession there was pain and suffering but wait it out and you have a fertile ground on which to build a solid prosperity sadly you also produce a firm financial footing that invites the government to abuse the system as Reagan did with record spending and record deficits if we want to look back even further to find better examples of how to handle recession we can look at 19 20 and 19 21 unless the government did the better long-term results Murray Rothbard zone dissertation on the panic of 1819 choses a pure case in which nothing was done to fix a problem what was notable about this panic is precisely that it never made it into the history books it didn’t because government didn’t make it worse in the months ahead where you’re going to witness more of these ridiculously futile attempts to patch up a failing economy and we’re going to pay a huge price this time it won’t be like 2001 or 1992 we’ll be lucky if it ends up like 1978 1982 more likely it’s going to be much worse and how much worse depends in part on just how stupid the Obama administration is going to be hard to imagine anybody worse than the Bush administration but we may find out we almost deal also with the possible death of the dollar many plans have been proposed through the years to restore a gold dollar and many have merit all these plans provide a means to go back to gold they’re not lacking in technical detail they are lacking in something that they can’t provide that is the political will to do the right thing they’re all premise Don an idea that our leaders might be interested in doing the right thing but the same people that would be in charge of implementing the reform are the very ones who got us into the mess it’s hard enough in the course of regular life find out anyone who admits an error and reverses course in politics it virtually never happens even in the case of egregiously immoral effects the political class persists in error because it is much more interested in saving itself that in Saving Society dito Holzman points out in his new book the ethics of money production that quote governments inflate the money supply because they gain revenue from the inflation unquote this is hardly a new insight Holzman quotes the 14th century Bishop Nicholas a resume as follows I’m of the opinion that the power of altering the coinage excuse me I’m I’m of the opinion that the main and final cause of why the prince pretends the power of altering the coinage is that the profit or gain which he can get from it it would otherwise be vain to make so many and so great changes besides the amount of the princes profit is necessarily that of the community’s loss the techniques are different today but the incentive and moral result are the same holzmann points to another change today’s princes quote have received absolution from the scientific authorities of our day prince is used to do their work in secret and be disgraced

when cod now they announced the policy as responsible statecraft that is consistent with the teachings of modern economics and The Economist stand ready to nod their heads in agreement in the face of this it is time to deal with political reality that no one in Washington except of course Ron Paul has any interest in whatsoever an orderly plan to restore some money and yet the problems of fiat money and financial collapse cannot go and address what’s more the institutions of fiat money are failing and this fact will be undeniably obvious to everyone in a matter of years we will look back on the end of the Bush administration as an economic disaster a capstone of many horrible years of foreign policy moved to domestic policy they will be disgraced as will be the new administration that pursues all the wrong measures as a response the new Messiah will face the same reality that the old one did no amount of bluster political will determined speeches and money flowing from the printing press can get around the problem of economic reality in an essay written at the end of his career and recently brought back to life by the musicians to do fa hayek discusses the only serious means of reform that is open to us of course we need to get rid of the central bank but money itself must be wholly untied from the state it must be restored as a private good privately produced for private markets government must have no role in all in monetary affairs money should be produced by private enterprise alone banks must exist only as free enterprise institutions with no privileges from the state Ron Paul outlined a similar program when he was running for president what strikes me is how these policies Accord precisely with what holzmann writes in his book the ethics of money production hurry ends with a call to end all intervention and Monetary Affairs coinage must be private banking must receive no privileges there should be no legal tender laws no guarantees no restrictions on currency use a fully Liz a fairer system what further striking about the Holzman and the Hayek and the Ron Paul idea is that they offer no plan for restoring a gold dollar it is not that any of them would disagree with the idea but all of them have fully confronted the reality that the idea of converting the existing fiat currency to sound money is essentially a nineteenth-century ideal that presupposes an enlightened class of political managers this condition is not met today so what is the means is the same as we propose in every area of national life yet the government out but the people be free to manage their own affairs stop interfering with commercial acts between consenting adults stop using violence to interfere with economic affairs but the people pursue mutually beneficial exchange based on their own self awareness and self assessment of the city advanced let property owners accept the risk and rewards for their own decisions it is the same with monetary policy and banking policy too but failing banks die but profitable banks live but the people choose any form of money but the people choose any means of payment that entrepreneurs create any form of financial instrument law applies only on the way it applies to all other human affairs punishing force and fraud otherwise the law should have nothing to do with it and what would be the result well we can actually cannot know for sure but history can be a guide in our speculation throughout all time and in all places precious metals have emerged as the foundation of the monetary system I think we can have every expectation that the same would be true today evidence comes from how many people turn to gold and difficult times as a store of value a safe house from the machinations of government gold is probably destined to be the foundation of any new free market monetary system to this extent and with this expectation all believers in Liberty can consider themselves advocates of the gold standard but we have to be careful with this phrase it’s identified with a particular set of policies associated again with 19th century practice it was a policy choice among many that some favored and some opposed a free market monetary system of the future will not be a policy option in this sense it is not something we want the government to adopt as its own in fact we don’t want the government to adopt any particular

policy but rather abandon the policy option altogether there should be no policy at all in the sense that this word is routinely used today in this way a path forward and money in banking is no different from the path forward in agriculture labor health care education or any other sector the right policy is no policy the job of the government is to stop interfering all together now I’m aware that this is a big intellectual leap for most everyone these days but you only need to consider the myriad ways in which government fails at everything at attempts whereas the market succeeds there is nothing about the structure of the universe that confers upon money in banking any special status that requires the government to regulate it the serve is the lender of last resort the marker of money the guarantor of stability or anything else a free market on money would work the same as a free market in anything else what about making the case for freedom it’s not easy these days or consider what we are asking we’re not asking the president to do anything we’re not asking for Congress to intervene with a plan no one is demanding that the Fed adopt this policy as versus that policy all we are asking they not intervene in the attempts by the market to fix the problems they have created that the central bank and the executive department have fastened upon us just imagine what would happen if legal tender laws were repealed and the government stopped intervention in the market for money virtually overnight we would see the appearance of hundreds if not thousands of new payment systems and alternative monies online merchants would be free to accept any means of payment there would be intense competition among them some would be foreign currencies like the euro some would be new currencies based on existing commodities such as gold and silver I’m certain that we would even see a period of wild experimentation take place for the market settle back down into a standard system that would be famed for its reliability and stability and honesty would we be able to endure the process of discovery of course we do this every day with our shopping online in searches for good providers of services and products in the physical world and our habits and how to invest our money the market is a process of trial and error one that never stops innovating and changing we see every day on the world wide web of this process of creation and change create the right balance between chaos and order experimentation and standardization this would happen in the field of money too in fact it might have happened already had the feds not intervened to stop the rise of alternative payment systems Walmart might have already entered the banking sector we might have a wide variety of currencies available to us Google might have created its own currency based on the number on a number of goods we might have more elaborate use of barter in the online world taking place and that barter solely converting itself into currency might be based on who knows google add points paypal dollars some other currency at a free market in money been a proponent permitted to develop over the last ten years we would have an option today as it is we’re being forced to stay within a falling dollar system what we’ve been hearing from Washington is that the economy in this country will be patched up by sheer force of will if we have hope and work together everything is possible there was only one thing standing in the way of this wish it’s called economics economic reality is more than a brick wall it’s like the sea or the world’s tallest mountain or like the force of gravity itself economics forces economic forces pay no attention to the wishes of charismatic leaders and their thong throngs of adoring followers wherever there is a kernel of truth in the added that the force of will can make a difference transfer this hope and that will outside the institutions of government and into the free market let experimentation and innovation begin take place under conditions of freedom we will begin to see the emergence of an answer we need the government merely to let the market be free of political violence we will begin to see our way out of this mess the government today is marshaling every resource and every means at its disposal to prop up a failing system of the past meanwhile we live in completely new times these new times are characterized by an international division of labor global capital flows digital information delivery and the slow but systematic destruction of the establishment in

media banking and finance what is emerging to replace them something that no government on the planet can stop Marcus will not be crushed and they will resist control as never before these times these new times are not the 1930s when a few eggheads in Washington could set in most prices and wages and gather the captains of industry to cobble together business cartels the economic and financial world moves at the speed of light in a soda use that no political authority and act quickly enough to control it the establishment is going down this is another reason that all this is another reason that all believers in freedom have reason to rejoice today in 12 to 18 months from now will be obvious there is nothing the new administration can do to patch things up Obama will be humbled before the market just as Bush and Clinton were before him but this time the humbling will overwhelm any attempt to patch things up or put a spin on the much-needed upheaval yes there is suffering thanks to what the Federal Reserve and its allies have done to us in past years but as a student of the Austrian school and a student of the history of Liberty you have the confidence and the clarity to see that freedom alone provides the answers it is time for calm in the face of the storm but advocates of freedom be steadfast rational clear and focused on the long term we have good cheer and snot never stop pointing out the truth about freedom the answer is not the left or the right nor the state the way out of this mess is freedom it is time we defer to it and to the revolution in the status quo that freedom implies and give up pretending as if any politician is going to be able to stop it

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