current Financial Crisis predicted and AVOIDABLE

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Ultraman83

< 25 Posts
Austrian Free Market Economics VS current system followed of Keynsian Economics

Austrian Free Market Economists such as Peter Schiff explain a system that excludes depressions, recessions, booms and busts in the economy. It is based first in sound money principles. Like money that is actually worth something. Fiat money is UNsound money. Fiat money is money that is worthless unless backed by legal tender laws... money like our very dollar which is just useless paper. What has inherent value? Paper or something like say... gold?

When a government allows Keynsian Economics (which also includes central banking) to dominate the economics of a nation that is made possible with legal tender laws. They are laws passed that prevent competition and create a monopoly owned by the government or their central bank. They create a monopoly on money, itself. This puts all the power of the money supply in the hands of a few select people in the form of the central bank. When they control the money supply and the interest rates at which they loan this money to other entities they control the lifeblood of the economy. The money.
 
When you control money in this fashion you control the economy of the nation, itself. Central bankers are central economic planners. They make decisions that assign the value of each dollar when they inflate or deflate the currency. To inflate the currency is to make more from thin air (and subsequently lend it out at an interest rate). When there is more of a currency in a market each unit of that currency is worth less. If there were 10 million signed Michael Jordan rookie cards each one would be worth much less individually than if there were only.. one. So when you inflate the currency as such, each unit of the money is worth less and they buy less and prices then rise. So inflation of the currency is what leads to rising prices.
 
Lending rates are also decided by the central economic planners at the Keynsian central banks. If they currency of the nation is lent starting at the top by the central banks which issue the currency at a rate of 3% then the banks it lends to like when the Federal Reserve lends dollars to Chase Bank or Citi Bank or Goldman Sachs, these banks, in turn, cannot lend their loans out at any rate below 3% or they would be losing money. They have to lend the dollars out at a higher rate. So central banks like the European Union's, Brazil's, Japan's, England's, or the USA's control the value of the currency and the lending rates in this fashion. It is central economic planning.

This is made possible under fiat money systems. Fiat money is money that is worth nothing on its own. Like the paper dollar. If it were a relic of the past in a hypothetical future AFTER the dollar is no longer being used, it would be worth nothing at all, unlike something like silver or gold. But when you have legal tender laws in place that force people to use it, they MUST use it. Fiat money backed by legal tender laws put all the power of the money supply in the hands of the central economic planners at the central bank. And they have a lot of power because of this.

In Austrian Free Market Economics the currencies are worth something on their own. Because it works like this. When there are no central bankers and central planners and fiat money and legal tender laws running the money show the free market takes over and stabilizes everything and punishes failure and rewards success. A failed currency is the dollar. The EU is failing as well. When the dollar reaches hyperinflation it will have failed and if we repeal legal tender laws then the free market will take over. People would probably start bartering. From there practical matters come into the fray.

If I were to barter couches for potatoes it would be difficult to move the couches. If I were able to find something worth my couches in what I can exchange it for then I would probably use that instead. I want something easily transported. Paper money is easily transported but if the dollar wasn't worth anything anymore after hyperinflation then no one could find inherent use for them outside of fueling fires, perhaps. So something that has inherent value like seeds might be something I could use instead of couches. Precious metals are often what eventually take over in a free market money system. They are easily transported and have an inherent value that allows them to be exchanged for a lot of goods. They have a high exchange rate. All through history gold has shown itself to be what the equilibrium of the free market settles on.

Fiat money developed when one essentially exchanged gold for an IOU at the bank. We used to be able to cash in our dollars for gold at banks. But with the abolition of the gold standard a monopoly over the money supply and inflation were made possible by our central bank, The Federal Reserve. And they took control of our economy, no longer leaving it to a true free market. When the government "regulates" an economy it imposes artificial restrictions. When a group of central economic planners get together to make money policy they don't have the foresight to know what would happen in a free market where millions of interactions lead to an equilibrium of the best and most sought after and rewarded form of currency and means of meeting the needs of the people. It would be like Communist China deciding how many cars to sell to the Chinese in a given year. If demand is higher than what they sell then there are people who go without a car. If demand is lower than what they made to sell there will be unused cars that they didn't have to spend money producing. The truly free market (not what we have) addresses all concerns of the market. Central economic planners don't have the foresight to do the same even if it is 8 or 100 experts.
 
So when governments pass legal tender laws they are essentially serving a central bank's purposes. When they abolish gold standards the same happens. In the 1930's gold bullion (coins) were seized so that no transactions in gold could occur. This is fascist. When enough people clamored for their rights back to hold gold bullion the government capitulated and in the 1970's gold was allowed once again. This serves the bankers.

Bailouts serve big corporations and bankers and punish small businesses when "too big to fail" means small banks or businesses will NOT be bailed out. This gives favor to big corporations and especially banks on Wall Street. They can make high-risk loans that will probably fail. When the loans pan out they get to reap the rewards. When they fail, which is more likely, they can be bailed out. It is a perfect system for them! And it goes against the truly free market.

So the bankers on Wall Street are in a very profitable business. Their businesses cannot fail, no matter what. Check out how many businesses the Federal Reserve has bailed out.

The Link

The above link is a clip of SOME of The Federal Reserve's released bailout information. Not long after this clip Fox and Bloomberg TV sued the Fed for info and got them to release 30 thousand documents.

Bailouts, central banking, fiat money, legal tender laws, gold standard abolition and other things contribute to a government explicitly favoring the industry of banking and Wall Street, in particular, and The Federal Reserve above all. It gives the Federal Reserve a lot of power. Unchecked power. Look at this link of Alan Greenspan, former Federal Reserve Chairman, admitting that the Federal Reserve is above the president, congress, and the supreme courts.

The Link

This is outrageous.

Does anyone know the direct connection, as understood by Austrian Free Market, between unsound money principles and tyrannical government? " He who controls the gold controls the rules," after all.
 
The Federal Reserve is a private bank. This means it is a bank. Not a governmental agency. It happens to be a corporation with private stock holders. The names of the stock holders isn't released to the public. Ron Paul is working to audit the Fed because, after all, it controls our money supply. We should know what it is up to. Check out this video of Alan Grayson drilling current Fed Chairman Ben Bernanke on lending half a trillion dollars out, much to foreign banks. That is OUR money he is lending! This is outrageous!
The Link

There were 3 central banks in American history before the Fed. They were primarily owned by Europeans when their stockholder's identities were public knowledge. Now... nobody knows... But that knowledge is what helped them to be overthrown. The running of our economy into the ground by our current central bank, The Fed, as well as the Great Depression which happened under its watch should be sufficient evidence to get rid of this vile beast. It doesn't do us any favors. It lends money to its buddies at other central banks of foreign nations. They act in concert. Libya's central bank is state-owned, for example, but many are private entities working together.
 
What is noteworthy is that if we followed the Constitution we would have a more prosperous, Austrian School of Free Market-type of economy. Our Founding Fathers stipulate to use gold currency. You cannot make more gold like you can more fiat currency. Fiat currency can be inflated indefinitely but gold cannot. There are only limited stores of gold in the world. Gold maintains its value or goes up in value with a few dips but overall consistent growth in its history. Silver more in the last hundred years.

If we followed the Founding Fathers' stipulation in the Constitution to use only silver and gold in paying all debts both public and private, would prevent central banking as we know it, prevent fiat currencies, and prevent such problems as we see today. Benjamin Franklin is quoted as saying that the issuing of currency by the Bank of England (the first central bank) to the colonists at an interest rate meant the colonists were forever indebted to the bank. This is what we have in The Federal Reserve. The Bank of England did not allow the Colonies to control their own money supply and they were taxed in this under-handed, unfair way. So they revolted for their own financial interest.

"

During a visit to Britain in 1763, The Bank of England asked Benjamin Franklin how he would account for the new found prosperity in the colonies. Franklin replied.

"That is simple. In the colonies we issue our own money. It is called Colonial Script. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers.

In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."
Benjamin Franklin 1

America had learned that the people's confidence in the currency was all they needed, and they could be free of borrowing debts. That would mean being free of the Bank of England.

In Response the world's most powerful independent bank used its influence on the British parliament to press for the passing of the Currency Act of 1764.

This act made it illegal for the colonies to print their own money, and forced them to pay all future taxes to Britain in silver or gold.

Here is what Franklin said after that.

"In one year, the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed."
Benjamin Franklin

"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the Revolutionary War."
Benjamin Franklin's autobiography

"

The Link


The colonists revolted against this tyranny. They were in a situation of perpetual debt to a foreign institution. Under central banking, since they issue the currency at an interest rate to governments, corporations, and banks, they make money on every dollar created with inflation. It is a very profitable system. And that is what we have with the Fed. as well. The Bank of England did to the colonies what The Fed does to us. It has not been audited yet and people like Ron Paul are working to audit it because they are certain that it has much to hide. Otherwise why is it hiding? Its been around for 100 years and still no audit???

The Link

The above link is a documentary from the 1960's about a book by distinguished history professor Carrol Quigley at Georgetown University who was well-connected and respected in academia and who, among other things, was a distinguished speaker at the Smithsonian Institute. He wrote this book on the history of central banking and how it came to the USA. Because central banking is essentially a system of secretive plunder right under the citizens' noses this book was heavily suppressed upon its release.
 
that is some late night / early morning energy you got going on there!

welcome to the board.
 
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