The Ongoing Presidential Policy of Inflation

In every major United States presidential election until the early 1990’s, monetary policy was a major hot button issue. And believe it or not it even captured the popular fancy. For example, The Wizard of Oz written by L. Frank Baum, a populist sympathizer, portrayed the struggles of the movement to add silver to the American currency in his book with metaphors and symbols.

But what most people do not know is that this movement was actually fomented by a group of people who simply owed a lot of money and decided to lobby for a policy of inflation.

As a result, the Federal Reserve Act of 1913 actually began a new era of monetary policy in the United States with one primary motivation in mind: controlling inflation. The politicians, conniving as usual, had figured out an easy way to finance their debt… the printing press.

So those who wanted to rein in the recklessness decided that by making the Federal Reserve independent from Congress, they could prevent skyrocketing inflation. But, as so often occur with “the best laid plans of mice and men,” what actually happened was an inflationary credit boom that created the “roaring twenties” and a bust which the world coined “the Great Depression.”

Now if you think this sounds familiar to the current financial crisis with the housing boom and bust, you are not alone. Nor are you observing an exception to the rule.

The Federal Reserve, since it’s founding, has fostered a constant uncontrollable policy of inflation. But since they claim that they are independent, they insist that the inflation is not due to political pressures.

This, of course, is completely false.

Economist Thomas DiLorenzo finds that the Federal Reserve board has been little more than the President’s handmaiden time and time again. For example, when President Jimmy Carter wanted a strong growth in the money supply to further social welfare programs, Americans saw a jump in inflation to 8.5 per cent. Later, Ronald Reagan, wanted to stop Carter’s damaging policies and stabilize the American economy. He called in newly appointed Fed Chair Paul Volcker. And lo and behold, the “independent” Fed reversed its policies.

So, if the Federal Reserve gives in to the pressures of the President, then why is it that mainstream scholars believe that the Fed is independent? Well, the confusion begins at the divide between instrumental versus goal independence.

It’s true that the Federal Reserve has the independence to set day-to-day monetary policy without any interference, which is called instrumental independence. But the President can heavily influence and direct the goals of monetary policy, thereby making the instrumental independence worthless.

The President does this by exercising his powers of appointing the members to the Board of Governors. This board is comprised of the most powerful players in the Federal Reserve. With only five of the seven positions filled, President Obama now holds an enormous amount of power because he could add two votes to an already small board, making the current members less powerful and insisting his own appointee further his political goals.

Already, with the massive new amounts of spending, there is no doubt that Obama has been leaning on the Fed Chairman Ben Bernanke to help finance all of the new bailouts and outright spending sprees to pay the debt.

The argument is that the United States needs to provide liquidity, or more cash, to the banks so that they can continue lending out money. What is going to inevitably occur, of course, is another boom period followed by a catastrophic bust.

All the while, the American people sit in the dark, while their money is being continually devalued by the Federal Reserve’s printing press, which will cause an artificial unsustainable boom and allow Obama to claim to be economic savior. Then, when the massive bubble eventually—inevitably—bursts, Obama will be either out of office, or (particularly if the mainstream media shameless idolatry continues) simply out of reach.

Perhaps, the last best hope for preventing all of this is the passage of H.R. 1207. The bill now gathering growing support in Congress to audit the Fed already has a staggering 227 supporters. If it reaches 300, Nancy Pelosi will certainly have to hold a vote.

And the beleaguered American people—victims of the “independent” Fed’s obstinacy for well nigh a full century—will finally have a prayer.

Justin Williams is a Contributing Editor of ALG News Bureau.


Fight Bob vs. Silent Cal: A asinine lineage of the Republican party

This is no Reagan.

In the article “Fighting Bob vs. Silent Cal: The Conservtive Tradition from La Follette to Taft and Beyond” by Jeff Taylor attempts to make the argument that Ronald Reagan made a huge mistake of aligning himself with Calvin Coolidge and was closer to Robert La Follette. Taylor seems to ignore the difference between limited government and big government. He tries to align “Mr. Conservative” Robert Taft with La Follette on the basis that they were not for big business and Coolidge was. Taylor makes the argument that Coolidge veruss La Follette was the battle between croney centralized capitalism and the peoples capitalism. First, let’s go back to the Taft-La Follette connection. This is what the author himself has to say about it:

” La Follette was a preeminent “liberal” and “progressive” while Robert Taft was described as a “conservative” and “reactionary” by the press of his day. La Follette ran for president in 1924 with Socialist Party Socialist party, in U.S. history, political party formed to promote public control of the means of production and distribution. In 1898 the Social Democratic party was formed by a group led by Eugene V. Debs and Victor Berger. support while Taft condemned the New Deal and Fair Deal for being socialistic. La Follette was a leader of the Progressive Era and named his party after the movement that wanted to use government on behalf of the common people, while Taft rejected centralized, bureaucratic government.”

From Taylor’s own mouth, it seems that these two are complete opposite. Of course, the author blows if off by calling it “superficial analysis.”

Let us move past this and back to the point that Coolidge was in the hands of big business. From a glance Coolidge is very anti-union. He busted strikes while he was Governor and railed against the coal strikes during his time. This could be seen as pro-crony capitalism or anti-unions. He signed the Revenue Act of 1924 lowering personal income taxes but raising gift and estate taxes. This does not sound like pro-crony capitalism. In fact, gift and estate taxes often prevent crony capitalism. He did later sign the Revenue Act of 1926, which lowered the income tax again and some estate taxes. He was also an avid federalist, from Sobel’s book on Coolidge:

“As Governor of Massachusetts, Coolidge supported wages and hours legislation, opposed child labor, imposed economic controls during World War I, favored safety measures in factories, and even worker representation on corporate boards. Did he support these measures while president? No, because in the 1920s, such matters were considered the responsibilities of state and local governments.”

Now a brief glance at La Follette would show (besides what is above written by Taylor) that he had hardly anything in common with Reagan. He was progressive who supported social security, tariffs, and other progressive reforms.

So here is was distiguishes me from the author of this article. I cite evidence to why Calvin Coolidge was more like Reagan and La Follette is almost a complete opposite. I challenge Taylor to cite evidence that Coolidge was a support of crony capitalism. He cites Ron Paul and Pat Buchanan as current leaders that live up to the style of La Follette. I agree with him that the protectionist progressive Bucahanan is much like La Follette, but Republicans are not for free trade, as they should be. Ron Paul is for uninhibited free trade, which means without the government involvement. This is nothing like La Follette also.

If you do not believe me at the outrage of the asinine attempt at Republican lineage read it for yourself here.


59% Still Believe Government Is the Problem

This from Rasmussen Reports:

“In early October, as the meltdown of the financial industry gained momentum following the collapse of Lehman Brothers, a Rasmussen Reports national telephone survey found that 59% of U.S. voters agreed with Ronald Reagan that “government is not the solution to our problem; government is the problem

Other survey data shows that 72% of voters believe a free market economy is better than one managed by the government. That’s little changed since December.

While voters prefer the free market in theory, they are clearly willing to support government intervention for specific projects. Most Americans favor a six-month moratorium on mortgage foreclosures. However, most are opposed to more bailouts.”

So what is the problem here? The problem is there is no major party between Democrats and Republicans that represent the majority view. These people may have been more likely to vote for Republicans because they were the limited government free market talking heads. Instead, they were faced with a chance that Barack Obama might turn into Bill Clinton or John McCain who may have turned into George W. Bush. In that case, most people would pick Clinton. It may be argued that Clinton rode some major bubbles, but he was able to control spending. Bush has created the most spending since FDR, but will go down in history as Herbert Hoover.

The rest is here.


Sunday: Freedom of Speech Watch

I am going to try to every Sunday, expose all the infringement on people’s freedoms and especially ones of free speech. I am doing this because I think that people in the United States take it for granted most of the time.

Today’s Feature: China

As in most dictatorships or communist countries the students are taught and propagandized. I am not saying that isn’t true in a democracy, but you definitely see it a lot more in those types of countries.

In China it seems that they are removing propaganda and putting in more worldly facts.

The Economist says that they have removed things like shortening the suffering of the people before communism. This was obviously used to justify and create legitimacy to it’s government.

Then the Chinese government took it away and called it the shortest life text book in history.

China’s Newsweek that the Economist states is the second biggest media outlet called it “rash.”

The good part is that a change that hasn’t been taking away is that instead of learning about history they learn more about economics and politics.

This is really putting the test to the Chinese government to some how liberalize the nation economically while keeping the political grip tight.

I urge the United States to continue to allow freer trade with China because we are infiltrating them with our ideas. If we continue this in the long run then we will see China slowly shift into a democracy and it is a lot easier than invading.

Ask George W. Bush…or even Ronald Reagan

It’s how he took down the Soviet Union.


Published in: on November 18, 2007 at 9:36 pm  Leave a Comment  
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