The "Untied States": Let's Get This Economic Collapse Over With, So We Can Get On With Our Lives

The United States are becoming "Untied".

The worst financial mistake we ever made was to create the Federal Reserve. In 1933, when the US went off the Gold Standard, it became only a matter of time before the center could no longer hold. I'm surprised it's lasted this long. But let's unmask the culprits and get it over with--because I would like my 401K to be worth something when I retire in 20 years.

Have you looked at your 401K lately? Mine sucks. I'm making a much higher salary than my employer projected, and I'm putting in 4 percentage points more of my own money than my employer projected, but right now, I'm about $25,000 off the pace of my employer's meager projection for my

We have become a mega-empire identified as much by gigantic economic bailouts as by military imperialism. We have become a welfare state that prizes moral hazard above all else. Somehow in the midst of all this, we think we can tax ourselves more to pay for more health care, more social security, and more CO2 abatement.

total earnings. I've lost about that much in the last year.

When one little person makes a mistake, the effect is not that costly. When a fiduciary tycoon, like Alan Greenspan or Ben Bernanke, make a mistake it is terribly costly. Many such tinkering mistakes are why the US economy will either go down in some sort of flames and/or we will soon be clamoring for the Amero.

In a House Financial Affairs Committee meeting 3 years ago, Ron Paul reminded Alan Greenspan how he had sold his soul to the financial devil.
Even you, in the 1960s, described the paper system as a scheme for the confiscation of wealth.
Greenspan replied:
But as I’ve testified here before to a similar question, central bankers began to realize in the late 1970s how deleterious a factor the inflation was.

And, indeed, since the late ’70s, central bankers generally have behaved as though we were on the gold standard.
That may have been partially true then, but it is not true today, and it is nonetheless a poor defense of the need for the Federal Reserve.

When George W. Bush took

Let's get over the Fed-induced economic collapse that must happen, and then let's get back to a Constitutional money standard--by abolishing the Federal Reserve.

office, you could buy an ounce of gold for about 300 bucks. Now it costs you about $970. What does that tell you about the Fed's ability to smooth out the booms and the busts?

The Fed pretends to help the economy by keeping interest rates far lower than the rate of inflation. That encourages people to buy homes and other instruments of debt that in a normal market they would have no business considering. It also makes it so you and I can't earn squat on our savings and investments. And then they finally admit what we've felt all along for quite some time--that we experienced the highest inflation in the last 37 years last year! We've already noticed a ton of belt tightening around our house in the last couple of years.

Is that why they don't dare report the value of M3 anymore? Business Week reports(March 31, 2008, page 30), however, that the Fed increased the value of M3 by as much as 15% in the past year--as well the highest increase in 37 years.

Municipalities are feeling the crunch as well. You know that $350,000 home of yours that recently skyrocketed to a value of $500,000?

We are nearly $80 trillion in debt in this country, and now the federal government is seriously considering bailing out Freddie Mac and Fannie Mae. And in other news, fire fighters fought an out-of-control blaze at an oil refinery with jet fuel.

Well, city and county governments will not be dropping your property taxes anytime soon, because they've become used to the increased revenue--because they're feeling the pinch, too.

We are nearly $80 trillion in debt in this country, and now the federal government is seriously considering bailing out Freddie Mac and Fannie Mae. And in other news, fire fighters fought an out-of-control blaze at an oil refinery with jet fuel. Not only will this prolong the inevitable, it will make the inevitable worse.

If our currencies remained tied to gold and silver, there would be no far less drastic booms and busts. Booms and busts occur when the government or its cronies manipulate the economy to their personal benefit. Under a gold standard, over time, the price of goods should go down, because: (1) there could be no inflation, and (2) the ability to produce goods and services would improve, making them cheaper to mass produce. That's why I want the collapse to happen, because that's the kind of economy that I want to live under--not the shyster-dominated one that we have now--even if it means we have to atone as a nation for our financial sins first.

Instead we have become a mega-empire identified as much by gigantic economic bailouts as by military imperialism. We have become a welfare state that prizes moral hazard above all else. Somehow in the midst of all this, we think we can tax ourselves more to pay for more health care, more social security, and more CO2 abatement.

To really fix the problem, we must clean out Congress--with the exception of the handful of people like Ron Paul who understand and want to fix the problem. And now is a good time for a cleaning, because almost no one thinks that Congress is performing well.

Yes, we are becoming "Untied". The Federal Reserve's enrich-the-rich policies are our main economic obstacle, and they have got to stop. Let's get over the Fed-induced economic collapse that must happen, and then let's get back to a Constitutional money standard--by abolishing the Federal Reserve.




Comments

  1. While I support a gold standard, I disagree that gold standards prevent booms and busts. We had booms and busts in the late 1800s when the U.S. and many European countries were on the gold standard.

    Booms and busts are not just monetary phenomena, contrary to what Milton Friedman suggested. Commodity supply shocks contribute to booms and busts as well. The gold standard will not eliminate excessive speculative borrowing entirely nor will it eliminate business cycles.

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  2. Gold is not that special. It is simply a way that people can represent goods or services they have exchanged. Societies throughout time have used a variety of instruments, such as rocks and shells. The value of any of these things is based on the confidence humans put in them as an instrument of exchange. Even gold by itself isn't worth that much, except as an instrument of exchange.

    One problem with using a gold standard -- or any other limited resource -- is the implicit assertion that the economy is incapable of producing more goods/services than the total supply of the instrument. This simply isn't true. Our gold supply has not grown in any kind of proportionate way with the growth of our total economy over the past four decades.

    Had we stayed on the gold standard, we would have been forced into nearly continuous deflation to match the total prices of goods/services available with the total supply of gold.

    I'm not saying that our Federal Reserve system is wonderful. You have noted some of the many problems with it. But let's at least acknowledge the problems inherent in a gold standard. It's no utopia either.

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  3. Frank, at the risk of joining the "let 'em eat cake" crowd, you could have bought shares in a gold commodity fund...

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  4. Anon and Reach,

    Thank you for the correction. I've changed the wording in the article to say "far less drastic" booms and busts. As anon says, excessive speculation will still cause the problem.

    Reach,

    You might be right about the quantity of gold, but I will disagree for argument's sake. If the quantity of gold remains small, then that would tend to drive prices down. Maybe I don't understand enough about deflation, but lower prices seem to me to be a good thing.

    Richard,

    I have--belatedly--began to wonder if I can do something like that with my 401K.

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  5. Frank,

    You said:

    "Municipalities are feeling the crunch as well. You know that $350,000 home of yours that recently skyrocketed to a value of $500,000?

    Well, city and county governments will not be dropping your property taxes anytime soon, because they've become used to the increased revenue--because they're feeling the pinch, too."


    Your description doesn't exactly reflect how things work in Utah. Taxing entities aren't allowed to increase their budgeted revenue just because real estate assessments have increased. If assessed values go up the tax levy has to go down to ensure there is no windfall that hasn't been publicly approved by elected (usually) officials. In Davis County most of our tax levies are decreasing this year compared to last year due to this principle. The only way a municipality's revenues can keep up with inflation is if there is a public truth in taxation hearing held by those responsible for setting that taxing entity's budget.

    I know this is a very tangential point but it is important that misconceptions not be spread; especially since real estate assessment notices will be sent out within the next couple weeks in all of Utah's counties. I typically spend a month or more at work during this season explaining to taxpayers in Davis County how property taxes work in Utah so I'm a little touchy when I see anything that might confuse someone I may end up having to deal with!.

    Great post. Gold may not be the best basis for the value of money but it sure beats leaving everything in the hands the unaccountable jokers who are trying to wing it right now!

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  6. Jeremy,

    I was on a city council once, and I remember avoiding those truth in taxation hearings because it was most easy for residents to complain to us when their taxes were too high than to complain to the state or the feds. So we never had one. (But we did raise fees as high as we could.) ;-(

    But when it comes to the county's evaluation of my home/land value, I remember over the last several years my property tax going up with a simple notice from the county saying "Your home was valued at x, but it is now valued at y, and thus your tax, which was a, is now b."

    So I guess I'm a bit confused at how that part of it works.

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  7. Yes, prices would go down -- on everything -- continually. So would wages and earnings. We also know from experience that investment in new ideas declines under limited monetary resources, so it is possible that prices wouldn't decline as I suggested. We would just have stagnant innovation.

    A gold standard might well be better than manipulations by central planning jokers, as Jeremy says. But let's not pretend like our problems would go away.

    Some economists have suggested that competing currencies would be healthy. Government rules currently try to stamp out all competing currencies. But with proper rules we could allow for private currencies that could be backed by any approved valuable instrument. A few years of something like that might render Federal Reserve notes obsolete.

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