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by Free Market Duck

J'accuse, Mr. Federal Reserve did it with the Candlestick, the Revolver, the Rope, the Knife, the Wrench, and the Lead Pipe in the House, the Senate, the University, and Wall Street
(Aug 23, 2007)

Whodunnit to whom?  Where?  And with what?

Wall Street, NY – A murder occurred on Wall Street last week.  You're an investor-detective.  Your job: figure out whodunnit to whom?  And with what?  Ready to play CLUE?

   Ms. Stock Market was found beaten, shot, strangled, and stabbed to death last Friday in what appears to have been a grisly long-term torture and murder on Wall Street.  The killer was sloppy and left clues strewn all over the place.

   Free market detective Phillip Marlowe reported, "Although the vic was found dead on Wall Street, the body was killed elsewhere, tortured for many years in the Billiard Room, the Library, the Lounge, the Conservatory, the U.S. House, the Senate, every University in the country, Wall Street investment houses, most banks, and finally dumped at this location last Friday."

   "Got any clues?" asked Deep Throat II from FM Duck Journal.

   "Yeah," said detective Marlowe, "we suspect this was the work of the serial killer who calls himself The Federal Reserve."

   At this point in the game, you're probably asking yourself, how can the culprit be the Federal Reserve?  Isn't the Federal Reserve supposed to be the solution to prevent stock market crashes, recessions, and depressions in America?

   Time for a refresher course in basic free market economics 101A, mes amies.  Time to review the terms free market, money, and price formation.

   First, a free market is an economy in which individuals are free to voluntarily exchange ideas, services, and commodities without governmental intervention.  The only function of government is to provide an objective judicial system to prevent the initiation of force or fraud.  It is not the function of the government in a limited free republic to "manage" the free market, either through a central bank or other bureaucracies.  Therefore, a true free market has no need of a central bank such as our current Federal Reserve to "manage" or manipulate the market.  A "managed" market is the trait of all collectivist governments such as socialism, fascism, and communism.

   Second, money is a commodity and paper money is an IOU or a promissory note for a specific amount of that commodity.  (see  05-26-2007  What is paper money? More... )  Currently, the U.S. does not use either real money or real paper money.  We use fiat (or forced) currency with no commodity backing whatsoever.  Our forced money is hyper-inflated by the Federal Reserve and is becoming worth less every day, devaluing at an exponential rate.  Therefore, the Federal Reserve has created the current stock market and monetary crisis and when it "injects liquidity" (inputs even more Funny Money into the market), it is actually ratcheting up its hyper-inflation of our fake money supply to benefit special interest groups (such as the bankers and Wall Street investment houses) and devaluing everybody's unit dollar.  The Federal Reserve is not our economic savior.  The Fed is the culprit who caused the mess in the first place with their "managed" monetary policies.

   Third, price formations in a free market are not the result of quantitative valuations inherent in either labor or any commodity.  Prices are qualitative priorities, emotional and otherwise, determined by individuals freely trading in a free market.  Governmental interference in the pricing mechanism of a free market through direct intervention or through central banks such as the Federal Reserve destroys the pricing mechanism which can only be brought about by qualitative decisions of supply and demand.  Intervention by the Fed produces unintended future economic consequences as well as wrecking all means of future economic calculations -- which, by the way is precisely why socialism always fails.  In short, intervention by the Federal Reserve destroys the very thing that the free market needs to dynamically correct itself:  free market price formations.

   Why do we put up with private central bankers (the Federal Reserve) attempting to pull off the oxymoron of "managing" a free market?  Congress wants Funny Money so it can play deficit financing without continually asking U.S. citizens for trillions of dollars every year.  University PhD.s in Econ have bought off on Quantitative Collectivist Economics because they think it makes their "dismal science" more scientific.  They don't understand the difference between the fundamental reasoning methodology underlying physics and chemistry (the scientific method) and economics (qualitative methods).  Both methods are legitimate, but only within their own disciplines and cannot be interchanged. 

   So, you ask, who murdered Ms. Stock Market last week?  J'accuse, Mr. Federal Reserve did it with the Candlestick, the Revolver, the Rope, the Knife, the Wrench, and the Lead Pipe in the U.S. House, the Senate, all Universities, and Wall Street. -- FM Duck

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