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by Free Market Duck

Idaho Statesman parent McClatchy confuses socialism with free market
(Dec 7, 2008)

 Joseph L. Galloway, military columnist for McClatchy Newspapers (military columnist?), accurately describes the Keynesian socialist economics of the last 5 decades and then amazingly concludes that the state interventionism he describes is, go figure, free market capitalism.

War is peace; slavery is freedom; paper is gold; up is down; left is right; Keynesian socialism is free market capitalism?  The Statesman’s article should have been titled, “Isn’t today’s New Speak grand?”

Boise, ID – Whoa, gather round, listen up, shut up, and pour yourself another hot cup of Rocket Java, girl friends.  The Idaho Statesman’s parent news rag, McClatchy, is so intellectually bankrupt that they – or at least one of their columnists – have no idea of the definition of free market capitalism vs. state interventionism.

   In the Statesman’s recent editorial column entitled, “So much for the free market,” McClatchy’s author says, “Hear that humming sound?  That’s the printing presses at the U.S. Treasury running 24 hours a day, seven days a week, churning out an ocean of green paper to bail out the billionaire bankers, brokers and assorted brigands who are responsible for the economic disaster that’s befallen us.  They’re busy running off $3.7 trillion in bailout money for those who don’t deserve it.  It’s a Happy Thanksgiving and a Merry Christmas to the very pirates whose greed got us, and them, in all this trouble.”

   So far, so good, but then the McClatchy author concludes, “Isn’t capitalism grand?”

   Huh?  Who’s the author speaking to, the Economic Village Idiot’s Convention?  He just described the hallmark of economic socialism or Italian fascism or government collusion with the central bankers and then calls it capitalism?  George Orwell warned us about New Speak and I guess we have now arrived:

War is peace; slavery is freedom; paper is gold; up is down; left is right; Keynesian socialism is free market capitalism?  The Statesman’s article should have been titled, “Isn’t today’s New Speak grand?”

   In essence, the author said, “Isn’t state interventionism grand?” or “Isn’t collusion by a Federal central bank and Congress and the bankers on Wall Street to (1) go off the gold standard and (2) replace sound money with non-collateralized, non-backed, irredeemable fiat (forced) currency, i.e., a Keynesian socialist or Fascist Business Model, GRAND?”

   But the McClatchy author – and apparently the Idaho Statesman editors who continually print such socialist diatribes as today’s absurd article blaming the “free market” for our current socialist (or at least fascist) economic problems – have no clue about what constitutes real money or free market capitalism vs. fake paper currencies and socialism.  Many journalists today obviously can’t differentiate between free market principles and Keynesian Quantitative Econometrics.

   The only thing the McClatchy author got right was that it was both the Republicans AND the Democrats who have brought this economic meltdown upon us.  George Bush’s economic philosophy and implementation is a simple variation on Karl Marxian state interventionism and the majority leaders in our Parliament of Whores have been gobbling up socialism and dispensing it via programs and Pulp Fiction Dollars like it was vanilla ice cream on top of a baked apple pie.

   The McClatchy author’s apt description of the “corporate welfare” allowed by Congress via a debtor economy mentality, with fake money (no gold) distributed by the U.S. Treasury and our Federal Reserve Central Bank to their alumni on Wall Street, should have tipped him off by his very own words: “corporate welfare.”

   “Corporate welfare” does not mean “free market” but rather “state interventionism” or “special interest legislation.”  Free market capitalism does not mean government collusion with private corporations, especially central bankers.  Dragging the government into the market changes the game from a free market to state interventionism.

   Wall Street bankers and brokers have not been creating toxic derivatives in a free market but rather in a Las Vegas style stock market using our Pulp Fiction Dollar as a medium of economic exchange and then extrapolating that medium into other media we now call toxic derivatives, CDOs, SIVs, CDSs, subprime mortgages, and ad infinitum, with many unintelligible hedge funds defined in over 400 pages of differential calculus equations and purporting to use non-collateralized debt such as credit card debt, school loans, car loans, etc. as so-called “collateral.”

   Question:  what are these so-called “securitized” debts using for “collateral:”  the toys and non-redeemable vacations people splurged on to incur credit card debt?  College graduates as what, slaves, or their future job salaries as collateral for Wall Street hedge fund loans?  People’s physical cars as collateral for Wall Street hedge funds?  Like I want my neighbor’s Ford Focus or iPhone as the collateral for my Retiree Pension Fund?  As if that’s even a valid concept in economics?  Hey, why not?  The Keynesians who took us off, and/or keep us off, the gold standard (Lord John Maynard Keynes, Alan Greenspan, Ben Bernanke, George Bush, soon to be Prez Barack Obama) state that our GDP acts as collateral for their huge printing of trillions and trillions of national debt.   Not only is that an insane concept, the current level of toxic derivatives churning around the market is over $680 trillion while our GDP is only around $15 trillion.  Whoa, somebody turned on the monetary spigots full blast to “churn” the crap out of the American public to the tune of 45 times our current GDP!  Does this sound like our U.S. Dollar is defined by our GDP?  Or course it’s not, nor does the Fed Reserve own every American’s private property against which the Fed could collateralize their paper debt, which, by the way, becomes OUR paper national debt.  This is not free market capitalism; it is Keynesian socialist economics on Pulp Fiction steroids.  The McClatchy author is off his gourd blaming the free market for this Keynesian socialist madness.

   Where else does the McClatchy author go wrong?  What is it that he doesn’t understand regarding the difference between free market capitalism and Keynesian socialism?  Why does he accurately describe our socialist economic system, including the collusion between Congress, the U.S. Treasury, the Fed Reserve and Wall Street bankers, and then erroneously call it a free market?  What he forgot to define or explain as a basic premise is the foundation of free market capitalism vs. Keynesian economics.

   What is the hallmark of free market capitalism?

   First, free market capitalism rests upon a foundation of individual rights and freedoms, mutually-agreed upon exchanges voluntarily arrived at in an open market.  Not through government participation or collusion.  The only proper function of government is to protect these rights and freedoms, including the right to freely choose one’s own medium of economic exchange such as gold or silver, not to invoke special interest legislation for the bankers to gain a monopoly on the creation and manipulation of the people’s medium of economic exchange.  FDR, in 1933, made it a criminal offense to own gold coins.  The U.S. government switched all silver in our coins to cupro-nickel in 1965.  Nixon went off the international gold standard in 1971.  If you try to stamp private gold or silver coins, you will go to jail.  The central bankers have counterfeited the U.S. Dollar, forced us to use it, and passed it out to their buddies on Wall Street.  Does this sound like a free market or government collusion?  The government is creating the crime instead of prohibiting it.  Sarbanes-Oxley stopped Enron from off balance sheet shenanigans but cleverly exempted all banks.  Does that sound like a free market or special legislation?  Fannie and Freddie and Congressional leaders and Prez Bush pushed cheap home mortgages to set us up for the current subprime housing crisis.  On and on and on it’s been constant governmental intervention with special legislation that has created our financial meltdown from hyperinflated paper money, cheap home mortgages, Wall Street bail outs for the bankers to shove their toxic derivatives onto the taxpayers, and now Bailout Booty for the Big Three Detroit carmakers.  This does not describe a free and open market with the government acting only as a protector of individual rights; this describes a Fascist Business Model of government collusion with private central bankers.

   Second, free market capitalism has no need of a federal central bank.  In fact, a private central bank is illegal, it is unconstitutional.  We already have a U.S. Treasury to carry out Congress’ mandate (Article 1, Sections 8 & 10 of the Constitution) to maintain “only gold and silver coin” as real U.S. Money.  Paper certificates, receipts for real money, must be 100% redeemable in real gold or silver money.  Period.  This would constitute a free market, not what we have today.  We have not had a free market in America since the Fed Reserve was created in 1913 and the Great Depression was not the result of free market capitalism.  Economic Myth # 1001:  FDR did not, I repeat, did not save America from the free market; FDR created the Great Depression by not allowing the free market to work, hence he brought about the economic philosophy and implementation of state interventionism on a grand scale.  As Stalin said of the Roosevelts and their naïve adoption of Marxist socialism, “They served as useful idiots.”  Stalin also stated, “The surest way to overthrow and control a nation is to gain control of its monetary printing presses.”  I give you today’s political scene, which is not about money; it’s all about power.

   Third, our illegal central bank, the Federal Reserve, and Executive Branch illegally dumped America’s gold standard, moving us onto the current system aptly described by the McClatchy author:  fiat paper (and credit) with no limits.  This is NOT free market capitalism.  This is a collectivist – socialist, fascist, etc – usurpation of the U.S. economy by a private banking corporation, the Federal Reserve, allowed by Congress.  The Fed central banks are transforming America’s private wealth into their own pockets not by a free market mechanism but by a not-so-clandestine manipulation of our Pulp Fiction money supply in collusion with a heavily fascist-oriented Congress and soon to be new President Barack “The Socialist” Obama.  Obama should thank President George “The Economic Fascist” Bush and the Republican Party for laying the groundwork for him.  Treasury Sec Paulson was not asking Congress for $700 Billion to stimulate the economy.  He was asking Congress for unlimited power to INTERVENE BY ANY METHOD into the economy.  He was asking for power, not money, and Congress gave it to him, thereby helping to further stomp on what was left of the free market.  The basis for trampling upon ALL of your individual rights has now been established by this pernicious piece of legislation and the Left Liberal Administration is just licking its chops at the chance to step on you while pretending to protect you from every evil in the world.

   Since 1971, when Prez Nixon cut all ties to an international gold standard, and Keynesian “targeted inflation” was, and still is, exported to virtually every country in the world, the U.S. has been functioning on a Keynesian Fascist Business Model, not free market capitalism.  All presidents since Nixon, including President George Bush and President-elect Barack Obama, have been (or will be, for Obama) operating on a hyper-inflated version of all the philosophical sophisms of Keynesian economics.  We will see more and more state interventionism in vain attempts to “bail out” or “stimulate” the economy with the federal printing presses running 24/7, 365 days a year until the Dollar finally collapses.

   The reason that Fed Chief Bernanke and Treasury Sec Paulson continue to push trillions and trillions of fiat currency into the banking system is because they truly – but erroneously – believe the Keynesian baloney that all ya gotta do to stimulate economic growth is to lead the economy with a continual increase in “targeted inflation” of the money supply.  Not coincidentally they think the economy must be stimulated by bank lending – or else they are liars and just want the Wall Street bankers to make lots of interest from car loans, school loans, home mortgages, credit card loans, etc.  You decide whether they are crooks or just economic philosophers but it really doesn’t matter.  Both reasons are not free market and both don’t work.

   The Keynesians are in a big conundrum, in fact, they are in a Keynesian economic death spiral.   At the same time that they want lower prices, they want higher prices.  They want to prevent home prices from falling while keeping home prices (mortgages) high through inflation and prevention of foreclosures.  You can’t have both.  The bankers are at an impasse.  Keynesian Quantitative Economics (Econometrics) is not working the way they were all taught at Harvard and Berkeley but they won’t let it go or admit that the classical free market economists, the Austrian School of Thought, is – and always has been -- correct.

   So those journalists who have no clue about the true nature of money and credit or free market capitalism vs. state interventionism, erroneously believe the pundits of Keynesian economics such as Fed Chief Ben Bernanke and Treasury Sec Paulson when they claim they are simply implementing “free market economic principles.”  The truth is, Bernanke and Paulson are not implementing free market principles; they are implementing state interventionism, Keynesian economics, a Fascist Business Model, socialism, etc., and they are implementing it in coordination with all the major central banks throughout the world.  That is why we see a global financial meltdown.

   The real economic solution?  Dump the central bankers and return to our constitutional requirement (Article 1, Sections 8 & 10) of using sound money, gold and silver coins and 100% gold-backed paper certificates.  Lack of value of our money (and toxic derivatives) is the real issue in our current financial meltdown and value will return to our Dollar when we return to gold and silver AND 100% gold-backed paper certificates.

   A true free market gold standard would have never allowed the current Wall Street shenanigans to occur because gold money is not simultaneously one man’s asset and another man’s debt (unlike paper, which is an I.O.U.)  For example, China holds our paper I.O.U.s while we obtain their goods.  They are in a trade “surplus” position and we are in a trade “deficit” position only because they are holding paper I.O.U.s.  If they had demanded payment in gold, nobody would be in a deficit or surplus position because gold itself is both money AND a commodity.  In the past, anybody defaulting on a gold-backed certificate would immediately lose economic credibility and thus lose all trading partners until they corrected their indiscretion.  This is what is meant by automatic self-regulation by a gold standard in a free market.  That’s also why central bankers and politicians hate gold -- because they lose control.

   Once again, the hallmark of a free market is a gold monetary standard.  Gold is a valuable commodity, especially as a medium of economic exchange, and in every exchange of commodities for gold money there is no resulting trade deficit or trade surplus precisely because gold itself is a commodity.  All exchanges using gold money are complete.  That’s why it is the par excellence of all commodity moneys; it automatically self corrects all the current financial aberrations we currently have in our unfortunate Keynesian global economies.  And, more importantly, with gold we can calculate the VALUE in all economic transactions, the very problem of why banks and other recipients of “free” Pulp Fiction Dollars from the Feds does not solve what ails them:  namely, the inability to calculate the value of their toxic derivatives.  The free market on a gold standard self-corrects itself automatically while a Keynesian non-market creates all sorts of financial conundrums that nobody can figure out.  Prolonging the Keynesian-created Recession with more of the same will result in a long, drawn out Depression, until the Dollar finally collapses.

   Finally, those journalists, whether at the Idaho Statesman or parent news rag McClatchy, should get their free market facts straight before they go rambling off on contradictory diatribes against free market capitalism.  War is not peace, slavery is not freedom, and Keynesian socialism is not free market capitalism.  So, bite it, McClatchy, and next time, check your premises. – FM Duck  

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