Category Archives: Monetary Policy

>The Fed Audit Goes the Way of the Tea Party

>”Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarianism which horrify us follow of necessity.”

– F.A. Hayek, The Road to Serfdom (1944)

When Congressman Ron Paul proposed his bill to subject the Federal Reserve System to regular audits, it was no secret what his ultimate objective was. If there was any doubt, his subsequent book, End the Fed, eliminated it. Congressman Paul hoped to educate the public about just what the Federal Reserve does – transfer wealth. With regularly scheduled audits, average Americans would see that new money and credit created by the Fed in the form of loans makes its way quickly and consistently to Wall Street, defense contractors, and government agencies.

Meanwhile, people would slowly begin to catch on that this apparent act of magic was not without a cost; that in fact, they were bearing the cost themselves through the loss of their purchasing power due to inflation of the money supply. This could plausibly start a popular movement to do exactly what Paul has been calling for throughout his political career. The key to the strategy was to educate Americans on the principle at issue with the Federal Reserve.

The principle is each individual’s right to keep his own property, which the Fed is completely antagonistic to. The Federal Reserve System is an instrument of theft. Even if managed flawlessly (which it never has been) by its government-appointed central planners, the Fed would still accomplish every one of its goals by taking property from some people and giving it to others. It is no less a wealth redistribution scheme than Medicaid, food stamps, or Social Security. The only difference is a cosmetic one. Instead of clumsily removing dollars from Person A’s bank account and depositing them into Person B’s, as Congress does through taxation and appropriation, the Fed operates with a more graceful subtlety. It allows Person A to keep his dollars while merely creating new ones for Person B. However, Person B’s new purchasing power has not been created. It has been stolen from Person A, whose dollars are now worth something less than they were before the new dollars were printed.

It is no mistake that a state-controlled central bank with an exclusive monopoly was one of Karl Marx’s ten planks of the Communist Manifesto. A system in which people are forced to use a state-sponsored currency, manipulated by a central bank to transfer wealth in support of the goals of the state at the expense of the individual is a completely communist, collectivist idea. No matter which monetary policy is pursued, the existence of monetary policy is anti-capitalist and anti-freedom.

Sadly, that central point has been largely obscured due to the varied ideologies of the people that make up the coalition that Congressman Paul has put together. Instead of an indictment of the ongoing theft that central bank monetary policy represents, the focus has shifted exclusively to the money and credit created during and after the financial crisis of 2008. The newly proposed one-time audit will show that the funds were directed towards Wall Street banking giants and foreign central banks. Both then and now, the cries of “but what about average Americans?” can be heard from populists of every political persuasion. It is no longer a question of whether or not we should steal, but rather how we should split up the loot.

It is important to remember that even if 100% of the money and credit in question was instead directed to average Americans in danger of mortgage foreclosure, it would still be stealing. The purchasing power in question would still have been taken from Person A in order to be redistributed to the troubled borrowers. Moreover, it would be just as economically destructive, as all wealth redistribution by government ultimately is. The only distinction would be that a different special interest group would be benefitting at the expense of the rights of those victimized to underwrite them.

This dearth of principle is pervasive in political protest movements in America today. There are no end of demagogues calling up the ghosts of early American heroes of liberty; some even wearing three-cornered hats for effect. The Tea Party is one example. Certainly it is laudable that its members oppose “Obamacare,” but how many would show up for Tea Party rallies if opposition to Medicare was also part of the platform? In reality, the lion’s share of support for the so-called Tea Party comes from Medicare beneficiaries who object not to government-provided health care, but to the program that they benefit from being cut to fund a program for other people. They also largely support the forced redistribution of wealth from individuals to military contractors and the government in support of the United States’ worldwide military establishment, which they extol as if it weren’t also a massive government program.

It is a sobering reality that any real understanding of liberty has been completely eradicated in the minds of most Americans today. Instead, we have become a collection of special interest groups, all competing with each other politically for other people’s money. Our “progressive” education system has rendered most Americans completely incapable of conceiving that there is an alternative to a government-directed economy. When confronted with the bank bailouts of 2008, the universal, conditioned response was one of outrage that wealthy bankers were getting public funds and average American homeowners were not. The idea that it was a violation of the rights of those from whom the money was taken never entered into their minds.

Why would it? That principle had never been taught to them in school. It was not voiced in the media. No politician, conservative, liberal, or otherwise, articulated it at all. The closest thing to it was the “moral hazard” argument, that rewarding the people who caused the problem would only lead to further problems. However, this is a sound economic argument made from a collectivist perspective, based upon what might acheive the best aggregate results, rather than one based upon freedom or individual rights. That the economic analysis happens to be true in the case of the “moral hazard” argument only further obscures the fundamental principle that makes it true. One might conclude from this argument that central planning and wealth redistribution would be beneficial if the planning and redistribution were done more wisely. The moral hazard argument correctly points to a negative effect but distracts us from the underlying cause – the violation of individual rights. It is this underlying cause that is at the root of every societal problem facing America today.

All resistance to government wealth redistribution is a good thing, regardless of whether the motives of every protestor are completely “pure” as defined by political theorists. The one-time audit of the Fed will be helpful, even if it is motivated in large part by the politics of jealousy rather than principle. However, it is the job of everyone who believes in and yearns for freedom to point out early, often, and loudly that the central objection to the Fed should be that it steals in the first place, not to how it divides up the take. Once that distinction is clear in the minds of average Americans, it is a cure for virtually all of our afflictions of government.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

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>Central Banking Doesn’t Work – Just Ask the Fed!

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>It is still a tiny minority who understand that central banking is a collectivist institution that is completely hostile to liberty. It is, by definition, an instrument of theft that purports to stabilize economic conditions for the collective by controlling the supply of money and credit. The fact that its only means to do so is to steal from savers to finance well-connected borrowers is a seldom-mentioned detail. That people only use the central bank’s currency because they are forced to do so by legal tender laws is spoken of even less. In this late stage of the Age of Government, the rights to liberty and property are expendable as our rulers “get the work of the American people done.”

Hopefully, the question of whether there should be a Federal Reserve will be on the table soon. However, once one concedes the existence of the Fed, there is a further question to ask: Can it do what it purports to do?

According to the Federal Reserve’s website, its mission is as follows:

Today, the Federal Reserve’s duties fall into four general areas:

• conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates

• supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers

• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets

• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system[1]

Of these four stated goals, the first is the most expansive in its scope. Let us leave it until last. The second, to ensure the soundness of the banking system, seems to have been answered by history. Since the Fed’s launch in 1914, the nation has suffered banking crises in every generation that have dwarfed the Panic of 1907 or any of its predecessors. In addressing the Great Depression, the Savings and Loan Crisis, and the 2008 Meltdown, the Federal Reserve’s only answer has been, “Without the Fed, it would have been much worse.” History is not on the Fed’s side. Only a general ignorance of the facts allows the Fed to keep fooling most of the people most of the time.

Refuting the third stated goal is so easy it’s almost embarrassing. For those not trying to regain their seats after falling on the floor laughing, I need only to point out 30-1 leveraging, $60 trillion (or more?) in derivatives [2], or the subprime mortgage disaster. I believe that to go any farther would be, to borrow a football analogy, “piling on.”

In fact, Alan Greesnpan’s now famous (or infamous) mea culpa on the “flaw” in his beliefs about the self-regulating nature of financial markets effectively amounts to the Fed admitting that it has failed in goals two and three. If the “Maestro” himself doesn’t speak for the Federal Reserve, then who does?

Regarding that fourth goal, one is tempted to give this one to the Fed. The important objection would be of the “should they” rather than of the “can they” variety. The fact that the Fed provides these services with an exclusive monopoly and claims only that it will play a “major role,” rather than a positive one, makes this the least significant of the four.

That leaves the first goal, which is stable prices, full employment, and moderate long term interest rates. There can be no doubt that the promises of stable prices and full employment in particular are now the principle justifications for the existence of the Federal Reserve. Almost exclusively, when the subject of the Fed comes up, these two goals are discussed. Even the Fed chairmen themselves, when testifying before Congress, often state these two goals exclusively in describing the Fed’s overall mission.

It should not be forgotten that until the late 1970’s, full employment was not part of the Fed’s mandate. Even using the logic of central banking proponents, these two goals are mutually exclusive of one another. Since the only means the Fed has at its disposal to try to achieve full employment is expansion of the supply of money and credit, which puts upward pressure on prices, the Fed must balance these two goals to try to find the optimum level of money and credit where everyone is employed but prices remain stable.

Ironically, the best source of information on the Fed’s performance in terms of its principle goal for the first sixty years of its existence (price stability) is the Fed itself. Among the collections of historical data on the Federal Reserve of Minneapolis website, there can be found a table documenting price inflation rates for every year since 1800 (Appendix A of this article). There, one can see for oneself whether or not the Fed provided price stability during any period in its existence.

The first fact that jumps off of the page is the stark difference in the trends before and after the creation of the Fed. For the period from 1800-1913, the general price level (a statistic that Austrian economists object to) was cut almost in half. In other words, products that on average cost $100.00 in 1800 would only cost $58.10 in 1913 (Appendix A). While there were some years where prices rose, prices generally fell overall during the entire 19th century.

This would probably be a startling revelation to most modern Americans. There isn’t an American alive whose parents or grandparents haven’t remarked at current price levels and gone on to say, “When I was your age, I only paid a dime for that.” As unbelievable as it might seem, that conversation would have been exactly the opposite in 1890. Grandpa would instead be saying, “When I was your age, I had to pay a lot more for that.” Today, Americans resign themselves to constantly rising prices as a fact of life. However, that is a phenomenon that has only occurred since the creation of the Fed.

In contrast to the century preceding the Fed, the century following has seen exactly the opposite result. Those same products whose average price had fallen from $100.00 in 1800 to $58.10 in 1913 rose to $1,265.14 in 2008. That is an increase of over 2,000%!

Without addressing the subject of which result is “better for society,” inflation or deflation, the data speak directly to the question of “price stability.” From 1800-1913, the average annual fluctuation in price was 3.4%. From 1914-2008, the average annual fluctuation in price was 4.5%, a 33% increase over the previous period. In fact, the numbers for the Fed would be far worse if the same methods used to calculate the price inflation rate were used for the entire period from 1914-2008. In the 1990’s, several changes were made to the methodology used to calculate the Consumer Price Index. They all have the effect of lowering the price inflation rate given a particular set of price data.

Regarding the goal of “full employment,” the Fed’s results are also poor. Similar to that of the CPI, the methodology for calculating the unemployment rate was also changed in the 1990’s. These changes in methodology, which include no longer counting “discouraged workers,” lower the unemployment rate from what it would be for the same data if calculated using the old methodology. Despite this handicap, the Fed still fails to achieve positive results. The average annual unemployment rate in the U.S. between 1948 and 1978 was 5.1% (see Appendix B). Even without compensating for the changes in methodology during the 1990’s, the average annual unemployment rate in the U.S. between 1979 and 2009 was 6.1%. So, unemployment was almost 20% higher during the period that the Fed actively tried to manage it than it was during the prior 30 years.

Once you undo the methodological changes in calculating price inflation and unemployment that were put in place in the 1990’s, the Fed’s results on price stability and unemployment get much uglier. Nevertheless, even after the Fed fudges its own numbers it still comes out a failure. Everyone can remember the ne’er-do-well from school that cheated on tests and still couldn’t pass. Would we want that kid managing the entire economy?

The arguments that the Fed makes to justify its existence are fraught with false assumptions. One is that “stable prices” are a good thing. Remember, the industrial revolution occurred amidst steadily falling prices. It was this period of steady deflation (gasp!) that saw the common people become the prime market for society’s output – for the first time in human history. It was this period that saw the United States transform itself in a matter of decades from an indebted hodgepodge of former colonies to a world economic power. The natural result of economic progress and increased productivity is falling prices. That is what raises the standard of living for the great majority of society.

However, the most absurd assumption underlying the arguments for the Fed is one common to all collectivist arguments: that there is some strange entity called “society” whose needs outweigh the rights of every individual that comprises it. Every citizen surrenders his right to liberty to legal tender laws because being forced to use the Fed’s worthless notes as currency supposedly benefits “society.” He surrenders his right to property in letting the Fed steal his savings through inflation for the same reason. In the end, however, the Fed fails to achieve its “societal” goals of full employment and stable prices, so he gives up his rights for nothing. Isn’t time he took them back? There is a way: End the Fed.

Appendix A – Price Inflation Rates 1800-2008 (Federal Reserve Bank of Minneapolis)

Appendix B – Unemployment Rate (Monthly) 1948-2009 (Bureau of Labor Statistics)

[1] https://www.federalreserve.gov/aboutthefed/mission.htm

[2] https://www.newsweek.com/id/164591

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

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Michael Moore Wants to End the Fed (He Just Doesn’t Realize It)

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“You keep on using that word. I do not think it means what you think it means.”

– Mandy Patinkin as Inigo Montoya in The Princess Bride (1987)

It is ironic that Michael Moore’s latest movie, Capitalism: A Love Story features two appearances by writer and comedic actor Wallace Shawn. There is even a clip of Shawn exclaiming “Inconceivable!” in his hilarious turn as Vezzini in The Princess Bride. However, the most appropriate clip from that movie would have been Inigo Montoya uttering the words quoted in the prologue of this article. Using one of Moore’s staple filmmaking techniques, he could have cut to the clip immediately after one of his own pronouncements about capitalism. For although Moore says the word over and over throughout the movie, it is apparent that it “doesn’t mean what he thinks it means.”

The closest thing to a definition of capitalism that Moore provides to his audience comes early on when he remarks, “Capitalism: a system of giving and taking – mostly taking.” He goes on to show a half dozen or so clips of people extolling capitalism for providing “the freedom to succeed and to fail” or hailing the virtues of competition. However, the common mistake made by both Moore when attacking capitalism and the Republican politicians he depicts defending it is their mutual failure to recognize the central tenet of capitalism: property rights.

True capitalism is based upon one simple principle: that all exchanges of property are made with the voluntary consent of all parties. Private ownership of property and competition – the other two components of capitalism in most traditional definitions – are actually results of this foundational principle. As all governments are institutions of coercion, there is no way for them to acquire property through voluntary exchange. Further, with all exchanges being voluntary, sellers must by definition compete with one another in order to sell their products. So, the foundation of “capitalism” is really the non-aggression principle applied to property. Capitalism requires that no one’s property can be taken from them without their consent.

However, Moore’s film does not examine anything close to that system, which Adam Smith called “a system of natural liberty” (the word “capitalism” was not coined until nearly a century later). There is a good reason for that – it doesn’t exist. What Moore mistakes for capitalism is really the soft fascism that has been increasing in intensity in the United States since the Federal Reserve and income tax were created and property rights were destroyed. He makes the same mistake that Republican voters make when they vote Republican politicians into office. They believe the politicians when they say that they support “free markets,” despite the fact that they go on to govern in exactly the opposite way.

The injustices that Moore depicts in his film are without exception caused by government. Not one can be traced to people voluntarily exchanging their goods and services with one another. What Moore represents as “capitalism” is really what Thomas Dilorenzo described as “Hamilton’s Curse” in his 2008 book of the same name. Without attempting to reduce Dilorenzo’s treatise to a few sentences, he generally describes the economic system whereby the government allies itself with the wealthiest segment of society in order to plunder the wealth of everyone else in pursuit of “national greatness” or “the common good.” The hallmarks of the system are corporate welfare, deficit spending by government, protectionist tariffs, and most importantly, a central bank with a government-granted monopoly on the creation of money.

This system purports to benefit society by encouraging the growth of domestic industry and thereby increasing the power and standing of the nation as a whole, as well as providing employment for the working class. However, like socialism, it must achieve “societal goals” by violating the fundamental principle of capitalism. It must violate the non-aggression principle by taking property away from people without their consent and redistributing that property to others. Some of this is accomplished through taxation. A much greater part is accomplished through monetary inflation.

It is astounding that most people are able to ignore the fact that the central bank is an instrument of theft and thereby completely antagonistic to capitalism. It takes an incredible dearth of healthy skepticism not to question the reason for legal tender laws, which force people to use the central bank’s currency. There is only one reason for these laws: without them no one would choose to accept an un-backed paper currency in exchange for their real goods or services. People are forced to use Federal Reserve Notes so that the government and its corporate allies can use inflation (expansion of the money supply) to transfer wealth from everyone in society to the privileged few who benefit from the transfer. The beneficiaries include corporate defense contractors, large farming corporations, Wall Street banks, and other “pillars of the economy.” It is inflation more than anything else that widens the gap between rich and poor. It is the chief vehicle for what Bastiat described as “the few plunder the many.”

However, Michael Moore does not recognize the right to the fruits of one’s labor and so he is completely blind to the difference between capitalism and the system promoted by Republican politicians (in deed if not in word). He fails to see that every aspect of our financial meltdown was caused by some violation of property rights, representing a departure from capitalism.

The money needed to extend all of those “deceptive mortgages” was created by the Federal Reserve out of thin air, thus diluting the value of all existing U.S. dollars. This was a theft from the holders of those existing dollars. Most of the loans themselves were guaranteed by Fannie and Freddie Mac, which uses the coercive power of government to force taxpayers to put up their money as collateral for people who would either not receive those loans or who would pay a much higher interest rate without it. Again, this is not capitalist voluntary exchange but instead wealth redistribution and a distortion of the free market. Similarly, the hundreds of billions paid out to defense contractors and other beneficiaries of President Bush’s wars in the Middle East were also funded by inflation, which the Republicans overtly flaunted by cutting taxes while skyrocketing government spending.

Since he fails to recognize that it was violation of property rights that truly caused our economic meltdown, he doesn’t recommend the restoration of property rights as the solution. Moore blindly accepts the traditional “progressive” fallacy that free market participants can only benefit at someone else’s expense, instead of recognizing that people who exchange voluntarily do so to their mutual benefit. As a result, he accepts government’s role as plunderer of property and merely suggests dividing up the loot differently. He promotes the bogus idea that the government can grant rights to people, and suggests that the coercive power of government no longer be used to redistribute to the wealthy, but instead be used to redistribute to everyone else. He objects to a system wherein the few plunder the many, but suggests it be replaced with a system where “everybody plunders everybody.”

Moore asserts that FDR had the answer when he proposed a “Second Bill of Rights,” granting Americans the right to a reasonable wage, health care, a pension, and other entitlements. Again, as the concept of property rights is foreign to him, Moore is able to ignore the fact that granting a right to these things means that those who provide them have no rights. He extols the “justice” of labor unions, but ignores the fact that it was the unions that destroyed the U.S. automakers by claiming exactly these rights. It was actually an alliance between government and these unions – identical in principle to the alliance between government and Wall Street – that turned his beloved Flint into a ghost town. He suggests that we should set these forces loose upon all of society. His ability to ignore reality is, to quote Mr. Shawn, “inconceivable.”

Like all of his movies, Capitalism: A Love Story is very well made. Moore is exceptionally good at what he does, bringing wit, comedic timing, and emotional power to the screen. Also like all of his movies, he identifies real injustices and expresses appropriate outrage at them. However, throughout his distinguished career he has made the classic mistake of misidentifying the cause of the problems he depicts so poignantly on the screen.

He compares the United States to Rome and points to the similarities between our problems and theirs. He correctly identifies half of the cause of Rome’s decline and ours: the government’s unholy alliance with a landed aristocracy that plunders the wealth of the people for redistribution to the privileged few. However, he fails to recognize his solution as the other half of the cause of both Rome’s decline and ours: the rest of society attempting to share in the plunder by means of majority vote (democracy). It was both of these forces acting together which destroyed Rome’s currency and led to her eventual collapse. Like Rome, we are also afflicted with both of these ills.

The only real solution to our predicament is to implement a system that supports Bastiat’s third alternative – “where nobody plunders anybody.” It is only by following this principle that justice can truly prevail. The most significant step in achieving such a system would be to eliminate the Federal Reserve System. Neither the Republican system of plunder for the wealthy nor the Democratic system of plunder for everybody is possible without monetary inflation. There is no way that government could ever achieve either through direct taxation.

I believe that Michael Moore’s intentions are good. At the end of his film, he asks Americans to join him. I have an alternative proposition for him. If he truly wants to see justice restored in America, along with equal opportunity for all Americans to pursue their happiness, he should call off his misguided attack on capitalism and join us to End the Fed.

Check out Tom Mullen’s new book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

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>China Saying Goodbye to US Market

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>I am not sure if this announcement will receive the attention it deserves, but it is probably the most significant piece of news of this entire turbulent month. China today announced that it will “seek to expand its massive internal market to counter the global economic slowdown that has reduced international demand for Chinese goods.”As reported by Associated Press writer Gillian Wong, China has decided to shift the focus of its economic planning away from exports and toward domestic consumption. This is the beginning of the end for the U.S. dollar and what is left of the U.S. economy.

Fans of Peter Schiff (and I am certainly one of them) are familiar with the central tenet of his thesis: that it is a misconception to believe that China is dependent on U.S. consumption to fuel their export economy. For years, Schiff has been arguing, with few in the mainstream media agreeing, that China would be better off without the U.S. According to Schiff, they would simply consume their own products instead of sending them to America in exchange for increasingly worthless U.S. dollars. In fact, China has suffered its own inflation as a result of pegging its currency to the U.S. dollar. If they unpegged their currency, it would naturally float to its true value on the open market, making it much stronger and the U.S. dollar much weaker. This seems to be what they have finally decided to do.

The official release from the Xinhua News Agency goes on to say, “We should step up efforts to boost domestic demand, particularly domestic consumption, and keep the economy, the financial sector and the capital market stable.”

It is important to remember the definition of demand. Demand is not only the desire for goods or services, but also the purchasing power necessary to acquire them. There is certainly never a shortage of desire for goods and services anywhere. The Chinese people haven’t failed to buy their own products because they didn’t want them. They have failed to buy them because they did not have the purchasing power they needed to buy them. Now, the Chinese government is saying that they are going to try to give them that purchasing power.

However, the Chinese government is also saying that they wish to maintain stability in their financial and capital markets. This means that they must avoid what has been the U.S. method of boosting consumption, namely pumping cheap money and credit into the economy, compliments of the Federal Reserve. However, without new money, what will give the Chinese people more purchasing power?

The answer, obviously, is an increase in the purchasing power of the money that they already have. This will be the inevitable result of unpegging the strong Chinese Renminbi Yuan from the weak U.S. dollar. The Yuan will quickly float to its natural high value, allowing the Chinese people to purchase themselves those products that they used to export to the U.S. This will also mean that U.S. consumers will have to either do without those products, or pay the much higher prices of their counterparts that are made in the U.S. The higher prices of U.S. made products may go even higher due to the decreased overall supply, depending upon how that decreased supply balances against decreased U.S. demand (purchasing power).

However it plays out, it will mean a huge shift in standard of living, with the Chinese enjoying a higher standard, while the U.S. suffers probably the biggest decrease in standard of living in its history.

Make no mistake. The Chinese will have to suffer through an adjustment period as their export economy reallocates resources to sell their products domestically. Their equity markets have reflected this, both over the past year and during the recent crash. However, once the markets bottom and the Chinese complete the adjustment period to a domestic consumption model, Chinese equities will skyrocket as their economy realizes unprecedented growth, this time on much more solid footing as they sell their products to their own citizens in exchange for a currency with REAL purchasing power. As Jim Rogers has said since he moved to Singapore last year, “Moving to Asia in 2007 will be like moving to New York in 1907 or to London in 1807.”

A paragraph near the end of the article aptly reflects the opposite directions that China and the United States are heading in.

“State media reports ahead of the meeting said the committee would review an amendment to give 750 million rural dwellers more freedom to lease or transfer their land, but the final statement did not mention the issue.”

One country is moving toward less regulation and freer markets, and has the most prosperous century in its history ahead of it. The other is moving toward more regulation and increasing government control. For the former, the explosion in prosperity will eventually result in a political revolution that will transform it into the free society it deserves to be. For the latter, only a reawakening of liberty can save it from the fate of all great republics that devolved into empire.

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>Be Careful What You Fight For

>Paulson Says, "He’s Not in This Stove"

>Life in the Post-5/7 America

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>We have spent the past seven years in a “post-9/11 world.” We started hearing this insidious slogan not long after the terrorist attacks occurred. To translate the slogan for anyone who has not realized what it means, it means this: Whatever was left of your personal liberty before the 9/11 attacks is no longer a privilege your government can afford to grant you (and make no mistake, your government considers liberty a privilege, not a right). It seems that personal liberty is something that was nice in the Old America, but is just impractical in a “post-9/11 world.”

Of course, the struggle for economic freedom was lost decades ago with the onset of public and corporate welfare, the abolition of the gold standard, and the emergence of the American Empire. However, as with the other “civil liberties,” some traces of the economic freedom of America’s former Republic have survived several decades into America’s post-WWII social democracy. Those last traces are about to disappear as well. The following is one way it could happen.

Why May 7th? There is no compelling reason for the exact day. However, it is the Thursday of the first full week after the next president’s first 100 days in office are completed. It may be just a coincidence, but cataclysms never seem to happen during those 100 days. Perhaps world market movers don’t do much until they get a feel for the new administration. Perhaps it is some kind of statist magic, left over from government sorcerers like Merlin or Morgan Le Fay. In any case, even the terrorists respected the first 100 days of George Bush’s administration before launching their attacks. So, I am going with the odds to say that the economic day of reckoning will not manifest itself until May 7, 2009 – the new “Black Thursday.”

Even if the American economy is already dead for all intents and purposes, an historic crash of the stock markets will officially signal the dawn of the new era. When it does, all pretense of the “possible moral hazard” accompanying massive government interventions into the marketplace will be dropped. We will be in a “post-5/7 economy,”[1] much like our “post-9/11 world,” and the last vestiges of your economic freedom will be lost, just as your personal liberty was lost after 9/11. Forgotten in debates regarding whether these interventions will be good or bad for “the economy” is the fact that each one amounts to stealing from someone – legal plunder because it is committed by government. Each new intervention, “unavoidable” because of the latest threat to the U.S./world economy, will cause three more problems for the government to solve with further interventions. Pointing out that the original problem was caused by a previous government intervention will be pointless. Free markets were a nice idea in the 20th century, but government control of the marketplace will be needed in a post-5/7 world.[2]

Despite the fact that government already treats the right to the fruits of your labor as a granted privilege, the small percentage Americans have been allowed to keep will seem relatively large compared to what they will be allowed after the big event. At that point, there will be a continual state of economic emergency that requires “Americans and Europeans to do more, not less,” as Barack Obama recently said in Berlin. There will be Housing in the New America and Universal Healthcare to be paid for, tens of millions of unemployed Americans to feed and clothe, and the “challenges of the 21st century (all created by government)” to meet.

Perhaps at that point it will occur to someone, somewhere, that none of this is necessary. Without the parasitic influence of a few thousand people, the other 300 million would naturally trade with each other to their mutual benefit, and would have little to fear from people thousands of miles away whom they would never think to bother themselves. It really is that easy. Americans can make a decision for freedom anytime they wish to, and rid themselves of the parasites once and for all. Hopefully, there will come a time when they will be easier to convince in the post-9/11, post-5/7 world.

[1] Whatever the actual date of the crash, simply insert it into the new government slogan and it works just as well.

[2] While it would be impossible in a Republic to enslave people with such nonsense as a market crash or a terrorist attack creating “a new world” where natural rights no longer exist, it is relatively easy in a Democracy, where only 51% of the people have to believe it for the scheme to work. This is just one reason why no politician refers to America as anything other than “a Democracy” anymore. Be suspicious of anyone who speaks likewise.

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To the People of the United States of America

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To the People of the United States of America,

I am writing today because no one has asked my opinion in any poll. No candidate has sought my vote, and no lobbyist taken up my cause. It seems that of all of the “special interests” in America, mine is forgotten – unworthy of notice by politicians, activists, media commentators, and the press.

It may be because I am neither a Republican nor a Democrat, nor represented by lobbyists for the disabled, senior citizens, minorities, trade unions, nor any other lobby. In fact, I am not a member of any group whatsoever.

I am the individual. Our Constitution was written to protect me from the majority. I am the victim of Democracy, which has overwhelmed the safeguards of the old Republic and replaced the Republic with mob rule. I am raising my voice now, while I am still able to raise it, if for no other reason than to let posterity know that I was still here when the ruins of our Republic are examined.

I have lived my life in a country that proclaims itself to the world to be the “land of the free,” but have watched my freedoms erode. The most basic right I had – ownership of the fruits of my labor – has been taken from me. Now, politicians argue over what portion of my labor will purchase medical care for the poor and elderly, what portion will pay social security, what portion will educate other people’s children, and what paltry sum I will be allowed to keep so that I may go out tomorrow and work another day.

I once lived in a country which recognized my right to do as I pleased, as long as I did not violate the rights of others. Now, mountains of laws and regulations have been passed in the perverse effort to prevent me from having even the opportunity to commit a crime. As a result, I am rendered paralyzed, as there is almost no action that I can take, beyond rising from my bed, that cannot be construed by someone to be a crime or violation.

More of my property is seized to support grand adventures in foreign lands, where my government spreads “freedom” through the crosshairs of its guns. My government’s invasion of countries that pose no military threat to us whatsoever has made me hated throughout the world, merely for being an American, and helped enslave my children to unserviceable debts.
Most ominously, even the legal protections of my person have been revoked in the name of protecting my fellow citizens against “terrorism.”

While the Constitution guarantees me sound money, as only gold and silver shall be legal tender, I am nevertheless forced to use the worthless paper notes of a private banking cartel that decreases their value daily, providing me no safe store of value to save for my future. To aid financial speculators who produce nothing whatsoever, the volume of these notes is increased out of all reason whenever these gamblers and thieves stand to suffer a loss. As a result, the purchasing power of this slave currency is constantly decreased, widening the gap between rich and poor, and destroying the middle class. I am left with no practical means to participate in free trade and civil society.

I give my fellow citizens the benefit of the doubt, and believe that they have merely forgotten what the true nature and purpose of government is. I remind them that government is nothing more than the collective use of force – and that the use of force is never justified except in defense. It is, by definition, a last resort. Government has almost limitless power, but very few rights. It has no right to do anything beyond protecting my life and my freedom.

Government has no right to provide for the needy with monies extorted at gunpoint from its citizens. I will gladly work with my fellow citizens to help those in need, once I have a choice. In the meantime, I demand that my labor cease to be taken from me without my consent.

Government has no right to bring freedom to the oppressed by initiating force. I remind my fellow citizens that all of the tyrants of history justified their conquests under the false guise of “liberation.” I will gladly stand with my countrymen to fight any foreign power that truly threatens us, but I demand that my government immediately cease to invade foreign countries in my name.

Government has no right to “manage the economy.” Trade is only truly trade when it is free – the result of exchanges between people by mutual, voluntary consent. There is no role for government in this whatsoever. I demand that my right to trade freely with my fellow citizens and citizens abroad be respected and no longer subject to inspection or interference.

Government has no right to “prevent crime.” It may only punish activities that are truly criminal, and those are relatively few compared to the ocean of laws and regulations that have been passed. I demand that any law prohibiting an act that does not directly harm another person be repealed, along with any law that prohibits unpopular thoughts or speech. Neither the threat of terrorism, poverty, natural disaster, nor epidemic justifies the surrender of one ounce of liberty. I demand that habeas corpus be restored.

Finally, government has no right to rob me of my property by forcing me to use paper currency whose value is subject to its whim. I demand that gold and silver no longer be taxed as capital gain if it rises in price relative to paper currency.

While I owe my fellow citizens nothing in return for heeding these demands, I nevertheless offer a thousand-fold in return. My fellow citizens are running out of fossil fuel – I will discover a new, renewable energy source. Our planet is growing crowded – I will unlock the secrets of traveling to others. The productive members of our society will soon be outnumbered by those less able or unable to produce any longer – I will feed them all. For it was I – the free individual – that gave you everything you have. It was I that invented the telephone, the automobile, the airplane, and the computer. It was I that devised methods to produce mass amounts of goods, making them affordable and available to everyone. It was I that devised a system of government where the rule of the jungle was replaced by the rule of just laws.

In return for restoring my rights, you will again free my creative power to give you more than you can possibly imagine, and solve problems which you are unable to solve without me. I ask nothing more in return, for it is no more my right to make claims upon my fellow citizens than it is their right to make claims upon me. I hereby waive any supposed “entitlement” to public welfare, medical care, retirement benefits, or any other benefit that requires coercion of my fellow citizens to provide it. In return I demand that my liberty be restored. As I believe that I am the last individual left on earth, I do not believe that my tax money will be missed. However, if there are other individuals besides me that would claim their freedom as well, I invite them to join me, and to them I pledge my life, my fortune, and my sacred honor.

Regards,

A Farmer

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.