Dakota Beacon

Book review by Lynn Bergman

American banking and financial crashes (R = Repubican President, D = Democrat President) in 1819(R), 1837(D), 1847(D), 1857(D), 1873(R), 1884(R), 1890(R), 1896(D), and 1907(R) led to the creation of the Federal Reserve System, America’s central bank, in 1913, only to be followed by the crash of 1929(R). The crashes typically involved “bank runs” and “market sell-offs”.

That’s an average of an economic crash every decade, so newly elected President Woodrow Wilson (D) “looked across the pond” for a solution. Unfortunately, Europe’s intrusion of government into banking and free markets with the concept of “central banks” simply added to the problem.

The root of all financial collapse events (excluding illegal activities, such as “ponzi” schemes) includes the manipulation of currency (either through the printing of money that eventually devalues it or through the instant or gradual devaluation of the currency, such as the removal of the gold standard), the manipulation of markets (i.e. import and export restrictions), and other acts of government. Free markets are not to blame!

The latest act of government to cause a market collapse was the establishment of quasi-governmental lending institutions (Fannie Mae and Freddie Mac) and the subsequent irresponsible mortgage lending to many who, ultimately, could not afford to pay the money back.

As we discuss this problem, our federal government is printing money, running up the national debt, proposing new spending programs, and suggesting tax increases, all counterproductive to what we all sense is the solution, “living within our means as a nation”.

Some of the ways in which we can “live within our means as a nation” include:

• Resist the temptation to enact any more socialist government programs
• Abolish the federal government’s permission to print money or otherwise manipulate the money supply; restore the gold standard when appropriate to do so, allowing the personal ownership of gold
• Abolish the federal government’s control of interest rates, returning to market forces
• Maintain current income tax rates short term, incrementally lower them long term
• Maintain existing free trade agreements and continually create new agreements with new trading partners
• Eliminate federal spending on programs other than national defense, maintaining law and order, protecting life and property, preventing dishonesty, facilitation of commerce, and directly associated activities, as specifically called out in our constitution
• Phase out all corporate and other subsidies over the next decade, 2010 through 2020
• Eliminate all protective tariffs
• Lower estate tax to 10%
• Eliminate gift tax
• Require all states to allow branch banking
• Require all states to allow the purchase of all types of insurance across state lines
• Outlaw all wage and price controls, including the minimum wage
• Outlaw all “make work” government jobs
• Limit administrative costs for all government programs
• Discourage appeals to class envy, bitterness, and hatred in the “political marketplace”

Milton Friedman argued indisputably that inflation is always and everywhere a monetary matter. Rising prices no more cause inflation then wet streets cause rain.

John Maynard Keynes wrote “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

Frederick Leith-Ross, a famous authority on international finance, observed: “Inflation is like sin; every government denounces it and every government practices it.”

Governments inflate because their appetite for revenue exceeds their willingness to tax or their ability to borrow. Our economy looks like a roller coaster because Congresses, Presidents, and the agencies they’ve empowered never cease their monetary mischief. And state and local “leaders” (oxymoron) keep holding their hands out for more! It’s enough already!

We all need to get active in politics before it is too late! Each of us can start today by joining a political party and then by participating this coming January in the caucuses that nominate candidates for public office. A coming issue of the Dakota Beacon will reveal those in the North Dakota legislature that beg retirement…then it will be up to you, the voters, to hand them their pink slip in January at the caucuses!