Ask the fat lady On Oct 15, 6:19 pm, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > "To condemn free-market capitalism because of anything going on today makes > no sense. There is no evidence that capitalism exists today. We are deeply > involved in an interventionist-planned economy that allows major benefits to > accrue to the politically connected of both political parties. One may > condemn the fraud and the current system, but it must be called by its proper > names Keynesian inflationism, interventionism, and corporatism."Has > Capitalism Failed?Ron Paul, Congressional Record US House of Representatives > July 9, 2002It is now commonplace and politically correct to blame what is > referred to as the excesses of capitalism for the economic problems we face, > and especially for the Wall Street fraud that dominates the business news. > Politicians are having a field day with demagoguing the issue while, of > course, failing to address the fraud and deceit found in the budgetary > shenanigans of the federal government for which they are directly > responsible. Instead, it gives the Keynesian crowd that runs the show a > chance to attack free markets and ignore the issue of sound money. > So once again we hear the chant: "Capitalism has failed; we need more > government controls over the entire financial market." No one asks why the > billions that have been spent and thousands of pages of regulations that have > been written since the last major attack on capitalism in the 1930s didn't > prevent the fraud and deception of Enron, WorldCom, and Global Crossings. > That failure surely couldn't have come from a dearth of regulations. > What is distinctively absent is any mention that all financial bubbles are > saturated with excesses in hype, speculation, debt, greed, fraud, gross > errors in investment judgment, carelessness on the part of analysts and > investors, huge paper profits, conviction that a new era economy has arrived > and, above all else, pie-in-the-sky expectations. > When the bubble is inflating, there are no complaints. When it bursts, the > blame game begins. This is especially true in the age of victimization, and > is done on a grand scale. It quickly becomes a philosophic, partisan, class, > generational, and even a racial issue. While avoiding the real cause, all the > finger pointing makes it difficult to resolve the crisis and further > undermines the principles upon which freedom and prosperity rest. > Nixon was right once when he declared "We're all Keynesians now." All of > Washington is in sync in declaring that too much capitalism has brought us to > where we are today. The only decision now before the central planners in > Washington is whose special interests will continue to benefit from the > coming pretense at reform. The various special interests will be lobbying > heavily like the Wall Street investors, the corporations, the > military-industrial complex, the banks, the workers, the unions, the farmers, > the politicians, and everybody else. > But what is not discussed is the actual cause and perpetration of the > excesses now unraveling at a frantic pace. This same response occurred in the > 1930s in the United States as our policy makers responded to the very similar > excesses that developed and collapsed in 1929. Because of the failure to > understand the problem then, the depression was prolonged. These mistakes > allowed our current problems to develop to a much greater degree. Consider > the failure to come to grips with the cause of the 1980s bubble, as Japan's > economy continues to linger at no-growth and recession level, with their > stock market at approximately one-fourth of its peak 13 years ago. If we're > not careful and so far we've not been we will make the same errors that will > prevent the correction needed before economic growth can be resumed. > In the 1930s, it was quite popular to condemn the greed of capitalism, the > gold standard, lack of regulation, and a lack government insurance on bank > deposits for the disaster. Businessmen became the scapegoat. Changes were > made as a result, and the welfare/warfare state was institutionalized. Easy > credit became the holy grail of monetary policy, especially under Alan > Greenspan, "the ultimate Maestro." Today, despite the presumed protection > from these government programs built into the system, we find ourselves in a > bigger mess than ever before. The bubble is bigger, the boom lasted longer, > and the gold price has been deliberately undermined as an economic signal. > Monetary inflation continues at a rate never seen before in a frantic effort > to prop up stock prices and continue the housing bubble, while avoiding the > consequences that inevitably come from easy credit. This is all done because > we are unwilling to acknowledge that current policy is only setting the stage > for a huge drop in the value of the dollar. Everyone fears it, but no one > wants to deal with it. > Ignorance, as well as disapproval for the natural restraints placed on market > excesses that capitalism and sound markets impose, cause our present leaders > to reject capitalism and blame it for all the problems we face. If this > fallacy is not corrected and capitalism is even further undermined, the > prosperity that the free market generates will be destroyed. > Corruption and fraud in the accounting practices of many companies are coming > to light. There are those who would have us believe this is an integral part > of free-market capitalism. If we did have free-market capitalism, there would > be no guarantees that some fraud wouldn't occur. When it did, it would then > be dealt with by local law-enforcement authority and not by the politicians > in Congress, who had their chance to "prevent" such problems but chose > instead to politicize the issue, while using the opportunity to promote more > useless Keynesian regulations. > Capitalism should not be condemned, since we haven't had capitalism. A system > of capitalism presumes sound money, not fiat money manipulated by a central > bank. Capitalism cherishes voluntary contracts and interest rates that are > determined by savings, not credit creation by a central bank. It's not > capitalism when the system is plagued with incomprehensible rules regarding > mergers, acquisitions, and stock sales, along with wage controls, price > controls, protectionism, corporate subsidies, international management of > trade, complex and punishing corporate taxes, privileged government contracts > to the military-industrial complex, and a foreign policy controlled by > corporate interests and overseas investments. Add to this centralized federal > mismanagement of farming, education, medicine, insurance, banking and > welfare. This is not capitalism! > To condemn free-market capitalism because of anything going on today makes no > sense. There is no evidence that capitalism exists today. We are deeply > involved in an interventionist-planned economy that allows major benefits to > accrue to the politically connected of both political parties. One may > condemn the fraud and the current system, but it must be called by its proper > names Keynesian inflationism, interventionism, and corporatism. > What is not discussed is that the current crop of bankruptcies reveals that > the blatant distortions and lies emanating from years of speculative orgy > were predictable. > First, Congress should be investigating the federal government's fraud and > deception in accounting, especially in reporting future obligations such as > Social Security, and how the monetary system destroys wealth. Those problems > are bigger than anything in the corporate world and are the responsibility of > Congress. Besides, it's the standard set by the government and the monetary > system it operates that are major contributing causes to all that's wrong on > Wall Street today. Where fraud does exist, it's a state rather than a federal > matter, and state authorities can enforce these laws without any help from > Congress. > Second, we do know why financial bubbles occur, and we know from history that > they are routinely associated with speculation, excessive debt, wild > promises, greed, lying, and cheating. These problems were described by quite > a few observers as the problems were developing throughout the 1990s, but the > warnings were ignored for one reason. Everybody was making a killing and no > one cared, and those who were reminded of history were reassured by the Fed > chairman that "this time" a new economic era had arrived and not to worry. > Productivity increases, it was said, could explain it all. > But now we know that's just not so. Speculative bubbles and all that we've > been witnessing are a consequence of huge amounts of easy credit, created out > of thin air by the Federal Reserve. We've had essentially no savings, which > is one of the most significant driving forces in capitalism. The illusion > created by low interest rates perpetuates the bubble and all the bad stuff > that goes along with it. And that's not a fault of capitalism. We are dealing > with a system of inflationism and interventionism that always produces a > bubble economy that must end badly. > So far the assessment made by the administration, Congress, and the Fed bodes > badly for our economic future. All they offer is more of the same, which > can't possibly help. All it will do is drive us closer to national > bankruptcy, a sharply lower dollar, and a lower standard of living for most > Americans, as well as less freedom for everyone. > This is a bad scenario that need not happen. But preserving our system is > impossible if the critics are allowed to blame capitalism and sound monetary > policy is rejected. More spending, more debt, more easy credit, more > distortion of interest rates, more regulations on everything, and more > foreign meddling will soon force us into the very uncomfortable position of > deciding the fate of our entire political system. > If we were to choose freedom and capitalism, we would restore our dollar to a > commodity or a gold standard. Federal spending would be reduced, income taxes > would be lowered, and no taxes would be levied upon savings, dividends, and > capital gains. Regulations would be reduced, special-interest subsidies would > be stopped, and no protectionist measures would be permitted. Our foreign > policy would change, and we would bring our troops home. > We cannot depend on government to restore trust to the markets; only > trustworthy people can do that. Actually, the lack of trust in Wall Street > executives is healthy because it is deserved and prompts caution. The same > lack of trust in politicians, the budgetary process, and the monetary system > would serve as a healthy incentive for the reform in government we need. > Markets regulate better than governments can. Depending on government > regulations to protect us significantly contributes to the bubble mentality. > These moves would produce the climate for releasing the creative energy > necessary to simply serve consumers, which is what capitalism is all about. > The system that inevitably breeds the corporate-government cronyism that > created our current ongoing disaster would end. > Capitalism didn't give us this crisis of confidence now existing in the > corporate world. The lack of free markets and sound money did. Congress does > have a role to play, but it's not proactive. Congress's job is to get out of > the way. --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. 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