The Neo-Alchemy of the Federal Reserve

Economics / Credit Crisis Bailouts Dec 02, 2008 - 05:35 AM

By: Dr_Ron_Paul


As the printing presses for the bailouts run at full speed, those in power are no longer even pretending that the new giveaways will fix our problems. Now that we are used to rewarding failure with taxpayer-funded bailouts, we are being told that this is "just a start," more funds will inevitably be needed for more industries, and that things would be much worse had we done nothing.

The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75% over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere - it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.

One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy.

http://www.marketoracle.co.uk/Article7566.html

The main failure of America's own capitalist "free enterprise" system is that it now
remains unwilling to compromise its "free enterprise" principles by nationalizing
those economic assets which can help create adequate financial basis to support
recovery.

Certainly going deeper and deeper into debt, while getting nothing for your money,
you only delay the inevitable total collapse of the entire system. It's band aid
management for a gaping would and the patient is bleeding to death.

You also have to remember that no matter what you spend on a non nationalized
entity, there are no guarantees that it will actually create jobs within the nation.
You have to take control of it to be sure of that. At least in the long term. Otherwise
you are simply tossing your loot, straight into the hands of the pirates, and they
will sink you for your troubles and sail off to other harbors, where there is more
favorable climate. Unless you have adequate control over those you actually choose
to fund, the long term prognosis is far from positive. That control is no longer
"free enterprise" and that is the problem. Belief in "free enterprise" has to largely
be abandoned in order to survive, and America is choosing to die for its beliefs.

Cheers.

Robert Morpheal