The Daily Bell - Richard Ebeling on Libertarianism, Anarchism and the Truth of Austrian... - 0 views
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These are at least two conceivable methods of compelling the government to stop, or limit, its abuse of the monetary printing press.
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Gary Edwards on 09 Jul 12Ebeling proposes two methods of reining in out of control government printing of paper money. There is a third method; one used by Lincoln and Kennedy. This is the issuance of gold/silver/oil backed reserve notes. The notes represent gold or silver being held on deposit, and are fully redeemable. The value of the gold/silver or another commodity represented floats in the marketplace against goods and services. Nor is there a fixed exchange rate for converting fiat (paper) dollars. The market will figure those things out if left free to do so. And that's one big big "if".
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So the normal market pressures of downward price and wage adjustments in the recession are partly counter-acted by a new monetary expansion that is delaying the necessary re-coordination of market activities. Thus, given these two pressures, prices do not fall as much as a post-recession adjustment may require and they do not rise as much or as fast as might otherwise occur due to the renewed monetary expansion.
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At the same time, as you correctly ask, the Federal Reserve has been paying banks a relatively low rate of interest to keep large excessive reserves in their accounts at the Federal Reserve, rather than to fully lend those excessive reserves to private borrowers. And given the low market rates of interest that Federal Reserve policy has generated, even the low rate of interest on unlent excess reserves offered to banks by the Federal Reserve appears the relatively more profitable way to use their available funds.
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Why has the Federal Reserve done this? They infused these two trillion dollars into the financial markets back in 2008-2010 because they feared that an economy-wide bank collapse was possible. They are afraid to reverse this monetary expansion because to do so would reduce potential bank-lending capacity and put upward pressure on interest rates at a time when the Federal Reserve wants to prevent the sluggish recovery from slowing down even more and also raise the cost of the US government's financing of its trillion dollar a year deficits. So, instead, they leave this excess bank lending power sloshing around in the system, while keeping it off the market and from causing significant new price inflationary pressures, by paying banks not to lend those vast sums.
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Austrians argue that economics is fundamentally a science and study of "human action." It attempts to trace out the logic and implications of man's intentional conduct in selecting among ends desired and applying perceived means to try to attain them. Austrians emphasize that all human action and the social and market interactions among men occur in a setting of imperfect knowledge, inescapable degrees of uncertainty and always through the passage of time.
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They emphasize that the networks of social institutions in which and through which men discover ways to coordinate their interdependent actions in complex systems of division of labor are not the creations of government edict or command; but are most often among those unintended consequences of multitudes of self-interested individual actions and interactions.
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They have developed theories of market competition and the role of the entrepreneur as the individuals always alert to market opportunities, and whose actions tend to bring about coordination between market supplies and demands.
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The Austrian analysis of markets, competition and prices, led them to devastating critiques of the unworkability of all forms of socialist central planning, the inherent contradictions and inconsistencies in virtually all forms of government intervention and regulation, and a theory of money and the business cycle that points the finger of responsibility for inflations and recessions at the doorstep of government monetary and fiscal policies.
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The philosophy of liberty proclaims that each individual is unique and possessing inherent rights to his life, liberty and honestly acquired property.
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It is not surprising that classical liberal and libertarian ideas are often attacked. After all they are the ideas that consistently oppose the current political systems of plunder, privilege and power lusting.
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That government, if it is to exist, is to serve as the protector and guardian of our distinct individual rights, and not the master of men who are obligated to sacrifice themselves for some asserted "national interest," "general welfare," or "common good."
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The only reasonable meaning to the "common good" or the "general welfare" is when each individual is free to peacefully live his life as he chooses and is at liberty to voluntarily associate and interact with his fellow men for mutually beneficial improvements to their lives.
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It is virtually inevitable that those who use political power for their own gain at their neighbor's expense will vehemently resist and oppose any attempt to stop them from feeding at the government trough.
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there is everywhere a class of plundering peoples – politicians, bureaucrats, special interest groups – receiving tax-based income redistributions and subsidies and benefiting from anti-competitive regulations and protections against and at the expense of their fellow human beings.
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Austrian Economics, not surprisingly, has been attacked precisely because of its insightful and cogent analysis of how it was government intervention and central bank monetary manipulation that generated the unsustainable boom in the last decade that set the stage for the inescapable bust, which the world is still suffering from.
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Because libertarians have not agreed about this among themselves, nor have they been able to persuade enough others in society to move the world further away from the collectivist premises and the interventionist-welfare state policies that guide so much that goes on in the world.
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I happen to have been most strongly influenced by the "natural rights" defense of liberty, and especially as formulated by Ayn Rand in her philosophy of Objectivism.
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First, it is argued that if one believes that the use of any and all forms of coercion are morally unacceptable in human relationships, then this should also imply that any compulsory taxation, even when for the funding of defense and legal justice, is unjustifiable. And, second, it is argued that the private sector could provide such admittedly essential services far more efficiently and cost-effectively than the monopoly agency of government. Murray Rothbard and David Friedman probably have been among the most well-known and articulate proponents of the anarcho-capitalist position over the last 50 years.
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Others like the Ayn Rand, Robert Nozick and Ludwig von Mises have made the case for constitutionally limited government. Their counter arguments have centered on the ideas that conflicts over jurisdiction, disputes among private defense agencies contracted by different individuals who have disagreements, and the likelihood that "defense" would turn out to be a "natural monopoly" anyway – that is, a tendency for one agency to end up being the single provider of defense and judicial services over a wide geographical area – raise questions about the long-run workability and sustainability of competing defense companies in society.
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From a moral perspective, I am in sympathy with the anarcho-capitalist position, in that I find the compulsory taking of people's income and wealth without their consent for whatever reason to be ethically repugnant.
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This means that the Supreme Court has said that you are the slave of "society" and the government that represents "the people," since, in principle, anything that you do or not do can be argued to have some affect, positive or negative, on others.
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Think about this Court decision. It is saying that if you do not buy health insurance the government will tax you to pay for it. If you refuse to pay the tax, the government will end up attempting to seize financial assets or real property you own in lieu of failure to pay. If you try to prevent this taking of your property, you are subject to arrest and imprisonment. If you resist arrest or imprisonment, the police have the authority to force you to comply – up to and including lethal force to subdue you into obedience.
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the freedom and dignity of the individual human being; and the attempt whenever and wherever on our part to reduce, repeal and abolish all forms of regulation, control, restriction, prohibition on the peaceful and honest affairs of our fellow men.
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Once you accept this premise, there is no end to the minutest detail and content of your life and actions the government cannot claim jurisdiction over to regulate, control or prohibit.
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Here is that end-of-the-road of the notion of unlimited democratic rule by "the people" and those who claim to speak for "the people" and rule on their behalf.
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Ayn Rand, of course, rejected any connection or compatibility with libertarianism. She argued this on two grounds. First, she felt that too frequently libertarians spoke of individual freedom, free markets and limited government, but failed to explicitly and clearly ground their political-economic ideas in a demonstrable philosophy of man, nature and society.
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Government control of money is the potentially most dangerous and damaging form of government power short of outright socialism.
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Rand's political philosophy arises out of the "natural rights" tradition, that rights are inherent in the nature of man and precede government.
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Mises believed that rights were, in a sense, "social conventions" that had evolved out of the discovery that certain social institutional arrangements were more conducive to the mutual betterment of all members of society for achieving their individual goals and values
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What they did agree upon was that, given their respective conceptions of the basis of individual rights, there was no social and economic system more consistent with the protection of those rights and more likely to generate the material and cultural achievements that are potentially possible than laissez-faire capitalism.
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And in the twentieth century, Rand and Mises were two of the most principled and uncompromising advocates for the completely free market society
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Second, she rejected the anarchist elements in the libertarian movement, believing that any reasonable analysis of the reality of man and the human condition strongly suggested the inescapable need for a single legal standard for defining and enforcing individual rights and a single authority to as impartially and "objectively" as possible enforce laws defending each individual's rights to his life, liberty and honestly acquired property.
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"Hardly ever do the advocates of free capitalism realize how utterly their ideal was frustrated at the moment the state assumed control of the monetary system . . .
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From that point on it is no longer a matter of principle but one of expediency how far one wishes or permits government interference to go.
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Money control is the supreme and most comprehensive of all governmental controls short of expropriation."
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Government basically has three ways to acquire the income and wealth of its citizens: taxation, borrowing and printing money
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So, governments throughout history have turned to the monetary printing press to fund the expenditures not covered by taxes or borrowed money
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This "non-neutral," or uneven, impact on prices and wages in the economy during the inflationary process brings in its wake distorted profit margins, misallocations of resources and labor and various mal-investments of capital. Here are the seeds for the artificial and unsustainable "booms" that invariably come crashing down in the "bust" once the monetary expansion that has set it all in motion is stopped or slowed down.
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I believe that the choice and use of money should be left to the market, that is, to the free and voluntary interactive decisions of those buying and selling in the market.
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I consider a private, competitive free banking system to be the only one consistent with a truly free market society.