Ron Paul as Spiderman

For this week's GOP primary, The Lincoln Eagle, Mike Marnell's edgy, pro-Ron Paul newspaper based in Kingston, NY,  features a cover drawing of Ron Paul as Spiderman.  The drawing is by Joe Sinnott, the 86-year old inker for Marvel Comics whom Stan Lee called Marvel's best. Wikopedia says that Sinnott has worked for Marvel for 60 years, including 16 on Fantastic Four as well as The Avengers, The Defenders and Thor.  Sinnott lives in nearby Saugerties, NY.

Federal Reserve on Ice

I just submitted this column to the Lincoln Eagle, which is scheduled to go online within a few months. Mike Marnell's circulation, currently around 13,000, is close to the Kingston Freeman's daily circulation of around 16,000.  Of course, the Lincoln Eagle only comes out monthly.

Federal Reserve on Ice

Mitchell Langbert, Ph.D.*

Several readers have commented. No issue is more urgent or of greater importance to you.  It is more important than the price of your car insurance or your annual salary increase.  The issue is simple.  But people find it confusing because they can’t believe it. To use a high school vocabulary word, they are incredulous. 

The Wall Street-owned Democratic Party media, from NBC to MSNBC to CNN to the Kingston Freeman, do not discuss it.  Congressman Maurice Hinchey recently voted to bury information about it by preventing its audit.  But, yes Virginia, the Federal Reserve Bank (the Fed) is bigger and better than Santa Claus.  It creates money out of thin air. And no, the goods and services of the American economy DO NOT back the Fed-created money.  Nor do the full faith and credit of the American people.  The money you use is Fed-created money printed on paper and notated in banks. Your dollars are backed by…nothing. 

If the international community stops believing in the dollar, it will be worthless.  If the American public loses faith in it, it will be worthless.  The recent rise in the price of gold from $250 an ounce in 2000 to $1400 an ounce recently, nearly a 600 percent increase, is evidence that some investors anticipate a dollar collapse.  This could harm you. If it happens, it will be because of socialist big government, because of the Fed, because of the Democrats and because of the Republicans. The two party system is a one party system that responds in unison to the interests who benefit from the Fed.

In 2005 there were $1.4 trillion in US checking accounts and cash.  Today there are over $2 trillion in Fed-owned deposits.  The Fed increased its own deposits and cash from about $800 billion three years ago to over $2 trillion today.  It did this by creating the dollars it holds out of thin air. And the Fed announced that it is counterfeiting another $600 billion in the near future.

Commercial banks have the power to create still more money, also out of thin air, through lending.  Thus, the money supply might triple within a few years.  That could mean your pension and savings accounts will be worth less. A lot less. Their value will have been diverted to Wall Street and commercial banking interests.  Your congressman, Maurice Hinchey, voted to cover up the Fed’s operations by voting against Ron Paul’s Audit-the-Fed Bill.  No greater subsidy to the super-rich exists, and Congressman Hinchey is on board.  Special interests have no greater means of exploiting you, and Congressman Hinchey has voted to facilitate your exploitation.

The Wall Street-owned media, which is called “liberal” but is better called corporatist or Whig, pretends that the Fed is too complex for you to understand.  Nothing could be further from the truth.  In the 19^th century the opposition to the "Fed" came from ordinary working Americans, just like you and me. 

The way the monetary system is set up is easy to understand.  The Federal Reserve Bank, the regulator of the banking system, is a private concern that the banks own.  It is empowered to create money out of thin air.  All greenback dollars, the dollars you hold, are artificial Fed reserves or derived from bank loans based on Fed reserves.  The gold in Fort Knox does not back them. The US public does not back them. The US economy does not back them.  The US government does not back them. Nothing backs them.  

Purchasing Treasury bonds from banks like Citibank, the Fed deposits dollars it creates out of thin air.  The assets it has traditionally chosen are Treasury bonds, but they could purchase other assets.  Dollars are called “Federal Reserve Notes”, which implies that they are debt, but the notes are only redeemable in other Fed Notes.  It is as though you had the right to pay for your house and car with loans that you had the right to repay with further loans and that people were legally required to accept your IOUs, which you only had to repay with further IOUs. If you could do that, you would have a holiday.  Since it is January, it would be a holiday on ice.  Wall Street has been having a holiday on ice since the winter of 1932, at your expense.

The Fed has no incentive to be even-handed or fair. Its owners, large commercial banks, have every incentive to expand the money supply because they benefit from more dollars, which they lend at interest, largely to Wall Street.  More accurately, for every dollar that the Fed creates, the banking system can lend up to $10.  It does this by using Fed-created dollars as loan reserves over and over.  The Fed creates a dollar by purchasing a Treasury bond from a New York City bank.  The bank uses the dollar by lending out 90 cents of the dollar to a borrower.  The borrower deposits the 90 cents in his bank. The borrower’s bank lends out 81 cents, using the same reserves a second time.  The second borrower deposits the 81 cents in his third bank. The third bank lends out 73 cents based on the same reserves to a fourth borrower, etc.  In the end, the banking system can create up to ten times the amount of money that the Fed creates.  In practice, the banking system approximately lends out less than double the Fed deposits.  Recently the Fed massively expanded reserves.  The expansion will not cause innovation, quality improvement or higher productivity.  Inflation will result as it has since the 1930s.

The people who get first dibs on the Fed’s fresh counterfeit benefit most.  These are the following: (1) commercial banks; (2) Wall Street and hedge funds; (3) managers of big business, which has easy credit access; (4) stock and bond holders (5) government (6) defense and other government suppliers; and (7) real estate-related interests.

The people whom the Fed hurts include those who are retired and are on pensions or other fixed incomes; private sector workers not in finance or real estate who live off wages; those who do not rely on welfare or other government programs; those who save; and those who aim to get ahead through innovation rather than asset manipulation or speculation.

The real hourly wage has hardly increased since 1971, when Richard Nixon abolished the gold standard.  In the 19^th century and until 1971, when there were elements of the gold standard remaining, it used to increase two percent per year. Now it increases two percent in forty years.  Government’s massive expansion could not have occurred without the Fed.  Hence, greedy government officials, congressmen like Maurice Hinchey, the Wall Street-owned Democratic Party media, government employees and bankers have waxed rich on your dime.

*Mitchell Langbert is associate professor at Brooklyn College. He blogs at http://www.mitchell-langbert.blogspot.com.

Do or Die Election 2010: Toward Freedom or Secession?

I have not been blogging because I have been busy with electoral politics. Like many who have been activated this year in response to the suicidal policies of America's selfish elite,  I have not done so much on a practical level in many years.  Like many, I do not love the mechanics of elections such as sign placement, phone banking, petitioning and the like, but do it as a calling.  My friend Glenda McGee suggested that we are throwing pebbles in the large American lake, and causing ripples just as others are causing ripples that together will form waves and then a tsunami that will overwhelm the centralized power elite. Or so we hope.

The Republicans in Ulster County, New York have never been more visible. Signs are everywhere to the extent that one Republican in the Hudson Valley suggested that too many signs were placed. County Chair Robin Yess noted in response that the Democrats have vandalized numerous signs. Indeed, many of the Paladino signs I put up have been removed, undoubtedly by people who believe themselves to be more right and more intelligent than we are.  This indeed raises doubts in my mind about the universalizability of ethical belief, the foundation of Immanuel Kant's philosophy.  More murder has been committed by people who believe themselves to be the most right and to be the universal standard bearers of historical right than by psychopaths and sociopaths in the normal sense.  The difference between someone who believes himself to know the absolute historical and universal right and someone who does not know what right and wrong are may be nil.

Our congressional candidate's, George Phillips's, performance has been amazing.  Socialist extremist Democrat Maurice Hinchey has never had an opponent this visible.  I am told that our congressional district, the New York 22nd, was set up by Pataki as a kind of toxic waste dump of college campuses from Vassar to Cornell and inner city districts (Binghamton, Ithaca, Poughkeepsie, Liberty and Monticello) that are left wing. In response, Representative Hinchey painted himself as a progressive; aimed to turn the Hudson Valley into a socialist park, and repeatedly attacked Israel.  Even in a toxic waste district like New York's 22nd CD there are enough normal, decent people to resist.  This is despite the pro-bailout left's domination of the local media.

On Wednesday, Thursday and Friday I put up dozens of signs in the Town of Olive and distributed calling lists to four or five members of the Town of Olive Republican Party.  On Thursday McGee and I gave out handbills.  On Friday night McGee and I helped local entrepreneur Mike Marnell stuff his Lincoln Eagle newspaper into saran wrap-like sleeves so that they can be tossed into thousands of driveways in the Hudson Valley.  On Saturday we drove around the Towns of Olive and Marbletown distributing the Lincoln Eagle to two dozen diners, farm stands, supermarkets and other stores.  As well we distributed the hand bill to farm stands and health food stores, many of whose proprietors said that they would give the handbills to their friends.

The response to our handbill was varied.  On Friday several of us distributed them in Woodstock and the hard leftists there were often hostile, although many others were interested.  Then, we went to Adams Fairacre Farms, a specialty store, and distributed them for about an hour until the proprietor chased us away.  The reaction there was positive.  In other words, all but the hard, ideological left were open to the handbill. The handbill was targeted at the left concerned with food issues.

The big news for us in Ulster County was George Phillips's national support in his run against Representative Maurice Hinchey.  Phillips has received more than $500,000 from American Crossroads and television advertisements have been flooding the cable lines and air waves. In addition, Phillips was aided by Mayor Edward Koch, who endorsed him over Hinchey because of Hinchey's aggressively anti-Israel position.  Given the toxic nature of the 22nd district, a Phillips victory will be amazing.

My prayers are with all of the Republican candidates this year, even the RINOs, because we need to take back the government from the extreme left and the Democratic Party and repeal the socialist laws that have created growing income inequality, a declining economy and an increasingly dictatorial government.  My good friend Cortes de Russy is running as a GOP write-in candidate in New York's 18th CD against extremist socialist crank Nita Lowy. I blogged about their debate about two weeks ago. Lowy is ignorant about economics and about what America is.  Lowy and her supporters have increasingly made it clear that we need to begin to think about secession.  This is no longer a long term question, but one that we need to start planning for.  The current state of America is unacceptable and many do not share any commitment to the type of government that the social democrats have created and favor.  The Untied States government is stupid garbage, and unless we can free ourselves through the ballot box, more direct political action leading to greater instability will be necessary. In a sense then, this is a do or die election.

Taking Ideology out of Your Child's Education

The following article "Taking Ideology Out of Your Child's Education" appears in the Memorial Day issue of the Lincoln Eagle, a Kingston, NY penny saver.  Mike Marnell, the Eagle's crusading editor, does an excellent job in putting it together. It is the only freedom oriented paper in the area, as far as I know.  It does not have a website but it reaches at least several thousand people. 

Taking Ideology Out of Your Child’s Education

Mitchell Langbert, Ph.D.*

When I attended high school in New York City, my class was required to read Karl Marx's "Communist Manifesto."  But we were not assigned to read any alternative view, such as Adam Smith's Wealth of Nations or Friedrich A. Hayek’s Road to Serfdom.  Communism was extolled, freedom disparaged.  I was recently speaking to a friend whose son graduated from a high school in this region and she told me that the emphasis on Marxism has not changed one bit.  Her son had not been assigned any book that describes free market economics or how and why free markets work better than government-controlled ones.  However, he had been assigned to read Marx and his teacher repeatedly preached in favor of socialism. 

The debate between people who believe in government control and those who believe in freedom is not new.  However, there are many myths not only about the subject but about its history.  The myths come from relentless efforts by advocates of government control to spin the debate. This has led to a takeover of the educational system by left-wing ideologues.  Thus, what students learn in public schools is often socialist propaganda and more often than not ignorant nonsense.

For example, the claim that adding layers of government or regulation is "progressive" is not historically true.  Yet, the students are told that it is.  In fact, the Roman Empire was based on a state-controlled, mixed economy like that advocated by today’s "progressives." What happened to Rome?   

In modern times, the idea of free markets originated out of a debate that had been initiated by advocates of government authority and regulation.  The mercantilists, such as Lord Shaftesbury and David Hume, advocated the use of government force to open markets, print money and regulate trade. Adam Smith responded to the mercantilists' "progressive", state-based ideas later in the 18th century.  Free markets are progressive, not socialism.  Advocates of monetary expansion to stimulate growth, such as David Hume, wrote before the advocates of the gold standard and zero inflation.

This was true in American history.  The first socialist in the history of US government was the first man to conceive of our Constitution, Alexander Hamilton.  Hamilton favored the use of paper money to expand the economy; government owned manufacturing; a central bank, the ancestor to today's Federal Reserve Bank; the use of subsidies to stimulate shipping; and taxes to fund government debt.  The problem with Hamilton's ideas was in part that they had led to hyper-inflation during the earlier Revolutionary War.  The central bank led to the earliest examples of corrupt speculation, and the stock of Hamilton's First Bank was the object of among the earliest financial bubbles in American history.  The government owned manufacturing firm he tried to start was associated with the corrupt bank stock speculation.  Hamilton’s Keynesian ideas (140 years before Keynes) failed.

In reaction to Hamilton's big government, "progressive" ideas, Jefferson, winning Hamilton's former ally, James Madison, formed the Democratic Republican Party.   The response to the big government ideas of Hamilton and his Federalist Party was to emphasize freedom.  This reached a crescendo in the 1830s, when Andrew Jackson founded the Democratic Party and abolished central banking, putting the US on a gold standard.  The most rapid growth in American history occurred during the 80 years that there was no central bank and money was based on the bi-metallic and then the gold standard.  Establishment of the Federal Reserve Bank in the 20^th century has led to slowed growth and stagnant real hourly wages.  You are poorer as a result of increasing government involvement in the economy. Much poorer.

The problem with government intervention is that it didn't work. But that’s not what students are taught in school.  

The examples of government failure get worse, though, when you fast forward in time to the early twentieth century.  The hyper-expansion of communism in Russia, China, Cuba, North Korea and elsewhere led to economic retardation and mass murder.  State-dominated economies were utter failures, and repeatedly so.  They failed so frequently and so thoroughly that one would think that anyone seriously studying them in universities would have tried to understand why they failed.  Yet, university professors throughout the communist era, until the 1980s, uniformly claimed that the performance of the Soviet economy exceeded that of the United States.  In other words, virtually 100% of university economic and social science departments ignored reality; preached ideological propaganda in favor of socialism; and excluded anyone who disagreed. 

When the Soviet Union fell in the late 1980s for the very reasons that the critics of socialism such as Ludwig von Mises and Frierich von Hayek had predicted in the 1920s to 1940s, you might think that university social scientists might have reconsidered their dogmatic, religious commitment to socialism. But that is not so.  The intolerance of anyone who disagrees with now obviously failed socialist and big government dogma has become even more extreme in universities.  Any academic who disagrees with the left is slandered and drummed out of universities.

Thus, it is not surprising that the local high schools are purveyors of ideological dogma. Having been educated by ignorant ideologues in universities, the teachers have been trained to be ideologues.

Parents have serious reason to be concerned about their children’s’ education.  The schools today are preaching socialism more aggressively than ever, even though historically socialist policies have repeatedly failed.  In order to counteract this tendency parents might consider taking the following steps:

1. Tell your school board that if the students are reading Karl Marx, they should also be reading Adam Smith.  If they are not reading Karl Marx, they should be reading Adam Smith anyway.

2. Ask you children for feedback about the claims being made by social studies teachers.  If the teachers are advocating socialism, they are incompetent.  If the school is encouraging the teachers to do so, the school board needs to be replaced.

3. Read your children’s social studies text books.  One parent told me that their child’s textbook’s discussion of the Second World War consisted of five pages on the internment of the Japanese (a terrible misdeed) and only one page on the war itself.  That is propaganda. It is not education.

Are your children being told of the advantages of freedom, or are they being propagandized as to the advantages of socialism?  I have worked in higher education for nearly twenty years.  I have repeatedly seen students who have been indoctrinated into failed, socialistic ideas in their primary educations.  I can undo some of the damage done by elementary and high school teachers, who in turn have been brainwashed by ideologues in universities.  You can undo some as well.

*Mitchell Langbert, Ph.D. is a member of the Town of Olive Republican Committee and is associate professor of business at Brooklyn College, CUNY.  He blogs at http://www.mitchell-langbert.blogspot.com.