CJ Maloney has written an excellent article on the panic of 1819 for the Ludwig von Mises Institute. Maloney points out that the panic of 1819 resulted from the same kind of central bank and banking incompetence as today's sub-prime crisis but that the policy decisions of 1819 were much smarter, more effective and more moral than Americans are capable of today. Maloney writes:
"It is the unusual that grabs the attention, and the ideas and beliefs of the majority of our ancestors on how best to clean up the mess of 1819 are vastly different from almost everything I see and hear today. From CNBC's cute little money honeys to newspaper op-eds to my coworkers on the trade desk, all cry that the government must do something. Many of the elite from 1819 believed the exact opposite — that government must do nothing.
"...In 1819 America, nobody blamed the effects for the Panic of 1819, they rightly blamed the cause; they blamed (in Caroline Baum's words) the 'friendly central bank.' As Professor John Dobson points out, 'the [central] bank's policies fueled inflation, and it was popularly viewed as a major contributor to the Panic of 1819.' After this encounter with central banks, 'hard money leadership was abundant and influential'.
"The urge to bail out debtors was fought against not only from a practical but from a moral level as well. Besides Tennessee state representative Robert Allen warning his colleagues that 'if people learn that debts can be paid with petitions and fair stories, you will soon have your table crowded' the pages of the influential Pennsylvania Aurora argued that any such bailouts would not only be economically unsound, but unjust, being a special privilege to the debtor.
"While the federal government was a heavy player in the housing speculation — having offered over $23 million in "affordable" but now mostly delinquent loans by 1819 — for the most part it was the state capitals, where much of political power still resided in America's pre-Lincoln days, that were the scenes of battle.
"And not all the states were clamoring for intervention. The Massachusetts legislature in 1820, referring to hastily passed monetary laws that forced people to accept worthless paper bank notes as if they weren't, stated 'the exchange value of notes must be regulated by the community itself, according to public wants and needs'...plus many thought that such monetary measures were pure hubris. Virginia state politician William Selden warned, 'Money itself is an article of transfer. Human legislation on the subject is worse than vain'..."
Read the whole thing here.
Tuesday, April 7, 2009
Sunday, April 5, 2009
Letter to Congressman Maurice Hinchey Re Congressional Dress Code
Dear Congressman Hinchey:
I urge you to propose a bill that would require all members of Congress to wear the clown nose pictured above. This will fit Congress's competence and intellectual level of development.
Please consider proposing this dress code. It would be the most intelligent legislation you ever proposed.
Sincerely,
Mitchell Langbert, Ph.D.
Friday, April 3, 2009
Bill O'Reilly: Socialist
Newsmax recently reported that Bill O'Reilly says that he despises the way that the media treats President Barack H. Obama with kid gloves but that conservatives are wrong to call President Obama a socialist.
It may surprise Mr. O'Reilly to learn that by 1912 previouly Republican but by then Progressive Theodore Roosevelt's platform had become socialist. Roosevelt favored federal government price setting. Legislation authorizing the federal government's setting of railroad rates had been passed in 1906, during Roosevelt's Republican administration.
Similarly, President Obama has been busily bossing around automobile companies and providing trillions in subsidies to his cronies in investment banks like Goldman Sachs. The American approach to socialism of TR and BO has always been socialism of the rich.
Dictionary.com defines socialism is defined as "a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole". Would not firing the president of General Motors qualify as outright socialism?
Presidents Washington, Adams, Jefferson, Madison, Monroe and Jackson would have been shocked at the lumbering Leviathan government that Mr. O'Reilly and his colleagues at Fox favor. Jackson in particular would have been disturbed at Mr. O'Reilly's silence about the role of the socialist Federal Reserve Bank in bleeding and wrecking the American economy. As in Jackson's day, today's Fed is emblematic of American socialism for the rich.
In a recent discussion of libertarianism Mr. O'Reilly claimed that the government must focus on the "public good". But President Jefferson would not have agreed that bailouts, social security or welfare programs contribute to the public good. Not much has changed since. Today, the economic contribution of the majority of contributors to social security is less than the economic value of the benefits they will receive. Social security was a pyramid scheme that transferred wealth from the 21st to the 20th century. And the chief function of Mr. Obama's socialist government, as would have been in Jefferson's day had the Federalists and the Whigs had their way, is to steal from the public in the interest of subsidizing bankers, a policy that the socialist Obama administration and Mr. O'Reilly support.
It may surprise Mr. O'Reilly to learn that by 1912 previouly Republican but by then Progressive Theodore Roosevelt's platform had become socialist. Roosevelt favored federal government price setting. Legislation authorizing the federal government's setting of railroad rates had been passed in 1906, during Roosevelt's Republican administration.
Similarly, President Obama has been busily bossing around automobile companies and providing trillions in subsidies to his cronies in investment banks like Goldman Sachs. The American approach to socialism of TR and BO has always been socialism of the rich.
Dictionary.com defines socialism is defined as "a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole". Would not firing the president of General Motors qualify as outright socialism?
Presidents Washington, Adams, Jefferson, Madison, Monroe and Jackson would have been shocked at the lumbering Leviathan government that Mr. O'Reilly and his colleagues at Fox favor. Jackson in particular would have been disturbed at Mr. O'Reilly's silence about the role of the socialist Federal Reserve Bank in bleeding and wrecking the American economy. As in Jackson's day, today's Fed is emblematic of American socialism for the rich.
In a recent discussion of libertarianism Mr. O'Reilly claimed that the government must focus on the "public good". But President Jefferson would not have agreed that bailouts, social security or welfare programs contribute to the public good. Not much has changed since. Today, the economic contribution of the majority of contributors to social security is less than the economic value of the benefits they will receive. Social security was a pyramid scheme that transferred wealth from the 21st to the 20th century. And the chief function of Mr. Obama's socialist government, as would have been in Jefferson's day had the Federalists and the Whigs had their way, is to steal from the public in the interest of subsidizing bankers, a policy that the socialist Obama administration and Mr. O'Reilly support.
The Chinese Were Suckered
The Chinese have embarrassed themselves. They believed that export-led growth was possible for a nation with a billion citizens. Export-led growth is fine for Japan or Korea, but China is so big that exports can account for only a small portion of the working population. Moreover, technological and scientific improvement limits the importance of labor-intensive industry. Export-led growth is fine to a point, but ultimately the comparative advantage of low labor costs needs to be surpassed by growth in human capital and technology, leading to competitive industry. With the largest potential market in the world, why would not China think in terms of developing the capacity to market internally? This would imply distributed growth, possibly based on the extent of export led growth that it has already experienced.
This would be accomplished through free market capitalist development whereby credit is widely distributed and entrepreneurship rewarded, free of taxation. The Chinese could accomplish this with a gold standard.
Instead, the Chinese allowed themselves to be suckered by Wall Street investment bankers and the US. The philosophical reason is likely this: the Chinese are still Marxists, and they believe that capitalism depends on exploitation. It seemed to them that in order to grow, their workers needed to be exploited. So they focused on low, exploitative labor costs. Then, they allowed Wall Street and its employees in the Fed and in Congress to convince them to invest in dollars, further reducing the cost of their exports. Thus, the Chinese have voluntarily cheated their workforce out of wages in order to subsidize American consumers and Wall Street.
Unfortunately for the United States, though, its public has been bamboozled into the same Wall Street scam: the advocacy of paper money expansion, high taxes and allocation of credit to foolish big business uses such as the Latin American debt crisis of the 1980s, Long Term Capital Management of the 1990s and the sub-prime bailout fiasco of the 2000's. This has led to a steady reduction in Americans' standard of living, a declining real hourly wage, as politically connected Wall Street opportunists make off with the cream of fresh Federal Reserve Bank reserves. The waste balloons larger as the "conservative"/"liberal" debate, better called the "Progressive"/"progressive" debate, grows ever more insipid, ever less relevant. American political debate has declined to the point where the news is communicated by bungling, drooling cretins who do not understand any of the issues.
Americans lack the intellectual curiosity or the motivation to question the Keynesian, pro-banker model. American politicians have squandered America's wealth on incompetently conceived and executed programs whose main purpose is to waste money. Americans do not raise an eyebrow that 50% of their earnings go to subsidize foolish government programs that produce value equal to 5% of their earnings. Americans are too busy watching "Entertainment Tonight" to care.
The Chinese have the potential to become the leading global power. They can achieve this by following common sense. Their call for a new currency was common sense. But they continue to be suckered by Keynesian double talk and lies. The new currency should be gold. It should be objective. It should not be subject to political manipulation as would a new paper currency. It should not be subject to the opinions of greedy bankers who do not know how to produce value.
I urge the Chinese to adopt the gold standard and the capitalist economic system. Capitalism does not mean exploitation. It means increasing wealth. When freed of the disruptions of paper money, it functions better than any other system.
This would be accomplished through free market capitalist development whereby credit is widely distributed and entrepreneurship rewarded, free of taxation. The Chinese could accomplish this with a gold standard.
Instead, the Chinese allowed themselves to be suckered by Wall Street investment bankers and the US. The philosophical reason is likely this: the Chinese are still Marxists, and they believe that capitalism depends on exploitation. It seemed to them that in order to grow, their workers needed to be exploited. So they focused on low, exploitative labor costs. Then, they allowed Wall Street and its employees in the Fed and in Congress to convince them to invest in dollars, further reducing the cost of their exports. Thus, the Chinese have voluntarily cheated their workforce out of wages in order to subsidize American consumers and Wall Street.
Unfortunately for the United States, though, its public has been bamboozled into the same Wall Street scam: the advocacy of paper money expansion, high taxes and allocation of credit to foolish big business uses such as the Latin American debt crisis of the 1980s, Long Term Capital Management of the 1990s and the sub-prime bailout fiasco of the 2000's. This has led to a steady reduction in Americans' standard of living, a declining real hourly wage, as politically connected Wall Street opportunists make off with the cream of fresh Federal Reserve Bank reserves. The waste balloons larger as the "conservative"/"liberal" debate, better called the "Progressive"/"progressive" debate, grows ever more insipid, ever less relevant. American political debate has declined to the point where the news is communicated by bungling, drooling cretins who do not understand any of the issues.
Americans lack the intellectual curiosity or the motivation to question the Keynesian, pro-banker model. American politicians have squandered America's wealth on incompetently conceived and executed programs whose main purpose is to waste money. Americans do not raise an eyebrow that 50% of their earnings go to subsidize foolish government programs that produce value equal to 5% of their earnings. Americans are too busy watching "Entertainment Tonight" to care.
The Chinese have the potential to become the leading global power. They can achieve this by following common sense. Their call for a new currency was common sense. But they continue to be suckered by Keynesian double talk and lies. The new currency should be gold. It should be objective. It should not be subject to political manipulation as would a new paper currency. It should not be subject to the opinions of greedy bankers who do not know how to produce value.
I urge the Chinese to adopt the gold standard and the capitalist economic system. Capitalism does not mean exploitation. It means increasing wealth. When freed of the disruptions of paper money, it functions better than any other system.
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