Freedom Chatter Blog – Featured

The Declaration of Freedom of the Individual

Wednesday, November 18th, 2009

No past, present, or future document can grant rights to humanity, nor can any government or collective. The rights and freedoms of an individual person are a priori, have been, are, and will be so long as a single person draws breath. Whenever in the course of history a governing body infringes upon the rights, life and property of the individual, that individual may bring it upon himself/herself to rise up against his/her oppressor in order to take back what was rightfully his/hers from the beginning of time. While in the past the will of the majority has served to oppress those in the minority, no greater example of this can be found than in the formation of nation-state governments. Government should have one purpose and one purpose only: to protect the people and their property from plunder. Instead, our government like so many that went before has passed laws allowing for legal plunder, and has systematically stolen our lives by taking the fruits of our labor, which no government can ever earn or deserve.

The crimes of our government are indeed too numerous to list them all, but some of the more egregious offenses include restriction of liberty through excessive taxation for the purpose of redistributing wealth, maintaining a monopolistic control over the means of money and credit, propagating inflation and the subsequent devaluation of the only legal tender allowed by law, subsidization of the immoral behavior of banks and bankers, the jailing of criminals who have committed victimless crimes, the sending of our men and women to fight unnecessary wars as well as unlawfully occupying other countries for the benefit of those in power while simultaneously spying on its own citizens without first obtaining the proper warrants.

It is because of the above mentioned policies that if any man, woman, or child should choose to fight back peacefully either by not paying taxes or impeaching the whole of the government he/she would be entirely justified in their actions.

The Constitution of Freedom

An individual owns his/her life, labor, and the product of his/her labor. People are free and no government, law or collective action of any kind shall infringe upon their freedoms, namely those of life, choice, belief, action, and property. A person’s freedom is infinite so long as it does not infringe upon the freedoms of another, cause bodily harm to another, or damage another’s property.

No person can be the property of another person, government or collective.

No ruling body is necessary for a functioning society. No government can make law restricting rights or freedoms.

People have the right to individual defense of their own life, liberty, and property. No army is permitted during times of peace; this does not include security forces for the purposes of personal protection of life, liberty, and property. No military war shall be waged for the purpose of conquest. If an army is formed it shall be for defense only. No army nor the government or collective it represents has a right to the land or property of any other individual or collective.

The will of the people can never take precedent over the rights and freedoms of the individual.

Law is justice. A law shall be invalid if it stands in violation of the rights or freedoms of an individual except in cases of reparations for payment of damages to another person or their property. Any law that promotes injustice in any form is invalid. Any law which would plunder a person’s life or property for the benefit of another person or group is invalid.

No tax shall be levied upon any individual or group of individuals. No tariffs shall be levied upon foreigners as this is a hidden tax upon the people. No inflation of any money supply is allowed without the consent of all the holders of that money.

No government can determine what is or is not money. No person must accept any form of payment that he/she determines to be unfit as proper payment for his/her goods or services.

Morality can not be imposed upon a person. No law shall be made in an attempt to impose morality on anyone. No crime can occur without a victim. If the rights or property of a person are infringed upon he/she make seek just compensation by bringing a complaint against the offender to be tried before a jury of peers presided over by an arbitror agreed upon by both parties.

The only public property is of that necessary to travel; this is to protect the freedom of movement. No one may prevent someone from traversing his/her land if their means are peaceful and nondestructive; this does not apply to a person’s or people’s private residence, only to pathways essential to commerce. If destruction does occur from such travel, just compensation for damages may be sought.

No restrictions of any kind shall be placed upon what may be owned by an individual. No restrictions or regulations may be put upon any business as no person may be forced to purchase the goods or services of another against his/her will.

No person shall commit fraud or in any way deceive another person in a voluntary exchange of goods or services. All contracts whether verbal or written are binding. In cases of fraud a person may seek just compensation by bringing a complaint against the offender to be tried before a jury of peers presided over by an arbitrator agreed upon by both parties.

The signer(s) of this document believe(s) that the government which governs least governs best, and that people should not be accountable to the government but the government accountable to the people. I ask nothing which I can not rightfully earn of my own accord, and demand only to be allowed to keep that which I earn. I ask no assistance from any government as anything the government has is not theirs to give. I hold all governments to the same standards expected of all people, namely not to plunder one person or group to profit another, to respect life, liberty, choice and property and deem any government which does not act in accordance with these laws as unlawful, unjust, invalid, and an atrocity in the history free acting people.

Tags: Constitution, Declaration, Freedom, Individual, Law, Liberty, Rights
Posted in Featured, Government, Uncategorized | No Comments »

Afghanistan War Plank

Wednesday, November 18th, 2009

“All Warfare is Deception… There has never been a protracted war from which a country has benefited.” – Sun Tzu, circa 250 BC

Summary: I will not approve spending to extend this unconstitutional war of aggression against Afghanistan and Pakistan. As Congressman, I will drive for a rapid immediate and orderly withdrawal from Afghanistan and redeployment to protect America’s sieve-like borders. I support increasing the reward for the capture of Osama Bin Laden forty times from $27 million to over $1 billion. I support issuing constitutional letters of marque to bring indicted terrorists to justice in a court of law.
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Tags: Afghanistan, Barack Obama, Borders, Federal Reserve, Iraq, Middle East, Military, Osama bin Laden, Pakistan, September 11, Terrorism, War
Posted in Current Events, Featured, Foreign Policy, Government, Historic Analysis | 2 Comments »

The Flexner Report’s Stranglehold on Health Care

Thursday, November 12th, 2009

Congressman Ron Paul recently gave a speech on the House floor covering the topic of health care. In it he brought up the Flexner Report, an item few individuals have even heard about that is worthy of much more attention than it currently receives.

“A lot of problems were created in 20th century as a consequence the Flexner Report (1910), which was financed by the Carnegie Foundation and strongly supported by the AMA. Many medical schools were closed and the number of doctors was drastically reduced.” — Ron Paul; September 24, 2009

The seeds of the Flexner Report were planted in 1908 when the Carnegie Foundation for the Advancement of Teaching commissioned Abraham Flexner, a high school principle, to research and report on medical schools in the U.S. Flexner himself was not involved in the medical industry, but after being asked to take on the report he researched and grew fond of the medical systems in England, France, and Germany.

In the report, which was officially published in 1910, Flexner called homeopathic schools “a striking demonstration of the incompatibility of science and dogma.” What’s curious is that Flexner points out between 1900 and 1909 homeopathic schools decreased from 22 to 15 and students within the schools decreased from 1,909 to 1,009. Flexner uses these figures to conclude that “the rise of legal standard must inevitably affect homeopathic practitioners.” In short, even with the marketplace whittling out the unproductive and unsustainable homeopathic colleges (or any colleges, for that matter) that Flexner clearly did not appreciate, he still advocated increased government intervention to further clear out homeopathic schools.
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Tags: American Medical Association, Carnegie, Central Planning, Congress, Doctors, Education, Flexner Report, Health Care, Individual, Ron Paul, States
Posted in Business, Featured, Government, Historic Analysis, Public Policies | 1 Comment »

The FDIC and the Follies of Modern Banking: Part 1

Tuesday, September 1st, 2009

When the Federal Reserve was signed into law in 1913, it was largely on the basis that the independent organization would assume the role of “lender of last resort” to struggling banks and institutions. This would allow the Fed to extend credit in order to prevent short-term economic hardships. As I wrote in my article, Deception in “Free Market” Banking, banks had not experienced troubles because of the free market as is regularly assumed, but through the government-protected fractional reserve system that allowed banks to overextend themselves and deceive depositors:

After the Panic of 1907 and the umpteenth failure of fractional reserve lending, the attacks still were not aimed at the fractional reserve system. This system, when protected through law, gave banks the undoubted opportunity to inflate the money supply, overextend themselves in ways that would never be sustainable in a free market economy, and give little regard to the customers’ original property. Instead, economists began calling for a “lender of last resort” to bail out banks if they were caught overstretched in commitments. Many people don’t realize it, but the U.S. financial system has been in bailout mode for nearly a century since this event.

The Federal Reserve’s “last resort” lending powers did not meet the expectation of politicians. Banks still overextended themselves with depositors’ money despite the new powers of the central bank. In fact, between 1921 and 1929 there was an average of 600 bank failures every year, which exceeded the previous decade’s average (the one in which the Fed was created) by ten times.

During the last few months of 1930 people grew increasingly weary and cautious of the banking system. Understandably, people did not react well when they realized the banks did not have their deposited money. Banks retracted credit and liquidated assets, building up a financial perfect storm that resulted in 9,096 banks suspending operations between 1930 and 1934.

Many politicians reacted by proposing a system (that had been discussed in recent years) of deposit insurance backed and paid by a federal agency, despite the failure of similar state setups of deposit insurance in the same era. Since the early 1800s many states had attempted to offer some form of deposit insurance, many failing to live up to their initial claims. All of them were broke by 1930 (some reached their demise many years earlier, such as Michigan, New York, and Vermont in the mid-1800s).

This all changed when The Banking Act of 1933 was signed into law by Franklin D. Roosevelt on June 16, 1933. The Federal Deposit Insurance Corporation (FDIC) was established as a temporary agency that started operating on January 1, 1934. In its first year the FDIC fund carried a balance of $292 million. In 1935, with President Roosevelt’s signing of The Banking Act of 1935, the FDIC was established as a permanent government agency.The act also strengthened the Federal Reserve Board of Governors, the group of seven individuals who play a major role in controlling monetary policy.

The primary functions of the FDIC include insuring deposits through the Deposit Insurance Fund (DIF) and examining/supervising “financial institutions for safety and soundness and consumer protection.” This has been the basic mission of the FDIC in its 75 year existence, the details of which I won’t fully cover in this article.

Modern economics and politics often praise the development of the FDIC as a great and necessary banking program (this alone might be reason enough to question the FDIC’s role). The main curiosity that I have is the fact that rather than recognize the failure of a government-protected banking system that had failed numerous times leading up to the Great Depression, politicians decided to once again prop up the government system. According to information on the fdic.gov website, the original FDIC legislation drew support from those “who were determined to end destruction of circulating medium due to bank failures and those who sought to preserve the existing banking structure.” (Emphasis added.) These people either failed to realize or downright ignored that it was precisely the banking structure of the fractional reserve system that made such booms and busts so dreadful.

The failure of many banks in the Great Depression was not due to the free market. Fractional reserve banking, the process of banks loaning and investing more money than they actually have in reserve, had been shot down by market forces many times throughout the 1800s in the U.S. The numerous “financial panics” of the 19th century that people often pin on the free market would not have been possible had the states and federal government ceased in protecting the ability of banks to deceitfully loan away depositors’ money. A free market system would not involve government protecting banks in this process, but enforcing the distinction of contracts between demand deposits and time deposits.

• Click here for Part 2.
  

Tags: Banking Act of 1933, Banking Act of 1935, Banks, Central Bank, Deposit Insurance, Deposit Insurance Fund, FDIC, Federal Reserve, Fractional Reserve, Franklin Roosevelt, Free Market, Great Depression, Individual, Panic of 1907, Panics, Recession
Posted in Business, Featured, Government, Historic Analysis, Monetary Policy, Public Policies | 1 Comment »

Profits Are Not the Problem

Tuesday, August 18th, 2009

In recent years profits have gotten a bad name from many people and politicians. Profits are said to take advantage of others, encourage greed, among a variety of other allegations. These concerns can be legitimate but often miss a crucial point.

Profit represents the reward for taking a risk. You wouldn’t start a business if you knew you weren’t going to make more than you would spend creating that business, would you? However, if you can increase your income more than your expenditures through that business, you’ll feel much more inclined to continue with the operation. Obviously, people cannot survive operating a business at a loss.

Profits do not come without work and risk. It is only possible to make a profit if you can offer a product or a service that people want, in an efficient manner. No matter how greedy you may be, in a free market you cannot survive without efficiently producing a product that has market demand. You cannot force people to work for you, you cannot force people to invest in your business, and you cannot force people to purchase your product. Your greed is limited to free and voluntary exchange.
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Tags: Corporatism, Cost, Department of Education, Drug and Cosmetic Act, Drugs, Efficiency, FDA, Federal Food, Health Care, Income, Individual, intervention, Kefauver Harris Amendment, Lobbyist, Medicaid, Medicare, Medicine, Post Office, Prevention, Prices, Profits, Regulation, Socialism, Treatment
Posted in Business, Current Events, Economy, Featured, Government, Historic Analysis, Public Policies | 2 Comments »

Assaulting Freedom: The Income Tax

Sunday, July 19th, 2009

In today’s age one would expect the principles of slavery and involuntary servitude to be unacceptable under any grounds. What people fail to realize is that while this may be true for individual citizens, what is illegal for citizens is not necessarily illegal for government.

The Merriam-Webster definition of slavery is the “submission to a dominating influence.” The 13th Amendment of the Constitution, adopted in 1865, specifically prohibits slavery and involuntary servitude. The U.S. Code punishes those who seek involuntary and forced labor of others with a fine and prison sentence of up to twenty years.

Yet there is one form of involuntary servitude, coercive labor, and obtaining money through force and threat of physical restraint that largely goes unquestioned in the U.S.: the income tax. First, let’s briefly explore the history of taxes in the U.S.

After the creation of the United States and the Constitution, the federal government paid the majority of its bills through tariffs and internal excise taxes on various items and goods. During the War of 1812 an income tax had been proposed to help pay off expenses but was never brought into existence. Several years later in 1817, every internal tax was eliminated and all of the federal revenue came from tariffs on imported items and the sale of public land.

To pay for the mounting costs of the Civil War, in 1862 Congress passed the first income tax of 3% on those who made between $600 and $10,000 (people who made above $10,000 paid a higher portion). This income tax was phased out in 1872. Another income tax was briefly put into place in 1894 and 1895, but was deemed unconstitutional by the Supreme Court. During this period, the Populist, Democratic, and Socialist Labor parties were all advocating for some form of income tax. The Socialist Labor Party was and still is the leading socialist/communist party in the U.S.

Arguments made for the passage of the 16th Amendment and the permanent ability of the federal government to tax income often revolved around the rhetoric that an income tax would mean less reliance on tariffs for revenue, which would result in lower prices, and therefore help less fortunate citizens. The original idea was that only the rich would be taxed and feel any negative effect. Sound familiar?

An income tax gives government the direct control over any individual who holds a legal job. This simple principle of direct taxation, especially since the 16th Amendment was ratified in 1913, has played a major role in the growth of the federal government over the past century. If government can reach into income, there is no limit to the extent that government can reach into your property to raise funds. It is all done in the name of protecting the poor and the middle class, punishing the rich, and promoting “equality.”

“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.” — Frederic Bastiat

Think about this situation for a second. Are taxes not forced out of us through coercion and threats (audits, fines, prison, etc.)? Is income taxation anything close to voluntary servitude? Is the income tax in any way not a “submission to a dominating influence,” the Webster definition of slavery? At what point does taxation become a form of legal slavery?

Most people in the U.S. spend approximately one-third of their time working for the government. Some may argue that we get benefits by working for the federal government: welfare, education, and many other programs created since the adoption of the latest income tax in 1913. Would these same people argue that if slaves had been forced to work merely one-third of their time and received basic benefits from their masters that it would be morally acceptable? This practice would be rightfully blasted as immoral and illegal in a second if it was done by a plantation owner, but it is rarely questioned when performed by government. So I ask again – at what point does taxation become a form of legal slavery?

“To tax the community for the advantage of a class is not protection, it is plunder.” — Benjamin Disraeli, Prime Minister of the U.K. (1874-1880)

The intentions of the income tax do not justify a thing. It is one of the core ideals of socialism, communism, and Nazism, the very systems that have grown into the greatest abominations of life that mankind has ever seen. The income tax builds into the notion that our rights, privileges, and liberties come from government and its powerful leaders. Certain centralized and elevated individuals have the power to take the fruits of our labor through force; this alone is a principle that originated with kings and some of the greediest individuals in history, not with a free people.

In The Communist Manifesto, first published in 1848, Karl Marx lists “a heavy and progressive or graduated income tax” as the second of ten general steps for a nation’s transition to communism.

The principle of the income tax is a direct assault on the life, liberty, and property of all humans. An income tax implies that there is a higher authority to whom we must work and contribute or be severely punished. It shifts power to the men and women who feel they know the best uses for our labor. The very idea is that certain centralized and powerful individuals in government have the wisdom and morality that the general people lack, and the authority to force others into that moral code. At heart, it is one of the most selfish, discriminatory, and violent ideals to have crept upon the U.S. and other nations.

“I know no class of my fellowmen, however just, enlightened, and humane, which can be wisely and safely trusted absolutely with the liberties of any other class.” — Frederick Douglass

The income tax has become incredibly entrenched in our economy and society today. It is often considered unthinkable to imagine a time when the federal government stayed within its constitutional confines; it is unimaginable to think of a federal government whose soul purpose is to protect life, liberty, and property. An income tax is one of the worst forms of taxation possible: there are few ways to avoid it (as you can somewhat do with sales tax, excise taxes, and tariffs), it is a horrid state invasion of privacy and property, and it turns government into a tool of plunder with a strong disregard for basic justice.

These elevated and seemingly angelic figures whom we elect convince us that it is because of too much freedom and voluntary exchange that our biggest problems arise, rather than recognize one of the greediest, most powerful, and largest attacks on life, liberty, and property through the income tax and the centralist principles it is guaranteed to carry with it.

“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” — James Madison

Tags: 13th Amendment, 16th Amendment, Civil War, Coercion, Communism, Constitution, Frederic Bastiat, Income Tax, Inheritance Tax, Involuntary Servitude, James Madison, Karl Marx, Nazism, Slavery, Socialism, Tarrifs, Violence
Posted in Current Events, Economy, Featured, Government, Historic Analysis, Public Policies | 2 Comments »

“Stimulus Packages” or “Economic Nightmares”?

Monday, July 6th, 2009

It’s hard to not go gaga over the ideas and intentions of “stimulus packages” and ramped up government programs. After all, won’t it create a lot of jobs, boost the economy, and lift us out of a rough spot? This is what we’ve constantly heard from politicians and the media especially over the past couple years. “Government needs to do something.”

Never forget how government gets its money. It does not earn it. It does not work for it. Every penny that goes to government must come forcefully from a productive area of the economy. Government can’t take money from a failing business or struggling individual, it must forcefully take money from wealthier (i.e. productive) businesses and individuals.

This brings us to the first problem with “stimulus projects” in the form of increased government programs, public works, and public spending in general. The only way any government can afford to spend billions and trillions of dollars “stimulating” the economy is to either tax, borrow, or print that money. In other words, people will either directly lose more money to government through taxes, the effect may be felt in the longer-term through debt and borrowing, or the currency will depreciate and prices will rise through the process of monetary inflation. Pick your poison; all three options for government to increase spending will inevitably pinch people the most either directly or indirectly.

“Stimulus packages” aim to boost the economy in the short-term. If government can provide jobs to build public entities (such as transportation options, buildings, etc.) the economy will correct quicker than if the market could work, right? The problem with this theory is people always ignore where that money comes from. Taking money from productive sources in the economy and throwing it to unproductive and expensive projects does not set the economy on a sustainable foundation.

Strong economies are not build on artificial spending. The more that government takes from productive sources in the economy and pumps it into unproductive government projects, the longer the correction and recession will be. Consider some of the projects being funded under Obama’s massive spending plan. One is building a light rail track. This is all well and good, but how is spending billions of dollars on a train track and system going to increase long-term productivity? Few people use government-operated trains as it is (witness Amtrak and its black hole of wasted money), it will simply require more funds sucked out of productive sources to survive.

People buy into the illusion that as long as people have jobs, regardless of productivity, it is good for the economy. Unproductive jobs do no good for the economy and will not expand sustainability and prosperity. Napoleon tried to create jobs and work just by paying people to dig up ditches and fill them back in. It’s a nice idea, but it won’t do a thing to improve the economic picture. It is when labor is efficiently and sustainably used that an economy will expand on a strong foundation.

Today we are seeing government promote and prop up unproductive entities like nothing else. First, we bail out companies who lived beyond their means, made terrible business decisions, and recklessly spent money. These companies were unproductive and hurting the economy. Second, we have the ongoing “stimulus package” pumping money into pork projects that will not be productive in the least. It may sound great to build roads and infrastructure to stimulate the economy, but it won’t create wealth and expand productivity. It is not beneficial to use productivity to fund nonproductive goals. It is a bogus and failed theory that we continue to follow. It will not help the long-term economic picture.

One does not need to look very hard to see how terribly these government shenanigans have failed in the past. The Great Depression is the first obvious example. Hoover and Roosevelt both increased taxes, public projects, and expanded government with hopes of curing economic ills. Subsidies, public works projects, and many other government programs were created and expanded in the 1930s. Roads were built, prices were propped up, and government would not let the market organize labor and money on its own. Despite the intervention and spending efforts from government, unemployment was higher in 1939 than in 1931. The New Deal cost billions of dollars and expanded the federal government like never before, but unemployment and productivity still did not improve.

Let’s take a brief detour to the recession of 1921. Few people have heard of this recession because government actually decreased its size, spending, and taxes during the rough economic period. The government and Federal Reserve did next to nothing as the economy began to correct after the government’s market intervention during World War 1. The government (to the disappointment of some interventionist politicians), rather than increase its role as it would do disastrously just eight years later, ended up sitting this recession out. Prices fell, unproductive businesses failed and reorganized, and the economy was back on its feet after no more than 18 months. The pain was brief, the correction and reorganization was quick, and it all happened largely because government reduced its size and let the market shift money and labor to productive areas of the economy.

In more modern times, Japan’s “Lost Decade” can be another example of the botched intervention of government and the central bank. Some believe that Japan did too little to “stimulate” the economy, when the government and central bank actually took a nearly identical road to the U.S. today. Failed businesses were propped up by government, the central bank lowered interest rates to 0% for a time and pumped cheap money and credit into the economy, and huge amounts of Yen were spent on unproductive and essentially worthless public projects. All of this did nothing but lead to huge government debt and a devastated economy.

It’s hard to understand how much money Keynesians want to spend on “stimulating” the economy. Paul Krugman, the front-runner of the Keynesian crowd, is calling for a second and larger stimulus package. The trillions of dollars already pumped into unproductive businesses and projects wasn’t enough? How much do these guys think we need to spend to bring about their Keynesian Utopia? Rather than realize that government intervention and central manipulation have done more to agitate the economy than help, people are crying for more of the same that historically has done more damage than good.

Government is great at managing the time, labor, and money of other people. It also guarantees that politicians won’t manage that time, labor, and money more efficiently than the people who own that time, labor, and money. The very concept that by taking from productive parts of the economy and spreading it to various unproductive jobs and projects is downright silly. The worst recessions and depressions have come in many countries when government prevents the market from reallocating funds from unproductive businesses and sectors to the strong and productive areas of the economy.

Preventing the failure of a large corporation because jobs would be lost is the equivalent of saying that government should have propped up horse and buggies and the many jobs in the industry regardless of its uselessness to society. The natural order of a free market is to shift funds to the strongest, smartest, and most productive businesses and industries. When government gets in the way with bailouts, “stimulus plans,” and countless other intervention methods, it only guarantees inefficiency, unsustainable activities, and prolonged suffering.

The answer to our economic problems does not lie in government spending as Paul Krugman and many other Keynesians would like, but in more freedom for the market and people to reallocate money and labor to the productive and sustainable portions of the economy.

Tags: Barack Obama, Currency, Deficit, Franklin Roosevelt, Great Depression, Herbert Hoover, Inflation, Japan, Keynes, Lost Decade, National Debt, Paul Krugman, Public Works, Recession of 1921, Stimulus, Stimulus Package, Taxes, Unemployment, Yen
Posted in Business, Current Events, Economy, Featured, Government, Public Policies | No Comments »

Money and Currency in a Free Society

Monday, June 29th, 2009

We live in times when government and central banks monopolize money and make it next to impossible for viable competing currencies to arise, which can make it difficult to see the possibility of other currency alternatives.

Picture a new village, untouched by current monetary laws. People begin exchanging goods through the process of bartering. This makes it difficult to know what you can buy, because the milkman will only need so many of the pouches that you manufacture. Because bartering can be inefficient, unpredictable, and unreliable, the people decide to represent their goods with something of value. They find copper, silver, and gold nearby, all unique, relatively limited (therefore they hold more value than, say, granite), and quite durable. Thus, they can represent their goods with these valuable metals (and to make it more convenient, paper guarantees to those metals).

Money does not get its value through “force” as some believe. When the people in the village were looking for a more effective way to exchange goods, they were not trying to represent force. They were aiming to represent value through metals that were limited enough to have value, had durability, and could not easily be counterfeit (or inflated).  Currency is never originally brought about by force or through government.

Historically government has gotten involved in currency for one reason: greed. Kings would debase the metals that the market freely used and valued. Kings would inflate and devalue the currency that was once stable when the market was in control. Government could not debase metals, clip coins, and print unsound paper money and expect people to voluntarily accept it, thus force was necessary to make it happen. Legal tender laws forced devalued government money on the people and markets.

It is difficult for government to grow when people demand the money to be backed by hard goods (such as metals). It is difficult for government to expand its presence when the money supply is stable and in the hands of the people. History clearly shows us that when government wants to expand its state or military presence beyond its usual bounds, it cannot do so without control over the nation’s money supply. Without the control of money, government would have to take every cent it needed directly from the people and businesses, an approach that would become very unpopular in a very short amount of time.

This is why governments have always tried to take control and monopolize money. If people are forced to use government money and cannot create a competing currency, they must use the money the government gives them. Government can then indirectly “tax” the people through inflation and devaluation of the currency. This allows government to grow its boundaries and influence without directly feeling the repercussions of a people who see their property forcefully go out the door to the government in the form of taxes. Monetary inflation is a very indirect and gradual process for government to take money from the people. And it can only work if people are forced to accept the debased and often worthless money. As the money supply grows without solid commodity backing, prices begin to rise, impacting poorer citizens the most.

This brings us to the U.S. Some have argued that the Constitution allows the government to pass legal tender laws and control many aspects of monetary policy. However, on close inspection, this power has been greatly abused and misinterpreted. The Constitution states:

Article I, Section 8: The Congress shall have Power…To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

Article I, Section 10: No State shall…coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.

Congress has the power to coin money, regulate its value, but nowhere does it have the authority to force people to accept that money. Congress can create and regulate its money, but it cannot mandate that people use it through legal tender laws. The states are prohibited from coining money and are required to make only “gold and silver Coin a Tender in Payment of Debt.”

Neither the powers delegated to Congress nor the states give them the authority to shove a currency onto the people. “Legal tender” means tender in the payment of debt. The states are given the duty to be sure that only gold and silver can be legal tender. For legal and juristic purposes, only gold and silver are acceptable in the payments of debt. But this does not give the state the power to dictate the forms of other monetary commodities or economic exchanges that the people and market might come up with. In other words, the state controls the legal use of money in the payment of debt, but neither the state nor Congress has authority over the economic exchanges of money in the marketplace.

The Founders did not give the federal government the ability to monopolize currency and force it on the people. There is no power in the Constitution given to the government to restrict currency production and choice of the people and marketplace. In fact, many competing and private currencies functioned efficiently for a good part of the 1800s. Today, however, we accept legal tender laws as a legitimate role of Congress, when in reality they do nothing but unconstitutionally force a worthless currency on the people.

Consider the basic principles of modern legal tender laws. No government force or mandates would be necessary to encourage people to use a widespread, valuable, and sustainable currency. Legal tender laws and government coercion over money are always used to force a currency that would otherwise be worthless onto the people and marketplace. Imagine if the legal tender laws enacted in the 1960s, forcing people to accept Federal Reserve Notes, were repealed today. Who in their right minds would continue using a currency whose value consistently decreases, is in the control of seven central bankers, and in reality is worth nothing more than the paper on which it is printed?

People will often reply that repealing legal tender laws would lead to the creation of hundreds of private currencies and economic chaos. But remember something. Especially in today’s digital, national, and even global economy, a currency would have to be simple, recognizable, valuable, and widespread to have a chance of surviving in the market. People will naturally encourage and use the currency that holds the most value and brings the greatest amount of ease to transactions. If that is the currency produced by Congress, so be it.

Monetary freedom simply gives people the option of throwing off the restrictive chains of a centrally manipulated, inflated, and drastically devalued currency, the symptoms of a government out of control. Competition in money would force government to stay in line, live within its means (both domestically and overseas), and maintain high levels of sensibility and responsibility. History has visibly painted the picture that without control over money, government’s long-term abilities are only as able as those that the people directly delegate to it. Freedom of money plays a major role in ensuring freedom and representation in government.

“With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.” — F.A. Hayek

“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” — George Washington

“All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.” — John Adams

“Whoever controls the volume of money in any country is absolute master of all industry and commerce.” — James A. Garfield

“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.” — Daniel Webster

Tags: Banks, Bartering, Central Bank, Commodity, Constitution, Copper, Currency, Devaluation, Federal Reserve, Fiat Money, Free Market, Gold, Inflation, Kings, Legal Tender, Metals, Money, Monopoly, Silver, States
Posted in Economy, Featured, Government, Historic Analysis, Monetary Policy, Public Policies | 2 Comments »

Finding the Balance in Foreign Policy

Sunday, May 10th, 2009

Since World War I, the U.S. has generally accepted a foreign policy of military involvement overseas. It almost seems as though we believe things would completely fall apart were we not to be militarily present around the world. However much we may accept these ideas, they do not represent the foreign policy of a free, sovereign, and leading nation.

It was the Treaty of Versailles that played a major part in the popularity and rise of Adolph Hitler in Germany. For starters, the U.S.’s national security was not threatened during WWI, yet we still felt the urge to get involved in the mess in Europe. The Treaty of Versailles was essentially created by all major countries involved with WWI, except Germany, in an effort to promote peace in Europe. The U.S. took a large role, as well as France and Britain, in creating and finalizing the Treaty.

In short, the Versailles Treaty brought enormous pressure and devastation upon Germany; forcing the country to reduce its army size, give up land, and pay for many of the rebuilding efforts in Europe. This is not to downplay Germany’s role in the war, but the Treaty did not give the German people a warm and fuzzy feeling about the outside countries dictating the rules to Germany. Adolph Hitler took advantage of the anger and resentment felt by Germans by uniting the country, partly by downplaying and attacking the outlines of the Versailles Treaty and the people behind it. Hitler came to power in 1933.

In 1930, Herbert Hoover and the U.S. Congress enacted the Smoot-Hawley Act, raising tariffs to record levels on thousands of items. Incredibly high tariffs led to decreased trade, and other countries enacted similar policy to retaliate and show resentment to the U.S. for heavily limiting trade. The U.S. was in the midst of starting a period of protectionist economic policy worldwide, after getting much more involved in world affairs in WWI and the Treaty of Versailles.

Ever since the Versailles Treaty and Smoot-Hawley Act, the U.S. has struggled to find the balance between forceful intervention overseas and domestic protectionism. Both policies are costly and counterproductive in the long run, but today we fail to recognize the dangers of foreign and domestic intervention.

Foreign intervention is simply built on bad principles. We do not carry the right to occupy other sovereign nations because we are a superpower. We do not have the moral authority or the constitutional authority to do this. Plus, it is costly in money, lives, and creates resentment towards the U.S., and in extreme cases will backfire in terrible measures such as terrorism.

Protectionism and isolationism are no better. Shutting down trade also leads to resentment, as we saw in the Great Depression, and keeping ourselves out of the rest of the world will greatly hold back the ultimate goals of world peace, friendship, and cooperation. If countries can’t freely exchange goods between each other without putting up a fight, that alone will be the beginning of major long-term problems.

Both interventionism and protectionism are shortsighted policies. Today we accept government-managed trade in the forms of NAFTA, NATO, etc., as free trade, but it is nothing more than a cover for more government interference and control in the marketplace. Pursuing either an interventionist foreign policy or protectionist domestic policy eventually leads to its own brand of isolationism, rarely serving the interests of the people.

As with domestic policy, the U.S. has maintained a very short-term view of how the world works. Truthful, sustainable, reliable cooperation will come by empowering people to trade and travel between countries. Governments have biases and lust for control that always seem to get in the way of creating a lasting and principled foreign policy. At least, this is how history has shown it.

Ever since the U.S. decided to get actively involved militarily in foreign problems, we have seen much bloodshed, war, and violence. The Vietnam War dragged on for years, but only when we pulled out our troops did the country start to recover to be the prosperous and expanding country that it is today. We have been in Korea for sixty years, yet the tension there is still high and lasting today. We continue to isolate ourselves from Cuba, despite the fall of the Soviet Empire years ago and no threat to our national security.

Fire does not disappear with more fire, yet even in many of the smallest skirmishes that occur in the world, violence is seen as the first retaliation. The 20th century saw many governments get forcefully involved in world affairs and it turned out to be the bloodiest period in the records of history.

Despite the high levels of interference from the U.N. and numerous governments (primarily the U.S.), the violence and wars continue unabated. Just look at the ongoing messes we face in Afghanistan and Pakistan. Iraq is years from reaching a conclusion with U.S. presence. And don’t forget, we have military bases in nearly 130 different countries today.

Just think for a moment. How would we feel if China built several military bases in the U.S.? How would we react if Russia deployed even as little as three hundred soldiers on our soil? We would not accept it without putting up a serious fight. Is it so hard to comprehend that when we build permanent military bases in sovereign nations, sometimes even on their holy land, it won’t result in serious blowback?

It was in the first grade when I first learned the golden rule: treat others the way you want to be treated. This simple principle that six-year-olds are learning isn’t understood by our own government. Even the people who support military intervention today can’t pretend that these policies won’t have consequences.

Foreign policy is much too dangerous of an area to follow a flawed belief, principle, or argument. A lasting, sustainable, and prosperous foreign policy will come not from government force, but with honest free trade, strong diplomatic relations and discussions, and a relentless pursuit of friendship before force.

Tags: Adolph Hitler, Blowback, China, Congress, Cuba, Germany, Great Depression, Herbert Hoover, intervention, Isolation, Korea, Protectionism, Russia, Smoot-Hawley, Terrorism, Treaty of Versailles, Vietnam, Woodrow Wilson, World War I, World War II
Posted in Featured, Foreign Policy, Government, Historic Analysis | 1 Comment »