If the Fed is unconstitutional then who/what is constitutionally responsible for managing the money supply? Congress? The argument has been made here over and over again that Congress is the only constitutionally authorized organization to do so. I'm guessing you have another suggestion that's explicitly identified in the Constitution.
We had central banks and centralized banking before the fed and when we didn’t, the government often let banks suspend specie payment taking away their incentive not to expand the money supply through fractional reserve banking.
And that gave us stable prices? No experiences with 5% inflation one year and then 5% deflation the next? No boom and bust cycles? We never had tens of thousands of families and businesses destroyed because of wildly swinging inflation and deflation before the Fed?
Police, military, and and a judiciary are necessary to capitalism to prevent fraud, embezzlement, murder, etc. and to protect property rights and ensure contracts. It isn’t capitalism without these things.
All supplied by government. The other poster said:
Capitalism only works with no involvement by government? Do you agree with me that this is a ridiculous statement? Sounds like you do. If so, why even bring it up?
Anti-trust laws are totally unnecessary.
Because all industries have low barriers for entry and a monopoly would never be able to manipulate the ebb and flow of supply and demand? Because without robust competition we can still have innovation? To think that monopolies will benefit consumers is naive at best.
I was told earlier this week on this forum that Ronald Regan was not a "true conservative", and neither was Jack Kemp. Now I'm being told, at least that's what it seems, that Teddy Roosevelt was not a "true conservative" because he supported antitrust legislation. When will we finally elect our first conservative president? Ron Paul 2012?
***I’m guessing you have another suggestion that’s explicitly identified in the Constitution.***
Article 1 Section 8 Clause 5:
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Here’s a link with various sources on what that phrase means: http://press-pubs.uchicago.edu/founders/tocs/a1_8_5.html
The federal government also isn’t given the power to emit bills of credit (a power specifically denied to the states) so when you ask who would manage the money supply (constitutionally) I would say nobody since that implies an unbacked paper currency.
***And that gave us stable prices? No experiences with 5% inflation one year and then 5% deflation the next? No boom and bust cycles? We never had tens of thousands of families and businesses destroyed because of wildly swinging inflation and deflation before the Fed?***
I think you missed my point. What is implied when people blame booms and busts on the fed is that they are blaming the fed’s ability to increase the money supply and artificially lower interest rates. Fractional reserve banking is a key ingredient to this. You had asked if prices were stable or if we had booms and busts before the fed. My point in illustrating that we had fractional reserve banking, central banks, and centralized banking before the fed was that we had many of the same conditions before the fed as when it was enacted (up to the present day) and so it would make sense for there to still be booms and busts and price instability (if indeed the theory portrayed is correct, namely that fractional reserve banking et al. lead to booms and busts, and here I haven’t made a judgment on whether that is true or not).
Most certainly we had both price and monetary inflation and and deflation before the fed, but then we never had a truly free market monetary system.
***Capitalism only works with no involvement by government? Do you agree with me that this is a ridiculous statement? Sounds like you do. If so, why even bring it up?***
The government’s legitimate role is to provide police, military, judiciary, etc. for the the reasons I stated earlier. Without those, there is no capitalism because in order to function, capitalism needs the protections offered by the police, military and judicial system. I don’t see those as an intervention of government so much as necessary conditions for capitalism to exist.
The reason I brought it up is because I believe calex59 was thinking about the issue like I have presented it, namely that the government (police, military, judiciary) must exist in order for capitalism to exist. Any government intervention beyond this constitutes government involvement (such as regulation, taxation for any purpose outside police, military, legislator, judiciary, executive, etc. etc.).
Clearly if there is no government, capitalism doesn’t work, so on that we agree, but if we assume that implicit in the definition of capitalism is the establishment of government with minimal taxation to allow government to function, then any involvement beyond that constitutes something other than capitalism. I think basically we’re all on the same page just coming from different angles.
***Because all industries have low barriers for entry***
Under a free market yes. When government gets involved, then that’s another matter. Anti-trust legislation would be the government’s response to a problem it created essentially.
***a monopoly would never be able to manipulate the ebb and flow of supply and demand?***
Well I’m not sure what it would be able to do to demand, but it could most certainly affect supply in the short run. Let’s say it restricts supply presumably to charge higher prices. Firstly it should be noted that this does not necessarily guarantee it higher profits. They are selling less but charging more so it depends.
But secondly and more importantly I think, under a free market, there is no barrier to entry. A monopoly became such because it beat out all other competition. So up until that point it has benefited consumers. If it seeks to then raise prices, the competition it had beat out can now afford to jump back into the market as there is now the potential for profit. The threat of competition never disappears and so the monopoly must always please its consumers and out bid its competition, established or potential. Restricting supply may help a monopoly for the very short term, but it will quickly lead to its undoing.
***Because without robust competition we can still have innovation?***
If the monopoly isn’t constantly finding ways to benefit consumers better than its potential competition, then it will not survive as a monopoly. It has a vested interest in keeping its market share so if it wishes to remain viable, then it will look for ways to innovate, invest, and in general lower the costs of production. If there is a monopoly in a market, there will constantly be potential competitors looking for ways to grab a piece of the market share.
***To think that monopolies will benefit consumers is naive at best.***
It depends if they come about by the free market or not. A government created or supported monopoly most definitely won’t benefit consumers, but how can it be said that a monopoly created by the free market hurts consumers? Consumers are the ones that made it a monopoly.