I feel the need to compile several talking points lists for the coming presidential campaign. One is the "If-Sarah-Palin-is-an-idiot-then-how-come-X?" list.
Maybe because Palin speaks for working stiffs and not the Wall Street/DC elites? Any number of FReepers predicted this fiasco. But, then again, we work for a living.
********Palin Ping********
No, how about sending the Fed to Palin, that is liquidating it and returning the country to a 100% reserve banking standard based on real money?
But since the Federal Reserve Corporation is wholly owned by the “member financial institutions” in proportion to their capital, how does one assign a fair market value to the shares in the Corporation that enjoys a government monopoly on the power to create US Dollars ex nihilo (”out of nothing”)?
In theory at least the value in USD of a single share of the Federal Reserve Corporation should be infinite. If so, should anyone seriously propose to abolish that Corporation, and this destroy the value of the shares, would the Federal government face “takings” litigation on the part of the shareholders?
It would be fascinating to see what would come out of the woodwork in terms of which parties in our political dynamic would take what positions on this question.
But the facts are clear: in 1913 the US government granted a monopoly to a corporation that it had zero ownership issue in but that was entirely owned by the banks. The banks continue to operate that Corporation in their interest. Money is created, interest rates are set and all manner of credit and currency swaps and loans are made with who knows whom in the interest of the banks.
If someone were to propose that government should assume this function, they would be proposing to run the Central Bank just as competently as they now run Amtrack, Medicare and Social Security, which is to say with zero competence.
The only answer is to return money to the only party who has the unalienable right to be secure in their personal property: the people. That means to abolish the national currency as a unique unit and allow people to choose whatever means of value exchange they please. The only role of government would be to protect against fraud and theft. History shows that people would return to using weights of gold and silver. There are existing forms of electronic precious metals, such as GoldMoney, where gold and silver is accounted for in milligrams. Electronic money would still be possible, but only as warehouse receipts.
One other benefit to this would be to eliminate or at least greatly reduce the boom-bust cycles that destroy wealth and throw so much chaos in our lives.
The Austrian economist Huerta de Soto wrote a book, Money, Bank Credit and Economic Cycles. He fully explained the fraud of fractional reserve banking and the damage it does. This is his conclusion:
In conclusion, if we wish to build a truly stable financial
and monetary system for the twenty-first century, a system
which will protect our economies as far as humanly possible
from crises and recessions, we will have to: (1) ensure complete
freedom of choice in currency, based on a metallic standard
(gold) which would replace all fiduciary media issued in
the past; (2) establish a free-banking system; and, most importantly,
(3) insist that all agents involved in the free-banking
system be subject to and comply with traditional legal rules
and principles, especially the principle that no one, not even a
banker, can enjoy the privilege of loaning something entrusted
to him on demand deposit (i.e., a free-banking system with a
100-percent reserve requirement).
Until specialists and society in general fully grasp the
essential theoretical and legal principles associated with
money, bank credit, and economic cycles, we may realistically
expect further suffering in the world due to damaging economic
recessions which will inevitably and perpetually reappear
until central banks lose their power to issue paper money
with legal tender and bankers lose their government-granted
privilege of operating with a fractional reserve. We now wrap
up the book as we began it, with this opinion: Now that we
have seen the historic fall of socialism, both in theory and in
practice, the main challenge to face both professional economists
and lovers of freedom in this new century will be to use
all of their intellectual might to oppose the institution of the
central bank and the privilege private bankers now enjoy.
Link to free PDF of book: http://mises.org/books/desoto.pdf
BTW, a great book and a pretty easy read.