November 9 will mark the 25th anniversary of the tearing down of the Berlin Wall. The extravagant hoopla began months ago in Berlin. In the United States we can expect all the Cold War clichés about The Free World vs. Communist Tyranny to be trotted out and the simple tale of how the wall came to be will be repeated: In 1961, the East Berlin communists built a wall to keep their oppressed citizens from escaping to West Berlin and freedom. Why? Because commies don’t like people to be free, to learn the “truth”. What other reason could there have been?
First of all, before the wall went up in 1961, thousands of East Germans had been commuting to the West for jobs each day and then returning to the East in the evening; many others went back and forth for shopping or other reasons. So they were clearly not being held in the East against their will. Why then was the wall built? There were two major reasons:
1) The West was bedeviling the East with a vigorous campaign of recruiting East German professionals and skilled workers, who had been educated at the expense of the Communist government. This eventually led to a serious labor and production crisis in the East. As one indication of this, the New York Times reported in 1963: “West Berlin suffered economically from the wall by the loss of about 60,000 skilled workmen who had commuted daily from their homes in East Berlin to their places of work in West Berlin.”
It should be noted that in 1999, USA Today reported: “When the Berlin Wall crumbled [1989], East Germans imagined a life of freedom where consumer goods were abundant and hardships would fade. Ten years later, a remarkable 51% say they were happier with communism.” Earlier polls would likely have shown even more than 51% expressing such a sentiment, for in the ten years many of those who remembered life in East Germany with some fondness had passed away; although even 10 years later, in 2009, the Washington Post could report: “Westerners [in Berlin] say they are fed up with the tendency of their eastern counterparts to wax nostalgic about communist times.”
It was in the post-unification period that a new Russian and eastern Europe proverb was born: “Everything the Communists said about Communism was a lie, but everything they said about capitalism turned out to be the truth.”
It should be further noted that the division of Germany into two states in 1949 – setting the stage for 40 years of Cold War hostility – was an American decision, not a Soviet one.
2) During the 1950s, American coldwarriors in West Germany instituted a crude campaign of sabotage and subversion against East Germany designed to throw that country’s economic and administrative machinery out of gear. The CIA and other US intelligence and military services recruited, equipped, trained and financed German activist groups and individuals, of West and East, to carry out actions which ran the spectrum from juvenile delinquency to terrorism; anything to make life difficult for the East German people and weaken their support of the government; anything to make the commies look bad.
It was a remarkable undertaking. The United States and its agents used explosives, arson, short circuiting, and other methods to damage power stations, shipyards, canals, docks, public buildings, gas stations, public transportation, bridges, etc; they derailed freight trains, seriously injuring workers; burned 12 cars of a freight train and destroyed air pressure hoses of others; used acids to damage vital factory machinery; put sand in the turbine of a factory, bringing it to a standstill; set fire to a tile-producing factory; promoted work slow-downs in factories; killed 7,000 cows of a co-operative dairy through poisoning; added soap to powdered milk destined for East German schools; were in possession, when arrested, of a large quantity of the poison cantharidin with which it was planned to produce poisoned cigarettes to kill leading East Germans; set off stink bombs to disrupt political meetings; attempted to disrupt the World Youth Festival in East Berlin by sending out forged invitations, false promises of free bed and board, false notices of cancellations, etc.; carried out attacks on participants with explosives, firebombs, and tire-puncturing equipment; forged and distributed large quantities of food ration cards to cause confusion, shortages and resentment; sent out forged tax notices and other government directives and documents to foster disorganization and inefficiency within industry and unions … all this and much more.
The Woodrow Wilson International Center for Scholars, of Washington, DC, conservative coldwarriors, in one of their Cold War International History Project Working Papers (#58, p.9) states: “The open border in Berlin exposed the GDR [East Germany] to massive espionage and subversion and, as the two documents in the appendices show, its closure gave the Communist state greater security.”
Throughout the 1950s, the East Germans and the Soviet Union repeatedly lodged complaints with the Soviets’ erstwhile allies in the West and with the United Nations about specific sabotage and espionage activities and called for the closure of the offices in West Germany they claimed were responsible, and for which they provided names and addresses. Their complaints fell on deaf ears. Inevitably, the East Germans began to tighten up entry into the country from the West, leading eventually to the infamous wall. However, even after the wall was built there was regular, albeit limited, legal emigration from east to west. In 1984, for example, East Germany allowed 40,000 people to leave. In 1985, East German newspapers claimed that more than 20,000 former citizens who had settled in the West wanted to return home after becoming disillusioned with the capitalist system. The West German government said that 14,300 East Germans had gone back over the previous 10 years.
Let’s also not forget that while East Germany completely denazified, in West Germany for more than a decade after the war, the highest government positions in the executive, legislative, and judicial branches contained numerous former and “former” Nazis.
Finally, it must be remembered, that Eastern Europe became communist because Hitler, with the approval of the West, used it as a highway to reach the Soviet Union to wipe out Bolshevism forever, and that the Russians in World War I and II lost about 40 million people because the West had used this highway to invade Russia. It should not be surprising that after World War II the Soviet Union was determined to close down the highway.
For an additional and very interesting view of the Berlin Wall anniversary, see the article “Humpty Dumpty and the Fall of Berlin’s Wall” by Victor Grossman. Grossman (née Steve Wechsler) fled the US Army in Germany under pressure from McCarthy-era threats and became a journalist and author during his years in the (East) German Democratic Republic. He still lives in Berlin and mails out his “Berlin Bulletin” on German developments on an irregular basis. You can subscribe to it at wechsler_grossman@yahoo.de. His autobiography: “Crossing the River: a Memoir of the American Left, the Cold War and Life in East Germany” was published by University of Massachusetts Press. He claims to be the only person in the world with diplomas from both Harvard University and Karl Marx University in Leipzig.
I like to read opposing views, but this is a joke. The author is trying a shotgun approach – throwing out every argument (reasonable or ridiculous), hoping the reader buys into at least one of them.
Apparently, the Berlin wall was really a good thing. And also it was a bad thing and the West’s fault that Soviets built it. And the Germans wanted to be on the communist side anyway… but they needed a wall to keep them in… because the West was stealing the workers. And the West split Germany but they were also trying sabotage to bring it back together. And the West are all Nazis.
Or anything, _anything_ you’ll believe. Just please believe that Soviet good, West bad.
You’re missing the point entirely. The argument being made is not “Soviet good, West bad”. The argument is that the standard narrative of “West good, USSR bad” is simplistic propaganda.
Nope, actually it was that simple for the most part. The West is a good system that has some flaws as any system will, and thus wasn’t perfect. The Soviet Union was a flat-out evil system.
To say there are “some flaws” in the functioning of Western governments is quite an extraordinary understatement.
The flaws were not near what you get with an authoritarian system.
My, what a high bar you set.
Lessee: West – free travel; USSR – walls to prevent travel.
Simple. Not propaganda.
But you forget:
West – sabotage and terrorism; USSR – wall to prevent sabotage and terrorism
Is someone actually paid for this?
Just one paragraph can be dissected into multiple lies.
“that Eastern Europe became communist because Hitler” .
Does this historical “expert” not realize Germany and Russia jointly invaded Poland and eastern Europe, splitting the lands under the Molotov–Ribbentrop Pact?
“Hitler, with the approval of the West, used it as a highway to reach the Soviet Union”. The “west” provided material support for communist Russia under the lend-lease act.
the Russians in World War I and II lost about 40 million people because the West had used this highway to invade Russia.”
Germans modeled their deportations and concentration camps after……………………
Russian concentration camps.
The Black Book of Communism
You seem to struggle with logic.
The fact that Germany and the USSR jointly invaded Poland does not make it any less true that Germany invaded the USSR.
The fact that the US provided support for the Soviet Union under the lend-lease act does not make it any less true that the US was perfectly content to sit it out and let Germans and Soviets kill each other. (FDR’s approval of loans to the USSR occurred only after the aforementioned German invasion because Stalin was considered the lesser of the two evils.)
The fact that the USSR also had concentration camps does not make it any less true that… well, let’s just quote from Winston Churchill as cited in the Introduction of Mr. Blum’s book “Killing Hope”:
“Germans modeled their deportations and concentration camps after Russian concentration camps.”
Source? Concentration camps were invented by the British during the Boer War in South Africa. The Germans used concentration camps during their genocide in Namibia in 1905-06. Many scholars draw a parallel between the Herero genocide and the Holocaust.
The Nazi eugenics program was inspired by American eugenicists. A total of 60,000 Americans were sterilized — some women because they were deemed to have abnormally large clitorises or labia — and Californian eugenicists sent Nazi doctors booklets with the most up to date information.
Hitler never said he was inspired by the Soviet system. He did, however, admire the British empire and wanted to rule Russia as (he believed) Britain ruled India. He also admired the way Europeans had cleansed America of its indigenous population and wanted to apply the same method in the East.
http://www.jewishjournal.com/sacredintentions/item/hitlers_inspiration_and_guide_the_native_american_holocaust
“Does this historical “expert” not realize Germany and Russia jointly invaded Poland and eastern Europe, splitting the lands under the Molotov–Ribbentrop Pact?”
The Soviet Union was the last European country to sign a non-aggression pact with Hitler. Poland was the first one — January 1938, the first major agreement signed by Nazi Germany with another country — and invaded Czechoslovakia together with Germany and Hungary in 1938. Just like Germany, Poland was a far right military dictatorship which used anti-Semitic laws to make the Jews emigrate and considered sending them to Madagascar. As late as January 1939, Poland together with Nazi Germany urged Romania and the Baltic states to expel their Jews.
In addition, the half of Poland taken by the Soviet Union wasn’t half of TODAY’s Poland. 20% of today’s Ukraine, 50% of today’s Belarus and 25% of today’s Lithuania, THAT was eastern Poland before 1939. In Lithuania’s case, it included their capital city Vilnius. These territories were not given to Poland when it became independent in 1919, Poland conquered them by illegal wars of aggression against USSR, Lithuania and Ukraine. The aim of the Polish regime was to restore the borders of the Polish empire of 1772 which would include more non-Poles than Poles, but thanks to the Red Army, Poland ended up “only” twice as big as in 1919.
Most people in these territories didn’t want to live in Poland. Most Belarusians wanted to join the USSR while most Lithuanians and Ukrainians wanted their own independent republics. The Catholic Belarusian nationalists allied with Lithuania to undermine Poland, the leftist Belarusian nationalists allied with USSR and the Ukrainian nationalists allied with Germany (both Weimar and Nazi). During WW2, they even made a genocide of Poles in these territories, to prevent the Poles from reclaiming them after the war. http://en.wikipedia.org/wiki/Massacres_of_Poles_in_Volhynia_and_Eastern_Galicia (this massacre of Poles was only the beginning, the OUN planned to purge the entire Ukrainian territory of all non-Ukrainians — Jews, Russians, Hungarians, Romanians etc. Their leader Stepan Bandera was awarded the title “Hero of Ukraine” by Yushchenko).
At least the Soviet Union signed peace with Poland in 1921, but Lithuania stayed in a state of war with Poland after Pilsudski had grabbed Vilnius during the after instigating a Polish mutiny there in 1920. France told Lithuania that they would only get their capital back if they joined Poland. In March 1938, Austrian Nazis backed by Hitler came to power and the country was annexed by Germany. Polish leaders decided to use the crisis to remind the Lithuanians of the Zeligowski mutiny and to threaten them with their own Anschluss if they didn’t renounce their claim on Vilnius. Under French and British pressure, the Lithuanians officially recognized the territory as Polish. http://en.wikipedia.org/wiki/1938_Polish_ultimatum_to_Lithuania To celebrate their victory over Lithuania, the Poles in Warsaw decided to beat up some Jews. http://i.imgur.com/dgecpG4.png
Vilnius was returned to Lithuania by the Soviet Union in October 1939. In June 1940 the three Baltic states were annexed by the Soviet Union. Under Nazi occupation, Lithuanian collaborators not only massacred Poles and fought against the Soviets, but also massacred Poles to prevent them from claiming the Vilnius region.
“Under the Ambrazevicius administration, the Lithuanization of the Vilnius region followed the same pattern as before, except that there was much more anti-Polish rhetoric and violence. Some clergy called from the pulpits for Polish pogroms, stating that the Poles were worse than the Jews. There were reports that Lithuanian priests were offering indulgences for the killing of Poles. At least one enterprising Lithuanian professor devoted a paper to the theme “Why We Should Hate the Poles,” and the Lithuanian Activist Front called for the erection of Polish ghettoes, for the establishment of ordinances requiring Poles to wear identification badges, and for the reduction of food rations to Poles – while bragging that under the Soviets they had exterminated 50 percent of the Poles and that under the Germans they planned to exterminate the other 50 percent.”
http://books.google.com/books?id=hC0-dk7vpM8C
I also have some neato pictures of Poland and Nazi Germany being friends. http://elly-vladi.livejournal.com/536.html
Eve Churchill approved of the Soviet occupation of Poland and the Baltic states:
“On the Soviet side it must be said that their vital need was to hold the deployment positions of the German armies as far to the west as possible, so as to give the Russians more time for assembling their forces from all parts of their immense empire. They had burnt in their minds the disasters which had come upon their armies in 1914, when they had hurled themselves forward to attack the Germans while still themselves only partly mobilized. But now their frontiers lay far to the east of the previous war. They must be in occupation of the Baltic States and a large part of Poland by force or fraud before they were attacked. If their policy was cold-blooded, it was also at the moment realistic to a high degree.”
Here’s how Churchill summed up the effects of the German-Polish friendship, after Hitler had renounced the non-aggression pact in April 1939:
“The denunciation of the German-Polish Non-Aggression Pact of 1934 is an extremely serious and menacing step. Like the Anglo-German Naval Treaty, it was negotiated at the wish of Herr Hitler. Both Agreements eased Germany’s position while she was weak. The German-Polish Agreement enabled Nazi attention to be concentrated first upon Austria and later upon Czechoslovakia, with ruinous results to those unhappy countries. It temporarily weakened the relations between France and Poland and prevented any solidarity of interests growing up among the States of Eastern Europe. Now that it has served its purpose for Germany, it is cast away by one-sided action, Poland is implicitly informed that she is now in the zone of potential aggression.”
And here’s what Churchill said after Britain and France promised to defend Poland from Hitler:
“In this sad tale of wrong judgments formed by well-meaning and capable people, we now reach our climax. Look back and see what we had successively accepted or thrown away: a Germany disarmed by solemn treaty; a Germany re-armed in violation of a solemn treaty; air superiority or even air parity cast away; the Rhineland forcibly occupied and the Siegfried Line built or building; the Berlin-Rome Axis established; Austria devoured and digested by the Reich; Czechoslovakia deserted and ruined by the Munich pact; its fortress line in German hands; its mighty arsenal of Skoda henceforth making munitions for the German armies; President Roosevelt’s effort to stabilize or bring to a head the European situation by the intervention of the United States waved aside with one hand, and Soviet Russia’s undoubted willingness to join the Western Powers and go all lengths to save Czechoslovakia ignored by the other; the services of thirty-five Czech divisions against the still unripened German Army cast away – all gone with the wind.
And now with every one of these advantages has been squandered, Great Britain advances, leading France by the hand, to guarantee the integrity of Poland – of that very Poland which with hyena appetite had only six months before joined in the destruction of the Czechoslovak State. There was a sense in fighting for Czechoslovakia in 1938 when the German Army could scarcely put half a dozen trained divisions on the Western Front, when the French with nearly sixty or seventy divisions could most certainly have rolled forward across the Rhine and into the Ruhr. But this had been judged unreasonable. Yet now at last the two Western Democracies declared themselves ready to stake their lives upon the territorial integrity of Poland. History, which we are told is mainly the record of crimes, follies, and miseries of mankind, may be ransacked to find parallel to this sudden and complete reversal of five or six years of easy-going placatory appeasement, and its transformation almost overnight to accept an obviously imminent war on far worse conditions and on the greatest scale.”
http://books.google.com/books?id=Daxn4IOTqC4C
This was April 1939, five months before the Molotov-Ribbentrop pact, and Churchill was already talking “an obviously imminent war on far worse conditions and on the greatest scale”. He pointed to Hitler’s invasion of Czechoslovakia as the point of no return. And Poland did everything they could to make that invasion possible. How do you feel about that?
Good grief. Where to begin. For one, those weren’t clichés, they were facts. The Soviet Union was a tyrannical system. It was built on force and oppression. Two, if the Berlin Wall was simply to stop the East from stealing worker talent from East Germany, then why did the East Germans put men with rifles and machine guns posted along the wall? Why were there explosives and guard dogs along the wall? Why did numerous groups of people seek to escape East Germany into the West? And of course people could freely travel from East to West before the Wall. The East didn’t stop them because there wasn’t really anyway to do that. That is WHY they built the wall in the first place.
Then come the various claims about how supposedly life in East Germany was actually pretty decent, and how people became disillusioned in the market capitalist West. The reality is that the vast majority of people who escaped the Soviet system had no desire to go back. And when the wall was brought down and the West actually got to see just how things were in the East and the Soviet Union over all, they were stunned at how terrible and decrepit everything was. The East Germans meanwhile FLOODED into the West in order to buy all sorts of consumer goods and services that they didn’t have access to.
This seems to be a hard point for Leftists such as the author to understand, but if the system you promote is truly better than another, you do not need to build a wall complete with guards, guns, explosives, dogs, etc…to keep people from leaving. You also do not need a secret police force watching over everybody where if someone doesn’t watch their mouth they disappear.
As for the Soviet system itself, it was a terrible and oppressive system. One need only look at what it did with regards to the Chernobyl crisis, something that could have been avoided entirely had the Russians not been so bent on crushing Ukrainian culture (Ukrainian engineers knew about the dangers of the Chernobyl facility and tried to warn the Russians but to no avail). When the meltdown happened, the Soviets avoided saying anything to the regular citizens. The elites were all made aware but the regular citizens were not and athletic games even were allowed to continue outside despite the radiation hazards.
As for the saying that, “Everything the Communists said about communism was a lie and everything they said about capitalism is true…” um, yes. Market capitalism is not any perfect system. No system is. But market capitalism functions a lot LESS badly than communism does. It’s like complaining about corruption in democratic political systems. Democratic political systems are not perfect, but they function a lot less badly than authoritarian ones do.
With regards to claims about sabotage and covert operations against the Soviets, well first of all, this ignores the imperialism and raw threat that the Soviet system was to Western civilization at the time. Two, it ignores how the Soviet system itself was engaged in all manner of covert operations against the West. This author makes it sound like it was the poor little Soviet Union against the Big Bad Evil West that just would not give it a break.
And let’s not even discuss about the gulags and so forth in the Soviet system. As for why Russian turned communist, it turned communist because of the Bolshevik Revolution. And Hitler invading wasn’t done with the approval of the West. Nazism was a death cult ideology, and one at odds with Western civilization. It unto itself was actually a variant of socialism, albeit a nationalist variant. Hitler was going to invade Russia regardless, as he was bent on global conquest. He had dreams of conquering much of Africa and after Russia, expanding down into the Middle East as well. Of course the United States would play one evil off another in such an event, because if Russia fell, it would have meant a Nazi empire of great size, resources, and power. At its height, the Nazis controlled an empire that was larger than the continental United States.
Eastern Europe would have become communist regardless as the Soviets had imperial and conquest ambitions of their own. Had it not been for the military presence of the United States in Germany, the Soviets would have tried to take all of Western Europe as well.
The suggestion that Western governments practice free market capitalism is a delusion.
If your definition of free-market capitalism is one with absolutely no regulations, then sure. But that’s one opinionated definition, primarily libertarian. Many European governments practice a variant of market capitalism that has a lot of government regulation and taxation, but it is still ultimately market capitalism. There’s a market and there’s capitalism, so it’s a form of market capitalism. Others are more free.
Saying “it’s a form of market capitalism” is meaningless. It is not free market capitalism, period. The idea of a free market is irreconcilable with a system wherein a government-legislated monopoly determines the money supply and engages in price fixing of interest rates.
I would have to disagree. It is fully reconcilable. And what else would you have determine the money supply? The gold standard? Tying the supply of money in the economy to the supply of gold makes no sense. It would be like tying it to the supply of oranges grown.
Nonsense. By definition, no.
Why, the market, of course. What a silly question!
It is reconcilable in that the market cannot determine the money supply. That always must be determined by a central authority. Otherwise, the money supply grows excessively or contracts excessively, causing bubbles and depressions constantly. The job of the central bank is to counter this as best as it can. That is why libertarians favor the gold standard. Because if no central authority controls the money supply, then they want the “central” mechanism to be the supply of gold. That isn’t workable either though.
Nonsense.
Oh my gosh, how would we ever be able to buy anything without a central authority to determine the money supply for us!
What a ridiculousness.
The absurdity continues. It is not at all evident that having a central bank print money out of thin air prevents bubbles. The Great Depression occurred after the Fed was established. Most recently, the 2008 financial crisis was the inevitable consequence of the Federal Reserve blowing up a housing bubble with its inflationary monetary policy.
Still more proof that you don’t have any clue what you are talking about. What patent nonsense to equate the historical gold standard with a free market system absent central authority when the US was on a gold standard for many years after the Federal Reserve was institutionalized.
It is not nonsense. If the market solely determines the money supply, then it can shoot up or down far too quickly, leading to crazy bubbles and then depressions.
Because if the money supply gets too low, massive deflation will occur. If it gets too high, inflation occurs. You always have to have some central authority controlling it. It is just a necessary evil.
Nothing absurd about it. The Fed can create money out of thin air as it needs to. What folks such as yourself seem to confuse is money as being the same as wealth. The Fed can’t create wealth out of thin air, but it can money, because the private sector itself creates money out of thin air (banking system, which increases the money supply when loans are made) and it can similarly contract the money supply (when a crash happens and loans start getting called in). Depending on this, the Fed can increase or decrease the money supply accordingly.
As for the Great Depression, that happened because the Fed adhered to the gold standard. And by adhering to the gold standard, they let the money supply collapse in the private economy, causing severe deflation. By contrast, in response to the 2008 crisis, the Fed flooded the economy with money in order to counter the deflation. Libertarians and Fed haters all predicted massive inflation as a result of this, but it hasn’t happened, because in spite of all the money the Fed created, the private sector destroyed a ton of money as well.
I am fully aware of that, but Libertarians favor a gold standard without a central bank. When the U.S. was on the gold standard with the Federal Reserve, that is a good deal what caused the Great Depression, because the money supply decisions were being made based on the gold standard as opposed to what was actually the right policy.
A gold standard in place of the Fed is favored because without a central institution controlling the money supply, it has to be tied to something.
Yes, it is. Up is down. Blue is red. Nonsense. By definition, a government-legislated monopoly over the supply of currency and credit is anti-free-market.
Nonsense. For thousands of years, the market has tended to choose gold and/or silver as money. You can’t just turn on a printing press and “shoot up” the supply of gold as the Fed has done with dollars.
Yes, it is evil. No, it is not at all “necessary”.
Thanks for helping to illustrate my point. This is, of course, precisely why the Fed’s inflationary monetary policy causes bubbles like the housing bubble.
Nonsense. The Fed’s policy was actually inflationary, and it was the Fed’s monetary inflation that led to the stock market bubble and crash of ’29. The reason for this inflation was that the Fed sought to help Great Britain, which had returned to “the gold standard” after inflating to finance the war effort and hence doing so at an exchange rate higher than the free-market rate, which resulted in flight of gold from Britain (Gresham’s law). By inflating the US’s own money supply, the Fed tried to mitigate the flight of gold to the US on Britain’s behalf. Hence we see that it was not strictly limiting the supply of money to gold and rather engaging in legalized counterfeiting that caused the Great Depression.
By which you mean it intervened to prevent the necessary market correction followng the Fed-induced NASDAQ bubble by doing even more of the same that caused the problem in the first place, running the printing presses and pushing down interest rates, thus setting the stage for the next, even more disastrous bubble (the housing bubble), which it in turn responded to by doing even more of the same, only on a still massively greater scale.
There is a word for this kind of behavior: insanity.
You are defining “inflation” as price inflation as measured by the CPI. Expansion of the money supply is inflation. It is not as though the consequence of monetary inflation was strictly limited to a general rise in consumer prices across a basket of goods. The newly created money does not flow evenly throughout the economy. When the Fed inflated following the NASDAQ bubble to prevent the market correction, did it result in high inflation as per the CPI? Not particularly. Instead, the money flowed into the housing sector, which is where we saw the inflation. Since 2008, look at the stock market and housing prices. In fact, the Fed has been explicit that one of its goals is to prop up prices in the housing market. That is inflation. (Also, the Fed’s own measure of price inflation excludes food and energy.)
How bizarre, that you would make nonsensical remarks, despite being fully aware that they are nonsense.
Which is not what “the gold standard” was. Hence my noting that that for you to equate the historic gold standard with a free market system being patent nonsense.
When it isn’t something the free-market can handle on its own, it isn’t.
That the market historically has tended to use gold and silver means little with regards to modern economies. You are correct that you cannot just increase the supply of money with a gold standard, which is a bad thing because if the market itself starts destroying the money supply, it will lead to serious deflation.
It is, unfortunately, very necessary, which is why there is no viable alternative to a central bank except a gold standard (which unto itself doesn’t really technically make sense).
The Fed is a price controller, so yes they can occasionally mess up. Libertarians always complain about the Fed’s policies being inflationary, while ignoring the fact that the gold standard has historically been deflationary.
The Great Depression was not caused by the 1929 stock market crash. The crash came and went and by modern standards was rather small. In the aftermath of the crash, the Fed’s policy was extremely deflationary. They let the money supply collapse essentially. This is well-understood, and precisely why Ben Bernanke did the exact opposite as Fed chairman in 2008 (as he is a very accomplished scholar on the history and causes of the Great Depression).
The 2008 crisis wasn’t just the real-estate bubble but the fact that the under-regulated financial system tied the real-estate to financial assets, thus causing a huge crisis when real-estate collapsed. As for the Fed, the “correction” would have been in the form of a severe depression, as there would have been severe deflation that would have occurred.
Expansion of the money supply is not inflation if the private-sector is itself destroying much of the money supply it has created (which the Fed countered by creating money to provide a balance). That is why massive price inflation did not occur with the Fed gunning up the money supply. Peter Schiff for example had predicted Weimar Republic-style inflation from it.
You must not be paying attention to what I wrote. I said originally that the Libertarians favor a gold standard because their version of it doesn’t require a central monetary authority. It is seen as a way to get rid of the Federal Reserve system. You said that the historical gold standard is not an example of a free-market system as the U.S. was on a gold standard when the Fed was in existence. I pointed out that I was aware of this, but that the Fed doesn’t need to exist for there to be a gold standard according to the Libertarians.
They sure have me fooled then, as one of the main things they talk about is ending the Federal Reserve and going to a gold standard.
Double nonsense. It remains nonsense to say the free market “can’t handle” money, and it remains nonsense to equate a government-legislated monopoly over the currency supply with the free market.
Nonsense. It means quite a lot, actually.
Nonsense. (How, one wonders, does the market start “destroying” the supply of, i.e., gold? Moreover, what is wrong with falling prices?)
Nonsense. It isn’t “necessary” and this is a false choice.
Yes, like causing, say, the Great Depression, or, more recently, the housing bubble — the very business cycle you claim we “need” a central bank to prevent.
The Great Depression was was caused by the Fed’s inflationary monetary policy, as I already explained to you.
False, as I already explained to you. The shrinking of the money supply notwithstanding, Fed policy remained inflationary.
Yes, Bernanke did more of the same that caused the problem in the first place, only on an even greater scale. Like I said, insanity.
No, it wasn’t “just” the bubble, but the collapse of the housing bubble is what precipitated the crisis, and it was primarily the Fed’s inflationary monetary policy that caused the housing bubble.
There would have been a recession. It would have been sharp, but of shorter duration, rather than turning into the “Great Recession”. Compare the depression of 1920, when the government did little to intervene, with the Great Depression, when the government intervened massively, which is precisely what made it “Great”.
Yes, by the definition I just explained to you, it is.
I’ve already addressed this fallacy of yours.
Actually, what you said originally is: “That is why libertarians favor the gold standard.” Emphasis added.
Hence my observation: “What patent nonsense to equate the historical gold standard with a free market system absent central authority when the US was on a gold standard for many years after the Federal Reserve was institutionalized.”
A worthy goal.
Please explain this concept of a “gold standard”. And then please explain what you point is, insofar as my point about how it is nonsense to equate the historic gold standard with the free market.
It can’t, which is why there is a gold standard argued for in the first place. Otherwise, who controls the money supply in the economy? The economy itself cannot control the money supply. And a free-market can very much exist in conjunction with certain portions government-controlled. The current U.S. economy is not communist for example.
Not really. Historically, economics wasn’t as well understood as it is today. Gold and silver have been valued due to their ability to make nice things and also gold doesn’t corrode, so they have oftentimes been used as mediums of exchange. But for a modern economy, those types of aspects mean very little.
Because the fractional-reserve banking system increases the money supply via its making of loans. When the reverse happens in crisis, this contracts the money supply. Falling prices are fine when due to free-market competition, but they are very dangerous when due to deflation.
What is the alternative?
They caused the Great Depression by not doing what they should have done and which libertarians always criticize them for, which is to gun up the money supply. Their adherence to the gold standard instead caused the Great Depression.
You are confusing the 1929 stock market crash with being the Great Depression. The two are different events. The ’29 crash did not cause the depression. The Fed adhered to a deflationary policy which caused the money supply to contract severely which is what caused the Depression. Basically the Fed took what at most should have been a minor recession and turned it into a full-blown depression. Hoover and FDR’s central planning policies to try and fix the depression didn’t help either.
You didn’t explain it though. And if the money supply shrinks, it is not inflationary, it is deflationary.
Quite the opposite of insanity. You don’t let the economy plunge into a full-on depression. And the bubble wasn’t solely due to monetary policy, as I’ve pointed out.
If the Fed’s policy was inflationary, then why was inflation rather low during the build-up period to the bubble. The Fed’s policy was far from inflationary.
Yes, the government intervened with regards to the Great Depression, but the Federal Reserve’s not intervening is what made it so bad. The government’s intervening just made it worse. With regards to the current recession, the Federal Reserve’s intervening has kept it from being much worse. The government’s intervening in terms of excessive regulations in the name of global warming and probably the stimulus as well, have made it last longer than it probably would have. Also the healthcare law and all the uncertainty that that has created.
You just took my quote totally out of context. Expansion of the money supply as long as an equal amount of the money supply is being destroyed by the private sector, does not cause inflation.
Your claim is the housing market, but even that is a stretch compared with how much money the Fed injected into the economy.
I said, “I am fully aware of that, but Libertarians favor a gold standard without a central bank.”
Plenty of Libertarians see the gold standard as free-market and as a way to displace the Federal Reserve. That the Fed and the gold standard co-existed doesn’t take away from this.
Not when there is no viable alternative.
It is not nonsense to equate the historical gold standard with a free market because so many libertarians argue for a gold standard as a replacement for the Federal Reserve. As for what a gold standard is, it was a standard in which the country’s money supply and rate of growth are tied to the growth in the supply of gold.
It is nonsense to equate a government-legislated monopoly over the currency supply with a free market.
It is nonsense to say that we require such to control the money supply.
The properties of gold for which it has historically been chosen as money, e.g., fungibility, durability, store of value, etc., are just as valid today as ever.
You ask what alternative we have to a government-legislated monopoly over the currency supply. The answer is obvious: allow currency competition in a free market.
The cause of the Great Depression is as I’ve stated. Once again, the Fed did not have a deflationary monetary policy. It’s policy was inflationary. You yourself have pointed out how the Fed can increase the monetary base and yet the broader money supply contract (i.e., people paying off debt instead of borrowing more through the fractional reserve system), so how this could have been the case should be no great mystery to you as you so feign.
What nonsense to say that in response to the housing bubble and financial crisis it precipttated doing even more of what caused the problem in the first place only on an even greater scale is “Quite the opposite of insanity.” This perfectly meets Einstein’s popularly used definition of the word.
Once again, the recession is not the disease, but the remedy. The market correction is necessary, as the actual disease is the Fed-induced bubble. Reacting to the collapse by trying to keep the bubble propped up is akin to treating a heroin addict’s withdrawal symptoms by giving him another shot of heroin.
Once again, I have also pointed out that the bubble wasn’t “solely” due to monetary policy; yet, once again, the Fed’s monetary policy was the primary cause.
What nonsense to say that the Fed did not have an inflationary monetary policy in response to the collapse of the NASDAQ bubble. Your logic that since inflation as measured by the CPI was low during the bubble years, therefore the Fed’s policy wasn’t inflationary is a non sequitur. Suffice to say that the Fed inflated in an effort to push interest rates down. The fact that you don’t know this simply illustrates once again how clueless you are about the subject despite feigning to be knowledgable.
Once again, the classical definition of inflation — the definition I used in the context above — is expansion of the money supply; hence, again, it is nonsense to say that Fed expansion of the base money supply is not inflation. It is, by definition, notwithstanding market forces that may actually cause a reduction in the total money supply. Again, you yourself have already explained how this can occur.
Again, what you said was “That is why libertarians favor the gold standard.” Emphasis added. Hence my observation: “What patent nonsense to equate the historical gold standard with a free market system absent central authority when the US was on a gold standard for many years after the Federal Reserve was institutionalized.”
You say, “Plenty of Libertarians see the gold standard as free-market …” Then plenty of Libertarians are mistaken. See my first sentence in this comment, above.
You say, “It is not nonsense to equate the historical gold standard with a free market because so many libertarians argue for a gold standard as a replacement for the Federal Reserve.” No, this is not the reason it is nonsense. It is nonsenes for the reasons I have given you–namely, that a government-legislated monopoly over the money supply is by definition anti-free-market.
Neither of these is nonsense. Government can control the money supply in conjunction with a free-market, especially when there isn’t really an alternative (although the Fed isn’t quite the government, it’s a hybrid public-private institution). There isn’t really an alternative to having a central monetary authority.
That’s the problem, they aren’t. Gold is, unto itself, a fairly worthless material. It would have great industrial application if it existed in much greater supply, but it doesn’t, so it is primarily valued based on faith and tradition. Thus the idea that the currency is somehow “worthless” unless tied to gold as many claim, unto itself makes no sense, because gold itself is a fiat currency. It only holds value because people say it does, just like everything else. Today, the U.S. dollar is the gold standard, tradable for virtually anything. If the economy collapses, then gold isn’t going to matter much, it will be what raw needed items and materials does someone have that they can barter.
That doesn’t address the question of how do you make decisions about the proper supply of money in the economy.
The Fed’s policy was highly deflationary. This is well-documented. Milton Friedman covered this extensively in his work “A Monetary History of the United States.” Bernanke also understood this. Yes, the money supply can still contract with the Fed pumping money into the economy, but that’s if the broader economy itself is destroying more money than the Fed is creating. During the Depression, the Fed did the opposite, and raised interest rates, thus reducing the money supply when it was already prone to contracting on its own. This proved disastrous.
To claim that the Fed precipitated the bubble is arbitrary. If the Fed had raised interest rates higher, it might well have caused a sizeable recession. IMO insanity is letting the whole economy plunge into a depression in which people’s lives can be totally destroyed and who knows what else because of a debatable economic belief that the best thing is to just let the system work everything out on its own.
Pumping money into the system to counter the deflation is not trying to prop the bubble, it is stabilizing the economy. The bubble pops regardless. But it can take the whole economy down with it. Prior to the creation of the Fed, our economy experienced a multitude of bubbles, and severe ups and downs. The Fed was initially created because of a very severe financial crisis that occurred. Point being, it’s not like we had a stable economy pre-Fed, and then suddenly tons of bubbles. The economy has actually been made a lot more stable since the creation of the Fed.
I do not see how.
Keeping interest rates down is not inflationary policy, it is countering deflation.
The money supply doesn’t really “expand” when the private-sector is also destroying it. The two cancel each other out. So what in normal economic times might be inflationary policy is not such in highly deflationary times.
Which is irrelevant, as in theory at least, a gold standard doesn’t require a central bank.
I’d agree that plenty are mistaken. But the Ron Paul types, of which there are many, believe this very much. Ron Paul even has a book, “End the Fed,” where he espouses this.
You keep saying that, but it doesn’t hold water. The gold standard is seen by many as free-market as it is seen as a way to replace the central bank. Just because the central bank co-existed with a gold standard doesn’t mean the gold standard needs the central bank. IMO, it also isn’t really a government-legislated monopoly if it adheres to a gold standard. But that is not by definition anti-free market. A free-market needs certain institutions underwritten by the government in order to be able to function. Having a single currency does not undermine the market. Having a central bank doesn’t undermine this (if history is any indicator, it actually helps it).
A government-legislated monopoly over the currency supply is by definition anti-free-market. There is certainly an alternative to a government-legislated monoply over the currency supply. It is very obvious: a free market.
The properties of gold for which it has historically been chosen as money, e.g., fungibility, durability, store of value, etc., are just as valid today as ever. The fact that value is subjective doesn’t change that one bit. The statement “gold itself is a fiat currency” is, of course, just more of your nonsense. You say: “If the economy collapses, then gold isn’t going to matter much…” We’ll see about that.
You ask, “how do you make decisions about the proper supply of money in the economy”? How you keep missing this fundamental point is beyond me: you don’t.
You say, “The Fed’s policy was highly deflationary.” False. See my previous comments.
I suggest you read Murray N. Rothbard’s America’s Great Depression.
Your statement “To claim that the Fed precipitated the bubble is arbitrary” is nonsense. I repeat: The Fed’s inflationary monetary policy was the primary cause of the housing bubble.
You say you “do not see how” this was so. The Fed pushed interest rates down. This fuelled a housing bubble. That’s pretty straightforward. For a full explanation, I refer you to my book on the subject, Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis.
You say, “Pumping money into the system to counter the deflation is not trying to prop the bubble, it is stabilizing the economy.” Yes, “stabilizing” the economy by trying to prop up the bubble.
You say, “The economy has actually been made a lot more stable since the creation of the Fed.” This is certainly not in evidence.
You say, “Keeping interest rates down is not inflationary policy…” Endless nonsense with you! Of course it is. You simply have no idea what you are talking about.
You say, “in theory at least, a gold standard doesn’t require a central bank”. You are welcome to explain how not so and what you’re point is.
You say Ron Paul “espouses” the view of Libertarians who “see the gold standard as free-market”. No, he doesn’t. You simply do not know what you are talking about.
A government-legislated monopoly over the money supply is by definition anti-free-mark. You remark that this statement of mine “doesn’t hold water”. What a stupid remark. It is by definition anti-free-market.
You can call your pet dog “Duck” but it won’t make him quack.
You add, “it also isn’t really a government-legislated monopoly if it adheres to a gold standard.” More utterly stupid nonsense that defies the meanings of words. The Fed was created by government legislation. It has a monopoly over the supply of currency. Hence, by definition, it is a government legislated monopoly, regardless of whether the currency is backed by gold or not.
You say that a free market “needs” government intervention “in order to be able to function.” No. This reminds me of George W. Bush defending the bank bailouts by saying “I’ve abandoned free-market principles to save the free market system.”
Pure, unadulterated, Orwellian nonsense. Like your statement that “Having a single currency does not undermine the market.” Um, yes, having a government-legislated monopoly over the currency supply does “undermine” the market. By definition.
If this system you are defending was really such a good idea, why isn’t it what the free market chooses?
There’s the 60 million dollar question.
Saying “a free market” means little. That doesn’t tell anything about how to regulate the money supply in the economy.
Nope, gold is a fiat currency. As such, it makes zero sense to say that the dollar needs to be tied to something like gold and to tie the money supply decisions to gold.
You have to. If not, you’ll end up with great swings in the money supply. Free-markets function poorly without a central monetary authority.
Your previous comments were incorrect, as I’ve pointed out.
Rothbard is incorrect here. I would suggest you read Capitalism and Freedom, Free to Choose, and A Monetary History of the United States by Milton Friedman. The Fed’s policy overall was deflationary. This is what caused the depression to kick in in the first place. The 1929 crash came and went and during 1930, the economy was fine. It wasn’t until about 1931 that the depression really began to occur.
It’s your arbitrarily-determined opinion, not any established fact. Whether the Fed’s policy was even inflationary is an opinion.
If the Fed had raised interest rates, this might well have tanked the economy as well.
Nope, because the bubble itself pops. But if the bubble can cause serious deflation to occur, the Fed will seek to counter the deflation to prevent a depression or serious recession from occurring.
Prior to the creation of the Fed, the economy and various areas of the country bounced in and out of constant bubbles and severe busts with severe recessions, culminating in a really severe bubble that led to the creation of the Fed. Since the Fed’s creation, the economy has been far more stable, minus the Great Depression due to the Fed abdicating what it was supposed to do and bad policy from Hoover and Roosevelt.
If it causes the money supply to excessively increase, then sure it can be inflationary. But unto itself, it is not necessarily inflationary. Or by your definition, would you prefer the Fed have pursued a deflationary policy?
The central bank controls them oney supply. The idea of the gold standard is to replace the central bank and tie the money supply to the supply of gold. hence why people such as Ron Paul argue to end the Fed and replace it with a gold standard.
Could have fooled me, as he has written a book on the subject and has made plenty of speeches criticizing the Fed for “printing money” and so forth. What is it the libertarians argue for then? Because they certainly do not argue against a gold standard but they do argue against a central bank.
A free-market can co-exist just fine with a government-monopoly over currency and control of the money supply and is in fact what is required to have a truly stable economy.
You misunderstood my post there, I should have worded it better. I mean that if the central bank adheres to the gold standard, then it isn’t a governmental entity ultimately making the money supply decisions since it is going by the gold supply.
A free-market requires a government or else you’re going to have an economic system that functions like organized crime with people killing each other, because there is no one to enforce contracts. That is how organized crime works. The mafias and cartels play the role of government.
And the bailouts were necessary to keep the whole system from crashing down. Markets are not like physics. There isn’t some universal law that says a private sector entity can always be allowed to fail and the market will recover just fine. Generally, that is true, but in the case of the financial institutions, if they had been allowed to collapse, then the economy might well have frozen up.
Having multiple currencies is what can undermine the market. Having a single currency promotes economic trade much better. The free-market functions just fine with single currencies.
Where does the free-market not choose it?
Saying “a free market” means everything: you don’t “regulate” the money supply. I don’t know what part of that you don’t understand.
By definition, no.
I am not proposing that. That is simply the old gold standard, which, as you must clearly understand from my previous comments, is not something I favor.
Nonsense. No, you do not have to have a central authority determining the money supply. The market functions perfectly well without a central bank. Again, how can you have “great swings” in the supply of, i.e., gold? It is pretty near a constant. That is among the reasons it has historically been chosen by the market as money. It is portable, durable, divisible, sufficiently scarce, fungible, and a store of value — unlike Federal Reserve Notes, which have lost 96% of their value since the Fed was established in 1913.
So you’ve claimed. Yet the facts remain as I’ve stated them.
No, he isn’t.
No, it wasn’t, as Rothbard just explained to you, giving you the actual numbers.
No. It was the Fed’s inflationary policy that caused the bubble. The bust was just the inevitable result.
No, the economy was not “fine” after the crash. As I’ve already shown you, the Fed responded by inflating and, again turning to Rothbard, “By mid-November, the great stock break was over, and the market, falsely stimulated by artificial credit, began to move upward again.” But this wasn’t real growth, just more easy credit-induced stimulation. The Fed just gave the heroin addict another shot of heroin to stave off withdrawal symptoms. You know what followed.
What nonsense to say that my observation that the Fed’s inflationary monetary policy caused the housing bubble is an “arbitrarily-determined opinion”. This is very much an established fact. But you don’t have to take my word for it. Here is the world’s most famous Keynesian:
“A snarky but accurate description of monetary policy over the past five years is that the Federal Reserve successfully replaced the technology bubble with a housing bubble…” — Paul Krugman
If you don’t understand how pushing down interest rates below what they would be if determined by the market can cause a bubble, again, I direct you to my book on the subject. Here is what Barron’s had to say about it:
“This short work conveys more insight into the causes and cures of business cycles than most textbooks, and more about the recent business cycle than most volumes of much greater length.”
Hence the Fed responding by trying to prop itself back up again.
Which is to say, the Fed responds by trying to prevent the necessary market correction from occuring by trying to reinflate the bubble (i.e., unsustainable growth fueled not by market fundametals but easy money).
This is certainly not in evidence. Of course, it is instructive when one makes such a statement by excepting the worst depression in the country’s history and, apparently, every other boom-bust cycle that has occurred since 1913.
Wrong. Regardless of whether the overall money supply actually increases or not, running the printing presses is by definition an inflationary policy.
You keep saying “the gold standard” as though it was synonymous with “free market”. The Federal Reserve existed under the gold standard. If you refer to the pre-Fed period, we had the National Banking Acts by which the government cartelized the issue of bank notes into the hands of a few large, federally-chartered “national banks” on Wall Street.
That was not, obviously, a free market — by definition.
Yes, he has written a book on the subject and criticized the Fed for its inflationary monetary policy (he accurately predicted the housing bubble and bust as early as 2001). How you get from this the idea that he therefore “sees the gold standard as free-market” is beyond me. As ever, you just don’t know what you are talking about.
By definition, no. By definition, having a government-legislated monopoly over the currency supply is anti-free-market.
Your conclusion does not follow from the premise, which should be easy enough to see simply by looking back once more at the historic gold standard, under which the Fed did indeed ultimately make decisions about the money supply.
Nonsense. You have it backwards. What plays the role of the mafias and cartels is the government. Hence, e.g., a government-legislated monopoly over the currency supply.
Yes, if it is the market that chooses that single currency. Having a single currency chosen not by the market, but because the government has legislated a monopoly over the currency supply able to create currency out of thin air for the benefit of the government and the banks, however, is a different story.
Where does the free-market not choose a government-legislated monopoly over the currency supply? What kind of ridiculous Alice-in-Wonderland question is that? The answer is, by definition, everywhere there is a government-legislated monopoly over the currency supply.
That is where I disagree. You DO in fact, have to regulate the money supply, unless you want tremendous instability in the economy.
By definition, fiat money is based on faith whereas commodity money is based on a physical good. The problem is that the value of said physical good is determined by faith as well. As such, all commodity money is ultimately fiat.
It is what many libertarians favor however.
Because with a fractional-reserve banking system, the private-sector will expand and contract the money supply on its own. The central bank has to act to counter these when required to soften the swings. With a gold standard, the ability to do this is greatly reduced because as you said, the supply of gold is essentially fixed. So you thus tie the decisions about how much money should be in the economy based on the supply of gold, which makes no sense. You are basing monetary policy on the supply of a physical item. There is nothing magical about gold in this sense. You might as well be tying the supply of money to the supply of oranges grown.
The very fact that different countries require different monetary policies shows how this is wrong. If all were on a gold standard, a great many would have the wrong monetary policy being implemented. And gold can be inflationary too if there are sudden increases in the supply of gold, which has happened periodically.
As for Federal Reserve notes losing their value, so what? That doesn’t take into account the massive increases in standard of living which have occurred since then. Also the reason is because of a low level of inflation occurring, which is a good thing, because a low level of inflation allows the central bank to be able to scale back the flow of money into the economy if needed without causing deflation.
No they don’t. Hence why Ben Bernanke for example once said to Friedman that, with regards to the Federal Reserve in the 1930s, “You were right. We blew it.” The Fed adhered to a deflationary policy that proved disastrous.
He’s saying the Fed’s policy was inflationary, which it wasn’t.
Like I said, read the books I recommended. The Fed, in addition to raising interest rates and contracting the money supply, allowed numerous banks across the country to fail.
You keep confusing the bust and the depression as being the same thing. They aren’t. The 2000 Dot Com bubble bust was significantly larger than the 1929 crash but the economy didn’t collapse. There 1987 crash was twice the size of the 1929 one, but again, the economy didn’t collapse into a depression. Because in both instances the Fed acted correctly.
The economy was plenty fine after the 1929 crash. 1930 came and went without a hitch. It was in the following years that the Depression kicked in. Keep in mind as well the policies of Hoover and then FDR that also contributed to the onset of the Depression.
Krugman is not a macroeconomist, he is a trade economist. He only is world-famous due to his NYT column. To claim the housing bubble was caused by the Fed is an opinion, not an established fact. If the Fed had pursued a policy of higher interest rates, and the economy had struggled, there are many who would have blamed the Fed for being too restrictive.
There is no way for the market to determine interest rates on its own. Hence why opponents of the Fed argue for a gold standard. Because if no central monetary authority is in charge of the money supply decisions, who is? The money supply instead will fluctuate up and down causing large swings in the economy.
The Fed responds to keep the money supply at a reasonable level and also to prevent a depression from occurring, not to prop up a bubble.
There is a difference between countering deflation from a popped bubble versus trying to re-inflate said bubble.
The worst depression in the country’s history that was due to the Fed completely failing to do the job that it was created to do because it was adhering to the gold standard, and then to add to that, there were the terrible policies from Hoover and FDR. As for the other boom-bust cycles, our economy had far more boom-bust cycles in local and regional areas during the 19th century prior to the creation of the Fed. Since the Fed’s creation, our economy and our currency have been remarkably strong and stable.
The Federal Reserve doesn’t run any printing presses. That is the Treasury. The Fed can create money however, which is fine, as this is a requirement to balance out when the private-sector destroys the money supply. The Fed also can scale back the money supply to help prevent bubbles.
The point that you keep missing is that just because the Fed existed under a gold standard does not mean that a gold standard requires a central bank. As it was, the Fed adhered to the gold standard while in existence with it. This is part of what caused the Great Depression. A gold standard is seen by many as a replacement for the central bank.
His (and Peter Schiff’s) prediction of the bubble was just an example of the broken clock syndrome. As I pointed out, Schiff also claimed we’d get Weimar Republic-style inflation from the Fed’s response to the crisis, and it hasn’t happened. He considers the gold standard as the free-market alternative to having a central bank. He is critical of what he sees as the Fed’s inflationary monetary policy.
That is your opinion, not any fact.
The Fed was forced to adhere to the restrictions of the gold standard with it in place.
This is something libertarians often like to claim, but it’s nonsense. The government can be heavy-handed, but generally-speaking, you do not have to worry about getting blown up or shot for criticizing the government or doing something wrong. Where the government literally plays the role of mafia is in a country like Russia for example. Government is a necessary evil. It is necessary though unless we want market capitalism to function like organized crime, and for there to be absolutely no worker safety laws, regulations, or what have you. Without government, there would be no way to enforce contracts, settle disputes, etc…in a peaceful manner.
The currency is chosen by the government to better facilitate trade and commerce. Creating money out of thin air is just fine, as the private-sector does the same and also can destroy it, which sometimes must be countered. Remember not to confuse creating money out of thin air with creating wealth out of thin air.
You specifically said,
“If this system you are defending was really such a good idea, why isn’t it what the free market chooses?
There’s the 60 million dollar question.”
What makes you think that there is an alternative currency that the market would choose? As it is, on a global level at least, the dollar is the primary currency that the world chooses.
Nonsense. This notion that we require central banks to provide stability in the economy is certainly not in evidence.
No. By definition, fiat money is “Currency that a government has declared to be legal tender, but is not backed by a physical commodity.”
Eliminate the legalized counterfeiting of fractional-reserve banking system.
So they don’t meet the criteria for “money” (obviously; as if that wasn’t clear from my previous comment).
No, it didn’t. See my previous comments.
Yes, it was, as Rothbard illustrates with the numbers.
Like I said, read Rothbard, who has shown you that the Fed in fact had an inflationary monetary policy. You have the numbers right there in front of you. You are being willfully ignorant. Here’s Ben Bernanke telling you the same thing: “many observers pointed to the fact that nominal interest rates were close to zero during much of the Depression, concluding that monetary policy had been about as easy as possible yet had produced no tangible benefits to the economy.”
I repeat: It was the Fed’s inflationary policy that caused the bubble. The bust was just the inevitable result.
Um… No.
It’s an inescapable conclusion, given the facts and some basic logic.
Nonsense.
Same difference.
You are welcome to explain what distinction you see.
It was due to the Fed’s inflationary monetary policy. See above.
This is certainly not in evidence.
It’s a figure of speech.
Why do you say I “keep missing” this when I pointed out myself that there was a “gold standard” prior to the Fed’s creation? The point that you keep missing is that the historic gold standard, both pre- and post-Fed, was not the free market.
Nonsense. They both explained precisely how and why the Fed’s inflationary policy would create a housing bubble. Again, read my book. Here is what Barron’s had to say about it:
“This short work conveys more insight into the causes and cures of business cycles than most textbooks, and more about the recent business cycle than most volumes of much greater length.”
No, it is not an “opinion”. Having a government-legislated monopoly over the currency supply is anti-free-market by definition.
Nonsense. You have it backwards. What plays the role of the mafias and cartels is the government. Hence, e.g., a government-legislated monopoly over the currency supply.
Nonsense. The government enforces a monopoly over the currency supply to finance itself and to benefit the banking interests.
No, legalized counterfeiting is most certainly not “just fine”.
The fact that Federal Reserve Notes are fiat currency created by a government-legislated monopoly, of course.
You’ve exhausted my patience with your trolling.
The fed was created to fund WAR! All it is. and guess what we have been doing since 1913? Literally have been at war this whole damn time. And what do we do when we need more money to fund vietnam? lol f the gold standard, lets just get off that so now we can spend even more on WAR! its all about war. In this case alone, yes it is EVIL.
Many Eastern European countries not only welcomed the Germans, they fought with them against the Soviets. Apparently, unlike the West, they considered Germany to be the lesser of two evils. The claim that Hitler was intent on world conquest was most likely Western war time propaganda. On the other hand, it is telling that the first Soviet flag featured a hammer and cycle over a globe of the earth.
We know now that Hitler had dreams of global conquest. For example, they conducted extensive training of administrators who would administer Nazi occupation of large portions of Africa and so forth. Remember, part of the reason Hitler lost the war was due to his own megalomania, and not listening to his generals.
The example you give would be equally consistent with colonial aspirations, much like those of Great Britain and France, which at the time had administrators all over Africa. As for Hitler being a megalomaniac, it seems to me that we almost always paint the leaders of our enemies with that brush.
Remember though that Great Britain and France were not hell-bent on destroying every non-white person in existence in concentration camps. And Hitler was a megalomaniac. That is very obvious from reading his work “Mein Kampf.” Nazism itself was a death cult. A death cult that took control over a whole nation, but a death cult nonetheless, with Hitler as the central leader.
Hitler was not unique at the time in believing the White race was superior to all others. There was plenty of White racism to go around. The French killed over a million Algerians during its colonial occupation including a massacre of 45,000 in May of 1945, incidentally the last month of WWII. Great Britain, the colonial ruler at the time, allowed some 3 million Bengals to starve to death in 1943. And as we all know America had a segregated military during the war. What few people know is that Eisenhower ordered that no black units participate in our triumphant march into Paris.
As far as Hitler goes, Africans and Indians joined the German army and were not put into segregated units. And it is a myth that he snubbed Jesse Owens at the 1936 Olympics. After the first day of the Olympics Hitler decided not to acknowledge any of the gold medalists, Germans won more than any other nationality, and was not even in the Stadium when Owens won his first gold medal. And, according to Owens, he did eventually meet Hitler at the games and said that Hitler was very gracious toward him. Compare that with how he was treated by FDR. FDR never publicly acknowledged Owen’s achievement, never sent him a congratulatory letter and never invited him to the White House.
And as far as the German people who supported Hitler, Owens said he was treated better by them than he was by his fellow White Americans. The Germans treated him like a major celebrity and mobbed him for autographs wherever he went. And although he did receive a ticker tape parade when he returned to The States, he never got any product endorsements.
Regardless, it’s a fact that all of Eastern Europe, including Finland and the Ukraine took the side of Germany during the war because they were more afraid of being conquered by the Soviets than by the Nazis.
How the Germans treated (or supposedly treated) Owens again does not change the fact that the country was swept up in a death cult mentality that called for the mass slaughter of certain peoples (Jewish people in particular).
It is very true that America itself was rather racist at the time, no one denies that. But America was not bent on destroying the Jews and other peoples the Nazis didn’t like.
I think it’s telling that despite the fact that Hitler looked down on the Slavic people and they knew it, they still preferred him to Stalin and the Soviets. Have you heard of the Holodomor? During the winter of 1932-1933 the Soviet government starved between 5 and 10 million Ukrainians to death. And talk about great ironies, some of the chief architects of that virtually unknown in the West genocide were Jews, Lazar Kaganovich and Genrikh Yagoda just to name a few.
“First of all, before the wall went up in 1961, thousands of East Germans had been commuting to the West for jobs each day and then returning to the East in the evening; many others went back and forth for shopping or other reasons. So they were clearly not being held in the East against their will. Why then was the wall built? There were two major reasons:
1) The West was bedeviling the East with a vigorous campaign of recruiting East German professionals and skilled workers, who had been educated at the expense of the Communist government. This eventually led to a serious labor and production crisis in the East. As one indication of this, the New York Times reported in 1963: “West Berlin suffered economically from the wall by the loss of about 60,000 skilled workmen who had commuted daily from their homes in East Berlin to their places of work in West Berlin.””
So, the wall *was* put up to keep east Berliners from traveling to west Berlin.
Of course they weren’t being held against their will *before* the wall. If keeping them from traveling wasn’t the point, why build it?
“2) During the 1950s, American coldwarriors in West Germany instituted a crude campaign of sabotage and subversion against East Germany designed to throw that country’s economic and administrative machinery out of gear. The CIA and other US intelligence and military services recruited, equipped, trained and financed German activist groups and individuals, of West and East, to carry out actions which ran the spectrum from juvenile delinquency to terrorism; anything to make life difficult for the East German people and weaken their support of the government; anything to make the commies look bad.”
You mean to tell everyone that the East Germans were so lousy at controlling their borders that they just had to lock their people in for their own good.
No.
BTW, the “we have to take drastic control because “saboteurs!” is literally as old as Bolshevism, and has not become more opaque in the years since.
The point is there is more to the story than is told in Western versions of the narrative. That this is so should hardly be a revelation to anyone.
HA! I welcome things like this. We are fed propaganda whether you realize it or not. Its nice to hear a possible opposing view. Take it as you want, but there is much to gain. Communism is not evil. And governments who have tried to impose it throughout history have used it to gain power and then abused this power. So the “communist” governments who have imposed this have failed, yet have also failed to institute what communism actually is. So will it ever work? Probably not. But we have yet to see it instituted the way it was meant to be. The only way I see it possible is as an anarchist communist system. Where there is no state. Now that will never work in today’s world, but in small communities that aren’t all about money and live in the country, I think itd work… maybe… now capitalism is not evil… but much evil has come out of it. We live our life obsessed with paper! We are slave to the dollar bill, subjecting ourselves to work for the rest of our life. Sure, cool technology has come out of it, and medicine that is no doubt extremely beneficial, but is this how life is supposed to be? Waste our youth in school, only to be dumped into the world where we are supposed to work in an office for the rest of our lives. And for what? money to buy that new car? that new house? Is this life? Are you happy with your job? Why do you work so much? What ever happened to enjoying life and the nature around us. I refuse to become a victim to the system… Free the people… Wake up… Do what you want to do… Your mental health is key…
And no i’m not some liberal hipster from portland (no offense, go timbers) I vote libertarian. The state is far too big… I’m for personal freedom.