History Is Clear

It is often said “there are no atheists in a foxhole.” The other week, as world financial markets melted down, CNBC go-to wise man Art Cashen put a market spin on that familiar line drolly saying, “there are no libertarians in a market crash.”

The crusty Cashen is certainly right for the most part. Plenty of financial talking heads who argue for free markets and smaller government on a daily basis suddenly screamed that government must intervene to “save capitalism.” Of course, the idea that government must print multiple blizzards worth of money to save a system where individuals and businesses trade with each other unfettered makes as much sense as presidents who claim that war must be waged to “protect the peace.”

The fact is that what we’ve been enjoying since the Federal Reserve was created is anything but free-market capitalism. The value of the dollar has been pushed down 99 percent and the economy has been a series of booms, followed by busts, ad nausea since J.P. Morgan partner Harry Davidson and other big bank chieftains secretly took a train to go duck hunting on Jekyll Island in 1910. Of course, the ducks were safe, but Americans since have paid the price for the Federal Reserve System idea that was hatched that weekend. As historian Gabriel Kolko wrote: “The entire banking reform movement, at all crucial stages, was centralized in the hands of a few men who for years were linked, ideologically and personally, with one another ... the major function, inspiration and direction of the measure [the Federal Reserve Act] was to serve the banking community in general, and large bankers specifically.”

The TV pragmatists probably forget that Karl Marx and Frederick Engels wrote in The Communist Manifesto that creating “a centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly” should be near the top of any communist’s agenda.
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Is it any wonder that Treasury Secretary Henry Paulson’s plan has morphed into the federal government taking equity stakes in banks, mortgage companies and at least one insurance company? As Oscar B. Johannsen wrote: “A socialized banking system is the precursor of socialism in all business.” (By the time you read this, airlines and car manufacturers may be partially owned by the government).
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As if all this past monetary expansion wasn’t enough, the Fed is now working overtime, in concert with the world’s other central banks, to create what investor Jim Rogers told a foreign CNBC audience will be “a monetary holocaust.