Paolo—you are describing a particular libertarian position—one in which the issuance of credit would be forcibly restrained (if I understand what you’re saying correctly).

In a purely libertarian polity, however, I don’t see what powers the state, if any, would have over the private issuance of credit.  For instance, I could print my own 100-dollar bills and give them to anyone who would take them.  If people believed in my wealth, my ability to give something equally valuable for the $100 bills, I could flood my neighborhood with $100 bills and cause a significant amount of local inflation.  Note that my actual ability to repay might be entirely fictional, and that I would not actually need to have any wealth on hand to make good on more money than was presented for redemption on any given day.  None of the above is fraud as long as I am able to make the exchanges promised for those who ask for them when they ask.

This is not much different from what governments do (and I include the Federal Reserve Bank as part of one government).  One might say the governments are usually a little less fraudulent; the currency seldom promises anything in exchange, and in any case governments have the power to seize wealth to make good on the currency, should they care to do so.  However, the principle is the same.

Consequently in flush times we are going to see a great demand and acceptance of easy credit, whether it is issued by government or by private parties.  The effect of the new money on the economy will be like that of a stimulant on the body, and consequently even more will be demanded.  Eventually the issuance of credit will outrun both the the ability to believe and the possibility of repayment, and the arrangement will crash.  A minority will have stepped out of the circle and, as “creative destruction” envelops the rest, will move in, buy everything in sight, and begin the next cycle.

I don’t see how you can avert this without some kind of very non-libertarian restrictions on money and credit by whomever issued.  And not only will they be non-libertarian, but extremely unpopular as well, except during the onset of a depression.  The Federal Reserve Bank was set up precisely to avert the kind of crashes which occurred in 1929 and 2008; instead, it contributed substantially to causing and exacerbating them.

Hi Anarcissie,

I think you misunderstand my position on credit. Let me describe it in more detail.

You say that if people can issue credit, they can multiply any kind of money many times over. This is not necessarily true. It is DEFINITELY true in our system that allows the inherently fraudulent practice of FRB (Fractional Reserve Banking).

In a free society in which fraud is punished, there would be two types of deposits at banks. First would be so-called “demand deposits,” where the depositor can demand his money at any time, with no prior notice. This money cannot be lent out. To do so would be an act of fraud; you have lent out money that the depositor can demand without prior notice. “Demand deposits” can be held by a bank at no charge, as a courtesy, or for a small fee. But they cannot and should not pay interest. How can you pay interest on money that does not belong to the person you lend it to? It belongs to the depositor, who can demand it at any time, with no prior notice.

Unfortunately, this is the system we have today. So under the current system, money can be “multiplied” by issuing credit on a Fractional Reserve basis. 

A free and non-fraudulent society would still have credit issued, but it would only be issued on “time deposits”, in which the depositor understands clearly that he/she cannot access the money until the pre-agreed time period has been fulfilled. For example, you can take out a six-money certificate of deposit that you understand up front will be invested with a good chance of paying returns.

When the six months are up, you get a premium of a certain percentage, as does the bank. There is nothing inflationary about this at all. No new money is created. All parties have dealt honestly and openly with one another.

So giving someone credit does not mean (in a free society), that you have “created” new money. It just means that you and a depositor have agreed to invest the money in something that shows promise of good returns.

If money is based on a one hundred percent precious metal standard, then it is impossible to create new money. You can’t make gold and silver out of thin air. You can do this with paper money or fraudulent entries on a bookkeeping form. This describes our current, dishonest system.

To reiterate: there is nothing wrong with any individual, in a free society, lending money on a “time deposit” basis. The lender and the depositor understand that they are taking a certain risk in lending the money. But no new money is created.

I hope this clarifies the libertarian (free society) position.

They have plenty of ideas left and none that benefit the people of this country or the rest of the world. Neocon’s will take it personal, the losing of power they think they should still have as witnessed by many of those still serving in congress that think any help for american citizens by jobs programs they lost by offshoring and privitizing what should be public and(god forbid using this word)social programs that helped those that these republican creeps have denied to them, are not to be.
And now that obama has brought up the idea to use the remaining $350,000,000,000.00 to help the citizens, these same creeps are thinking that maybe the bailout is not such a good idea.

Paolo—if people can issue credit then they can multiply any kind of money many times over.  One doesn’t need a Federal Reserve Bank to do this.  So unless you’re going to prohibit credit, you’re going to have inflation during optimistic times (when people believe they are going to be able to pay and to be paid) and deflation during pessimistic times.  Theoretically basing the money on a commodity is not going to solve anything in itself.  I do concede that it would be helpful to have a relatively stable measure of value, but it would not prevent bubbles and crashes.

Hi Anarcissie,

I’m not sure if your question below was directed to me, or to someone else.

Assuming it was me, I would say I don’t want to stop any private individual from issuing credit. Whether or not someone decides to issue credit is entirely their own decision.

However, I am very much against the Federal Reserve (a quasi-private agency) issuing easy credit to the Treasury, which then uses the fresh money to pay for insane adventures in Iraq, Afghanistan, and elsewhere. That credit is either paid off through higher taxes, or the debt is “monetized”; that is, the money is just created out of thin air.

There is, however, an inherently fraudulent practice of banks, known variously as “double entry bookkeeping” or “fractional reserve banking”, in which banks can lend the majority of money in demand deposits, thus increasing the money supply many times. All this is done on the theory that demand depositors will probably not all want to withdraw their money at once. But in many instances historically, this is exactly what has happened. It’s called a “run on the bank.”

This practice, since it is fraudulent, should also be outlawed, much as other inherently-fraudulent practices (like pyramid schemes) are justly outlawed.

But otherwise, you have the right to lend your money to whomever you choose, and either reap the benefits if you lend wisely, or pay the penalties if you lend foolishly.

Only Ron Paul has really addressed these issues, among Washington politicians.

Okay.  How do you all propose to stop private persons from issuing credit?

Actually, there is no essential difference between the Republican and Democratic approaches to the recession/depression. Both want us to “spend our way out of it.” The R’s tried that earlier this year with their tax refund, followed by the $750 billion, no questions asked “stimulus” package that has done nothing.

The Democrats just want more of the same. Oh, there may be a few window-dressing differences, but essentially, there is no difference. They want to “stimulate” the economy by pumping tax money (stolen money) or newly-created money (inflation) into the system. This was exactly the Republican approach.

As previous posters have noted, the only person discussing an essential change is Ron Paul. Since loose credit and inflationary policies created the problem, more of the same will not solve the problem.

What is needed is to get away from the fundamentally dishonest government money that can be created at whim by the Fed. We need to return to honest money; that is, gold and silver coin.

The “problem” with gold and silver is that the government cannot inflate it to finance insane overseas wars and empire building. So both parties not only reject gold and silver, the solution isn’t even discussed or considered. It just doesn’t exist in the brains of R and D leadership.

The GOP has thoroughly blended politics into all their programs.  You can not practice any kind of economics when you put politics ahead of anything sensible.

Anarcissie, Dr. Paul is in the GOP because he wants to change it from the inside (virtually an impossibility, I know, but he’s aware from bitter experience in 1988 that the Libertarian and other small parties haven’t the ghost of a chance of getting their messages heard, thanks to the ballot-access laws and the debate-access rules that artificially level the playing in favor of the Repubs and Demos).

I wouldn’t dismiss what he says as “shtick”, either—it’s a hundred times better than the outright dreck spoken by politicians of the two big parties who favor the Status Quo, even if it means this country’s ultimate ruin.

Ron Paul’s shtick isn’t particularly new—it’s basically classical liberalism, and it’s been around for a couple of hundred years.  I don’t know what he’s doing in the Republican Party, which since the advent of the Southern Strategy, and the acceptance of world domination as a legitimate and necessary national goal, has been completely hostile to the idea of less government.

I agree—Ron Paul is the only Republican with genuinely new ideas and who thinks outside the box; but only because he’s a genuine libertarian. It’s folks like him who will be needed by the country in the next few years of trial and tribulation, and not the Tweedledumbs and Tweedledumbers in the two major parties who stand for the poisonous, dying Status Quo.

First, there is no difference between D or R. Obama is proposing the same thing Bush did. More wars, more spending, less liberty and more “economic stimulus” (aka printing more FRNs).

Perhaps Joe Conason hasn’t heard of Ron Paul. Yes, there are those that label themselves with an R that do have solutions. Stop spending and stop printing. The honorable Dennis Kucinich recently proposed placing the Fed under the Treasury, where it should be… or just abolish the Fed completely - problem solved.

Unfortunately, the planned collapse will proceed as ordered. Put on your seat belt and enjoy the ride as much as you can.

I would like to have seen some filibustering against the invasion of Iraq, among other things.

Anarcissie:

Yes, you ARE confusing OPPOSITION with OBSTRUCTION.

But first, for the voting record:

126 of 208 Democratic Representatives voted against the Iraq War Resolution in October of 2002.
 
21 of 50 Democratic Senators (all but one a Democrat) voted against that resolution.

Perhaps you call those very underwhelming Democratic YES votes as “complicity.” I don’t. Similarly, I wouldn’t call their NAY votes as “obstructionist.”

A Yes vote maintained that Iraq’s actions were indefensible and warranted a response, up to and including the deployment of our armed forces in an invasion of Iraq. A nay vote maintained that Iraq’s actions, though indefensible, were not sufficient to abandon ongoing UN inspections and not sufficient to authorize Bush to use armed forces in an invasion of Iraq. This is what our elected representatives do: vote for or against measures.

OBSTRUCTIONISM is ongoing and repeated inaction, filibustering, resistance or refusal to offer alternative options, non-participation….something very different from OPPOSITION.

We agree on illegality, stupidity and evilness of this Iraq War; we disagree on definitions.

The meritology of their ideology meets the standards of their roadway scatology.  Or enormous obstructive beasts ever fouling the roadway of progress with fetid mushy mire.

Grand Old Party or:

    Greedy Old Politicians
    Graft Obfuscation Prevarication
    God Oligarchy Partisanship
    Grimy Outdated Pachyderm
    Goo-goo Over Palin
    Guaranteed Obscene Profits
    Gambling On Palin
    Gaggle Of Provocateurs
    Gutter Of Politics
    Gardians Of Pollution
    Guarantors Of Poverty
    Gods Of Pandering
    Gullibility Offers Promise
    Greatly Offensive Politics
    Gushing Oil Profits

BruSays:
‘Anarcissie:

You’re confusing OPPOSITION with OBSTRUCTION. ...’

No, I’m not.  It was the duty of the Democrats to obstruct the invasion and occupation of Iraq, and a lot of other evil things.  Bush could not have done half the damage he did without the extremely weird complicity and cooperation of the Democrats.

Anarcissie:

You’re confusing OPPOSITION with OBSTRUCTION. Were the Republicans falling all over themselves to provide alternative - though opposing - views, we wouldn’t be having this conversation.

But they’re not. As others have noted, they’re putting their party, their egos, and their re-election campaigns far, far ahead of the needs of the people. No one is naive enough to think that politicians won’t act as politicians often do, but this is ridiculous.

Inherent in the “Opposition Party” role is a Position...even if it is opposite. These Republicans don’t have a position, therefore, they’re obstructionists.

At this point, I’m not that sure if anyone really knows what to do. Either Republican or Democrat.

Both parties are consulting with supposed experts who were blind-sided by what has happened.

So far I haven’t really heard anything from either party about undoing some of the things that caused our present economic problems.

The bailouts appear headed into the hands of those very financial institutions that have the American people in a choke hold. They seem reluctant, to losen their grip so the people can breathe. 

It wasn’t too long ago that Harry Reid’s answer to President Obama’s stimulus plan was to state, that he “doesn’t work for President Obama”.

So I’m wondering what the Democratic parties stance will be now that they don’t have the GOP to blame anymore, for their own lack of spine.

Will they support the people’s will, or will they try to thwart it? Will they play political games, and make it dificult for President Obama?

Or will they continue to be the corporate martinets they have become.

JFoster2k:
‘While he may not officially speak FOR the republican party, Rush Limbaugh certainly speaks TO their base. His recent call to arms for the diminished party is to “obstruct” everything proposed by the incoming administration. ...’

That’s one of the things an opposition party is supposed to do.  Another is to criticize the ruling party and propose alternatives.  It’s something the Democrats could learn.

I do agree with the Rethugs on “wasteful spending”, since they want to stop funding waste here are a few suggestions:
(1) Let us go thru both Defense Spending Bills and those extra “Appropriations” bills - you know that 5 or 6 million spent on new planes/submarines/equipment the Navy/Air Force never wanted because the upgrades haven’t proved beneficial!

(2) Let us get rid of “Star Wars”, not only has it never worked - the tests have been fudged to make it appear so!  That’s a cost savings of at least 100 million!

(3) Let us stop giving Agri-business hand-outs (welfare), and actually let the free-market settle it!

(4) Let us stop contracting out to BLACKWATER, HALIBURTON, and the like on no-BID contracts.  There is another 200 million in savings!

They started it, now let us see if they are willing to put their butts on the line for their campaign backers!

While he may not officially speak FOR the republican party, Rush Limbaugh certainly speaks TO their base. His recent call to arms for the diminished party is to “obstruct” everything proposed by the incoming administration.

The perception on the right that anything liberal = immoral, socialist or a welfare state, is deeply rooted in the neocon psyche.

It seems apparent, in their current position, that they have little choice if they intend to hold onto their base. The old addage, “Lead, Follow or Get Out of the Way”, sadly requires an additional option for the far right: employ the only tool left to them… Obstructionism.

Well, I have some advise for Republicans.  It’s about time the free-loading poor started PAYING taxes. Schools, parks, healthcare, fire departments, police departments, roads, jails…they use them all and pay for none.

Definitely time to further relieve the rich of their huge tax burden the fruits of which, at present,  the undeserving poor unjustly benefit. Yeah, I’m all for a progressive income tax structure but the other way around.  The poor pay the most, the rich pay none.  (There isn’t a good Republican out there who would disagree.)

SamSnedegar, January 15 at 9:43 am #

Anything else they do or say is transient and based entirely upon (1) or (2).
********************************************

Sam, I must STRENUOUSLY disagree!  Here are the 3 things Rethugs are interested in:

1) Get richer while making poor people poorer
2) Create a modern feudal society (result of 1) above)
3) Practice boardroom socialism to keep the elite caste rich. (See 1) and 2)above)

Now to do this they concentrate on
1) getting elected by any means, legal or illegal.
2) getting re-elected as above.

The current version of the Republican party looks more and more like a nationalist, anti-immigrant party of the mid 1800s. It originated in 1843 as the American Republican Party, became known as the Native American Party and then the American Party.  The party was secretive about some of its activities, so when a member was asked about its activities, he was to reply, “I know nothing,” and thus it justly became, for its beliefs and procedures, to be called the “Know Nothing” party. 

With their lack of solutions, hostility to ideas and intellectuals, their ever narrowing base of white southerners, and hostility to foreigners, our Republican brethren seem poised to once again proudly proclaim themselves the “Know Nothing” party.

Sorry I can’t agree that the GOP has more than two ideas which fill all their days and nights.

The two are:
(1) getting elected; and
(2) getting reelected.

Anything else they do or say is transient and based entirely upon (1) or (2).

The conservative theory (Milton Friedman as opposed to Keynesianism) for handling this kind of crisis has traditionally been monetary policy.  However, the money supply has been increased, but it (the conservative approach) is not working.

Oh the Repugs have ‘ideas’ except they have all proven to be High Crimes, and Utterly contradictive of the principles laid down in our founding documents.
Someone had better remind the Repugs those documents were Written ‘For the People’ not the Corporations.
Repugs should consider that the only reason McCain came within 6% of Obama was because he was not a ‘typical’ Republican- at least not until he sold his soul to them during the campaign. If he had not, the race would have been closer.
Hell they even tried using their ‘Girl Friday’ Hillary to defeat Obama, and she too failed miserably (couldn’t even get ‘supporters’ to cough up a $1.25 each to pay off her debt).
FYI Repugs..Obama Won for 2 reasons 1) using the ‘WE’, thus inviting Ameircans to once again control their own destiny and 2) ‘Bottoms Up’ economics, the ONLY Economic stratedgy for a truely FREE Market Democracy.
If some Americans had not yet realized just how much the Repugs HATE our Citizens, they got a rude awakening during the Big3 Loan inquistion and subsequent Blackmail of the Workers. the Drumbeat of ‘Union concessions’ has made it very clear their disdain for the American Dream.
Lockheeds CEO recently made the analogy which NO american Worker could have ignored..” We can get 9 Mexican workers for the Price of ONE American Worker”, thus telling American Workers Repugs & their Corp Masters intend to bring down american workers to the level of an impoverished nation.
It is not a Free Market if the only ones allowed access, control and Freedom in the market place are Incs. That is exactly what Our founding fathers fought against…Family Crest or Logo makes NO difference, when Citizens are barred from negotiating the best price for their ‘wares’. Why is it CEO’s et al can fetch the best price (wages & bennies), yet the Laborers are restricted to set ‘prices’?
Americans are not only sick of this Feudalistic Caste system, they are Outraged and gathering their pitchforks and torches to destroy the ‘Trickle Down’ monster and it’s mad scientists.Hang ‘em High!
Sit Dwon and Shut Up before the Evil Eye of the American Citizen turns toward You Repugs and Corp top brass, we have a thirst for revenge (a dish best served COLD)