The Separation of Money and State

Yesterday we featured an excellent video called The American Dream which we applaud because any insightful and entertaining ways to get the general public to wake up to their monetary slavery is a good thing.

However it should be pointed out that the video implied one thing that is patently incorrect.

The video does an excellent job of giving a history of central banking and how it allows inflation that ends up stealing from the poor and giving to the rich.  It also shows the evils of fractional reserve banking and all the other reasons why the Federal Reserve is a pox on all our houses and is the main reason for the grave financial problems in the US today.

However, it seems to imply that the main problem with The Federal Reserve is that it is a private bank rather than "the people's bank".  There is a growing movement, often referred to as "green-backers" and often associated with a woman named Ellen Brown, who wish to end the Fed, which is good.  But they want to give the US Government the power to issue currency and manipulate interest rates.  Which is very, very bad.

In fact, possibly one of the only things that could be worse than having a central bank like the Federal Reserve control your money would be to have people like Barney Frank, Nancy Pelosi and Barack Obama at the controls of the printing press.

Giving control of money creation to the US Government would be even worse than under the Fed.  You could only imagine the hyperinflation we'd be quickly entered into if the Government were to control the printing of the fiat US dollar.  The green-backer retort would be, yes, but what if we put limits on the Government so they couldn't print too much?

And the answer to that question is: They already tried that.  It was called the Constitution.  Remember that quaint part about no State having the ability to make any thing but gold and silver coin a tender in Payment of Debts?  Ah, but who can understand that document anyway... it is over 100 years old!

The simple fact of the matter is that the government should have no role in the money system.  Money should come from the free market and whatever money system people accept, without coercion, should be the money system.

The government should have no role in it for many reasons, not least of which is that governments always ruin or destroy everything.  Try putting the government in charge of creating new music and within a few months you'll be begging for Justin Beiber to come back!

So, on this point, the video is half right.  Unquestionably, the evil, corrupt, non-free market Federal Reserve should be immediately shut down.  But transferring its powers to the Government will only likely make things worse.  Shut it down, walk away, and watch as the free market rushes in to fill the public's need for money.  Formats such as Goldmoney.com, where gold is held in secure vaults and transferred on behalf of buyers and sellers digitally without having to take possession of their gold, would likely blossom.  And there is no doubt that dozens of other competing currencies would flood in and within a matter of months we'd be on a free market money system and all of the horrible effects of central banking such as inflation, booms & busts and governments having access to unlimited funds to conduct wars and giant welfare schemes would end.

In short, the video got most of the things that are wrong with the Federal Reserve right.  But they got the part about what "should" replace the Federal Reserve wrong.  When the day comes for the Federal Reserve to be shut down, or when it just plain collapses, don't look to your government for the solution.  Politician's always have lots of solutions to sell you but you should never buy them.

Separate money from state and the world will be almost completely free of war and poverty.  To echo John Lennon: Give the free markets, and peace, a chance.

Comments

[Tom L]

I think you touched on a broader trend that isn't just limited to this video. Many people point out important problems with government, finance, environment, etc, but most people get the solution completely wrong. The most common solution that people mention is more government regulation, which of course makes things worse, not better.