This was posted by John Zogby in FORBES:
Ron Paul And Libertarians Can't Be Discounted
If the Republican Presidential race were decided on intensity of support, Ron Paul would be the frontrunner. Of course it’s not, so Paul’s constant showing of about 10% in nearly every poll allows the political class to treat him as a fringe candidate.
Whether or not you agree with his libertarian doctrines, he deserves more regard because of the loyalty he draws from his supporters and the importance of their votes. Handicappers will speculate on who will win Paul’s voters when he is forced to drop out. I don’t expect Paul to drop out, or for very many of his supporters to abandon him when the process comes down to the two-person race many anticipate between Mitt Romney and Herman Cain or Rick Perry. Instead, I could see Paul gaining support, especially if Cain’s candidacy is blown up by sexual harassment charges.
Paul is the hero of libertarian voters. He is a physician turned Constitutionalist politician. His first run for President was as a Libertarian in 1988, and ran as a Republican in 2008. Paul has represented a district near Houston that includes Galveston for 12 terms, beginning in 1976 and including two separate breaks in service. He has said he will “never vote for legislation unless the proposed measure is expressly authorized by the Constitution.” He opposes foreign interventions (Paul voted against the Iraq War Resolution) and favors withdrawal from the UN and NATO. He opposes NAFTA and the World Trade Organization. Paul has pledged never to raise taxes and or vote to approve a budget deficit.
While he has been called “the intellectual Godfather” of the Tea Party movement, he is not the favorite among Tea Party supporters in our IBOPE Zogby polls. Paul’s views on our use of military power may be one reason for that. Instead, Cain is the runaway leader among those who say they are influenced by the Tea Party. Paul’s supporters are more uniquely and proudly libertarian.
Our polling samples usually yield just more than 100 voters who identify their ideology as libertarian. That isn’t sufficient for me to cite specific polling numbers for that subset, but it is enough to give us a sense of what they think about all of the candidates, including our incumbent President.
Libertarians who approve of Barack Obama and believe he deserves re-election are rare. In match-ups with Cain, Romney or Perry, Obama gets less than 10% of libertarians. Those numbers are predictable, but less interesting than the roughly one-third of libertarians who say they would vote for someone else or not vote at all if the race was between Obama and Romney or Perry. That number becomes smaller if Cain opposes Obama.
Those results are from an early October poll, before charges of sexual harassment against Cain. An Oct. 18 poll, also before the Cain accusations, found Paul the expected leader among libertarians, but with Cain not far behind.
There are parallels between Paul and the candidacy of Ralph Nader. Yes, Paul is running as a Republican while Nader ran as an independent or on the Green Party line. But in both cases, the support for Paul and Nader is a rejection of both parties. Don’t expect Paul to endorse one of his GOP rivals, or for it to matter very much to libertarians if he did.
Instead, the Republican nominee must go to the libertarians with proposals that fit their views. Cain would appear to have the least trouble succeeding with them, probably because he comes to the race as a businessman, not a politician. If Romney is indeed the likely nominee, he would need to move even harder to the right to win the trust of libertarians. The risk of doing so might not be worth the reward in a campaign where Obama will present himself as the centrist running to prevent a right wing takeover of Washington.
Paul gets labeled a fringe candidate. But in this era of a closely divided electorate, anyone who commands the allegiance that Paul does from an activist libertarian movement must be accounted for in the political calculus.
POSTED BY TONESSS IS A LIBERTARIAN
Wednesday, November 9, 2011
Monday, November 7, 2011
KOCHTOPUS VS. MURRAY ROTHBARD
THIS IS VERY INTERESTING FOR THOSE WHO ARE FOLLOWING THE KOCH BROTHERS..
The Kochtopus vs. Murray N. Rothbard
by David Gordon
The "Kochtopus" is a derogatory name coined by the late Samuel Edward Konkin, III, an anarcho-libertarian, for the group of libertarian organizations funded by billionaire Charles Koch. (Konkin, a gifted wordsmith, also is responsible for the term "minarchism" for the libertarian view that accepts a minimal state.) Murray Rothbard often used this term when referring to organizations within the Koch ambit, with the Cato Institute foremost among them. To say the least, Rothbard's enthusiasm for Cato was not unbounded; and employees of the Kochtopus often treat Rothbard with hostility and contempt. Further, the Kochtopus has displayed unremitting hostility toward the organization with which Rothbard was associated from 1982 until his death in 1995, the Ludwig von Mises Institute.
Someone acquainted only with these facts would never suspect that Rothbard was a principal founder of Cato and that the organization had been established to promote his distinctive variety of libertarianism. From this beginning, how did it come about that Cato shifted course and now takes Rothbard to be an enemy?
To understand what happened, one must begin with Charles Koch. He and his brothers inherited an oil business from their father, Fred Koch, a stalwart of the John Birch Society and long active in rightwing causes. They developed and massively extended the family business, to the extent that Charles Koch and his brother David rank among the wealthiest people in the United States. On the current Fortune 400 list, the brothers are 9th and 10th, each with $17 billion; if the net worth of the brothers is taken together, the Kochs are second only to Bill Gates and Warren Buffett.
Charles, influenced from an early age by the pro-capitalist beliefs of his father, became interested in libertarianism. He attended Robert LeFevre's Freedom School and became acquainted with the work of Murray Rothbard. He met Rothbard and was so impressed with him and his ideas that he decided to endow an organization to promote libertarian theory and policies.
In this endeavor of his, Rothbard was a main collaborator.It was not widely known, but stockholders, who had the power to dismiss the Board of Directors, controlled the Cato Institute. The original stockholders were Charles Koch, Rothbard, an employee of Koch, and Edward Crane, whom Koch hired to run the day-to-day operations of the Institute. Koch, by his control of the majority of the stock, had absolute control of the newly formed group. Of course, he would have possessed a large measure of influence anyway, because he was by far the largest donor; but he wanted to ensure complete dominance.
Rothbard had some misgivings: might it not be unwise to rest so much on the good intentions of a single donor, however extensive his benefactions? Nevertheless, he embraced the new group with enthusiasm. Who would not be happy if one of the wealthiest men in the country embraced one's views and offered to set up an institute to promote them?
It needs always to be kept in mind, to reiterate, that the Cato Institute was at its inception distinctly Rothbardian in orientation. I first encountered the Cato Institute at a summer program held in Eugene, Oregon, in June 1979. Most of the lecturers were committed Rothbardians. The speakers included, besides Rothbard himself, some of his closest intellectual associates: Ralph Raico, Ronald Hamowy, Leonard Liggio, and Walter Grinder. The conference was designed to appeal especially to historians, but participants received a thorough grounding in the Austrian economics that Rothbard favored. Nor did the conference shy away from the most controversial parts of Rothbard's intellectual system. Rothbard, like almost all libertarians, supported a non-interventionist foreign policy. "War is the health of the state," as Randolph Bourne presciently remarked; those opposed to a powerful state must then shun foreign quarrels. But Rothbard had the courage of his convictions; unlike all too many others, he refused to make an exception for World War II, "the good war." The conference featured the well-known historian James J. Martin, who presented a strong defense of both World War I and World War II revisionism. This was no isolated occurrence. The Institute published a pamphlet by the dean of revisionist historians, Harry Elmer Barnes: Revisionism: A Key to Peace, in which Barnes made clear his opposition to American entry into both world wars.
After the conference, I was offered a job at the Institute, and I arrived in San Francisco in the fall of 1979. I was eager to work with a group centered on Rothbard, whose great work Man, Economy, and State I had read when it was published in 1962. There was much to admire in the activities of Cato as it was then. In particular, Ralph Raico, in charge of the book review section of Inquiry magazine, a public affairs magazine that Cato published, had somehow managed to persuade world-renowned scholars, including Noam Chomsky, Peter Strawson, Maurice Cranston, and Donald Davie, to contribute.
But already problems were developing. A number of the executives did not get along with one another. Crane was for long periods barely on speaking terms with the Vice President, David Theroux. More important for our purposes, Crane and the editor of Inquiry, Bill Evers, were at odds. Evers and Crane differed on libertarian political strategy. Further, Crane, primarily interested in campaign organizing and influencing public policy, regarded intellectual affairs as of secondary significance, and Inquiry accordingly he viewed as little more than a distraction. He berated Evers because of Inquiry's budgetary problems. Evers was at this time Rothbard's closest political associate, and Rothbard supported him over Crane in these disputes.
I later learned that Crane's impatience with intellectuals extended to Rothbard himself. Crane evidently believed that books were like automobiles, to be produced assembly line fashion. Rothbard had received a grant to write Ethics of Liberty, but Crane was not satisfied with Rothbard's progress. Rothbard was an incredibly fast writer, but, as Crane did not grasp, it takes time even for someone of Rothbard's speed to read and think about the relevant material. He demanded results; on one occasion, I have been reliably informed, Rothbard had to seek refuge in a closet to escape his verbal barrage. After the break, Crane claimed that Rothbard had received an $80,000 grant for a book on the Progressives but produced nothing. One may be confident that, had the breach between Rothbard and Cato not occurred, Crane would once again have been proved unreasonable and impatient. Was not Ethics of Liberty worth the wait?
I have jumped ahead of the story, referring to the break that I have not yet explained. But one more background matter should be mentioned in order to grasp the issues. Charles Koch has made a great fuss about "market-based management." The key to business success, in his opinion, lies in reliance on initiative from below rather than on rigid control from the top. Yet at Cato all important decisions were made only in consultation with Koch: Crane was constantly on the telephone to him in Wichita.
Three main issues led to the irreparable rupture. First, as I have already mentioned, Austrian economics was central to Rothbard's system. He did not embrace all economists who more or less favored a free market: quite the contrary, he wished sharply to differentiate Austrian economics from the Chicago School. This is not the place to discuss the theoretical differences between the two approaches, but one issue in dispute assumed great importance later. Austrian economics is in itself a value free science, but Austrian economists, like Rothbard, fully committed to a free society, rely on Austrian monetary theory to demand a return to the gold standard and abolition of the Federal Reserve System. The Chicago School strongly disagrees. The greatest representative of Chicago economics, Milton Friedman, thought that the monetary authority should follow a fixed rule of moderate expansion and held a diametrically opposed theory of the causes of the Great Depression of 1929 to Rothbard's.
Rothbard was thus not pleased when Cato hired David Henderson, who leaned toward the Chicago School, as an economist. Rothbard had no personal animosity toward Henderson. Quite the contrary, he liked him, and Henderson has gone on to produce excellent work. (I'm sure that Rothbard would have liked his penetrating articles critical of the Iraq war.) But to hire a non-Austrian was hardly in keeping with the original mission of Cato.
Rothbard, as usual, saw something before everyone else. In the years since Rothbard's break with Cato, the Institute has no longer supported the abolition of the Fed. Quite the contrary, the Institute now endeavors to attract high officials of that organization to participate in its seminars and conferences. The aim now is to influence policy in Washington. Legislators who wish to restore the gold standard, Ron Paul chief among them, are shunned and defamed.
If we ask how it came about that Henderson was hired we immediately arrive at the second main incident leading to the split. Roy Childs, the editor of Libertarian Review, and Henderson were friends, and Henderson secured his post largely through Childs's recommendation.
Childs was a gifted theorist and writer, largely self-taught. He and Rothbard had once been close, but he did not get along well with Evers. Childs was given to sudden enthusiasms from which he could not be dissuaded. One such concerned nuclear power. Childs and some of his followers, such as Milton Mueller, the head of Students for a Libertarian Society (another group within the Kochtopus) fell under the influence of John Gofman, a Berkeley medical physicist associated with the Lawrence Livermore Laboratory. Gofman had once strongly supported nuclear power, but he switched course and became its leading opponent. In his view, nuclear power plants emitted levels of radiation unacceptably dangerous to health. Childs maintained, relying on Gofman's data, that emitting nuclear radiation violated the libertarian non-aggression principle and ought to be forcibly curtailed. An issue of Libertarian Review featured Gofman on the cover and contained a long interview with him.
Rothbard rejected this position. The strict application of Childs's approach to aggression, he maintained, would cripple economic production. All of our physical actions emit particles of some sort or other. Does anyone who objects to having a subatomic particle impinging on his body have the libertarian right to forbid the activity that generates it? Such a consequence is absurd, but as Rothbard often noted, for many libertarians this is no problem. If one took the less radical view that only dangerous radiation could be prohibited, Rothbard's response was that Gofman had not made out a good case for his alarmist assertions.
Rothbard made no secret of his disapproval of the anti-nuclear position, and doing so estranged him from Childs. Bill Evers circulated a letter critical of Gofman's contentions, which about one dozen people, including Rothbard, signed. The letter infuriated Crane. I do not think he held strong views on the nuclear question. Rather, as was his wont, he saw the issue as a power struggle, in this case between Evers and Childs. He was upset that the letter had brought to public attention that dissent from a single party line existed among libertarian groups sponsored by Koch. He thought the dispute should have been kept private. Crane, before hiring me, called me on the carpet for having signed the letter. I had the strong feeling that he did not withdraw the offer of employment only because he thought that I had not grasped Evers's intentions in drafting the letter.
Childs, stung by Rothbard's opposition, became intensely critical of him. By telephone calls and letters, he incited anti-Rothbard feeling among his immensely wide circle of libertarian friends and acquaintances.
The tension might eventually have been contained had nothing else intervened, but the 1980 libertarian campaign for the presidency of Ed Clark ended all hopes of reconciliation. Both Koch and Crane hoped to transform the Libertarian Party from a fringe group to a real presence on the national scene. To this end, Koch was prepared to spend vast sums of money. His brother, David Koch, was nominated as the vice-presidential candidate in order to evade the limits the law imposed on campaign contributions from a single donor. David Koch, and Charles standing behind him, was not subject to these legal limits: David could spend all he wished on his own campaign.
In order to achieve wide popular support for a libertarian candidate, Crane believed that he had to conceal aspects of the libertarian program that many voters would consider extreme. Under his guidance, Clark campaigned for a reduction in government welfare spending rather than its total elimination. Rothbard saw matters differently. For him, libertarianism was a coherent system of ideas that a libertarian candidate ought fully to embrace. He had his own political group, the Radical Caucus, on which Evers and Justin Raimondo were leading lights. As its name suggests, the Radical Caucus favored a much more confrontational approach to politics than did Crane. For Rothbard, the last straw was Clark's depiction of himself as a "low-tax liberal." Rothbard in his privately printed publication Libertarian Forum assailed this as a betrayal of libertarian principle: Clark, after all, was campaigning as an explicit libertarian. Rothbard would not have objected to a self-consciously "moderate" policy of tax and welfare reform had these been part of a Constitution Party platform. But the candidate of the Libertarian Party, he thought, must embrace libertarianism in uncompromising form.
Rothbard's differences with Crane and Koch went beyond this one political campaign. He thought that Cato's primary mission should be scholarship rather than political campaigns and attempts to secure audiences with the high and mighty in Washington. His antagonists emphatically disagreed.
Crane and Koch could not tolerate what they deemed blatant disloyalty. Even though Rothbard was the leading theorist of libertarianism and the Cato Institute had been established to promote his views, they expected him to obey the orders sent down from on high. No one at all acquainted with Rothbard could have reasonably expected him to do so. He was always his own man and would agree with Dante: "Follow your own course, and let the people say what they will."
Rothbard was removed from his position at Cato, and he was no longer invited to lecture at the summer conferences of the Institute for Humane Studies, another organization under Koch's patronage. Rothbard did not go quietly. He was, it will be recalled, a stockholder in the Cato Institute; and he intended to make clear his opposition to current policy at stockholders' meetings. In addition, his public criticisms would draw attention to a fact that Koch preferred to keep hidden, i.e., that the stockholders, principally Koch himself, and not the Board of Directors, held final control.
Koch and Crane were determined to prevent Rothbard from doing so. Koch refused to return Rothbard's shares, which he had supposedly been holding in safekeeping for him. When Rothbard appeared at the Cato offices for a stockholders' meeting, Crane informed him that his shares had been voided. Though the legality of this was eminently questionable, Rothbard elected not to pursue the case further. Lawsuits against billionaires often have unhappy endings.
After Rothbard departed from Cato, he joined forces with the Mises Institute, established in 1982 by Lew Rockwell. The new group was a standing reproach to Koch and Crane, since its consistent defense, encouragement, and development of a Rothbardian program were exactly the program that the Cato Institute had betrayed. The Koch forces endeavored to strangle the new group in its cradle. Rockwell received a telephone call from George Pearson, Koch's Wichita lieutenant in charge of libertarian programs. He screamed at Rockwell that he must on no account found a group named after Ludwig von Mises. Pearson informed him that Mises was an extreme and polarizing figure who should be downplayed. When Rockwell nevertheless proceeded as planned, Koch and his minions actively sought to discourage contributions to the new group. (Incidentally, Pearson, despite years of faithful service to Koch, was eventually discharged without notice. He had incurred the enmity of Richard Fink, who turned on his former mentor after supplanting him in the Koch hierarchy.)
Unfortunately, the efforts of the Kochtopus against the Mises Institute have continued to the present. The current campaign for the presidency of Ron Paul has secured for libertarian ideas a greater public hearing than ever before. But owing to Paul's long association with Rothbard and Rockwell, his campaign had little appeal to Cato. High officials of Cato cooperated with James Kirchick's malicious smears against him in The New Republic. (After his losing Senate campaign to Phil Gramm, Paul had been employed by Koch as chairman of Citizens for a Sound Economy, but his contract was not renewed. Like Rothbard, Ron Paul is a man of principle and would not compromise on his advocacy of the gold standard and opposition to the Federal Reserve System. Charles Koch did not want this: such measures would hardly help him gain influence with the Republican Party, to which, if I am not mistaken, he and his brother are the largest private contributors.Further, Paul would have no part of Koch's efforts to have the CSE, beneath free market rhetoric, lobby to promote legislation beneficial to his business interests.) It should come as no surprise that Matt Welch, the new editor of Reason, has published a viciously negative piece against Rockwell and Paul. Koch is a large funder of the magazine, and, as Murray Rothbard learned to his cost, he expects those he funds to obey his dictates.
POSTED BY TONESSSSSSSS
The Kochtopus vs. Murray N. Rothbard
by David Gordon
The "Kochtopus" is a derogatory name coined by the late Samuel Edward Konkin, III, an anarcho-libertarian, for the group of libertarian organizations funded by billionaire Charles Koch. (Konkin, a gifted wordsmith, also is responsible for the term "minarchism" for the libertarian view that accepts a minimal state.) Murray Rothbard often used this term when referring to organizations within the Koch ambit, with the Cato Institute foremost among them. To say the least, Rothbard's enthusiasm for Cato was not unbounded; and employees of the Kochtopus often treat Rothbard with hostility and contempt. Further, the Kochtopus has displayed unremitting hostility toward the organization with which Rothbard was associated from 1982 until his death in 1995, the Ludwig von Mises Institute.
Someone acquainted only with these facts would never suspect that Rothbard was a principal founder of Cato and that the organization had been established to promote his distinctive variety of libertarianism. From this beginning, how did it come about that Cato shifted course and now takes Rothbard to be an enemy?
To understand what happened, one must begin with Charles Koch. He and his brothers inherited an oil business from their father, Fred Koch, a stalwart of the John Birch Society and long active in rightwing causes. They developed and massively extended the family business, to the extent that Charles Koch and his brother David rank among the wealthiest people in the United States. On the current Fortune 400 list, the brothers are 9th and 10th, each with $17 billion; if the net worth of the brothers is taken together, the Kochs are second only to Bill Gates and Warren Buffett.
Charles, influenced from an early age by the pro-capitalist beliefs of his father, became interested in libertarianism. He attended Robert LeFevre's Freedom School and became acquainted with the work of Murray Rothbard. He met Rothbard and was so impressed with him and his ideas that he decided to endow an organization to promote libertarian theory and policies.
In this endeavor of his, Rothbard was a main collaborator.It was not widely known, but stockholders, who had the power to dismiss the Board of Directors, controlled the Cato Institute. The original stockholders were Charles Koch, Rothbard, an employee of Koch, and Edward Crane, whom Koch hired to run the day-to-day operations of the Institute. Koch, by his control of the majority of the stock, had absolute control of the newly formed group. Of course, he would have possessed a large measure of influence anyway, because he was by far the largest donor; but he wanted to ensure complete dominance.
Rothbard had some misgivings: might it not be unwise to rest so much on the good intentions of a single donor, however extensive his benefactions? Nevertheless, he embraced the new group with enthusiasm. Who would not be happy if one of the wealthiest men in the country embraced one's views and offered to set up an institute to promote them?
It needs always to be kept in mind, to reiterate, that the Cato Institute was at its inception distinctly Rothbardian in orientation. I first encountered the Cato Institute at a summer program held in Eugene, Oregon, in June 1979. Most of the lecturers were committed Rothbardians. The speakers included, besides Rothbard himself, some of his closest intellectual associates: Ralph Raico, Ronald Hamowy, Leonard Liggio, and Walter Grinder. The conference was designed to appeal especially to historians, but participants received a thorough grounding in the Austrian economics that Rothbard favored. Nor did the conference shy away from the most controversial parts of Rothbard's intellectual system. Rothbard, like almost all libertarians, supported a non-interventionist foreign policy. "War is the health of the state," as Randolph Bourne presciently remarked; those opposed to a powerful state must then shun foreign quarrels. But Rothbard had the courage of his convictions; unlike all too many others, he refused to make an exception for World War II, "the good war." The conference featured the well-known historian James J. Martin, who presented a strong defense of both World War I and World War II revisionism. This was no isolated occurrence. The Institute published a pamphlet by the dean of revisionist historians, Harry Elmer Barnes: Revisionism: A Key to Peace, in which Barnes made clear his opposition to American entry into both world wars.
After the conference, I was offered a job at the Institute, and I arrived in San Francisco in the fall of 1979. I was eager to work with a group centered on Rothbard, whose great work Man, Economy, and State I had read when it was published in 1962. There was much to admire in the activities of Cato as it was then. In particular, Ralph Raico, in charge of the book review section of Inquiry magazine, a public affairs magazine that Cato published, had somehow managed to persuade world-renowned scholars, including Noam Chomsky, Peter Strawson, Maurice Cranston, and Donald Davie, to contribute.
But already problems were developing. A number of the executives did not get along with one another. Crane was for long periods barely on speaking terms with the Vice President, David Theroux. More important for our purposes, Crane and the editor of Inquiry, Bill Evers, were at odds. Evers and Crane differed on libertarian political strategy. Further, Crane, primarily interested in campaign organizing and influencing public policy, regarded intellectual affairs as of secondary significance, and Inquiry accordingly he viewed as little more than a distraction. He berated Evers because of Inquiry's budgetary problems. Evers was at this time Rothbard's closest political associate, and Rothbard supported him over Crane in these disputes.
I later learned that Crane's impatience with intellectuals extended to Rothbard himself. Crane evidently believed that books were like automobiles, to be produced assembly line fashion. Rothbard had received a grant to write Ethics of Liberty, but Crane was not satisfied with Rothbard's progress. Rothbard was an incredibly fast writer, but, as Crane did not grasp, it takes time even for someone of Rothbard's speed to read and think about the relevant material. He demanded results; on one occasion, I have been reliably informed, Rothbard had to seek refuge in a closet to escape his verbal barrage. After the break, Crane claimed that Rothbard had received an $80,000 grant for a book on the Progressives but produced nothing. One may be confident that, had the breach between Rothbard and Cato not occurred, Crane would once again have been proved unreasonable and impatient. Was not Ethics of Liberty worth the wait?
I have jumped ahead of the story, referring to the break that I have not yet explained. But one more background matter should be mentioned in order to grasp the issues. Charles Koch has made a great fuss about "market-based management." The key to business success, in his opinion, lies in reliance on initiative from below rather than on rigid control from the top. Yet at Cato all important decisions were made only in consultation with Koch: Crane was constantly on the telephone to him in Wichita.
Three main issues led to the irreparable rupture. First, as I have already mentioned, Austrian economics was central to Rothbard's system. He did not embrace all economists who more or less favored a free market: quite the contrary, he wished sharply to differentiate Austrian economics from the Chicago School. This is not the place to discuss the theoretical differences between the two approaches, but one issue in dispute assumed great importance later. Austrian economics is in itself a value free science, but Austrian economists, like Rothbard, fully committed to a free society, rely on Austrian monetary theory to demand a return to the gold standard and abolition of the Federal Reserve System. The Chicago School strongly disagrees. The greatest representative of Chicago economics, Milton Friedman, thought that the monetary authority should follow a fixed rule of moderate expansion and held a diametrically opposed theory of the causes of the Great Depression of 1929 to Rothbard's.
Rothbard was thus not pleased when Cato hired David Henderson, who leaned toward the Chicago School, as an economist. Rothbard had no personal animosity toward Henderson. Quite the contrary, he liked him, and Henderson has gone on to produce excellent work. (I'm sure that Rothbard would have liked his penetrating articles critical of the Iraq war.) But to hire a non-Austrian was hardly in keeping with the original mission of Cato.
Rothbard, as usual, saw something before everyone else. In the years since Rothbard's break with Cato, the Institute has no longer supported the abolition of the Fed. Quite the contrary, the Institute now endeavors to attract high officials of that organization to participate in its seminars and conferences. The aim now is to influence policy in Washington. Legislators who wish to restore the gold standard, Ron Paul chief among them, are shunned and defamed.
If we ask how it came about that Henderson was hired we immediately arrive at the second main incident leading to the split. Roy Childs, the editor of Libertarian Review, and Henderson were friends, and Henderson secured his post largely through Childs's recommendation.
Childs was a gifted theorist and writer, largely self-taught. He and Rothbard had once been close, but he did not get along well with Evers. Childs was given to sudden enthusiasms from which he could not be dissuaded. One such concerned nuclear power. Childs and some of his followers, such as Milton Mueller, the head of Students for a Libertarian Society (another group within the Kochtopus) fell under the influence of John Gofman, a Berkeley medical physicist associated with the Lawrence Livermore Laboratory. Gofman had once strongly supported nuclear power, but he switched course and became its leading opponent. In his view, nuclear power plants emitted levels of radiation unacceptably dangerous to health. Childs maintained, relying on Gofman's data, that emitting nuclear radiation violated the libertarian non-aggression principle and ought to be forcibly curtailed. An issue of Libertarian Review featured Gofman on the cover and contained a long interview with him.
Rothbard rejected this position. The strict application of Childs's approach to aggression, he maintained, would cripple economic production. All of our physical actions emit particles of some sort or other. Does anyone who objects to having a subatomic particle impinging on his body have the libertarian right to forbid the activity that generates it? Such a consequence is absurd, but as Rothbard often noted, for many libertarians this is no problem. If one took the less radical view that only dangerous radiation could be prohibited, Rothbard's response was that Gofman had not made out a good case for his alarmist assertions.
Rothbard made no secret of his disapproval of the anti-nuclear position, and doing so estranged him from Childs. Bill Evers circulated a letter critical of Gofman's contentions, which about one dozen people, including Rothbard, signed. The letter infuriated Crane. I do not think he held strong views on the nuclear question. Rather, as was his wont, he saw the issue as a power struggle, in this case between Evers and Childs. He was upset that the letter had brought to public attention that dissent from a single party line existed among libertarian groups sponsored by Koch. He thought the dispute should have been kept private. Crane, before hiring me, called me on the carpet for having signed the letter. I had the strong feeling that he did not withdraw the offer of employment only because he thought that I had not grasped Evers's intentions in drafting the letter.
Childs, stung by Rothbard's opposition, became intensely critical of him. By telephone calls and letters, he incited anti-Rothbard feeling among his immensely wide circle of libertarian friends and acquaintances.
The tension might eventually have been contained had nothing else intervened, but the 1980 libertarian campaign for the presidency of Ed Clark ended all hopes of reconciliation. Both Koch and Crane hoped to transform the Libertarian Party from a fringe group to a real presence on the national scene. To this end, Koch was prepared to spend vast sums of money. His brother, David Koch, was nominated as the vice-presidential candidate in order to evade the limits the law imposed on campaign contributions from a single donor. David Koch, and Charles standing behind him, was not subject to these legal limits: David could spend all he wished on his own campaign.
In order to achieve wide popular support for a libertarian candidate, Crane believed that he had to conceal aspects of the libertarian program that many voters would consider extreme. Under his guidance, Clark campaigned for a reduction in government welfare spending rather than its total elimination. Rothbard saw matters differently. For him, libertarianism was a coherent system of ideas that a libertarian candidate ought fully to embrace. He had his own political group, the Radical Caucus, on which Evers and Justin Raimondo were leading lights. As its name suggests, the Radical Caucus favored a much more confrontational approach to politics than did Crane. For Rothbard, the last straw was Clark's depiction of himself as a "low-tax liberal." Rothbard in his privately printed publication Libertarian Forum assailed this as a betrayal of libertarian principle: Clark, after all, was campaigning as an explicit libertarian. Rothbard would not have objected to a self-consciously "moderate" policy of tax and welfare reform had these been part of a Constitution Party platform. But the candidate of the Libertarian Party, he thought, must embrace libertarianism in uncompromising form.
Rothbard's differences with Crane and Koch went beyond this one political campaign. He thought that Cato's primary mission should be scholarship rather than political campaigns and attempts to secure audiences with the high and mighty in Washington. His antagonists emphatically disagreed.
Crane and Koch could not tolerate what they deemed blatant disloyalty. Even though Rothbard was the leading theorist of libertarianism and the Cato Institute had been established to promote his views, they expected him to obey the orders sent down from on high. No one at all acquainted with Rothbard could have reasonably expected him to do so. He was always his own man and would agree with Dante: "Follow your own course, and let the people say what they will."
Rothbard was removed from his position at Cato, and he was no longer invited to lecture at the summer conferences of the Institute for Humane Studies, another organization under Koch's patronage. Rothbard did not go quietly. He was, it will be recalled, a stockholder in the Cato Institute; and he intended to make clear his opposition to current policy at stockholders' meetings. In addition, his public criticisms would draw attention to a fact that Koch preferred to keep hidden, i.e., that the stockholders, principally Koch himself, and not the Board of Directors, held final control.
Koch and Crane were determined to prevent Rothbard from doing so. Koch refused to return Rothbard's shares, which he had supposedly been holding in safekeeping for him. When Rothbard appeared at the Cato offices for a stockholders' meeting, Crane informed him that his shares had been voided. Though the legality of this was eminently questionable, Rothbard elected not to pursue the case further. Lawsuits against billionaires often have unhappy endings.
After Rothbard departed from Cato, he joined forces with the Mises Institute, established in 1982 by Lew Rockwell. The new group was a standing reproach to Koch and Crane, since its consistent defense, encouragement, and development of a Rothbardian program were exactly the program that the Cato Institute had betrayed. The Koch forces endeavored to strangle the new group in its cradle. Rockwell received a telephone call from George Pearson, Koch's Wichita lieutenant in charge of libertarian programs. He screamed at Rockwell that he must on no account found a group named after Ludwig von Mises. Pearson informed him that Mises was an extreme and polarizing figure who should be downplayed. When Rockwell nevertheless proceeded as planned, Koch and his minions actively sought to discourage contributions to the new group. (Incidentally, Pearson, despite years of faithful service to Koch, was eventually discharged without notice. He had incurred the enmity of Richard Fink, who turned on his former mentor after supplanting him in the Koch hierarchy.)
Unfortunately, the efforts of the Kochtopus against the Mises Institute have continued to the present. The current campaign for the presidency of Ron Paul has secured for libertarian ideas a greater public hearing than ever before. But owing to Paul's long association with Rothbard and Rockwell, his campaign had little appeal to Cato. High officials of Cato cooperated with James Kirchick's malicious smears against him in The New Republic. (After his losing Senate campaign to Phil Gramm, Paul had been employed by Koch as chairman of Citizens for a Sound Economy, but his contract was not renewed. Like Rothbard, Ron Paul is a man of principle and would not compromise on his advocacy of the gold standard and opposition to the Federal Reserve System. Charles Koch did not want this: such measures would hardly help him gain influence with the Republican Party, to which, if I am not mistaken, he and his brother are the largest private contributors.Further, Paul would have no part of Koch's efforts to have the CSE, beneath free market rhetoric, lobby to promote legislation beneficial to his business interests.) It should come as no surprise that Matt Welch, the new editor of Reason, has published a viciously negative piece against Rockwell and Paul. Koch is a large funder of the magazine, and, as Murray Rothbard learned to his cost, he expects those he funds to obey his dictates.
POSTED BY TONESSSSSSSS
Saturday, November 5, 2011
Health Benefits of Red Wine
A glass of red wine a day keeps the doctor away
Is red wine the fountain of youth or a potent poison? Is enjoying a glass of red wine with dinner each evening beneficial to your health? Current research suggests that a glass of red wine each day may be providing you with more than just a little relaxation. What are the health benefits of drinking red wine?
For over 10 years, research has indicated that moderate intake of alcohol improves cardiovascular health. In fact, in 1992 Harvard researchers included moderate alcohol consumption as one of the "eight proven ways to reduce coronary heart disease risk." However, research has suggested that specifically red wine is the most beneficial to your heart health. The cardioprotective effect has been attributed to antioxidants present in the skin and seeds of red grapes.
Scientists believe the antioxidants, called flavonoids, reduce the risk of coronary heart disease in three ways:
by reducing production of low density lipoprotein (LDL) cholesterol (also know as the "bad" cholesterol)
by boosting high density lipoprotein (HDL) cholesterol (the good cholesterol)
by reducing blood clotting. Furthermore, consuming a glass of wine along with a meal may favorably influence your lipid profiles following that meal
Recently, researchers have found that moderate red wine consumption may be beneficial to more than just your heart. One study found that the antioxidant resveratrol, which is prevalent in the skin of red grapes, may inhibit tumor development in some cancers. Another study indicated that resveratrol aided in the formation of nerve cells, which experts believe may be helpful in the treatment of neurological diseases like Alzheimer's and Parkinson's.
Which wines should you consume to reap the most benefits?
Researchers at the University of California, at Davis tested a variety of wines to determine which types have the highest concentrations of flavonoids. Their results concluded that the flavonoid favorite is Cabernet Sauvignon, followed closely by Petit Syrah and Pinot Noir. Both Merlots and red zinfandels have fewer flavonoids than their more potent predecessors. White wine had significantly smaller amounts than the red wine varieties. The bottom line is the sweeter the wine, the fewer the flavonoids. Dryer red wines are your best bet for a flavonoid boost.
How much red wine should I drink?
A four-ounce glass of wine is equivalent to one serving. Men will benefit from consuming one to two servings per day. Women should consume only one serving per day to reap the maximum benefits. This is not to say that you should start drinking alcohol if you presently do not. Occasional or binge drinkers have higher mortality rates than those who drink moderately on a regular basis. In those who consume three or more drinks per day, there is an increased risk for elevated serum triglycerides (fat in the bloodstream). Long-term, excessive alcohol consumption can damage nerve cells, the liver and the pancreas. Heavy drinkers are also at risk for malnutrition, as alcohol may substitute for more nutritious foods.
What if I have other health problems?
Recommendations to consume moderate amounts of wine are limited to individuals with a clean bill of health. It is clear that people with medical and social conditions worsened by alcohol should not consume any alcohol at all. Hypertryglyceridemia, pancreatitis, liver disease, uncontrolled hypertension, depression and congestive heart failure are diseases that may be worsened by alcohol. Those individuals at risk for these conditions should consult with their physician before consuming any alcohol at all.
What about grape juice and non alcoholic red wine?
In 1997, researchers at the University of Wisconsin concluded that purple grape juice also reduced blood clotting. Another study by researchers at University of California at Davis, confirmed the findings that non alcoholic red wine contains the same antioxidant profile as red wine. However in a 1998 study, Japanese researchers found that while grape juice still had antioxidative benefits, it did not significantly lower LDL cholesterol levels compared to red wine.
The debate continues on whether it is the components of the wine, the way the wine is consumed, or the lifestyle traits that is the most responsible for the long healthy lives of many wine drinkers. However, the evidence seems clear that regular, moderate consumption of red wine is beneficial to your health. So here's a toast to your health! Cheers
CHEERS FROM TONES! Cabernet is the way to go! Bottoms UP!
Is red wine the fountain of youth or a potent poison? Is enjoying a glass of red wine with dinner each evening beneficial to your health? Current research suggests that a glass of red wine each day may be providing you with more than just a little relaxation. What are the health benefits of drinking red wine?
For over 10 years, research has indicated that moderate intake of alcohol improves cardiovascular health. In fact, in 1992 Harvard researchers included moderate alcohol consumption as one of the "eight proven ways to reduce coronary heart disease risk." However, research has suggested that specifically red wine is the most beneficial to your heart health. The cardioprotective effect has been attributed to antioxidants present in the skin and seeds of red grapes.
Scientists believe the antioxidants, called flavonoids, reduce the risk of coronary heart disease in three ways:
by reducing production of low density lipoprotein (LDL) cholesterol (also know as the "bad" cholesterol)
by boosting high density lipoprotein (HDL) cholesterol (the good cholesterol)
by reducing blood clotting. Furthermore, consuming a glass of wine along with a meal may favorably influence your lipid profiles following that meal
Recently, researchers have found that moderate red wine consumption may be beneficial to more than just your heart. One study found that the antioxidant resveratrol, which is prevalent in the skin of red grapes, may inhibit tumor development in some cancers. Another study indicated that resveratrol aided in the formation of nerve cells, which experts believe may be helpful in the treatment of neurological diseases like Alzheimer's and Parkinson's.
Which wines should you consume to reap the most benefits?
Researchers at the University of California, at Davis tested a variety of wines to determine which types have the highest concentrations of flavonoids. Their results concluded that the flavonoid favorite is Cabernet Sauvignon, followed closely by Petit Syrah and Pinot Noir. Both Merlots and red zinfandels have fewer flavonoids than their more potent predecessors. White wine had significantly smaller amounts than the red wine varieties. The bottom line is the sweeter the wine, the fewer the flavonoids. Dryer red wines are your best bet for a flavonoid boost.
How much red wine should I drink?
A four-ounce glass of wine is equivalent to one serving. Men will benefit from consuming one to two servings per day. Women should consume only one serving per day to reap the maximum benefits. This is not to say that you should start drinking alcohol if you presently do not. Occasional or binge drinkers have higher mortality rates than those who drink moderately on a regular basis. In those who consume three or more drinks per day, there is an increased risk for elevated serum triglycerides (fat in the bloodstream). Long-term, excessive alcohol consumption can damage nerve cells, the liver and the pancreas. Heavy drinkers are also at risk for malnutrition, as alcohol may substitute for more nutritious foods.
What if I have other health problems?
Recommendations to consume moderate amounts of wine are limited to individuals with a clean bill of health. It is clear that people with medical and social conditions worsened by alcohol should not consume any alcohol at all. Hypertryglyceridemia, pancreatitis, liver disease, uncontrolled hypertension, depression and congestive heart failure are diseases that may be worsened by alcohol. Those individuals at risk for these conditions should consult with their physician before consuming any alcohol at all.
What about grape juice and non alcoholic red wine?
In 1997, researchers at the University of Wisconsin concluded that purple grape juice also reduced blood clotting. Another study by researchers at University of California at Davis, confirmed the findings that non alcoholic red wine contains the same antioxidant profile as red wine. However in a 1998 study, Japanese researchers found that while grape juice still had antioxidative benefits, it did not significantly lower LDL cholesterol levels compared to red wine.
The debate continues on whether it is the components of the wine, the way the wine is consumed, or the lifestyle traits that is the most responsible for the long healthy lives of many wine drinkers. However, the evidence seems clear that regular, moderate consumption of red wine is beneficial to your health. So here's a toast to your health! Cheers
CHEERS FROM TONES! Cabernet is the way to go! Bottoms UP!
Who Invented Libertarianism?
Who Invented Libertarianism?
by Robert Wenzel
Economic Policy Journal
Recently by Robert Wenzel: Is Peter Schiff a Racist?
The Kochtopus has launched a new web site, Libertarianism.org.
A quick glance of the site might give you the impression that David Boaz invented libertarianism.
There's an introductory reading list that mentions Boaz, but no mention of Ludwig von Mises or Murray Rothbard.
There's a "deep foundations" reading list with the first book being a Boaz book, but no mention of Mises or Rothbard.
There's a history of libertarianism reading list, the first book mentioned is a Boaz book, but no mention of Mises or Rothbard.
Though there is no work of Mises or Rothbard mentioned others getting on the reading list include, P. J. O'Rourke, Milton Friedman, Matt Ridley, Richard Epstein, Robert Nozick, John Locke.
There's an essay section that includes writings of, you guessed it, many by David Boaz. In addition, essays by Tom Plamer, Nat Hentoff, Gerald O'Driscoll, Nathaniel Branden, Frederick Douglass, Adam Smith. But no mention of Mises or Rothbard.
Mises and Rothbard do get profiles and there are other mentions, including some Rothbard videos. But anyone looking at the reading lists or essays, logically a first stop for learning more, would get the impression that the seeds of libertarianism were planted by, say, Adam Smith and John Locke (and perhaps Tom Palmer) followed by a great leap over to David Boaz.
For those new to libertarianism, here's a few books and essays the Kochtopus appears to have missed. Fourty-one books and essay compilations by Murray Rothbard and thirty three books and essay compilations by Ludwig von Mises. For the record, the best introductory book on libertarianism is Murray Rothbard's For A New Liberty.
Reprinted with permission from Economic Policy Journal.
November 5, 2011
©2011 Economic Policy Journal
POSTED BY TONESSSSSSSS
by Robert Wenzel
Economic Policy Journal
Recently by Robert Wenzel: Is Peter Schiff a Racist?
The Kochtopus has launched a new web site, Libertarianism.org.
A quick glance of the site might give you the impression that David Boaz invented libertarianism.
There's an introductory reading list that mentions Boaz, but no mention of Ludwig von Mises or Murray Rothbard.
There's a "deep foundations" reading list with the first book being a Boaz book, but no mention of Mises or Rothbard.
There's a history of libertarianism reading list, the first book mentioned is a Boaz book, but no mention of Mises or Rothbard.
Though there is no work of Mises or Rothbard mentioned others getting on the reading list include, P. J. O'Rourke, Milton Friedman, Matt Ridley, Richard Epstein, Robert Nozick, John Locke.
There's an essay section that includes writings of, you guessed it, many by David Boaz. In addition, essays by Tom Plamer, Nat Hentoff, Gerald O'Driscoll, Nathaniel Branden, Frederick Douglass, Adam Smith. But no mention of Mises or Rothbard.
Mises and Rothbard do get profiles and there are other mentions, including some Rothbard videos. But anyone looking at the reading lists or essays, logically a first stop for learning more, would get the impression that the seeds of libertarianism were planted by, say, Adam Smith and John Locke (and perhaps Tom Palmer) followed by a great leap over to David Boaz.
For those new to libertarianism, here's a few books and essays the Kochtopus appears to have missed. Fourty-one books and essay compilations by Murray Rothbard and thirty three books and essay compilations by Ludwig von Mises. For the record, the best introductory book on libertarianism is Murray Rothbard's For A New Liberty.
Reprinted with permission from Economic Policy Journal.
November 5, 2011
©2011 Economic Policy Journal
POSTED BY TONESSSSSSSS
Friday, November 4, 2011
ovomit
Ovomit likes to push the envelope. Yesterday I had to warn him as an admin about his text, advocating killing liberals, of which I didn't get a screen shot of and now today he advocated that someone put a cap in kcgentz2012. This really is unacceptable behaviour in a chat room. He is skating on thin ice. Here are the links of today's screenshots of ovomit being disgusting. Link 1, Link 2Come and chat with us:
http://chat.paltalk.com/g2/group/771180009/
Published by zipperdedoodah
Thursday, November 3, 2011
Fractional Reserve Banking and Central Banking by Murray Rothbard
Fractional Reserve Banking
Let's see how the fractional reserve process works, in the absence of a central bank. I set up a Rothbard Bank, and invest $1,000 of cash (whether gold or government paper does not matter here). Then I "lend out" $10,000 to someone, either for consumer spending or to invest in his business. How can I "lend out" far more than I have? Ahh, that's the magic of the "fraction" in the fractional reserve. I simply open up a checking account of $10,000 which I am happy to lend to Mr. Jones. Why does Jones borrow from me? Well, for one thing, I can charge a lower rate of interest than savers would. I don't have to save up the money myself, but simply can counterfeit it out of thin air. (In the nineteenth century, I would have been able to issue bank notes, but the Federal Reserve now monopolizes note issues.) Since demand deposits at the Rothbard Bank function as equivalent to cash, the nation's money supply has just, by magic, increased by $10,000. The inflationary, counterfeiting process is under way.
The nineteenth-century English economist Thomas Tooke correctly stated that "free trade in banking is tantamount to free trade in swindling." But under freedom, and without government support, there are some severe hitches in this counterfeiting process, or in what has been termed "free banking." First: why should anyone trust me? Why should anyone accept the checking deposits of the Rothbard Bank? But second, even if I were trusted, and I were able to con my way into the trust of the gullible, there is another severe problem, caused by the fact that the banking system is competitive, with free entry into the field. After all, the Rothbard Bank is limited in its clientele. After Jones borrows checking deposits from me, he is going to spend it. Why else pay money for a loan? Sooner or later, the money he spends, whether for a vacation, or for expanding his business, will be spent on the goods or services of clients of some other bank, say the Rockwell Bank. The Rockwell Bank is not particularly interested in holding checking accounts on my bank; it wants reserves so that it can pyramid its own counterfeiting on top of cash reserves. And so if, to make the case simple, the Rockwell Bank gets a $10,000 check on the Rothbard Bank, it is going to demand cash so that it can do some inflationary counterfeit-pyramiding of its own. But, I, of course, can't pay the $10,000, so I'm finished. Bankrupt. Found out. By rights, I should be in jail as an embezzler, but at least my phoney checking deposits and I are out of the game, and out of the money supply.
Hence, under free competition, and without government support and enforcement, there will only be limited scope for fractional-reserve counterfeiting. Banks could form cartels to prop each other up, but generally cartels on the market don't work well without government enforcement, without the government cracking down on competitors who insist on busting the cartel, in this case, forcing competing banks to pay up.
Central Banking
Hence the drive by the bankers themselves to get the government to cartelize their industry by means of a central bank. Central Banking began with the Bank of England in the 1690s, spread to the rest of the Western world in the eighteenth and nineteenth centuries, and finally was imposed upon the United States by banking cartelists via the Federal Reserve System of 1913. Particularly enthusiastic about the Central Bank were the investment bankers, such as the Morgans, who pioneered the cartel idea, and who by this time had expanded into commercial banking.
In modern central banking, the Central Bank is granted the monopoly of the issue of bank notes (originally written or printed warehouse receipts as opposed to the intangible receipts of bank deposits), which are now identical to the government's paper money and therefore the monetary "standard" in the country. People want to use physical cash as well as bank deposits. If, therefore, I wish to redeem $1,000 in cash from my checking bank, the bank has to go to the Federal Reserve, and draw down its own checking account with the Fed, "buying" $1,000 of Federal Reserve Notes (the cash in the United States today) from the Fed. The Fed, in other words, acts as a bankers' bank. Banks keep checking deposits at the Fed and these deposits constitute their reserves, on which they can and do pyramid ten times the amount in checkbook money.
Here's how the counterfeiting process works in today's world. Let's say that the Federal Reserve, as usual, decides that it wants to expand (i.e., inflate) the money supply. The Federal Reserve decides to go into the market (called the "open market") and purchase an asset. It doesn't really matter what asset it buys; the important point is that it writes out a check. The Fed could, if it wanted to, buy any asset it wished, including corporate stocks, buildings, or foreign currency. In practice, it almost always buys U.S. government securities.
Let's assume that the Fed buys $10,000,000 of U.S. Treasury bills from some "approved" government bond dealer (a small group), say Shearson, Lehman on Wall Street. The Fed writes out a check for $10,000,000, which it gives to Shearson, Lehman in exchange for $10,000,000 in U.S. securities. Where does the Fed get the $10,000,000 to pay Shearson, Lehman? It creates the money out of thin air. Shearson, Lehman can do only one thing with the check: deposit it in its checking account at a commercial bank, say Chase Manhattan. The "money supply" of the country has already increased by $10,000,000; no one else's checking account has decreased at all. There has been a net increase of $10,000,000.
But this is only the beginning of the inflationary, counterfeiting process. For Chase Manhattan is delighted to get a check on the Fed, and rushes down to deposit it in its own checking account at the Fed, which now increases by $10,000,000. But this checking account constitutes the "reserves" of the banks, which have now increased across the nation by $10,000,000. But this means that Chase Manhattan can create deposits based on these reserves, and that, as checks and reserves seep out to other banks (much as the Rothbard Bank deposits did), each one can add its inflationary mite, until the banking system as a whole has increased its demand deposits by $100,000,000, ten times the original purchase of assets by the Fed. The banking system is allowed to keep reserves amounting to 10 percent of its deposits, which means that the "money multiplier" – the amount of deposits the banks can expand on top of reserves – is 10. A purchase of assets of $10 million by the Fed has generated very quickly a tenfold, $100,000,000 increase in the money supply of the banking system as a whole.
Interestingly, all economists agree on the mechanics of this process even though they of course disagree sharply on the moral or economic evaluation of that process. But unfortunately, the general public, not inducted into the mysteries of banking, still persists in thinking that their money remains "in the bank."
Thus, the Federal Reserve and other central banking systems act as giant government creators and enforcers of a banking cartel; the Fed bails out banks in trouble, and it centralizes and coordinates the banking system so that all the banks, whether the Chase Manhattan, or the Rothbard or Rockwell banks, can inflate together. Under free banking, one bank expanding beyond its fellows was in danger of imminent bankruptcy. Now, under the Fed, all banks can expand together and proportionately.
Let's see how the fractional reserve process works, in the absence of a central bank. I set up a Rothbard Bank, and invest $1,000 of cash (whether gold or government paper does not matter here). Then I "lend out" $10,000 to someone, either for consumer spending or to invest in his business. How can I "lend out" far more than I have? Ahh, that's the magic of the "fraction" in the fractional reserve. I simply open up a checking account of $10,000 which I am happy to lend to Mr. Jones. Why does Jones borrow from me? Well, for one thing, I can charge a lower rate of interest than savers would. I don't have to save up the money myself, but simply can counterfeit it out of thin air. (In the nineteenth century, I would have been able to issue bank notes, but the Federal Reserve now monopolizes note issues.) Since demand deposits at the Rothbard Bank function as equivalent to cash, the nation's money supply has just, by magic, increased by $10,000. The inflationary, counterfeiting process is under way.
The nineteenth-century English economist Thomas Tooke correctly stated that "free trade in banking is tantamount to free trade in swindling." But under freedom, and without government support, there are some severe hitches in this counterfeiting process, or in what has been termed "free banking." First: why should anyone trust me? Why should anyone accept the checking deposits of the Rothbard Bank? But second, even if I were trusted, and I were able to con my way into the trust of the gullible, there is another severe problem, caused by the fact that the banking system is competitive, with free entry into the field. After all, the Rothbard Bank is limited in its clientele. After Jones borrows checking deposits from me, he is going to spend it. Why else pay money for a loan? Sooner or later, the money he spends, whether for a vacation, or for expanding his business, will be spent on the goods or services of clients of some other bank, say the Rockwell Bank. The Rockwell Bank is not particularly interested in holding checking accounts on my bank; it wants reserves so that it can pyramid its own counterfeiting on top of cash reserves. And so if, to make the case simple, the Rockwell Bank gets a $10,000 check on the Rothbard Bank, it is going to demand cash so that it can do some inflationary counterfeit-pyramiding of its own. But, I, of course, can't pay the $10,000, so I'm finished. Bankrupt. Found out. By rights, I should be in jail as an embezzler, but at least my phoney checking deposits and I are out of the game, and out of the money supply.
Hence, under free competition, and without government support and enforcement, there will only be limited scope for fractional-reserve counterfeiting. Banks could form cartels to prop each other up, but generally cartels on the market don't work well without government enforcement, without the government cracking down on competitors who insist on busting the cartel, in this case, forcing competing banks to pay up.
Central Banking
Hence the drive by the bankers themselves to get the government to cartelize their industry by means of a central bank. Central Banking began with the Bank of England in the 1690s, spread to the rest of the Western world in the eighteenth and nineteenth centuries, and finally was imposed upon the United States by banking cartelists via the Federal Reserve System of 1913. Particularly enthusiastic about the Central Bank were the investment bankers, such as the Morgans, who pioneered the cartel idea, and who by this time had expanded into commercial banking.
In modern central banking, the Central Bank is granted the monopoly of the issue of bank notes (originally written or printed warehouse receipts as opposed to the intangible receipts of bank deposits), which are now identical to the government's paper money and therefore the monetary "standard" in the country. People want to use physical cash as well as bank deposits. If, therefore, I wish to redeem $1,000 in cash from my checking bank, the bank has to go to the Federal Reserve, and draw down its own checking account with the Fed, "buying" $1,000 of Federal Reserve Notes (the cash in the United States today) from the Fed. The Fed, in other words, acts as a bankers' bank. Banks keep checking deposits at the Fed and these deposits constitute their reserves, on which they can and do pyramid ten times the amount in checkbook money.
Here's how the counterfeiting process works in today's world. Let's say that the Federal Reserve, as usual, decides that it wants to expand (i.e., inflate) the money supply. The Federal Reserve decides to go into the market (called the "open market") and purchase an asset. It doesn't really matter what asset it buys; the important point is that it writes out a check. The Fed could, if it wanted to, buy any asset it wished, including corporate stocks, buildings, or foreign currency. In practice, it almost always buys U.S. government securities.
Let's assume that the Fed buys $10,000,000 of U.S. Treasury bills from some "approved" government bond dealer (a small group), say Shearson, Lehman on Wall Street. The Fed writes out a check for $10,000,000, which it gives to Shearson, Lehman in exchange for $10,000,000 in U.S. securities. Where does the Fed get the $10,000,000 to pay Shearson, Lehman? It creates the money out of thin air. Shearson, Lehman can do only one thing with the check: deposit it in its checking account at a commercial bank, say Chase Manhattan. The "money supply" of the country has already increased by $10,000,000; no one else's checking account has decreased at all. There has been a net increase of $10,000,000.
But this is only the beginning of the inflationary, counterfeiting process. For Chase Manhattan is delighted to get a check on the Fed, and rushes down to deposit it in its own checking account at the Fed, which now increases by $10,000,000. But this checking account constitutes the "reserves" of the banks, which have now increased across the nation by $10,000,000. But this means that Chase Manhattan can create deposits based on these reserves, and that, as checks and reserves seep out to other banks (much as the Rothbard Bank deposits did), each one can add its inflationary mite, until the banking system as a whole has increased its demand deposits by $100,000,000, ten times the original purchase of assets by the Fed. The banking system is allowed to keep reserves amounting to 10 percent of its deposits, which means that the "money multiplier" – the amount of deposits the banks can expand on top of reserves – is 10. A purchase of assets of $10 million by the Fed has generated very quickly a tenfold, $100,000,000 increase in the money supply of the banking system as a whole.
Interestingly, all economists agree on the mechanics of this process even though they of course disagree sharply on the moral or economic evaluation of that process. But unfortunately, the general public, not inducted into the mysteries of banking, still persists in thinking that their money remains "in the bank."
Thus, the Federal Reserve and other central banking systems act as giant government creators and enforcers of a banking cartel; the Fed bails out banks in trouble, and it centralizes and coordinates the banking system so that all the banks, whether the Chase Manhattan, or the Rothbard or Rockwell banks, can inflate together. Under free banking, one bank expanding beyond its fellows was in danger of imminent bankruptcy. Now, under the Fed, all banks can expand together and proportionately.
Wednesday, November 2, 2011
Wisdom X
Wisdom X made a flying visit to our illustrious chat room and graced us with his perfect presence tonight and guess what topic Wisdom X spoke on? ... Yes you guessed it,
R A C I S M !! lol. Whilst Wisdom X may have genuine grievances, his approach to the topic leaves something to be desired. His approach only serves to alienate those his dialogue is aimed at.
Wisdom X is a self avowed homophobe. So while he rails against racism he practises bigotry in the form of homophobia. Have fun Wisdom X, you have no basis while you suppress your own kind.
Come and chat with us:
http://chat.paltalk.com/g2/group/771180009/
Published by zipperdedoodah
Come and chat with us:
http://chat.paltalk.com/g2/group/771180009/
Published by zipperdedoodah
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