Saturday, December 20, 2014

Counterfeiting is the health of those who rule us

I found this re-posted on a Facebook page today, having originated from End the Fed


This is not so much posing a question as making a point.  Nevertheless, how might a contemporary economist (i.e., an inflationist) address such a query, assuming it was serious?  Here’s how I imagine she might go about it in an offhand manner.

In the US, counterfeiting is illegal only when some person or organization other than the Federal Reserve Open Market Committee practices it.  When politically-appointed bureaucrats print money, it's not only legal it's essential to the health of the economy.  If you don't believe me read the textbooks.  It turns out that what’s true on a micro level — that counterfeiting is theft — isn’t true on the macro level.  Only those committed to the principles of the Austrian school would disagree.  And the world today little resembles the teachings of the Austrian school.

Without the Fed and its fiat machine we would have to rely on the market to provide the money necessary to maintain the division of labor.  The market, that wild beast forever in need of government restraint, would control the most critical element of the economy.  Consider: The Fed-less market of the 19th century brought us price deflation.  Price deflation -- lower prices -- the ultimate nightmare.  Far better to have the spotless bureaucrats of the Committee debase the currency so that goods keep rising in price.  Chairman Greenspan once reminded us of the overwhelming success they've had driving the “price level” through the roof.  As any poor person will assure you, having one’s money buy less is a godsend.

Shhh.  Listen.  That tap-tap-tap you hear is a banker probing in the darkness of his empty vault.  That could be the big banks' fate if the Greenspan - Bernanke - Yellen combo couldn't make unlimited amounts of money snap into existence.  How could the federal government ever keep the economy from imploding and shore-up our inalienable entitlements if the big banks dried up?  If it had to rely on greedy taxpayers for all its funding and borrowing?  If it couldn't swap its IOUs for freshly minted digits?  If the Fed couldn't tap its computer to create those digits?

In other words, if it couldn’t counterfeit?

The Federal Reserve Act was signed into law by Thomas Woodrow Wilson, 28th president of the United States, on December 23, 1913.  As such we should remember the Fed this Christmas and every Christmas —  every day! — for without it we would've had no "war to end all wars" and its record-setting slaughter, no Great Depression, no follow-up world war, and no modern world plagued with the fallout from Keynesianism.  

Let's not forget Mr. Wilson, either, usually regarded as among the top ten greatest presidents.

If war is the health of the state, then counterfeiting is the health of war. Taxes alone wouldn't begin to provide the revenue needed to keep the rest of the world in line and the home folks dependent and obedient.   Onward central bankers!  Onward counterfeiting! 

Conclusion

Offhand, I can't think of a bigger racket than central banking and fiat money.

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