A government-run bank?

Reuters:

A top adviser to Obama, who takes office on Tuesday, said a fresh approach to the crisis would be unveiled in coming days. A person familiar with the thinking of Obama's team said his administration was considering setting up a government-run bank to acquire bad assets clogging the financial system.

Further on:

In addition to steps to bolster banks, Obama officials want to aggressively attack the underlying causes of the credit crisis, David Axelrod, a top adviser to Obama, told Reuters.

Attack the underlying causes? Does that mean put an end to fiat inflation, legal tender laws, and fractional-reserve banking? Not quite:

"What we have to do is approach this with a lot more transparency on the front end," Axelrod said about what he called a revamped financial rescue package.

"Only a handful of times in our history has a generation been confronted with challenges so vast," Obama said as he began a train trip from Philadelphia to Washington three days before his inauguration.

Obama has vowed to spend hundreds of billions of dollars to jolt the country out of a deepening recession.

Apparently, the reason we're in this crisis is because government hasn't spent as much as it should. Now there's a fresh approach that attacks the underlying causes!

Repudiate the national debt

Thomas Knapp blogs:

From a libertarian standpoint, the justification for repudiating the debt is fairly obvious -- see Murray N. Rothbard's essay on the subject or listen to last night's episode of Free Talk Live (MP3), for example.

In terms of visceral, gut-wrenching populist appeal, debt repudiation has a lot of potential, too, and it's nice to see that appeal exploited. For a good example, see the YouTube campaign of kids (correctly) asserting "it's not MY debt."

Conveying the basic injustice of expecting someone else (especially a bunch of kids) to pick up the tab for spending that they had no part in is easy and effective, and the knotheads in Washington just keep making it easier with their bailouts, projections of future $1 trillion deficits, etc.

Knapp points out that politicians can easily ignore grass roots movements, as they have done with the bailout larceny. But serious talk of debt repudiation would spread fear among the elite: the "investors" in government debt won't like it, and that could spell trouble for politicians who believe the serfs can always be forced to pick up the tab to pay back the investors.

Take away that perception -- stir, in the buyer's mind, the possibility that those bonds may at some point in the near future become mere paper of no value whatsoever -- and that buyer is going to either stop buying or at the very least demand a much larger return for the risk.

And that is how we get at the politicians. They can always vote themselves the power to borrow money and try to stick the rest of us with the debt, but that power is meaningless if nobody's willing to lend it to them.

$8 trillion and counting

An article on CNNmoney.com claims that the bailouts currently total $7.2 trillion, and when Obama's proposed fix is applied a little later this year, that figure will swell to $8 trillion. Of course, these are estimates, and when government is involved they're usually low. "That puts a lot of taxpayer money at risk," the article mentions with head-spinning analytical prowess. Taxpayer money? Since when has the government looked at the money it spends as belonging to the taxpayers?

But that raises another question: Where is all this loot coming from? Has the government raised taxes to pay for these bailouts? No. They're either going to borrow it from foreigners or print it. In other words, they're going to send the bill to future generations.

Little wonder that Ron Paul's candidacy sparked a revolution, especially among young adults.

Hamilton's Counterfeit Capitalism

December 16, 2008 was my debut on Mises.org:

"As we await Bush's replacement to straighten our wayward lives, it's crucial to understand how we got here and why policy makers are so determined to do the wrong thing. Austrian economics explains why their policies are flawed, but no one with a voice seems to care. When history confirms that hands-off is the only effective and humane approach to a bust, and to prosperity generally, while hands-on brings ruination, why do governments today consider every option but free markets?" Read the rest of the article.

Map of high-risk banks

Not sure this reveals anything new, but it's interesting to see. Thanks to Chris Brunner, LRC blog.

The ultimate impact of inflation

Is inflation a threat to our survival?

"All paper-money systems, be they national or international, labor under the presence of moral hazard. In the long run, therefore, a global paper money cannot evade the fate of national paper money. It must either collapse in hyperinflation or force the government to adopt a policy of increasing control, and eventually total control, over all economic resources. Both scenarios entail economic disruptions on a scale that we can barely imagine today. The inevitable result would be death for many hundreds of millions of human beings." The Ethics of Money Production, Jörg Guido Hülsmann, p. 236.