To Save Society We Must Save the Free Market

To Save Society We Must Save the Free Market

Interventionism in the market economy – in all of its various forms – will have disastrous results if it is not stopped.

Below are a few excerpts from two important texts of the Austrian School of Economic Theory:

From Understanding the Dollar Crisis – by Percy L. Greaves, Jr.:

The main objective of economics is to substitute consistently correct ideas and actions for the contradictory ideas and actions inherent in popular fallacies…

We all want things that are not necessarily essential, but we always choose those actions which we think will best improve the situation from our viewpoint.  This means that the ideas that men hold determine their choice of actions.  This means that the most important thing in the world is ideas.

From An Introduction to Austrian Economics – by Thomas C. Taylor:

The decision not to halt the credit expansion eventually must lead to what Mises has called the “crack-up boom,” characterized by a general flight into real values and the collapse of the monetary system.  In the later stages of the expansion the additions to the money supply must be increasingly accelerated as market participants have come to expect ever-increasing prices.  At some point, the system of monetary exchange must break down.  Consequently, to continue the easy-money policy in order to avoid the otherwise inevitable depression must bring about an even harsher fate:  the collapse of the monetary system and the market economy, with its great advantages of specialization and division of labor.

From Understanding the Dollar Crisis – by Percy L. Greaves, Jr.:

On Safe Savings

Q.  In your opinion what is today the safest way to save in the long run?

A.  That is a question people ask me very regularly.  As mentioned in answer to an earlier question, everyone is interested in trying to improve his situation.  For most of us, this means trying to remove our uneasiness about inflation.  This is a part of everyone’s problems.  I face it personally just as each one of you does.

Perhaps one of the most important conclusions to be drawn from these lectures is that you cannot save yourself if the society goes down.  the problem is primarily one of saving the free market society – the capitalistic system.  If the system fails, we shall all flounder.

Let me give you a quick and simple illustration.  for centuries Christians were taught by their churches that lending money at interest was an immoral, unchristian, action.  So the money-lending business was left to the Jews.  A number of them became the chef money experts of the world.  Many of them realized what was happen in Germany in 1920, 1921, and 1922.  They went into Germany and bought everything they could.  Paying 10, 15 or 20 percent down, and assuming mortgages or other debts for the balance.  In 1923, when the mark went to zero, their debts were wiped out.  These financially intelligent Jews then became the sole owners of most of the business enterprises and investments in Germany.  They found a solution – a personal solution – for the inflation.

The Jews had not caused the inflation.  It was not a Jewish plot.  The inflation was produced by the German politicians in power after the war.  They were trying to get out of what they considered the onerous terms of the Versailles Treaty.  However, some intelligent Jews who understood what was happening sought to improve their situation financially.  They were merely acting as all human beings do.  They were using their knowledge and understanding to improve their situation from their viewpoint.  In our first lecture, it was pointed out that this is the a priori reason for every human action.

Most Germans had thought they were improving their situation by placing their savings in banks, bonds, insurance annuities, mortgages, and other assets with fixed values in marks.  When the mark collapsed, these innocent but financially ignorant German people lost all of their savings.  The value of their life insurance policies was wiped out.  Their government bonds were worthless.  All their savings in German marks had evaporated.  The savings of generations of thrift were wiped out.  Then, all around them, they saw Jews profiting, getting rich, seemingly at their expense.  Envy and resentment soon gave way to a strong tide of anti-Semitism.  This in turn led to to the election of Adolf Hitler and all the ugly results that flowed out of his dictatorship.  A few fortunate Jews escapted from Germany, with or without their wealth, but many did not.

So if you find a way to profit from this inflation, or even to save what wealth you have, you can be sure you will be considered a public enemy by all the suffering people around you.  If you have wealth wile those around you are starving, your life will not be worth much.  It will not be worth any more than the lives of the Jews in Germany during the final days of Hitler.

There are, of course, some things that are a better form of savings than others.  I would have to say paper money is not one of them.  Some people say buy stocks.  Others say buy real estate.  However, let us remember that you cannot just buy stocks.  You have to buy particular stocks.  Some may go up.  Some may go down.  The same is true of real estate.  If I were to get facetious, I would advise you to buy 100 shares of the “Cost of Living Index.”  We can be sure that will go up!

The problem is one of saving the system.  We are all in it together.  It is as though we were all out in a lifeboat in the middle of the ocean.  If the boat goes down, being the richest man in the lifeboat will not save your life.  It will not do you any good to own great wealth if the society is not saved.  If one of you, or a few of you , could own or get title to all of Buenos Aires, it would be worthless to you without the cooperation of your fellowmen.  The lights would go out.  The gasoline pumps would not work.  Your physical wealth would be completely without value without the social cooperation of your fellowmen.  It is the free market society that must be saved.

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