Tag Archives: Crony Capitalism

Crony Capitalism Revisited (Is Keynesianism What We Think It Is?)


Free Market Capitalism is an Economy Driven by the 99%

From AgainstCronyCapitalism:

I’ve watched the Occupy movement with quite a lot of interest. I hung out for a day in October at McPherson Square with the Occupy DC folks. I was even on NPR for two seconds as they identified me as someone who was sympathetic to the TEA Party and also interested in what OWS had to say.

I was at CPAC and literally right next to Andrew Breitbart (coincidentally—we weren’t hanging out) as he traded words with Occupy.

Later that night I took part in the impromptu “beer summit” at CPAC where TEA Partiers basically bought drinks for a group of Occupy people and we traded ideas civilly.

I’ve read plenty of Marx, and Chomsky. My favorite class in college was a seminar I took on revolution.

The point is I have a decent sense of where Occupy is coming from and though I don’t agree with much that I hear from Occupy, I respect the noise. It is good for the Republic to have people yelling at the top of their lungs.

But there is one vital point that Occupy does not get. Markets and free market capitalism are the best things that ever happened for the “99%.”


That is a ridiculous statement Nick! How can you possibly say that? Look around. There is poverty everywhere. Kids graduating from college are saddled with horrible debt. Look at the wars and the war profiteering! Look at Wal-Mart and its exploitation of its workers!

Thing is, if one looks closely, it is the hand of the state that is behind these perceived injustices not the invisible one.

The poverty one sees in the United States is perpetuated by a highly inefficient welfare system.

People fall on hard times. Some people just cannot care for themselves and those people must not be tossed into the cold, like they were before the industrial revolution. Society recognizes the collective responsibility it has for this relatively small sliver of the population. American society always has, and did so long before the advent of the welfare state. Churches and civic organizations used to handle such problems. Imagine if we actually let them solve such problems today without an intrusive state? The country would be far better off.

The co-founder of this website, Hunter Lewis, has actually written a book on how society can deal with many of its challenges through charitable organizations entitled Are the Rich Necessary? Someone should put a copy in the Occupy community library.

Students are indeed saddled with horrible debt. This student still has some to pay off and I graduated over 10 years ago. Trust me I can relate to the students who are graduating these days with the equivalent of a mortgage to pay back, before they can even think about a mortgage. That kind of puts a damper on working life.

But it’s not the market that is to blame for this situation. In an effort to turn college into an American right the federal government has poured massive amounts of subsidies into the system, which colleges adjusted tuitions for, thereby increasing the cost of a college education. It’s simple supply and demand.

Huge amounts of federal money were sent to colleges through federal student loans and other vehicles and surprise, surprise the price of a college education lurched skyward. It used to be that people really could work their way through college and emerge free and clear. Now one must take out loans because the government has inflated the cost of education. This bubble is bursting, however, thankfully.

As for the wars and war profiteering, these things do not exist without a massive federal government. When contractors and manufacturers make money on war, when politicians can use war as a jobs program, war happens.

Additionally it is very hard to wage 10-year wars with a currency that can’t be debased by the Federal Reserve. If for instance the dollar was backed by gold, the limited nature of gold would have restricted our “efforts” overseas. The government would have had to come to the people to ask for permission to continue the wars, because in a hard money regime (the dollar backed by gold or a basket of metals and/or commodities) taxes would have to be raised to continue the fight. Afghanistan would have ended five years ago if the taxpayer actually felt that he or she had to pay for the war instead of financing it with a credit card to be paid off by future generations.

As for Wal-Mart, I am no particular fan. But I will say that Wal-Mart has helped many people gain access to goods that make their lives better. And Wal-Mart workers can afford to shop in the store in which they work.

What I have found is that over and over the social ills that government tries to solve almost always end up expanding the problem that was to be addressed. The War on Poverty worked pretty well, and the War on Drugs, and the War on Terror. All of these “wars” are shining successes!

War is perpetuated by the state and each war needs fodder. The 99% provides the fodder.

In a truly free market however, where money is not destroyed and manipulated by central banks, and where innovators and entrepreneurs are allowed to solve problems without jumping through hoop after hoop, the 99% are who is in charge, not the state.

The “people” can simply vote with their wallets. In a free market the average person is empowered because he or she can simply opt out or support alternative solutions to problems. In a free market a boycott works. In a society run by the government one can boycott a company all one likes, but so long as that company has the right friends in government that company will survive.

Sure Nick, but what if we simply abolish the private ownership of companies? That’ll make things right. That’ll make the “people” the owners.

Yes, it’ll make the people the owners of a nonproductive entity. Then the people will starve because whether one wants to admit it or not the profit motive and markets are as natural as gravity. Markets are how nature deals with inequality and want. This was as true in the Soviet Union as it is in the United States. One can either learn the Tao (way) of markets or spend a lifetime (and the lives of others) fighting it. Go with the flow and people will flourish. There will be inequality as markets emerge and then go away, but thankfully markets come and go. The state instead crushes this dynamism.

If one is miserable, and indeed believes things are always going to be miserable, it makes sense to expand the state. If, however, one has any sense of optimism for oneself and one’s fellow humankind allowing markets to grow and die is the only way to go. It is also the only “sustainable” way for a society to exist. The constant expansion of credit by government encourages the trashing of the planet (for all you enviros out there).

Many people subscribe to the false belief (in my view) that the government is the people, that it should be composed of the 99% and that the government should then be used to rein in the evil 1%. So long as Occupy believes this, and I am of course speaking broadly, it will only make matters worse.

A free market economy is an economy run by the 99%. Just ask Jeffery Imelt the CEO of GE and good friend to the Obama administration if he personally would be better or worse off in a free market. Ask him if a free market gives more power to his customers to force changes in his company.

The answer is that he would be far worse off and that the products his company makes would be far more responsive to the desires of the 99%.

The question really is: Does Occupy honestly want the 99% running things? If so it should embrace free market capitalism.

What free-market capitalism is not

It is not about being “connected and protected”:

Thanks to EPJ:

Voting is Evil – Christine Smith

From the web:


Gold as the Silent Witness

Dan Norcini writes:

I wanted to post some brief comments to let some of the newer readers understand why many of us believe that there is a war being waged upon gold by the Central Banks of the West.

Let me start this off by quoting from none other than former Fed Chairman Alan Greenspan more than 40 years ago:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard

What the former Fed Chairman was then saying was that absent a gold standard or some device for restraining the unlimited creation of fiat money, there was nothing to impede monetary officials from engaging in such activity to the extent that it would ultimately set in motion a process of inflation, which is really just another name for the erosion of the purchasing power of a nation’s currency by debasing it. Inflation was and is in essence, the transfer of wealth from one class to another.

Today we have the Fed engaging in the very process that Greenspan warned against back then. We also have the BOJ and the ECB effectively doing the same thing to an extent.

Unlike Silver, Gold is the main metal that most analysts and commentators look to when attempting to decipher whether or not inflation is a serious problem. That means the reference point of gold has become a target for Central Banks which want the world to believe that they can create unlimited amounts of funny money with absolutely ZERO impact on inflation levels. In other words, that they can conjure up wealth and produce prosperity with the electronic equivalent of a printing press and produce no serious inflationary impact by so doing.

A rising gold debunks their hubristic assertions to the contrary for it stands as a silent witness testifying against them. This is the reason the yellow metal is despised by so many Central Banks. It mocks their policies and displays their folly for all the world to see. Central Bankers, being the demigods that they are, will tolerate no rivals to their claims of economic omniscience. You see they have actually come to believe that it is their own wisdom and foresight which enables them to see through the fog that hinders and impedes our economic progress and that they are in a unique position to provide the rest of us with lasting prosperity. They attempt to do this by basically providing or withdrawing liquidity as they in their wisdom judge best and by the setting or manipulation of interest rates.

Those of us who believe that it is free market capitalism and the industry and efforts of mankind that produce wealth and prosperity would beg to differ but that is another story altogether. I would add that it is my opinion that the world would be better off without this plague of locusts that actually devour a nation’s wealth but the fact is that they are here.

While they are here gold will attempt to move in such a manner that it either blesses or curses their policies. Now we all would love to have our policies approved by the vote of the market but what about those times in which the market frowns on our course of action and refuses to smile upon it? Why this is but a simple matter – attack the messenger! If one can somehow manage to keep the price of gold under wrap so that it does not move sharply higher then one can attempt to make the claim that inflation is not a serious problem. The comments usually go something like this:

“Well Jerry, we are looking at the gold price and from what we can see, that while it is definitely higher, it is not soaring out of control. The market may be pricing in some gradual inflation but the action in the gold price is telling us that any fears of inflation getting out of control are definitely unwarranted. Besides, we all agree that some inflation is a good thing because the alternative is deflation and no one wants to see that”.

Imagine Fed Chairman Ben Bernanke testifying before Congress saying that the current rise in prices of many goods is only “temporary” and “relatively modest” if the gold price were soaring beyond $1650 and higher! Do you think anyone would take anything that the Chairman said seriously? Copper can soar higher and most will not notice it. Even if it does, it is generally explained as a positive because we are told it is a sign of strong economic growth ahead. Crude oil and energy prices can rocket higher and that can be attributed to geopolitical unrest among oil producing nations. Food can rise sharply and everyone notices that but such things are often explained away by citing weather conditions, supply constraints, etc. but a rising gold price? How does one explain that away?

The only reason that gold has a sustained price rise is because of a lack of confidence in the monetary system. It does not rise sharply because of such things as jewelry demand or industrial demand – it rises when fear, distrust, doubt, suspicion and uncertainty over Central Bank policy reigns. It rises when REAL interest rates are negative and investors understand the insidious process of currency debauchment practiced by these monetary authorities is underway. It thus cries aloud and issues a warning to those who can hear it and what it shouts displeases many Central Bankers because they are among those who while they despise its message, are all too keenly able to hear that message.

Thus the messenger, the prophet, the oracle, must be silenced or at the very least, his message blunted, toned down, marginalized, trivialized by whatever means possible. The mechanism employed to do just this is a subject for another time and place. Suffice it to say for now, without the efforts by the monetary officials of the West to discredit gold, it would be trading considerably higher. Even at that however, the ancient metal of kings refuses to go quietly and docilely into the night. It will yet have the final say.

Bob Wenzel on the State of the Union

Via EPJ:

From last night’s SOTU:

The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people. We’re the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It is how we make our living.

Our free enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout our history, our government has provided cutting-edge scientists and inventors with the support that they need.

Why should government determine in what direction research money is headed? If firms choose not to do research in a certain sector, it’s because they don’t see the payoff down the road, i.e., consumers aren’t willing to spend enough on the new potential research created product to justify the research expenditure. This isn’t a flaw of free markets. It is a part of the foundation of free markets: You don’t spend money on projects that consumers don’t want. Thus, any government spending on research is wasteful. It puts research through a bureaucratic approval system. It takes money from individuals through taxes or deficit spending that would otherwise be directed in a different direction, chosen by the individuals, not the bureaucracy. It opens about a new avenue for cronyism.

Bottom line: This isn’t a recipe for advancement, but for distortion, suffocation, cronyism and coercion.

10 Things That Would Be Different If The Federal Reserve Had Never Been Created

From EconomicCollapseBlog.com:

The vast majority of Americans, including many of those who believe that they are “educated” about the Federal Reserve, do not really understand how the Federal Reserve really makes money for the international banking elite.  Many of those opposed to the Federal Reserve will point to the record $80.9 billion in profits that the Federal Reserve made last year as evidence that they are robbing the American people blind.  But then those defending the Federal Reserve will point out that the Fed returned $78.4 billion to the U.S. Treasury.  As a result, the Fed only made a couple billion dollars last year.  Pretty harmless, eh?  Well, actually no.  You see, the money that the Federal Reserve directly makes is not the issue.  Rather, the “magic” of the Federal Reserve system is that it took the power of money creation away from the U.S. government and gave it to the bankers.  Now, the only way that the U.S. government can inject more money into the economy is by going into more debt.  But when new government debt is created, the amount of money to pay the interest on that debt is not also created.  In this way, it was intended by the international bankers that U.S. government debt would expand indefinitely and the U.S. money supply would also expand indefinitely.  In the process, the international bankers would become insanely wealthy by lending money to the U.S. government.

Every single year, hundreds of billions of dollars in profits are made lending money to the U.S. government.

But why in the world should the U.S. government be going into debt to anyone?

Why can’t the U.S. government just print more money whenever it wants?

Well, that is not the way our system works.  The U.S. government has given the power of money creation over to a consortium of international private bankers.

Not only is this unconstitutional, but it is also one of the greatest ripoffs in human history.

In 1922, Henry Ford wrote the following….

“The people must be helped to think naturally about money. They must be told what it is, and what makes it money, and what are the possible tricks of the present system which put nations and peoples under control of the few.”

It is important to try to understand how the international banking elite became so fabulously wealthy.  One of the primary ways that this was accomplished was by gaining control over the issuance of national currencies and by trapping large national governments in colossal debt spirals.

The U.S. national debt problem simply cannot be fixed under the current system.  U.S. government debt has been mathematically designed to expand forever.  It is a trap from which there is no escape.

Many liberals won’t listen because they don’t really care about ever paying off the debt, and most conservatives won’t listen because they are convinced we can solve the national debt problem if we just get a bunch of “good conservatives” into positions of power, but the truth is that we have such a horrific debt problem because it was designed to be this way from the beginning.

So how would America be different if we could go back to 1913 and keep the Federal Reserve Act from ever being passed?  Well, the following are 10 things that would be different if the Federal Reserve had never been created….

#1 If the U.S. government had been issuing debt-free money all this time, the U.S. government could conceivably have a national debt of zero dollars.  Instead, we currently have a national debt that is over 14 trillion dollars.

#2 If the U.S. government had been issuing debt-free money all this time, the U.S. government would likely not be spending one penny on interest payments.  Instead, the U.S. government spent over 413 billion dollars on interest on the national debt during fiscal 2010.  This is money that belonged to U.S. taxpayers that was transferred to the U.S. government which in turn was transferred to wealthy international bankers and other foreign governments.  It is being projected that the U.S. government will be paying 900 billion dollars just in interest on the national debt by the year 2019.

#3 If the U.S. government could issue debt-free money, there would not even have to be a debate about raising “the debt ceiling”, because such a debate would not even be necessary.

#4 If the U.S. government could issue debt-free money, it is conceivable that we would not even need the IRS.  You doubt this?  Well, the truth is that the United States did just fine for well over a hundred years without a national income tax.  But about the same time the Federal Reserve was created a national income tax was instituted as well.  The whole idea was that the wealth of the American people would be transferred to the U.S. government by force and then transferred into the hands of the ultra-wealthy in the form of interest payments.

#5 If the Federal Reserve did not exist, we would not be on the verge of national insolvency.  The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080.  Remember when I used the term “debt spiral” earlier?  Well, this is what a debt spiral looks like….

#6 If the Federal Reserve did not exist, the big Wall Street banks would not have such an overwhelming advantage.  Most Americans simply have no idea that over the last several years the Federal Reserve has been giving gigantic piles of nearly interest-free money to the big Wall Street banks which they turned right around and started lending to the federal government at a much higher rate of return.  I don’t know about you, but if I was allowed to do that I could make a whole bunch of money very quickly.  In fact, it has come out that the Federal Reserve made over $9 trillion in overnight loans to major banks, large financial institutions and other “friends” during the financial crisis of 2008 and 2009.

#7 If the Federal Reserve did not exist, it is theoretically conceivable that we would have an economy with little to no inflation.  Of course that would greatly depend on the discipline of our government officials (which is not very great at this point), but the sad truth is that our current system is always going to produce inflation.  In fact, the Federal Reserve system was originally designed to be inflationary.  Just check out the inflation chart posted below.  The U.S. never had ongoing problems with inflation before the Fed was created, but now it is just wildly out of control….

#8 If the Federal Reserve had never been created, the U.S. dollar would not be a dying currency.  Since the Federal Reserve was created, the U.S. dollar has lost well over 95 percent of its purchasing power.  By constantly inflating the currency, it transfers financial power away from those already holding the wealth (the American people) to those that are able to create more currency and more government debt.  Back in 1913, the total U.S. national debt was just under 3 billion dollars.  Today, the U.S. government is spending approximately 6.85 million dollars per minute, and the U.S. national debt is increasing by over 4 billion dollars per day.

#9 If the Federal Reserve did not exist, we would not have an unelected, unaccountable “fourth branch of government” running around that has gotten completely and totally out of control.  Even some members of Congress are now openly complaining about how much power the Fed has.  For example, Ron Paul told MSNBC last year that he believes that the Federal Reserve is now more powerful than Congress…..

“The regulations should be on the Federal Reserve. We should have transparency of the Federal Reserve. They can create trillions of dollars to bail out their friends, and we don’t even have any transparency of this. They’re more powerful than the Congress.”

#10 If the Federal Reserve had never been created, the American people would be much more free.  We would not be enslaved to this horrific national debt.  Our politicians would not have to run around the globe begging people to lend us money.  Representatives that we directly elect would be the ones setting national monetary policy.  Our politicians would be much less under the influence of the international banking elite.  We would not be at the mercy of the financial bubbles that the Fed has constantly been creating.

There is a reason why so many of the most prominent politicians from the early years of the United States were so passionately against a central bank.  The following is a February 1834 quote by President Andrew Jackson about the evils of central banking….

I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank. You tell me that if I take the deposits from the Bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out and, by the Eternal, (bringing his fist down on the table) I will rout you out.

But we didn’t listen to men like Andrew Jackson.

We allowed the Federal Reserve to be created in 1913 and we have allowed it to develop into an absolute monstrosity over the past century.

Now we are drowning in debt and we are on the verge of national bankruptcy.

Will the American people wake up before it is too late?