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Showing posts from July, 2012

Does the Fed really monetize government debt?

If monetizing debt is understood to mean printing money to pay for government deficits, then the Fed is guilty.

The basics are quite simple.  The federal government issues and the Fed buys interest-bearing debt certificates.  The Fed pays for these securities by creating digits on a computer that represent dollars.  In this Age of Ron Paul, more people are learning that the digits do not represent savings borrowed from the public.  The Fed is not a financial intermediary; it is a money factory.  And while factories under capitalism produce for the benefit of the masses, this factory cranks out dollars for the politically-favored, to the detriment of the masses.   The Fed is thus an anti-capitalist, anti-free market institution.  The 12 members of the FOMC decide how much money they need and create the digits on-the-fly, from nothing.  The idea of Bernanke or other Fed chairmen printing money is a metaphor, but an accurate one.  It’s simply more convenient for the Fed to create digits t…

Honest money in dishonest hands

People are always looking for better ways of doing things, and this includes a better way of imparting a message to a misinformed American public.  In particular, if a layman wanted to learn about the nature of our money and banking system I would direct them to Murray Rothbard’s What Has Government Done to Our Money?  In my view Rothbard’s classic has always been the best introduction to the topic.  But Gary North has written an elementary work called Honest Money that held my interest not merely for its economic reasoning, but for the many original touches I found throughout.  Would North’s book reach more people than Rothbard’s?

I must point out that Honest Money is subtitled, “The Biblical Blueprint for Money and Banking,” and each chapter begins with references to the Bible and Christian ethics.  In the introduction he says his book asks a question:
What violations of the principles of the Bible did the West commit that led us into this mess [referring to the crisis of 2008 and …