mazon

"I have been both a central banker and a market regulator. I now find myself questioning whether my early career, largely devoted to liberalising and deregulating banking and financial markets, was misguided. In short, I wonder whether I contributed - along with a countless others in regulation, banking, academia and politics - to a great misallocation of capital, distortion of markets and the impairment of the real economy." Well, though he still wonders, at least he's on the path to self-discovery. "The cause of serial bubbles is no mystery to Congressman Ron Paul, Republican candidate for President or for any other Austrian economic thinker. It has not been free markets that have caused serial bubbles and the huge mis allocation of resources but rather the absence of free markets caused by fiat (or forced) used of government defined money rather than allowing markets to define and determine what is used as a medium of exchange. Conventional wisdom (Keynesian and monetarist in origin) holds that whenever there is market turmoil (usually caused by prior excessive money creation out of thin air) is met with even more money created out of thin air. During Alan Greenspan's tenure at the Fed he pumped so much liquidity into the banking system that bankers were forced to seek more and more absurd ways to try to allocate that money to maximize profits. The result when money is created out of thin air rather than allowing commodity money to prevail is what the Austrians call "mal (bad) investment. The result of Alan Greenspan's monetary promiscuity during the 1990s was bad enough. He created the dot com and telecommunication bubbles which when bursting, resulted in trillions of lost wealth. Those enterprises which were funded with all that funny money, simply were not viable but because of the excess cash wealth was mis-allocated. But the 1990s was child's play compared to what was to come in the politically charged house funding scam that was to follow. And now the piper must be paid. Like it or not, we are heading back to real money -- to gold or silver or some form of money that cannot be created by lies, but must be won from the earth in a very difficult manner. What has happened with the debasement of the dollar via fiat money has been one of the biggest wealth reallocating scams in history form those who produce wealth--the farmer, miners, manufacturers, inventors, etc. to the politicians and bankers in a fascist arrangement that is not only leading the U.S. into poverty but worse is likely to result in the total loss of our freedoms. And when that happens, a recovery may be many generations away. Such was the message of Ron Paul. But the establishment couldn't laugh at him hard and often enough to try to discredit the Austrian economic truths he was espousing. God help us all as we face what is looking more and more like a hyper inflationary future. Written by Jay Taylor, Editor J Taylor's Gold & Technology Stocks newsletter on 2008-08-01 16:35:54" That's not bad: Keynes, promiscuity, fascism and God. He would've won the car if he hadn't forgotten socialism/communism and the cuddly toy.