What caused this? It is a simple question, and yet answers are all over the map, as you might expect.
Here’s mine in two words: fiat money.
The word “fiat” means “out of nothing.” Money out of nothing is money that is eventually worth nothing. The possibility of precisely that happening emerged in August 15, 1971. Since Nixon severed the last tie of the dollar to gold, the world’s monetary system has not been restrained by anything physical. We’ve depended on the discretion of central bankers. We can’t trust that, and this crisis shows precisely why.
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Very good read.
I would say that the blame should be put squarely at the Fed. It is them who have caused the recent crisis, just as they caused every other crisis in the past.
The depression of 1929 happened at a time when the gold standard was in place, yet it was a far bigger event than today’s crisis. That is not to say that the gold standard was to blame but that it was the Fed that brought it about. Just as today we can not say that it was Fiat money that was the problem but rather the Fed, this criminal group, this illegal entity, this den of thieves and vipers as Jackson called them, they are the ones to blame.
I know i am preaching to the quire here since the author is one of the most fierce opponents of the Fed, but i say this in terms of a more sound and better argument. I can assure you that if we had the gold standard in place the crisis would have been as severe if not more, precisely because it is those who control it, that through manipulation and deceit find ways to bring about similar situations every time.
Also this is not a defense of Fiat money, far from it but as i said Commodity money VS Fiat VS Credit money, is another subject altogether, still open to discussion, where as there can be no doubt about the criminals behind all this mess.
Good article. I have been reading everything I can find on this subject because simply listening to the mindless “information” coming from the Secretary of The Treasury”, Paulson, was enlightening me at all. Nor was the follow up interviews with a few of our senators who are about to vote upon the information given by Paulson!
Secy. Paulson says his plan…which will be directed and implemented with no oversight by himself…must be put into place immediately. And yet he can’t say what the plan is; how much it will cost; how long it will take to make a reasonable difference, if at all; how many of the global institutions are involved; if his plan is going to allow the CEO’s of the failing institutions to walk away with millions of dollars in “bonuses”; or, apparently, anything at all, other than “it” must be done and now.
WHOA! Why would any thinking person run blindly into a box canyon just because a few of the people who set this situation up to begin with have said that we must or the system will shut down?! A bitter pill, but perhaps it should shut down. All of this urgency from a man who one year ago said we were fine tells me that absolutely nothing should be done until there are reasonable and provable answers to every question, and reasonable limits and full oversight. NOT simply bi-annual reports….FULL oversight. And all regulations governing the banking industry, the insurance industry, and the Securities and Exchange Commission should be the first order of the day.
First an illegal invasion in Iraq, then The Patriot Act and all of the following invasions of individual privacy, then the President of these United States sets himself up as “the decider” in matters of law, and now this? Toto, I don’t think we are in America anymore!
Now that Paulson, Bush, and Bernanke are seeking a $700 BILLION bailout we see that the totalitarianism has truly blossomed in the land of the slaves and the home of the cowards. Maybe it is time to leave. We have gone from the gold standard to the taxpayer standard. Everything is ok as long as taxpayers are breathing and most importantly using their second mortgages so that they can keep up with the neighbors. The problem is that the prodigal child will eventually wake up in the pig pen or government housing.
Now that Paulson, Bush, and Bernanke are seeking a $700 BILLION bailout we see that the totalitarianism has truly blossomed in the land of the slaves and the home of the cowards. Maybe it is time to leave. We have gone from the gold standard to the taxpayer standard. Everything is ok as long as taxpayers are breathing and most importantly using their second mortgages so that they can keep up with the neighbors. The problem is that the prodigal child will eventually wake up in the pig pen or government housing.
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