Thursday, July 8, 2010

My Letter to National Review re: The Sources of the Crisis

Subject: The Sources of the Crisis
Date: Thu, 8 Jul 2010 08:30:39 -0400

Dear Sirs:
A grad school professor on mine many moons ago said that a good book review makes one believe that he does not need to read the book. That is my conclusion after reading John Steele Gordon's excellent review of Judge Richard A. Posner's new book on the current financial crisis, The Crisis of Capitalist Democracy. Although I will not read the book, Mr. Gordon's recap of Judge Posner's analysis and recommendations lead me to the conclusion that Judge Posner's prescription is just more of the same failed regulatory tinkering that has brought us to the brink of financial collapse. The very fact that Judge Posner has "high praise for John Maynard Keynes" is enough for me. Combine that with the judge's recommendation that the U.S. establish a "well-funded inquiry into the causes of the crisis...conducted by an elite presidential commission" and my gut feeling is confirmed. (Gee, I wonder who could possibly be persuaded to head such a "well-funded" commission...let's see...oh, how about Judge Posner!) This is ironic since the judge himself states in the first line of his book that the crisis was caused by the Fed. I'll save the overly burdened U.S. taxpayer some more boondoggle commission money and give my prescription in one word--FREEDOM. The U.S. needs economic freedom. This means ending the Fed. The only role for the government would be to prevent fraud, something that it now PROTECTS in its devil's bargain with the Fed by allowing it to print as much fiat paper money as it deems necessary...and, oh, how it deems it necessary! In a free economic market place no one would accept fiat paper money. The market would accept only commodity money or commodity money substitutes (certificates backed 100% by commodity money). The government's sole responsibility--charged to it by the Constitution, by the way--would be to prosecute as fraudulent any bank that issued certificates in excess of its commodity holdings. Furthermore, rather than separate commercial banking and investment banking--the Depression Era Glass-Steagall law so loved by Judge Posner--the government should insure the separation of deposit banking and loan banking. For a simple and yet powerful explanation of this sound banking practice, see Murray N. Rothbard's The Mystery of Banking. It's all there. We need look no further and require nothing more than to regain our freedom and charge our government with protecting our property.

Patrick Barron

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