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Thursday, September 03, 2009

Peace through ending the Fed

If you want to make it harder for the U.S. government to act like an imperial power, you need to find ways to reduce the resources available for it to do so. Preventing the state from creating money would eliminate its ability to manipulate the monetary system to raise funds surreptitiously for foreign adventurism.

Fighting wars requires resources. Governments have only four ways to raise revenue: sell off assets, borrow, tax, or inflate/manipulate the currency. If we assume that states interested in making war are also ones interested in accruing power, selling off assets is unlikely, at least as anything but a last resort.

Both borrowing and taxing have their limits. . . .

Governments that can either create money directly or use regulation to force banks to provide the resources will be able to conduct war more often and with less political resistance than those that cannot. . . .

Because inflation's costs are normally dispersed, subtle, and longer term, politicians find it a politically more palatable way to raise revenues, especially for unpopular causes. This point is even more important because politicians play up the very short-term benefits of inflation as if they were a panacea for a stalled economy. Persuading the public to accept those ephemeral and small short-term gains without an understanding of the long-term costs is part of the general deception often used to promote empire-building wars.

For those who object to an American empire, protesting the occupation of Iraq may seem the best course. But institutional changes that would deprive the state of resources—specifically, privatization of the monetary system—would be much more effective.
-- from "Free-Market Money: A Key to Peace" by Steven Horwitz, Professor of Economics at St. Lawrence University

His discussion of the role played by the Fed in financing the Vietnam war is particularly good. Here we are a generation later and once again the Fed is financing illegal and immoral wars in Iraq and Af-Pak. A generation hence, will the Fed be financing yet another illegal and immoral war by increasing the money supply once again?

To achieve an enduring peace, we have to get rid of the Fed's ability to increase the money supply. Obama might succeed in ending the occupation of Iraq, but if the Fed continues to have the power to increase the money supply, the federal government will continue to have the power to wage war without having to pay for it, making present and future wars more likely than not.

Now that another generation is spilling its blood in "the next Vietnam", isn't it time to do what's necessary to make it unnecessary for yet another generation to spill its blood in "the next Iraq" and "the next Af-Pak"?

Once again: "For those who object to an American empire, protesting the occupation of Iraq may seem the best course. But institutional changes that would deprive the state of resources—specifically, privatization of the monetary system—would be much more effective."

I don't want future generations to have to spend their time protesting the "next Vietnam", the "next Iraq", and the "next Af-Pak". Let's end the Fed.

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