Reader Sound-Off: How Washington can weather the economic crisis
June 11, 2008 · Updated 6:23 PM
The current leadership in Washington D.C. and the Federal Reserve can agree on one thing: Whats good for banking is good for America.
The latest tragedy-in-the-making is the festering creature that will come to pass from the spreading contagion of the mortgage crisis. Already our Federal Government is attempting to rewrite contracts that will rob pension funds, rob university endowment funds, rob retiree-investors and rob money market funds. This transfer of wealth will go to those investment and commercial banking ventures that served up the toxic mortgage products encouraged by the Federal Reserve. This creates a moral hazard by perversely rewarding those who should fail and punishes the society-at-large; those who did not misuse credit.
The tragic effects of these policies cannot be ignored. The proposals to bailout the institutions call for more money creation, furthering the decline of our currency. This is a topic to which our leaders will not speak to when they bailout, or deficit-spend, without directly increasing taxes. When revenue cannot be exacted directly from our physical toil, they resort to a hidden tax called inflation. Inflation insidiously cheats the middle class and the poor the most, since they are on the receiving end of the debased currency. The bankers, who collect an upfront fee when the new credit is created from thin air, get to spend the debased currency first, before it dilutes the greater currency pool. The rich get richer and the poor get poorer.
Aside from the personal financial peril we face as a result of this credit misuse, is the political hay that will be spun to further enrich those who were cheerleading these practices to begin with. Much like our Great Depression of the 30s, these failures will be politicized as failures of the free market system, to allow for further expansion of the Federal government to the detriment of individual liberties and property. This politicization is misleading and ignores the root cause of the problem. So long as we have a central bank that creates money from thin air, we do not have a true free market system.
Our debt-based economy based on the Federal Reserve System model is beginning to fail; along with that, the standing of the U.S. dollar as the worlds reserve currency. This means far higher prices and lower living standards for all Americans. Washington state has weathered the current downturn among the best of all regions, but we cannot forever be immune from the strangulation that awaits us when consumer credit starts to dry up next year. We cannot afford a wait and see approach based on the Pollyanna scenarios touted by the government-licensed media outlets. A proactive approach is needed if Washingtonians are to weather the financial tsunami that will engulf our nation. For starters, we need to heed the words of the Constitution which admonishes that all money must be issued by individual states and be backed by gold or silver.
Gold and silver currency makes sense for Washington state. Extending legal tender status for gold and silver-backed currencies will encourage residents to own an appreciating asset, making us wealthier by boosting our purchasing power. As a result, taxes will go down for us and domestic businesses will flock here as an investment and property safe haven. Also, since we are strategically located between Beijing and D.C., Washington state will attract more foreign investment and savings from the emerging powers of the East, which can be lent to productive use here at home. Alas, shifting to a commodity-backed currency adds an effective check on legislative power; giving the people a fairer say in the workings of government.
By exercising our rights, Washington state will usher in a new era of prosperity for citizens and businesses seeking a stable and sustainable climate. A plan for implementing a fully competing currency system based on gold and silver has been backed by former presidential candidate and publisher Steve Forbes on CNBC. From this endorsement, we can only assume that interest will increase and gain footing as a proactive citizenry demand honest money again from their government.