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Old August 8th, 2009 #1
Alex Linder
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Default Catholic View of Money

[Tom Woods comments on recent pope encyclical.]

In addition to some of its more unfortunate statements, Caritas in Veritate is also a gigantic missed opportunity. There are legitimate moral concerns to be raised about the structure of the world’s monetary systems, but Benedict XVI does not discuss them.

If those moral concerns interest you, I suggest Jörg Guido Hülsmann’s brilliant work The Ethics of Money Production, or my The Church and the Market. (The former title was greeted with great enthusiasm in The Wanderer by Paul Likoudis, a good man whom I would classify as a third-way distributist of some sort, so its appeal extends well beyond the usual Misesian circles.) Hülsmann shows that within Catholic tradition there is ample testimony to the wickedness of monetary debasement, fractional-reserve banking, and numerous other institutional commonplaces we hardly give a second thought. As Hülsmann argues, there is no moral or economic case for the monetary system under which we are forced to live—a system that has never been introduced voluntarily but has always been enforced by violence, with the police empowered to suppress alternatives. The insidious nature of the government’s monopoly on money becomes even clearer when a currency degenerates into hyperinflation, all known examples of which have occurred under monopoly fiat-money systems. Short of a completely state-run system, it is as far from a free market as one can imagine.

The system we have now involves a government-privileged central bank with a monopoly on the creation of legal-tender money, charged with watching over a cartel of ostensibly private but also state-privileged commercial banks. Its debasement of money makes it very difficult for people to save for the future without having to become speculators of one kind or another. A hard-money system, on the other hand, permitted the average person to save for the future simply by accumulating precious-metal coins, which, back in the days when they served as money, held or increased their value over time. Who today would save for the future by piling up Federal Reserve Notes? Society’s most vulnerable now must enter the stock market or take other kinds of risks just to hold on to their wealth. Is this not a moral issue?

The present system gives rise to the business cycle when it attempts to push interest rates below their free-market level. The resulting discoördination within the structure of production puts the economy on a path it cannot follow indefinitely. The bust then throws countless households into turmoil, and inevitably encourages the most despicable, predatory behavior on the part of firms seeking bailouts.

The monopoly central bank institutionalizes the problem of moral hazard. There is no physical limitation on the creation of additional paper money. For that reason, major market actors know there is no physical constraint on bailing them out in emergencies. The only obstacle, easily conquered, is one of political will. It should be obvious enough how a system like this both promotes an artificially elevated level of risk tolerance and benefits the already privileged at the expense of the average person.

http://www.takimag.com/site/article/truth_charity/

I agree with the above. The government's job is to keep the money honest so that White men living the right way can accumulate wealth through savings and solid investments. That is the right policy for a White nation.
 
Old August 9th, 2009 #2
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These observations are correct.

Quote:
Hülsmann shows that within Catholic tradition there is ample testimony to the wickedness of monetary debasement, fractional-reserve banking, and numerous other institutional commonplaces we hardly give a second thought. As Hülsmann argues, there is no moral or economic case for the monetary system under which we are forced to live—a system that has never been introduced voluntarily but has always been enforced by violence, with the police empowered to suppress alternatives. The insidious nature of the government’s monopoly on money becomes even clearer when a currency degenerates into hyperinflation, all known examples of which have occurred under monopoly fiat-money systems.
But the root of the problem extends beyond the Catholic church and the bought 'governments'.

This problem is tied up with the jewish takeover of the cultures of the west.

To anyone without any knowledge of this, then a quick summation goes like - jewish (bandits) have used christianity to infiltrate western Aryan cultures.

The result has been the Bank and corrupt credit system.

This situation should lead any reasonable person into questioning the REASON for the 'invention' of christianity in the first place.

Regardless, its the jews and their control system: the Bank which is the thing that needs to be rooted out. Until we get rid of that, no policies put forward by government - economic or otherwise - will have any effect.
 
Old August 9th, 2009 #3
Mike Parker
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A Catholic view of money.

Quote:
Originally Posted by Alex Linder View Post
The insidious nature of the government’s monopoly on money becomes even clearer when a currency degenerates into hyperinflation, all known examples of which have occurred under monopoly fiat-money systems. Short of a completely state-run system, it is as far from a free market as one can imagine.
Something seems to be missing. But is the "free market" valued in Catholic social teaching?

Quote:
The system we have now involves a government-privileged central bank with a monopoly on the creation of legal-tender money, charged with watching over a cartel of ostensibly private but also state-privileged commercial banks.
That's an important qualification. Currency is just one piece of the money supply. Commercial banks create money all the time. IIRC, money market funds do the same.

Quote:
Society’s most vulnerable now must enter the stock market or take other kinds of risks just to hold on to their wealth.
Do they? Or is it the wealthy looking to get more wealthy? This could be easily answered empirically, but Lewpies never do that. BTW you can buy "TIPS" to hedge against inflation. Unfortunately the official measures of inflation understate it, but at least it's something, for people who really don't want to speculate.

Quote:
The present system gives rise to the business cycle when it attempts to push interest rates below their free-market level.
How would Woods account for all the recessions, depressions and financial panics under the gold standard?

Quote:
The monopoly central bank institutionalizes the problem of moral hazard. There is no physical limitation on the creation of additional paper money. For that reason, major market actors know there is no physical constraint on bailing them out in emergencies.
That's another empirical question. Do "market actors" take the risks they do because (1) they're relying on bailouts, (2) their shareholders have limited liabilty or (3) it's just what they do? Recall Lehman was not bailed out.

Quote:
The only obstacle, easily conquered, is one of political will.
Isn't that always true? Years ago the Fed ended its "too big to fail" doctrine, saying it would rely instead on "market discipline." The markets didn't discipline the banks very well and the Fed changed its mind. How would the gold standard be any different? The same government that goes on the gold standard can go off it.

Last edited by Mike Parker; August 10th, 2009 at 06:43 AM.
 
Old August 9th, 2009 #4
Rick Ronsavelle
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The gold standard was called gold exchange standard. Currencies were still inflated via fractional reserve- when one country inflated too much, others turned in that currency and demanded physical gold. That was called the specie flow. The last specie flowed 8/15/1971.

This fractional gold standard created boom-bust cycles, as it was not based on 100% gold.

Money is of the market, not of the state. Money is whatever the buyer and seller agree it to be. The most important issue is busting these money monopolies, and eliminating legal-tender laws.

 
Old August 9th, 2009 #5
Alex Linder
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The point, to me, is that if you don't have inflation -- if you don't have Fed clowns "managing" the economy by printing money, then you have a stable system. The little guy can get ahead even if only by means of a savings account or a CD. We need a system in which the guy who plays by the rules doesn't get screwed. The more adventurous can speculate for higher returns, but if they lose, the government doesn't bail them out.
 
Old August 9th, 2009 #6
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Prior to the Federal Reserve the cost of basic commodities in this country remained stable for several decades and inflation was an arcane term known only to economist.
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Old August 9th, 2009 #7
DMS
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I suspect that the Vatican is

1) deeply in debt

and/or

2) has money involved in financial speculation.

Either of these would prevent the pope from speaking out against the status quo.
 
Old August 10th, 2009 #8
Mike Parker
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Being NS I'm loath to admit this, but I think New Deal era financial regulation largely worked. Banks and thrifts gave low interest fixed rate mortgages to white men who could afford to repay them. Banks made prudent loans to the industrial companies that employed those white men. Bank risk management was done according to conservative rules of thumb that you didn’t need a PhD in physics to understand. The financial sector was basically stable. Then with the advent of deregulation we’ve gone from crisis to crisis: junk bonds, S&L’s, LDC debt, Asian contagion, LTCM, tech bubble, subprime lending, housing bubble…Of course like the Lewpies I’m just telling a story and not proving anything, but I’m just saying that for so long as we’re stuck with the alien system of finance capitalism, I’m inclined to constrain it, not free it up for new machinations.
 
Old August 10th, 2009 #9
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Quote:
Originally Posted by Mike Parker View Post
Being NS I'm loath to admit this, but I think New Deal era financial regulation largely worked. Banks and thrifts gave low interest fixed rate mortgages to white men who could afford to repay them. Banks made prudent loans to the industrial companies that employed those white men. Bank risk management was done according to conservative rules of thumb that you didn’t need a PhD in physics to understand. The financial sector was basically stable. Then with the advent of deregulation we’ve gone from crisis to crisis: junk bonds, S&L’s, LDC debt, Asian contagion, LTCM, tech bubble, subprime lending, housing bubble…Of course like the Lewpies I’m just telling a story and not proving anything, but I’m just saying that for so long as we’re stuck with the alien system of finance capitalism, I’m inclined to constrain it, not free it up for new machinations.
According to Jonah Goldberg, and the whole kosher conservative and libertarian gamut, New Deal is NS.
 
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