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Will Persian Gulf ‘Tanker War’ Become a Shooting War? – Article by Ron Paul

Will Persian Gulf ‘Tanker War’ Become a Shooting War? – Article by Ron Paul

Ron Paul
September 2, 2019

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The UK got a taste of its own medicine  in late July 2019, as Iran seized a British tanker, the Stena Impero, just two weeks after UK Royal Marines seized a tanker near Gibraltar carrying two million barrels of Iranian oil. As could be predicted, the US and UK media are reporting Iran’s seizure of the Stena Impero as if it were something out of the blue, pushing the war propaganda that “we” have been attacked and must retaliate. Media criticism of the UK is limited to claims that it has not put enough military into the Persian Gulf, not that it should never have seized the Iranian ship in the first place.

The truth is, the UK seizure of the Iranian ship was calculated to force Iran to retaliate and thus provide the pretext the neocons need to get their war.

As usual, Trump’s National Security Adviser John Bolton is in the thick of this operation. Bolton Tweeted that he was so surprised – but pleased – by the UK move against the Iranian tanker. However it is becoming clearer that Bolton was playing a role behind the scenes pushing London to lure Iran into making a move that might trigger the war he’s long been yearning for.

The ramping up of tanker wars comes just as the Pentagon has announced that it will send 500 US troops to Saudi Arabia – the first such US deployment since the US withdrew its troops in 2003. At that time, then-Deputy Secretary of Defense Paul Wolfowitz hailed the move out of Saudi Arabia as denying al-Qaeda one of its prime recruiting tools – US troops in their holy land. What will 500 troops do in Saudi Arabia? Some say they will help prepare the Prince Sultan military air base for a possible US air squadron deployment.

We must be clear on how we got to the very edge of war with Iran. President Trump pulled out of the Joint Comprehensive Plan of Action (JCPOA) promising he would exchange it for a much better deal for the US. He quickly re-applied all previous US sanctions on Iran and demanded that our allies do the same. The US policy would be to apply “maximum pressure” to Iran which would result in Iran capitulating and agreeing to all US demands.

US economic warfare against Iran would bring the country to its knees, the Administration claimed, and would deliver a big win to the US without a shot being fired. But the whole plan has gone terribly wrong.

Iran did not back down or beg for mercy in the face of Trump’s actions, and the Europeans have at least attempted to keep the JCPOA agreement alive. And the UK following neocon orders has led the country in a serious and unnecessary crisis that does not look to be easily resolved.

How could the US administration have miscalculated so badly? Many of us could have told President Trump that the neocons always promise a “cakewalk” when they are talking up a military action. Time and time again – Iraq, Afghanistan, Libya, Syria – they promise a quick victory and deliver a quagmire.

The American people overwhelmingly do not want to go to war with Iran and the president wants to be re-elected. Will he return to the political base that elected him on promises of getting along with the rest of the world, or will he continue to follow his neocon advisers down the road to a failed presidency?Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

This article was first published July 22, 2019.

Charlie Gard’s Parents Are Forced to Stop Fighting for Their Dying Baby – Article by Marianne March

Charlie Gard’s Parents Are Forced to Stop Fighting for Their Dying Baby – Article by Marianne March

The New Renaissance Hat
Marianne March
July 27, 2017
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I cannot imagine the pain Charlie Gard’s parents are feeling now, as they savor their last moments with their precious child. Charlie is 11 months old and he’s dying.

Chris and Connie have been fighting for months to get treatment for Charlie, ever since he was diagnosed with a rare genetic condition, mitochondrial DNA depletion syndrome. But they have been forced to give up that fight.

I can’t imagine their pain, but I can imagine their fury because I share it.

From the Hospital to the Courts

Charlie is not mine. I’ve never met him or anyone who knows him. Yet I am furious with the British government for refusing to allow his parents to take their dying son to the United States for treatment: a therapy trial, his last and only hope.

No further recourse was available in the UK, but an American doctor was ready to try to help him at Columbia University Medical Center. Charlie’s parents raised £1.4 million through crowdfunding; they had the money to take him to the US by air ambulance.

But doctors at Great Ormond Street Hospital in London didn’t like that idea. They said it wouldn’t help, that the American therapy was experimental. They said the baby’s life support should just stop.

On April 11th, a British High Court judge ruled with the doctors, empowering them to turn off Charlie’s life-support machines. His mother screamed “no” when she heard the verdict.

There was a petition with more than 110,000 names on it. People wrote letters to the Prime Minister, calling on her to release Charlie from Great Ormond Street’s care. The pope said he was praying for Charlie’s parents, “hoping that their desire to accompany and care for their own child to the end is not ignored.”

And now Charlie is out of time.

Even US President Trump tweeted that “If we can help little #CharlieGard, as per our friends in the U.K. and the Pope, we would be delighted to do so.”

Charlie’s parents challenged the decision in the Court of Appeals, the Supreme Court, and the European Court of Human Rights.

All to no avail. The Courts would not allow them to try to save their baby’s life.

Who Can Call This Justice?

And now Charlie is out of time. According to the BBC, “US neurologist Dr. Michio Hirano had said he was no longer willing to offer the baby experimental therapy after he saw the results of a new MRI scan last week.”

It’s possible that Charlie’s doctors were right, that experimental treatment wouldn’t have helped (although his parents don’t think so, nor do American and Italian doctors). But what harm could it have done when he’s dying anyway? And if his parents had the means to give him one last chance, why shouldn’t they exercise their right to do so? They belong to Charlie just as he belongs to them, and no one but Chris and Connie should get the final say on his medical care.

I never really knew what people meant by the phrase “death panels” before. It was just a term bandied about by talking heads and political personalities. It’s chilling how well it applies in this instance: a group of bureaucrats that sits around deciding who is worthy of medical care.

I don’t know how the power slipped away from the individual, whether taken by force or given away with applause, but this is outrageous. And it’s wrong.

Read with a Box of Tissues

I will leave you with the words of Connie Yates, Charlie’s mom:

Due to the deterioration in his muscles, there is now no way back for Charlie. Time that has been wasted. It is time that has sadly gone against him.

We want people to realise that we have been speaking to parents whose children were just like Charlie before starting treatment and now some of them are walking around like normal children. We wanted Charlie to have that chance too.

All we wanted to do was take Charlie from one world renowned hospital to another world renowned hospital in the attempt to save his life and to be treated by the world leader in mitochondrial disease. We feel that we should have been trusted as parents to do so but we will always know in our hearts that we did the very best for Charlie and I hope that he is proud of us for fighting his corner.

Charlie had a real chance of getting better. It’s now unfortunately too late for him but it’s not too late for others with this horrible disease and other diseases. We will continue to help and support families of ill children and try and make Charlie live on in the lives of others. We owe it to him to not let his life be in vain.

Despite the way that our beautiful son has been spoken about sometimes, as if he not worthy of a chance at life, our son is an absolute WARRIOR and we could not be prouder of him and we will miss him terribly. One little boy has brought the world together and whatever people’s opinions are, no one can deny the impact our beautiful son has had on the world and his legacy will never ever die.

We are now going to spend our last precious moments with our son Charlie, who unfortunately won’t make his 1st birthday in just under 2 weeks’ time, and we would ask that our privacy is respected at this very difficult time.

Mummy and Daddy love you so much Charlie, we always have and we always will and we are so sorry that we couldn’t save you.”

Marianne March is a recent graduate of Georgia State University, where she majored in Public Policy, with a minor in Economics. Follow her on twitter @mari_tweets.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author. Read the original article.

Are We Fighting Terrorism, Or Creating More Terrorism? – Article by Ron Paul

Are We Fighting Terrorism, Or Creating More Terrorism? – Article by Ron Paul

Ron Paul
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When we think about terrorism, we most often think about the horrors of a Manchester-like attack, where a radicalized suicide bomber went into a concert hall and killed dozens of innocent civilians. It was an inexcusable act of savagery, and it certainly did terrorize the population.

What is less considered are attacks that leave far more civilians dead, happen nearly daily instead of rarely, and produce a constant feeling of terror and dread. The victims are the civilians on the receiving end of US and allied bombs in places like Syria, Yemen, Afghanistan, Somalia, and elsewhere.

Last week alone, US and “coalition” attacks on Syria left more than 200 civilians dead and many hundreds more injured. In fact, even though US intervention in Syria was supposed to protect the population from government attacks, US-led air strikes have killed more civilians over the past month than air strikes of the Assad government. That is like a doctor killing his patient to save him.

Do we really believe we are fighting terrorism by terrorizing innocent civilians overseas? How long until we accept that “collateral damage” is just another word for “murder”?

The one so-called success of the recent G7 summit in Sicily was a general agreement to join together to “fight terrorism.” Have we not been in a “war on terrorism” for the past 16 years? What this really means is more surveillance of innocent civilians, a crackdown on free speech and the Internet, and many more bombs dropped overseas. Will doing more of what we have been doing do the trick? Hardly! After 16 years fighting terrorism, it is even worse than before we started. This can hardly be considered success.

They claim that more government surveillance will keep us safe. But the UK is already the most intrusive surveillance state in the western world. The Manchester bomber was surely on the radar screen. According to press reports, he was known to the British intelligence services, he had traveled and possibly trained in bomb-making in Libya and Syria, his family members warned the authorities that he was dangerous, and he even flew terrorist flags over his house. What more did he need to do to signal that he may be a problem? Yet somehow even in Orwellian UK, the authorities missed all the clues.

But it is even worse than that. The British government actually granted permission for its citizens of Libyan background to travel to Libya and fight alongside al-Qaeda to overthrow Gaddafi. After months of battle and indoctrination, it then welcomed these radicalized citizens back to the UK. And we are supposed to be surprised and shocked that they attack?

The real problem is that both Washington and London are more interested in regime change overseas than any blowback that might come to the rest of us back home. They just do not care about the price we pay for their foreign-policy actions. No grand announcement of new resolve to “fight terrorism” can be successful unless we understand what really causes terrorism. They do not hate us because we are rich and free. They hate us because we are over there, bombing them.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

As Ukraine Collapses, Europeans Tire of US Interventions – Article by Ron Paul

As Ukraine Collapses, Europeans Tire of US Interventions – Article by Ron Paul

The New Renaissance HatRon Paul
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On Sunday Ukrainian prime minister Yatsenyuk resigned, just four days after the Dutch voted against Ukraine joining the European Union. Taken together, these two events are clear signals that the US-backed coup in Ukraine has not given that country freedom and democracy. They also suggest a deeper dissatisfaction among Europeans over Washington’s addiction to interventionism.

According to US and EU governments – and repeated without question by the mainstream media – the Ukrainian people stood up on their own in 2014 to throw off the chains of a corrupt government in the back pocket of Moscow and finally plant themselves in the pro-west camp. According to these people, US government personnel who handed out cookies and even took the stage in Kiev to urge the people to overthrow their government had nothing at all to do with the coup.

When Assistant Secretary of State Victoria Nuland was videotaped bragging about how the US government spent $5 billion to “promote democracy” in Ukraine, it had nothing to do with the overthrow of the Yanukovich government. When Nuland was recorded telling the US Ambassador in Kiev that Yatsenyuk is the US choice for prime minister, it was not US interference in the internal affairs of Ukraine. In fact, the neocons still consider it a “conspiracy theory” to suggest the US had anything to do with the overthrow.

I have no doubt that the previous government was corrupt. […] But according to Transparency International, corruption in the Ukrainian government is about the same after the US-backed coup as it was before. So the intervention failed to improve anything, and now the US-installed government is falling apart. Is a Ukraine in chaos to be considered a Washington success story?

This brings us back to the Dutch vote. The overwhelming rejection of the EU plan for Ukrainian membership demonstrates the deep level of frustration and anger in Europe over EU leadership following Washington’s interventionist foreign policy at the expense of European security and prosperity. The other EU member countries did not even dare hold popular referenda on the matter – their parliaments rubber-stamped the agreement.

Brussels backs US bombing in the Middle East and hundreds of thousands of refugees produced by the bombing overwhelm Europe. The people are told they must be taxed even more to pay for the victims of Washington’s foreign policy.

Brussels backs US regime change plans for Ukraine and EU citizens are told they must bear the burden of bringing an economic basket case up to European standards. How much would it cost EU citizens to bring in Ukraine as a member? No one dares mention it. But Europeans are rightly angry with their leaders blindly following Washington and then leaving them holding the bag.

The anger is rising and there is no telling where it will end. In June, the United Kingdom will vote on whether to exit the European Union. The campaign for an exit is broad-based, bringing in conservatives, populists, and progressives. Regardless of the outcome, the vote should be considered very important. Europeans are tired of their unelected leaders in Brussels pushing them around and destroying their financial and personal security by following Washington’s foolish interventionism. No one can call any of these recent interventions a success, and the Europeans know it.

One way or the other, the US empire is coming to an end. Either the money will go or the allies will go, but it cannot be sustained. The sooner the American people demand an end to these foolish policies the better.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

Blurred Lines: The Humanitarian Threat to Free Speech – Article by Aaron Tao

Blurred Lines: The Humanitarian Threat to Free Speech – Article by Aaron Tao

The New Renaissance HatAaron Tao
June 25, 2015
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“Think of liberalism … as a collection of ideas or principles which go to make up an attitude or ‘habit of mind.’” – Arthur A. Ekirch

In Democracy in America, Alexis de Tocqueville was keen to observe that “once the Americans have taken up an idea, whether it be well or ill founded, nothing is more difficult than to eradicate it from their minds.”

Reflecting upon my experience as a first-generation immigrant who grew up in the United States, I concur with Tocqueville; this inherent feature of the culture and character of the American people holds true even today.

In America, there are no sacred cows, no one is above criticism, and no one has the final say on any issue. It is worth emphasizing that today, the United States stands virtually alone in the international community in upholding near-absolute freedom of personal expression, largely thanks to the constitutional protections provided by the First Amendment.

But without certain internalized values and principles, the legal bulwark of the First Amendment is nothing more than a parchment barrier.

As cliché as it may sound, it is important to recognize that our cherished freedom to think, speak, write, and express ourselves should not be taken for granted. Defending the principle of free speech is a perennial conflict that has to be fought in the court of public opinion here and abroad.

Unfortunately, a number of recent developments have greatly alarmed civil libertarians and may very well carry long-term negative repercussions for the United States as a free and open society.

In his new book, Freedom from Speech, Greg Lukianoff, the president of the Foundation for Individual Rights in Education (FIRE) and tireless free speech advocate, highlights a troubling cultural phenomenon: the blurring of physical safety with psychological and ideological comfort.

It is a disturbing trend that is not limited to the United States:

People all over the globe are coming to expect emotional and intellectual comfort as though it were a right. This is precisely what you would expect when you train a generation to believe that they have a right not to be offended. Eventually, they stop demanding freedom of speech and start demanding freedom from speech.

On the other side of Atlantic, Great Britain is undergoing what one writer describes as a “slow death of free speech.” The land of Milton is now home to luminaries who wish to reinstate Crown licensing of the press (not seen since 1695!).

Meanwhile, ordinary people face jail time for callous tweeting. In British universities, student-driven campaigns have successfully shut down debates and banned pop songs, newspapers, and even philosophy clubs.

While the United States is fortunate enough to have the First Amendment prevent outright government regulation of the press, cultural attitudes play a greater role in maintaining a healthy civil society.

Lukianoff reserves special criticism for American higher education for “neglecting to teach the intellectual habits that promote debate and discussion, tolerance for views we hate, epistemic humility, and genuine pluralism.”

Within academia, “trigger warnings” and “safe places” are proliferating. In a truly Bizarro twist, it has now come to the point that faculty members are defending individual rights and due process and decrying mob rule, while their students run off in the opposite direction.

We now hear on a regular basis of campus outrages involving a controversial speaker or perceived injustice, and the “offended” parties responding with a frenzied social media crusade or a real-world attempt to shame, bully, browbeat, censor, or otherwise punish the offender.

A small sampling from this season include attempts to ban screenings of American Sniper at the University of Michigan and the University of Maryland, resolutions to create a Stasi-like “microaggression” reporting system at Ithaca College, and the controversy involving AEI scholar Christina Hoff Sommers speaking at Oberlin College.

These incidents are just the tip of the iceberg.

With the endless stream of manufactured outrages, perhaps it is fitting that George Mason University law professor David Bernstein would raise the question, “Where and when did this ‘makes me feel unsafe’ thing start?”

My personal hypothesis: When postmodernism found itself a new home on Tumblr, spread across the left-wing blogosphere, became reinforced by mobs and echo-chambers, and spilled into the real world.

Luckily, not all progressives have sacrificed the basic principles of liberalism to the altar of radical identity politics and political correctness. One liberal student at NYU courageously pointed out the grave dangers posed by the ideology embraced by many of his peers:

This particular brand of millennial social justice advocacy is destructive to academia, intellectual honesty, and true critical thinking and open mindedness. We see it already having a profound impact on the way universities act and how they approach curriculum. …

The version of millennial social justice advocacy that I have spoken about — one that uses Identity Politics to balkanize groups of people, engenders hatred between groups, willingly lies to push agendas, manipulates language to provide immunity from criticism, and that publicly shames anyone who remotely speaks some sort of dissent from the overarching narrative of the orthodoxy — is not admirable.

It is deplorable. It appeals to the basest of human instincts: fear and hatred. It is not an enlightened or educated position to take. History will not look kindly on this Orwellian, authoritarian perversion of social justice that has taken social media and millennials by storm over the past few years.

I, too, am convinced that these activists, with their MO of hysterical crusades, are one of today’s biggest threats to free speech, open inquiry, and genuine tolerance, at least on college campuses. The illiberal climate fostered by these their ideologues seems to be spreading throughout academia and is continuing to dominate the headlines.

As of this writing, Northwestern professor (and self-described feminist) Laura Kipnis is undergoing a Kafkaesque Title IX inquisition for writing a column in the Chronicle of Higher Education and making comments on Twitter that offended a number of students. The aggrieved mobilized in full force to have her punished under the federal sex discrimination law.

These groups and their tactics represent what Jonathan Rauch would describe as the “humanitarian” challenge to free speech. In his must-read book, Kindly Inquisitors: The New Attacks on Free Thought, Rauch identified how these “humanitarians” sought to prevent “offense” to “oppressed and historically marginalized” peoples. In the name of “compassion,” words became conflated with physical action.

As speech codes spread and the definition of “harassment” (reading a book in public, for instance) became broader within the bureaucracy of academia, an “offendedness sweepstakes” was cultivated and turned into the norm.

Rauch’s book was published in 1993, but his diagnosis and arguments still apply today, if not more, in the age of social media when the “offendedness sweepstakes” are amplified to new levels.

Nowadays, PC grievance mongers can organize much more effectively and more often than not, get rewarded for their efforts. The future of a free society looks very bleak should these types become a dominant force on the political landscape. I can’t help but shiver at the prospect of seeing the chronically-offended eggshells of my generation becoming tomorrow’s legislators and judges. The chilling effects are already being felt.

Even as numerous challenges emerge from all corners, free speech has unparalleled potential for human liberation in the Digital Age. The eternal battle is still that of liberty versus power, and the individual versus the collective. I remain confident that truth can still prevail in the marketplace of ideas. It is for this reason we should treasure and defend the principles, practices, and institutions that make it possible.

Last month marked the birthday of the brilliant F.A. Hayek, the gentleman-scholar who made landmark contributions to fields of economics, philosophy, political science, and law, and established his name as the twentieth century’s most eminent defender of classical liberalism in the face of the collectivist zeitgeist.

For all his accomplishments, Hayek practiced and urged epistemological humility (a position that should be natural to any defender of free speech) in his Nobel lecture. Looking back on his life’s work, Hayek was highly skeptical of the nebulous concept of “social justice” and its totalitarian implications. He even went as far as to devote an entire volume of his magnum opus, Law, Legislation, and Liberty, to completely demolish The Mirage of Social Justice.

Hayek concluded:

What we have to deal with in the case of “social justice” is simply a quasireligious superstition of the kind which we should respectfully leave in peace so long as it merely makes those happy who hold it, but which we must fight when it becomes the pretext of coercing other men [emphasis added].

And the prevailing belief in “social justice” is at present probably the gravest threat to most other values of a free civilization.

Hayek did not predict that “social justice” would be first used to silence dissent before moving on to its long-term agenda, but it would not have surprised him. Weak ideas always grasp for the censor in the face of sustained criticism — and feeble ideas made strong by politics are the most dangerous of all.

Humanitarians with guillotines can be found from the French Revolution to present day. Modern day defenders of individual liberty would do well to heed Hayek’s warning and resist the Siren song of “social justice,” the rallying cry of collectivists who cannot realize their vision without coercion.

Aaron Tao is the Marketing Coordinator and Assistant Editor of The Beacon at the Independent Institute.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the author.

Confusing Capitalism with Fractional-Reserve Banking – Article by Frank Hollenbeck

Confusing Capitalism with Fractional-Reserve Banking – Article by Frank Hollenbeck

The New Renaissance Hat
Frank Hollenbeck
August 10, 2014
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Today, capitalism is blamed for our current disastrous economic and financial situation and a history of incessant booms and busts. Support for capitalism is eroding worldwide. In a recent global poll, 25 percent (up 2 percent from 2009) of respondents viewed free enterprise as “fatally flawed and needs to be replaced.” The number of Spaniards who hold this view increased from 29 percent in 2009 to 42 percent, the highest amongst those polled. In Indonesia, the percentage went from 17 percent to 32 percent.

Most, if not all, booms and busts originate with excess credit creation from the financial sector. These respondents, incorrectly, assume that this financial system structured on fractural reserve banking is an integral part of capitalism. It isn’t. It is fraud and a violation of property rights, and should be treated as such.

In the past, we had deposit banks and loan banks. If you put your money in a deposit bank, the money was there to pay your rent and food expenses. It was safe. Loan banking was risky. You provided money to a loan bank knowing funds would be tied up for a period of time and that you were taking a risk of never seeing this money again. For this, you received interest to compensate for the risk taken and the value of time preference. Back then, bankers who took a deposit and turned it into a loan took the risk of shortly hanging from the town’s large oak tree.

During the early part of the nineteenth century, the deposit function and loan function were merged into a new entity called a commercial bank. Of course, very quickly these new commercial banks realized they could dip into deposits, essentially committing fraud, as a source of funding for loans. Governments soon realized that such fraudulent activity was a great way to finance government expenditures, and passed laws making this fraud legal. A key interpretation of law in the United Kingdom, Foley v. Hill, set precedence in the financial world for banking laws to follow:

Foley v. Hill and Others, 1848:

Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to an equivalent by paying a similar sum to that deposited with him when he is asked for it. … The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands. [1]

In other words, when you put your money in a bank it is no longer your money. The bank can do anything it wants with it. It can go to the casino and play roulette. It is not fraud legally, and the only requirement for the bank is to run a Ponzi scheme, giving you the money deposited by someone else if they lost your money and you happen to come back asking for your money. This legalization of fraud is essentially one of the main reasons no one went to jail after the debacle of 2008.

The primary cause of the financial panics during the nineteenth century was this fraudulent nature of fractional reserve banking. It allowed banks to create excessive credit growth which led to boom and bust cycles. If credit, instead, grew as fast as slow moving savings, booms and bust cycles would be a thing of the past.

Critics of the gold standard, (namely, Krugman, et al.), usually point to these cycles as proof that it failed as a monetary system. They are confusing causation with association. The gold standard did not cause these financial panics. The real cause was fractional reserve banking that was grafted onto the gold standard. The gold standard, on the contrary, actually greatly limited the severity of these crises, by limiting the size of the money multiplier.

This is why in the early days of banking in the US, some wildcat bankers would establish themselves in the most inaccessible locations. This was to ensure that few would actually come and convert claims for gold into actual gold since banks had created claims that far exceeded the actual gold in their vaults. And, if by chance a depositor tried to convert his claims into gold, they would be treated as thieves, as though they were stealing the bank’s property by asking for their gold back.

The Federal Reserve System was created following the panics of 1903 and 1907 to counterbalance the negative impact of fractional reserve banking. One hundred years after its creation, the Fed can only be given a failing grade. Money is no longer a store of value, and the world has experienced two of its worst financial crises. Instead of a counterbalance, the central bank has fed and expanded the size of the beast. This was to be expected.

That global poll on capitalism also found that almost half (48 percent) of respondents felt that the problems of capitalism could be resolved with added regulations and reform. Janet Yellen also holds this view, and that regulation, not interest rates, should be the main tool to avoid another costly boom and bust in global finance. This is extremely naïve. We already have more compliance officers in banks than loan officers. Recent banking legislation, Dodd-Frank, and the Vickers and Liikanen reports will probably make the situation even worse. Banks will always be able to use new technologies and new financial instruments to stay one step ahead of the regulators. We continue to put bandages on a system that is rotten to the core. Banking in its current form is not capitalism. It is fraud and crony capitalism, kept afloat by ever-more desperate government interventions. It should be dismantled. Under a system of 100 percent reserves, loan banks (100 percent equity-financed investment trusts) would be like any other business and would not need any more regulation than that of the makers of potato chips.

Notes

[1] Quoted in Murray Rothbard’s, The Mystery of Banking (Auburn, AL: Mises Institute, 2008), p. 92.

Frank Hollenbeck teaches finance and economics at the International University of Geneva. He has previously held positions as a Senior Economist at the State Department, Chief Economist at Caterpillar Overseas, and as an Associate Director of a Swiss private bank. See Frank Hollenbeck’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.