The power of gold and silver

Here's proof that the Fed was a progressive conspiracy by the Republicans:

Nevada has the most homes with underwater mortgages in the country. Nevada also has the fewest mortgages that are equity rich. Although better than 2008-2010, Nevada housing is in bad shape.

Libertarians see the Great Recession as the result of a corporatist monetary system controlled by the Federal Reserve Bank. The best way to combat greed is not to hire regulators who will likely watch porn all day. The best way is to introduce competition into the system. Ron Paul built a movement in 2008 that revived ideas of radical monetary reform.

The Austrian Business Cycle Theory (ABCT) targets fractional reserve banking as the destabilizing force in capitalism. Banks keep say 10 percent of their assets as reserves, and lend out $10 for every dollar in reserve. Where does that $9 come from? It literally comes out of thin air.

When banks lend money from checking accounts (demand deposits), what happens if depositors suddenly demand their money? There is a “run” on the banks. The banks shut down. Depositors lose their savings.

While banks are lending this artificially created money, there is a “boom” of investment. When the people want their money back, then there is a “bust” or recession. When money is cheap and comes largely from demandable accounts, businesses invest in projects for which there is no real consumer demand. These projects are the first to go under. The housing booms in the “sand states” of Southern California, Arizona, Florida and Nevada were the hardest hit in 2008. Government mandates to finance homes for those not credit worthy led to “subprime mortgages,” which were then bundled into securities and traded. When the bust began, markets had no idea what these bundled assets were really worth. They turned to the government to get bailed out, but libertarians insisted the bailouts will only start the boom and bust cycle over again. These “toxic assets” should have been liquidated and the monetary and banking system reformed. A bill to audit the Federal Reserve is in the Senate. Dean Heller supports it, but Harry Reid is sitting on it.

There are two ways to reform the system. One is Andrew Jackson’s way. The other is the progressives’ way. We have tried the progressive approach of a central bank with monopoly control over a monetary system based on debt since 1913. Ron Paul got more people to think maybe we should try Andrew Jackson’s way.

Jackson waged war on the national bank of his day and won. He destroyed the Second Bank of the U.S., and after a sharp recession America prospered. During the gilded age, the crony capitalist Republicans created a National Banking System, which in 1913 was converted to the Federal Reserve System.

The U.S. Constitution states, “No State shall make any thing except gold and silver coin a tender in payment of debt.” Obviously, every state makes fiat paper money created by the Fed its tender in payment of debt. So, every state is in violation of the Constitution. When Jackson was president, the states were powerful and corrupt, and he forced them to pay their debts in gold and silver.

Now the federal government is powerful and corrupt. The states could force the federal government to put its house in order by refusing to pay debts until they can do so in gold and silver coin. Unfortunately, we would need 50 state level Andrew Jacksons, or at least 10 or 20, to do that. Since Jackson was the last president who left office with the federal government debt free, that is not likely to happen soon.