by evilgenius » Mon 23 Oct 2017, 13:24:07
You people who are constantly calling for an end to the Fed and wailing about the evils of fiat currency are actually calling for the rule of the king. You fail to understand that fiat currency comes with the expansion of democracy. It sees money as a tool for individuals to exercise power. Money supply expands along with debt because the use of money, which is being borrowed, allows people more degrees of freedom. You can argue that money has nothing to do with real freedom, but that is a separate topic. What it does do is allow people to exercise power relative to their circumstances. How easily they can get it has direct bearing upon how they will use it.
When the world was organized according to kingdoms all of the 'wealth' that was used to back currency was technically owned by the king. It turned out that the king didn't exist in a vacuum. There were, first of all, other kings. Never mind the hardships of nature requiring spending, kings could ignore your suffering, it was confrontation with other kings that drove kings to get into debt. That is when kings 'discovered' the reality of their immediate aristocracy beyond its role in determining succession. By seeing the role that the aristocracy could play as landowners, and serf owners, they could derive additional value in order to confront other kings. They could not only tax, but borrow from the immediate aristocracy. Even doing this, however, they could still achieve bankruptcy. That meant they had a much harder time borrowing, and couldn't afford much of a standing army. Their chances against other kings were diminished.
Each world dominating power, as they evolved, had to deal with what to do when providing for a standing army. The standing army was the exemplary way of exercising power. Standing armies also cost more than could be collected, if the desires of he king went too far. The English were the first to realize they could expand the circle of power beyond that of the aristocracy, by instituting a Parliament. The trade off was one that allowed for a much greater economic pool from which to fund a standing army. It also gave sovereignty to the people. Not really the people, but to the merchants who had the money that the crown needed in order to fund the exercise of power. What we understand as a practice of democracy came about so that the crown could expand its exercise of power. We understand it as an exercise of democracy because certain inalienable attributes of such a transfer necessarily applied to the people at large. First, the suffrage only expanded to land owning men. Then to all indigenous men. Then to men who were outsiders, like ex-slaves or foreigners. Then to women. Then to arguments about voting age. I'm sure I've missed a few points in between. I don't mean to alienate any particular group.
What the fiat money system has done is to allow for this expansion of suffrage. It puts the exercise of power into the hands of the people. The argument against it is not the one which its detractors suppose when they speak of its instability. The argument is actually that of Aristotle, when he said that democracy always devolved into mob rule. For it is by malfeasance across the board, the overwhelming taking on of debt which people ought to know they cannot repay, but take on anyway, by numbers of people vast enough to make a difference, that the system is threatened. There is no grand banker conspiracy. That is just individuals pining to have sovereignty taken out of their hands, or, on a more sinister level, placed into their hands - as they believe they would enjoy a position as members of whatever aristocratic form of rule would follow.
The concept of the standing army as the exemplary exercise of power still holds true, even though democracy has spread the suffrage. That is why the Fed remains a quasi-governmental body. That is why money remains a sovereign issue. You should be glad of that, at least in concept, for it is that version of government, the regulator, which serves to rein in borrowing. Such regulation's intent ought to be to prevent borrowing on a level which tempts systemic default. I believe history will see that it was the Fed's perceived mandate to control inflation, acting in conflict with the Fed's more reasonable purpose, which caused the Great Recession. Their actions to limit workers wages, and force more borrowing as the people sought exercise of power, over a period of time that lasted longer than inflation as sole driver, which is troublesome for sure, actually ruled, had a direct bearing upon the growth of excess debt beyond what could be repaid. Such a mandate is actually the providence of kings, inasmuch as it comes with perfunctory assertions of its legitimacy, in a power struggle with the people. The real trouble with the Fed, in other words, is not whether it should exist, but for whom should it exist. It ought to walk a line, both for and against seemingly egregious expression, as such a thing is both necessary and regrettable. If it doesn't do that, as well as service some kind of understood monarchical urge hidden within the structure, then it will fail.