Thursday, October 02, 2008
In the aftermath of this financial catastrophe, as we sort out causes and assign blame, with experts offering various solutions -- More regulation! Less complex financial instruments! -- let's not lose sight of the most fundamental component of finance. No credit-default swap, no exotic derivative, can be structured without stipulating the monetary unit of account in which its value is calculated. Money is the medium of exchange -- the measure, the standard, the store of value -- which defines the very substance of the economic contract between buyer and seller. It is the basic element, the atom of financial matter.The article is worth a full read and even manages to deal with former Objectivist Alan Greenspan's role as a central banker about as well as one could hope for a non-Objectivist proponent of capitalism.
It is the money that is broken. [bold added]
After the article is the following blurb about its author: "[Judy] Shelton, an economist, is author of 'Money Meltdown: Restoring Order to the Global Currency System' (Free Press, 1994)."
Notice the year her book came out. I remember that year, and the heady (but mistaken) feeling that came with the Republicans winning control of Congress. It seemed at the time like we were finally about to make some progress towards reversing the decades-old trend towards a government-run economy.
Now, nearly a decade and a half later, we have not only failed to achieve even the beginning of a rollback, but have seen a massive increase in the size and intrusiveness of the federal government, and driven by a Republican President at that! For anyone urging a vote for McCain based on the notion that you "fight an election with the politicians you have", there might be a historical lesson here.
The fight for a sound financial system is too important for pro-capitalists to make the mistake of pledging loyalty to any one political party. Advocates of capitalism must instead present our arguments to the public at large, and make the parties vie for our votes in every election instead. The former will ensure that our numbers grow, and the latter will protect our political power from misuse by false allies (such as the religious right) for purposes at odds with freedom.