Quick Roundup 417

Monday, March 30, 2009

Will End the Fed end the Fed?

Amit Ghate points to a debate in the Wall Street Journal that Harry Binswanger says, " was in response to Alan Greenspan's unintelligible WSJ piece of March 11, 'The Fed Didn't Cause the Housing Bubble.'" [link added]

Ghate asks whether "we can realistically hope for a dismantling of the Fed in the not so distant future." His question is well-founded since two of the six writers brought up the idea of abolishing the Federal Reserve.

Interestingly, there even seems to be some popular support for the idea. Sunday morning, while at the grocery store, I spotted a guy wearing a tee shirt whose front read, "End the Fed", and whose back read, "Sound Money for America." Being in a hurry, I did not stop to talk to the man, but later, I was able to find the web site for an advocacy group (called "End the Fed" -- what else?) that appears to be backing a measure to abolish the Federal Reserve.

That's the good news. The bad news is that, based on my skim of the web site, the organization is not founded on philosophical principles that are compatible with capitalism. For example, the site complains at one point that the Fed is "about as Federal as Federal Express." It also complains that the Fed acts without Congressional oversight. Do we really want to put Nancy Pelosi in charge of that? Another complaint by End the Fed is that despite the fact that it is a "private corp.", the Fed doesn't pay taxes. In laissez-faire, there is no taxation at all.

Most ominously, End the Fed "contingents" have been participating in anti-war rallies marking the anniversary of the invasion of Iraq. While it is true that sound money would put the brakes on such attempts to export the welfare state, left-wing anti-war activists are not enemies of the welfare state and would support ending the Fed only if they thought doing so would harm America. They certainly are not friends of freedom or capitalism.

This last also causes me to wonder whether End the Fed really understands what it is doing. If ending the Fed really would make our country stronger (and I am sure it would), why not attempt to persuade real patriots that it is a good idea? And if capitalism is good -- which it is -- what's wrong with a "private monopoly" on money? The real answer is "nothing" -- but then the Fed, being a government creation is not really a private monopoly.

The difference between a good (i.e., private) monopoly and a bad (i.e., government-enforced) monopoly is that a good monopoly can exist only so long as it earns the confidence of the market. Calling a federal creation a private monopoly is wrong and creates confusion about the difference between government coercion and individual freedom.

End the Fed appears to be -- at best -- an ad hoc group desperately in need of intellectual ammunition. Whatever it is, though, the real thing that needs to end is confusion about the proper role of the government, including belief in the charade that a nominally private entity created by the government like the Federal Reserve Bank, or Fannie Mae, or Freddie Mac is really a private entity.

Although I favor ending the Federal Reserve and returning to a gold standard, I cannot support this group.

Questioners and Answerers

Jennifer Snow has been blogging pretty actively lately, and has an interesting post on how people approach the fact that they don't know everything:

I realized that when people don't know something, most fall into one of two approaches to dealing with it. Some immediately start asking questions of whoever or whatever is available, while some sit down, summon up all of their relevant knowledge, and try to think through it themselves. I call these two types (obviously enough) the Questioner and the Answerer.
She has lots of interesting insights about each type.

I'm an answerer, but I can't help ending this with a question: Which type are you?

Card Check in Check -- for Now

Kimberly Strassel of The Wall Street Journal reports what passes for good news these days, but correctly notes that it will probably be fleeting:
The business community is dancing a victory jig over Pennsylvania Sen. Arlen Specter's announcement that he'll provide the crucial vote to stop Big Labor's top priority, the "card check" bill. Fair enough, though the real test of corporate America is yet to come. [link added]
Later, she continues: "[L]ate last week ... news leaked that the CEOs of three companies -- Whole Foods, Starbucks and Costco -- were breaking with the rest of the business world to support some sort of compromise."

This unprincipled skirmish on the part of American businessmen has been a holding action at best. And yet many persist in decrying principles as "impractical." This issue won't go away until people start making the case that such restrictions on freedom of speech and freedom of association are morally wrong and contrary to the proper purpose of government.

Netbooks and Data

Over a year later, I remain happy with my netbook, which has been invaluable during my travels between Boston and Houston. (Those have certainly gone on for far longer than I initially expected.)

An article in the New York Times describes four market leaders in that laptop category. Of the four, the HP MINI seemed like the least attractive to me, but not due to its "small" 60 GB hard drive. Is it just me, or is that not a ridiculous amount of data to keep on a secondary computer which could easily be lost or stolen?

And speaking of data, do you maintain good backups? Regular backups of important data also happen to be one way of combating "data rot," a problem I have been aware of for some time.

Edison Hour -- or "Human Achievement Hour?"

I was happy to see that many people in my own neck of the virtual woods celebrated Edison Hour -- Rational Jenn even posted a photo -- but I was ecstatic to learn that some other pro-capitalists are competing with us via "Human Achievement Hour" (HT: HBL).

Michelle Minton of the Competitive Enterprise Institute writes:
We have no problem with an individual (or group) that wants to sit naked in the dark without heat, clothing or light. Additionally, we'd have no problem with the group holding a pro-green technology rally. That's their choice. But when this group stages a "global election" -- enviros are asking the world's citizenry to vote Earth by switching off our lights with the express purpose of influencing government policies to take action against global warming -- we have every right as individuals to express our vote for the opposite.

If our Human Achievement Hour is at all a dig against Earth Hour, it is so only by the fact that we are pointing out what Earth Hour truly is about: It isn't pro-Earth, it is anti-man and anti-innovation. So, on March 28, I plan to continue "voting" for humanity by enjoying the fruits of man's mind."
Human Achievement Hour" is a fine name, but I find "Edison Hour" catchier -- and the man's name is virtually a synonym for human achievement, anyway.

Let's outshine HAH next year!

-- CAV


Jasmine said...


great points in "Will End the Fed end the Fed?".
I always find it particularly tragic when an individual or group has some very valid premises that are mixed up with some really bad ones, i.e. philosophical inconsistencies, that make their case untenable and their fight in persuading people about the righteoness of their cause impossible as is the case with this particular group.

Gus Van Horn said...


And that last point is, in a nutshell, what is almost always wrong with such efforts in general and the Libertarian Party in particular.

People will choose morality over practicality any time they see a conflict between the two. I can see altruistic, anti-capitalistic moral premises showing through the nicks in the gold plating here.

Phoroneus said...

I found Human Achievement Hour catchier, but think Edison Hour would be better, reason being that Human Achievement (and even Edison!) deserve more than an hour to be celebrated.

Kyle Haight said...

Michelle Minton was apparently an officer of the Johns Hopkins Objectivist Club, and was at one point a subscriber to HBL. So in a way 'we' are competing with 'ourselves' as regards the Edison Hour vs. Human Achievement Hour question.

It's still a form of progress when the left hand doesn't recognize the right hand by name, though...

Gus Van Horn said...

And some friendly competition can be fun!

SN said...

What!! You mean that the Fed is not a conspiracy hatched by the Illuminati during their so-called hunting trip on Jekyll Island!! lol.

Here's a response I posted to a forum, when someone repeated the notion that the Fed is a private corporation:

The banks do not own the Fed in any substantial way. It does not matter that they contribute to the bank's capital. The bottom line is: control. If the government forces banks to give money, it is a tax. If the government then takes that money and gives it to an entity called the Fed, that is controlled by the government, it does not make that entity a bank-controlled entity. Even if the government calls the money "capital" and keeps it there "in the name of" the "contributing" banks, that still does not change its essential nature. Even if the government tells some of the bank CEOs to serve on the board, that does not change its essential nature.

There was a time when the local Fed-banks were a little more independent, listening a lot more to their local banks. Of these Feds, the New York Fed used to sometimes even call the shots over the Fed Board. However, this political tussle was finally won by the Fed Board, which is basically a government institution.

This has come up a bit, and I want to get into the detail because this is a recurring Libertarian fiction that people like Ron Paul also repeat.

If one steps back more broadly, one will often find that this is a typical way government works. They decide to intervene in some area. At first, businessmen fight the government off. Finally, the businessmen realize that they are not going to win the argument. So, instead, they get together and lobby about what the direction of policy ought to be. Sometimes, they even ask for the government to form some type of policy-making board to which they (the businessmen) can nominate members.

Libertarians often portray these as actions of monopolists who were trying to use government power for their business. This is definitely true in some cases. However, that is not the majority of the examples. More typically, the businessmen are not the prime-movers of such governmental action, but are trying to play defense as best they understand how. Call them pragmatic, but they're only reacting.

Gus Van Horn said...


Thanks for your concise debunkery.

I am slightly surprised, but only through through lack of familiarity, that this is a common myth among libertarians.

Very interesting, and very much worth keeping in mind whenever debating a libertarian, be that in hopes of persuading the libertarian himself or a more rational audience.


Mo said...

what are ways to get more people involved in edison hour or HAH hour?

Matt said...

I actually know a few cats around Houston who wear these shirts. Including a fellow philosophy grad student. Of course, upon talking to him, I found out he was just the standard libertarian type... I somehow ended up on his Ron Paul for President e-mail list.

Gus Van Horn said...

Well, Mo, Probably just getting the word out sooner and to more people.

Matt, especially after SN's comment, that makes sense. I did hear the guy at the store talk on his cell once, and he sounded too educated to be the type of conservative I'd otherwise imagine lobbying for the end to the fed.

Kevin S. Van Horn said...

I don't know much about "End the Fed", but I have some comments on what you wrote.

1) Yes, you're right that whether the Fed is private or governmental isn't the important issue. You're right that free-marketers shouldn't be complaining about "lack of Congressional oversight" and the fact that the Fed isn't taxed. The important point is that the Fed is a monopoly backed by government force. And THAT is entirely incompatible with the free market.

2) What's wrong with a "private monopoly" on money? It's entirely incompatible with the free market. In a free market, there are no legal tender laws; the market decides what is money, not the government. Individuals decide for themselves what they will use as money or accept as payment of debts. In a free market, you and I can stipulate in a contract that you will pay me in gold, or silver, or Brittney Spears memorabilia, for that matter. (FDR took away that freedom in the '30's when he declared contracts requiring payment in gold to be null and void.)

3) Why is participating in anti-war rallies "an ominous sign"? Being anti-war doesn't make one a leftist; in fact, the anti-war position used to be associated with the Old Right. Even today the most consistent opposition to the Iraq war comes from libertarians and conservatives (check out antiwar.com and The American Conservative).

As Randolph Bourne wrote, war is the health of the state. Read your history and study what happened to American freedoms during the Civil War, WWI, and WWII. These were all time of great expansion of federal power and diminution of individual liberties. For that matter, take a look at how the "war on terror" has been used as an excuse to shred the Constitution and destroy the 700-year-old right of Habeas Corpus.

As for the wars in Iraq and Afghanistan having anything to do with protecting America... To those of us who grew up during the Cold War, wondering when the bombs might drop, it's nothing short of ludicrous to think of Iraq and Afghanistan as a threat.

Gus Van Horn said...

2) What's wrong with a "private monopoly" on money? It's entirely incompatible with the free market.

Only if backed by government force. What if the market decides to use nothing but bills from my bank, because they're backed by gold and nobody else has the sense to issue similar? Is THAT incompatible with capitalism? No.

In a free market, there are no legal tender laws ...

I thought we were talking about PORIVATE monopolies. You've already strayed into government force in this context.

3) Why is participating in anti-war rallies "an ominous sign"? Being anti-war doesn't make one a leftist; in fact, the anti-war position used to be associated with the Old Right. Even today the most consistent opposition to the Iraq war comes from libertarians and conservatives ...

Being against a war (as I am the non-war in Iraq) does not make one a leftist, and certainly, many non-leftists foolishly participate in anti-war rallies.

What's wrong with that? The same thing that would be wrong with participating in, say, an anti-Reagan rally with a bunch of communists, even though you are angry at Reagan for not cutting taxes ENOUGH. First, you're making it look like you support the wrong side. Second, picketing is hardly an effective way to change MINDS.

The fact is thet the majority of anti-war protesters are anti-American self-defense, and adding your voice to theirs may not make you a leftist, but it almost always makes you a useful idiot.

... war is the health of the state ...

The state, libertarianism to the contrary, is not inherently bad. What protected us during WWII? The state.

War is an emergency, and emergency measures always come with the risk of abuse. This doesn't mean we should avoid war at all costs or support anarchy.

Read your history...

Read your etiquette and refrain from insulting me or I'll just not post anything else you say.

As for the wars in Iraq and Afghanistan having anything to do with protecting America... To those of us who grew up during the Cold War, wondering when the bombs might drop, it's nothing short of ludicrous to think of Iraq and Afghanistan as a threat.

Not opposing Islamic totalitarian states is a mistake, as is fighting a Vietnam=-like "war". We should have decimated Iran and Saudia Arabia by now and recovered their oil fields for the American and British corporations that rightfully owned them before they were nationalized in the fifties.