Give Democratic Socialism a Chance

Posted on June 19, 2012 by MN Gordon

“It is not good to have a rule of many.” – Homer

A New Greek Tragedy

A country with a burgeoning economy offers an intoxicating sensation.  It warms the hearts and softens the minds of men to notions that would otherwise be impossible.  Suddenly their best and brightest shine brighter than everywhere else, their military might’s the mightiest, and their system of government is the most high.

For a time this appears to be true.  The evidence, for a while, shows no indication to the contrary.  But, then, when everyone least expects it, the seemingly impossible happens.  The money, the military, and the people’s dignity crash in rapid succession.

Athens, for example, lost its edge over 2,400 years ago.  When the Peloponnesian War ended in 404 BC, after 27 long years, Athens had been reduced from the strongest city-state in Greece to a state of complete devastation.  So, too, the Peloponnesian War closed the door on the golden age of Greece.  Athens’ pre-war prosperity and preeminence were gone forever.

To this day the shattered psyche of Athens’ population has never fully been pieced back together. Continue reading →

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Faux Capitalism and the Great Middle Class Debt Anchor

Posted on June 15, 2012 by MN Gordon

Economies, like ocean tides, rise and fall.  So, too, they fall and rise.  Sometimes a rising tide floats up all boats…even those captained by freeloaders.  Other times a falling tide pulls down vessels crewed by even the most industrious deckhands.

There are times when just showing up to work each day is rewarded with abundance.  Conversely, there are times when showing up and working like a mule earns you a kick in the teeth.  No doubt, most anecdotes of recent years have been of an economy yielding few rewards and plenty of hard knocks.  On Monday the Fed confirmed such anecdotes…and it’s worse than we thought…

According to the Fed’s Survey of Consumer Finances, U.S. wealth fell nearly 40 percent between 2007 and 2010…erasing 18 years of gains for median U.S. household net worth.  Specifically, median net worth declined to $77,300 in 2010 from $126,400 in 2007.  The last time median net worth was at this level was 1992.

Obviously, the housing crash – and the disappearance of illusory wealth – was the main contributor to the decline in middleclass net worth.  But incomes are falling too. Continue reading →

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The Greatest Fraud of All

Posted on June 12, 2012 by MN Gordon

“As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate,” said Federal Reserve Chairman Ben Bernanke to Congress last Thursday.

The stock market dropped immediately following Bernanke’s comments.  The DOW fell 145 points from its intraday high.  Apparently, Bernanke’s promise was not good enough.

Wall Street wants more than talk from the Fed…they want action.  They want QE3.  They want the Fed to flood financial markets with a torrent of liquidity and buoy stock prices up forever and ever.  Quite frankly, that’s what the Fed, under both Greenspan and Bernanke, has trained Wall Street it always does.

Here at the Economic Prism we’re confident the Fed won’t ultimately disappoint Wall Street.  However, for now, Wall Street will have to be patient.  Perhaps the DOW will have to fall 2,000 more points before Bernanke opens the sluice gates.

More importantly, we find all this expectation and speculation on Fed monetary policy to be a distraction.  Unquestionably, Bernanke’s assurance that the Federal Reserve’s willing and able to provide money to support the financial system sounds well and good. Continue reading →

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Suffering Under Improper Banking Practices and Government Monetary Laws

Posted on June 8, 2012 by MN Gordon

Suffering Under Improper Banking Practices and Government Monetary Laws
By Michael S. Rozeff, LewRockwell.com

Improper Means of Exchange

There are many ways in which human beings have created means of exchange (currency, means of payment, money) that have worked successfully over long periods of time.  There is the way that Menger explained, through discovery of a highly marketable commodity. This is the way in which precious metals gained ascendancy. Another way is through banks that have intermediated short-term (90-day) bills of exchange and provided bank notes.  This was common for many centuries.  Another way is through the deposits of goldsmiths at a bank in exchange for certificates that circulate.  Fourth, governments have created tax certificates good for paying taxes, and these have functioned as means of exchange.  We should not forget also that there have been many commodities that have been used as means of exchange.

This is not an exhaustive list.  It is enough to suggest that the private economy is perfectly capable of generating a variety of means of exchange that solve the economic challenge of low-cost exchange without barter. Continue reading →

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