Rooted in Reason: Nurturing the Seeds of Liberty


Rush Jobs by maliab
September 6, 2011, 7:26 pm
Filed under: Economy | Tags: , , , , , , ,

It’s the jobs, stupid.  At least, that’s what the new call of the politicians (and political advisers) seems to be of late.  Personally, I always find it a bit surreal watching politicians talk about their plans to increase jobs.  As though our economy was powered by hot air and political promises.  Granted, sometimes one of them will stumble upon an economic truth. (Like the fact that the best thing they can do for the job market is remove some of the federal barriers to economic growth–especially the banking regulations and monetary policy that prevent small to  mid-range businesses from growing in this struggling economy.)  But then, likely as not, they’ll just pick themselves up and hurry off as though nothing has happened.

And now, many of us are faced with a conundrum on Thursday night.  Do we tune in to see President Obama unveil his “Jobs Plan”?  Or do we make sure we are properly stocked up on buffalo wings and chips and watch the first game of the NFL season?  It’s true that we are facing a serious unemployment crisis in this country.  On the other hand, it seems unlikely that the President was visited in the night by the ghost of Milton Friedman and saw the error of his big government ways.  And the Saints are playing the Packers, which could not only be a glimpse of the NFC playoffs, but carries major implications for millions of fantasy football rosters.  And I’m not the only one feeling less than enthused about what I secretly fear is the unveiling of yet another giant spending program.   Consider what Dr. Merrill Matthews, Resident Scholar for the Institute for Policy Innovation has to say:

Perhaps the most underreported story last week was the announcement from the Office of Management and Budget that the unemployment rate would likely remain in the 9.0 percent range throughout 2012. And this a week before the president plans to deliver to Congress and the nation a jobs package that is supposed to help create jobs.

So what is OMB telling us? You would think that if the White House and its relevant advisors had been developing a drop-dead jobs-creation package, OMB would have waited until after the speech and then released an analysis saying that unemployment would likely remain in the 9 percent range, but that number could be significantly lower if Congress adopted the president’s jobs plan.

So did the White House not consult with OMB about its jobs proposals? Or, more likely, is it that everyone in the administration knows that there’s nothing new or innovative in the jobs package, and that it likely won’t pass anyway because it costs billions of federal dollars the government doesn’t have?

Either way, the “anticipation factor” for the president’s speech is very low, because no one expects that his proposals—mired as the White House is in Keynesian economics and big-spending notions—would do any good anyway. No one, including, apparently, the president’s own budget office.



Unstimulated by maliab
August 31, 2011, 9:07 pm
Filed under: Economy | Tags: , , , , , , , ,

The President will be unveiling his new jobs plan next week.  (Though when seems to be in doubt, as Rep. Boehner has indicated that Wednesday isn’t good for him and Congress, what with the GOP presidential debate and the last minute-ness of it all, and the White House has indicated that they’re not in love with Thursday as a day–with some commentators speculating that they don’t want to compete with the first NFL game of the season.)  If presidential conversation about jobs could create employment opportunities, we’d be at about 0% unemployment right now.

But, of course, it doesn’t.  And it turns out that buying jobs with huge chunks of federal dollars doesn’t do much better.

As the Weekly Standard points out, a study of the hiring practices of firms who received stimulus funds reveals that the stimulus package created as much job poaching as job creation.  Yet more proof (if we even needed it) that Keynesian economic theory so loved by this Administration seems to crumble in the face of the real world practice:

The Mercatus Center at George Mason University has just released an important new study on the hiring practices of firms that used stimulus funds. It’s fairly comprehensive, based on over 1,300 surveys of managers and employees. There’s been very little good empirical data on the stimulus thus far, so the study contains a lot of valuable insights. Among the findings by authors Dan Rothschild and Garrett Jones:

Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5%) or from outside the labor force (4.1%)(Figure 2). Thus, there was an almost even split between “job creating” and “job switching.” This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.

Put simply, stimulus funds caused more job shifting than job creation. Another key finding? Union-friendly wage protections kill jobs:

Among organizations required to pay prevailing wages, 38.2 percent thought that they could have hired workers at wages below the Davis-Bacon prevailing wage (Figure 3) while another 17 percent were unsure. This meant higher costs for the federal government and fewer jobs created.

Of course, merely having your economic philosophy proved disastrously wrong doesn’t seem much of a hindrance to the Left.  Talk about the power of wishful thinking.



Dale’s Latest on Transit, Energy, and the Rest by maliab
August 30, 2011, 6:11 pm
Filed under: Economy, World | Tags: , , , ,

Dale of Charley’s Taxi is back with the latest headlines on transit, funding, energy, zoning, and highways.  Highlights for this week include yet more eye-opening material on what I’m going to have to start calling “the Honolulu Rail Debacle.”  (One tiny bright spot in the whole mess–we’re bringing back the word “debacle”, which is just plain darned fun to say.)  And then there’s the not particularly surprising news that most legislators have no background knowledge of business.  I don’t know whether I should be relieved that the incompetence and obstructionism comes from ignorance and lack of experience or not, but it sometimes seems like our elected officials would have to know a lot about business to be able to muck things up so thoroughly.

QUOTES

PBN has long been in favor of mass transit, and we continue to be. We’re not saying, “Don’t build something.” We’re saying, “Don’t build an elevated rail project, and don’t build anything as it’s currently proposed.” This project cannot be fixed, and we are extremely concerned that its enduring legacy — should construction ever start — will be as our “rail to nowhere” effort. — Pacific Business News Editorial

I guarantee you this – I’m going to do my damndest to see that money [$1.5 billion from feds] comes in. It should be okay. But to predict an absolute outcome, only a fool would do that.” — Sen. Daniel Inouye to HART board

“Performance.gov tracks out progress on the administration’s efforts to create a government that is more effective, efficient, innovative and responsive. Importantly, the site is also a valuable tool for sharing best practices across the government – supporting learning and coordination across agencies.” — Jeff Zients, OMB

TOP HEADLINES
Green Scissors: Cutting Wasteful and Environmentally Harmful Spending 2011, Heartland Institute, 8/24/11

Study shows traffic accidents in Michigan costs the state US $4.4 billion more than crime, Traffic Technology Today, 8/25/11

The Henry Ford of Our Time, John Steele Gordon, American Enterprise Institute, 8/26/11

Is the Country on Empty?, American Legislative Exchange Council (ALEC), Special Issue, Inside ALEC, July/August 2011

U.S. has 200-year supply of coal, and 100-year supply of natural gas.

Impacts of Potential Oil Shale Development on Water Resources, Anu K. Mittal, GAO 11-929T, Testimony to House Subcommittee on Energy and Mineral Resources, Committee on Natural Resources, 8/24/11

US Geological Survey estimates that Green River Formation contains about 3 trillion barrels of oil, about half of it recoverable, depending on available technology and economic conditions. Equals entire world’s proven oil reserves.

News in Hawaii

Elevated rail project leads Oahu in wrong direction, Pacific Business News Editorial, 8/26/11

Inouye to HART: “I’ll do my best.”, Hawaii News Now, 8/25/11

How the city misled the public, Walter Heen, Benjamin Cayetano, Cliff Slater, Randall Roth, Honolulu Star Advertiser, 8/21/11

TAXES & ECONOMIES

Harkins: Upgrading U.S. infrastructure more important than cutting deficit, Jennifer Jacobs, DesMoies Register, 8/26/11

Nation’s economic growth slides down to 1 percent, Peter Schroeder, The Hill, 8/26/11

What’s Better for the Environment: Raising the Gas Tax or Fuel-Efficiency Standards?, Infrastructurist, 8/25/11

Labor chief: Obama needs to focus on job growth, not cutting the deficit, Kevin Bogardus, The Hill, 8/25/11

Green Scissors 2011: Cutting Wasteful and Environmentally Harmful Spending, Eli Lehrer, Autumn Hanna, Benjamin Schreiber, Tyson Slocum, Heartland Institute, 8/24/11

Office of Management and Budget puts accountability online, Joe Davidson,Washington Post, 8/24/11

CBO estimates show Congress faces huge test on debt, unemployment, The Hill, 8/24/11

Wall Street Aristocracy Got $1.2 Trillion in Secret Loans at Lowest Rates, Bradley Keoun, Phil Kurtz, Bloomberg, 8/22/11

U.S. Travel: Overseas visitor spending driving growth, Danny King, Travel Weekly, 8/20/11

Forget Corporate Jets. Government Limousines Show They’re Stealing You Blind, Iain Murray, Competitive Enterprise Institute, 8/19/11

HIGHWAYS & BRIDGES, PPP & TOLLING, DRIVING ISSUES

DUI, Uninsured Motorists, Tolling, PPPs, Variable Pricing, RUCS and Sustainable Transportation

Study shows traffic accidents in Michigan costs the state US $4.4 billion more than crime, Traffic Technology Today, 8/25/11

Drivers not happy about toll hike, Steve Metsch, Casey Toner, Chicago Sun-Times, 8/25/11

Big Brother Bloomberg, Charles C.W. Cooke, National Review, 8/25/11

Interview with Donald Shoup: Los Angeles Making Strides with ExpressPark, Damien Newton, LA.StreetsBlog, 8/24/11

HNTB survey shows Americans top concerns are poor road conditions and congestion, Traffic Technology Today, 8/23/11

The Wrong Road to Transportation Solutions, Benita Dodd, Georgia Public Policy Foundation, 8/19/11

TRANSIT
Watchdogs seek cost information on Dulles Metro line, Dana Hedgpeth, WashingtonPost, 8/27/11

Should a ‘Walker’s Paradise’ Save Plenty of Room for Parking?, Saqib Rahim, NYTimes, 8/25/11

TTC may ban criminals who assaulted transit workers, Metro Mag, 8/25/11

California’s Goofy Train Fixation Could Bankrupt the Country, Roger Hedgecock, Human Events, 8/26/11

No tram line for city centre and 4m-a-year loss, Brian Ferguson, The Scotsman, 8/26/11

What Does Opposition to Government Rail Projects Have to Do with Individual Liberty?, Matt Welch, Reason, 8/25/11

San Francisco High Speed Rail on Varney & Co., FoxNews, 8/24/11

Traveling back to the future on intercity buses, Michael Barone, Washington Examiner, 8/23/11

Dulles Metrorail Silver Line vs Bus Rapid Transit, Steve Lafleur, New Geography, 8/19/11

ZONING, HOUSING & LAND USE

TODs, Eminent Domain, Property Rights

How To Save The Housing Market: Destroy Houses, Massimo Calabresi, Stephen Gandel, Time, 9/05/11

The Evolving Urban Form: Beijing, Wendell Cox, New Geography, 8/29/11

America’s Gambling Craze: Playing with Fire, Neal Peirce, Citiwire, 8/25/11

Suburbanized Core Cities, Wendell Cox, New Geography, 8/26/11

Universal Principles for Creating a Sustainable City, Sven Eberlein, Planetizen, 8/11/11

ENERGY & ENVIRONMENT

Rigged For Failure, Investors Business Daily, 8/24/11

Last year, 3 oil rigs moved out of Gulf of Mexico. Now, it’s 10.

Is the Country on Empty?, American Legislative Exchange Council (ALEC), Special Issue, Inside ALEC, July/August 2011

U.S. has 200-year supply of coal, and 100-year supply of natural gas.

Impacts of Potential Oil Shale Development on Water Resources, Anu K. Mittal, GAO 11-929T, Testimony to House Subcommittee on Energy and Mineral Resources, Committee on Natural Resources, 8/24/11

Not Free to Choose: The Reality behind Clean Energy Standards, Kenneth P. Green, American Enterprise Institute, 8/23/11

Cities Mean Coal, Energy Facts, 8/23/11

What New Emissions Standards Will Mean to Automakers, Mike Orcutt, MIT Technology Review, 8/22/11

The EPA’s giant green jobs-killer, Michael A. Walsh, NYPost, 8/21/11

Ozone Standards Not Scientific Either, Adam Peshek, Reason, 8/19/11

Number of Green Jobs Fails to Live Up to Promises, NYTimnes, 8/18/11

Where to put spent U.S. nuclear fuel, Robert Bryce, Politico, 8/18/11

Climatology Professor Rebuts Smear on Skeptical ScientistJames M. Taylor, Heartland Institute, 8/15/11

The Wind-Energy Myth, Robert Bryce, National Review, 8/12/11

New Study Touts Benefits of Expanded Oil Trade with Canada, Christine Hall, Competitive Enterprise Institute, 8/09/11

The Economic Opportunities of Shale Energy Development, Timothy J. Considine, Robert W. Watson, Nicholas B. Consodine, Manhattan Institute, Energy Policy & the Environment Report No. 9, June 2011

Global Carbon Markets Dirty Secret, Will Evans, Center for Investigative Reporting, 5/21/11

Lawsuit by low-income groups may delay climate law, Sarah Terry-Cobo, CaliforniaWatch, 2/09/11

MISCELLANEOUS

Perry: Gates Gave China Fighter-Jet Superiority, William chedsey, Newsmax, 8/27/11

49% of Newborns on Food Assistance Programs, Newsmax, 8/27/11

How to Keep Your Cell Phone going as Long as Possible, Christopher Mims, MIT Technology Review, 8/27/11

Crime and the Great Recession, James Q. Wilson, City Journal Summer 2011 vol. 21. No. 3.

The minister of magic steps down, The Economist, 8/27/11

The Henry Ford of Our Time, John Steele Gordon, American Enterprise Institute, 8/26/11

Cheeky: Rick Perry Bills the Feds for Illegal Immigrant Imprisonment Costs, Erika Johnsen, Townhall, 8/26/11

Arming the Cartels, Geoprge H. Wittman, American Spectator, 8/26/11

Astronomers discover planet made of diamond, Ben Hirschler, Reuters, 8/25/11

Study: 80 Percent of Lawmakers Lack Academic Background in Business, Economics, FoxNews, 8/25/11

Employment Policies Institute found that 55.5 percent of lawmakers majored in a government-related field or “humanities. Only about 8 percent majored in economics, 14 percent studied business or accounting in college. These numbers raise questions about legislators’ ability to tacke otuch economic challenges.

Let’s Put a Stop to the War On Salt, Luke Pelican, Jacqueline Otto, Fox News, 8/15/11



Fact Check: Criticizing the “Texas Economic Miracle” by maliab
August 24, 2011, 5:58 pm
Filed under: Economy | Tags: , , , ,

There is an interesting game that goes on when the political conversation turns to unemployment.  Despite the rather depressing unemployment numbers, there are still plenty of arguments to be found about the kinds of jobs available.  Some of these criticisms are well-founded, as when it is pointed out that creating temporary government jobs via state-funded spending sprees is not a path to long-term economic recovery.  Others, such as the spats over the relative “quality” of new jobs available are a bit more complex.  As Dr. Steve Pejovich, a Professor Emeritus from Texas A&M University writing for the Institute for Policy Innovation, explains, there’s a lot more to economic recovery than the wage rate:

Challenging the supposed “Texas economic miracle” under Governor Rick Perry, CBS recently reported, “Critics also note that many of the jobs created on Perry’s watch are low-paying and lack benefits.” This statement is wrong at best and stupid at worst. Here is an economist’s explanation for non-economists.

The demand for labor, like the demand for all scarce goods, is a function of price. The lower the wage the more people are hired.

What’s known as the “market-clearing wage” (i.e., price) is the wage at which all people who want to work at that wage have jobs. At any wage above the market-clearing wage not all people who want to work at that wage have jobs.

Government can’t determine the market-clearing level, only markets can. But government can distort it by imposing regulations on business, minimum wage laws, and unions (think of the Boeing case), which force wage rates above the market–clearing level.

Perry’s critics are confusing the wage rate with income. The higher the wage rate (above the market-clearing level) the more who are unemployed. That is, high wage rates mean zero income for many. The market-clearing wage rate means positive income for all.

Governments can choose to make labor markets less or more competitive. Perry has chosen the latter for Texas. Yes, the average wage rate in Dallas might be lower than in Detroit, but more people are earning money from work in Dallas than in Detroit. This raises an important question upon which a free society depends: the freedom of choice.

Any person in a right–to-work environment can choose between zero income and the wage he or she could get in the labor market. No person in a union-controlled or government-regulated environment can choose between zero income and the wage at which he or she is willing to work.

No one has to work for a lower wage, but at least in Texas more people can choose that option over being unemployed.



Paul Jacob & the Human Face of Corporations by maliab
August 23, 2011, 4:56 pm
Filed under: Economy, Limited Government | Tags: , ,

It’s a little tiring, listening to the tired trope that makes corporations the ultimate bad guy of modern culture.  Look at Hollywood.  Any time they can’t work a Nazi (or at least a neo-Nazi) into the plot of their latest action thriller, they turn to the same cliche . . . the evil corporate fat cat.  So is it any wonder that Mitt Romney earned heaps of undeserved scorn for commenting that “corporations are people”?  As Paul Jacob, President of Citizens in Charge, points out, Romney biggest offense was pointing out the ugliness of the Left’s anti-business prejudice:

On the video page featuring Mitt Romney’s notorious “corporations are people” comment — the one I clicked to, anyway — every comment was negative, with jokes like “Did you hear that S&P downgraded the Tea Party credit grade to KK+?” and economically illiterate whoppers like “Corporations do not help anyone except those who own them or do what they say.” It’s saddening to see ignorance and bigotry so self-righteously maintained by everyday Americans.

Yes, bigotry.

For Romney was right: Corporations are made of people. Those who roil with hatred for corporations, singling them out for more regulation or greater taxation, are attacking actual living, breathing people, who, as Milton Friedman pointed out, are made up of three classes of just plain folks: the owners, the, who are people; the corporation’s hired managers, who are people; and served  that is, people who have chosen,  duress, to buy stuff from the corporations.

Economist Steven Horwitz, writing in the , cited one study that estimated that “45 percent to 75 percent of the burden of a corporate tax increase is borne by workers,” and noted that, if profits fall, fewer dividends would go to stockholders.

And “stockholders” are often nothing other than workers’ retirement funds.

Yeah, soak the older people. That should make corporation-haters feel good.

Setting aside “some other people” to hate is exactly what anti-corporatists are doing. It’s bigotry. And it’s ugly . . . and de-humanizing.

This is Common Sense. I’m Paul Jacob.



Downturn for Wisconsin Union by maliab
August 19, 2011, 5:37 am
Filed under: Economy, Limited Government | Tags:

The Milwaukee Wisconsin Journal-Sentinel is reporting that the state’s largest teacher’s union, the Wisconsin Education Association Council (WEAC) has been forced to layoff 42 employees (or 40% of its staff):

Burkhalter said that the layoffs and other budget cuts at WEAC are a result of Gov. Scott Walker’s “union-busting” legislation.

“Right now we’re engaged in membership continuation campaigns,” Burkhalter said in a statement. “We’ve made steady progress in signing up members and we anticipate further progress will be made as the school year resumes. Despite budget cuts and layoffs, our goal remains the same: to be a strong and viable organization that represents the voices of Wisconsin’s public school employees.”

The organization has been working to stay relevant in a time when state legislation has severely clipped the collective bargaining of teachers and other public workers. The legislation makes it illegal for local teachers unions to electronically deduct dues from the payroll of teachers, and local unions also have to hold re-certification votes.

The Wisconsin Association of School Boards estimates that about 275 school districts in the state are working outside of collective bargaining agreements and subject to the new legislation. About 150 or so districts are operating under contracts that were extended with their respective unions before the legislation passed.

No doubt some people will be confused (or willfully misled), so it bears repeating–these are union employees who are losing their jobs, and not the state’s teachers themselves.  It is being blamed on the fact that new legislation frees most of the state’s school districts from collective bargaining agreements, though one does wonder whether there may be other factors in play.  After all, one person’s “union busting” legislation is another’s “critical effort to resolve a budget crisis.”  Of course, one can hardly expect that the Union would also announce that they had an unsustainable model, but the fact that one of the blows to their bottom line is the fact that they can no longer electronically deduct union dues from people’s paychecks warrants at least an eyebrow raise.

Hawaii’s own state unions are immensely powerful and entwined with the government (or at least with the Democratic Party that runs most of the government in these parts), and our own state/union agreements have a significant impact on our own budget woes.  But don’t look for solutions from the unions themselves, which are more concerned with their own bottom line than the long-term economic health of the state.



Benko on Monetary Policy by grassroothawaii
August 15, 2011, 8:31 pm
Filed under: Economy | Tags: ,

It’s interesting how, when economic worries abound, so few people actually talk about actual monetary policy.  It’s almost as if they worry about the effect of looking to closely at it–like sausage, perhaps we prefer not to know too much about our monetary system and how the value of the dollar is determined.  Unfortunately, it’s also one of those factors that affects every aspect of our lives–and in Hawaii, where the state of the Asian markets is almost as important to us as what’s happening on Wall Street, it bears special consideration.  And, as Ralph Benko points out in a recent Forbes column, perhaps a change is called for:

Is it possible that the ghastly unemployment, stagnant growth (and possible double-dip recession), and financial market convulsions all can traced back to one single decision?  Perhaps.

Monetary policy is the most recondite yet most pervasive and powerful of economic forces.  Keynes, in The Economic Consequences of the Peace, wrote, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

The converse also is true.  Restoring real monetary integrity engages all the hidden forces of economic law on the side of prosperity.  And forces for monetary reform are very much in motion.

The dollar has fallen in value by more than 80% from the day when Richard Nixon took the world off the tattered remnants of the gold standard.  Aug. 15 marks the 40th anniversary of the avowedly “temporary” abandonment of the gold standard by President Richard Nixon.

“Closing the gold window” was part of a series of dramatic but shocking and destructive tactics by Washington, including wage-price controls, a tariff barrier, and other measures, all leading to economic and financial markets hell.  All such measures save one stand discredited.  The only piece of the Nixon Shock still in force was the piece most ostentatiously designated as temporary.  Nixon: “I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold….”

Suspending convertibility was no trivial matter.  Nixon speechwriter William Safire recalled: “On the helicopter headed for Camp David, I was seated between [Herb] Stein and a Treasury official.  When the Treasury man asked me what was up, I said it struck me as no big deal, that we would probably close the gold window.  He leaned forward, put his face in his hands, and whispered, ‘My God!’  Watching this reaction, it occurred to me that this could be a bigger deal than I thought….”

It proved to be a very big deal.  How ironic that the most staunch defenders of a pure paper standard, the sole remnant of Nixonomics, are a few influential “progressives” such as Paul Krugman, Joseph Stiglitz and Thomas Frank.  Call them “the Nixonians.”  The poor jobs growth and stagnation of today’s “world dollar standard” are not, unsurprisingly, dissimilar to the results of the Nixon Shock.

There is ample evidence that restoring gold convertibility would put the world back on the path of jobs, growth, and a balanced federal budget.  Politicians do not like messing around with monetary policy. But gold, recently rediscovered by the Tea Party, has an impressive technical, economic, and political pedigree of gold convertibility and a very well established track record of job-creation, properly applied, during many eras.

The silver lining to the whipsawing Dow is … that it makes politicians open to new ideas, even new old ideas.  Monetary statesmen from Alexander Hamilton forward have faced circumstances far more dire than those of today and turned things around.  Modern example? The German economic miracle, the Wirtschaftswunder.

That miracle was founded in currency reform.  On the very day when Ludwig Erhard’s currency reform was put into place the economic paralysis ended.  The “rightest” economist of the 20th century, Jacques Rueff, wrote (with André Piettre) about the turnaround beginning on the very day of the reform:

Shop windows were full of goods; factory chimneys were smoking and the streets swarmed with lorries.  Everywhere the noise of new buildings going up replaced the deathly silence of the ruins.  If the state of recovery was a surprise, its swiftness was even more so.  In all sectors of economic life it began as the clocks struck on the day of currency reform.  Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display.  Shops filled with goods from one day to the next; the factories began to work.  On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food.  A day later they thought of nothing but producing them.  One day apathy was mirrored in their faces while on the next a whole nation looked hopefully into the future.

Rueff took a similar approach, including a dramatic currency reform, to reviving the French economy.  As economist and Lehrman Institute senior advisor John Mueller summarizes:

Despite the unanimous opposition of his cabinet, de Gaulle adopted the entire Rueff plan, which required sweeping measures to balance the budget and make the franc convertible after 17.5% devaluation – though not without qualms. ‘All your recommendations are excellent,’ de Gaulle told Rueff. ‘But if I apply them all and nothing happens, have you considered how much real pain it will cause across this country?’ Rueff replied, “I give you my word, mon General, that the plan, if completely adopted, will re-establish equilibrium in our balance of payments within a few weeks. Of this I am absolutely sure; I accept that your opinion of me will depend entirely on the result.’ (It did: ten years later, de Gaulle awarded Rueff the medal of the Legion of Honor.)

Today on this the 40th anniversary of the closing of the gold window a group of Americans issued a statement stating, in its conclusion:

[W]e support a 21st century international gold standard.  America should lead by unilateral resumption of the gold standard.  The U.S. dollar should be defined by law as convertible into a weight unit of gold, and Americans should be free to use gold itself as money without restriction or taxation.  The U.S. should make an official proposal at an international monetary conference that major nations should use gold rather than the dollar or other national currencies to settle payments imbalances between one another.  A new international monetary system, based on gold, without official reserve currencies, should emerge from the deliberations of the conference.

Many of the signers are associated with the American Principles Project, chaired by Sean Fieler, and the Lehrman Institute (with both of which this writer is professionally associated), chaired by Lewis E. Lehrman.  Signers also include such important thought leaders as Atlas Foundation’s Dr. Judy Shelton and Forbes Opinions editor John Tamny.

Politicians may have forgotten the power that real money, money of integrity such as currency convertible into gold, has to reverse an economic crisis.  But the people have not.  Earlier this year, the government of Utahrestored, to international attention, the recognition of gold and silver coins as legal money.  Now news emerges that the largest and most respected political party in Switzerland is supporting the work of the Goldfranc Association, led by citizen Thomas Jacob, to introduce a gold-convertible Swiss franc as a parallel currency.

To read more, click here:  http://www.forbes.com/sites/ralphbenko/2011/08/15/fiat-money-the-root-cause-of-our-financial-disaster/




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