Socialist Seers
By Thomas E. Brewton
The cloudy crystal ball of socialist intellectuals must be, not just
cleaned, but consigned to the trash heap.
Most commentators blame corporate greed and poor judgment for the
subprime mortgage meltdown and the resulting squeeze in the financial
community.
In reality, excessive Federal spending on the socialist welfare-state
inaugurated by the New Deal, and the Federal Reserve's over-
expansion of the money supply to fund it, are the proximate causes
for today's financial mess. Without excessive money in the system,
neither greed nor imprudence enters the picture.
Today's mess could not have developed had President Roosevelt not
deliberately devalued the dollar and repudiated gold payment clauses
for the currency and Federal debt in the 1930s, while centralizing
control of the Federal Reserve system in the Federal Reserve Board to
facilitate Federal deficit spending.
As I have written frequently over the past couple of years, the
Federal Reserve is an example of the inherent weakness of entrusting
planning for the entire economy to a small group of intellectuals.
See Financial Hurricane Ahead ( http://www.thomasbrewton.com/
index.php/financial_hurricane_ahead/ ) for a partial list of those
postings.
Alan Greenspan and Ben Bernanke, the two most recent Federal Reserve
Board chairmen, are intelligent and talented men. But no individual,
or small group of individuals, can assemble in real time all of the
relevant data on economic conditions, process it, and comprehend it
in a timely way to manage the entire economy. Picture an ant trying
to build the pyramids solo.
As Arnaud de Borchgrave, editor at large of the Washington Times
writes in his November 28 commentary ( http://www.washingtontimes.com/
apps/pbcs.dll/article?AID=/20071128/COMMENTARY/
111280013&template=nextpage ):
"Many saw the disaster coming but kept quiet as the international
Ponzi scheme kept belching huge profits. One leading global umpire,
then-Fed Chairman Alan Greenspan, didn't throw any yellow or red
flags on the plays, and admitted after retiring he knew about abuses
in subprime lending but failed to foresee their paralyzing effects
until early 2006.
"Mr. Greenspan, who led the Fed through 18 years and four presidents,
still defends his lowering of interest rates from 2001 until 2004
that critics say caused the crisis in the first place.
"The housing bubble was the size of a Macy's Thanksgiving Day parade
balloon when Mr. Greenspan said in Oct. 2004, "there's a little froth
in this market," but, "we don't perceive that there's a national
bubble." Frenetic bank lending led to the Denver Post story of a
runaway prisoner who managed to borrow enough to buy three expensive
houses while on the lam and then two more while in prison."
A principal role for the Fed when it was created in 1913 was to react
to differing regional banking needs by providing liquidity to local
banks to meet seasonal lending needs or financial emergencies. Not
until Franklin Roosevelt's New Deal imposition of socialism in 1934
did anyone imagine that the Fed could, or should, be so foolhardy as
to shred the differing regional needs into one massive pot and stir a
national economic broth.
One of the cornerstones of liberal-progressive-socialism is a
presumption first articulated by the early 19th century French
progenitors of socialism. In that presumption, individualism is
abhorred, because individual business managers and entrepreneurs are
led astray by greed, and "the people" are crushed by the barbarism of
capitalist market competition. Only intellectual planners have the
knowledge and capacity to regulate the economy. Only the
intellectual planners have the breadth of vision to understand the
big picture. And only they understand social justice, implementation
of which demands collectivist planning by the political state.
This is the paradigm that leads liberals to believe that only the
Federal government can improve the living conditions of individuals,
that individuals are helpless to deal with their own needs. It's
time for liberal-progressives to get over it and re-enter the real
world.
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.
The New Media Alliance is a non-profit (501c3) national coalition of
writers, journalists and grass-roots media outlets.
His weblog is THE VIEW FROM 1776
http://www.thomasbrewton.com/
Email comments to viewfrom1776@thomasbrewton.com
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