Fiat Money, EPA , High-Taxes, Unions – The Four Horsemen of the Apocalypse.

        Thorsten Polleit is an Honorary Professor at the Frankfurt School of Finance & Management, when questioned on the cause for the current economic crises, he said that government caused it by suppressing the free-market, and only the free-market can fix itself. Government cannot. His thesis is that the government’s fiat money policy is to blame. Fiat money is money that is not tied to a commodity such as gold, and therefore can be created out of nothing simply by printing more money. In essence central planning is too blunt a tool to fix an economy that requires millions of micro adjustment, and the only way the economy can function effectively is to allow the free-market to make those corrections.

        The free-market is hampered by more than government monetary policy. The primer for the present failings of our economy was the deindustrialization of America. The fact is that if the domestic economy were guided by the free market, we would still have heavy industry in America. The twin enemies of the free-market in my opinion are the Environmental Protection Agency, and its sister high-taxes. Together they have driven labors out of high-paying jobs and into fast food jobs that pay minimum wage.

        The Keynesian model is based on consumer demand. The Austrian School of Economics teaches that businesses create jobs and commodities that are in demand. Jobs create wealth. Wealth creates demand for commodities. Improved methods of production lower the cost of commodities. Even when wages remain fixed, lower retail prices translate into a higher standard of living, because money becomes more valuable. This is the free-market in action.

        Contrary to this free-market model, the Democrats have destroyed the industrial machine through onerous regulations and mandates which increases the cost of production and devalues money. The Democrats raise taxes on business which increases the cost of commodities. The result is that money is worth less. To maintain the same standard of living, Democrats impose wage increases on businesses, which also increases the cost of production and the wage increases are off-set by increases in the retail price of commodities. The only way for the consumer to be able to increase demand and raise his standard of living is to create debt. Debt is not taxable as are wages, so the government looses revenue. When the government looses revenue it must borrow, and that creates more debt, which necessitates higher taxes. It is a vicious cycle that is ultimately unsustainable. Democrats have no aversion to creating debt, and Obama is proving to be the king of debt.

        Democrats also know how to destroy the free-market. The government guaranteed loan has a malevolent inclination to destroy the free-market, and its cousin is government bailout. In a free market, consumer demand is based upon savings from wages, and loans are based on the ability to repay. Fiat money was not the only culprit in the collapse of economy. The proximate cause for the failures of the largest financial institutions in the country was what some have termed the “moral hazard”. In other words, government guarantees, and the certainty of government bailouts encouraged banks to make improvident loans. Financiers earned income on the loan, and then passed the risk off onto the taxpayers.

        In a free-market, no competent banker would lend money to anyone if his company were likely to suffer the loss if the loan is not repaid. In a free-market there are no government bailouts, no zero interest rates, and no attempt to prop up a failing economy with taxpayer dollars.  In a free economy there are business failures, but they are not catastrophic because they have not been centrally planned. Failures in a free-market actually strengthen the market because only the strong and well run companies survive.

        The free market cannot function when government becomes so powerful that it can dictate what products must be manufactured. It cannot function when the government determines how much smoke can be emitted into the air, or how much labor will cost etc. Franklin Delano Roosevelt signed into law the National Labor Relations Act which is a monster that has over the years destroyed industry. Union strikes amount to nothing less than government sponsored mob rule, and the EPA resembles the Nazi Gestapo. Environmental extremists like Al Gore will not tolerate an open and frank discussion on the effects of man-made activity on global warming. The verdict is in, the book is closed, and the government has executed industry that traditionally paid high wages and supplied commodities that were competitive in a world economy.