Mark Skousen on the Failing Dollar, the Growth of Liberty and the Success of FreedomFest
The Daily Bell is pleased to publish an exclusive interview with Mark Skousen (left).
Introduction: Dr. Skousen has had a diverse career. He has taught at Columbia Business School, served as president of the Foundation of Economic Education (FEE), the first free-market think tank, and has had a business school named after him (Grantham University). He and his family have lived in Washington, the Bahamas, London, and New York. Since 1980, Dr. Skousen has been Editor in Chief of Forecasts & Strategies, a popular award-winning investment newsletter published by Eagle Publishing in Washington, D.C. He is also editor of his own website, www.mskousen.com, and editor of three trading services, Skousen Hedge Fund Trader, Skousen High Income Alert and Skousen Turnaround Trader. He earned his Ph.D in economics and monetary history from George Washington University in 1977. He also was an economic analyst for the CIA. Since then he has written over 25 books, including Economics on Trial (McGraw Hill, 1991), Puzzles and Paradoxes in Economics (Edward Elgar Publishers, 1997), and The Making of Modern Economics (M. E. Sharpe, 2001). Dr. Skousen is the creator and producer of FreedomFest, the "greatest libertarian show on earth" (Washington Post), held every July in Las Vegas.
Daily Bell: Tell us about FreedomFest this year.
Mark Skousen: It looks like we will have another record turnout (last year we had nearly 2,200), so we continue to grow very fast, and provide something unique – an intellectual love-fest in the world's most laissez faire city. We have attendees coming from all over the country and the world – all the way from Moscow this year.
We just redesigned our website, so I hope your readers will check it out: www.freedomfest.com.
Daily Bell: Who are some of the big stars?
Mark Skousen: Our biggest draw is Judge Andrew Napolitano from Fox News, who is going to do an "off the record" private talk on Thursday, July 14, on "Do We Still Have a Constitution?" Some pretty scary things are going on in death star (Washington DC) these days, and he's going to give us an inside account. Also, Steve Forbes and John Mackey (CEO, Whole Foods Market) are returning as official ambassadors – they come at their own expense, they are so excited. And they stay all three days.
Other big names include Dick Morris, Juan Williams, Peter Thiel (co-founder of PayPal and early investor in Facebook), Steve Moore (Wall Street Journal), Nick Gillespie and Matt Welch (Reason), Peter Schiff, Bjorn Lomborg, David Boaz (Cato), Arthur Brooks (AEI), Larry Reed (FEE), Larry Arnn (Hillsdale), and Wayne Allyn Root.
Plus we offer a full 3-day investment conference with Rick Rule, Alex Green, hedge fund manager Donald Smith, Don Luskin, Bert Dohmen, Rick Maybury, Frank Suess, Peter Zipper, and others.
Daily Bell: Who's the most interesting or unexpected speaker this year?
Mark Skousen: Two non-financial speakers include Mark Eliot, the premier biographer of Hollywood, who will be doing sessions on conservative actor Ronald Reagan and libertarian actor Clint Eastwood; and we also have Robert Greenberg, the Teaching Co's #1 lecturer who has done 28 courses for them on classical music. He will be speaking on Beethoven and "Music that has caused riots." He brings his own piano and sound system.
We also have some hot debates, such as "Vaccines, good or bad?" and "The Bush Doctrine: Pro and Con." I'll be debating Todd Bucholz on his new book "The Rat Race: Good or Bad for Americans?" John Mackey (Whole Foods) and John Allison (BBT Bank) will discuss their two different approaches to running a successful business (Mackey's "conscious capitalism" vs. Allison's "Ayn Rand" philosophy).
We're also having Anthem, a libertarian film festival, for the first time, which is sponsored by Pacific Research Institute (PRI) and run by my wife, JoAnn, who is the entertainment editor at Liberty magazine. We're going to show a lot of cool films such as "Cool It!" and "Free or Equal?"
Daily Bell: Do you have a theme?
Mark Skousen: Actually our theme this year is "Are We Headed for Another American Revolution or a French Revolution?" The American Revolution was all about limiting government power, but the French revolution was all about unlimited government. The question we will try to answer is "Where is America headed – toward liberty or slavery?"
Daily Bell: Why should people attend? What will they learn?
Mark Skousen: FreedomFest changes people's lives forever, and that's why they come. We have sessions for everybody on every subject imaginable, including a 3-day investment conference (financial freedom is vital). Thousands have changed their way of acting and thinking -- one couple altered their estate and set up a "job-creating" foundation as a result of a session....a consultant landed a major contract with someone he met at our conference....Investors bought a stock that doubled in a year...a father brought his son who converted to free-market economics (at the end of the show, he said, "Dad, promise me we'll come back next year")... and one speaker (Dinesh D'Souza) made the cover of Forbes magazine because Steve Forbes heard him speak at a luncheon. Anything is possible. We've even had a couple go on their honeymoon at FreedomFest.
Daily Bell: Will you be speaking?
Mark Skousen: Yes, a few times, but I don't like to overdo it. I think of FreedomFest as "our" conference, not "my" conference. I do a pre-conference seminar each year, this time on "Austrian vs. Chicago economics," the Big Three in French Laissez Faire Economics (Say, Bastiat, and Tocqueville), and a breakfast talking about my new book "The Maxims of Wall Street: A Compendium of Financial Adages, Ancient Proverbs and Worldly Wisdom." I'm also debating economist Todd Buchholz on whether the rat race in good for us or not. At the masquerade party on Saturday night, I'm dressing up as Ben Franklin, and my wife as Madame Brillon. So it's a lot of fun.
Daily Bell: Why do you think it is so popular?
Mark Skousen: I think we've created a conference about everything. We have sessions on philosophy, history, science & technology, art & literature, dance & music, law & religion, investments, healthy living, geo-politics, you name it. We have 10 breakout sessions and a film festival, so nobody is ever bored. Even speakers stick around. Steve Forbes attends all 3 days, and so does John Mackey.
It's also an open forum, so if you a young author or professor has something to say, you can ask to speak, and if you check out, we'll add you to the program.
Daily Bell: Are people more hopeful about the economy generally this year?
Mark Skousen: Americans are now more pessimistic than ever, and more so than attendees from other countries. We've overspent and overpromised, and now we are paying the price. But we are going to have a session organized by FSU economist Jim Gwartney and Cato specialist Richard Rahn on "Three Countries that Have Done It Right: Canada, Chile and Sweden." Attendees will hopefully come away upbeat about the future of the United States.
Daily Bell: Are we headed toward a double dip recession for the world and America?
Mark Skousen: Only if the US government blunders more than they have already. We are suffering from too much wasteful deficit spending, easy money, and excessive regulations (such as ObamaCare). It's creating too much of a burden on the United States and hurting job creation. This is the slowest recovery of all the recessions since World War II, and we have only the government to blame (both Bush and Obama administrations).
Other countries are doing better than we are, so it's possible that the global recovery will help America survive. Clearly we need strong leadership to address the deficit and debt problems this country faces.
Daily Bell: Where is gold and silver headed?
Mark Skousen: Both have risen so much in the past ten years that I'd be surprised if they keep going. There's got to be a major pullback, and if the US gets its act together, we could see a significant correction. We've already seen it in silver. But as long as the Fed keeps pumping cheap money into the monetary system, and keeps interest rates artificially low, commodities like gold and silver should do well. Oil too.
Daily Bell: What investments are you especially high on?
Mark Skousen: I'm very bullish on high-income dividend-paying stocks and funds. I have seven such high-income recommendations in my newsletter, Forecasts & Strategies, and they are all quite profitable, and will probably move higher.
Daily Bell: What are your thoughts about Utah passing the gold and silver currency act?
Mark Skousen: It's certainly a good way to send a message to Washington about a return to Constitutional principles. Article 1 Section 10 prohibits states from using anything other than gold or silver for all debts. Unfortunately, it did not prohibit the Federal government from issuing unbacked paper money. Under the new Utah law, citizens can buy goods and services with US gold or silver coins (eagles) without any tax consequences. I hope this new law spreads to other states, but their biggest challenge is "Gresham's Law." Gresham's law states that "bad money drives out good." In this case, the bad money is fiat paper currency, which you will spend, and the good money, the American eagle silver dollars, will go in your pocket, or a safe deposit box.
I keep in my pocket a 2011 American Eagle silver dollar to remind me of my origins. Silver was my first investment in the early 1970s after reading Harry Browne's bestseller "You Can Profit from a Monetary Crisis." It is also our symbol of liberty and sound money at FreedomFest.
Daily Bell: Is the dollar on its way out?
Mark Skousen: It's in a bear market, that's for sure, but once the Fed reverses course and raises rates, and the government stops spending like a drunken sailor, I see the dollar recovering. The dollar is still the world's reserve currency, and I don't see anything replacing it, certainly not the euro, the yen, the yuan, or the Swiss franc. It's the elephant in the room. China and other countries with large foreign reserves can diversify into other currencies or gold, but the majority of their holdings will remain in US treasuries, because it's the only market big enough.
Daily Bell: What about the debt ceiling? Should the debt ceiling be moved upward immediately as the Democrats demand?
Mark Skousen: This is a great way to insist that we live within our means. I think the House should stick to its guns and refuse to raise the debt ceiling. They have Obama over a barrel. However, in reality, the Republican House is simply playing a game to cut spending, but not to balance the budget anytime soon. Even Paul Ryan's "radical" proposal doesn't balance the budget for decades!
Daily Bell: Does President Obama have responsibility for the current crisis?
Mark Skousen: Yes, he has not resolved it. Only the Fed has kept the system afloat. Huge trillion dollar deficits are only make things worse. Higher regulations (ObamaCare, Financial Regulation Act) have kept employment from recovering. For one thing, he should push through a major tax cut on US corporations to make them more competitive with the rest of the world.
Have you seen my spoof ad for the new ObamaCare drug: http://www.youtube.com/watch?v=rkH_aaaSOP0. It's only 2 minutes long, but has gone viral, as my kids say.
Daily Bell: What about George W. Bush?
Mark Skousen: He was a disastrous president, who brought us big government in the name of conservative Republicanism.
Daily Bell: Where do you rank Obama in terms of US presidents?
Mark Skousen: Low. At least I expected him to get us out of the Middle East, but he hasn't. Very disappointing.
Daily Bell: Can a politician really make a difference at this point?
Mark Skousen: Yes, absolutely. We need to be reminded of a similar fiscal crisis facing Canada in the mid-1990s – a falling dollar, large deficits, out of control government growth, etc. Then the head of the Liberal Party of Canada said "Enough is enough," and reversed course. Within 2 years, they balanced the budget and enjoyed 11 straight years of surpluses. They engaged in supply-side tax cuts and avoided the financial crisis in 2008, with no bank failures. The Canadian dollar is now equal to the buck. And all it took was strong leadership. That's what we need in the United States, and tragically, Obama hasn't done it.
Daily Bell: Will Obama be re-elected?
Mark Skousen: Hopefully not. He shouldn't be. No president has won re-election with unemployment over 8%. But anything is possible in this world of "anyone can vote" system.
Daily Bell: Does he understand the economy?
Mark Skousen: He had the audacity to say in a Business Week cover story in 2009 "I am pro-growth. I am a fierce defender of free markets." What a joke. I show his quote and BW picture at investment conferences, and everyone gets a big laugh.
Daily Bell: Do his financial advisors know what's going on?
Mark Skousen: Treasury Secretary Tim Geithner said two weeks ago that another meltdown was inevitable, so at least he's a straight shooter. The worse character is Ben Bernanke, who should have been fired for getting Congress involved in TARP, and for allowing banks to engage in "no doc" and subprime mortgages. (The Fed is in charge of bank regulation, and Bernanke failed miserably in this important job.)
Daily Bell: We believe this current economic downturn will end up rivaling the Depression. Your thoughts?
Mark Skousen: I give it a 30% chance, and rising. Pundits have been predicting another Great Depression for decades and it hasn't happened. I don't buy Milton Friedman's argument that we are "depression proof" but I do think we have been "depression resistant." The only way the monetary system could collapse is if the public lost faith in the dollar. I hope it never happens, because if it does, it won't be a pretty scene with riots in the major cities, huge shortages, etc.
Daily Bell: Isn't it too late now to take the actions that Obama should have been taken?
Mark Skousen: No, not at all. We have time to correct the mistakes of the past. Get rid of ObamaCare, and unnecessary financial regulations like Sarbanes-Oxley and the new Financial Regulation Act. Cut out wasteful spending, cut taxes (especially corporate taxes), raise interest rates to normal levels, etc. Canada did it, why can't we?
Daily Bell: What about the EU and the euro? Is the euro going to make it with all the problems in Greece, Portugal, Spain, and Ireland (PIGS)?
Mark Skousen: I think the euro and the EU will survive. This huge free trade zone is a positive development. You can't go back. Greece will probably need to default on its sovereign debts, and that would send a message loud and clear that this sort of Keynesian overspending won't be tolerated. Everyone needs to adopt the German model of fiscal responsibility.
Daily Bell: What about China and India? When does price inflation get the better of their current booms? When do they pop – or do they continue onward and upward along with Brazil?
Mark Skousen: Monetary and price inflation are serious problems in both countries. The money supply grew 26% last year in China, and they are suffering the consequences. The boom in China is unsustainable, and will eventually collapse. The Austrian economists are right. No emerging market boom has ever had a soft landing.
Daily Bell: Do you have any favorite regions at this point? Favorite countries?
Mark Skousen: Yes, Canada, Australia, New Zealand, Sweden and Chile. These countries have their act together and should survive and prosper.
Daily Bell: Will Ron Paul be a factor in the upcoming presidential elections? Could he go all the way?
Mark Skousen: I doubt it. His position is too extreme – abolishing the Fed, going back to the gold standard, eliminating the IRS, etc. Americans don't like extreme policies. The best he can do is influence current policies and make them more responsible. His son Rand Paul has some good ideas in cutting back government. Mitt Romney is presidential and has experience in business, government and dealing with crises. He even knows how not to manage state health care! Once he admits RomneyCare was a mistake, he will do well.
Daily Bell: What about America's wars? Is the war in Afghanistan winnable or is it already lost?
Mark Skousen: I don't know. I don't consider myself a foreign policy expert. Ask Doug Casey. In general, I don't think we can afford to be engaged in foreign wars, and having troops in 40 countries. Ben Franklin said it best: "The policy of America should be commerce with all, and war with none."
Daily Bell: Will Saudi Arabia fall?
Mark Skousen: I'd rather see them adopt free-market reforms. We are having an important Middle East panel at FreedomFest to answer this important question, with Tom Palmer and Professor Daniel Peterson, both experts in the field.
Daily Bell: We've asked you this before: is the Internet, like the Gutenberg press before it, responsible for a lot of the changes taking place? If not – what is?
Mark Skousen: Absolutely. The ramifications of the Internet and technology are hard to predict but largely beneficial. Some pundits like Peter Thiel (co-founder of PayPal) and GMU Professor Tyler Cowen think technology is stalled out in America, but we're still seeing all kinds of changes. The cost of textbooks, for example, is falling like crazy due to e-books. Google, Yahoo and Facebook are transforming the world – economically, politically, culturally.
Daily Bell: What are you working on now? Another book?
Mark Skousen: Yes, I just came out with a book I've been working for 30 years, and I think it will be a classic that goes through many editions. It's called "The Maxims of Wall Street," a compendium of all the Wall Street sayings, proverbs, poems, and worldly wisdom. It has a lot of humor, and even a few short stories I've written. It's about 300 pages long, and I'm doing a special limited edition of only a thousand copies, all numbered and signed. I let each buyer choose his favorite number anywhere from 2 to 1000 (#1 is already taken). I'll have copies to sign and number at FreedomFest, but if you want a copy, call my publisher, Eagle Publishing, at 1-800-211-7661, and order one ($39 plus $5 S&H). Be sure to name your favorite number.
Daily Bell: Any final thoughts? Any closing remarks on FreedomFest?
Mark Skousen: I've had a dream for some time that all the liberty lovers and freedom fighters would gather once and year to learn, network, socialize and celebrate liberty, or what's left of it. I imagine walking into an exhibit hall and seeing all the free-market think tanks and freedom organizations like Cato, Reason, Mises, Heritage, and FEE – one stop shopping for liberty. John Mackey calls it "The Trade Show for Liberty." And I think my dream is finally coming true, after years of hard work. I hope all your readers will join us. For either we all hang together, or we shall surely hang separately, to quote Ben Franklin.
Our symbol for FreedomFest is the American Eagle Silver Dollar, now worth around $40. It symbolizes liberty and sound money. Everyone who comes to FreedomFest is expected to bring a silver dollar (or buy one there from one of our many coin dealers in the exhibit hall). When you come up to say hello, be sure to show me your lucky silver dollar!
Daily Bell: Well, good luck with the Fest and thanks for sitting down with us again.
Mark Skousen: Thank you, and I look forward to seeing you at FreedomFest. So long, fellow free-marketers, and remember, AEIOU.
Daily Bell: I notice you end your letters and hotline with AEIOU. What does that mean?
Mark Skousen: I never say. It's a puzzle wrapped in an enigma surrounded by a paradox. Have you tried Googling it?
FreedomFest, organized by Mark Skousen, just gets bigger and bigger. It runs this year from July 14-16 at Ballys, Las Vegas and features a pantheon of formidable libertarian minds and famous names such as Steve Forbes, Juan Williams and Dick Morris. An annual festival where free minds meet to celebrate "great books, great ideas, and great thinkers" Skousen has resolutely created an independent, non-partisan event not affiliated with any organization or think tank. Since 2002, FreedomFest has invited the "best and the brightest" from around the world to talk, strategize, socialize, and celebrate liberty. Here's more from the FeedomFest website:
If you have never attended FreedomFest, you are in for a treat. FreedomFest is an intense three days. It's different from any conference you have ever attended. Have you been to a seminar where you were bored by the speaker? Well, there's never a dull moment at FreedomFest, because we offer seven sessions simultaneously, including discussions and debates about philosophy and history; arts and entertainment; public policy and geo-politics; science and technology; economics and finance; law and religion. (For those who wish to attend more than one session at a time, we tape all forums and workshops and made them available for sale during the festival. We sell a lot of audio CDs!)
We have separate forums on philosophy, science and technology, art and entertainment, economics, geo-politics, finance, and literature, among others. There's a debate room, where a new hot topic is debated every hour, general sessions where we hear world-renown experts, and a special one-hour time where we hear 6-7 "bright new stars"–up and coming scholars who have something to contribute. No other conference in the world offers these opportunities.
This year's festival, with its many speakers and events sounds as if it will be just as successful or moreso than previous years'. We congratulate Mark Skousen and we have personally dispatched a contingent of elves to capture libertarian material from exhibits and presentations.
Editor's Note: We know there are more than a few in our audience who on seeing the presenters will perceive that hard and soft libertarianism are intermingled at FreedomFest and that this lessens the impact, ultimately, of the conference. But freedom is not necessarily in great supply these days, and FreedomFest, with its generous array of programs and speakers, provides a broad resource. Attendees will make of it what they will, and one person's FreedomFest will no doubt be different than anothers'.
Posted by LibertyBelle on 06/15/11 01:04 PM
I understand and agree your point about Ron Paul, Bluebird (if our vote counts at all). We are hanging from a cliff,as a nation, and help has arrived (Ron Paul)and we refuse the help just so we can hang on the cliff a few moments longer. That is what a vote for the staus quo equates to. I have heard the "...he can't win argument" over and over -- it is always what is said about Ron Paul, so much so, that the "spoiler" aspect of him has become a dominant social meme(thx DB for teaching me to recognize these!) to prevent likely voters (perhaps even Mr.Skousen) from supporting him. What a perfect way to keep his message of Liberty and economic policies, the very things that can save our country, out of the White House -- tell his supporters he can't win! It is one of the ways that election outcomes are controlled. The media manipulates you into voting for the lesser of two evils...which is still evil. The money power maintains control and the beat goes on... I believe the only way to break free of the mind control and manipulation of the American political media is to see it, understand it for what it is, mind control, and not comply. (aren't we all here for that reason?) If we all voted upon principle instead of pragmatism Ron Paul would be the next president. What ever happened to principles?
I realized that as long as we continue to play to the two party hegelian dialectic, nothing will change and we will continue to decline as a nation.
Both parties represent the status quo, which is what must stop for our Republic and prosperity to be restored. Both parties support the same policies and they are passed on from one administration to the next. Many now call Obama "Bush the Third" and I see Mitt Romney in the same light...he, as President, will continue to promote many of the same failed policies of the previous administrations; Patriot Act, TSA groping, growth of the Police state, Nation building, reform Obamacare into Romneycare, reining in the internet ( the last bastion of freedom on the planet).
I have yet to find emphasis on restoring the Constitution in Mr. Romney's web site. He speaks of reforms and vision, but does not outline a plan. He takes few powerful or controversial positions with the exception of assuring us he will continue to support no reduction in military spending, and he supports NATO and establishing alliances with democratic allies, this equals -- Nation Building...a Bush policy that Obama continues, that we can ill afford economically or for our image globally. Strong military to defend our country in case of attack, YES! Nation Building...NO!
Finally, I would like to point out that Ron Paul's message of restoring our civil liberties and ending the foreign wars is appealing to a growing number of centrists Democrats who voted for Obama for his, now obvious, campaign rhetoric. Even Prof. Cornell West, leftist progressive, who worked hard to get Obama elected no longer supports him. These people are disappointed and feel duped by Obama. This is a HUGE demographic that I can GUARANTEE will not vote for Romney or any status quo Republican! Who will they vote for? Think about it. Ron Paul is appealing to these, cross over voters. So it doesn't matter if he splits the Republican party if he is a candidate who appeals to BOTH parties...to American citizens. Liberty, returning to our Constitution, the real possibility of restored prosperity, sound money, End the Fed and an end to endless wars is a powerful message. Lastly, the economy is THE ISSUE in this cycle. Does Mr. Skousken really think Romney has the economic intellect to beat Ron Paul on these issues?
Posted by rossbcan on 06/15/11 07:44 AM
"On the free market, everyone earns according to his productive value in satisfying consumer desires. Under statist distribution, everyone earns in proportion to the amount he can plunder from the producers."
- Murray N. Rothbard
"Division of Labor" (peaceful trade) versus "Division of Spoils" (enforced by conflict) Civilization.
Posted by Wayne on 06/13/11 09:43 PM
"Ha, feedbackers such as yourself spread the word."
You talking to me?
I am so devoid of wisdom and insight that I must have the Free Market to tell me what to do.
"On the free market, everyone earns according to his productive value in satisfying consumer desires. Under statist distribution, everyone earns in proportion to the amount he can plunder from the producers."
- Murray N. Rothbard
Reply from The Daily Bell
Good and clever point, thanks.
Posted by Wayne on 06/13/11 08:49 PM
"Read I Claudius and Claudius the God to see a narrative of how history will treat these banking families in the future. Over time, we shall see that nothing changed - that there were still Emperors contemptuous of their subjects. They are secret emperors now, in our view, but not forever ..."
Very good reference!
And as far as they are now hiding is secret goes, well, that's why you are the Daily Bell. You are the new Paul Revere, bringing the details of how to defend Individual freedom from thoese who would enslave, whether through chains, or mind control!
Reply from The Daily Bell
Ha, feedbackers such as yourself spread the word.
Posted by forbestop10 on 06/13/11 08:27 AM
Posted by forbestop10 on 06/13/11 08:27 AM
Mark is a pretty neat person. He deals in truth. In his letters he writes things like;"The last train is leaving out of Koyto station..." i reckon he's interesting. i always thought he meant American Eagle I Owe You. AEIOU. Mark is cool. i want to meet him on Masschuettes Avenue over there at his office up near Diplomatic Row.
Posted by Bischoff on 06/13/11 05:28 AM
"Now if we can only get you to see that Real Bills can be applied in an entirely free-market context (absent any government involvement) we will be entirely on the same page."
I catagorically state that Real Bills can ONLY EXIST in entirely free-market context without government involvement, whatsoever. If I left you with an impression to the contrary, I apologize.
I do maintain, however that state governments must be involved if the Real Bills are to be used as "legal tender".
To your statement: "Ha, you have done the libertarian world a service by rehabilitating the concept of Real Bills." ---- I must say that you give me too much credit. It is Dr. Fekete who singlehandedly has fought the fight to bring Real Bills back into popular consciousness. I am happy to have had him as my teacher.
Posted by Bischoff on 06/13/11 05:06 AM
"The power elite works by incrementalism and through fear-based promotions. Thus, they will create a system or facility and gradually corrupt it into authoritarian madness. One sees this deeply cynical and ruinous process over and over. The environmental movement of the 1970s has turned into an insane gambit that intends to penalize animals, humans and their environment for EMITTING CARBON DIOXIDE. The same thing can be said of the Fed. The elites planted it as a small monstrosity and took some time to create a large one."
I don't disagree with this statement at all. As a matter of fact, I heartily endorse it. I even say it applies to the Federal Reserve, except it does not apply as you assume.
Here is the way that I see it.
The big bankers always were concerned about congressional hearings to reorganize the banking business. After the 1907 Depression the necessity to do so became pressing for the Congress. To have a meeting without official record, where the NY bankers and Senator Aldridge could sit together and discuss the coming federal banking regulations, they decided to meet at Jekyll Island in great secrecy. They likely did write the legislation they wanted passed by the Congress. However, the political climate in the country did not favor the big banks. The NY bankers knew that they could not get their legislation passed, and consequently their thinking concentrated more on what to do in the future.
Here is how their contemplations tie into your statement.
When the NY bankers saw that the Congress would not enact banking legislation to put control over the banking system into their hands, they looked at the demands the Progressive Movement was making for a more even distribution of wealth. The movement tried to accomplish this by demanding an Income Tax Amendment. They also wanted to fight corruption in state legislatures in the selection of U.S. Senators by demanding popular elections for that office.
Therein lies the reason why U.S. Senator Nelson Aldridge initially opposed the Income Tax Amendment, but then full square supported the ratification of the 16th Amendment.
The bankers also stood fully behind the ratification of the 17th Amendment. The had the Hearst papers taut it wherever and whenever possible, because they realized that it would eliminated their opposition to central banking.
So, what significance did the ratification of the 16th and 17th Amendments hold to the furtherance of the interests of the big NY banks?
The 16th Amendment provided the U.S. Government with constitutional power to collect an Income Tax from the American people. The bankers knew that if they wanted to monetize debt and sell this debt, they had to have an iron clad guarantee that the government would be in the position to collect taxes with which to pay interest and to repay the debt. The 16th Amendment was that iron clad guarantee. Ratified when...??? February 3, 1913.
Furthermore, the big NY bankers also knew that, if they ever wanted the Congress to pass legislation to establish a central bank, they would not be able to do so as long as the state governments had a voice in the U.S. Senate. The renewal of the 20 year charter of the First Bank of the U.S. was defeated by strong opposition from the states. President Jefferson concurred. The renewal of the 20 year charter of the Second Bank of the U.S. was defeated by opposition from the states. President Jackson concurred strongly.
The 17th Amendment proposed to change the selection of U.S. Senators by state legislatures to an election of U.S. Senators by the people of the state. The big bankers realized that the 17th Amendment, designed to eliminate corruption by introducing more "Democracy" into the process, would in fact remove the voice of the state governments from the U.S. Congress. That is why they backed the ratification of the 17th Amendment with full force. Ratified when...??? April 8, 1913.
The Federal Reserve Act was signed by President Wilson on December 23, 1913.
Just as you alledge in your statement, down the line the 16th Amendment came in handy to conduct illegal FOMOs and get away with it. The new U.S. Senate obliged the bankers by passing an ex-post-facto amendment to Section 14 of the FRA in January of 1934 which retroactively legalized the illegal acts of the NY Fed bank that were started in the 1920s.
The 17th Amendment came in handy when it came to passing the Banking Act of 1935 which established a U.S. central bank in perpetuity. By 1935, every U.S. Senator was then popularly elected and could not be recalled by their state legislature. In fact, the U.S. Senators no longer represented the state governments, instead they represented the people at large who elected them only every six years. The majority of U.S. Senators today get their campaign contributions from the big banks to successfully prevail in popular elections.
There....that is how I see our statement to apply to the development of the Fed into a central bank.
Posted by Bischoff on 06/13/11 03:24 AM
"We don't want to stop your frequently interesting and insightful comments and we when we asked you stop posting the "1935-stuff" we were making a rhetorical suggestion based on the incorrectness of the statement. It simply not correct. But you are welcome to continue to make it and any other pertinent comments that come to mind. Fire away."
Thank you for your clarification and your generous comment.
The internet no doubt is a teriffic tool to communicate and learn. What also must be understood is that none of us has the absolute truth. We all only have our points of view, however staunchly expressed.
Sometimes, it is well to contemplate the meaning of phrases, words or expressions before rushing to conclusions. Also, more fact based conclusions are better than opinionated statements. Fact based conclusions can be easily questioned, not so opinions.
Thank you again for providing the platform to express my views, though they are often not accepted. They are however what I truly believe, and they are not given just to be contrary, nor are they given to fall in with a popular notion.
If the DB can accept controversal views, I for my part will state mine and explain them as best and as simply as I can.
Reply from The Daily Bell
"If the DB can accept controversal views, I for my part will state mine and explain them as best and as simply as I can."
Ha, you have done the libertarian world a service by rehabilitating the concept of Real Bills. Now if we can only get you to see that Real Bills can be applied in an entirely free-market context (absent any government involvement) we will be entirely on the same page.
Posted by Don on 06/13/11 02:56 AM
Aldrich's proposed bill starts on page 43. His bill never got voted out of committee because the public perceived it as "a scheme for a central bank in disguise." A situation that clearly called for a better disguise as delivered by Glass-Owen.
Final report of National Monetary Commission (Aldrich Plan) - 1912
Click to view link
Reply from The Daily Bell
Thanks for the link. We would argue that many of the elements that Aldrich and others wanted in the bill were incorporated.
Posted by Wayne on 06/13/11 02:35 AM
Massive intervention into Markets was commenced by the Republicans right after the Civil War
"Dickson G. Watts was President of The New York Cotton Exchange between 1878 and 1880. This exchange was one of the greatest arenas of speculation in America. Seats sold for as much as $45,000. At this writing, the bid is $770 and the trading ring is deserted. The epitaph of The Cotton Exchange is that our Great Society of Free Enterprise sup? ports the price of cotton above the world market. Speculators cannot out-bid The Government, so the price cannot go up. The price cannot drop because Uncle Sam has unlimited funds. There is a remote possibility that the cotton produc? ers will grow cotton faster than the Government can print money and the market will be free again."
Reply from The Daily Bell
The Civil War was Leviathan's turning point.
Posted by Rastindian on 06/13/11 01:56 AM
Stopping by Sir?
Now you make me feel like an outsider.
This is Home :)
I think the editor's note was clear enough, I don't need to expound on it as John Danforth(Its a habit of his now and I am not complaining) has put forth a most eloquent summary of it.
Reply from The Daily Bell
Ha, welcome home then.
Posted by Bischoff on 06/13/11 01:55 AM
"It was THEIR plot. They wrote the Act as we understand it Congress merely rubber-stamped it. And the world has been paying for it ever since."
If you get your history from Griffin's book "The Creature from Jekyll Island", no wonder you have to preference your statements with "as we understand it". It shows that you lack confidence in the knowledge you gained by reading just one book.
Expand your horizons. There are plenty of other books besides the Griffin book. You might have to pay a higher price for them. The popularity of a book has nothing to do with its accuracy. Particularly when it comes to information about the FED or banking. Books that threaten the FED are either not generally available or otherwise they carry a price which is so uncommonly high as to discourage any widespread distribution.
Believe me, Griffin may have told you about the meeting at Jekyll Island and the possible discussions which took place there. I don't doubt that the bankers assembled there wrote a wish plan for the Federal Reserve Legislation to give to Senator Aldridge to try and pass in the U.S. Senate.
However, until Edward Griffin or you can furnish me with the legislation they wrote and how their wording is the Federal Reserve Act of 1913, I say what "you understand" happend with the passage of the Federal Reserve legislation is in fact incorrect.
Just answer one question for me with regard to the passage of the Federal Reserve Act of 1913.
If the legislation the bankers wrote was "rubber-stamped" by the U.S. Congress and acted into legislation with the passage of the Federal Reserve Act of 1913, please tell me why these bankers, going through all the trouble to secretly cabal on Jekyll Island, were so stupid as to write legislation they needed to violate ten years later to gain an advantage...??? Why would they risk prosecution by committing a serious violation of the law they were able to write themselves?
The only answer to the question is that they were either really stupid, or the legislation they wrote to benefit themselves never was incorporated in the final Federal Reserve Act of 1913.
If you discount the existence of stupidity on the part of the bankers, then the only conclusion left is that what you "understand" about the U.S. Congress "rubber-stamping" the bankers' legislative proposal and passing it into law in fact never happend.
Reply from The Daily Bell
The words "we understand" were used because we do NOT know the whole historical process. But this much we do know:
1. The power elite works by incrementalism and through fear-based promotions. Thus, they will create a system or facility and gradually corrupt it into authoritarian madness. One sees this deeply cynical and ruinous process over and over. The environmental movement of the 1970s has turned into an insane gambit that intends to penalize animals, humans and their environment for EMITTING CARBON DIOXIDE. The same thing can be said of the Fed. The elites planted it as a small monstrosity and took some time to create a large one.
2. Every legislation is a price fix. Every price fix distorts the market and transfers wealth from the creator to someone else who will not be able to make "natural" decisions with it. The initial legislation creating the Fed was a mercantilist price-fixing activity. It only got worse from there ...
Posted by Lyuba32 on 06/13/11 12:26 AM
Firstly, I enjoyed reading about FreedomFest. Up until this point, I had never heard of it. I'm happy to know about it now.
Secondly, Mr. Skousen says, 'For one thing, he (Obama) should push through a major tax cut on US corporations to make them more competitive with the rest of the world.' He also says again, '…cut taxes (especially corporate taxes)'.
My question is, why? They certainly are not going to be bringing the jobs back home. That's a bygone era. I remember several years ago I worked briefly as a temp for a manufacturing company that produced conveyor belts. I remember on one occasion at a staff meeting we were told that one of the company's plants was going to be moved to Mexico. Fortunately, at the time it was not the plant that I was working at.
The sad part of the news was the company planned to pay (per employee) a total of $3 per/hr: $2 would go to the Mexican government and $1 would go to the worker. I was shocked when I heard that because I knew that some of the individuals who worked on the plant floor made around $13-$14 per hr. And that was after being with the company for at least ten years!
I think US Corporations are greedy and they don't deserve anymore tax breaks. The middle class are the ones who really need the tax breaks.
Posted by bionic mosquito on 06/13/11 12:03 AM
Once again you reply with a history lesson, and off the direct subject, instead of replying to the comments as presented.
I understand you do not reply to me, as you said you no longer would. I don't expect you will reply here either.
However, following are some of DB's comments, which you do not address because you cannot:
"And the establishment of the Fed gave rise to immediate abuses AS MERCANTILISM ALWAYS DOES."
"Supposedly the Fed governors at the behest of the Central Bank of London began printing more money than they were legally allowed to print because they were attempting to weak the dollar to bring it back into parity with the British Pound."
"Then after the crash, the establishment panicked and shut down the banks and confiscated gold because they did not want anyone to find out that they had printed too many dollars."
"If the Fed Act mandated nothing (did not fix prices) why did these powerful men want it?"
"And they apparently abused them and caused first a bubble, then a crash and finally the Great Depression."
Then my comments, which of course you will not address, not because you said you will no longer address me, but in fact because you have no response:
"Those behind the creation of the Fed never saw it as an innocent clearing house of real bills, they saw in it a tool for control of money."
"To create such a beast is to invite abuse of the power behind it. The burden sits on you to demonstrate where such power has been created and subsequently NOT abused."
You seem to believe that the original Fed act only failed because of bad people, while ignoring that a) bad people were the ones behind it, and b) bad people would have arrived on the scene sooner or later to take advantage of such a powerful entity. It is a naive belief, dis-proven by virtually every act of government enforced centralization known to man.
Reply from The Daily Bell
"You seem to believe that the original Fed act only failed because of bad people, while ignoring that a) bad people were the ones behind it, and b) bad people would have arrived on the scene sooner or later to take advantage of such a powerful entity."
It could not work as advertised but certainly further ruined the US economy. And in hindsight that was actually the plan.
Read I Claudius and Claudius the God to see a narrative of how history will treat these banking families in the future. Over time, we shall see that nothing changed - that there were still Emperors contemptuous of their subjects. They are secret emperors now, in our view, but not forever ...
Posted by Rastindian on 06/12/11 11:03 PM
Thanks to The Daily Bell for bringing these stalwarts to us, stall warts and all
Reply from The Daily Bell
Thanks for the kind words and for stopping by ...
Posted by Bischoff on 06/12/11 09:37 PM
There is no doubt that the big money center banks pushed to have any congressional legislation to reorganize the banking system be written so as to leave control over the system in the hands of the big banks in New York.
The fact that the big banks supported the ratification of the 16th and 17th Amendments proves to me that they had planned far into the future to eventually establish a central bank.
However, to accuse the U.S. Congress to be in on the plan from the beginning, and to have passed the Federal Reserve legislation to intentionally favor the big banks, is completely false. Yet, it is the popular "wisdom". Nothing could be further from the truth.
While Senator Nelson Aldridge from Rhode Island, the Republican leader in the U.S. Senate rounded up considerable support to give control over a federal banking system to the big New York banks, most U.S. Senators from other states strongly opposed his effort. He initially opposed the Income Tax Amendment, but in the end, he came out in strong support for its ratification. I wonder why...??? Don't you wonder why...???
The Congress held hearings for many years to deal with the recurring crises in the banking system. These hearings were spurred on by the fallout of the 1907 Depression. The congressional hearings of the Pujo Commission of the U.S. House as well as many hearings held by the U.S. Senate contributed to the final provisions in the Federal Reserve Act of 1913. These hearings were watched over by the big NY banks with great apprehension.
Contrary to the efforts of the New York banks to be given control over the Federal Reserve System, the final Federal Reserve Act of 1913 divided the Federal Reserve System into twelve districts. The currency creation was controlled on a regional basis by each of the twelve regional Federal Reserve bank. Each of these banks was responsible to account for their operation to the Board of Directors of the Federal Reserve System, the oversight body of the U.S. Congress.
The New York Federal Reserve Bank was just one of twelve individual, independent Federal Reserve Banks. However, based on the size of its banking business, it was twice as large as the next biggest bank, the Federal Reserve Bank of Chicago. Soon, the governor of the NY Fed, Benjamin Strong influenced the other federal banks, and intimidated the directors of the congressional oversight body to the point that when the NY Fed in the early 1920s started to conduct illegal Federal Open Market Operations, no objection was heard from the other regional Federal Reserve banks nor from the Board of Directors of the Federal Reserve System.
The illegal FOMOs conducted by the NY Fed crashed the stock market in 1929 and ushered in the Great Depression of the 1930s. The rest is history.
Why are the technical and legal differences between the pre- and post-1935 Fed the ONLY thing at issue here...???
BECAUSE, the pre-1935 Fed created a "redeemable" currency until 1933. It was a currency with a "positive value" suitable in which to keep ones savings. It was created only against Bills of Exchange (Real Bills) and gold in existence within the banks of a Federal Reserve district.
With the Banking Act of 1935, the U.S. Congress created a central bank to monetize government debt to create an "irredeemable" currency totally unsuitable to be used as savings. The individual state governments would have never, ever agreed to the passage of the 1935 Banking Act. However, the separate state governments gave up their voice in the U.S. Senate with the ratification of the 17th Amendment.
No matter how you structure central banking, monetizing debt is a Ponzi Scheme which sooner or later will lead to the collapse of the system as the compound interest spins out of control.
Go stick your heads into the sand, and wish that what I am saying isn't so. Not until you understand the difference between the pre-1935 Fed and the post-1935, do you also understand the importance of Bills of Exchange in a workable banking system. Yet, who wants to understand the importance of Real Bills, certainly not the central bankers and their academic stooges who have helped them sweep under the rug the importance of Real Bills in the creation a "redeemable" currency which puts control over money back into the hands of American businesses and American savers.
But then, who would want to know about that, right DB...???
Reply from The Daily Bell
"However, to accuse the U.S. Congress to be in on the plan from the beginning, and to have passed the Federal Reserve legislation to intentionally favor the big banks, is completely false."
Where did we accuse Congress? We suggested it was a banking plot from the beginning. You believe donning costumes and sneaking around is perfectly normal for these important men. We disagree.
It was THEIR plot. They wrote the Act as we understand it Congress merely rubber-stamped it. And the world has been paying for it ever since.
Posted by Col on 06/12/11 09:29 PM
I wouldn't put any faith in the Australian Economy most States have seen Commercial, Industrial & Domestic Energy price rises of over 300% just in the last 12 months which is set to possibly double by year's end owing to Australia's Prime-minister Gillard's (a Fabian Socialist) intention to introduce a "Carbon Tax" of $23-$26 per tonne.
Ask any Kiwi on the effects of their "Carbon Tax" whom have faced substantial increases in the costs of living.
Posted by bionic mosquito on 06/12/11 07:54 PM
The issue (at least for me) has nothing to do with whatever technical or legal differences there may or may not have been pre- and post-1935.
The issue is that once the Fed was created, it was certain to become what it became. Those behind the creation of the Fed never saw it as an innocent clearing house of real bills, they saw in it a tool for control of money. That the 1913 legislation was (perhaps) just getting the camel's nose under the tent was sufficient for those behind the curtain. They knew their time would come.
To create such a beast is to invite abuse of the power behind it. The burden sits on you to demonstrate where such power has been created and subsequently NOT abused. I know of no such event of any significance.
Reply from The Daily Bell
The initial Fed Act, like any other law, is A PRICE FIX. Simply the MANDATED ESTABLISHMENT of a Federal Reserve was enough to help set up the bubble of the Roaring 20s. Members of the Fed were also apparently eligible for DISCOUNTED RATES from the Fed window - another evident market distortion.
And the establishment of the Fed gave rise to immediate abuses AS MERCANTILISM ALWAYS DOES. Supposedly the Fed governors at the behest of the Central Bank of London began printing more money than they were legally allowed to print because they were attempting to weak the dollar to bring it back into parity with the British Pound. Then after the crash, the establishment panicked and shut down the banks and confiscated gold because they did not want anyone to find out that they had printed too many dollars.
This is "secret history" but we long ago confirmed it with several prominent Austrian scholars who have studied the issue at length. Mr. Bischoff may wish to deny it but every law is a price fix and every price fix DISTORTS THE MARKET and moves wealth from where it is earned to where it is not.
If the Fed Act mandated nothing (did not fix prices) why did these powerful men want it? Obviously it did something - provided government mandated privileges - that they would not have had otherwise. And it did. And they apparently abused them and caused first a bubble, then a crash and finally the Great Depression.
Posted by bionic mosquito on 06/12/11 07:49 PM
DB: Given the frame of reference about economic and sociopolitical issues provided here every day by elves and feedbackers alike, we believe people are capable of making up their own minds about Mark Skousen's comments.
BM: To be clear, my intent was not to be critical toward DB. In fact, it was due to the last Skousen interview that I came to what I believe is a more appropriate place as regards my relationship with this site. As to my overall view of the value of this site to my continuing education, my regular participation speaks for itself.
DB: We recommend the Bug's blog by the way. Very well done.
BM: I thank you kindly, and am humbled.