Change is coming whether we want it or not.  In fact, it is already here.  The nation’s financial system is in turmoil.   The nine largest banks in the country have all but been nationalized by the federal government, the markets are scared and showing it; and, the possibility of a long and deep recession is beginning to put pressure on average folks who are trying to find what all of this means for them. To be sure, everyone will have to more closely watch his or her finances and strive toward a more frugal, long-term outlook. 

While economists are still in general disagreement as to how long, how deep and how significant this recession will be, we are even now witnessing rising unemployment, a lack of credit, and the Fed leading the charge toward hyper-inflation as they crank up the printing presses and create money out of thin air. And while the miscreants on Capitol Hill speculate, hypothesize and hold hearings and point fingers of blame for the current mess, the specter of authoritarian socialism looms over this republic, but the only people who seem to want to acknowledge this fact are those on the right – and no one, most certainly no one in government – seems to be taking us seriously. Indeed, of those who are even willing to acknowledge where we are headed, few will admit that we have already been on our way, ‘fellow travelers,’ so to speak, for quite some time.

To better illustrate this fact, I shall endeavor to point out the glaringly obvious with the help of Karl Marx. The following are what Marx in his Communist Manifesto deems as 10 essential elements to achieving socialism:

1. Abolition of property in land and application of all rents of land to public purposes.

2. A heavy progressive or graduated income tax.

3. Abolition of all rights of inheritance.

4. Confiscation of the property of all emigrants and rebels.

5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

6. Centralization of the means of communication and transport in the hands of the State.

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.

8. Equal liability of all to work: Establishment of industrial armies, especially for agriculture.

9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country.

10. Free education for all children in public schools: Abolition of children’s factory labor in its present form: Combination of education with industrial production, etc.

Marx also notes:

“Of course, in the beginning, this cannot be effected except by means of despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production.”

Certainly no one would be foolish enough to suggest that the United States has already gone full-blown “commie.” But, one would have to be a fool to deny the fact that our government and politicians have been moving us steadily toward socialism by their insistence on more and more social and entitlement programs, giveaways, and interference in the economy and our personal lives. Even a cursory glance at the list above ought to raise a few red flags (no pun intended…). Of course the US has not met all of Marx’s essential requirements to facilitate socialism, but the groundwork has indeed been laid.

That said, here is something the average citizen should understand but does not: government is force, and every time government increases the amount and extent of its interference in the economy, in our social relations, in our commerce, it usurps our liberty little by little. It is unnoticeable at first, as such usurpations seem incremental; until suddenly the nation wakes up to realize that it is no longer free, that liberty has been sacrificed for empty promises of physical and economic security, and that the people have received – and will only receive – nothing for the sacrifice of their liberty. People don’t understand this because they have only been taught that government is good and benevolent and that its most noble purpose is to help the people on their way to success. Over the last several decades the general perception of what government is vis-à-vis what it ought to be has shifted decidedly in favor of bigger government and the welfare/nanny state.

The Federal Reserve and Federal Income Tax Acts both of 1913, the New Deal and Great Society and all the social-welfare programs contained therein, and, yes, the extraordinary consolidation of executive powers through the Department of Homeland Security and the Patriot Act are just some of the more glaring examples of government interference and interventionism. Certainly one cannot omit the government forcing the nation’s nine largest banks to “participate” in its bailout program, by which these banks taken federal money under coercion and the government assumes what it terms as “observer status” with a non-voting seat on the board. This sounds innocent enough, except for the fact that it is highly probable that at future board meetings the “observer” from the government might offer “advice” or “suggestions” to the controlling officers of the institution as to the government’s position on a particular course of action. Such situations easily conjure up images of the Soviet Political Officers or KGB officials inserting themselves into the everyday business of the citizenry.

It is noteworthy that this is not where we are headed – it is where we presently are. So, what of the future? What will define what is rapidly becoming our American Socialism? Will it merely be an iPod and a cell-phone in every child’s book bag, enrollment in the new national healthcare program, and annual re-distribution checks sent out from the Treasury to those too “poor” to contribute, or will it devolve into something even more sinister? 

The great economist Ludwig von Mises wrote a great deal on the subject of government encroachment in the economy of nations, and we and our “representatives” in Washington would to well to heed his warnings. Mises concluded that government meddling in the economy, interventionism, can only lead to socialism, and that socialism cannot subsist unless it takes on an authoritarian nature, which is its tendency. 

In his essay “Middle-of-the-Road Policy Leads to Socialism (1950),” Mises wrote, “There are two methods available for the transformation of capitalism into socialism.” The method by which the US is moving toward socialism is, according to Mises, “…the method of the Hindenburg plan, the originally German pattern of the welfare state and of planning. It forces every firm and every individual to comply strictly with the orders issues by the government’s central board of production management. Such was the intention of the National Industrial Recovery Act of 1933, which the resistance of business frustrated and the Supreme Court declared unconstitutional. Such is the idea implied in the endeavors to substitute planning for private enterprise.”

Mises continued his remarks on British and German socialism relative to the United States: “The United States embarked later than these other two countries upon this decline, and is today still farther away from its end. But if the trend of this policy will not change, the final result will only in accidental and negligible points differ from what happened in the England of Attlee and in the Germany of Hitler. The middle-of-the-road system is not an economic system that can last. It is a method for the realization of socialism by installments.”

The devolution of a nation into socialism has as much to do with economics as with politics. Government intervention in the market in the interest of enforcing “fairness” or in striving to manipulate such conditions as to create artificial conditions to continue an economic “boom,” leads to ever more widespread encroachment and manipulation to perpetuate artificial “boom” conditions, because it cannot be otherwise. If government implements price controls for one commodity it follows that the new condition will affect the production of that commodity to where its components must be strictly regulated and controlled, thereby expanding government intervention into areas of the economy never intended by enactment of the original policy. This is the law of unintended consequences, which itself is the result of the short-sightedness of policy makers and economists who look to the immediate solution or fix for one aspect of the economy or one class of people (farmers, middle class, etc.) without taking the time to think through the potential long-tem affects of their brainchild, and whether and to what extent those affects would be beneficial or not. 

Government is force and money is power and the two, force and power, should never be allowed to become concurrently subject to the arbitrary whims of government officials, bureaucrats and spineless and corrupt politicians. Should such a thing occur, as it has recently here with government acquisition of the nation’s nine largest banks, a republican form of government and rule of law will not long endure such temptation and tyranny. 

Socialism is coming no matter the outcome of the presidential election, and in many ways it is already here. The only way to stop it is to un-elect it by re-forming the ideological and socio-economic outlook and understanding of the people. In other words, demonstrate to the masses how government deceit, corruption and misguided planning, subsidy, welfare and other interventionist policies set about to ruin a solid free-market system that works best when simply left alone and unencumbered by government nonsense and politics. Given the current state of the economy and the possibility of what is to come with a pro-socialist majority in both Houses of Congress and occupying the White House we can be sure that things will get worse before they get better. Ironically, for that we might actually be thankful soon, for in our need to gather evidence and data to present and make our case against socialism to the people, government will have largely done our work for us. All we need do is present what they provide, which should be sufficient.

Bad things happen. It screws up everything – even the correct understanding of what, exactly, government is supposed to do and, more importantly, what it ought not to do. For those within the government, especially you “progressive” and faux-conservative politicians out there, here’s a little clue: the government has no business messing with the economy. Our government has become so monstrous that the confused masses of America now overwhelmingly look to this Leviathan to cure all that ails our nation. Why? Because they’ve been taught to. They don’t know that government has no such Constitutional authority as helping citizens and funding businesses and fixing the economy. Perhaps they (especially politicians) ought to actually read the document some time – it is very enlightening indeed.

Here’s how bad it is: when most people are asked who is to blame for the economy being screwed up, they tend to answer that the government is responsible. This answer is not at all incorrect. But, here’s the problem: when asked how the woes of the economy ought to be healed, most believe that the government needs to “do something about it.” Then they demand that Congress and the President act now! Seriously – isn’t the government the entity that is responsible for screwing things up in the first place? Now we are demanding that this screwed up government “fix” things? We want to entrust an impotent and self-serving Congress with a 9% approval rating and an Administration with little understanding of Constitutional restraint to “fix” things? The government has no business messing with the economy in the first place because in doing so it just messes things up even more and ends up costing the taxpayers (don’t even get me started).

On Sunday Treasury Secretary Henry Paulson announced that Freddie Mac and Fannie Mae were being placed in a “government conservatorship.” The plan to take control over the companies was approved by Fed Chairman Ben Bernanke. Paulson also affirmed that the Treasury would do “whatever it takes” to keep these two bastions of government excess from failing. Initially the Treasury would receive $1 billion in preferred shares, and then is initially prepared to provide up to $200 billion to help the companies heal from their financial hemorrhaging over excessive risky home loans. Remember that word: initially… you’ll see why in a minute.

The CEOs of both companies were fired – sort of. Freddie Mac’s Richard Syron and Fannie Mae's, Daniel Mudd, were respectively replaced by David Moffett, a former top official at US Bancorp and Herb Allison, formerly with Merrill Lynch. But, Syron and Mudd won’t be leaving immediately – they’ll be sticking around for the transition. If that weren’t enough, The Treasury's plan puts the two companies under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency.   FHFA was created recently by Congress specifically to oversee Freddie and Fannie. Are you beginning to see the pattern here?   Try Googling FHFA.gov to find its website and you’ll see that there is none. Either the agency is too new, or the government has become so big there’s no more room left in cyberspace for any more.gov websites. I am inclined to believe the latter.

According to the Wall Street Journal, with the government seizure of Freddie and Fanny, “the U.S. mortgage crisis entered a new and uncharted phase, potentially saddling American taxpayers with billions of dollars in losses from home loans made by the private sector. Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.” Potentially? Are they kidding? The bill is already in the mail.

But, the best is yet to come. Secretary Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide.

Do you know what that means? Think back to where the Treasury pledged to initially provide up to $200 billion and how Secretary Paulson stressed that the Treasury will do “whatever it takes” to save Freddie and Fanny. Factor that in with the $5 trillion of debt that is owned by foreign central banks and investors and then put Congress into the mix, and guess what you have? A Congressional authorization for our comrades at the Federal Reserve to do “whatever it takes” even to the tune of, oh, say, $5 trillion. After all, it won’t really be “debt,” because said “debt” will just go back to the Treasury to be auctioned off to more foreign central banks and investors. And eventually, our taxes will go up and we’ll pay for foreign bankers to get filthy rich. 

Keep in mind that the whole reason Freddie and Fanny were created by Congress is summed up in the following signature mission statement: “Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac raises capital on Wall Street and throughout the world's capital markets to finance mortgages for families across America.” Translated from Congress-speak this means: all investments through Freddie and Fanny are safe because Uncle Sam guarantees them. 

There is no risk at all to the investor. And that is exactly the problem. That is exactly why government should never, ever be involved in messing around with the economy.

From the Wall Street Journal: “The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits.”   And they will. And the people will be angry, but Congress won’t care. You can bet on a new-and-improved “public-private scam that will certainly fleece the taxpayers of even more money. 

One economist from the University of Pennsylvania's Wharton School said, “Without government support for the mortgage market, home prices would fall much further, exposing the country as a whole to greater economic strain.” Any reasonable person who has ever read the Constitution with even a modicum of understanding and who gets the basic principles of supply and demand as the basis of a free market capitalist system of economics would argue the exact opposite. Why? Because of the difference between a supply system vis-à-vis a command system: once the government enters into the business of supporting various sectors of the economy the entire economy becomes de facto an artificial bubble, ever more removed from the reality of the market and prompting more and more government intervention until the government has to take control of or nationalize most of the economy in order to regulate prosperity and production and keep the whole thing from imploding. The problem here is obvious: Freddie and Fanny are the most startling examples of who our Founding Fathers never intended the government to be involved in such things.

Today President Bush had this to say: “Putting these companies on sound financial footing, and reforming their business practices, is critical to the health of our financial system and to making further progress with the housing correction that today is weighing heavily on our economy. Allowing the companies to fail or further deteriorate would damage our home mortgage market, and could weaken other credit markets that are unrelated directly to housing." He went on to stress that this is not a government bailout. 

Well, if a pledge of $200 billion for starters with a real possibility of running into the trillions is not a government bailout, I don’t know what it is. Wait a minute - maybe I do. It’s called nationalization. It’s called command economics. It is a deadly endeavor for a free republic. It is the inevitable result in a series of mortal errors that began with the creation of a central bank, the Federal Reserve System, by the Federal Reserve Act enacted December 23, 1913. That Act alone was a treasonous violation of the Constitution that has effectively sealed the ultimate fate of this republic – unless it can someday be repealed. It was shortly followed by another treasonous abomination, the 16^th Amendment ratified 03 February 1913 resulting in the Federal Income Tax Act of 03 October 1913. All must be repealed because all are deadly to a free republic because they by their nature usurp Liberty and encroach upon the rights of the individual. Not surprisingly a progressive income tax and a strong central bank are number 2 and 5, respectively, of Karl Marx’s list of 10 essential measures that must be enacted in order “to centralize all instruments of production in the hands of the State, i.e., of the proletariat organized as the ruling class; and to increase the total productive forces as rapidly as possible.” For those who are interested, this list is located toward the end of Chapter II of the Communist Manifesto. 

Every American should read the Communist Manifesto. They should read it so that they all understand what happens when government gets too big. They should read it all be frightened and angered. They should read it so that they can better understand why our Founding Fathers gave us the Constitution of the United States of America, and why that document was crafted so as to never to be tampered with or reinterpreted, lest we lose our Liberty to government hegemony, for such hegemony against individual Liberty is the only possible result when government grows too big to be stopped. It feeds on Liberty and snuffs out freedom. And this is only the beginning – unless it can be stopped.