Early on in his book “End the Fed” Dr. Ron Paul makes the following statement: “Everyone should have an intense interest in what money is and how it is manipulated by the few at the expense of the many. Money is crucial for survival. It is necessary for maintaining a free society. A healthy economy depends on it. Limiting political power is impossible without it. Sound money is essential for preventing unnecessary wars. Prosperity and peace are impossible in the long run without it. To understand money, one absolutely must understand what a central bank is all about. In the United States, the central bank is the Federal Reserve, the instrument by which our money and credit are constantly manipulated for the benefit of a privileged few.” (End the Fed, pp.3-4).

Here is a question to begin with: Have you ever really thought about why we need to have the FDIC (Federal Deposit Insurance Co.) if there is nothing wrong with our banking system? We always assume that whenever we wish we can just show up at a branch of our bank and slip our card into the ATM or write a check and we can withdraw as much of our money as we want, even up to the total sum we have deposited. After all, we’ve always assumed and been told that when we open an account, say for example a demand deposit (standard checking account) that the money is there for our use, that it is obviously ours, and that we can demand its redemption at any time, without notice. We’ve either been told or led to believe that once we deposit our money in a bank it is there for safe keeping, until such time as we, it’s owners, should decide to utilize it for whatever purpose we should choose. If this is indeed so, then why would we ever need the FDIC to insure our money, now up to $250,000 per account, if it is just being stored there in an account? This is one of those things that ought to raise a red flag, because although on the surface it seems benign, once one scratches even a little bit below that surface one soon discovers a mountain of evidence that only leads to more questions, and one of the best-kept open secrets of all time. What is that secret? The secret is the fact that our banks are inherently insolvent. The reason is called fractional reserve banking.  The primary culprit is the Federal Reserve.  (continued...)

In a speech aimed at further demonizing Wall Street by once again failing to accept that government also bears responsibility for the much of the ongoing financial meltdown, President Obama declared, “I have always been a strong believer in the power of the free market. I believe that jobs are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea.”

It is one thing to utter such words in a speech, and yet something entirely different to put them into action; and to date, all of Mr. Obama’s actions relative to the economy have been wholly manipulative and hostile to the idea of free market capitalism. To be fair, Mr. Obama is certainly not alone in his hostility toward true free market capitalism, for since the inception of the Federal Reserve in 1913 U.S. economic and monetary policy have been overwhelmingly interventionist and inflationary, building an faux economy with a fragile basis in easy money, easy credit, fiat currency.  (continued... examiner.com)

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.

Congress to debate passage of $700 billion “Taxpayer Bailout Economic Stimulus Act of 2008.” OK, maybe that’s not entirely true, but they should consider it. After all, it certainly can’t be worse than what is already being proposed, right? Just consider that with the unprecedented government intervention and unlawful appropriations of the public monies we have endured over the last couple of weeks to bailout several private financial institutions and lenders that failed because of poor, if not corrupt business practices and an overabundance of government meddling in the private sector, the best idea our friends in Washington DC can come up with to solve this ever-growing financial crisis is a $700 billion bailout package to save the companies that screwed us over in the first place. 

If nothing else, this just goes to show how really out of touch with reality the Washington elite are. And it is why I am proposing an alternative to this $700 billion monstrosity, one that will actually prove a benefit to the economy and the taxpayer.

So, what is this solution to calm the perfect storm presently ravaging our economy? It is a “bailout” for the taxpayers to the tune of $700 billion.   The original “plan” really wasn’t my idea. I first saw it posted on a fellow Townhall blogger’s site, which he titled “A Tongue in Cheek Plan for Fixing the Economy.” He gave the credit to a “Mr. T. J. Birkenmeier, A Creative Guy & Citizen of the Republic.” I liked it and thought about it and felt there was room for improvement. I asked the blogger if I could repost this and he said yes. But, after thinking about this proposal and doing a bit of research I have come up with a slightly different version of this plan. I will keep it simple, because there is no need to complicate it.

According to the IRS 138,893,908 individual tax returns were filed for FY 2007, but for the sake of simplicity lets round that up to 140 million.

The “Taxpayer Bailout Economic Stimulus Act of 2008” will would consist of a one-time $700 billion refund being sent in equal amounts back to all eligible citizens. Period. No fancy formulas or breakdowns of this tax rate or that tax rate - everyone who gets a check gets the same amount, plain and simple. So, what that essentially means is that every person who filed a 2007 individual tax return (form 1040) will receive a one-time lump-sum payout of $5,000 to do with what they please. That’s it. Easy, right?

There would be one catch. Before getting their checks all eligible recipients would have to read the Constitution of the United States, Milton Friedman’s “Capitalism and Freedom,” as well as “Economic Freedom and Interventionism” and “Liberalism: A Socio-Economic Exposition” by Ludwig von Mises. For those who are unfamiliar and bristled at the title of the last book by Mises, it refers to the Classic or Traditional Liberalism of the kind espoused by the Founding fathers of our nation. The bill would mandate the reading and testing of these works in the public school systems at least twice between beginning middle school and graduating high school. It would eliminate federal withholding for “income” tax purposes and all capital gains for a minimum of two years. It would also require that the Fed seek approval from Congress prior to printing any money, and that it report to Congress on a bi-monthly basis the estimated amount of liquid cash in the national monetary system.

Eligible recipients would then log on to a special and secure government website and, after creating their account by entering their unique taxpayer ID and coded password, take one online test each on the Constitution as well as on each book, and a final cumulative test on the general economic principles espoused within these great works as well as a comprehensive analysis on the Constitutional limitations on government. Immediately upon passing all the tests the recipient’s check would be mailed or electronically deposited, if so desired. This would ensure that all recipients had a solid foundation for understanding at the very least, the basic principles of liberty, free market economics, fiscal responsibility of the individual and government, that the proper respective roles of government and individual citizens in a free republic.

Such a proposal would be far more beneficial to the economy and to the republic than would the current government plan, if for no other reason than that the $700 billion government plan is far too expensive for its intended purpose and is also very, very stupid. But, given how we ended up in this mess, what should we expect from a government conceived and managed “solution” except incompetence, criminal behavior, and unadulterated stupidity? The “Taxpayer Bailout Economic Stimulus Act of 2008” is a far superior solution because, simply put, it is not stupid. It makes perfect sense for a number of reasons: 

First, this proposal is not a bailout. It is either a refund or an inheritance, depending upon how you look at it (just think about the amount of money the IRS confiscated from your families since the Federal Income Tax Act of 1913. 

Second, if you want to pass an economic stimulus package that will actually help the overall economy, said package ought to enable the recipient to do something significant. The recent stimulus check I received, while appreciated didn’t go nearly as far as is needed for its intended purposes. A substantial amount of monies returned to the people would have created the desired effect, but $1,200 when gas is at $4.00 a gallon… well, you get the idea.

Third, given the current situation it makes far more sense to stabilize the economy from the bottom up and not from the top down. Gove the money to the people who will decide where their confidence is in the general market and invest or purchase commodities and goods accordingly. For example, the primary thrust of Secretary Paulson’s argument for a top-down bailout of banks and financial institutions is that under the heavy burden of such vast amounts of bad debt, as the crisis is prolonged the fears of customers and traders will manifest themselves in runs on the banks and financial institutions and will ultimately result in crashing of the collective value of all of these companies, and hence the entire financial system will collapse completely in an economic domino effect. This argument is nothing more than fear-mongering, because it overlooks the simple fact that money in a free market system is equivalent to security, an so if given the money the people who pay that money in the first place will feel more secure (as in they will know they will not be going hungry and will be able to get to work…). When they feel financially secure, they will spend money, either on consumer goods or investing in stocks and commodities, and right now there are many bargains to be had on Wall Street. 

Large numbers of people buying stocks in troubled institutions actually does make sense. Why? Because you generally want to buy something like stock when it is cheap and hold it as it accrues value. T be sure, people would be buying that financial stock up immediately – as they are even now because they know that instinctively buying such stock now is a good bet to make more money later. With waves of people purchasing and therefore by default showing confidence in the overall soundness of the economy and the free market, Wall Street would rally and the value of all companies, public and privately traded would increase, the economy would expand, job would be created due to the affordability of innovation and we would soon find ourselves once again in cyclical upswing, and all without unnecessary government intervention and unlawful nationalization of sectors of the economy or unconstitutional bailouts of private companies. 

Fourth, sending large amounts of money directly to the people instead of to the failing banks and financial businesses is entirely Constitutional and sensible and has a far greater probability of succeeding. Why? Because, in essence, you and I are the economy (read the books…). Such action would truly be supportive of free market capitalism by empowering the consumer and letting the market dictate from there without unlawful manipulation by quasi-government agencies (cough! The Fed) to create artificial conditions conducive to the instability and collapses we are now witnessing because the government wants to perpetuate the upswing cycle and wholly avoid the downswing cycle. Such efforts to force markets and economies to do things and perform in ways that against they nature will never succeed and will only make the eventual downside more severe. Talk to the former Soviet planners about that.

Finally, such an action would boost confidence not only in the economy but also in government for finally realizing that it was the primary reason things are so messed up and for having the sense to trust the people and do the right thing. Bailing out massive corporations that are possibly going to be unresponsive to the injection of cash is just plain stupid. There is no reason whatsoever to appropriate hundreds of billions of dollars for the government to buy bad debt when at the same time there is plenty of reason to spend one-seventh of the current proposed amount and enable those individuals who are struggling to pay off those debts, and by solving their individual financial crises solve by default the collective crises of the larger economy by bringing the debt ratios of the various financial institutions into proper alignment and thereby allowing for the market to do what it alone does best – correct itself.

So, if you are a person who thinks they could use a spare $5,000 maybe you ought to copy this proposal and send it to your representatives in Washington DC before they give a whole lot more of your money to the wrong people and make things even worse.