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I was reading an article about the creation of the Federal Reserve Bank (boo, hiss) in 1913 and I came across this:
Faced with the supreme necessity of sustaining the national credit and providing a market for Government securities, the Secretary of the Treasury in 1863 passed a National Bank Act basing the issue of currency by the banks upon the purchase of an equal amount of Government bonds. That was a cardinal error which still remains uncorrected. It has entailed a vast locking-up of banking capital in Government bonds as security for notes, and it has made impossible a normal and elastic currency system based on commercial paper and similar assets and automatically adapting itself to the daily needs of business.
Cue utter confusion. For starters, why would a bank want to issue currency? Surely, a bank has all the money it wishes to lend out in the form of deposits. And what is meant here by currency? notes and coins or money in general?
…it has made impossible a normal and elastic currency system based on commercial paper and similar assets and automatically adapting itself to the daily needs of business.
This is really confusing. I can understand how notes work in a goldsmith system. Briefly, a depositor deposits some gold with the goldsmith and in return receives a receipt for that gold. The receipt, or note, is then capable of being used as money because it is literally “as good as gold”. I can see how government bonds might replace gold but it requires a depositor. And surely, once a depositor has deposited his bond the bank can issue its own receipts/notes rather than having anything to do with the government. Or maybe that’s illegal. Or maybe depositors would prefer to use government notes as they are accepted in more places.
“…a normal and elastic currency system”. What do they mean by “elastic”? Do they mean what modern-day Austrian economists mean i.e. inflationary? I doubt it because at the time the UK was on a gold standard which tends to be anti-inflationary [notwithstanding comments I have made about how there was some inflation at the time].
And what’s all this about commercial paper? The modern meaning is short-term business debt. I can kind of see how that would replace government bonds although presumably it would have to be extremely homogenous and what happens when the term is up?
And where, if anywhere, is the link with gold which, as I understand it, was one of the main issues in the 1896 presidential election?
Whatever the case may be it seems clear that the US monetary system was far from being a free market before the Fed came along.
One last thought: there are times when I think the confusion that monetary matters generate is deliberate rather than accidental.
 The Times 10 September 1913 page 8
It was twelve years ago now, so it is no particular surprise that nobody here, as September 11th 2013 comes to its end, had much to say about September 11th 2001. But Simon Clarke of Libertarian Home does say something of significance about this tumultuous day. In a posting entitled Libertarian Home started 12 years ago today, he says this:
To say that Libertarian Home is a result of 9/11 sounds like some random happenstance, but it was not. 9/11 woke me up, and got me thinking.
9/11 woke up a lot of people. It got a lot of people thinking. A great many blogs started up soon after that day. It wasn’t merely because, at around that time, they could. In the aftermath of 9/11 people found themselves wanting to say things that the regular media were not saying, and to criticise a lot of the things that the regular media were saying.
Simon did not immediately start writing blog postings, but he did start reading blogs, including this one, which is most gratifying to know.
In short, by 2013 the Republican Establishment had proved itself so alien to the domestic concerns of that majority of Americans who dislike the direction in which the ruling class is pushing it, that the party was becoming irrelevant. Despite the Bush Administration’s disastrous commitment to Nation-Building however, the memory of Ronald Reagan’s and Dwight Eisenhower’s forceful, levelheaded patriotism still lingered about the party.
But by urging war on Syria more vehemently than Obama, the Republican Establishment may have finished off the Republican Party, as we know it. Surely it has discredited itself.
– Angelo Codevilla
A while back, I did a piece here about US government space policy. I tried to answer the question of why President Obama was doing it so bizarrely well, given that he seemed to be doing lots of other stuff so bizarrely badly. My answer was basically that he is doing everything well, as he understands it. He believes the US government has been chucking its weight around in the world far too much of late, and that this aspect of its activities should be weakened. And he believes that the US government hasn’t chucked its weight around enough, domestically. That aspect of US government policy should be strengthened. All this has been and is being busily accomplished, indeed accomplished with considerable political virtuosity, with Big Government and the political party that favours Big Government working ever more closely in harmony with one another.
Norman Podhoretz seems to agree, certainly on the foreign policy bit:
It is entirely understandable that Barack Obama’s way of dealing with Syria in recent weeks should have elicited responses ranging from puzzlement to disgust. Even members of his own party are despairingly echoing in private the public denunciations of him as “incompetent,” “bungling,” “feckless,” “amateurish” and “in over his head” coming from his political opponents on the right.
For how else to characterize a president who declares war against what he calls a great evil demanding immediate extirpation and in the next breath announces that he will postpone taking action for at least 10 days – and then goes off to play golf before embarking on a trip to another part of the world? As if this were not enough, he also assures the perpetrator of that great evil that the military action he will eventually take will last a very short time and will do hardly any damage. Unless, that is, he fails to get the unnecessary permission he has sought from Congress, in which case (according to an indiscreet member of his own staff) he might not take any military action after all.
Summing up the net effect of all this, as astute a foreign observer as Conrad Black can flatly say that, “Not since the disintegration of the Soviet Union in 1991, and before that the fall of France in 1940, has there been so swift an erosion of the world influence of a Great Power as we are witnessing with the United States.”
Yet if this is indeed the pass to which Mr. Obama has led us – and I think it is – let me suggest that it signifies not how incompetent and amateurish the president is, but how skillful. His foreign policy, far from a dismal failure, is a brilliant success as measured by what he intended all along to accomplish.
I am seldom convinced by explanations of why the President of the USA has just done something that the explainer considers stupid, when the explanation is that the President of the USA is himself stupid. I didn’t believe this kind of thing when it was said about Reagan or Bush jnr by their political opponents, and I don’t believe it now when it is said about Obama, by his political opponents. Those who argue that this or that bad thing happened because the President is an idiot call this argument things like: “Occam’s Razor”. But I think they confuse brevity and simplicity, and what they want to believe, with truth.
If the President is so stupid, how come he’s President? He got that bit right, didn’t he? And President Obama is a member of an even more exclusive club, one that also includes Reagan and Bush jnr. He is a President of the USA who got himself re-elected. The dumber and more disastrous you think his first term policies were, then the smarter you must concede he had to be to win re-election.
I think the argument that Obama knows just what he’s doing and is doing just fine, by his reckoning, makes far more sense.
A generation from now, Americans will be richer, more leisured, healthier and longer-lived than ever. That sentence could have been written at any time since the Mayflower landed (at least of the settlers; it was a different story for the indigenous tribes). It would always have prompted scepticism; and it would always have been true.
– Daniel Hannan begins his response to America 3.0, an optimistic book about the historic origins of and future consequences of the exceptionalness of America, by James Bennett and Michael Lotus. Hannan shares their optimism.
The quick version of something the old plague-carrier said is that history repeats itself, the first time as tragedy, the second time as farce.
Second time as tragedy and farce would have been more accurate.
Top comment: “I did not set a red line, Bush did it and you are a racist”
There is a Samizdata team joke that the difference between American arrogance and British arrogance is the British think they run the world, whereas the Americans think they are the world.
Well just last week I started doing some business with a European bank… a quite mainstream one I might add… and discovered something remarkable. I had to sign a series of statements that I did not do business in the USA, had no assets in the USA and was not a US citizen or resident. Only then would they do business with me. Indeed I had to sign more papers regarding this than any actually pertaining to the business I was doing with them.
And this is why…
The Internal Revenue Service on Monday launched an online registration program for the hundreds of thousands of financial firms around the world that must comply with a U.S. anti-tax evasion law or risk being shut out of financial markets.
Surely a significant European bank must do some business in the USA, I asked. Can the world’s largest economy really be so onerous that you truly want nothing whatsoever to do with it?
Well he was rather guarded and he knew I was a blogger, which I suspect made him a bit uneasy at the prospect of being quoted, which is why I am naming no names. But to paraphrase the reply I coaxed out of him, it was “yes, the USA is simply not worth the trouble and so rather than complying with their endless diktats and the uncertainties of what are increasingly capricious rules… well… there is a whole great big world out there for us to do business with that does not include the United States.”
Yet I suspect the powers-that-be in Washington could not care less and moreover the notion that sophisticated foreign bankers are starting to see American not as the land of opportunity, but as a place to be avoided at all costs, would strike them as preposterous. Indeed had I not had those documents laid in front of me asking me to attest to a complete lack of economic links to the USA or anything associated with the USA that the US state might claim extraterritorial jurisdiction over… well, I would not have believed it myself.
Moreover, after our business had been concluded and he relaxed a bit, the banker in question, who I very much doubt is on any Interpol wanted lists (well I certainly hope not given that he now has some of my money) said he would not even visit the USA or transit a flight through it, due to the US authorities propensity to detain foreign bankers and ask them questions if they even suspect any involvement with US nationals, particularly from ‘non-compliant’ banks such as his.
Am I the only one who is astonished things have come to this? I am suddenly very glad I do not actually live in Arkham, Massachusetts (not sure which is worse, the IRS or the Deep Ones).
Mr Obama laments that the debate over these issues did not follow “an orderly and lawful process”, but the administration often blocked such a course. For nearly five years it appeared comfortable with the secret judicial system that catered to executive demands. It prized the power to spy on Americans, and kept information from Congress. Mr Snowden exposed all of this. His actions may not have been orderly or lawful, but they were crucial to producing the reforms announced by Mr Obama.
– The Economist
High-level whistleblowers know when they come forward that they’re sacrificing their national security clearance, likely their jobs, and quite possibly their freedom. Set aside for a moment what you think about the actions of Bradley Manning or Edward Snowden. Imagine you have a top-level security clearance, and you discover in the course of your work evidence of illegal government activity. Even going through the proper internal channels carries risks, and aren’t likely to change much, anyway. (Thomas Drake, remember, actually went through the proper internal channels to expose government spying — he was prosecuted, anyway. He now works at an Apple store.) Would you risk your career, your lifestyle, your family’s security, and possibly your freedom to expose it? How serious would it need to be for your to consider going public? It needn’t even be something as dire as national security. I’ve seen and reported on countless law enforcement officers whose careers were cut short (or worse) when they reported wrongdoing by other cops, or more systemic problems within their police agencies.
Radley Balko.
This is an issue that is unlikely to go away regardless of which political party holds sway in major Western powers. For all the talk about “freedom of information”, “transparency” and the like, the benefits of silencing awkward people are too great. And what is particularly hypocritical about all this is that governments routinely like to lecture banks, for example, on the need for their staff to sound the alarm about would-be money launderers.
Balko has interesting ideas on how to reduce the costs to those who sound the alarm.
It has been less than 42 years since a US President ordered his minions to break in to the opposition party’s headquarters in an effort to conduct espionage directed at undermining them.
Now, thanks to the NSA, no one would need to physically break in to anything — a few calls would be sufficient.
People keep talking about the current NSA scandal as though privacy was something intended to keep your neighbors from finding out you listen to embarrassing music — an understandable desire but ultimately of no great importance. To believe that is why people need privacy is to completely misunderstand what is at stake here.
Richard Nixon really existed, and was really elected to office. The problem is not a hypothetical one.
Consider just for a moment what an unscrupulous President, like Richard Nixon, equipped with the information already available from the NSA could do to his political opponents, to reporters trying to find out the truth about his activities, to anyone he thought of as being “in the way”. Consider how much easier it would be for such a President to find his enemies given what the NSA has already built.
Total Surveillance Means Absolute Power.
The surveillance systems that have been developed by the NSA are too dangerous for us to permit to exist.
(39 years ago almost to the day.)
A new story from The Guardian, barely twelve hours after the last set of revelations: “NSA loophole allows warrantless search for US citizens’ emails and phone calls”.
Yes, this one is indeed far worse than the previous ones, unbelievable as that might seem.
Explaining why to those not following in detail is almost not worth it any longer, however.
A friend of mine long ago coined the term “Outrage Fatigue”, the condition in which so many awful actions by a set of State actors have been revealed that one can no longer hope to track the entire list of their offenses and crimes in one’s head.
I have long since passed that point for the Obama administration in general. Imprisonment without charge, war crimes, coverups, the silencing of whistleblowers and dozens of other acts have become so numerous that I cannot hope to remember them all.
However, I have now passed the point where, even as a putative subject matter expert, I could hope to remember even everything that has been revealed about just this one scandal.
It is painfully clear that the contempt of the Obama Administration and its minions for the rule of law is near total, that their contempt for the truth is near total, and that one’s confidence in anything they say in public whatsoever should be precisely zero.
NSA Nabs Cabbie!
Yes, folks, you heard it here first! The NSA, in the midst of a full-court press to capture our hearts and minds, has revealed the secret of one of its most important cases. It managed to catch a cab driver who was sending $8,500 to Somalia. Countless lives must have been saved in the process!
With impressive results like these, it is obvious why we need a Stasi-like total surveillance state, at a cost of [redacted] billon dollars per year.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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