Dr. Schoon on the Financial Crisis

Bringing this over from my old blog which was hypomarx@gmail.com
from Wednesday, December 5, 2007

An interesting article from Darrell Robert Schoon. I do not agree with all he says. I do know that we in the USA live under a fractional reserve debt capitalist system which is like saying we live under Pharaoh in Egypt. I certainly do not think that free markets are a panacea. I am certainly not a libertarian or anarchist.
yours truly, Hypo Marx

http://www.drschoon.com/The stock market surged upwards upon hearing the US Federal Reserve may cut interest rates to save the economy. This is tantamount to heroin addicts rejoicing their morphine will be increased because doctors are concerned about their rapidly failing health.Recently, Bloomberg News noted:"U.S. Stocks Rally for Second Day; Citigroup, Google Shares GainBy Elizabeth StantonNov. 28 (Bloomberg) -- U.S. stocks staged the biggest two- day rally in four years, led by financial shares, after Federal Reserve Vice Chairman Donald Kohn reinforced expectations for another interest rate cut. "The record 331 point gain in the Dow reinforced the fact that the fundamental driver of today’s markets is not productivity, profitability, or growth but rather the availability of cheap credit.Prices depend on buyers and when buyers depend on credit and credit becomes dear, prices collapse.page 3, How To Survive The Crisis And Prosper In The Process. Since August, central banks have been pouring credit into financial markets in Asia, Europe and the US in the hopes of containing a credit contraction that is threatening the stability of capital flows and global finance. It is not working. The current credit contraction is the beginning of the end of credit-based capital markets as we know them. ALL MANAGED MARKETS COLLAPSE. COMMUNIST MARKETS COLLAPSE SOONER CAPITALIST MARKETS COLLAPSE LATER. In August as credit markets were beginning to fail, I spoke at Professor Antal E.Fekete’s Gold Standard University Live (http://www.professorfekete.com/gsul.asp) in Szombathely, Hungary. In my speech (available at http://www.drschoon.com/media.asp), I pointed out that capitalist and communist markets are not free markets—both are managed and both are destined to collapse. Communist and capitalist markets, while fundamentally different, are both managed markets—though for different ends and in very different ways. Communist markets are managed by governments setting production goals and price controls. Capital markets are managed by central banks issuing credit in the form of debt, thereby indebting producers, savers, and governments with unsustainable levels of debt—which is where we are today. WHAT WE DON’T KNOW ABOUT HISTORY EXPLAINS IT. Capitalism, sic credit-based economies, first appeared in England in 1694 when King William III chartered the Bank of England, the world’s first central bank. The legal issuance of credit-based money by private bankers via a central bank enabled England to dominate global commerce and world power for the next 200 years.But by 1900, even the spoils of imperialism could no longer pay for England’s mounting debts and expenditures. In the 1870s, increasing military costs combined with a negative balance of trade began to drain England’s treasury of its gold and England’s reign as a world power was over. England was then succeeded by the United States whose economy, at the time, was savings-based, not debt-based. However, in 1913, this changed. In 1913, private bankers accomplished in the US what they had previously achieved in England—the creation of debt-based money by a central bank and the implementation of a national income tax now necessary to pay for America’s increasing debts. Mike Hewitt’s revealing article on this subject, America’s Forgotten War Against Central Banks, is a must-read and is available at http://www.dollardaze.org/blog/?post_id=00255."