Republican bankruptcy and the need for a sound money party

I’ve thought a lot about this issue over the years: In a general election, do you vote for the guy you believe in who will get .1% of the vote, or do you hold your nose and vote for the best major party candidate who can win? Lately I’ve leaned toward the latter because civil power comes through coalitions. But it depends on the candidate.

I no longer expect much of political parties anyway. Power attracts power-mongers like manure attracts flies. Obtaining power is all that really interests the parties that have a chance of winning, and I think that’d eventually be the driving force for a minor party that breaks through to replace one of our major parties (meet the new boss… same as the old boss).

An election like 1994 or 2008 may bring a temporary change, but a more powerful tsunami — the market — could well wash a whole lot of political parasites and their allies (e.g. the massive education establishment for one) out to sea. It will wash a lot of bystanders out to sea too. Government will have no choice but to shrink. The parasite won’t give up, but the host is weakened.

The year 2008 really showed me the bankruptcy of the Republican party on economic matters. Philosophically, it (finally) became all too clear that that the party sits on the same foundation as the Democrats: Keynesian counterfeiting, fiat currency, and massive government spending. Oh, the parties may disagree on who gets the money and how — farmers instead of welfare queens, health care accounts instead of the single payer model, a meaningless tax cut for taxpayers (since it’s occurring without any cut in spending) instead of a meaningless tax cut for non-taxpayers, a different type of Ponzi scheme for Social Security — but the premise is the same. The premise is the right of the government to spend trillions of dollars. Republicans can rail about big government all they want, but the cuts they support won’t make a dent in the trillions that our government continues to borrow and spend each year. Republicans don’t want to risk short-term unpopularity even if it’d position them strongly down the road.

America didn’t get to its current state of bankruptcy without Republican complicity. They say that they support the free market, but even the most conservative Republicans tell us that the government needs to smooth the business cycle, it needs to liquefy the markets, it needs to create incentives for home ownership, it needs to protect us from a greater meltdown, it needs to extend SEC regulation, etc. These phrases all mean “more government intervention.” In other words: We’re for the free market, but we’re not. Republicans are the Michael Corleone to the Democrats Sonny Corleone. They want to create mayhem, but in a more orderly and controlled fashion.

The Bush Administration and the Republican Congress have been more fiscally irresponsible than the Clinton Administration and its Republican Congress. If you don’t believe that, look at the charts. George W. Bush has pretty much killed what little remained of the Republican “brand,” and Congressional Republicans spent whatever moral capital they had left when many of them voted for the bailouts. None of them (save one, more on that momentarily) have demanded that the Treasury and the Fed cease their irresponsible actions. They are working with the Democrats to hamstring future generations.

How will the Republicans ever recover? One way might be due to the sheer incompetence of Barack Obama and the Democratic congress. It’s too early to tell if Obama will be a popular fraud a la FDR, who charmed the public even as he greatly damaged the country, or an unpopular Jimmy Carter type who wears out his welcome quickly. The other way Republicans could return is the better way. There’s one guy who has had a principled voice in this mess, and he just so happens to be a Republican! Ron Paul understands that sound money is the basis for sound fiscal policy. Mr. Paul isn’t getting any younger, so the window for Republicans isn’t open forever.

We need a major political party in this country that stands for sound money. Look again at the charts to see the explosive growth in spending and expansion of the money supply since the U.S. completely abandoned the gold standard in 1971. This ability to spend via inflation (i.e. by increasing the money supply) has enabled the explosion of entitlements and programs that have done enormous damage to the social fabric of the country.

A friend of mine who supported the Iraq War (which I did/do not) has long said that if you don’t defend our country, then nothing else will matter. This crisis may show us something different: If you don’t defend the currency from counterfeiting and defend the economy by reigning in spending, and that includes the trillions the Iraq War will cost us before we get out of there, then you’re not going to have a country that has the money to defend itself. The days of buying everything on credit, including our armaments, appear to be numbered. How many empires have fallen due to bankruptcy caused in part by wars?

Friends, we will never drive a stake into the heart of Big Government without killing fiat currency. The parties used to argue money policy in the 19th century; they need to do so again. When powerful people can enrich and further empower themselves and their friends by stealthily (and legally) devaluing your savings, they will do it.

If the dollar collapses in the next few years and 200 million Americans end up back at zero, which could very well happen, those Americans may be quite willing to listen to what once seemed arcane. Experience is a harsh taskmaster.

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