Why did the gold standard fail?

If the classical gold standard worked so well, why did it break down? It broke down because governments were entrusted with the task of keeping their monetary promises, of seeing to it that pounds, dollars, francs, etc., were always redeemable in gold as they and their controlled banking system had pledged. It was not gold that failed; it was the folly of trusting government to keep its promises.

- Murray Rothbard

Behind Closed Doors

From Marketwatch:

Pelosi said the exact timing of the House vote would depend on the outcome of closed-door meetings currently underway on Capitol Hill.

Freedom is won on the field and lost behind closed doors.

$700,000,000,000.00

I wonder what $700,000,000,000.00 could buy, you know, if we were to actually put it to some constructive use as opposed to, you know, handing it over to Wall Street.

One can only imagine.

Quote of the day

We are little lost children who believe in fairy tales. We believe in Santa and the Tooth Fairy. But we don't believe in the Big Bad Wolf. That would be an impossible conspiracy or organized planning. We are in denial. We are part of the conspiracy of silence. There is no such thing as organized crime on the international level. The economy is just a series of random events and unpredictable black swans.

- The Guest

Boston Globe reader: On the Bailout

A letter to the editor from a Boston Globe reader:

I have an idea for a piece the Globe should write ('Inside Congress’s housing repair kit,' July 31): an analysis of two buyers who bought roughly the same house in the same neighborhood for the same price (say $500,000) at the peak of the market. The first buyer does things the right way: 20 percent down, documents income, fixed interest rate, mortgage = 28 percent of monthly income. The second puts nothing down, lies about his income, gets a negative amortization adjustable rate mortgage that resets so that he now pays 40 percent of his income. Home prices drop 20 percent since they bought.

The first guy has lost all his equity. The second guy gets to participate in Barney Frank’s and Chris Dodd’s great bailout plan. He negotiates his loan down to $360,000 and gets a lower fixed rate than the first guy since his new mortgage is subsidized by the Federal Housing Administration (read: the US taxpayer). He is rewarded for stupidity and lying.

Do I have this right? Is this still the USA we live in?

I have never in my life been more sickened by a piece of legislation than this one.

What more could I say.

They didn't understand

The great housing crash is rolling on and lately there's a lot of talk about what happens next, the bailouts. There is a strong contingent of support for bailing out homeowners based on the fact that the government has already held no hesitation towards bailing out Wall Street players. So the argument goes, if they can be bailed out, why can't homeowners? A better question might be, why should anyone involved be bailed out?

Gretchen Morgenson at the New York Times was writing about the bailout controversy over the weekend and brought up that point above about Wall Streeters enjoying bailouts while homeowners have not (so far):

Borrowers who are in trouble on their mortgages have seen their government move slowly — or not all — to help them. But banks and the executives who ran them are quickly deemed worthy of taxpayer bailouts.
...
The message in this disconnect couldn’t be clearer. Borrowers should shoulder the consequences of signing loan documents they didn’t understand, but with punishing terms that quickly made the loans unaffordable.

This is a common premise coming from the pro-bailout crowd, roughly, that borrowers didn't understand their loans. As the basis for an invasive, socialist, taxpayer funded bailout, it is inadequate. Many homeowners clearly did understand their loans, yet they chose to take a gamble on a home purchase with the idea that their home's value would increase and net them a reward.

So how is it that such gambles should be subsidized by the hard-earned money of others who had no involvement whatsoever?

Freedom to make bad decisions is inherent in the freedom to make good ones. If we are only free to make good decisions, we are not really free.

- Ron Paul

Quote of the day - Power Grab

Quote of the day

The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.