For anybody that hasn't, I would ask only that you read what I have to say before dismissing me for having invoked what I am sure many on the far left reaches of webdom would consider to be the holy triumverate of nut-root-dom.
Hayek, Friedman and Rand promoted the idea of Capitalism as the highest ideal for man to achieve happiness. The purpose for this is that true free-market capitalism is the swiftest way that people are rewarded fairly for the skills and the work that they provide. Subsequently it is also the swiftest way for people of no particular name or history to rise to great prominence. One need look no further than the recent rises of men like Mark Cuban, Bill Gates or, for those of you misguided enough to believe capitalism necessarily excludes poor black folk from the south, Robert Johnson, to understand that this is indeed the case.
Our current economic situation has many crying foul of Capitalism, denouncing the free market as having brought the economy to its knees. I should hope, if you're reading this, that you already understand this not to be the case. If you do not understand this, please allow me to assure you that indeed it has been, over the course of time, intermittent meddling by the government, coupled with immoral practices within the marketplace, no doubt by people far too intertwined with the immediate success of the regulators themselves (Read: Political Corruption: Chris Dodd, Barney Frank, Franklin Raines, etc.), that have created the situation.
Now, it should further be understood that even further down, at the very root of the problem, where the life of even the smallest corruption begins, is with our country's monetary policy, embodied by the organization known as the Federal Reserve.
There is much to be discussed about how the Federal Reserve operates, but the simplified version is that it was created purely for the purpose of allowing the Federal Government to spend beyond its means, and essentially forever. The beginning of the Federal Reserve in the United States represented the first step away from the Gold Standard for our money. Our Constitution itself requires, to this day, that our money be tied to some sort of tangible product.
People like Rand and Friedman and Hayek argued that in order for the idea of Capitalism to remain the highest ideal, the money always had to mean something. To untie money from the substance that gave it its true value was, particularly to Rand, the root of immorality. This may seem a stretch to many of you, but it is actually only a short jump intellectually.
As an example, and indeed this is how our money used to work, if I had one gold coin, and I knew that for that one gold coin, I could hire a man to paint my porch, I could know that I would get my porch painted well, and he would know that I could pay him one gold coin, which in turn he could then trade to somebody else for whatever that one gold coin was worth to them, perhaps his weekly groceries. With the always-tangible value associated with the gold coin, I must not only respect the man painting my porch, but he must also respect me. Collectively upon entering the agreement to paint my porch, I would subsequently respect that my gold coin was going to allow the man to respect another person in an equal manner.
Enter the creation of the Federal Reserve and the idea, promoted by Keynes and largely instituted by FDR, of defecit spending through a combination of going into immediate debt, as well as inflating the currency, meaning printing more of it than had previously existed. For many years, while we were issued paper money, notes known as Silver Certificates, we were able as citizens to go to the government and trade our paper currency in for physical silver. This ended with the collapse of Bretton Woods in 1971, when our government officially announced that it would no longer allow this conversion, and that, as you will find on your bills at this moment, the currency would be backed only by the "Full Faith and Credit of the US Government."
It is not difficult to understand why someone like Ayn Rand, who believed that in order for all men to live with the highest respect for one another, they be able to trade in a currency that held absolute equal value for all, that this was an extreme hazard to all people of the country, morally.
This video provides a fantastic explanation of what has happened to our money since 1971. Particularly well explained is the fact that it is not the goods themselves that have continued to become more expensive, rather it is the value of our money itself that has evaporated.
Now, as we embark upon what people are describing as the worst financial crisis since the Great Depression, economic history remains lost on our political leaders. Over the course of the past calendar year, our government has authorized two stimulus packages, as well as a massive bank bailout over and above our typical government spending totalling approximately $1.7 trillion.
The money is not coming from us via taxation at this point, though it will have to at some point down the line. Rather the money is coming from our government setting the tremendous example to its people of going deeper and deeper into debt and, where it cannot borrow, it continues to print more money, further inflating the dollar and further reducing its value.
When one cannot know the true value of the dollar bill in his hand from one day to the next, that dollar bill holds no moral purpose. No longer can I call upon a man to paint my porch for say, $100 today, and know that by the time he finishes painting that porch at the end of the week, that that same $100 will still buy him his weekly groceries. The bond of respect between us over our transaction is necessarily eroded since, over that time, as he had expected to eat for a week from our agreement, he can now only eat for three days. He will want his similar just compensation in value, meaning more money to eat for that week, and I will not want to give it to him, because that was not out agreement. We will fight over the value of what he accomplished and will terminate our relationship having lost all respect for one another. Such will be the state of any transactions made between all people.
The United States of America set out to show the world that a government of the people, by the people, and for the people would live on forever. One of the pillars of the ability of the people to govern themselves was that our money retain its true value. Our government is, almost daily, in the process of devaluing that currency. In the process, not only do they devalue our currency, but they subsequently devalue the respect we hold for one another in our daily interactions and daily transactions.