On December 16, 2008, the US Fed took the last step down the conventional road which they had been travelling ever since they came into existence at the end of 1913. In mid 1913, as a pre-requisite, the federal government got a constitutional amendment (the 16th Amendment) giving them the power to tax the income of their citizens - “from whatever source derived”. To do this effectively and efficiently, a
uniform medium of exchange under the control of and issued by the government was required. This, in turn, required a central bank with the sole authority to issue what would circulate as money. The creation of the Federal Reserve, ten months after the passage of the income tax amendment, took care of that.

The income tax amendment “guaranteed” the federal government an internal income stream. The establishment of the Fed “guaranteed” the federal government a means of payment over which they had sole control. The Fed took care of the “elastification” of the US Dollar which, henceforth, would be issued exclusively in the form of a “Federal Reserve NOTE” - long the only “legal tender” in the US.

The next time you hear an economist or government “expert” holding forth on the subject of the “failure” of the free market and/or the absolute necessity for government intervention and “supervision”, keep the above firmly in mind. The power to interfere with, intervene in and “oversee” economic freedom and therefore, political liberty has been the exclusive preserve of the US government in Washington DC for
almost a century. And the US was a latecomer on the international scene.

The next time you hear your local central banker and/or Treasurer maintain that the current global financial crisis is a failure of regulation and supervision of the financial markets, keep the above firmly in mind. Neither the US nor any other nation in the world - whether developed, “developing” or in dissolution - has political or economic freedom or liberty. Nor, as a direct and inevitable result of that fact, does any of them have a SOUND MONEY. The global theme of the century since the onset of WW
I in 1914 is INTERVENTION - with money, with property, with incomes, with employment and with the choices that individuals are NOT allowed to make concerning all these (and many other) vital ingredients of the free market. What is failing, as it was always destined to do in the nature of things economic and as it has always without exception done in history, is government manipulation of money and markets.

Every frantic effort by every government in the world taken to “shore up” a failing credit money system over the past eighteen months has been designed to obscure this simple fact. Every claim that the present credit crisis “could not have been foreseen” or that “nobody knew it would get this bad” is warding off dark fears. These fears are not so much that the “system” is failing, it has been failing for decades. The fear is that the system is SEEN to be failing. No system based on “full faith and credit” can survive that.