Freddie Mac and Fannie Mae are poised for a bailout. In the words of John Edwards: "Why?" Have we not bailed out enough corporations, financial or otherwise, to satisfy the teat-suckers? And when I say teat-suckers, I mean everyone who would enrich himself through government plunder of his neighbor. How long can this charade go on?
FDR made private ownership of gold illegal, and nullified all private contracts that called for payment in gold in 1933. Back then, you could redeem your paper money for gold at $20 an ounce. Look closely at the $5 bill below. It is a "demand" note.
"The United States of America Will Pay to the Bearer On Demand..." Our paper money does not say that anymore. It does not even say "United States Note." It says "Federal Reserve Note." What is being held in reserve is anyone's guess. It could be Skittles or M&Ms.
The rate for foreign banks to redeem U.S. gold was set at $35 per ounce (inflation already) until Nixon closed the doors to the vault at Fort Knox, stating that at $35 an ounce, we will soon have not an ounce of gold remaining. Inflation has done its dirty work since then, to the point that our currency is, quite literally, not worth the paper it is printed on.
Senator Daniel Webster, denouncing President Madison's administration and its funding of the the War of 1812 through paper money, said: "Of all the contrivances for cheating the laboring classes of mankind, none has been found more effectual than that which deludes them with paper money." Paper money, the Federal Reserve, government bailouts - the whole thing is not only wrong, but unconstitutional.
So when the government bails out Freddie Mac and Fannie Mae, the Federal Reserve will once again create magikal dollars out of thin air for the purpose, and through the roundabout transfer of wealth, the taxpayers will one again be left holding the empty bag.
We are just kicking the proverbial can down the road, postponing the day of reckoning when our bloated system fails. Michelle Malkin is calling this "the Mother of All Bailouts." She also cites that John McCain (who knows a little about money - Keating Five? - and should know better) is riding the fence on the issue:
This morning, McCain says “I don’t think that there is a requirement for a government bailout” while reiterating that Fannie/Freddie “must not fail.” Cognitive dissonance, desperate straddling, or totally out of touch with reality? Take your pick. Even the free-market WSJ supports a federal bailout. Agh.
I’ve long warned of the inexorable bailout frenzy in the wake of last year’s stimulus-palooza. The Fannie/Freddie rescue will make the Bear Stearns bailout look like chickenfeed
It would be less painful to allow failure now, rather than to keep bailing out every "important" corporation to the point where the whole thing comes crashing down. And crash it will.
Government should not be the arbiter of prosperity.
UPDATE: Lew Rockwell calls it fascism. Indeed it is.
UPDATE, Again: The $5 note above is not a "demand" note, but fiat currency exchangeable for other currency. Read more about U.S. paper money here. In 1929, there were six diferent kinds of paper currency: United States Notes, Gold Certificates, National Bank Notes, Silver Certificates, Federal Reserve Bank Notes, and Federal Reserve Notes. At the end of WW2, there were three, and in 1970, only Federal Reserve Notes remained.