Friday, February 20, 2009

Towards a Philosophy of Money-9

America, listen thy voice!

It's a strange fact that during the crisis, there are so many different arguments about the nature of the problem, symptoms of the problem and the prescriptions for solving the problem. This creates a serious confusion among all people who were involved in the crisis. It's very difficult at this juncture to find the right person and right institution so as to locate the exact reason of that crisis. I don't aim to suggest any panacea but I do feel that during such moments, we must go to the fundamentals and the basic categories that we are supposed to protect. Today, the entire world has or is slipping into recession and despite all efforts on the part of governments, there has been not any substantial improvement in controlling the spread of that crisis. It begin with the largest economy of the world, the American economy which had created such a vast bubble of credit particularly in the housing sector that when it collapsed, along with it also collapsed a number of financial institutions, both banking and nonbanking. Till date, the American government is trying to prevent the expansion of this crisis by expanding more credit in the economy. The interest rates are almost zero and money supply has increased by more than 70% in last four months. Still, there is no hope that this crisis will stop. The productivity has gone negative, unemployment is increasing millions month by month and state governments are reducing their expenditure on social sectors frequently. In such a case, the chances of any sincere opinion being accepted as the unanimous opinion are quite remote. What should be done? Instead of answering this question, I feel we need to understand why this has happened because instead of reacting to a problem (that's what we're doing), we should be understanding the origin of that problem. The reason lies in the basic philosophy of money and credit that America built since its inception but lost the track of it midway. Thomas Jefferson once said that banking and financial institutions can be more damaging than the standing armies. Why he said that? We need to look into why America decided to be a free nation. It wanted to be free in terms of independence of currency, independence of citizens from the cruel Bank of England and stability of the purchasing power of American people. What Bank of England wanted to control the credit system of America, was finally done by the Federal reserve of America. It was an institution which was serious distraction from the original path suggested by the founding fathers of America but this blunder took people's freedom away and drove them into a permanent cycle of debt and indirect slavery of the financial system.

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