THOMAS JEFFERSON

A prosperous society requires a powerful and principled government anyway. The further decentralized a society is, the higher the burden on the Judicial Branch of the government, and on the executive branches of government that must enforce judicial decisions. Property rights are not borne out of thin air !

I don’t understand how you can say that 19th century Europe was more “free from government” that the preceding era. It is quite the contrary. The UK embarked in a very successful government sponsored imperial project (these “free from government” merchant received a very strong help from the Royal Navy). France and Germany State apparatus developed very strongly during that century as well, together with their economies.
Think about that : before the revolution in France, even tax collections were a private business ! Tax receipts were “securitized” and sold by the state to private collectors.

No libertarian would argue that a completely free society including its monetary system and financial sector is perfect. What they will argue is a free society with a completely free and private banking sector is the best system ever practiced and the best available.

“One has not found any better solution than a powerful, but principled, “trust busting” government for that purpose.” This powerful, but principled government does not exist in the long-run, in my opinion.

Tom

I think if you look into the reality of “trust busting,” much as corporations essentially write their own regulations today, you would find that these government actions largely favored the oligarchs.

Price-fixing and collusion are very unstable and nearly impossible to sustain without the force of government. This is why the only real monopolies are government-sponsored.

http://punditkitchen.files.wordpress.com/2010/05/129170684251270550.jpg

During the 1800’s “Golden Age”, the opium wars occurred precisely because China was implementing a mercantilist policy that had the effect of sucking precious metals out of Europe.

Fighting rents from monopolies and “managed” scarcities have nothing to do with Marxist analysis, you can find it in Adam Smith. Free markets only work when economic agents do not collude on a large scale. One has not found any better solution than a powerful, but principled, “trust busting” government for that purpose.

This rent theory of yours sounds like 1930s Marxism. The old, almost-free-banking US had a middle class and unlimited possibilities for upward mobility.

Gold was never “cornered” by anyone in the way the Hunt brothers tried to corner silver on the Comex. The relative stability of price levels from the 1800s to WWI proves it, but the idea makes no sense — gold was money, and money is valuable for what you can do with it. There were no Scrooge McDuck moneybins.

I don’t understand your solution, but it sounds like it requires the use of force. It also is naive to think that government doesn’t work first and foremost for the rich — any solution that requires government force will be unjust and favor the rich, no matter how good it sounds in theory.

Time for an in depth debate here : this “much better solution” solves the problem of the money supply, but fails completely to address the velocity issue : Pure commodity currencies are “cornerable”. When left to themselves, it always ends in a situation where a few people hold the majority of the stock of money and extract a hefty rent from it (one doesn’t even need to take credit risk for that, triggering deflation ensures positive real returns). The existence of rents for a segment of the population is always a drag on productivity growth, as the idle moneyed class funds wasteful consumption by the rents it extracts from the productive class, whereas it is the latter that has the skills to grow the capital stock.
Historically, the answer from authorities has either been currency debasement (the Humpty Dumpty solution : “a pound of silver weight as much as I want it to weight”) or outright expropriation of the money cornering class organizations (the “Order of the Temple” dissolution solution). More modern solutions involve central banking and paper money. No solution is perfect, and I think we can do much better than what we have today (my preferred solution is the banning of maturity transformation except for the Sovereign), but one has to acknowledge that there is a fundamental problem in the first place.

I didn’t hear Prechter’s comments on the Fed.

Tom