But certainly the government, the banksters, and the economists cannot be accused of assisting them to understand the truth – that fiat money is fraud.

It is not enough for people to understand that there are issues of morality involved in the financial system and its institutions.

If, for example, public concern translates into calls for government to take action, which translates into stimulus packages, price controls, government take-overs of industry, printing more money, wars and rumours of war, it can only make matters worse, not better, which is exactly what has happened . Gadzooks, it’s like a re-run of the 1930s.

We can’t “mend our profligate ways’” at the same time as the government inflates the money supply. That’s the whole point. To talk in those terms is to misunderstand the problem as being one of morality, divorced from other social values as it were, without seeing the connection back to debauching everyone’s money.

The consequences of inflationism cannot be remedied by more interventions. They can either lead to depressions sooner, or the complete collapse of the money system later. All fiat money systems in history have eventually collapsed, usually in a miasma of fascism and war.

The only thing that will stop the problem, is to stop doing what’s causing it.

Therefore my argument does not attack a straw man.

The power struggle is between those who get their money by violence and fraud, and those who get it by production and consent. The pretense to create net wealth by stamping pieces of paper is fraudulent and should be abolished now.

The Austrian theory of the trade cycle is not a “mantra”, it’s an unrefuted economic theory that alone:
a) explains the cause and cure of the trade cycle of boom and bust in manipulation of the money supply;
b) predicted both the Great Depression and the GFC years in advance; and
c) identifies specific remedies in ending the immoral policies that are causing the problem.

Central banking and fiat money should be abolished now.

It is possible that you may be right, Peter Hume, when you say that...

>>Most people have only the vaguest understanding about ["the Fed, fractional reserve banking, fiat money, and government policy"].

But I suggest they may be equally, if not more, ignorant of the "Austrian theory of the trade cycle", and the whole rigmarole of Mises "I-told-you-so" economics.

But no matter. We are required to deal with the here-and-now. Pretending that it would have been far better if we had all suffered in silence and lived only off our savings, doesn't actually help us with anything real. It's just another piece of abstract philosophising by after-the-event abstract philosophers.

As far as I can tell - and you might help me understand better if I have it wrong - the Austrian School is vehemently opposed to credit.

It throws up its little hands in horror at the notion of borrowing, and would prefer that we all cut up our credit cards, paid off our mortgages, and lived off bread-and-dripping for the rest of our lives.

Ok, so I exaggerate a little.

But what is fascinating, is that this view is closely aligned with the sentiments expressed in the article under discussion. Which makes your protestations about it even more difficult to understand.

Yes, of course, if we didn't borrow, there wouldn't be a problem with credit. Duh.

The most frustrating aspect of the Austrian School is that it doesn't say "how". It can tell us why this or that happened the way it did in the past.

But exactly how do we move away from a system that has for centuries been built upon borrowing, to a system where capital is only available from existing stock?

Secondly - and this probably illuminates the first as well - if there are to be no borrowings other than from existing available physical stock, how does it get there in the first place?

And in answering that last one, don't forget that Karl Marx, as well as Thomas Aquinas, is looking over your shoulder.

<<All value is subjective>> is the same as saying people want what they want, buy what they buy and value what they value. In other words it is total BS and as circular as reasoning can get.
There is no "law" of marginal utility it is nothing more than a fraudulent fantasy that is used to justify the current inequality of wealth, power and consumption.

<<Inflation takes from the productive and gives to the privileged.>>
No more than capitalism as a whole does. Deny the reality! Who holds most of the wealth? Who does most of the work? It is capitalism that rips off the workers and makes the parasite class into billionaires. And it is your phony, unreal, faith of an economics theory that you use to justify the current unfair, unsustainable and frankly evil state of the worlds economies and the ordinary people they subjugate.

<<The Austrian theory of the trade cycle is not a “mantra”, it’s an unrefuted economic theory>>. Only to you mate. The rest of us can see it for the greedy, elitist, soul destroying, planet destroying ideology of the rich that it really is and slowly people are realising they can change it. The great are only great because we are on our knees.

The state, capitalists and the godbotherers are the holy trinity of oppression and exploitation that underlines this world and the results are the debt and wageslavery that afflicts most middle class people and the endless treadmill of consumerism, environmental destruction and social decay and crime that is now the norm for most people in the west. Your efforts to blame it all on government and inflation are disingenuous to say the least.

Without the state and its monopoly on violence and property protection you capitalists would be at the mercy of the poor and powerless who would refuse to recognise your theft of all the land and resources and their reduction to little more than serfs. It is the state and its laws and enforcers that keep people subjugated and in poverty, landless and at the whim of the rich.

No moral dilemma expressed by the author about he and his ilk hanging out for such crises. His enjoyment is barely moderated by a passing comment about not downplaying the real hardships people have suffered. Hope the whole disaster has given him something to get his proverbial teeth into. He can barely contain his glee while running to get his soapbox and loud haler. BTW What are Economists hoping for next?

Well another example of economists missing the point again.
Did you not notice that the price of oil was $US147 a barrel shortly
before the crash occurred ?

Recessions occurred after four out of the previous five oil price spikes.
Everyone who is asleep is running around blaming the sub prime loans
but have not asked why they all crashed at the same time.

The price of oil started rising early in 2007 and this put pressure
on fuel prices and subsequently on food production and then made
worse via ethanol production using food crops.
The borrowers then had the choice of driving to work and eating or
paying their mortgage.

Pehaps Ian Harper has heard the saying;

If one believes in continuous growth in a finite world he is either
a madman or an economist.

I suggest Ian that you go and do a search on the oildrum.com
for oil price spikes and recessions.

Peter, the next great moral revolution is to end global poverty. Our international financial institutions have worsened the situation from the GFC.

World Bank and IMF loans have in the past gone to elites in generally corrupt governments. Loan conditions are sadistic including user pays schools and up-front hospital payments that have caused unneccessary school drop outs to the many families living below $2 a day.

Even worse, is the needless deaths of the most vulnerable lives that could be saved with a simple medical intervention such as hyration salts or anti-biotics.

What the world needs now, is a reformed World Banking System with a single currency that applies well targetted finance to help train and then finance small business entrepreneurs, lifting millions of people into a sustainable and fullfilling lives.

The new World Bank could be financed by a small transaction tax on all global financial transactions, making achievment of the UN's millenium goals a realistic objective rather than a whistful pipedream. Our world leaders can do it, it just needs true leadership.