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Darth Greenspan

Mises Daily: Monday, May 11, 2009 by

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The former chairman of the US Federal Reserve shares a lot in common with one of the most famous villain characters in the history of Hollywood, Darth Vader, who was first a member of the Jedi coalition when his name was Anakin Skywalker.

Anakin Skywalker was a tremendously talented young boy discovered by Obi Wan Kenobi, who initially believed that Anakin was the "Chosen One" foretold by a Jedi prophecy to bring balance to the Force and restore harmony to the universe.

As a youth, Anakin Skywalker received close training from Obi Wan Kenobi and fought many great battles as a member of the Jedi league, but he developed a few dangerous qualities as he grew older — specifically a desire for power, a belief that a central authority was capable of controlling society, and a misplaced confidence in the "Dark Side" of the Force.

After Anakin became taken over by the desire for power and the belief that he as an individual had the ability to control the universe, he renounced his allegiance to the Jedi, turned to the Dark Side and began to control the operations of an entire galaxy as the republic had been transformed into an empire. The decisions of Darth Vader now affected everything and everyone in the galaxy, rather than all creatures being able to live their lives free from the influence of one central authority.

As a youth, Alan Greenspan was a diligent student of economics and a close friend and colleague of Ayn Rand, as they were both stern supporters of the tenets necessary for a free society, which requires a commodity-based currency. In fact, in 1966, Greenspan wrote a famous article advocating the need for a gold standard in America in which he stated,

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

In the 1970s, he became involved with members of the US federal government. He initially began as an advisor to those who aim to bring about the most effective economic and monetary policy for an entire nation. Perhaps, it was during this stage in Mr. Greenspan's life when he began to develop a strong desire for power, a skewed view that governments can effectively dictate economic policy, and a misplaced confidence in the role of the Federal Reserve.

In 1987, Alan Greenspan was officially appointed to his position as chairman of the Fed, where he became one of (if not) the most powerful men in the world. Although he was appointed by the president of the United States and ostensibly obeyed the orders of the president, in many ways Alan Greenspan went on to govern the Fed with almost no oversight. With his newly granted authority, the chairman was now able to determine the interest rates of an entire nation (which influence the interest rates of the entire world) and expand and contract the nation's money supply however he and his constituents deemed necessary — an ominous power, indeed.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
– Alan Greenspan, 1966

The policies of the Federal Reserve Bank had an enormous impact on our current crisis; and the American people have come to realize how destructive the force of the Fed can be. By expanding the supply of credit, inflating the currency, and keeping interest rates artificially low and fixed for an extensive period of time (a form of price fixing), the country — and globe — became plagued by malinvestment: people and banking institutions were encouraged by this dark and opaque monolith in Washington DC to buy and spend. Although many politicians conveniently blame the banks and the borrowers for the turmoil that Americans are faced with, most of the nation's top economists are pointing their fingers at the Fed.

The only way to prevent this sort of disaster from reccurring is to take this powerful and insidious authority out of the hands of the Fed and restore the Republic, whose founders understood the evils of a central authority controlling a nation's money supply. This is the reason that the word "coin" was specifically written in the Constitution over 200 years ago. When the United States was on a bimetallic -currency system during most of the 19th century, it was much harder for politicians to shell out cash to friends and those with whom they shared a vested interest.

In Return of The Jedi, Luke Skywalker confronted Darth Vader in an attempt to save the galaxy, destroy the Dark Side, and restore the republic that once was.

In the midst of a fierce light-saber battle with his son, Vader becomes wounded and can no longer fight back.

Ultimately, the good side of Darth Vader re-enters his soul. He lifts up the evil emperor and throws him into a deep, dark hole. The Dark Side is destroyed and balance in the republic is restored.

Over the past few years, Alan Greenspan has undergone widespread criticism for the disaster that he created. Although he has not yet accepted blame for the harm caused, nor publicly acknowledged the damaging effects of centralized control over money and credit, his reputation has been severely wounded by his critics around the world.

It is not too late for redemption. Alan Greenspan still has the power to expose the Fed for all of its evils. He knows its operations inside and out. He knows how powerful and damaging this force is on the economy and the world at large. Perhaps he is the "Last Hope" — the "Chosen One" who can expose the Fed's inner workings to the American people and bring back a monetary system free of government manipulation and control.

Mr. Greenspan, expose the Federal Reserve Bank for all of its evils. Help to restore the republic that once was!