A Manmade Disaster

When discussing the problem of evil, philosophers of religion bifurcate evil into two types: natural evil and moral evil.

Natural evil, as the descriptor signifies, is that type of evil that seems to be, as a part of the natural (fallen) world, amoral. Horrible examples of natural evil abound, things like hurricanes, earthquakes, wildfires, cancer, and so on.

Moral evil, as the descriptor signifies, is that type of evil which (as opposed to natural evil) has a distinctively moral (or immoral) tinge. Horrendous examples of moral evil are things like, theft, rape, murder and torture.

The current “credit crisis” is not a natural evil. The current credit crisis is a moral evil perpetrated against all users of the US dollar.

The proposed solution – the so called “bailout” is another moral evil which will further injure the many while benefiting only a few.

Contrary to the pitiful assertions by Comrade Bush that the free market is “not working,” the Militant Pacifist asserts that the exact opposite is true. The free market is working perfectly. I hesitate to brand “ignorance” as a “lie” (I must remain charitable). The invisible hand of the free market is working just fine!

The free market has made a statement. It has said, I have evaluated the mortgage backed securities and derivative products offered for sale by several major investment banks and I have determined their value to be approximately $0. Hence, I, the free market, offer the princely sum of $0 in exchange for this worthless commercial crap paper.

The proposed “bailout” would come and “re-value” these worthless securities at $700B, or whatever the current number happens to be.

Comrades Paulson and Bernanke would purchase these securities, which the free market has said are worthless ($0) for $700B. The purpose of the purchase would be to “remove this toxic paper from the market.”

But look at what would really happen. Something that the free market values at $0 will be purchased (by force – NOT by an arms-length, free market transaction) for $700B.

In other words $0 worth of value will be removed from the economy, and $700B will be “injected” into the economy.

In a few short months, the money supply will be dramatically increased. The resulting inflation should be obvious. The dramatic increase in the number of dollars circulating in the economy makes each dollar worth less than it was before.

The shirt that used to cost $50, now costs $75. The shirt didn’t actually rise in value – the dollar that’s being used to purchase the shirt actually fell in value – the price of the shirt became “inflated.”

For anyone who has read my ramblings, it should be obvious that I’m a strong proponent of the Austrian School (of economic theory) – but the analysis above doesn’t require that you subscribe to Austrian Economics – it just requires some very basic economic reasoning.

Raising taxes to pay for the “bailout” is not feasible. What will happen is that Comrade Paulson will ask Comrade Bernanke to “authorize” the currency to fund the transaction. The resulting “fiat money” will be “legal tender” for all debts, public or private (i.e., the government will require it to be accepted as payment).

The resulting inflation will effectively tax anyone and everyone who uses the US dollar.

The debasement of a people’s currency is a moral evil which harms people indiscriminately.

Those who commit and support such moral evil are worthy of judgment, and unless they repent, they will certainly be judged.