Economic crisis demands free-market solution

If bailing out Fannie Mae, Freddie Mac, IndyMac and Bear Sterns did not provide enough liquidity into the banking system, why is the Federal Reserve bailing out AIG to the tune of $85 billion and laying out plans to infuse “hundreds of billions of dollars,” according to Treasury Secretary Henry Paulson at a press conference Sept. 19?

The government’s unprecedented, unconstitutional and inefficient intervention has not worked, yet the politicians and the political operatives continue to tell the American public to hang on – it will only take a few more hundred billion dollars.

American taxpayers are already on the line somewhere between $1 trillion and $4.5 trillion.

Essentially, this power grab to “stabilize” the markets has increased the national debt by 50 percent.

Since America left the gold standard in the 1971, the currency is backed only by assumed national debt against the Gross Domestic Product. If the GDP remains static, yet the supply of money and national debt increases, each dollar has a lower purchasing power – inflation.

This de-facto inflation tax imposed by the Federal Reserve System only serves to cover Congress and Wall Street’s misconduct.

While Americans are struggling to pay for energy, food and housing, the government is eroding the value of the currency.

The reason the Fed intervened is because no other private financial institution would touch the mortgage-backed security.

Sound financial institutions deem these high-risk mortgage bundles worthless, yet somehow the Fed, Congress and the president claim if America does nothing, it will be a catastrophic collapse of the global banking system.

The recent string of bailouts goes far beyond the realm of “infusing capital,” as the government owns 80 percent of AIG’s assets.

This is the definition of nationalization. America, within the last two decades, railed against nationalization in Russia and Venezuela, and now it is a willing participant. America has lost its historical and intrinsic pride in liberty and freedom.

Financial reasoning aside, the moral ramifications of the government’s interventions are startling.

It used to be that with great risk came great rewards. Now, America is bent on privatizing gains while socializing losses.

If there are no consequences for failure – executives maintain their pensions and the countless millions of dollars they receive from a board of directors for driving the company into the ground – then why would corporations adhere to sound business practices?

What kind of message does this send to Wall Street?

Do as you please and don’t worry, the government will make it all better at the expense of the taxpayer.