First, Juan makes a statement indicating that the main reason we are in this economic mess is that there was massive de-regulation of the financial markets; that they were too free. This is essentially Alan Greenspan's reasoning in his statement made before a Congressional Committee. But this is a red-herring. The problem is not de-regulation and a free market. A truly free market has never existed in the United States nor anywhere else for that matter, in any substantive form. If it did exist, the market would automatically correct itself. What we do have in the United States and all over the world is central banking, heavily manipulated markets, and fiat currency systems—all anathema to the very idea of a constitutional republic or limited democracy.
The problem is not de-regulation and overly free markets (they're clearly not) but misguided regulation. For example, the Fed made artificially cheap credit available, and the government encouraged and even forced banks to extend that credit to poor-credit borrowers. As a result, housing prices climbed about 50% in 7 years while all the traditional market forces were trying to pull these prices down through higher interest rates. But the Fed prevented this natural correction from happening through their forced low interest rate policy. Couple this to massive leveraging of these bad debts (20x-30x, up to 100x in some instances), and we have the current credit crisis.
Traditional market forces could and would have corrected the problem, if these forces were allowed to function, by not allowing bad debt to circulate in the first place. However, the root of the problem is even more menacing: it stems from the debt-based fiat currency system in use today in the United States and all over the world. This system facilitates derivatives, leveraging, and fractional reserve banking. In our current debt-based system, the markets need to be carefully shielded from manipulative/interventionist forces (i.e., artificial interest rates), and greedy banking interests (i.e., derivatives, leveraging, and fractional reserve banking). These are the excesses pandemic in our current debt-based financial system. Hence the need for "regulation." Regulation would not be necessary if the financial system was a real asset-based system.
The solution Juan proposes is that we need to defend this little piece of paper called the U.S. dollar. No, what we need to do is let it die, and replace it with an asset-based non-fiat currency, instead of a debt-based fiat currency. Otherwise the problem will simply repeat itself in a more magnified form at some point in the future. Why? Because this boom and bust cycle is built into the existing financial system. We need to replace this little piece of valueless paper with a currency that has intrinsic value with absolutely no possibility for fractional reserve banking. A 100% commodity-backed currency, for example, using silver or gold. This would prevent governments and banking institutions from "printing" money when they wanted it, which includes any form of derivative and/or leveraging, and would be the greatest restraint on government spending, borrowing and bank lending, not to mention dramatically curtailing government's imperialistic "prerogative." This would be the end of big government, the end of the military-industrial complex, the end of the welfare state, and the dawn of limited government, a creature that has been extinct in the United States since the mid 19th century.
The basis for the entire U.S. financial system as it stands is a fraud perpetrated on the American people and in direct contravention to the Constitution. In 1913, the prevailing forces finally got their tentacles into the right politicians and forced the Federal Reserve into being through the Federal Reserve Act, in addition to instituting the Federal Income Tax and Internal Revenue Service as the 16th Amendement. Both fraudulent and illegal institutions. Skeptical? Have a look at these fascinating quotes with many more available here.
"For the first time in its history, Western Civilization is in danger of being destroyed internally by a corrupt, criminal ruling cabal which is centered around the Rockefeller interests, which include elements from the Morgan, Brown, Rothschild, Du Pont, Harriman, Kuhn-Loeb, and other groupings as well. This junta took control of the political, financial, and cultural life of America in the first two decades of the twentieth century." — Carroll Quigley (Professor, Georgetown University, mentioned by Bill Clinton in his inauguration speech)
"The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government of the U.S. since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president." — Franklin D. Roosevelt, U.S. President
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." — Henry Ford
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." — Thomas Jefferson, U.S. President
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." — James Madison
