Central bank = not capitalism, not free-market.
Soft (fiat) money = not capitalism, not free-market.
FTC, SEC, FDA, etc. = “…”
Freddie & Fannie = “…”
Income Tax/IRS = “…”
NAFTA, etc. = “…”
High tariffs = “…”
Economic sanctions, embargoes, etc. = “…”
Monopoly-encouraging “regulations” = “…”

There has not been a free-entry, free-enterprise market in this country since at least 1914, but especially since 1933, and definitely since 1971.

And who or what, btw, instituted all these tyrannical arbiters upon our formerly-free enterprise system? I dare say it wasn’t the free market or its honest champions.

PS: Friedman is a poor example of a free-market capitalist: he believed in counterfeit money and the “installation” of “capitalism” by force. A truly-free marketer does not believe in using the government’s monopoly on violence to make others abide by their fundamental beliefs. Friedman & Co. are not much more free-market than Krugman, Keynes, & Co. The Austrian School folks, with their consistent application of non-aggression principles in all facets of society, are the standard-bearers of free-market capitalism. In a free-market society (i.e, absent central controls), volunteerism (charity, etc.) is encouraged and in fact flourishes; monopolies are discouraged and in fact die off. The opposite has come to fruition in our time. If the free market has failed, then it has failed as a result of it being slowly murdered by those posing as capitalists but who are really corporatists, mercantilists, national-socialists — i.e., those who could otherwise not compete in a free system without cheating through the use of government intervention.

Your demolition of “economic man” and “free markets” are accurate, but misplaced, it seems to me, leaving your arguments open to attacks such as Alex’s:

“The blame should not be placed on the market idealist, for that person does not believe in the flawed current system. Place the blame on the scoundrels in government, who steal and prostitute the system, turning it into a monster.

… The government is blameworthy. The banking laws, the government’s monopolization of money and credit–these are your culprits.”

Better, I think, to focus on two other criticisms of the present system: the way money buys government via “campaign contributions”, so that policies favored by clear majorities of voters are declared “politically impossible” ( e.g., single-payer healthcare insurance), and the strangely unquestioned persistence of fractional reserve banking, which is fundamentally unfair because it inherently causes wealth to flow from the many to the few (it is nothing less than a license allowing bankers to counterfeit almost all of our money) and also because it is ultimately unsustainable, a 300 hundred year old Ponzi scheme dependent on ever-rising total debt. The current financial crisis may be nothing less than the final collapse of fractional reserve banking, crushed under the impossible levels of debt we have had to incur to keep it going till now.

Alas, the most numerous and vociferous critics of fractional reserve banking are Libertarian gold bugs like Alex, who distrust all government and who yearn for a “return to the gold standard”.

Many academic economists have dismissed the Libertarian so-called Austrian School of economics, since “solid money” can’t increase the money supply as needed to accommodate growing productivity. Paul Krugman likens it to the phlogiston theory of fire.

It is common, and wrong, to assume that all critics of fractional reserve banking are hard money advocates–even Wikipedia makes this mistake. This leads to the error of assuming that refuting the case for hard money therefore refutes the arguments against fractional reserve banking. Not so.

Also not so is Alex’s contention that government has monopolized money and credit. The opposite is true: government has ceded creation of money to private bankers, contrary to common sense and the Constitution. Why should we as a nation have to borrow money at interest from bankers whom we have licensed to create money from nothing? Why don’t we just create that money ourselves, and avoid the interest?

The really interesting critics of the current banking system, fairly new on the scene, are those who can be called the “Fiat Money/Full Reserve” people, like Stephen Zarlenga, Bill Still and Ellen Brown. (Google them.) They argue that the government should claw back the right to create our money, as specified by the Constitution, and stop licensing privately owned banks, including the Federal Reserve, to create money out of thin air, like counterfeiters.

The FM/FR people propose that the government retire the national debt by issuing about $10 trillion of new treasury-issued greenbacks to pay it down. This would approximately double the money supply, devaluing the dollar by about 50% , but we could avoid that inflation, and establish a sustainable banking system, by simultaneously raising required bank reserves from 10% to 100%, thus eliminating some $10 trillion of “credit money” created by banks. Recipients of greenbacks replacing their US debt instruments would deposit them in banks to regain interest payments, thereby backing up bank loans with “strong currency” and relieving the current credit crunch.

After one or two years, we would have no national debt, no inflation, an end to the 300-year old Ponzi scheme of fractional reserve banking, a sustainable money and banking system in place, and an end to the current credit crisis.

Is this too good to be true? Why?

Since it revokes their license to create money from nothing, the bankers would oppose this action. Because bankers are so influential, the new administration can be expected to make this move only if forced by circumstances to do so, when all else fails to repair our broken credit system.

It can take 300 years, but eventually, reality asserts itself: debt cannot be increased forever.

Your reasoning is good except on one assumption, which serves as the background of your argument, and that is your false assumption that we have had free-market capitalism. But you contradict yourself on this assumption. You would agree that we have never seen “the perfect market”. Yet you blame the non-existent system for great human heartache. You believe in a ghost. When we realize this, we must wonder who is truly fantasizing? Your argument, then, is that because the ideal social structure has not been implemented, we should stop dreaming and accept a mediocre structure. If all the great men of history had shared that attitude, we would not have any great men, which may very well be your goal–universal mediocrity.

In a free market, government serves very important roles. It stops monopolization and protects property. Currently, our government does exactly the opposite. It helps create monopolies and steals property. The blame should not be placed on the market idealist, for that person does not believe in the flawed current system. Place the blame on the scoundrels in government, who steal and prostitute the system, turning it into a monster.

You think well, but you are asking questions of the wrong people in the wrong places. If gold is not important, why was it confiscated? If too much debt caused the financial crisis, is more debt really the solution? Why, after all the prudent saving a retiree has done, is he under the impression that–if a $700 billion bailout is not passed–his money would have been better off in his mattress? The government is blameworthy. The banking laws, the government’s monopolization of money and credit–these are your culprits.