Aged Albany

I want to think William F. Hammond Jr. for his prescient op-ed on the sad state of affairs of the (still) Republican-held state Senate [“Senescent Senate,” Opinion, November 29, 2004]. The bottom line is that our aging GOP senators are going to have to do something they are loathe to do: Find younger, more dynamic candidates to run and replace them.

They had a chance to do this with John Fleming but opted instead, in Bronx County, to cut a deal with Democrat Steven Kaufman, a deal that backfired. The Republicans in Albany could begin by replacing Joseph Bruno as their leader.

Mr. Bruno has gone increasingly to the left and has lost the support of the Conservative Party. He no longer represents the values that core Republicans share: smaller government, lower taxes, and personal responsibility. It is time to clean house before it is too late – and it may already be too late.

ALICE LEMOS
Woodside, N.Y.

‘Messianism Meets Its Match’

Does Hillel Halkin envision all men of faith to be extremists [“Messianism Meets Its Match,” Opinion, November 23, 2004]? It is ironic that he praises the Christian influence in attempting to set America’s domestic agenda while he attempts to deconstruct Moshe Feiglin for doing the same in Israel, as many of the Christians that Mr. Halkin praises are key supporters of Mr. Feiglin.

Mr. Feiglin has said over and over he has no wish to establish a theocracy in Israel. In fact he has called for the removal of the religious parties from the government.

Mr. Halkin is quick to extol the virtues of democracy in Israel. Does he realize that Mr. Sharon has been governing in direct violation of several of his own Likud Party’s votes and directives? Or that he is now governing with only a minority government and all the while refusing to call a national referendum on several key issues, including the proposed Gaza disengagement?

Does he also know that Mr. Feiglin was also asked to establish his “Jewish Leadership” movement inside the Likud at the behest of many senior secular Likud members who were horrified at the Sharon family’s hijacking of the Likud Party and turning it into their own personal fiefdom?

JAY E. GOLD, M.D., FACP
Manhattan

‘Mr. X’s Neighborhood’

I think most Americans agree that our politics would be better off with less personal rage directed at one another [“Mr. X’s Neighborhood,” Mr. X, Opinion, November 22,2004].But to claim that religious believers “are more…in love with this country” is an outrageous and offensive claim.

As Americans, we are the proud inheritors of a tradition of citizenship that does not discriminate between the varieties of – or indeed the presence or absence – of religious belief.

The framers of our Constitution knew this: they spoke of a “decent respect to the opinions of mankind,” and when they articulated this radical notion of citizenship, they, unlike “Mr. X,” had the guts to sign their names.

JENNIFER BLUESTEIN
Brooklyn

‘Stop the Presses’

I applaud The New York Sun for its editorial “Stop the Presses”[November 26, 2004]. As you demonstrate, inflation is caused not by the “trade deficit” (which is a mere accounting artifact) but by the Federal Reserve’s artificial expansion of the money supply.

You are right to cite Ludwig von Mises when you conclude, “Mr. Greenspan could end the weakening of the purchasing power of the dollar were he to stop the presses.”

Unfortunately, as von Mises himself understood, the problem goes deeper than that. The basic problem is the Federal Reserve itself, which would not exist under real capitalism.

Under capitalism, the supply of money and credit is determined by the free market: money and credit are issued by a free, unregulated banking system, and the amount each bank issues is determined by its judgment of its future profits.

A bank’s actual profit or loss is determined by objective factors, including the general level of production, the cost (in gold) of gold-production, and a host of financial market issues.

Banks that make the best decisions are rewarded by profits, and expand their influence. Banks that make bad decisions have their range of action contracted or, in the extreme, are eliminated by bankruptcy. In this way, the capitalist system of free banking exhibits a “natural selection” for ability in making the right, profit-making decisions, and the whole economy benefits.

In contrast, the Fed determines the supply of money and credit based on political factors. Even when, as under Alan Greenspan, the Fed tries, in part, to set prices based on economic data, the Fed cannot substitute for the billions of price-signals generated by the judgment of the billions of participants in the global economy.

This is an application of one of von Mises’ great discoveries: There is no way for a socialist manager to set prices rationally, objectively.

There is no way, other than the workings of the price-system, to identify the proper amount of money and credit. The proper amount is the free-market amount. That is the amount that is, in Ayn Rand’s terminology, “socially objective.”

A government-determined quantity of money and credit is necessarily subjective. Inflation and deflation are the only possible result.

Abolition of the Federal Reserve system and a return to the free banking system of the 19th century should be the ultimate goal.

HARRY BINSWANGER
Manhattan

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