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Shades of FDR! Socialist Chavez Nationalizes Gold

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Venezuelan President Hugh Chavez has announced that he’s nationalizing the country’s gold industry. He also announced that he’s bringing Venezuelan gold reserves held in the American and European banks to Venezuela.

There’s no doubt as to why Chavez is bringing the gold reserves to Venezuela: He fears that the U.S. government will do to Venezuela what it’s been doing to Middle East dictatorships with the imposition of sanctions — seizing their money and refusing to send it to them. He doesn’t think that his gold is safe from the U.S. government as long as it sits within the United States. I personally think he’s smart to get his gold out of the country for the very reason he’s doing it.

Chavez’s nationalization of gold, of course, brings to mind President Franklin Roosevelt, who did the same thing to the American people.

Having revolutionized America’s economic system from one based on economic liberty to one based on the welfare state, FDR wanted no restraints on federal spending. Of course, the gold standard was the big restraint.

Since gold was the official money for the country — and had been for more than 100 years — federal officials were restrained from issuing too many bills and notes promising payment in gold. If they over-issued, people might show up all at once demanding that their notes be redeemed in gold.

In one of the most extraordinary acts in U.S. history, federal officials ordered Americans to turn in their gold coins to the government in return for irredeemable bills and notes. FDR also made it a felony offense to Americans to possess gold.

That, of course, opened the floodgates to the printing of federal paper money. As federal officials continued printing the money to help fund ever-growing welfare-state expenses — and later warfare-state expenses — they didn’t need to worry about people demanding that the paper be redeemed in gold. They could just keep printing money to their heart’s content.

That’s why the paper dollar (which is actually an irredeemable note — a Federal Reserve Note) is worth only about 5 percent of what it was worth in 1913, when the Federal Reserve was established. That’s what comes with continuous debasement of the currency, decade after decade after decade.

I think most everyone would acknowledge that Hugo Chavez is a socialist. After all, he calls himself a socialist.

What’s funny is how upset the mainstream pundits get when one refers to FDR (or Obama) as a socialist. In their minds, anything an American president does cannot be socialistic because he’s an American. It’s only foreign rulers who embrace socialism. American rulers are always, by definition, free enterprise.

Yet, look at what FDR did — he confiscated everyone’s gold by ordering people to send their gold holdings to the government, on pain of a felony conviction. How is that different in principle from what Chavez and a host of other Latin American socialist dictators have done, including Fidel Castro?

FDR also established cartels for the major industries in America, permitting them to establish their own prices and set them into law. That’s what the NIRA was all about, along with its fascistic Blue Eagle campaign, a campaign of propaganda and intimidation similar to the ones that Chavez has implemented in Venezuela.

Don’t forget Social Security, which today is the crown jewel of the welfare state. It was begun by Roosevelt, but he got the idea from Otto von Bismarck, the “iron chancellor of Germany,” who himself got the idea from German socialists.

In fact, it shouldn’t surprise anyone that Adolf Hitler, who embraced Social Security, public works, government-business partnerships, and vast military-industrial complex, public ownership or control over the means of production, greatly admired Roosevelt’s New Deal. Here’s what John Toland wrote in his biography Adolf Hitler:

Hitler had genuine admiration for the decisive manner in which the President had taken over the reins of government. “I have sympathy for Mr. Roosevelt,” he told a correspondent for the New York Times two months later, “because he marches straight toward his objectives over Congress, lobbies and bureaucracy.” Hitler went on to note that he was the sole leader in Europe who expressed “understanding of the methods and motives of President Roosevelt.”

Will President Obama follow in the footsteps of Chavez and FDR and renationalize gold? I think anything is possible. As everyone knows, federal spending and debt are out of control. The Fed is now cranking up the printing press, as it has done for decades, and federal officials know that the people are turning to gold to protect the value of their savings from the Fed’s inflation. The rising gold price tells people what the Federal Reserve is doing to their money. Thus, big spenders like Obama, Chavez, and FDR hate gold even more than they do speculators, bond-rating agencies, leakers, and other people who communicate what the government is up to.

The federal government’s appetite is voracious. Welfare-state and warfare-state expenditures continue soaring out of control. They need money — big money — to fund the dole recipients in both sectors. I wouldn’t be surprised to see Obama turning to Chavez and FDR for guidance.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.