The Mexican bailout was a bipartisan scheme, meaning that its details were kept shrouded in secrecy. The White House and the congressional leadership conspired with the banking industry, and Alan Greenspan even telephoned Rush Limbaugh and ordered him to support it. Limbaugh did not need to be told.

Almost alone, Senator Alfonse D’Amato started looking into this caper, using his small staff as investigators. He sponsored a bill that would have restricted the flow of cash to Mexico and forbid any repeat performances. The party-controlled FEIC suddenly slapped him with hefty fines for trivial campaign violations that he denied committing. He has now moved on to other matters.

Groups like the IMF, unlike the rest of us, have permission to pronounce on this subject. Its report on Mexico was revealing. It turns out that the peso collapse was not caused by foreign investors dumping pesos and investments in Mexico. The spark was the Mexican business class, which scrambled to sell at the top of their inflated market. That is their right. What is criminal is that American taxpayers were forced to make up the difference.

The IMF report also denies that Mexico’s troubles could have triggered a “contagion effect,” a banking crisis spreading throughout Latin America, to North America, to Asia, and finally to all the world’s economies. But who knows? If the peso collapse would not have caused it, some other crisis still might.

Murray Rothbard, in his book The Case Against the Fed, asks an interesting question. Why do banks in developed countries, unlike firms in every other industry, rely on the public’s “confidence in the system” to keep them afloat? Why must depositors never wonder if they will get their money out? If you think about it, a grocery store would welcome a “crisis of confidence” that resulted in periodic “runs” on its products. Imagine people sitting at home wondering: What would happen if the store: ran out of goods? They then rush out to stock up in the process. If a business is dealing honestly, a wave of suspicion would either be good or irrelevant.

Banks are different because they are permitted by law to hold only a fraction of the deposits they claim to hold. It is made possible by deposit “insurance,” with government (taxpayers and savers) the payer of last resort. It has not always been this way. In the 19th century, bank-runs kept banks honest. Credit was appropriately tight, money was backed by gold, and loan officers had to be sure about projects before they funded them. Still, the bank-run was a staple; now the run is considered an evil act of betrayal.

With the end of the gold standard—a degenerative process that lasted from 19n until 1973—came the age of inflation. Then came deficits, explosions in government s size. worsening business cycles, domestic and foreign bailouts, paper billionaires, and an extension of the welfare principle into credit markets. Paper money and perpetual credit inflation are malevolent institutions that benefit both big bankers and big government. They are the root cause of most of our economic troubles. Say what you will about the old populists, they knew that monetary issues are more central than they first appear. They communicated this to the masses, much to the consternation of the elites.

Contrast this with the modern right. The last time conservatives talked about gold was in the early 1980’s. Now, the new Republican Congress has cut back the frequency of Alan Greenspan’s testimonies, so as not to interfere with his “independence.” The Democrats were at least curious about what he and his friends were up to in Washington’s Temple of Doom. Under a gold standard, there would be no bailout of bankrupt government.

Under the present system, we are looted subtly and insidiously, and do not know whom to blame. It is a sad state of affairs when a person who questions the Mexican bailout is seen as a crank. That’s the world that Greenspan, his predecessors, and current co-conspirators have created for us.