In an unprecedented move this week, the Federal Reserve worked with other central banks in a coordinated move to lower interest rates.

The reason? The $700 billion bailout was not working to restore confidence in financial institutions and the economy, so the Fed felt a reduction in interest rates was necessary to get business borrowing again. It apparently had little effect. By the end of the week the Dow had suffered its worst week ever.

The volatility in the market was amply demonstrated on Friday, October 10. "For the first time in its 112-year existence, the Dow Jones Industrial Average swung in a range of more than one thousand points on an intraday basis," the Wall Street Journal reported on Friday. "The blue-chip gauge had dropped sharply in early trading, falling more than 600 points and dropping through the 8000 level for the first time in five years. But stocks quickly came off their lows, and by the afternoon the industrials jumped more than 300 points."

Also in the past week, the British government announced that it has purchased interest in financial institutions as a way of assuring consumers and restoring confidence in that country's banks. A similar measure is being bantered around Washington.

Although he wouldn't say it directly,  U.S. Treasury Secretary Henry Paulson suggested that the bailout legislation has given him the authority to take a wide range of actions that might include buying stock in banks and other financial institutions.  "I'm not going to speculate on all the things we may have to do," he said. "I would simply say we have a broad range of authorities and tools ... to work with going forward here."

Speaking at a news conference ahead of a Friday meeting of Group of Seven finance ministers, Paulson also said, "We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size."

Congress, in passing the bailout legislation, has opened a Pandora's box. It granted far to much power to the Treasury Secretary, removed Congress from an oversight role, and created a path toward nationalization of private enterprises. Other extreme measures have undermined the value of the dollar even more by inflating the money supply. All of these steps run counter to the laws of economics, with the predictable result of causing the chaos that has been witnessed in the markets this week.

The next step on the spiral down further into socialism is government ownership of banks. But that is only the first step in that direction. There are now calls beginning to be heard on the international stage for a complete reworking of the financial system on an international scale. On October 7, for instance, Robert Zoellick, the former U.S. trade representative that now heads the World Bank, called for a "new multilateral network for a new global economy."

The Zoellick pronouncement followed Nicolas Sarkozy of France who said on September 26: “the evil is deep, we must rethink the financial system from scratch, as at Bretton Woods”. He has reportedly called for a new Bretton Woods conference several times since.

The plan, on both the national and international levels, appears to be to fan the flames of fear over the economic crisis in order to justify greater and greater levels of government intervention. The objective, increasingly, appears to be not a solution for the financial problem, but the accumulation and centralization of power.

Rather than expanding government power and spending at the national and international levels, the only real solution would be to shrink government power, radically cut spending, deregulate the economy at all levels, and drastically chop taxes. Only then will we see a return to normalcy, profitability, and most importantly, peace and freedom.

Dr. John Fisher teaches communications and researches in the area of mass media and political decision making.

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