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Jeff Booth (Private Sector Vs Government Money Printing, Sound Money, Civil Unrest, Totalitarianism)

Rebel Capitalist Show

Do We Have a Free Market?

In a free-market economy, the production of goods and services and the prices they are sold for are driven by the competitive forces of supply and demand. At the center of these forces is a voluntary transaction between two parties.

On the other end of the spectrum is a controlled economy, where central planners will make these decisions for the market and own the means of production. This leads to economic distortions due to the lack of price discovery and competition.

The United States prides itself on the foundations of free-market capitalism that it was built on. But almost 250 years into this experiment of self-governance, can we still use the term “free market” to describe our economy?

Prices Decrease in a Free Market

In a free market, prices tend to fall as new technology increases productivity and brings down the cost of production and prices.

The United States experienced this in the 1800s as entrepreneurs like John D Rockefeller introduced new technologies and increased productivity to bring down the costs of production and consumer prices.

In 1913, the Federal Reserve was created and over the next century, the dollar lost over 90% of its value. The only reason the dollar lost 90% of its value in that span of time is that the government stepped in with regulation and oversight that burdened businesses while also inflating the money supply to pay off its own debts.

Consumer electronics is a good example of free-market activity reducing the price of goods over time. On the other hand, prices of prescription drugs have gone parabolic since 1960.

You can thank government regulation and compliance for that!


A fundamental tenet of a free market is that businesses will fail. When this happens, the market sheds the dead weight and replaces it with more efficient and productive businesses.

This is what happens when the market is left to regulate itself and it's exactly what we saw after the forgotten Economic Crisis of 1920-21 which saw the market crash 47% and unemployment rates spike.

Rather than turning on the printing press as we have seen in recent economic crises, the U.S. Government under President Warren Harding at the time decided to balance the federal budget, increase rates, and let it ride out.

This allowed prices to drop and businesses to reinvest in the economy that would go on to “roar” for the next decade.

Contrast this government reaction to the Great Financial Crisis in 2008 and the collapse in 2020 and you get a very different picture.

After the collapse of the housing market and the banking crisis of 2008, instead of letting the market take its course and allow the economy to come roaring back on its own, the government responded with corporate bailouts and quantitative easing.

These government interventions led to the slowest recovery since the Great Depression.

Fast forward a decade to another total economic collapse and money printing is at all-time highs while the banks are still being bailed out because nobody is defaulting on their loans thanks to stimulus checks

Although we have yet to feel the full effects of the government’s most recent market interventions, we can be certain that our government has not learned from any of these past events and a similar fate probably awaits. As Mark Twain said, “history doesn’t repeat itself, but it often rhymes.”

Three Letter Gov’t Agencies

The U.S. Federal Government is bloated with unelected bureaucrats who waste no time after economic crises to further burden businesses with more oversight and regulations.

Emerging from the Stock Market Crash of 1928, the Securities and Exchange Commission (SEC) held hearings to uncover unscrupulous business practices that led to the collapse, resulting in unprecedented government oversight and regulation of the stock market.

In 1962, The Food and Drug Administration (FDA) passed the Kefauver Harris Amendment in reaction to a new drug’s damaging effects on unborn children. Although the concern was of safe usage, the amendment required drug manufacturer’s to not only prove a drug to be safe but that it was effective. It turns out that proving efficacy is much more expensive and time-consuming than simply proving safety.

If a drug is proven safe, the free market can easily determine whether it is effective, without increasing the cost of research and development that is passed on to the patient.

The Environmental Protection Agency (EPA) is one of the government’s favorite tools to trample on private property rights and business activities. Now that the ESG movement is taking off, we can expect to hear much more from this three-letter agency in the years to come because, to Build Back Better, we must save the planet.

The Future of the Free Market

The future of the free market is uncertain. Whether it ever did or not, in a definitional sense, the United States does not operate under a free market in today’s world.

Since governments tend to always grow and not shrink, expect to see more regulation and oversight in the years to come as we drift farther and farther away from the foundations the country was built on.