Monday, January 28, 2019

Our Hell-Raising Founding Father

“… if the journalistic credos of speaking truth to power, comforting the afflicted, and afflicting the comfortable have a godhead, that would have to be Paine, whose writing was so provocative and so uncompromising that he faced the gibbet and the blade everywhere he published—in England, and in France, and in the United Colonies.” — Craig Nelson
Thomas Pain (later changed to Paine) was born on January 29, 1737 in Thetford, England, his 40-year-old Anglican mother the daughter of a popular local lawyer, his 29-year-old Quaker father a destitute master craftsman staymaker.  In Thetford the Pains lived within sight of the local hanging ground called Gallows Hill.  Paine biographer Craig Nelson tells us:
The most popular entertainment of the age was the thrill of the hangman’s noose, with executions the only public holidays for workers besides Christmas and Easter, thus allowing apprentices, servants, and the working poor to mull the consequence of villainy.
In eighteenth century England “villainy” among the politically powerless included some 200 crimes punishable by death.  Steal a box of tea or a handkerchief and you could be facing the hangman’s noose, even if you were starving.
As was true in England as a whole, 5 percent of Pain’s neighbors were aristocrats and gentry (doctors, lawyers, and landowning yeomen and clergy), while 95 percent were rural paupers trying to survive the enclosure movement, when common folk were suddenly forbidden to graze their herds, hunt, or forage on 3.4 million acres of now private grounds.
Though baptized as an Anglican, Thomas Pain would often accompany his father to the local Quaker meetinghouse, adjacent to which were “the cage, pillory, and stocks for the condemned overflow of Thetford prison.” Thus, the prayer and testimony of the Quaker gathering would be mixed with “bellowing wails, screams for mercy, and the taunts of locals having a grand old time tormenting the criminals on public display next door.”

Thomas began grammar school at age six and quit at age 12 to begin an apprenticeship in staymaking.  Seven years later (1756) the Seven Years' War was underway, with the English and its allies fighting the French and their supporters.  Pain left home and joined the crew of a privateer warship that succeeded in capturing “the treasure of eight enemy vessels in as many months,” providing him with a handsome commission for his service.  

While most successful privateers spent their winnings on women and clothes, Pain bought a pair of globes and began attending philosophical lectures in London. 
Historians have long wondered exactly how this lower-class rarely-do-well became the most popular author of the eighteenth century and famed citizen of the world. He did it, we now know, in a signature American fashion—a rigorous course of self-improvement leading to personal reinvention—inspired by one of the most remarkable transformations of thought in world history. Thomas Pain would spend only a few years in London, but they would make of him a central figure in the creation of the modern world.
Pain later married but his wife and child died during childbirth.  He married again but following a financial collapse he and his second wife Elizabeth Ollive agreed to a separation, though they were never divorced.  Pain’s bankruptcy came during his stint as an excise taxman when he abandoned his post in Lewes and went to London to petition Parliament for better pay for excise tax collectors.  There he distributed copies of his pamphlet The Case of the Officers of Excise, which though compelling in many ways stood in contradistinction to his later essays against government and especially its taxes.  It was largely ignored. “Between the public’s loathing of the Excise and the government’s interest in paying its employees as little as possible, this noble campaign was a fool’s errand,” Nelson writes.

When he returned to his post in Lewes, Pain was fired and arrested for debt.  He sold assets in a business he and his wife ran to pay his creditors, and Elizabeth went home to live with her parents.  Neither one ever remarried, and both lived into their seventies, dying only eight months apart.  
When Pain in later life learned that the Ollives were having financial troubles, he would anonymously send Elizabeth money, and when Elizabeth had the opportunity to pocket a tidy sum by agreeing to take part in the British government’s drive to vilify her ex-husband, she would categorically refuse.
With personal bankruptcy, loss of his job, and the breakup of his marriage, Pain, age 37, had reached the nadir of his life.  
He did not know it at the time, but this seemingly unconquerable mountain of failure would force him to risk all, to take a very great leap of faith that would lead to his immortality.
Or as another biographer said about him with memorable flair: “When the British fired Thomas Paine, it cost him his marriage, but it cost the British their American colonies.”

Shortly after and with Ben Franklin’s blessing, Paine ventured to America, began writing, and achieved everlasting fame and notoriety.  His 1776 pamphlet Common Sense set the colonists on fire for independence.  According to Wikipedia, “In proportion to the population of the colonies at that time (2.5 million), it had the largest sale and circulation of any book published in American history.  As of 2006, it remains the all-time best selling American title, and is still in print today.”

He followed Common Sense with a series of essays called The American Crisis that attempted to raise American spirits during the war. 
THESE are the times that try men's souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph.
Returning to England after the war to find a builder for an iron bridge he had designed, he wrote Rights of Man, in two parts, as a rebuttal of Reflections on the Revolution in France by Edmond Burke.  “Like Hamilton, Burke believed that only the nation’s elite should be involved in the affairs of state, which in his mind meant not just the rich and the landed but chivalric nobles, and clearly not common tradesmen,” Nelson explains.

In Rights, Paine points out that government by elites or anyone is unnecessary:
For upwards of two years from the commencement of the American War, and to a longer period in several of the American States, there were no established forms of government. The old governments had been abolished, and the country was too much occupied in defence to employ its attention in establishing new governments; yet during this interval order and harmony were preserved as inviolate as in any country in Europe. There is a natural aptness in man, and more so in society, because it embraces a greater variety of abilities and resource, to accommodate itself to whatever situation it is in. The instant formal government is abolished, society begins to act: a general association takes place, and common interest produces common security.
Later as a condemned prisoner under Robespierre, he penned the first volume of his The Age of Reason in which he presented his deistic view of the Bible and organized religion:  
I do not believe in the creed professed by the Jewish church, bythe Roman church, by the Greek church, by the Turkish church, by the Protestant church, nor by any church that I know of. My own mind is my own church. 
All national institutions of churches, whether Jewish, Christian
or Turkish, appear to me no other than human inventions, set up to
terrify and enslave mankind, and monopolize power and profit.
He died all but forgotten at age 72, on the morning of June 8, 1809, in Greenwich Village, New York City, after suffering from a long, devastating illness.     

As an afterword, Paine published his final installment of The Crisis on April 19, 1783, coinciding with the firing of the first shots in Lexington eight years earlier, saying that "The times that tried men's souls are over.”

No, they are never over.


George Ford Smith is the author of eight books, including The Flight of the Barbarous Relic, Eyes of Fire: Thomas Paine and the American Revolution, and The Fall of Tyranny, the Rise of Liberty.  He is also a filmmaker whose latest work is a five-minute documentary about the Christmas Truce of 1914, A Christmas to Remember.

Monday, January 14, 2019

Thomas Paine blasts fake money

The paper money that funded the American Revolution led to post-war grievances, the most well-known of which was Shays’s Rebellion in backcountry Massachusetts.  For years after the war the Boston legislature imposed taxes, falling mainly on those least able to pay, for the full payment in specie of the highly-depreciated notes issued during the war and held mostly by well-to-do legislators and bankers.  As a further aggravation, the war was fought mostly by those on whom the taxes fell, while the elites stayed home.  (See the Nobel-worthy Shays's Rebellion: The American Revolution's Final Battle by Leonard L. Richards)

Petitions for redress having been ignored by the legislature for several years, town leaders in western Massachusetts organized marches, beginning in August 1786, to shut down the courts, demanding that the state constitution be revised.  Eventually, through force of arms, the government put a halt to the uprising while mischaracterizing it as a refusal of the poor to pay their just taxes.  

Shays’s Rebellion became a propaganda ploy to lift George Washington from his retirement at Mount Vernon to lend his prestige as father of his country to serve as president of the Constitutional Convention in Philadelphia.  Meeting in secrecy from May 25, 1787 to September 17, 1787, representatives from the various states formed a new federal charter in violation of the agreement to amend the existing one, the Articles of Confederation.   

The result was a constitution with enough loose language and new powers that Alexander Hamilton and subsequent Hamiltonians exploited into the document today that is largely ignored or corrupted through political double-talk.  Thus, for example, we have a central bank with a monopoly on the issue of fiat money the rest of us are forced to use, while the Constitution prohibits states issuing “any Thing but gold and silver Coin a Tender in Payment of Debts.” (Article 1 Section 10)

Today, people don’t know or care enough to protest government's fake money, but in early 1786 Thomas Paine was one of those who did.  The author of Common Sense and The American Crisis essays, who as a soldier in the Continental army lifted the spirits of fellow soldiers and civilians alike with the opening words of his first essay, These are the times that try men’s souls, understood the theft that the Continental Congress had committed with its paper emissions.  

As part of his essay Dissertations on Government, etc. , published in February, 1786, Paine included a scathing condemnation of paper money that is Austrian School-consistent in most ways.  (“The pretense for paper money has been, that there was not a sufficiency of gold and silver. This, so far from being a reason for paper emissions, is a reason against them.”) 

In honor of his upcoming birthday on January 29 and the publication of Common Sense on January 10, 1776, I present Paine’s insightful essay on paper money.

* * *

I shall enumerate some of the evils of paper money and conclude with offering means for preventing them.

One of the evils of paper money is, that it turns the whole country into stock jobbers. The precariousness of its value and the uncertainty of its fate continually operate, night and day, to produce this destructive effect. Having no real value in itself it depends for support upon accident, caprice and party, and as it is the interest of some to depreciate and of others to raise its value, there is a continual invention going on that destroys the morals of the country.

It was horrid to see, and hurtful to recollect, how loose the principles of justice were left, by means of the paper emissions during the war. The experience then had, should be a warning to any assembly how they venture to open such a dangerous door again.

As to the romantic, if not hypocritical, tale that a virtuous people need no gold and silver, and that paper will do as well, it requires no other contradiction than the experience we have seen. Though some well-meaning people may be inclined to view it in this light, it is certain that the sharper always talks this language.

There are a set of men who go about making purchases upon credit, and buying estates they have not wherewithal to pay for; and having done this, their next step is to fill the newspapers with paragraphs of the scarcity of money and the necessity of a paper emission, then to have a legal tender under the pretense of supporting its credit, and when out, to depreciate it as fast as they can, get a deal of it for a little price, and cheat their creditors; and this is the concise history of paper money schemes.

But why, since the universal custom of the world has established money as the most convenient medium of traffic and commerce, should paper be set up in preference to gold and silver? The productions of nature are surely as innocent as those of art; and in the case of money, are abundantly, if not infinitely, more so. The love of gold and silver may produce covetousness, but covetousness, when not connected with dishonesty, is not properly a vice. It is frugality run to an extreme.

But the evils of paper money have no end. Its uncertain and fluctuating value is continually awakening or creating new schemes of deceit. Every principle of justice is put to the rack, and the bond of society dissolved: the suppression, therefore, of paper money might very properly have been put into the act for preventing vice and immorality.

The pretense for paper money has been, that there was not a sufficiency of gold and silver. This, so far from being a reason for paper emissions, is a reason against them.

As gold and silver are not the productions of North America, they are, therefore, articles of importation; and if we set up a paper manufactory of money it amounts, as far as it is able, to prevent the importation of hard money, or to send it out again as fast it comes in; and by following this practice we shall continually banish the specie, till we have none left, and be continually complaining of the grievance instead of remedying the cause.

Considering gold and silver as articles of importation, there will in time, unless we prevent it by paper emissions, be as much in the country as the occasions of it require, for the same reasons there are as much of other imported articles. But as every yard of cloth manufactured in the country occasions a yard the less to be imported, so it is by money, with this difference, that in the one case we manufacture the thing itself and in the other we do not. We have cloth for cloth, but we have only paper dollars for silver ones.

As to the assumed authority of any assembly in making paper money, or paper of any kind, a legal tender, or in other language, a compulsive payment, it is a most presumptuous attempt at arbitrary power. There can be no such power in a republican government: the people have no freedom, and property no security where this practice can be acted: and the committee who shall bring in a report for this purpose, or the member who moves for it, and he who seconds it merits impeachment, and sooner or later may expect it.

Of all the various sorts of base coin, paper money is the basest. It has the least intrinsic value of anything that can be put in the place of gold and silver. A hobnail or a piece of wampum far exceeds it. And there would be more propriety in making those articles a legal tender than to make paper so. . . .

The laws of a country ought to be the standard of equity, and calculated to impress on the minds of the people the moral as well as the legal obligations of reciprocal justice. But tender laws, of any kind, operate to destroy morality, and to dissolve, by the pretense of law, what ought to be the principle of law to support, reciprocal justice between man and man: and the punishment of a member who should move for such a law ought to be death.

When the recommendation of Congress, in the year 1780, for repealing the tender laws was before the Assembly of Pennsylvania, on casting up the votes, for and against bringing in a bill to repeal those laws, the numbers were equal, and the casting vote rested on the Speaker, Colonel Bayard. "I give my vote," said he, "for the repeal, from a consciousness of justice; the tender laws operate to establish iniquity by law." But when the bill was brought in, the House rejected it, and the tender laws continued to be the means of fraud.

If anything had, or could have, a value equal to gold and silver, it would require no tender law: and if it had not that value it ought not to have such a law; and, therefore, all tender laws are tyrannical and unjust, and calculated to support fraud and oppression.

Most of the advocates for tender laws are those who have debts to discharge, and who take refuge in such a law, to violate their contracts and cheat their creditors. But as no law can warrant the doing an unlawful act, therefore the proper mode of proceeding, should any such laws be enacted in future, will be to impeach and execute the members who moved for and seconded such a bill, and put the debtor and the creditor in the same situation they were in, with respect to each other, before such a law was passed. Men ought to be made to tremble at the idea of such a bare-faced act of injustice. It is in vain to talk of restoring credit, or complain that money cannot be borrowed at legal interest, until every idea of tender laws is totally and publicly reprobated and extirpated from among us.


As to paper money, in any light it can be viewed, it is at best a bubble. Considered as property, it is inconsistent to suppose that the breath of an assembly, whose authority expires with the year, can give to paper the value and duration of gold. They cannot even engage that the next assembly shall receive it in taxes. And by the precedent (for authority there is none), that one assembly makes paper money, another may do the same, until confidence and credit are totally expelled, and all the evils of depreciation acted over again. The amount, therefore, of paper money is this, that it is the illegitimate offspring of assemblies, and when their year expires, they leave a vagrant on the hands of the public.

George Ford Smith is the author of eight books, including The Flight of the Barbarous Relic and The Fall of Tyranny, the Rise of Liberty.  He is also a filmmaker whose latest work is a five-minute documentary about the Christmas Truce of 1914, A Christmas to Remember.

Wednesday, January 9, 2019

Moore’s Law has replaced the gold standard

I collect gold in the form of important insights, and in this article I’d like to share some of them with you. 

Until a few years ago I never thought of Moore’s Law and a gold coin standard as having an important connection, but they do.  Gary North lays it out (8/17):
The gold standard was an institutional restraint on the expansion of government spending, and central banks were designed to thwart the gold standard. We live in an era of the triumph of central banking. We therefore live in an era of the comprehensive defeat of gold coins as restraining factors on the expansion of the government.
Here is the good news: we no longer need gold to do this. 
I favor a gold coin/digital standard established by the free market -- not any government -- but we no longer need it. If we did, then liberty would have been lost after 1971 or 1933. 
Moore's law has replaced the gold standard as a means of restraining civil governments' central planning. . . .
The escalating effect of Moore's law in reducing the cost of information is changing the whole world in ways we can barely perceive today. There is no way that any federal bureaucracy can keep up with the social, economic, educational, and political transformations that are taking place as a result of Moore's law. . .
People are finding ways to participate in the world economy that are outside the jurisdiction of the administrative state.
The inevitable bankruptcy of every national Western government because of compulsory government medical insurance programs and old-age retirement programs will complete the destruction of the Hamiltonian movement in America and the Keynesian welfare state everywhere else.
Since states are involved in just about every area of our lives, and since few people talk about whether they’re necessary or not, it’s always refreshing to read Murray Rothbard.  In Anatomy of the State he explains how the almighty state operates to support itself:
The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively “peaceful” the lifeline of the parasitic caste in society.
States, however, are not the same as government, as Albert Jay Nock tells us in Our Enemy, the State:
Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. 
The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. 
It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
The trouble is, all governments today are states.

Robert P. Murphy, author of Chaos Theory, a highly-readable primer on anarchy, has long defended the idea of a stateless society.  In this article he addresses a common concern of critics that under anarchy warlords would take over.  Murphy claims that,
for any given population, the imposition of a coercive government will make things worse.  
The absence of a State is a necessary, but not sufficient, condition to achieve the free society.
To put the matter differently:  It is not enough to demonstrate that a state of private-property anarchy could degenerate into ceaseless war, where no single group is strong enough to subjugate all challengers, and hence no one can establish “order.”  After all, communities living under a State degenerate into civil war all the time.  We should remember that the frequently cited cases of Colombia and now Iraq are not demonstrations of anarchy-turned-into-chaos, but rather examples of government-turned-into-chaos.
For the warlord objection to work, the statist would need to argue that a given community would remain lawful under a government, but that the same community would break down into continuous warfare if all legal and military services were privatized. [His emphasis]
Why does almost everyone accept the existence of states as axiomatic, when judging by what they actually do they’re nothing more than bandit gangs writ large?  Are we the propagandized adults in The Emperor’s New Clothes?

The American state is a burden and a threat but so far it hasn’t completely regulated the American economy -- to our great benefit.  Gary North (7/2015)
Economists define economic growth as follows: "An increased range of choices at the same income level." 
Using this definition, Americans are the richest people in history. 
We have more liberty, income, and geographical mobility than any nation on earth. We live in a huge free trade zone. We have the same language. We have a common monetary system. We have a highly developed road system. We have an airline system almost devoid of price fixing. We have more housing options than anywhere else. We can buy a home with a 30-year fixed interest rate at 4%. We can start a business in one hour -- two hours, at the most. We have the best higher education system in the world . . . and it's going online for free. We have a common law system, where everyone is innocent until proven guilty, except when dealing with the IRS. We have the right to own as many guns as we want.
“Money is the whole thing,” said a bitter Rod Steiger in The Pawnbroker, claiming it is the only thing that matters in life.  It’s so important some people would counterfeit it to get what they want.  And this turns our attention to the government and its central bank, the federal reserve.  

The secret of retaining the public's confidence in any currency unit is simple enough: convince users of the money that the issuers are responsible, reliable, and trustworthy. 
Government and its licensed agents have a monopoly of money creation. Private competitors are called counterfeiters. 
Sadly, in our day, it is very difficult to understand just what it is that counterfeiters do, economically speaking, that governments are not already doing. Fiat money is fiat money. 
(Perhaps the real legal issue ought to be the illegal use of the government's copyrighted material. Copyright infringement makes a much more logical case for Federal prosecution than counterfeiting.)
Central banking is one of the greatest cons in human history.  

The justifications for Federal Reserve Act of 1913 was to prevent bank failure and maintain price stability. Simple before and after analysis demonstrates that the Federal Reserve Bank has been a failure. In the century before the Federal Reserve Act, wholesale prices fell by 6 percent; in the century after they rose by 1,300 percent. Maximum bank failures in one year before 1913 were 496 and afterward, 4,400.
With a record like that it's no small achievement that it's still around.  But don't sound the trumpets because the public won't understand.  And people don’t care.  As long as their digital or paper dollars continue to buy stuff without too much pain, they’re okay.

As consumers they want high quality and low prices. But who’s going to give them a deal like that?  Big business.
There is a slogan about American big business wanting to hire low-cost immigrants. Don't blame big business. Big business caters to the vast middle class. Big business wants to cut prices to penetrate new markets. Middle-class people buy from Amazon and Walmart and Target for a specific reason: to get the best prices. Big business is responding to consumer demand. 
It is consumers, not big business, who demand low prices. Big business would like higher prices, but consumers won't let them impose higher prices. 
So, big business goes out to find ways to cut costs, so that big business can cut prices. Cause-and-effect is not from big business to the consumers; it is from consumers to big business. 
This is the logic of free market economics. — Gary North (1/2016)

George Ford Smith is the author of eight books, including The Flight of the Barbarous Relic and The Fall of Tyranny, the Rise of Liberty.  He is also a filmmaker whose latest work is a five-minute documentary about the Christmas Truce of 1914, A Christmas to Remember.







Tuesday, December 18, 2018

A Christmas to Remember

The Christmas Truce of 1914 is remembered today as something of a miracle, and based on letters the soldiers had written home it struck them much the same way.

How could it be that men can stop killing each other for a day after five months of mutual slaughter on the battlefield?  Nor did they merely take a time out, but fraternized, much to the displeasure of their high command.  They exchanged gifts, played European-style football, and generally behaved like men do when they get together during peacetime. Were they suffering from a form of psychosis? Didn't it penetrate their brains that they were celebrating with men who had killed many of their comrades?  Where was the hate, the lust for revenge?

For many of those celebrating that day it would be the last Christmas of their young lives.  Surely, some of them had to be aware of that possibility, given the heavy casualties incurred to that point. And some undoubtedly let that thought darken their day.  But not all of them.  Their letters home reflected a kind of school's-out attitude.  No thoughts about what was waiting for them the next day or week.

When the armistice was declared nearly four years later, at 11 o'clock on the eleventh day of the eleventh month, US flying ace Eddie Rickenbacker disobeyed orders and flew solo over the trenches to see what would happen at that precise moment.  Here's what he wrote:

On both sides of no-man’s-land, the trenches erupted. Brown-uniformed men poured out of the American trenches, gray-green uniforms out of the German. From my observer’s seat overhead, I watched them throw their helmets in the air, discard their guns, wave their hands. Then all up and down the front, the two groups of men began edging toward each other across no-man’s-land. Seconds before they had been willing to shoot each other; now they came forward. Hesitantly at first, then more quickly, each group approached the other.

Suddenly gray uniforms mixed with brown. I could see them hugging each other, dancing, jumping. Americans were passing out cigarettes and chocolate. I flew up to the French sector. There it was even more incredible. After four years of slaughter and hatred, they were not only hugging each other but kissing each other on both cheeks as well.

Star shells, rockets and flares began to go up, and I turned my ship toward the field. The war was over.

Maybe the men realized their enemies weren't always the guys shooting at them.  Maybe they understood that the ones at the top had everything to do with what was happening on the field.

If so, the Christmas Truce of 1914 was indeed special.

A Christmas to Remember





Friday, November 16, 2018

New anti-state movie

My new movie on Amazon Prime Video is called Audition, the tagline for which is "Sometimes success depends on the chemistry of strangers."

While this has romantic implications, the question before them is whether their acting inexperience can fulfill demanding roles in an anti-state movie.  Is it possible they have an edge that veteran actors don't?

The Amazon link has a trailer, and I've put together another one here.

The movie runs close to 19 minutes.  Check it out when you get a break.






Friday, July 13, 2018

War is a racket — and so is the state

In past writings I’ve attempted to show that the majority of the social problems experienced throughout the world — poverty, war, economic collapse, famine, hyperinflation, genocide, unilaterally broken agreements — can be traced to the dominant form of social organization under which we live: the State.  

Simply put, states are bullies that collect their revenue through theft and manage their populations through threats of punishment.  They use other incentives, such as tax breaks, but their existence depends on keeping their populations fearful of reprisals.  Of course they don’t want to be seen as thieves or bullies — they want our allegiance.  So, to win our favor they manufacture crises through lawmaking and other interventions, shift blame elsewhere, then use the crises to justify further interventions, calling on us for support as they continue meddling in our lives.  Meanwhile our natural liberty gradually erodes as state power expands.   

This is not a complex or original idea.  Rothbard, Hoppe, Nock, Spooner and many others have written at length on the nature of states.  Were any of their works required reading in school?  Probably not.  Definitely not in mine.  What would happen if Major General Smedley Butler’s War is a Racket became requisite reading for high school graduation?  Think that might affect enlistments?  How many of today’s teens have even heard of the book?  They know nothing about Butler but they’ve been told that Woodrow Wilson was a great president for sending over 100,000 young Americans to their death.  

War is a racket — and so is the state.  In Butler’s words, “A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small ‘inside’ group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many.”  He goes on to detail how and why World War I was a conspiracy instigated by the ruling elite.  

Government, however, is a different matter from the state.  As Albert Jay Nock wrote in Our Enemy, the State (Kindle edition):
Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
So far from encouraging a wholesome development of social power, it has invariably, as Madison said, turned every contingency into a resource for depleting social power and enhancing State power.  As Dr. Sigmund Freud has observed, it can not even be said that the State has ever shown any disposition to suppress crime, but only to safeguard its own monopoly of crime.
Some people can’t deal with the notion that they elect criminals to rule them.  They use government and state interchangeably, and they’ll tell you there are good people in government working hard for our welfare.  Elect more of them and the state will serve our needs.  But it can’t, not without abandoning its monopoly control over our lives, at which point it will cease being a state.  If that ever happens we can hope market forces would provide for the defense of property and life.  But abandoning power is not something to expect from a state.  It is far more likely to self-destruct, as I discuss in my book The Fall of Tyranny, the Rise of Liberty.

If the emperor’s new clothes strike you as ennobling when in fact he’s buck-naked, you can thank government schools and our pro-state culture for ceding reality to authority.

POSTSCRIPT: I have produced a short movie about a young woman called on to give a commencement speech at her alma mater when the scheduled speaker becomes sick.  She became a bestselling author after graduating, but not because of anything the school did to help her.  Should she convey this message to the graduates?  


See Risky Pinch Hitter, available on Amazon Prime Video. Suitable for all ages.

Monday, March 12, 2018

Gary North on central banking, gold, federal debt, and Keynesianism

I have never met Gary North and probably never will.  Yet, through his writings he has had a far-reaching influence on my thinking, especially with regard to government and economics.  He runs a membership website, GaryNorth.com.  For $14.95 a month you get access to everything on the site, including four daily articles that he writes six days a week and posts while most people are still asleep.  Members can ask questions in the forums to which he and other members will post replies.

North wrote what I consider a very important book on money and banking that’s available on Kindle: What is Money?  It is not only an enjoyable and highly informative read, but at $0.99 it’s virtually a gift.  Get it, read it, reflect on its insights.

Over the years I’ve accumulated excerpts from his daily articles that I thought were not merely important but profound.  Some of his articles are posted for members only.  I am sharing excepts from four of those articles here.

Central banking

[The] push behind central banking began with the creation of the Bank of England in 1694. It was motivated by private bankers who wanted to clean up through leverage, and they also wanted a cartel operation to keep out interlopers. They wanted a government monopoly. Next, the banking cartel needs an agency that will protect the cartel. It will always provide money for the cartel if it gets in trouble: bank runs. This is what the central bank does. As part of the payoff to the government for the monopoly, the central bankers also promise to defend the government whenever it runs into financial difficulties. So, there's a quid pro quo. The crooked bankers get their leverage, and they get their guarantees, and the crooked politicians get their spending, and they get their guarantees.

The public doesn't know, and the public doesn't care. This is a fundamental political fact: you must not expect the public to reform the system. The public knows nothing about the system. The public doesn't understand the system. The public can barely function during the day. People get used to keeping themselves going, week to week, or even day to day, and we should not expect much more than this from the average guy in the street. He knows how much money he's going to need to pay his bills at the end of the month, which means he's smarter than Congress. But the best you can hope for is that he is going to pay his bills at the end of the month. Don't expect him to save for retirement. Don't expect him to save to send his kids to college. Expect him [to vote] for people who promise him to get his kids educated cheaply, and then to get himself supported in his old age.

The logic of gold

When you buy gold, you are shorting Western civilization.

I have been saying this for 50 years, and I will not stop saying it.

When you buy gold, you are shorting Keynesianism. You are shorting the Chicago School of economics. You are shorting the stock market. You are shorting currencies. You are saying to yourself, loud and clear, that you do not believe that a world controlled by central banks is a stable, reliable world….

The average man believes in the promises of politicians. To the extent that he understands central banks, he trusts them too. He thinks the world is run by experts, and these experts are going to do whatever it takes in order to make the world safe for the average Joe. So, there are lots of reasons not to buy gold. You will be told by everybody that buying gold is foolish. Your investment advisor will tell you this. Your brother-in-law will tell you this. CNBC will tell you this.

The entire civilization is built on this presumption: gold is a barbarous relic. This is because modern civilization is built on the wisdom of central bankers. The modern world is built on permanent monetary debasement….

Why should you buy gold if you don't own any gold? Because there should be something in your life that says this: "I don't trust the politicians, the central bankers, and the Medicare system." At some point in your life, you have to put it on the line. You have to have at least a symbolic amount of your net worth tied up into an asset that will protect you briefly if there is a major crisis….

Anyone who refuses to own gold is saying, loud and clear, that he trusts Janet Yellen, he trusts Obama, he trusts Jeb Bush, he trusts Hillary Clinton, and he trusts his local Congressman, who has assured us Social Security and Medicare payments are guaranteed forever. He also trusts the business cycle. He doesn't think he's going to get fired. He doesn't think mass inflation is a possibility.

On Federal debt

This is the horrendous fact about federal debt. The worse the policies get, the more likely that rich investors and institutions will fund the ever-rising federal debt. It will be the equivalent of pouring gasoline on the fiscal fire. This is because long-term Treasury debt is subsidized by widespread error. The entire investment community believes that US Treasury debt is the safest of all forms of debt. This idea is found in economics textbooks. It is basic to the capital structure of the world.

The error regarding the safety of federal debt has been widespread for so long, and there has been no threat of default for so long, that people have become immunized against any suggestion that, ultimately, there is going to be a great default. People just cannot believe this. There are 250 years of tradition on the side of those who say that the federal government will never default. This has blinded people to the reality of the unfunded liabilities of Medicare and Social Security. It has also blinded them to the possibility of a great default. This very blindness subsidizes the expansion of the debt. People simply cannot bring themselves to believe that there will be a default.

It all boils down to this: you can't get something for nothing. The federal government cannot continue to tap the capital markets without affecting the capital markets. Capital that would've flowed into the private economy, especially capital formation, flows instead into the coffers of the federal government, where most of the money is wasted. This de-capitalizes the private sector. It reduces productivity. It is hailed as sound fiscal policy by all Keynesians, most monetarists, and most supply-side economists, but few Austrians. Obviously, members of Congress are not concerned. The voters are not concerned. Trump is not concerned. Who is concerned? A handful of Austrian School economists. They have no influence in academia, finance, or politics.

So, the federal debt will continue to rise. The recession will arrive. The on-budget debt will then become exponential. To this will be added the unfunded liabilities of Medicare and Social Security. The deficits in both of those accounts will increase. The general fund will have to be tapped in order to fund Medicare and Social Security. This will push the on-budget debt even higher.

We can see where this is heading. Almost nobody else does.

Don't lose sight of the obvious, namely, the irreversible increase in the on-budget debt. It reminds us, day by day, that the day of reckoning is approaching. Kicking the can down the road politically cannot go on forever.

Keynesianism

Here is Keynesianism in four words: "Deficit spending overcomes recessions." That is all you really need to know. . . .

This economic outlook can be refuted with one question: "Where did the government get the money to make the purchases?”

There are only three possible answers.
The government taxed it. So, the people who were taxed cannot spend it. Thus, there is no increase in total spending. 
The government borrowed it. So, the people who lent the money cannot spend it. Thus, there is no increase in total spending.
The government borrowed it from the central bank, which created the digital money out of nothing. So, there is no increase in total demand; there is only an increase in the money supply. When the government spends it, it will redirect this newly created money toward government projects, but the result will be a transfer of assets from the private sector to the public sector. There is no increase in total spending.
This is easy to understand. But Schiller and the Keynesian economists never quite face this. They never refuted [it] in a systematic way. They never acknowledge these three refutations of the Keynesian system. They never acknowledge that this is a philosophy of magic: stones into bread. Ludwig von Mises called [it] that in 1948, and he was correct.

We live in a world in which people have Ph.D.'s and win million-dollar awards based on an erroneous economic philosophy that is easy to refute. There are lots of arcane Keynesian formulas, but they cannot answer these three questions. There is no increase in total spending. There is simply a transfer of spending from the private sector to the public sector. It means that the government spends more, and people in the private sector spend less. It usually means that governments don't invest. Investors who would have lent to businesses instead lend to the government.

Keynesianism is all about shifting resources out of the private sector into the public sector. The Keynesians see this as productive. Austrian School economists see it as unproductive. The Keynesians see this as creating wealth; the Austrian School economists see this as destroying wealth. The debate rarely gets into the academic journals. The debate rarely gets into the public political sector. That's because politicians want to spend money. Voters will receive freebies from the government, and the only way to pay for these freebies will be these: taxing, borrowing, and spending fiat money into circulation.

Our Hell-Raising Founding Father

“… if the journalistic credos of speaking truth to power, comforting the afflicted, and afflicting the comfortable have a godhead, that wou...