Saturday, February 4, 2023

The State Unmasked

“So things aren't quite adding up the way they used to, huh? Some of your myths are a little shaky these days.”

“My myths? They're not—“

He held a hand up. “Don't take it personally. You wanted straight talk, so let me talk.” To me, 'Will' looked like any number of motorcycle mechanics I had known. Lanky, hair in a ponytail, jeans with knee ventilation, and a T-shirt with a lewd graphic or saying. His shirt, though, bore the inscription 'Publik Skul Graduwit.' Except for the Ray-Ban Aviators, there was little to suggest he was actually a government spook.

“I feel like I'm describing the color of fresh snow,” he said, looking everywhere except at me, “but here it is. We do whatever you let us get away with. That's all there is to it. And each day you let us get away with more. Any questions so far?

“We knew you'd be lousy guardians, and you didn't let us down. We've created and milked crises throughout our history so that we now have the imperial executive every State needs to go along with an overarching bureaucracy meddling in your affairs. But you call this political arrangement the fruits of democracy, as if you'd decided you needed more war and less freedom in your life, then voted to make it happen. What's better, we've still got you believing democracy is a good idea. Every Fourth of July, you wave your sparklers in our honor, as if we were intellectual descendants of the revolutionaries of 1776, rather than the counter-revolutionaries of 1787. Who says public education is failing us? It may be failing you, but not us.”

He grinned and shook his head. “We impose gun control to reduce the crime rate. The thugs cheer and the crime rate goes up. And the rate excludes crimes committed by government thugs. Some of you try to stick the Bill of Rights in our face. The Bill of Rights is a tourist attraction. We should sweat a document sequestered in the National Archives? Elected stiffs from Woodrow Wilson onward, as well as a few appointed ones, have been telling you the Constitution is alive. In other words, your rights are dead. No guns for you, pal.

“You know, it really scares me when people say government serves their interests. How many politicians have the demeanor of servants? Politicians respect money and votes. And both have to be in large amounts and concentrated to become a threat or an advantage to them. Since most voters aren't organized, it's the politicians' rich supporters who help pull the levers of power.

“Sometime during your school years, you were told the State's basic function is to protect you from domestic and foreign aggression. Therefore, it was only logical that we needed complete control of the military, police, and courts. What saints do you know personally who could be trusted with such power? And how do you think the people who have this power are going to fund these policing functions? Through voluntary trade on the market? Why should they mess with production and exchange when all they have to do is nudge you with a gun?  We're a monopoly of crime."

“Almost no one believes that,” I said.

“Don't I know. If enough people did, we'd be in trouble.”

“Look, maybe people will admit it isn't ethical, but we at least get some benefit from taxation.”

“Only if you don’t look at the alternatives. Some of you make a killing from taxes, others are literally killed. Let me read you something Randolph Bourne wrote in 1918:

“The modern State is not the rational and intelligent product of modern men desiring to live harmoniously together with security of life, property, and opinion. It is not an organization which has been devised as pragmatic means to a desired social end. All the idealism with which we have been instructed to endow the State is the fruit of our retrospective imaginations. What it does for us in the way of security and benefit of life, it does incidentally as a by-product and development of its original functions.”

“What does that prove?” I said. “It's a series of assertions. You haven't proved a thing.”

“Nor can I. You have to look for yourself. Have you noticed it's impossible to vote away the State? You might find a candidate now and then who speaks out boldly against government growth. But that's mere election rhetoric, in most cases. So far, nothing has stopped us.

“Did the Gipper, your sole purported savior in recent memory, get government off your backs, as he said he would? He pledged to abolish the departments of Energy and Education, but last I heard they were still around. Rather than ditch the bankrupt Ponzi scheme we call Social Security, he followed Alan Greenspan's advice and increased taxes to postpone the bankruptcy. During the Gipper's eight-year reign, the federal debt tripled and civil liberties diminished. How does your back feel?

“Maybe you think the State's done a good job defending you against foreign aggression. Let's touch on a few low points of history.

“No Union lives were lost during the Confederacy's 36-hour shelling of Fort Sumter, an incident provoked by Lincoln 's ordering the fort reprovisioned instead of abandoned. A month earlier, he had ignored a Confederate peace commission that had traveled to Washington , D.C. to negotiate a peaceful secession. But Lincoln had his 'incident,' got his war, and 800,000 young men died, plus an estimated 50,000 civilians and a few thousand slaves.

“The end of slavery was never Lincoln 's objective, as he repeatedly stated, but rather one of the byproducts Bourne refers to. By 1840, the British Empire had ended slavery peacefully through compensated emancipation. During the 19th Century, dozens of other countries ended slavery without war. If manumission was Lincoln 's goal, why did the master statesman need a long, bloody war to achieve it? Lincoln invaded the South to regain lost tariff revenue when the southern states seceded. Lincoln, in other words, murdered and imprisoned people to carry on his policy of predation.

“By the way, since Lincoln invaded a sovereign country — the Confederate States of America — I consider the war of 1861-1865 a foreign war.

“Moving ahead a half-century, why do you suppose Wilson imposed a maximum 20-year prison sentence for anyone criticizing the government during World War I? Why did he conscript a million men who were packed like sardines into ships and sent overseas to join a war that had already killed five million men? Was it because Americans were convinced the State was acting in their defense?

“Okay, but what about the 'good war,’ you ask.  World War II was different. The so-called 'good war' was the costliest conflict in human history. Civilian deaths outnumbered military deaths by over 16 million and total deaths on both sides exceeded 72 million. The 'good war' saw the guys in white hats set the precedent for dropping nuclear weapons on mostly civilian populations. Who was being defended when we incinerated two hundred thousand people whose leaders had earlier asked to negotiate a conditional surrender, a condition we ultimately agreed to? 

“Was the State defending its citizens during the build-up to war when we neglected to tell Pearl Harbor commanders Short and Kimmel an attack was imminent? Twenty-four hundred troops lost their lives in that attack to join a war the president promised we would never join. The man who made the promise had an eight-point provocation plan to get Japan to attack us.

“Did the war in Vietnam stop communism in its tracks and keep other dominoes from falling? The only thing it stopped were the lives of 58,209 American soldiers and several million Vietnamese civilians. And these figures don't include countless others who suffered and perished from Agent Orange exposure.

“Were your trillions of dollars in taxes at work on 9-11 defending Americans from terrorist hijackers? And did you get your money's worth later, when the president invaded a country posing no threat to our security and having no connection to the attacks?

“I don't have time to talk about inflation and its role in the State's growth and wars, other than to say most people buy our claim that the Federal Reserve is our number one inflation fighter. Ironically, it's true but only because the Fed is the sole source of inflation. It's a little like saying Al Capone was Chicago 's number one crime fighter. To lower the incidence of crime, all Capone had to do was let up on it.

“The State makes its most significant inroads on liberty during major crises — wars and depressions, and more recently pandemics. The State is primarily responsible for bringing about, intensifying, and prolonging these crises. You still think the State exists for your benefit?

“Change won't be easy because so many people feed at the federal trough. Ask them if they think we're plunderers or parasites or warmongers. To them we're compassionate visionaries and 'partners' in their success. Some of them are opinion-molders, and one way or another we take care of them. Is it any surprise they stand up for us?

“So there you have it. The only way you can beat us is with ideology, but we've got the majority of ideologists, both left and right, eagerly defending us. You'll have to educate yourselves and enough others to pose a threat. You’ve been trying since 1576 if not earlier.  How’s that going?”

“If you understand all this,” I said, “why do you work for the State? Why aren't you fighting it?”

“Because my family and I have a nasty habit. We like to eat. See ya ‘round.”


George Ford Smith is the author of eight books and welcomes speaking engagements.  Contact:

Friday, January 27, 2023

The search for a level playing field

Bernie Sanders and other politicians have made socialism attractive to voters, especially young ones, because it promises to eliminate the injustices of capitalism. As to what these terms mean no one seems to care much, other than by socialism they mean a kinder, caring society without income extremes, whereas capitalism is the preferred system of ruthless exploiters who amass obscene fortunes while real workers struggle to survive.  

In recent times the disparagement of capitalism has included its attack on Mother Earth and the air Al Gore breathes.

This has to stop.  Today’s socialists simply want to make America great -- but for everyone

And that starts with taxation. The very, very rich pay almost no income taxes, while many of the biggest corporations pay nothing.  According to an organization that researches this matter,

The tax-avoiding companies represent various industries and collectively enjoyed almost $40.5 billion in U.S. pretax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 percent. The 55 corporations would have paid a collective total of $8.5 billion for the year had they paid that rate on their 2020 income. Instead, they received $3.5 billion in tax rebates.

Clearly, income taxation as it exists is grossly unfair even if it is legal.  Something must be done if society has a future.  If taxes are the price we pay for civilization, and society is demonstrably uncivilized, there’s a bug in the system somewhere.  But where?  Today’s socialists think they know.

Its not necessarily a case of the super-rich wanting to exert their power over the poor. According to Forbes, “At least a dozen billionaires have made public statements that call for the super-rich to pay more in taxes.”  Some mega-rich individuals such as Warren Buffet apparently feel guilty and want government to swipe more of their income.  Surrendering to a mega-thief whose appetite is insatiable doesn’t balance the scales.  

If people, regardless of income, had the choice of keeping what they earned, how many would instead turn it over to the government?  In all likelihood they would avoid thieves of any kind since they have a way of wasting what they steal. Instead, they would direct more of their money into philanthropic activities, as the super-rich did before the 16th Amendment made income theft legal.  

So what is the solution?

We need to ask ourselves: Is thievery necessary for civilization?  Does making it legal make it any less larcenous?  Does stealing more from those who have it add a luster of righteousness to it?

Most of us were raised with the notion that theft is theft, and theft is wrong. If a thief can be duped so much the better. 

The super-rich, well-aware of their vulnerability, have used the law to protect themselves, as Trump’s now-famous remark to Hillary reminds us.  If you were super-rich you would do the same.  It’s a matter of buying the right politicians and bureaucrats to complicate the tax code.  

Clearly, the oddball organization in all this is the government.  It has more guns than Trump, a lot more, plus it has the nearly unanimous support of the media.  It could, if it also believed its rhetoric, bring any billionaire to his knees.  Alas, we are dealing with a corrupt government, easily swayed by the prospect of obscene monetary gains.

Corruption raised to a virtue

Once upon a time governments discovered there are more ways to steal than through direct taxation.  Kings and other tyrants noticed that their citizens trusted government coins and began diluting them of their precious metal content or falsifying the stamped content.  The peasants caught on and hoarded the good ones, while using the king’s coins in trade.  But the kings caught on and made the peasants pay their taxes in good coins. 

Much later when banks got into the act, they noticed their depositors began using their gold receipts in trade instead of the gold itself.  They trusted the banks, but then the banks decided to issue receipts for gold they didn’t have.  Unlike the days of coin debasement, a phony receipt looked the same as a good one.  People were fooled but eventually the banks were caught and had to shut down at least temporarily.  

Since banks dealt with money and governments could never get enough of it, the two became close friends.  Government passed laws declaring that the banks owned the gold in their vaults, not the hapless depositors.  They also legalized central banks that could control all or most of the banks of the country, as well as the economy itself. 

Vera C. Smith addressed the topic of central banking in her 1936 book, The Rationale of Central Banking and the Free Banking Alternative.  In the book’s introduction, economist Leland Yeager tells us “A central bank, as Smith notes, is not a product of natural development. It originates through government favors and bears special privileges and responsibilities.”

Typically, it serves as banker for the government and for the ordinary banks and monopolizes or dominates the issue of paper money. From this privilege derive the secondary functions and characteristics of a modern central bank: it guards the bulk of its countrys gold reserve, and its notes and deposits form a large portion of the cash reserves of ordinary banks. It is constrained under a gold standard, though less tightly than competing banks would be, by the obligation to keep its notes redeemable. When unable to meet this obligation, it typically suspends payments and goes off the gold standard, while its notes acquire forced currency. . .

Control over the volume of its own note and deposit issue gives the central bank power over the size or scale of the countrys money and banking system and over the general credit situation. {emphasis mine]

In the US, the Fed and the federal government have had a cozy relationship for over a century.  With gold redemption gone the only receipts the Fed issues are fake, yet they pass as money, by decree.  And with the Fed serving as a buyer of government debt, it helps fund its welfare - warfare expenses.  

Since the Fed has bought the economics profession, its operations are protected from acceptable scrutiny.  Inflation, for instance, is usually defined as a volatile rise in the general price level — see here, here, and here among many others — not an increase in the money supply as it was originally understood.  The economists tell us a 2% price increase is not only acceptable but necessary for a healthy economy.  And with the Fed targeting 2%, it is seen as an inflation fighter rather than an inflation creator.

Inflation eats away at the purchasing power of the dollar.  Check it out for yourself.  It’s effectively a hidden tax.  Who is hurt the most, the few holding lots of dollars or the rest holding a few?

And if the few are big enough and can’t pay their bills, who do suppose bails them out with its power of the printing press?

With the big players protected and even encouraged through what was originally termed the Greenspan put, is it any wonder large discrepancies in income result?

People say they want a level playing field.  Rather than giving them more power as today’s socialists and progressives want, the known thieves should be ousted to achieve this goal.


George Ford Smith is the author of eight books and welcomes speaking engagements.  Contact:


Friday, January 20, 2023

Fighting inflation means fighting the Fed

“There are surely other worlds than this—other thoughts than the thoughts of the multitude—other speculations than the speculations of the sophist.”

— Edgar Allan Poe, “The Assignation”

Nothing brings out misleading or false narratives like the subject of money. 

Prices over the last — what? — 25 months have shot up, and this development is roundly called inflation.  Why?  Because prices have shot up.  The criminals running the government even passed an inflationary omnibus spending bill under the pretext of fighting inflation, the logic being they can do whatever they want because we can’t stop them.

In today’s fiat world of make-believe, inflation is an increase in the money supply and is synonymous with counterfeiting — an exchange of nothing for something.  As Ryan McMaken reports, “During the thirteen months between April 2020 and April 2021, money supply growth in the United States often climbed above 35 percent year over year, well above even the ‘high’ levels experienced from 2009 to 2013.”

Money supply metrics are not front-page news.  Most accounts give us the hand-wringing figure of higher prices or CPI inflation.  It seems everyone uses “inflation” and “CPI inflation” interchangeably, as if the difference is only linguistic.

It isn’t.  CPI inflation is an effect, inflation is one of the causes.

Among other things, prices are influenced by changes in the money supply.  More money puts upward pressure on prices.  Improvements in production/distribution efficiency does the opposite.  The two work simultaneously.  Sometimes prices remain constant while the Fed inflates the money supply, as happened prior to the Crash of 1929.  Given that the bureaucrats who control the money supply, the FOMC of the Federal Reserve, want an annual CPI inflation rate of 2%, they have to figure out how to assess the infinite complexity of the market to adjust the money supply accordingly.  No wonder one Fed official thinks economics is real hard.

But wait — Biden wants the Fed to ensure the woke goal of racial equity along with its dual mandate of “maximum employment and price stability.” Is this a call for reparations? Who better to provide the necessary billions than a government agency that can create money at will?

What would happen to price inflation if that happened?

Reparations aside, the Fed had it going for awhile.  Using an inflation calculator, I found that from 2017 to 2019, prices increased annually at a rate of 2.13%.  The FOMC would cheer that figure.  Beginning in the year of covid hysteria — 2020 —prices since have gone up 4.67% annually.  Oops.

How did we get into this mess?

One of the most prosperous eras in our history, in all of history, came after the Civil War.  It was a period without a central bank or income tax.  No entity was tasked with maintaining macroeconomic or racial goals.  No entity served as a lender of last resort.  Monetary policy was left mostly in the hands of the market rather than a gathering of bureaucrats.  Gold and to some extent silver coin was money, and paper currency a convenient substitute.  

What about price inflation during this period?  From 1870 to 1900 there was none.  The purchasing power of the dollar increased.  According to calculations based on the Bureau of Labor Statistics consumer price index the country had a deflation rate of -1.47% per year.  By1900 prices were 35.88% lower than the average prices of 1870.  Saving was rewarded, and the economy thrived.

Unlike the myth that a committee has to inflate the money supply to avoid deflation and therefore a downturn, the American economy did its best by far without any committee or any CPI inflation. 

During the late 1800s banks ignored the requirements of demand deposits and engaged in fractional reserve banking, as banks have always done almost without exception, including today under the Fed.  They held only a fraction of deposits in reserve and loaned the rest, but this created problems called Panics when many banks were caught short.  

Instead of acknowledging the pitfalls of fractional reserves (see here and especially here), they condemned the commodity money for its lack of “elasticity.”

A few of the biggest bankers — along with key politicians — decided to address this problem.  In late 1910 they met secretly on Jekyll Island, Georgia and worked out the structure for a banking cartel that in its essentials became the Federal Reserve Act of 1913. 

Senator Nelson Aldrich of Rhode Island was one of those present at Jekyll, and the plan that emerged bore his name.  Unfortunately for the bankers, Aldrich was a Republican and getting a Democrat-controlled congress to embrace it proved futile. When Democrat Woodrow Wilson became president in 1912 the Aldrich plan emerged under the auspices of Democratic Congressman Carter Glass of Virginia, who like other politicians lacked technical knowledge of banking and relied upon hired hands for assistance.

If truth were to dominate the banking bill should have born the name of banker Paul Warburg of Kuhn - Loeb & Company, who was the chief architect of the Jekyll proposal.  One writer referred to Warburg as "the mildest-mannered man that ever personally conducted a revolution.”

For nearly a century government officials denied the authenticity of the Fed’s furtive foundation, but in 2010 Bernanke and team held a celebration of its founding on Jekyll Island.

Murray Rothbard describes the bankers’ victory this way:

Following the crucial plank of post-Peel Act Central Banking, the Fed was given a monopoly of the issue of all bank notes; national banks, as well as state banks, could now only issue deposits, and the deposits had to be redeemable in Federal Reserve Notes as well as, at least nominally, in gold. . . 

The Fed was now in place as lender of last resort; and with the prestige, power, and resources of the U. S. Treasury solidly behind it, it could inflate more consistently than the Wall Street banks under the [previous] National Banking System, and above all, it could and did, inflate even during recessions, in order to bail out the banks. The Fed could now try to keep the economy from recessions that liquidated the unsound investments of the inflationary boom, and it could try to keep the inflation going indefinitely. [My emphasis]

And beginning with WWI the Fed has proved indispensable for conducting war.

Moral: When you talk about inflation, always include the government’s central bank, the Federal Reserve, the entity solely responsible for inflating the money supply and thereby creating social and economic havoc.

George Ford Smith is the author of eight books and welcomes speaking engagements.  Contact:

The State Unmasked

“So things aren't quite adding up the way they used to, huh? Some of your myths are a little shaky these days.” “My myths ? They're...