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.

Wednesday, March 7, 2018

“Close the public schools forever”

From everything I read you would think we were incapable of solving social problems.  

In truth, we find matters only getting worse because the proposed solutions always involve the culprit, the state, taking more control over our lives.

The state is a box we desperately need to think outside of if we’re ever going to establish civil relations among people. We would do well to remember that the state is absolutely not in the business of making our lives better. It is an institution appended to the rest of society through force for the purpose of enriching the lives of its members.

Modern welfare states might make this difficult to understand, but it’s no less true.  The State is not in the business of producing wealth and then distributing it to the most needy or deserving. It is not the successful entrepreneur turned humanitarian when it dishes out payments to favored beggars, whether they be unemployed workers, corporate cronies, foreign dictators, research facilities, or any other rent seeker.  It is best thought of as a homicidal thief who takes pains to appear as a good guy.  

The state is fundamentally a criminal organization and liberty’s greatest enemy.  It’s that simple, and that ugly.  For more details see Anatomy of the State, The Criminality of the State, and The Left, the Right, and the State.

The state, being criminal and criminally inept, creates the crises that naive or disingenuous members of society blame on liberty.

School shootings

Americans are horrified at the wanton nature of school shootings.  One occurrence is bad enough, but repeat occurrences are unthinkable in a civilized society.  Yet the school in Parkland was preparing for just such a crisis because they had no politically acceptable way of preventing it.  

As long as the state is in charge there won’t be a politically acceptable way.  What if it decided to outlaw gun ownership?  Completely, totally, immediately, no exceptions (other than the usual exceptions: members of the political class and their cronies).  Make violators pay with their lives.  Aside from it being a human rights nightmare and therefore politically unacceptable to many, it would at least maximize the risk and minimize the likelihood of a crazy walking into a school and shooting people. But it wouldn’t stop them from killing people.  Law-abiding murderers would have to find other means to carry out their crimes.

Interventionist mania has been hugely successful but only as a means of bloating the state.  Otherwise it achieves the opposite of its stated aims.  Has the state been successful in preventing terrorist attacks? Has it achieved its stated goal of eradicating poverty?   Have state regulations in health care, which began long before ObamaCare, succeeded in making health care better and more affordable?  Did its central bank prevent the recession of 2007-2008, as it was created to do -- or did it make it unavoidable?  How about the job it did following 9/11, with Orwell at home and nonstop cakewalks overseas, both of which are running indefinitely?  What grade would we give it for the job its done educating our children?  Not only are our kids exposed to a creativity-killing environment but they’re forced to sit defenseless in rooms all day, with everyone hoping the next attack doesn’t happen at their school.  

Leave it to the state to play Russian Roulette with children. Leave it to insouciant parents to let the state get away with it.

It might still be argued that since these are state schools, the state should at least be responsible for ensuring the safety of its students.

The state, not you, is sovereign

But the state repudiates any and all responsibility. Parents of the victims can’t expect to sue the government for gross negligence or wrongful death and win. They can try, but governments protect themselves with something its lawyers call Sovereign Immunity.  You can only sue governments if they let you, and since they’re all broke and corrupt the chances of success are nil.  

It’s one of those fascinating aspects of the institution so many people regard as indispensable — you can’t hold the state responsible for its actions or negligence. You can’t hold it responsible for school slaughters or overseas military murders.  You can’t hold it responsible for its endless lies and the damage they cause.  You can’t hold it responsible for balancing its budget.  You can’t hold it responsible for deliberately debasing the currency.  

But the reverse is emphatically not true — the state, backed by the bayonet, can hold citizens responsible for anything it chooses, especially the payment of tribute.  People count on the state anyway, perhaps because they read somewhere that in the land of the free the people are sovereign, not government bureaucrats.

What’s the difference between a prison and a public school?  Not much, but one of the few differences is this: you can’t walk into a prison heavily armed and start shooting people, at least not without guards shooting back at you right away.  In a public school killers will enter a world in which a careless student can be suspended for pointing his finger in the shape of a gun.  But if an Uber rider pulls up armed with evil intentions what’s to be done?  Tell him to go away?  Hope he loses his nerve?  Seems the only deterrent is the threat of much-delayed retaliation.

I don’t like the thought of any kid attending a public school.  Not at all.  Neither should you.

In a satirical essay mocking the breathless demands of gun-controllers following a mass shooting, Gary North draws the irresistible conclusion that public schools are too dangerous. 
Students in public schools are at risk. Terrible risk. Unacceptable risk. There is no excuse for this any longer. None. The statistics are clear. Students get gunned down only in public schools.
The solution?  He recommends charter schools or homeschooling. 

“We must close the public schools forever . . . for the sake of the children.”


I fully agree.

Tuesday, February 13, 2018

Better than the alternative?

As people age we sometimes hear them say it beats the alternative, which is usually left unsaid.  It’s an old joke technology aims to eliminate by treating aging as a disease and curing it.  

But there’s another sense in which the alternative is assumed to be far worse than the present condition.  I’m referring to the type of government almost all people live under, which is the nation state.  As bad as states might be — we’ve all been taught — it certainly beats the alternative, anarchy.  

Really?

Headlines have never been favorable to the state as a form of government.  In the days when states couldn’t threaten humanity with total extinction it was common for writers like Thomas Paine, Mark Twain, Will Rogers, Alfred Jay Nock, H. L. Mencken and others to lampoon them mercilessly, even if their criticisms amounted to little more than entertainment.  The public for the most part expects others to make changes in government when the need arises and registers their preference at the polls.  Ruling elites know this of course and have rigged the system of state governance, whatever form it takes, to ensure significant change never happens.  See Brexit.

Here in the US as elsewhere, the quarrels between the political parties are mostly for our entertainment.  Neither party would ever seriously consider doing away with the income tax or the federal reserve, for example.  Doing so would starve the state, and our bipartisan overseers won’t allow it.  Even worse, thanks to government schools and a corrupt media, most people see nothing wrong in principle with government theft.

It is alleged that the state represents order, whereas the absence of the state releases all the evils of which man is capable, producing dog-eat-dog chaos.  Since states have become our schoolteachers the idea of government without the state is simply not discussed.

According to most dictionaries, synonyms for anarchy include lawlessness, disruption, turmoil, disorganization, and disintegration.  Such terms also describe countries being bombed back to the stone age, such as those in the Middle East where “righteous” states have intervened to eradicate evil or “defend the freedom” of their clueless citizens thousands of miles away.  

The synonyms also depict the current state of Venezuela, where a human rights organization “detailed cases of sexual violence, censorships, personal insecurity, limits on political rights, food shortage, malnutrition and inadequate health service -- all amid hyperinflation and high levels of corruption and impunity.”  

Venezuela has stolen the spotlight from Zimbabwe, which in recent years had prices doubling every 24.7 hours, thanks to the state’s printing press.  According to CNNMoney, “About the only thing Venezuela has in abundance is chaos.”

Is it possible states create the conditions associated with anarchy?  

The US war in Iraq from 2003-2011 cost $1.06 trillion.  Since the invasion was based on lies and without a declaration of war, every Iraqi life lost amounts to murder.   But to the government and media the war was a mistake, nothing more, like getting off at the wrong exit.  From 2012-2014 another $7.8 billion was paid to “contractors” who stayed in Iraq.  From 2015-2016 the US spent $38.7 billion fighting militants its original invasion made possible.  

The devastated city of Mosul claims it needs $100 billion to rehabilitate it.  Baghdad wants the same.  No one is coming forth with money.  The US has already spent $60 billion over nine years for Iraqi reconstruction, $8 billion of which was wasted through corruption and mismanagement.  

And none of the money it spent was the state’s to begin with.  It was loot stolen from hapless Americans.  Any reasonable account of the cost should also include the infringements on liberty that monsters such as the DHS and Patriot Act impose.

Given what the US state and its coalition partners have done to Iraq, to Iraqis, to American military personnel, to the cultural climate of peace and liberty that makes prosperity possible, it’s hard to imagine a stateless America would be even worse.   

Keep in mind that it wasn’t anarchy that produced the massive death and devastation of the two world wars, or the numerous illegal regime change operations carried out by US intelligence agents.  Neither Stalin, Hitler, nor Mao are remembered as anarchists, though Mao, the number one murderer, gets off with having only made a “mistake” in some quarters.  It wasn’t anarchists who built atomic bombs.  It wasn’t anarchists who dropped them on civilian populations.  Nor is President Trump considered an anarchist for declaring he might hit North Korea with nuclear weapons if it doesn’t behave. 

Father Abraham, Wilson, and FDR are not renown for their anarchist views.  Through the state they had the means to go to war while forcing others to do the killing and dying.  Through the state they had the propaganda tools and the arms to keep most of the public compliant.  Through the state they had the means to steal wealth from their citizens to pay for it.  Even today, with their crimes detailed online, they remain among the “great” in American history because of an insouciant public that has been indoctrinated from an early age.

Better than the alternative?  

Saturday, January 20, 2018

Digital School Days

The biggest trend I see for the future is the meltdown of governments at all levels combined with a decentralizing, individual-empowering exponential growth in technology.  States, in other words, will self-destruct while people get smarter, stronger, healthier, and freer — they will get a lot smarter, a lot stronger, a lot healthier and from this, freedom from the state will be a natural evolution.

There will be efforts to resurrect states but the attempts will fail.   Too many people will recognize the futility of trying to secure their well-being under a monopoly form of government — a government that threatens violence against nonviolent individuals such as taxpayers.  As social organizations, states are headed for extinction while technology, in spite of its downsides, will be our liberator. 

The warnings we hear from Stephen Hawking, Elon Musk, Bill Joy, Julian Assange, and others about AI’s threats shouldn’t be dismissed, but never forget: The one organization that makes any intelligence an existential threat is the State.  The most obvious example is the cartel arrangement banking achieved with the Federal Reserve Act and the incalculable wreckage the Fed has made possible.  As long as Google, Facebook, and other tech giants are kept separate from the State their power is subject to competition and other free market forces.  For more details, see The Fall of Tyranny, the Rise of Liberty

The evidence for this dual-trend is bountiful, though it isn’t always obvious.  When it is obvious, I like to call attention to it.

Which brings me to my grandson’s recent snow day off.

He’s in the seventh grade of a government middle school with relatively small class sizes.  He’s with us, his grandparents, when he’s not in school and his first-string supporters (his mom and her partner) have to work, which means we see him quite often.  This in itself is wonderful.  Like most kids he’s quite comfortable with technology.

When his mom dropped him off that snowy morning he went straight to the couch and pulled out his iPhone.  I fixed him his morning drink and went off to do some work of my own, then came back to see if he needed anything.   

Right away I knew something was off.  There were no hysterics coming from his phone, yet he was focused intently on it.   What I heard sounded like a man giving a lecture.  Then I heard music, but not his music.  His music was Spiderbait’s Black Betty.  This was Pachelbel’s Canon in D.

He was watching a Tedx Talk given by Notre Dame student Jackson Jhin.  The subject: What makes popular music popular?  Jhin discussed how predictability and variability, along with repetition, distinguished noise from music.  During his talk he took Canon and made it noise, and took the sound of a coconut hitting the ground and made it into music.  Very instructive and entertaining.  

The bigger picture: My grandson was doing his classes from home, on an iPhone, while sitting on a couch and taking occasional sips of coffee-milk.  His teachers were conducting school over the Web.  Most of his classes required little typing and could be done from a smartphone.  He did his science class from a laptop only because he could get it done faster that way.

He and the rest of the middle school were homeschooling.  He finished everything by mid-morning rather than late afternoon.  There were no school buses, parent drop-offs, parent pickups, sitting at desks in classrooms, none of the usual distractions that hurt academic performance.  No wondering what, or if, he ate during the day and whether he got enough exercise.

He was learning through instructional videos that were often entertaining and which could be played again if needed.  I found it overwhelmingly appealing.

I asked him: “Wouldn’t you like to do this every day?”

He said, paraphrasing, “Definitely.  What I would really like is take only those classes I would need for my career.”

“Which is still architecture, right?”

“Yeah.  So I would be taking engineering and math, and nothing else.  What I think would be an ideal educational program would be to devote the first five or six years of school to the broad basics, then concentrate on courses that are needed for your field.  If you wanted to expand your interests you could do it on your own.”

“I like your idea,” I said.  

I have a daughter who finished high school as a homeschooler, and with the time saved she worked in Mexican restaurants where she learned to speak Spanish fluently.  Hispanic friends tell me she speaks without an accent, too.  Her language ability is proving to be a big asset in her medical career.

It isn’t AI that is threatening the human race but the wasteful schooling kids are getting.  The benefits of homeschooling are so enormous that it’s a virtual certainty it will be the gold standard of education in the near future.  

Classrooms of the future



Wednesday, January 10, 2018

Born on the Tenth of January

If Tom Cruise was Born on the Fourth of July, then he can thank Thomas Paine, who it can be said was born on January 10, 1776 with the publication of his incendiary essay, Common Sense, that argued for independence from England.  He priced it cheaply (two shillings), argued passionately, and wrote in a direct style so that readers could understand him. 
It was sold and distributed widely and read aloud at taverns and meeting places. 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. [Wikipedia]
Common Sense relieved the political constipation of the Second Continental Congress, which was stalled between reconciliation and independence.  The 77-page pamphlet blasphemed the English king as a royal brute and obliterated the arguments opposing independence.  Further, it presented the issues in a tone of utmost gravity:
The cause of America is, in a great measure, the cause of all mankind. Many circumstances have, and will arise, which are not local, but universal, and through which the principles of all lovers of mankind are affected . . .
The stakes were high.  Paine was calling on Americans to save the world, not only through arms but by repudiating their saintly icon, George III, who in truth was nothing but a “crowned ruffian,” as all monarchs were.   John Locke had argued that states exist to protect man’s natural rights; Paine argued that they were instead born in “naked conquest and plunder.” [Conceived in Liberty, IV]   Independence would also free America from Europe’s wars and quarrels, whereas the current colonial alliance would “set us at variance with nations . . . against whom we have neither anger nor complaint.”

Common Sense swept through all 13 colonies and established strong support for secession, enough, at least, to kick Congress into action.  John Adams, who hated Paine, later conceded that “Without the pen of the author of Common Sense, the sword of Washington would have been raised in vain.”   Murray Rothbard concluded that “Paine had, at a single blow, become the voice of the American Revolution and the greatest single force in propelling it to completion and independence.”  [Conceived in Liberty, IV]  “So gripping was Paine’s prose,” writes Jill Lepore in The New Yorker, “and so vast was its reach, that [John] Adams once complained to Jefferson, ‘History is to ascribe the American Revolution to Thomas Paine.’”

But of course almost no one does.  He is listed as one of the less significant founders, when he’s listed at all.  When Benjamin Franklin died in 1790 at age 84, some 20,000 people attended his funeral.  When Paine died in 1809 at age 72, six people paid their respects, none of whom were dignitaries.

A mostly self-educated man, Paine went on to be the 18th century’s bestselling author, and one of the most reviled.  He mercilessly pummeled the hypocrisy and abuses of government elites and their distain for commoners.  As he wrote in a footnote to Rights of Man, “It is scarcely possible to touch on any subject, that will not suggest an allusion to some corruption in governments.” 

Rights of Man II condemned English law and politics, for which he was tried in absentia for seditious libel while living in France and, ironically, arguing in the French Assembly for sparing the life of Louis XVI.  During his trial the Crown’s prosecutor accused Paine of being a traitor and a drunken roisterer who had vilified Parliament and king.  Among the evidence he cited was a letter Paine had written to the attorney general in which he stated, “the Government of England is [the greatest] perfection of fraud and corruption that ever took place since governments began.“

For four hours his defense argued that Paine was innocent by virtue of freedom of the press.  It carried no weight with the Crown’s handpicked jury — all wealthy, plump, and respectable men filled with icy hostility toward the defendant.

Paine on Religion

One book, The Age of Reason — the first part written while he awaited execution in a French prison but was spared by a bureaucratic blunder — has served to relegate him unjustly to academic obscurity.  In presenting his case for deism, he attacks organized religion, especially Christianity and the Bible.  He rejects the creeds of all churches, and he rejects the national institutions of all churches, for they were no more “than human inventions set up to terrify and enslave mankind, and monopolize power and profit.”

What really bothered his critics was the manner in which Age was written.  “By presenting [his arguments] in an engaging and irreverent style, he made deism appealing and accessible to a mass audience.”  [Wikipedia] The low price of his pamphlet ensured a vibrant market, and the British government feared it might spark a revolution among the downtrodden.  Printers were prosecuted for publishing or distributing it.  

Among the educated his views were not regarded as radical.  John Adams, for example, had privately written that the Bible was "full of whole cartloads of trumpery." James Madison said the fruits of Christianity were “pride and indolence in the clergy, ignorance and servility in the laity.… Religious bondage shackles and debilitates the mind and unfits it for every noble enterprise.”  

In 1787 Jefferson had advised his nephew, Peter Carr, to "Question with boldness even the existence of a god; because if there be one he must approve of the homage of reason more than that of blindfolded fear.”

Adams, Madison. and Jefferson it should be remembered are forever entrenched as American founders.

For Paine the word of God is not found in any written work, but in nature, which he referred to as the Creation:  “The Creation speaks a universal language, independently of human speech or human language, multiplied and various as they be. It is an ever-existing original, which every man can read. It cannot be forged; it cannot be counterfeited; it cannot be lost; it cannot be altered; it cannot be suppressed. It does not depend upon the will of man whether it shall be published or not; it publishes itself from one end of the earth to the other.”

Paine’s Integrity 

There are elements in Paine’s political writings that appeal to statists of varying degrees.  Was he merely a pen for hire?  For the most part, at least, I would say no.  Yet, though he bashed government throughout his writings, he was one of the first, in 1783, to call for a stronger central government.  As I wrote earlier, “[H]is idea of strengthening the Articles of Confederation was to ‘add a Continental legislature to Congress, to be elected by the several States.’ When he was asked to propose his suggestion in a newspaper article, he declined, saying he ‘did not think the country was quite wrong enough to be put right.’”

His solidarity with liberty came in 1786 with his essay on paper money.  “When an assembly undertakes to issue paper as money, the whole system of safety and certainty is overturned, and property set afloat. Paper notes given and taken between individuals as a promise of payment is one thing, but paper issued by an assembly as money is another thing.  It is like putting an apparition in the place of a man; it vanishes with looking at it, and nothing remains but the air.”  He went on to enumerate many of the evils of paper money.

There are excellent biographies of Thomas Paine, one my favorites being Thomas Paine: Enlightenment, Revolution, and the Birth of Modern Nations by Craig Nelson.  It has the page-turning quality of a good novel and is now available on Kindle. 


I’ve also published a script about Paine, Eyes of Fire: Thomas Paine and the American Revolution.

Thursday, January 4, 2018

Smile, the future is coming

I’m sure there will be some shocking events in 2018, but I have no idea what they will be.  There are too many wildcards in the mix, with one big one taking center stage: States.  

The civilized world, such as it was, took a nosedive after the Sarajevo assassinations in 1914 ignited the political tinderbox in Europe.   To pay for the massive slaughter that followed, states abandoned gold and turned to inflationary finance and borrowing, in addition to heavy taxation. Very importantly, as Rothbard notes, World War I also served as the excuse for 
a "war collectivism," a totally planned economy run largely by big-business interests through the instrumentality of the central government, which served as the model, the precedent, and the inspiration for state-corporate capitalism for the remainder of the 20th century.
For the big shots running things, the war required issuing outrageous lies, suppressing dissent, and everything else except actual combat.  The nightmare of trench fighting they forced upon American men.  “You die over there while we get richer over here,” Wilson and his gang were in effect saying to the conscripts, while peddling “Liberty” Bonds.   Yet, as humanitarian episodes throughout the war made eminently clear, especially the Christmas Truce of 1914, the soldiers were mostly eager to fraternize not kill one another.  Ironically, they might’ve written war’s last chapter had they refused orders to continue the killing, thereby fulfilling the prophecy of H. G. Wells that it would be “the war that will end war.” 

But when peace stands in the way of big profits, the banker/state alliance usually wins.  Quoting Ferdinand Lundberg from America’s Sixty Families, G. Edward Griffin writes in his masterpiece, The Creature from Jekyll Island, that
the total wartime expenditure of the United States government from April 6, 1917, to October 31, 1919, when the last contingent of troops returned from Europe, was $35,413,000, 000. Net corporation profits for the period January 1, 1916, to July, 1921, when wartime industrial activity was finally liquidated, were $38,000,000,000, or approximately the amount of the war expenditures. More than two-thirds of these corporation profits were taken by precisely those enterprises which the Pujo Committee had found to be under the control of the "Money Trust.” [ A handful of Wall Street banks, primarily those in the Morgan ambit]
The point of bringing all this up is that states are powerful organizations that sell their services (various forms of coercion) to the highest bidders.  If the price is right laws will be passed, relaxed, or ignored.  If a war is needed to get the public behind some scheme, a Lusitania will sink, a Twin Tower will collapse, with some targeted enemy taking the blame.  

Rothbard had it right — states are criminal gangs writ large. 

There are times when I picture the state as analogous to the loose cannon that broke free from its fastenings and menaced the lives of the warship crew in Victor Hugo’s novel, Ninety-three.  The crew at least recognized the threat of a ten thousand pound cannon on the loose that “leaps like a panther, has the weight of an elephant, the agility of a mouse,” whose “terrible vitality is fed by the ship, the waves, the wind. . .”  I can’t imagine a crew feeling reverence for such a monster.

Failsafe projections

None of us feel comfortable without some idea of what lies ahead, so allow me to offer a few projections that require no crystal ball to make.  I can predict with a high degree of confidence that:

1.  Most people will not take any interest in the origin and nature of money.
2.  Most people will not seek to understand the role of money in a market economy.
3.  Most people will not take any interest in central banking or the American state’s central bank, the Federal Reserve.
4.  If questioned, most people will agree with the “experts” that a central bank is absolutely necessary to manage the economy, otherwise we would fall prey to financial crises or depressions.
5.  Most people will continue to believe rising prices are a natural outcome of a market economy, with the puzzling exception of digital gadgets.
6.  Most people will continue to believe economic and foreign interventionism is a Good Thing, if executed by politicians of their preferred political party.
7.  Most people will continue to believe in government-provided free lunches.
8.  Most people will continue to believe in the government’s number one free lunch, public education, which like all government free lunches needs more funding.
9.  Most people will continue to believe that victims of U.S. invasions hate us for our freedoms.
10.  Most people will continue to believe we need the state, however corrupt and burdensome, because otherwise we would have chaos and the strong would dominate the weak.

And finally, I remain optimistic about the future of the world, and so should you.  Why?  The coming government default and the exponential pace of technology.  It will be a seemingly autonomous process of shifting power from the state to the individual, and it’s already well underway.  For a detailed discussion, see my little book, The Fall of Tyranny, the Rise of Liberty.

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, especi...