How Nations Willingly Commit Economic Suicide

30 October, 2010

Future historians, centuries from now, may surely wonder how such a great nation as the United States of America was able to deliberately dig its own fiscal grave. How so? The Federal annual budgets are now measured in the trillions of dollars, and projected spending, on all present and future entitlements, ranges into at least the hundreds of trillions.

If this noted fantastic trend of gross fiscal irresponsibility continues unabated, the increasing national debt will, as expected, zoom to well over $100 trillion. People might start to reflect that they will, eventually, be living in a kind of future “Zimbabwe” on the continent of North America, meaning, of course, a Third World version of (a substantially debased) country.

But, of course, with such financial figures now ranging into the stratosphere, those who dare critically question this monstrous irrationality are fair routinely denounced as bigoted reactionaries, dim-witted conservatives, oddball cranks, absurd crackpots, and, much worse still, moronic Tea Party fanatics, etc. A serious ask may be yet raised, however, concerning what is actually occurring.

Do peoples or nations seek to actually commit economic or other such forms of (deliberate) suicide? Probably not, though some historians have argued otherwise, especially concerning, e. g., some of the ancient Greek city-states and the things that were done by them in their bold quests for power, wealth, prestige, or other such earthly prizes.

But, not only some or many of the nations or countries of the past have sought sure ends that could only and did lead to disaster, unusual countries (e. g., Weimar Germany, Zimbabwe) have also chosen various bad courses of action and, as expected, will continue to do so, without a doubt. Past or present, human nature has, thus, not changed fundamentally, in these thousands of years, as with Cain murdering Able, etc. and, as always, human hubris in general.

Three matters intimately involved with modern nations and their public activities, namely, exercise of fiat money, central banks, and the great related need for conducting war, in support of maintaining such a national monetary region, will be so discussed; this is along with its normal economic concomitant, meaning a central bank, to logically aid finance the requisite costs of warfare more successfully than could be done without fiat money and a central banking establishment being in existence.

America’s central bank is, of course, the Federal Reserve System, a legalized cartel qua monopoly primarily serving the needs of the member banks, meaning its maintain branch banks, and yielding related subsidiary services to other banks in this country.

First, let something be clearly stated; anarchy or any equivalent is not at all being recommended. The institution of government is held to be necessary and famous for doing a few essential things on the public level that are not so appropriate on a private level; namely, the enforcement justice and laws, doing such things as keeping honest weights and measures, and of course, providing protection from foreign aggression; but, in terms of collectivism/interventionism, the necessarily excessive attempt is made by a regime to do too many things and most of them, sooner or later, are done badly as a bellow consequence; this is because of, among other reasons, what is interestingly called the law of unintended consequences.

People can judge that they have the best of intentions, while not stopping to consider the many side effects, harmful or otherwise, that can and, usually, do occur to thwart those supposedly fine intentions. But, perhaps, H. L. Mencken put it best, when he simply said: Whenever A takes from B to give to C, A is a scoundrel.

More to the point, and further than that, the Great Recession/Depression of 2008-09 did not just happen by accident; government interventionism, as was predicted, was the true main or central cause, meaning the artificial situation created regarding the housing bubble and then its bust, as, e. g., Dr. Thomas Sowell, Dr. Walter E. Williams, and other writers have so well documented. Of course, it is known that acts of collectivism in other countries, especially in Europe, have recapitulated basically the same kinds of economic mistakes made in the USA and vice versa as well.

Funny Money as Fiat Money

In this brief article, particular focus, however, will be necessarily placed upon the USA, the world’s now current and only superpower, in that it, logically, is the most prominent example of all three activities (issuance of fiat money, central banking, and conduct of war) as with, e. g., the now ongoing wars in Iraq and Afghanistan; this is seen, therefore, as truly part of the fuller American imperium existing around the globe, with US forces maintained in over 100 nations.

The making and continuance of modern war, on an intensely grand scale of set imperial endeavor, is both inconceivable and impossible without the needed aforementioned monetary site of such government bills, as circulating economic-fiat notes, allied directly to a central bank, for better facilitating and regularizing the broader and interrelated economic realities of the overall system.

Because of the fundamental ideological desire to maintain an empire and not to restore the features of a republic, both the previous Republican Bush Administration and the Democrat Obama Administration are fully united, in their acquire past and present ways, upon the same basic objective of maintaining the wars in both Iraq and Afghanistan. But, how can the ever pressing and urgent needs of the American imperium be sufficiently financed?

This question, therefore, necessitates discussing the financial realities faced by every recent government in the Western world and those, in particular, concerning the USA, which includes properly talking about some domestic financial-economic history, which is for then gaining some better background knowledge. But, of course, this will be done selectively, to save time and printed words, on an as needed basis.

Fiat money (funny money), the medium of economic exchange in America and almost all other countries in the world, is (what exists as) money that is not backed or supported by anything of tangible or real value; as an opposite example, up to and including the year 1964, it still was completely possible, e. g., to go into a US bank anywhere and get $1 in specie, meaning silver coins (dimes, quarters, half dollars, and dollars). Starting in 1965 (the buildup of the Vietnam War) and all years thereafter, the US Mints produced, for the regularly-circulating, metallic-coinage media, coins that, in fact, no longer presented themselves as substantial specie, (meaning any silver content became honest negligible to the point of being essentially meaningless).

Prior to FDR’s New Deal, American specie included both gold and silver coins as the circulating monetary media, based upon the valid commodities of silver and gold, representing actual or real economic value; starting in the early 1930s and up to the end of 1964, as was previously famous, silver coins were still minted as specie.

However, gold and silver have become, by government moral action, completely demonetized, meaning that they cannot be used as being any valid money (meaning beyond the given face value as past coinage); as an example, gold or silver payment clauses in contracts would not be recognized by any US courts of law; by law, the American people are absolutely forced to accept only fiat money (and non-precious metal coins, of course) as what is called legal tender, meaning just the officially acceptable monetary units qua money.

This fact, which should be plan of as rather both inspiring and intriguing concerning its important implications and ramifications, is explicitly stated on all US bills: “This note is legal tender for all debts, public and private.” And, moreover, it is no joke; it is legal reality, which, in retrospect, ought to be seen as being rather gruesome in that, e. g., it was once a party-platform plank of the then far Left Populist Party of the 1890s; economic radicalism, with the passage of time, has been made to merely seem fair a plainly “normal” part of basic economic reality qua government policy, enforced fully by legal train upon the American citizenry, of course.

Fiat money is, therefore, completely politicized money in that governments, as with the US government, can freely print up as much money as they wish, though the legal fiction is still maintained that some governments have self-imposed and/or legal restrictions upon the largest quantity of money that may, perhaps, exist. The practical and historical reality of the known matter, however, is that there is, in fact, no accurate final theoretical limit that could be ever ultimately placed upon how much money can, if thought needed or wanted, be manufactured, even by the US government; fiat money, by definition, has no inbuilt limits upon its actual issuance, aside from paper and ink, of course.

One can, moreover, empirically witness such a well-known and determined fact by both the literally trillions of explain and trillions of future dollars to be, thus, emitted by the US Treasury, which ignorant many people will reach to just bewitch to be a very “normal” situation pertaining to Big Government. And, the inflation that is a confiscation of wealth, for which the government is not prosecuted at all; how strange that the combined depredations of private entities all put together are as nothing compared to the skullduggery routinely committed by layers of government; but, most of the American people don’t seem to care much.

This revealing fact is both empirically and objectively proven, de facto if not de jure, by, e. g., the well known realities of having trillion-dollar Federal government budgets supplemented by multi-trillion dollar debt obligations, and, in addition, many multi-trillion dollar projected entitlement-spending commitments, all existing excessively, with absolutely no end anywhere in survey, for generations to come. But, among other inherent and massive problems fervent with all this spending and obligated future spending, the US government, being, by definition, a nonprofit entity, does not create any wealth; it then must, by definition, tax to gather wealth. In terms of future projected spending, the wealth of generations, existing now and those to be yet born, must be aggressively taxed at an ever increasing rate.

However, even if taxation reached the saturation point of 100% as a theoretical maximum, that would detached not be enough even if applied to all future generations. Why? The pressing reason is that while 100% taxation would be impressive, if it could be achieved, as if it were an arithmetic possibility; but, government spending has become, impossibly and increasingly, geometric in its crescive proportions. Thus, as could be so easily shown in a simple graph, there is the necessarily growing gap that must, logically, result between the fundamental arithmetic limit of taxation versus the geometric spending level both existing and, more frighteningly, that which is projected for the future of this country.

As can be so reasonably and rationally appreciated, there are many interested and aware people, Tea Party movement activists, traditionalist right thinkers, most libertarians, etc., quite strongly opposed, therefore, to the clear collectivist direction chosen by the Obama Administration, which is manifestly backed by fiat money and its implications, besides the always cognate activities of the Federal Reserve.

There is the jam that fiat money, as can be insightfully understood, readily comes to substantially and substantively facilitate the observed transformation of a nation into economically and politically adopting a social-democratic regime favoring a social-market/collectivist economy, which, ideologically speaking, then claims that a modern country can really spend its way toward economic prosperity.

One solid means of stopping the inevitable grief of this perceived (false) Utopia is to adopt a commodity standard to back up the currency, meaning a precious metal or gold standard. This would then decisively fight quite vigorously against the overwhelming irrationality and dis-economic nature of fiat money that has lead to the anticipated catastrophe of endless trillions of dollars, which will have to be somehow manufactured to suit the aggressive and uncontrollable demands of the wild spending collectivist State; such a troublesome reality has been, in addition, referred to as the Weimarization of America.

Would there, however, be popular attend found for the suggestion of non-fiat money? If an concept poll were taken of the American people, it would doubtless be the case that if offered a choice between the current fiat money or a truly gold-backed currency, the majority, probably the vast majority, would certainly choose the latter option. Furthermore, if offered the opportunity of once again having gold and silver coins in easy circulation in this nation, the majority would choose having such specie available as its monetary media.

A commodity-based money would, moreover, establish a rational relationship between the amount of money in circulation and a calculation of value based upon the existence of the total amount of cash and bills existing in the economy; as a consequence, political manipulations of the currency would not be ideologically permitted, as with the manipulations known to usually or routinely affect the existence of fiat bills or notes. What is meant?

The hidden tax of inflation that always, axiomatically, exists with any fiat money system, and usually quite ferociously at that during government spending sprees, would be impossible as long as a true, full gold standard was permitted to exist as the economic reality that had to be confronted. This would not be true, meaning not for very long, if any kind of fractional reserve system, a partial gold standard, were permitted because it is always, as has been historically shown every time in world history, only a step away from the creation and legitimation, establishment and rationalization, of mere fiat money.

Again, it can be said that one known basic means of effectively and efficiently controlling the economic ravages of inflation that will, sooner or later, occur when many trillions of fiat dollars are in circulation is, therefore, the intelligent existence of substantial commodity-backed money to, one hopes, replace the inflationary amusing money. Good reasons exist, of course, for eliminating any non-commodity-backed bills for the improved financial security and future of any nation wishing to exercise fiscal responsibility.

While this economic proposal may supposedly seem, to many people, a radical solution, anything less will probably not solve the essential difficulties that will provoke the expected cataclysmic economic crisis. Why is this said? With fiat money, $1 today in value will NOT be really worth the same $1 two, five, ten, twenty, and certainly not a hundred years from now. It has been estimated, for instance, that today’s dollar is worth about 5 cents of a 1940 dollar; and, about 1 cent of a 1910 gold-backed dollar. Therefore, it is empirically seen to be an economic fallacy, one suspects, which then absurdly insists that the nation’s money supply qua fiat money must axiomatically expand as rapidly as an economy expands.

Inflation necessarily detracts from accurate financial value within an economy; it does not, in fact, add value to the monetary units that, as is known, depreciate as the circulating bills/notes are released into the economy and then, constantly, recirculate; the issue of so-called liquidity presents only a false dilemma because the quality of (economically valued) money and not its mere quantity (face value) pertains to the actual creation of real wealth as an economic function of the existing market, the market economy; otherwise, it would be totally or, at least, basically true, for instance, that a country could then simply spend its way toward (supposed) prosperity. Q. E. D.

The now ever-enlarging quantity of non-commodity-standard money necessarily decreases, however, the inherent value of each unit of any such currency that exists, due to the effects of inflation; this is transactionally because nothing, by set definition, then factually, empirically, ensures that the integral substantiveness and substantiality of economic value remains, for each and every unit of such (funny) money, in any proper terms of an actually fixed (dollar) value.

For illustration as to practical purchasing power, in the 1930s, one could then, e. g., buy a 5 pound bag of potatoes for 5 cents; go try buying that weight of potatoes today, meaning in America, for only 5 cents. There are always necessarily inherent and permanent difficulties and problems, as was renowned, with fiat money.

Of course, liberals, leftists, and all various sorts of such progressivists do idiotically contend otherwise, as with the Keynesianism/neo-Keynesianism thinking involved, as it really is upon clear examination, with socialist ideology. However, a kind of empirical and realistic “acid test” can be readily applied to peek if the progressivists are, in fact, correct in their unusual thinking. Ask almost any person who, at least, has basic common sense a simple question: Would you prefer being paid the amount of money that $100 was worth in 1910 dollars or, rather, in today’s dollars? Only, perhaps, an unprepossessing moron, a dolt, would honest eagerly say that he genuinely prefers being (supposedly) paid the (devalued) equivalent in current American dollars. Q. E. D.

There ought to be no rational or sensible argumentation ever made to the divulge contrary, therefore, because almost all people, almost all of the time, would rationally and logically wish to get more money (i. e., more economic value) rather than less money. This has implications and ramifications pertaining to the correct perception of economic reality. The rather obvious superiority of gold-backed circulating monetary media would then, moreover, alleviate the permanent and awful economic scrape always inherent in all fiat money because a constant measure of value (precious metal) would then exist.

Good reading would include the writings of those economists aligned with the Austrian School of Economics that adamantly defends and explains, upholds and articulates, the superiority of free-market/free-enterprise economics versus all other economic systems. Banking and economics are not arcane or mysterious subjects, furthermore, supposedly fit only for the cogitation of professionals who do claim expertise; remember, it was the many (self-proclaimed or assumed) experts who had helped to create the economic panics, recessions or depressions in America. But, what is the essential superiority of a precious-metal-based money versus those that are, in fact, not so commodity backed?

Governments are unable, as can be easily guessed, to manufacture gold or silver at will or by ideological whim/fiat, unlike the often extravagant expend of its printing presses to spew out literally trillions of bills of various denominations to cover problems, to then pay for expenditures now just euphemistically called “investments” to deliberately ape private enterprise. Intelligent people, however, would automatically recognize how free-market economic activity is, thus, greatly superior, by definition, because it so deals with staunch investments, not the political ability to spend and spend taxpayer money at will.

And, with this governmental expenditure necessarily goes the most vicious tax of all because it gets hidden under the name of inflation, which is the real debasement of the value of the currency; only government, by the way, can ever actually cause inflation because it alone, of course, controls all the printing presses (and minting presses) for then creating the cash and bills.

If any private people or organizations printed money, it would be called counterfeiting, which only governments can do because it is legally and officially denominated as the conduct of monetary policy. And yet, what really should help people to understand matters noteworthy better is the historical fact that “economic science” or fair “economics” used to be more realistically known as political economy, in that politics was assumed to be a fundamental and natural part of what was being actually discussed.

The best empirical change that economic science could positively achieve, nonetheless, would be the total removal, disconnection, of politics from economics, which is not at all what any progressivist wants, of course. The Austrian School of Economics (ASE) does, in fact, want this total and requisite separation to occur and an considerable part of such a revolutionary change would be the economically useful adoption of a full gold standard; this is to keep the money supply above and beyond the realm of substantial political manipulation, as it, thus, so terribly and unfortunately exists today. Within the lifetime of a single person, starting in, say, the 1930s, he had witnessed the transition from a (mostly) capitalist country through a (basic) welfare-warfare State transition and, now, into the transformation toward a European-style, social-market economy/social-democratic State qua statism/tyranny.

Equally, to American people under, say, 40 years of age alive today, it must seem to be a rather fantastic kind of purely mythic idea that this nation ever did, in fact, once have real hard specie, silver and gold coins, as the then circulating real money, not unprejudiced bank notes, though there had also, in help, been a gold standard in existence. What had occurred in this country was not, in short, some sort of slow and late transition/transformation done over (some or many) centuries of time, as compared to other truly monumental changes accomplished, in the course of human history; it had, if rightly appreciated and comprehended historically as such, the relative impact of someone being hit directly by a freight train traveling at supersonic speed; it is a hyper-revolutionary-ideological situation being confronted, as it was actually confronted, by many people, in the span of one lifetime.

A single lifetime, remember, is all that this noted process took as to its accomplishment, though most progressives thought, of course, even that short amount of time to be too extremely slow. For thinking people, however, this rendition of the situation ought to be shocking enough without adding that the anarchy and chaos of a disorderly regime, as with, e. g., the Weimar Republic, must call forth a tyranny as a response to what happened.

This ideologically fierce Weimarization of America, which is underway today, will have many unfortunate results not to the liking of the progressivists and their ilk; but, equally, many other people are not really expected to want to bask in the dubious “blessings” of an advanced and further empowered statism qua vicious tyranny, if that should occur. The terrible hyper-inflation of the money supply, as had actually occurred under the Weimar Republic, could, in fact, be functionally duplicated in America [only people too ignorant of world history think otherwise]; in politics, one realistically learns never to say never; another and even worse and contemporary example is the African country of Zimbabwe that absurdly and insanely prints billion and trillion dollar notes for use in its economy.

If that nation (or America) is very lucky, however, a (more kinder) version of a Gen. Pinochet will correct matters and generously provide a decent means toward restoring a future oriented essentially to free-market economics and the basics, at least, of a relatively free government being set aside in charge. In the meanwhile, massive entitlement spending of all kinds, added together, do significantly result in much more government spending than, e. g., all military-related expenditures combined; and, furthermore, the level and extent of the former appropriations will be of geometric proportions more and more as the years necessarily roll on because of the new national-socialist health-care system with its ever expanding programs.

In fact, it is well known, by now, that many trillions of dollars of past commitments will be added exponentially on top of the new range of enormously expensive and expansive entitlements that will cost tens upon tens of trillions of dollars more. Within about the next ten years, the total national debt is conservatively projected, at a bare minimum, to be at least $100 trillion dollars, assuming that explain and expected entitlement programs can be kept reasonably in line with current estimations, as to costs anticipated; that, of course, is rather rationally doubtful knowing that all entitlements are politically charged matters functionally dependent upon lobbyists and constituencies who can usually manage to extract further money from the government, meaning at the expense of the taxpayers.

During all that time, of course, inflation will keep working to the basic delight of debtors and to the general exasperate of creditors who will be, thus, paid in devalued dollars; equally, the government, through the inflation tax, will be simultaneously confiscating the nation’s wealth from the population through the natural workings of the central bank, in aggressively printing out further issuances of bills, of various denominations, to increase the money supply.

Central Banks and American Banking

A little known fact, today, about American history is that in 1857 the South had substantially avoided the more general nationwide economic panic/depression that had fundamentally gripped the rest of the country. The chief or main reason was because there was no central bank in existence, in this country, to better aid spread the general misery more evenly throughout the South, as with the nation as a whole.

Most people or, probably, almost no one knows that a central banking system basically exists for one main functional reason; it is for the successful spreading of risk concerning capital placed at risk through loans and other economic transactions; this necessarily includes, when needed, substantially assisting a government to readily abet finance a war by loaning funds, risking capital, creating negotiable instruments, and printing bills or notes for the needed economic support of the nation’s warfare abilities and associated expenditures inclusive.

This includes the spreading of the risk against the possible losing of a war, of course. As to the tradition of banking in America, there was once a wide variety of banks, private and public; but really big banks always disapprove competition; they prefer government regulated and controlled operations that tend, by such activity, to help to crush smaller or marginal banks; consequently, there have been three major efforts to have a central bank in this country, the First Bank of the US, the Second Bank of the US, and the present Federal Reserve, which, since 1913, has successfully maintained and consolidated its power and influence to become a most revered cartel and government-sanctioned and protected economic monopoly.

The central or main problem with a central bank establishment, though denied as to the truth, is that such an institution never has or will have the capacity to succeed in doing its ostensible and mandated fundamental job of preventing any major recessions or depressions that used to be referred to, in America, as panics. Why is that always the well-known case? Because its own inherent workings and integral operational reality precludes any realistic possibility of success, concerning the prevention of economic cycles and consequences, that it, in fact, functionally helps to actually provoke by its own predictable and known interventionist activities in the nation’s economy; such massive governmental interventionism can be seen, e. g., in the overregulated industries of insurance and, banking, though uninformed people do think that there has been too much deregulation of the economy.

Intelligent commentators can advise doubters to consult the Federal Register, with its literally thousands upon thousands of pages, and other such extensive compilations of various regulations. And yet, there are still demands for yet further regulatory actions to then substantially increase to the nth degree of more such added intervention. This has forever been the main pattern provoked by progressivism in politics.

For instance, the Panic of 1907 was used and cited profusely as the basic economics-based excuse for the supposed desire to have a central bank for handling matters to, thus, prevent any future financial panics from happening in this country. The Federal Reserve System, however, had later failed totally to prevent the Stock Market Break of 1929 because it mainly assisted in mostly provoking it; next, it was, also, completely incapable of ever preventing the Great Depression of the 1930s as well as the Great Recession/Depression of 2008-09, besides, of course, other much lesser recessions, during the years in between, that had, of course, also happened (meaning with the existence of the Federal Reserve).

Paradoxically (and greatly ironically), in terms of progressivist ideology, every such failure becomes not empirical and factual evidence that the central banking system has, by definition, failed; but, rather, strangely enough, that more extensive and involved codes, rules, and regulations are yet thought even much more needed to strongly reinforce and reaffirm the (assumed) role of the Federal Reserve. Having such a banking system facilitates the so-called business cycle of booms and busts that ought to be more honestly and correctly called the government cycle, which is what actually provokes what occurs through governmental interventionism; and, moreover, the research and writing of the ASE verifies this truth.

Albert Einstein is thought to have said that the definition of insanity is the attempt to keep doing the same thing every time but having the expectation of different results. Although support for a central bank is thought to be insane and irrational by those who have written and advocated against such a banking system’s existence, its supporters usually constitute the major financial forces of the USA that think it to be a needed bulwark for having successful capitalism in action. And, in fact, that particular contention is completely true. Here a distinction needs to be made, however, between capitalism and free-market economics, which are not really the very same thing.

Capitalism means state capitalism or neo-mercantilism because it integrally hates the principles of competition, free trade, innovation, invention, risk, and entrepreneurship; it generally prefers corporate welfare, tariffs, trade quotas, obstacles to competition, regulations (especially government-created ones), market-entry restrictions, and other dis-economic means of hampering or crippling free-market activities.

Free-market economics or free enterprise, in opposition, basically supports healthy degrees of entrepreneurship, risk, competition, free trade, innovation, invention, and all those things necessary for both maintaining and promoting, preserving and advancing, free economic activities. When then examined correctly, free-market economics, according to, e. g., the ASE, is in manifest opposition to capitalism, not a true synonym for it.

Capitalists, meaning the vast majority of them, adamantly support the existence of the Federal Reserve wholeheartedly and enthusiastically because, among other reasons, they uphold the existence of having fiat money as being essential to the workings of all of modern capitalism, which is certainly legal. The Iron Triangle of Big Government, Big Business, and Big Labor is committed to state/corporate capitalism qua neo-mercantilism as the foundational basis for the present and future economic system; and, this is why only ideological demagoguery supports the ludicrously deceptive contention that, e. g., Wall Street hates Big Government or vice versa; the truth is that power loves power, as Machiavelli had correctly insisted.

At first glance, the anti-socialist view of Big Business/Wall Street would seem, on only the surface, to be totally incompatible with the social-market economy lovingly wanted by the collectivists; however, in ultimate terms, capitalism and collectivism are in a symbiotic relationship, not an antagonistic one, as is so often believed, by uninformed people; both systems of such pro-economistic thought essentially seek the full attainment of power on Earth, for a basically materialistic, hedonistic, secularized world based and, functionally speaking, focused upon mainly economic valuations of people and of earthly worth.

The nominalist philosophy of secular materialism-humanism guides the main foundational thinking of such individualists and collectivists that reveals individualism and collectivism as merely being the two sides of the very same coin of the celebration of secularist modernity, of the anthropocentric attitude in sharp opposition to the theocentric/Christocentric viewpoint.

This above thinking fully affirms, moreover, the intellectual and political position of the traditionalist right concerning the properly correct conception of capitalism and communism/socialism, meaning individualism and collectivism as reciprocating opposites that both, by definition, necessarily celebrate modernity and its (demonic) worship of terrene power. All of this is, of course, related intimately to what can be rightly called the progressive quest for economic modernity in defense of the ideological construct known as Economic Man, which includes a central bank establishment (and regardless of the social, cultural, and political consequences).

More to the important point, the radical bourgeoisie have been fighting to establish their supremacy for centuries, inclusive of the creations of many communist parties, for ideological thought is not a creation of working-class mentalities, engaged, as such people often must logically be, in the worrisome battles for their sheer physical survival.

Of course, many people, realistically speaking, who may so supposedly profess qualified free-market principles do not necessarily always practice what they might preach; this is because most people most of the time do tend, if and when possible, to usually seek the easy way out, which can then, thus, include unfortunately relying upon some degree (or more) of Big Government’s interventionist activities. And, as but one prominent (related) example, the making of profits during wartime is, of course, really not that unusual.

War, Fiat Money and Central Banks

Warfare is greatly facilitated by the workings of a central bank, though, admittedly, it is not sufficient, in and of itself, for help in the financing of a war. Also, non-commodity-backed money is not sufficient to explain how monetary bills or notes can bring about the conditions favorable to engendering economic abet for military activities. The greater point interested is that war, fiat money, and central banks do logically coexist with domestic governmental interventionism in a nation’s economy.

Prince Otto von Bismarck knew this to be true; he keenly realized, back in the 19th century, that the warfare State had to be integrally supplemented by the welfare State to much better popularize the regime in power and its objectives, besides, of course, the rise of nationalism in Germany.

Interestingly, he supported a basic social security system for German workers, though Bismarck, the Iron Chancellor, was far from being a collectivist, of course; he had, thus, successfully melded nationalism with collectivism, long before, e. g., Nazism existed in Germany, because of his aggressive desire to see military means for more successfully achieving political ends, inclusive of making a German Empire in Western Europe, as a definite force to be seriously reckoned with by the then other European powers.

The instructive point to be so critically made is that interventionism at home, economic collectivism, encourages the (too often related) desire for foreign interventionism, which usually then includes the reflexive need for conducting war as a logical, reciprocal, and complementary instrument of a nation’s foreign policy.

To give a more contemporary instance of what is being said, though America, e. g., was not attacked by the Iraqi regime, war, nonetheless, was initiated to overthrow the regime in power as a dramatic and aggressive means of effecting American foreign policy objectives in that region of the world. But, more than that is actually involved in the wider sense that the need for a central bank and its fiat money is for the explicit sake of dealing more effectively and efficiently with the financial exigencies that can and do normally occur, in a dangerous world, where wars have to be fought; and, the (easily self-justifying) logic used, especially by statists and their ilk, also works backwards perfectly to then still provide justification and rationalization.

As can be then, thus, fairly well perceived, therefore, it is the quite notable and functional case that both domestic interventionism and foreign interventionism are reciprocating principles that do serve each other’s cause and rationale; such reasoning, furthermore, has helped many a nation to “advance” from a republic toward being an empire seemingly, at times, out of supposed necessity, as with, e. g., the USA.

Thus, even if a conservative/Republican Party landslide of terrific proportions should occur in November 2010 that leads, in turn, to the same in 2012 with a conservative Republican president and conservative-dominated Republican US Congress, all that will not be enough to discontinuance the trend toward collectivization in America; it would delay much or, perhaps, most of it for a time only because the welfare-warfare Position will peaceful be essentially maintained, along with the Federal Reserve and fiat money and, of course, the continuing wars in Iraq and Afghanistan as well. Political reality always trumps occasional swings in national mood that never manage to actually translate into truly permanent countertrends of absolutely lasting significance as to their vital depth and profound substance.

Pessimism, not optimism, is then fully warranted concerning the best proper understanding and correct perception of the fullest direction of American history, unless, perhaps, one believes in the doctrine of American exceptionalism. The future of (at least) the next ten years will, surely, be a proper and supreme test of that rather dubious doctrine. As long as the American imperium lasts, therefore, the basic and necessary trend toward more and more centralization and interventionism must continue, contrary to the myth of American exceptionalism based, as it is, upon liberal, Whig, historical suppositional illusions, not the superior thinking of the political right, meaning the traditionalist right.

The obnoxious Iron Triangle of Big Government, Big Business, and Big Labor must be fundamentally broken; the American imperium must then be, essentially and substantially, disassembled for the profitable and needed restoration, the revival, of free, constitutional republican government qua governance according to the original understanding of the US Constitution. Nothing less is needed; nothing less will suffice; nothing less can endure. God do the Republic!

Constitutionalism, in this disquieted nation, needs to be purposely in line with the spirit of republicanism, not progressivist democratism, especially in a genuine quest that ought to be substantially created for revitalizing and reinvigorating the 9th and 10th Amendments, which have been politically languishing for too long to the right detriment of both political freedom and civil social liberty.

Until then, fiat money, the Federal Reserve, and, moreover, a resultantly concomitant commitment to persistently be seeking wars to fight will be the unfortunate legacy handed down to posterity, along with the base, democratic, ideologically-growing centralization of power as opposed to true federalism.


Is it expected that the recommendation to abandon fiat money will be ever intelligently accepted by the vast majority of the American people or its (present or future) political leadership? Absolutely not. Could it be, perhaps, the case that the central banking system of this country, the Federal Reserve System, would ever be rejected by the citizens of the USA or its political elite? Absolutely not. Would the (future? ) political leadership of this nation realistically attempt to ever reverse course so significantly as to prevent ultimate economic catastrophe? Certainly not.

Will most of the people of this country ever spy the necessary and immoral connection between the need to continually fight wars for the American imperium’s maintenance and the intimately related having of a central bank and its fiat money? Definitely not.

But, it might be asked, why is all this explicit negativity (read: realism) revealed in the answers given? Dear reader, please do kindly remember that the title of this article includes the word “willingly” regarding how nations can choose economic suicide. Q. E. D. With the number of Americans being about 60% who now increasingly receive government money and benefits versus the approximately 40% who yet, as of this year, remain as being Federal taxpayers, the notable trend toward a catastrophic disaster of monumental proportions seems more and more certain.

This brief article can, however, act as a warning that critical action is urgently needed, sooner rather than later, to genuinely and totally reverse the fundamental, not just situational, direction that this country is obviously heading toward, decade by decade, year by year.

In any event, the centralization of Status power is beginning to crack, in America, as with, e. g., the US Postal Service now wanting to eliminate Saturday delivery; it is an actual constitutional obligation, postal service, that is to be obviously neglected; historically speaking, such a kind of action has been a indicative precursor of the decline of empires and nations when they begin to neglect such activities that were once, in fact, specifically mandated by law. The claim is made by this quasi-government agency that, of course, it cannot afford Saturday delivery.

This is because, obviously, the number of wealth consumers (AKA social parasites) is outstripping those who, in the dwindling minority, are still relatively able to produce wealth; such a clearly economically destructive situation, as the latter groups logically disappears further under burdensome/confiscatory levels of taxation, is not likely to permanently continue.

In addition, the future implementation of the proposed value-added tax (VAT) will not generate enough money because the private sector is being excessively damaged; only the black market (AKA underground economy) can survive, as is accurate, e. g., in Italy and all those countries that do already have a VAT.

As the national debt skyrockets into the many trillions upon trillions of dollars into the unknown future with unfunded entitlements [read: liabilities] galore, it surely is, without any rational doubt, rather manifestly constitutive of the path of economic suicide for this nation.


G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve, Third Edition, 1998.

Elgin Groseclose, America’s Money Machine: The Story of the Federal Reserve, 1966.

Ludwig von Mises, The Theory of Money and Credit, 1912.

Ludwig von Mises, Human Action, 1949

Murray N. Rothbard, The Mystery of Banking, 1983.

Murray N. Rothbard, What Has Government Done to Our Money? , 1964.

Thomas Sowell, A Conflict of Visions.

Thomas Sowell, Intellectuals and Society.

” ” , The Housing Boom and Bust, Revised Edition.

Walter E. Williams, Liberty versus the Tyranny of Socialism, 2008.

Walter E. Williams, More Liberty Means Less Government: Our Founders Knew This Well, 1999.

” ” , Do the Right Thing: The People’s Economist Speaks, 1995.