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The Anglo-American Establishment (or: Who Are the GOYISH Bad Guys?)

Fake History. How The Money Power Controls Our Future By Controlling Our Past

By Jim Macgregor and Gerry Docherty

The ‘Fake History’ and ‘Fake News’ pejoratives (like ‘Conspiracy Theory’ before them) have only recently entered common parlance, but the falsification of history and news reporting is as old as history itself. For many a long year television news channels and newspapers owned or controlled by the Money Power (including the British Broadcasting Corporation), have been feeding us a daily diet of fake information. But in a black is white Orwellian reversal of truth it is the very people spreading falsehood who hurl the ‘fake news’ and ‘fake history’ pejoratives at truth tellers. To maintain control and stem dissent, the ruling elites maliciously misrepresent and question the integrity of alternative media and non-corporate news sources which broadcast genuine news, and the honest revisionist historians who relate historical truths. George Orwell suggested in his ‘war is peace’, ‘freedom is slavery’, ‘ignorance is strength’ thesis that the masses fall for the ruling power’s lies because their critical thinking has been so repressed they will believe any absurdity in contradiction of the plain facts.

Orwell famously added: ‘Who controls the past controls the future.’ Fake history is a weapon wielded by ruling elites to exert control over us, for it is knowledge about the past that has the power to shape us as people and develop our comprehension of reality. True history reveals to those who care to learn that democracy is a sham; that we the people are akin to Orwellian proles in Oceania watched over by Big Brother and accepting of anything he cares to tell us or throw at us. Money Power control of the received history is crucially important (more so than control of fake news) because it enables them to keep us in the dark and ensure our ongoing subservience. After almost seventy years Orwell’s observation may appear somewhat clichéd, but it is now more relevant than ever. The highly perceptive author added: ‘The most effective way to destroy people is to deny and obliterate their own understanding of their history.’

George Orwell was correct and if humankind is to stand any chance of determining a future without oligarchic totalitarian control, the lies and mythology of our past must be challenged by honest history, hard but necessary truths and historical revision. ‘Revisionism’, according to Joseph Stromberg in an article he wrote about Professor Harry Elmer Barnes, ‘refers to any efforts to revise a faulty exiting historical record or interpretation.’ [1] Professor Barnes, himself one of the greatest revisionists of the 20th century, wrote that revisionism has been most frequently and effectively applied to correcting the historical record relative to wars because ‘truth is always the first war casualty.’ [2] Hold that important statement close. The emotional abuses and distortions in historical writing are greatest in wartime. Consequently, both the need and the material for correcting historical myths are most evident and profuse in connection with wars.

The present authors’ years of research into the origins and conduct of the First World War of 1914-18 (though it continued until the signing of peace in 1919) demonstrates just how accurate Professor Barnes understanding was. Mainstream historians tell us that Germany was guilty of starting WW1 and committing the most barbarous crimes throughout. Proud, virtuous Britain, on the other hand, was forced to go to war against this German evil to fight ‘for freedom, civilization and the integrity of small helpless nations.’ It is all a deliberately concocted lie. Patriotic myths and the victors’ wartime lies and propaganda had been scripted into Britain’s ‘Official History.’ In truth, Britain – or to be more precise, immensely rich and powerful men in Britain – were directly responsible for the war that killed over 20 million people. Kaiser Wilhelm II and Germany did not start the war, did not want war and did what they could to avoid it.

But it is not just First World War history that is involved in the grand deception. Our contention that virtually the entire received history of the twentieth century has been faked and requires urgent and complete revision, will raise no eyebrows in enlightened circles. It will most definitely elicit howls of derision and cries of ‘impossible’ and ‘conspiracy theory’ from the vast majority. Self-interest or cognitive dissonance?

This essay cannot cover the many thousands of examples of historical falsehoods or omissions we found in our historical research – our books do that – but it explains in detail how the men behind the curtain actually create fake history. It is complex and the article is, by necessity, long because corners cannot be cut in relating this hugely important issue.

Who is responsible for faking history?

The elites multifaceted approach ranges from the straightforward destruction or concealment of documents and books, to the more subtle methods of employing Court Historians with their control systems such as ‘peer review’. Before we examine how history is actually faked we need to understand who fakes it. In this regard, the most important influences on our work were books by Professor Carroll Quigley, Tragedy and Hope and The Anglo-American Establishment.

The astonishing 1,300 page tome Tragedy and Hope, published in 1966, revealed the existence of a secret society initially created by the gold and diamond magnate Cecil Rhodes in London in 1891. Its aim was to expand the British Empire to all habitable parts of the world. The enlarged empire would be run by wealthy upper class elites and based on English ruling class values as espoused by Professor John Ruskin at Oxford University. These rich and powerful individuals felt obliged to rule the entire world because they considered the vast majority of the human race too ignorant to do so themselves. In the decades following Cecil Rhodes death in 1902, the secret society evolved. It became transnational as the singularly English elite merged with the American money-power – Quigley’s Anglo-American Establishment – and the geographical axis moved from London to New York. The Royal Institute of International Affairs in London, the Council on Foreign Relations, the Trilateral Commission and the United Nations in the U.S. were created as Money Power instruments towards their one world government, that is, the ‘New World Order’ which is openly discussed today.

Members of the secret society controlled the United States, the White House, the Federal Reserve System and Wall Street. They likewise controlled Britain, Downing Street, the Bank of England and the City – the financial district of London. They ruled from behind the scenes and were not necessarily the major political players known to everyone. They selected major political figures and funded and controlled them. They would not be the great teachers or historians, but they decided who would be elevated to the great chairs of learning and funded historians who wrote the fake histories. This secret group has been the world’s major historical force since before World War 1 and, according to Professor Quigley, every major event in history since then has been dominated by them. [3] The secret society was

…one of the most important historical facts of the twentieth century. Indeed, the Group is of such significance that evidence of its existence is not hard to find, if one knows where to look. [4]

We looked, followed the clues, trails and names presented by Professor Quigley and were utterly astonished to find that a secret cabal actually existed with unfettered powers in Britain and the United States. Quigley called them the ‘Group’; we have termed them the Secret Elite, but they are also known as the Money Power, the Deep State, the Men behind the Curtain and so forth. The shocking evidence we have uncovered goes much deeper than that exposed by Quigley, and indicates beyond all doubt that the individuals involved in the cabal – in both London and New York – were responsible for starting, and unnecessarily prolonging, the First World War. Through enormous wealth, power and control of Oxford University, they were able to cover their tracks and fabricate a history which blamed Kaiser Wilhelm II and Germany. A century later, that fake history is still presented as truth by ‘eminent’ mainstream historians with links to Oxford.

The Rise of the Money Power

Carroll Quigley’s Tragedy and Hope revealed the ambitions of those whose wealth bought real power:

…The powers of financial capitalism had a far-reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.’ [5]

Free from any single political interference, this system was controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland; a private bank owned and controlled by the world’s central banks which were themselves private corporations. Quigley was adamant that ‘Each central bank … sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.’ The power of the central bank in each instance rested largely on its control of the credit and money supply. In the world as a whole the power of the central bankers rested very largely on their control of loans and gold flows.

Professor Quigley explained how, in 1924, Reginald McKenna, former British Chancellor of the Exchequer and at the time chairman of the board of the Midland Bank, told its stockholders:

I am afraid the ordinary citizen will not like to be told that the banks can, and do, create money … And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hands the destiny of the people. [6]

It was an extraordinarily frank statement from a man close to the inner circles of the British Establishment. The international bankers on Wall Street were intimately linked to the Rothschilds in London and Paris. They manipulated the political power of the state to create the corrupt Federal Reserve System to gain a monopoly over the money issue through it.

Another important contributor to the unmasking of the Money Power, Professor Antony Sutton revealed:

The Federal Reserve has the power to create money. This money is fiction, created out of nothing … In brief, this private group of bankers has a money machine monopoly. This monopoly is uncontrolled by anyone and is guaranteed profit. [7]

With a magic machine that created money from thin air, the international bankers were able to control not merely individual politicians, but entire governments. By comparison, controlling the writing and teaching of history was child’s play. Quigley revealed the names of the rich and powerful banks and bankers – the Gods of Money – who were intimately involved. They included N.M Rothschild, Barings, Hambros, Lazard Brothers and Morgan Grenfell in London. [8] On Wall Street were J.P. Morgan, Kuhn-Loeb & Co., J.D. Rockefeller and Brown Brothers and Harriman. [9] Members of these banks on both sides of the Atlantic ‘knew each other intimately.’ [10]

Carroll Quigley had been invited by the secret society to study its membership, aims and objectives, and states he was helped in this by the British historian Alfred Zimmern who was himself a member of the secret cabal. It appears that Professor Quigley was actually chosen by the secret society to be its official historian. [11] He was one of the brightest stars in the galaxy of American academics. As a student at Harvard, Quigley had gained two top degrees and a Ph.D. He taught history at Princeton University and Harvard before moving to the School of Foreign Service at Georgetown as professor of history. He was a distinguished member of the American Association for the Advancement of Science, the American Anthropological Association and the American Economic Association for many years. He was also a consultant to the U.S. Department of Defense, the U.S. Navy and the Smithsonian Institution. He sat on the Congressional Select Committee which set up the National Space Agency. This is an outstanding professional record. Most academics of ambition would have considered their careers to be crowned by any one of Quigley’s individual achievements. He had entry to the innermost workings of the powers which controlled the United States. It is vital that we appreciate that his voice comes from the inside looking out. He knew what was happening and how the system truly worked.

Yet Quigley’s personal position on these developments remains somewhat confused. He stated that he admired the society and many of its members and its goals, but not its methods. [12] He believed they should abandon secrecy and make their aims and objectives clear to all. This may have been his downfall. To us it remains an enigma that Quigley said he admired these individuals and their globalist aims of a one world government controlled by bankers, yet on the very same page stated that their tendency to place power in and influence into hands chosen by friendship rather than merit, their oblivion to the consequences of their actions, their ignorance of the point of view of persons in other countries or of persons of other classes in their own country … have brought many of the things which they and I hold dear, close to disaster.’ [13]

Did Professor Quigley decide in the end, like his fellow historian Professor Alfred Zimmern, that the secret society posed such a menace to the world that he chose to expose it? We shall never know. Unable to ridicule Tragedy and Hope as ‘conspiracy theory’ because of his exalted academic position and status, when it was published those he named decided to bury the book. Immediately on its release, unknown persons removed it from bookstore shelves in America – ‘faster than exploding Easter bunnies’ as one wit put it. It was withdrawn from sale without any justification and its original plates were destroyed by Quigley’s publisher, the Macmillan Company. The publishing company was owned by the family of the Earl of Stockton, Harold McMillan, who was British Prime Minister 1957-1963 and at the heart of the British Establishment. Years later, when a rare surviving copy of Tragedy and Hope was found and an unknown publisher decided to pirate it, copies began to sell.

Continue reading…

From Information Clearing House, here.

Central Bankers and Counterfeiters – Spot the Difference

The Moral Issue of Honest Money

Monday, February 01, 1982

Gary North

Because of the nature of the economics profession—“guild” might be a better word—it is necessary to put quotation marks around the words, “honest money.” Economists will go to almost any lengths to avoid the use of moral terms when they discuss economic issues. This has been true since the seventeenth century, when early mercantilistic pamphlet writers tried to avoid religious controversy by creating the illusion of moral and religious neutrality in their writings. This, they falsely imagined, would produce universal agreement, or at least more readily debatable disagreements, since “scientific” arguments are open to rational investigation. The history of both modern science and modern economics since the seventeenth century has demonstrated how thoroughly unreconcilable the scientists are, morality or no morality.

Nevertheless, traditions die hard. Economists are not supposed to inject questions of morality into their analyses. Economics is still supposedly a “positive” science, one concerned strictly with questions of “if . . . then.” If the government does A, then B is likely to result. If the government wants to achieve D, then it should adopt policy E. The economist is completely neutral, of course. He is just an observer who deals with means of achieving ends. The economist can therefore deal with “complete neutrality,” with this sort of problem: “If the Nazis wish to exterminate 50,000 people, which are the most cost-effective means?” No morality, you understand, just simple economic analysis.The problem with the theory of neutral economics is that people are not neutral, effects of government policies are not neutral, social systems are not neutral, legal systems are not neutral, and when pressed, even economists are not neutral. Because societies are not neutral, the costs of violating a society’s first principles have to be taken into account. But no economist can do any more than guess about such costs. There is no known way to assess the true costs to society of having its political leaders defy fundamental moral principles and adopt any given policy. And if the economists guess wrong—not an unlikely prospect, given the hypothetical moral vacuum in which economists officially operate—then the whole society will pay. (This assumes, of course, that policy-makers listen to economists.)

The inability of economists to make accurate cost-benefit analyses of any and all policy matters is a kind of skeleton in the profession’s closet. The problem was debated back in the late 1930s, and a few economists still admit that it is a real theoretical problem, but very few think about it. The fact of the matter is simple: there is no measuring device for balancing total individual utility vs. total disutility for society as a whole. You cannot, as a scientist, make interpersonal comparisons of subjective utility. The better economists know this, but they prefer not to think about it. They want to give advice, but as scientists they cannot say what policy is better for society as a whole.[1]

This is why politicians and policy-makers have to rely on intuition, just as the economists do. There is no scientific standard to tell them whether or not a particular policy should be imposed. Without a concept of morality—that some policy is morally superior to another—the economists’ “if . . . then” game will not answer the questions that need to be answered. Without moral guidelines, there is little hope of guessing correctly concerning the true costs and benefits to society as a whole of any policy. The economist, as a scientist, is in no better position to make such estimations than anyone else. If anything, he is in a worse position, since his academic training has conditioned him to avoid mixing moral issues and economic analysis. He is not used to dealing with such questions.

What Is Honest Money?

Honest money is a social institution that arises from honest dealings among acting individuals. Money is probably best defined as the most marketable commodity. I accept a dollar in exchange for goods or services that I supply only because I have reason to suspect that someone else will do the same for me later on. If I begin to suspect that others will refuse to take my dollar in exchange for their goods and services in the future, I will be less willing to take that dollar today. I may ask the buyer to pay me a dollar and a quarter, just to compensate me for my risk in holding that dollar over time.

A currency unit functions as money—a medium of voluntary exchange—only because people expect it to do so in the future. One reason why they expect a particular currency unit to be acceptable in the future is that it has been acceptable in the past. A monetary unit has to have historic value in most instances, if it is to function as money. Occasionally, meaning very rarely, a government can impose a new currency unit on its citizens, and sometimes this works. One good example is the introduction of the new German mark in November of 1923, which was exchanged for the old mark at a trillion to one. But normally the costs are so high in having people rethink and relearn a new currency unit that governments avoid such an imposition.

Historic Stability

The question policy-makers must ask themselves is this: To avoid the necessity of imposing a totally new currency unit on a population, what can be done to convince people that the future usefulness of the currency in voluntary exchange will remain high? What can be done to improve the historic value of money in the future? In other words, when people in a year or a decade look back at the performance of their nation’s currency unit, will they say to themselves: “This dollar that I’m holding today buys pretty much what it bought back then. I think it’s safe for me to continue to accept dollars in exchange for my goods and services, since people trust its buying power. I have no reason to believe that its purchasing power will fall in the future, so I can take the risk of accepting payment in dollars today.” If people do not say this to themselves, then the dollar’s purchasing power is undermined. Pep-pie will demand more dollars in payment, meaning prices will go up, if they suspect that prices will go up. This, in turn, convinces more people that the historic value of their money has been unreliable, which then leads to higher prices.

The economist will tell you that prices cannot continue to go up unless the government, working with the central bank, accommodates price inflation by expanding the currency base. The economist is correct in the long run, whatever the long run is these days, or will be in a few years. But governments have a pernicious tendency to accommodate price inflation.Dr. Arthur Burns was forthright about this back in 1976:

These days the Federal Reserve is now and then described as pursuing a restrictive monetary policy. The Federal Reserve is described as being engaged in a struggle against inflation. The Federal Reserve is even charged with being more concerned about inflation than about un employment, which is entirely false. It is by generating inflation, or permitting inflation, that we get unemployment on a massive scale eventually. But let us in the Federal Reserve ask this question: Are we accommodating inflation at the present time or not? The answer—the only honest, professional answer—is that, to a large degree, we are accommodating the inflation; in other words, are making it possible for inflation to continue.[2]

So we get a kind of self-fulfilling prophecy. The government expands the money supply in order to finance its deficits, or create a temporary economic boom, or whatever, and the prices for goods and services rise. Everyone in the “great American auction” has more dollars to use in the bidding process, so prices rise. Then the public gets suspicious about the future value of money, because they have seen the loss of purchasing power in the past. They demand higher prices. Then the Federal Reserve System is encouraged by politicians to accommodate the price inflation, in order to keep the boom going (to keep the “auction” lively). The dollar loses its present value, because it has lost its historic value, which encourages people to discount sharply its future value.

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

Who Guards the Guardians?

There is an ancient question that every society must answer: “Who guards the guardians?” Or in more contemporary usage, “Who referees the referees?” The public needs an impersonal guardian to restrain the actions of those who hold a legal monopoly of money creation: the government, the central bank, and the commercial banks. The public can guard the guardians if citizens have the right to go down to the local bank and receive payment in gold, silver, or some other money metal. The issuers of money need only stamp on the paper money (or check, or deposit book entry) that the holder of the currency unit has a legal right to redeem his warehouse receipt for a stated weight and fineness of a specific metal.[3] Whenever the issuing agencies begin to issue more receipts than they have reserves of metal, the public has the option of “calling the bluff’ of the issuers, and demanding payment, as promised by law. It is this restraint—implicit economically, but explicit legally—which serves as the impersonal guardian of the public trust.

The government can always change the law. Governments do this all the time. Whenever there is a major war, for example, governments suspend specie payments. They also suspend civil liberties, and for the same reason: to increase the power of the state at the expense of the citizens. Governments in peacetime are frequently unwilling to reestablish pre-war taxes, pre-war civil liberties, and pre-war convertibility of currencies, long after the war is over. Civil libertarians have not generally understood the case for a gold standard as a case for civil liberties, despite the obvious historical correlation between wartime suspension of civil liberties and wartime suspension of specie payments.

When the authorities declare the convertibility of paper into specie metals “null and void,” it sends the public a message. “Attention! This is your government speaking. We are no longer willing to subject ourselves to your continual interference in our governmental affairs. We no longer can tolerate illegitimate restrictions on our efforts to guard the public welfare, especially from the public. Therefore, we are suspending the following civil right: the public’s legal right to call our bluff when we guarantee free convertibility of our currency. This should not be interpreted as an immoral act on the part of the government. Contracts are not moral issues. They are strictly pragmatic. However, we assure you, from the bottom of our collective heart, that we shall never expand the money supply, or allow the historic value of the currency to depreciate. It will be just as if we had a gold standard restraint on our printing presses. However, such restraints are unnecessary, and besides, they are altogether too restraining.”

Redeemability Required

Critics of the gold standard tell us that the value of any currency is dependent on public confidence, not gold. But what the critics refuse to admit is that the existence of the civil liberty of redeemable money is an important psychological support of the public’s confidence in money. Even when the public does not understand the gold standard’s theoretical justification—an impersonal guard of the monopolistic guardians—citizens can exercise their judgment on a daily basis by either demanding payment in gold (or silver, or whatever) or not demanding payment. Like the free market itself, it works whether or not the bulk of the participants understand the theory. What they do understand is self-interest: if there is a profit to be made from buying gold at the official rate, and selling it into the free market (including foreign markets) at a higher price, then some people will enter the markets as middlemen, “buying low and selling high,” until the government realizes that its bluff has been called, and it therefore is forced to reduce the expansion of the money supply.

What is the morality of a gold standard? Simple: it is the morality of a legal contract. A government’s word is its bond. A government promises to restrain itself in the creation of money, in order to assure citizens that the monopoly of money-creation will not be abused by those holding the monopoly grant of power. The gold standard is very much like a constitution: an impersonal, tellable institution which has as its premier function the counterbalancing of potentially damaging monopolistic power.

“Flexible” Money

Flexible money is a euphemism for the government’s ability to increase (but, historically speaking rarely to decrease) the money supply. The degree of flexibility is determined by the political process, not by the direct response of those affected, namely, individual citizens who would otherwise have the right to demand payment in gold. Flexible money means monetary inflation. Very flexible money means a whole lot of monetary inflation. Monetary inflation means, within 24 months, price inflation.

Civil libertarians instantly recognize the danger of “flexible administrative law,” or “flexible censorship,” or “flexible enforcement of speed traps.” Yet they have great difficulty in recognizing precisely the same kind of evil in “flexible monetary policy.” The threat comes from the same institution, the civil government. It comes for the same reasons: the desire of the government to increase its arbitrary exercise of monopolistic power over the citizenry, and to limit public resistance.

The inflationary implications of “flexible monetary policy” can be seen in a revealing exchange between Arthur Burns and Henry Reuss:

DR. BURNS: Let me say this, if I may: the genius of monetary policy—its great virtue—is that it is flexible. With respect to the growth ranges that we project for the coming year, as I have tried to advise this committee from time to time—and as I keep reminding others, including members of my own Federal Reserve family—our goal at the Federal Reserve is not to make a particular projection come true; our goal is to adjust what we do with a view to achieving a good performance of the economy. If at some future time I should come to this committee and report a wide discrepancy between our projection and what actually happened in the sphere of money and credit, I would not be embarrassed in the slightest. On the contrary, I would feel that the Federal Reserve had done well and I would even anticipate a possible word of praise from this generous committee.

CHAIRMAN REUSS: You would get it, and the word of praise would be even louder and more deeply felt if you came up and said that due to the change in circumstances you were proving once again that you were not locked on automatic pilot and were willing to become more expansive if the circumstances warranted. Either way you would get praise beyond belief.[4]

Praise beyond belief! Who wants anything less? Just take the monetary system off “automatic pilot,” and turn it over to those whose short-run political goals favor a return of the inflation- generated economic boom, once the boom has worn off because the printing presses are not accelerating the output of fiat money—fiat money being defined as former warehouse receipts for metal, in which even the pretense of a warehouse has been abandoned. Gold is a tough-minded automatic pilot.

Politically, there is a great deal of flexibility in monetary affairs. Few people even pretend to understand monetary affairs, and most of those who do really do not understand the logic of the gold standard. The logic is very simple, very clear, and universally despised: It is cheaper to print money than it is to dig gold.

Problems with Fiat Money

Fiat money is indeed more flexible than gold, especially in an upward direction. Fiat money allows the government to spend newly manufactured money into circulation. It allows those who gain early access to the newly created fiat money to go out and buy up scarce economic resources at yesterday’s prices—prices based on supply and demand conditions that were being bid in terms of yesterday’s money supply. But this leads to some important problems.

1. Yesterday’s prices will climb upward to adjust for today’s money supply.

2. People will begin to have doubts about the stability of tomorrow’s prices.

3. Producers and sellers of resources may begin to discount the future purchasing power of today’s dollar (that is, hike today’s prices in anticipation).

4. The government or central bank will be severely tempted to “accommodate” rising prices by expanding the money supply.

5. And the beat goes on.

Paying for the Guards

It is quite true, as Milton Friedman has stated so graphically, that the gold standard is expensive.[5] We dig gold out of the ground in one location, only to bury it in the ground in another location. We cannot do this for free. Wouldn’t it be more efficient, meaning less wasteful of scarce economic resources, Dr. Friedman asks, just to forget about digging up gold? Why not keep the government or the central bank from expanding the money supply? Then the same ends could be accomplished so much less wastefully. Save resources: trust politicians.

This is a very strange argument, coming as it does from a man who understands the efficiency of market processes, as compared to political and bureaucratic processes. The gold standard is the way that individual citizens, acting to increase their own personal advantage, can profit from any monetary inflation on the part of the monetary authorities. They can “buy low and sell high” simply by exchanging paper money for gold at the undervalued, official exchange rate, and hoarding gold in expectation of a higher price, or selling it into the free market at a higher price. Why is the price higher? Because individuals expect the government to go back on its promise, raise the official price of gold (that is, devalue the currency unit), or close the gold window altogether. Citizens can become future-predicting, risk-bearing, uncertainty-bearing speculators in a very restricted market, namely, the market for government promises. It allows those who are skeptical about the trustworthiness of government promises to take a profit-seeking position in the market. It allows those who trust the government’ to deposit money at 6 percent or 10 percent or whatever. Each side can speculate concerning the trustworthiness of government promises concerning redeemability of the currency, or more to the point, government promises concerning the future stability of the currency unit’s purchasing power.

Let the Market Function

Defenders of the commodity futures markets—and this includes Dr. Friedman—argue that the existence of a market for future delivery and future payment of commodities smooths out market prices, since it opens the market to those who are willing to bear the uncertainties of predicting the future. Those who are successful predictors increase their profits, and therefore increase their strength in establishing market prices according to the true future conditions of supply and demand. Those who are less successful soon are forced out of the futures markets, thereby passing along capital to those who are more successful predictors. The public is served well by such markets, for obvious reasons. Prices adjust to future consumer demand more rapidly, since accurate future-predictors are being rewarded in these markets.

Then why not a market for future government promises? Why not a market which can test the government’s willingness to deliver a stated quantity and fineness of gold or silver (but preferably gold, given international exchange)? The monopolists who control the money supply then are faced with a market which offers rewards to those who are willing and able to “call the monopolists’ bluff’ and demand gold for the government’s warehouse receipts.

Why not just rely on the standard commodity contracts for gold in the commodity futures markets? Won’t skeptics be able to take their profits this way? Why bring in the “spurious” issue of a convertible currency? The answer is simple enough: once society has given a monopoly to the government to create money, then the full redeemability of the currency unit is a direct, immediately felt restriction on government power. Of course the free market in commodities allows speculators to take advantage of monetary inflation, if their timing is correct. But this does not mean that the public at large will exercise effective action to force a political change in present monetary policy. There is no immediate self-interest involved in expending resources in what could prove to be a fruitless, expensive campaign to stop the inflation.

Fixing the Responsibility

In the commodities market, one investor wins, and one investor loses (unless the price stays the same, in which case only the broker wins). By establishing the gold standard—full redeemability of gold on public demand—the government forces the Treasury to risk becoming an immediate, measurable loser. It forces the Treasury’s officials to come back to the politicians and announce, “Folks, we have lost the bet. The public has called our bluff. They have drained us of our gold. We can’t go on much longer. We have to stop the inflation. We have to convince the public to start trusting the currency, meaning that they should start trusting our competence in securing them a currency with a future. We have to balance the budget. Stop inflating!”

An open commodities market in gold is desirable, of course. But it is no substitute for a gold standard, if the state has a monopoly of money creation (along with its licensed subcontractors, the banks). Unless there is full redeemability, the Treasury is not forced by law to “go long” on its promises whenever anyone else wants to “go short.”

Without full redeemability, the Treasury, meaning the government, can keep on shorting its own promises, despite the response of organized commodities markets, until an expensive and successful political campaign can be launched to stabilize the money supply. As free market analysis tells us, these campaigns are expensive to launch because of such factors as information costs, costs of organizing pressure groups, and the lack of an immediate, short-run pay-off to “investors” who contribute money to such a program. Full redeemability allows market forces to work. Self-interested forecasters can speculate in the government promises market. The public never has to be told to vote, or send letters of protest, or do anything. The self-interested speculators—a small but well-capitalized elite—will do the “policing” job for the citizens free of charge.[6] (Well, almost: there are transaction costs.)

So when we are told that it is inefficient to dig gold out of the ground, only to deposit it in a vault, we are not being told the whole story. By tying the currency unit to that gold—which is wonderfully expensive to mine, as any monetary brake should be and must be—the body politic enlists a cadre of professional, self-interested speculators to serve as an unpaid police force. This police force polices the trustworthiness of government monetary promises. The public can relax, knowing that a hard core of greedy capitalists is at work for the public interest, monitoring Federal budgets, Federal Reserve policies, and similarly arcane topics. By forcing the Treasury to “go long” in its own promises market, the guardians are guarded by the best guards of all: future- predicting, self-interested speculators whose job it is to embarrass those who do not honor contracts—monetary contracts.

Conclusions

I suppose I could invest more time in presenting graphs, or faking some impressive-looking equations, or citing innumerable forgotten defenders of the gold standard. But I think I have reached the point of diminishing returns. The logic of the gold standard is really fairly simple: Treasury monopolists, like all other monopolists, cannot be trusted to honor their promises. Better put, they cannot be trusted at zero cost. The gold standard is one relatively inexpensive way to impose high costs on government monetary officials who do not honor their implicit contracts with the body politic to monitor and deliver a reliable currency unit that will have future value—a trustworthy money system.

There are moral issues involved: honoring contracts, preserving social stability, providing a trustworthy government. There are civil liberties issues involved: protecting citizens from unwarranted taxation through monetary inflation, protecting citizens from arbitrary (read: “flexible”) monetary policies, and restricting the expansion of government power. There are economic isues involved: designing an institutional mechanism that will bring self-interest to bear on political-economic policies, to stabilize purchasing power, to increase the spread of information in the community, and to increase the political risks for money monopolists. No doubt, I could go on, but these arguments seem sufficient.

The real question is more fundamental: Do we trust governments or the high costs of mining precious metals? William McChesney Martin, Dr. Burns’ predecessor as Chairman of the Federal Reserve Board, gave us the options back in 1968, in the midst of an international monetary crisis: “It’s governments that you have to rely on. Basically, you can’t rely on a metal for solvency.”[7]

Those of us who cannot bring ourselves to trust the government with any monopoly over the control of money prefer to trust a metal. It may not be the best thing to trust, but it is certainly more reliable than governments.

Keeping Government Honest

The case for a gold standard is the case against arbitrary civil government. While politicians may well resent “automatic pilots” in the sphere of monetary policy, if we had a more automatic pilot, we would have less intensive “boom-bust” cycles. When the “automatic pilot” is subject to tinkering by politicians or Federal Reserve officials, then it is not automatic any longer.

The appeal of specie metals is not the lure of magical talismans, as some critics of gold seem to imply. Gold is not a barbarous relic. Gold is a metal which, over millennia, has become acceptable as a means of payment in a highly complex institutional arrangement: the monetary system. Gold is part of civilization’s most important economic institution, the division – of- labor – based monetary system. Without this division of labor, which monetary calculation has made possible, most of the world’s population would be dead within a year, and probably within a few weeks. The alternative to the free market social order is government tyranny, some military- based centralized allocation system. Any attempt by the state to alter men’s voluntary decisions in the area of exchange, including their choice of exchange units, represents the true relic of barbarism, namely, the use of force to determine the outcome of men’s decisions.

The gold standard offers men an alternative to the fiat money systems that have transferred massive monopolistic power to the civil government. The gold standard is not to be understood as a restraint on men’s freedom, but just the opposite: a means of restraining that great enemy of freedom, the arbitrary state. A gold standard restores an element of impersonal predictability to voluntary exchange—impersonal in the limited sense of not being subject to the whims of any individual or group. This predictability helps to reduce the uncertainties of life, and therefore helps to reduce the costs of human action. It is not a zero-cost institution, but it has proven itself as an important means of reducing arbitrary government. It is an “automatic pilot” which the high-flying, loud-crashing political daredevils resent. That, it seems to me, is a vote in its favor. []

1.   For those who are curious about this great debate over the impossibility of making interpersonal comparisons of subjective utility, see the exchange that took place between Sir Roy Harrod and Lionel Robbins: Roy F. Harrod, “Scope and Methods of Economics,” The Economic Journal (Sept., 1938) and Lionel Robbins, “Interpersonal Comparisons of Utility: A Comment,” The Economic Journal (Dec., 1938). For some “new left” conclusions concerning the results of this debate, see Mark A. Lutz and Kenneth Lux, The Challenge of Humanistic Economics (Menlo Park, Calif.: Benjamin/ Cummings, 1979), pp. 83-89. For my own observations on its implications, see Gary North, The Dominion Covenant: Genesis (Tyler, Texas: Institute for Christian Economics, 1982), ch. 4.

2.   Federal Reserve Consultations on the Conduct of Monetary Policy, Hearings Before the Committee on Banking, Currency and Housing, House of Representatives, 94th Congress, 2nd Session (July 27 and 28, 1976), pp. 26-27. Printed by the U.S. Government Printing Of-rice, Washington, D.C.

3.   On money as a warehouse receipt, see Murray N. Rothbard, Man, Economy and State (New York: New York University Press, [1962] 1975), pp. 700-3.

4.   Federal Reserve Consultations, p. 13.

5.   Writes Prof. Friedman: “My conclusion is that an automatic commodity standard is neither a feasible nor a desirable solution to the problem of establishing monetary arrangements for a free society. It is not desirable because it would involve a large cost in the form of resources used to produce the monetary commodity.” Capitalism and Freedom (Chicago: University of Chicago Press, 1962), p. 42.

6.   “By creating monitors with a vested interest in the maximization of a given set of values, property rights reduce the social cost of monitoring efficiency.” Thomas Sowell, Knowledge and Decisions (New York: Basic Books, 1980), p. 125.

7.  William McChesney Martin, quoted in the Los Angeles Times (March 19, 1968), Pt. I, p. 12.

Drug Laws Deny Personal Free Will

Marijuana Did Not Kill Your Son

By 

December 4, 2018

I occasionally get some unusual responses when I write about the evils of the government’s war on drugs.

On election day, Tuesday, November 6, I had an article published on this website titled “Voting Right.” The article was about the marijuana ballot initiatives that were being voted on that day. I maintained in the article that voting right meant voting in favor of ballot initiatives to legalize the medical or recreational use of marijuana.

I took this position because, as a libertarian, I believe that there should be no laws at any level of government for any reason regarding the buying, selling, growing, processing, transporting, manufacturing, advertising, using, or possessing of any drug for any reason.

This is not because libertarians believe that drugs are beneficial or harmless and not addictive or dangerous, but because

1) it is not the proper role of government make such laws,

2) anyone should be able to do anything that’s peaceful as long as he doesn’t infringe upon the personal or property rights of others, and

3) a free society has to include the right of people to use or abuse drugs.

Just because libertarians oppose the war on drugs doesn’t mean that they believe it would be a good thing for anyone to use drugs, that they are indifferent to or unconcerned about the dangers of drugs in the hands of children, or that they are naïve about the potentially negative consequences of drug abuse.

In my article, I called for the war on drugs to be ended immediately and completely, although the article was mainly about marijuana.

Here is the only negative response to the article that I received. I have obscured the writer’s name to protect his privacy.

Subject: weed
From: W****** P******** <w******.j****.p********@gmail.com>
Date: Tue, Nov 06, 2018 9:11 am
To: lmvance@laurencemvance.com

my dead son thought the same way

Now, I assume from this response that this man lost his son. This is a terrible thing that I would not want anyone to have to go through. I also assume that this man’s son used marijuana on a regular basis, and not just on occasion. I think it is also safe to assume from this response that this man blames his son’s death on his marijuana use. I don’t know what else to make of this response. I am commenting on it because I am sure that others who have had loved ones die from drug overdoses feel the same way.

I’m sorry to have to tell you, Mr. P., but marijuana did not kill your son.

First of all, as I wrote about a few months ago, the federal government acknowledges that no one has ever overdosed on marijuana.” Does this mean that smoking marijuana is beneficial, healthy, safe, wholesome, risk-free, and harmless? Of course not. Does this mean that someone high on marijuana has never had an accident or done something stupid that resulted in his death? Of course not.

Second, and more importantly, even if marijuana did kill those who smoked too much of it, even if marijuana was the most dangerous Schedule I drug, and even if marijuana was the most dangerous substance known to man, the person smoking it is directly responsible for the consequences of his actions.

Libertarians make much of individual liberty when it comes to the drug war. As well they should. Any legal adult should have the freedom to use marijuana to medicate himself or to get stoned out of his mind. But with freedom comes responsibility. This is why personal responsibility should be preached when it comes to the drug war just as much as individual liberty.

To the drug user I would say:

  • Using drugs may adversely affect your health
  • Using drugs may ruin you financially
  • Using drugs may be addictive
  • Using drugs may grieve your family and friends
  • Using drugs may cost you your job
  • Using drugs may cost you your family
  • Using drugs may destroy your mind
  • Using drugs may cause you to lose your friends
  • Using drugs may wreck your life
  • Using drugs may have unintended negative consequences
  • Using drugs may kill you

I would also say to the drug user that you are fully responsible for the costs and consequences of your actions—not your family, not society, and certainly not the government. It is not the job of the government to prevent anyone from using drugs, to warn anyone about the dangers of drug abuse, to provide drug users with clean needles, to send anyone to drug rehab, to help anyone get off drugs, or to pay for anyone’s drug-related medical treatment.

No, Mr. P., marijuana did not kill your son. Marijuana did not kill your son anymore than a knife, a gun, or a blunt instrument committed a murder. Your son is personally responsible for whatever happened to himself or anyone else because of his marijuana use.

From Lewrockwell.com, here.

When You Subsidize Incompetence You Get Even MORE of It…

Pentagon Fails First Audit, Neocons Demand More Spending!

By 

Ron Paul Institute

November 20, 2018

The Pentagon has finally completed its first ever audit and the results are as many of us expected. After spending nearly a billion dollars to find out what has happened to trillions in unaccounted-for spending, the long look through the books has concluded that only ten percent of all Pentagon agencies pass muster. I am surprised any of them did.

Even the Pentagon is not surprised by the failure of the audit. “We failed the audit. But we never expected to pass it,” said Deputy Secretary of Defense Patrick Shanahan. Can we imagine any large US company subject to the prying eyes of the IRS being so unfazed by the discovery that its books have been so mis-handled?

As with all government programs, but especially when it comes to military spending, the failure of a program never leads to calls for funding reductions. The Pentagon’s failure to properly account for the trillions of taxpayer dollars shoveled in year after year only means, they say, that we need to send more money! Already they are claiming that with more resources – meaning money – they can fix some of the problems identified by the audit.

If you subsidize something you get much more of it, and in this case we are subsidizing Pentagon incompetence. Expect much more of it.

Outgoing chairman of the House Armed Services Committee, Rep. Mac Thornberry, warned against concluding that this mis-handling trillions of dollars should make us hesitant to continue sending trillions more to the Pentagon. The failed audit “should not be used as an excuse for arbitrary cuts that reverse the progress we have begun on rebuilding our strength and readiness,” he said.

The neocons concur. Writing in the Free Beacon, editor Matthew Continetti (who happens to be Bill Kristol’s son-in-law) warns that now is “the wrong time to cut defense.”

But I agree with the young neoconservative Continetti. I would never support cutting a penny of defense. However, the Pentagon’s lost trillions have nothing to do with defense. That is money propping up the high lifestyles of those connected to the military-industrial complex.

Continetti and the neocons love to throw out bogeymen like China and Russia as excuses for more military spending, but in fact, they are hardly objective observers. Look at how much the military contractors spend funding the neocon publications and neocon think tanks telling us that we need more military spending! All this money is stolen from the productive economy and diverted to enrich neocon cheerleaders at our expense.

Of course, the real problem with the Pentagon and military spending, in general, is not waste, fraud, and abuse. It is not ten thousand dollar toilet seats or coffee mugs. The problem with military spending is the philosophy that drives it. If the US strategy is to maintain a global military empire, there will never be enough spending. Because there is never enough to control every corner of the globe. But if we are to return to a well-defended republic, military spending could easily be reduced by 75 percent while keeping us completely safe. The choice is ours!

From LRC, here.

Economic Morality and Jewish Law

Can Judaism Save Capitalism?

Posted by: Gil Student Apr 29, 15

image

Eric Cohen’s impressive argument for a uniquely Jewish conservatism includes a long section on economics. Quoting R. Jonathan Sacks and Dr. Isaac Lifshitz, Cohen makes a case that emerges from Jewish sources for Free Market Capitalism. However, as Yuval Levin points out in his response to Cohen, Judaism is consistent with capitalism but does not necessarily advocate for it. Yes, the Torah protects property rights and advocates productive labor, but there is more to capitalism than earning a salary and keeping it.1 What role, then, can Judaism play in economic ideology?

Levin seems to think that Judaism has little to teach the world about capitalism. I suggest that while Judaism may not advocate a specific economic theory that developed a dozen centuries after the close of the Talmud, it can teach the world how to properly implement it. This is a particularly timely task because recents events emphasize how desperately capitalism needs direction.

It is one thing to wax passionately about free markets in theory. Getting down to the nitty-gritty implementation is quite another. Free markets require regulation to prevent abuse, such as monopolies and corruption. As we have seen multiple times over the past century, such as in Russia over the past two decades, free markets without sufficient protection will not remain free for very long. The rich and powerful grab control and become richer and more powerful. Some argue that, to a lesser degree, this has happened throughout the free world as income inequality grows and the wealthiest few keep awarding themselves higher salaries and oversized bonuses while under- and unemployment stubbornly persist.

The 2008 Economic Downturn nearly destroyed Capitalism. While financial watchdogs propped up the global economy at exorbitant cost, the vast majority of people suffered unemployment, loss and financial uncertainty. Mistrust of Capitalism grew to catastrophic proportions. If not for the comical ineptitude of the Occupy Wall Street movement, the financial system as we know it may have been overthrown. Despite this revolutionary failure, a new generation is rising that fears Capitalism and distrusts free markets. What could not be accomplished through revolution may yet be achieved through legislation. The inherent unfairness of Capitalism, the growing visibility of income inequality, may spark angry legislation disturbing the free markets.

The salvation of Capitalism lies in redeeming it through morality. The proponents of free markets need to claim the language of morality to define Capitalism’s scope and limitations. Everyone agrees that a free market needs adequate regulation to protect it from the inevitable would-be abusers. We can save Capitalism by defining it through its regulation in terms of morality, of right and wrong.

Economists make policy recommendations, which if approved become required by law, based on the expected social and economic impact. One main approach is called Welfare Economics, which measures the benefit to the public of proposed regulations (it has no connection to the Welfare System). This is a purely pragmatic evaluation emanating from a consequentialist view of right and wrong. If a policy has positive economic consequences, it should be implemented.

Judaism rejects this entire approach to governance. Free markets should not be ruled by cost-benefit analyses but by objective rules of right and wrong, good and bad. Rabbi Aaron Levine dedicated his career as an economist to arguing this point, which he most clearly expressed in the introduction to his posthumously published Economic Morality and Jewish Law. Welfare Economics can lead to absurd results, such as the argument that toxic waste should be dumped freely in less-developed countries. The world needs a deontogical approach, an ethical system with which to evaluate policy proposals based on their merit, not just their consequences. For R. Levine, this basis is Halakhah, Jewish law.

It might seem odd to argue that an ancient ethical system, sometimes accused by critics of being immoral (although usually from a superficial analysis), to lead the way. But we are talking about much more than a PR strategy. We need a systemic overhaul of the way we think and speak of economic issues. Free Markets must become a moral issue and its policy decisions made based on what is right and wrong. For its part, Halakhah can only guide modern economies if it is taken out of the pre-modern world. Decisions must be made based not only on a deep familiarity with the rules and concepts of Jewish tradition but also expertise in contemporary economics. When the two fields are married, as a number of outstanding scholars have accomplished, we find a remarkable union that offers insight into the fine details of economic policy, the small decisions that cumulatively grease the wheels of free markets.

R. Levine compares Welfare Economics and Halakhah in many cases. For example, deceptive advertising damages customers and is therefore subject to regulation. However, when an advertiser lies about prices, it is rarely penalized because regulators believe that a focus on price ultimately leads to lower prices, i.e. it has a positive consequence for customers. In contrast, Halakhah forbids falsehood and therefore, if implemented in regulation, would ban ads that provide incorrect price information. Judaism teaches that the rule of honesty should prevail in the marketplace, not just an economically or socially useful honesty.

Similarly, insider trading can be debated based on the impact to stock market participants. Does it improve market efficiency by providing incentive to insiders to manage better or does it allow for quick gain that leads to poorer management? For R. Levine, this consequentialist thinking is beside the point. The inside information belongs to the company and Halakhah forbids profiting from someone else’s property. Economic policy should be determined by rules governing what is right, not predictions of likely outcomes and their corresponding benefits. Being right means doing right, not doing whatever it takes to reach a useful end.

In his response to Cohen, Levin writes that he can see Judaism playing a role of moralism in a Jewish conservatism but what can the religion offer in the economic realm? While he was looking for a Jewish theology of entrepreneurship, he already had his answer. Capitalism desperately needs a strong dose of economic morality. Regulation based on morality would prevent some of the immoral incentives that led to the recent economic downturn, many of which still exist. It would demand incentives that foster responsibility and long-term thinking, regulate executive compensation packages to serve shareholders and demand responsibility from corporate boards that cannot be quickly passed on to insurers.

An implementation of Capitalism based on economic morality would not engage in the class warfare that is rampant among social policy advocates, nor accept dubious predictions common among consequentialists. Competing notions of social engineering are beside the point. The focus on effective regulation is the morality of a given action–is it inherently proper?

Jews should be morally invested in the implementation of meaningful economic regulation that requires proper behavior of all parties. Capitalism can only survive if it continues to inspire hope. To do this effectively, it must adhere to basic rules of fairness and right and wrong.

  1. I disagree that Judaism encourages competition. Torah teachers are a unique exception to the regulations of hasagas gevul that prevent ruinous competition

From Torah Musings, here.