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by Eric Englund
As J.G.
Hulsmann stated in his seminal essay The
Cultural and Spiritual Legacy of Fiat Inflation: “The
government’s fiat makes inflation perennial, and as a
result we observe the formation of inflation-specific institutions
and habits. Thus fiat inflation leaves a characteristic cultural
and spiritual stain on human society.” It is, therefore,
crucial for people to awaken to the fact that the manipulation
of money and credit, on the part of central bankers, is tantamount
to manipulating the minds and hearts of human beings –
a matter also covered in a jointly-written essay.
Right behind owning one’s own body, the second most personal
asset an individual owns is the fruit of one’s own labor
– with such fruit typically taking the form of money;
which is exchanged for food, clothing, transportation, shelter,
etc. Accordingly, with the common yardstick here being money,
a person’s self-worth, in part, can be measured by earnings
power, accumulated savings, and personal net worth.
With
central banks, however, continuously perpetrating the immoral
and fraudulent act of fiat inflation, money perniciously loses
value over time. When such an important and profoundly intimate
self-measuring tool (money) loses its stability, people tend
to lose their moral bearings and social decay ensues. And,
correspondingly, state power increases – for awhile at
least – as the populace becomes evermore dependent on
state bureaucrats for guidance. To be sure, this seems quite
abstract. Hence, it is my objective to bring you tangible
examples as to how fiat inflation, as wrought by central bankers,
has had a deeply personal impact on people and is a key factor
behind the gradual decivilization process engulfing humanity.
An appropriate
place to begin pertains to the impulsive and adolescent financial
behavior so commonly displayed by American adults. Since the
bursting of the NASDAQ bubble in 2000, the Federal Reserve
has gone on a fiat-money-and-credit-creation bender. In turn,
the masses have imbibed this easy credit and are drunk with
confidence that they are on the road to riches. Just look
how effortless it has been to purchase McMansions and expensive
cars in order to convey that you are in the game, you are
a player, and that you are on your way to Easy Street. Houses,
after all, will only increase in value and make us all wealthy
in the long run – this mindset will change once it is
recognized that the housing bubble has burst. The most seductive
aspect of this game is that one does not have to delay gratification
by saving. Most certainly, by today’s standards, saving
reflects a lack of financial acumen and certainly isn’t
much fun. No. In order to reveal financial wisdom, one must
maximize the use of leverage and minimize the size of a down-payment.
Consequently, borrowing hundreds of thousands of dollars,
to purchase a dream home and two luxury automobiles, defines
financial sophistication in the United States. Borrowing,
indeed, has become a virtue whilst saving has become a vice.
Such
reckless financial behavior, as encouraged by central banking,
comes at a high price in which the social fabric frays one
family at a time. As Dr. Hulsmann explains in his above-mentioned
essay:
The
net effect of the recent surge in household debt is therefore
to throw entire populations into financial dependency. The
moral implications are clear. Towering debts are incompatible
with financial self-reliance and thus tend to weaken self-reliance
also in all other spheres. The debt-ridden individual eventually
adopts the habit of turning to others for help, rather than
maturing into an economic and moral anchor of his family,
and of his wider community. Wishful thinking and submissiveness
replace soberness and independent judgment. And what about
the many cases in which families can no longer shoulder
the debt load? Then the result is either despair or, on
the contrary, scorn for all standards of financial sanity.
For a
state to gain in power, it must shift its citizens’ chief
allegiance from the family to the state. As aided by the Federal
Reserve and America’s public schools, Uncle Sam is winning
this power struggle for loyalty – for now. When mothers
and fathers are economically and financially illiterate –
thanks to public schools – then the Federal Reserve’s
siren-song of easy credit becomes irresistible. Profligate
parents do not serve as economic and moral anchors for the
family. Instead, they reach a stage of permanent adolescence
in which they are more likely to teach their children to play
a video game than to teach children how to read, write, do
basic math, and lead a virtuous life. As a brief sidebar,
you may detect those “adults” who have reached permanent
adolescence by observing their driving habits – such
individuals drive as if they are in a NASCAR race or playing
an auto-racing video game. In a household “run”
by adolescent-adults, parents redefine their roles as that
of a child’s best friend. A house, additionally, is no
longer a home but more of a hangout. With family bonds weakening,
and state power increasing, it is no wonder that the Homeland
Security Act, the Patriot Act, and NSA snooping have only
received a collective shrug of the shoulders.
Would
it be farfetched to say that central banking can affect sexual
behavior? One could argue that in light of the aforesaid decline
of family bonds (as partially brought about by the Federal
Reserve), parents have left it to public schools to “educate”
children about the intimate matter of sex. Without going into
details, we know this has been a disaster. Nonetheless, can
a more direct link be made between central banking and changes
in sexual behavior?
To answer
this question, all one must do is read Otto Friedrich’s
engrossing book Before
the Deluge: A Portrait of Berlin in the 1920s. An
important facet of this book deals with how hyperinflation,
as perpetrated by Germany’s central bank, affected the
German populace. To put it bluntly, yes, central banking had
a direct impact on Germany's sexual mores. The following excerpt,
from Before the Deluge, will remove any doubt:
“Yes,
the inflation was by far the most important event of this
period”, says a seventy-five-year-old journalist, a
woman who still lives in Berlin. She is white-haired and
rather large, and she nibbles cookies as she talks, forgetting
that it is already two in the morning. “The inflation
wiped out the savings of the entire middle class, but those
are just words. You have to realize what that meant. There
was not a single girl in the entire middle class who could
get married without her father paying a dowry. Even the
maids – they never spent a penny of their wages. They
saved and saved so that they could get married. When the
money became worthless, it destroyed the whole system for
getting married, and so it destroyed the whole idea of remaining
chaste until marriage.”
“The
rich had never lived up to their own standards, of course,
and the poor had different standards anyway, but the middle
class, by and large, obeyed the rules. Not every girl was
a virgin when she was married, but it was generally accepted
that one should be. But what happened from the inflation
was that girls learned that virginity didn’t matter
any more. The women were liberated.” (Italics in the
original)
Accordingly,
let’s fast forward from sexually-liberated Weimar, Germany
to modern-day America in search of “inflation-specific
habits.” Considering that central banking does alter
sexual behavior and does weaken family bonds (with American
parents, in all too many cases today, no longer serving as
the moral anchor of a family), should it not be surprising
to see a depreciation in fashion – especially amongst
children? Presently, the body-hugging look, which passes for
fashion amongst young girls, is simply atrocious, trashy,
and sexually-charged. The same can be said about boys. Few
people understand that the baggy-pant
look, with such pants drooping below the buttocks, thus,
revealing boxer shorts, is actually a “fashion”
that originated in prison. When a prisoner wears pants in
this drooping mode, he is advertising that he is a prostitute
and is promoting his availability. Today, a child in not dressed
as a beloved family member, yet, instead, is presented as
a sex object. Indeed, if today’s children’s fashion
is properly viewed as the “canary in the coal mine,”
then we have confirmation that the quality of parenting has
depreciated in lockstep with the value of the dollar. Consequently,
a sacred institution – the family – has been cheapened
by inflation.
Few things
are more personal than suicide. So if it seems unlikely that
a person measures self-worth, using money as the yardstick,
then please recall the high-profile suicides related to the
1929 stock market crash. To make the connection between central
banking and the aforementioned stock market crash, a brilliant
exposition was provided by Murray Rothbard in his masterful
book America’s
Great Depression. Dr. Rothbard points out that the
Federal Reserve aggressively inflated the money supply during
the 1920s. However:
The
inflation of the 1920s was actually over by the end of 1928.
The total money supply on December 31, 1928 was $73 billion.
On June 29, 1929, it was $73.26 billion, a rise of only
0.7 percent per annum. Thus, the monetary inflation was
virtually completed by the end of 1928. From that time onward,
the money supply remained level, rising only negligibly.
And therefore, from that time onward, a depression to adjust
the economy was inevitable. Since few Americans were familiar
with the “Austrian” theory of the trade cycle,
few realized what was going to happen.
A great
economy does not react instantaneously to change. Time,
therefore, had to elapse before the end of the inflation
could reveal the widespread malinvestments in the economy,
before the capital goods industries showed themselves to
be overextended, etc. The turning point occurred about July,
and it was in July that the great depression began.
The
stock market had been the most buoyant of all the markets
– this in conformity with the theory that the boom
generates particular overexpansion in the capital goods
industries. For the stock market is the market in the prices
of titles to capital. Riding on the wave of optimism generated
by the boom and credit expansion, the stock market took
several months after July to awaken to the realities of
the downturn in business activity. But the awakening was
inevitable, and in October the stock market crash made everyone
realize that depression had truly arrived.
As certainly
as central banking is capable of driving an economy into freefall,
individuals can be driven to the ultimate breaking point by
the catastrophe that is an economic depression. Thus, in many
instances, financial ruin, suicide, and central banking can
be directly linked.
Let’s
examine
this matter a bit further. Historian William K. Klingaman
conveys in his book, 1929:
The Year of the Great Crash, that – as related
to the stock market crash – asphyxiation by gas was the
most common method of committing suicide, yet there was considerable
variety. He states:
The wife
of a Long Island broker shot herself in the heart; a utilities
executive in Rochester, New York, shut himself in his bathroom
and opened a wall jet of illuminating gas; a St. Louis broker
swallowed poison; a Philadelphia financier shot himself in
his athletic club; a divorcee in Allentown, Pennsylvania,
closed the doors and windows of her home and turned on a gas
oven. In Milwaukee, one gentleman who took his own life left
a note that read, “My body should go to science, my soul
to Andrew W. Mellon, and sympathy to my creditors.”
While
visiting New York, at the time of the great crash, Winston
Churchill saw the broken body of a man who had jumped from
a building and plunged fifteen stories to his death. Later,
a notable suicide took place on Friday, November 8, 1929 when
J.J. Riordan, president of the County Trust Company, took
a pistol from a teller's cage at his bank, went to his home
in downtown Manhattan, and shot himself.
An institution
capable of hurtling an economy into depression most certainly
can be directly connected to the heinous and most personal
act of suicide. This is yet one more reason to properly deem
the Federal Reserve as “hazardous to humankind.”
Let there
be no doubt that monetary mischief (i.e. inflation), as perpetrated
by a central bank, does damage the human psyche. To be sure,
the manipulation of money does transform a society’s
view of sex (for the worse) and has lead countless poor souls
to financial devastation, and sometimes, tragically, suicide.
To connect the dots between sex, suicide, and central banking
is, in itself, narrow yet evocative. Nevertheless, are there
not broader implications?
In Before
the Deluge, Otto Friedrich quotes historian Alan Bullock
as to the devastating impact inflation had on society in Weimar,
Germany:
It
had the effect, which is the unique quality of economic
catastrophe, of reaching down to and touching every single
member of the community in a way which no political event
can. The savings of the middle classes and the working classes
were wiped out at a single blow with a ruthlessness which
no revolution could ever equal…The result of the inflation
was to undermine the foundations of German society in a
way which neither the war, nor the revolution of November,
1918, nor the Treaty of Versailles had ever done. The real
revolution in Germany was the inflation.
Sadly,
the German hyperinflation laid the groundwork for the Nazis
to eventually take power. Shortly thereafter, Germany lay
in ruin.
History,
clearly, has shown that money, a human construct in and of
itself, has a powerful affect on the human mind. Hence, it
logically follows that the central-bank induced depreciation
of the dollar – a fiat currency – goes hand in hand
with the social decay we see all around us. We must learn
from the German experience. To help reverse this decivilization
process, we must abolish the Federal Reserve and re-establish
a 100% gold standard – in essence, a counterrevolution.
And then perhaps, once again, we will walk amongst a people
who live by the Golden Rule.
July
10, 2006
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