Today's Thoughts

 "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."  -John Maynard Keynes – (The Lavender Bolshevik ) speaking of monetary inflation

“It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” - Warren Buffet- On gold

A man whom I much admire spent a lifetime and was awarded the Nobel Prize for his work in economics.  In order to understand economics one must also be a philosopher.  In order to succeed in this endeavor one must practice a moral self-discipline based on logic and reasoning.  Milton did this until he drew his last breath.  He was always the champion of self determination and always the first to defend liberty.  Too many fail to understand the inseparable relationship between man’s economic life and his liberty and freedom.  Milton did his best to spread the word in a manner even the common man could understand through a series of made for TV documentaries in 1980.  I doubt that many paid attention simply because of the condition in which we find ourselves over 30 years later.  Below I include Dr. Freidman’s words as best as I could transcribe for your consideration.  His words in quotations, mine in italics.

“The great depression was NOT a failure of private business but was produced by a failure government monetary policy. A  Failure of the Federal Reserve System to act in accordance with the intentions of those who established it.  It was a failure of the Federal Reserve, that despite the knowledge of many people in the system of the right course of action.
 

Why is the myth that private business caused the depression so prevalent?  The answer is simple; private enterprise has no press agent.  The Government has a great many press agents.  The Federal Reserve has a great many press agents.  Naturally, neither would ever 

admit nor claim that they had produced the great depression."

The free market has no press agent.  The Federal propaganda machine has been running full tilt ever since this latest economic upheaval began.  Our world and their concerns thrive on perception rather than reason or fact.  Notice the trend to publish and tout favorable economic numbers then ‘revise’ them down at some future date.  That’s intended to make the public feel good for now but with the understanding they will not pay attention to the revised pitiful numbers later.  Again today, it’s about perception,  not economic reality.  Yet, it must work as the rank and file seem to simply accept and continue with the same behavior. 

“If you read the annual reports of the Federal Reserve for the last 80 years you will notice (providing someone has called it to your attention) that in the years where things are good and the economy is booming you will read that the Federal Reserve though its wise policy and its wonderful management of money has produced this wonderful situation.  However, when things are bad the tone of the reports changes to despite the best efforts of the Federal Reserve, outside forces have combined to produce difficulties.

 

In the depth of the depression in 1933, the Federal Reserve System, which had been established in order to prevent bank panics and keep banks from closing, closed its own doors and declared a banking holiday for 7 days.  When over the previous 3 years 1/3 of the banks of this country closed their doors and went broke because of the poor policy followed by the Federal Reserve.  Even in 1933, if you read the report you will discover how much 

worse things would have been if the Federal Reserve hadn’t behaved so well.

But fact is that from 1929 to 1933 the total quantity in the United States, the amount of currency and the amount of bank deposits, referred to as M2, declined by one third, the total number of banks went down by one third.  The Federal Reserve failed to prevent the decline when at all times during this period; they had the power to prevent the decline.   If it had prevented the decline in the quantity of money, there might have been a recession, but it would have been a normal garden variety recession and likely been over by 1930. 

This was a failure of government and a failure in an area in which responsibility had been assigned to government since the founding of this country.  The Constitution of the United States gives Congress the power to coin money and set the value thereof; And it was in the management of this fundamental function of government that government failed and produced the great depression.  We have learned from that failure, the Federal Reserve will not fail in this way again.  This time it will fail in a different way.  The Fed fails now not by producing a great depression but by producing inflation.  Because just as, you will hear that it was business that produced the great depression you will hear today that it was labor and management that are responsible for inflation.  It is the same kind of a myth.

 Inflation is made in one place and one place only, Washington D. C.  And in Washington the chief source of inflation is a Greek Temple on Constitution Ave. which houses the Federal Reserve board.    A major accomplice is the halls of Congress.  They are a major accomplice because we tell them to be.  The American people have been telling Congress for years;  “spend more money on us” but don’t raise our taxes;  and Congress has been listening.  It’s been spending more money but, on the other hand it’s been unwilling to raise taxes.  As a result it has imposed inflation as a tax.  That’s one tax you don’t have to vote for but you have to pay.”

These tie into the Keynes quote at the beginning of this article.  “Not one man in a million is able to diagnose.”  Our currency is a commodity and like any other commodity the more abundant the less valuable.  Most people will complain about the cost of goods going up but it is the value of the dollar which goes down that’s the real problem.  The opposite of inflation is deflation and that’s where the pain is.

 

“A myth is like an air mattress. There’s nothing in it, but It’s comfortable; and deflation causes 

an uncomfortable jolt.”

A life living in a sea of economic turmoil cannot long remain free.  To become encumbered because of irresponsible spending of funds obtained with debt by another person; to give to a third party is nothing more that economic slavery.  Furthermore, on the scale to which this has occurred in the U.S. might well be the plunder to which Bastiat referred.

“Those of us who have been so fortunate to have been born in a free society, tend to take freedom for granted, to regard it as the natural state of mankind.  It is not.  It is a rare and precious thing.  Most people throughout history, most people today, have lived in conditions of tyranny and misery not of freedom and prosperity.  The clearest demonstration of how much people value their freedom is the way they vote with their feet when they have no other way to vote.”

There is no nirvana

 

The most precious asset we possess is freedom.  The easiest way to lose one’s freedom is to go into receivership and I mean economic receivership, because a receiver is a dictator.  And, to the degree that which we bear the cost and burdens of government that lead us in the direction of further debt, ultimate receivership, and then the political consequence of the imposition of the political dictator over the economic, job and living rights of the individual.  

Any law which attempts to impose equality is likely to eventually fail.

 

The uniform, constant and uninterrupted effort of every man to better his condition to improve his own lot and make a better world for his children and his children’s children.  When the law interferes with that pursuit everyone will try to find a way around,  He will try to evade the law, break the law or he will immigrate from the country.  Only fear of punishment not a sense of justice will cause them to obey the law.  And when people start breaking one set of laws there’s a strong tendency for the lack of respect of the law to extend to all, even to those which everyone regards as moral and proper;  Laws against violence, theft and vandalism.   As hard as it is to believe the growth to crude criminality owes much to the drive for equality.”

A good example is the phenomena rapidly sweeping through the nation now;  The Flash Mob.  Flash Mob’s are organized through various social media mostly by juveniles.  Some include numbers in the 10’s and 20’s and some of the mob are even larger.  They target a certain location, a store or other retail business and the mob enters on cue and simply takes anything they want.   Recently, in Philadelphia and also in Chicago the mob turned violent and since all the these mobs I have seen were composed mostly of young blacks, I feel certain that the object of violence will eventually be of a racial nature.

   

“During the 19^th  century and especially after the civil war the idea of equality  began to have a definite and more specific meaning than the abstract concept of equality before God.  It came more and more to mean that everyone should have the same opportunity to make what he could of his capacities;  that all careers should be open to people on the basis of their talents independently of the race, religion or belief or social class that characterized them.  This concept of equality, of opportunity, offers no conflict at all with the concept of freedom. On the contrary, they reinforce one another, the concept widely held today.  But in the 20^th century, beginning especially abroad, and at a later date in this country, a very different concept, a very different idea has begun to emerge.  That is, the idea that everyone should be equal in income, in level of living and what he has.  The idea that the economic race should be so arraigned that everybody ends at the finish line at the same time, rather than everyone starts at the beginning line at the same time.  This concept raises a very serious problem for freedom it is clearly in conflict with it since it requires that the freedom of some be restricted in order to provide greater benefits to others.

  

The society that puts equality before freedom will end up neither.   The society that puts freedom before equality will end up with a great measure of both.”

It is this type of equality sought by the socialist and promised by Marxist that will eventually turn everyone into slaves of the State.  A State that will be Centrally planned an run by who?  Why, the Marxist themselves of course.  They have believed for years that the common man knows not what’s best for him but rather must be put in his proper place for the good of all.  FROM each according to his ability TO each according to his need is the sales pitch.

   

It is not the people who are stirring; it is a handful of intellectuals.

 

No truer words were spoken.  Since the influx importation through immigration of some brilliant Academic’s infatuated with Fabian socialism near the turn of the century our Institutes of higher learning have been selling the bunk to our young impressionable student population.  A person between 18 and 23 years of age has barely had time to discover his aptitude for self determination and is still highly impressionable, especially when it is is presented to them in such a manner to make them seem compassionate to the opposite sex.  These socialist are nothing more that opportunist who plunge a knife into the very soul of our National Culture.

 

There is all the difference in the world between a social or governmental system in which 90% of the people tax themselves to help the 10% who are in distress and a system in which 80% of the people in the middle try to tax the 10% at the top to help the 10% at the bottom.  You end up with A and B imposing taxes on C to help D and some of it in the process ends up in the hands of A and B.

 

Anyone who has been semi-conscious during the last 50 years can clearly see that we have ended up as the last sentence of the above paragraph indicates.

In order to understand how we fix all of these issues one must first understand how ALL of this came about and how it works in our society and economic lives.  The philosophy of economics is a very dry subject which the majority has no time for.  But it is this very subject that drives the entire global system and we have embraced a system that tries to please everyone and satisfies no one (except maybe politicians and investment bankers).

   

I know most who read this understands these issues but sometimes it’s good to get the memory jogged and maybe point out a few things the some may not have considered.  Once the mind and the head is cleared a bit maybe a few people will take a more active role in getting this mess fixed for future generations because we are in a pickle now. 

.