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by Eric Englund
As J.G.
Hülsmann 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 a while 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. After the
bursting of the NASDAQ bubble in 2000, the Federal Reserve
went on a fiat-money-and-credit-creation bender. In turn,
the masses imbibed this easy credit and became drunk with
confidence that they were on the road to riches. Just look
how effortless it had been to purchase McMansions and expensive
cars in order to convey that you were in the "game"
and on your way to Easy Street. After all, anyone with a brain
knew that houses will only increase in value and make us all
wealthy in the long run. The most seductive aspect of this
game was that one did not have to delay gratification by saving.
Most certainly, by such standards, saving reflected a lack
of financial acumen and certainly wasn’t much fun. No. In
order to reveal financial wisdom, one had to maximize the
use of leverage and minimize the size of a down-payment. Consequently,
before the housing bubble burst, borrowing hundreds of thousands
of dollars, to purchase a dream home and two luxury automobiles,
defined financial sophistication in the United States. Borrowing,
indeed, had become a virtue whilst saving had 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. Hülsmann explains in his aforementioned
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 quick sidebar, you can even
detect those "adults" who have reached permanent
adolescence by 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 aspect 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)
Considering
that central banking does alter sexual behavior and does weaken
family bonds, should it not be surprising to see American
children today dressing as prostitutes? Presently, what passes
for fashion amongst 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. Where there is smoke, there
is fire. Many children may be doing more than just dressing
like prostitutes. Well, at least these kids can fall back
on what they learned in sex-ed class. To witness this sad
state of affairs confirms the quality of parenting has depreciated
in lockstep with the value of the dollar.
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 can drive an economy into freefall, individuals
can be driven to the ultimate breaking point by the catastrophe
that is an economic depression. Hence, 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, can damage the human psyche. To be sure,
the manipulation of money does alter 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 establish a 100% gold
standard – in effect, a counterrevolution. And then perhaps,
once again, we will walk amongst a people who live by the
Golden Rule.
March
4, 2008
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