Monetary Policy As A Tool For Evil

Several comments were made recently regarding the "advantages" of an elastic currency compared to that of gold backed money. A common misconception is that a fiat currency can support the middle class and make the public as a whole richer.

To address these ideas, that are so common in current thought, we need to examine the purpose of monetary policy and central banking.

Central banking with a fiat currency allows for unlimited and virtually unrestrained increases in the money supply.
As F A Hayek taught us, collectivists & socialists have unlimited demands for new spending by the state. The proverbial adage says "we are from the government and are here to help you" (which naturally assumes that you need "help").
To fully understand this thinking, we must first understand the philosophy and world view behind it.

A Nietzschean philosophy predominates, that of moral relativism - there is no right and wrong.


Perhaps Nietzsche can best be summarized by quoting Alice in Wonderland,
"Alice laughed: 'there's no use trying,' she said; 'one can't believe impossible things.' 'I daresay you haven't had much practice,' said the Queen. 'When I was your age, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast.'"

The lack of an absolute standard to restrain spending results in currency "share dilution" over time ie: inflation

Consider the value of a US dollar in 1810 vs. 1910 vs 2010.  Also note that all fiat currencies regardless of country have similar long term trends.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The abandonment of the gold standard made it possible for welfare statists to use the banking system as a means to an unlimited expansion of credit (debt creation)" - Alan Greenspan (#8), 1966


The Problem of Moral Hazard


Both socialists and fascists are supported by the cronyism involved in special government projects whether they be welfare based or warfare based.

Let us examine these two goals of the pathological state.

1. Consider the following "benefits" the welfare state promotes:

The central tenant of the welfare state is that goal with Marxist/Communist roots - the "Equalizing" of wealth  "The whole of society will have become a single office and a single factory with equality of work and equality of pay"  Nikolai Lenin - 1917


The example of Zimbabwe shows how well equalization works.

A personal anecdote here:
I lived in South Africa for a short time in the early 1980s.  During that time many white farmers fled Zimbabwe as Robert Mugabe's Marxist land confiscation project was in full swing.  Many of the refugees I met were not wealthy as one would  suppose.  They ended up living year round in tent trailers in campgrounds, until they could establish a new life in South Africa.
So much for equalization of wealth and "fairness".
Consider too the state of Zimbabwe today, 30 years later, where the country that was once the "Breadbasket of Africa" can not feed itself and has gone through the worst hyperinflation in recent history.
There are many good reasons to loathe socialism in my experience.


"Free" Health Care and Education

A pathological welfare state creates a sense of entitlement, primarily through the public education system resulting in an "I deserve it" attitude whether something has been worked for or not.  Further, the quality of education is often questionable.  What ever happened to classes in critical thinking and logic?  They have been replaced by "sensitivity" classes to promote political correctness.

Publicly funded health care is another elephant in the welfare state's room.  In Canada, costs of medical care have been increasing at 8% annually for the past 15 years.  Government tax receipts have increased perhaps 3% annually.  The portion of government budget that is dedicated to health spending has increased to 40% of annual budgets and is still climbing.  Obviously, this is not a sustainable trend, particularly when combined with aging demographics.

Gradually and insidiously the welfare state restricts personal freedoms under the guise of "safety". A prime example is that of gun control.  Experts are consulted, hot buttons are pressed when a tragic incident occurs, and the public is manipulated into giving up their civil rights of gun ownership.

In essence, monetary and taxation policy are used as tools of enslavement of a malevolent, pathological state, rather than delivering the promised liberty or equity, by undermining natural values and laws.

2. Consider the warfare state's characteristics:

A large military industrial complex.

Numerous military bases outside of the home nation.

Massive military budgets:
In the US current military spending is approaching $720 billion -SOURCE- one third of total tax receipts ($2,165 billion) and one fifth of the total government budget ($3,721 billion)

Large budgets produce continuous investment in military technology that needs to be "tested" eg: Iraq

A propaganda machine develops that has both real and imaginary enemies that must be hunted eg: Osama and Weapons of Mass Destruction.

Gradually and insidiously the warfare state also restricts personal freedoms under the guise of "safety". Again the example is that of gun control. Experts are consulted, hot buttons are pressed when a tragic incident occurs, and the public is manipulated into giving up their civil rights to process. Big media is the useful idiot that promotes the latest "benefits" of surrendering civil liberties. It only shows gun related violence, but does not report on incidents when citizens owning guns actually stop or prevent crime.  Joseph Gobbels would be proud of the media if he were alive today.

In short, by having a fiat currency that violates the three functions of money, the currency can easily be debauched, and cause the people to become dependent, mindless drones, forfeiting their civil liberties to the benefit of the elite masters of the pathological state.

Comments

  1. What can one say PW, magnificent piece and spot on.

    Yes PW the Nanny State is alive and well. Little Bo Peep, and millions and Millions of Sheep.

    Bill

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  2. I hear you, PW , but it doesn't all hang together for me quite the way you tell it. Example: The big move is not to take away guns; it doesn't have to be as we become almost as surveilled as Britain or Russia. I live in a county where most pick-ups have a gun rack. But 2nd amendment rights comes across as a little silly when the protest du jour was to throw back lattes at Starbucks while packing heat. We have facebook/Guv'mint harvesting "the days of lives" and people are still worried about the God-given right of concealed carry. Whatever else Obama has done or not done, he hasn't confiscated guns. That seems to be redneck paranoia, ie. focussing on the last war fought instead of paying attention to what have become the new strategies and tactics of subjugation. And BTW, do you really want to live in a country that does not have public education? It may not be perfect but overwhelming ignorance has never been a roadmap to empowerment or liberty. Another BTW, I'm glad I found your blog. Keep tellin' it like you see it.

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  3. Thank you for your comments Cadam.
    You may be right in your thoughts on fighting the last war over 2nd amendment rights. There are other rights that are being trampled as we speak. The surveillance state that exists today, thanks to modern electronics, is far more pervasive than that of cold war Russia.
    Regarding my comments on public education, I am not completely opposed to a public system, just concerned how it has been used to indoctrinate our children with certain socialist/fascist ideals for the past 50 years. Indeed ignorance does not lead to liberty. But state propaganda disguised as political correctness does lead to intellectual slavery. After all, when is the last time we saw a compulsory course in logic in the public classrooms?

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