This is in response to your list of errata, here, supplementing my earlier response here.
I’m admonished by my trusty Public-banking Google group that I should not spend more time on this, but since you seem to have put so much work into it, I thought I would give it a day’s effort.
You suggested that one of my alternatives was to do a book revision. I have done that; in fact, I have done THREE formal revisions and four informal revisions (i.e. by submitting updated pdfs to Lightning Source, the print on demand publisher, without changing ISBNs). You seem to be relying on an old edition. So my first point would be, you should base your critique on the latest available edition (4th edition 2010).
I’ve done a detailed response to your itemized list of 31 errata, below. I found a few that were useful; thanks for those. I’ll incorporate them in my next revision. I will take out all the challenged quotes, not just qualify them, since they’re so controversial. It won’t change my argument, which isn’t based on what famous people said or didn’t say.
The book is 565 pages long and contains 40 pages of endnotes in fine print. I drew from my sources. I could not check the source of every source; in fact they generally didn’t give sources. Of your list, I found perhaps four that were valid. Four in 565 pages I think is a remarkably good track record. I have no proof reader, no staff, the book is self-published, and I did much of my own formatting, which was a serious challenge. What you’re not noticing is what a really good read it is; many people have said so. That took a LOT of work. I was trying to make economics exciting and understandable for the average reader, and I believe I did that. You could put decades into footnotes and fact-checking and you would just be wasting your time if you didn’t come up with prose people wanted to read.
Despite what you think, I care very much about being accurate. That’s why your errata list was the first thing I zeroed in on. That’s also why I’ve done seven revisions in three years, and why I spent six years writing Web of Debt in the first place. I would have spent longer – I enjoyed putting those puzzle pieces together – but the financial dyke broke in June 2007 and it was publish or watch the economy perish. I was in print two weeks later.
That’s the beauty of self-publishing by print on demand. I can fix the errata you have done yeoman’s work collecting – the ones I think are valid — for a total cost of $40 ($75 if I change the ISBN), and the revision will be ready in two weeks. But I’ll give you a few more weeks first, till you tire of this subject, since you seem to be prepared to keep at it. Some writers are professors with 150 students they can assign to check their footnotes. The Lord sent me you. Thanks!
Here is your list and my response:
1. A bogus quote from Sir Josiah Stamp on the Bank of England
Here is what I wrote, giving an endnote for reference: “He is quoted as saying in a talk at the University of Texas in 1927: [etc.]” (p 2) He IS quoted as saying that, by many people. Google gives 68,000 results.
2. Jefferson was a promoter of unbacked paper money.
Here is what I wrote, and I believe it is correct:
It would be several decades before Jefferson realized that the villain was not paper money itself. It was private debt masquerading as paper money, a private debt owed to bankers who were merely “pretending to have money.” Jefferson wrote to Treasury Secretary Gallatin in 1815:
The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment.
Jefferson wrote to John Taylor on May 28, 1816:
I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Jefferson wrote to John Eppes in 1813, “Although we have so foolishly allowed the field of circulating medium to be filched from us by private individuals, I think we may recover it . . . . The states should be asked to transfer the right of issuing paper money to Congress, in perpetuity.” He told Eppes, “the nation may continue to issue its bills [paper notes] as far as its needs require and the limits of circulation allow. Those limits are understood at present to be 200 millions of dollars.”6
3. Lincoln promoted debt-free paper money.
Here is what I wrote, which I believe is true; I agree he was a reluctant Greenbacker:
The Greenback system was not actually Lincoln’s idea, but when pressure grew in Congress for the plan, he was quick to endorse it. . . . He took the revolutionary approach because he had no other real choice. The government could either print its own money or succumb to debt slavery to the bankers.
4. Colonial Pennsylvania avoided taxes by issuing paper money.
I did not say that. You have mischaracterized my statement, and your link does not show that they paid any taxes.
[I will expand on this to respond to your post of October 20. The implication of your statement is that the Pennsylvania government simply printed fiat money to pay for its budget. My point was that Pennsylvania did something different from the Northern colonies that ran into trouble: it funded itself by setting up a publicly-owned bank, which LENT money and charged a reasonable interest on it. (I consider this the ideal solution -- local publicly-owned banks. My next article, hopefully to be posted by the end of the week, is on how we can solve our current credit problem in this way.) I said in the section you quoted, "The loan office was the province's chief source of revenue." You argue that Pennsylvania scrip was not "money" because the British crown did not recognize it as money. The Merriam Webster online dictionary defines "money" as "something generally accepted as a medium of exchange, a measure of value, or a means of payment." To the Pennsylvania colonists, it was money.]
5. A bogus quote from Franklin on colonial paper money
That quote is not in my 4th edition. I had to restructure the whole chapter to take it out, but I did it, in the interests of accuracy. In fact I had to restructure two whole chapters, a total nightmare; but I did it. I actually think I’ve spent too much time on details — I should be writing another book – but like you, I find it interesting.
6. Ignoring a negative statement by Franklin on the “Continentals”
Ignoring a negative statement? Please! And the statement you cite is from 1789. The statement I was quoting in their favor was made during the Revolutionary War. We all know they went bad by the end of the war. I also said that one problem with the Continentals was that they weren’t all issued as legal tender; many were issued as debt. So at the end of the war, there was a debt owed. On Franklin being in France rather England, point taken; I’ll add that to my errata file, thanks.
7. A bogus quote from John Adams on debt as a means of conquest
I responded to this earlier. Here is what my text says:
“President John Adams is quoted as saying, ‘There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.’”
He IS quoted as saying that, by many people. Bing returns 1,870,000 results when queried with that quote, all of the earliest results, at least, attributed to John Adams.
8. The “Christian Bible” Prohibits Interest, but not the “Jewish Bible.”
That’s not what I said. I was explaining why Jews historically wound up the “bankers.” Christians were forbidden to charge interest at all, while Jews were forbidden only to charge interest to “brothers”, meaning other Jews. They COULD charge interest to Christians. This is from Wikipedia:
The Hebrew Bible regulates interest taking. Interest can’t be charged to Jews but only to non-Jews.
Deuteronomy 23:20 Thou shalt not lend upon interest to thy brother: interest of money, interest of victuals, interest of any thing that is lent upon interest.
Deuteronomy 23:21 Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the LORD thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it.
You make an interesting point that it’s not in the New Testament. Apparently the prohibition only began in the Middle Ages. I see in the Catholic Encyclopedia:
The canonical laws of the Middle Ages absolutely forbade the practice. This prohibition is contained in the Decree of Gratian, q. 3, C. IV, at the beginning, and c. 4, q. 4, C. IV; and in 1. 5, t. 19 of the Decretals, for example in chapters 2, 5, 7, 9, 10, and 13. These chapters order the profit so obtained to be restored; and Alexander III (c. 4, “Super eo”, eodem) declares that he has no power to dispense from the obligation. Chapters 1, 2, and 6, eodem, condemns the strategems to which evenclerics resorted to evade the law of the general councils, and the Third of the Lateran (1179) and the Second of Lyons (1274) condemn usurers. In the Council of Vienne (1311) it was declared that if anyperson obstinately maintained that there was no sin in the practice of demanding interest, he should be punished as a heretic (see c. “Ex gravi”, unic. Clem., “De usuris”, V, 5).
It is a curious fact that for a long time impunity in such matters was granted to Jews. The FourthCouncil of the Lateran (1215), c. 27, only forbids them to exact excessive interest. Urban III, c. 12, “De usuris” (V. 19) and St. Louis in twenty-three of his regulations extended the prohibition to theJews. With the exception of c. 27 of the Fourth Council of the Lateran, we know of no canon lawwhich takes into consideration the question of moderate interest; and canon law nowhere states distinctly that interest is, under any circumstances whatsoever, contrary to justice.
Okay, I missed that point. But to call my ignorance “astounding” is still a bit of an exaggeration. My book has sold 23,000 copies, and nobody has pointed that out before.
9. China’s medieval unbacked paper money had centuries of success.
Here is what I wrote:
In Mandarin China, where paper money was invented in the ninth century, this sort of fiat currency funded a long and prosperous empire.
I did not “make that up,” as you suggest in your note. In fact I haven’t made anything up. I always draw from sources. I may have sometimes misread them, or my sources may have been wrong, but I actually did quite exhaustive research for this book, and I’ve corrected errors in subsequent revisions – more revisions than most books run to, certainly in 3 years. You have a degree in history. I have degrees in English and law. You’ve got a head start. I’m doing my best here. What I lack in historical training I make up for in writing skills.
Anyway, here’s what Wikipedia says under “China.” I don’t think it contradicts my statement. I did not say China’s paper money was not inflationary; I said it funded a long and prosperous dynasty. The population doubled; they needed to inflate the money supply to match:
The Song dynasty was the first government in world history to issue paper money and the first Chinese polity to establish a permanent standing navy. Between the 10th and 11th centuries, the population of China doubled in size. This growth came about through expanded rice cultivation in central and southern China, and the production of abundant food surpluses.
Within its borders, the Northern Song Dynasty had a population of some 100 million people. The Song Dynasty was a culturally rich period for philosophy and the arts. Landscape art and portrait painting were brought to new levels of maturity and complexity after the Tang Dynasty, and social elites gathered to view art, share their own, and trade precious artworks. Philosophers such as Cheng Yi and Chu Hsi reinvigorated Confucianism with new commentary, infused Buddhist ideals, and emphasized a new organization of classic texts that brought about the core doctrine of Neo-Confucianism.
10. England’s medieval wooden “tallies” were interest-free money.
Your argument in your link is:
If an IOU is a receipt for payment in money — coins — then is the IOU fiat money?” If your answer is “no,” then it agrees with my answer.
I disagree with your premise. ALL fiat money is paid by the government as a receipt for something delivered to the government. What else is the government going to do with it but pay for something? A “receipt” is not an “IOU.” It’s an acknowledgment of value received. If it’s used as a currency, the receipt can then be traded in the marketplace for other goods and services.
11. A bogus quote from Nathan Rothschild
You’re quoting from an old edition. My current edition says:
Nathan Rothschild, who controlled the Bank of England after 1820, is quoted as declaring:
I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.
This is quite true, as you note; you got 40,000 hits on it yourself.
12. A bogus quote from Jefferson on banks
That quote has been omitted from my 4th edition, after it was pointed out to me that it was apocryphyal.
13. Jefferson and Jackson fought the 1st Bank of the U.S.
This is what I wrote:
Opposition to the First U.S. Bank was led by Thomas Jefferson, the country’s third President; while opposition to the Second U.S. Bank was led by Andrew Jackson, the country’s seventh President. (p 73)
I was talking about the Second U.S. Bank with Jackson, not the First. On Jefferson, this is from Wikipedia:
The establishment of the bank also raised early questions of constitutionality in the new government. Hamilton, then Secretary of the Treasury, argued that the Bank was an effective means to utilize the authorized powers of the government implied under the law of the Constitution. Secretary of State Thomas Jefferson argued that the Bank violated traditional property laws and that its relevance to constitutionally authorized powers was weak.
I was, as I said in my earlier response, trying to make economics interesting, and for that I was using imagery from the Wizard of Oz. I tried to open every chapter with a quote from that story, and my opening quote for this chapter was this; I agree it was a bit of stretch applying it to Jefferson and Jackson, but I was running out of quotes (I had 47 chapters) –
Chapter 7
WHILE CONGRESS DOZES IN THE POPPY FIELDS:
JEFFERSON AND JACKSON SOUND THE ALARM
The Scarecrow and the Tin Woodman, not being made of flesh, were not troubled by the scent of the flowers. “Run fast,” said the Scarecrow to the Lion. “Get out of this deadly flower bed as soon as you can. We will bring the little girl with us, but if you should fall asleep you are too big to be carried.”
– The Wonderful Wizard of Oz,“The Deadly Poppy Field”
14. The Civil War’s paper money made survivors richer.
I disagree with your conclusions, and I believe I have cited plenty of authorities for my position in that chapter. See, e.g., the section beginning on p 86 titled “Did Greenbacks Cause Price Inflation?”
15. A bogus Lincoln quote on men and wages
Your link quotes this:
Lincoln is quoted as saying, “The wages of men should be recognized as more important than the wages of money.” [Web of Debt, p. 85]
Your link then acknowledges that 800+ references quote him as so saying, so he obviously is quoted as saying that. The sentence would be neither more nor less true if Lincoln said it. It stands on its own merits. It is true, and that was the point I was making. Money should be issued in return for wages, not to non-producing middlemen.
16. Lincoln favored the Greenbacks over Union debt to banks.
Your own entry makes my case. You quote a letter from Lincoln saying, “He accepted the third and final issue of these fiat bills, but he sent a letter to Congress, in January 1863, in which he expressed his “sincere regret that it has been found necessary to authorize an additional issue of United States notes.”
Why did he find it necessary? Because otherwise they were going to be paying 24-36% interest on a crippling debt. I acknowledged that debt was also used to fund the war. I wrote:
Greenbacks were not the only source of funding for the Civil War. Bonds (government I.O.U.s) were also issued, and these too increased the money supply, since the banks that bought the bonds were also short of gold and had no other way of paying for the bonds than with their own newly-issued banknotes. The difference between the government issued Greenbacks and the bank-issued banknotes was that the Greenbacks were debt-free legal tender that did not have to be paid back. (P 86)
17. The Greenbacks were pure fiat money unrelated to gold backing.
You cite some 1993 source which says:
Did people believe that the government would eventually redeem Greenbacks for gold? As Unger [1964, p.16] noted, “Little had been said on the subject of redemption when Congress debated the Legal Tender” issue. However, all the available evidence indicates that the public believed that at some future date, convertibility would be reinstated, and all Greenbacks would be redeemed in gold.
The cite acknowledges that redemption was not discussed. The fact that “all the available evidence was that the people believed” something does not mean that the notes were not pure fiat money. They bore no promise to redeem in gold.
18. Two bogus quotes from Bismarck on European bankers
I’ve said he is “quoted as” saying that and have given my historical source.
19. International bankers defeated Lincoln in 1863 with the National Bank Act.
Point taken. I’ll fix that in my next revision.
20. A bogus quote from Garfield on the control over money
I was already alerted to that. Garfield is no longer mentioned in my book.
21. The island of Guernsey had fiat money without inflation.
Your link is bad.
What are you claiming I said, it had no price inflation or there was no inflation of the money supply? Here is how my text reads, and I believe it is correct (a modest price inflation is not considered “troublesome”):
During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.6
22. Populism defended the interests of the common man.
Nothing in your comment refutes my point. You conclude, “The Populists wanted their share of government loot. They wanted big government for their interests.” Quite right! Government of the people, by the people, for the people. That is the very definition of “populism” – “for the people”!
23. A bogus document: “Bankers’ Manifesto of 1892″
I acknowledged that it was of questionable derivation. Here is what I wrote (p 105):
A document called “The Bankers Manifesto of 1892” suggested that it was all part of a deliberate plan by the bankers to disenfranchise the farmers and laborers of their homes and property. This is another document with obscure origins, but its introduction to Congress is attributed to Representative Charles Lindbergh Sr., the father of the famous aviator, who served in Congress between 1903 and 1913.
24. “Robber Barron” Capitalists raised prices and lowered quality.
I don’t see where I allegedly made that point, or that you have refuted it. You write:
Ellen Brown repeats the Left-wing myth of the exploiting corporations of late 19th-century America.
In 1934, these international bankers and businessmen were labeled the “Robber Barons” by Matthew Josephson in a popular book of the same name. The Robber Barons were an unscrupulous lot, who “lived for market conquest, and plotted takeovers like military strategy.” John D. Rockefeller’s father was called a snake-oil salesman, flimflam man, bigamist, and marginal criminal — never convicted but often accused, of crimes ranging from horse theft to rape. He once boasted, “I cheat my boys every chance I get, I want to make ‘em sharp.” Once the Robber Barons had established a monopoly, they would raise prices, drop the quality of service, and engage in unfair trading practices to drive other firms out of business.[Web of Debt, p. 117]
Then you say, “First, Rockefeller’s father was not a robber baron.” So? I didn’t say he was, I said he was the father of one. And that doesn’t refute my statement that Matthew Josephson called that group Robber Barons in his book. I’m just reporting.
Then you simply give a difference of opinion among historians, citing a source which says:
Today’s history textbooks typically depict the Industrial Revolution in the United States as a period dominated by “robber barons”–unscrupulous businessmen who earned vast fortunes on the backs of weary workers and naïve consumers.
Challenging this view is Dr. Burt Folsom, a professor of history at Hillsdale College in Michigan. Too often, he says, textbooks fail to distinguish between what he calls “economic entrepreneurs”–self-made industrialists whose hard work and ingenuity helped make the United States the superpower it is today–and “political entrepreneurs”–well-connected businessmen who used their political clout to extract money and privileges from taxpayers while contributing little to economic progress.
So you’ve got your sources with their opinions and I’ve got mine. Whether mine is myth or yours is is a matter of debate.
25. Benjamin Strong (d. 1928) plotted with Montagu Norman in 1929.
You write:
Ellen Brown’s Web of Debt is filled with bogus quotations. She likes to make things up. She thinks something really ought to have happened, so she writes that it did happen.
The meetings between Norman and Strong were very secretive, but the evidence suggests that in February 1929, they concluded that a collapse in the market was inevitable and that the best course was to let it correct “naturally” (naturally, that is, with a little help from the Fed). They sent advisory warnings to lists of preferred customers, including wealthy industrialists, politicians, and high foreign officials, telling them to get out of the market. Then the Fed began selling government securities in the open market, reducing the money supply by reducing the reserves available for backing loans. The bank loan rate was also increased, causing rates on brokers’ loans to jump to 20 percent. [Web of Debt, p. 143]
Your point that “She likes to make things up” is simply not true. I start with research – an overwhelming amount of research – and I try to knit it into a consistent, readable, understandable book. I see I did misquote my source in one place, and I will correct it in my next revision; but it was not an intentional error. My error was in assuming that “Bank of England” and “Federal Reserve” meant their heads, Montague and Norman. Other than that, I track my source, G. Edward Griffin, pretty much word for word. Griffin says:
There is circumstantial evidence that the Bank of England and the Federal Reserve had concluded, at a secret meeting in February of 1929, that a collapse in the market was inevitable and that the best action was to let nature take its course. (p 503)
The rest of the story you quote is drawn from my sources quite accurately. The sources are these: 5. G. E. Griffin, “The Creature from Jekyll Island,” pages 423-26, 502-03; S. Zarlenga, “The Lost Science of Money,” pages 546-48.
26. Milton Friedman said that the Federal Reserve caused the Depression.
You challenge my quote as unsupported, then give this supported quote, which so far as I can see says the same thing:
Here is an interview that he gave to PBS in 2000. There is a transcript.
At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.
Then you show a chart of the money supply from 1929 to 1939 and quote me as saying:
Yet on page 151, she writes: “In the Great Depression, labor again rusted into nonproductivity, due to a lack of available money to oil the wheels of production.” Give me a break! Look at the chart!
I have looked at the chart. It shows that the money supply did not get back up to 1929 levels until 1938. So where is the error there? The money supply had collapsed, and it took all that time to get back to where it was earlier.
27. Hitler’s National Socialism ended the Great Depression in Germany.
“National socialism” was a political party. I was talking about an economic policy. In any case, I don’t see that your sources say otherwise than that it worked. They say it was military spending at the end of the 1930s that kept the economy going, but I was writing about the early 1930s, and there are many sources that I cite supporting my point. You write:
Ellen Brown adds this:
While Hitler clearly deserved the opprobrium heaped on him for his later military and racial aggressions, he was enormously popular with the German people, at least for a time. [Web of Debt, p. 235.]
Her message: Hitler was a man of the people! She wants the United States to follow his lead . . . but only in economic policy, of course. Not the concentration camps. Not the war.
She does not draw the obvious conclusion, namely, that the centralized power of the government over money, business, and labor was basic to the power which that government imposed over the Jews and other minorities. It is almost as if his racial tyranny and military aggression were completely divorced from his economic views and the government’s economic policies.
I addressed this in my earlier response: tyranny and military aggression are NOT necessary corollaries of governments using their own national credit power to get their economies going again. They did not result in Australia, New Zealand, Canada, Guernsey, or the American colonies when that economic policy was pursued.
28. Germany’s hyperinflation (1921-23) happened only after the central bank was privatized.
My section on that currently reads as follows, and I believe it is accurate:
The Weimar financial crisis began with the crushing reparations payments imposed at the Treaty of Versailles. Hjalmar Schacht, who was then currency commissioner for the Republic, complained:
The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . [T]he Reich could not fi nd any way of holding its head above the water other than by the inflationary expedient of pr inting bank notes.
Michael Hudson is an economist who has studied hyperinflation extensively. He asserts that “every hyperinflation in history stems from the foreign exchange markets. It stems from governments trying to throw enough of their currency on the market to pay their foreign debts.”10
That was the precipitating cause of the Weimar financial collapse, but there was more. Zarlenga writes that Schacht proceeded in his 1967 book The Magic of Money “to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the ‘accepted wisdom’ the fi nancial community has promulgated on the German hyperinfl ation.”11 Schacht said that it was chiefly the privately owned Reichsbank that was pumping new currency into the economy.
29. Foreign currency speculators caused Zimbabwe’s inflation.
I don’t see that you’ve disputed that validity of what I said. This is what my text says:
As usual, the crisis was blamed on the government frantically issuing money; and in this case, the government’s printing presses were indeed running. But the country’s radical devaluation was still the fault of speculators, and it might have been avoided if the government had used its printing presses in a more prudent way. . . .
According to a statement by the Zimbabwe central bank, the hyperinflation was caused by speculators who charged exorbitant rates for US dollars, causing a drastic devaluation of the Zimbabwe currency. [Web of Debt, pp. 246-47]
We both have our sources. Mine disagree with yours on the cause; you haven’t shown that yours are more legitimate than mine.
30. Gold’s price rose in the 19th century
Here is a 1909 book about gold prices from 1890 to 1907, the economically depressed period I was writing about –
http://www.jstor.org/pss/1820390
Gold’s price rose in terms of wheat, which is what the farmers cared about and what I was referring to. Of course it stayed stable in terms of the “dollar,” because the dollar was backed by gold! If you can always trade a dollar in for a dollar’s worth of gold, the value of gold is always going to be the same, no? But that’s not going to stabilize prices for farmers.
Shays’ Rebellion (1786) took place after the Constitution was ratified (1788).
My quote is:
The drawbacks of limiting the medium of exchange to precious metals were obvious as soon as the Founding Fathers decided on a precious metal standard at the Constitutional Convention, when the money supply contracted so sharply that farmers rioted in the streets in Shay’s rebellion.
I take your point on the dates, but my overall point is still correct. Shays’ Rebellion WAS about a contracting money supply, which occurred when paper money could not be used in the payment of taxes. Wikipedia says of Shays’ Rebellion –
Seeking debt relief through the issuance of paper currency and lower taxes, they attempted to prevent the courts from seizing property from indebted farmers by forcing the closure of courts in western Massachusetts.
They wanted to be able to use their paper money to pay taxes, and the “elitists” at the Constitutional Convention insisted on using only precious metals. That’s not my word. Leonard Richards writes in “Shays’s Rebellion: The American Revolution’s Final Battle” (University of Pennsylvania press 2002):
Rufus King and the other sponsors of the Constitution thus faced an uphill battle at the Massachusetts ratifying convention. Not only did they have to confront old enemies, they lacked popular support. They spoke for a document that began with “We the People,” but it was not the “people” who had demanded a new national government. Instead, the Constitution was the handiwork of a small segment of governing elite, and everyone knew it. . . . Every critic, it seemed, envisioned the “little people” being stomped on by “the well-born,” “the great men,” and “the aristocracy.” (Pp 147-48)
Paper money was the money of the people. Gold was the money of the elite, and gold prevailed. The “little people” obviously did not have it; so for them the money supply had shrunk radically, and depression ensued.
That’s all the time I’d better give to this. ForeclosureGate beckons!
[...] Response to Gary North — itemized points [...]
I read North’s articles attacking Ellen. (There are a LOT of them.) Mr. North does not understand economcs, and does not care about the American people. He is a “Christian” fundamentalist who indulges a fanatical and twisted obsession with Ellen as a person, saying, “I have been waiting for a target like her for 45 years. This is going to be fun. For me.”
Having checked into Mr. North’s background, I regard him as a sociopath. He is not worth responding to.
I consider myself a Christian and I do read the Bible and I don’t agree with Mr. North, particularity with regard to gold. I don’t agree completely with Ellen either but I respect her viewpoint.
And BTW Mr. North, the Bible advocates debt forgiveness (Deuteronomy 15, Leviticus 25). What are your views on that? Or is foreclosure your idea of forgiveness?
What does the Bible say about incurring debt?
You see there’s two sides to every coin.
In answer to your question, Gary North is a Rothbardian, he believes in voluntary contract between consenting parties.
When a debtor cannot pay his debt, he must forfeit the property to the creditor, or pay his debt. It’s a matter of property rights. If a debtor does not pay his debts, he is in possession of stolen property. It is an unethical position to be in.
Now the Creditor has every right, and has a complete free will to forgive debts. However, it is the creditors prerogative to exact payment or take back his property.
When a debtor cannot pay his debt, he must forfeit the property to the creditor, or pay his debt. DIMoose
Debt to the government backed counterfeiting cartel? The Bible commanded debt forgiveness every 7 years long before fractional reserve lending in a government enforced monopoly money supply was invented. The need is even greater now.
As much as the Austrians claim to understand the evils of fractional reserve lending, they offer precious little in the way of compensation to the victims of it. Indeed, they offer justification for the miserable bust of the boom-bust cycle.
Don’t waste your time pointing to the Bible for answers. Eye for an eye? You can twist it any way you want.
Austrians have the perfect answer to the victims of fractional reserve banking: live and learn. I will help you as a brother voluntarily, but if the govt is going to rob from me to help you, you’re on your own.
He did write some good articles on other things though. I liked the ones on “It’s a Wonderful Life.” And he put so much time into analyzing my work, I was a bit flattered. If he were friendlier I’d actually feel appreciative! I have to admit though, I haven’t been able to plow through all that Hitler stuff. I don’t mind doing errata — I’m interested in that myself — but the other, well, I’d much rather be exposing ForeclosureGate.
Nothing, I repeat, nothing hitler did was admirable as you claim.
Ellen has been called to the carpet to defend her book (Web of Debt) and she quickly responded; point by point as you can see in her post above (with more to come). This is a fair exchange of ideas but it must be a two way street. And who the hell is Gary North?
This may be the most important point made in Ellen Brown’s “Web of Debt” and it deserves our attention for it is the remedy and reason for true monetary reform. Mr. North does not argue for or against the concept, choosing instead to quibble over “Shays’ (not Shay’s) rebellion.”
By choice, not necessity, our government borrows money from the privately owned and operated Federal Reserve banking monopoly. When the Fed decides to increase the supply of money, they buy government issued bonds with money they create for free. The money is endowed with value as it is backed by the credit, people and property of the United States. If we alone back the money, why are we borrowing it?
Thomas Edison elegantly explained this conundrum “If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also…Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges…”
Congressman Wright Patman was one of the few politicians who understood and was honest about the absurdity of our nation borrowing its own money “When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money.”
“The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks.”
“I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.” – Wright Patman: excerpts from September 29, 1941, as reported in the Congressional Record of the House of Representatives (pages 7582-7583).”
The truth is startling – there is no need for a national debt or for the national government to borrow what it alone has the sovereign power to create. Wright Patman was right, and I hope that in addition to blaming “you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue” that people like Gary North are called to the carpet to explain why they never exposed what is the greatest theft in history.
Larry
Thanks Larry! Want to join our public-banking google group? Invitation only.
Larry, thanks for quoting that renowned economist Thomas Edison. What an eye-roller.
Who the hell is Gary North? Stay tuned, you’re about to find out.
Larry, How does it matter ‘who the hell is Gary North’. Point here is, who the hell is making more sense. If the president of America, or Edison were to make nonsensical statements, their position would not make those statements immune to refutation. When Ellen is making a logical case for a viewpoint, then surely the details she’s using should be cross examined just as rigorously as Gary is insisting they should be.
Gary North is someone who actually understands history and economics, not to mention philosophy and theology, and marketing, business, and investing. He’s written extensively on all those subjects. He’s a Calvinist, so his findings are troubling to those who aren’t, but he can’t just be wished away because he actually understands history, economics, philosophy, and theology. He has long been exposing the problems of the power structure and the system, and he understands that real solutions have to be based on peace, liberty, and property.
If Ellen Brown chooses not to listen to him and learn so much the worse for her. We should definitely listen to him and we will learn quite a bit that is good and true. His basic points are very sound, so I don’t see how he can be refuted, and he’s so knowledgeable I find it hard to imagine who will know enough to be able to do it.
Just today, there was a story in the NY Times about how 40 Attorneys General are now banding together to sue the big banks in the rapidly escalating foreclosure crisis where banks have been unable to “produce the note.” Years ago, before the problem was defined this way, I told anyone who would listen that the banks that sold their mortgage portfolios were essentially double-counting; counting the loan “asset” to the borrower, and then counting the loan a second time when they sold it to groups of investors. Once they sold it, they no longer owned the loan, so what right do they have to foreclose and take possession of the house at all?
I point all this out just to emphasize, as if more emphasis were needed, that we are IN CRISIS, and need to get onto REAL solutions such as State Banks.
I spent the better part of last week, and a good amount of time over the past year, going over the Bank of North Dakota’s balance sheet and charter and operations. As far as I can tell, they have never securitized any loans on their books, issued significant amounts of subprime loans (there are a few, but not enough to get them in trouble), and have, as is their mandate, made loans in-state. This is in stark contrast to the SIVs promoted by all the TBTF banks who, let us never forget, had to be bailed out by taxpayer dollars – and does it matter if those dollars are repaid now that the Fed has generously provided so many of them to repay them with? Imagine if I created the money to repay the money I just loaned you, and used it to buy your assets so you could pay me back. Wouldn’t that be a cozy relationship for you? We are living with a highly dangerous incestuous relationship, where bankers and their backers are indistinguishable, and often interchangeable. State banks, which CANNOT create actual money, but only credit, within limits imposed by their reserves, are a way to stop this madness.
I haven’t heard anything from North that would do that, and his gold-backed currency would lead to massive shortages of currency, especially today when fully 1/7th of the gold supply is traded daily under easily traded gold asset funds like the GLD. If we ever went back to the gold standard, speculators would buy up the GLD like there was no tomorrow, as indeed, there wouldn’t be, for the dollar. Already, the commodity markets are soaring on speculation of the dollar’s weakness, but that is because of overproduction of dollars (or their electronic equivalent), and backing dollars with gold wouldn’t stop that. It’s more likely the government would simply confiscate actual gold, as it did in FDR’s time, and ban trading vehicles like the GLD, returning pennies to their holders (full disclosure: I hold GLD stock).
As for coining money with actual gold, commoditization of the currency leads to currency shortage and empire-destruction, as Zarlenga makes quite clear in discussing the fall of the Roman Empire in TLSoM.
You complaint about banks “double-counting”. The practice is made possible by the –unconstitutional – Federal Reserve Board which has a policy to allow Fractional Reserve Banking. So clearly the FED ought to be abolished.
You also objected to gold-backed currency because it would lead to” massive shortages of currency”. That’s is pure nonsense. Study the causes of the German hyperinflation of 1914–1923 then re=post.
Neither fascism nor socialism is the answer. When everything fails try CAPITALISM – The FREE MARKET.
.
The Free Market failed a long time ago, if it ever really existed at all. In fact, according to Karl Polanyi (The Great Transformation) it was the attempt at a free market system and the resulting protectionism that lead to corporate cartels and, ultimately, fascism.
It’s a very thorough and illuminating book.
“The Free Market failed a long time ago, if it ever really existed at all.”
Well, duh, if it never really existed, how could it fail?
The fact is, the nations and societies that have allowed the markest to be the freeEST have seen the most true capital expansion and resulting the prosperity that the world has ever known. Today, the Chinese are beating the pants off the so-called free market capitalists of the West because they’re finally learning the lesson that managed economies don’t work, and in fact lead to poverty for all but the elites. We, on the other hand, are going rapidly in the other direction, and Ellen Brown would have us move even faster down that path.
Corporate cartels and fascism are exactly where the Greenbackers are headed. Open your eyes and get a basic Austrian economics education before it’s too late. Just some friendly but not-too-optimistic advice from a Gary North fan.
“The Free Market failed a long time ago, if it ever really existed at all.”
So then it never failed. If it didn’t exist, then it didn’t fail…and if it failed because of protectionism, then it didn’t exist.
Got it?
“As for coining money with actual gold, commoditization of the currency leads to currency shortage and empire-destruction, as Zarlenga makes quite clear in discussing the fall of the Roman Empire in TLSoM”.
Utter nonsense! The Roman Empire fell for many reasons, all of them good, sound reasons for empires (all of which are evil, including the US empire) to fall. The emporers repeatedly debased the gold denarius in order to inflate the money supply so they could temporarily finance their wars of conquest. They debased the gold coins by melting them down and mixing them with lead and other metals; they debased them by melting them down and recasting them in molds that were 10% smaller; they inflated by recasting the coins with higher monetary denominations (a one denarius coin is inscribed as a 10 denarius coin, etc.).
The Roman Empire fell because the Emperors and their hordes of bureaucrats sucked the empire dry, and the military escapades eventually failed to suck enough wealth from the conquered people. The Centurions eventually failed to find reasons to fight for the Emperor, who desperately sought to buy their allegiance with various perks, land grants, etc.
Sound familiar, dear American friends? I fear that Ellen Brown is more attuned to the Emperors than the subjects. Debased money, fiat money — it’s the same old same old.
[...] Response to Gary North — itemized points [...]
Had I been in Ellen’s shoes, I would have found it to be a most unpleasant task to take the time to compose this post, but I’m glad she did, because I’ve found it very helpful. I’m especially glad to learn about the revisions related to Franklin and colonial paper money and Garfield. I have the Third Edition of Ellen’s book and I’m glad to be alerted to these changes.
I hope that Mr. North can drop his swagger going forward because it is valuable to have mistakes pointed out but criticism is even better if it’s done constructively and respectfully because it leads to the spirit of cooperation, which is dynamic.
My question for Mr. North: Is he a libertarian or is he in favor of a government backed gold standard? He can’t be both.
There are private forms of money that do not require precious metals such as futures contracts and common stock so even in the private sector gold is not needed.
F. Beard states that Mr. North is either a Libertarian or favors a government backed gold standard.
The US Constitution (1787) is essentially a Libertarian Manifesto. The Founding Fathers set up a government in order to secure our rights to life, liberty and property.
So the government has been authorized to SECURE our right to a sound economic system.The clearest path to the restoration of economic health is the free market under girded by a sound monetary system.
The clearest path to the restoration of economic health is the free market under girded by a sound monetary system. Contu Macious
But what is a “sound monetary system”? Opinions vary greatly. Libertarians would leave that for the free market to decide but that still leaves the problem of fair taxation using various private money supplies.
I suggest that a good compromise would be to separate the government money supply from private money supplies. Let government money be pure fiat but only legal tender for government debt (taxes and fees). Let private monies be backed by whatever which should please the goldbugs but also allow more modern forms of money such as common stock and futures contracts.
F. Beard always goes back to wringing his hands over the issue of fair taxation. He lacks the very basic understanding that there is no such thing as fairness when it comes to coercive force, i.e. taxation. When there’s such a thing as voluntary paying of taxes, get back to me. Prior to that, let’s talk about how we can eventually make all government services voluntary, with people voluntarily paying for only the ones they need and want.
As far as letting the free market money suppliers compete with the government, and have people pay their taxes only with fiat money, I’m all for it! How long do you think it would take for the govt to demand to be paid in gold, which would immediately drive paper money out of the free market? Jeez, man, just think this through a little bit and you’ll see how silly your argument is.
F. Beard always goes back to wringing his hands over the issue of fair taxation. He lacks the very basic understanding that there is no such thing as fairness when it comes to coercive force, i.e. taxation. Glen L
Oh yea, as if government will disappear soon. And there is the issue of compensation to the current victims of the government backed counterfeiting cartel. Let’s just forget that and move on, eh? But in any case, if we are to have private currencies, which I support, then taxation is a crucial topic if all those private monies are to compete on a level playing field with respect to government.
How long do you think it would take for the govt to demand to be paid in gold, which would immediately drive paper money out of the free market? Glen L
Domestically, a country has no need for gold, since its currency is backed by force. Nor is gold needed internationally, if a country keeps its currency strong.
F. Beard, in case you missed my other reply: Gary North has written an excellent article today that addresses your concerns.
Yes, I’ll check it out when I can read it for free.
Gold would arise as currency spontaneously. Whether the government acknowledges that or not is irrelevant.
Then gold needs no government backing, does it? So it will be able to compete
in a completely free market of private monies?
That sounds so ridiculous that I now strongly suspect that Gary North himself does not believe it.
I think that the major argument against Ellen’s proposal is that you cannot trust any politician, delegate, or autocrat to do anything without screwing we the ppl big time, as human experience showed us time and again in the latest few thousands years of human history with no exception.
That is why I think that the only way out are community currencies, gold & silver and/or anything useful to trade without any interference of the leviathan. But I am open to any reality-based different views.
What is the point of using a precious metal as money? In fact, if it were truly precious then it would not be used for money. Copper was so needed in WWII that the copper bus bars at Hoover Dam were replaced with gold from Fort Knox. So, the chief purpose of using precious metals is their ( usual ) scarcity. So any other scarce item could also serve as money including picture of Presidents on green paper if the amount issued was limited.
As true as that is, we are currently experiencing a shortage of real legal tender compared to the amount of debt-credit money in circulation. The US Treasury should rectify that by bailing out the entire US population with a nice big fat check to every US adult.
correction, I think the gold bus bars were used at Columbia Dam.
What if I run a mafia-like protection racket and I issue a limited quantity of “don’t get your legs broken ‘notes’?” Would it be ethical if these “don’t get your legs broken notes” circulated as money?
The problem with government greenbacks, is its only the threat of the government’s hitmen that gives them value–just as it would only be the threats behind mafia “don’t get your legs broken notes” that would give them value.
It’s true, the ultimate backing of Greenbacks is the avoidance of government violence; I don’t deny it. However, I think the state will eventually “wither away” to a minimum once we learn to do capitalism correctly. A good start would be to have separate government and private money supplies; the government money would only be legal tender for government debt. The private sector would be free to develop its own tax free monies. That way we could at least eliminate or reduce and localize the boom-bust cycle and other ills of a government enforced monopoly money supply.
That certainly sounds like a giant step in the right direction.
However, I’m not sure that all greenbackers would agree with you and me that govt violence is the actual backing behind govt greenbacks.
If Ellen Brown could stipulate this at the beginning of the debate, then I think North should realize he’s won the debate because everything else follows from this individualistic method of analysis.
If its govt violence that gives value to greenbacks, then all of the bad greenbacker “value theory” (which North claims is non-existent) goes for nought. By greenbacker value theory, I mean all of the non-sense about money being a separate representation of value and such.
I think there’s a certain sense in which the greenbackers understand some things better than the libertarians, by the way. For example, the the viability of alternatives to gold such “free market socialist” barter credits, Lysander Spooner’s land bank, and such never had a fair chance against the legal tender law enforced govt gold standard.
I’m reading Stephan Zarlenga’s The Lost Science of Money which I recommend to all. He makes the point that many in the past who had gold or silver bullion profited by obtaining government privilege to coin that gold or silver. So what they had was FIAT precious metal money. Ironic, eh?
What I fear about North is that he and other gold-bugs will similarly seek government privilege for their favorite (and accumulated?) commodity. In the case of a professed libertarian, that would be pure hypocrisy. Let them coin their own PRIVATE PM money supplies if they wish but I’d bet that a true free market in PRIVATE money creation would eventually eat them alive.
As for government money it can and should be pure (or nearly pure) fiat since it is backed by government violence as you point out.
Unless the gold-bugs can get government privilege for gold based money then ultimately the free market will discipline them since it (gold) is a barbaric and inferior form of money.
Here’s my proposal to get the greenbackers and the libertarians to join hands and work toward a common goal:
1. Greenbackers acknowledge that the social contract is b.s., libertarian individualistic methodology and subjective value theory is irrefutable, and that taxation, legal tender laws, and mafia thugs are the only thing that could possibly give value to greenbacks.
2. Libertarians acknowledge that the govt and silver standards were b.s and that although its usually supposed that gold and silver would be popular monetary commodities, the greenbackers rightfully ask, “Why the legal tender laws? We’ll never know the true exchange value of gold and silver until the great crimes of taxation and legal tender laws are abolished.”
3. Both Greenbackers and Libertarians agree to work toward the abolition of legal tender laws and taxation. (I think Ron Paul has a program that both can support)
4. Greenbackers prove they’re not cranky objective value theory-ists who romanticize building govt schools and govt bridges with govt goon value imputed un-notes by striking the word “tax” from all documents and replacing it with “theft”.
6. Libertarians somehow prove that they’re not hypocritical aristocratic gold fetishists who will enforce a new govt gold standard on the world at the point of the bayonet.
Very well said.
(I think Ron Paul has a program that both can support) Wolfgang
I hope Ron Paul supports ALL alternatives for private money, not just gold and silver. For instance common stock would make an excellent private money on a level playing field since it requires no borrowing or lending; the corporation would simply buy assets with new stock issues thus sharing wealth at the same time as it purchases it. Futures contacts could also be used as money. For instance, Ford could pay its workers with coupons that could be applied to the purchase of new Ford autos.
As long as its voluntary, I’m sure Ron Paul’s down with it. He always talks about a bill that he’s proposed that would repeal the legal tender laws and allow gold or anything else to function as money without interference from the govt goons.
And he’s proposed bills to abolish income and all sorts of taxation for years. In the police state that we currently live, Ford can’t pay its workers in anything without reporting to, surveiling for, and skimming for the government. How can we know the true exchange value of any potential monetary commodity such as Ford stock, Spooner land claims, Josiah Warren Time-Credits, whatever, without abolishing the notion that a mythical social contract requires everybody to report everything they do to a mafia organization?
Sounds like a plan to me! It’s like the fine print when you sign into your bank website; you don’t read it, you just sign it, and then you can get on with it. Whatever you want, now let’s get some work done!
How are you so blind?
How are you so blind? dimoose
I would ask people why they are so blinded by gold when it is a convenient tool of the usury class? I have considered all the arguments for gold as money and used to be a gold bug myself and have concluded it would not survive (or at least prosper) in a truly free market of private monies.
So what do the goldbugs have in mind? A government endorsement of their pet money to the disadvantage of other forms of private money?
“What is the point of using a precious metal as money? In fact, if it were truly precious then it would not be used for money. ”
Where do I start to correct the misunderstandings you have about what money is? Maybe I should direct you the governments own admission of the inflation rate since 1913, with the value of the government dollar falling over 95% in the ensuing 97 years. One dollar today would buy you about 5 cents worth of 1913 penny candy. The same amount of gold that would fetch you $1 worth of anything in 1913 – 1/20 of an ounce — would today buy you $67+ of anything you wanted to buy. That’s a lot of candy — but only $1 worth, when we were on even a government gold standard, was a lot of candy.
The point is that gold remains the ultimate store of value, and the commodity most resistant to price fluctuations and inflation. It is extremely difficult for Keynesians and Chicago school monetarists to understand why, because they have no coherent theory of what money is. The key to understanding this is to understand that gold is the _peoples’ choice_ as money, always was and always will be. All fiat money systems are _ government_ systems, simply because they can print as much as they want, and never have to worry about running out of paper (or electronic digits — even better for those counterfeiters!).
When you understand that gold and other precious metals are almost impervious to counterfeiting, and admit to yourself that all paper forms of money (including stock certificates) can be counterfeited by governments and other crooks, the light may yet shine down upon you, and you will lift your eyes up and thank people like Gary North for sharing his wisdom.
I used to believe as you do, Glen, so I could have easily written your comment myself. However, I have moved on and hopefully you will too.
There are two sides to every story and believe me gold has been used as a tool of oppression just as fiat has.
Let’s just have a truly free market in money creation and we shall see. But I would bet that gold as money and usury REQUIRE some sort of government subsidy. No libertarian could be for that.
I recommend Stephen Zarlengas book “The Lost Science of Money”. I have not finished it yet so I don’t know what his recommendations are. However, he makes many sound arguments against commodity based monies.
“Let’s just have a truly free market in money creation and we shall see. But I would bet that gold as money and usury REQUIRE some sort of government subsidy.”
Yes, let’s have that free market. Of course, it will never happen as long as most people buy into the fiction of benevolent government. Governments will never allow competition in money from the free market, for the precise reason that control of the money supply is vital for control of the society at large. I assume that the readers here are in agreement that the Fed has nothing to do with free markets, by the way.
The one major area of disagreement I have with Gary North’s positions is his continued belief that minarchism can work; he thinks decentralized government (state and local) can be controlled and kept in bounds by the citizens. As an anarcho-capitalist, I disagree, of course, but would love to see the US return to a minarchist systems with the restoration of States’ Rights (minus the slavery part). That would at least be a step in the right direction, but I’m not holding my breath.
Of course, it will never happen as long as most people buy into the fiction of benevolent government. Glen L
Please don’t think that bankers are any better in their hearts. And I am afraid that some degree of government is inevitable though it should be limited. But in any event, millions would currently starve to death without some form of forced redistribution by the government.
Their own fault you say? No because that is equivalent to claiming that there are no victims of the current banking and money system and that is absurd. The government backed banking cartel is responsible for the Great Depression which is a major cause of WWII which killed 50-86 million people.
You do realize, of course, that North’s argument with you is far beyond some quotes? He doesn’t have 31 points against you, he has an additional 21. In no way have you addressed the fundamental disagreements (on theoretical issues). Hence, you replies are completely unconvincing. Moreover, if you are interested in clearing the air, please also set up a debate on theoretical issues with arbiter Max Keiser.
Some of the replies to this post are wrong. Those saying that libertarians are “gold fetishists” only prove that many of you haven’t even read a book by Murray Rothbard, e.g., “The Mystery of Banking” (and it’s a short book). And looking at modern libertarian scholars, none of them technically want a government standard, be it gold or whatever, e.g., see “The Ethics of Money Production” by Jörg Guido Hülsmann (also a short book).
Do you want everyone to be free of a monopolist? Fine, if you are serious. But this means no legal tender laws. It means no monopoly, either to bankers or the government. Saying to the government “limit” yourself in printing paper money is fantasy. The government, a monopolist, can do things that those outside of it cannot do. It has ever incentive in the world to outlaw competition of better moneys so as to increase its own wealth.
The whole idea of a paper money is nonsensical, if regular people want protection from abuse. It costs almost nothing to create more of, especially with electronic money, and can potentially drop to zero in value, unlike a commodity which has lots of value for direct, non-monetary use. An economy where everyone had the legal authority to create their own paper money, e.g., would have the result of making this paper money worthless and valueless in its function. Freedom could never produce this kind of money. It would, practically speaking, make it no longer scarce and it would therefore not be valued as an economic good as such. Such would not be money, no more than dirt could become money. A good that becomes money must have had a demand before it became money. To have a demand means that it has had a price, and to have a price is to mean that it is scarce.
A government that creates money is one that does so at specific points in space and time. It is practically impossible to increase so that everyone gets the new money at the same time. (And that would do nothing.) Some will get it first and others later. Hence, redistribution will occur to those who are nearer to government at the expense of those who are further away from it. And the demand for it cannot be controlled. Different people value money differently. Some want to increase cash balances and some don’t. These constant changes always bring about affects; it does not happen from the top-down. We don’t own money as a collective. Individuals own their own money. The function of money is that it is a medium of exchange. In a way it is a hot potato. Money is not a consumer or producer good. Having more money doesn’t create more of these goods. There does not, e.g., need to be some kind of ratio of money to other goods so that an expanding economy with more goods needs more money because it misunderstands basic price theory of adjustment (see first chapters of “Mystery of Banking”). If such adjustments, so to speak, were not already a part of the relationship of the purchasing power of money and the price levels, money could never get off the ground to be used as a money.
“Optimal Monetary Policy” by Hülsmann:
http://mises.org/journals/qjae/pdf/qjae6_4_4.pdf
“The Cultural and Spiritual Legacy of Fiat Inflation” by Hülsmann (paper money centralizes power and business, among other things):
http://mises.org/daily/1570
“Deflation: The Biggest Myths” by Hülsmann: http://mises.org/daily/1254
“Deflation and Depression: Where’s the Link?” by Salerno:
http://mises.org/daily/1583
“The Necessity for a Value Independent of the Monetary Function Before an Object Can Serve as Money” by Mises:
http://mises.org/books/Theory_Money_Credit/Part2_Ch8.aspx#_sec2
My google group is working on a response. I’m working on ForeclosureGate. I’m hot on the trail of why ALL of the securitizations involve mortgages that were NEVER assigned to the real parties in interest. I think I just discovered the reason, and I want to get it out there. We can waste time arguing among ourselves while TARP II gets passed in the dead of night, or we can be on top of it and direct thought-traffic. I was interested in looking at the errata, because that is something I try to keep up with and be correct on. On economic theories, I think we’re just going to have to agree to disagree. If you’re seriously interested in my position, you might try reading my book.
I am looking at your work, respectively. But how can we stop “TARP II” if our underlying theory is all wrong?
I can agree to disagree, but that (1) ends the conversation and (2) will not advance a fight against the status quo because only correct ideas can defeat it. Hence, energy is -not- at all wasted fighting over economic theory.
Besides, what is wrong with debating North for 30 minutes or so on theory? (I don’t know North personally but I doubt he would be verbally rude to you on the phone. Of course, if he did, we would all hear it and we could then attack his character.)
In general, my rule has been to not respond to rudeness. One thing I’ve learned from motherhood is, you don’t reward bad behavior. Our public-banking google group is invitation-only because it allows us to have a serious but civil exchange of ideas and get real work done. Here is what I would propose: I’ll debate someone of the Lew Rockwell libertarian free market school who has some diplomatic skills, preferably a woman. My choice would be Lila Rajiva. She has posted on Lew Rockwell quite a bit, and we disagree on economic fundamentals. But we have had some interchange on the Internet, and she is pleasant and reasonable. We could make some real headway I think in bringing opposing viewpoints together.
Gary North may have come off as too direct and personal in his critique, and this can be granted (though it should not be exaggerated). But it was a serious critique. That is what matters. Defending ideas in the public is not for the emotionally sensitive. Running away from that is simply running away.
No offense, but I see your refusal to debate him as an intellectual retreat. Putting additional obstacles to a debate (namely, that you prefer a woman to debate with!) is further evidence of a lack of seriousness. If you want to prove to people, like myself, that your ideas have merit, you should be able to debunk (convincingly, that’s all) North’s arguments. You have not done that. This whole topic is an economic topic, after all. If you cannot defend your views on that topic, why should anyone listen to your proposals?
In any case, it is not my place to be some kind of moderator, or help set up a debate. I have no ties to Rockwell’s group. I’m trying to be fair (and I hope you somewhat agree). Contact Lila Rajiva, I guess. Yet Rajiva is not North. She is not the one who has gone through your book and argued against it point-by-point.
@F Beard, As I implied above I still buy the libertarian/Austrian analysis and think it must underlie any proposed solutions because its ethical and and just, but I have some objections to some of the things they sometimes seem to ignore and sort of skim over.
For example, although Lysander Spooner didn’t understand subjective value in the scientific way that the Austrians did, in the case of analyzing money and the Supreme Court’s legal tender laws, I think Spooner’s individualistic methodology led him to more accurate, libertarian, and radical conclusions and their significance, than the Austrians about the great crime of the “gold monopolists.”
Even though nowadays, I think just about all Austrian Schoolers–as ARemnant has proven–oppose legal tender laws, it often SEEMS as though they speak of the gold standard era as just about as good as having no legal tender laws at all.
Austrians should be selling their highly convincing individualistic methodology to populists by saying, “Hell yeah, who knows? With no state, no legal tender laws, no taxation and no soldier’s bayonets to impute value to mafia-scrip, maybe Spooner land shares or the shares of worker owned-cooperatives would compete and thrive in a free market?”
We can leave for much later the debate about what sort of use and occupancy should be required for honest property ownership. But for now Austrian school libertarians and repentant/re-constructed greenbackers who swear off state-violence imposed scrip should join together and support Ron Paul’s anti-legal tender/anti-taxation proposals.
“Hell yeah, who knows? With no state, no legal tender laws, no taxation and no soldier’s bayonets to impute value to mafia-scrip, maybe Spooner land shares or the shares of worker owned-cooperatives would compete and thrive in a free market?” Wolfgang Bohringer
Yes, no compulsion would be ideal. However, I don’t see the state going away any time soon so the problem of fair taxation remains. The only solution I can think of is for government money to only be legal tender for government debts. That way, the government can ignore free market monies and the free market which would benefit everyone including the government. The Income Tax could remain but only for government money; private monies would be exempt.
Some of the replies to this post are wrong. Those saying that libertarians are “gold fetishists” only prove that many of you haven’t even read a book by Murray Rothbard, e.g., “The Mystery of Banking” (and it’s a short book). And looking at modern libertarian scholars, none of them technically want a government standard, be it gold or whatever, e.g., see “The Ethics of Money Production” by Jörg Guido Hülsmann (also a short book). Remnant
I have read “The Mystery of Banking” (great book!) and started reading “The Ethics of Money Production”. I am familiar with Austrian thinking because I used to be one. However, i am disappointed with the Austrians because:
1) They are nowhere to be found in favor of debt forgiveness.
2) Many of them think actual monetary deflation is good.
3) I suspect many of them are in favor of a government backed gold standard or are not in favor of allowing all other monetary alternatives equal standing with PMs. Common stock, for example, is an excellent money candidate. Which Austrian has ever pointed that out? Futures contracts are another possibility. However, if common stock continues to be taxed but gold isn’t then wouldn’t that be a defacto government endorsement of gold?
As for legal tender laws, they should not apply to private debt.
I suggest you read “The Lost Science of Money” by Stephen Zarlenga to balance your perspective.
I honestly don’t know about 1, but as for points 2 and 3 Michael Rozeff I think agrees somewhat with what your saying:
http://www.lewrockwell.com/rozeff/rozeff329.html
We Don’t Need No Stinkin’ Gold Standard
What we need is market-produced money. This may take a number of possible forms, such as e-money backed by metals such as silver and gold, or silver coin, or gold coin and bullion for larger transactions.
Market-produced money differs radically from government-controlled and government-produced money. With market-produced money, there cannot be a systematically injurious deflation or harmful shortage of money. If the demand for money exceeds the supply to the point where the costs of a money shortage to demanders are exceeding the costs of producing more money, the market will produce more money and eliminate the shortage.
…The Great Depression occurred at a time when the gold backing of government money was extensive. The current hardships are occurring at a time when gold is far, far less important in America’s monetary system. The common feature of these large depressions is not the presence or absence of gold backing. It is the presence of government-controlled money, with or without gold backing.
The most common meaning of “gold standard” associates this term with government-controlled money, not privately-produced money. This is why we don’t need no stinkin’ gold standard.
AND
http://www.lewrockwell.com/blog/lewrw/archives/23060.html
Wal-Mart could have bank branches everywhere, in many countries too, and in far more convenient locations than most banks.
What if we had a really free market in money and banking?
Wal-Mart in a free market could issue its own vouchers or certificates good for the purchase of goods at Wal-Mart. Given its big size, its reputation, and that so many people shop there, these vouchers could pass from hand to hand. In short, Wal-Mart would be issuing currency based on a “shop” foundation of these vouchers being redeemable at Wal-Mart for merchandise. It could even pay employees in these vouchers.
Wal-Mart could issue Wal-Mart money.
Mike Rozeff is cool even though he defends fractional reserve lending. He is a nice man and I have corresponded a bit with him. Yes, “Wal-Mart money” is an excellent ideal. The problem with private monies is taxation which is why I think the government should be allowed to issue fiat that is legal tender for government debt ONLY.
So, lets find out if North and the OTHER Austrians are hypocritical gold-bugs or are truly for liberty in money creation. Like I said, Mr. Rozeff is cool.
The feds could require all currencies to be measured in gold even if their not backed by gold and then request a certain amount in gold via your choice of currency.
The feds could require all currencies to be measured in gold even if their not backed by gold and then request a certain amount in gold via your choice of currency. JG
Nice try but i have come to the conclusion that gold is just a shiny metal of convenience for the usury class. I myself used to think of gold as “stable money” because the rate of mining supposedly equals the average economic growth rate (Gary North’s fine suit for an ounce of gold argument). However, with greater knowledge I now reject that theory. It is much more likely that rather than gold measuring economic growth, it has in fact limited that growth to the increase in gold supply.
I am a libertarian; let Gary North play with his shiny metal and usury if he desires BUT WITHOUT GOVERNMENT PRIVILEGE.
The ONLY way I can see all private money supplies competing equally is for NONE of them to be acceptable for government debts (taxes and fees). Hence, the government needs its own money that is legal tender for government debt only.
Gold was an example any commodity could be used or even a basket of commodities.
In your idea of the government issuing fiat curency to pay taxes, how does one aquire this fiat currency to pay taxes/how is it issued?
And then what is to prevent the government from mandating new legal tender laws, outlawing all competition?
In your idea of the government issuing fiat curency to pay taxes, how does one aquire this fiat currency to pay taxes/how is it issued? JG
It would just be spent into existence for government salaries, Social Security benefits, infrastructure, etc. The hitch is why would people voluntarily accept it? What would give it value? Ultimately it would be the governments’s authority and power (read bayonets for Wolfgang) to tax in that currency. People who did not have the government money would have to buy it from those who did on the open market.
And then what is to prevent the government from mandating new legal tender laws, outlawing all competition? JG
The understanding that all of US profit from a free market and that none of US benefit from the boom-bust cycle? The humility to concede that money is not a science and that we need the freedom to experiment with various alternatives?
Actually, U.S. money today isn’t controlled or issued by the government. That’s the point. The government is controlled by the money creators – rather the other way around. I think that’s where the confusion comes from. It’s easy to assume that government is as we see it, but what we see is only one sick contorsion of government. There are many, many other ways to have a government, and a government that isn’t controlled by private money creators would be a big step in the right direction.
I agree that the US Treasury should just spend money into circulation. The Fed is a deliberately confusing shell game. Also, the US government should never borrow money.
Bringing a Walmart reference into a debate is similar to dropping Hitler’s name. I only mention that because of where this thread started. “Malwart, your source for cheap plastic crap!” say the bumper stickers.
Anyway, yes; and I could issue bread tokens that would be redeemable for one loaf of bread or its equivalent at my little bake shop, and you could issue your cookie tokens. Everyone would know that if they stopped by my shop they could get a loaf of bread for my token. Every family unit and business cooperative could have its own little token or bill or receipt. So what happens when these little tokens float around free with the Walmart dollar? I don’t know, but as long as there is Walmart – or, as long as the conditions exist that allow, even promote, the aglomeration of Walmart – Walmart will figure out a way to work the “free” system to its advantage.
How about a central government currency that is the main, guaranteed currency, but not necessarily the only currency. Legal Tender doesn’t have to mean it is the only legal tender, and I don’t think it does. You can use other local currencies so long as you still pay taxes. My trapper friend defended himself in court on charges of bartering. (?!!!?) He won by arguing that Canada, from its early formation to the acquisition of its new provinces, exists because of bartering.
It is incredible how many options are freed up when income tax is done away with. Perhaps not so incredible when you think that income tax policy is pushed by land barons (as a ‘progressive tax’). The big issue with government is its method of taking straight from earnings, where it should be adding. Freeing productive wealth entirely from tax by government or cartel, I think you will agree, would be very stimulating. Then rent (on land, not buildings), instead of going directly to landowners, would go in part or in entirety to government.
First of all, determining the value of land is very easy to do fairly, relative to determining the earnings of people and things. It is way harder to fake or find dispute, or to pass the tax on to the consumer. The government could spend money into circulation, and provide super low interest loans for projects and credit unions and small banks and what-all. What it spent in excess of what was determined (by an independent body) to be needed in circulation, it would take back as land tax, payable in its own currency or other local currencies, or even in commodities. Of course, multiple currencies could confuse this simplicity a bit, but not fatally.
Again, only the land itself would be taxed, not any improvements that had been done to it in the past few generations. Swapping away government debt (using the method Ellen suggests) and getting rid of most of the tax-collecting bureaucracy would be a big first step toward shrinking government like dimoose promotes, shrinking even the remaining tax on land. I imagine it would only be taxed above a certain amount per person or something, making owner/dwellers in cheap areas totally tax free. It would then be tax free to live in the bush or remote villages – hermits should always be tax free – and private protection of wilderness lands could be deducted.
Phasing in the increased tax on land would slowly release the pressure of the great real estate bubble (which hasn’t been hit most places like in the U.S.), lessening the speculative value of land. As land lowered toward its real value it would become more accessible to the people whose real wages had just jumped from income tax relief, and less appealing to those wishing to profit simply by owning it.
I don’t know, is this making sense? Way more local government and organization, less big central control, more federal government as central watchdog and arbiter. The central government doesn’t have to have much less power than it does now for it not to be appealing to those looking to control. This single tax movement appeals to my sense of functional anarchy better than most anything else. It would slowly undo the insanity that clouds our minds, and allow further improvement and innovation.
How about a central government currency that is the main, guaranteed currency, but not necessarily the only currency. Legal Tender doesn’t have to mean it is the only legal tender, and I don’t think it does Birch
Nope, this is precisely what we don’t want. Legal tender should only be created by the government and it should ONLY be legal tender for government debt. Do you want Gary North to be able to gain a windfall by coining his gold bullion into legal tender? Hell no. If gold is so damn superior as a currency then it should be able to survive in the free market without government privilege.
As for government taxes, I have no opinion as long as they are only payable in government fiat and private money supplies are not taxed.
It’s really simple. If one owns a resource then one may issue money as claims on it. In the case of government, its resource is a legal monopoly on force. The government should not be able to issue money claims on private property and the private sector should not be able to issue money claims on government property.
As for thousands of private currencies, that is no big deal with modern communications and computers. The optimal balance between convenience and flexibility would be quickly determined and maintained by the free market.
Sorry, that Gary North gold bullion part is a non-sequitor. How can he make gold coins into legal tender if gold isn’t the legal tender? Counterfeiting is what it is, and is determined by the reproducibility of something, not by how that something came into existence.
Actually, I don’t think you disagreed with me. The government would create its currency and spend it into circulation, and by guaranteeing to accept it in payment give it value in the community. Call this legal tender or not, I don’t care. The community can do what it wants with it in the meantime, so long as they don’t go about destroying it or counterfeiting it or whatever.
Sorry, that Gary North gold bullion part is a non-sequitor. How can he make gold coins into legal tender if gold isn’t the legal tender? birch
Some of the gold bugs imply that the metal is the source of value in gold coins when in fact it (depending on denomination) is the legal tender status that gives it value. So, depending on denomination, one could easily make a profit by coining gold from bullion. A more sophisticated goldbug would say that the virtue of using gold is that the issue of new coins would be limited to the amount of new gold supplies but that ties the nation’s money supply to its success in gold mining!
Counterfeiting is what it is, and is determined by the reproducibility of something, not by how that something came into existence. birch
Surely you jest. If I produced a PERFECT copy of a $20 bill, I would still be a counterfeiter. It is WHO makes the money that matters. Only the government should be allowed to make government money and it should only be legal tender for government debts.
Actually, I don’t think you disagreed with me. The government would create its currency and spend it into circulation, and by guaranteeing to accept it in payment give it value in the community. birch
Agreed.
Call this legal tender or not, I don’t care. The community can do what it wants with it in the meantime, so long as they don’t go about destroying it or counterfeiting it or whatever.
OK
Government should not be in debt, any more than the individual should be in debt.
There was a time in America when debt was considered a bad thing, not a necessity.
All of our money with the exception of coins is debt. To eliminate government debt would thus eliminate our money supply. The solution is for the government to exercise its sovereign right and issue its own debt and interest free money but only
as legal tender for government debts not private ones.
“1. They are nowhere to be found in favor of debt forgiveness.”
Those with an admitted superficial understanding of debt forgiveness should read the entire article for context.
http://www.lewrockwell.com/rothbard/rothbard190.html
Yes, I agree with Rothbard that the national debt should be repudiated.
However, that article did not address the issue of private debt to the government backed counterfeiting cartel.
A Remnant wrote:
“Do you want everyone to be free of a monopolist? Fine, if you are serious. But this means no legal tender laws. It means no monopoly, either to bankers or the government. Saying to the government “limit” yourself in printing paper money is fantasy. The government, a monopolist, can do things that those outside of it cannot do. It has ever incentive in the world to outlaw competition of better moneys so as to increase its own wealth.”
~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~
You raise two important questions that I will take a stab at addressing. First, let’s talk about legal tender laws and money.
The bulk of all significant transactions are conducted without legal tender money. Coins and currency are legal tender but credit cards, debit cards, checks, travelers checks and digital transfers ARE NOT legal tender.
It is ironic in a way that we pay our federal income tax with non-legal tender (check).
Next, you stated that you did not trust the government to hold the money making monopoly because you didn’t trust their judgment or restraint.
I can understand your point, and suggest that checks and balances are needed. For example, while I am an advocate of the federal government, through congress and the treasury, should create all new money but I don’t think they should distribute it.
I would suggest that private and publicly owned state banks should continue handling the distribution of money with the government creating it and charging an issuance fee (seignorage).
Basically, instead of banks creating money for free, they would receive it from the government. Banks should continue determining credit worthiness and earn a return by assuming the risk and processing the transaction. The return could be in the form of a fee or interest.
Larry
Give person X a check. He will not value it per se. No one does. He will not just eat it or, more importantly, just sit on it forever. He values it because it represents money, not because it is a check per se. X can turn it into something underlying it, i.e., fiat money, even if he chooses not to (because a substitute can stay a substitute, so to speak) (and, incidentally, this is exactly the kind of analysis an economist can use to understand why we have fiat money because it does not come about by itself by the people). It is therefore ultimately under legal tender laws. Person Y can give a check to X, but this check cannot be legally enforced if it is not in compliance with these laws.
My argument is that fiat money is wrong per se. It is the embodiment of government abuse. Fiat money’s existence will always be harmful to the bulk of people, while beneficial for a small elite. Checks and balances are in the nature of a market money. Paper money is far more unstable because, for one thing, it -depends- on wise politicians (how many of them do you know?).
It is not a money that can stand free and open competition. Would anyone take an “Ellen Brown paper money” or “Gary North paper money”? No, but government can try to force us. Hence, Brown’s ideas have all do with force and having that force be monopolized by some kind of elite. She’s an unknowing “elitist.”
The banks should not have a monopoly on creating money no more than the government. Changing who has the monopoly does not get at the heart of the issue. Plus, in free market competition creating money simply by printing it up could not stand in competition. It would be valueless.
A money chosen voluntarily by individuals is beneficial to all because it does not depend on the dreams of God-like politicians. Again, paper money, costing almost nothing to make, can easily be increased to the benefit of politicians and those close to them. It can also drop to a value of zero. In opposition, voluntary money has open competition, no one is forced to accept it, a person can move to another money easily, its value cannot be dropped to zero because it is a commodity and also cannot be increased “to” infinity, etc.
And it is likely if you pressed Brown on the subject, she does not even believe there is a law of demand or Cantillon effects. She thinks that more money is needed to buy more goods. Hence, she doesn’t believe in price theory. (If I double the supply of good Z to sell, I guess I will be hopeless to sell the extra supply because, for whatever reason, prices cannot be adjusted in the free market. So then what? Every unit of a good that is increased needs, how about, a one-to-one ratio of an increase of a dollar, or what? Or do some additional units need a bigger increase? … So people cannot bid up or down on things, or anticipate upward or downward tends of prices, costs, inputs, outputs? This is just nonsense, historically and theoretically.) Instead she thinks that an elite needs to price fix things, so to speak. Mere will, from a God-like government, solves things.
Ms. Brown’s only response to Dr. North, and even me, is to say “agree to disagree.”
She just ends the conversation, and I was not at all rude in my “debate” with her, and thus reveals that she is not intellectually fit enough to handle these complex issues. She cannot defend her mistaken ideas. Hence, she doesn’t.
I see no benefit in looking at her ideas any longer (unless she finally engages in community debate with North and company).
Two other quick comments can be mentioned: 1. I don’t see this reply on the main blog site. Is this deliberate? North has probably not even seen it. 2. A defense that says “I only said so-in-so was quoted AS saying such-in-such” is misleading. If I read a book, I expect the quotes to be correct unless -explicitly- stated otherwise. No serious author would defend herself/himself on false quotes the way she does. When I read a book, the default position is to assume the quotes are correct. Come on, no normal person can buy into her defense.
I’m sorry, if I am now being rude, so be it. Her economic argumentation and reasoning is shallow. I doubt she knows the first thing of, say, Hayek’s Nobel work in capital theory, money and banking, and their relationship to the business cycle. How ridiculous. To defeat the status quo needs correct ideas from people who understand them, even competing ones.
No one should take this woman seriously. I browse her work, find it valueless, and she herself cannot defend it. I’m done with this website.
In opposition, voluntary money has open competition, no one is forced to accept it, a person can move to another money easily, its value cannot be dropped to zero because it is a commodity and also cannot be increased “to” infinity, etc. A Remnant
There you go falsely equating “voluntary money” with “commodity money”. Common stock is merely paper but could easily serve as private, non-legal
tender “voluntary money”. Also, it cannot be increased without limit because the existing money holders would also be stock holders and could vote on new money issue if the corporation was set up that way.
Futures contracts are also merely paper but have real value and could easily serve as money.
So again, “Voluntary money” DOES NOT necessarily require commodity money.
You didn’t read what I wrote closely enough. Substitutes can of course exist. I mentioned this in reference to checks, etc. (How can you say that I’m against checks or such things?) There is no disagreement there. But paper money per se cannot become money in the free market. It has to be tied to something, that’s all. For a money to become a money there must be a demand for it before it became money, i.e., it must have been a scarce good valued as such. Dirt, paper, air, etc. thus cannot be money in the market. This is basically what the Regression Theorem says. Fiduciary media is a different story and another debate. In this very limited sense, we might be able to talk about the so-called “free banking” position.
If you want to talk about this with me, I will not do so at this website any longer. remnant “dot” az “at” gmail “dot” com.
One of the hallmarks of sound money is price stability. That’s why using common stocks as money is a particularly bizarre idea — stock prices reflect (ideally) the underlying value of the companies that issue them, a value that can and does change radically over time, often a very short time. If stocks could be used as money, we’d have, what — 10,000 different, competing monies? Would that price system be just a little confusing?
That’s why they’re priced in dollars; we need dollars, but we need stable dollars backed by gold.
That’s why using common stocks as money is a particularly bizarre idea — stock prices reflect (ideally) the underlying value of the companies that issue them, a value that can and does change radically over time, often a very short time. Glen L
The volatility in stock prices is mostly because they are priced in the money used by the current government backed counterfeiting cartel. Massive leverage enabled by government privileges to the bankers is a major cause of price volatility. For example, buying on margin allows massive demand for stocks to drive up their prices. It is our money supply that is volatile, not typically the stock of a well established company.
If stocks could be used as money, we’d have, what — 10,000 different, competing monies? Would that price system be just a little confusing? Glen L
The free market would determine and maintain the correct balance between convenience and diversity. Plus modern computers and communications make any number of private currencies doable.
That’s why they’re priced in dollars; we need dollars, but we need stable dollars backed by gold. Glen L
So now we are back to whose currency will be used to oppress the rest of us via government privilege? Let the free market determine which monies will used in the free market. If you need stable, gold backed money then the market would provide it, would it not?
If you assume that gold will be used to oppress “via government privilege”, then the government can use any form of money to oppress, the way it does now in collusion with the Fed cartel. But with a gold coin standard, if we can’t get government entirely out of the money market, we can at least prevent mass inflation and the funding of the military empire that paper money automatically allows.
In the final analysis, I don’t care what the free markets decide to use for money. We could go back to using salt, like the Romans used to pay the Centurions, for all I care. But, I would bet the ranch that if it ever has the chance, gold will rise to the top as the premiere form of money, as it always has. Bernanke recently stated that people always turn to gold in times of uncertainty and fear, but then said “we don’t know why”. Well, I’ll hazard a guess: because gold, above all other forms or money, possesses the qualities that you need for money: it is durable, almost impossible to counterfeit, universally accepted, beautiful, easily divisible, rare, and has intrinsic value on its own as a commodity. The only intrinsic value greenbacks have is the same as the roll that hangs next to your toilet.
If you assume that gold will be used to oppress “via government privilege”, then the government can use any form of money to oppress, the way it does now in collusion with the Fed cartel. Glen L
True but then we are subject to three oppresions, the government, the limitations of gold and those private individuals or corporations who may have a large corner on the supply of gold.
But lets not argue about it. As libertarians we should agree that the free market should settle any debates about the nature of money. I claim that gold is a primitive form of money and that a truly free market would demolish it. Let’s find out.
Any professed libertarian who values gold over liberty is a hypocrite. Also, Christians and Jews who value gold and silver over liberty and justice are guilty of idolatry, IMO.
As for Gary North, is he in favor of a government backed gold standard or is he a libertarian? He can’t be both.
Gold and silver are typically tools of the usury class. There are ways to do money that do not require lending at interest.
I think I know Gary North’s positions well enough to speak for him here. He is in favor of a free market in hard money, with gold as the logical choice, backed by 3,000 years of history. He does not want a return to phony government gold standards that are manipulated for the benefit of special interests. And he is most definitely a libertarian.
I suggest you educate yourself: Go to his website, http://www.garynorth.com, and avail yourself of his free series of articles called The Gold Wars. This monetary history written for the intelligent layman. Don’t be surprised if you decide to become a subscription paying member. There is no better economic education you could get for $9.95 a month.
I have just read “Two Kinds of Gold Standards” by Gary North. It sounds very libertarian and I am a libertarian. But the devil is in the details as they say. One big question is the matter of taxation. Any private currency (or commodity) that the government accepts as taxes would have an advantage over private monies that the government did not accept. So, if the government accepted only precious metals for taxes, for instance, then other forms of money not based on PMs (such as common stock) would have to be exchanged for PMs. Thus the demand for PMs would have a de facto government subsidy which no consistent libertarian should be for.
Gary North has written a brilliant article on his website today that addresses exactly the issues you seem most concerned with: paying taxes under a gold coin standard, and reimbursement to the public by forcing the Fed to sell its gold to them at the official market price of $42.22 per ounce. In the process, a true free market in money, controlled neither by a central bank nor Congress, would emerge. A pure hypothetical, of course, but he shows how it could be done quite easily and justly.
The article is long and gloriously detailed; you should read it and find the devil in there, if you can, and report back to us.
If you’re not a site member you can’t view it today, but Lew Rockwell almost always publishes the best of Gary’s articles, so you can watch for it at http://www.lewrockwell.com
by forcing the Fed to sell its gold to them at the official market price of $42.22 per ounce. Glen L
I shall read it if I can for free but I see a major problem already if you are being accurate. There is not enough gold to sell it at $42/oz.
I don’t know what you mean by your last remark, unless you’re saying that demand would far exceed the supply. Well, of course, but the Fed has screwed itself by setting that as the official price of gold (the IMF also uses that price, by the way). Gary North proposes that all the gold be melted down and sold to the public (US voters) at that price in the form of 1/10 oz. coins, with a specified limit per customer (probably 10 coins, or 1 oz.). The public can then turn around and sell, if they so desire, the coins at market price, and pocket a hefty $1,300 or so at current prices. It would have the very large secondary benefit of putting millions of gold coins in circulation, helping us to get back to the gold coin standard.
His idea is admittedly purely a hypothetical exercise, but he shows in on uncertain terms how this can be accomplished, and how the Fed would go belly up in the process. I’ll save the rest of the details for your reading pleasure, once Lew Rockwell publishes.
Gary North proposes that all the gold be melted down and sold to the public (US voters) at that price in the form of 1/10 oz. coins, with a specified limit per customer (probably 10 coins, or 1 oz.). Glen L
I have no problem with that but the gold should not be distributed in the form of coins. Another sneaky attempt to apply legal tender status to gold?
His idea is admittedly purely a hypothetical exercise, … Glen L
That’s fine and the more reasonable and just an idea is the more likely it will be adopted. However, I point out that returning to gold based money is a return to the past. Not every reason for abandoning it was base. Also, I would think Gary North would be enthused about non-usury forms of money such as common stock since he is a professing Christian. Perhaps it just never occurred to him.
This central money you refuse “depends” on wise bureaucrats, or a wise bureaucratic system, sad to say, not even politicians. I bet politicians didn’t even notice when money was invented until after. It is possible to split up the different functions of controlling the amount and flow of money so no one entity or person gets to call the shots on his own. Little interlinking circles of influence, like they say the Bildeburger Group is set up I don’t know.
The ethic of granting huge bonuses to those who figure out how to suck more from the system probably doesn’t help.
Remnant, you’re way out to lunch. You really don’t get what she’s trying to say. There are some fundamental principles somewhere that you missed. Your take on Ellen’s book is… ephemeral? You can have your own opinions by all means, but try to get an understanding of her message. There are a lot of spot on people behind what she’s saying, and I’m sure you would glean some advantage from understanding her view.
Birch, I guess I’m out to lunch too, since I can’t find those fundamental principles you’re talking about. How about you enlightening us — exactly which principles are you referring to?
“It is ironic in a way that we pay our federal income tax with non-legal tender (check). ”
Which are redeemed for?
Nice try.
I hope real Liberty seekers read this post thoroughly. The Big Government folks here will not have this, it restrains their heroes.
I read somewhere that Max Keiser wants to get Ellen Brown on his show with Gary North. I encourage Ms. Brown to take that opportunity to show that feeble old man what she is made of.
From what i hear he has quite a of a following so this could be a great learning experience for all and a great way to get more exposure to ideas in her book
I will be on Max Keiser on Thursday, in an interview that was arranged before this came up; but the subject is ForeclosureGate.
“Feeble old man”? Dr. North is in his late sixties, works out every day (weights), has written over 50 books and is working on several more. He writes 4 articles a day, 6 days a week, for his website, many of which are the length of most book chapters.
Ellen Brown will not appear on the Keiser show simultaneously with Gary North, as he has challenged her to do. She understands that it would be exactly the kind of exposure to her ideas that she DOESN’T need.
Her ideas are perfect for the all powerful, all intrusive government. They have nothing to do with individual prosperity.
We should be careful, DiMoose, or we might end up with the worst of both worlds, a government ENFORCED gold standard. Yes, North is supposedly against that but the devil is in the details as they say.
As for PMs in general, they are a primitive form of money and I predict a truly free market in money creation and acceptance would eventually crush them.
Anarcho capitalists are not for a fiat gold standard, any more than they are for fiat paper schemes. What they want are competing currencies.
What they want are competing currencies. DiMoose
So do I. But I am strenuously opposed to any back door or otherwise government endorsement of any particular private money or class of private monies.
In a truly free Market, I predict gold buggery and usury could not compete with common stock and perhaps some other forms of money. But let’s have one and see, eh?
It will never happen.
North is too much out of Brown’s league for her to step up to the plate of logical debate.
Thank you for your prompt response. Over the next 31 days, I will reply.
http://www.garynorth.com/public/7109.cfm
I am looking forward to your responses to my 21 criticisms of your economic theory.
This is going to be fun. For me.
Ms. Brown is in trouble. Gary North is a tough guy. He is good at history, combined with his Calvinistic logic reasoning, nobody can win a debate against him.
Don’t fight Gary North. He is a genius.
Yes Gary North is smart but the question I have for him is how taxation would occur in a nation of only private currencies. If the government accepted only PMs for taxes and fees, for instance, then wouldn’t folks who used other forms of private money such as common stock be forced to buy PMs to pay their taxes? Would that not be in effect a government subsidy of demand for PMs?
So despite the fact that Mr North is opposed to legal tender for all debts (which I agree with, BTW) his logic may compel him to the necessity of legal tender for government debts only.
F. Beard,
As an anarcho capitalist, I don’t believe in the State. So it stands to reason, I don’t believe in fiat monetary schemes, government debt, or taxation.
If you were to read the Declaration of Independence, you might think, by today’s standards, it were a joke. What they considered oppression in those days, We (and I use the term liberally) not only accept, but expect from a government.
We cannot overhaul the banking or monetary system without a proper discussion regarding the role of government.
We cannot overhaul the banking or monetary system without a proper discussion regarding the role of government. DMoose
First, we need government to bailout the victims of the current government backed usury and counterfeiting cartel. Second, the large size of the government has resulted because of that cartel so we can expect that it would shrink once that cartel is abolished.
A Remnant just left many golden nuggets of wisdom about money and why it has value. If you are ever able to grasp what money is…and why it has value, you will dismiss The Greenbacker out of hand.
Do not dismiss knowledge for personality. Your prosperity depends on critical thinking. This site will not help you understand economics.
Read Economics in One Lesson by Henry Hazlitt
Do not dismiss knowledge for personality. Your prosperity depends on critical thinking. DiMoose
But the wisdom from above is first pure, then peaceable, gentle, reasonable, full of mercy and good fruits, unwavering, without hypocrisy. James 3:17
Often, I can’t get past “pure” but I notice the stronger my case is, the more likely I am to be gentle, reasonable and etc.
But the wisdom from above is first pure, then peaceable, gentle, reasonable, full of mercy and good fruits, unwavering, without hypocrisy
best thing you said.
you are not a libertarian if you keep worring about taxes, and no we do not care if it is gold or walmart money just so long as it is not forced money.
you are not a libertarian if you keep worring about taxes, … John
Indeed I am a libertarian and the issue of taxation is CRUCIAL to any discussion of private monies. For instance, suppose the government makes coal based money the only money it accepts for taxes (because of the coming global cooling). Won’t the goldbugs have to exchange their gold to buy coal so they pay their taxes? Is that not a government subsidy of coal based money?
I am a libertarian and I can imagine a couple of forms of money that require no usury such as common stock and futures contracts. So I would love to see a genuine free market competition between various private money forms. It does not make sense that a shiny metal and usury could outcomptete more modern money forms. But lets see. The gold buggers have in the past used government privilege to coin their gold into legal tender and obtain a windfall. They won’t be that obvious the next time. Perhaps they will only try to keep the capital gains tax on common stock and other potential money alternatives while gold becomes tax free.
Point taken F. Beard.
Was mine?
Sure. My interest in money was sparked by Mr. North’s “Honest Money”. And I have also read and appreciated greatly Murray N. Rothbard.
However, I am disappointed that the Austrians have not gotten past gold and usury for their monetary solutions. But let’s have a truly free market in money creation and we shall see.
Good job, Ellen. I read Gary North’s response first and followed the link here. You answered every point he made, but he claims you didn’t answer anything. Well, I think everyone can see through that. You win by being the adult.
She didn’t answer every point he made. Her answers were half-baked and misleading, cherry-picking her points. See his reply today that shows how she quoted Jefferson’s letter only in part, leaving out the rest of the quote that clearly shows he hated paper money. The part she quoted is slightly out of context.
Ellen seems like a likable enough person, but Gary’s point is that you all should take heed that the Greenback movement is a left-wing dupe job that would hand over money printing to the Congress. As bad as it is in the hands of the Fed, the prospect of hyperinflation is remote while they have that power, while it’s a virtually certainty if Congress has it.
Sorry, Ellen, but if you’re the intellectual leader of this movement, it is going to fail. The rest of you should not be suckered in.
… but Gary’s point is that you all should take heed that the Greenback movement is a left-wing dupe job that would hand over money printing to the Congress. As bad as it is in the hands of the Fed, the prospect of hyperinflation is remote while they have that power, while it’s a virtually certainty if Congress has it. Glen L
It is precisely Congress that should have the power to issue government money but that money should only be legal tender for government debts (taxes and fees for instance). For anyone else to issue government money is counterfeiting just as much as if I issued claims to someone else’s gold supply.
Let Congress issue fiat for government debt only and if Congress over issues then only Congress shall suffer the loss of purchasing power.
Ellen:
In case you haven’t noticed, your fiat money has gone now except DOWN the past decade (and actually much longer). The price of my house has trippled in terms of fiat money in ten years. Gold, what? about four times. Gasoline, food, taxes, property taxes, untilites, You name it. All more expesive in terms of fiat money. In terms of gold? hmmm.
Tell you what. You pay my wages in gold, my future penison in ounces.
I’ll pay yours in fiat money.
Deal?
I started becoming a believer about 1980. That’s at least three serious recessions during that span. I’m solid in the camp of hard money. You’re quite welcome to all the fiat money the government can print.
Ellen Brown writes:
“According to a statement by the Zimbabwe central bank, the hyperinflation was caused by speculators who charged exorbitant rates for US dollars, causing a drastic devaluation of the Zimbabwe currency. [Web of Debt, pp. 246-47]”
“We both have our sources. Mine disagree with yours on the cause; you haven’t shown that yours are more legitimate than mine.”
You. Have. Got. To. Be. Kidding. Me.
OF COURSE THE ZIMBABWE CENTRAL BANKERS WOULD BLAME ANYTHING BUT THEMSELVES FOR HYPERINFLATION!!! JUST LIKE THE GERMANS DID!!!
They are not going to blame themselves for anything!!
Look, the current financial mess in the US was ultimately caused by Federal Reserve policy. But Bernanke and Greenspan have denied any such responsibility. For Miss Brown, their say-so would be enough. For a real scholar searching for credible information, that is a joke.
I hate to say it, but it looks like Gary North is going to make you look very bad.
F. Beard said “Please don’t think that bankers are any better in their hearts [than government].
I can’t read what’s in anyone’s heart, but I can judge them (bankers) by their actions. Most commercial bankers in the US are presumed to be honest businessmen. They may gamble too much with our money, but they play with the hand they were dealt, and the dealer is the government. Make no mistake that the Fed is an instrument of the shadow government, not a private banking institution.
“And I am afraid that some degree of government is inevitable though it should be limited. But in any event, millions would currently starve to death without some form of forced redistribution by the government.”
Utter nonsense. There is not a single documented case of anyone starving to death in the USA from the founding to the advent of the welfare state. You’re straying off the libertarian reservation with remarks like that.
“Their own fault you say? No because that is equivalent to claiming that there are no victims of the current banking and money system and that is absurd.”
I was wondering how long before you would resort to putting words in my mouth. I never said either of those things.
“The government backed banking cartel is responsible for the Great Depression which is a major cause of WWII which killed 50-86 million people.”
No argument there, unless it’s a veiled defense of Hitler.
I apologise for putting words in your mouth. It’s good to see you have a heart.
As for bankers being honest businessmen, that is stretch. Their very business is based on theft of purchasing power from all money holders including the poor. My sister worked as a vice president at Chase. Her analysis? “It’s all bullshit.”
As for people starving to death in the US, I hope you are right. That still leaves death by exposure and other hazards of extreme poverty.
I’d like to see Gary North debate Stephen Zarlenga too. I don’t completely agree with either of them but they should be good for exposing the flaws in the other’s thinking.
As for North, he might win a debate with Ellen but that is no guarantee that his ideas on money are perfect either. And as I have demonstrated, there may be a NEED for government fiat (for government debt only) if all private monies are to compete on a level playing field. So, there is a good probability that Ellen is partially correct, IMO.
North’s dismissive attitude is therefore not justified, imo.
The first to plead his case seems right, until another comes and examines him. Proverbs 18:17
I’m, for one, delighted to see so much debate on this topic. It’s far to important to let it slide as has been done since the creation of the Federal Reserve.
Having read both The Web of Debt as well as many articles by Mr. North, I’m looking forward to the future discussions on the topic of money.
Concerning government money supplies:
“Tell us then, what do You think? Is it lawful to give a poll-tax to Caesar, or not?”
But Jesus perceived their malice, and said, “Why are you testing Me, you hypocrites? Show Me the coin used for the poll-tax.”
And they brought Him a denarius.
And He said to them, “Whose likeness and inscription is this?”
They said to Him, “Caesar’s.”
Then He said to them, “Then render to Caesar the things that are Caesar’s; and to God the things that are God’s.”
And hearing this, they were amazed, and leaving Him, they went away. Matthew 22:17-22 (New American Standard Bible)
F. Beard what is up with you and common stock and futures contracts? Why on earth would I sell my products for common stock in Intel or Microsoft or any other company for that matter?
This form of money would be totally useless to me. The point of money is its usefulness as a medium of exchange. I can’t see getting 1/100 of a stock in microsoft as change at the gas station. Can you?