Category Archives: United States

Trump’s Inflation

Former President Donald Trump attends a rally in support of Arizona GOP candidates, Prescott, Ariz., on July 22, 2022. (Mario Tama/Getty Images)

Once again, former president Donald Trump criticized the Biden Administration for the record consumer price increases that Americans are now paying.  His remarks followed up on his July 4th speech in Wyoming where he lamented about the state of the nation: “I know it’s not looking good for our Country right now, with a major War raging out of control in Europe, the Highest Inflation in memory, the worst 6 month Stock Market in History, the highest energy prices ever.”* 

In his most recent campaign rally for GOP hopeful Kari Lake, Trump lambasted President Biden for creating the “worst inflation in 47 years”** and for his “war on American energy” which Trump believes has contributed to the record hike in fuel prices.

The former president boasted that had he been re-elected “none of these terrible events would have happened.”  He reassured his audience “not to worry” and that “we will make America great again.” 

As with all of his post-presidential rallies, Trump’s criticism of the Biden regime comes with touting his own accomplishments as chief executive.  Most of these claims are so outrageous they damage or totally negate his critique of Biden’s policies and make Trump sound like a fool.

Take, for instance, his rally in Arizona for Kari Lake, where he had the audacity to say that under his watch the country “had the greatest economy in the history of the world with no inflation.” [!]  Such nonsense needs no comment.

Like his boasts about the economy, the former president deftly left out his Administration’s role in the drastic rise in prices which Americans are currently suffering from. 

First, however, the meaning of “inflation” should be explained.

Inflation, properly defined, as it was understood until the present era, meant an expansion of the money supply.  “Deflation,” its opposite is a decrease in the money supply.  The rise or fall in prices – usually a rise in producer and consumer prices – is a consequence of the expansion or contraction of the money supply.  Once understood, the rampant rise in prices in America and throughout the world has been the result of the increase in the money supply not only by the Federal Reserve, but all central banks.

Another important tenet of monetary theory long since forgotten has been the notion of a “lagging indicator.”  Between the expansion of the money supply – inflation – and the resultant increase in prices, there is often a lag which could take months or years to appear. 

The increase in consumer and producer prices is due to the dramatic explosion of money and credit which took place during the Trump Administration not only in response to the scamdemic, but in the years leading up to it.  In fact, the plandemic was a convenient excuse to inject massive liquidity into a system that began to hemorrhage in September, 2019.  In the early months of 2020, the markets began to implode before the unnecessary lockdowns as the air began to come out of the financial bubble.  This has been ignored by the financial press and Trump himself.

Prior to the covid hysteria, Trump had repeatedly lobbied for “cheap” money, calling for a renewal of quantitative easing, reduction in interest rates, and he even spoke about “negative” rates.  The former president threatened to fire Jerome Powell, whom he had picked to head the Federal Reserve, for not reducing interest rates far enough.  Trump complained that President Obama benefited from the Fed’s accommodative monetary policy and wanted similar treatment so as to keep the financial bubble going.

Trump’s fiscal policy was also highly inflationary as he ran record deficits long before covid.  His tax cuts and failure to cut government spending led to greater government borrowing which the Fed was forced to monetize.  Trump was on pace, well before the 2020 lockdowns, to spend more money in four years than Obama spent in his two terms.  By 2019, the deficit had grown to $1 trillion dollars, up $205 billion, 26 percent from 2018.***  Again, all before covid had begun.   

It was the Trump Administration’s wrongheaded response to the corona virus which is largely responsible for the rising prices of today.  If the lockdowns were necessary (which a growing number of officials now admit they were not), the proper policy would have been to reduce the money supply (and government spending in general) since the lockdowns reduced production meaning less goods and employment.  The massive increase in the Fed’s balance sheet from $4 trillion to some $9 trillion meant more money “chasing fewer goods” causing the prices of the available goods to increase – some dramatically.

What was needed was a reduction in consumer spending since there was less goods being produced with the lockdowns.  Less demand would have offset the reduction in supply and would have kept prices from spiraling.

Instead, Trump – as did his successor – following the doctrines of Lord Keynes, attempted to maintain aggregate demand at pre-covid levels and sent out stimulus checks even to those still employed.  While the money given out to American workers pales in comparison to the massive transfer of wealth to politically-favorite corporations, big business, and the expansion of the government itself, the propping up of aggregate demand led to supply chain shortages.   

Trump is not alone in his ignorance of economics.  His handlers, economic advisors, and the vast majority of his loyal supporters do not understand what took place under his administration.  The current financial mess can be laid at his – and the Federal Reserve’s – feet.  To be fair, his predecessor, Barrack Obama, is also liable.    

The “inflation,” and now recession, which the country is suffering through cannot be fully attributed to the Biden Administration although it too has added to the crisis with more profligate spending. 

The remedy for the current mess is not the re-election of a very flawed former president who does not understand the problem at hand and throughout his term was constantly outfoxed by the Swap which he was elected to drain.  The solution is a return to sound money, the abolition of central banking, and the allowance for the necessary cleansing of the financial bubble. Until a presidential contender speaks in these terms, America’s financial woes will continue.

*https://www.zerohedge.com/political/heres-what-trump-says-inflation-would-be-if-he-were-still-president

**https://www.zerohedge.com/political/trump-blasts-biden-over-soaring-prices-says-true-inflation-rate-much-much-higher-91

***https://www.washingtonpost.com/business/2019/10/25/us-deficit-hit-billion-marking-nearly-percent-increase-during-trump-era/

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

America’s Trade Deficit: An Enormous Concern

Another milestone (or more accurately millstone) was recently passed by the U.S. economy as the January trade deficit surged to an all-time record high of $107.6 billion, up some $26 billion from December’s $80.7 billion imbalance.*

Like the gigantic federal budget deficit, the trade imbalance is no longer talked about by the financial press.  There has been little criticism of President Biden on either matter nor are Administration officials questioned about how things can be reversed.  In fact, some commentators bizarrely contend that trade deficits show how robust an economy actually is!     

The trade deficit was supposed to be alleviated by former President Trump who vowed throughout the 2016 campaign that he would rectify the situation and repeatedly ridiculed U.S. trade negotiators for their lack of financial acumen.  He touted that his “friendship” with world leaders, most notably Chinese President Xi Jinping, would result in favorable trade deals for the country. 

Trade hawks got on board with Trump’s economic nationalism believing that he would not only fix imbalances, but create an American industrial renaissance.  Optimism ran high after his unexpected win in 2016. 

As president, after a couple of contentious years of on-again, off-again negotiations a first phase of an agreement with China was signed in early 2018.  During the negotiations, he boasted:

When a country (USA) is losing many billions of dollars

on trade with virtually every country it does business with,

trade wars are good and easy to win.**

In actuality, nothing significant was agreed upon with China despite the Trump Administration bragging that it was the first phase of a more comprehensive deal to come.  Despite all of the hoopla, the trade imbalance continued to grow and no deal was ever finalized. 

Besides the initial agreement with China, the next biggest trade policy act was the scrapping of NAFTA and its replacement with a new treaty, “The U.S.-Mexico-Canada Agreement” (USMCA).  The new agreement was little different than the original treaty.

Thus, by the time he left office in 2020, the U.S.’s trade gap ($68.2 billion) was greater than during his predecessor, Barrack Obama’s term, who Trump lambasted for his ruinous trade policy.***

Trump wisely spoke little about trade during his unsuccessful 2020 re-election bid and, surprisingly, his opponents, despite the president’s miserable failure, steered clear of the issue.  Of course, the Democrats were limited in what they could do with an obvious feeble, senile, and vile candidate at the top of their ticket.

Like the Democrats, Trump’s trade-hawk cheerleaders have remained reticent about the escalating trade numbers and like the former president they too, are now discredited when it comes to trade.  If America could not overcome its trade gap with an economic nationalist as president for four years, then there must be a problem with their thinking.      

The reason why Trump failed – as will Biden – is that he, his negotiators, and the trade hawks who supported him are ignorant of basic economics. The burgeoning trade deficits are not the result of bad trade deals or that of ineffective tariff policies, but are the result of a deteriorating U.S. economy which is no longer one of production, but of consumption and debt.  A growing economy creates trade surpluses not deficits; it produces more than it consume.

Because of decades of anti-capitalistic economic legislation – confiscatory taxation, regulatory burdens, inflationary monetary policy, “crowding out” budget deficits, unemployment subsidies, minimum wage laws, and an overemphasis by the Establishment on higher education – the U.S. is no longer an industrial power and not a conducive environment for economic growth.    

Because it possesses the world’s reserve currency, the U.S. has been able to offset its trade imbalances by importing goods in exchange for dollars.  Even with this advantage, however, trade deficits have continued to grow.  It appears that even its status as the possessor of the world’s reserve currency may be coming to an end as the dollar’s preeminence will fall with the surge in price inflation.  This will have a devastating effect not only for the domestic economy but its foreign trade as well as the country will not be able to export dollars for goods in the future. 

The burgeoning trade deficit is a far more accurate indicator of the health of an economy than GDP, unemployment figures, or the government’s “official” rate of price inflation.  All these statistics are so manipulated that they do not come close to showing what is actually happening in the real world.  The trade deficit is a more reflective gauge of an economy’s productive capacity.    

That Trump posted the largest trade deficit in history also explodes his claim that under his watch, the U.S. had the greatest economy ever!  How he calculated and supported such nonsense (which was not challenged by the financial press) is hard to maintain with trade deficits in the stratosphere.

When America’s economy was at its zenith, it was a creditor nation with trade surpluses and producing goods which were sold the world over.  It had a high savings rate, a low inflationary environment, little public debt, and respect for private property, particularly the right for entrepreneurs to hire and fire whom they pleased.  All socio-economic groups prospered from the free market and free trade, not just the 1%. 

The trade deficit can be turned around, but not through bureaucratic state orchestrated deals which favor big business and multi-national corporations at the expense of American consumers.  The proper trade policy is no policy at all, except the freeing of the economy from government intervention.     

*https://www.reuters.com/business/us-goods-trade-deficit-hits-record-high-january-2022-02-28/

**https://www.reuters.com/article/us-usa-trade-trump/trump-tweets-trade-wars-are-good-and-easy-to-win-idUSKCN1GE1E9

***https://www.cnbc.com/2021/03/05/us-trade-deficit-january-2021.html

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

                               

                               

                               

                               

The January 6th “Insurrection” and the Epiphany

One year ago a haphazard and foolish attempt was made by supporters of former President Donald Trump to disrupt a joint session of Congress which had assembled to formalize the victory of then president-elect Joseph Biden.  Some Congressional offices were vandalized while Congress had to halt proceedings as representatives were evacuated and the Capitol building was put under a lockdown.

A number of the participants in the ransacking were arrested and even those who did not take an active part have been imprisoned and remain there to this day.  Some of the right-wing groups, such as Proud Boys and Oath Keepers, have been fined and face further legal persecution.

The ease that protesters were able to gain access to the Capitol building, the lack of police response, and the number of agent provocateurs among the Trump supporters makes it hard not to believe that the entire affair was a sting operation. Trump played right into the scheme by calling for the rally on December 18, four days after the Electoral College had voted, “Big protest in D.C. on January 6th.  Be there, will be wild.”  The build-up and encouragement by Trump and others gave U.S. intelligence agencies plenty of time to orchestrate a false flag.

What has been forgotten since the calling of the “Save America” rally by Trump and the government’s response to the ‘insurrection” has been that January 6th is an important date in human history.  January 6th is the feast day of the Epiphany, the date that it was revealed to the gentile nations that the Messias had been born.  “Epiphany” in Greek signifies “appearance” or “manifestation.”

The Magi – guided by the Star of Bethlehem – were led to Bethlehem to adore the Savior, bearing with them precious gifts.  In fact, Epiphany has been traditionally a higher class of feast than the Nativity. 

That Trump and his supporters most of whom consider themselves Christians decided to make their futile protests on the Epiphany instead of celebrating the day for its importance demonstrates why the world is in its present deplorable condition.

Until those who seek to halt the neo-leftist assault on what is left of Western culture which began in earnest with the election of President Trump in 2016 get their priorities straight, they will have little success against the forces that seek to destroy them. 

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

“Inflation,” Properly Defined

What Is Inflation in Economics? Definition, Causes ...

The use or rather misuse of language has always been an effective tool of politicians to enact their agendas.  George Orwell’s “Politics and the English Language” brilliantly showed, in his day, how language was being manipulated for all sorts of totalitarian measures:

Political language — and with variations this is true of all  political parties, from Conservatives to Anarchists — is designed to make lies sound truthful
and murder respectable, and to give an appearance of solidity to pure wind. One cannot change this all in a moment, but one can at least change one’s own habits, and from time to time one can even, if one jeers loudly enough, send some worn-out and useless phrase —
some jackboot, Achilles’ heel, hotbed, melting pot, acid test, veritable inferno, or other lump of verbal refuse — into the dustbin, where it belongs.*

Since its publication in 1946, matters have only gotten worse.  For example, in today’s parlance words such as “racism,” “discrimination,” “fascism” have lost all meaning and are usually used by the Left to smear its political opponents.

In the sphere of economics, examples abound of the misuse of terms and concepts all of which advance the interests of the politically-connected elites, technocrats, governments, and the banking establishment at the expense of everyone else.  One of the most glaring examples which, after the financial collapse in 2020, has now become more prominent in daily life, has been the meaning of the word “inflation.” 

Inflation, at one time, and properly understood meant an increase in the money supply; it did not mean an increase in prices.  A rise in prices was and still is, the result of inflation.

The meaning of inflation, however, has been deftly misused by the world’s monetary lords to cover their own nefarious machinations.  By deliberately changing the term it deflects the focus of their activities which can thus be blamed on others – greedy businessmen, oil cartels, workers demanding higher wages, etc.

Since central banks have complete control of the money supplies of the world, when inflation is properly understood its cause can be directly traced to them, which may lead to some inconvenient – for the banksters at least– inquires such as: “How did they attain such power and privilege?”

Redefining inflation has been done to disguise and shift focus away from the actual cause of what America and many economies of the Western world are now experiencing in the startling rise in both producer and consumer prices.  This is the result of the central banks’ expansion of the money supply to mind-boggling proportions purportedly to fight the corona plandemic, but in reality it has been done to offset the financial implosion which began in late February/March of 2020 before the unnecessary and destructive lockdowns began.  The lockdowns and closing of the economies gave cover for the Federal Reserve and central banks to create vast amounts of money and credit to salvage, and then re-inflate a bubble in the stock and asset markets.   

An accurate account of the matter will show that the financial collapse of the system really began in the fall of 2019 as the “repo” market began to meltdown, causing the Fed to intervene with injections of “liquidity” to keep interest rates from spiking.  However, just like the meaning of inflation has been corrupted, so has the narrative of the financial collapse of 2020 been purposely skewed.

As a separate discipline, economics developed in large part in reaction to British Mercantilism of the 18th century.  Economic theory was used by authors such as Adam Smith in his Wealth of Nations to debunk the system of regulations, taxes and subsidies that the British government imposed.  Such economists, as did later schools of thought, most notably the Austrians, used economic thinking and its terms to expose the baneful effects of government intervention, fiat money, and the benefits of free trade. 

Over time, however, most economists became corrupted and instead of acting as a check on state power, became champions of regulation, central banking, and all sorts of social engineering schemes.  Economists were paid for their sell out with cushy positions and jobs in the state apparatus to manipulate language and doctrines. 

Today, an inflation rate of 2% is regarded by Fed officials as good for the economy and something monetary policy should try to achieve.  Previously, a rise in prices of 2% was seen for what it was – a loss of purchasing power hurting the middle and lower classes the worst while benefiting the wealthy.

For those who seek to rid economics or, for that matter, all the social sciences of deliberately misleading language and terms, George Orwell’s works are indispensable.  It is, therefore, incumbent for truth seekers of all persuasions to do so not only for their own benefit, but to maintain the sage author’s legacy.

*https://libcom.org/files/Politics%20and%20the%20English%20Language%20-%20George%20Orwell.pdf

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

 

A Warning of Economic Collapse

Eleison Comments by His Excellency Bishop Richard Williamson

Traditional Catholic Bishop Richard Williamson’s latest missive should be a wake- up call for those who naively believe that the worst is behind for the US and Western economies after the March financial sell off and the long-anticipated implosion of the bubble economy.  His Excellency asserts that the US and much of the world are on a financial precipice:

At this moment the United States has been brought to the brink of a tremendous

economic crisis, and with the USA, the rest of the world.*

Bishop Williamson contends that it has not only been the response to the virus, but more importantly, the response to the bursting of the financial bubble, created by the Fed, which will ultimately lead to a cataclysmic collapse:

By 2019 as the public was more and more hooked on fantasy money, the

Fed’s public balance sheet took off into complete unreality, seven trillion dollars

and counting, and it is now crashing the real economy with the corona-panic,

then ‘paying’ the crash debts that everybody gets into with its unreal trillions, but

turning the whole world into real slaves.

The bishop’s brief analysis of the history of the Fed is right on as he explains that the central bank has been the engine of monetary mischief since its inception:

These money men had promised that the Fed . . . would solve the problem

of reoccurring economic crises. . . .  It did nothing of the kind.  On the contrary,

it made them even worse, like the Great Depression of 1929 and the years following,

and now the Depression of the 2020s which risks making 1929 look like a picnic, and

risks stripping the United States of its prosperity and enslaving its liberty by making all

American citizens into debt-slaves. The middle class will soon be no more.

One quibble: Bishop Williamson rightly sees the problem of the money supply controlled by “private individuals” (central banksters):

It is not normal for private citizens to control their State’s money because they risk

doing so in their own interests, and not for the common good.

Yet, the alternative – State control – is no better and, under “democratic conditions,” maybe even worse considering the State’s horrific record in the debasement of money, the creation of booms and busts, hyperinflations, the destruction of savings, etc.

The only economically sound, morally defensible monetary system is one based on gold/silver where money and credit cannot be created “out of thin air” and where competing gold and silver producers vie with one another to produce the “best money.”  Such a system requires no central bank while fractional-reserve banking is prosecuted as fraud.  The creation of money is what is mined out of the earth not government and central bank fiat.

America’s current financial condition has ominous parallels to ancient Jerusalem before its destruction by the forces of Vespasian and Titus.  A couple of years before its final destruction, a Roman army, under Cestius Gallus, had stationed troops under the walls of Jerusalem posed to launch an assault.  Yet, Gallus did not attack and ultimately pulled back.  This was a clear fulfillment of Christ’s prophecy about the city’s destruction:

And when you shall hear of wars and seditions, be not terrified: these things must first

come to pass, but the end is not yet immediately.  [St. Luke Ch. XXI; vs. 9]

 

And when you shall see Jerusalem compassed about with an army: then know that

the desolations thereof is at hand. [Ibid., vs. 20]

Rome’s hesitation – a clear result of Divine intervention – gave Christians a chance to escape the coming conflagration which many wisely took advantage of:

Then let them that are in Judea, flee to the mountains: and let them that

are in the midst thereof depart out: and let not them that are in the

countries, enter into it. [Ibid., vs. 21]

Destruction of Jerusalem

50. The First Jewish-Roman War; the destruction of the ...

Since the March lows, Americans have been in a situation not unlike the denizens of ancient Jerusalem.  The relief programs and bailouts of businesses (mostly large corporations and banks) has staved off an even greater downturn, however, this has come at a tremendous cost as the Fed has had to print trillions, the consequence of which will mean either a collapse of the dollar or, at the very least, a dramatic loss in its purchasing power.      

At present, it does not appear that the US has much time before the final unraveling of the economy takes place.  The current debt levels and the new debt that will have to be created to maintain the status quo will lead to a monumental monetary crisis.    

Many have interpreted Jerusalem’s fall as a punishment for its sins.  Likewise, the coming collapse can also be seen as retribution for the US’s crazed monetary and fiscal policies which have bankrupted the nation while enriching the few at the expense of the many. 

While Jerusalem’s destruction had little reverberations on the wider Roman Empire at the time, the demise of the dollar will have global implications since it is the world’s reserve currency.  Like those who heeded the Divine prophecy two millennium ago the present generation should take Bishop Williamson’s words to heart and prepare for the coming financial storm.

*His Excellency Richard Williamson, “Economic Reality,” Eleison Comments, 12 September 2020.  https://stmarcelinitiative.com/eleison-comments/

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

 

Memo to The Donald: Cut Tariffs NOT Rates

trump tariff

So far, President Trump’s economic response to a potential coronavirus outbreak and a further stock market sell off has been expected – calls for more interest rate cuts and an additional round of monetary stimulus.  For the stock market, economy, and the virus itself, neither measure will have their desired effect and, in fact, may exacerbate things.

Further rate cuts and more money printing will not alleviate the situation since it has been the Federal Reserve’s recent “repo operations” which has pushed the market to its unsustainable highs.  For President Trump’s re-election hopes, the current “correction” better be short lived since he has repeatedly boasted about the stock market and has tied its success with the supposed health of the economy.  He will pay a political price if the market continues to tank and brings the economy down with it.

While President Trump and economic nationalists have bashed China for its trade practices, they are now going to see first hand how dependent the US and the West are on Chinese exports, as supply chains are disrupted over the coronavirus.

A Bloomberg article describes China’s weakest factory activity ever recorded:

The manufacturing purchasing managers’ index plunged to 35.7 in

February form 50 the previous month, according to data received by the

National bureau Statistics on Saturday, much lower than the median

estimate of economists.  Both were well below 50, which denotes

contraction.*

The expected reduction of Chinese goods will mean higher US domestic prices, however, the increase in prices can be offset somewhat not by rate cuts, but by tariff reductions, or, better still, elimination of duties on imports.  Increasing the money supply or cutting interest rates, which is what Trump, the market, and 95% of economists favor, will only mean higher prices for dwindling imports as greater amounts of money will chase fewer goods.

In the President’s comments on the coronavirus and the stock market plunge, he has repeatedly cited other nations’ (Japan, Germany) – lower interest rates as a policy that the Fed should pursue.  Apparently, the President is not aware that recent data out of Japan has shown that the economy shrank at an annualized rate of 6.3% for the fourth quarter of 2019 while the German economy only grew at 0.6% last year.**  Low rates have not helped either economy or anywhere else where they have been foolishly tried.

What President Trump, world policy makers, and central bankers do not understand, whether deliberately or from willful ignorance, is that the artificial suppression of interest rates and money printing does not lead to economic growth. Instead, prosperity can only come about by the arduous process of saving (abstention from consumption), which provides the means for capital formation, which leads to production.  Employment, wage growth, and income are also ultimately tied to savings.  For the creation of wealth, there is no way around this elementary economic principle – one that few profession economists comprehend.

For saving and investment to have their most efficacious impact and for individuals to engage in such sacrificial behavior, a sound monetary order must be in place.  Unfortunately, ever since the US went off the gold standard internationally in 1971, its monetary system has grown increasingly unstable.

If the Trump Administration would eliminate, or at least reduce significantly, tariffs, it would more than likely induce China to do the same.  The benefits of lower import prices for the millions of out of work Chinese due to the coronavirus shut downs would be a tremendous help and would also boost America’s export industries.  Such action would show to those who elected him that Donald Trump was not a typical politician, but one who thought outside the box.

While it did not cause the Great Depression, the Smoot-Hawley Tariff of 1930 contributed to its severity.  If the recent sell-off is indeed the beginning of the long anticipated bust, following a supposed decade long expansion, then policy makers should do all in their power to alleviate the coming suffering.  The reduction of tariffs not only on Chinese goods, but those the world over would be a step in the right direction.

Let us hope that someone will convince Donald Trump that tariff reduction and not rate cuts will help Americans better deal with the troublesome and potentially economic and socially devastating coronavirus.

*China Posts Weakest Factory Activity on Record,” Bloomberg News, 29 February 2020.  https://www.bloomberg.com/news/articles/2020-02-29/china-feb-manufacturing-pmi-at-35-7-est-45-0

**Megumi Fujikawa, “Japan’s Economy Shrinks Faster Than Expected.”  Market Watch.  16 February 2020.  https://www.marketwatch.com/story/japans-economy-shrinks-faster-than-expected-2020-02-16;  “German Economy Stagnates as Eurozone Growth Hits Seven-Year-Low,”  The Guardian,  14 February 2020, https://www.theguardian.com/business/live/2020/feb/14/german-economy-stagnates-growth-eurozone-gdp-business-live

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

The Ethics of a Gold Standard

goldstandard

The efficacy of a metallic monetary system is beyond dispute at least among real economists which eliminates just about 95% of whom are now engaged in the “profession.”  Money, which gold is, allows for specialization, the division of labor, and provides the means for mankind to escape from barter and, thus, a primitive existence.  Like free trade, money naturally integrates mankind both among and between peoples.

A system of central banking with an unbacked paper currency is the antithesis of a gold standard.  Manipulation of currencies by central banks, mostly through debasement, hinders trade, creates distortions, and ultimately leads to the dreaded business cycle.  Murray Rothbard aptly describes the baneful results of state intervention in the monetary system:

. . . government meddling with money has

not only brought untold tyranny into the world;

it has also brought chaos and not order.  It has

fragmented the peaceful, productive world

market and shattered it into a thousand pieces,

with trade and investment hobbled and hampered

by myriad restrictions, controls, artificial rates,

currency breakdowns, etc.  It has helped bring

about wars by transforming a world of peaceful

intercourse into a jungle of warring currency blocs.*

Rothbard Money

While the economic efficiency of a gold standard is important, the ethical case for it is more compelling and was the reason why gold, as money, lasted as a medium of exchange for so long.  Gold/money has to be created through honest-to-goodness production and exchange.  The often dangerous mining of gold takes labor, capital goods, and land.  Turning raw gold into coinage is another process which requires a high level of specialization and production techniques.  Both are honest and morally sound activities which make for the betterment of life all around.

The ethical standing of central banking and its issuance of unbacked currency as money through the printing press, stroke of a computer key, or via the expansion of credit cannot stand similar scrutiny.  By any appraisal, central banking is immoral.  Through the creation of money, banks stealthy transfer wealth to those who control the money supply and those closely associated with it.

The ability of central banks to create unlimited amounts of money and credit has been the greatest redistribution scheme ever conceived.  The process ultimately leads to class conflict as the wealth disparity between the politically well-connected and those outside that nexus invariably widen.

Under a gold standard, none of this would take place.

Because of their lack and often distain for economic doctrines, in particular, monetary theory, “economic nationalists” (really “economic ignoramuses”) have wrongly focused on trade as a factor in the continued decline of the middle and working classes.  China’s supposed unfair trade practices was a staple of President Trump’s campaign rhetoric and has continued through much of his first term.

The focus on trade has deflected attention from the real cause of worsening economic conditions for American workers and the enrichment of Wall Street.  Despite the blatant transfer of wealth via the Fed’s policies of suppressed interest rates and money printing since the 2008 Recession, economic nationalists continue to applaud President Trump’s tariff policies while the President continues to browbeat the Fed to do more of the same even calling for negative interest rates and more Quantitative Easing.

The Left rightly speaks out of the vast and growing inequality of wealth distribution, but like those who espouse economic nationalism, they fail to understand the reason for why the societal imbalance has occurred.  One remedy they propose – a “wealth tax” – will not address the problem.  Moreover, their “soak-the-rich” schemes would snare in their plunder (not that Leftists particularly care) many of the wealthy outside of the banking and financial sector of their legitimate, just gains.

The case for honest money must be made on ethical grounds.  The current system must be exposed and shown for the scam that it is: a massive redistribution scheme enriching the political elites and their closely aligned business and financial allies. While it is undeniable that a gold standard would lead to enormous prosperity, its reinstatement would remedy one of the great injustices that plague the world – central banking!

*Murray N. Rothbard, What Has Government Done To Our Money?  BN Publishing, 2012: 84.

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The Geopolitical Consequences of a Coming Recession

Irian Military

With the recent ominous inversion of the 2-10 year yield curve and its near infallible predictive recessionary power, the consequences for the economy are plain to see, however, what has not been spoken of by pundits will be the effect of a recession on US foreign policy.  If a recession comes about prior to November 2020, or if economic indicators such as GDP plummet even further, the chances of a Trump re-election is extremely problematic even if the Democrats nominate a socialist nut case such as Bernie Sanders or Pocahontas.

Elizabeth Warren has been the most vocal about coming economic troubles:

Warning lights are flashing.  Whether it is

this year or next year, odds of another

economic downturn are high – and growing. . . .

 

When I look at the economy today, I see

a lot to worry about again.  I see a

manufacturing sector in recession.  I see

a precarious economy built on debt – both

household debt and corporate debt and that

is vulnerable to shocks.  And I see a number

of serious shocks on the horizon that could

cause our economy’s shaky foundation to crumble.*

Warren

A “doom and gloomer” Demo?

If the economy cannot be reversed, despite the likelihood of rate cuts in September and a possible resumption of “QE” by the end of the year, President Trump will probably look for some “victory” or success to divert public attention away from deteriorating economic conditions.  The most likely targets will be renewal of hostilities toward Iran and/or an escalation of pressure on Venezuelan President Nicolas Maduro to resign.

Of course, the US has been conducting economic warfare on Iran ever since Trump stupidly pulled out of the nuclear agreement and began applying even more crippling sanctions on Iran.  In June, armed hostilities were about to take place over the Iranians downing of a US drone over its air space.  Reportedly, at the last minute, Trump called off retaliation, enraging, no doubt, the bloodthirsty neocons itching for an excuse to unleash more death and destruction.

Another factor, which has been little spoken of, but may contribute to foreign intervention is that Trump has alienated a number of his political base especially the spokesmen among the Alt Right.  While he still commands high poll numbers among Republicans and still attracts impressive rallies of “deplorables,” a number of his prominent backers, who were so crucial for his success in 2016, are, to say the least, disappointed over his inability to stem the tide of illegal immigration.  Moreover, these voices feel rightly betrayed since he has done nothing to halt the Internet tech giants from de-platforming many of their social media activity.

Another group which may be quickly added to disillusioned Trump supporters are gun owners and free-speech advocates if the President goes along with the proposed draconian “red flag” legislation. If these totalitarian measures are enacted, 2nd Amendment defenders will probably not vote for Trump’s opponent in 2020, but instead, may stay home in protest.

In electoral politics, voter enthusiasm can sometimes offset money and media control which was certainly the case for Trump both in the Republican primaries and the general election.  To win again, he will need to mobilize similar sentiment.

The politically savvy neocons, which the President has insanely surrounded himself with, are certainly aware of this dynamic which will give them considerable leverage to push forward their agenda.  A desperate Trump will surely be more malleable if a second term is in jeopardy.  Just look at the recent capitulation when there is, as of yet, no recession, yet, he called off the additional Chinese tariffs after the Dow plunged 800 points.

Even if a recession does not rear its ugly head, an armed conflict with Iran is a distinct possibility.  The more hard line neocons understand that they would be out of power under a Democratic president who may revert to compromise and negotiations to re-engineer a nuclear deal with Iran.  The push for war will intensify if Trump’s poll numbers drop as the election gets nearer due to a moribund economy.

Of course, the US is infamous for provocations and with the huge military build up in the Persian Gulf, any of the many trip wires may spring, leading to a local war which might turn into a general conflagration.

While it is not a certainty that a recession will lead to regime change in Washington, Trump has mistakenly tied his political fortunes to the well being of the economy especially the stock market.  He had the chance and the public support at the beginning of his term to level with the country and explain the monumental financial and economic problems which exist and that he had pointed out during the campaign.  Unfortunately, for both his and the nation’s future, he chose business as usual putting his own political goals (re-election) over the good of the country.

The cost of that choice is now coming to bear which may end in another war that will certainly seal the President’s fate and likely that of America.

*Sanjana Karanth, “Elizabeth Warren Predicts Another Economic Downturn.”  Politics.  22 July 2019.

Antonius Aquinas@antoniusaquinas

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“We’re All Socialists Now!”

Despite being probably robbed of the Democratic Party’s nomination by the Clinton political machine, the success of the Bernie Sanders’ 2016 campaign with his advocacy of “democratic socialism” was an ominous sign of things to come and, in some sense, more telling of the political climate than Donald Trump’s improbable victory in November, 2016.  The millions of votes garnered by Sanders in the Democratic primaries has emboldened other socialists to seek political office while socialist ideas are openly spoken of with little fear of political recriminations. 

Sanders has doubled down on his advocacy of democratic socialism in a recent speech at George Washington University, calling for the completion of Franklin Delano Roosevelt’s New Deal of the 1930s:

Today I am proposing we complete

the unfinished work of Franklin Roosevelt

and the Democratic Party by putting

forth a 21st century economic bill of rights.*

Even supposedly “moderate” Democrats are trying to tout their “progressive” credentials, such as creepy Joe Biden who recently said:

I’m told I get criticized by the

New Left.  I have the most

progressive record of anybody

running for . . . anybody who would run.**

While Sanders’ chance of becoming the Democratic nominee in 2020 is still uncertain, President Trump has already indicated what is going to be a centerpiece of his election strategy: oppose socialism.  The first hint of the strategy came at this year’s State of the Union address when the President declared:

America will never by a socialist country.***

While President Trump will espouse his supposed accomplishments (tax cuts, deregulation, trade) as a contrast to democratic socialism, his emphasis will also  deflect attention away from his most solemn campaign pledge which has not been achieved – a border wall and a crack down and deportation of illegal immigrants.

Whether this is a winning formula remains to be seen.  If the Democrats are led by Bernie Sanders in 2020, they will probably lose, unless the economy falls off a cliff (very possible) or the Donald follows the suicidal advice of the war- mongering team of Messrs Bolton and Pompeo and start a war with Iran.

While the Trump campaign narrative for 2020 may convince the masses who may still not be ready to vote for outright socialism, the country, like most of the Western world, has long ago imbibed and adopted many of the philosophy’s tenets. 

Frank Chodorov, one of the most perceptive and courageous writers of what was affectionately known as the “Old Right,” pointed out over a half century ago that America had enacted many of the ideas which were enumerated in Marx and Engels’ Communist Manifesto.  Chodorov constantly chided the Cold War warriors of his time, such as William Buckley, that communism had come to America without one shot being fired by the Soviets.

Frank Chodorov, 1887-1966

In one of his most penetrating essays, “How Communism Came to America,”* Chodorov incisively pointed out the “long-term objectives of communism:”

Among them are government ownership of land, a heavy progressive income tax,

abolition of inheritance rights, a national bank, government ownership or control of

communication and transportation facilities, state-owned factories, a government

program for soil conservation, government schools, free education.

He trenchantly asked: “How many of these planks of the Communist Manifesto do you support?  Federal Reserve Bank?  Interstate Commerce Commission? Federal Communications Commission? Tennessee Valley Authority? The Sixteenth (income tax) Amendment?  The inheritance tax?  Government schools with compulsory attendance and support?”   

Further in his piece, Chodorov describes how the American economy, even at the time, had taken on many features of state capitalism: deficit financing, insurance of bank deposits, guaranteed mortgages, control of bank credits, regulation of installment buying, price controls, farm price supports, agricultural credits, RFC loans to business, social security, government housing, public works, tariffs, foreign loans.

He again asked: “How many of these measures . . . do you oppose?” 

The next financial downturn, which is starring America in the face, will be far more devastating than the last since nothing has been resolved financially while the cause of the Great Recession – the Federal Reserve – continues to operate with impunity. As things continue to deteriorate, there will be even greater calls and support for more socialism.  The free market will be blamed.

Despite the collapse of communism in the Soviet Union and the present day economic basket cases of North Korea and Cuba, socialism continues to be espoused throughout the West.  Despite its historic and current failures, socialism survives because it was never debunked philosophically within Western academia.  The main reason for this is that the intelligentsia derives much of their influence, power, and position from a socialistic society. 

Until the ideology of socialism is shown to be the morally corrupt, economic destructive, and de-civilizing social system that it has always been, the likes of Bernie Sanders will continue to be a nuisance and quite possibly the new rulers of America. 

*Stephen Dinan, “Sanders Proclaims Democratic Socialism as Answer for America.” The Washington Times.  13 June 2019, A1.

**David Krayden, “Biden Says He’s The ‘Most Progressive’ Democrat as He Almost Announces His 2020 Candidacy,”  The Daily Caller, 17 March 2019.

https://dailycaller.com/2019/03/17/biden-most-progressive-democrat-2020/

***Dinan, “Sanders Proclaims Democratic Socialism as Answer for America.”

****Charles Hamilton, ed. Fugitive Essays: Selected Writings of Franck Chodorov.  Carmel, IN.: Liberty Fund, 1980, pp. 186-89.

Antonius Aquinas@antoniusaquinas

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The Constitution Myth

One reason for the failure of the modern conservative and libertarian movements to scale back, in even a miniscule way, the now gargantuan US welfare/warfare state has been the misinterpretation of the US Constitution.  Many conservatives have a slavish devotion to the document, placing it on a par with the Ten Commandments and New Testament.

A typical misunderstanding of the Constitution’s history and content appeared in this recent op-ed:



The Constitution was intended to limit 1) the power


of government over the citizenry 2) the power of each branch of


government and 3) the power of political/financial elites over the


government and the citizenry, as the Founders recognized the intrinsic risks


of an all-powerful state, an all-powerful state dominated by one branch of


government and the risks of a financial elite corrupting the state to serve


the interests above those of the citizenry.*

The author, like so many “Constitution enthusiasts” has also been hostile to the Medieval era, denigrating its institutions and social constructs – feudalism, aristocracy, crusading – when, in fact, the Middle Ages, in many respects, were far freer with less government than the present epoch. **

When the founding fathers decided to meet in Philadelphia in 1787, they did so at first to “amend” the Articles of Confederation which had guided the young country through some perilous times.  While the Articles had some defects (some libertarians even contend that they were too statist***), the delegates, at first, did not want it scrapped, however, it was the “leading lights” of the convention which connived to completely do away with it.

By superior political maneuvering, the pro-Constitution forces were able to ramrod their plan through despite being in the minority.  Not only were the majority of the delegates initially against scrapping the Articles, but most Americans were opposed to the creation of a new central government. 

Despite this, the Constitution was ruthlessly pushed through and, as its opponents feared, America would be saddled with a highly centralized national government, the loss of considerable state sovereignty, and the eventual erosion of individual liberties even with the inclusion of a Bill of Rights.

A brief examination of the document reveals that its implicit and explicit language grants wide latitude for the expansion of state power.  In its Preamble, the ambiguous clause to “promote the general welfare” can and has led to all sorts of destructive social engineering schemes.  More ominously, for anyone that is under the illusion that America is governed by a “federal” system, they should reread Article VI which in part says

This Constitution, and the Laws of the United his Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land. [emphasis added]

An all-powerful central state went against much of Western history after the fall of the Roman Empire and the idea was always feared by philosophers.  Basic political theory and practical experience showed that a multitude of sovereign states were preferable not only for the protection of personal liberty, but for economic growth.  Numerous states and jurisdictions were a far greater check on government than the much celebrated “separation of powers” concept of constitutional government.

Under the Articles of Confederation, each individual state was autonomous while the national government had to rely on the states for most of its support.  Unfortunately, it will never be known what would have happened if the country remained as a confederacy of states, it is likely however, that there would have been less bloodshed, greater economic growth, and more personal freedom under a decentralized regime.

It is curious, therefore, why so many on the Right continue to revere the Constitution as some great bulwark against state power.  Much of it probably stems from ignorance or personal bias against the political conditions which existed prior to the late 18th century. 

Much of European history was under the sway of monarchial and aristocratic rule and the integral presence of the Catholic Church in society with a diffusion of power among kings, princes, dukes and Churchmen.  While far from perfect, the social order which existed under Christendom may not have been as materially or technologically advanced as contemporary times, but in regard to morality, justice, and individual freedom, there is no comparison.  The Christian age saw nothing of the social depravity, war making with its mass murder, the trampling of individual rights, and the existence of totalitarian government as witnessed in the supposedly “enlightened” modern age.

Decentralized Europe of 1300

Until it is realized that the Constitution is an impediment to rolling back the American Leviathan, there will be little progress in the fight for individual liberty and economic progress.

   

*Charles Hugh Smith, “Let’s Face It: The U.S. Constitution Has Failed.”  Zero Hedge.  20 February 2019. 

**One example, Charles Hugh Smith, “America’s ‘Neo-Feudal’ System is ‘Both False & Precarious.”  Zero Hedge 19 December 2018.

***David Gordon, ed., Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard, Auburn, AL.: The Ludwig von Mises Institute, 2015, pp. 96-98.

Antonius Aquinas@antoniusaquinas

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[emphasis added]