A Warning of Economic Collapse

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 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 posted 9-16-’20

Pope Francis the Taxman

On the heels of calling for a Marxist economic conference this coming March (“Economy of Francesco”), Jorge Bergoglio (a.k.a. “Pope Francis”) has once again opined on financial matters.  The purported head of the Catholic Church has now designated “tax cuts” as sinful behavior on a par, apparently, with stealing, lying, and adultery:

Today’s structures of sin include repeated tax cuts for the richest people, often justified in the name of investment and development.*

Bergoglio did not mention what category of sin advocacy for tax cuts falls under – venial or mortal.  Maybe the details of how such a policy ranks in offending Divine Justice will be hammered out at the upcoming Economy of Francesco Commie confab! In Bergoglio’s collectivist mind, those who try and keep their wealth from the ravenous demands of the State are somehow denying the poor their just due:

Every year hundreds of billions of dollars, which should be paid in taxes to fund health care and education accumulate in tax haven accounts, thus impeding the possibility of the dignified and sustained development of all social agents.

What Bergoglio and his fellow socialists do not understand is that tax cuts lead to economic growth, whether they are for higher or lower income groups.  The less wealth that the State confiscates, the more is available to be used for saving and investment – two keys to economic growth.  The rich do not horde their money but expand and create businesses which leads to more and better paying jobs for lower income groups who supposedly Bergoglio wants to help. The poor will only be uplifted by greater production where more goods and services are available at lower prices.  Redistribution of income via taxation does not create new wealth, but simply transfers existing wealth from the productive class.  Moreover, taxation has the deleterious effect of making individuals produce less since their efforts are siphoned off at the point of a gun.  More taxation means less production and, thus, less and more expensive goods for the poor. Of course, this is basic economic theory that any sane person can understand unless one has matriculated to a Western university or college or pays attention to economic ignoramuses like Jorge Bergoglio! Bergoglio’s constant attention to the plight of the poor along with other social issues (“climate change,” the environment, immigration) does not align with the vision that the Entity, which created the office that Bergoglio currently holds, had in mind.  On at least two occasions, He counseled His followers to focus their attention on spreading the “good news” instead of earthly concerns:

For the poor you have always with you:  but me you have not always.  [Mt. 26:11] Let the dead bury their dead, but go thou, and preach the kingdom of God.  [Lk. 9: 60]

While the Church has always sought to protect and help the poor, widows, orphans, and the downtrodden, its primary mission is to preach the Gospel.  Since the time of the Second Vatican Anti-Council, 1962-65, and especially during the “reign” of Pope Francis, evangelization has been condemned and, like tax cuts, is now considered sinful activity. Bergoglio’s criticism of tax reduction is, no doubt, aimed at the Trump Administration’s plan for an additional round of tax cuts.  Tax reduction, however, without cuts in government spending will further explode budget deficits which are now even beyond sustainable. Without corresponding spending reduction, tax cuts will mean that the Federal Reserve will have to make up for the short fall with further money printing.  One cannot have Big Government and tax cuts simultaneously.  The inevitable monetary crisis will, unfortunately, be blamed on tax cuts and will play into the hands of Bergoglio and his fellow travelers. That Bergoglio spends most of his time as a social justice warrior instead of the supposed “vicar of Christ” on earth shows the state of the modern Church.  Worse, when he does speak on matters of faith, his words and actions are riddled with heresy. For all those concerned, it is best that “Pope Francis” should be ignored not only for the falsehoods he spreads about Christianity, but also as a social theorist.  His pronouncements on the latter will only lead to further impoverishment of the poor and the rest of society while inciting class conflict between those who seek to keep their wealth and those who want to confiscate more of it. *https://www.teaparty.org/tax-the-rich-pope-francis-calls-for-global-wealth-redistribution-427517/ Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com posted 2-17-20

The Ethics of a Gold Standard

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.*

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. Antonius Aquinas@antoniusaquinas https://antoniusaquinas.comhttps://antoniusaquinas.com posted December 27, 2019

Is Bitcoin a Diversion from the Natural Monetary Order?

As modern man continues to wantonly deviate, flaunt, and reject the natural law and the Divinely-created order from which it derives, it is not surprising that illusions like Bitcoin and other crypto currencies have captured the imagination of many and have provided a vehicle for scammers to rip off their fellow man. Crypto currencies are a more complex, yet still devious derivative of the immoral, economic destructive, and social debilitating system of central banking.  In response, Bitcoin pumpers have craftily tried to portray digital currencies as a “decentralized” alternative to the present fiat, paper-money standard. While this has attracted many libertines and “fast buck” speculators, Bitcoin is  more similar to the present fractional-reserve monetary order than a real honest-to-goodness money and banking system based on 100% redeemable currency.  Moreover, crypto currencies’ initial allure was that they could be used as a general medium of exchange, but as time has gone on, their sycophants have had to concede that none of these Ponzi schemes can act as money. Unlike a metallic monetary order where gold and silver have to be mined and brought into use through land, labor and capital, Bitcoin, like paper money, is created out of thin air.  In this sense, however, paper money is superior to Bitcoin because it can be used for other purposes albeit severely limited – wall paper.    Bitcoin, instead, has NO intrinsic, or “use” value, as precious metals did prior to their use as general medium of exchanges. Crypto currencies also fit nicely in the on-going efforts by the Establishment and monetary authorities to eliminate cash in transactions.  Despite the talk of “decentralization” and privacy that crypto currencies’ supposedly provide, all transactions on the computer and across the Internet can be recorded and traced which governments will use to spy on their tax slaves.  In direct contrast, gold and silver carried on one’s person or stored for safe keeping is the most private and secure means of wealth preservation ever known. The banksters have been pushing a cashless world to reduce their operating costs as Bank of America’s CEO Brian Moynihan recently called for:

We want a cashless society. We have more to gain than anybody from a pure operating cost (perspective).*

If anyone believes that the only reason banksters like Moynihan want a cashless society is to reduce costs, they are incredibly näive.  Banks and other credit institutions have, from orders of the surveillance arms of the national security states across the globe, de-platformed and tried to silence all sorts of alternative and politically incorrect websites and groups by shutting down their bank and credit card accounts.  If cash is outlawed, it will have a devastating effect on dissonant outlets and true free speech in general. The efforts to get rid of cash has been a long held goal by the ruling class that began with the introduction of paper notes which were granted legal tender status.  Irredeemable notes for specie followed and outright confiscation and prohibition of gold ownership took place in America and other jurisdictions in the 20^th century.  Internationally, gold was finally severed from monetary use with President Nixon’s insane decision to no longer redeem US dollars for gold in 1971. More importantly, and what infuriates Left-Libertarians of the crypto movement is that the precious metals were created by Divine Providence to be used by His creatures to augment their lives and eventually create sophisticated societies.  The qualities and quantity of gold and silver were designed in their optimal amounts to serve as a medium of exchange.  There are ample historical episodes of the social and economic disasters which have occurred when “natural money” was replaced by a man-made substitute.  The powers-that-be are certainly aware of this historical “law” and have long understood that to maintain their hegemony gold and silver must not be a part of a monetary order. The contemporary world is in a state of perpetual crisis because it has persistently violated the natural law.  The creation of more illusions such as Bitcoin and other crypto currencies is not a solution, but are diversions which prevent mankind from returning to a natural monetary order. *Rey Mashayelchi, “Bank of America CEO: ‘We Want a Cashless Society.'” MSN.com, 19 June 2019. Antonius Aquinas@antoniusaquinas https://antoniusaquinas.comhttps://antoniusaquinas.com

“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 21^st 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.

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 https://antoniusaquinas.comhttps://antoniusaquinas.com

While the farcical Kavanaugh confirmation hearings dominated the news cycle for the past couple of weeks, little mention was made of a disturbing economic headline – the August US trade deficit. Despite all the bluster from the Trump Administration about “winning trade wars” and “trade wars are easy,” America’s trade imbalances for August were the highest ever and its deficit with its most contentious partner – China – reached an all-time high.

Some highlights or low lights for the Trump Administration and the clueless economic nationalists were:

• August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
• August imports of automotive vehicles, parts, and engines ($31.7 billion) were the highest on record.
• August imports of other goods ($9.1 billion) were the highest on record.
• August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).*

These numbers will probably mean that the Trump Administration will push for more and stiffer tariffs, although the President is set to meet with Chinese President Xi Jinping next month. Yet, if anything comes out of the meeting, it will have little impact on US trade imbalances or the economy overall.

President Trump does not have to meet with the Chinese President or, for that matter, any other head of state, for the cause of US trade problems emanate right where he currently resides – Washington, D.C. The US trade deficit is the culmination of years of ruinous Congressional and Presidential polices of high taxes, onerous regulations, and deficit spending which have gutted the nation’s manufacturing base. The US simply does not produce goods like it used to and has been kept afloat by its status as the world’s reserve currency. “King Dollar” has allowed America to consume without having to produce.

Instead of trying to strong-arm trading partners into better “deals,” the Trump Administration should be creating an environment for the re-industrialization of the American economy. The first step in such a policy must start with savings which is the key to economic growth.

Before production takes place, savings must be accumulated. The creation of goods takes place over time and savings provide the means for production – land, labor, capital – to be implemented. The more sophisticated goods require greater amounts of savings since they take longer to produce. Production, and thus, economic growth are intimately linked to savings.

Since savings are fundamental for economic growth, policies which encourage it should be advanced. Since the act of saving involves sacrifice, compensation for such behavior – “interest” – should not be tampered with or suppressed which will discourage saving.

The Federal Reserve’s policy since the financial crisis has been to artificially lower interest rates as it has tried to revive the economy by money printing and bank-credit expansion. The result has been the creation of massive asset bubbles, exploding federal deficits, and a debt–ridden economy.

While President Trump may prefer low interest rates, the exact opposite should be advocated. A free-market rate of interest (higher than current levels) would encourage savings, and while higher rates would pop asset bubbles, they are the necessary, albeit, painful fix to readjust the economy.

Once the bubbles are deflated, real economic growth can take place based on actual savings which will lead to capital formation and the creation of goods. America could start again to become productive and create goods to exchange with its trading partners. Such a transition, however, will not take place over night, nor will it be pleasant.

Below market interest rates has enabled the federal government to engage in its profligate spending, much of which is done through borrowing. Instead of badgering the Chinese and others, President Trump should be attacking Congress to rein in spending. Of course, he is a major culprit in this area, having signed off on the latest massive budget which included insane increases to unproductive and destructive “defense” spending of some $700 billion which he lobbied for!

Trade deficits are a symptom of a bigger problem with the economy and are an excuse to deflect from dealing with real issues. Until the current “bubble economy” is deflated and savings and investment become the foundation of American economic life, trade deficits will continue and the ensuing trade wars may then escalate into actual shooting ones.

*Tyler Durden, “US Trade Deficit With China Hits New All Time High,” Zero Hedge. 05 October 2018.

The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.  Instead, in the American case, the Constitution created a powerful central government which eliminated much of the sovereignty and independence that the individual states possessed under the Articles of Confederation. While the US Constitution contains a “Bill of Rights,” the interpreter of those rights and protections thereof is the very entity which has enumerated them.  It is only natural that decisions on whether, or if such rights have been violated will be in favor of the state.  Moreover, nearly every amendment which has come in the wake of the Bill of Rights, has augmented federal power at the expense of the individual states and that of property owners. History has shown the steady erosion of individual rights and the creation of “new rights” and entitlements (education, health care, employment, etc.) which have occurred under constitutional rule.  Instead of limitation on government power, constitutions have given cover for the vast expansion of taxation, regulation, debt, and money creation. While taxation has always been a facet of constitutional governments, it has been the advent of central banking and with it the elimination of the gold standard which has provided the means for the state to become such an omnipresent force in everyday life.  Irredeemable fiat paper money issued by central banks has also led to the entrenchment of political parties which has allowed these elites to create and subsidize dependency groups which, in turn, repeatedly vote to keep the political class in office. Without the ability to create money and credit, the many bureaucracies, regulations, and laws could neither be created or enforced.  This would mean that the vast and powerful security and surveillance agencies could not exist or would be far less intrusive then they currently are.  With commodity money, debt creation would have to be repaid in gold, not monetized as it is currently done through the issuance of paper currency. Just as important, it would have been next to impossible for the two world wars to have been fought and carried to their unimaginable destructive ends.  None of the populations involved would have put up with the level of taxation necessary to wage such costly undertakings.  Few of the wars which followed (most of which have been instigated by the US) could have taken place without central banking.  Nor could the level of “defense” spending – currently at a whopping $717 billion for fiscal year 2018 – be financed if the US was on a commodity standard.* Under a gold standard, governments would have to rely on taxation alone.  Since citizens directly feel the effects of taxation, there is a “natural level” that it can be raised.  Punitive tax rates usually lead to a backlash and potential social insurrection which strike fear in the hearts of political elites. Recent projections by the Congressional Budget Office again demonstrate that constitutional government provides little restraint on spending. If present trends continue, the federal government will spend more on its interest serving its debt than it spends on the military, Medicare, or children’s programs.  It is also expected that next year’s interest on the debt will be some $390 billion, up an astonishing 50 percent from 2017.** And, for the entire fiscal year of 2018, the gross national debt surged by $1.271 trillion, to a mind-boggling $21.52 trillion.*** At one time, economists used to speak of the pernicious effects that “crowding out” had on an economy.  Since the onset of the “bubble era,” talk about deficits has almost dropped out of financial discussions.  Yet, the reality remains the same: public spending and borrowing divert scarce resources away from private capital markets to unproductive wasteful government projects and endeavors. For those who seek a reduction in State power, defense of individual rights, and economic prosperity, the re-establishment of a monetary order based on the precious metals is the most efficacious path to take.  Such a social system would not require elaborate legislation or fancy proclamations of man’s inalienable rights, but simply a return to honest money – gold! *Amanda Macias, “Trump Gives $717 Billion Defense Bill a Green Light. Here’s What the Pentagon is Poised to Get.”  CNBC.com 14 August 2018. https://www.cnbc.com/2018/08/13/trump-signs-717-billion-defense-bill.html **Nelson D. Schwartz, “As Debt Rises, the Government Will Soon Spend More on Interest Than on the Military.”  The New York Times. 25 September 2018 https://www.nytimes.com/2018/09/25/business/economy/us-government-debt-interest.html ***Tyler Durden, “US Gross National Debt Soars $1.27 Trillion in Fiscal 2018, Hits $21.5 Trillion.” Zero Hedge.  2 October 2018.   https://www.zerohedge.com/news/2018-10-02/us-gross-national-debt-soars-127-trillion-fiscal-2018-hits-215-trillion posted 10-7-’18 Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com At one time, the Federal Reserve’s sole mandate was to maintain stable prices and to “fight inflation.”  To the Fed, the financial press, and most everyone else “inflation” means rising prices instead of its original and true definition as an increase in the money supply.  Rising prices are a consequence – a very painful consequence – of money printing. Naturally, the Fed and all other central bankers prefer the definition of inflation as a rise in prices which insidiously hides the fact that they, being the issuers of currency, are the real culprit for increased prices. America’s central bank is right in line with this lunacy as it has been reported that at the Fed’s “May minutes” it wants “a temporary period of inflation modestly above 2 percent [which] would be consistent with the Committee’s symmetric inflation objective.”* Translated into understandable verbiage, the Fed wants everyone to pay at least 2% higher prices for the goods they buy. Yes, by some crazed thinking US monetary officials believe that consumers paying higher prices is somehow good for economic activity and standards of living!  Of course, anyone with a modicum of sense can see that this is absurd and that those who espouse such policy should be laughed at and summarily locked up in an asylum!  Yet, this is now standard policy, not just with the Fed, but with the ECU and other central banks. The baneful consequence of this economic quackery is being felt by American workers as admitted by the Labor Department.  Instead of spurring expansion, inflation is eating into and depressing wages:

For workers in ‘production and nonsupervisory” positions, the value of the average paycheck has actually declined in the past year.  For those workers, average ‘real wages’ – a measure of pay that takes inflation into account fell – from $22.62 in May 2017 to $22.59 in May of 2018.*

While the decline in nominal wages is not significant, the manner in which the government now calculates inflation has been skewed to understate its impact.  Under the previous calculation, the current US inflation rate is probably closer to 5%. Wage stagnation is not new.  Average real wages peaked more than 40 years ago and have fallen in real terms ever since.  Not surprisingly, the drop in wages in real terms began soon after the US went off the last vestiges of the gold standard in 1971. As sound theory has long ago demonstrated, the idea of economic growth through money printing is absurd.  Increases in living standards and real wages can only come about through savings, investment, and capital accumulation.  Workers who have superior tools and equipment are obviously more productive than those that do not. Yet, capital goods have to be produced and production takes place over time.  Savings allow for the production process. The level of wages are also closely linked to savings.  The greater savings an economy has enables entrepreneurs to bid for workers and increase wage rates.  This is how wages rise – competition for labor among businessmen pushes up wage rates.  The more savings entrepreneurs have, the higher they can bid for employees. How and why wage rates rise and how employment is created had been understood by economists of yesteryear.  Today, however, the profession is dominated by “inflationists” and monetary cranks who believe that nearly every economic problem can be solved by the printing press.  Anyone who holds such ideas cannot be taken seriously. While the Federal Reserve may think an inflation target will create prosperity, the reality for real wages is quite the opposite.  The laws of economic science have not been repealed.  An inflation target will lead to the impoverishment of not just workers, but lower living standards for all. *Jeff Stein and Andrew van Dam, “For the Biggest Group of American Workers, Wages Aren’t Just Flat.  They’re Falling.”  The Washington Post.  16 June 2018 A10. Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com The inevitable collapse of the student loan “market” and with it the takedown of many higher educational institutions will be one of the happiest and much needed events to look forward to in the coming months/years.  Whether the student loan bubble bursts on its own or implodes due to a general economic collapse, does not matter as long as higher education is dealt a death blow and can no longer be a conduit of socialist and egalitarian nonsense for the inculcation of young minds. The perilous condition of the student loan sector can be seen by looking at a few ominous pieces of data:

• The US has around $1.3 trillion in non dischargeable loans to students
• Over 120 billion in student loans are already in default
• 27% of students are a month behind on their payments*

As economic conditions deteriorate and there are even less meaningful jobs for college graduates than there are now, these numbers will only get worse. Not only have colleges and universities been havens of leftist thought for many years, but they have become ridiculously expensive and beyond the reach of most middle-class income earners to afford without going into significant debt.  Moreover, the incessant barrage by the Establishment about the necessity of a college degree has distorted the labor market to where worthless, debt-ridden degrees are pursued instead of much needed blue-collar employment.  The readjustment of the labor market to a proper balance will not only take time, but it will be a costly, painful process. While the “hard” sciences have not been as effected by the Left, the social sciences have long been an intellectual wasteland devoid of any freedom of thought or opinion.  Promotion and recognition of academic excellence is, more often than not, based on diversity and one’s skin color not merit.  Arguably, economic science has been the most corrupted discipline.  Economics departments of major universities are now training grounds for employment in state and federal bureaucracies, the banking industry, and Federal Reserve where Marxism, Keynesianism, neo-Keynesianism or whatever kooky, nonsensical theory of the day can be put into practice. While higher education has long been hostile to the ideals of Western Civilization, it is now explicitly a bastion of anti-white discrimination and hostility especially against white heterosexual men.  Few days now pass where there is not an incident, many of which are approved by school authorities, blatantly attacking white Americans or symbols that supposedly represent them. Of course, the higher education apparatchiks have had an easy time in their brainwashing task since the impressionable minds in their charge have been indoctrinated by twelve years of public “schooling.”  Not only has the public school been a mechanism of social engineering, but it has constantly pushed its chattel to continue their “education” at the collegiate level. The Trump Administration and most on the Right have failed to grasp the liberalistic bias of American education.  Education Department Secretary Betsy DeVos has spoken about “competition” via school choice, vouchers, magnet and charter schools to increase school and student performance.  The Administration’s proposed 2018 education budget calls for an increase in federal spending on school choice by $1.4 billion, a $168 million increase for charter schools, and a $1 billion increase for Title I “to encourage school districts to adopt a system of student-based budgeting and open enrollment that enables Federal, State, and local funding to follow a student to the public school of his or her choice.”** These shopworn ideas and policies are not only fundamentally flawed and will make matters worse, but they will do nothing to counteract and or end the Left’s domination of education.  Instead, President Trump should do what he spoke of at times on the campaign trail and what President Reagan promised to do, but never did – abolish the Department of Education! While the collapse of the student loan bubble may be the catalyst for a general financial downturn and will certainly be the cause of tremendous social pain and dislocation, it will, nevertheless, be a necessary prerequisite if America and, for that matter, the Western world is to ever break the grip of leftist ideology which rules it.  May the bursting of the student loan bubble commence! *Tyler Durden, ‘”Staggering’ Student Loan Defaults On Deck: 27% Of Students Are A Month Behind On Their Payments.”  Zero Hedge.  15 April 2017. http://www.zerohedge.com/news/2015-04-15/staggering-student-loan-defaults-deck-27-students-are-month-behind-their-payments **Jade Scipioni, “Why Betsy DeVos Is Visiting This Ohio School Today.”  Fox Business.  20 April 2017.  http://www.foxbusiness.com/features/2017/04/20/why-betsy-devos-is-visiting-this-ohio-school-today.html Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com The Trump Administration has presented the first part of its plan to overhaul a number of Wall Street financial regulations, many of which were enacted in the wake of the 2008 financial crisis.  The report is in response to Executive Order 13772 in which the US Treasury Department is to provide findings “examining the United States’ financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief.”* In release of the first phase of the report, Treasury Secretary Steven T. Mnuchin stated: “Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy.  We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products – while ensuring taxpayer-funded bailouts are truly a thing of the past.”** Some of its highlights include:

• Community financial institutions – banks and credit unions – are critically important to serve many Americans
• Capital, liquidity and leverage rules can be simplified to increase the flow of credit
• We must ensure our banks are globally competitive
• Improving market liquidity is critical for the U.S. economy
• The Consumer Financial Protection Bureau must be reformed
• Regulations need to be better tailored, more efficient and effective
• Congress should review the organization and mandates of the independent banking regulators to improve accountability***

Not surprisingly, most of the banking industry expressed support for the report, critics (mostly Democrats) pointed out that it would lead to the type of practices that produced the 2008 panic in the first place.  Both opponents and those in favor as well as the clueless financial press fail to grasp the underlying cause of not only the recent crisis, but the majority of those which have occurred for the past century. Quite simply: the fundamental cause of the 2008 financial crisis was fractional-reserve banking (FRB).  FRB is the practice whereby banks keep a “fraction” of the funds deposited by customers in their vaults lending out the rest at interest and “profit.”  Banks are thus inherently unstable since if all depositors came at once and demanded their money (a “bank run”), banks could not be able to redeem their deposits.  Moreover, FRB encourages banks to engage in exceedingly speculative and risky behavior which creates unsustainable bubbles throughout the economy. The nation’s central bank, the Federal Reserve, was created by the banksters and politicos to enshrine this immoral and economically ruinous practice into the heart of the American financial landscape.  Any “reform” of Wall Street’s financial practices that does not address FRB by doing away with it and the institution (the Fed) which enables it to exist, is doomed. The banks in collusion with the Fed are able to expand the money supply through this process while enriching the banksters’ balance sheet.  On the macro level, the creation of money through FRB is the genesis of the destructive boom-bust cycle. This is why banks and the entire financial system are so prone to reoccurring crisis and no regulation, reform, or Treasury Department “findings,” can make such a system “stable.”  The only true reform is to abolish FRB and establish a monetary order that requires all financial institutions to keep 100% reserves of depositors’ assets. The Treasury Department’s recommendations are mere window dressing by the very banksters whose opulent livelihoods are predicated on FRB. The elimination of FRB would go beyond a beneficial financial revolution, but would affect the foreign policy of the USSA.  Without the ability to create money via FRB, the murderous American Empire could simply not exist, nor would the nation’s draconian domestic security state. With his selection of crony capitalists and members of Goldman Sachs to his economic team, it is apparent that President Trump does not understand the true nature of the nation’s financial woes or what precipitated the last financial crisis and what will assuredly lead to a far bigger mess down the road.  If he did, his next Executive Order would be to implement steps and procedures to eliminate the scourge of fractional reserve banking forever. *U.S. Department of the Treasury, “A Financial System That Creates Economic Opportunities.”  6 June 2017.  https://www.treasury.gov/press-center/press-releases/Pages/sm0106.aspx **Ibid. ***Ibid. Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com Not surprisingly, Donald Trump has followed in the infamous footsteps of his presidential predecessors in the transition from candidate to chief executive.  Invariably, every candidate for the presidency makes a whole host of promises, the vast majority of which are horrible and typically only exacerbate the problems they attempt to resolve.  Among the proposals, however, there is an occasional bright spot.  Yet, once elected the stupid polices are eagerly pursued while the good ones are quickly discarded. What was somewhat unique about Donald Trump was that he was the first candidate in a long while who had a number of refreshing and much needed proposals – border wall, “drain the swamp,” criticism of Ma Yellen and the Fed, rapprochement with Vladimir Putin and Russia, a deescalation of U.S. imperialism overseas.  There were bad ones, too, but the good ones were enough to lead him to a smashing win over the Wicked Witch of Chappaqua. Even before being sworn in, however, the president-elect began to downplay his most positive positions and emphasize the worst.  At the top of this list, and what Trump has been consistently wrong about since the inception of his political career, and even prior to it, has been “trade.” Trump considers himself an “economic nationalist” in the mold of Patrick Buchanan.  Both, however, are simply wrong in this regard demonstrating that they do not have a grasp of the most basic of economic principles. The latest Trump tirade on trade was reported during his recent trip to Europe and a meeting with high-ranking officials.  Trump is reported to have lashed out at German auto makers who the President accused of being “very bad” because of the “millions of cars that they sell in the U.S.”  The Donald bemoaned, “Terrible, we’re going to stop that” and added “I don’t have a problem [with] Germany, I have a problem with German trade.”* Such talk makes Trump sound like a fool.  What is “bad” about providing American consumers with first-class automobiles that they apparently want in large quantities and are voluntarily willing to pay for?  And what of American workers employed with Mercedes Benz, BMW, and Volkswagen?  What is so horrible about the jobs and income that is provided by German firms to these workers? Instead of berating German car manufactures, Trump should direct his ire at the immigration policies of psychopathic politicians like Frau Merkel.  Candidate Trump was very vocal about this and criticized European leaders for allowing their countries to be turned into multicultural cesspools. The benefits of free trade and the baneful consequences of protectionism have long ago been elucidated by right-thinking economists, while the historical record has shown that lands which engage in “free trade” are decidedly richer than those that do not.  That Trump could spout off such nonsense about the evils of German trade shows how far the level of economic understanding has fallen. Not only does free trade allow for the extension of the division of labor and specialization, but it has very important non-economic fruits.  When trade is unregulated, there is less of a tendency of trading partners to engage in bellicose actions toward each other.  Free trade and peaceful coexistence among nations are synonymous.  It is when trade is prohibited, skewed by governments to “protect” favored industries, which creates tensions among peoples. Free trade does not require measures such as NAFTA or negotiated deals by politicians.  Instead, producers of one region are free to sell their goods at whatever prices or quantities to consumers of other areas that agree to buy them.  Ultimately, trade is up to individual producers and consumers in what they contractually agree to exchange, there is no need for political involvement. Trump’s lambasting of the German auto makers, however, underscores a more fundamental problem with the U.S. economy.  America no longer produces goods that the world’s consumers desire, but instead, produces military hardware that it sells to despotic regimes which enables them to remain in power and wreck havoc on their enemies.  Predictably, this escalates tensions abroad while, domestically, the standard of living of Americans fall as scarce resources that could have been used in the production of useful consumer goods are diverted to the creation of murderous military armaments. Trump has repeatedly boasted about his and his appointees’ abilities to negotiate great trade “deals.”  His bashing of the German auto makers right after his multi-billion dollar arms sales to the Saudis show not only that he is clueless in regard to the immense benefits of free trade, but that he is just another adherent, like his predecessors, to the ideals of crony capitalism. *Tyler Durden, “Trump Slams ‘Very Bad’ Germans for Selling Millions of Cars in US: ‘We Will Stop This.'”  Zero Hedge 26 May 2017. http://www.zerohedge.com/print/596683 Antonius Aquinas@AntoniusAquinas https://antoniusaquinas.com/

John Connally, President Nixon’s Secretary of the Treasury, once remarked to the consternation of Europe’s financial elites over America’s inflationary monetary policy, that the dollar “is our currency, but your problem.”  Times have certainly changed and it now appears that the dollar has become an American problem.

In a recent interview with the Wall Street Journal, the soon to be 45^th President of the United States believes that the greenback’s strength – up some 25% against a broad basket of currencies since 2014 – is now “too strong,” “killing us,” and has hurt companies trying to compete overseas.* A top Trump economics advisor, Anthony Scaramucci, reinforced his boss’ sentiment adding that “we must be careful of a rising dollar.”

Apparently, making America great again does not include the nation’s monetary standard.  Trump’s belief that the dollar is too strong also shows a distinct lack of historical understanding.  Every great nation and empire (which Trump promises to restore America to) had a sound monetary system.  It is no coincidence that the pound sterling was the world’s “reserve currency” at the time when the British Empire was at its height.  Debasement of it to finance Britain’s insane decision to enter World War I led, in large part, to the eventual loss of its empire.  If Trump truly seeks to restore American greatness at home and its prestige throughout the world, devaluating the currency is not the way to go.Nor does a weakened dollar benefit the middle class whom the president elect throughout the campaign has pledged to help.  In fact, it has been the fall in the purchasing power of the dollar due to the inflationary policies of the Federal Reserve which have decimated the living standard of the middle class.  And, while the proposed Trumpian middle class tax cuts will help, just as important is a sound monetary system if Middle America is to become once again a creditor class.Pensioners and retirees, another group that Trump has promised to help, would continue to see their financial condition decline under a policy to weaken the dollar. A fall in the purchasing power of money would devastate the income stream of pensions and social security payments.While a weaker dollar policy would hurt the middle class, retirees, and savers, it would benefit the most responsible for the continued economic doldrums of America – banksters and the government.  A weaker dollar would allow the government to continue to borrow and maintain its profligate spending.  Financial houses and the banksters would receive credit at nearly zero cost which would allow them to continue to blow bubbles in the asset markets.  Export firms, too, would benefit at least for a while, but would more than likely face retribution from foreign governments and central banks which would retaliate with their own devaluations sparking potential currency wars.Talk of “currency manipulation,” “weakening the dollar,” “trade deals,” and the like do not address what lies at the heart of not only America, but the Western world’s economic problem – too much debt.  The reason why the West has been able to incur its current gargantuan level of debt is not because of a “weak” or a “strong” dollar, but because the dollar is a fiat currency not backed by any commodity.  A true gold standard, where each currency unit represents either gold or silver, provides monetary discipline which prevents politicians and banksters from incurring ruinous levels of debt.Since money is the lifeblood of an economy, any hope that one can be turned around without a stable monetary order is, to say the least, delusional.  If president-elect Trump and his policy makers do not realize this, they will be severely disappointed in the years to come.  Sound money allows for the accumulation of savings and capital formation, the essential elements of the market economy and the only basis upon which real economic growth can occur.  More savings and capital are needed to boost production and create employment, not supposedly wiser and more competent international trade negotiators.Talk of currency devaluation is what is typically heard from banana republics, it should not be advocated by those who have aspirations of making their country great again.*Tyler Durden, “Dollar Tumbles After Trump Calls Currency ‘Too Strong,’ Slams Border-Adjustment Tax.”  Zero Hedge.  17 January 2017.Antonius Aquinas@AntoniusAquinashttps://antoniusaquinas.com/

“Black Friday:” Symbol of America’s Economic and Cultural Decline

3 Replies

The Deteriorating U.S. Economy Despite doubling the national debt and the expansion of the money supply to some $8 trillion since the beginning of Obummer’s misbegotten presidency, the U.S. economy is once again in a free fall. Actually, there has been no real recovery, but a continual deterioration of living standards despite the lies and distortions from the financial media and government authorities. Conditions, however, are now descending at an even faster pace. Recently, the leading manufacturer of heavy equipment, Caterpillar, announced that job cuts would exceed 10,000 through 2018. Up to 5,000 employees will receive pink slips between now and the end of 2016. Retail sales for the manufacturing giant have slumped 11% between June and August.* While Caterpillar’s contraction is an ominous sign, a more telling indicator of worsening economic conditions came from the Federal Reserve’s refusal to raise interest rates at its latest FOMC meeting. Many commentators had speculated that the Fed would raise rates at least a quarter of one percent on the belief that the economy was strengthening. The Fed, of course, based its refusal to raise rates on “international concerns” – China’s stock market selloff. The real reason is that the nation’s central bank understands, although it will not publicly admit it, that the economy is far too weak to “absorb” a rate hike, no matter how infinitesimal. More importantly, the Fed cannot raise rates to any significant degree because the entire financial system, which is built on “cheap money,” would immediately plunge into a significant downturn similar to that of 2008, or worse. The federal government and many of the states and municipalities would default since they could not continue to finance their current profligate borrowing and spending patterns with higher interest rates. Thus, the Fed is trapped in a world of zero interest rates for the foreseeable future. As economic conditions continue to worsen, the central bank will more than likely turn to another round of money printing like its infamous “QE” program. While the Fed is locked into a zero interest rate policy, the Obama Administration and Congress remain oblivious to economic reality. A few years back, Obama and the one time Democratically-controlled Congress tried a “stimulus” program which did nothing, but increase the national debt. Also weighing down the economy is the disastrous Obamacare program which will only become more burdensome as time passes. Just as troubling, none of the current crop of presidential hopefuls, with one possible exception, has proposed or suggested any credible measure that will improve matters. None of the fundamental problems that are crippling the economy have been seriously addressed. The reason why there has been no recovery is that the malinvestments and bubbles created during the last boom have not been allowed to contract and or burst. Instead, the Fed pumped massive amounts of “liquidity” (money printing) into the markets which kept these institutions (mostly banks) and their assets afloat. A credit implosion will not come about “voluntarily.” The Fed will not increase interest rates nor will the Obama Administration or Congress have the courage to cut spending to relieve pressure on the Fed to finance its unsustainable deficits and continue to inflate the stock market. Instead, there eventually will be a monetary crisis surrounding the dollar which will force interest rates to rise which will lead to widespread defaults and bankruptcies and an ensuing depression which will dwarf every previous economic downturn in American history. Alternative financial analysts have, for some time, pointed to the declining living standards not only in the U.S., but throughout the Western world. Egon von Greyerz of Matterhorn Asset Management has predicted some very unpleasant times in the not too distant future: “The coming years will not be easy. I wrote an article a few years ago called ‘The Dark Ages Are Here’ and I now really think they are imminent. These will be difficult times for most of us.” ** Ultimately, the only way the U.S. economy will be turned around is through a change in ideology. The ideas and policies upon which not only the U.S., but the Western world’s economies are predicated upon must be debunked. Until the principles and beliefs of the current economic system are intellectually discredited, the U.S. economy will continue to stagnate and eventually collapse. * Matt Egan, “Caterpillar to Cut More Than 10,000 Jobs.” CNN Money. http://money.cnn.com/2015/09/24/investing/caterpillar-job-cuts-china-oil/index.html 24 September 2015. ** Egon von Greyerz. “A Stock Market Collapse and Surge in Gold is Imminent. What will be the Trigger?” Gold Switzerland. https://goldswitzerland.com/a-stock-market-collapse-and-surge-in-gold-is-imminent/ 10 October 2015. Antonius Aquinas@AntoniusAquinas

Mario Draghi and THE Issue of Our Times

   Europe’s Counterfeiter-in-Chief

Europe’s Counterfeiter-in-Chief, Mario Draghi, President of the European Central Bank (ECB), has again demonstrated why the Western world will never get out of its depressed condition until the likes of Draghi are deposed and the institution in which he heads is abolished. Draghi actually believes that there has been improvement – “the ongoing recovery” – across Europe’s economic landscape. Such a statement, which flies in the face of reality, is couched with a “warning” that could derail Draghi’s fantasy scenario of the Continent’s economic condition. Draghi, and, for that matter, every other central bankster believes that “low inflation” will stunt economic progress. In a recent speech given in Amsterdam, Draghi said: “a rise in the exchange rate [of the Euro], all else being equal, implies a tightening of monetary conditions, a downward impact on inflation and potentially a threat to the ongoing recovery.” Like all good sophists, Draghi obfuscates terms in order to bamboozle his audience (something that is quite easy to do in this era of widespread economic ignorance). To him, “inflation” is meant as a rise in prices instead of its traditional and more correct meaning as an increase in the supply of money. The perversion of the meaning of inflation has been a favorite tactic of counterfeiters like Draghi who then can intentionally distort cause and effect. Inflation – an increase in the money supply – is the cause of rising prices. Overall price increases are not inflationary, but the consequence of money printing, which Mario Draghi, Janey Yellen, Ben Bernanke and all central bankers wholeheartedly engage in. What Mario the Moneyprinter actually wants to say is that if inflation (rising prices) is too low, it could stall the recovery and it will then be up to the ECB and other monetary authorities to generate more inflation which they will vigorously undertake. This, he contends, will continue the recovery and lead to economic growth. Such a statement is pure idiocy and shows that one of the most important monetary officials in the entire world is basically an ignoramus! What Draghi will not openly admit is that they will achieve their purpose – increase in prices – by expanding the amount of currency they have under their monopolistic control. This, of course, will mean a fall in the purchasing power of the Euro and eventually will lead to all sorts of economic chaos. Contrary to Mario the Moneyprinter’s imbecilic statements, rising prices are the antithesis of a robust economy. A vibrant economy is one of generally falling prices and costs, as the production of goods and services increase and the purchasing power of money increases at the same time. Falling prices are synonymous with high standards of living; money printing, rising prices and unemployment are signs of stagnation and eventual collapse. For Draghi and the other politically-connected financial elites rising prices are good because they enhance, at least nominally, the value of equities and banking assets. While the balance sheet of banksters and those of Wall Street have shown record profits, everyone else suffers from higher consumer good prices, most importantly food and energy. The ongoing and deepening economic crisis has been the direct result of the crazed monetary policies of central banksters such as Mario Draghi. Not only have they created the problem in the first place, but their supposed remedies have solved nothing but have led to unprecedented indebtedness, economic regression and social turmoil. It is well past the point where Draghi and his cohorts can be simply ignored, they must be removed and the offices and institutions they hold liquidated so that the massive wealth transference and the ruination of so many lives over the past few years will be repeated never again. May 5, 2014 Antonius Aquinas@AntoniusAquinas

Minimum Wage Chicanery

In one of the most callous and insensitive acts as chief executive, President Obama has called on Congress to increase the minimum wage from $7.25 to only $10.10 per hour! If he were truly compassionate, the president would seek an increase to at least $20 per hour instead of the paltry sum of ten bucks. Come to think of it, if he really wants to help the poor and unskilled, the minimum wage should be raised to $50 per hour!

Such reasoning, of course, is idiotic which is why economic ignoramuses like Obummer advocate such nonsense as when he recently said: “You’ve got a choice. You can give America the shaft, or you can give it a raise.” More illogicality followed, during, not surprisingly, a campaign stop with a fellow Michigan democrat: “It [a minimum wage hike] would lift millions of people out of poverty right away. It would help millions more work their way out of poverty right away.”

Minimum wage legislation, like rent control and all other forms of government price fixing, has had the opposite effect of what it is supposed to do. Minimum wage laws lead to the destruction of jobs while making business less competitive and consumer friendly as sound economic theory and numerous empirical studies have demonstrated.

If Obummer, or those who are supporting such hikes, had any sense, they would understand that increasing the price of any good, in this case wages, above the “market level,” will ultimately lead to a surplus – an increase in the unemployed. What if the government did raise the minimum wage to $50 per hour? Then, nearly everyone would be unemployed!

Yet, this is the predictable outcome of minimum wage laws. Those whose skill sets are below the mandated rate will not be employed as businesses will simply eliminate positions and jobs. A notable example of this is gas station service. At one time, nearly all gas station pumps were “full service” where an attendant not only filled up the tank, but offered to clean windows, check oil and fluid levels and tire pressure. As the minimum wage increased, jobs like these fell by the wayside and consumers had to pump their own gas and tend to their own maintenance. Naturally, automation played a part in the elimination of some of these jobs, but without minimum wage laws, many more gas stations would be offering “full service.”

While service stations are hampered in providing customers with better service, the loss of employment is worse. Having a job (especially for the young) is more than just monetary reward, for employment provides invaluable work experience, instills discipline and responsibility all of which makes the employee more marketable. Yet, when such jobs are eliminated by governmental decree, not only is there financial loss, but these other “benefits” disappear.

Of course, any rational thinking person (which leaves out all politicians) understands that wages and the level of employment cannot be “raised” through the edict of the state. Wages and employment rates are determined by the amount of savings and capital accumulation that is available. Why wages and the standard of living in the Western world were so high for so long was due to the massive accumulation of capital and savings that took place primarily because of the low levels of taxation, monetary debasement, and regulation. Capital accumulation provided better tools and equipment which allowed workers to be more productive while the vast savings allowed businessmen to pay higher wages when competing for workers in the marketplace.

Tragically, this magnificent trend is coming to a very bleak end with little hope of a turnabout.

If Obummer and his fellow sociopaths would truly like to see real wages rise while lowering the level of unemployment, they would do all in their power to foster the growth of savings and the expansion of the capital base. This would mean a reduction in the criminally excessive tax burden, the elimination of burdensome regulations, and the cessation of monetary debasement through the Federal Reserve’s crazed “QE” policy which artificially lowers interest rates which, thus, discourages saving. Unfortunately, none of these policies will be forthcoming under the current despotic regime or any other one that will likely follow.

A further detrimental aspect of minimum wage legislation which is often overlooked is that their enforcement leads to bigger government. Those who are prevented from working at a mutually agreed upon wage will typically take part in some part of the welfare state, be it unemployment compensation, job training, food stamps, etc. The big winner in such a scenario are the politicians who get to rule over a larger dependent class and the bureaucrats who administer the welfare programs. The obvious losers in this vicious cycle are the taxpayers.

All in all, minimum wage laws are a detriment to society. This, of course, does not prevent politicians from calling for such measures which makes them appear compassionate and caring to their constituents. At one time, there was a segment of the financial press and academia that understood basic economic principles and would expose such nefarious thinking, this, however, is no longer the case. Until such ideas are ridiculed and those who advocate them identified as charlatans, the plight of wage earners will continue to plummet.

First published 4-9-’14 Antonius Aquinas@AntoniusAquinas

Meet the New Boss… Same as the Old Boss

  Yellen: “I am a sensible central banker.” As expected, the new Federal Reserve Chairwoman, Janet Yellen, is continuing the same destructive polices of her infamous predecessor, the counterfeiter-in-chief, Benjamin Bernanke. While Bernanke and now Yellen’s polices have, so far, been devastating for the vast majority of Americans (especially savers), their actions have been a boon for the banking, governmental, and financial establishments not only in America, but around the globe.

Like “Helicopter Ben,” Yellen has been masterful in obfuscating, distorting, and lying about the actual reality of the U.S. economy. Of course, this is why she was, in part, chosen as Fed chair to provide “intellectual cover” and “spin” of the facts in order that the real manipulators of the economy – the mega banks and financial houses – continue to receive a goodly amount of the Fed’s monthly “stimulus” program.

In Congressional “testimony,” Yellen considers “inflation” to have been kept in check, “Inflation is running well below our 2% target. . . . ” Yet, as everyone knows prices for nearly every commodity have gone up significantly since the beginning of the crisis in 2007. And, Ms. Yellen failed to mention, nor did any of the gullible politicians who questioned her know, that the Fed’s “measurement” of prices no longer includes energy or food prices! Gasoline prices have nearly doubled since Obummer has taken office while food prices have soared over the same period.

Ms. Yellen surpassed her doozie on inflation with her statement on unemployment or, more accurately, the lack of meaningful employment throughout the economy. While she acknowledges that the economy has not achieved “maximum employment” (whatever that means), she amazingly added: “there has been substantial job creation.” One wonders what piece of data Ms. Yellen is using to substantiate such a ridiculous claim. Maybe she should ask some recent college graduates about “job creation” where most have either moved back home with their parents or are working at jobs which do not require overpriced “higher education.”

Perhaps, no group has been more negatively affected by the Fed’s monetary policy than retirees. Yet, to Yellen, and Bernanke before her, the lack of interest on saving for those who have to rely on it for their independence and survival is not thought of as dire by our financial masters, but as if one’s favorite sports team lost a championship game. “A low-interest-rate environment is a tough one for retirees” was the response when the subject was posed to the Madam chairwoman. She compounded her lack of concern with a nonsensical explanation for the abnormally low rates: “There’s an excess of saving relative to the demand for those savings for investment purposes.”

If Yellen were honest, she would explain that the Fed’s “zero interest rate policy” is deliberate so that the Federal government can borrow money at virtually no cost in order to sustain its massive deficit spending and to provide “liquidity” to the insolvent banking system in order that it does not collapse. Period.

What Americans have to realize is that the primary purpose of the Fed from its surreptitious founding until the present day has been to protect the “solvency” of the banking system. Unemployment, the “price level,” trade imbalances, or the overall health of the economy are secondary concerns for the Fed. While Yellen and her predecessors may fret about the level of employment or inflationary “targets,” it is simply theatre to placate the clueless in Congress and among the financial press where not a few reside.

Until the Federal Reserve is liquidated and replaced with a monetary order of sound money – gold/silver – the chance of any real sustainable economic growth is nil. Sadly, the likelihood of a return to a system of sound money will not take place until there is a general economic collapse or a severe financial crisis. The ruling power structure will not relinquish a primary source of their dominance.

 While there will, in all likelihood, be a financial collapse, it is not a given that there will be a return to sound money in the aftermath of such an event. The power elite will more than likely impose severer financial controls. Sound money and its corollary – economic growth – will only come about when there is an “intellectual turnabout” where central banking is discredited and shown as an engine for the betterment of the financial and political elite at the expense and misery of everyone else. Until that glorious day when the scourge of central banking is eradicated, Americans and all those living under its suzerainty will continue to face economic and social decay.

First published 3-16-’14 Antonius Aquinas@AntoniusAquinas