Tag Archives: Central Banking

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 4^th 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

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“Inflation,” Properly Defined

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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 18^th 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

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Pope Francis Calls Marxist Economic Summit

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index

Pope Francis and his mentor

As if there needs to be further evidence that the current occupant of St. Peter’s Chair in Rome is a Marxist, the announcement of an upcoming conference at Assisi entitled the “Economy of Francesco” should convince any skeptic otherwise.

In his invitation letter to “young economists and entrepreneurs worldwide,” Bergoglio sets the agenda for the Leftist confab quite clearly which is virulently anti-market, a call for massive redistribution of wealth, and a reordering of the current economic systems of the world with a healthy dose of climate change nonesense:

. . . a different kind of economy: one that brings life not death, one that is inclusive and not exclusive, humane and not dehumanizing, one that cares for the environment and does not despoil it.*

While Bergoglio’s Marxist credentials have been firmly established, his blashemous actions and words has a growing number outside of “sedevacantist circles” calling him a heretic. The legitimacy of “Pope Francis,” however, is more fundamental than him being a manifest heretic, but his standing as a legitimate pope is invalid since his ordination as a priest and his consecration as a bishop came under the new rites of Holy Orders instituted in the wake of the Second Vatican anti-Council (1962-1965).

The mastermind behind Bergoglio’s summit is professor Luigino Bruni and from his comments he sounds more radical than the Argentine Apostate, if that is possible. Professor Bruni wants to use taxation as a weapon to “redistribute income and wealth from the rich to the poor.”*

Bruni, a professor of political economy at the Italian University, LUMSA, and the author of a number of books, basis his advocacy for redistribution of wealth on the Scriptures:

[T]he Bible has many words to offer our economic life and ideas [with] the transformation of wealth into well-being.**

It appears that the good professor’s Bible is missing the Seventh Commandment of the Decalogue which solemnly states: THOU SHALL NOT STEAL! In no legitimate commentary ever written on this Commandment is there an exception made for the confiscation of wealth from the well-to-do to be given to the poor. Probably just an oversight on the Professor’s part.

Because they are blinded by socialistic ideology, Bruni, Bergoglio, and the likes of Bernie Sanders cannot see that the growing wealth inequality which they complain about is not the result of “capitalism,” but is the outcome of the monetary policy of the world’s central banks. This, along with tax policies which hamper innovation and shield the entrenched financial class from competition, is why financial elites are able to maintain and increase their power.

Central bank policy of suppressing interest rates and of money printing allow banks and financial institutions to receive “free money” which they can invest and speculate with at zero cost. The boom (actually a bubble) in asset prices on Wall Street is a demonstration of how wealth disparity takes place.

If Bergoglio really meant to reform the present system, he would call for the abolition of central banking and a return to “hard money.” Under such an order, banks and financial institutions become wealthy on their ability to make prudent investment decisions subjected to profit and loss. A free market in banking is the antithesis of the current system of credit expansion and money printing.

Not only have Bergoglio and his cohorts abandoned the Faith, but they have also overturned the Church’s long-held condemnation of socialism and have ignored many of its own outstanding thinkers on financial matters. From the Scholastics to the School of Salamanca through the Jesuits and the great Cardinal Cajetan, who finally taught the proper doctrine on interest rates, the Church has produced scores of eminent economic thinkers in its long history.

index 1

School of Salamanca

Ever since socialism reared its ugly head as a social system of thought, the Church has warned of its dangers even its more milder forms as Pope Pius XII wrote, “No Catholic could subscribe even to moderate socialism.” Since Vatican II and especially under Bergoglio’s regime, however, Leftist ideas of all sorts have been warmly embraced.

At the heart of socialism, be it Marxism or its equally pernicious variants, lies envy which became a part of the human condition with the fall of man. While once condemned, envy has been turned into a virtue by the likes of Bergoglio.

While such ideas may sound appealing to human sensibilities, they will not pass the Divine Judge who knows the thoughts and souls of all His creatures even those of supposed popes.

*Vatican website: http://www.vatican.va/content/francesco/en/letters/2019/documents/papa-francesco_20190501_giovani-imprenditori.html

**Jules Gomes, “Pope Francis Convenes ‘Anti-Capitalism’ Summit,” Church Militant.com, 15 January 2020.

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The Ethics of a Gold Standard

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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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Is Bitcoin A Diversion from the Natural Monetary Order?

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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.

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Debt, Death, and the US Empire

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In a talk which garnered little attention, one of the Deep State’s prime operatives, National Security Advisor John Bolton, cautioned of the enormous and escalating US debt. Speaking before the Alexander Hamilton Society, Bolton warned that current US debt levels and public obligations posed an “economic threat” to the nation’s security:

It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society. And that kind of threat ultimately has a national security consequence for it.*

What was most surprising about Bolton’s talk was that there has been little reaction to it from the financial press, the markets themselves, or political commentators. While the equity markets have been in the midst of a sell off, it has not been due (as of yet) to US deficits, currently in excess of $1trillion annually. Instead, the slide has been the result of fears over increase in interest rates and the continued trade tensions with China.

While Bolton’s warning about the debt is self-serving, it is accurate in the sense that the US Empire which, in part, he directs is ultimately dependent on the strength of the economy. “National security” is not threatened by a debt crisis which would mean a compromised dollar, but such an event would limit what the US could do globally. Real national security is defense of the homeland and border control – non intervention abroad.

War mongers like Bolton are fearful that a debt crisis would necessitate a decline in US power overseas. America is fast approaching what took place with the British Empire after its insane involvement in the two World Wars and its own creation of a domestic welfare state which exhausted the nation and led to the displacement of the British pound as the “world’s reserve currency.”

The US-led wars in the Middle East have been estimated by a recent Brown University study to have cost in the neighborhood of $4 trillion.** Despite this squandering of national treasure and candidate Trump calling the Iraq War a “disaster,” as president, Trump increased “defense” spending for FY 2019 to $716 billion.***

Profligate US spending and debt creation has, no doubt, been noticed by those outside of the Empire. It is probably why Russian President Vladimir Putin has been so hesitant to take any serious action against the numerous provocations that the US has taken around the globe and against Russian interests directly. The wily Putin probably figures that an implosion of US financial markets would eventually limit America’s ability to foment mayhem and havoc internationally.

The Trump Administration’s latest bellicose act, engineered by – you guessed it – John Bolton, has been the withdrawal from the intermediate-range nuclear forces treaty (INF). The treaty, signed in 1987, was a landmark achievement of the Reagan Administration which de-escalated tensions between the two super powers and kept a lid on a costly arms buildup that neither can afford.

The next financial downturn will certainly dwarf the 2008 crisis, the latter of which nearly brought down the entire financial system. The next one will be far worse and will last considerably longer since nothing has been resolved from the first crisis. The only thing that has occurred has been the creation of more debt, not only in the US, but by all Western nation states.

Under current ideological conditions, a change in US foreign policy to non-intervention is unlikely. Public opinion is decidedly pro-military after years of indoctrination and propaganda by the press, government, academia, and the media. It will take a fall in America’s economic power, specifically the loss of the dollar as the world’s reserve currency, which will ultimately bring down the empire that has neocons like John Bolton concerned.

Unfortunately, until that time, the US will continue its rampaging ways. The day of reckoning, however, appears to be fast approaching and instead of a defeat on the field of battle, the US Empire will collapse under a mountain of debt. It would be more than fitting that such a scenario should play itself out which would thus begin the very necessary retribution process that may, at least in a small sense, compensate those who have suffered and died from America’s murderous foreign policy.

*Tyler Durden, “John Bolton Warns National Debt Is An ‘Economic Threat’ To The US Security.” Zero Hedge. 01 November 2018.

**Jason Ditz, “Study: US Wars Cost $4 Trillion, Killed 259,000.” Antiwar. 29 June 2019.

Military Benefits, “2019 Defense Budget Signed byTrump.” Military Benefits. September, 2018.

Antonius Aquinas@AntoniusAquinas

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“Strong Dollar,” “Weak Dollar,” What About a Gold-Backed Dollar?

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The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronoucements and reversals which will take place in the coming months/years as the world’s reserve currency continues to be compromised. So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide, “Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”* Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks. President Trump weighted in on the matter saying, “Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”

While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:

I must be honest, I’m a low interest rate

person. If we raise rates and if the

dollar starts getting too strong, we’re going

to have some very major problems.**

Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless. That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.

If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals. Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar. These two acts would guarantee a strong dollar and insure that the dollar would remain the world’s reserve currency. Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures.

A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency. Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe.

Gold-backed money will not only have positive international effects, but domestic benefits as well. Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past. Prices in a gold-backed currency will actually fall, raising living standards for everyone.

Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with. And, without the Fed’s purchasing of US debt, the government would be forced to make cuts in spending. Spending cuts would have to be deep and across the board.

Happily, under such a scenario, reduction in spending would mean a pull back in the American Empire. The US would simply not have the resources to maintain bases abroad or involve itself in the countless conflicts and wars it is now engaged in. It is more likely that when the American Empire comes to an end, it will not be because of a military defeat, but because it can no longer be sustained financially.

Sadly, under current ideological conditions, a return to gold money is not on the financial horizon. It will most likely take a collapse of the irredeemable paper monetary system before commodity-backed money is re-established as a general medium of exchange.

It is clear from the recent exchange among Trump Administration financial officers that the same dollar policy will continue, which will lead to an inevitable dollar crisis and certain political disaster for the President.

* “Trump Wades Into the Currency Uproar, Favours ‘Strong Dollar,’ Government & Economy.” Brit Asian News 26 January 2018. http://britasiannews.com/en/2018/01/25/trump-wades-into-currency-uproar-favours-strong-dollar-government-economy/

**Inflation Alert: Trump Also favors Low Interest Rates, Weak Dollar.” Weekly Market Wrap. 6 May 2016. https://www.moneymetals.com/podcasts/2016/05/06/trump-supports-weak-dollar-000864

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Donald and the “Maestro”

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trump-ii greenspan-ii

Former Federal Reserve Chairman Alan Greenspan, who was once laudably referred to as “Maestro” for his supposed astute stewardship of U.S. monetary policy, commented last week on the nation’s current political and economic climate:

We’re not in a stable equilibrium. I hope

we can all find a way out because this too

great a country to be undermined, by how should

I say it, crazies.*

Well, if there is anyone who knows how to “undermine” an economy, it is the Maestro, since it was his “crazed” policies that brought about the 2008 financial crisis which ushered in the Great Recession that continues to this very day.

In a demonstration of how truly clueless Greenspan is about economic conditions, he cautioned that the U.S. is “headed toward stagflation – a combination of weak demand and elevated inflation.” Memo to the Maestro: stagflation is already here and has been for quite a while, especially when real economic gauges are used instead of the phony baloney numbers routinely lied about by the BLS and other corrupt state agencies.

The “crazies” that Greenspan refers to are, of course, the “deplorable” Trump supporters and The Donald himself, who the Maestro contends is responsible for “the worst economic and political environment that I’ve ever been remotely related to.” Oh, poor Alan has to suffer through an election where one of the candidates has not been approved by the ruling class. Too bad.

Instead of carping about the current state of political affairs which, at least financially, he and his successor, Helicopter Ben Bernanke, largely contributed to, Greenspan should be grateful that he has had no reprisals for the financial crimes, chaos, and misery that he has afflicted upon the world. Instead of significant jail time or worse, Greenspan is free to pontificate on current events, receiving hefty financial remuneration, and just as important for top members of the governing elite, ego-enhancing hosannas!

While Ben Bernanke has been a lifelong committed Keynesian and inflationist, Alan Greenspan, at least in his younger days as a member of Ayn Rand’s circle, was a free marketer who spoke positively about the efficacy and moral soundness of a gold standard. That he abandoned these beliefs to go over to the Dark Side is further cause for retributive justice.

Greenspan’s betrayal was similar to those economists of the 1930s (Lionel Robbins most notable) who were followers of the teachings of Mises and Hayek, yet were swept away by the fanciful Keynesian deluge of the day and abandoned their economic senses and conscious for similar allurements which seduced the Maestro. Had these economists as well as Greenspan stuck to their original principles, the world may not be in its current financial mess.

While Greenspan was lamenting the state of political affairs, the head “crazy,” Donald Trump, commented on the Maestro’s former place of employment. Unlike the Maestro, the financial media, and just about every other politician, Trump had some perceptive things to say about the nation’s central bank, showing again that the billionaire businessman’s political acumen is quite good:

The Fed is being totally controlled politically because

Obama wants to go out with no stock market disruptions.**

The Republican Presidential hopeful could have easily added that the Fed’s policy is being deliberately carried out to ensure his Democratic opponent’s victory this fall. A booming stock market is perceived by most as an indication of a vibrant economy.

Trump does not buy the supposed “independence” of the Fed from political influence and the conduct of monetary policy solely for the well being of the economy:

If it was a choice between the right decision and a political

decision… The Fed would choose the political decision.

Throughout the campaign, Trump’s instincts on political and economic matters have been quite good and hopefully if he does become chief executive those instincts will translate into positive change.

A Clinton Presidency would assuredly mean a continuation of the ruinous policies of Greenspan and his successors. The election of Donald Trump could not only mean a new direction in monetary policy, but the public demotion of the likes of Alan Greenspan who will hopefully fade into the sunset never to be heard or seen from again.

*Rich Miller, “Greenspan Worries That ‘Crazies’ Will Undermine the U.S. System.” Bloomberg. 14 September 2016. http://www.bloomberg.com/news/articles/2016-09-14/greenspan-worries-that-crazies-will-undermine-the-u-s-system

**Tyler Durden, “Trump Slams ‘Totally Politically Controlled’ Fed, Sees No Rate Hike Until Obama Has Left.” Zero Hedge. 15 September 2016. http://www.zerohedge.com/news/2016-09-15/trumps-slams-totally-politically-controlled-fed-sees-no-rate-hike-until-obama-has-le

Antonius Aquinas@AntoniusAquinas

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John Maynard Keynes’ “General Theory” Eighty Years Later

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Keynes Gen Theory

To the economic and political detriment of the Western world and those economies beyond which have adopted its precepts, 2016 marks the eightieth anniversary of the publication of one of, if not, the most influential economics books ever penned, John Maynard Keynes’ The General Theory of Employment, Interest and Money. Sadly, even to this day, despite its thorough refutation by lights such as Henry Hazlitt and other eminent scholars, The General Theory, which spawned “Keynesianism” and its later variants, remains supreme in academics, financial markets, and public policy.

Despite its outlandish theoretical flaws and nonsensical economic jargon and the catastrophic empirical evidence of its failure to prevent financial downturns or “stimulate” sustainable growth, Keynesianism remains the ruling paradigm of economic thought.

Why?

A number of trenchant reasons have been given for the General Theory’s continued dominance, however, one stands above all else: Keynesian economics provides the intellectual justification for economists, statisticians, technocrats, bureaucrats, and policy wonks in their exalted positions as “fine tuners” of economies the world over. Since markets are to Keynes and his disciples inherently unstable from erratic investment spending and aggregate demand, it is up to these theoreticians steeped in the knowledge of their master’s teachings to ameliorate any economic fluctuations.

The General Theory came on the scene at a propitious time during the height (or more accurately the depth) of the Great Depression, which in 1936, despite Roosevelt’s New Deal and other Western nation states’ initiatives, had not improved conditions. Keynesianism was actually a “middle way” between all out Soviet-style central planning and that of laissez-faire capitalism. Primarily through fiscal policy, the economy would be kept on an even keel under the astute management of Keynesian-trained economists. Naturally, this appealed to academics and intellectuals the world over who correctly envisioned positions of power and influence in expanded state apparatuses.

As history has shown, Keynesianism was to become more than a remedy for the Depression, but would be applicable after the crisis dissipated. The General Theory was based, in part, on the (false) notion that the capitalist system is inherently unstable and is, therefore, in need of state intervention. Keynes deliberately ignored the scholarship at the time, which demonstrated that the instability was not a “market failure,” but a monetary disorder caused by artificial credit expansion generated by the central banks, especially the Federal Reserve.

The enthusiasm for The General Theory came at first from younger economists while it was (rightly) dismissed by many of their elders as incomprehensible. Yet, its lack of clarity was appealing to the novices, since they would become the Creed’s interpreters.

Not all, however, were entirely overwhelmed by their mentor’s magnum opus as Paul Samuelson candidly admitted:

[The General Theory] is a badly written book:

poorly organized. . . . It abounds in mares’ nests

of confusions. . . . I think I am giving away no

secrets when I solemnly aver – upon the basis of

vivid personal recollection – that no one else in

Cambridge, Massachusetts, really knew what it

was all about for some twelve to eighteen months

after publication.*

Despite such an assessment, Keynesianism was never seriously challenged by its adherents, it opened too many lucrative policy making doors to be refuted.

That Keynesianism continues to reign supreme, despite its theoretical and empirical bankruptcy, speaks volumes of the state of Western intellectual and academic life. Instead of the pursuit of truth and the refutation of error, Western intelligentsia is primarily concerned with securing privilege and power for itself. At one time such status was gained by honest inquiry into social questions and issues, now it is obtained in the justification of the expansion of state power. Very few turn down such enticements!

Societies are the product of ideas. Since the release of The General Theory, the Western world has been under the destructive sway of Keynesianism, which has resulted in stagnation, financial turmoil, and eventual collapse. Until Keynes and his nutty theories have been refuted, the economic malaise will continue.

Quoted in Murray N. Rothbard, “Keynes, the Man.” In Mark Skousen, ed., Dissent on Keynes: A Critical Appraisal of Keynesian Economics. New York: Praeger Publishers, 1992, p.184

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com/

“A Date Which Will Live in Infamy:” President Nixon’s Decision to Abandon the Gold Standard

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Nixon-Gold

Franklin Delano Roosevelt called the Japanese “surprise” attack on the U.S. occupied territory of Hawaii and its naval base Pearl Harbor, “A Date Which Will Live in Infamy.” Similar words should be used for President Nixon’s draconian decision 45 years ago this month that removed America from the last vestiges of the gold standard.

On August 15, 1971 in a televised address to the nation outlining a new economic policy entitled, “The Challenge of Peace,” Nixon instructed the Treasury Department “to take the action necessary to defend the dollar against the speculators.”*

Nixon continued:

I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interests of monetary stability and in the best interests of the United States.**

Of course, any objective student of history knows that this was a lie and that it was not “speculators” which were causing monetary instability, but the U.S.’s own crazed inflationary policy which attempted to fund its imperialistic endeavor in Vietnam while expanding the welfare state at home. This resulted in the Treasury losing an alarmingly amount of gold reserves to other central banks who rightly sought real value in exchange for depreciated American greenbacks.

In essence, Nixon’s decision ended gold redemption and placed the U.S. and the rest of the world on a purely fiat paper standard for the first time in recorded time. By doing so, the U.S., in effect, became a deadbeat nation which no longer honored its obligations and was set on the road to its current banana republic status.

Instead of impeachment proceedings and his ultimate resignation for the juvenile break in at the headquarters of the nation’s other ruling crime syndicate, Nixon should have been imprisoned for this deliberate and destructive act which has led, in large measure, to the nation’s crushing and insurmountable debt burden, reoccurring booms and busts, and now economic stagnation.

Nixon’s disastrous decision had precedent. FDR had his own day of monetary infamy in 1933 when, by Executive Order 6102, he outlawed the private ownership of the precious metal while eliminating gold redemption by banks for dollars. Ostensibly, the order was instituted as an emergency measure to combat the Depression, but in reality, it was done to allow the Federal Reserve greater “flexibility” in inflating the money supply.

While Roosevelt and Nixon’s decisions would backfire economically, their actions highlighted the totalitarian direction that the federal government and its executive branch were heading throughout the 20^th century. Moreover, the lack of opposition or protest to blatant executive dictatorial decrees by either the legislative or judicial wings of the federal government demonstrates again the flawed and frankly naive argument put forth by Constitutionalists of every ideological persuasion on how the celebrated “separation of powers” theory checks tyranny.

Nixon’s final abandonment of the gold standard had far greater ramifications than simply bad economics. Without the discipline of hard money, central banks could, and did, create massive quantities of paper money and credit, which enriched the politically connected financial elites and the governments which they were aligned. Such power was used, in time, to control, spy on, and regulate the subject populations to a degree never seen before. The power of the state has swelled mostly through bank credit expansion without worry of gold redemption.

Despite what is taught in social science courses, a true gold standard is a greater protector of individuals’ economic well being and, ultimately, their political liberty than any legislation or “rights” document ever penned. Hard money limits state power!

While it is painful to quote from an ardent opponent of sound money, the international bankster Baron Rothschild said it best when he described the relationship of money and power: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

Richard Nixon’s elimination of the last remnant of the gold standard over four decades ago combined with FDR’s earlier decree has fulfilled to the detriment of the American and world economies Baron Rothschild’s adage to a tee. The return of prosperity and individual liberty will only come about when these two heinous acts are eradicated.

*Richard M. Nixon. “Address to the Nation Outlining a New Economic Policy: ‘The Challenge of Peace.’” The American Presidency Project. 15 August 1971. http://www.presidency.ucsb.edu/ws/?pid=3115

**Ibid.

Antonius Aquinas@AntoniusAquinas

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