Tag Archives: china

The Ethics of a Gold Standard

goldstandard

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

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

. . . government meddling with money has

not only brought untold tyranny into the world;

it has also brought chaos and not order.  It has

fragmented the peaceful, productive world

market and shattered it into a thousand pieces,

with trade and investment hobbled and hampered

by myriad restrictions, controls, artificial rates,

currency breakdowns, etc.  It has helped bring

about wars by transforming a world of peaceful

intercourse into a jungle of warring currency blocs.*

Rothbard Money

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

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

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

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

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

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

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

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

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

Antonius Aquinas@antoniusaquinas

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Heaven Forbid Peace Should Break Out Between the US and North Korea!

US bombing Korea

Hamhung, North Korea, June 30, 1950

As long as the US Empire can be funded and maintained on the backs of its taxpaying public, the chance of de-escalation of tensions not only on the Korean peninsula, but throughout the world are practically nil.  And, as long as the nation’s current interventionist ideology holds sway, it will only be through a financial meltdown that the US’s role as global policeman will come to a much-needed end.

The most recent example of the world’s biggest bully escalating matters is its on-again, off-again badgering of North Korea.  In contrast to Western/CIA media reports, the November 28 launch of what appears to be an intercontinental ballistic missile, the Hwasong-15, was not unprovoked.  Instead, the North Korean test firing was in response to the unexpected announcement of further US/South Korean military drills to take place starting on December 4.  The exercises are, in part, to show off the latest mass murdering “product” of America’s military industrial complex, the USF-22 Raptor stealth fighter jet.

Before the latest launch, the Kim Jong Un regime had not fired a missile for two months and was in discussions with other intermediaries about how tensions could be lessened on the Korean peninsula. For the bellicose US, however, not even an uneasy “truce” can be tolerated.  The next American scheduled drill was not to take place until the spring of 2018, yet, while negotiations were taking place, the US abruptly, and to the outrage of everyone involved, renewed exercises.  Russian Foreign Minister, Sergei Lavrov, explains:

We have been working with Pyongyang.  Then,

all of a sudden two weeks after the United States

had sent us the signal [about readiness to dialogue],

they announced unscheduled drills in December.

there is an impression that they were deliberately

provoking [North Korean leader] Kim Jong Un to

make him break the pause and gave in to their

provocations.*

This, of course, is not the first time that the US has acted with duplicity in foreign matters.  Its barbaric dealing with two Middle Eastern strongmen (Saddam Hussein, Muammar Gaddafi) are grisly examples of what happens to those who run afoul of the US Empire, especially those who do not possesses a nuclear deterrent.

North Korea, too, has witnessed the wanton destructive capabilities of the American military during the so called “police action” of the early 1950s:

The US Air Force estimated that North Korea’s

destruction was proportionally greater than that

of Japan’s in the Second World War. . . .   American

planes dropped 635,000 tons of bombs on Korea . . .

including 32,557 tons of napalm, compared to

503,000 tons of bombs dropped in the entire Pacific

theatre of WWII.**

The loss of life was, to say the least, catastrophic as 10% of the population, some 3 million people, perished due mostly to American bombing while the destruction of property was equally brutal.  “By the end of the war,” North Korean sources assert, “only two modern buildings remained standing in Pyongyang.”***

Is it any wonder that the North Korean leadership gets a little antsy when the US scramble its jets.  It does not want a repetition of the holocaust inflicted on it by the merciless American Air Force.

Of course, these inconvenient facts are rarely if ever spoken about in the Western media, academia, and certainly not by war-mongering politicos like U.N. Ambassador Nikki Haley.  They are simply ignorant of history or pretend not to know.

The US Empire only accepts peace if it favors its interests.  For the Korean Peninsula that means that Kim Jong Un must disband his nuclear program.  Such a move, however, would mean a premature death to Un and the eventual carpet bombing of his country.  The North Korean strongman will do no such thing.

The Trump Administration may huff and puff all it wants and enact greater sanctions on the North, but unless it wants to risk a nuclear confrontation that may spread into a general world war, it has little options.

Instead of another round of destabilizing military maneuvers, maybe President Trump and his foreign policy team should try to engage in genuine negotiations to bring about an equitable solution to the matter.

Why not “give peace a chance?”

*”Russian FM Reveals First Victims in Case of War on Korean Peninsula.”  Sputnik News.  2 December 2017.  https://sputniknews.com/asia/201712021059640205-russia-provocations-korea-war/

**Charles K. Armstrong, “The Destruction and Reconstruction of North Korea, 1950-1960.”  The Asian-Pacific Journalhttp://apjjf.org/-Charles-K.-Armstrong/3460/article.html

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com

What President Trump and the West Can Learn from China

Trump Trip China

Instead of a demonstration of its overwhelming military might intended to intimidate tiny North Korea and pressure China to lean on its defiant communist neighbor, President Trump and the West should try to learn a few things from China.

The President’s trip to the Far East came on the heels of the completion of China’s 19th National Congress where the current president, Xi Jinping, has cunningly positioned himself as China’s unchallenged leader.  In an address at the opening of the Congress, Xi cautioned that the country faced “challenges” that are “extremely grim” yet, despite these, the nation’s future is “extremely bright.”*

While Western politicos and pundits bemoan the lack of political pluralism that exists within China and President Trump complained about bad trade “deals,” they miss an important factor as to why China has transformed itself from a socialist basket case some three decades ago into an economic powerhouse which now boasts over a third of the world’s billionaires!

China’s economic ascendancy can be attributed not only to the implementation of market reforms in the 1990s, but also its lack of “political competition.”  As a one-party state, resources, time, energy, and capital are not allowed to be channeled into wasteful political processes, but instead are used and “invested” in wealth-creation activities – construction, factories, plants, equipment, research, technology – all of which leads to more and cheaper consumer goods.

The US and the West spend too much on elections, campaigns, polling, political consultation, etc., which diverts scarce resources away from the private wealth sectors of society.  For example, in her last failed presidential campaign run, the Wicked Witch of Chappaqua alone spent over a half of billion dollars.

Under Western democratic pluralism, public debt and state spending have increased to unsustainable levels.  In the US alone – history’s greatest debtor nation – the national debt is in excess of $20 trillion, while its total debt officially is $68 billion with a federal deficit (GAAP) running yearly at $5 ½ trillion.

Such staggering numbers are the result, in part, from political parties seeking public office and once elected exploiting their position to enrich themselves, their constituents, and create dependent classes among the ever shrinking productive segments of society.

China’s foreign policy – an extension of politics – has also been conducive for wealth creation.  Instead of wasteful spending on military hardware, the maintenance of a far-flung global empire, and involvement in incessant wars, China has a rather meek military compared to its national income and has conducted a pretty much non-interventionist foreign policy – witness its diplomacy with North Korea.

The US is almost the polar opposite.  It spends more on “defense” than the next eight countries combined.** Instead of the production of useful consumer goods, billions are siphoned off into the military/security industrial complex.  Not only does this impoverish Americans at home, but it leads to never ending involvement in wars, conflicts, and disputes, most of which are created or exacerbated by US spy organizations.

Def spending

After meeting with Chinese leadership, President Trump tweeted:

I don’t blame China, I blame the incompetence

of past Admins for allowing China to take advantage

of the U.S. on trade leading up to a point where the

U.S. is losing $100’s of billions.  How can you blame

China for taking advantage of people that had no clue?

I would’ve done the same!

Making better trade deals will not revitalize the moribund US economy.  Instead, there should be less politicization of society and adoption of market reforms as China has done.  The most important plank of such a policy would be the encouragement of real savings – not the creation of bank credit – through the normalization of interest rates.  This would begin the arduous process of capital accumulation, the basis upon which any economy can be built.

Another sign of the divergence between the two is China’s continued push to make the yuan the world’s reserve currency with apparently some sort of gold backing to it.  Contrarily, the Trump Administration has continued the same disastrous policies of its predecessors and has chosen a Janet Yellen clone to head the Federal Reserve with a continuation, no doubt, of the suppression of interest rates.  On the other hand, China continues to import massive quantities of gold and encourages its citizens to own the yellow metal while the West is in the midst of a crypto currency mania, another fraudulent monetary scheme.

China’s economic miracle, while certainly impressive, would not look as astounding if Western economies had not been in a state of stagnation and decline over the past half century.  It was not political liberalization that led to China’s phenomenal growth, but economic freedom which used to be a staple of Western life.  The lesson that should be taken from President Trump’s trip is less politics domestically and more free markets.

*Chris Buckley, “Xi Jinping Opens China’s Party Congress, His Hold Tighter Than Ever.”  The New York Times, 17 October 2017.   https://www.nytimes.com/2017/10/17/world/asia/xi-jinping-communist-party-china.html

**Peter G. Peterson Foundation.  “US Defense Spending Compared to Other Countries.”  1 June 2017.  https://www.pgpf.org/chart-archive/0053_defense-comparison

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com