Tag Archives: Economics

Memo to The Donald: Cut Tariffs NOT Rates

trump tariff

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

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

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

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

The manufacturing purchasing managers’ index plunged to 35.7 in

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

National bureau Statistics on Saturday, much lower than the median

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

contraction.*

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

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

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

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

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

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

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

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

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

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Pope Francis the Taxman

Bergoglio Marxist

 

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

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Pope Francis Calls Marxist Economic Summit

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.

Antonius Aquinas@antoniusaquinas

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The Ethics of a Gold Standard

goldstandard

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

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

. . . government meddling with money has

not only brought untold tyranny into the world;

it has also brought chaos and not order.  It has

fragmented the peaceful, productive world

market and shattered it into a thousand pieces,

with trade and investment hobbled and hampered

by myriad restrictions, controls, artificial rates,

currency breakdowns, etc.  It has helped bring

about wars by transforming a world of peaceful

intercourse into a jungle of warring currency blocs.*

Rothbard Money

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

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

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

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

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

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

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

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

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

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The Geopolitical Consequences of a Coming Recession

Irian Military

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

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

Warning lights are flashing.  Whether it is

this year or next year, odds of another

economic downturn are high – and growing. . . .

 

When I look at the economy today, I see

a lot to worry about again.  I see a

manufacturing sector in recession.  I see

a precarious economy built on debt – both

household debt and corporate debt and that

is vulnerable to shocks.  And I see a number

of serious shocks on the horizon that could

cause our economy’s shaky foundation to crumble.*

Warren

A “doom and gloomer” Demo?

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

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

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

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

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

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

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

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

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

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

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

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Demonocracy: The Great Human Scourge!



Review: Christophe Buffin de Chosal, The End of Democracy, Translated by Ryan P. Plummer.  Printed in the U.S.A.: Tumblar House, 2017.

Introduction

One cannot speak too highly of Christophe Buffin de Chosal’s The End of Democracy.  In a fast paced, readable, yet scholarly fashion, Professor Buffin de Chosal* demolishes the ideological justification in which modern democracy rests while he describes the disastrous effects that democratic rule has had on Western societies.  He explodes the myth of Democracy as a protector of individual liberty, a prerequisite for economic progress, and a promoter of the higher arts.  Once Democracy is seen in this light, a far more accurate interpretation of modern history can be undertaken.  The book is a very suitable companion to Hans-Hermann Hoppe’s iconoclastic take down of democracy in Democracy: The God That Failed, released at the beginning of this century.  Buffin de Chosal has spoken of a follow up which will be eagerly awaited for.

Democratic Governance

The idea of rule by the people is a scam, one perpetuated by those who, in actuality, are in control of the government.  Through the “democratic process” of voting and elections, a small, determined minority can impose its will despite majority opposition:

We often hear it said that ‘in a democracy,

it is the people who rule. . . .’  Rule by the

people is a myth which loses all substance

once confronted with the real practice in

democracy.  [13]

Quoting from a Russian philosopher, Buffin de Chosal continues his criticism:

    The best definition [of democracy] was

given by the Russian philosopher Vasily Rozanov. 

‘Democracy is the system by which an

organized minority governs an unorganized

majority.’  This ‘unorganized majority’ is the

people, aggregated and individualistic,

incapable of reaction because disjointed.  [28]

He expands upon Rozanov’s theme:

. . . [C]ontrary to what [democracy’s] principles

proclaim: one can say that the majority

almost never wins.  Democracy is not the

system of the majority, but that of the most

powerful minority, and it has this power

not simply due to its numbers, but also and

above all due to its organization. [31]

Power does not reside in “the people” and certainly not in the individual.  In democracy, the only way to express one’s preference or protect one’s rights is through the ballot box every so often. “Each voter,” writes Buffin de Chosal, “in a democracy, is the depositary of a tiny particle of sovereignty, in itself unusable. His sole power consists in dropping a ballot into a box, whereby he is immediately dispossessed of his particle of sovereignty at the profit of those who are going to represent him.”  [Ibid.]

Popular democracy has always been condemned and feared by most thinkers since the beginning of human societies.  It was not until intellectuals saw democracy as a way they could attain power that they began to advocate it as a system of social order.  Prior to the democratic age, most of the learned understood that democracy would result in mob rule and the displacement of natural authority with demagogues.  In short, the worst would rise to the top as the author describes the characteristics of a contemporary politician:

The ideal politician, on the other hand, is

pliable, convincing, and a liar by instinct.  He is

not attached to any platform and has no

ideological objective.  The single thing to which

he is truly committed is power.  He wants its

prestige and advantages, and seeks above all

to be personally enriched by it.  Any politician

who presents this aspect is recognized as fit for

power in a democracy. . .  .  It is therefore not

surprising that democratically elected assemblies

are almost exclusively comprised of

these kinds of men and women.  Elected

heads of state almost always fit this profile,

and international institutions, such as the

European Union, consider it the only

acceptable profile. . . .  [35]

Democracy and the State

Since the advent of modern democracy, the principle benefactor of its rule has been the State and the politically-connected financial elites who are in actuality the true rulers of societies.  Instead of putting an end to the supposedly despotic rule of the Ancien Régime, which Democracy’s proponents claim to have existed throughout the monarchial and aristocratic age, governance by the people, has instead witnessed an increase in state power and control of individual lives to an unprecedented level in human history. Few, if any, pope, emperor, king, prince, or duke have ever possessed such suzerainty.

In contrast to what has been taught in classrooms, on university campuses, and espoused throughout the media, individual rights and freedoms were far better guarded in the age prior to Democracy’s ascendancy.  Pre-revolutionary Europe had social structures which insulated individuals from State power far more effectively than under modern democracy:

    The concept of an organic society was abolished at

the time of the French Revolution.  The corps and

orders were suppressed, the privileges were abolished,

and everything which allowed the people to protect

themselves from the power of the state was banished

in the name of liberty.  [24]

And in return for giving up the order that protected them from state depredations, the people received “sovereignty:”

They were given the false promise that they

would no longer need to defend themselves

from the state since they themselves were the

state.  But if a people organized into corps and

orders are incapable of exercising sovereignty,

how much more so a people comprising a formless

mass of individuals!  [Ibid.] 

Historically, all of the democratic movements which supposedly stemmed from the people were, in fact, a falsehood, perpetuated largely by revolutionaries who sought to replace the established order with themselves.  While legislatures, congresses, and democratic bodies of all sorts have been interpreted as the fruition of the masses’ desire for representation, the reality was quite different:

    Democracy is not, in its origin, a system of

the people.  In England with the advent of the

parliamentary system just as in France during the

Revolution, it was not the people who were seen

at work.  Even the Russian Revolution was not a

phenomenon of the people.  To regard the people

or what the communist elegantly call the ‘masses’

as the agent of change or political upheaval is purely

a theoretical view, a historical myth, of which

one sees no trace in reality.  The ‘people’ were

the pretext, the dupes, and almost always the

victims of the revolutions, not the engines.  [13]

Not only was propagation of the myth of popular support for democratic ideals propounded for the survival of the new social order, but putting these tenets into practice was accomplished, in large part, by the role of the “intellectual” an often neglected feature of standard historical analysis and the reason behind much social transformation:  

The ‘nation’ met the desires of the philosophers

who wanted to transfer power from the monarch

to an enlightened, philosophical, and philanthropic

class who, moreover, ought to be financially

comfortable.  The educated bourgeoisie of the

time were the protagonists of this idea, and a

portion of the nobility formed their audience.  [13-14]

The intellectuals promoted Democracy because it would open up for them considerable opportunities for position and income in the nation state.  It must be remembered that it was the intellectuals who justified the idea of Absolutism.  Later, the intellectuals turned on the monarchies and sided with the emerging republican classes rightly believing that democratic governance would give them greater opportunities for power in the emerging nation states.

Democracy and Modern History

While most historians see the advancement of democracy and the development of legislative bodies over the course of the last centuries as an advancement in the human condition and one that has emanated from the people’s desire for greater political representation, Buffin de Chosal presents a far different and more accurate interpretation.  “Democracy,” he asserts, “is not, in its origin a system of the people.” [13] All of the social movements which eventually led to the destruction of Christendom did not come from the people seeking a greater “voice” in their governance.

“The ‘people,’” he argues, “were the pretext, the dupes, and almost always the victims of the revolutions, not the engines.” [Ibid.]  Liberty, Equality and Fraternity was not a popular cry, but one coined and used by the “enlightened” classes to mobilize and justify their overthrow of the French monarchy and with it the destruction of the Church. 

    The French Revolution was built on the

idea of the ‘nation,’ which claimed to bring

together the intellectual, social, and financial

elite of the country.  It was on this foundation

that democracy was established and that it

functioned during almost all of the nineteenth

century.  [Ibid.]

A similar historical narrative can be seen in England.

The rise and eventual triumph of representative democracy in England was not one that percolated from the masses itching for more freedom.  “The appearance of the parliamentary system in England,” Buffin de Chosal contends, “was tied to the great movement of Church property confiscation begun under Henry VIII and continuing until the coming of the Stuarts.” [14] 

After Henry gorged himself on the Church’s wealth, he sought to bribe as much of the nobility as possible with his ill-gotten gains to insure his power.  An envious Parliament, however, wanted its cut of the loot which led to the great internecine struggle between Crown and Parliament which eventually ended in the suzerainty of the latter with the Glorious Revolution of 1688.  The real power from then on rested with an oligarchical legislative branch:

The families who had thus helped themselves

to the Church’s goods, morally justified by

Protestant ethics, formed the gentry, the class

of landowners who sat in Parliament.  Parliament

was not then, as one might believe today, an organ

of poplar representation.  It was an instrument

in the hands of the gentry to defend its own class

interests. [16-17]

That Parliament and the monarchy would become the two dominant ruling structures was the result of the breakdown of the feudal structure which was taking place not only in England, but across Europe.  European monarchs continued to gain more and more power at the expense of the feudal landed elite.  The gentry’s power and wealth was also on the wane with the rise of commercial centers which most of the time aligned themselves first with the kings and then later with Parliament.  The eventual triumph of Parliament, however, did not mean greater democracy for the people:

The financial incentives for England’s adoption

of the Protestant Reformation are therefore

intimately connected with the bolstering of

Parliamentary power. The Parliament in England

was used to put the monarchy in check and to

replace it with an oligarchic class of wealthy

Protestants to whom the kings were required to

submit.  This is why the overthrow of James II

in 1688 was a true revolution.  It was not a

popular revolution or the overthrowing of a

tyranny, but it was the rebellion of a class

implementing the transfer of sovereign power

for its own profit. [17]

The Market Economy

The author takes a refreshing look at the market economy that sets straight the inaccurate and often times hostile analysis of it that frequently comes from conservative circles.  He distinguishes and rightly points out that “pure capitalism” or the “unhampered market” is an “excellent thing” [123].  The free market is intimately tied with private property which is a prerequisite for a just society:

[Capitalism] proceeds from respect for private property.

As capitalism is the reinvestment or saved money for the

purpose of making new profits, it presupposes respect for

property rights and free enterprise.   It has existed in Europe

since the Middle Ages and has contributed significantly to

the development of Western society.  [Ibid.]

He insightfully notes that “bad capitalism” often gets lumped in with its “good form” while the latter gets the blame for the baneful excesses of the former.  “Monopoly capitalism,” “corporatism,” “the mixed economy,” and “crony capitalism” are not the result of the market process, but stem from “intervention” brought about by the State in favor of its business favorites through participatory democracy.  In a truly free market, entrenched wealth is rarely maintained but is constantly subjected to challenges by competitors:

But what one ought to designate as bad

capitalism is the concentration of wealth and

power this wealth procures.  This danger does

not stem from capitalism itself but rather from

parliamentary democracy, for it is democracy

that enables money powers to dominate the

political realm.  [Ibid.]

The “monied interest” did not exist under “traditional monarchy,” but was a product of Democracy and the protection and extension of the “bad capitalistic” paradigm that came into being and was expanded by the rise of popular representative bodies.  Assemblies, legislatures, and congresses, which emerged, became aligned with the banking and financial interests to bring about the downfall of the monarchies. 

The concentration of political power could only be attained after the control of money and credit were centralized in the form of central banking and the gold standard was eliminated.  Central banks have been an instrumental part of the democratic age, funding the nation state’s initiatives and enriching the politically- tied financial elites at the expense of everyone else.   

Wealth concentration is not a by-product of the free market.  Rarely are firms able to maintain their dominance for long periods of time.  Many turn to the State to get protection and monopoly grants to ensure their position in the economy:

. . . capitalism only becomes harmful when

it grants political power to the money powers.

This was only made possible thanks to the advent

of parliamentary democracy, which was an

invention of liberalism.  It is therefore the

foundational principles of political liberalism

(equality before the law, suppression of privileges,

centralization of political power, censitary suffrage,

and the accountability of ministers to the legislative

houses) which have enabled the rise of a wealthy class

and its power over society.  [124]

Such sound economic analysis abounds throughout his tome.

Future Prospects

The author rightly sees that because of its nature and the type of personalities that it attracts, modern democracy cannot reform itself, but will eventually collapse from financial stress, war, and/or civil strife:

    Parliamentary democracy rarely produces true

statesmen, as its party system more often

promotes ambitious and self-interested persons,

demagogues, and even communication experts. 

These are generally superficial and egocentric

individuals with a very limited understanding

of society and man.  These politicians do not      

have the makings of statesmen.  They are

adventurers who use the state to satiate their

hunger for power and money or to benefit

their party.  [147]

Efforts to reform it, however, should not be totally dismissed since they could lead to more fundamental change and ultimately the creation of a new political paradigm for Western governance.  Populism and the various movements around the globe which fall into that category should be encouraged.  Populism, because of is lack of definite ideological underpinnings, has meant different things at different times to different people.  Most populists, however, do not want to get rid of democratic forms of government, but want the system to be more “responsive” of its constituents instead of favoring entrenched political elites.  Populism is a symptom of the growing failure of modern democracy’s inability to “deliver the goods” that it promises to a now growing dependency class. 

As a means of getting rid of totalitarian democracy, populist movements and themes should always be encouraged:

In Europe, the only political forces today

which could, in the more extreme of circumstances

assume this rescue role are found on the side of

populism.  Conservative in its values, sometimes

classically liberal when it is a matter of opposing

the stifling interventionism of the state, and yet ready

to defend social gains . . .  populism is the only

political current which comes to the defense of

those interests of the population denied or ignored

by the parties in power. [148]

He adds:

Populist parties, from the simple fact that they

can bring together voters from both the left

and the right, have a chance of coming to power

in the near enough future.  The deterioration of

security conditions in Europe due to mass

immigration plays in their favor.  [148-49]    

While he does not explicitly discuss it, a more concrete and ideological coherent idea and one of historical precedent, is that of secession.  For all those who oppose the democratic order, secession is the most justifiable, logical, and practical strategy for the dissolution of the nation state.  Secession movements, therefore, whether they do not outwardly condemn parliamentary democracy and only seek to establish a “better run” system, should always be supported. 

Conclusion

The most likely scenario if there is to be a change in Western democratic life will be from a world-wide economic crisis and collapse of the financial system which will render the nation states unable to meet their financial obligations to their citizens.  All economies are hopelessly indebted from their welfare state excesses and can never hope to meet their promises which now runs in the trillions.  What will emerge in the aftermath of a collapse is hard to predict, but some form of authoritarianism is likely which will be centered on a one-world state with a single, irredeemable currency.

While the financial demise of Western-styled democracy will be evident for all to see, its ideological underpinnings which have justified its existence needs to be extirpated.  Any hope of it being reconstituted to better serve “the people” needs to be shot down.  There is no better place to start the de-mystification of Democracy than with Christophe Buffin de Chosal’s magnificent, The End of Democracy.  

*Professor Christophe Buffin de Chosal teaches economic history at the United Business Institutes. 

Buffin-de-Chosal

 

Antonius Aquinas@antoniusaquinas

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

The Gold Standard: Protector of Individual Liberty and Economic Prosperity

goldstandard vs.    the-bill-of-rights

 

 

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 than 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

Antonius Aquinas@AntoniusAquinas

https://antoniusaquinas.com