Money Crank Alert

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Carl Veritas's picture
Carl Veritas
Status: Gold Member (Offline)
Joined: Oct 23 2008
Posts: 294
Money Crank Alert

From  the foundation for economic education ---   Where have all the monetary  cranks gone?

http://www.thefreemanonline.org/columns/ideas-and-consequences/monetary-...

and for something more current ---

http://www.telegraph.co.uk/finance/china-business/7454501/Record-numbers...

http://www.businessweek.com/news/2010-03-12/inflation-eroding-china-depo...

 

 

 

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Re: Money Crank Alert

Prepare for the onslaught from the sovereign money crowd.

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Re: Money Crank Alert

I guess I was wrong.  It is easier to ignore than to respond.  Here is another article of interest.

http://books.google.com/books?id=jStx9gEb6cUC&lpg=PP1&dq=fiat%20money%20...

or PDF

http://mises.org/books/inflationinfrance.pdf

Early in the year 1789 the French nation found itself in deep financial embarrassment: there was a heavy debt and a serious deficit.

The vast reforms of that period, though a lasting blessing politically, were a temporary evil financially.  There was a general want of confidence in business circles; capital had shown its proverbial timidity by retiring out of sight as far as possible; throughout the land was stagnation.

Statesmanlike measures, careful watching and wise management would, doubtless, have ere long led to a return of confidence, a reappearance of money and a resumption of business; but these involved patience and self-denial, and, thus far in human history, these are the rarest products of political wisdom.  Few nations have ever been able to exercise these virtues; and France was not then one of these few.

There was a general search for some short road to prosperity: ere long the idea was set afloat that the great want of the country was more of the circulating medium; and this was speedily followed by calls for an issue of paper money.  The Minister of Finance at this period was Necker.  In financial ability he was acknowledged as among the great bankers of Europe, but his was something more than financial ability: he had a deep feeling of patriotism and a high sense of personal honor.  The difficulties in his way were great, but he steadily endeavored to keep France faithful to those principles in monetary affairs which the general experience of modem times had found the only path to national safety.  As difficulties arose the National Assembly drew away from him, and soon came among the members renewed suggestions of paper money: orators in public meetings, at the clubs and in the Assembly, proclaimed it a panacea—a way of “securing resources without paying interest.”  Journalists caught it up and displayed its beauties, among these men, Marat, who, in his newspaper, “The Friend of the People,” also joined the cries against Necker, picturing him—a man of sterling honesty, who gave up health and fortune for the sake of France—as a wretch seeking only to enrich himself from the public purse.

Against this tendency toward the issue of irredeemable paper Necker contended as best he might.  He knew well to what it always had led, even when surrounded by the most skillful guarantees.  Among those who struggled to support ideas similar to his was Bergasse, a deputy from Lyons, whose pamphlets, then and later, against such issues exerted a wider influence, perhaps, than any others: parts of them seem fairly inspired.  Any one to-day reading his prophecies of the evils sure to follow such a currency would certainly ascribe to him a miraculous foresight, were it not so clear that his prophetic power was due simply to a knowledge of natural laws revealed by history.  But this current in favor of paper money became so strong that an effort was made to breast it by a compromise: and during the last months of 1789 and the first months of 1790 came discussions in the National Assembly looking to issues of notes based upon the landed property of the Church,--which was to be confiscated for that purpose.  But care was to be taken; the issue was to be largely in the shape of notes of 1,000, 300 and 200 livres, too large to be used as ordinary currency, but of convenient size to be used in purchasing the Church lands; besides this, they were to bear interest and this would tempt holders to hoard them.  The Assembly thus held back from issuing smaller obligations.

Remembrances of the ruin which had come from the great issues of smaller currency at an earlier day were still vivid.  Yet the pressure toward a popular currency for universal use grew stronger and stronger.  The finance committee of the Assembly reported that “the people demand a new circulating medium”; that “the circulation of paper money is the best of operations”; that “it is the most free because it reposes on the will of the people”; that “it will bind the interest of the citizens to the public good.”

The report appealed to the patriotism of the French people with the following exhortation: “Let us show to Europe that we understand our own resources; let us immediately take the broad road to our liberation instead of dragging ourselves along the tortuous and obscure paths of fragmentary loans.”  It concluded by recommending an issue of paper money carefully guarded, to the full amount of four hundred million livres, and the argument was pursued until the objection to smaller notes faded from view.  Typical in the debate on the whole subject, in its various phases, were the declarations of M. Matrineau.  He was loud and long for paper money, his only fear being that the Committee had not authorized enough of it; he declared that business was stagnant, and that the sole cause was a want of more of the circulating medium; that paper money ought to be made a legal tender; that the Assembly should rise above prejudices which the failures of John Law’s paper money had caused, several decades before.  Like every supporter of irredeemable paper money then or since, he seemed to think that the laws of Nature had changed since previous disastrous issues.  He said: “Paper money under a despotism is dangerous; it favors corruption; but in a nation constitutionally governed, which itself takes care in the emission of its notes, which determines their number and use, that danger no longer exists.”  He insisted that John Law’s notes at first restored prosperity, but that the wretchedness and ruin they caused resulted from their overissue, and that such an overissue is possible only under a despotism.

M. de la Rochefoucauld gave his opinion that “the assignats will draw specie out of the coffers where it is now hoarded.

On the other hand Cazalès and Maury showed that the result could only be disastrous.  Never, perhaps, did a political prophecy meet with more exact fulfillment in every line than the terrible picture drawn in one of Cazalès’ speeches in this debate.  Still the current ran stronger and stronger; Petion made a brilliant oration in favor of the report, and Necker’s influence and experience were gradually worn away.

Mingled with the financial argument was a strong political plea.  The National Assembly had determined to confiscate the vast real property of the French Church,--the pious accumulations of fifteen hundred years.  There were princely estates in the country, bishops’ palaces and conventual buildings in the towns; these formed between one-fourth and one-third of the entire real property of France, and amounted in value to at least two thousand million livres.  By a few sweeping strokes all this became the property of the nation.  Never, apparently, did a government secure a more solid basis for a great financial future.

There were two special reasons why French statesmen desired speedily to sell these lands.  First, a financial reason,--to obtain money to relieve the government.  Secondly, a political reason,--to get this land distributed among the thrifty middle-classes, and so commit them to the Revolution and to the government which gave their title.

It was urged, then, that the issue of four hundred millions of paper, (not in the shape of interest-bearing bonds, as had at first been proposed, but in notes small as well as large), would give the treasury something to pay out immediately, and relieve the national necessities; that, having been put into circulation, this paper money would stimulate business; that it would give to all capitalists, large or small, the means for buying from the nation the ecclesiastical real estate, and that from the proceeds of this real estate the nation would pay its debts and also obtain new funds for new necessities: never was theory more seductive both to financiers and statesmen.

It would be a great mistake to suppose that the statesmen of France, or the French people, were ignorant of the dangers in issuing irredeemable paper money.  No matter how skillfully the bright side of such a currency was exhibited, all thoughtful men in France remembered its dark side.  They knew too well, from that ruinous experience, seventy years before, in John Law’s time, the difficulties and dangers of a currency not well based and controlled.  They had then learned how easy it is to issue it; how difficult it is to check its overissue; how seductively it leads to the absorption of the means of the workingmen and men of small fortunes; how heavily it falls on all those living on fixed incomes, salaries or wages; how securely it creates on the ruins of the prosperity of all men of meagre means a class of debauched speculators, the most injurious class that a nation can harbor,--more injurious, indeed, than professional criminals whom the law recognizes and can throttle; how it stimulates overproduction at first and leaves every industry flaccid afterward; how it breaks down thrift and develops political and social immorality.  All this France had been thoroughly taught by experience.  Many then living had felt the result of such an experiment—the issues of paper money under John Law, a man who to this day is acknowledged one of the most ingenious financiers the world has ever known; and there were then sitting in the National Assembly of France many who owed the poverty of their families to those issues of paper.  Hardly a man in the country who had not heard those who issued it cursed as the authors of the most frightful catastrophe France had then experienced.

It was no mere attempt at theatrical display, but a natural impulse, which led a thoughtful statesman, during the debate, to hold up a piece of that old paper money and to declare that it was stained with the blood and tears of their fathers.

And it would also be a mistake to suppose that the National Assembly, which discussed this matter, was composed of mere wild revolutionists; no inference could be more wide of the fact.  Whatever may have been the character of the men who legislated for France afterward, no thoughtful student of history can deny, despite all the arguments and sneers of reactionary statesmen and historians, that few more keen-sighted legislative bodies have ever met than this first French Constitutional Assembly.  In it were such men as Sieyès, Bailly, Necker, Mirabeau, Talleyrand, DuPont de Nemours and a multitude of others who, in various sciences and in the political world, had already shown and were destined afterward to show themselves among the strongest and shrewdest men that Europe has yet seen.

But the current toward paper money had become irresistible.  It was constantly urged, and with a great show of force, that if any nation could safely issue it, France was now that nation; that she was fully warned by her severe experience under John Law; that she was now a constitutional government, controlled by an enlightened, patriotic people,--not, as in the days of the former issues of paper money, an absolute monarchy controlled by politicians and adventurers; that she was able to secure every livre of her paper money by a virtual mortgage on a landed domain vastly greater in value than the entire issue; that, with men like Bailly, Mirabeau and Necker at her head, she could not commit the financial mistakes and crimes from which France had suffered under John Law, the Regent Duke of Orleans and Cardinal Dubois.

....

Does this sound familiar to anyone else but me?

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: Money Crank Alert

Carl,

Thanks for linking and warning us about that crank site  - http://www.thefreemanonline.org/columns/...

As soon as I saw the "Foundation for Economic Education" (FEE) I instantly became suspicious, and then when I read some of the bunk, I agreed with you...they are cranks.  I'm sure you know that the FEE was a big funder for Ludwig von Mises Institute:

Today the Austrian tradition is kept alive by the Ludwig von Mises Institute, a think tank financed entirely by wealthy business donors. It is part of a broader phenomenon, the explosion of far-right think tanks in the last 20 years, funded by such conservative and libertarian donors as the Bradley, Coors and Koch family foundations.

These foundations have poured hundreds of millions of dollars into the creation of an "alternate academia" of right-wing think tanks, after the failure of mainstream academia to support right-wing dogma. This alternate academia comes complete with extensive media ties to publicize their research, which is why Austrians are so frequently found on conservative talk radio. Austrian economist Israel Kirzner describes the critical role that their primary backer, the Foundation for Economic Education (FEE), has played in the "revival" of Austrian economics:

"It was their vision which brought Ludwig von Mises to FEE at a time when he was, to put it mildly, all but ignored on the academic scene. It was through the resources of FEE, its skilled use of the tools of communication and public education, which ensured that Mises' message would survive."

Friedrich von Hayek, protégé and colleague of Mises, is one of the founders of the Mont Pelerin Society, with Mises a member for at least 13 years.  The Guardian UK explained what and who the Mont Pelerin Society is... 

How the neoliberals stitched up the wealth of nations for themselves, A cabal of intellectuals and elitists hijacked the economic debate, and now we are dealing with the catastrophic effects

When the Mont Pelerin Society first met, in 1947, its political project did not have a name. But it knew where it was going. The society's founder, Friedrich von Hayek, remarked that the battle for ideas would take at least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy, which later came to be known as neoliberalism, accorded with the interests of the ultra-rich, so the ultra-rich would pay for it.

Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm.

This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top 1%, but to the top tenth of the top 1%. In the US, for instance, the upper 0.1% has already regained the position it held at the beginning of the 1920s. The conditions that neoliberalism demands in order to free human beings from the slavery of the state - minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions - just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim. In practice the philosophy developed at Mont Pelerin is little but an elaborate disguise for a wealth grab.

The first great advantage the neoliberals possessed was an unceasing fountain of money. US oligarchs and their foundations - Coors, Olin, Scaife, Pew and others - have poured hundreds of millions into setting up thinktanks, founding business schools and transforming university economics departments into bastions of almost totalitarian neoliberal thinking. The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK, were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme - the restoration of the power of the elite - and package it as a proposal for the betterment of humankind.

Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused unfold, the public will need ever less persuading that it has been misled.  - complete article link

The FEE, Mises and Austrian theories have helped destroy any sanity remaining in economics.  That is why Rockefeller brought Mises to the U.S. in the first place.  The foundations then kicked in to support the poisoning of economics, it became a belief system rather than a social science. 

"Many readers may be surprised to learn the extent to which the Graduate Institute and then Mises himself in the years immediately after he came to United States were kept afloat financially through generous grants from the Rockefeller Foundation. In fact, for the first years of Mises’s life in the United States, before his appointment as a visiting professor in the Graduate School of Business Administration at New York University (NYU) in 1945, he was almost totally dependent on annual research grants from the Rockefeller Foundation.

Even after he finally landed the position at NYU, where he remained only a visiting professor until his retirement in 1969, his salary was paid for not by NYU, but from funds contributed by generous private supporters."

  • Mises wife, Margit Herzfeld, wrote in her biography of Ludwig Von Mises

"that he participated in Count Coudenhove-Kalergi’s Pan Europe movement in 1943. He had been brought to the U.S. in 1940 by a grant from the Rockefeller Foundation of $2500 a year to work at the Natl. Bureau of Economic Research, which grant was renewed in 1943."

"Hence his [Montagu Norman, Governor of the Bank of England] campaign in favour of completely autonomous central banks, dominating their own financial markets and deriving their power from common agreement among themselves. They would succeed in taking out of the political realm those problems which are essential for the development and prosperity of the national financial security, distribution of credit, movement of prices. They would thus prevent internal political struggles from harming the wealth and the economic advancement of nations.

In short, Norman wished to see the imposition of the World Order over the financial affairs of the nations. It was this agreement among the central banks, rather than the front organization, the League of Nations, which became their final instrument of power. Crucial to these arrangements was the monetarist school, the Austrian School of Economics, an outgrowth of the Pan-Europe movement."

Thanks again for bringing these treacherous cranks to our attention.

Larry

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Re: Money Crank Alert

Larry,

Surely you can do better than more ad hominem attacks on Mises and Hayek.

Carl Veritas's picture
Carl Veritas
Status: Gold Member (Offline)
Joined: Oct 23 2008
Posts: 294
Re: Money Crank Alert

 

To clear the path for true monetary reform and  keep tyrants and monetary cranks in check:

(1)   Abolish legal tender laws

(2)   Allow bankers to fail.

 

 

 

 

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