Author: White Whale

I get his columns from time to time. Since he is an important element in the leftist propaganda machine, I think it worth taking a moment or two from time to time to deconstruct the patent idiocies, and subtle deceptions which characterize his work, and which characterized his ideological forebears: John Galbraith, John Maynard Keynes, George Bernard Shaw, Karl Marx, Robespierre, and the Marquis de Sade. The task is to leave the world in flames, but since most people find that idea objectionable, for whatever reason, they have to be sneaky.

The task which Keynes set for himself was the transfer of all wealth, power, and means of production to the State. The means of doing this was, proximately, investment in public works projects which caused long term economic harm, in ways I have discussed over the last week or so.

In this weeks column, he is arguing against German cuts in spending. As he says (to them, in an imagined debate which will never happen):

budget cuts will hurt your economy and reduce revenues.

Let’s ponder that for a moment. He slips things like that in. Skillful illusionists draw attention to one place, while the movement happens elsewhere. The spirit behind it is very much Nancy Pelosi’s “unemployment benefits create jobs”. No they don’t.

What he is saying is if the German government spends less money, they will collect less in taxes. Let me repeat that: if they spend less money, they will collect less in taxes. This means that he is positing that for every dollar spent, some amount at least equal to that amount comes back, and presumably more. Moreover, that this process is sustainable. That we should be doing this year over year.

Logically, if deficit spending pays for itself–it one dollar spent yields one dollar in the coffer–then deficits would not be deficits: they would be funded. This would imply private sector job growth, though, which is not attained through government spending, as I will discuss in a moment.

It is reasonable to suppose, though, that as you spend more, you get more back.

Let us say this supposed “ricochet” effect is real, which to some extent is indubitably the case. $100 billion collected and spent gets $80 back. $200 billion collected and spent gets $150 billion back. In the second case, tax receipts have in fact increased. His “theory” has been proven true. Yet in the first case the net debt increased $20 billion, and in the second it increased $50 billion, AND THIS PROCESS WILL CONTINUE INDEFINITELY AS LONG AS MORE IS SPENT THAN COLLECTED. Moreover, the amount of taxes that need to be collected to maintain a steady state condition will go up steadily as interest payments on the national debt.

The simple, ineluctable fact of the matter is that only people in the private sector create jobs which pay taxes in a sustainable way. You can borrow and spend money, and create illusory wealth, but all that is happening is you are getting back some percentage of what you spent, that is LESS than the total.

Take unemployment benefits. You have Hans Schmidt sitting on his duff, collecting a check every month. He uses that money to buy groceries, pay his rent, make his car payment, and to buy beer. These benefit the grocery, landlord, car and beer businesses, AS LONG AS THE MONEY KEEPS COMING. Cut off the money, you put pressure on all those same businesses, to the extent that they depended on Hans getting his check for the government.

But if they depended on that check, then they were never really independent, sustainable enterprises in the first place. Just like Hans, they are really dependents on the government, aren’t they? The government is a big old Sugar Daddy, that will feed you as long as you play ball.

This is not health. This is illness. It is unsustainable. And Keynes/Krugman don’t want it to be sustainable. They want it to collapse, eventually, from the weight of the contradiction.

The Germans recognize this. The Tea Party movement in this country recognizes this. Adam Smith was on the mark when he said, roughly: “what counts as common sense in personal life can scarcely be unwise when deployed more widely.”

You can’t spend borrowed money forever. How hard is that to understand? You can’t live beyond your means forever. You can live well, for a time, but bills come due.

It’s not commonly known, but interest payments on our national debt will surpass our expenditures on national defense within ten years.

Krugman keeps invoking the era in which Socialists finally got their way here–the late 30’s. Obama was supposed to be FDR. It hasn’t worked out, but a playbook predicated on deception can only have so many plays. Go too far, and people get wise. That is what has happened here, and apparently there.

This is what we need to do, in my opinion. This is the counter to the schemes of fools, liars and villains.

What we need in Congress, in the White House, and in the Supreme Court are leaders. True leaders have three qualities: vision, moral courage, and the ability to get things done in groups. The first two qualities help with the third.

Perhaps the most ludicrous aspect of our current political system–and by and large this has only rarely not been a problem through our history, so this is nothing new–is that we do not ask of our elected representatives what their long term vision is. What do they want for their grandchildren? How do they expect to get there?

What we see is short sighted political grandstanding. Shots lobbed at others through the press, then responded to in the same way. Nobody anywhere is sitting down, it seems, developing a vision consistent with political freedom and economic viability, and then executing it with moral courage.

By and large, our “leaders” are a bunch of clucking chickens going wherever their seed gets thrown. They’ll do “whatever it takes”, to get reelected.

All of us, as individuals, need to ask ourselves what we want for our grandchildren, and we need particularly to ask the same of anyone who wants to speak on our behalf, and control in part the enormous sums taken from us in taxes, and borrowed from our grandchildren on our behalf.

It seems to me one of the most salient cultural facts of Europe, today, is that fewer and fewer people are choosing to reproduce. As Mark Steyn has noted, this will over time lead inevitably to a shift in the direction of nearly univesal Islamic hegemony on their continent. More subtly, though, it allows Keynes “in the long run we are all dead” philosophy to intrude, such that people don’t CARE as much about the future, and instead focus on the here and now, and what pleasure they can get from this life, now.

I listen to a bit of everything, but most days you will find me listening to country during the day, and classical when I get home–really, I should say when I finish my work, which continues here–and pour myself one of those wonderful, cold beverages that I find make life so much more enjoyable.

Many people don’t get country. Many of the songs are sad to the point of being painful. As an example, I have George Jones “He stopped loving her today” as my ring tone. If you haven’t heard that song, I suggest you take just over 4 minutes and listen to it.

This song is intended to make you cry. It is intended to cause a welling up of sympathy and awe and grandeur at the mysteries of life, love, mourning, happiness and redemption.

Can you not picture this sad man, who knows he needs to let go, and just can’t figure out how to do it? It’s a mistake. It’s a pathology. Yet there it is. Are we not all like that, in our own individual ways?

This is the point of the best country music (and it doesn’t get better than George Jones): to teach you to release these feelings, to integrate them, and so perhaps if you are going to fail, to fail knowingly.

And it is cathartic, too. Did you not notice how the host was smiling as he pointed out there wasn’t a dry eye in the house? Sometimes when I’m feeling a bit bad in the morning I’ll listen Hank Williams “Alone and forsaken”, or “I’ll never get out of this world alive”. Both make me feel better. The latter always puts a smile on my face. Note the music is somewhat upbeat. He’s just sort of throwing up his hands and smiling rather than crying.

The point of tragedy is to strengthen your moral and emotional senses. The point of feeling pain in a ritualistic, theatrical setting is to prime your emotional pump. How can you love deeply if you are afraid of emotional pain? How can you walk through the world, open both to its pain and wonder, if you are constantly shrinking from it?

Our emotional, spiritual “bodies” (for want of a better word) need exercise too, and the best Country does that. If you want some practice, listen to this song. It will get you. And that’s a good thing.

It is perhaps a truism in some circles, but it has been said that the net effect of the Sexual Revolution has not been to elevate women, but to denigrate them, to bring them to the level of the man.

It seems intuitively obvious to me that women are capable of much greater enjoyment of sex thaan men. They have more refined senses than men do. If the moment of “ringing the bell” is a few moments for men, the after-tone for women seems to go much longer.

The ultimate aphrodisiac for women is trust rewarded. I wrote this in my notes a few months ago, and I believe it is true. I think for most women who are honest with themselves, the most satisfying moment is when they are lying in their lover’s arms, feeling warm and protected, vulnerable and safe.

For men, I think the greatest aphrodisiac is simply physical beauty, of the sort that for whatever reason appeals to them as individuals. The greatest guarantor of long term happiness, though, is acceptance. In their own way, men are vulnerable too, to the covert attack on their sense of self embedded in rejections of various sorts.

It seems to me that pornography is a means for systematically deducting trust from sexual relationships. It is a vehicle for converting love into lust, and complex human feelings into manias and compulsions. It appeals directly to what is worst in men, which is the objectification of women–treating them as other than individual beings, with needs, hopes, and the potential to love–and the avoidance of the fear that attends risking rejection through emotional openness and attachment.

Self evidently, we are all born with a sexual instinct that needs to be expressed for us to be happy. It does not seem to me that it has to be expressed impersonally, and with many partners. This is the point of marriage. Not all marriages work out, for a variety of reasons, but this basic vehicle balances both the need for sexual expression and the need for safety.

Is it the only vehicle? No. If everyone were honest, if everyone were emotionally mature enough to see other people as they are (and as importantly as they want to be), then over time marriage would be less important. Yet, the importance of committment between individuals would not diminish. You can’t trust people who are “here” one day emotionally, and gone the next. And the more times trust is violated, the harder it becomes to achieve satisfaction even in a sexual relationship.

We see the argument that to “repress” sex is unnatural, that optimal health depends on expressing it as often and in as many ways as possible. This argument neglects the emotional consequences of such behavior. For women, I think they lose a part of their identity, that of the loving woman, caring for her loving man. It is perhaps a cliche, but I think it is hard-wired into them. For men, they lose the sense of being reliable, sturdy, “there”, especially for a family, which in the end is the point of sex.

For that reason, I developed the notion of “qualitative repression”, which is the suppression of our higher, more refined instincts in favor of our more primal, more animalistic ones.

I would submit that having and raising children is one of the most satisfying experiences which is possible on this world. I don’t think any career or personal success can equal it, although of course those things are desirable. The pursuit of sex, qua sex, diminishes the capacity to do this well, and for many eliminates entirely the desire to have–and take responsibility for–children. Constant sexual “movement”–either a roving eye, or roving genitalia–leads to divorce, and unhappiness for those who stay married. The other side of the fence is always greener. Yet when they get there–having suffered in the meantime–I think many find it is just as brown, and possibly worse.

Trying to find fulfillment through sex leads, in my view, to the collection of invisible scars. It leads to “experimentation”, which amounts in the end to the substitution of quantitative variety for qualitative variety. Why not group sex? Why not bisexuality? Why not sadomasochism?

Qualitative variety would be different senses of love, engaging with all your senses open, trying to see another human being as they are and want to be.

I believe innocence, potentially, is as natural as sexual expression. The two combined are heaven on Earth, and heaven seems to be receding. Bringing it back (or, perhaps, bringing it here for the first time in human history) requires understanding that what we are doing, on balance, is not working, if by “working” we understand qualitative fulfillment and genuine contentment.

As I see it, the Tea Party represents the resurgence of classical Liberalism, which is based on self restraint, personal responsibility, and civility towards fellow citizens.

At the same time, I think we need to be careful to not just look backwards, as for example to the world of our Founding Fathers, steeped as it was in institutions such as slavery, and the exclusion of non-property owners from participation in the democratic process.

The United States was founded as a place where MORAL progress was possible. We ended slavery. Everyone got the vote. We have acted on many occasions to combat tyranny and oppression.

And we can do better. We need to remember this, and consecrate ourselves to the motto “the best is yet to be”.

My answer to the “how” is Goodness, as I define it, but the beauty of our system is that all of us can come up with our own answers, and compare them. That is the task now, to generate new ideas, new forms, new directions, based on very old principles.

Henry Hazlitt dealt well with the contradictions of Keynesism. You borrow money–with interest–from the future to fund the present, and in doing create the illusion of prosperity in the present, at the cost of reduced prosperity in the future. A notable line that comes up often is Keynes aphorism “in the long run, we are all dead”. He had no children, however, and in the long run our children inherit what we create. Keynes was a vicious, selfish man, whose “morality” consisted in convivial clubbishness with those he saw as social and political fellow travellers and bon vivants.

I want to point out, though, the disruptions which his policies, when followed, create in the private sector. Let us suppose that “stimulus” money hits Smalltown, USA. They want to build a new highway, complete with rest stops and playgrounds. The economy is somewhat down, but some businesses are holding on. Where the going wage for, say, a plumber is $15/hour, he will now pay $30/hour. In our country, all Federal contracts have to pay Davis-Bacoin wages, which are substantially higher than what would otherwise be free market prices.

The whole town goes to work on this project, which is scheduled to last some 5 years. During that time, they live well. New restaurants are opened, clothing stores, laundries, and put-put courses. Plumbing companies have a hard time finding workers, since they all go to work for the government. Some go under.

Then the project finishes and the money runs out. Nobody can go out to dinner any more. Nobody buys clothing any more. They stop going to the put-put course, and revert to doing their own laundry. All the businesses that were created by the Stimulus now go out of business. Many or most of the private enterprises that existed before the “blessing” of the project have folded. The town is now in a much deeper Depression than before. Unemployment is even higher than before. What is the Keynesian solution? Either unemployment benefits, funded by some combination of deficit spending, and increased taxes on those businesses that remain productive in other parts of the country. Alternatively, if we use his example of the “benefits” of pyramid building, we use deficit spending to build a second highway next to the first. Now everybody is employed again. Now, the Socialits running the thing have created one more drag on the private sector.

Make no mistake: the end goal is for every man, woman and child in the United States and around the world to depend entirely and he and his for every last detail of their life: food, clothing, shelter, medical care and everything else you need.

This program has been enacted many times around what I will call for convenience the Third World. The IMF loans money for some project. The money is spent (after a suitable amount is siphoned off by the ruling elite), apparent wealth is created for a period of time, then things are twice as bad. The country is in debt, with no private sector resources to pay the taxes needed for survival. What then? Either another round of borrowing (the IMF creates money, as I understand it, so there is no practical limit to their ability to lend), or paying bills with printed money, which creates they hyperinflation we read about around the world. Such policy benefits the ruling class, and wrecks the lives of everyone else. The people with the money, though, have the guns, so things continue on as before.

If people accept the Keynesian argument that spending money creates jobs, this is their fate.

The alternative? IF we are going to spend money for job creation, it MUST be made available to private enterprise, in economically sustainable enterprises. Such loans must be short term, and they must be paid back, as in the microloan program.

To foster global development, we must exorcise the ghost of this very clever, very evil man. And we need to end both the IMF and the World Bank, in a manner like I have proposed for our own national financial system.

[Edit: I’m not fully satisfied with this post, but it’s close to the mark.]

I used to wonder how it is that currencies change “value”. Why is a dollar worth “X” euro one day, and 1.1X the next?

The answer is really quite simple: values change acccording to the perceptions of institutional and other investors of the relative rate of inflation of one currency compared to another. People are holding a lot of dollars now. Why? The Europeans and Chinese seem to be pursuing even more inflationary policies than we are. We sank a ton of money into various financial groups to stabilize them, but that money simply served to refresh money they had lost in failed investments. Only slowly will it find its way back into the wider economy. Likewise, the so-called Stimulus was really not that large. A third of it is propping up Medicaid programs for various States that spent themselves into bankruptcy. A third of it is going to send “vote for me” checks to likely Democrats, with some reserved for corporate tax cuts, which really isn’t spending at all. And only a third of it–roughly $250 billion in all–is getting spent. Of that, only about $148 billion has been spent in the last two fiscal years.

This brings to mind a fundamental fact about the Great Depression. We all know that a lot of banks failed, but not the reason. The reason was that our currency was attacked. First, some numbers with respect to the Great Depression:

During the major contraction phase of the Depression, between 1929 and 1933, real output in the United States fell nearly 30 percent. During the same period, according to retrospective studies, the unemployment rate rose from about 3 percent to nearly 25 percent, and many of those lucky enough to have a job were able to work only part-time. For comparison, between 1973 and 1975, in what was perhaps the most severe U.S. recession of the World War II era, real output fell 3.4 percent and the unemployment rate rose from about 4 percent to about 9 percent. Other features of the 1929-33 decline included a sharp deflation–prices fell at a rate of nearly 10 percent per year during the early 1930s–as well as a plummeting stock market, widespread bank failures, and a rash of defaults and bankruptcies by businesses and households.

Now, that piece is by the current Chairman of the Federal Reserve Board. I have posted that link elsewhere, but only just now read it all the way through. The gist of his explanatin of the cause of the Great Depression was, in essence, that the Fed pursued inflationary policies in the 1920’s, and then tightened the money supply, causing first the Crash of 1929, and then the following failure of roughly half the banks in the United States. They protected–through extensions of credit–banks within the system, but did nothing at all to protect those outside the system.

This contraction, combined with banking failures–which caused net losses in the money supply, since the money they held simply vanished into thin air (the same way most of it was created)–caused deflation. Deflation decreases lending, since if you borrow $1, and have to pay back $2, you are paying back more than the nominal interest rate you commited to. This means that there is no money for borrowing, and what money there is, most people don’t want.

He blames the gold standard for the deflation. Let’s think about that. What the gold standard is designed to do is prevent inflation. It is designed to protect the value of the money, by limiting how much you can print. In theory, if $1 is worth 1/10th of an ounce of gold, you can go to a bank and ask for the gold instead of the money. You can then take that gold to another country, and exchange it for their money.

Let us think about this, though. The United States in the 1920’s held X amount of gold, let us say 10,000 tons. In THEORY, there would be only enough money in circulation to equal out the exchange rate. In theory, it should match to the penny and ounce. Let us say, for example, that $1=1/10th of an ounce of gold. Let us say there are 16 ounces in a pound (there are troy ounces but I don’t understand them, and it doesn’t matter enough to look it up). If my math is correct, that means no more than $200,000,000 could be in circulation.

If you look at my piece on Money Creation, though, what you realize is that printing money is a very unimportant part of how money is created, and that the Federal Reserve (and all central banks) have the ability to create essentially unlimited quantities, and did even when we were theoretically on the gold standard. This means that, for example, that if our reserves (the Federal Reserve of New York, btw, holds the largest gold reserve in the United States to this very day) would imply $200,000,000 in circulation, that there could easily be, following inflationary policies of the sort in place throughout the 1920’s, $1 BILLION in circulation. Our dollars would be worth 1/5th, in gold, what they should have been worth, but that they could be REDEEMED for full face value. Phrased another way, that you could get $1 Billion in gold, for a mere $200 million in cash.

Now, the amount in circulation is a function of many things, such as the required bank reserve requirements, and what the Fed is doing as far as their open market operations (described in my piece on Money Creation). Phrased another way, the relative trajectory of the value of money can be influenced by Fed policy. In point of fact, that is almost the only factor, in the end, that matters.

Bernanke, here, tells us that the policies the Fed pursued were, in effect, allowing the forest to burn to clear out the dead underbrush. Yet, they also had the effect of strengthening the power of Wall Street banks, and those within the Federal Reserve system. What we need to understand, is that those same banks COMPRISED the Federal Reserve System. The same man might literally sit on the Board of Directors of the Fed, and at a large multinational bank that stood to benefit from the policies the Fed pursued. This is patent–and UNREGULATED–conflict of interest. We are not even sure who owns all the “stock” in the Fed. This is patently ridiculous.

We need to remember, too, that the value of all the loans which the member banks of the Federal Reserve held increased substantially as a result of deflation. Deflation forces the debtor to pay not just the interest, but to use money whose worth is increasing to do so. This creates an added stress, over and above the normal stress of doing business, and of course for that reason is economically damaging.

Inflation is created when banks create money from nothing to loan. Deflation is created when they contract the money supply. Self evidently, the failure of half the banks in the US caused severe deflation. Those positioned correctly win in both directions.

Bernanke cites apparently empirical evidence that the longer nations stayed on the gold standard, the worse they fared. This is of course an argument in favor of Keynes flexible currency, and in favor of what he, as Federal Reserve Chairman, does. Let us suppose this is accurate (as proper propagandists never lie: they interpret, lest we draw the “wrong”–which is to say correct–conclusions.)

Why would this be? Gold makes it harder to inflate–at least in theory–which means less credit is available. Deflation further makes it harder to justify taking out loans for business expansion. Hitler, to use one example–one cited by Keynes as a good example of his policies at work–used his central bank (which had inflated away all debts in the early 20’s) for massive public spending program. How did he intend to pay them off? Simple: conquest. America did not have that option. Nor have we paid off the debts we incurred in that war, which was in fact inflationary.

Throughout the 1920’s, Benjamin Strong, who was the Federal Reserve Chairman, worked in close collaboration with his counterpart at the Bank of England, Montagu Norman. When Churchill–a bit out of his depth, I think, economically–put England back on the gold standard, they set the price of the pound a bit high. In the course of implementing Labor (Socialist) policies, they had created problems for themselves in affording all it, particularly when their war debts were added to the mix. [Edit: this is written from memory. I may be wrong in part on this part, with respect to the details, although I think the larger picture is correct.]

What does this mean? Let us say that one pound ought to have been worth 1 ounce of gold, based on the amount of gold they held, and the quantity of pounds in circulation. They set it at, say, 2 pounds, such that they immediately created money for themselves. This sort of thing is exceedingly difficult to measure. Only very few would have grasped this. They then pursued ostensible fiscal tightening, in the form of tighter monetary policy relative to the United States.

For his part, Strong–a pronounced Anglophile–kept interest rates (here, we are talking mainly about the Discount Window, which was much more important, prior to the Fed getting unlimited freedom for their open market operations, although open market operations were pursued then, in the form of buying the securities of member banks, and thus providing them money to lend) lower than they should have been. This made our money weaker than it ought to have been relative to the pound, and thus made holding pounds relatively more attractive to international investors than the dollar. It allowed them to buy more, domestically and abroad, than they ought to have been able to afford.

At a certain point, the scheme collapsed, and people who had held pounds, asked for gold instead. This led to England abandoning the gold standard. Then, as Bernanke put it: With the collapse of the pound, speculators turned their attention to the U.S. dollar, which (given the economic difficulties the United States was experiencing in the fall of 1931) looked to many to be the next currency in line for devaluation.

If my understanding is correct, this is fundamentally disingenuous. The value of money has nothing to do with economic circumstances, and everything to do with monetary policy, specifically the extent to which Federal Reserve policy has enabled the overvaluation of our currency to begin with. Put another way, it only makes sense to “buy” money if that money is undervalued, and it makes sense to “sell” it when it is overvalued. Both terms are best understood with reference to gold. If there are too many dollars relative to the gold we have, it makes sense to get the gold, and dump the dollars; or, alternatively, to buy some other currency, like marks or yen.

Let me think out loud for a moment. Once large scale deflation set in, it would have made sense to hold dollars again, provided other currencies were not deflating faster than us. The fear of devaluation that Bernanke says led to the panics that closed so many banks would have been the fear that international markets would recognize that we had inflated far past our ability to redeem our money in gold. This would have led to dumping dollars in favor of other currencies. Why did money not flow back in, though? Maybe it did. Maybe international banks DID hold dollars, and simply didn’t spend them. We did not see widespread transfer of ownership of our economic assets to foreign interests, though. Perhaps members of the Federal Reserve system held them themselves, for later use. This is plausible. If you can create money at will, then getting cash is never a problem. Sometimes you might just want to sit on your money. In deflationary times, that amounts to an investment.

As I have argued in my series on economics inflation is a means by which to transfer ownership of real property through leveraging a protected position in the economic system, without thereby creating anything of real value. It is anti-Capitalist. If Capitalism is harnessing the powers of motivation and creativity to create wealth, our financial system in large measure, as currently constituted, acts to reallocate the fruits of that system to people who have added nothing of value. This process is quite similar to the process portrayed by Marx, in which people who sit in the right place get richer, at the expense of everyone else. To be redundant to emphasize the point: THIS IS NOT CAPITALISM.

What happened, then, is that our currency was made less valuable throughout the 1920’s, during which process people creating the money attached de facto liens to our means of production, and then it was devalued through a financial disruption in which half of the banks in the United States failed, and as a result of which all outstanding loans increased in value. Competition was destroyed, and existing loan “assets” went up in value.

Given that the same people created the policy and benefited from it, it is exceedingly hard not to see this as the result of planning. How would we know what happened in the meetings at the Fed? We don’t even know with certainty who the members are. The meetings are closed to the public. At that time, they did not even announced their targeted Federal Fund rate, as they do now (this is what creates the Prime Rate).

Then we add Keynes (who by the way was a member for some time of the Board of Governors of the Bank of England). What was the proposed solution to deflation? Deficit spending by the Federal Government. Who financed that spending? The same Wall Street banks that constitute the Federal Reserve. Funding deficits is a primary function of central banks the world over, although we are unique in having one that is accountable to no one. They use open market operations to buy Treasury bonds, which are interest bearing.

Now, I don’t think Keynes was on the same page as Wall Street. With his pal, Soviet agent Harry Dexter White, he tried to nationalize the Federal Reserve, presumably to get precise control over this process. They failed. But they did succeed in creating a de facto World Central Bank, in the IMF and World Bank.

In politics, economics is everything. Hitler only came to power because of the economic dislocations of the Great Depression. Lenin was only able to seize power in the aftermath of World War 1, and the generalized economic problems that caused. Mao seized power in the aftermath of World War 2, facing a financially depleted government.

Given the foregoing, consider the recent news that global financial chiefs reached new rules on reserve requirements. It is all the central banks–the Federal Reserves of the world–reaching an agreement to require all banks to keep more money in the proverbial safe. This is categorically going to have deflationary consequences. It will pull money out of circulation. It will make banks more stable, but it will likely push some over the edge, and it will tighten credit.

Consider, too, the INSANITY of the Fed making policy internationally, when it is not accountable to anyone. There will be no Senate hearing on this. We are in effect entering into a treaty that will be signed by someone who was appointed, but who can do ANYTHING he wants after that.

This system is utter and complete lunacy. Here, again, is my solution.

The process of earning more money than you need to survive, and allowing it to accumulate, until you can create something with it, is fundamental to Capitalism. With a sound monetary system, everyone would over time own their own means of production. They would invest in small businesses–shops, production facilities, restaurants–which they would control. The end aim of Capitalism is very simply for everyone to be a Capitalist, and for there to be no “workers” as such at all. Where things can’t get done by individuals, they could aggregate as a collective and own things in common, as in some corporations, which are owned by the employees. Socialists will claim this for themselves, but quite obviously such arrangements are both common sense and common, already. I know any number of companies that are owned by a group of people. Generally, they will have employees, but all that needs to happen to convert an employee into a Capitalist is the opportunity to buy in.

As I have argued often, Socialism is not a system for improving the shared experience of humanity at large. Socialists–true Socialists, not people with “tribal” orders characterized by uniformity of moral belief and culture, such as the Scandinavians, that operate as high trust cultures–are quite willing to accept, for others, a uniform poverty, in exchange for eradicating both the relatively rich and the relatively poor.

Their views, external appearances to the contrary, are shaped neither by genuine compassion and empathy, nor by the sincere desire to create anything like freedom. On the contrary, their views are shaped by their own internal necessity, which typically is the formation of a moral code–a meaning system, in my terms–in a condition of atheism, and moral pessimism if not outright nihilism. The “Nihilists” were in fact the literal ideological forebears of Lenin. I will be writing on that shortly.

The task Socialists set themselves, then, is primarily the acquisition of power over their fellow human beings. That is the primary goal. It is not wealth creation. It is not freedom creation. It is not even eradicating injustice, since their policies create far, far greater injustices than the worst abuses of Capitalism in its worst periods. One will not find people digging up their dead and eating them in any period of modern history, until one gets to Mao’s unnecessary famine.

Self evidently, one will find nowhere in Capitalism the systematic use of torture, murder, and deportation as political tools. There have been deaths, yes, and patent cruelties, but they disappeared 100 years ago or more. One has to look to modern nations like China to find their equal. And China, today, is far more cruel than we were even in the so-called Robber Baron era.

To the topic. Logically, if savings is the process of the democratization and generalization of the means of production and personal freedom, then it is the antithesis of the project of centralizing control of the means of production and generating autocratic control.

In my view, Social Security is an attack on savings. Prior to the Great Depression, people saved money. It was quite common, since savings was your safety line, your protection against the unknown. Now, if you can depend, instead, on the government, then you no longer need savings.

When it was first introduced, in my understanding, the program was intended primarily to furnish unemployment benefits. Many millions had no way of feeding, clothing, or housing themselves. In no small measure because of Communist agitators blaming Capitalism for their plight, revolution was in the air. One could, I suppose, call Huey Long the Obama of his day, with the difference that Huey was more honest, and a much, much more capable leader.

Now if you want to fully eradicate savings you need a two-pronged attack. You first need to convince people that whatever bad thing happens to them, Uncle Sam will be there to the rescue. This includes illness, unemployment, and old age.

Then you need to make credit easy, which is equivalent to pursuing inflationary policies. The first allows people to own, now, what they want (albeit at a price). The second disincents savings, since money held in a condition of inflation counts as a negative investment. It loses value.

Keynes was adamant we had to get off the gold standard. Why? Simple: it is much harder to inflate a currency backed by gold. I don’t think the hyperinflation of the 70’s would have been possible if Nixon had not taken us off the gold standard. I read some time ago that the Fed intentionally pursued a policy of increasing M1–which is basically money in circulation–throughout the 70’s. This was on their website.

In 1980, they got the permission of Congress to perform “open market operations” with respect to any security whatsoever. As I understand it, this was to help them “tame” the inflation they surely created.

Would one of necessity have to be conspiratorially minded to see this as at least possibly a policy that was pursued with clear eyes, and great deceit? I can see no way to explain the inflation of the 70’s without an increase in the money supply, and no way to explain an increase in the money supply without active Fed control.

I have said a number of times, that the Fed is an organization that only solves problems that it creates. No Fed: no problems.

I got off track there. Some people want to link the people who run the large banks with Fabian Socialism, or some other scheme to rule the world. It’s impossible to say, of course, what plans might have been hatched, but it is quite clear that greed is a constant in human history, and that where motive and opportunities exist in the same place, quite often immoral behaviors result.

This is Keynes term for the rule of all by an elite. It was to be undemocratic, since the people simply were not as clever as he and his, and did not know what was good for them. They possessed, to use an overtly Marxist word, “false consciousnes”, which is codespeak to say they had not yet been indoctrinated sufficiently as to be reliable.

Here is my own definition of Salariat: that class which makes rules for OTHER people. They retain another set for themselves. By that standard, Congress is already half there.

I see these constant debates on conservative websites on whether or not Islam is “fundamentally” capable of moderation. I read a piece tonight by David Solway, where he did his homework, and quoted a variety of sources on both sides of the issue.

Here is my take: we really don’t know what the people who profess an allegiance to Islam are capable of. Neither do they. Clearly, Muslims have coexisted more or less in peace with other faiths in many places for many years. Clearly, many of the nations that speak Arabic as their primary language do so as a result of conquest.

The question, to me, is “what should we do, now”? I want to get along, but not at the cost of my culture and country. I want peace, but am quite prepared to fight for our Liberal order.

My problem with the “debate”, such as it is, at the moment, is that people seem to want to reach some clear, stable, non-negotiable stance with respect to “Islam”, when in reality many, many people fall under that rubric, and we can’t with justice sit in judgement on them all. This is the tendency we ALL have that academics call “essentializing”.

Always, always, always, judgments have to be localized. We have to have specific policy questions in front of us. Solway, in a four page essay, is only truly useful in one paragraph, where he offers CONCRETE policy proposals:

These would include the shutting down of terror-preaching mosques (as well as the cancellation of the Cordoba project), the deportation of extremist imams, a ramped-up prosecution of phony Islamic “charities,” the stringent oversight of Wahhabi-inspired madrassas with a view to eliminating them altogether, the delicensing of Islamic organizations allied to the Muslim Brotherhood, tightened immigration policies, the prohibiting of shari’a law and finance, the close monitoring of Middle East Studies departments in our universities whose real mandate is not to teach but to proselytize and indoctrinate in favor of Islam, and an all out campaign to dry up the sources of Islamic funding in all areas of public and professional life.

In my own view, these are–considering the global context–reasonable proposals.

Bottom line: we don’t have to decide–nor can we with justice EVER decide–what sort of people “Muslims” are. The questions, always, are policy oriented. How do we protect American lives? How do we support what is good in the world, and starve what is bad?

Would I like to see a Muslim renaissance, in which they approach something like the universal values of the Enlightenment? Of course. We need to work to build up everything that is good and wholesome anywhere Muslims congregate. Will such efforts in the end matter? Only time will tell. We have to make the effort, in my view.

I am very fond of a line I saw in the Kentucky Derby Museum, and have quoted it often, but hopefully not so often as to be dull: “Mint juleps should never be made by novices, Yankees, and statisticians”.

Never count the odds bef0re the fight, if you are right. Do what is right, adjust as needed, and keep firing until you prevail or fall. That is a very simple life strategy, and one I embrace whole-heartedly.