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I am still working my way towards working on a piece on Jacques Ellul’s book “Propagandas”, but felt a need to comment on one point here: propaganda is an anti-anxiolytic. It calms and soothes people, who view this as a desirable outcome.

For example, when Paul Krugman tells us confidently that we can spend our way into prosperity, many know on some level this is hogwash, but he is, after all, a Nobel Prize winning economist.

Or when Pres. Obama tells us that by increasing medical insurance costs and building a huge bureaucracy that our overall level of health will improve, the same people who think the government has money believe him. It all sounds so seductive, and people WANT it to be true.

One of the principal qualitative aspects of the indoctrination of our school children is teaching them that EXPERTS ARE ALWAYS RIGHT. Given this predisposition to take things on faith, lying simply involves getting the “experts” on board.

And to the point, here: that is what many people want. The anxiety they would otherwise suffer, of doubt and confusion, would be intolerable.

It occurred to me one could draw a basic relation between certainty and learning that I drew between money and wealth. If one is perfectly certain, one is incapable of learning, which I will define as perceptual movement. If one doubts everything–really, the acceptability of treating anything as a “fact”–then nothing is accumulated; there is no residual one might term “knowledge”.

The task, then, is to balance the two. It is a bit like walking. You have believe that in voluntarily falling forward the other leg will catch you. And one can treat all those bits we call facts as useful until they prove otherwise. Practical knowledge is what is useful, which in turn normally means observable and repeatable.

From the book “Viewing Violence”: “Violence on television is damaging to children. Forty years of research conclude that repeated exposure to high levels of media violence teaches some children and adolescents to settle interpersonal differences with violence, while teaching many more to be indifferent to this solution. . .

Children who are heavy viewers of television are more aggressive, more pessimistic, weigh more, are less imaginative, less empathic, and less capable students than their lighter-viewing counterparts.”

These are not speculation, but facts, to the extent any general statement about a human social system can be. Why is this issue not considered to be of vital importance? Quite literally, our future is being shaped by forces we do not control–except to the extent we turn the TV off–and which are pernicious.

I think most people who have travelled will agree with me that when you return to this country, one thing you note is how superficial people seem, how little emotionally engaged they are with the big issues of life. How impervious, in some ways, to poetry, and a capacity to “get” big works of literature.

This is not universal, obviously, but it is certainly something I noticed. The reason for this “fact”–which I am positing as subjective judgement–is that our media consumption patterns differ from other nations. Clearly, we are infecting other countries, exporting our own worst cultural impulses, but that virus can be contained with better programming, and/or less TV use.

What is the political impact of this? It seems to that anything that makes people pessimistic, less empathic, and more violent is going to create a pool of people vulnerable to recruitment in a “grand cause”, of precisely the sort the Left has in mind.

From that basic framework, you have people who are isolated socially. They know people, but not deeply, since their training has been in superficiality and an inability to express or even feel deep sentiments. Lacking compassion, they don’t develop deep attachments. Using violence as a solution, they push people away. Just look at the patterns of internet use by our young: aggressive, brash, stupid, inhuman in many ways. Their “connection” is striking out, preferably within a “community” of like-minded simpletons.

They are uncreative. They don’t have practice working through complex issues of profound importance. They are used to constant stimulation, not being the ones doing the stimulating.

All of this goes far beyond asking if movies showing explicit scenes of sadistic torture should be legal. This is not a First Amendment issue. What should be an issue is if we CARE what our future will look like. If we do, then such movies, when made, will not sell. That they do sell should be a cause for much concern.

As I was watching the sky on an intermittently cloudy night, it occurred to me that the stars are always shining, even when covered by clouds. Remembering they are there is an act of faith, but one backed by repeated experience. The first time they disappear, the child may doubt they will return, but they do. Likewise, all of experience troubles, but they end, or we learn to deal with them. The stars return, and we value them all the more for it.

I was watching the Ohio River a few weeks ago. One thing about it that has always interested me is that it always seems, on the surface, to be flowing in any direction except the direction it is actually flowing. Often, it appears, on the surface, to be going backwards.

It seems to me that often our perceptions work like this. We look at the surface only, and never dig deep enough to get at deep realities. Truth, itself, is a type of river. Things that work happen in systems in motion. They never operate with perfect consistency in social systems, since they are complex, but on balance they all flow in the same direction. Capitalism works, but it is not perfect. Democracy works, but it is not perfect. Flaws happen, water get stuck in eddies that never quite resolve themselves, but the eddies move, and different water composes them.

The whole task of perception is to look at the big picture. Had I thrown a float on the water, I would have seen soon enough what way the water was going, and researching social realities is no different.

Patently, the Stimulus was in large measure intended as a slush fund for various projects that couldn’t get funded if named. Consider that some $6.4 BILLION went to 440 Congressional districts that don’t exist.

Where could that money have gone? That is no clerical error. Let’s consider some possibilities. First, it seems virtually certain that that money will find its way into the hands of various leftist activist groups, like ACORN. It will fund the agitation (which we might define as “resentment building”) of community organizers.

It could, with some care, quite easily find its way into various lobbying and election funds. It can be disbursed to individuals, then recontributed in amounts small enough that no documentation is needed.

It could be used to fund political research that is used for “message refinement”, which is to say lying more skillfully, based on more complete knowledge of what people want to hear.

It could be used for outright bribes of key officials in influential positions, which may not take the form of outright payments, but maybe contract preferences, or jobs for family and friends, or vacations, or houses, or boats.

Or, if one wants to take a more conspiratorial, paranoid stance (the foregoing, regrettably, all seems eminently plausible for a disciple of Saul Alinsky), what about high tech spying tools? Software to map social networks, to discern patterns of internet use and thereboy isolate political “deviants” (non-leftists)?

What about the paranoics obsession: mind control? Hear me out: what if technologies could be developed that were able to alter behavior patterns through subliminal elements in your computer or TV? It apparently worked for selling popcorn. Frankly, getting Obama elected in the first place was a triumph of deviousness. What if those same people now had tens of millions to play with in labs?

As an example, look at this piece.

No doubt, most Americans don’t want to think about these things, but I will offer a historical reminder: Communism happened. It is happening today in North Korea and Cuba, and has been used to deny basic human rights to a billion Chinese.

It’s a reasonable question, again, assuming my own views will prove, if tested, to be most correct.

The obvious first response is that many economists are idiots. We have, to this day, Nobel Prize winners arguing that we can spend our way into prosperity. How is this possible? Maybe they are bought; more likely is that are smart enough to make the puzzle so complicated that they can get counter-intuitive–and wrong–answers.

Whatever the cause, I do want to point out one thing: it seems to me that inflation and full employment are related, but that the causal arrow needs to be reversed. Specifically, I believe inflation causes full employment. How is inflation created again? Through money creation, which is used to fund industrial expansions.

Now, how the investment banks benefit from fiat money is obvious. They get something for nothing. This tool, though, is also used by people who do actually make things.

Let us take as an example a business startup in China, which we are told is getting ready to go into high inflation. A young man marries the daughter of a prominent local Communist Party official. You have to be connected to them, from what I can tell, to get anything done. You can bribe, you can kiss their ass, but you need their support, since no one has any rights in China not granted them at the whim of the ruling elite.

This young man wants to start up a shoe factor. Our official loves the ideas, makes a few calls, and poof he has a business license (you can’t be on any shit lists and get a license), and $10 million “Mao’s” in startup capital. That money is from the Chinese equivalent of the Federal Reserver. It just “prints” the notes.

Our young man works hard, and the factory succeeds. He employs 100 Chinese, who pay two thirds of their money or so in taxes, and he is now rich. The business is now his, and self sustaining, and he pays the money back.

Yet, this money was created from nothing. Therefore it added to the money supply. Therefore it is inflationary. This is basic. A year or two or five down the road, the effects of this policy hit, and the workers money now purchase less than it used to. So wages rise, and we are told their employment is what caused the inflation.

This gets it backward. Perhaps this correllation is what has confused so many people. Once you learn the lingo, and calculus, and especially once you start reading recondite treatments by economic theorists, common sense flies out the window. That’s how people still believe in Marx, and how Paul Krugman has a job.

We were all taught in school that 2-3% inflation is normal, and needed to balance production, employment and everything else. This is wrong.

As I have said a number of times now, inflation is a means of wealth redistribution. Why don’t we notice this?

As Hazlitt argued in his classic “Economics in one lesson”, a key error that many or most economists make is to forget about opportunities lost. In the “broken window fallacy” of Bastiat, as retold by Hazlitt, what everyone misses is that the shopkeeper could have bought SOMETHING ELSE with the money he spent fixing the window.

Likewise, what we miss with inflation is what we now can’t buy. We miss all the things that our money could and should have been able to purchase, if it had not been devalued.

Let me be clear: Wall Street bankers buy very real estates from the proceeds of profits enabled by the same mechanism that causes inflation, which is fiat money, money from nothing, money which competes with money already in existence, and lowers its value. But in the moment of creation, that part which contributes to inflation changes hands.

Instead of buying a lawnmower, we actually bought a drawer for a desk for a Congressman or a banker. We lost this money, but since the system is so complex, very few see this. But bankers–and I mean here the really big, many, many billion dollar banks that get the bailouts when they fail, and the profits when they succeed–understand this.

Here is another way of putting the gulf between Capitalism proper, and Inflationism: bankers borrow money to make-create–money; Capitalists borrow money to create real goods and services. We can only consume the latter.

It is interesting to ponder what the cultural effects of being a nation of borrowers, rather than a nation of savers, have been. Clearly, it has been the policy of the bankers behind the Federal Reserve to, in effect, get us addicted to easy money, to spending more than we make. What they want is a nation that is constantly making interest payments, but never paying off their debts.

If not one of the effects of never thinking in the long term frivolity? A sense of tenuous and superficial pleasure in material things, that never quite scratches the itch, because you haven’t earned them?

Does not a sense of dependency emerge? One thinks of the movie “Brazil”, where Michael Palin’s character instructs the protagonist not to hold out too long, lest it affect his credit rating. Our credit ratings: surely this is a point of vanity, to “earn” the right to spend considerably more than you make?

Is any amount of money enough to avoid bankruptcy, if you spend just a bit more? Are the foreclosure rates less in the swank neighborhoods than the poor ones? Probably a bit, but there have been many, many bonfires of the vanities lately.

Does easy credit not alter our perceptions of what to value, what to pursue? Does it not alter it in slight but real ways in the direction of materialistic acquisitiveness?

Worth pondering.

Here is what I propose: a Federal law is passed directing all States to find or construct a gold depository, and to print up paper notes that meet the best spec’s currently available to deter counterfeiting. Within a time window of, say, one month, all dollar bills in circulation are to be turned in, and will be replaced with State bills in exactly equal amounts. Those dollars, in turn, are used to buy gold. This would apply as well to bank balances.

Obviously, the price of gold will go up, and some speculators will make a lot of money. So be it. The money used to buy the gold is the new State bills. This will be mildly inflationary, since you are paying out what the gold is worth, plus the money you give to the depositor. This means you are paying out slightly more than what the gold is “worth” (if I thinking correctly: this is a complex system, and obviously I may have overlooked some important variable, but you have to start somewhere).

Now, money creation is what banks do now, anyway. They can loan out 9x what they have in actual reserves. This is where inflation comes from in the first place.

This is not a bank, though: it is a State agency that directs all the banks to turn in their actual assets for new State money. And once the transition is done, they have little to do but guard the building. No further action is needed.

The actual price paid for the gold doesn’t matter, because in my view what we need to do is make it “special” gold. Once it is bought, and physically placed somewhere secure, it is now, say TEXAS gold. Texas gold is special because its price never changes. It is always worth exactly as many notes as were issued against it.

What many economists seem to miss (and, again, I am here claiming to be smarter than people who have won the Nobel Prize, so take this with a grain of salt, but think it over carefully, and follow what I am saying and look to see where, if anywhere, I err in my logic) is that THERE IS NO VALUE TO ALTERATIONS IN THE QUANTITY OF MONEY. None.

None of us want money. We want what money will buy: houses, cars, trophy brides, golfing trips. Thus free markets in gold don’t help. Gold can be mined, and added to the supply, which dilutes it. There is no value in this. Self evidently, the market for gold will not go away; people still need to get married, and make good with the wife on her birthday. But in this scenario gold, per se, is no longer MONEY.

What needs to happen is that the quantity of money needs to be fixed. What will happen over time is that our collective purchasing power will continually increase, since it is no longer being siphoned off by the Federal government through the hidden tax of inflation, and no longer buying oceanfront properties for banking executives.

Now what does this do to banks? If the quantity of State bills is fixed, then you can’t make loans with money you don’t have. Thus, they will be required to lend real money. This will decrease greatly the quantity of money loaned. We can anticipate an economic crash when this happens, because what we see, today, isn’t real. It is smoke and mirrors. It is problem spreading like the ocean of oil in the Gulf, polluting everything.

THERE IS NO PAINLESS WAY TO FIX THIS PROBLEM. But big boys and girls take their medicine, no matter how bad it tastes, because they know–or the adults in the room know–that it is NECESSARY.

How, then, will banks make money? The old fashioned way: they earn it. They pay interest on deposits, and loan that money out at higher rates. They make fewer loans, but fewer go bad. We turn back into a nation of savers.

Pie in the sky? Maybe. But when we crash, a lot of crazy ideas will start looking good. We need to have a plan, and this is my suggestion.