OT: Interesting article on debt, conspiracy, and how society got where it is

Gary North argues persuasively here that behind the U.S. economy's mess is the idea that we can get something for nothing, and that the two dominant political parties in the U.S. are both based on the same premise of legalized plunder.

Love & Liberty,
        ((( starchild )))

Critics of large-scale debt in the United States usually begin with the admitted on-budget deficit of the United States government. This debt is now in the range of $9.6 trillion. You can monitor this figure, moment by moment, here:


The more sophisticated critics of the United States government debt then go to the off-budget balance sheet of the United States. If you add the unfunded liabilities of Medicare and Social Security, you get a total in the range of $100 trillion. This is in addition to the admitted $9.6 trillion. A good article on this was written by the head of the Federal Reserve Bank of Dallas.


Then we go on to personal debt and corporate debt. Never in American history has there been this high a level of private debt. This shows no signs of reversing. It shows every sign of increasing.

While personal household debt is geared to household income, and is governed primarily by the size of the monthly payment required to service household debt, it has increased as a percentage of disposable income over the last 25 years. It has not increased as much as people might think, from about 16% to about 19%, but nevertheless it has increased.


When we look at the size of the debt, we should ask ourselves this question: "What will it take to pay off these obligations?" It is obvious that we are way beyond the point of no return. Individually, we can. Corporate debt, probably not. There is no possible way that the Federal government will be able to re-pay its existing level of debt. It will default. The question is: How? The other question is: When?

If we are realistic about the size of the government debt, we can begin to make personal preparations in our lives to alleviate at least some of the negative effects of the inevitable default. This begins with deciding which form of default is most likely to affect us individually. There are several ways that the government can default.

     An open default: announcing that none of the existing debts of the Federal government are legally binding any longer. "Sorry, Charlie. You lost." Announce that the age of eligibility for Medicare and Social Security has risen. This is a form of default that hits specific groups, but does not get all groups at the same time. It especially does not hit foreign central banks, which have purchased the debt of the Federal Government. It hurts American citizens, but only a small group of them at any one time. Congress tells the Federal Reserve System to increase its purchases of on budget government debt so that the government can make payments on the off budget government debt. The effect of this is to increase the money supply, which decreases the purchasing power of the dollar. This hurts everyone a little bit. The effects of this policy, namely rising prices, can then be blamed on speculators. Politicians can blame the evil capitalists and greedy entrepreneurs for driving up prices that affect the general consumer. Governments have been doing this for centuries.


One of the standard complaints that I have heard for 40 years about government debt is that the people, meaning the voters, are victims of a conspiracy. Somehow, the voters do not catch on. Somehow, they just cannot figure out that the government is acting against their best interests. Somehow, the policies of Congress and the President benefit a tiny conspiracy of decision-makers, always at the expense of the voters. We are assured that if the voters simply knew what was going on, they would vote against it.

This argument is naive to the point of intellectual bankruptcy. First, it assumes that conspiracies can operate completely opposed to the underlying motivation of the voters. Second, it assumes that a rival political group, dedicated to the interests of the voters, is incapable of gaining the support of the voters in opposition to the conspiracy, which is pursuing policies against the interests of the voters. Somehow, advertising does not work. It works in other areas of the economy, but somehow it does not work in the realm of politics.

Other critics say that the conspirators have gained control of both political parties. I have no doubt that this is the case. The question is: "How did they accomplish this?" In other words, how did they capture both political parties on behalf of a single conspiracy, or at least an oligarchy of conspiracies, when the public could have been informed that any time about this takeover? This was Rushdoony's question. He asked how it is possible for a group of conspirators to hijack the political system of the nation. If the conspirators believe in a set of moral presuppositions completely different from what is believed by the voters, and they then attempt to use politics to legislate their view of economic, social, and political morality, how is it that representatives of the silent majority do not rise up and persuade that majority to vote against those politicians who represent the conspiracy? The defenders of the conspiracy view of American history argue that the conspirators have maintained control of American politics since at least 1912, possibly as far back as 1865, and maybe as far back as 1788. For those of us who believe that it happened early, the career of Alexander Hamilton is a powerful piece of evidence. He was the one who persuaded the Jeffersonians to go along with his creation of a privately owned central bank that would control the money supply of the nation.



If the voters are completely opposed to the political programs that the conspirators seek to enact through Congress and the President, how is it that they are duped, century after century? If this is really possible, then democracy is a preposterous myth. It doesn't matter whether a nation has a political institutions of democracy. An aristocracy always rules. The aristocracy rules in favor of its own self-interest, and the voters are incapable of taking control. If the conspiracy theory of history is right about the silent majority, then the standard democratic theory of history is wrong. Yet, without exception, those proponents of the conspiracy view of history who argue that the voters have been deceived also tell us that democracy is a reliable form of civil government. The whole point of their argument is that it is only the deception of the voters which has enabled the conspirators to take control and retain control century after century. They do not seem to realize that if their theory is correct about the power of conspirators in American history, their entire theory of democratic government, that is the basis of their claim that the voters can, somehow, rise up and throw out the conspirators, is a convenient myth. In fact, one could even argue that the conspiracy view of history, as applied to democracy, is the most successful tool that the conspirators have ever created. It has kept the voters blind for centuries. This has lowered the cost of running the conspiracy, because it gains the voluntary assent by the voters to the legislative programs of the conspiracy.

No conspiracy could operate if the broad public were actively opposing the conspiracy. So, the most important single thing that the conspiracy can do is to persuade the voters that the voters are in charge. This is what the theory of democracy does more effectively than any other single idea in the history of man.

In other words, those who argue that the fault is in the conspiracies rather than in the hearts of the people are arguing that democracy is the most effective lie in the history of conspiracy.

I am of the opinion that the theory of democracy articulated by H. L. Mencken is correct: democracy is the system by which the voters get what they want, good and hard.


It is a good idea for those of us who oppose the expanding welfare-warfare state to call attention to the failures of this state whenever we can.

It is also a good idea, if we have the time and money to do so, to follow the money. That phrase, follow the money, was made famous by the screenwriter of the popular movie, "All the President's Men." It is a good slogan. But far more important than following the money is following the confession of faith. What men say they believe in most of all is the heart of their lives. It is therefore also the heart of the social and political system. What many believe in today, almost universally, is something for nothing. They believe that they can tax others in order to benefit themselves. They do so in the name of helping the poor. What has resulted is a tax system that officially taxes the rich, but enables the super-rich to decide how much tax they will pay in any given year. Warren Buffett once observed that his secretary pays a higher percentage of her income to the Federal government then he pays.

The voters got what they wanted, and they got it good and hard. They wanted a state that has the authority to send a man with a badge and a gun to an individual and demand that the individual fork over 40% or more of his income to the government. The voters have gone along with this system ever since World War I. They have done so all over the West. This is not simply an American problem; this is a civilizational problem. If anything, American voters are taxed at a lower rate than most European nations impose on their citizens.

There comes a time for people to figure out the nature of the prevailing political order. Ours is based on something for nothing. It is based on the idea that you can tax somebody else, lining your own pockets, and do so in the name of the downtrodden and oppressed. No matter who advocates a government subsidy, that person is furthering the moral debauchery of the public, and therefore also furthering the continuing domination of American politics by a small group of very wealthy, very influential private citizens.

There will always be a hierarchy. There will always be an aristocracy. The question is this: "On what basis will be aristocracy continue to maintain both its authority and its political power?" In other words, what are the standards by which competitive people gain access to the aristocracy? Is it by production? Or is it by plunder? If it is by plunder, then we can be certain that the worst will get on top. The most ruthless people, the least ethically motivated people, will gain control of the levers of political power. This was Hayek's insight in chapter 10 of his famous book, "The Road to Serfdom." He was correct.

The United States is so far down the road of debt that there is no turning back without default. How did we get here? We got here because the voters approved of the politics of plunder. They were not hoodwinked. They voted for people who self-consciously appealed to the worst influence of the voters, and promised that the government would steal from the rich and give to the poor. We did this to ourselves. So did our parents. So did our grandparents. This did not happen overnight. This level of debt, matched by the depreciation of the dollar since 1914 of 95%, did not happen in a corner; it happened in full public view.

The voters love it. Make no mistake about this. The voters are absolutely committed to a government which will continue to plunder one group of citizens on behalf of another. American politics is about plunder; it is not about rolling back the size of government.

The voters do not want to roll back the level of American government. They want to use the American government to roll over their political opponents. So, the conspiracy which is behind both political parties uses the government's steamroller to roll over one group of voters and then, one or two elections later, roll over the other group of voters. This is what the voters want. They believe in the steamroller. They do not believe that the steamroller should be disassembled on a permanent basis.

Rolling back the steamroller and disassembling it was Congressman Ron Paul's position. It gains a few advocates, mainly because of the World Wide Web, but his campaign had never had a chance.


Let us not be naive. Let us not believe that appeals to the voters will change anything significant. Their minds must be changed -- in churches, in private schools, in home schools, and as a result of the bankruptcy of the steamroller.

This is why you should do what you can to build up the capital of your family, then the groups closest to you, then the local community. When I say build up capital, I mean primarily moral capital.

If the central bank can debase the currency, as it obviously can, then almost everything you do to protect yourself financially is going to fail. The basis of the current government -- fiat money -- undermines the productivity of the social division of labor. It is the social division of labor that provides our wealth, more than any other factor in history. If this is lost, all the tinkering in the world not matter in the slightest.

This is why the education of the aristocracy that will take over when the steamroller goes bankrupt is so important today. Who will train it?

Tax-funded schools? Which the voters love? That transfers control to the self-certified, tax-funded educational bureaucrats and their allied textbook companies. We know where that has led to: today.