Woohoo! We'd all be millionaires!
What he should have said is he would dissolve the federal reserve
system, stop fractional banking, devalue the US paper dollar by at
least 1,000 to one then go back on the gold standard with an arbitrary
value of say $50.00 per oz gold maybe even a $100 value.
From: Philip Berg <philip@...>
To: firstname.lastname@example.org; email@example.com
Cc: Mike Gittelsohn <gittel@...>; misha <Iolmisha@...>; Luke Thomas
Sent: Sunday, January 13, 2008 9:09:10 PM
Subject: [lpsf-discuss] Re George Phillies, honest money is not the
Yesterday at the LPSF meeting in response to a question about
hard money, Libertarian Presidential Candidate George . Phillies
stated that gold caused the various panicks of the nineteenth century.
I said that he was wrong, but the conversation was ended there.
I picked up the conversation later and discovered that Mr. Philies
is in favor of central banking, like Ben bernanke, that steady , slow
inflation should be the policy of the central bank. In the same
conversation in which he praised the management of the european
Central Bank, he also noted the lower standard of living that
Europeans enjoy in certain material ways.
WHY DOES THIS MATTER???
1. (And this has real traction with liberals). Hard money is anti
War. Modern war requires, more than bullets and artillery, money.
Paper money can be printed in nearly unlimited quantities to fund the
war machine, while leaving taxes the same or lower. Very few people
blame the resulting inflation on it's perpetrator.
2. Central banking and fractional reserve banking persistently cause
economic booms and busts that waste vast amount of resources and cause
great human misery. The assumption that these booms and busts are
inherent in free markets is a cornerstone of socialist ideology.
So long as the public continues to believe that inflationary booms
and the resulting busts are built into free markets, they will be
seeking other solutions.
I don't see how a Libertarian candidate can effectively espouse free
markets, while supporting central planning of the medium that is half
of every economic transaction?
Mr. Phillies also appears to confuse the use of gold , as money with
the gold standard.The gold standard was a set of rules, set up by the
Bank of England, in consultation with Sir Isaac Newton to manage the
central bank monetary system. Central banking, fractional reserve
banking, legal tender laws, and the forced acceptance of paper notes
were part and parcel of this standard. The standard also allowed the
central bank or other monetary authority to adjust the ratio of silver
(and copper) to gold by fiat.
Mr. Phillies was correct, there were numerous panicks in the 19th
century. With few exceptions that serve to prove the rule, booms were
the result of some form of credit expansion that was either permitted
through the failure to punish the fraudulently issued paper
certificates that are not backed by the gold or silver that they claim
to be backed by, or by forced changes in metal ratios. Wars,of course,
can cause economic hardship independently of monetary policy, as can
bad economic policy pursued by important trading partners. The
exception that proves the rule that free market hard money is
stabilizing was the gold rush, that caused a mild inflation. in the
era following 1849..
The assertion that steady inflation is a good thing strikes me as
odd. It seems to me that if prices are constantly falling at a steady
rate due to the continued progress of man making more and more goods
available at a faster rate than money can be dragged out of the stingy
earth, then everyone benefits. Who wants higher prices for what they
consume. Who wants to put money in the bank to save for a rainy day or
old age, and find it nearly worthless twenty years later. No Mr.
Phillies, and Mr. Friedman, inflation is not a good thing.
Unfortunately, in an economy where money is created when people
borrow it, inflation is a necessity in order to allow the debt to be
serviced. In this sense, Mr. Phillies is correct, constant inflation
is a necessity of a debt base
monetary system. The interest on the debt must be serviced. If
inflation stops, the debt pyramid collapses… Inflate or Die should be
written in stone above the portico of the Fed. Those who have trouble
keeping up with the inflation, the old, the sick, and those who pursue
traditional values such as saving money, and not participating in
massive ponzi markets, these people will be crushed by inflation and
the low interest rates created by easy money.
Most of the old folks in my family and circle of friends have been
squeezed to the point of near poverty by the years of low interest and
persistent inflation, witch, incidentally, is far worse than reported,
according to www.shadowstats.com
The other big complaints that most people believe are failures of
free markets, are in fact the result of fractional reserve banking.
The concentration of economic power in a few hands is a result of
chronic inflation. As new money is created, those who can borrow that
money can use this newly created money to buy real assets. As
inflation progresses, the resulting debt is easily paid off.
Much of the concentration of political power is nurtured on the
mothers milk of newly created money. take ruddy for instance. He
resigns from a modestly paid government career and opens a Security
Consulting firm. So far so good. Given his access to bankers with high
level connections, he is lent most of the money to buy an investment
bank. Now he really has connections to the fresh green inked paper.
Then, a few years later, he sells the Bank he bought for 8.5 million
for 85 million. wither this windfall was actually "earned" or just a
payoff will forever remain a mystery.
Feinstein is married to an investment banker. I should emphasize
that is not a hint of illegality or scandal in the affairs of Mr.
(Feinstein) Blum. Just the normal course of business in the world of
paper money, central banking, fractional reserve banking, and legal
Pelosi is married to a former New York investment banker.
clean as whistle, but nevertheless her power rests on his good fortune.
Bankers bought George Bush his baseball team with newly printed paper.
George Bush's brother was a key officer in a failed Savings and Loan
that cost the taxpayers 150,000,000.00 dollars in the mid eighties.
John Glenn,Clark Clifford, Lyndon Johnson, and on another all based
their power on banking careers or participating in access to newly
minted bank credit.
Another symptom of our dysfunctional society that most people blame
on free markets is concentration of power in the media. If a major
broadcaster steps out of line, they can be brought to Jesus by either
threatening to short the stock to oblivion, or buy them out with the
endless credit of the Federal Reserves printing presses. Chuck Colson,
Nixon's counsel, threatened to do both of those things to CBS when
Walter Cronkite did his first major segment on Watergate. All three
major networks have been bought out by Wall Street in recent years.
It is important that the people never catch on to the perps of
chronic inflation. One of the biggest indicators of the rate of
inflation is the price of gold. Throughout the last twenty eight years
the price of gold has been manipulated by the dishoarding of gold
from central bank vaults in the west and persistent naked shorting of
gold by key investment banks who work in the Feds interest. The battle
is being lost. The powers that be do not want this understood, thus
for the last 28 years they have reminded the public how much the price
of gold is below it's minutes long peak in the nineteen eighties. Now
that this record has been breached on a weekly basis, the new line
coming from the financial media is that gold is way below it's
inflation adjusted peak, something that gold bugs have been saying for
years. Again , the controlled media is trying to prevent the public
from waking up to the continued debasement of the dollar. I was
saddened to hear
this mantra being parroted in our very own group.on Saturday. The
media's grip reaches deep, even in libertarian circles.
The continuous emission of new money is often misallocated by the
banks, usually in gigantic and spectacular fashion. In the twenties it
was overinvestment in agriculture. The ubiquitous tractor plowed up
the entire Midwest fence post too fencepost. the dust bowl resulted,
coinciding with the great depression, as all the bad investments made
by the first credit boom of the newly created Fed imploded.
Now we come to the real concentration of power. When the inevitable
bust comes, the work out firms, still having access to Fed credit
emitted in New York, buy up assets at pennies on the dollar.
FDR was hailed as a savior of the common man. One of his first acts
in office was to close all the banks for a holiday, not allowing
Americans access to their money. Then he outlawed the personal
possession of gold and forced the American people to take 20 dollars
in paper for each ounce.Once all the gold was safely in the bankers
control, he, by fiat, devalued the dollars in the peoples pockets from
20 dollars and ounce to 35 dollars an ounce,instantly making the banks
sixty percent richer and the American public sixty percent poorer
There was mass hunger, but the big banks were saved. My cousin lived
out his life with severe retardation because his mother was
malnourished in his first trimester during the debts of the depression.
The big workout firms that are now collecting assets as agents for
the Feds role as lender of last resort have deep political
connections. Cyberus is the Republican favored work out firm, with Dan
quail in a very senior position.Cyberus was the two headed dog that
guarded the gates of hell.You will recognize many other names if you
The instability resulting from the creation and destruction of debt
based money is very difficult on the poor and middle class. Long term
chronic inflation makes it particularly difficult to save for old age.
Only the lucky crap shooters in the stock market might come out
reasonably well off after taxes, fees and inflation. The American
public is quite aware of this insecurity. Unfortunately, the Cato
institute , not being Austrians, are not. Thus CATO embarrassed the
libertarian movement with their plan to privatize Social Security
without first making the money secure. I recall a Cato "expert" smugly
saying that stocks always go up and thus people who just put money in
the stock market can retire securely. Let them eat cake shares and
icing dividends was his attitude.
Of course no system is perfect. Even honest money can be influenced
by the use of force to skew the markets by our trading partners. Mr.
Phillies thus sought to justify his dislike of precious metals by the
historical example of the two Opium Wars Britain fought with China, in
order to force into circulation the silver the Chinese were hording.
Lack of silver was causing declining prices in Britain, as less silver
chased the same amount of goods. Debtors hate this and guess who the
biggest debtor in an Empire is.
Mr. Phillies is a deeply decent man, and perhaps the best candidate
He is unfortunately deeply miseducated on the strengths of Austrian
theory. This is excusable, being that he works in Academia in Boston,
the twin axis of Keynesian orthodoxy.