Tagged: federal reserve

The End of an Era: The Abandonment of Gold

15. August 1971

(Un)happy Birthday, Fiat Money!

40 years ago today, President Richard Nixon severed all ties to gold in the measure of the value of the U.S. Dollar.

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

-Thomas Jefferson

Myth Makers, Debt Ceilings, and Balanced-Budget Amendments

The gospel hath been spoken.

In the pseudo-arguments taking place on the House and Senate floors, cable news rooms, and plushy White House office chairs, every incendiary measure is being played out to a sold-out audience across the nation. Those in power are reduced to invoking fear in the American populace to bend and snap at their will, much as was done after 9/11 and before the large government transfers of public funds to private industries in September of 2007.

What is being shown on stage during the course of the debt and deficit ‘negotiations’ is an attempt to effectively erase the memories of the public, and to re-write history as to frame a new narrative for current agenda. This is an idea shared by American commentator Reinhold Niebuhr, who wrote that the populace must be sold “necessary illusions” because they simply cannot cope with the complexities of real problems (a great motivation for the research of Noam Chomsky):

Rationalism belongs to the cool observer. But because of the stupidity of the average person, they follow not reason, but faith. This naive faith, requires necessary illusions and emotionally potent oversimplifications, which are provided by the myth maker to keep the ordinary person on course.

Reinhold Niebuhr, Moral Man and Immoral Society, pg. 121

The use of myth maker to manipulate the democratic public is much the same premise offered by the father of modern Public Relations, and nephew of Sigmund Freud, Edward Bernays:

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.

Edward L. Bernays, Propaganda, pg. 37

The latest chip to be thrown into the high-stakes pot of the American federal government’s public funds is that of a balanced-budget amendment, a ludicrous idea at best. This is a motion supported by many who now consider themselves the ‘fiscally-conservatives’ members of Congress, though they readily delegated carte blanche to the spendthrift administrations of the past. And now it comes down to debating how much money the central government of the United States of America should spend and how much it should be allowed to allowed to spend, granted that the limit has already been set and surpassed, in recent and more historical times.

The ‘leaders’ of the House and Senate Republicans have consistently stalled on increasing the federal debt limit, now at $14.294 trillion dollars, in order to voice their opposition to such bloated spending by the federal government. Gracefully evoking the ideas of intellectuals previously mentioned, even Democratic President Barack Obama flipped on the fright machine to make the claim that Social Security checks won’t be “guaranteed” were the government to default, a point later played down by the White House. Resulting to their own tactics, many in the Senate are now seeking approval on a balanced-budget amendment as a condition for raising the debt ceiling of the United States.

The amount of ink and airtime devoted to this topic in the past few months has been enough to exhaust any reasonable person to the brink of insanity, but it is important that the ideas and supposed remedies be discussed and dissected, so the working public can receive the actual truth free from any sort of posturing or grandstanding.

The idea for a balanced-budget amendment is both ludicrous and nonsensical. If the government has already produced unbalanced budgets the last ten years, why would any Constitutional amendment change that fact? Has the government’s ability to constantly forgo the Constitution, whether in matters of war or peace, not convinced all rational individuals that the federal government is a leviathan unto itself that cannot be tamed by institutional rule-making? Attempting to pass this amendment to the Constitution is akin to plainly stating: “We’ve spent all the money we have. We propose the solution to this problem to be the passage of a law which will restrict us from doing what we just did, ex post facto“.

The fact of the matter is a balanced-budget is, for any and all sane individuals, supposed to be an assumed fact, rather than an enforced rule. This was a rule enforced by the strict gold standard for thousands of years, keeping politicians and bankers away from the control of the money supply. The only time excessive spending could be tolerated would be a suspension of the gold standard, normally done in times of war of increased justification for government expenditure. Before the fiat money system and the central banking monopoly of the Federal Reserve existed, ballooning any federal spending beyond brink was considered heresy, and contrary to all economic law. Now it is the status quo, and will continue to be, until the people realize that the entire system of human organization that has been constructed on this continent is both inherently unstable and unsustainable. They myth makers can no longer keep us from these facts.

Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.

-Frédéric Bastiat