JimmyConway Posted June 10, 2008 Share Posted June 10, 2008 War and Inflation by Llewellyn Rockwell Jr. "This institution is the very mechanism by which the dreams of both the fanatical Right and the fanatical Left come true." The US central bank, called the Federal Reserve, was created in 1913. No one promoted this institution with the slogan that it would make wars more likely and guarantee that nearly half a million Americans will die in battle in foreign lands, along with millions of foreign soldiers and civilians. No one pointed out that this institution would permit Americans to fund, without taxes, the destruction of cities abroad and overthrow governments at will. No one said that the central bank would make it possible for the United States to be at large-scale war in one of every four years for a full century. It was never pointed out that this institution would make it possible for the US government to establish a global empire that would make imperial Rome and Britain look benign by comparison. You can line up 100 professional war historians and political scientists to talk about the 20th century, and not one is likely to mention the role of the Fed in funding US militarism. And yet it is true: the Fed is the institution that has created the money to fund the wars. In this role, it has solved a major problem that the state has confronted for all of human history. A state without money or a state that must tax its citizens to raise money for its wars is necessarily limited in its imperial ambitions. Keep in mind that this is only a problem for the state. It is not a problem for the people. The inability of the state to fund its unlimited ambitions is worth more for the people than every kind of legal check and balance. It is more valuable than all the constitutions every devised. The state has no wealth that is its own. It is not a profitable enterprise. Everything it possesses it must take from society in a zero-sum game. That usually means taxes, but taxes annoy people. They can destabilize the state and threaten its legitimacy. They inspire anger, revolt, and even revolution. Rather than risk that result, the state from the Middle Ages to the dawn of the central-banking age was somewhat cautious in its global ambitions simply because it was cautious in its need to steal openly and directly from the people in order to pay its bills. To be sure, it doesn't require a central bank for a state to choose inflation over taxes as a means of funding itself. All it really requires is a monopoly on the production of money. Once acquired, the monopoly on money production leads to a systematic process of depreciating the currency, whether by coin clipping or debasement or the introduction of paper money, which can then be printed without limit. The central bank assists in this process in a critical sense: it cartelizes the banking system, the essential conduit by which money is lent to the public and to the government itself. The banking system thereby becomes a primary funding agency to the state, and, in exchange for its services, the banking system is guaranteed against insolvency and business failure as it profits from inflation. If the goal of the state is the complete monopolization of money under an infinitely flexible paper-money system, there is no better path for the state than the creation of a central bank. This is the greatest achievement for the victory of power over liberty. The connection between war and inflation, then, dates long before the creation of the Federal Reserve. In fact, it dates to the founding itself. The fate of the Continental currency during and after the Revolutionary War, for example, was a very bad omen for our future, and the whole country paid a very serious price. It was this experience that later led to the gold clause in the US Constitution. Except for the Hamiltonians, that entire generation of political activists saw the unity of freedom and sound money, and regarded paper money as the fuel of tyranny. Consider Thmoas Paine: "Paper money is like dram-drinking, it relieves for a moment by deceitful sensation, but gradually diminishes the natural heat, and leaves the body worse than it found it. Were not this the case, and could money be made of paper at pleasure, every sovereign in Europe would be as rich as he pleased…. Paper money appears at first sight to be a great saving, or rather that it costs nothing; but it is the dearest money there is. The ease with which it is emitted by an assembly at first serves as a trap to catch people in at last. It operates as an anticipation of the next year's taxes." But the wisdom of this generation, attacked by Lincoln, was finally thrown out during the Progressive Era. It was believed that an age of scientific public policy needed a scientific money machinery that could be controlled by powerful elites. The dawn of the age of central banking was also the dawn of the age of central planning, for there can be no government control over the nation's commercial life without first controlling the money. And once the state has the money and the banking system, its ambitions can be realized. --This is just a taste. Link for full article: http://mises.org/story/3010 Link to comment Share on other sites More sharing options...
Thiebear Posted June 10, 2008 Share Posted June 10, 2008 I think this is 2/3rds of a whole over the top with the rheteric. But it is not a good institution... Its run by the gov't: Duh. Link to comment Share on other sites More sharing options...
SnyderShrugged Posted June 10, 2008 Share Posted June 10, 2008 I think this is 2/3rds of a whole over the top with the rheteric.But it is not a good institution... Its run by the gov't: Duh. actually, it isnt (at least "officially") :2cents: Link to comment Share on other sites More sharing options...
Thiebear Posted June 10, 2008 Share Posted June 10, 2008 actually, it isnt (at least "officially") :2cents: And talking in riddles will get you nowhere soon. I do like the last 2 paragraphs... Wait till we go to UN money, that will be great... Link to comment Share on other sites More sharing options...
Larry Posted June 10, 2008 Share Posted June 10, 2008 Like all good evil conspiracy theories, I suspect that it does contain some truth. Link to comment Share on other sites More sharing options...
Winslowalrob Posted June 11, 2008 Share Posted June 11, 2008 Dang, an article from the Mises institute. Old Ludwig was not my cup of tea, cause the Austrian school was a little too hard edged for my tastes, but unlike a lot of so-called Libertarians the dude ain't no hypocrite and a lot of the people at this institute are pretty smart, if zealous. For all the leftists that read this article, keep in mind that the ability to afford wars, has been part and parcel of modern nation-states. Indeed an interesting method of stopping retarded chickenhawks from using the military is destroying the Federal Reserve. Personally I blame Nixon for figuring out a way to pass the costs of the Vietnam war without direct taxes, but the author makes a very persuasive case for 1913. Link to comment Share on other sites More sharing options...
jbooma Posted June 11, 2008 Share Posted June 11, 2008 sounds like someone has a case of the mondays . . . . . . . . . . . . . . . . i have always wanted to say that Link to comment Share on other sites More sharing options...
SnyderShrugged Posted June 11, 2008 Share Posted June 11, 2008 And talking in riddles will get you nowhere soon.I do like the last 2 paragraphs... Wait till we go to UN money, that will be great... sorry! I was just trying to say that the Fed isnt Federal any more than Federal Express is. Link to comment Share on other sites More sharing options...
aREDSKIN Posted June 11, 2008 Share Posted June 11, 2008 Ludwig, one of my favorite classes in college Link to comment Share on other sites More sharing options...
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