THE LATEST IN THE DESTRUCTION OF AMERICA: OUR CURRENT FEATURE ARTICLE
Table of Contents
FROM BEHIND ENEMY LINES:A Conservative Libertarian Inside Academia
SOUTHERN HERITAGE: Dedicated to the truth about the War of Yankee Aggression
Constitutional Law
NEW WORLD ORDER, UNITED NATIONS, ONE WORLD GOVERNMENT AND AMERICAN SOVERIGNTY
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A Condensed Version of The People's Pottage by Garet Garrett. The complete book is available for download at: http://www.mises.org/books/pottage
Condensed by
Dr. Jimmy T. (Gunny) LaBaume
Ex America
Part I
“The winds that blow our billions away return burdened with themes of scorn and dispraise.”
There is a little brat wind that says: "You Americans are like the fat, rich boy who spends his money at the drugstore and then gets chased home. But, he wants so much to be liked that he will come back tomorrow.”
Another wind whispers: "You Americans' worship of success has ruined your spiritual and moral values.”
America has lived the greatest success story in history. We are so rich that the next-richest country is poor by comparison. This is a fact that an impoverished world cannot forgive.
However, it is not the only unique thing about America's wealth. First, we made it all ourselves through our own labor, thrift, self-discipline and austerity. Second, we have shared it with the world.
This sharing is unprecedented in history. During World War I we made large loans which we expected to be repaid only in part. But those loans were repudiated completely because it was too hard to repay them and Americans were already too rich. This was the beginning of capitalism's fatal illness—fatal because it (capitalism) is founded on the inviolability of contract.
Then in World War II we were called Shylock for expecting anything back. Even though, from the beginning, we said that we will “erase the dollar mark." This is what Lend-Lease meant. During the period, the American wealth that was distributed over the world was roughly equal to the total national wealth of Great Britain —the next-richest nation on earth.
The postwar Marshall Plan was nothing but giving. Russia declined but the nations of Western Europe accepted with expressions of affection and gratitude. They used two-thirds the money for restoration and the other third for expansion of lines competitive with American industry. By 1950 Western Europe's productive capacity was 30 per cent greater than before the war. Nothing in the world had ever happened like that before.
Irregardless, Socialist Great Britain accused us of being hypocrites. We were accused of having a surplus that we could not consume or sell. We needed to get rid of it or else we would have drown in it. Therefore, we should be grateful to other people for taking it.
There was no surplus. It was wealth and nonsense to say we could not have used it ourselves. We increased our national debt so that Great Britain could reduce hers. This will make “an odd paragraph” in the history books.
Another wind says: "You Americans are dangerous and too ready to use the atomic bomb.” After all, isn't it possible that America's insatiable economy requires the military stimulus to go on expanding? On the one hand, these accusations are feasible because we do have quite a history of war. We fought the first world war to “make the world safe for democracy.” Only a few years later we fought a much more terrible one to kill the aggressor everywhere and for all time. And now we have taken on the defense of the entire free world—a self-imposed responsibility which makes it impossible to stay out of war.
But there is another history that is more significant because it is a result of our own free will. We had the greatest navy in the world when World War I was over. But, we made the other naval powers an unprecedented offer. We were willing to “break our sword to the length of the next longest one” if they would agree to stop there. A treaty was signed and we towed our ships out to sea and sank enough of them to give the British navy parity. No other signatory power to this treaty kept the faith absolutely.
In all history there is no such a thing as a nation engaging in two world wars and renouncing beforehand any material gain or advantage and meaning it. Yet the “chill sardonic wind” from France accuses us of moral imperialism—trying to impose our way of life on other people, whether they want it or not. We are accused of confining the world to choosing between two forms of coercion—communism or the American way. The Russians are saying that “people can have any kind of government they want provided it is anti-capitalist and anti-American." How is what America saying any different?
And the winds from Asia contemplate the values of the West. Asia is not impressed with American values and believes its values are superior. Asia's wealth once dazzled the barbarians from the West. What happened to it? Poverty, and preferring its miseries to the boredom of good living, was made a virtue. That may have saved their souls, but to claim that receiving American wealth to improve their standard of living will not hurt their souls, whereas the giving of it may save the American soul, strains any claim they might have to spiritual superiority.
Part II. 1951
Obviously the richest and most powerful nation in the world will not be loved. In fact, it can expect to be feared, hated, maligned and misjudged. But it need not accept the expectations of other people as the measure of its obligation to them.
The flowering of the intellectual began around 1900. As a product of a free academic world, he knew about everything and all about nothing. However, he did know how to subvert traditions and invert laws. He could not make a living in a capitalist world because he was not creative or inventive. His got his revenge by embracing “Old World socialism.” These disaffected intellectuals multiplied geometrically in the academic world as sowers of the seeds of discontent.
Through them, we began to import political ideas from Europe —social security from Germany, slow socialization from the British, etc. Socialism was represented as a working-class movement but it really was not. As Friedrich Hayek said, "socialism has never and nowhere been at first a working-class movement." Throughout all of history it has originated as a movement in the minds of the intellectuals.
The first significant event was the amendment of the Constitution in 1913 which gave the Federal government power to impose a progressive income tax. This idea was strictly Marxian. In fact, it was (is) one of the major points of the Communist Manifesto. The only type of tax Americans ever knew was for the purpose of raising revenue. No body had any idea that this one would be used to redistribute the national wealth.
Then, the first year of the Roosevelt era the Federal government seized control of money and banking, and introduced an irredeemable paper-money currency. Furthermore, the New Deal devised a method for converting public debt into money—a process now known as "monetization of the debt." So, for the first time in history the government was free. Free from the age old limitations of money. It no longer had to be afraid of a deficit because it could turn a deficit into money. The revolution was complete.
After that it was pointless to believe that the people could control government or limit its powers. In fact, without these powers World War II would have not been possible for the lack of money.
Although dollars made the war possible, the American mind still had to be reconditioned for intervention. After World War I American opinion had soured on Europe. We refused to join the League of Nations and even went so far as to pass a neutrality law which forbade the sale of arms to any combatant nation. It also forbade American citizens to travel abroad during wartime on any but neutral vessels.
But then, in 1937, Roosevelt made his "quarantine speech" which was aimed at the Germans. Up until that time, internationalism had been held back by its unpopularity. This speech was the signal that released the intellectuals. Never before in any country had the mind of the people been so thoroughly conditioned. In took only a few years for “ isolationist” to become a smear word. To say “ America first” was treason.
In actuality the country was illegally at war with Hitler nine months before Pearl Harbor .
Part III. 1951.
Former Senator Albert Hawkes asked if anyone thought that this world is better after World War I and II than it was before when the Constitution was the supreme law of the land. And Professor Harry Barnes observed that "The first World War and American intervention therein marked an ominous turning point in the history of the United States and the world.”
Nowadays there are three kinds of Americans: 1) those who hate what has happened to the country's morals, principles and ways of thinking; 2) those that are just now beginning to see the signs and sense oncoming disaster; and 3) those who like it.
Suppose Americans had been presented a true image of the present in 1900 and asked if they wanted it. Their answer would have been an emphatic “No!” So, then how do we account for the fact that everything that happened was with their consent? (Actually, it happened first and then they consented later.) They voted against World War I. They voted against the New Deal. Then, after the fact, they got both.
They did not vote for getting into World War II. During the 1940 campaign, Roosevelt promised the people repeatedly that their sons would never be sent to fight in foreign wars. He was elected for the third time based on that promise. Then immediately after the election came Lend-Lease which was, by any interpretation of international law, an act of war. The uS navy escorted Lend-Lease cargo across the Atlantic but the Germans could not be baited into attacking uS naval vessels. They shot only in self-defense because Hitler did not want to attack. Roosevelt needed an attack . His problem became how to bait the Japanese "into firing the first shot." Pearl Harbor provided the solution.
The people never voted for the Welfare State. They never voted for the United Nations and putting its flag above American troops in foreign countries. They did not vote for the North Atlantic Pact which could automatically involve us in war and thereby void the Constitutional provision that only Congress can declare war.
The people never consented to any of these things beforehand, only afterward.
In 1945 the security of the United States was in our own hands. Only five years later the people were told they had to fight the aggressor that we had swapped for Hitler and that our only salvation was with the aid of subsidized allies in Europe. The people never voted for it. In fact, they never had anything to say about it. They just accepted it as though it was inevitable.
They never voted for a reduction in the constraints that the Constitution placed on the power of executive government. But, at least they were alarmed when Roosevelt asked why the Constitution should stand in the way of a desirable law. In addition, when the President tried to pack the Supreme Court with New Deal minds, they defeated the proposal with an intense protest. But, what Roosevelt was unable to do by onslaught was done by death and old age. As the conservative judges died or retired, they were replaced with men who sympathized with the Welfare State. The Court then cast itself in a social role and rendered law subordinate to men in contrast with the idea that the cornerstone of freedom is a government of law and not of men.
The people did not vote to debase the dollar. In fact, they voted for sound money. They never voted on any of the things that were done to money by the government—the deceptive separation of people from their gold; the confiscation of the gold; the making of private ownership of gold a crime; the making of a law that forbid contracts to be made in any kind of money but irredeemable paper; and finally the dishonorable repudiation of the promissory words engraved on the government's bonds.
A momentous change took place in only a few years. The people lost control of their government. The number of executive administrators increased fivefold and expenditures increased twenty times in twenty years. While during the same time, the power of the individual to resist diminished drastically.
In times past the citizen referred to it as “ my” government. He now speaks of it as “ the” government. Now, when we use the term “government” we do not include Congress or the Supreme Court. We are referring primarily to the executive branch – the various agencies that exercise all three (legislative, executive, and judicial) functions at the same time by writing regulations that they enforce by the force of law.
1951. Part IV
Rousseau believed that the whole is more than the sum of its parts. Society is more than just its members. He called it the “General Will.” So it is with government—a thing in itself with a power derived from the center of its own being.
In Garrett's own words: “The founders of the American government knew history. As far back as they could see all governments both good and bad, no matter in what form they appeared, had certain features in common, such as a natural appetite for power, a passion to act upon peoples' lives, a will to live, resources of self-perpetuation and longings for grandeur—with always the one sequel, that they abused their power and fell and were succeeded by government that did it all over again, as if by some kind of inner compulsion. (The founders)… did not attempt to formulate this law of inner compulsion. What they did was to create a government that could not obey such a law if one existed.”
This was to be a government without ultimate sovereignty. It was a government with a written Constitution that was to be the supreme law of the land. This government had three separate and coequal powers that were balanced in such a way that any one could check the other two. Behind all of this was the sovereign power of the people who could change the Constitution if they were so minded.
There was one characteristic feature of government that the founding fathers did not see. No government can acquire power and put it forth solely by law and edict. It must have the means. In ancient times the means might have been the direct command of labor, food, and materials. In today's world the means is money. That is why government always favors inflation. It provides the means. The people's consent is bought with the proceeds of inflation.
The root evil of inflation is political, not monetary. Its monetary effects can be seen and felt immediately. The greater evils work slowly to corrupt the integrity of government and the morals of the people.
The monetary effects can be overcome. The purchasing power of money falls but this is not calamitous provided, first, it happens slowly enough for the compensating factors to have time to act and, second, the fundamental principles by which wealth renews itself are preserved.
Furthermore, inflation is intoxicating as long as the effects are only monetary. Even though they may realize that, ultimately, a reckoning will come, everybody loves a boom. Profits rise but these are illusory. Never-the-less, most would rather have illusory profits than no profits at all.
The evil kind of inflation is that which serves government as an instrument of policy intended to produce revolutionary social change. When a government deliberately implements an inflationary policy there are revolutionary consequences. For example: 1) as government expands, the people lose control of it; 2) people become dependent on government for aid and comfort; 3) people are first enticed and then obliged to exchange freedom for status; and 4) the illusion that public money does not cost anybody anything leads to immoral conduct.
The monetary consequences of inflation are relatively unimportant. The moral consequences are destructive and, like an aggressive form of cancer, may be incurable.
Part V. 1951.
Lenin said that the best way to destroy the capitalist system was to debauch its currency. John Maynard Keynes added that, by inflation, governments can secretly confiscate the wealth of their citizens. While this process impoverishes many, it actually enriches some.
Any defender (be it intentional or unintentional) of irredeemable currency is advocating socialism or government dictatorship in one form or another. As long as a government has the power of an irredeemable currency, any effort to stop socialism is futile.
In order for the New Deal to implement revolutionary change in the government's laws, it had to have the means of enforcement—e.g. it had to have the money. Therefore, its first act was to induce inflation for that premeditated political purpose.
First it got physical possession of the people's gold under the pretense of an “emergency” measure. Then it confiscated it by edict—all the existing gold and any that might be mined later was declared to be government property. It then introduced a paper dollar that was not redeemable in anything but itself and declared it to be the only lawful money. It was illegal for private contracts to be made for payment in any other kind of money.
Next, the New Deal planners wrote a series of monetary laws.
One of these laws authorized the printing of three billion dollars in counterfeit money.
Another law authorized the government to take three billion dollars out of the Federal Reserve in exchange for its IOU's. This is how converting government deficits into money began.
Another law allowed the President to "reduce the gold content of the dollar." This was ingenious because the new irredeemable paper dollar did not have any gold content to begin with—but the lie served its purpose.
One way to depreciate the value of the dollar was to print large quantities of it. Another was to price it down in terms of gold. To do that, the Treasury bought gold on the world market, and each day, they offered more and more dollars per ounce. In this way the government deliberately beat down the international value of its own money.
When the hoax began, the price of gold was $20.67 an ounce. When it ended the Treasury was offering $35 an ounce. At that point, the President announced that the imaginary gold content of the dollar was reduced from 100 to 59 cents. The result was that the New Deal acquired for itself nearly three billion dollars out of thin air. How? Simple.
When the government nationalized the gold it was worth $20.67 an ounce. After the beat down of the dollar it was worth $35.00 an ounce. The total difference amounted to almost 3 billion dollars profit which was declared to belong to the government.
Then, the government learned how to turn its deficits into money simply by pledging its IOU's (bonds) as security for more credit. The national debt began to rise drastically yet nothing disastrous happened. As a result, the people began to ask why this could not go on forever.
Part VI. 1951
After eight years of inflation, then World War II, and then five years of postwar inflation, the material content of life was higher than before the Great Depression. How was that possible? If we can produce no explanation of that, then we must “live by delusion and fallacy becomes wisdom.” Actually, there are several reasons.
First, “never had a crew of planners captured a galleon so rich.”
Second, the country's power to create and recreate wealth on demand seemed inexhaustible and had been underestimated. Inflation could be absorbed because there was almost no strictly creditor class as such. Here creditors are also debtors and producers and participants in wealth creation.
Third, the New Deal's inflation was primarily political and not economic.
As John Maynard Keynes once said, "While the process (of inflation) impoverishes many it actually enriches some." Understanding the political meaning of that is the key to using inflation for the political ends of redistribution of national income and revolutionary social change. Inflation will be planned so as to enrich the greatest possible number of people and therefore, the revolution will be popular.
So, the New Deal's initial targets were farmers, organized labor, and the low income brackets. If you can enrich these groups you will have increased the buying power of about two-thirds of the population. Then, as they spend their money prices will rise causing a temporary boom in business. If that happens, then the businessmen and bankers will be halfway with you. From time to time they will worry about inflation and call for stopping it. At that point, you then threaten them with deflation. They will respond that they do not want that but that “we need to stop it here." And they will be in favor of employing the resources of government (even a little more inflation) to prevent deflation because it is such a bitter pill to swallow.
To the farmers, the New Deal gave cheap credit, price supports, and "parity" (if other prices rise, farm prices will be raised by more subsidies.)
To organized labor it gave exemption from the antitrust laws and the legal right to a labor monopoly (compulsory unionism) whereby a man has to pay for the right to work.
To the low-income group it gave social security. A problem that is yet to be solved is how to maintain this bauble as prices rise.
Part VII. 1951
New Deal inflation was certain to be popular because it enriched many while impoverishing only a few. Furthermore, if it could be arranged so that the enriched could assist the few, then it could possibly go on forever. This was the logic of inflation. But it is seriously flawed.
The theory of perpetual inflation and perpetual boom goes something like this. If creditors are hurt by rising prices, it would be better to aid them from the public treasury than to deflate wages and prices because that would hurt too many others. Thus, immunity from the ill effects of inflation could be provided for everybody by more inflation.
But the logic of this leads to an economy that is like a rocket. It must go ever higher and faster because deceleration would be fatal—it will crash. Deficit spending is the rocket fuel. If it cannot go to infinity and it cannot stop or decelerate without crashing, what will happen?
If you say we need to cut government back to its limited functions, they say that we can't do that because it is not politically feasible. But, they add, it must stop growing. Then you ask them what new function of government they would stop. The answers you get will be “vague, desultory and irrelevant” because each new function has its own powerful clients and beneficiaries.
Many say the dragon must be overcome but they do not want to slay it. They only want to chain it down. If you ask them how much depression and unemployment they are willing to face, they answer that it is not deflation they are talking about. They are saying that it is "inflation" that must stop.
So at what level do we do that? Do we stabilize inflation at the top of the largest inflationary boom that has ever occurred? They will answer that it is better to gradually absorb the consequences of past inflation than to have deflation.
Then you point out that inflation has a momentum--it feeds upon itself. To stop it suddenly might cause a depression and unemployment. They will reply that is no longer true because it is possible to stop inflation without having deflation, falling prices, and unemployment. Why or how? Government will intervene to keep the economy in a “state of equilibrium." That is the fatal answer—government intervention; government responsibility.
The new responsibilities of government are:
- To keep an ever-expanding economy in a state of equilibrium.
- To maintain full employment
- To insure the people have all the buying power they need.
- To maintain the national income at the optimum level and make sure it is “equitably” distributed.
- To provide for the poor, the old, and the unemployed.
- To prevent deflation—e.g. to insure that the price of the boom never has to be paid.
So now, what will the government do at the first sign of trouble? How will it discharge these new responsibilities? It will take complete control of the economy—just like the New Deal tried to do. What the New Deal tried was strange and sudden. What the government will do in the next crisis is pre-determined.
Garrett says it too well to paraphrase: “And when this end has come to pass not only will we be through with the fiction of free prices, free markets, free contracts, and free enterprise; we shall probably be through also with inflation. A government that has arrived at the ultimate goal of total power may dispense with inflation. The power to command obedience enables it to achieve directly what formerly it could only achieve indirectly by inflation.”
There is a delusion that this can not happen because of what America used to be. But, “by a long lure of planned grass a society of bison may be decoyed to captivity in the Valley of Security.” The question is, will the herders be good to us? The answer: "Nature was sometimes cruel."
Copyright ©2004, FlyoverPress.com
Jimmy T. LaBaume, PhD, ChFC is a full professor teaching economics and statistics in the School of Agricultural and Natural Resource Sciences, Sul Ross State University, Alpine, TX. He does not speak for Sul Ross State University. Sul Ross State University does not think for him.
Dr. LaBaume has lived in Mexico and spent extended periods of time in South and Central America as a researcher, consultant and educator.
“Gunny” LaBaume is a decorated veteran of the Vietnam War and Desert Storm. His Marine Corps career spanned some 35 years intermittently from 1962 until 1997 when he refused to re-enlist with less than 2 years to go to a good retirement. In his own words, he “simply got tired of being guilty of treason.”
He is also currently the publisher and managing editor of FlyoverPress.com, a daily e-source of news not seen or heard anywhere on the mainstream media. He can be reached at jlabaume@sulross.edu.
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