“Yesterday, Dec. 7, 1941 — a date which will live in infamy — the United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan.” -President Franklin D. Roosevelt (07DEC1941)
If it had been one day of infamy, it had been preceded some years earlier by two days of infamy — days that would have a longer lasting and more damaging consequence than even the Japanese military attack against Pearl Harbor. Those two days occurred on 22DEC1913 and 23DEC1913. The Congress of the United States of America, at the urging of the so-called Progressive and newly-elected, Democratic President Woodrow Wilson, passed legislation creating the now-infamous Federal Reserve Board (FRB) with its twelve Federal Reserve Banks, the primary and most powerful of which was and is in New York City.
“Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them but leave them the power to create money, and, with the flick of the pen, they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear, and they ought to disappear for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.” -Sir Josiah Stamp (1880-1941), President of the Bank of England in the 1920s.
Between its creation and today, the Federal Reserve Board has debased the currency of the nation by 96%. A note worth $1.00 in 1914, in 2014, retained the purchasing power of $0.04 in 1914 — a mere 4% of the original!
President Trump today bleats incessantly about a “strong dollar”. What “strong dollar”? Weakened dollar would be more truthful.
So, let’s pick a date, say 01JAN1960. How strong was the U.S. dollar then against some other major currencies? The Australian dollar? 1USD = AUD1.84; today 1USD = 1.48AUD. The Chinese yuan? 1USD = 8.76CNY; today 1USD = 7.06CNY. The German Deutschmark = 4.17; today 1USD = 0.97 (EUR). The New Zealand dollar? 1USD = 2.55NZD; today 1USD = 1.55NZD. The Swiss franc? 1USD = 4.38CHF; today 1USD = 1.02CHF.
“Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal reserve banks. The Federal Reserve Board, a Government Board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt. The depredations and the iniquities of the Federal Reserve Board and the Federal reserve banks acting together have cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States; has bankrupted itself, and has practically bankrupted our Government. It has done this through the maladministration of that law by which the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.” -Rep. Louis T. McFadden, 1932
Rep, McFadden may have been a controversial character, but was he wrong in his characterization of the FRB? Has subsequent history proven him right?
“Inflation is taxation without legislation.” -Milton Friedman (1912-2006)
Between 1913 and today, someone stole $0.96 of every dollar. Who? That late-economist from the University of Chicago well knew the answer — the politicians and bureaucrats in the federal government. Those who created via the FRB inflationary fiat-money with its phantom-income then taxed that which they had created.
“The woman Folly is riotous;
She is thoughtlessness and knoweth nothing.” -Proverbs 9:13
Fourteen years after the birth of their monetary monster, the financial folly of the central bankers finally took its toll. The year was 1927. Consequence? The Great Depression of the 1930s.
Four men gathered at a private estate on Long Island for a meeting, the consequences of which would be disastrous for these United States of America. Who were these men with so much power that they could bring the greatest and most prosperous nation on Earth to the brink of total ruin? All four were bankers — central bankers.
“I believe that banking institutions are more dangerous to our liberties than standing armies.” -Thomas Jefferson (1743-1826), U.S. President 1801-9.
Truer words never were uttered than those few by Jefferson. At that meeting on Long Island in 1927, the four central bankers confirmed the validity of Jefferson’s observation. The four were the following: Montagu Norman, Governor of the Bank of England; Charles Rist, Deputy Governor of the Banque de France; Hjalmar Schacht, President of the Reichsbank in Germany; and Benjamin Strong, Governor of the Federal Reserve Bank of New York.
After the Great War (1914-1818), these United States had fallen into an economic depression. In 1921, the newly-elected Republican President, Warren Harding, disregarding the typically unsound advice of his Secretary of Commerce, Herbert Hoover, embraced the sound advice of his Secretary of the Treasury, Andrew Mellon, by lowering taxes and cutting federal spending; thereby, returning the United States to the Path to Prosperity.
By the time of the meeting in 1927, economic growth was more than 3% while inflation remained at 0%. Danger, however, hovered. The stock-market was booming, fueled by easy money from the FRB and by mounting consumers’ debt. Decades later, another inept and misguided Chairman of the FRB would characterize the phenomenon as “irrational exuberance” while perpetuating the context that generated the madness.
In contrast, Europe had remained in the economic doldrums after the Great War, its entire economy less than that of the American. Half the international supply of gold had migrated to the these shores. These booming United States were seeking new international markets for their industrial wares. Relative poverty, however, created a poor context for European buying-behavior.
“Hell is full of good intentions or desires.” -Saint Bernard of Clairvaux (1091-1153)
Intending to stimulate European economies, Chairman Strong promised to lower the discount rate despite an economic field fertilized by the manure of mounting debt. His inept and misguided intention was to have holders of American assets move them to Europe in order to gain a higher return. He predicted that the supposed consequence of sending financial assets to Europe would be increased value of European currencies followed by increased, European trade with the USA.
“The future isn’t what it used to be.” -Yogi Berra (1925-2015)
Predictions are one thing. Events are another.
As Strong demonstrated, economics is not a science. The function of science is to predict and, where possible, to control; astronomy being a science that can predict but not control, at least currently. Economics neither can predict nor control, as the error of the four central bankers on Long Island in 1927 subsequently was to prove. Often called “the dismal science”, economics may be dismal, but it is not a science.
In 1927, Strong’s decreasing the interest-rates further fertilized the economic field with even more debt. The paper-value of stocks doubled in 1928, not fueled by productive fundamentals but fertilized by destructive debt. In October 1929 came the real consequence — the Great Crash.
The electorate blamed the White House. The real culprit was the FRB. By 1939, the attempted cure clearly only had aggravated the American, economic malady.
“We have tried spending money. We are spending more than we have ever spent before, and it does not work.” -Henry Morgenthau, Secretary of the Treasury (1934-1945)
In 1929, however, the Great Crash provided President Hoover the opportunity to become Strong’s accessory by putting into play his own unsound advice of 1920. Presaging the ill-conceived bleating of Lord Keynes in the 1930s, he converted that which likely might have been a moderate, economic setback into a severe, economic collapse. Moreover, he created the context for his successor, FDR, to accelerate his unsound actions, thereby, deepening the downward-spiraling depression.
“The only thing we learn from history is that we learn nothing from history.” -Friedrich Hegel (1770-1831)
So, what have we Americans learned from the folly of those forebears? Given the recent antics of Greenspan, Bernanke, and Yellen, apparently very little. What of the current Chairman? We await the consequence of lowering interest-rates while the economy is booming — booming fueled by debt cheered by the our current President.
“To relieve the present exigency is always the object which principally interests those immediately concerned in the administration of public affairs. The future liberation of public revenue they leave to the care of posterity.” -Adam Smith, The Wealth of Nations (1776)
Sound familiar? The economic antics of Strong’s latest successors combined with the political antics of Bush the Second and Obama led these United States of America down the perilous Path to Perdition. Now, the four-times bankrupted “King of Debt” — Donald Trump — is demanding even more and faster debt in accordance with “Modern Monetary Theory”. Long-term consequences be damned! Economic pain for the electorate now means political loss for the politicians next election.
Serial military defeats have been sapping Americans’ confidence in this fragmenting, declining nation on fire. With good reasons. Ill-conceived, poorly executed wars have sapped the its economic strength. With most of the federal budget feeding welfare in the name of “humanitarianism”, a recent, Australian study concludes that in a conventional war with China, our Pacific Fleet would lose in a matter of hours.* Meanwhile, deepening debt has been feeding upon itself to fend off another seemingly inevitable Great Crash. Self-degradation has been destroying traditional American ideals and values. Loss of liberty in the name of security has been imposing tyranny — economic, political, and social. The current crop of candidates resemble a crew drawn from Central Casting for a Fellini-movie.
*Wolfgang, B: “China Has the Power to Crush U.S. in Pacific”. The Washington Times, 26AUG2019, p.6.
“An autopsy of history would show that all great nations commit suicide.” -Arnold Toynbee (1889-1975)
Where will the current trend end? The suicide of these United States as we have known them? If so, can the trend be reversed? How painful will doing so be?
“The world wants to be deceived, so let it be deceived.” -Petronius (1st-century A.D.)
Careening down the Path to Perdition ultimately leads to an unintended and unwanted destination. Listening to deceitful, power-hungry politicians echoed by their ideologically-driven, self-serving bureaucrats may make the populace feel more comfortable short-term; but those lofty lies and hollow promises make the populace suffer long-term. Already, the Chinese view these United States as a “nation in terminal decline”.
“God watches out for little children, fools, drunks and the United States of America.” -Otto von Bismark (1815-1898)
Heretofore, God has bestowed His grace onto these United States. For how much longer will He continue to protect us from our own folly?
Can the current trend be reversed? Is there a Road to Resurrection — resurrection of traditional American ideals and values? As described in the semi-fictional novel, Retribution Fever, it must run through a free market and be paved with scientific principles, principles that others and we ourselves steadfastly have refused even to recognize, let alone to adopt; otherwise, it will prove merely a detour on the Path to Perdition.
“The light of life is insufficiently bright to overcome the darkness of reality.” – Erich Maria Remarque (1898-1970)
By refusing to reverse course; by listening to the lofty lies and hollow promises of power-hungry politicians and their self-serving bureaucrats; by promoting defeat over victory; by incurring debt over credit; by suppressing common decency over the basest of our animalistic instincts; and by sacrificing our precious liberty for a phony sense of security, shall we not bring to bitter fruition Remarque’s words?
Is there a better way? Yes. Ignore it at your peril.