At one time, Classical Liberalism promoted the ideals found within the principles of a sound monetary unit that not only provided stability economically, but also provided for the spread of real prosperity and liberty. The cornerstone of Classical Liberalism was private property rights and the cornerstone of all private property rights was, and is sound money, money that is actual real property, solely owned by the individual who labored either by the sweat of his brow or the sharpness of his creative mind. Such money was not owned or controlled in any significant way by government except in trust through the regulation and verification of the fineness of coinage in purity, weight and measure. Otherwise, money was the property of the individual, or legal corporation, just as any other property of which legal title may be held.
Along with the ideal of private property rights, Classical Liberalism, which could just as easily be called Jeffersonian Liberalism, promoted a confidence in the market economy, as free as possible from all interventions, especially from the government. They held, and still hold that private property rights, in all aspects, provides for the best means of production and distribution of prosperity within society with a system of economic organization organic in both concept and operation. It was, and is, the best system to secure the broadest means of prosperity and individual protection within a society for it assigns the individual consumer the power to choose which producers provide the best quality at the lowest possible price for the consumer's needs and desires. The principles of sound money and free, unencumbered markets were just some of the foundation stones that help create this wonderful and I might add, successful experiment in the broadest spectrum of individual freedom and liberty the world had experienced: These united States of America under an mutually agreed Constitutional Compact between the people and their government.
The Founders of our country realized that the main challenge facing such a liberal system of government and society was how to control the only real danger that would ever face the country, the government itself. The goal of the Founders was to institute a government so cumbersome, so divided in function and authority that all power would be distributed between the general government and the independent State Republics; the best description could be called a Republic of Republics, functioning in a cooperative compact. Then, of course, they implemented further divisions within the general government itself, once again dividing function and authority to ensure that power could not easily be concentrated or consolidated.
In essence, the general federal government was simply a reflection of the will of the people through the agency of their respective State Republics. So, the main problem, in the minds of the Founders, was how to prevent those who are entrusted to govern by consent from becoming despots, endangering and enslaving the citizenry in their stewardship. The layers of defense for individual liberty was obviously the primary goal in the institution of our system of governments and the focus of each layer of defense was the broadest application of individual freedom and liberty possible within such a system. What an absolute shame that we have allowed ourselves and our country to devolve far from such a very workable, very efficient ideal.
Today, there are few who seem to realize or understand that within all the defenses for individual freedom and liberty laid out by the Founders, was the principle of sound money. It is absolutely impossible to understand the full meaning and import of sound money without understanding that one of the primary purposes of sound money is the protection of individual freedoms and liberty, private property rights, as well as a protection against government intrusion. Sound money is politically and ideologically in the same strata as our Constitution and our Bill of Rights, and it is just as important to our freedom and liberty. It was, and should be considered, the most essential restraint upon arbitrary government expansion and the potential for unbridled consolidation of power.
The principle of Sound money has a dual purpose, one positive, one negative; in the positive aspect it provided for the greatest degree of individual freedom and liberty while providing for the broadest spectrum of free market choices. On the negative side, its aspect was one of governmental restraint, an abutment of reckless expansion, potentially dangerous debt aggregation and of course eventual despotism. In such a system, only actual coinage was to be considered loose legal-tender, all tokens, scripts and types of "paper-money" were to only represent the real money and only served as fiduciary mediums, which upon demand of the holder, were completely redeemable in lawful real money. "Real money", it definitely has a wonderful ring to it, doesn't it?
Today, we are so far-removed from the concepts of sound money that it is totally foreign to our understanding; we have been convinced that the only monetary system that is acceptable or applicable is the one we current have imposed upon us and that is the fiat monetary system. Sound money is an alien concept, so much so that we don't realize just what we are missing, it doesn't enter our minds, for the most part we are totally unaware of the benefits of a sound monetary system. Of course, a fiat monetary system requires ignorance, equalized with confidence, in the general population to function properly, without widespread ignorance or confidence, the system fails, as we will see.
The fiat system not only relies upon widespread ignorance and misplaced confidence, but it also relies heavily upon government intervention and regulation. A sound money system, on the other hand, doesn't rely upon such numerous variables in order to function; actually it is extremely simply and straightforward in both functionality and application. A sound money system can easily operate independently of all government policies and the pressures of political intrigues, including very divisive party politics. Such a system also helps to prevent government officials, and representative assemblies, from using various tricks to elude their budgetary and fiscal responsibilities to the people and the country.
Since the rather subversive introduction of the fiat monetary system in this country, there has been little room for the consideration of a sound monetary system. The proponents of the fiat system have for the most part, effectively exiled it from economics and serious monetary studies for good reason, for it poses the greatest danger to the fiat system and those who enormously benefit from that system. The various proponents and schools of economic thought have yet to consider the precarious position they are in because they have failed, utterly failed to contemplate that all their theories are based upon a monetary system inherently doomed to failure. Such a foundational flaw will always ultimately distort all conclusions associated with it, especially when the flaw is not considered to exist. Today, our country is fraught with what could only be considered "Crypto-Despots", eager to maintain their position as well as their power, the prime impetus of which has been the introduction of a system of fiat money for it provides them with medium of control over society that they crave.
So, there are few questions asked and the questions that arise are based upon incomplete assumptions because the foundational structure of the economy is completely based upon a system that contains two divergent fault lines, which will, in time converge in disaster. The first fault line consist of the inherent terminal life span of all fiat monetary systems due to the systemic inflationary pressure, the second fault line consist of requirement of absolute widespread public confidence in fiat money itself.
Eventually, these two fault lines converge and the system collapses. Such collapses are not preventable any more than the system itself is sustainable without massive government and central banking interventions. The system lends itself to those who require the benefits of inflationism, this trait, of course, is welcomed and enhanced by both government and central bankers who are all too eager to utilize such a trait to their best advantage. What need is there to operate within budgets, to maintain expenditures by within tax revenues since, according the a former Chairman of the Federal Reserve of New York: "taxes for revenue are obsolete", and indeed they are obsolete within a fiat monetary system. I have found that the full import of that statement has yet to be realized, especially within the minds of the majority of economists and their feeble schools of economic theory fashioned around the fiat monetary system, a system that is inherently flawed.
Eventually, of course, the people, the economists and the politicians will become painfully aware of just how flawed the fiat monetary system really is as the very harsh reality rises into view, affecting everything and everyone within this country. Like all fiat monetary systems, ours is destined to go through the same stages of failure as all others before it, and our economy will, at that moment, collapse under the weight of massive insolvent debt, upon which the system is created.
Inflation is an easy tool in the hands of the government as long as they can maintain it at gradual incremental increases over long periods of time, but the moment a rapid increase occurs, the ruse becomes far more difficult to maintain. In the first stage, the people will begin to witness the rapid increase in prices for both goods and services. While at that point they simply believe the government when it states that commodity prices are rising for various reasons; the government of course, always has a plethora of reasons on hand to justify such price increases, all in the hope of maintaining the charade.
At this stage, there will be a few people who actually realize just what is going on in the economy, but unfortunately the majority will remain true to their conditioning and while they may gripe, will not question the true cause of their financial pain or the culprit behind it. The majority will continue living their daily routines as though the inconveniences of higher prices will be a passing phenomena, continuing to misplace their trust in a government that was in on the damnable ruse from the beginning as it shifts all blame to something or someone other than itself.
While, at this stage, people may wish to make certain purchases, they think that prices will eventually retreat so they put off the purchases in the short-term until a later date. This common attitude is relatively short lived because as prices continue to rise, at unprecedented levels over longer, consistent periods of time, people will begin to think that because prices are so high that they will then put off a purchase for a year or two, perhaps then prices will once again subside to more normal and manageable levels for their income. The last stage abruptly hits and the entire system then faces catastrophic collapse when the people begin to think that they had better make a purchase, any purchase immediately because they realize that the purchasing power of their fiat money is rapidly loosing its value of exchange.
So, the people, in a panic, will withdraw, if they are allowed, their bank deposits, cash in their stocks, redeem any bonds for cash to exchange for commodities or merchandise they feel will retain value even if they have no real needs for the commodities or merchandise they are buying. As the panic spreads, shortages being to take shape, manufacturing slows to a halt, unemployment skyrockets, and public services breakdown and in the last stages chaos ensues. The government seeks to assert itself, but to no avail for even the government under these circumstances, in this present age will prove to be as impotent as the fiat money they so ardently promoted, to solve the problems faced by the country and the people.
While it is easy to see the conclusion of such a system as a failure, the truth of the matter is that entire system, and the polices created to sustain it, were failures from the beginning. The purpose of the system is not, nor has it ever been throughout history, for the benefit of the people; its sole purpose is to provide the government with unlimited, unrestrained finance and the central bankers with an incredible profit machine without much oversight or regulation to impede their government authorized monopoly.
So, the system of government and central banking fiat money, dependent upon intentional deception of the population to remain viable comes to an abrupt end, it is no longer a manageable system of exchange, nor will it provide the government with a free financial reign. There are no solutions to the problems inherent within our government's fiat monetary regime even though the government economists continue to heap unabashed praise on both the system and the polices required to maintain it, that will become more and more difficult as the system reaches its terminal point.
Historically, fiat inflation was realistically deemed extremely dangerous to the economic, social and political safety of a country, but as usual, the temptation for the unleashed power and the ability to use the fiat system to convert the labor of a population to unlimited wealth for those in charge of the money has always proven far too great to resist. Of course, the campaign to demonize sound money has been unrelenting, primarily from those who benefit the most from the fiat monetary system, and those who have been duped into believing it was the source of all economic troubles prior to the advent of the Federal Reserve System, of course, it wasn't. Those pro-inflationist, those fiat-philanderers have vowed to forever prevent sound money from raising its head in this and other countries again, but their faith will be shaken soon enough.
In Liberty and Eternal Vigilance,
Republicae
4 comments:
I couldn't agree more. What truly boggles my mind is how frightenly unaware and ignorant the US populace really is. Surely things will play out as you say but the question I have for you is this...after the collapse, then what? What will the the U.S. look like after the collapse takes place? By the way, I'm an avid reader and appreciate your blog very much
Our society floats, indeed it drifts on certain well-placed and deeply ingrained assumptions about our country, its stability and it future. Long ago it forsook the single stabilizing force it had: Constitutional Common-Sense and Order. I hope the following never happens, but the way things look it would do well that we should prepare for such eventualities.
As we are currently seeing, the economy is taking a particularly pernicious turn, but all that we see now is mild, a pre-cursor to a far more difficult stage to follow. As economic dislocations become more and more frequent, defaults multiply as profits are drained by the massive burden of debt that supports the economy. Massive closures and layoffs with unemployment rapidly increasing to unimaginable levels. The economy begins to seize piece by piece until it shuts down in systematic collapse. Hyperinflation eats through the economy like a cankerworm through a ripe harvest. The tattered government will attempt to create various programs to no avail, monetary policies will prove worthless, and job creation schemes will be overwhelmed by exponential increases in joblessness.
It will be vital that if you live in a city that you have a safe escape route planned and at the very beginning of the collapse you make your way out of the most dangerous place to be during that time and that place is urban areas. It is very important that your plans include a safe-haven, a place to take refuge during the first few months of the decay. Ideally, if we could somehow form a network of safe-zones, a network of like-minded people who have not only prepared for such eventualities, but who can support those who are in urban areas during this most dangerous period. I am not sure just how that could be accomplished, but I have a deep gut feeling that it is very necessary.
During the seize phases, there will be an increase of shortages, shortages in fuel will bring about shortages of just about everything else we can imagine, like food, common everyday consumer items, medicine and then will come outages of utilities, transportations systems breaking down, infrastructures falling apart. The people who are so accustom to getting their milk, bread and butter from the grocery store shelves, pumping their gas from the convenience stores will be dumbfounded to find the shelves empty, the pumps dry.
The vast majority of the population will be stupefied; even most of those in our government and the major corporations, yes and even the elite will stumble about in utter confusion and despair. As hyperinflation takes its final toll, the penniless people will look to an equally penniless government to no avail, there will be no help coming from “on-high”. As profits dry up so do the services, including the profitable health-care business in this country. Yes, there will be Martial Law until the government itself succumbs to the plague of monetary collapse, then it is every man, woman and child for himself. Community will be extremely important, a prepared people, like-minded families of friends that can be counted on in such times. It will be almost tribal in the beginning, and then it will evolve into a medieval society in many respects.
For the few people who do own their property outright, their safety, especially in urban areas, will be questionable. Initially, the massive numbers of homelessness wander, raiding what stored goods are available to them, or stealing goods they suspect of being hidden, eventually the homeless hoards will become squatters, taking any property that will offer a degree of shelter and safety. As the massive confused and bewildered hoards will eventually migrate, like beasts looking from greener pastures, they will trample through the countryside looking for subsistence. In the beginning, there will be a massive migration into the cities, when supplies are exhausted there, when the violence, pestilence and starvation take their deadly tolls, the migration will spread outward to suburban areas and then into the countryside. The selfishness of our society will find its expression during these dark times, people who were cold and selfish during the good times will be even much more cruel during the bad times.
So, what will be important? Obviously, friends and family, but beyond that there are certain things that will be immediately necessary and then there will be things that will be necessary over the long-term. Survival and security will be of the utmost importance, especially during the initial stages of the collapse. As the first few months of chaos turns into the first few years of growing despair, there will be some important elements of survival that needs to be understood. It is extremely important that we stock up on Heirloom Seeds now, they will be worth more than all the gold and silver in the world during the first few years after the collapse.
Some important things to know and remember is to avoid strangers at all costs, never get backed into a corner or in a location without knowing a route of safe escape, never travel alone or be outside a safe place at night, always be armed and always have some sort of trade goods on your person. After the collapse, our money will be no good, gold and silver will also be of little use during those first few years, but trade goods used for barter will be of immense value. It is important that we stock up now on various consumer goods such as razor blades, matches and cigarettes as well as lighters will be highly prized, so too will salt and spices, soap, rope, tools, medical and first aid supplies, fishing tackle, etc., but above everything else knowledge will be of the greatest value. It is important that we know trades, such as pottery making, blacksmithing, gardening, preserving foods, woodworking, etc. Those will be valued trades and those who can provide such abilities will be sought out.
As communities coalesce around trade routes, laws will gradually find their way back into society the question will be what type of law, what type of society? The principles we hold so dear must never die out, no matter how horrible the chaos, no matter how difficult the times. It will be very important that there is a remnant who hold the principles of Liberty and Honor upon which this country was once found in the highest regard, that a people serve as a reservoir for such principles.
Another great article. Is there another way to contact you to discuss matters of a different subject? I do not want to clutter up the comment section with questions about different matters in American history.
Yes, you can write me at Hewn@knology.net
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