The Just Third Way

A Blog of the Global Justice Movement

Thursday, July 28, 2016

Future Schacht, IX: Infinite Velocity (b)


It was not until November 1923, that effective action was taken to stabilize the currency.  On November 13, 1923, Doctor Hjalmar Horace Greeley Schacht (born in Tingleff in what is now part of Denmark, but his parents, both German, were married in New York City, and, apparently, admirers of that city’s periodicals) was appointed Commissioner of National Currency.  He was given a free hand in all questions of money and credit.  His sole priority was to halt the inflation that by this time had become an inferno.
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Wednesday, July 27, 2016

Future Schacht, VIII: Infinite Velocity (a)


Adding to the problem of mere quantity of currency in Germany during the hyperinflation of the 1920s was the almost infinite “Velocity of Money” that resulted.  The “Velocity of Money,” the rate at which money is spent, went to the maximum as people rushed to spend whatever currency they had before it lost any more value.  As any monetary economist will quickly tell you, this effectively multiplied the amount of currency in circulation immensely, adding to the rate of inflation like pouring gasoline on highly inflammable material.
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Tuesday, July 26, 2016

Missing the Point, II: Why It Was Missed


Yesterday we noted that, on the whole, latter day Chestertonians and distributists seem to have missed some very important points Chesterton made in his thought and writings, viz., that certain modern phenomenon were presaged by some fundamental errors made in the Middle Ages and were carried forward to today, and that the great error of the modern age (again anticipated by events in the Possibly-Not-So-Dark Ages) is widespread acceptance of the shift from the Intellect to the Will as the basis of the natural law. The great problem is the effect this shift has had on civil, religious, and domestic society.
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Monday, July 25, 2016

Missing the Point, I: What Was Missed


A short time ago, while we were in the throes of composing the series on Woodrow Wilson and the Federal Reserve, we came across a posting in a FaceBook group devoted to “distributism,” distributism being a somewhat loose theory of political economy developed by G.K. Chesterton and Hilaire Belloc advocating political democracy supported by widespread capital ownership, with a preference for small, family-owned farms and artisan businesses.
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Friday, July 22, 2016

News from the Network, Vol. 9, No. 29


A significant number of news items this week, so we will get straight to the substance:
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Thursday, July 21, 2016

Future Schacht, VII: The Road to Hyperinflation


The only thing that could happen in Germany and Austria-Hungary following World War I and the imposition of virtually unlimited reparations is precisely what did happen: the collapse of the financial system, the ruin of the economy, and complete political chaos.  It was a situation ripe for the rise of anyone who could promise stability and have some chance of achieving it.  As Germania, a large Berlin newspaper, reported on July 27, 1923, “It is a situation for a dictator.  The conditions call for a Mussolini in bullet-proof armor with a revolver in either hand.”
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Wednesday, July 20, 2016

Future Schacht, VI: Reparations and Resentment


One thing the German government discovered very quickly after agreeing to an Armistice to end the First World War was the fact that the different sides each seemed to have a different idea of what “Armistice” meant.  To the Germans it meant cessation of hostilities and a return to the situation immediately preceding the outbreak of the war, with appropriate payment for violations of international law.
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Tuesday, July 19, 2016

Future Schacht, V: America’s Political Defection


Having chosen to finance the First World War by taking on debt instead of raising taxes, the Second Reich was in bad financial shape by the time the Armistice was declared.  The country’s commercial banks had been discounting accommodation bills (bills backed only by a general promise to pay, not a claim on a specific asset or revenue stream) at a tremendous rate.  As Hjalmar Schacht recalled,
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Monday, July 18, 2016

A Brief Outline of How to Save the World (and Other Modest Goals)


What would you do if somebody offered you $100 million to change the world?  What is the problem you would address?  We got asked that question recently, and — as you might expect — the first reaction was, “Haven’t you read the CESJ website?”  After all, we’ve been saying pretty much the same thing for decades.  Of course, our real reaction was, “Just give us the money and let us think about that . . . which is probably acceptable when you’re talking about something that isn’t real in the first place. . . .
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Friday, July 15, 2016

News from the Network, Vol. 9, No. 28


We recently (this week) heard from our correspondent in Germany, located near Ulm, in the state of Hesse, right over the border from Bavaria.  Like you care.  Anyway, one of her questions — all of them rather insightful for someone without an education in economics (or maybe because of that) was to ask why, when obviously many people aren’t being productive, and things are generally on the skids in Germany and elsewhere, why is the stock market booming?  And why are the more conservative financial analysts looking so scared?
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Thursday, July 14, 2016

Future Schacht, IV: War Financing


After the Great War, as World War I was called before 1939, the Allies were bent on revenge.  The war had begun over the issue of Serbian interference in the internal affairs of Austria, the assassination of Archduke Francis Ferdinand, heir to the Austrian throne with Serbian aid and complicity, and the subsequent refusal of Serbia to make reparations . . . which would, admittedly, have involved a virtual takeover of the country by Austria.
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Wednesday, July 13, 2016

Future Schacht, III: Economic Prelude to the Great War


Guided by the principles of America’s founders and inspired by Abraham Lincoln, during the election of 1912 there was a nearly successful attempt to reverse the disturbing trends in American society.  This was long past due, as social pressure from the new things noted by Leo XIII had been building up since before the Civil War.
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Tuesday, July 12, 2016

Future Schacht, II: Philosophical Prelude to the Great War


At the end of the nineteenth century, the situations of State and Church in Europe and the United States were deteriorating rapidly.  Despite all that popes or presidents could do, the social order was in terrible danger, and for the same reason: loss of personal empowerment through the growing concentration of capital ownership in fewer and fewer hands, and an ever-increasing reliance on the wage system.
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Monday, July 11, 2016

Future Schacht, I: A Sound Monetary System


However the details end up being worked out, the Brexit has revealed serious weaknesses not merely in the economic, political, and financial institutions of the European Union, but in the assumptions that guided — and continue to guide — the structuring of those institutions.  This has led to an inherent instability that led, seemingly inevitably, to the Brexit.
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