THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Friday, March 13, 2020

News from the Network, Vol. 13, No. 11

It seems almost incredible, but the situation today and that of two hundred years ago are so similar as to make it look as if we’re replaying the past with a vengeance.  Society is dissolving in chaos, socialism is being offered as a panacea, and a very bad, even destructive understanding of money and credit virtually rules the world:

"I'm Irving Fisher. I'm great. Just ask me."
• Pump With Trump.  When the Dow Jones Industrial Average fell by another 2,000 points or so earlier this week, President Trump vowed to stimulate the market by pumping half a trillion dollars to save the gamblers of Wall Street.  As of this writing, Dow futures are moderately up in response to the favorable reaction in the European markets.  Looking back at the financial history of the United States, it is interesting to note that Irving Fisher, considered by Milton Friedman to be the greatest economist ever (with the possible exception of himself), called for something similar following the 1929 Crash.  It seems Fisher was heavily invested in the market and kept insisting that it could only go higher and higher, even after the Crash.  To try and ensure that it would (and recoup his losses), Fisher advocated “reflating” the currency by pumping billions of dollars into the economy to raise the prices of shares on Wall Street.  The government refused (although it did effectively the same thing when John Maynard Keynes ordered it), and Yale University had to bail out Fisher.  To his dying day Fisher insisted that his plan had been correct and the government creates wealth by printing money backed with its own debt, even though the equivalent scheme implemented at the behest of Keynes caused “the Depression within the Depression.”  What brought the U.S. out of the Great Depression?  World War II, not Keynesian or Monetarist economic policies or currency manipulation.
"I'm Peter Lynch and I'm one up on Wall Street."
• The Downer Dow.  Perhaps a little reminder is in order about what a stock market is — and what it is not.  A stock market does not create wealth.  It is a secondary market for existing equity shares and debt instruments.  It is not a leading economic indicator or an indicator at all, but at best a gauge of how confident the stock speculators are that prices will go up (go long) or down (go short).  It’s not even very useful as a determinant of fair market value of debt and equity (although legally accepted as such), as the prices of the instruments on Wall Street often have little to do with the actual value of the “underlying,” i.e., the asset behind the instrument.  Peter Lynch made a fortune by being able to gauge the probable real value of a publicly offered company and correlate it with the behavior of the speculators on the Street.  Read carefully, his books are manuals of how to do this — if you manage to distance yourself from the speculative frenzy.
Lack of credit for Main Street, not for Wall Street, caused the Depression.
• Capital Credit Insurance.  Not to dwell on the Crash of 1929 too much, but many people are unaware that the Crash didn’t cause the Great Depression.  What did?  The drying up of credit for the productive sector.  As the “fair market value” of shares on Wall Street plunged, all assets became valued lower, especially those pledged as collateral for loans for industry, agriculture, and commerce.  When the value of collateral fell, companies found their coverage ratios on their loans were suddenly inadequate.  Loans were called or not renewed, and new loans were not made.  This is not because the commercial banks were evil, but because they were legally required to do so, even when they didn’t want to.  Businesses that had been blue chip found themselves in receivership due to lack of credit.  While the speculators were screaming for the Federal Reserve to prop up share prices on Wall Street, the real problem was lack of credit on Main Street.  What was needed was an emergency program of government loan guarantees for business to be replaced as soon as possible with private sector capital credit insurance to get banks lending for productive purposes again, not money to bail out the speculators.  What the country needed was collateral and sound money backed with private sector hard assets.  What it got was Keynes and funny money backed with government debt.
Étienne Cabet
• Icarian Socialism.  Our research over the past several years has revealed a startling fact or two about the rise of socialism.  Although the rise of capitalism caused many problems in society, the early socialists were — at first — more concerned with blaming existing institutions and people for the problems besetting society following the French Revolution.  Almost without exception, early socialists targeted private property, marriage and family, and organized religion, especially the Catholic Church as institutions that must be either reformed or abolished if society was to be justly structured.  The Second Estate, the political leaders and order, had already demonstrated its weakness and inadequacy with the French Revolution.  The First Estate, the Church, now came under fire, with socialism proposed as the Democratic Religion or New Christianity to replace existing forms of Christianity that had clearly failed, at least in their opinion.  In 1832 the Catholic Church issued the first social encyclical, Mirari Vos, condemning the new things that eventually became known as socialism, modernism, and the New Age.  It had some effect, and convinced some socialists that organized religion should not simply be replaced, but completely eliminated from society.  Étienne Cabet was one of the first (if not the first) of the early socialists to propose what in the hands of Karl Marx a generation later became known as “Atheistic Communism.”  Calling his system “Icaria,” Cabet shifted the focus from socialism as a replacement for Christianity, to a replacement for capitalism, which he identified as the real villain: “The first and second estates were no longer formidable; Louis Philippe was the king of the bourgeoisie.  Money was the new tyrant.  Capital controlled the electorate.  The government was in league with bankers, manufacturers, and the mercantile classes.  Democracy now meant the movement of the proletariat against the bourgeoisie.  Society was breaking into two more and more clearly defined classes: the rich and prosperous, the capitalized class, numbered by the thousands; and the laboring class, numbered by millions.  Oppression was no longer conceived of as political [or religious], but as industrial.” (Albert Shaw, Icaria: A Chapter in the History of Communism.  New York: G.P. Putnam’s Sons, 1884, 8.)
Shop online and support CESJ’s work! Did you know that by making your purchases through the Amazon Smile program, Amazon will make a contribution to CESJ? Here’s how: First, go to  Next, sign in to your Amazon account.  (If you don’t have an account with Amazon, you can create one by clicking on the tiny little link below the “Sign in using our secure server” button.)  Once you have signed into your account, you need to select CESJ as your charity — and you have to be careful to do it exactly this way: in the space provided for “Or select your own charitable organization” type “Center for Economic and Social Justice Arlington.”  If you type anything else, you will either get no results or more than you want to sift through.  Once you’ve typed (or copied and pasted) “Center for Economic and Social Justice Arlington” into the space provided, hit “Select” — and you will be taken to the Amazon shopping site, all ready to go.
Blog Readership.  We have had visitors from 35 different countries and 43 states and provinces in the United States and Canada to this blog over the past week. Most visitors are from the United States, India, Canada, the United Kingdom, and Spain.  The most popular postings this past week in descending order were “Did C.S. Lewis Approve of Socialism?”, “Thomas Hobbes on Private Property,” “Fulton Sheen Again!”, “The Problem of Social Justice,” and “Social Justice IV: The Characteristics of Social Justice.”
Those are the happenings for this week, at least those that we know about.  If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we’ll see that it gets into the next “issue.”  Due to imprudent language on the part of some commentators, we removed temptation and disabled comments.