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

Wednesday, February 1, 2023

The Currency Principle

Nowhere is the pervasiveness of the “New Things” (rei novae) of modernism, socialism, and the New Age more obvious today than in the prevalence of Keynesian economic and monetary policies throughout the world.

Keynesian Economist


Keynesians and adherents of other schools of economics based on the same assumptions as that of Keynes insist they are being scientific.  Once the assumptions behind Keynesian theory are examined objectively, however, it becomes obvious that they are not connected to reality, that is, the natural law, in any meaningful fashion, and therefore cannot be considered scientific.

Keynesianism, and to a limited extent other schools of economics that accept the same assumptions, is in fact a religion in direct competition with Christianity.  It is a modern version of “the New Christianity” (Le Nouveau Christianisme) or “the Democratic Religion” (Le Démocratie Religieuse) a materialist faith intended to replace spiritual faiths, especially that of the Catholic Church.

Louis Kelso


That Keynesianism is a religion becomes clear when attempting to integrate economic principles with common sense.  Unquestioned Keynesian assertions in economics often defy logic and achieve the status of religious dogma.  Principally this is seen in two fundamental Keynesian assumptions, what Louis O. Kelso and Mortimer J. Adler called “the slavery of [past] savings,” and that the end of human existence is satisfaction of material needs.  These two assumptions are interconnected, with the first leading inevitably into the second.

The slavery of savings is a perversion of natural law, best seen in a monetary and financial theory known as “the Currency Principle.”  It is important to note that Kelso and Adler were not rejecting the role of savings in finance.  What they rejected was the idea that savings consists exclusively of what can be accumulated by restricting consumption.

This “past savings assumption” leads to the belief that financing for new capital formation can only come from existing accumulations of savings.  Full participation in economic life is therefore exclusively for the currently wealthy who can afford to cut consumption in the required amounts (capitalism), or for the State (socialism) that can create money backed by its own debt, a process Irving Fisher called “legal counterfeiting.”

Most simply stated, the Currency Principle is the belief that the amount of money in the economy determines the level of economic activity.  Production derives from money, therefore the only way to finance economic growth is to produce more than is consumed, accumulate a surplus, and use the surplus to finance additional production.  This can be seen in how one understands the Quantity Theory of money equation,

M x V = P x Q

where M is the quantity of money, V is the “velocity of money (the average number of times each unit of currency is spent in a year), P is the price level, and Q is the number of transactions.


In Currency Principle economics, changing the quantity of money, however it is done (whether by the rich accumulating savings or the State creating money backed with its own debt), leads to changes in how fast money is spent, the price level, and how many transactions are carried out.  Mathematically — that is, scientifically — this makes no sense.  In algebra, a single equation can have only one “dependent variable,” or it cannot be solved.  The Currency Principle understanding of the Quantity Theory of Money equation has three dependent variables.  It is therefore contrary to reason and thus to natural law and Catholic social teaching.

Summarized, the case for Keynesian economics and the rationalization for concentration of wealth and the economic disenfranchisement of the great mass of people in the world is relatively straightforward.  Keep in mind that these statements are either demonstrably false assertions, or are based on demonstrably false assertions:

·      Only existing accumulations of savings can be used to finance economic growth.

·      As technology becomes increasingly expensive, this requires a class of people, the fewer the better, who do not — and eventually cannot — consume all their income and necessarily reinvest the surplus in new capital.

·      New capital creates jobs for those who do not own capital and additional surplus income for the rich that they reinvest in additional new capital formation to create jobs.

·      If enough jobs are not created, the rich are taxed, and the currency manipulated (usually through inflationary monetization of government deficits) to provide propertyless people with income to generate the effective demand to purchase what the rich produce, channeling savings to the rich that they reinvest in new capital to create jobs.


The result of Keynesian economics is a system like the Great Reset that is capitalism for the rich, and socialism for everyone else.  Of course, once it can be shown that economic growth can be financed out of future savings, and that ordinary people can derive income from a source other than wages and welfare, the whole of Keynesian economics is revealed as a gigantic Ponzi scheme.  This enriches politicians and the currently wealthy at the expense of ordinary people, increases corruption, broadens the wealth and income gap, and undermines marriage and family.