Economists and their political stooges . . . or maybe that’s politicians and their economic stooges (it’s so hard to keep that straight these days in a Keynesian plutocracy) profess to be terrified and worried and even a trifle concerned about the possibility of the U.S. Dollar losing its place as the primary global reserve currency.
|No, the other JPMorgan!|
And why is that? Because it will hurt people trying to produce, distribute, and consume marketable goods and services? No. According to JPMorgan, it’s that “the US could lose a key tool it’s used to fight past crises.”
You read that right. Although the whole reason for having money at all is to facilitate the production, distribution, and consumption of marketable goods and services, the greatest problem with not having a sound reserve currency (please hold your laughs and stupid jokes until the end, please) is not that it will interfere with the whole reason for having an economy in the first place — which it does — but because it will mean that the United States government can’t manipulate the money supply and the value of the currency in Kreative Keynesian Korrections to try and fix previous currency manipulations!
This is nothing new, by the way. It’s been obvious ever since most governments adopted Keynesian (meaning Fabian socialist) economic policies that manipulating the currency in order to achieve economic (meaning political) goals was the primary, if not the only “tool” (meaning weapon) in the Keynesian armory. As Keynes stated at the beginning of the first volume of his Treatise on Money (1930), intended to be his magnum opus until it was shredded by Friedrich von Hayek and replaced by the equally incoherent General Theory of Employment, Interest and Money (1936),
It is a peculiar characteristic of money contracts that it is the State or Community not only which enforces delivery, but also which decides what it is that must be delivered as a lawful or customary discharge of a contract which has been concluded in terms of the money-of-account. The State, therefore, comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contract. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time — when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern States and has been so claimed for some four thousand years at least. It is when this stage in the evolution of money has been reached that Knapp’s Chartalism — the doctrine that money is peculiarly a creation of the State — is fully realized. (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt, Brace and Company, 1930, 4.)
In other words, as far as John Maynard Keynes was concerned, an all-powerful State has the power to change the value of the currency and even what money means at will, along with being able to interfere in any agreement between private persons. The State is God, and God is the State. It’s not by coincidence that Keynes, an atheist, was a follower of Walter Bagehot, who was enamored of the totalitarian political philosopher Thomas Hobbes, who contended in II.xvii of Leviathan (1651) that the State is a “Mortall God” that rules on Earth as the Immortal God rules in Heaven and must be obeyed without question.
|Dr. Harold G. Moulton|
Dr. Harold G. Moulton, president of the Brookings Institution from 1928 to 1952, noted this slight problem in a pamphlet he wrote in 1943, The New Philosophy of Public Debt. In it he noted that there might be some justification for the Keynesian practice of “pump-priming,” i.e., inflating the currency by issuing government debt backed by nothing more than the government’s ability to collect taxes in the future to stimulate economic activity. This, however, could only be justified once, and then only under extreme conditions when there was no other recourse available . . . which Moulton had shown was not the case in The Formation of Capital (1935). There is no need whatsoever for a government to issue any amount of debt-backed reserve currency to kickstart economic activity, as the commercial and central banking system was invented for that very purpose, and the proper “tool” to use is to back new money with private sector hard assets, not government debt.
The main problem with so-called pump-priming, then, was not that it primed the pump by circumventing the internal controls of a sound monetary and credit system, but that it didn’t prime the pump at all. It was never a one-time thing as stated and originally justified, as the past near-century of financial fiascos has demonstrated.
|Pope Pius XI|
The supposedly one-time emergency measure has turned into a normal means of government policy in a failed attempt to control economic activity. As a result, the wealthy and those who control wealth (who may not themselves own that wealth) have been able to impose a degree of control over economic life and thus political, civil, social, and family life that no one can call his or her life his or her own. As Pope Pius XI said nearly a century ago in §§ 105-106 of Quadragesimo Anno,
In the first place, it is obvious that not only is wealth concentrated in our times but an immense power and despotic economic dictatorship is consolidated in the hands of a few, who often are not owners but only the trustees and managing directors of invested funds which they administer according to their own arbitrary will and pleasure.
This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.
This, of course, was precisely what Keynes wanted, for as he had previously stated in 1919 in The Economic Consequences of the Peace, the book that established his reputation as the world’s leading defunct economist, “The immense accumulations of fixed capital which, to the great benefit of mankind, were built up during the half century before the war, could never have come about in a Society where wealth was divided equitably.” (2.iii)
Fortunately, there is a solution . . . if the powers-that-be have the political will and the moral courage to implement it. It’s called the Economic Democracy Act, and it has the potential not merely to correct the Keynesian errors that currently hold the global economy in a death grip, but establish that economy on a sound basis for the benefit of every child, woman, and man.