Deflation Made Simple (Part II)
The Story of Real Money (Entry 113)
In an economy with real money, a government cannot create money ex-nihilo (out of nothing). To do so would be an act of theft more contemptuous (Entry 106) than direct taxation and military conscription. By way of preview, let us dwell for a moment on the issue of theft, for real money plays a key role in its prevention.
It is one thing to suffer the humiliation of a state actor who stands before you at gunpoint and demands that you surrender a portion of your wealth (money-per-vim) or your person for the good of your nation; it is quite another for that same state actor to break into your shop or barn under the cover of darkness and steal your belongings. In the first instance, you know clearly the source of the theft, and everyone can see what is occurring. In the second instance, you do not know whom to blame, and you are left with feelings of anxiety and insecurity — conditions that the state typically promises to alleviate in exchange for certain rights that its citizens relinquish in its favor.
So, how does one defend oneself against an invisible enemy, and to whom does one turn for relief when the invisible enemy is the very same who is supposed to protect one against all enemies (both foreign and domestic)?
CoVID is also an invisible enemy — one, that has been made very visible by the same who continue to steal our wealth when we are not looking! But, let us not jump ahead.
When theft is performed at gunpoint, you can readily resist, if you are so prepared. And, if the thief is the state, and your neighbor is reluctant to stand with you in opposition, you may very well consent to the theft with the understanding that what is stolen will be used in defense of what the government has not yet taken — this, in the end, is Thomas Paine’s notion of a necessary evil (Images 96 and 103 and Entries 105-106) that defends us against our own vices and wickedness.
Now, imagine having to awake every morning only to discover that your wealth has declined in market value, but you cannot explain it. You know that something is not right, but you cannot defend yourself well against a problem that you do not understand.
Alas, if you hold, money-generating debt instruments (Images 100-103), your pain will be mitigated and your concern not as great. And yes, those who hold such financial paper tend to be the wealthier among us — those who are best positioned to check the excesses of the state (Image 100), on the one hand, and those who are the primary contributors to the state’s excesses, on the other hand. This presents a dilemma for the rest of us, does it not?
A serial killer takes pleasure in the act of murder, and with each new successful murder that goes unchecked, the killer plans still another. The only way to stop the murder is to catch him. The addiction must be stopped.
Once the thief discovers that he can steal with impunity, his theft increases until he is finally captured and punished. Indeed, until the criminal is caught and stopped, however, the thievery becomes increasingly worse.
A state that knowingly borrows to the point of bankruptcy, is not exactly a thief, but its negligence will almost certainly lead to theft beyond what it is seeking to avoid with its negligence — namely, taxation. Default is a messy business. Many promises are broken, and the market place is temporarily torn asunder.
The struggle against debasement (Images 3, 6-9, 11-12, and 26) had persisted since money was first coined in the West. This said, so long as the Wisselbank of Amsterdam remained true to its mission, and the money received by The Estates remained sound, a negligent hand was eventually identified, and the thieves were inevitably caught.
Only after Johan de Witt and his brother were brutally murdered (Image 99) in 1672 did things begin to change in the United Dutch Provinces. No, the change did not take place over night, nor was it necessarily obvious to most that it was even occurring. Looking back, however, it was clear that the Wisselbank and the Dutch Republic were in danger.
No, it was not that the citizenry had let their guard down; rather they were betrayed by their own vanity, an abundance of real money and low interest rates, and those in whom they had placed their trust. Indeed, the mischievousness was always performed in the name of the republic, if it were proclaimed at all. In fact, it was performed on behalf of those who were finding it increasingly difficult to maintain the appearance that all was in good order when it was not.
No, the dictum, “What is good for General Motors (GM) is good for America”, was no more true for the VOC and the United Provinces back then, than it was for the United States of America only yesterday!
Pandora’s Box would be opened, and it has yet to be closed. Simply the British would take matters to another level. See you tomorrow!
In liberty, or not at all,
Roddy A. Stegemann, First Hill, Seattle 98104