Wednesday, October 6, 2010

FIAT Money is the Root of All Evil

Many folks don't get GBFM's schtick. Some people mistake his adderall and ritalin influenced prose to be meaningless trolling.

Than he'll go ahead and post the sources for his musings. The substance of his muse is substantial. His latest posting at Roissy's is a tour de force of quotations throughout history regarding the evils of fiat currency.

Of the innumerable evils which usually brings the decadence of kingdoms, principalities, and republics, the four greatest are, in my opinion: war, immorality, infertility of the land, and the debasement of money. For the first three, the evidence is obvious. But for the fourth, which concerns money, except for a few men of intellect, few people ever see it. Why? Because it is not in one fell swoop, but gradually, by a somewhat latent character, it ruins the state. –Copernicus

If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. –Thomas Alva Edison

Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice. –George Washington

No state shall emit bills of credit, make any thing but gold and silver coin a tender in payment of debts, coin money. –Article One, Section Ten, United States Constitution

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it. — Frederic Bastiat, The Law

Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money. –Daniel Webster

You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold. –George Bernard Shaw

The directors of such companies (joint-stock corporations), however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own …. Negligence and profusion, therefore, must always prevail, more or less in the management of the affairs of such a company? –Adam Smith, The Wealth on Nations, 1776

If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered. –Thoms Jefferson in 1802 in a letter to then Secretary of the Treasury, Albert Gallatin

Fair dealing leads to greater profit in the end. –Homer’s Odyssey

Thou shalt not steal. –Moses, Exodus

The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. –Ludwig von Mises

The authors of the Constitution were very much aware of the dangers of inflation and the need for commodity money. Destruction of the continental dollar was vivid in their minds. The journals of the Continental Congress noted that “paper currency… is multiplied beyond the rules of good policy. No truth being more evident, than that where the quantity of money. . . exceeds what is useful as a medium of commerce, its comparative value must be proportionately reduced.” Further, inflations “tend to the depravity of morals, and decay of the public faith, injustice to individuals, and the destruction of the honor, safety, and independence of the United States.” –R. Paul, End The Fed, The Constitutional Case, p. 165

If you are in debt, you are a slave to that debt. –Benjamin Franklin

The second vice is lying, the first is running in debt. . . Lying rides upon debt’s back. –Benjamin Franklin

Paper money eventually returns to its intrinsic value—zero. —Voltaire

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. –Ernest Hemingway

If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash. –George Washington

To emit an unfunded paper as the sign of value ought not to continue a formal part of the Constitution, nor even hereafter to be employed; being, in its nature, pregnant with abuses, and liable to be made the engine of imposition and fraud; holding out temptations equally pernicious to the integrity of government and to the morals of the people. –Alexander Hamilton

I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country. –Thomas Jefferson

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. –John Kenneth Galbraith, Money: Whence it came, where it went – 1975, p15

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. . . This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard. –Alan Greenspan, Gold and Economic Freedom

The bold effort the present (central) bank had made to control the government … are but premonitions of the fate that await the American people should they be deluded into a perpetuation of this institution or the establishment of another like it. –Andrew Jackson

I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country. –Andrew Jackson

Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. –Andrew Jackson

The process by which banks create money is so simple that the mind is repelled. –John Kenneth Galbraith, Money: Whence it came, where it went – 1975, p29

Is there any reason why the American people should be taxed to guarantee the debts of banks, any more than they should be taxed to guarantee the debts of other institutions, including merchants, the industries, and the mills of the country? –Senator Carter Glass,
Author of the Banking Act of 1933

I see in the near future a crisis approach which unnerves me and cause me to tremble for the safety of my country. Corporations (of banking) have been enthroned, an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic destroyed. –Abraham Lincoln

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. –James Madison

All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation. –John Adams

The gold standard has one tremendous virtue: the quantity of the money supply, under the gold standard, is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments. . . The gold standard did not collapse. Governments abolished it in order to pave the way for inflation. The whole grim apparatus of oppression and coercion, policemen, customs guards, penal courts, prisons, in some countries even executioners, had to be put into action in order to destroy the gold standard. –Ludwig von Mises

I’ll tell you what I think about the way
This city treats her soundest men today;
By a coincidence more sad than funny,
It’s very like the way we treat our money.
The noble silver drachma that of old we were
So proud of, and the recent gold coins that
Rang true, clean-stamped and worth their weight
Throughout the world, have ceased to circulate.
Instead the purses of Athenian shoppers
Are full of shoddy silver-plated coppers
Just so, when men are needed by the nation,
The best have been withdrawn from circulation.
Aristophanes, The Frogs, 400 BC

Give me control of a nation’s currency and I care not who makes the laws. –Baron Rothschild

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people. –F.A. Hayek

Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose. –John Maynard Keynes

We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people. –Daniel Webster, speech in the Senate, 1833

You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out. –Daniel Webster (upon evicting from the Oval Office a delegation of international bankers discussing the Bank Renewal Bill, 1832)

In short, Fiat currency gives the people who control the printing press to create it, the power to butthex society and desoul us all by enslaving us into debt serfdom.

No lolzlozlzolzozlol-ing here.


Anonymous said...

FIAT money = money spent on a shitty little Italian car?

Anonymous said...

I have thought national debt to be the main hurdle in our age.

For once debt is eliminated, the following budget would show the parasites for who they are.

But this is a fantasy, because civil war would likely erupt long before that, thus muddying the waters.

Default User said...

The thing is that I read your post. I did not, indeed could not, read GBFM's.

GBFM's "prose" may as well be meaningless trolling as I just skip over it.

Conan the Cimmerian said...

Linked you.
Another great post.


Flahute said...

Many of the us who work in the world of money and banking understand it too, but like Hemmingway said, for many it is an opportunity to exploit.

No civilization has ever been successful with fiat money; all collapse.

I find GBFM's obsessions with Tucker Max, butthex, feminism, Bernanke and the publishing companies amusing, but he's also right to connect them all. Moral decay is accelerated by a fiat financial system because it removes the need for hard work, for production, and gives the illusion of something for nothing.

dienw said...

So, what shall we do; how shall we rout the money changers and their dupes; if we are successful, what should we do to them, their families who have benefited from their theft of generations, and should we confiscate and breakup their estates and businesses?

There is nothing that can be done: the ruling class has laid the snare and protects it with the armed force of government.

Anonymous said...


What would you explicity favor over paper-fiat-money? Would you be in favor of paper money that has to be backed by gold, annually audited, at a 1-to-1 ratio?

Would you back real gold coins of varying thickness in bank accounts (vaults) with people using debit cards on those accounts?

Interested in what you'd advocate as a replacement.......

By The Way......I saw something on a bag of tortilla chips (the kind you dip into salsa) that made me both mirthlessly smirk and think of your nutritional writings at the same time: It said something like "be sure to get your daily recommended 48 grams of grain" (Im paraphrasing). The food pyramid really is a bad joke.

Anonymous said...


Keoni Galt said...

Conan, thanks for the link.

Default - Glad I could highlight the substance for lozlzolzozl here!

Anon - I'd prefer free market banking with no fractional reserve lending allowed, and some sort of commodity to back up any bank's currency.

I'm glad to see my writing on nutrition resonates with somebody!

That's a high compliment, my friend.

Gunn said...

Re: what would we use instead of fiat money, the answer is that as soon as you link paper money to a commodity such as gold, you're done. Money can be kept as paper, but the key difference is that the government promises that it can be exchanged for the physical commodity at the bearer's request (and at a fixed 'exchange' rate).

The point of linking to (say) gold is that the government is unable to inflate its way out of debt. This acts as a brake on its spending, and prevents it from ramping up the welfare state etc.

Today, we have western governments that are close to the limit of taxation (i.e. raising taxes has lower and lower increments on actual tax receipts and at some point you simply can't get more tax than you're currently taking) whilst also massively constrained in their ability to cut back on spending (because of the tyranny of democracy where every special interest group wants to keep its snout in the trough).

To cut this gordian knot, governments inflate the money supply through debt issuance, which is effectively a systemic, unavoidable, stealth tax on everyone who holds the currency. This is also the reason that the US and various EU governments are berating the chinese for not allowing the Renminbi to appreciate; basically, the Chinese are not playing ball and allowing the USD to fall in value, which prevents the full stealth tax being effected.

By linking the currency to a standard such as gold, its simply not possible for governments to issue new debt without backing it up with the physical commodity, meaning that they have to go back and address the structural cause of the deficit - i.e. to rein in their spending, and thereby reduce the size of government.

This naturally scares the hell out of politicians who are used to bribing their way into power, and bribing their way to maintaining power once they have it.

One of the most entertaining things (if you can be detached about it) is when you read garbage like 'tax cuts represent a poor way for government to spend its money'. Politicians today seem to believe that they have first right to the GDP of their countries, and that tax cuts are a way of giving back some of this as a 'gift' to the people whose taxes are being cut. This type of nonsense is brought starkly into focus once you require governments to explicitly balance their books against an objective standard, rather than allowing them to continually shift the goalposts by printing whatever new money they feel like doing.

Schanrhorst said...

Yes because the world was a paradise before the evil fed took over. If we just made America into a libertardian paradise it was originally meant to be we would usher in a utopia.

What fucktard AMERICAN libertardians don't understand is that America was flawed from the beginning. In their rasing of freedom up as the highest good in a sociey one ultimately enslaves one's self.

No, the evils of feminism that you MRA pussies bitch about most did not start with feminism or Marxism!
They started in 1776 and 1789!

Anonymous said...

It's sad that of that entire list only two of those people (Ron Paul and Alan Greenspan) are alive today, and one of those people (Greenspan) has changed his mind.

Most Americans don't understand the effects of debt and the effects of a fiat currency created by a private bank (even if it does have the word "Federal" in its name).

There are two ways to learn; by the words of others or by your own experience. We have ignored the words of others so we are not experiencing the effects for ourselves.

Anonymous said...

The Federal Reserve is a federal as Federal Express. You US residences must do what Iceland and Russia (after Yeltsin)done. Fire all the oligarchies and "default and start from a clean slate. Greece must do the same. The citizens of these countries are not responsible for wasteful govt. spending for the most part. Most politicians from these countries are globalists and Bilderberg attendees and favour a new world order with one world govt. and currency.

sth_txs said...

FIAT: Financial Instrument Administering Theft

sth_txs said...

Everyone should go read the only coherent thing ever written by Alan Greenspan. Do a search of his name along with 'Gold and Economic Freedom'. If you can't figure it out then there is really no hope for you.

The core issue is whether the market or people can choose what they want to use for money. Not only is there silver and gold but also platinum and palladium. Is it perfect? No. There was a bit of inflation during the CA gold rush, but the market adjusted to this.

Not much we can do. MBA's are taught the central bank thesis and wedded to it. The feds have the guns; Liberty Dollar was pummeled along with another guy out in Nevada that was paying his employees in silver and gold.

Anonymous said...

GBFM and da roissy blogger yo