Twentieth Century Tyranny
An interesting article has recently come to my attention. It was written by a US Congressman in 1948. He begins by asking the well known question, ‘what did Lenin, Mussolini, Hitler and FDR have in common?’ The answer is, of course, they all outlawed the private ownership of gold. The point is that without gold, there is no human liberty. Lenin reinforced this point by stating that a sure way of overturning the existing social order, and bringing about Communism, was by printing paper money. The Congressman further states that in a free country, the monetary unit must rest upon a fixed foundation of gold and/or silver, independent of politicians. The U.S. dollar was that kind of money before 1933. He also reminds us that no paper money system has ever survived. From 1930 to 1946, the government went into the red every year, and the debts steadily mounted. Sound familiar? In an act passed by the US Congress in 1946, it was required to fix a maximum budget each year. In 1947, the Senate and the House could not reach an agreement on this maximum budget, and the law was ignored. He tells us that there is only one way that the continual pressure to spend by Congress could be halted, and that is to make our currency redeemable in gold. Then it would be the people who would decide how much spending the government could make. That was the way it was before 1933. He gives us an example of the payroll pressure on Congress at that time. In June 1932, there were 2,196,151 people receiving regular monthly cheques from the Treasury. In June 1947, this number had risen to 14,416,393. Today, it is half of the American population.
The danger was once highlighted by Mr Alan Sproul, President of the Federal Reserve Bank of New York, who said, ‘without our support [the Federal Reserve System], under present conditions, almost any sale of government bonds, undertaken for whatever purpose, laudable or otherwise, would be likely to find an almost bottomless market on the first day that support was withdrawn’. The article was written by Howard Buffett, U.S. Congressman from Nebraska (also the father of Warren Buffett). Sixty-three years later, the problem is still the same, but the numbers have gotten much bigger.
Count the donkeys
In the Eurozone, the masquerade goes on. At this writing, Merkozy are preparing a Code of Behaviour for Eurozone countries for the future, but what about all the countries who are already in trouble today? How will they be saved? No one wants to be the first to tell the unpleasant truth.
In 2008, when the Americans and others started printing money into their economies to save the banks and others, Mrs Merkel asked, ‘how can one solve a problem by doing more of what caused the problem?’ This was the most sensible thing she had ever said. But now, she has made a 180 degree turn, and is pretending that all the Eurozone countries can, and will be saved by money from the ECB and the IMF. Rumours have circulated in the press of a €600 billion loan being readied by the IMF for Italy. But how can you solve a debt problem with more debt?
Taking the IMF first, the current IMF resources fall significantly short of the rumoured Italian loan, and further increases to IMF funds would greatly worsen the situation of the bankrupt nations providing money that they do not have to bale each other out. Former IMF chief economists agree that the IMF was never designed to make even a medium sized loan. It was designed to assist small Third World countries with their balance of payment problems, not to act as lender of last resort for irresponsible countries in Europe. According to data provided on the IMF website, there is only approximately $385 billion of remaining fire power to provide aid to member nations, less than half the size of the rumoured Italian loan. The IMF has already made a mockery of its own policies by making a commitment to Greece that was 32 times the Greek SDR quota.
The IMF and the ECB own 40% of all Greek sovereign debt, on which they will clearly have to take a big loss. If one thinks that the ECB has been purchasing Greek bonds in the market since May 2010, when the Greek 10-year bond rates were as low as 6.34%, while Greek 10-year rates are now at 31.98%, clearly both the ECB and the IMF will take enormous losses. But if the ECB cannot hold down Greek rates, how can they possibly hold down Italian rates when Italy’s debts are six times Greece’s debts? Meantime, Greece, which should have about 90,000 civil servants, continues to have 790,000 civil servants. Yet, despite all the negotiations about “cuts” in Greece, not a single civil servant has been sacked.
Meantime, it is important to grasp that Europe’s debt is not repayable, and that even if Mrs Merkel’s new regulations succeed, they will only succeed in reducing the debt. The debt can never be paid off, and after a reduction of debt, the same things will begin all over again.
Wasting money isn’t very environmental
It is hard to be shocked by anything these days, in view of what is happening in the world. Yet I have to admit that I was recently shocked to learn that Britain has spent in the last five years more than £600 million on securing an international agreement on climate change, and in “promoting green technologies in developing countries”. These figures do not, of course, include the Foreign Office, which has an entire department dedicated to this specious subject, nor to the amounts given in aid to foreign countries for “climate change” projects by the Department for International Development.
These revelations come as Chris Huhne leads a delegation of 45 people to Durban for the latest round of negotiations, aimed at achieving an international deal on “climate change”. Indeed, his title is formally that of Energy and Climate Change Secretary, as if the very real challenge of acquiring the former compared at all with the nonsense of the latter.
It is very difficult to understand such behaviour. Professor Richard Lindzen of MIT, the leading climate scientist in the world, has categorically stated that “global warming” is nonsense. There has been an avalanche of evidence from every direction that it’s a nonsense, and yet our government not only believes it, but tries to impose it on us by costly force. Regardless of what they believe, any government must accept the fact that “climate change” is very controversial. How do they, therefore, have the nerve to force us to pay an enormous bill for it? What kind of democracy is that? But even more to the point, even if it had been proved scientifically, and had been generally accepted, the fact is that we are the most indebted country in the world, per capita, and we do not have $1 billion to throw around on anything that does not affect us urgently. The government claims this spending is “essential” so that Britain can “lead the world” in reducing global greenhouse gas emissions. Why should we lead the world? The fact that the country is bankrupt, and has a substantial budget deficit, does not stop the government from continuing to be arrogant and irresponsible. They do not seem to grasp that the $1 billion that they spend on “Climate Change” had to be borrowed because we did not have it. Everything that we spend on other countries has to be borrowed. We borrow it with one hand, and give it away with the other, and our debt just keeps on growing. Even Cameron and Clegg should understand this.
Worse even than British journalism
The New York Times columnist, Paul Krugman – the Mad Dog of Socialist economics – was on the warpath again recently, attacking “rich” people for not paying enough taxes. I wonder if Mr Krugman is aware of the following two, rather critical facts? 50% of Americans pay no tax at all; the top 5% earning Americans pay 60% of all the taxes. The other 45% of Americans pay the remaining 40% of taxes. One has to ask just how many people who can count would agree with the vaunted Nobel laureate?
An American lawyer who is now in the financial world, Demetri Marchessini lives in London.