Posted by
ROBERT HARKINS on Wednesday, November 04, 2009 12:00:00 AM
THE DEFICIT PIT
By Robert Harkins
What has been will be again, what has
been done will be done again; there is nothing new under the sun. Ecclesiastes
1:9
In 400 B.C., Aristophanes,
in a mockery of Athens’ ruination of its currency, wrote this poem in his play,
The Frogs.
I’ll tell you what I think about the way
This city treats her
soundest men today
By a coincidence more
sad than funny,
Its more 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 copper
In 70 A.D. Flavius
Vespasianus, continued the debasement of the Roman dinarius. The Empire was
broke and as Vespasianus could not safely squeeze more tribute from vassals or
taxes from Roman citizens he embarked upon other means, as old as civilization
itself, the debasement of Rome’s currency, or to say it plainly, imperial
theft. Rome paid its obligations to the citizen and soldier with silver
Dinarius, once worth its weight in silver. When profligate consumption, and the
cost of welfare (bread and circuses), bellicosity and war exceeded Vespasianus’
take in tribute and taxes, Rome paid its debts to citizen and soldier with a
silver dinarius insidiously alloyed with copper. Because the Romans were not
nearly as ignorant as the Emperor thought them to be, the price of all goods
and services rose inversely to the quantity of copper worked into the Dinarius.
From the onset
of the Caesars, from Caesar Augustus in the first century to Diocletion in the
third century, the denarius lost 95% of its value through debasement.
Ultimately, the continuous debasement of the Dinarius impoverished the Roman
people, fatally compromised Rome’s national security, created despair and
cynicism among its citizens, and contributed to the fall of Rome in the fifth
century. Rome did not simply fall;
first, its emperors drove it broke. Byzantium, the last citadel of ancient Rome
survived. However, Byzantium too debased its coin, the Solidus by thinning
extremely the once hefty gold coin. In the years before Byzantium’s collapse,
the solidus was minted so thin that it could be bent in half in the fingers of
one hand.
Today, the
members of the Federal Reserve decree—with an authority as potent and
unchallenged as the imperial authority of a Vespassian, or a Caligula— that the
dollar shall be worth precisely what they say it is worth, no more and no less.
Anne Nelson, in her new book, Red Orchestra,
describes the consequence of Germany’s intentional debasement of its mark, a
practice identical to Federal Reserve policy today in its technological
debasement of the dollar.
By 1923, Germany had
entered its infamous phase of hyperinflation. The government’s presses ran
overtime printing worthless bills, and the value of German currency sank to
over four trillions marks. Millions of citizens lost their life savings.
Pensions accumulated by workers through decades of struggle, vanished
overnight, along with their trust in middle-class values of diligence and
thrift.
The German
government’s printing of worthless marks worked an even greater tragedy than
middle class impoverishment. Hyperinflation created a feeling of
hopelessness, desperation and
fear, a sense of betrayal and cynicism, and in too many an anger that would make them
susceptible to the tortuous National Socialist propaganda that Germany’s defeat
in World War I, was caused by Jews who “stabbed Germany in the back”.
Still, the idea
that the economic destruction of the middle-class was caused by the German
government’s plan to pay off an unconscionable war debt by the printing of
worthless marks was nearly unthinkable.
After all, Germany, notwithstanding the war, existed at the very
pinnacle of modern European civilization. Germany was a leader in the sciences,
in music, poetry, literature and philosophy. Germany was civilized. It simply could not be that the German
leadership would betray and sacrifice its middle class by a means so sordid as
the theft of its citizens’ life savings, retirements earned over decades of
faithful service, and the purchasing power of its remaining marks, all this, by
running the presses until the mark was worthless.
In his book
End The Fed, Congressman Ron Paul marshals
irrefutable evidence that past administrations and in particular, the current
Administration, have used the Federal Reserve to cast Americans into a pit of
national debt so deep that now, the insidious confiscation of American wealth—
by oppressive taxation and the imposition of incalculable deficits including
billions upon billions in payment of deficit interest— may well make of the
national debt, a permanent, exhausting and obscene fixture of the American
economy.
While it would
be unfair to place the blame entirely on the present Administration, it is also
true that in his first ten months of office the President and his party have
incurred a debt that dwarfs the total of national debt incurred since the
Founders met in Philadelphia in 1787
to draft an American Constitution. Included in this count are debts
incurred from two world wars, a Korean and Vietnam war and a burgeoning welfare
state that exists because there is a Federal Reserve to debase the dollar and a
“progressive” ideology willing to use the police power to confiscate against
their will the wealth of American citizens.
Today, however
precarious is the existence of middle class wealth, the Administration
nevertheless has pledged itself to a new and perilous path to social utopia.
The Federal Reserve need not debase the currency with base metals. Now, simply
by the stroking of a computer, the Federal Reserve, unchecked by congressional
authority, may increase the money supply, immediately diminish the worth of
every dollar, eliminate payment of interest on middle class savings, buy time
to service the debt, put in place another bubble, and finally, avoid for a
little while America’s day of reckoning.
Americans,
therefore, have reached the precipice. The question is whether the President’s
proposed cure for a recession caused by bald political and ideological
corruption, a consequent housing bubble, bloated, blue-sky securities and
financial collapse is worse than the disease. The critical question, of course, is what measures must be
immediately taken to reduce the conflagration of national debt? But the
question is not asked. The issue is not debated. Steps have not been and will not be taken. There is no plan
whatever to slow or stop the American citizens’ descent into the pit. Instead, Americans are told by an
Administration that has promised transcendent and purifying change, that
trillion dollar deficits will and must continue for decades, or in other words,
to a time long after this Administration has strut its bleak hour upon the
stage of American government, and passed mercifully into a well deserved
obscurity.
Americans are
told that if the deficit is to be reduced, they must dig themselves deeper into
the pit. They are told that the only means to deal with the debt is to spend
trillions of newly minted dollars on a “stimulus package” and perhaps a second
“stimulus package”, that they must pay hard cash so that others may purchase
new automobiles, all this, so that
unemployment will not exceed 8 percent, and to guarantee that the government will “create or save” three and a half million jobs.
Well, Americans
have heard the promises and seen the results. It is this same Administration
that promises solvency in return for a decade of trillion dollar deficits. Of
course, the Administration will also raise income taxes, capital gains taxes,
estate taxes, fines, penalties, a Health Care Mandate, and by its imposition of
additional Medicaid costs upon the states, insure that the states will also
impose punitive income taxes on Americans.
Americans are
assured that while every government scheme to provide free medical care to the
masses, Medicare, the Medicare Supplement Plan, Medicaid and the Massachusetts
Plan, are now pitifully bankrupt, and rife with fraud and waste in the
billions, Americans are once again assured— that by the infusion of trillions
of debased dollars into the economy over the course of a decade or more—
Americans will at last ascend from the deficit pit. They will— by the mindless embracement of repetitious
oratorical platitudes and the addition of base metals to the American coin—
become again an affluent society.
The question
should be asked: how will these trillions in debt be paid? What federal
programs will be trashed? What sacrifice
and austerities will government impose on itself? What taxes will it
forgo? Will it substantially reduce federal salaries so that they are equal to
the salaries that taxpayers earn? Will it abolish the yearly $350 billion
dollars in taxes it will squeeze out of the private sector in the name of Cap
and Trade? To these questions alas, elegance fails and only crude words are
capable of telling the raw truth. Here finally and at last, as it is revealed
to Americans, in deficits and sophistry, in plain and transparent
mendacity, is the change promised
in 2008.
Still it is good
that we Americans will finally learn something about imperial theft: as did
Athens during the life of Aristophanes when they discovered their drachmas were
“…full of shoddy silver-plated copper;” as did the Romans when they too
discovered that their pure silver dinarius was corrupt with worthless copper;
as did the citizens of Byzantium when paid in a solidus minted so thin they
could bend it in the fingers of one hand; and finally as did the German people
when confronted with the truth that the national impoverishment of the German
people was a cornerstone of German government policy.
Well Americans,
whither the dollar?
And what is to
be done?
This
Administration has promised Americans something new.
But there is
nothing new under the sun.
What do you think?