Who Will Be Allowed to Die: Granny or the Economy

Gary North (www.garynorth.com), June 18, 2020

The Wall Street Journal ran an article about coronavirus deaths. It reported that of 116,000 fatalities from the coronavirus, about 50,000 of these were residents of nursing homes.

This means that 43 governors shut down their states’ economies and wiped out the jobs of at least 20 million Americans and maybe 30 million in order to save the lives of 50,000 people who were going to die anyway within a couple of years.

Of course, nobody puts it this way. That’s the way I put it.

Granny was going to die anyway. She and her 49,999 peers were not in the economy. Their departure from this mortal coil did not leave any economic evidence of the fact that they left. It would’ve been noise.

Pandemics kill people. They especially kill old people who were going to die anyway. It kills them a little earlier.

America was sent into a frenzy by epidemiologists and virologists who said that this pandemic was going to kill tens of millions of people, or it might not, but we need more testing, which we never got, because we don’t really know, so lockdown the economy.

The 43 governors took away our freedoms. They confined people in their homes. They destroyed tens of thousands of businesses. Congress then responded by a $2.3 trillion bailout. It’s going to spend another trillion dollars, and maybe even more. The economy has suffered the worst setback since the Great Depression. For what? The lockdowns didn’t do the 50,000 residents any good. They died anyway. Maybe the lockdowns saved another 25,000. Nobody knows. Nobody will ever know.

So far, politicians have wiped out the economy in order to save people who were in nursing homes. But 66,000+ have died anyway. The worst of the pandemic seems to be behind us, although it may flare up again. But, for now, it’s about 1,000 people a day who die from it. That’s a lot of people, but people die for many reasons. We don’t know how many will die if the economy is completely opened up. We are not going to find out, for this reason: the economy is not going to be opened up to where it was in February. It is going to stay partially locked down for the rest of the year, probably most of the next year, and maybe permanently. We don’t know.

We also are not told how many of the 66,000 dead who were not in nursing homes were above age 65. Most old people aren’t in nursing homes. They are walking around. Anyway, they used to be walking around. Then they were locked down. My guess is that if the study that revealed that 50,000 residents of nursing homes died also covers the ages of those who died who were not in nursing homes, the results would show that an abnormally high percentage were over 65. Now they won’t have to go to nursing homes. Their families will be able to save the money. That has to be worth something to the overall economy. But, of course, no governor is going to go public with this assessment. It is not politically correct. Too many old people vote.

What we do know is this: the pandemic has been a minor affair statistically. It was nothing compared to the pandemic of 1918. What is not a minor affair is locking down the American population. Tens of millions of Americans have lost their source of income. They are kept on the dole by the new American welfare state. There are locked in their homes, and governments are paying them money that governments don’t have to keep them in their homes.

The economic absurdity of all this should be obvious. The pandemic threatened mainly granny, and granny kicked the bucket anyway. So did 50,000 of her peers. I would call that a failed policy.


The policies remain partially in force. If there is a resurgence of the coronavirus, will the American population allow another series of lockdowns? I don’t think so. I think any governor that attempts it is not going to be reelected this fall if he is on the ballot. I think Americans have had enough. I could be wrong. But the voters do have the ability to get even. Governors are aware of this.

The voters are now in a better position to do a cost-benefit analysis. The economic cost of a return of the lockdowns will be horrendous. The cost of doing nothing will be bad for granny and her friends in the nursing homes, but the prognosis for them is bad anyway. They are not long for this world. That’s why they are in nursing homes.

The chief fatality of the coronavirus has been the idea of a balanced federal budget. That idea was in the intensive care unit before the coronavirus hit. It is now on a ventilator. Its next stop is the morgue.

When The Treasuries Are Empty

Gary North  (www.garynorth.com) – November 19, 2015

The secular world today is religiously committed to pragmatism. If something “works,” meaning survives for over a decade, then it is considered valid until it subsequently fails. The trouble is, some policies take over a century to fail. Witness the collapse of the public education system in England and the United States. Witness the collapse of the so-called Social Gospel. It takes a long, long time to convince pragmatic secularists, who believe in the substitute god of the State, that their god has failed. Even with disintegration all around them, the secularists will not abandon government-financed educational institutions. If anything, they want to increase the monopoly by stamping out all private education, either directly or through licensing and certification. They refuse to learn precisely because they are not neutral observers; they are religiously committed to secular humanism, and they cloak this religious commitment in the language of pragmatism.

What will it take for the scholars, bureaucrats, and politicians to abandon the present system? Collapse. Total, unmistakable, universal bankruptcy is the price of their education. This is not to say that a majority of present-day Keynesian apologists will actually abandon their present principles. It is to say that they will find it far more difficult to get anyone to listen to them, finance them, or put more of their visibly disastrous programs into effect. In short, in the long run, Keynesians are all dead. They will be forcibly retired from public “service.” They will go away muttering to themselves that things would have been all right if politicians, consumer, voters, and speculators had only imposed more Keynesianism. But no one will be listening.

What is far more significant is the attitude of the general public. The average voter knows nothing about economic theory. He is a Keynesian by default. He likes free lunches. He likes all the talk about depressions being impossible today. He likes to live in a world of government-guaranteed security. What he is living in is a world of government slogans. When the treasuries are empty in the various socialist states throughout the world, or the money is worthless, men will no longer be able to rely on government slogans. The calorie content of slogans is remarkably low.

What then? Will he abandon his false slogans for valid principles, like those Prof. Sennholz outlines? Will he accept a very basic principle, namely, that no man has the right to confiscate another man’s wealth for his own benefit, or the benefit of those whose favor he is courting? You don’t need graphs and equations to make a decision concerning the legitimacy of ballot-box plunder. You don’t need a course in econometrics to get your hand out of your neighbor’s wallet.

An effective course in practical ethics is coming. This “refresher course” will be analogous to the one promised to Israel by the prophets. It will make a strong impression on the minds of the students in question. The trouble is, we cannot be sure about the lesson that the public will learn. Will it be the lesson learned by the British in the mid-1800’s, when rising grain prices finally called attention to the fact that quotas on grain imports were hurting the public? Will we see some new pair of Cobdens and Brights coming to the forefront with the message of free trade? Will the conservative, independent clergy support the hoped-for pair the way that they did in the 1840’s? Will we see, as they did in Britain, a one-generation roll-back of the regulatory legislation that had kept the British economy in a straight-jacket? Or will we see the coming of the Age of the Caesars, the men on the white horse, who come in the name of political order? Will it be a new Napoleon?

This is why serious Christians must get involved in political economy. Political economy will be the battlefield of the early decades of the next century. Political economy will be the arena of confrontation between humanism and orthodoxy. If Christians today succeed in rethinking the crucial questions of the State and its role, then there will be a foundation of Christian ethics which will serve society well. But if the present-day trend of pietism, with its head-in-the-sand, pie-in-the-sky theology, continues to dominate the churches, then there will be no immediate confrontation. The “new, improved humanism” of the would-be Caesars will go without a direct challenge.

My opinion is this: there will be no rethinking of either pietism or Keynesianism until the consequences of both are painfully apparent. There will be no felt need for creating alternatives, both theoretical and practical, until the pragmatism of both pietism and Keynesianism is forever smashed. The pietists are pragmatists, too. They think you can exist equally well as a Christian under any economic system, so it really is not the place of Christians to offer concrete alternatives to any particular economic system. (Marxian Communism is understood as an evil, but not primarily because of its economics; its atheism and persecution are the evils to be removed, with democratic socialism. or free enterprise. or guild socialism, or cosmonomic mysticism as equally acceptable alternatives.) Christianity is seen as something totally separate from specific economic principles, so all economic systems “work” equally well for Christians. This is the ultimate pragmatism: everything works.

Both pragmatisms are united on one point: there is no such thing as Christian economics. The Keynesian pragmatist insists that there is only good economics or bad economics, but all economics is morally and theologically neutral. What he really means is this: Christian economics is, by definition, flawed because it is revelational and not neutral. Therefore, Christian economics is bad (non-) economics. In contrast, the pietist pragmatist insists that there is no economics at all. Good economics, bad economics, and in-between economics are all of one piece, namely, irrelevant to spiritual concerns. There is good and bad in all economics, meaning there is no way to determine the good from the bad and reduce the element of evil in bad economic systems. The Bible does not speak to the question of economics, it is argued, so we cannot really be sure what is good or bad in any economic arrangement. In short, everything works, meaning everything fails. The Christian is to be above it all on some higher, spiritual plane.

When the treasuries are empty, the public will get a glimpse of the reality of truly bad economics. At that point, who will offer the public an alternative? Will it be the Marxists? Will it be the anarchists? Will it be the guild socialists? Will it be the Bible-believing covenantal economists? Obviously, it will not be the defeated Keynesians. It will not be the pietists. So who will pick up the pieces? Or more to the point, in your local community, who will pick up the pieces?

My feeling is that in each local community, different people will be influential. Different working arrangements will be discovered. Most of these discoveries will be based on reaction: how to avoid the immediately preceding disaster? A sort of trial-and-error process of experimentation will take place in thousands of local regions. I do not believe that any central government can impose its will over every nook and cranny of a nation. There will be pockets of resistance to socialism in local communities and inside big cities (fraternal groups. churches. secret societies. etc.). This is why it is absolutely crucial to train up a small cadre of informed people in each local community. The world will be crying for leadership, and orthodoxy must provide it. But to be realistic, we have to say that orthodoxy will not immediately step forward with a fully developed, generally agreed-upon alternative to the empty treasuries of Keynesianism. It will be a long, slow process of education.

We know where the leadership will not come from. It will not come from the nation’s conservative seminaries. They are normally controlled by administrators who are, at best, committed to pietistic pragmatism. The Calvinist seminaries are headed by men who are in some cases committed to political liberalism (“we must be relevant”) and theological conservatism. The Roman Catholic seminaries are so few and far between, and so divided theologically and politically, that no one can guess what will come forth, but one thing looks certain: not many celibate, traditional priests will. The liberal seminaries are a dying lot anyway, and the public will not be interested in baptized Keynesianism by then. (Baptized Marxism may be a problem, however.)

We know that the leadership will not come from the struggling, schizophrenic Christian colleges, with their secular textbooks, their divided faculties, and their pitiful libraries. They will, as always, play follow-the-leader. They will, as always, play it safe. They may, God willing, go bankrupt. So it is up to local congregations, local Christian day-schools, independent publishing houses, and other local Christian voluntary organizations to create the necessary leadership in each community. A local church which is not systematically training its members to take principled leadership in a time of crisis is little more than a pleasant social club. Social clubs have a place in society, but they are not much good for Christian reconstruction. When times get tough, churches will either change, finally becoming relevant, or die.


Biblical Economics Today Vol. 1, No. 3 (June/July, 1978)

Why Pay Equality Is Irrational, Criminal, And A Job Killer

The USA women’s soccer team won the World Cup. Now they want to be paid what male soccer players are paid. Women’s soccer and basketball don’t draw the same crowds, interest, and money that the men’s teams do.

The total prize money for the women’s 2019 World Cup was $30 million, with the champion taking away about $4 million. The total for the men’s 2018 World Cup was $400 million, with the champions winning $38 million.

This seems blatantly unfair until you take into account the vastly different viewership and revenue from the two events. FIFA raked in more than $6 billion from the 2018 men’s World Cup. The women’s 2019 World Cup has been projected, when all is said and done, to make about $130 million.

The women’s tournament this year may have garnered about a billion viewers across all platforms, nothing to sneeze at, but the 2018 men’s World Cup had more than a billion viewers just for the final game.

Men’s soccer brings in more than 40 times as much revenue as well as much higher ratings and viewership. “People seem confused about World Cup pay. Each team gets paid from a total pot.” In the end, it’s about how much money is in the pot. In terms of percentages, it looks like men “men get paid less than women in proportion to the funds generated by the respective tournaments.”

If the women get their way, it won’t be long before biological women soccer players are replaced with transgender women, men masquerading as women, like this one:

Did you know that eight members of Iran’s women’s soccer team are men who “are awaiting sex change surgery”? (Breitbart)

Liberals have been pushing “pay equality” laws for some time. Many of them are already in effect. Pay equity would require employers to pay women what men receive if their educational standards, work experience, and time on the job are equal. “Equal pay for equal work,” as the saying goes.

“Pay equity” is similar to the minimum wage. No matter a person’s skill level or experience, minimum wage laws require that every worker gets paid at least so much.

All of this sounds good on the surface. Why shouldn’t someone with the same skills, education, and experience get paid the same?

First, it’s no business of the government how much an employer pays anyone. If I want to pay someone a dollar an hour, I should be permitted to do so. Will I get anyone to work for a dollar an hour? Probably not. Not even my grandchildren will work for a dollar an hour.

Second, it shouldn’t matter to the government who I employ. It’s my company. I’m taking the risk. I’m paying the bills. If I want to discriminate, I should be allowed to do so.

Third, if a person, man or woman, is getting paid less for doing comparable work, then the simple thing to do is to go to the employer and ask for a raise. If the employer says no, the employee has three options, (1) stay put with the same salary at the same job, (2) look for a new job, or (3) start a new business. Maybe the employer can do better with a new employee and won’t have any problem if you quit. Maybe you are indispensable and making the company a lot of money. In that case, you might get the raise. There is, of course, the third option: Go out on your own and start your own company and pay yourself and your own employees what you believe is equitable.

Fourth, pay inequity as it is presented by (mostly) feminists is a myth. Men and women choose different career paths for a variety of reasons. Many women want flexibility in their jobs so they can have children. They might drop out of the workforce for a time in order to raise children. Some women chose jobs that give them more freedom in their career paths because of family considerations. This is one of the reasons there is “pay disparity” between men and women. Some jobs are just harder for women to do no matter how “equal” men and women work at the same job.

Fifth, once the government gets involved in determining what’s “fair,” the trial lawyers will have a field day.  We already have the EEOC making it difficult for employers on the issue of “discrimination” in terms of sex, handicap, religion, etc. We don’t need any more government intrusion.

One last point, women are making their way as entrepreneurs. The rise of female-owned businesses may be the result of past discrimination, but it’s most likely related to the fact that women got their training in mostly male-dominated companies, learned what they needed to know, started businesses that became attractive to investors who saw ways they could make money. Consider this from an article that appeared in USA Today (June 5, 2012):

[A]n emerging class of early-stage tech start-up executives is helping dispel the notion that there isn’t a leading role for them in the male-dominated valley. Company founders and leaders are coming out of Google, Salesforce.com and elsewhere for the excitement of shaping a young business.

This is being done without the help of “pay equity” laws. Government … keep out!

What are Socialism’s Dirty Secrets that must be Kept from America’s Youth?

By Thomas DiLorenzo, (The Ron Paul liberty Report), 20th March, 2019

  1. Socialism has always and everywhere been an economic disaster, and every honest scholar knows this. After seventy years of socialism, the Soviet economy was barely 5% of the U.S. economy, despite the false assertions of pro-socialist economists like Paul Samuelson, who wrote in the 1988 edition of his famous textbook that the Soviet economy would exceed the U.S. economy by the year 2000.
  2. You cannot fix socialism with smarter government planners or plans. Socialism cannot work because the rational economic calculation is impossible without private property, free-market prices, the profit-and-loss market feedback mechanism, and economic freedom in general.
  3. The ostensible goal of socialism – egalitarianism – is at war with human nature because all human beings are unique in thousands of different ways. The only kind of “equality” that socialism has ever created is equality of misery and poverty.
  4. Socialism generates far more societal inequality than economic freedom does. In all socialist societies the politically-connected elite live lives of luxury while nearly everyone else is equally impoverished.  In democratic socialist Venezuela today the economy has been ruined by socialism while the daughter of the late Hugo Chavez, the father of Venezuelan socialism, is reportedly worth $4.5 billion.
  5. The worst kind of people – the most immoral, corrupt, cynical, uncaring, and brutal – rise to the top under socialism because socialism is all about forcing people to abandon their own plans for their own lives and complying with mandatory government plans instead. It is no accident, in other words, that socialism is associated with such violent thugs as Stalin, Hitler, Mussolini, and Mao.
  6. Fascism was just another variety of socialism. The word “Nazi” was an acronym for national socialism. The German socialists distinguished themselves from the Russian socialists by calling their variety of socialism “national” as opposed to “international.” 
  7. It is a myth that Scandinavian socialism has been successful. Swedish capitalism was extremely successful in the late nineteenth and early twentieth centuries.  The Swedes began living off of the fruits of capitalist prosperity by adopting a version of democratic socialism in the 1950s.  As a result, there was not a single net new job created there from 1955 to 1995.
  8. Nineteenth-century socialism was “government ownership of the means of production,” but it now includes the welfare state progressive income taxation and the strangulation of capitalism with regulation and taxation. The welfare state has destroyed the work ethic of millions; destroyed millions of families; caused a 400% increase in out-of-wedlock births in America since 1960; and transformed millions into lifelong beggars and wards of the state.
  9. Government-run healthcare systems – medical care socialism – is like all other government enterprises in that it operates with all the efficiency of the Post Office or Department of Motor Vehicles and all the compassion of the IRS. Anything as important as medical care should never be put in the hands of politicians and bureaucrats.
  10. The worse pollution problems on the planet for the past century or more have been in the socialist countries, as documented by books with titles like Ecocide in the USSR.  After the collapse of socialism the world learned that, in addition to being economic basket cases, socialist countries were also ecological cesspools.

Two Simple Questions That Keynesians Prefer Not to Answer

Gary North (www.garynorth.com), February 20, 2019

Let us say that a carpenter wishes to cut fifty boards for the purpose of laying the floor of a house. He has marked his boards. He has set his saw. He begins at one end of the mark on the board. But he does not know that his seven-year old son has tampered with the saw and changed its set. The result is that every board he saws is cut slantwise and thus unusable because [the board is] too short except at the point where the saw first made its contact with the wood. As long as the set of the saw is not changed, the result will always be the same. Cornelius Van Til

I first read this in the summer of 1963. I spent the academic year 1963/64 studying under Dr. Van Til. I have never forgotten this analogy. Just as a sharp buzz saw cannot cut straight if it is set at a crooked angle, sharp people cannot think straight if they are set at a crooked angle. You can sharpen a crooked buzz saw ever so precisely. It will still not cut straight. The same is true of intellectual defenders of obvious nonsense. This analogy has served me well ever since.

Over the years, I have become convinced about just how well this analogy applies to Keynesians.

Keynesians have above-average IQs. Sometimes they are mathematically skilled. They graduate from institutions of higher learning with advanced degrees. Yet becoming a Keynesian intellectually incapacitates the person who has chosen this intellectual career path. He must become a defender of obvious nonsense. The more rigorously that a Keynesian trains himself to defend the system, the more crooked he cuts, conceptually speaking.


John Maynard Keynes offered only one central idea: Government spending overcomes recessions by increasing consumption. This was an ancient error in 1936, the year that The General Theory was published. He dressed up this ancient error with incoherent jargon. His disciples then added irrelevant equations and superfluous graphs.

Keynes never bothered to deal with this crucial question: “Where does the government get the money that it spends into the economy?” This remains the crucial question that Keynesians need to answer. Yet for all of their equations, for all of their incomprehensible jargon, and for all of their rhetoric, they never face this question.

It is such a simple question. It has a simple answer. A government can obtain money from only three sources: taxation, lending, and monetary inflation. There are no other sources.

National governments run massive deficits most of the time. They certainly run massive deficits in depressions and recessions. So, they do not get all of their income from taxation. If they did, they would not run deficits. Keynesians understand that raising taxes in a recession would depress the economy. So, Keynesian policy-makers recommend that the national government borrow money. From whom? Either from the private sector or the central bank.

To believe that government borrowing increases wealth is to believe that politicians and salaried bureaucrats are wiser spenders than money-owners are — people who invest their own money. This is a universal belief among Keynesians. They trust the short-term economic judgment of people with no skin in the game. They trust people who spend other people’s money.

In short, they trust people like themselves: salaried anonymous bureaucrats who are immune from public scrutiny. They cannot be fired because of the failure of their recommendations.

I prefer to trust the free market, which is guided by competitive monetary bids of people with skin in the game. If they guess wrong, they lose money — their own money, not yours and mine.

What about you? Which system do you trust?


Here is an obvious question that free market economists should ask Keynesians directly, but they never do: “What would the lender who lends money to the government have done with his money had he not lent to the government?” It is a simple question. It has an obvious answer: he would have invested it. The lender was not going to use his money on consumer goods. He owns lots of goods. He does not need lots more goods.

Furthermore, people in a recession cut back on their consumer spending. This is true of rich people, upper-middle-class people, middle-class people, lower-middle-class people and even poor people. Rich people see investment opportunities: capital goods selling at fire-sale prices. The rest of the population gets scared. So, most people put their money in the bank. What does the bank do with the money? It does not put it in a vault, drawing no interest. It buys investment assets. It may make loans to consumers, but consumers tend to be frightened in recessions. They cut back on debt. Maybe a bank makes loans to consumers who want immediate spending, and therefore who run up their credit card debt at high rates. But, as a group, they borrow too little to make a difference for the overall economy. There are not that many of them.

The Pareto 20/80 distribution curve of wealth tells us that the vast majority of any nation’s wealth, approaching 80%, is owned by the top 20% of citizens. This was true when Vilfredo Pareto made the discovery in the 1890’s, and it remains true today.

Most productivity comes from about 20% of the population. Therefore, most of a nation’s wealth is owned by this same group. Most of a nation’s income is directed into the bank accounts of this same group. This should come as no surprise. The reason for this was explained over two centuries ago by J. B. Say in his famous law: “Production creates its own demand [assuming no government-enforced price floors].” Keynes, more than any other economist, rejected Say’s law. The General Theory is an incoherent tirade against Say’s law.

The General Theory really is incoherent. If you don’t believe me, try to read it. This is why it is rarely quoted except by critics who cannot resist quoting obvious nonsense. No one cites Keynes verbatim in order to win an argument. That is because you can’t win an argument by citing incoherent jargon and obvious nonsense.

The man who persuaded the academic world to adopt Keynesianism was not Keynes; it was Paul Samuelson. This began in 1948, when his lower-division college textbook, Economics, was first issued. It has never been out of print. Every edition from 1961 to 1976 sold about 300,000 copies. It is in its 19th edition. It has been the most successful college-level textbook in history. It made Samuelson a multimillionaire from book royalties. It was Samuelson, not Keynes, who became the pied piper of classroom economics. But he was a reverse pied piper. He did not lead the plague-infected conceptual rats out of the afflicted community. He led them in from impoverished villages across the mountains.

Here was Samuelson’s assessment of impact of The General Theory. He wrote a laudatory essay in 1946, which was published in the arcane journal, Econometrica. He wrote clearly and forthrightly, which has never been Econometrica‘s style.

Herein lies the secret of the General Theory. It is a badly written book, poorly organized; any layman who, beguiled by the author’s previous reputation, bought the book was cheated of his five shillings. It is not well suited for classroom use. It is arrogant, bad-tempered, polemical, and not overly generous in its acknowledgments. It abounds in mares’ nests or confusions. In it the Keynesian system stands out indistinctly, as if the author were hardly aware of its existence or cognizant of its properties; and certainly he is at his worst when expounding its relations to its predecessors. Flashes of insight and intuition intersperse tedious algebra. An awkward definition suddenly gives way to an unforgettable cadenza. When finally mastered, its analysis is found to be obvious and at the same time new. In short, it is a work of genius.

It was not a work of genius. It was a work of conceptual self-deception. It was defended with verbal incoherence. It was Samuelson’s self-appointed task to try to make a silk purse out of this sow’s ear. He persuaded three generations of academic economists that they have wisely (and profitably) devoted their lives to promoting massive government debt that cannot be paid off and will not be paid off.

Ludwig von Mises correctly characterized Keynesian economics in 1948, the year of Samuelson’s textbook: the economics of stones into bread.


You don’t have to have an IQ above 100 to be able to torpedo Keynesianism. You just ask these questions.

1. “Where did the money come from that the government spends into circulation?”

2. If the government runs a deficit, which is what Keynesians recommend in recessions, it did not get all of its money through tax revenues. “Did the borrowed money come from private lenders or from the central bank?”

3. “If the money came from private lenders, what would the lenders have done with their money if they had not loaned it to the government?”

4. If the money did not come from private lenders, then it must have come from the central bank. “How does money created out of nothing create wealth?”

These are really two questions. (1) “What would lenders to the government have done with their money if the government had not offered the promise of guaranteed repayment?” That money would have been spent either on consumption or production. This raises a second question: (2) “Why would either of these options be worse for the economy than spending by government bureaucrats?”

To understand the fallacies of Keynes, you don’t need to understand equations, graphs, and jargon. You just need the ability to follow an argument based on this principle: there is no such thing as a free lunch. Put differently, you cannot get bread out of stones.

Keynesian economists are not skilled in the use of logic, let alone responding coherently to it. They are trained from their Economics 1 course until the day they retire from college teaching not to reason from obvious premises to economic conclusions. They get no tenure consideration for arguing coherently without equations and graphs. They are probably going to be penalized if they attempt to do this. Graduate students in economics learned this fact of academic life no later than their senior year in college. If they did not learn it, their grades would not have been sufficiently high to get them into grad school.


Keynes became famous for his criticism of thrift. What he criticized was thrift in the private sector. Thrift was great as far as he was concerned if the thrifty person bought government bonds, and the government then spent the money on anything. You think I exaggerate? Here is a direct quote from Keynes’ General Theory.

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing”( p. 129).

Here is what he wrote on page 220.

In so far as millionaires find their satisfaction in building mighty mansions to contain their bodies went to live in pyramids to shelter them after death, or, repenting of their sins, erect cathedrals in and down monasteries or foreign missions, the day when abundance of capital will interfere with abundance of output may be postponed. Quote to dig holes in the ground, unquote paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services.

Notice that he did not call for millionaires to invest. He called on them to spend. He did not ask them to direct their money toward production: he directed them to spend their money as fast as possible. It is spending by millionaires on consumption, not the savings of millionaires for future consumption by others, that is the key to wealth creation in the mental universe of Keynes and his disciples.

Keynes called on governments to spend on public pyramids and burying bottles of money because he did not trust the millionaires to keep spending on mansions and their own personal pyramids. He knew they would invest in capital goods. He attacked the idea that millionaires could benefit the economy by saving and investing in the private sector. His book is dedicated to a refutation of investing during a recession. The entire Keynesian movement, which dominates academia and policy-making today, rests on this intellectual premise: “Consume, don’t invest, during recessions.”

Why would millionaires trust the government with their money? Because the government promises to guarantee the return of their money. But why should millionaires believe this promise? Because governments back up this promise with the threat of violence. Governments have the power to send tax collectors into people’s homes and stick guns in their bellies. “Hand over your money,” says the man with a badge. Governments come before millionaires and say this: “We sell promises to return your money. We can guarantee this because we have the power of taxation. Therefore, you can be certain that you will get your money back. You have our word. What’s not to trust?”


Keynes was the defender of present-orientation. He was the defender of “consumption now.” He was, in this sense, a defender of lower-class economics. Edward Banfield, a Harvard political theorist in the late 1960’s, wrote a section on lower-class and upper-class attitudes in his book, The Unheavenly City (1968). He identified lower-class thinking as present-oriented. The lower-class person thinks little about the future. Lower-class people want to consume now. They borrow at high interest rates in order to get this consumption. Upper-class individuals are the opposite. Keynesian economics is a defense of lower-class economics.

Anti-Keynesian economists in universities dare not use this kind of rhetoric against Keynes and Keynesians. They would not get tenure if they used it early in their careers. They would not be published in mainstream, tenure-generating academic journals. They would become pariahs. Fortunately, I am not part of academia. So, I can call a spade a spade. Keynesianism really is best encapsulated in the famous phrase by Keynes: “In the long run, we are all dead.” In the meantime, Keynesians give this advice to politicians: “Borrow and spend, inflate and spend, monetize government debt, and never pay it off.”

Keynesian economics is the economics of debt-addicted, lower-class spendthrifts: modern governments.

Keynesians are apostles of big government. In his concluding remarks in his 1946 article on Keynes, Samuelson wrote:

With respect to the level of total purchasing power and employment, Keynes denies that there is an invisible hand channeling the self-centered action of each individual to the social optimum. This is the sum and substance of his heresy. Again and again through his writings there is to be found the figure of speech that what is needed are certain “rules of the road” and governmental actions, which will benefit everybody, but which nobody by himself is motivated to establish or follow. Left to themselves during depression, people will try to save and only end up lowering society’s level of capital formation and saving; during an inflation, apparent self-interest leads everyone to action which only aggravates the malignant upward spiral.

The message is clear. “Left to themselves,” people cannot be trusted with their own money. That would mean resource allocation by the metaphorical invisible hand of the market’s process of voluntary exchange. Keynesians prefer to trust the economy to the palsied hands of tenured bureaucrats and the grasping hands of elected politicians, who want access to other people’s money in order to buy votes from special-interest groups.

I would rather live in an economy governed by the invisible hand of the free market than in an economy governed by the palsied hands of government bureaucrats and the grasping hands of politicians. I would rather live in an economy in which customers are in authority rather than politicians and bureaucrats. Customers spend their own money. Politicians and bureaucrats want to spend my money. I resent this. I can spend my money more wisely than politicians and bureaucrats can. Keynes did not believe this. Neither did Samuelson.

The free market economy is governed by the sanctions of profit and loss. The Keynesian economy is governed by the sanctions of badges and guns. I recommend the former: greater personal liberty and greater per capita wealth.


Keynesian economics is counter-intuitive. It was answered, line by line, by Henry Hazlitt in his coherent and devastating critique of Keynes: The Failure of the “New Economics.” It was published in 1959. It sank without a trace. Why? Because it was hostile to the prevailing climate of academic opinion. Also, it was easy to read. That is always out of fashion in academia. Fortunately, it is available today from the Ludwig von Mises Institute. You can even download it for free. It is 450 pages long. Yet even Hazlitt, for all of his penetrating insights written in the vernacular and devoid of equations and graphs, did not boil down his critique into two simple questions.

This is odd. The heart of his classic book on economics, Economics in One Lesson (1946), was this insight: the fallacy of the thing not seen. The book calls on readers to ask this question: “What would property owners have done with their money if they had not suffered violence?” This is the question that undergirds my two questions.

1. “What would lenders to the government have done with their money if the government had not offered the promise of guaranteed repayment?”

2. “Why would this have been worse for the economy than spending by government bureaucrats?”

Keynesians never answer these two questions in anything resembling common language. That is because they cannot answer it this way without sounding ridiculous.

Keynesianism is a long parade of would-be emperors without clothes. They attempt to cover their conceptual nudity with academic fig leaves: equations, graphs, and jargon. This was Keynes’ strategy. It was also Paul Samuelson’s.

These men are the wizard of Oz. They are, collectively, the man behind the curtain.

Call me Toto.

Toto did not complete the procedure. Pulling back the curtain was step one. He should have completed the procedure by lifting his leg on the wizard. That is what humbugs deserve whenever they impose economic quackery with deception backed by government power.

In the movie, the now-unemployed wizard departed from Oz by ascending in a hot-air balloon. The junior wizards of Keynesian economics will not find their departure so easy. They hold their tenured positions in governments and universities, isolated and secure from downturns in private labor markets. But the day is coming when governments around the world are going to default on their economic promises to the voters. Keynesians will be called upon by politicians to provide justifications for this default, and also provide explanations showing why it is not really the governments’ fault. It is the free market’s fault. When they attempt to fulfill their role in public affairs as court prophets, defending massive government failure in the name of Keynes, they will be seen by the enraged public as intellectual laughingstocks and charlatans. They have always been charlatans. They should have been laughingstocks. I recommend patience. The day of fiscal reckoning draweth nigh.

Count Your Capitalist Blessings

By Gary North (www.garynorth.com) – December 15, 2018

I challenge you to a contest.

I’m working on a high school home school curriculum. I want to produce a list of blessings that the West has enjoyed. Then I plan to show them how most of these blessings have come from free market capitalism.

I have prepared a list of blessings that are enjoyed by residents of capitalist societies, but especially countries in which English is most people’s first language. Read my list. See what I’ve left out. Then compile a list of your own.


The industrial revolution began in Great Britain sometime after 1750 but before 1800. Historians disagree about how this happened, just as they disagree about how everything else has happened. But the fact that it did happen, and happened first in Great Britain, is undisputed.

Children grow up accepting their blessings as part of their environment. They give little thought to this. They assume their environment’s existence, even when it is something analogous to a miracle. I want to go from what is common to what has not been common that made it possible: liberty.

Think of the light switch and all that it represents. Think of all that came together to make it possible. Electricity has done more to equalize the races and the sexes than all the equal opportunity legislation ever has.

Half a century ago, before rock & roll took over the airwaves, there was a hit song, “Count Your Blessings Instead of Sheep.” It was a sappy song. Yet I can still remember the opening lines:

When I’m worried and I can’t sleep
I count my blessings instead of sheep.
Then I fall asleep, counting my blessings.

It was written by the most successful of all popular music writers, Irving Berlin, who surely had a lot of blessings to count, including living to age 101.

Today, Prozac is the drug of choice for tens of millions of Americans. Psychological depression has become a pandemic. Yet we live in a world that is so much more physically comfortable and so much more productive than the one in which I grew up, let alone when my parents grew up.

Our bodies are pampered by our economic environment. We pay for this with our stomachs.

Something is seriously wrong. But it’s not the economy.

Every once in a while, we need a reality check: an inventory of blessings that even the federal government has been unable to take away, despite its efforts to make things better for us by removing our liberties, one by one. (On this freedom-hijacking process, read any book by James Bovard.)

So, let’s go through a list of blessings. We tend to assume that they are normal. They are abnormal beyond all human forecasts, 1750 or earlier.


Anesthetics (post-1843).


Infant mortality is low. Children usually bury their parents. Two centuries ago, the mortality rate was 50%, except in North America: half would die before adulthood.

We are approaching age 80 as the life expectancy at birth. Women live longer than men, but life expectancy for both sexes is rising.

Medical technology for operations is improving constantly. We can still select our own physicians in the United States. Alternative health care is plentiful.

Soap is cheap. Refrigeration is cheap. Food doesn’t spoil.

Food is cheap, especially the basics that keep us alive. Famines don’t happen, except in war-torn sub-Sahara Africa.


Economic growth means that we can accomplish more with whatever amount of money or assets that we possess.

Economic growth compounds in the West at about 2.5% per annum. At 2.5%, wealth doubles every 29 years. Over a 250-year period, this means over a 250-fold increase. Then, 29 years later, a 500-fold increase. Then, 29 years later, a 1000-fold increase. Wealth gets big, fast, as time passes.

We live better than our parents did. They lived better than their parents did.

As more societies adopt capitalism, the division of labor increases, increasing productivity.

The whole world is now adopting capitalism.

People can remain productive longer than ever before.

Tools make our work either easier or more productive.


Phone calls are cheap, and getting cheaper. On the Web, they are free.

Email is free.

Computers talk to each other cheap, lowering all costs.

Cell phones are almost universal. This took 15 years.

The Internet lets anyone become a publisher.

The Web is a 4 billion-page free encyclopedia.

Google lets us find what we are looking for (usually).

Politicians can’t hide anything for very long.

Political resistance is cheaper than ever.


Private education is spreading: home schools, day schools.

CD-ROM technology lets anyone become a curriculum publisher.

Library catalogues are easily accessed by anyone on-line.

Walk into any university library, free, and access all the books in the library, plus the college-students-only Internet library of journals, which is huge. In 1850, a large college library was 20,000 books. A typical university library today is 500,000 volumes. Harvard has 13 million.

The Web makes distance education easy, which makes earning a college degree much cheaper.

The Massachusetts Institute of Technology (MIT) has put its courses on-line, free of charge. This is the wave of the future.

Books are cheap and available everywhere, including Amazon.

Publications are highly specialized, for every profession.

English is becoming the world’s second language. English is the premier language of business, finance, and scholarship. This is great for consumers who speak English.


Plane fares keep falling as competition increases.

Cars are universal. Poor people can afford used cars.

The highway system is huge.

U-Haul and its competitors have wiped out the moving van oligopoly. People can afford to move to places with greater opportunity. The cost of delivering goods is falling. This lowers prices: the Wal-Mart phenomenon.


More square feet per home each generation. Separate bedrooms are universal. Indoor plumbing is universal.

Mortgages are common: wider home ownership. Bug-free housing, almost. Heating with fuel makes wood-chopping obsolete. Air conditioning has made Phoenix larger than Philadelphia.

Mass production of housing has made suburbs possible: housing comfort available only to the rich in 1850. Most people have a lawn and flowers: the unfulfilled dream of slum dwellers, which were most people, in 1850.


Electricity has delivered most of us from physically hard labor. Clean water is cheap and abundant. Water-spread diseases have disappeared. Population growth is now possible.


Human labor is the most versatile factor of production. The problem has been to finance specialization. Specialization today is extensive and increasing through capital investment. Each person can match his skills with consumer demand. Each person can thereby increase his output.

Guilds are limited mainly to the professions. Just about anyone can get the training he needs to enter any occupation that he has the skills to perform. Entry-level jobs are plentiful.

Unemployment is low, especially for married men. If you want to work, there is a job. Crummy jobs are stepping stones, not brick walls.

There is demand for work done well, on time, at the price agreed on.

Racial discrimination can be offset by the willingness to work cheaper, faster, and better.

Thrift is constantly providing new tools. New tools increase workers’ production. Air conditioning makes siesta societies more productive.

Electric lights make the workday longer for businesses but shorter for workers: Henry Ford’s 8-hour shifts, 3 shifts/day. Wages rise when opportunities increase.


Americans live by eight words: Live and let live. Let’s make a deal.

It is still possible for anyone to start a small business in one day in the United States. It is still possible to get rich by running your own business.

The number of new businesses started each year is rising. Most of them will fail, but most of their owners will start another one.

Discrimination is falling because opportunities to serve consumers is increasing. Everyone is looking for a better deal, which was once called the Jewish brother-in-law deal, itself testifying to opportunities for minority groups.


Word processing eliminates erasers, and a lot of fear of making a mistake. Quicken lets us keep track of where our money goes.

Quick Books lets us run a medium-size business, or even larger. It costs $200.

Spreadsheets make possible work that only Harvard Business School types could do in 1975. (VisiCalc was invented for the Apple I computer by a Harvard Business School student, who needed a way to speed up classroom calculations.)

Database programs let small businesses compete. Order Desk Pro let my secretary run a $500,000 a year non-profit publishing organization in 1995 that had cost $250 a month to hire a specialist to run in 1985. Order Desk Pro cost under $300 at the time.

Computer games amuse millions of people.


Stereos are cheap. So are CD’s. So are downloaded music files. We can listen to music that only the rich could afford to hear a century ago. We can listen at any time, day or night. Television amuses us.

Cable and satellite channels have broken the network oligopoly. The networks are losing market share. We can watch old movies any time.

A video player that cost $1,000 in 1980 — $2,000 in today’s money — costs under $80. A 6-hour videotape that cost $20 in 1980 — $40 in today’s money — costs under $1.

We can shoot cheap videos of our children. We and they will not forget. (But there will be more videos of the first child.)


What did a powerful king have in 1700 that you don’t have? (I don’t mean syphilis.)

What can you buy that a king would have paid half his kingdom to buy? (See the first entry, above.) New, expensive products for the rich find new markets. Price competition then widens the market for successful products.

Price competition creates mass markets for a product line. Then product improvement creates specialized niche markets. Opportunities increase.

The lifestyle of the very rich, except for three things, is essentially the same as the lifestyle of the middle class. The exceptions are: (1) full-time employees to run errands and wait on them; (2) enough land to keep their homes invisible to the public; (3) no personal debt.

“Tariffs Create Jobs”

Gary North – December 14, 2018

Conservatives who defend tariffs as job-creating government interferences with the free market do not understand basic economic theory. They surely do not understand the consequences of taxation.

President Trump’s recent imposition of tariffs, which are sales taxes on imported goods, has created some curious consequences. They are not curious for economists, but they are curious for defenders of tariffs, who do not have a clue as to the logic of economics. There are millions of these people.

Reason magazine offers some data-confirmed insights regarding the consequences of a specific group of tariffs: tariffs on aluminum imports.

Those 300 new jobs didn’t just spring up out of nowhere because the president said some magic words—they are the result of businesses shifting resources and strategies in an economic environment where imported aluminum has suddenly been subjected to a 10 percent tax increase. In other words, the trade-offs (in this case, the higher taxes) matter.

And the trade-offs are huge. Since the aluminum tariffs were imposed on June 1, American companies have paid about $690 million in tariffs to the federal government, according to data from The Trade Partnership, a pro-trade nonprofit, and Tariffs Hurt the Heartland, which is lobbying for Congress and the administration to remove those tariffs.

Do the math. That means those 300 jobs have cost about $2.3 million each.

This kind of logic makes no impact on people who defend the tariffs. They are as blind to the effects of government taxation as the supporters of President Obama were with respect to the effects of subsidies to industry after industry, especially the solar panel industry. Obama collected tax money from the general public in order to waste on companies that were not economically sustainable in the free market, and therefore needed subsidies from the federal government. Conservatives delighted when some of these companies went bankrupt. They saw this as part of some movement toward socialism in America. I had some fun with this myself. Back in 2012, I published this article: Obama’s Green Energy Stimulus: $1.6 Million Per New Job. I have reprinted it here.

Now the political shoe is on the other foot: the right foot. President Trump is pursuing policies that Adam Smith said would make a nation poorer back in 1776. The heart of Adam Smith’s intellectual revolution and his free-market economic analysis was his attack on tariffs. But big-government conservatives have rejected this logic ever since 1776. They have favored government intervention of many kinds. There is a tradition that began with Alexander Hamilton in 1791, which extended to Sen. Henry Clay in the 1830’s, which extended to Abraham Lincoln, which culminated in the Republicans increase in tariffs in the Smoot-Hawley tariff of 1930. The story is always the same: (1) the government collects taxes, (2) prices rise for the now-taxed imported goods, (3) prices rise for domestic production, and (4) consumers pay more. This receives the cheers of tariff-supporting mercantilists in the Hamilton – Clay – Lincoln – Hoover tradition.

The millions of voters who elected Trump because he promised to increase tariffs, which meant that he promised to raise American prices and decrease the wealth of consumers, have not changed their minds. They will vote for him again in 2020 if he decides to run. After all, he did what he promised with respect to tariffs. He hiked tariffs, which have led to tax revenues, higher prices, and restricted consumption.

There are no free lunches. This includes lunches at the federal commissary. Somebody pays for the free lunches enjoyed by those who eat lunch in the federal commissary. Mostly, the people eating lunch at the commissaries are CEOs and senior managers of companies in the industries benefited by decreased competition from abroad. Some of the people are employees of these companies, but they are not the ones who get the stock options, the raises, the bonuses, and the perks associated with senior management.

Here is one estimate of the effects of Trump’s tariffs on steel and aluminum.

Services sectors are hit the hardest for several reasons. First, as the largest component of the U.S. economy, services are key inputs into the output of every U.S. sector. As manufacturing, agriculture and energy output decline, so too do services output and related jobs. Second, consumers reduce spending when they are hit by higher costs (of a new car, a new washing machine, etc.) and, for many, lost wages from unemployment. As a result, households pull back on spending; services like education, entertainment and even healthcare are on the front lines of the spending reduction impacts, with additional attendant job losses.

Finally, Table 3 shows that every U.S. state will experience a net job loss as a result of the tariffs and retaliation. California, Texas, and New York are heaviest , but there are large net employment losses in the states where the steel and aluminum sector s figure prominently: Illinois ( – 15,38 9), Indiana ( – 5,777), Michigan ( – 11,365), Ohio ( – 13,042), Pennsylvania ( – 14,084) and Wisconsin ( – 7,657).

As I have said for years, tariffs are the taxes that masochists delight in.

Conservatives never call tariffs “taxes.” They literally do not have a sufficient understanding of economic cause-and-effect that would enable them to understand that a tariff is a sales tax. They literally cannot follow the logic. They may read a critique of raising sales taxes, i.e., increase tariffs, but all they do in response is to say this. “Tariffs save American jobs. They are good for the economy. They are good for the nation.” These are impervious to the logic of economics. This is not a new phenomenon. It has been going on since 1776.

What has Q. E. Wrought?

By Ron Paul (www.lewrockwell.com), 8/1/2018

The Great Recession began in 2007. It didn’t take long for the money managers to recognize its severity, and that a little tinkering with interest rates would not suffice in dealing with the economic downturn. In Dec. 2008, the first of four Quantitative Easing programs began which did not end until Dec. 18, 2013. Some very serious consequences of this policy of unprecedented credit creation have set the stage for a major monetary reform of the fiat dollar system. The dollar’s status as the reserve currency of the world will continue to be undermined. This is not a minor matter. As our financial system unravels, the seriousness of it will become evident to all, as the need to pay for our extravagance becomes obvious. This will make the country much poorer, though the elite class that manages such affairs will suffer the least.

By the time the QE’s ended, the Central banks of the world had increased their balance sheet by $8.3 trillion, with only $2.1 trillion worth of GDP growth to show for it. This left $6.2 trillion of excess liquidity in the banking system that did not go where the economic planners had hoped. Central banks now own $9.7 trillion of negative interest yielding bonds. The financial system has been left with a bubble mania, financed by artificial credit and unsustainable debt. The national debt in 2007 was $8.9 trillion; today it’s $20.5 trillion. Rising interest rates will come and that will be deadly for the economy and the Federal budget.

This inflationary policy is generated by the belief that there is no benefit in allowing the needed economic correction to the problems generated by the Fed to occur. The correction is what the market requires, not the resumption and acceleration of the dangerous inflationary policy that caused the bubble economy. It’s like giving a case of beer to an alcoholic to calm his nerves as he attempts to stop drinking. It should not surprise anyone that perpetuating a problem won’t solve the problem.

The obsession with a QE monetary policy has created a bubble economy of enormous size which one day will burst. The warning signs are everywhere, yet ignored. Political demands control policy; not common sense or sound economics. All major decisions are bipartisan and guarantee a continuation of current spending, taxing, inflationism, welfarism, and warfarism until the giant bubble bursts.

All recessions since the Great Depression were essentially caused by the Fed’s mismanagement of monetary policy and subsequently resolved by it with renewed vigor in monetary mischief by rigging interest rates and the money supply. This off and on process temporarily aided the economy, but structural defects multiplied. Debt accumulation, mal-investments, unfunded liabilities, welfare benefits, militarism, constant wars, uncontrolled government growth, and systematic attacks on our liberties, have continued unabated…

Inequitable wealth distribution becomes a problem in an economy regulated by Federal Reserve mismanagement. The wealthy do get wealthier and the poor do get poorer when a currency is debased, with the middle class suffering the most. The ability of the special interests to influence legislation to benefit from the distribution of newly created money, is legendary. Think: “military industrial complex,” “free welfare benefits,” “bank bailouts,” and early access to an inflated currency. All these items play a significant role in the accelerating disparity of wealth distribution between the top 10 percent and rest of the people. These problems will worsen and fuel social conflicts and anger.

The inequity, not being fully understood, causes those who feel cheated to become angry and to start thinking about the false promises of the Socialists. This, along with the large number of economic Marxists who have inundated our government-run colleges, presents a problem that feeds into the anger. It doesn’t take a lot of searching to witness the anger in action on the campuses, as expressed by both students and faculties.

This conflict encourages envy and greed to flourish and justified with a sense of moral indignation. The greater the chaos, the easier it is for the Marxists to join in the fray and promote hate and destruction of cultural and traditional norms. It’s essential that the economic distortions, that arrived with the QE’s, as part of Keynesian economic planning, will need corrected to restore long- term economic growth. The full cost of decades of deficit spending must be paid for one way or another.

The problem of economic ignorance and misplaced good intentions will need to be addressed in order to steer a course that rejects the notion that unlimited government spending can be financed by the dangerous QE type of monetary inflation. This, sadly, will not be considered until the super bubble bursts and it becomes evident that the correction that has been avoided so far has become a necessity.

It is my opinion that the QE bubble is bigger than the Housing Bubble and the Dot Com Bubble combined. It is no easy task to correct for all the mal-investments and excessive debt and provide for all the unfunded liabilities. In the process of paying the piper, the country is destined to become much poorer, especially since a miraculous increase in productivity is unlikely in spite of the hoped-for benefits from the recently passed tax law. Economic, psychological and political pressure will prevent the changes in policy needed to deal with the huge complicated mess that the QE’s have generated. What we are experiencing is the climactic end of gigantic experiment with a fiat currency inflation, the size of which was never tried before.

The Fed has followed a deliberate policy of monetary debasement from the time it was sanctioned in 1913. Though there was a steady erosion of the dollar’s value throughout the 20th Century, a link to gold was maintained until the closing of the gold window by Nixon in 1971. A total fiat currency – the dollar – was unleashed on the world with this event, and the US became the biggest beneficiary by assuming the role of managing the world reserve currency. For decades this well served America’s interests since it was equivalent to the world permitting us to create as much “gold” as we wanted. The system was totally fraudulent since it was imaginary money and we owned the printing press. Why should anyone be surprised at the results of what excessive money creation has caused? Printing fiat currency and expanding the money supply has nothing to do with creating wealth. This process is more likely to destroy wealth than create it…

What’s involved in the bubble? Plenty! Almost everything to some degree. It is difficult for an economy to operate smoothly without a sound currency to measure value when goods and services are transferred from one entity to another. A definable medium of exchange is crucial to facilitate the market. Ever since direct bartering was phased-out more than three thousand years ago, the choice of the marketplace for money has been something tangible. As the understanding of the nature of money developed, the items used for money were easily recognizable, devisable, long lasting, and definable. Early on, governments challenged the market choices, especially when gold and silver were chosen, and replaced them with a government monopoly control over the currency. The contest between the market’s desire for honest money and the government’s desire to solidify power by usurping the authority to debase the currency started early on and continues to this day.

Government’s monopoly over the creation of money is equivalent to counterfeiting and resulted from the fact that the people never liked to pay taxes for unnecessary wars and to provide benefits to the politicians and their friends. Though beneficial to the powerful few, the abuse and the inequitable distribution of wealth that resulted would inexorably stir anger and rebellion within the people, who demanded changes to the system.

It is true that nothing ever changes under the sun or with human nature. We today are approaching a political and economic crisis of enormous proportion as a consequence of this age-old phenomenon of abuse from a government financed by a modern-day monetary destruction of the economy with the QE’s dangerous experiment. It is more than a minor correction that is needed to deal with the huge excesses that today exists world-wide.

Many of the central planners in charge reassure us that the concern for a dangerous bubble existing is completely unfounded since the CPI is barely rising. Two points: 1) The CPI is rising faster than they will admit and 2) The CPI is not the tell-tale sign of a serious bubble forming. Many other bubbles and dislocations can exist as a consequence of creating trillions of dollars out of thin air. And there are quite a few…

Transfer payments to the dependent poor will never be cut. Instead, when the big bubble bursts these payments will skyrocket since the process will generate more poor.

The medical care spending bubble has created a huge mess with misallocation of resources, runaway cost, and poor care. Corporate medicine must end and be replaced by a free market.

Cultural Marxism’s influence on American college campuses is a dangerous “bubble.”

The dollar is in a bubble.

The unpayable pension systems: federal, state, county, city, involves trillions of dollars.

The unpayable debt bubble can only be held together by accelerating inflation and the liquidation of debt by currency debasement. This is a very dangerous economic and political solution that seems inevitable. The problem describes what happens to a bankrupt country refusing to live within its means. Instead of being reassured that things are going well because Wall Street is booming, it should be a warning sign that danger lies ahead and reveals the growing imbalance between rich and poor.

The bubble mentality of neocon war-mongering needs to end. The sooner the better. Sadly, it will only end after the dollar-driven bubble economy collapses. The foreign policy of militant interventionism needs to be extinguished. It’s a major source of debt and lost credibility for us, both of which undermines dollar hegemony. The bursting of the dollar bubble will not be a minor event. The adjustments required to restore economic prosperity and preserve liberty will be a major challenge to all freedom loving Americans.

The excesses of an economy based on debt, inflation, central planning, constant war, the military industrial complex, and crony capitalism, all contribute to a growing disparity of wealth between rich and poor. This type of command system is self-limited but eventually always fails. Though it takes a lot to kill a once robust economy, our political leaders have managed to set the stage for a major crisis, brought on by QE’s attempt to rescue it from the coming bankruptcy.

The problems we face today did not appear overnight. It took many decades to create the conditions of bankruptcy and the beginning of the end for the dollar as the world’s reserve currency. There have been many warning signs, dating all the way back to the origination of the Federal Reserve in 1913, and with the subsequent growth of central banking world-wide. The Bretton Woods Agreement in 1944 established the dollar as the reserve currency of the world with a watered-down version of the gold standard, and was destined to fail as it did in 1971. Noted free market economist, Henry Hazlitt, at the time of its inception, predicted that it would fail due to inflationary policies that the Fed would not be able to resist.

Throughout the 20th Century, the Fed created many recessions and depressions that were papered over with accelerating inflation and government deficit spending. It worked to some degree on the short run, but postponed the required payment for another day. Unfortunately that day has arrived, and the flawed policy of delaying the payment needed to keep the economy churning, is no longer working.

There’s a growing number of people becoming aware of the significance of the Fed’s disastrous monetary policy and the utter silliness of QE. Since few people expect the privileged class to promote sound money, many outside of government are seeking a system of money that protects wealth rather than destroys it.

Historically, money originated in the marketplace as a tangible asset. The choice for thousands of years has been the precious metals, especially gold. Governments, notoriously, have taken over monopoly control of the monetary systems and used them to benefit the government over the people. Because of the abuse of the currency over the centuries, a return to gold was frequently needed to restore order and confidence in the money. For this reason, I have been a champion of competing currencies to allow the people to make the choice about the monetary unit, as long as no fraud was involved. A government-designed currency should also be free of fraud. This means no fiat currency and no legal tender laws. A tangible currency developed in the market, such as gold or silver, should not be subject to sales or capital gains taxes.

The race is now on to find an alternative to our current dollar system in order to escape from the Federal Reserve run banking system. Crypto-currencies have been offered as an alternative with much vigor. By Jan. 3, 2018 their total capitalization was more than $700 billion with 97 percent of that achieved in less than a year. It has been declared a “mania” by many. This type of price appreciation would not have occurred without the funds the QE’s generated by the Federal Reserve. The money managers have been in a quandary for the past 10 years because the inflated money supply and the very low interest rates did not generate the economic growth they wished for. Now it’s going into numerous bubbles like stocks, bonds, housing, student debt, and crypto-currencies. My view is that the entire economy is a huge bubble with sovereign debt being the most dangerous.

Though currently, there is a lackadaisical interest in gold compared to crypto-currencies, I believe gold is in the early stage of the third major bull market since 1971, which started two years ago when gold was $1050/oz. If history is of any benefit, gold will be used in the coming monetary reform, whether it’s accomplished by the government or the market. But if the choice of a monetary unit turns out not related to something tangible, it will prove to be a first in history. Just because our current money is now a total fiat dollar, it can’t be used to justify a market developed fiat currency. We must remember that the dollar was originally defined as a weight of silver or gold. The destructive nature of the monetary event of Aug. 15, 1971 was a consequence of our government refusing to maintain the dollar’s relationship to something tangible, thus making it a fiat currency. This explains why we’re in such a mess. A fiat currency developed in the market, won’t solve the current financial crisis the world faces.

A sound currency must have a fixed definition of a tangible item. Its value must be determined by free market pricing in exchange for goods and services. Bi-metallism, by fixing an ounce of gold to a certain number of ounces of silver was unworkable. Fixing the definition of the monetary unit is similar to fixing the exact length of a “yard or meter.” The “yard” can be used to measure any item you want and it’s crucial in all construction. Likewise, a currency with a fixed definition of a tangible item will facilitate all market transactions. A fiat currency without a precise definition by its very nature will fluctuate wildly and interfere with all economic calculations. This is why all fiat currencies are destructive and end badly. The dollar since 1971 has been a fiat currency and the mischief it has caused has been especially harmful and broad since it has served as the world reserve currency. The importance of this is evident when the US government is willing to exert military force against those who threaten to abandon the dollar in world trade…


The trillions of dollars created by the QE program have not restored soundness to the economy. QE did not address the problems caused by a central bank manipulating interest rates, determining the money supply, continuing to monetize government debt, pursuing central planning, and depending on a very unstable fiat currency. Only true monetary reform can address these problems.

The economic and political clout that a central bank has in managing a fiat currency system is enormous. Without the government’s ability to create money out of thin air, the cost of financing needless wars and the welfare state would be prohibitive. This arrangement guarantees excessive government and a systematic abuse of liberty. The people lose; the special interests always win.

We’re at the point where another QE inflationary binge will not tide us over in the next economic downturn. We’re fast approaching the time when true monetary reform will be required to deal with the “sin” of living beyond our means. If that is not done, expect a long period of economic chaos, inner city violence, and political warfare…

In medicine a correct diagnosis of a serious illness can be very depressing, but knowing that treatment is available is uplifting. Remaining in denial of a problem’s severity is a dangerous option. Knowledge and truth lead to optimism. In politics and economics, the only decision to be made is to decide whether or not the goal of peace and prosperity can be best achieved by more intrusive government or by promoting personal liberty.

If peace and prosperity are the goal, and flawed policies are identified, an understanding of what needs to be done should be greeted with applause. Fortunately the answers are not complex, and when discovered most agree that they are based on common sense.

The philosophy of liberty is based on the moral principle of non-aggression being applied to all individuals and governments. If individuals can’t steal or cheat, neither should the government. If individuals can’t harm or kill, neither should the government.

Unfortunately, throughout history it’s been government that has committed the greatest crimes of aggression against humanity. A modest beginning for us would be to rein in government initiated violence by rejecting the Federal Reserve’s authority to finance wars of aggression overseas and the welfare state at home.

The political chaos, as reflected by the mess in Washington, is an expected consequence of the last 100 years of our drift away from a limited government philosophy. There is now a growing interest in the cause of liberty as it becomes evident that the current system is financially and morally bankrupt. The intellectual groundwork has been laid for a free society, and with the disintegration of the current system there is room for hope that truth “will out” and a better world for peace and prosperity will be available to us.

The Bible and Economics (11)


Socialism is finished: it is destroying itself, and although the worst lies ahead, the certainty of socialism’s collapse is nonetheless inescapable, and it must be a basic premise of all thinking concerning the future. The central concern even now must be reconstruction, the creation of new institutions dedicated to liberty, education to that end, and the assurance that the fresh air of liberty is ahead, past the days of chaos.[1]

The Biblical prophets of old always seemed to be improbable characters. They were so radical to their contemporaries, they seemed to be from another world, which in so many ways they actually were. John the Baptist’s confrontation with Herod was stunning in its bold fearlessness, as was Moses’ confrontation with Pharoah, Elijah’s with Ahab, and Nathan’s with David.

Yet all of the true prophets were entirely consistent in their message to God’s people. God is both Creator and ruler of the earth, we have departed from His laws, and we are obligated to turn from our follies in repentance and obedience, or face His judgement.

To a great degree, this has to be the message today, too. The world has been departing from God’s economic laws now for over a century, and as a consequence, there will be a lot of pain for people and nations. The saddest part of this, has been that the church has been an accomplice in this most sinful and evil behaviour.

I hope that the church really will provide leadership in this field. No doubt in time, it will. But meanwhile, Christian individuals, families and churches are required to begin at the beginning.

Where is that?

With God’s law, which has so much to say about economics, which is clearly a moral and ethical issue. At the beginning of the Ten Commandments, God said,

I am the Lord your God, who brought you out of the land of Egypt, out of the house of slavery (Ex.20:2).

You didn’t think slavery was an issue today? Rushdoony and Powell commented

One of the surest means of enslaving another person is through dependence…This is one of the major characteristics of our modern welfare oriented society. Few persons who have received monthly welfare for any extended period of time are any longer capable of taking care of themselves.[2]

God also said,

You shall not steal (Ex.20:15),


You shall not covet your neighbour’s house; you shall not covet your neighbour’s wife or his male servant of his female servant or his ox or his donkey or anything that belongs to your neighbour (Ex.20:17).

Socialism is legalised theft by government, under the guise of charity or equality. It may be portrayed in heart-warming terms, as though its “compassion for the poor,” but it’s still theft. Judas used a similar ploy to hide his theft, too (Jn.12:1-6).

Slavery, theft, covetousness and criminal behaviour are common among godless people. God’s people must renounce all of these things, and begin to lead the way forth into godly faith, liberty and charity, expecting no help from government.

No doubt, this requires massive, long-term change, and there very well may be massive resistance, because people mostly don’t appreciate sharp increases in responsibility, without a commensurate payoff. Aircraft carriers can’t turn around in a few moments, and our change may be slow and incremental, begun by a small cohort of faithful people, who operate in faith and obedience to God. The Bible calls these a “remnant:” a very small component of a larger group, that God uses to initiate change.

You want to be a part of that remnant?  So do I.

Where do we start?  Right where we live, at home and in our church and neighbourhood, which desperately needs the testimony and obedience of faithful Christians.

How do we start?

In the same way as Nehemiah: he prayed and he acted to rebuild the wall of Jerusalem, out of faithfulness to God and His Word. Just like him, in obedience to God we’ll all find plenty to do.



[1] Rousas Rushdoony, “Roots of Reconstruction,” 1991, p.641-644.

[2] E. Powell, and Rousas Rushdoony, “Tithing and Dominion,” 1979, p.122.

The Bible and Economics (10)

If churches had not defected with respect to the preaching of the gospel and the preaching of the covenant, the once Christian West would not be in the present disastrous situation in which it finds itself. The modern welfare state would not have come into existence. The bankruptcy-producing unfunded liabilities of the West’s national governments to fund old-age retirement plans and health care for the aged were voted into existence by politicians elected by Christians. If pastors had preached the laws of Christian economics, and if church members had believed them, this would not have happened. But the pastors did not preach this, so the welfare state gained support from the broad masses of Christians. From 1885 on, the idea of the welfare state began to gain support of pastors in the large northern Protestant denominations in the United States. This new theology was known as the social gospel. It was dominant in the large Northern Protestant denominations by 1925. It was dominant in the rest by 1980.[1]

Most Christians will concur with the general notion of Christian responsibility, so long as we keep the notion general. As soon as we begin to get particular, and begin linking Christian responsibility to issues like the tithe, and Christians caring Biblically for the poor through giving, support for the notion of Christian responsibility begins to quickly fall away.

The last 140 years in the West testifies of this; in carrying on the tradition, we keep doing what our forefathers have done, and think nothing of it. Well, we might think nothing of it, but Jesus Christ has clearly noted our attitude, and is in the process of bringing us to account for it.

National bankruptcy of Western governments will not be a happy time for many. But a remnant of Christians will see in it the righteous judgments of God on His church, and on the godless institutions which have been foolishly perpetuated through the disobedience of Christians.

This means that national bankruptcy will actually be a great opportunity for those Christians, who are prepared to get busy in the work of the gospel. Why is this? Because people who are in financial pain but are being helped by Christians, are often ready to listen to them as well.

In the midst of strife, there will be progress with the gospel. And more than that, there will be opportunity for Christians to learn new avenues of faithfulness to God, many of which have been largely lost, at least for the bulk of the church.

What will this mean? I don’t know, but it will mean that the church will at least have the opportunity to lay the foundations again of the godly society.

Crisis does mean opportunity for faithful and willing people, who will see past the many negatives. The welfare state, smashing onto the rocks with its atheism, hatred of God, theft and bloated budgets, will indeed be painful for many, but we’ll have the opportunity to go to the scriptures to determine what should replace it.

What should replace it?

In what was a pivotal occasion in scripture, God He gave His law to Israel in Exodus 20, commencing with the Ten Commandments. Immediately following these are the Case Laws of Exodus 21-23, which give practical application to the Ten Commandments, including God’s commands in relation to welfare.

Israel had now come out of bondage, but what should replace it?  God laid it out for His people, as He has for us today. Here is one example:

If you lend money to My people, to the poor among you, you are not to act as creditor to him; you shall not charge him interest. If you ever take your neighbour’s cloak as a pledge, you are to return it to him before the sun sets, for that is his only covering; it is the cloak for his body. What else shall he sleep in? And it shall come about that when he cries out to Me, I will hear him, for I am gracious (Ex.22:25-27).

Servitude is a fact of life. This is one of the themes of Exodus. But the children of Israel, having escaped the tyrannical control of Pharoah in Egypt, were very slow to get the message: their new-found God-given freedom was given by Him, so they could worship and serve Him.  This would be the basis of their future freedom.

People today frequently proclaim their desire for the forms of freedom, while they amass large, unwarranted amounts of debt on their credit card or property mortgage. Whether they acknowledge it or not, their debt has become the means of their servitude.  So the question is never whether we will serve, or not. It is always, “Whom shall we serve?”

The poor person who needs to borrow for the basics of life is in a vulnerable position. God considers it a heinous thing to capitalise on this, by compelling someone to pay interest on a charitable loan. The Bible explains that “the rich rules over the poor, and the borrower becomes the lender’s slave” (Prov.22:7).

This negative command to charitable lenders (“…you are not to act as creditor to him; you shall not charge him interest…”) is matched by God’s promises to them:

How blessed is he who considers the helpless; the Lord will deliver him in a day of trouble. The Lord will protect him and keep him alive, and he shall be called blessed upon the earth (Ps.41:1-2).

He who despises his neighbour sins, but happy is he who is gracious to the poor (Prov.14:21).

He who oppresses the poor taunts his Maker, but he who is gracious to the needy honours Him (Prov.14:31).

One who is gracious to the poor man lends to the Lord, and He will repay him for his good deed (Prov.19:17).

He who gives to the poor will never want, but he who shuts his eyes will have many curses (Prov.28:27).

Notice too, that the text pictures lending and borrowing in an individual context: “you shall not charge him…” Welfare and “compassion” is never a task of civil government. According to the Bible, it is always an individual, family or church responsibility. The Bible never speaks of any form of government initiated “welfare.”

As Ronald Reagan stated in 1985, “Government that is big enough to give you everything you want is more likely to simply take everything you’ve got.”


The welfare state will ultimately go the way of all flesh, and every Christian should rejoice at the prospect of that. Our challenge is to come up with its godly replacement, for you cannot replace something with nothing. There must be works of charity within the church which have developed over time, to be a source of welfare within the community, and these will require the usual things: time, money, inconvenience and suffering.

Are these things you’re ready to put your hand up for, as part of a team within your church?



[1] Gary North, “Christian Economics,” Chapter 11, Individual Covenant,  22/5/2017