Big Head Press

L. Neil Smith's
Number 576, June 27, 2010

Mercantilism is the same thing that we now call "fascism"

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Weimar mark, Yugoslav dinar, USA dollar
by Jim Davidson

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Special to The Libertarian Enterprise

"The coin is a delicate meter of civil, social, and moral changes. ... It is the finest barometer of social storms, and announces revolutions."
—Ralph Waldo Emerson, 1860 "Essay on Wealth."

In the long history of the externally imposed coercion of the centralised state, there have been many experiments with fiat money. What is fiat money, and who can we blame for it?

Fiat is the Latin word for "let there be" and is prominent in many Roman declarations. Fiat Lux or "let there be light" are the first two words spoken by God in the Latin language version of the bible.

Many attempts were made by Roman emperors to debase their currency, but they always involved at least some precious metal. The same is true for the ancient Greeks. Roughly 400 BC, the playwright Aristophanes laments in the play "the Frogs" about silver-plated copper coins.

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The best have been withdrawn from circulation."

Antony Sutton, in his extremely well documented examination of "the war on gold" by the book of the same name, discusses the mulberry bast paper created by Genghis Khan. Marco Polo remarked upon this black paper, with its vermilion ink markings. It was such a nasty tool of coercion, and caused so much suffering that four hundred years after Polo it was impossible for the British to hire anyone in India without minting copper coins for the purpose.

Since the hyper-inflationary blow off of the mulberry paper money of the Khanate Mongol empire, we have seen many other experiments in paper money. These include the American revolutionary war era "Continental" currency issued by the Continental congress under their imagined authority of the articles of confederation. American sailors returning to port in 1783 after the final victories over the hated and evil British (including sea battles near India that you probably never heard about—did you even know it was a world war?) were paid off in Continentals. They found that no shopkeepers would take the money. In protest, many of them sewed the worthless money into their clothing and marched down boulevards in Boston, New York, and Philadelphia. "Not worth a Continental" is still a saying for worthless money. Too bad, too, because the motto "Mind your business" on the currency is a very good one.

Too bad, as well, because the instability and difficulties caused by the fiat money of the articles of confederation led to the establishment of a counter-revolutionary convention in Philadelphia. That convention met in secrecy. The delegates to the constitutional convention of 1787 swore a blood oath of secrecy, and their deliberations were kept a secret until after most of them were dead, largely because Alexander Hamilton was proposing to replace the free government of the USA with a tyranny. And in large measure did, as you can see by simply looking around you.

So fiat money ended badly with tyranny.

In 1789 the French held their own revolution, overthrowing a hated monarch. In 1790, the estates general met to issue paper money, allegedly "backed" (but never redeemed for) by the lands recently seized from the Catholic church (a tyrannical and hated institution). The king even assented to having his image and signature appear on the currency. But the national assembly was not satisfied and kept issuing more and more paper money, as detailed by Andrew Dickson White in Fiat Money Inflation in France. If you wish to understand the temptations of fiat money and its difficulties, you should certainly read this book.

In 1797, Napoleon Bonaparte won the hearts and minds of many in France by repudiated the fiat currency of the national assembly and of the directorate (the assignat and the mandat, respectively). He brought back gold and silver coins. Of course, he would subsequently steal a fortune in gold from Hamburg, and he raided the banks and private fortunes of people all over Europe. He also sold a vast tract of land called "the Louisiana Purchase" in an act of Jeffersonian defiance of the constitution—Jefferson repeatedly noted that he had no constitutional authority for the purchase—in order to get yet more gold. And blew most of it on an idiotic invasion of Russia. Thus always with tyrants.

So fiat money ended badly with tyranny.

The Confederate States of America endlessly printed paper money. President Jefferson Davis suspended habeas corpus, had pro-Union newspapers destroyed, and conscripted everyone from 15 to 55 into the military. At one point in March 1865 the Confederate congress voted to emancipate the slaves held in Confederate territory, and promptly conscripted them into the army.

So, fiat money ended badly with tyranny.

Lincoln issued the greenback currency. This infuriated the banking gangsters because it was not based on a note with interest payable to some bankers. This action delighted the Tsar of Russia who sent his Pacific fleet to San Francisco to help defend it against British attempts to seize the mint there, and his Atlantic/Baltic fleet to New York to support the defence of that city. I suspect that it was this support for the greenback that caused the banking gangsters led by Jacob Schiff who funded the Japanese militarists and the Bolsheviks to have the Tsar's family massacred after the 1917 revolution. (Didja know that Schiff wrote a $20 million check for the Bolsheviks? And another one about as large for the Japanese to build up their navy prior to the 1905 war? Yep. You could look it up.)

The greenback was not as inflated by the end of the war as the Confederate paper money. But its eventual redemption was also not prevented by an amendment of the constitution. I believe the USA died as a sovereign nation when the so-called fourteenth amendment was ratified because, among other things, that amendment modifies the protection of the members of congress to say anything they please without consequence. In particular it says that the validity of the public debt of the United States shall never be questioned.

Lincoln also suspended habeas corpus, imposed conscription, and engaged in the aggressive use of total war against Southern cities. Slaves captured by Union forces were labelled "contraband" and frequently conscripted into the military. Sherman's march from Atlanta to the sea was noted for its cruelty, rape, murder, and destruction of property by his "bummers"—men selected to go into the countryside, ransack homes, and set fire to everything.

So fiat money ended in tyranny.

On 10 January 1919 it was 12 German marks to buy an ounce of silver. Today it is about $18.83 to buy an ounce of silver. On 10 November 1923 it was 543 billion 750 million marks to buy an ounce of silver. That was the same day a strange little German guy who had been a corporal or something in world war one (so-called, though clearly not the first of many world wars) climbed up on a bar in Munich and declared a revolution. His name was Adolph Hitler. He would use the victimisation of Germany by the Versailles Treaty to justify extreme militarisation, genocide, and war.

So, fiat money led very swiftly to tyranny.

There are similar stories about the republic of China and their fiat currency under the tyrant Chiang Kai-shek—??? / ???; Hungary; South Vietnam; and many other places. In 1993 the Yugoslavia government began to inflate their dinar. They replaced it with a new dinar and lopped off a bunch of digits, then replaced that currency with the "new new dinar." That was in turn replaced, with a confiscatory exchange rate, by the "super dinar." In all, the Yugoslavia government imposed something on the order of five quadrillion percent inflation.

You may have heard about the genocides and war and bloodshed in that region which followed the collapse of the Yugoslavia government. You may have heard of Bosnia, and Kosovo, and other new countries formed as NATO attempted to intervene in the Balkans. You may even have heard of the USA role in this overseas adventure, this nation building endeavour, and of Michael New and his concerns about USA sovereignty. Or, you could look it up.

I think it is fair to say that the hyperinflation of the Yugoslav currency led to tyranny.

Of course, that isn't always the order of things. Very clearly Robert Mugabe was a brutal tyrant and a mass murderer before the hyperinflation of the Zimbabwe dollar. But that inflation led to even more suffering than he had already caused.

In September 1999, when gold was at its secular low of around $252 an ounce, Gordon Brown was selling half of the Bank of England's gold. At that point, silver was $5 an ounce. Stocks were booming. In fact, priced in gold, stocks have never been higher than they were in 1999. Today silver has been close to four times the price it was in 1999. Gold has been about 5 times the price it was in 1999. These prices do clearly indicate significant monetary inflation. And the charts from tend to corroborate a dramatic acceleration of the size of the monetary base.

However, that increase in the monetary base has clearly been ameliorated in some ways, because prices have not tripled since October 2008 although the monetary base may have done if we trust the charts. (Gold was around $700 an ounce, and is not now $2,100 an ounce.) Why not?

Two reasons seem to be involved. One is, banks were not lending out the money being created, but using it to prop up their balance sheets. Now, that has recently changed.

I think this fact of banks lending again means that much of the monetary inflation of 2008-2010 is now going to be expressed in higher prices. Gold has been setting new all time highs, and oil has started back up, too.

The other reason is that demand is broadly lower as many people are out of work. As many as 21.5% of those who would like to be working are now unemployed, using the 1980 algorithm for unemployment and the government's statistics. I don't trust the government's statistics, of course, nor do I trust the Feral Reserveless, but there isn't much in the way of independent data on this stuff. No audit of the Fed, nor of the Fedgov has ever taken place to my understanding. The government auditing itself isn't what is meant by "audit."

So, are we about to experience a hyper inflation? Possibly, but it is very hard to say. Remember that the Feral Reserveless System can decrease the money supply, too.

Nor do we have to concern ourselves with hyper inflation as a cause of tyranny, since we already have tyranny. The president of the United States has authorised the execution of an American citizen without trial and without any of the other protections for the accused. The president has authorised the routine use of indefinite detentions and the routine use of torture. At least four dozen prisoners in USA military and espionage agency custody that we know of have definitely been tortured to death, and possibly hundreds more. Habeas corpus was suspended in 2006. The Foreign Intelligence Surveillance Act that Obama voted for when he was a senator pretends to authorise unlimited wiretaps and endless domestic espionage. The police have been nationalised and militarised and are more brutal than before with more people being beaten, electrocuted, and killed by police that at any time in the past twenty years.

What to do? Prepare. Buy guns, ammo, food, fuel, gas masks, build a bomb shelter, stock it well, prepare for civil unrest and tyranny, brutal repression and violent reprisals.

What to expect? Expect, as TE Lawrence once noted, just before taking 50 men across the Empty Quarter to conquer Aqaba, that "It's going to be fun." And if you do not share this peculiar idea of fun, well, too bad.

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Jim Davidson is an author, entrepreneur, and anti-war activist. His 1990 venture to offer a sweepstakes trip into space was destroyed by government action as was his free port and prospective space port in Somalia in 2001. His 2002-2007 venture in free market money and private stock exchange was destroyed by government action in 2007. He's going to Mars if he has to walk. His second book, Being Sovereign is now availble from Lulu and Amazon. His third book Sovereign Self-Defense will be released for Kindle soon. His fourth book Being Libertarian will be available for free download as a .pdf, being a compilation of all his essays and letters in "The Libertarian Enterprise" since 1995. Contact him at or He and his associates at Individual Sovereign University are planning a series of concerts and celebrations of freedom around the world. One of these events is in March 2011 in Kansas City, Missouri.


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