THE PORK BARREL CORRUPTION: Keywords: Public corruption, excess public spending, budget deficit, earmarks, the pork barrel, Gavin Newsome, Nancy Pelosi, Sarah Palin, Ronald Reagan, the FED, Citizens Against Public Waste.

Politics at the Olde Country Store

 

THE PORK BARREL

“The old general store barrels – pickles, crackers, and pork

Each county and village official took turns to use them as court

And deep in the worn oak staves left their initials engraved

State troopers, marshals, sherifs, judges, mayors and clerks

All came for hot coffee and stew, and had pickles, crackers or pork. 

Old settlers, farmers and ranchers found them a place to shoot bull.

Low price of crops and high prices of feed, urea, nitro, fuel and shoes.

The blacksmith, mechanic, plumber, painter, and printer complained

Their city folk suppliers, vendors and travelling salesmen dealt hard

And all came to sit by the oak barrels of the old general store.

A vote for the keeper for each pickle, cracker and morsel of pork.”

 

A meditation about the budget deficit and corruption by Xuan Quen Santos

 

 

Some time ago, my wife inherited several carton boxes full of old recipe books. Most had been collected from church groups frequented over the years as the families moved during their lives. Selling home-style recipe books has been a traditional fundraising activity for churches in the country towns. Some came from her mother’s, but others had been passed down from older matrons of the families going back several generations. Most had pencil notes on the margins of the recipes that had been followed at one time or another. Peaking from the edges, I also found numerous handwritten recipes. Some had been written on cards, others on the back of grocery lists, and even on some child’s homework pages. One of the books had the surprising present of a few dollar bills kept between pages for safekeeping and were forgotten. Others had clippings of local newspapers with recipes. On the back of a published recipe for cabbage soup, I found a 1905 poem. It had something to do with food, but also with the style of small-town politics. Capsules of bygone days, with many lessons for the present. This is about the famous “barrel of pork”.

 

Barrels and barrels at the old country store

Folklore transmits its common sense wisdom through fables, proverbs, maxims, aphorisms, adages, and legends, among many such literary devices. I am sure you have heard “I’m in a pickle”, “I feel dry as a cracker barrel”, and “the governor’s budget is nothing but a pork barrel”. The central word is “barrel”, and they have to do with the poem and an old recipe. Being in a pickle means being in serious trouble. Dry as a cracker barrel means having nothing to say or add to a discussion. The pork barrel refers to today’s most important political malady: unchecked public spending.

 

            The story is ancient, so old we can’t remember when pickling, salting and brining were discovered as safe methods to preserve fresh food. The next chapter is the barrel, in ancient Germanic languages “tun”, the root of tonel in romance languages, and the origin of the measure of weight we call ton, or tonelada. One old ton was the weight of a tun full of water. Originally built and designed to hold liquids, barrels of oak have many lives. They are also easy to roll and to load on ships with heavy nets. You are probably familiar with how some wines are aged in oak barrels, some of them charred inside. Shipped from mainland Europe to Scotland, once the wine was bottled or consumed, the empty barrels were used to age whiskey. The second use barrels gave the Scottish drink its darker color and sophisticated aromas. Bourbon and more recently tequila undergo the same aging process. Barrels were also used to store and transport dry goods on ships. The ancient Medieval Vikings and Biscayne fishermen travelled to the North Atlantic cod fisheries with dry salt, dry unleavened bread and fresh water in barrels. They survived and came back with salt-dried cod. Barrels with liquids and dry goods travelled with Columbus and Magellan. They made it to America during colonial times. A hundred years ago, salted cod and pork, and soda crackers were still delivered to country stores in barrels. Particularly in the South, many stores still sell pigs feet, noses, lips and ears ready to eat, but now they are stored and displayed in glass jars. Crackers are now the famous “Saltines” and were the first to be packaged in waxed paper bags inside boxes. What about pickles? Before they were pickled in glass jars, they were pickled and stored in oak barrels, or heavy ceramic pots. Pickling in brine, or in   brine and vinegar, with salt and spices are now common fare at picnics, BBQs and tailgate parties. They are likely a common staple in most American refrigerators. That is the literal story of the barrels of pickles, salt crackers and pork.

 

Among the many old family recipes, I found one that motivated this meditation. Farmers that raised hogs in addition to their crops always butchered them when the weather chilled in early or late fall for two reasons. The hogs born in spring had matured, and from then on would only eat with little growth. The cooler weather allowed the butchering process to maintain the meat fresh until the next stages. The hams, shoulders and bacon would go to the smokehouse, or to the salting and drying room. The cleaned skin would be boiled into crispy cracklings and the tallow would be turned into lard. Lesser pieces of meat and fat, and well washed guts, would be turned into sausages and hung by the hams in the smokehouse. The rest, cut into smaller pieces, would go into the pork barrel. Properly prepared and stored, pork meat would be preserved and ready for cooking during the months of winter and spring. How did they prepare the pork barrel? First, clean well the barrel and make sure it holds liquid. Every cut piece of pork is rubbed with salt and packed closely in the barrel to stand overnight. Pieces that still had skin should be placed against the wall. For 100 lbs. of pork make a brine with 10 lbs. of salt, 2 lbs. of saltpeter, dissolved in 5 gallons of clean water. Bring the brine to a boil and cool covered. The next day, slowly pour the brine into the barrel. This allows all crevices to be reached. Fill to the top without leaving any space for air. Place cap on top and weigh down. After a week or two, any piece can be used as regular fresh pork, but only after soaking for a few hours to extract as much salt as possible. I give thanks for refrigeration, for the modern meat packing industry, and for supermarkets. How did the pork barrel get into politics?

 

The answer is in the poem.

 

Anything you needed you could find at the country store

Many years ago, I witnessed the kind of scene described by the verses. While in college, I became seriously interested in a smart young lass. During a holiday festivity she invited me to meet her family. I did not catch on to what that meant, so I agreed. Her parents were living abroad, so her family meant all the rest of her extended family! The Interstate highway system was still under construction, and soon I found myself directed towards an old two-lane national highway winding through the woods. After a few hours we turned into narrower farm-to-market roads. Eventually, they led us to a narrow gravel road. I was puzzled by the many side lanes we encountered as we drove onwards under the shade of tall pines, the rhythm broken only by small steepled churches here and there. All the road signs repeated a handful of last names. She began calling them out; a cousin here, an uncle there, another cousin, a great aunt, two elderly sisters cousins of her mother, several double-first cousins… I began to get worried.

 

We turned into a private road that traveled by well fenced pastures of hay and alfalfa. We could see cattle in some areas and horses in others. We finally arrived at a fine country home at the end of an oak grove. Behind it lay a complex of barns, sheds, silos and ag machines I could not identify. This was Uncle Frank’s family residence, then the patriarch of the Ragley family. Our two-day celebration went by meeting new people, trying small talk, eating too much delicious home cooked country food, and pretending I could understand what everyone was saying. I discovered the new American meaning of the barrel of pork when Uncle Frank took me to his business. He drove us on his truck back to the main road, and then to an important intersection not far from the highway. He was the storekeeper of the general store.

 

Have you heard about the Constable? The cost of gas has gone
up to 10 cents a gallon!

Gas, diesel and oil; hay, feed and seeds; hats, boots, belts, jeans, jumpsuits and overalls; over the counter drugs, old liniments and first aid items; house cleaning products, brooms and mops; hammers, nails and edging tools; thread, buttons and shears; garden tools, hoses and plumbing fittings; candies and bottled sodas long disappeared in cities; cigars, chewing tobacco and cigarettes; lanterns, batteries, pails, ropes and more. I lost track, but the shelves displayed boxes and tins of “store bought foods”; just followed by cans of all sizes and colors. No more barrels of soda crackers, salt pork or pickles; but there was a large glass jar with pickles swimming in green brine full of seeds and spices; there were boxes of Nabisco Saltines and Ritz Crackers; there was Spam and Deviled Ham, sardines and tuna cans. There was an old barrel that served as a table with a box of dominos and a chess board, and two cane chairs waiting for regular players to make their first moves, always invited by the aroma of a freshly made pot of coffee.

 

We sat on a corner framed by two well-worn rockers arranged around a sizable empty can of Community Coffee that sat on the floor. I answered my interrogator, who as the elder of the Ragley family was making sure I would be OK for his niece. In between the questions two things took turns to catch my attention. The coffee can began to receive his frequent deposits of chewed tobacco, and an endless parade of friends, clients, vendors and more cousins came by our corner to pay their respects, give some news, or ask for a favor, that is, before they walked their way to the register. A sheriff came by and gave his report. He was married to a granddaughter. Everybody was offered coffee, so was I. I took a cup of what looked like tar, and so strong that I thought for a moment the spoon of sugar was standing on its own in the center of the cup. I survived the investigation and must have been approved, for his final words sounded positive, but I wasn’t sure. As we got up to leave, he said, "When you get married you need to get you some chains. When she gives you any trouble, you just rattle them chains.”  It took me a few years and many more visits to celebrate in family reunions to figure out that the gruff Uncle Frank really had permission from his sweet wife to say such things.

 

One other fact was also evident. His voice in the community counted. His advice was followed. His opinions influenced others. The free coffee, stew, pickles, crackers or salt pork were one more reason to come to the old country store. Common problems were aired, discussed and some form of action decided. Voters carefully inform themselves before they vote.

 

Porch, rocking chairs and politics: real democratic process at its best

        

The barrel of pork is no longer, but its message remains. It was at the old country stores that the real political life of communities happened. Many towns grew around the country stores. They often served as post office and community bank. The owners served as notaries and Justices of the Peace. They also served as centers of communications and political clubs. The use of the phrase "pork barrel" to describe questionable or clearly corrupt public spending dates after the Civil War. It used to refer to any excess detected in how governments spent the people’s money. Things began to happen as soon as the Federal Congress discovered that it could bribe the voters with what they had first taken from them. After visiting the expanding United States in 1831, the famous French politician Alexis De Tocqueville, published his impressions in 1840 in “Democracy in America”. He had these words of advice after living through three revolutions in France. “The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money”.

Bi-partisan collaboration in corruption

Congressmen discovered it, and corruption in public office has become a descriptor of politics. Since then, the pork barrel refers to expenditures on projects of questionable value that the U. S. Representatives and U. S. Senators push through for their benefit during elections, as they claim they are “bringing home the bacon”, another well-known phrase. Politicians running for re-election always brag about “the money they have brought back to their constituents”, something their opponents that are running for the first time can’t do. They are also used during the negotiations behind doors between politicians that have publicly pretended to be opponents. “You vote for my project, and I will vote for yours”. Parties use the process in a grand scale. The party in government punishes the districts that favor the opposition and showers the ones that they want to keep in their voting roles. There is now so much information that has been gathered about the voters that it is now done at the level of ZIP codes. Ask the county supervisors and city mayors how they distribute the investments in “public works”. There is a name for this type of corruption that does not stop until the governments go broke. It is called “hitting the bottom of the barrel”.

It is not corruption now. It is monetary policy

Feeding from the “pork barrel” has a name. They are called “earmarks”. An earmark is a substantial budget item tagged along an important Act of Congress, usually budget decisions, but not always, and they are for the benefit of a single constituency. They are always hidden among the thousands of pages of the proposed legislation that is made public on the day of the vote and nobody has time to find what was approved. Citizens Against Public Waste (www.capw.org) is the private watchdog that monitors “pork”. According to them, “A ‘pork’ project is a line-item in an appropriations bill that designates tax dollars for a specific purpose in circumvention of established budgetary procedures.” They publish the “Annual Congressional Pig Book”. CAPW estimates that between 1991 and 2023, pork barrel projects totaled almost 112,000 earmarks costing taxpayers almost $ 400 billion dollars. This corruption is not partisan. Politicians from all pigsties go to the trough. Conservatives that claim to be fiscally responsible are not exempt. Even champions (in public) against government waste have added their favored town or college with some free money.

Boston's Big Dig and Alaska's Gravina Island bridge are scandalous examples of pork barrel spending.

In 2023, NPR described the Boston highway project: “Whether it's high-speed rail or highway reconstruction, infrastructure projects in the U.S. are often associated with high price tags and lengthy timelines. Perhaps no project captures this better than Boston's Central Artery Tunnel project, more commonly known as the Big Dig. It's the nation's most expensive highway project. And it took more than two decades to plan and build”. It was initially scheduled for completion in the late 1990s and budgeted at a cost of $3 billion. The project wasn’t completed until 2007, and its cost ballooned to $ 22 billion. Democrat Bill Clinton was President during the approval process. Boston and Massachusetts have been democrat enclaves for decades and are home to a large number of colleges and schools that promote socialism.

In 2008, CNN carried this note about the Alaska’s Gravina Island Bridge: “The proposed $400 million span that would have connected the (tiny) coastal city of Ketchikan to its airport on Gravina Island died after it became a symbol of congressional excess. But the three-mile access road that was built on the island is ready for residents to take a drive to nowhere.”  The project had been promoted by Republican Governor Frank Murkowski, but was cancelled by his successor, Governor Sarah Palin. The road cost $ 26 million and was already contracted and under construction when she took over. Ketchikan Mayor Bob Weinstein calls the road, which was paid for by federal tax dollars, “a waste of money that could have been used to fix his city's roads and sidewalks”.

The San Francisco Federal Building completed in 2008 after delays and costs overruns, was renamed “Speaker Nancy Pelosi” in her honor recognizing the many projects that over her long tenure in the House of Representatives she had helped fund from her powerful position. News cited her projects to combat drug addiction and the HIV-AIDS epidemic, homelessness, education through sports, mental health and crime prevention, among others totaling hundreds of millions of dollars. San Francisco is not known for success in any of those areas.

The high-speed super train from nowhere to nowhere in California, Democrat's pride and shame

The biggest pork scandal in California is the High Speed Train from Nowhere to Nowhere. In 2019, Nick Zaiac reported in the R Street Institute that the project was halted: “Gov. Gavin Newsom announced that the railroad will never reach Los Angeles or San Francisco. What should have been a $15 billion project was going to cost at least $77 billion. And while Newsom made the call, cost-overruns of this magnitude were going to render the project a failure regardless of whether trains ever run in the Central Valley. The end of California’s high-speed rail dream highlights the challenges of attempting to manage railroads through politics.”  The failed project was re-started as soon as the Biden-Harris administration took office. Its cost has risen to $ 110 billion. Of the nearly 500 miles, only about 120 are in some stage of construction, but not a single mile is operational.

While the pork barrel politics at the old country stores are still an expression of local community democratic preparations for exercising the power of votes, the elected pork barrel politicians corrupt the elections trying to buy votes by gas-lighting the voters with visible expenditures. We should never forget that whatever bacon they bring home, it was first taken from us and only a small part is being returned.

I highly recommend reviewing the “Annual Congressional Pig Book” published by the Citizens Against Public Waste, CAPW. Make sure you are sitting down and have something to prevent your blood from boiling.

Ronald Reagan once said, "The first pork-barrel bill that crosses my desk, I’m going to veto it and make the authors of those pork-barrel items famous all over America". Most state governors have what is called “a line item veto”. It allows them to cancel projects that are clearly pork barrel expenditures.  This power has been denied to the President of the Federal Government. I suggest you read the following record of the intervention in Congress by State Representative Jeb Hensarling (R-Texas), who in May 14 of 2008 exposed the excesses of the use of earmarks for clearly corrupt purposes.

https://justfacts.votesmart.org/public-statement/344444/pork-barrel-spending

What has made it easy to justify the massive amounts of public money that are like a giant wave into a stable economy is the pseudo-science of New Economics, also known as Keynesianism. It is the Law now, it governs the Federal Reserve and the Treasury, and it is disguised under the veil of “monetary policy”. The pork barrel projects are the most popular way for politicians to contribute to execute monetary policy when the mandate is to “stimulate the economy”. It does not. It creates inflation which sooner or later leads to a recession. They also promote public corruption, not only on the public officials that hope to gain votes with the projects, but also on the public which become complicit in accepting gladly the “free money giveaway” that is implicit in projects that are not really economically justified. It destroys the American work ethic, and the moral standards expected in public service.

            If you think we are in a pickle, if you feel your wallet is as dry as a cracker barrel, it is likely because we are getting near the bottom of the barrel of pork. 

 

THE ECONOMIC MIRACLE: Keywords: Inflation, stagflation, unemployment, Keynes, Ludwig Erhard, The Asian Tigers, Marshall Plan, Walter Eucken, Wilhelm Roepke, F. A. Hayek, Hitler, National Socialism, NAZI, Freiburg Circles, Eisenhower, Rabushka

A Cornucopia, ancient symbol of wealth and abundance

THE ECONOMIC MIRACLE

 

A miracle is defined as an inexplicable, unusual and mysterious event in the physical world that is beyond any scientific comprehension. It is beyond science. Faithful people recognize it and give thanks. A real scientist may humbly find it as a challenge to his knowledge and to his method, and an opportunity for new advances. An arrogant scientist will use it as an insult to hide his conceit, errors, and limitations in comprehending it.

In previous pages I described how political economists avoided the responsibility their limited knowledge had in creating the booms and busts that led to WW I. They blamed the capitalist system driven by the greed of business, thus, they called it “the business cycle”. They constructed a “fallacy of the straw man” to criticize an emerging market economy and declared it dead when they could not solve the mysteries of “The Great Depression”. Like the child that throws a rock to break a storefront window and hides his hand behind his back when asked, political economists, very expediently, offered in their other hand a manual on how to replace the window they had broken. It is called New Economics, or plain Keynesianism. It spread during the inter-war period like a virus. It infected academics in the English-speaking establishment on both sides of the Atlantic, and it became Law.

Keynes was clear his ideas were a way to fix the defective capitalism his generation had described and beat up. In a lecture he first delivered in 1924 titled "The End of Laissez-Faire," he gave birth to the idea of a “mixed economy”, part free market, part government control. The text follows.

"Confusion of thought and feeling leads to confusion of speech. Many people, who are really objecting to Capitalism as a way of life, argue as though they were objecting to it on the ground of inefficiency in attaining its own objects. Contrariwise, devotees of Capitalism are often unduly conservative, and reject reforms in its technique, which might really strengthen and preserve it, for fear that they may prove to be first steps away from Capitalism itself. Nevertheless, a time may be coming when we shall get clearer than at present as to when we are talking about Capitalism as an efficient or inefficient technique, and when we are talking about it as desirable or objectionable in itself. For my part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any other alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organization which shall be as efficient as possible without offending our notions of a satisfactory way of life."

Conveniently, the comedy of errors found another way to hide the fact that free-helicopter money does not work. It makes matters worse. Keynesians quickly followed the advice of the leader of the Reign of Terror. “War is always the first object of a powerful government which wishes to increase its power. A war affords the opportunity to exhaust the people, dissipate its treasure and to cover with an impenetrable veil its depredations and its errors.” These words were pronounced by Robespierre shortly after taking over control of the French Revolution. Wars are expensive, so they justify more inflation. Wars create many jobs, so unemployment drops. If you have heard of the “military-industrial complex”, you have been introduced to a creation of Keynesianism. To keep it going you need more wars to stimulate the economy.

The fire-bombing of Dresden, worse than Hiroshima and Nagasaki

Another creation of Keynesianism after WW II was the Marshall Plan. The National Archives describe its origin. “On April 3, 1948, President Truman signed the Economic Recovery Act of 1948. It became known as the Marshall Plan, named for Secretary of State George Marshall, who in 1947 proposed that the United States provide economic assistance to restore the economic infrastructure of postwar Europe.”  The plan distributed assistance towards the reconstruction in the amount of $ 13.6 billion. The sixteen Marshall Plan beneficiary countries in order of the funds received were the United Kingdom (25%), France (21%), Italy (12%), Netherlands-Belgium-Luxemburg (12%), West Germany (11%), Austria (5%), and Greece (5%). The remaining 9% included Iceland, Ireland, Norway, Portugal, Sweden, Switzerland, Turkey, and Denmark. All of the central European and Balkan countries, as well as East Germany were excluded, with the exception of Austria, as they had become part of the Soviet Union occupation. Switzerland and Portugal had remained neutral, and Spain, although assisted by Axis powers before the war, had undergone a civil war that reversed a communist takeover.

President Truman and the promoters of the Marshall Plan

It should be obvious that in 1948, the country that had suffered the most destruction was Germany. Its territory and its capital, Berlin, were cut in half making its reconstruction more challenging. At the end of WW II, West Germany was occupied by three different bureaucratic armies, and in the early years, it had to absorb a flood of 12 million refugees from East Germany that were escaping from the communism they knew would come. By 1948, the industrial production was only half of what had been in 1936 before the war. The inflation rate in the final months of the war had reduced the value of the NAZI Reichsmark from 2.50 ℛ︁ℳ︁ = $1US to 10 ℛ︁ℳ︁ = $1US. The National Socialist regime had imposed strict price controls and rationing. This had generated scarcity and an active black market that operated by barter. Unfortunately, after the defeat of the National Socialist government, the occupying Allied forces that had defeated Hitler imposed their own form of centrally directed economy by maintaining Hitler´s price and wage controls. Money was worthless, and Hershey chocolate bars and American packs of cigarettes operated as a more efficient form of money.

Dresden at the time Erhard took control of the economy

Ten years later, by 1958, an astonished Europe and a more astonished United States occupying administration, witnessed the headlines. An Economic Miracle in West Germany.

Of all the recipients of the Marshall Plan assistance, only West Germany and Italy had successfully managed to establish a stable new monetary system. Only West Germany, the one that had been most damaged by the war and not the recipient of the largest sums, had already doubled its GNP to twice that from before the war. How did it happen?

A living laboratory. West Germany's free market vs East Germany's communism

Of course, the Harvard designers of the Keynesian Marshall Plan take the credit, and so does the official history of the U. S. Government. Common sense requires the answers to other questions. How come the other countries did not progress at the same pace? How come the most destroyed economy that received less money that others succeeded? Don’t ask them. That is why it has been called a miracle, so you don’t ask the questions. Enough time has passed that the questions that were answered can be made public. They are no secret. They are just discreetly archived.

It had to do with one group of the several German underground resistance plots to bring down the National Socialist regime. Most failed, were repressed and paid the consequences. Three have received attention worth mentioning. The White Rose non-violent “conscience” movement was led by five students and one professor at the University of Munich. Operation Valkyrie was an attempted coup d’etat led by notable military officers whose motivations are questionable. Many religious leaders of many denominations, such as Dietrich Bonhoeffer were active in the underground and ended in the concentration camps. One that does not get enough attention is the network of numerous communist intellectual cells that after failing in politics were hunted down. Many escaped to the United States. The fact that most of them were Jews allowed their easy entry. They became the nursery of “The Enemies Within”. The group I want to highlight is identified as the Freiburg Circles, a group of professors and students that in addition to opposing the NAZI regime, worked in a plan for the reconstruction that would happen, sooner or later. The economics professor Walter Eucken’s resistance group was not just limited to academic opposition. One of his disciples, Ludwig Erhard was part of the group of businessmen, intellectuals and other notable economists and legal scholars who shared a vision of a free market economy. He was educated at the University of Frankfurt and had been a disciple of the free market economist, Wilhelm Roepke. Erhard wrote drafts of a plan that he sent to Carl Friedrich Goerdeler, an important leader of the resistance.

During the U. S. takeover, their archives fell in the hands of the high command. The rest is history, but not well known. Erhard was called in to interview with General Lucius D. Clay, the Allied commander and Deputy Governor of Germany and ended up in charge as Director of Economics of the occupied zone. His first assignment was to oversee monetary reform and implement the Marshall Plan. General Clay was a key assistant of General Eisenhower. His career was as an administrator and logistics expert, not in combat. Like Eisenhower, they were preoccupied with how the war effort had transformed the economies of the Allies into command economies, far from what the American free market economy had been, and not very different from the ones in NAZI Germany or the Soviet Union. Americans should remember Ike as the first one to warn about the “military-industrial complex”.

General Clay and General Eisenhower
Liberated West Germany from the Marshall Plan

At that moment in history, one non-academic book was circulating as a best seller. Keynes’ livelong intellectual nemesis, Friedrich A. von Hayek had published in 1944 “The Road to Serfdom”. The following year, the Reader’s Digest magazine published a condensed version for the public at large that sold in millions. Hayek warned that Western democracies, including the United Kingdom and the United States, had "progressively abandoned that freedom in economic affairs without which personal and political freedom has never existed in the past". The Road to Serfdom was not just a criticism of the centrally directed war effort, but also a warning against the rising influence of Keynes. Whether or not Clay or Eisenhower had read it, and shared Hayek’s concern is not certain, but “it was in the air”.

THE ROAD TO SERFDOM
A must read in 2024

This is the short story as told by Erhard in private among friends in Guatemala and in London. Erhard was confronted with a dilemma. He could attempt to implement the Keynesian Marshall Plan devised in Harvard with the central controls already in place that existed from Hitler’s regime that the allies had tried to drive, or to liberate the economy. He had proposed many changes to the Marshall Plan, but to no avail, until General Clay told him: “You are not authorized to make changes nor I to approve them. But you can trash it. You have the power to implement your plan.” Clay was also contemplating for the whole territory the Federal political organization proposed in Bavaria. This became the template for the Constitution of the Federal Republic of Germany. Erhard, a Bavarian, went ahead and trashed the Marshall Plan, a decision that resulted in the German Economic Miracle. When General Clay informed Erhard that all the American and English economic experts were opposed and greatly concerned about the consequences of eliminating all wage and price controls, Erhard replied, “So are mine.” Americans today have forgotten that “the war effort” created domestically the same type of government controls over the economy that Hitler had imposed in Germany.

Ludwig Erhard as 
Director of Economics of the Occupied Zone
later known as West Germany

A complete description, of course more diplomatic and documented, can be found in his best seller “Prosperity Through Competition: The Economics of the German Miracle” (1958). Erhard went on to be appointed as Minister of the Economy during Konrad Adenauer’s government and was elected Chancellor in 1963.

Erhard the celebrity of 
The Economic Miracle

Erhard knew that two key free market policies needed to be implemented immediately: a new monetary system and the elimination of all wage and price controls. He did it overnight, on a Sunday in June, when the bureaucrats were not able to blink. Each German would be given forty new Deutschmarks to be followed by a second installment of twenty. Credits and debts would be converted into the new currency at the rate of ten to one, all the old NAZI bills could be trashed. The following paragraphs are his description of what happened.

“The black market suddenly disappeared. Shop windows were full of goods, factory chimneys were smoking, and the streets swarmed with trucks. Everywhere the noise of new buildings going up replaced the deadly silence of the ruins. If the state of recovery was a surprise, its swiftness was even more so.”

“In all sectors of economic life, it began as the clock struck on the day of the currency reform. Shops filled up with goods from one day to the next; the factories began to work. On the eve of currency reform, the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later, they thought of nothing but producing them. One day apathy was mirrored on their faces, while on the next the nation looked hopefully into the future.”

“This measure of the undisputed success of the policy demonstrates how much more sensible it is to concentrate all available energies on increasing the nation’s wealth rather that to squabble over the distribution of this wealth, and thus be sidetracked from the fruitful path of increasing the national income. It is considerable easier to allow everyone a larger slice out of a bigger cake than to gain anything by discussing the division of a smaller cake.”

Erhard definitely was what, two decades later, is referred to as a “supply-side economist”, fully aware that the Law of The Market is a law of nature, a law that economic science recognizes as its fundamental principle. I discussed this concept as “Say’s Law” in “The Illusionists of Inflation”.

Who coined the phrase about the economic miracle? Most likely a frustrated Keynesian that did not understand what happened.

The United States under President Eisenhower did much to dismantle the apparatus of bureaucratic control created under the New Deal and the WW II effort. That did not happen in most of Europe, until Margareth Thatcher began the dismantling one generation later. 50 years later, the entrenched policies and bureaucracies seem to have taken over again, just as they create what looks like a WW III.

Hong Kong, Taiwan, South Korea and Singapore
More miracles emerge as the economies gain freedom

Just a few years behind what Erhard was doing in West Germany, The Tigers of Asia were awakening. One difference is that they began as poor, developing countries, without the human capital and previous infrastructure that Germany had enjoyed. Professor Alvin Rabushka, associated for many years with the Hoover Institution, published several books and numerous articles describing the “Economic Miracles of Hong Kong, South Korea, Taiwan and Singapore. What was the recipe? Stable currency and liberating the market forces. In only two generations they left poverty and underdevelopment behind. Today, 50 years later, these economic Tigers are among the most prosperous and free countries in the world. The sad exception is Hong Kong that was taken over by communist China in 1996 after being “loosely” (freely and with a minimum law and order government) under British control for 156 years as a colonial trading post. Hong Kong has been in decline for twenty years and serves mostly as the laundry of all the dirty deals of the Chinese Communist Party, including dumping and as a gateway for foreign investment.

Japan began the post-war with its own Marshall Plan
The four Asian Tigers on their own have surpassed it
Singapore is now 40% wealthier than the USA (100)

As we face the future in 2025, America needs an economic miracle that will restore the reliability of the US Dollar as a safe and sound currency. It should be safe from our own government. Restoring the US Dollar as a currency of reference in the world would add to our strength to promote American values around the world and protect the world’s savings against the destructive wave of Keynesian monetary policies. To stop inflation, the federal budget needs to be under control with a supermajority law that requires a balanced budget. State governments have such commonsense requirement. All expenses originated in Keynesian “demand stimulus programs” should be forbidden. A re-prioritization of the programs that distribute wealth should be returned to the state budgets and approved under the balanced-budget laws. The invisible costs of government regulations should be transparent. The recent Supreme Court decisions are clear: the bureaucracy does not have the power to legislate beyond what the Acts of Congress establish, nor can they be the administrative judges of their own decisions. Abusive, intrusive, unnecessary and politically motivated regulations should be eliminated. Subsidies and grants to promote specific sectors of the economy when they are not feasible under market conditions should be prohibited. Subsidies and grants to the states that promote policies contrary to the policies of their jurisdictions should be prohibited. Taxes should be transparent and all citizens and foreign residents benefitting from the services provided by government should contribute to their cost. Taxes should not be arbitrarily imposed on some and lifted from others. The tax burden should be such that politicians can’t use the tax system as a threat to some for the benefit of others.

Major revisions to the Executive branch should be made under the lens of the U. S. Constitution. The growth and extension of the administrative state would find itself in multiple violations. Departments such as Education, Energy, Health and Human Services, Housing and Urban Development, Agriculture, Labor, Commerce, and Transportation are highly questionable. How many of those functions belong to the states? If there is a role for the federal government, what should that role be?

Other institutions should be examined, such as the FED, Federal Reserve System. Its original function was to preserve the value of the currency and establish a stable price level. Since the Great Depression and subsequent economic crisis, Keynesian monetary theory has re-shaped its mandate. It now can alter the value of the currency at will, manipulate credit, and create inflation or deflation “as needed” to maintain employment and unemployment at politically acceptable levels. In other words, it is clearly in direct violation of the original intent. Moreover, if you have followed my arguments critical of the New Economics promoted as a cure for the collapse of the free market economics, all the changes are based on an error of the academics that promoted them. Or worse if the links to the intent to “debauch” the currency have any basis. This would require a major discussion that had already started. In 1976, Friedrich A. Hayek published his ideas about a currency system for the future in “The Denationalization of Money”. At one time decades ago, a new currency could have been created having as reserves “other stable and dependable” currencies. The US Dollar, the British Pound, and the Swiss Franc come to mind. The problem is that in 2025, all the currencies in the world have been contaminated with Keynes “monetary agitation”. What if the government let anyone use a currency of his choosing? What if the government permitted entrepreneurs to innovate in the monetary sector, such as by creating digital currencies or minting commodity money? This is precisely what F. A. Hayek suggested. There are many that would like to return to the gold standard, which could be another possibility.

One final discussion should be questioning what under the principles of the U. S. Constitution could be a clear limitation to the power of governments to intervene or interfere in the market. It is fortunate that two important documents were made public in 1776. One is the “Declaration of Independence” of the united Colonies. The other one is “An Inquiry into the Nature and Causes of the Wealth of Nations”, published by Adam Smith. It is no accident that some of its key ideas found their way into the U. S. Constitution. Once established as the United States of America, why did the interstate borders disappear?

Obama-Biden-Harris abusers of Keynesian errors
Masters of Deception

President Calvin Coolidge is often quoted for his declaration in 1925 that “The chief business of the American people is business.” His observation has the limitation that it leans towards the business side, ignoring the consumer side. We are now used to the phrase that the American economy is driven by consumer spending. The economic activity of the American people is commerce, including the business interests and the consumer interests. All transactions have a buyer and a seller that voluntarily agree to exchange what they both have judged to be in their benefit. The role of government is not to take one side or the other; it is the preservation of the integrity of the system as such. The two major political organizations seem to ignore this, and each one has become identified with one opposing side. Anything that is peaceful does not require the intervention of the powers invested by the people on those temporarily in public office. One role government has in the economy is maintaining a monetary system that is stable in value. Changes in the value of money alter a key clause of all contracts: the price over time. Another one is the preservation of competition. The market should be open to all innovations, reducing the entry requirements to a minimum. Property rights must be protected for everyone. Disputes should be resolved quickly and fairly. The U. S. legislation and judicial system had been considered a good model to follow. Many international contracts are radicated here, even in the parts are all foreign. For businesses, which require long term investments to mature, stable rules and taxes are crucial. Capital, financial and human, should be welcome.

What is not acceptable is what has been happening during the last three decades. Every political cycle has brought an economic and financial crisis. The concept of a government with limited powers no longer exists. Radical swings in policy have occurred from the control of one party to the other. A business and consumer climate of stability is gone. Budget deficits, arbitrary regulations, abusive exercise of executive powers, favoritism, prohibitions, and clear interference in the market activities for political purposes have become the norm. And still, we brag we are doing better than others as the explanation as to why the people should not complain. An old maxim explains this foolish attitude: “A malady of many is a fool’s consolation”.

   Imagine how much better we could be as nation if these reforms were adopted. Imagine what they would mean to you, your family and your community.

 

THE SUBTLE DEBAUCHERY: Keywords: Debauch the currency, inflation, Keynes, Lenin, Yellen, communism, Soviet Union, Jesuit guerrillas, straw-man fallacy, Ronald Reagan, Margareth Thatcher, St. John Paul II Pope, Centesimus Annus, Teilhard de Chardin, Henri de Lubac, Jacques Maritain, and the Germans Karl Rahner, and Paul Tillich. Tillich, Gustavo Gutierres of Peru, and Jesuits Juan Luis Segundo, Jon Sobrino, Ignacio Ellacuria,

 

Venezuelans with their last loaf from the bread line before leaving to the USA

THE SUBTLE DEBAUCHERY

 

                I began this search for answers by remembering how many people with good intentions embraced the ideas of communalism in the not distant past and failed.

                Life in a prosperous community where opportunity is open to everyone is based in respecting the right of people to decide what to create and what to do with it. This concept is the idea of property. When people freely exchange what they produce or own, the market economy emerges, and people prosper without a “common” plan. It is unnecessary to call it “private”. Tenancy in common is the term appropriate to managing any resource by a group. The larger the group, the more evident it becomes that is not as effective. State property or government property are empty phrases that can be best described as oxymorons.

                Strong communities, as extensions of groups of families, transcend time for many generations. Bureaucrats, technocrats and temporary politicians can only develop a short-term vision of the future they want to impose, and they do it with resources they don’t really own. Communist parties only plan in terms of five years, and they are always revising their plans for their failures to meet the “common” goals. The mask of “scientificism” hid the ignorant arrogance that empowered political leaders that no longer had good intentions. It seems we are only discovering that. What the early communes described as distress and hunger ended in their closing and most people went away searching for a better option. The modern communist regimes have been fatal. They are difficult to escape from. They used intentional famines in the last hundred years to subdue or eliminate an estimated 200 million people under their system of communal (communist) state farms.

                I continued this search for answers to the questions of why government officials and politicians in campaign are always acting empathetic and charitable with public funds (other people’s money). The key word is acting, from theatrics. In their private lives, they may be with their own money what they pretend as public officials. But they can’t be using the public resources as described in the anecdote of Davy Crockett. Government money is not theirs to give. Why do they get away with? Many people still have a lingering memory of when the powerful kings and lords, popes and bishops, were charitable at their pleasure simple because the right of owning ourselves, our labor, and property was not generalized. Our ancient languages and classic literature reflect this attitude that makes it easy for the new powerful to offer everything for free by the grace of the pork barrel. How we respond to the offers of “free” everything in our system of free people may very well be the force that destroys it.

          

1970 Prophecy

     

               Several decades ago, I used to read a comic strip named Pogo. On the occasion of the birth of Earth Day, Pogo (J. Madison and W. Kelly) looked in the mirror and exclaimed: “We have met the enemy, and the enemy is us”. Ecological hysteria seems to have followed as the substitute ideology-religion after communism and socialism failed. It is just another ploy to transfer the control of resources to the apparatus of the state. Instead of being charitable and empathetic, they have offered during the last fifty years a heroic vision of themselves saving the planet. Half a century later, the people seem to catch on to the fraud. Environmental hysterical catastrophism is waning. Communism ideology and its supporting pseudo-scientific construct died by the end of the XIX, but its political spell dissipated only after 100 years. It is still going around as the latest of a mutating virus, more infectious, and less lethal in appearance. If it is not the ozone hole caused by the gases used in spray deodorant, it is the new ice age caused by emissions from pollution caused by automobiles, only to be substituted by acid rain, or global warning, giant tsunamis, rising tides, or something mysterious and nebulous about the climate, all catastrophes impossible to fully comprehend, but always the accusing finger pointing to the market economy that many people still call capitalism. The government has decided what kind of vehicle you can drive, what can of energy you can use, what kind of lightbulbs, toilets, toasters, ovens, showers, windows, ceiling fans, air conditioners, leaf blowers…you can buy. It has closed mines and power plants, pipelines, refineries, manufacturing plants… It has forbidden pizza ovens, fireplaces and bbq grills and smokers because they use wood. All in the name of saving the planet. Did anybody ever ask why they don’t mention the ozone hole or the ice age anymore?

                Pogo had it right. There is an enemy within; an infection festering inside the scientific/ academic/educational establishment that serves the state. The recent public health crisis caused by the COVID epidemic exposed what has been happening across the educational system, public or private, from elementary to doctoral levels. It is no accident the ideas and actions being promoted as health measures have the same origin as the deteriorating economic and social conditions: Socialism in disguise. It is an error of reason and science.

Great Depression era food line. Photo by D. Lange

                It begins with the fallacy called “the straw man”. The description is simple. You construct a scarecrow with all the ugly adjectives you know, and you give it a name. Then, you beat it to a pulp and declare victory. The enemies of the free and open society saw at the beginning of the XIX century an emerging industrial economy in Europe. They could see the changes in labor that technological change was bringing. Smokestacks were the most popular image of the new era. They saw institutions struggling to emerge out of the government controls of mercantilism. They suffered the horrors of the many senseless wars between royal cousins, and a process of massive emigration from the rural areas that stressed urban growth. They called it “capitalism”. The picture was ugly. Was it what we now understand as capitalism? Was it the same system that has taken a more defined form a century later as an open society with a market economy? The transformation from the “ancien régime” into what we now may call modern times did not happen overnight, like turning on an epoch of history with a light switch. How a free and open society has begun to take shape does not conform to their images that are trapped in their times. Marx, Comte, Popes Pious IX and Leon XIII, C. Bronte, E. Gaskell, C. Dickens, Victor Hugo and the emergence of “realism” in literature describe this period. Marx’s elucubrations about the forces of history had plenty of supporting evidence that he projected into a linear future. The history of human progress has proved him wrong.

It is easy to beat on a straw man fallacy
Everything falls apart

                The observations and criticisms of the literati and intellectuals were turned into the punches that beat the straw man. They were describing a decaying European society and giving something novel for academics to study under the spell and enthusiasm of an infant scientificism. The XIX century political convulsions consumed a decaying Europe, and many alternatives for the future were proposed as a substitute to the capitalism they had imagined. The XX century’s period between world wars provided what they called “the end of capitalism”.

Young J. M. Keynes, 1919
Author of The Economic Consequences of the Peace

                On the other side across the ocean was America suffering the same transformation, but without the chains of the legacy of the old order; capital, ideas and entrepreneurs fled the old world; masses of impoverished war refugees brought their skills and dreams; together they accelerated the maturity of the new order for the centuries. They created the “middle class” that proved the anti-capitalist prophets wrong. By the birth of the XX century, Europe was in ashes and the United States of America had become the most prosperous and powerful nation in the world. America saved Europe from its own errors in WW I at great costs. It did it again in WW II and has been doing it since. But the anti-capitalism mentality was never corrected. Instead, the infectious virus took hold of American institutions with the arrival of many ungrateful academic refugees still fighting with their European legacy. This is how we now have enemies within.

                Reason, confirmed by the facts of history, point to what should have been the end of the argument about the “straw man”. If it is a fallacy, an error in logic, all the intellectual construct that was built upon it is an error too. Remember the parable of the foolish builder who built his house on sand. It rained, floods came, and the winds blew on the house; and it fell. This explains why I continued my search for answers analyzing the alternative that was discreetly used to cover the errors with more errors. Indifferently called Keynesianism or New Economics, and more recently Neo-Keynesianism, these damaging errors have been legislated and empowered governments further in the artful illusionism of free public charity. I have not been alone in this concern, and I mention many original critics and contributors to the science that supports the economic system of free people for those interested in turning the tide of free loafers.

Prime Minister Margareth Thatcher and President Ronald Reagan
Two champions of the Cold War meeting at the White House

                Three people are responsible for exposing the fallacy of socialism/communism. Their message was like the storm that blew the house built on sand until it fell. Prime Minister Margaret Thatcher, President Ronald Reagan, and Saint John Paul II Pope, with their clarity of thinking brought the Berlin Wall down, and with it the Soviet Union that was the head of the Comintern (The Communist International). The intellectual work and influence of St. John Paul II has received less attention in the English-speaking world, where a lingering medieval anti-Catholic bias persists. The most extraordinary admission that a century and a half of beating the straw-man was in error came from the Vatican in 1981. In his message to the more than one billion Catholics and the world titled “Laborem Exercens” (1981), he corrected a century of errors of previous popes caused by the fallacy of “the straw man”. He clearly distinguished “early nineteenth century capitalism” from the recent and evident progress made by free markets. Ten years later, he went further with an instruction of hope to all those countries that had gotten rid of the soviet chains. In “Centesimus Annus” (1991) he stated: “If by ‘capitalism’ is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a ‘business economy’, a ‘market economy’ or simply a ‘free economy’.”

President Ronald Reagan meeting Pope John Paul II
Two champions of the Cold War at the Vatican

                Unfortunately, the intellectual rot was already inside the Vatican, but particularly, in many of the 1,340 Catholic universities around the world, all of them operating as “seminars” for future clerics. The radicalization of the Christian churches, the Catholic Church included, was led by the radical Jesuit theologians that preached anti-capitalism, anti-Americanism, and frankly, an anti-Christ message who was portrayed as a revolutionary. This had given rise to what became known as “Liberation Theology”, but the seed was planted during the French revolution’s aftermath. Joseph de Maistre (1820) and Félicité Lamennais (1829), lamenting the excesses of the French Revolution’s anti-clerical and secular violence, were critical of “extreme individualism”. They associated it, not only with the emergence of biblical Protestantism, but with England and the Germanic northern regions, traditional enemies of anything French. The seed grew into a new theology championed by Teilhard de Chardin, Henri de Lubac, Jacques Maritain, and the Germans Karl Rahner, and Paul Tillich. Tillich once said, “Any serious Christian must be a socialist”. In the usually enigmatic Jesuit talk, the attack on “extreme individualism” leads invariably in the minds of the listener to its opposite: collectivism.

                The new theology was Marxist in its methodology and emphasized the "liberation of the oppressed". It became the urbane and tolerated ally of the radical guerrillas that had already been linked to the Soviet expansionism in Latin America. It replicated later in Africa, and finally in India. In Latin America, it took control of Jesuit universities and even of the CELAM, the Conference of Latin American Bishops. The better-known intellectual leaders were Gustavo Gutierres of Peru, and Jesuits Juan Luis Segundo, Jon Sobrino, and Ignacio Ellacuria. A disproportion of the liberation theologians of Latin America were really European expatriates, many from Spain and the Vasque country. Sobrino is credited with the phrase “preferential option for the poor”. The Jesuit Province of Central America became the recruiting and training ground, not just of priests and nuns, but of guerrilla commanders and medics. The civil wars of the 1960s to the 1980s in Central America are directly linked to their activism. It is no coincidence that St. John Paul II made several extended visits to this area, even to Nicaragua, where the new revolutionary government of the Sandinistas was directed by Jesuit priests. They were promptly expelled from the order and defrocked.

Pope John Paul II reprimanding Fr. R. Cardenal
upon landing at Managua´s Airport.
On the left, the still dictator Daniel Ortega

                The position of Saint John Paul II could not have been clearer to the Catholic gray than when in 1981 he intervened the Jesuit order. Time reported it as “…a move interpreted as a warning to all religious orders, he suspended the normal workings of the Jesuit Constitutions, removed the acting leader of the organization and replaced him”. It was the greatest blow to the Society of Jesus since the order was supressed in 1773 by Pope Clement XIV. The Polish pope did not allow the election of a new Superior General for years, and his successor Pope Benedictus XVI continued the effort to reform the Jesuits. Unfortunately, when pope Ratzinger retired, they came back with a vengeance and managed to elect an Argentinian Jesuit that has been undoing what his two predecessors had done. Pope Francis is woke, has fallen for all things environmental, caved under pressure from Xi by accepting Xi’s appointing a bishop for Shanghai, and negotiated with Secretary of State Blinken the censorship of the United States Conservative Bishops who wanted to excommunicate Biden and Pelosi for promoting abortion without limits while pretending to be “faithful Catholics”. He even pardoned and reinstated the communist priests St. John Paul II had defrocked. The reform St. John Paul II begun failed.

                What about Thatcher’s Conservative Revolution and Reagan’s New Federalism? England just elected again a Labor (Socialist) government, and the United States seems to be transitioning from an extreme Keynesian government (Fabian socialism) to the first communist government and the end of the representative constitutional republic that stood for nearly 250 years.

Meeting of communist dictators
Miguel Diaz-Canel of Cuba; Daniel Ortega, of Nicaragua; Nicolás Maduro, of Venezuela; and Luis Arce, de Bolivia. Met in Caracas to commemorate the 10th anniversary of Dictator Hugo Chaves death.
They all consolidated their power by debauching their currency with hyperinflations

                 It is obvious to me that what we clearly see happening now in the United States is not an isolated regression, and it did not just happen overnight. In previous pages I devoted a lot of attention to what a “compromise” means when opposing principles and fundamentals are at stake. I refer to Keynesianism as an effort to produce the image of a mixed economy. It can supposedly combine the best the free market can offer with a supposed efficient centralized management the state experts can provide. I compared it to an oil and vinegar salad dressing. To combine it requires a lot of agitation. As soon as agitation stops, the two parts separate naturally because they are not compatible. Keynesianism requires agitation to be justified. It is invited when economic anxiety, a slowdown, and unemployment are forecasted. Then, there is political agitation and Keynesianism gets into the market as an intruder and causes a correction by causing a boom with low interest rates and inflation. More agitation comes as real wages drop and scarce capital is misdirected. Another correction comes and a recession is caused raising interest rates that result in unemployment, and a new correction is needed… The logical conclusion is simple. There is no end to the cycle because agitation is always needed. Agitation is more than a word on paper. It means social convulsion; it means a public state of anxiety and anomie; it means massive transfers of wealth from some groups to others, destruction of scarce capital, price controls, rationing at times and excessive inventories at others. It also means an ever-growing increase in the controls the state has over the lives of the people. It requires the growth of the state apparatus and a growing dependence on the state’s handouts. The list of consequences ends my comments about the Illusionists of Inflation.

                The erosion of the wealth of the people and of the soul of the nation is gradual and difficult to perceive until it is too late. Compromising and negotiating becomes an endless series of crisis. In their error in science, they called it “the business cycle”. The name is a misdirection that evades all responsibility in those that believe that the government should be in absolute control of money, banking and credit. They blame business, who is us, We the People. We are the victims, not the perpetrators.

                I began these meditations remembering how the ideas of living in a perfect and happy community of well- intentioned people start by eliminating the institution of individual and separable ownership of resources. What if there are no good intentions involved?

                What if Keynesianism never had the intention of correcting what they identified as inherent deficiencies of the market economy? What if they have always known of the required agitation and growing controls? What if they use it to lubricate the path towards their goal avoiding the violent revolution their previous models required?

                In “The Illusionists of Inflation” I gave enough evidence to conclude that John Maynard Keynes was always a socialist, albeit of the Fabian kind. He preached his visions from a comfortable oversized leather armchair while smoking a cigarette and sipping expensive scotch whisky. I also included the following quote about inflation he published in the book that brought him initial notoriety. “The Economic Consequences of the Peace” (1919) became a bestseller with a warning that went unheeded. Keynes had participated as part of the British delegation in the discussions that led to the Treaty of Versailles that ended WW I. He resigned before the treaty was concluded in despair over the extreme reparations and conditions the Allies were imposing on Germany. He had concluded that trying to meet those conditions would inevitably create such internal crisis that Germany would resort to war again. Time proved him correct. He illustrated this point thus:

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”

Keynes predicted the rise of Hitler and other dictators
that would lead to WW II due to hyperinflations

                What I did not indicate is that Keynes attributed this terrifying dictum to the founding father of state terrorism, Lenin. It is usually shortened as “The best way to destroy the capitalist system is to debauch the currency.” A hundred years later, there is still controversy as to its origin as it does not appear in the collected works and documents of the Lenin archives. Critics claim Keynes made it up. In the Journal of Economic Perspectives of the Spring 2009, Michael V. White and Kurt Schuler report their findings on the issue, “It is now possible to show that Keynes based his remark on a report of an interview with Lenin published by London and New York newspapers in April 1919. Keynes’ discussion of inflation in the Economic Consequences can then be read as an extended commentary on the remarks attributed to Lenin in the interview”.

                White and Schuler explain what was happening in 1919 and the consequences that Keynes predicted, “Old governments clinging to power or revolutionaries trying to seize power found, either by design or effect, that inflation was the quickest way to supply their spending wants. By the time Keynes wrote The Economic Consequences of the Peace, events were in train that by 1923 would lead to hyperinflations in Austria, Germany, Hungary, Poland, and Russia. All fit the definition of a hyperinflation as a period where inflation exceeds 50 percent a month for at least three consecutive months”.

                The famous quote appears in Chapter 6 of Keynes’ book, at the end of the following paragraph, “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose”.

 

V. U. Lenin
Father of modern state sponsored
terrorism through inflation

                The interview with Lenin while he was in Geneva was published on April 23, by The New York Times and in London by the Daily Chronicle. One of the interviewer’s notes describes Lenin’s obsession with a plan to destroy the power of money in the capitalist system. Within a rambling series of attacks, Lenin describes his personal experience as to how to weaponize monetary inflation describing what he had been doing in the recently created Soviet Union.

 

Keynes leading discussions of the Treaty of Bretton Woods
in 1944 to set new rules of international monetary exchanges
after most monetary systems had been destroyed 

                “Hundreds of thousands of rouble notes are being issued daily by our treasury. This is done, not in order to fill the coffers of the State with practically worthless paper, but with the deliberate intention of destroying the value of money as a means of payment. There is no justification for the existence of money in the Bolshevik state, where the necessities of life shall be paid for by work alone. Experience has taught us it is impossible to root out the evils of capitalism merely by confiscation and expropriation, for however ruthlessly such measures may be applied, astute speculators and obstinate survivors of the capitalist classes will always manage to evade them and continue to corrupt the life of the community. The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort. Already even a hundred-rouble note is almost valueless in Russia. Soon even the simplest peasant will realize that it is only a scrap of paper, not worth more than the rags from which it is manufactured. Men will cease to covet and hoard it as soon as they discover it will not buy anything, and the great illusion of the value and power of money, on which the capitalist state is based will have been definitely destroyed. This is the real reason why our presses are printing rouble bills day and night, without rest”. The reason why Lenin was announcing this policy to the world followed, “…this simple process must, like all the measures of Bolshevism, be applied all over the world in order to render it effective. Fortunately, the frantic financial debauch in which all Governments have indulged during the war has paved the way everywhere for its application...”

 

                I am sure Secretary of the Treasury Janet Yellen is a good grandmother even if she eats hallucinogenic mushrooms when she goes to China to bow to the officials of the CPC. I am sure she has good intentions every time she orders the printing presses to print more dollars. I am sure the attorney and Wall Street banker Fed Chair Jerome Powell had good intentions every time he raised the interest rates in his efforts to reduce the inflationary effects caused by Grandma Yellen. I am sure he noticed he was burning the brakes at the same time Grandma was pushing the accelerator even more. I am sure they know what they are doing.

 

                     Are you sure? Are the next ones going to have good intentions too?

Chilean President Salvador Allende hosting Fidel Castro during
his state visit. Allende was deposed when inflation reached 170% per year

Citizens in Caracas line up to buy scarce groceries at government control stores
 It could be Denver, or El Paso, or Provo, or Santa Fe, or Riverside...

             

           Think about this announced strategy when you analyze how the firm takeover of Cuba, Nicaragua, and Venezuela happened. Allende’s Chile reached 170% annual inflation. Argentina has had several periods of socialist control and subsequent destruction of their currency. The list should include many countries in Africa and Asia that are still struggling to rid themselves of their socialist or communist heritage, such as: Angola, Chad, Congo, Ethiopia, Ghana, Sierra Leone, Zimbabwe, and Laos. The previous list includes the countries with the highest double-digit current rates of inflation in the world, excepting Turkey, Iran and Syria that have similar inflationary rates under different forms of one-party systems.