Nick Gillespie narrates this video sponsored by Americans for Prosperity, the Heritage Foundation, and Reason.tv that clearly shows our current economic situation.
While it seems most available information focuses attention upon the segments of the economy that appear to be responsible for this mess few possess the willingness to look upon the economy as a whole.
Here I wish to look upon the economy as a whole.
Money used to be things, commodities, that could be traded for anything else because everyone recognized and accepted their value. Precious metals eventually became the commodity of choice to use as money but throughout history almost any other thing you can imagine became used as money someplace sometime.
The concept of money, commodities with universally recognized value, is really straight forward and simple. If people harvest or produce something lacking a widespread market then trading it for something else of equal value with a widespread market opens up new trade opportunities for them.
Trade became so dependent upon money that local bullies, Priest-Kings with armies, reserved the right to issue money for themselves and with this monoply in hand controlled trade. You would think that this control over money allows Priest-King with armies to do or have anything but it was not enough.
To get more out of money, Priest-Kings came up with the idea of debasement. Since the local bullies controlled the money they changed the precious metal content of money whenever they wished.
For example, the Roman denarius originally contained about 4.5 grams of nearly pure silver. Under the Claudio-Julian Emperors the denarius contained about 4 grams of silver.
Nero reduced the silver content of the denarius to 3.8 grams. By the second half of the third century the denarius contained only about 2% silver and was replaced.
Under Diocletian (c. December 22, 244 – December 3, 311) taxes increased and extra coins were minted to pay for the military expansion intended to secure the empire. The resulting inflation debased the money and the empire’s mercenaries ended up sacking Rome for payment.
More recently, the U.S. dime was 90% silver until 1964. Starting in 1965 it no longer has any silver in it.
The Invention of Paper Money
The Chinese, inventors of the printing press, also invented paper money. During the reign of Kublai Khan, grandson of Genghis Khan and heir to the Mongol Empire, paper money became their predominant medium of trade.
The unbacked currency of Toghan Temur (r. 1333-70) produced a hyperinflationary spiral and the Han-Chinese people revolted due to the dynasty’s oppressive security state. The Mongols lost most of China to the Ming rebels in 1368 and fled to their homeland Mongolia.
The Great Debasement
In 1544, Henry VIII of England , King and head of the Church of England, reduced the silver in minted coins by about 50% and repeated this to a lesser extent the following year. The resulting long term inflation crisis threatened landowners’ wealth which pushed them to institute enclosure.
The enclosure movement essentially completed the destruction of the medieval peasant community and manorial serfdom in England. Capitalism and wage labor developed to replace manorial serfdom.
Eventually English colonies in North America rebelled against new laws prohibiting them from issuing their own money and requiring them to borrow money at interest from the Bank of England. The rebellious colonies also rejected the possibility of rule by Priest-Kings and attempted to preserve these gains for future generations with the Bill of Rights.
The following 8 minute segment from the movie Zeitgeist:Addendum provides an excellent overview of what happened next.
The financial services industry, like all powerful industries before them, demanded increasingly “handout-minded” Presidents and Representatives who inevitably mortgaged the country’s future in order to win reelection. Elections today are won with money provided directly by the financial services industry, indirectly through their lobbies and spent by their political action committees.
William K. Black most recently brought this issue to national attention.
The United States of America, founded by slave owners on stolen land, securing its empire with professionalized armed forces and mercenaries, now practices money debasement through quantitative easing.
This, along with the loss of rights to the encroaching security state, seems no different than the end phase experienced by other empires. If this were all there is, then we could all expect to go on to establishing new societies in the future.
The things that are different this time involve the global exhaustion of nonrenewable resources and world wide climate change in the face of unprecedented population levels. Without a doubt these issues complicate matters a great deal.
If you have ever thought about becoming independent from reliance upon an employer, now would be a good time to act. If you have never thought about it, now would be a good time to start thinking about it.
Personally, nothing within the boundaries of the law seems as feasible as establishing an online business. How long that remains feasible is anybody’s guess but by the time that becomes unfeasible we will be experiencing the total collapse of industrialized civilization.
And that will be the subject of another atticle.
It is no measure of health to be well adjusted to a profoundly sick society.
Jiddu Krishnamurti
