/tag/currency

2 quotes tagged 'currency'

Publisher: Founders House (2015)

159-161

No matter how you twist and turn the matter, Greece is never going to be able to pay its national debt. Neither are Spain, Italy, or half a dozen other nations that ran up big debts when it was cheap and convenient to do so, and are now being strangled by a panicking bond market and a collapsing economy. This isn't new; most of the countries on Earth have either defaulted outright on their debts or forced renegotiations on their creditors that left the latter with some equivalent of pennies on the dollar. The US last did that in a big way in 1934, when the Roosevelt administration unilaterally changed the terms on billions of dollars in Liberty Bonds from 'payable in gold' to 'payable in devalued dollars,' and proceeded to print the latter as needed. That or considerably worse will be happening in Europe in the near future, too. \nA good deal of the discussion of these upcoming defaults in the blogosphere, though, has insisted that these defaults will lead to a complete collapse of the world's financial economy, and from there to an equally complete collapse of the world's productive economy, leaving all seven billion of us to starve in the gutter. It's an odd belief, since sovereign debt defaults have happened many times in the recent past, currency collapses are far from rare in economic history, and nation-states can do - and have done - plenty of drastic things to keep goods and services flowing in an economic emergency. Partly, I suspect, it's our old friend the apocalypse meme - the notion, pervasive in modern culture, that the only alternative to the indefinite continuation of business as usual is some unparalleled cataclysm or other. \nStill, there's another dimension to these fantasies, which is simply that the financial industry has done a superb job of convincing people that what they do is important to the rest of us. It's true, to be sure, that having currency in circulation makes economic exchanges easier, and the kind of banking services that people and ordinary businesses use are also very helpful, but governments used to produce and circulate currency without benefit of banks until fairly recently, and banking services of the kind I've just mentioned can be provided quickly and easily by a government that means business; in 1933 it took the US government just over a week, at a time when information technology was incomparably slower than it is today, to nationalize every bank in the country and open their doors under Federal management. The other services the financial industry provides to the real economy can equally well be replaced by hastily kluged substitutes, or simply put on hold for the duration of the crisis. \nSo the downside of any financial crisis, however grandiose, can be stopped promptly by proven methods. Then there's the upside. Yes, there's an upside. That's the ultimate secret of the financial crisis, the thing that nobody anywhere wants to talk about: if a country gets into a credit crisis, defaulting on its debts is the one option that consistently leads to recovery. \nThat statement ought to be old hat by now. Russia defaulted on its debts in 1998, and that default marked the end of its post-Soviet economic crisis and the beginning of its current period of relative prosperity. Argentina defaulted on its debts in 2002, and the default put an end to its deep recession and set it on the road to recovery. Even more to the point, Iceland was the one European country that refused the EU demand that the debts of failed banks must be passed on to governments; instead, in 2008, the Icelandic government allowed the country's three biggest banks to fold, paid off Icelandic depositors by way of the existing deposit insurance scheme, and left foreign investors twisting in the wind. Since that time, Iceland has been the only European country to see a sustained recovery. \nWhen Greece defaults on its debts and leaves the Euro, in turn, there will be a bit of scrambling, and then the Greek recovery will begin. That's the reason the EU has been trying so frantically to keep Greece from defaulting, no matter how many Euros have to be shoveled down how many ratholes to prevent it. Once the Greek default happens, and it will - the number of ratholes is multiplying much faster than Euros can be shoveled into them - the other southern European nations that are crushed by excessive debt will line up to do the same. There will be a massive stock market crash, a great many banks will go broke, a lot of rich people and an even larger number of middle class people will lose a great deal of money, politicians will make an assortment of stern and defiant speeches, and then the great European financial crisis will be over and people can get on with their lives.

The Illuminatus! Trilogy

Author: Robert Shea and Robert Anton Wilson

Publisher: Fine Communications (1998)

786

Flaxscrip was first introduced into Discordian groups by the mysterious Malaclypse the Younger, K.S.C., in 1968. Hempscrip followed the year after, issued by Dr. Mordecai Malignatus, K.N.S. (In the novel, taking one of our few liberties with historical truth, we move these coinages backward in time and attribute hempscrip to the Justified Ancients of Mummu.) The idea behind flaxscrip, of course, is as old as history; there was private money long before there was government money. The first revolutionary (or reformist) use of this idea, as a check against galloping usury and high interest rates, was the foundation of 'Banks of Piety' by the Dominican order of the Catholic Church in the late middle ages. (See Tawney, Religion and the Rise of Capitalism.) The Dominicans, having discovered that preaching against usury did not deter the usurer, founded their own banks and provided loans without interest; this 'ethical competition' (as Josiah Warren later called it) drove the commercial banks out of the areas where the Dominicans practiced it. Similar private currency, loaned at a low rate of interest (but not at no interest), was provided by Scots banks until the British government, acting on behalf of the monopoly of the Bank of England, stopped this exercise of free enterprise. (See Muellen, Free Banking.) The same idea was tried successfully in the American colonies before the Revolution, and again was suppressed by the British government, which some heretical historians regard as a more direct cause of the American Revolution than the taxes mentioned in most schoolbooks. (See Ezra Pound, Impact, and additional sources cited therein.) During the nineteenth century many anarchists and individualists attempted to issue low-interest or no-interest private currencies. Mutual Banking, by Colonel William Greene, and True Civilization, by Josiah Warren, are records of two such attempts, by their instigators. Lysander Spooner, an anarchist who was also a constitutional lawyer, argued at length that Congress had no authority to suppress such private currencies (see his Our Financiers: Their Ignorance, Usurpations and Frauds). A general overview of such efforts at free enterprise, soon crushed by the Capitalist State, is given by James M. Martin in his Men Against the State, and by Rudolph Rocker in Pioneers of American Freedom (an ironic title, since his pioneers all lost their major battles). Lawrence Labadie, of Suffern, N.Y., has collected (but not yet published) records of 1,000 such experiments; one of the present authors, Robert Anton Wilson, unearthed in 1962 the tale of a no-interest currency, privately issued, in Yellow Springs, Ohio, during the 1930s depression. (This was an emergency measure by certain local businessmen, who did not fully appreciate the principle involved, and was abandoned as soon as the 'tight-money' squeeze ended and Roosevelt began flooding us all with Federal Reserve notes.) It is traditional among liberal historians to dismiss such endeavors as 'funny-money schemes.' They have never explained why government money is any less hilarious. (That used in the U.S. now, for instance, is actually worth 47 percent of its 'declared' face value). All money is funny, if you stop to think about it, but no private currency, competing on a free market, could ever be quite so comical (and tragic) as the notes now bearing the magic imprint of Uncle Sam—and backed only by his promise (or threat) that, come hell or high water, by God he'll make it good by taxing our descendants unto the infinite generation to pay the interest on it. The National Debt, so called, is of course, nothing else but the debt we owe the bankers who 'loaned' this money to Uncle after he kindly gave them the credit which enabled them to make this loan. Hempscrip or even acidscrip or peyotescrip could never be quite so clownish as this system, which only the Illuminati (if they really exist) could have dreamed up. The system has but one advantage: It makes bankers richer every year. Nobody else, from the industrial capitalist or 'captain of industry' to the coal-miner, profits from it in any way, and all pay the taxes, which become the interest payments, which make the bankers richer. If the Illuminati did not exist, it would be necessary to invent them—such a system can be explained in no other way, except by those cynics who hold that human stupidity is infinite. The idea behind hempscrip is more radical than the notion of private-enterprise currency per se. Hempscrip, as employed in the novel, depreciates; it is, thus, not merely a no-interest currency, but a negative-interest currency. The lender literally pays the borrower to take it away for a while. It was invented by German business-economist Silvio Gesell, and is described in his Natural Economic Order and in professor Irving Fisher's Stamp Script. Gresham's Law, like most of the 'laws' taught in State-supported public schools, is not quite true (at least, not in the form in which it is usually taught). 'Bad money drives out good' holds only in authoritarian societies, not in libertarian societies. (Gresham was clear-minded enough to state explicitly that he was only describing authoritarian societies; his formulation of his own 'Law' begins with the words 'If the king issueth two moneys . . . ,' thereby implying that the State must exist if the 'Law' is to operate.) In a libertarian society, good money will drive out the bad. This Utopian proposition—which the sane reader will regard with acute skepticism—has been seen to be sound by a rigorously logical demonstration, based on the axioms of economics, in The Cause of Business Depressions by Hugo Bilgrim and Edward Levy.* * Economists can 'prove' all sorts of things from axioms and few of them turn out to be true. Yes. We saved for a footnote the information that at least four empirical demonstrations of the reverse of Gresham's Law are on record. Three of them, employing small volunteer communities in frontier U.S.A. circa 1830-1860, are recorded in Josiah Warren's True Civilization. The fourth, employing contemporary college students in a psychology laboratory, is the subject of a recent Master's thesis by associate professor Don Werkheiser of Central State College, Wilberforce, Ohio.