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Top Ten Lies and Mistakes of Austrian Economics

by on January 25, 2012

In the face of Austrian Economics’ ongoing onslaught through Ron Paul, the Mises Institute and Gold Dealers parading as the ‘Alternative Media’, we present the next installment in our series of articles exposing it for what it really is: just another Banker Mind Control Operation.

1. Bankers hate Gold
Nowadays everybody knows that the 19th century was called ‘the Age of Rothschild’. They controlled the Gold Market and became incredibly rich by lending the stuff to Governments.

The Money Power came to power through Gold.

They love it because it is deflationary, they can tax it with interest, they can create the boom/bust cycle with it and they control it completely.

Clearly Bankers don’t hate gold. Europe was on a Gold Standard for the entire 19th century and left it only in the thirties, due to the horrible deflation that was the Great Depression. Populists at the time finally managed to force their Governments to get rid of it. They had been warning about its deflationary tendencies for ever.

Gold is de facto World Currency.
Ron Paul: “Commodity money if voluntarily and universally accepted could give us a single world currency requiring no money managers, no manipulators orchestrating a man-made business cycle with rampant price inflation.” — Ron Paul, Congressional Record, March 13, 2001

In older days Austrian Economists would say Governments hate the Gold Standard. Alan Greenspan, one of the more famous Austrian Gold loving Bankers, wrote in 1966: “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions.

Government, of course, is Austrian Economics’s classic enemy, but the adversary du jour in the ‘Truth Movement’ are the Bankers. So to sell something we say Bankers hate it.

They did face the little problem that the American Populists would be very hard to convince of this. Not in the least because of the book ‘Secrets of the Federal Reserve’ by Eustace Mullins, who famously described who owns the FED and how it came about. Mullins of course was quite explicit in his analysis of Gold as the Banker’s favorite currency.

But Ed Griffin solved this for them. He wrote an even more famous book: ‘the Creature from Jekyll Island’. This is basically a rip off of Mullins’s book, with one difference: it proposes a Gold Standard to get rid of the FED.

In this way Griffin obscured the truth for millions of people, who assumed he was basically saying the same thing as Mullins.

2. Government is the main problem
This is the red herring that Austrian Economics is famous for. Just like the mainstream it completely ignores the Money Power.

Austrian Economics is also incredibly ‘naive’ when it comes to private interests controlling markets. Austrian Economics will always explain Governments shouldn’t mess with the economy, while ignoring the monopolistic inclination of Capital.
As a result Austrian Economics is the wet dream of the Trillionaires, as they will resist any Government action against them and their Transnationals.

Austrian Economics will actually blame Government for the fact that markets now are controlled by Transnational Cartels. Why they don’t seem to consider the shareholders and controllers responsible remains an open question.

To be fair, the analysis of Austrian Economics about the negative implications of many regulations is spot on and very enlightening.

However, to ignore the power struggle that is inevitable both in the market in and politics, is so naive and pleasant to the powerful that it is almost impossible to fathom how somebody else could have thought it up than these powerful interests themselves.

The fact is, that Governments all over the world have been subverted by private interests. And these private interests are quite homogenous. This international centralization of power, concentrated around extremely rich banking families, the Money Power, is the problem.

Government is a neutral institution, associated with a Nation. Public Opinion can always force its hand.

But when both Government itself AND Public Opinion are captive to the Money Power, Government will become quite unpleasant.

Soon, it will be obsolete, as it surrenders its sovereignty to World Government and World Currency. Governments and certainly Nations will never voluntarily surrender sovereignty.

These projects clearly belong to the Money Power.

3. Manipulation of the Volume of the Money Supply is the main problem with our money
Another red herring: manipulation of Volume is certainly quite a scourge. But it ignores an even bigger problem: Interest.

The Government currently pays 700 billion per year in debt service for the National Debt.
It matters not whether she pays this for Gold or for paper.

We currently pay $150.000 dollars in interest over thirty years for a $100.000 mortgage. Most of this mortgage was created by simple bookkeeping the moment we borrowed it.

45% of prices we pay for our daily needs are compensation for capital costs incurred by the producer.

We are Interest Slaves.

But if we can have credit by bookkeeping, clearly we should get the money interest free, because it is our credit, not the bank’s.

4. Gold guarantees a steady volume
This another very strange supposition. After all, the Gold Standards of the past saw horrible asset bubbles.

The boom/bust cycle has nothing to do with the currency, but whether the money supply is being manipulated.

The idea that Gold cannot be printed and that that give security about the volume is nonsense. Bankers routinely have withheld vast quantities of specie from circulation, only to inflate at a later stage again.

5. Inflation is bad
It is certainly true that inflation knows problems.

Inflation hurts savers,  creditors and people on pinned incomes. But it is pleasant for debtors, of which there are far more than creditors. And, very important, inflation is associated with economic growth. People stop hoarding cash and rather invest and spend.

The one sided focus of Austrianism on inflation, while actually promoting the horror of deflation (see next) makes it look like they’re demonizing inflation in order to make deflation more palatable.

6. Deflation is good
This statement is so incredibly favorable for the ultra rich, who are basically the only ones who benefit from deflation, that it puts Austrian Economics in a very bad light.

Austrians clearly promote the Deflation vs. Inflation dialectic, with all its nefarious implications.

Deflation hurts debtors. It makes their debts and the interest they pay over it worth more.

Deflation is a wealth transfer from those holding assets to those holding cash.

Deflation destroys economic growth because people rather hold cash than invest or spend it.

As a result, Deflation on all fronts makes the rich richer and the poor poorer.

7. We don’t want a Gold Standard, we want a Free Market for Currencies
This is such nonsense.There are two major reasons why it is.

1. In fact, the idea of a Currency Free Market is quite attractive. In the case that all different systems would receive the same funding and propaganda, such a market would undoubtedly see Mutual Credit Facilities providing interest-free credit prevail, see below.

However, only Gold and perhaps Silver, but not if they can avoid it, will receive all the attention and funding. In fact, Mutual Credit will be resisted actively by the Money Power.

This will not be hindered Government, who just by decree created this new ‘Free Market’, because that would be ‘statist interference’

Thus, only Gold will circulate.

2. Would there be a ‘free market’, there is Gresham’s Law. Bad money drives out good money.

It means that the units appreciating in value will be hoarded, while those depreciating will be used to pay.

Everybody will accept the depreciating unit (as long as it is not hyper inflating), because most will want to pay with it and firms will have to accept them to accommodate their customers. They won’t have a problem with that anyway. Firms don’t care what the money will be worth in a year. They want to know where they can spend it tomorrow.

This means nothing will happen if Ron Paul’s proposal to make Gold and Silver also legal tender is accepted. People will continue to pay with the Fed’s notes and hoard Gold.

Also, if you can get a Gold based mortgage costing 5% per year, or a 0% mortgage in Mutual Credit, which would you chose?

Case closed.

8. Austrian Economics is hated by the Main Stream Media
While it is true that Austrian Economics is a fringe, also in terms of Media Attention, it always has maintained a steady niche. It is not for nothing that Peter Schiff and Gerald Celente were predicting the crash in the MSM.

Lately, Ed Griffin was plugged by Glenn Beck on prime time T.V.

Judge Napolitano gets all the airtime he wants on Fox News, spouting his Austrianism. Amazingly, the fact that even Fox News will plug Austrianism does not ring a bell with people.

9. Fiat Currencies are always bad
Another typical device: a dialectic. Trying to frame it as Paper vs. Gold. Both ignoring interest.

But interest-free paper is of course something else entirely. At least it won’t suffer from the forced inflation on interest-bearing money supplies. Because the interest is not spent back into circulation, but lent back, there is never enough to pay off all the debt + interest. During a Gold Standard this is deflationary, because the money supply can’t grow. With paper, this is ‘solved’ by ever more debt. With ever more interest.

Modern Mutual Credit is inflation free. Or better: the market is in control of the money supply. It grows when it must, shrinks when it must.

Social Credit is probably inflationary, but everybody will be fully compensated for it because of the fact that they spend the inflationary cash into circulation themselves. Meanwhile, the inflation will stimulate production.

They are trying to promote the idea that Fiat Currencies are automatically bad ‘because the volume will be manipulated’.

This is the eternal clincher, killing all rational debate about how to manage all the different parameters in the different proposals.

10. The problem is the FED
The FED is a symptom, not the problem. The problem is that the Money Supply is controlled by the Money Power, which uses this control to enslave us with interest, scarce money and the boom/bust cycle.

The FED is their vehicle. We want to get rid of it, because we want to end the control of the Money Supply by the Money Power. It’s not a goal in itself.

Austrians use this to ‘fight the FED’ and gain sympathy and support, meanwhile maintaining the control of the Money Supply with the Plutocracy.

Recovering Austrians
Who is Ed Griffin?
The Ron Paul Challenge: Ten Reasons why the Alternative Media is Failing this Test
Alex Jones joins Alan Greenspan in Calling for Gold Standard

  1. Justin permalink

    This article should be named “Top Ten Lies and Myths of Austrian Economists”. No where in this article is the actual theory approached. And even when it attacks the views of Austrian economists(not Austrian economics) it does so very poorly and with little evidence to back up the arguments. 2/10. Straight to DVD.

  2. Tex2112 permalink

    Your assumptions are nonsense – “while ignoring the monopolistic inclination of Capital” who says so? You? “Government is a neutral institution, associated with a Nation. Public Opinion can always force its hand.” Again, who says so? I don’t need to read anymore…

    • Austrians are always saying the mythical ‘free market’ will see competition. Bigger nonsense is hard to imagine.

      History shows that the State was always controlled by the Plutocracy. I’m hardly pro Government, let alone Big Government, but this shows, with many issues, that the Plutocracy is the problem and the State only its tool.

      • I could imagine bigger nonsense: your comment that inflation is associated with growth. Tell that to Zimbabwe, Argentina, Hungary. I agree with you that bankers are the problem, but they could be curbed if only government wouldn’t bail them out. Thus, the cure, bankers going bankrupt, is circumvented by government – so ultimately Ron Paul is right, government is the root cause of the problem.

        • Nonsense. It’s true that the banks would not go bust if there was no bail out. They’re much too smart for that.

          But they’d continue to rule over us all through usury, money scarcity and the boom/bust cycle and this is what Austrianism is trying to hide by blaming the State.

          Remember: it’s the bankers bribing the politicians and lending to the State. They are in control. They are the ones whose intent is materializing. It is they who rule and while they own government, they don’t need it. They quite fine with hiring some mercenaries if they don’t have a statist army.

          • Hyperinflation is hyperinflation, nobody is arguing in favor of that.

          • When you talk Plutocracy, what is it? And what is the State? The necessity for defining concepts is crucial for argumentation. The State is the reflex of the majority. It is a mirror. In the State, you see the legimization of the establishment, or plutocracy, as you call it, by the majority. The majority legitimizes. The argument about the separation of the State and the Plutocracy is not convincing. The State must necessarily be seen an environment relatively open to people. Among these people we have the elite, the wealthy, whomever. They get in and stay there to legislate as the majority wishes them to do. They are representatives. The majority that has legitimized is the ultimate author of what happens.
            The argument is too complicated and subtle to be liquidated so easily. What can be shallow in Austrian economics in general is the sociological aspect, but your debunking is extremely dangerous because you are not dealing with the Austrian theory. You are just using words to make believe that the Austrian theory has actually stated what you are trying to debunk.

            • About your last point: of course Austrianism’s own words are different from my translation of them.

              I look at the real implications of the nicely phrased Austrian proposals and they are exactly what I have written in the article.

      • krle permalink

        according to the Austrian theory, the state IS the product of the free market.. I wonder how complicated that is for them to understand?

  3. Neodoxy permalink

    I see the substance of your first position as being a combination of gold’s deflationary tendencies as well as the ability of banks to control the boom/bust cycle. If this is not the case then it’s unclear in your reasoning why bankers would “love gold”.
    The first point is incorrect for reasons that I will bring up in point 6. The second point is incorrect because a fiat currency gives bankers total control over the currency, while gold presents clear restrictions to the control that they have. They are forced to conform to an objective standard or else they suffer either from local or foreign demands. This necessarily prevents them from “controlling the business cycle”. Indeed, if they could control the business cycle, and if they love gold then why did they allow the Great Depression to happen at all? How does the Federal Reserve, with absolute and unchecked control over the money supply prevent bankers from controlling the system?
    Finally, this statement begs the question: If mega-million bankers who control public and private interests love gold, then why isn’t gold the world’s universal currency?
    I think your major points here are that Austrians ignore the capitalistic tendency towards monopoly, that Austrians ignore the fact that many governments and their regulations are manipulated by corporations, and that without corporations controlling public opinion the public can always counteract corporate manipulation of the government. I’m uncertain whether or not this final point is entirely correct. You say “Government is a neutral institution, associated with a Nation. Public Opinion can always force its hand.” I’m uncertain how to interpret this in any other way than that the government is not inherently negative and that it’s ultimately subject to the voters.
    The first point is disputed by Austrians on a number of levels. First of all, the point is deemed by Austrians to be ultimately irrelevant. If the free market has a tendency towards monopoly then this is necessarily because this is where economies of scale cluster, this level of organization means the best price for the consumer. Furthermore the omnipresent threat of competition and the desire to increase demand still further is assumed to keep prices low and promote quality service. Therefore a market monopoly will almost always be quite positive. However, when we look at the factors that bring about monopoly, high startup costs, it’s clear that the government is the one institution that can increase these startup costs arbitrarily, discouraging competition without economies of scale in place. This can be done through various taxes and regulations, which large established firms can easily deal with and which startups probably can’t afford. Finally, while it’s clear that some form of “imperfect competition” is probably inherent to any large scale capitalism, it’s unclear to what extent this is true. For instance, back when the United States was a much freer market in the late 1800’s and early 1900’s, Standard Oil, the monopolistic megalith that fit all of the usual standpoints of a monopoly, had seen a massive drop in market share from its peak in the year before it was forcibly broken up by the United States government.
    The second point is false, and I frankly don’t know where you’re getting it from. Austrians consistently use the term “corporatism” or “crony capitalism” to differentiate the current state of affairs from a free market or an idealized “social democracy”. Austrian literature is full of claims that corporations have a very significant hold over the public sector, and that many regulations and interventions are supported by businesspeople for the reasons I showed above; government intervention protects them from unwanted competition.
    The final point is puzzling because it doesn’t follow that the government is inherently “neutral”, in that it does or doesn’t have tendencies for or against the market. Indeed, the Austrian explanation of the tendency for government towards interventionism is quite convincing. On one hand we have straight up corruption and more subtle lobbying to influence officials. At the same time officials, particularly local officials often have a reason to try to build regulations around established industries and be influenced by established industries so that they don’t disrupt these industries or put too many out of business. If they ignored them then many people could potentially be put out of business, harming that official’s chances of being put back into office. Similarly public officials have an incentive to promote short term projects in their district, regardless of the long run or national consequences, because the short term is what wins them votes when the public cares about their month to month paycheck.
    The voters are unlikely to come to the rescue because of simple problems of rationality (See “The Myth of the Rational Voter”). Let’s say that there’s some sort of regulation on glass that increases the prices of glass by a mere three percent. Now on a national scale this will costs hundreds of millions of dollars, if not more, and is therefore extremely negative. On a local scale it probably won’t cost any single voter that much. Even if I buy 10 30 dollar window panes then I’m only out twelve dollars, yet profit margins for window companies are up by 4%. Therefore looking up the exact nature of this regulation and trying to expose it, with my negligible influence as a voter probably isn’t worth it for me, nor is it for you or anyone else, but it costs society as a whole a huge amount of influence. Common people aren’t well versed in the regulatory structure, and therefore government intervention will have massive pitfalls. Yet “money power” doesn’t influence this at all, these tendencies for regulation are ultimately a result of economies of scale and the existence of a market at all, combined with the failures of a democracy.
    The only solution? Prevent the government from influencing the market.
    I think your main argument here is basically that interest costs us and atrocious amount of money and should be abolished. Your complaint that a mortgage is primarily created out of thin air by banks is perfectly legitimate, but it does not demean the Austrian solution of just preventing banks from expanding much credit. Indeed your argument invokes the fact that a loan can be created out of midair through the expansion of the money supply.
    Interest cannot be abolished because people prefer present goods to future goods. Individuals won’t lend out their money unless they can have their money guaranteed, or unless they receive something for the time they have foregone the money. For instance, if I receive nothing for lending out a thousand dollars to a business, then I won’t loan it out at all, I’ll just spend it or put some of it in my mattress. You might say that people put money into checking accounts in our day, yet this state of affairs is propped up through the ability to create credit by banks and the state-supported FDIC. If banks tried to lend out money from checking deposits then they would experience a run, because individuals would know the money that they have in checking is unsafe (it may or may not actually be there). The bank collapses. Therefore interest must be used in order to promote investment at all. Because production takes time and must take away from more present production, and because money has present value, interest must always exist within the market economy. Indeed, it occurs spontaneously and to the benefits of both lenders and debtors, unless one party has made a mistake in their own actions.
    For instance, in the case of the mortgage, the money forwarded to the person buying a house could have instead brought about a large amount of investment if used in other fields. Just short term loans could bring about the rate of interest per annum, so why in the world should the bank lend to the would-be home buyer at all? Interest is an opportunity cost necessary to disseminate information and promote calculation within the market system just like all other prices on the market.
    I have nothing to say on this point
    I believe the author’s main point here is that inflation spurs investment and helps creditors, therefore it is not too negative.
    The author overlooks several of the prime critiques of Austrians of inflation. The first is that inflation harms wage earners and aids bankers because bankers and entrepreneurs receive inflated money and therefore see an increase in their incomes long before lower level workers do. This tendency is exactly why Keynes supported a policy of inflation in times of a recession; it decreases real wages. Meanwhile the rich are likely to be insulated from the negative effects of inflation because they are more likely to hold assets such as stocks and claims to various forms of capital, which not only retain their value during inflation (preventing a loss of wealth), but increase in value as the interest rate falls through new money being loaned out. Therefore the wealth of the rich increases while the “working class” sees a fall in real income and wealth.
    The most important factor the author overlooks is that Austrians blame the business cycle in inflation. The theory is too complex to lay out in much detail here, but this is probably the most serious Austrian argument against inflation.
    I see the main argument here as being that deflation promotes the hoarding of money, which helps the rich.
    Now if we assume that this deflation is “natural”, and not caused by a manipulation of the money supply, then this has likely been caused by increasing innovation on the market. This increases the real value of wages on the market and causes the value of assets to fall and money in general to rise. This means that workers get a better deal because their savings appreciate and wages increase. Many more people have savings account than invest in the stock market, and therefore the poorer are likely to benefit. Furthermore a fall in the interest rate will likely offset deflation because the real value of investment equal to what it otherwise would have been. Insofar as deflation causes hoarding of cash, it promotes further investment, falling prices, and a further fall in the rate of interest as the prices of consumers goods fall and the value of investment rises.
    The majority of this point comes down to Gresham’s law, although the author also makes the claim that only gold and silver will receive attention.
    First of all, Gresham’s law doesn’t hold true when market ratios are allowed to fluctuate. For instance if the government sets the price of silver to high compared to gold, then individuals will hoard and sell silver because it’s advantageous. If the restriction were repealed then prices would reach an equilibrating exchange ratio, just as with all other goods within the economy. The price of silver would fall on the market until it made sense to actually use it as currency once more.
    Secondly, there’s no way to predict what would and would not “receive attention” on the market for currencies. If individuals perceive it as more stable then they will most likely choose the free market currency, since that is less likely to devalue in real terms.
    This point is based around the fact that Austrians receive a reasonable amount of coverage in the media.
    While it is true that Austrians receive more attention than some, Schiff is often brought on to shows as a piñata, Napolitano’s show got cancelled, and even the Ron Paul campaign is infamous for being ignored by the mainstream. I would also like to point out that since libertarianism has become more prevalent and popular it only makes sense to give them more air time.
    I don’t have anything to say on this point except that the author doesn’t deal properly with inflation or deflation and therefore he does not seem to understand the harm in inflation.
    The argument here is that the FED is a symptom rather than a cause of monetary woes and troubles within the system.
    So long as there is a fiat money currency it will either act like a commodity standard and inflate only sparingly, or it will need to be backed up by the government. This comes in the form of a central bank, which also acts as democracies’ control over the monetary system, allowing for the creation of booms and busts. Central banks are the problem, while interest is unavoidable so long as individuals prefer the present to the now, and as long as production takes time to complete. I don’t think either are going away any time soon.

    • Hi Neodoxy, Here are my replies, as promised:
      1. Well, the usurious bit is equally important. Usury is one of the main items under discussion here at Real Currencies.
      I’ll come back to it.
      But indeed, the boom/bust cycle is easily created under the Gold standard. Just look at all the asset bubbles that we had under the Gold Standards of the 19th century. It’s quite clear that the Money Power has absolutely no problems creating it with Gold.
      Keep in mind that to me it’s a given that the Federal Reserve and the Gold Crowd are one and the same: the Money Power, or the Banking Cartel.
      Why they allowed the Great Depression? Well, the Great Depression was engineered by going back to Gold globally in 1925. In Britain it was Churchill who did as finance minister at the time and when he did it, the rest of the world had to follow. Our friend Keynes wrote a pamphlet at the time: the economic consequences of Mr Churchill, predicting the depression. Why they did it? Well, order out of chaos. They wanted the 2nd World War and they got what they ordered.
      2. I disagree fundamentally with the Austrian notion that market monopolies would only exist in beneficial form, because the players would be so efficient. Market monopolies are never efficient, they are a result of market power. Start up costs are prohibitive for new players. And they can be easily bought out with an ‘offer they can’t refuse’, as is common practice in all major industries nowadays and always. Just think of what happened to people like Rife, Tesla and countless others.
      I do, however, agree with many Austrian concepts regarding the problems of Government, that’s not really the issue. In no way do I believe Government is a panacea let alone downplay the utter depravities Government has shown throughout history. Public vs. Private is just another dialectic. The key is to provide cheap and stable money, it does not really matter whether Government or the market does it.
      3. “Interest cannot be abolished because people prefer present goods to future goods.” This is the eternal Austrian (and mainstream) argument for interest and it’s the key mistake. Our current fractional reserve system after all shows that the banks don’t lend anything: it’s all bookkeeping. Interest does not need to be abolished, as it can be made completely superfluous with credit creation without interest. It is quite clear that 300k interest for a 200k mortgage is insanity. 10% of the principal seems a reasonable price for the credit and this should not be priced with interest, but with one-off service charges. This does require another way of managing Volume, this is true: it’s easy to print too much, that is clear.
      5. I do realize the problems with inflation: I’m just saying they are way overblown by Austrianism, particularly considering their (rather crummy and far fetched) defense of deflation. It looks like inflation is demonized to make the horror of deflation, which is far, far worse (just look at the current deflationary bust we’re in) look more palatable.
      I don’t agree bankers have the benefit of spending the inflationary cash they create: that benefit is for those borrowing: they spend it, after all.
      6. Deflation is a shrinking money supply. It does NOT mean declining prices: this is a common misunderstanding and it’s true that the word has corrupted. I’ll give you a link to the Daily Bell, a leading Austrian site, explaining this:
      I agree we all want declining prices through innovation, of course. But deflation is a tanking money supply and that’s an entirely different beast. Again: look this depression we’re in, or that horrible contraction of the money supply known as the Great Depression.
      Deflation is also per definition a wealth transfer to those holding money and even worse, bad for debtors, who see their debts and debtservice in real terms get worse. Not good when the whole world is drowning in debt.
      By the way: the way Austrian Economics handles deflation is my biggest and main problem with it. Usury is little understood, but the very lacking way they handle deflation reeks of intellectual dishonesty to me.
      7. 1st point: I simply disagree with that take on Gresham’s law. It may have been part of the context in which Gresham formulated his famous law, but the simple fact is: the fastest depreciating unit is used to pay with, the appreciating, or less quickly depreciating unit will be used to hoard. It’s just common sense.
      2nd point: it’s quite clear which will get the most attention: the solution promoted by the Banking Cartel, putting it’s incredible resources behind it, while starving the other initiatives for credit and media attention (the press is owned by the Banksters). Market power at its finest.
      8. Perhaps. But to me it’s quite clear that AE gets a fair bit of air time, a lot of ‘Nobel prizes’ (8 for Mont Pelerin Alumni, all in all) and when you for instance check Wiki, it’s always the Austrians when quoted as ‘opposition’ to the mainstream, never other schools of thought. This is no coincidence, experience suggests to me.
      9. Well, it’s important for Austrians to start understanding the major systems that are behind the ‘fiat’ container. I did a short primer here, fyi:
      10. Well, I hate the FED. The question is what will replace it. To my mind a Gold Standard would be even worse.

      Then about Usury: I have two articles on usury that give a quick heads up on the fundamental problems with it, that are definitely not evaluated by Austrian Economics, but which are huge.
      The biggest problem is, that the 80% poorest of the Globe pay more interest than they receive to the richest 10%. All in all they pay anywhere between 5 to 10 Trillion (!!!!!!!!!) per year. This is THE reason the rich get richer and the poor get poorer. This MUST be addressed in any real monetary reform program.
      Here are the links:

      Thanks for opening up this dialogue, I’d be interested in any comments!

  4. Kenneth Andrews permalink

    You leave out A mojoraty of the theory that explains the holes you leave.

    For example you say that deflation causes people to hold money and this discourages investment.

    We would reply by saying that people hold money in the bank. money in the bank is thus lent out, and is thus Investment. Just an example of one of your arguments.

  5. Tom Reubens permalink

    @Anthony. Lots of critics on here, but I found the article to be well argued. I was hoping to find your opinion on the connection between “resource based economics” (RBE) and Austrian Economics, but since it hasn’t been mentioned, I’ll just ask.

    I’ve recently been pondering the growing hordes of RBE advocates, which seem to be blindly following Jacques Fresco (Venus Project guy) and Peter Joseph (advocated Venus Project at the end of his anti-Christian Zeitgeist film). Naturally these RBE proponents paint a rosy picture for their new world order. But common sense tells me that a transition from the status quo to a RBE could not be achieved peacefully (despite Fresco’s naiveté) because money and private property would have to be destroyed. If you aren’t familiar with the Venus Project, it’s radical socialism with all resources owned communally and no money system (even though ration cards would probably become inevitable).

    Now, I see many Ron Paul “End the Fed” type Austrians advocating a 100% reserve ratio on banks, which seems like a genuine attempt to strip bankers of their power, even though it would raise interest rates by shrinking the availability of bank credit and would probably be incredibly difficult to enforce (problems that could be solved by providing people with a SC alternative). All that aside, if Austrian economics were to produce an economic system with only commodity money (let’s say gold) and a 100% reserve ratio on bank credit (and let’s assume that no other credit system is allowed to exist), then it seems that Austrian economics could be a Trojan Horse for a RBE. Naturally this would be offered as the Austrian economists’ solution to hyperinflation. In this scenario, where all credit systems are eliminated (including cheap bank credit), there might arise new debates for credit (or possibly monetized silver/copper) as long as democratic institutions and private property have been maintained. However, if monetary reforms were to be suppressed, then I am inclined to believe that the property-less working class (“proletariat”) would be immensely oppressed and flock to a socialist RBE, like the Venus Project. Your thoughts?

    • Yes Tom, your take on RBE is the same as mine.

      It’s probably not unlike the pseudo utopia that the NWO has in mind.

      Nice tell tale: the abolition of private property. Ie: they will own all.

  6. Dr Philip McCormack permalink

    Hasn’t anyone on this site read A E Fekete. His work on interest and the Real Bills Doctrine make him the outstanding economist in the world at this time.

  7. Deleted: see our Comment Policy

    • Vishesh Dewan permalink

      Most people hold some of their savings in cash. That portion of their savings increases in purchasing power when prices fall. But people also save by purchasing financial assets, such as stocks and bonds, or real assets such as property, and rental housing. All of these assets have a price, which could rise or fall. Depending on the mix of cash and other assets that an individual holds, a fall in asset prices could wipe out any gains in purchasing power from the cash portion of their savings.

      That’s your answer to the fact deflation favors creditors instead of debtors. Austrians do not believe that both inflation and deflation are fine as long as its natural. Read the below article.

      • Vishesh Dewan permalink

        sorry Austrians believe that both natural inflation/deflation is fine.

  8. Matt permalink

    Everyting you write is pretty idiotic. I don’t have time to go into why in detail; and I expect that you don’t have time to read it, so I’ll give a couple quick comments.
    Deflation: “so incredibly favorable for the ultra rich…” Noooo… deflation is incredibly favorable for anyone who saves money. This is so obvious. I don’t even think Austrians favor deflation anyhow. They favor a 0% inflation. The idea that the money supply doesn’t expand or contract under a gold standard shows that you really do not understand the concept.
    If a person making a contract with another individual agrees to produce something or do some amount of work for $1; that money should be worth $1 at some later date when the producer decides to spend it, not some smaller amount because of some central banks accounting manipulation to soften the impact of their idiotic decision to go into debt.
    The system you promote to stave off “usury” through low interest rates,easing and moving money around so debt doesn’t appear as bad is an idiotic pyramid scheme that is about to collapse in both Europe and the US and everyone sees it. Umm, how about not borrowing so much money? I’m pretty sure economists in Greece, Italy and Spain would agree with pretty much everything you’ve written. Have you checked interest rates in Greece lately? Sounds like the market really doesn’t care what sort of steps the government takes to prevent “usury”.

    • “Noooo… deflation is incredibly favorable for anyone who saves money”
      It seems pretty clear to me the ultra rich have saved more money than the others. Hence my statement. 50% of Americans have zero assets or less.

      While money gains value, all other assets, including labor decline in value.

      While money gains in value, all debts gain in value.

      How to avoid debt with Gold as currency? How do you suppose the Gold will circulate? The Central Banks and the few very rich holding Gold will all just spend it into circulation? Or will they use the banks to lend it into circulation? At interest?

      Per year 5 to 10 trillion dollars are paid by the poorest 80% to the richest 10% globally. A few years of low interest rates change nothing. By the way: Greece is not known for its low interest rates: the market won’t buy it’s debt at zero % and the other nations lend it 5%.

      So you see, there is a little more to it that you had supposed, memorizing your favorite demi Gods Mises and Rothbard…..

      • Matt permalink

        “50% of Americans have zero assets or less…all debts gain in value” which is why you should avoid debt and save.
        The way gold circulates is a person has to create a widget or provide a service that another person with gold needs or wants.
        And yes, they’ll also lend it, but at a much higher interest rate; which will force people to produce something for the gold rather
        than take out a loan and promise that they’ll supposedly produce something later on.
        It’s amazing how under the evil gold standard western capitalist systems led the world out of 6,000 years of the
        ox and plow/horse and buggy/ 35 year life expectancy within like 100 years
        and they didn’t even have any paper money controlled
        by liberals who think they understand all of the complex intrecacies of the velocity of money and the expansion and contraction of money suplly so well
        that they’re going to control it.
        I think it’s pretty undeniable that people with your view point have had absolute control for at least the past 40 years over Europe and the United States.
        When this debt pyramid collapses you’ll probably be joining Krugan claiming we just didn’t go deep enough into debt at the pivitol point to prevent it all from
        falling apart. It’s going to be so blatently obvious to everyone else who was right and who was wrong. If it happened in one country, you could argue your way out of it
        but when it happens in almost every country that tries it; it will be undeniable.
        Hey, I’m giving you a thumbs up just for reading my comment on your post and commenting. I didn’t really even think you’d read it. I’ll pass on your site to any of my friends
        who are interested in the subject (not too many). At least your passionate about a pretty interesting subject.

        • “I think it’s pretty undeniable that people with your view point have had absolute control for at least the past 40 years over Europe and the United States.”

          You clearly have absolutely no idea yet of interest-free economics, which is under discussion at Real Currencies. Keynesianism and Austrianism are just two sides of the dialectic aimed at maintaining monopolistic control of the money supply, either through the paper printing press or through control of gold supplies, so that they can continue to extort us through usury.

          You can read about the dialectic here:

          • Matt permalink

            You’re right, I have no idea. I know that it’s an idea among socialists who think that everything produced is equally valuable ( pretty much how they think; for some unknown reason; that pratically everything is equal). Sorry, I don’t have time to read that, so can’t comment much further on it. It’s sort of like the Ocoms razor test; it’s completely clear that no one would lend money in a system you describe , unless they were compelled to do so; that it becomes uselss to learn anything further about it.
            I wish we could implement your system somewhere however; just so I could watch it fail. We’d probably have to listen to the supporters of such a system babble on how it wasn’t implemented in exactly the right way, much how Socialists do in every country where it has ever been tried, and much the same we are about to watch the Keynsesians do in short order.
            Lefitists remind me of the movie “A Beautiful Mind “(?? I think that’s the name). They perceive themselves ultra sophisticated and have these theories that no one else can understand, and if you have a simple reason for debunking it; it’s just because you are unable to understand all of the complexeties, intricacies and moving parts like they can. But when you look at it, it’s really nothing more than a bunch of news paper clippings and magazine articles cobbled together by a schizophrenic. That is the reason socialism fails and this silly idea would too… it’s simply stupid and doesn’t work.

            • The left right paradigm only exists to control us. Interest free economics has nothing to do with socialism, which was invented by the same people that gave us capitalism, libertarianism and keynesianism.

              As you are probably aware banks create all the money they lend out. since the money (credit) costs nothing to produced, it should be lent out at cost price, which is virtually nil. Instead, nowadays we pay 300k interest for a 200k mortgage.

              This can be easily organized with Mutual Credit:

              There is also a fully functional model to relend already existing money without interest. With a so called JAK bank, people save without, the deposits are lent out to borrowers. People do this, because they all share equally in the interest free loans.
              Read about it here:

              The idea that we can and should avoid debt is a hoax. Without debt there would be no money. This would not change under a gold standard: The money would not be spent into circulation, it would be lent into circulation: to producers, who can then hire workers. All the gold would circulate as credit.

              The interest over the gold, which, according to you, should be much higher, would be passed on to the consumers by these producers. The consumers would be the workers. So here’s another little secret for you: even if you have no debt, you still pay interest, passed on in prices.
              How much?

              Are you sitting?
              45% of your disposable income goes to cost for capital passed on by producers. You can read about it here:

              A debt free economy would be possible, by having Government printing debt free units, preferably as Social Credit:

              However, you would probably reject this as ‘violent statist interference’.

              Of course, you have every right to remain in the dark because you have other priorities (‘no time’), but you are missing out on something pretty big. Here’s your chance to wisen up.

              Thank you for reading Real Currencies.

              • Matt permalink

                Ok, I’ll have to read more about it this weekend then. I’m working now.
                I basically predict two major things would happen (before reading a thing about it).
                1) You would end up with inflation X 100 if you implemented this. Governments can’t resist the temptation to expand the monetary base now, even with interest rates.
                2) Whatever I read will extensively try to dismiss point #1. If it does it effectively; I’ll look at your thery further. Somehow I don’t think the explanation will be all that persuasive.
                Don’t think that I’m not open minded about it. You may think me a raw-capitalist or libertarian.
                Not so. I am a Christian and find the social-Darwinistic ideas of libertarians to be quite awful at time as well. I’m simply far more skeptical of the Left as the Right in regards to how much they actually understand economics in comparison to how much they claim or think they do. Also, I think the results of each system bears no comparison.

                • the point 1 you refer to is your own point 1?
                  then you should also read this:

                  I’d be very interested in futher comments after reading.
                  It’s crucial to snap out of the left-right mind control operation, which is both favorable for the Prince of Darkness.
                  Trust your instincts and continue to look for an option that is not between a rock and a hard place.

                  Hit reply to read squashed text

                  • Anthony,

                    you’d have bit more credibility if you could refrain from the “X is there to control us” argument.

                    Also, despite numerous requests, you still haven’t listed a single Austrian book or article you’ve actually read. Every single thing you write about Austrian economics, including this blog post, is demonstrably false, as I have demonstrated on numerous occasions.

                    So tell us, please, which Austrian texts have you actually read?

                    • Perhaps to you Kaj. Others consider it quite a vital argument.

                      I understand that groupies acquire status by showing off how well they can imitate and recapitulate their heroes and undoubtedly you have worked hard to read as many Austrian books so you can huff ‘n puff within the Austrian community about your ‘knowledge’.

                      I’ve read enough. Everybody can come to his own conclusions reading my stuff and if he doesn’t like it he’s fully free to move on elsewhere, as, indeed, are you.

  9. Memehunter permalink

    I don’t really want to do it, but someone has to reply to Kaj, Anthony deserves a break.

    This is a reply to:

    KG: “But if that is the case, why do you make such a big deal out of the fact Rothbard worked for the fund for period?”

    Because the fund was controlled by the Rockefeller Foundation, at least after Volker’s death. Do you get it?

    KG: “There are many great names associated with this school of thought, such as Bastiat, Turgot and du Tocqville in France, Adam Smith, Richard Cobden and John Bright in the UK, Mises and Hayek from Austria, Anders Chydenius from Finland and so on. In some ways, the roots can be traced back to the Spanish scholastics.”

    Spanish scholastics: yes indeed, the Alumbrados, the predecessors of the Illuminati Jesuits. See The “Catholic” Arm of Libertarianism.

    KG: “The very idea that they were bought and paid for by the bankers, as you’ve so laboriously and unsuccessfully have tried to show, is ridiculous on its face.”

    Well, it’s only ridiculous to you because you cannot accept it. Mises, Hayek, and Rothbard were all supported by the uppermost level of the elite hierarchy. Bastiat was a Freemason. The “Spanish scholastics” were a proto-Illuminati sect.

    KG: “Every single book Rothbard ever wrote on money and banking, ever single essay and article, in fact, was the exact opposite of what banking-industrial-congressional complex wanted to hear.”

    Again, that’s only because you don’t understand that the elites can support different ideologies, both mainstream and alternative. Here’s a thought exercise for you: Do you think that what Marx wrote was what the “banking-industrial-congressional complex” wanted to hear? Does that automatically means that everything Marx wrote is “the way” toward freedom?

    KG: “Had they had the full support of the wealthiest and most powerful banking families in the country, their careers had been very different.”

    They had the full support of the wealthiest and most powerful banking families in the entire world.

    KG: “The very fact that the libertarian movement always was and still is a fringe element also proves this.”

    Again (I’ve said this already a few times before…), the elites do support several ideologies. There are mainstream ideologies and alternative ideologies. The alternative ideologies act as gatekeepers to prevent people who see through the mainstream lies to grasp the whole truth. In the case of libertarianism and Austrian economics, this is an essentially anti-statist ideology. Why, then, do you expect their proponents to become professors in top Ivy League universities? Why would the “statists” want to see their “enemies” become an accept part of the establishment? This would be the ultimate contradiction, no? So the alternative ideologies remain fringe movements, and the illusion that, because they are not mainstream, they are automatically truthful and in favor of freedom is maintained (at least for people like you).

    KG: “The thing is this: Either the Money Power elites have great, if not unlimited power but they never gave any actual support to Mises/Rothbard, or they did give significant support but they have no power. These are the only two possible explanations for Mises/Rotbhards academic obscurity and their utter lack of influence on US politics. There is now way for you to get around this.”

    Here is a third explanation, which is the most obvious one, but that you keep omitting for some reason: Mises/Rothbard remain in academic obscurity because they support an anti-statist ideology and academia cannot, in general, be very tolerant of anti-statist ideologies because these guys are (generally) paid by the State. It’s not that hard to understand, no?

    KG: “Instead of digging in Mises/Rothbard, shouldn’t you be looking at who is and who has been backing all those who rose to great prominence and ACTUALLY had influence? Like the Fed Chairmen, the presidents of various FED banks, of the great financial institutions, the professors at all the Ivy League schools who have never failed to propagandize for more power to the big bank/big government cartel, the chairmen of the House and Senate committees, and the council of economic advisors to the President.”

    Look, most alternative media outlets already debunk these guys. Everyone reading Real Currencies knows who is backing these guys and who they work for. What we are doing, on Real Currencies, on Recovering Austrians, and on the Daily Knell, is to debunk the elements of the alternative media that are part of the gatekeeping operation (sadly, this comprises most of the alternative media). We are looking at the dialectic from outside in, while you are still stuck in the dialectic. Get it?

    KG: “Just log on to and you’ll see what they think about Cato, Ayn Rand institute and even George Mason University. Cato and ARI aren’t that fond of Rothbard either.”

    Yes, I know that there is some infighting within the Libertarian movement, but I don’t see how that supports your point. I get it that the Mises/Rockwell faction is more “extreme” than the Cato guys, but again what you don’t get is that you are not necessarily more truthful because you are more “extreme”. You constantly seem to equate being part of the “fringe” with being the true, the only, the real “anti-elite” opposition. Being part of the fringe a necessary condition, but not a sufficient one. Are you starting to understand what I’m talking about here?

    KG: “As far I as I know, the hijackers have all been identified as arabs. I think 9/11 was a predictable consequence of US foreign policy, as was the bombings in 1993 and any number of other so called terrorist attacks.”

    One question: “Who” has identified the hijackers as “arabs”. You know the answer, right? Why should you believe these guys, after everything you’ve written here about “those who rose to great prominence? The fact that you still believe this explanation while denouncing the “Fed Chairmen” and the “professors at the Ivy League schools” shows the extent of your cognitive dissonance.

    • Memehunter

      Oh, so the Volker Fund was “controlled” by the Rockefeller Foundation. Yes, we’re back to the enormous network of think tanks the Rockefellers built to control the world. Doesn’t seem like the Volker Fund helped them much with that, certainly not Rothbard, who criticized them and their banking/monetary system throughout his life, which of course is why he eventually was fired.

      No, I don’t need to see the “Catholic Arm of the Libertarianism. Is that all you have to say to the long list of classical liberal philosophers I listed? Weak even for you.

      If even a tiny sliver of your claims be true, both Mises and Rothbard would have enjoyed completely different lives than they did. We always come back to this. You’re so buried in your conspiracies that you can’t even see that neither of them ever held any position of prominence. That cannot be squared in any way with the, again, ridiculous claim that they were “supported by the uppermost level of the elite hierarchy”. For heaven’s sake, can you hear yourself?

      Ah, I don’t “understand that the elites can support different ideologies”. Right. So, doesn’t that mean that you’re in the bankers’ pockets as well? Maybe this site, that so heavily criticizes the Money Powers and their lackies, is just a front for a still uncovered Rockerfeller foundation? I mean, you are almost, but not quite, as critical of the “Money Powers” as Rothbard was.

      Your Marx experiment is laughable. Marx never advocated freedom, he wanted to abolish private property. But I guess he was controlled by the bankers too? But no, just because you spend your entire life criticizing the banking-industrial-congressional complex, it doesn’t mean that you are pro freedom. But it does mean you are against banking-industrial-congressional complex and thus hardly likely to be controlled by them. Of course. Rothbard happened to be very pro-freedom.

      “They had the full support of the wealthiest and most powerful banking families in the entire world.”

      No, they didn’t, as evidenced by reality. Have you noticed that you keep repeating this ridiculous lie over and over again, but you never explain why Mises never even got a paid position, while Rothbard spent most of his life anywhere but at a prestigious university.

      You’re “the elites support several ideologies” is beyond weak. They don’t need to support several ideologies, in fact, they have no reason to. The only thing they need to do and in fact do is to push their own agenda. They’ve always pushed for the establishment of a central bank, and succeeded. They’ve always pushed for legal privileges, and succeeded. Last century, they finally got their complete fiat paper standard. Since then, every alternative to the FED-driven, credit expanding fractional-reserve banking system has been ridiculed out of existence. And now, not content having abolished sound money in favor of paper money, they aim to get rid of even that, leaving us with nothing but their computer entries.

      “Why, then, do you expect their proponents to become professors in top Ivy League universities? Why would the “statists” want to see their “enemies” become an accept part of the establishment? This would be the ultimate contradiction, no?”

      Uhm…yes? And why would the Money Powers want to see economics that runs contrary to everything they stand for taught at the private/public universities? Of course they don’t, so they don’t support anyone who advocates such economics, like Mises and Rothbard. Are you finally getting it?

      Your third explanation doesn’t hold water. The Ivy League universities receive significant funding from private sources. In fact, all those subsidized student loans come from the banks. In case you missed it, the banks are extremely statists since they rely on the state for their privileges. I mean seriously, you didn’t realize that the bankers were statists!? For real!?! So we’re back to my two explanations, of which the first is the obvious one.

      “We are looking at the dialectic from outside in, while you are still stuck in the dialectic. Get it?”

      You really are too much. Ron Paul has done endlessly more to raise awareness of big business/big government partnership than you’ll ever do. Add to that the tireless efforts of Mises, Rothbard and other Austrians, all you do here is helping and supporting the “Money Powers”, by slandering the few people who actually provide intellectual and scholarly opposition to the “elites”. That is another reason for assuming that you are shills for the “Money Powers”.

      The libertarian movement is very diverse, which proves that it isn’t “controlled” by some monopoly men in smokey rooms, which seems to be our view.

      There is no reason to think that the hijackers weren’t Arabic, since the Arabs have been victimized by US foreign policy for the past half century or so, and continues to be so. It is the Arab countries that are being invaded and occupied by the US. It is their innocent people who are being bombed and killed by people playing with joysticks in Langley. 9/11 was hardly the first “terror attack”, it was just the most successful. So no matter who reports it, it makes sense that the hijackers were Arabic. As a matter of fact, it would be crazy to think all the death and destruction wouldn’t provoke serious reprisal. If you have evidence to the contrary I’d be happy to see them.

      Let’s remember why Mises came to the US. He didn’t arrive as an eminent scholar, although in Europe he of course was. Writing great critiques of socialism and fascism during the height of the socialist/fascist movements, while laying the foundation for the Austrian Business Cycle theory in his dissertation. He came to the US as a refugee, fleeing for his life. Had he been captured, he had died because of his heritage and his ideas.

      And you have devoted your life to slander him. How very honorable indeed. Tell me, who do you think mattered more to the Rockefellers/Rothschilds. This refugee, or the powers whose wars they financed?

      • Memehunter permalink

        KG: “That cannot be squared in any way with the, again, ridiculous claim that they were “supported by the uppermost level of the elite hierarchy”.

        Let me try differently (not that it will make a difference…) and ask you a question: if Rothbard and Mises were so anti-elite as you claim, why did the Rockefeller Foundation directly support Mises for 19 (yes, as in nineteen) years? Why was Mises then sponsored by the American Jewish League against Communism (financed by Bernard Baruch, a known Rothschild agent) for several years ? Why was Rothbard supported by the Rockefeller-controlled Volker Fund for 11 years and then by the Koch-sponsored CATO for several years as well? Why was Mises very active in the Mont Pelerin Society until the early 1960s (when he was over 80 years old)? The Mont Pelerin Society is, by the way, one of the most elite liberal associations in the world, with only a few hundred members even nowadays, many of them top politicians or economists.

        KG: “Have you noticed that you keep repeating this ridiculous lie over and over again”

        Who is lying, Kaj? Answer the questions above, please…

        KG: “Of course they don’t, so they don’t support anyone who advocates such economics, like Mises and Rothbard.”

        We agree, universities generally don’t support economists who advocate these ideologies. That’s exactly what I was saying. But the Rockefeller and the Rothschild did, by way of their agents. I’m not sure why you can’t seem to understand that.

        KG: “There is no reason to think that the hijackers weren’t Arabic, since the Arabs have been victimized by US foreign policy for the past half century or so, and continues to be so.”

        After reading this simplistic explanation, I don’t think it’s worth discussing 9/11 with you. Let’s leave it at that.

        • Memehunter

          The question is rather is this:

          what support did Rothbard and Mises actually receive? If they had received millions and millions of dollars over several decades, why did they labor their entire lives in obscurity in the US? Why was Mises especially dependent on friends and pro-freedom sympathizers, if he was getting millions in Rockefeller money and pushed to every Ivy League institutions by the most powerful families in the world?

          This is the question you won’t answer. And whenever pressed, you’ll admit at the “full and active support” you’re talking about was in fact very indirect, very limited, and very periodic, always through some supposed network of “Rockefeller-controlled” think thanks. In other words, virtually non existent, which of course explains their modest careers in the US.

          This really comes down to whether you believe the weatherman who tells you the sun is shining, or your own eyes when you see rain pouring down outside your window.

          And as has been noted, your sites are most likely bought and paid for by the Rockefelles too, given the obvious support you provide them with.

          “After reading this simplistic explanation, I don’t think it’s worth discussing 9/11 with you.”

          Haha! Right. Contemplating the decades of wars, death and destruction wreaked upon the Arab world by the US is “simplistic”. Taking into account the previous terror bombings is “simplistic”. I knew you’d crumble as soon as I asked for evidence, exactly the same way you crumble when confronted with the reality of Mises’ and Rothbards lives and academic careers, which debunks any claim to them having the “full and active support by the uppermost level of the hierarchy”.

          • Memehunter permalink

            KG: “And whenever pressed, you’ll admit at the “full and active support” you’re talking about was in fact very indirect, very limited, and very periodic, always through some supposed network of “Rockefeller-controlled” think thanks.”

            Wrong. I provided you with several quotes by Hülsmann showing how Mises was directly paid by the Rockefeller Foundation for 19 years, and his Austrian Institute was sponsored by them. Nothing indirect here, and even Hülsmann pointed that out. I gave you a reference to a study by van Horn and Mirowski showing how Luhnow and Miller (who took charge of the Volker Fund after Volker’s death) made sure to “make every dollar count” in their support of Austrian economics, principally at the Rockefeller-controlled University of Chicago, but also elsewhere (including Mises and Rothbard).

            You still haven’t explained why the “anti-elite” Mises was at the forefront of the Mont Pelerin Society for more than a decade.

            Your worldview is very simplistic, Kaj. The fact that the US inflicted death and destruction upon the Arab world does not prove that “Arabs” did 9/11, nor does the fact that previous bombings were possibly (because, again, who is giving us that information, Kaj?) done by Arabs.

            Nobody is crumbling here except you, but you seem to enjoy it, you have been crumbling for more than a week here at Real Currencies :)

            • None of the Hülsmann quotes supported any claim that Mises/Rotbhard recieved the millions of dollars and heavy lobbying support by the Rockefellers themselves, which you claim they did. To the contrary, the Hülsmann quotes show clearly that no direct support was forthcoming at all after Mises came to the US.

              You also claim that Mises/Rothbard were the “chosen people” of the Rockefellers, that of all economists and political theorists it was these two who recieved the most support from the Rockefellers, that Rockefellers themselves actively and aggressively championed Mises and Rothbard. This was obviuosly not the case.

              Austrian economics were NEVER promulgates at the University of Chicago. It was completely dominated by the monetarists, chiefly by Milton Friedman. The only Austrian who ever taught at Chicago was Hayek, but only in a minor capacity.

              Now I’m starting to understand where you’re coming from. You can’t differentiate between the monetarist Chicago School and the Austrian School. Well, since you’ve never read any of the Austrians (and probably not that much of Chicago either), this is an easy mistake to make. However, it is undeniable that Austrian economics wasn’t taught at Chicago nor any other university. Maybe you should be more diligent in your research, so you at least can tell one school of thought from another.

              Mises wasn’t a forefront for the MPS. Hayek was one of the principal members of the MPS. Being a former student and colleague of Mises, it is not strange that Mises participated in the MPS. Nor do I understnad your grief with the MPS. What did it ever accomplish? It was scarecly more than a debate club.

              My world view is realistic. Wreaking death and destruction has a tendency to produce blowback, this has been the case throughout the history of mankind, so why is it such an impossible thought now? An I note that neither you, Ren or Anthony have been able to any of the key questions asked. And with this last post, you really revealed your ignorance. Austrian economics at Chicago…how embarrasing!

              • Memehunter permalink

                KG: “None of the Hülsmann quotes supported any claim that Mises/Rotbhard recieved the millions of dollars and heavy lobbying support by the Rockefellers themselves, which you claim they did. ”

                I never talked about “millions of dollars”. You are now completely making up quotes, Kaj. Pitiful.

                KG: “You also claim that Mises/Rothbard were the “chosen people” of the Rockefellers, that of all economists and political theorists it was these two who recieved the most support from the Rockefellers, that Rockefellers themselves actively and aggressively championed Mises and Rothbard. ”

                I did not claim that they were “the chosen people” or that they “received the most support”. All you’re doing now is invent strawman quotes because you’ve obviously run out of arguments.
                The point is that (to repeat the obvious), if Mises and Rothbard were so “anti-elites” as you claim, they would not have been funded over such a long period by the Rockefeller Foundation (direct funding), or by the Koch family in the case of Rothbard, and so on.

                KG: “Mises wasn’t a forefront for the MPS.”

                Hayek himself credited Mises and said that the first MPS meeting would not have happened without Mises. Mises gave numerous talks, including an opening keynote in 1958 (at 77!), and chaired sessions or discussions at MPS during the 1950s, and was actively involved in the organization of MPS meetings until the late ’50s at least.

                KG: “What did it ever accomplish? It was scarecly more than a debate club.”

                Wrong again. The MPS is an elite club whose goal is to transmit elite ideologies. Even the pro-Austrian Daily Bell (they are your friends, remember?) says so, so again you’re in trouble here, Kaj. Nothing new for you.

                KG: “Austrian economics at Chicago…how embarrasing!”

                Is Hayek Austrian, yes or no? Again, the point is that the Volker Fund supported Friedman and the Chicago School, but also Mises, Rothbard, Gary North, and Hayek.

                You are spinning your wheels, Kaj. You have absolutely no arguments but you keep inventing strawmen. It is crystal clear that your Austrian idols were completely supported by elites such as the Rockefeller, Rothschild, and Koch families. Deal with it like a grown man and stop whining about it.

                • Memehunter?

                  Not millions? What could the “full and active support of the wealthies families in the world” otherwise mean? Hundreds and hundreds of thousands of dollars? Funny how you keep touting the “full and active support”, but when pressed, you can’t account for it. Suddenly, it was’t so significant after all.

                  The point is that Mises/Rothbard weren’t funded by the Rockefellers, they only happened to have some associations with some organisations that had some ties to the Rockefellers. But any “support” they ever recieved was completely negligable and insignificant.

                  Nor were they anti-elite, they were anti-state. There is a big difference. They were against the banking and money system of the day, and Austrians still are. All their works are extremely critical of it. You see, Meme, that is how you determine what someone advocates or opposes, by READING THE BOOKS, ESSAYS AND ARTICLES THEY WRITE. Considering the vast business and political conglomerate the Rockefellers were running, it is extremely unlikely that they ever read anything Mises or Rothbard produced, certainly not much of it, considering the enormous productivity of the two.

                  You, on the other hand, would have us believe that the Rockefellers slavishly read “Man, Economy, and State, “Human Action”, “Omnipotent Government”, “The Theory of Money and Credit”, “The Mystery of Banking”, “The Case Against the Fed”, “America’s Great Depression”, “The Panic of 1819” plus all the thousands of articles Rothbard produced, and concluded everytime “I need to give more money to these people who trash the very estbalishment I’m part of”.

                  Rockwell credits Margit von Mises for creating the the Mises Institute, tht doesn’t mean she founded it. Of course Hayek credited his mentor. So what? I have nothing against the MPS, but I recognize its very marginal role in history. This constant talk of it being an “elite clube” is just conspiracy nonsense. Name one significant contribution it made to change the course of Us policy. Just one.

                  Hayek was an Ausrian, but he was completely marginalized at Chicago in favor of Friedman and the monetarists. Hayek taught at LSE too, does that make it an Austrian bastion as well? To claim aht Austrian economics was taught at Chicago like saying Austo-libertarian philosophy dominates Congress, because Ron Paul has been there for so long.

                  Deal with the fact that your conspiracy theories are falsified by the evidence: the academic squalor and non-influence that was Mises and Rotbhards lives. All you do is slander someone who fled for his life for his heritage and ideas. That is about as pitiful and pathetic it gets. Typical for such person’s is that they since they can’ argue against what Mises/Rothbard said and argued, you smear them instead. Just like the MSM. I’m sure the bankers are very happy with the support you provide them with.

                • Andy Pinkney permalink

                  Oh the Kochs are in on it now are they?? Never mind that they conspicuosly fund CATO, but not the Mises Institute and that the two institutions are known to have a stand-off. Never mind that the ‘libertarian’ Kochs have consistently lavished cash on, ahem, ‘tea party’ big government neo-cons like Bachmann, Cain et al and have never given Ron Paul a cent. This is my problem with this blog – none of you will admit when people present you with evidence that disproves your badly-researched ad hominem.

                  Not only have you not read the things you condescend to critique, you won’t accept demonstrable facts. It’s just the same nonsense over and over.

                  Memehunter, Mighels etc: Ron Paul is a freemason! Look at that devil’s horn hand sign!

                  Austrian: Erm, actually what he’s doing there is sign language for ‘I love you’. Go look it up. Being a doctor for 30 years, he probably had a deaf patient or two and picked a bit up? What else you got?

                  Memehunter, Migchels etc: Ron Paul is a freemason! Look at that devil’s horn hand sign!


                  • Andy Pinkney permalink

                    Austrian: (sigh)

                  • Andy, this is a world of dialectics and controlled opposition. Satan organizes through conflict. He has his henchmen fight amongst each other. He likes fighting for its own sake and believes the survival of the fittest gives him the best executives.

                    The point is that the fight is within controlled parameters, thesis and antithesis creating predictable and favorable outcomes. Directed history.

                    The Cold war is a good example. They own both communism and capitalism, the US and the SU. The SU was destroyed, does that mean it was not completely satanic?

                    About the Kochs: yes, they go further than libertarianism and sponsor much of the ultra right. But nobody can deny they were instrumental in the buildup of libertarianism.

                    Cato and the volkerfund are closely connected, through Rothbard himself.

                    Andy: about the handsigns: they always have plausible explanations. the fact that in hand signs the sign for love is a masonic sign for the devil is actually quite telling and should give pause about those who created the hand signs or the deaf. This kind of sickening ‘humor’ is quite typcial for them.

                    • Anthony,

                      I actually appreciate the satanists using the two-fingered finger as I call it.

                      The reason is that when I see this finger, I immediately separate myself from the person so showed it. I had a neighbor do that to me the other day, and now I know not to engage myself with him because the man is going to be trouble. Look at Ron Paul. He’s been seen with the two-fingered finger in photos so you know where he’s coming from, and none of it is good.

                      While it is disgusting, it does serve a purpose in the labeling of themselves as satanists. That’s how you can tell to just stay away from people like that. I’m grateful that they do such things so that I can avoid them and their businesses.

                      The whole government and religious systems of the world are essentially under the satanic curse. I frankly don’t appreciate anything that they do and I simply try to separate myself from them as much as possible.


  10. Here is a point by point rebuttal. Again I ask you where you get your “views” on Austrian economics from. It certainly isn’t from reading any of their material, so where does it come from?

    1. Bankers hate gold.
    ”They did face the little problem that the American Populists would be very hard to convince of this. Not in the least because of the book ‘Secrets of the Federal Reserve’ by Eustace Mullins, who famously described who owns the FED and how it came about. Mullins of course was quite explicit in his analysis of Gold as the Banker’s favorite currency.”

    Rothbard has written extensively about the Fed its precursors. Muslin was hardly a pioneer when it came to central banking. At any rate, what you fail to explain is why the remnants of the gold standard was practically destroyed through the creation of the FED, even more so by FDR in 1932 and then completely by Nixon in 1971. Why should this have happened, if the bankers favor gold as you claim?

    Secondly, you clearly don’t understand what the gold standard is. It is not a single system, it has a great range. What you fail to mention is that the favor full-reserve banking in connection with a commodity money. No bank nor any government wants that. So you’re debunked.

    2. Government is the problem.
    “This is the red herring that Austrian Economics is famous for. Just like the mainstream it completely ignores the Money Power.”

    Another lie right off the bat. Read Rothbard’s “Mystery of Banking”, Hülsmann’s “The Ethics of Money Production”, Salerno’s “Money, Sound and Unsound” and de Soto’s “Money, Bank Credit and Economic Cycles” just to name a few. Austrians have for decades described the influence of big banks on the government, they just don’t use silly names like “Money Power”.

    What you constantly miss is that the problem is the partnership between big government and big business the Austrians criticize. As long as there is government power, big business and other corporations (e.g. unions) will take it over. Even Milton Friedman understood that. You, however, seem to think that government is made up angels who are then corrupted by men in big white mustaches who carry sacks of money on their backs. It’s a bit more complicated and sinister than that. So you’re debunked again.

    3. Manipulation of the Volume of the Money Supply is the main problem with our money
    “Another red herring: manipulation of Volume is certainly quite a scourge. But it ignores an even bigger problem: Interest.”

    Austrians don’t generally point out “main problems” in a complex setting like money. Manipulation itself is the problem, be it through money printing, setting of reserve requirements, the interest rate etc.

    Interest per se is not a problem. To the contrary, it is the most important price signal of all. In and of itself, it is just a reflection of our time preferences. You’ve never really understood interest. All you do is complain about how much money the government pays on its bonds. From a economics perspective, that is irrelevant. Debunked again. Let me know if you want to have a serious discussion about interest.

    4. Gold guarantees a steady volume
    “This another very strange supposition. After all, the Gold Standards of the past saw horrible asset bubbles.”

    Most of the depressions in the 19th century either didn’t happen or were much less severe than those post-FED. At any rate, gold by itself will not stave off the business cycle, and no Austrian has made such claim. But the booms/busts did not happen because of gold, they happened mainly because of credit expansion through fractional reserve banking, which is the case today as well. However, a gold standard severely limits the banks capacity to engage in credit expansion. Post-FED, they’ve had no such limitations and that explains the veritable explosion in the growth of the money supply and the subsequent bubbles. Again you show that you really don’t have any idea what the “Gold Standard” really is, or monetary/banking theory in general. Debunked again.

    5. Inflation is bad
    “It is certainly true that inflation knows problems.”

    So how exactly is this and “Austrian lie”? You debunked yourself on this one.

    6. Deflation is good
    “This statement is so incredibly favorable for the ultra rich, who are basically the only ones who benefit from deflation, that it puts Austrian Economics in a very bad light.”

    The fact that we haven’t had deflation for at least the past 100 years is something you’ve never been able to explain. You yourself rest your entire creed on the Money Power, the banks omnipotent power over everything. Yet they seem either unable or unwilling to set in motion deflation. Try as you might, you’ve never been able to explain that obvious contradiction. Nor do you seem to understand that bankers are debtors too, so even from your own perspective deflation would be bad for bankers.

    The real mistake you make is of course that Austrians don’t favor either inflation or deflation, they favor a stable money supply, which over times leads to gradually falling prices. Only when the money supply has been hugely inflated is it due for a deflationary correction. The same goes for everything else. So as usual, you’re debunked, mostly because you still are unable to state an Austrian position correctly. It makes me wonder where you’re getting all your stuff from.

    7. We don’t want a Gold Standard, we want a Free Market for Currencies
    “This is such nonsense.There are two major reasons why it is.”

    And none of those reasons hold true. Firstly, free-market currencies is not about who gets what funding and propaganda, it is about letting the market choose what it wants to use as money. Undoubtedly there would emerge different monies and monetary systems, which over time would be weeded out in favor of the superiors monies and monetary systems.

    Nor do you understand Gresham’s law. It referred not to slightly damaged coins, the point is that as long a money of lesser quality, e.g. FED-notes, are in use, people will not trade gold for those notes. In a free market setting, paper money would disappear quite quickly in favor of whatever monies the market chose to use. Therefore, Gresham’s law wouldn’t be a problem. Debunked again.

    8. Austrian Economics is hated by the Main Stream Media
    “While it is true that Austrian Economics is a fringe, also in terms of Media Attention, it always has maintained a steady niche.”

    One need only look at the treatment of Ron Paul to see that the MSM don’t like the Austrian School, not to mention that actual scholars are never invited on anywhere. To claim that this is a “lie” is ridiculous on its face. Debunked again.

    9. Fiat Currencies are always bad
    “Another typical device: a dialectic. Trying to frame it as Paper vs. Gold. Both ignoring interest.”

    Not until you come to terms with what interest really is can there be any rational discussion about currencies. There is no argument against the fact that paper money always has and always will be manipulated, because it is so easy to do it and there will always be a great temptation to do it. You have no come-back against this. Debunked.

    10. The problem is the FED
    “The FED is a symptom, not the problem.”

    The FED is a huge problem borne out of a greater disease. It is, as you say, a vehicle for the government and the big banks to control the money supply. As such, it is a huge problem. Abolishing the FED would go a long way to solve the many problems with the current monetary system. So it is far more than just a “symptom”.

    And I have to say, calling “The problem is the FED” an Austrian lie or mistake is really scraping the barrel. Debunked completely, mostly by your own ignorance.

    I ask again, where are you getting all your disinformation from? We know you haven’t read any Austrian books yourself, so I’m really curios to know.

    • 1. ‘Muslin’? Who is he?
      Mullins is the one who wrote the Secrets of the Federal Reserve after the War: it is he, together with Ezra Pound, who made public the private ownership of the FED by the Banking Families.

      Mullins also explained how the Gold standards of these days were banker operations.

      The Gold standard was reinstated in 1925 and then again mostly abandoned in the thirties, after it had done why the bankers brought it back: create a massive depression. Keynes, interestingly, predicted this depression in 1925 when he wrote ‘the economic consequences of Mr Churchill’ (who in England was the one brought back Gold and in doing so forced it on the world).

      You don’t understand dialectics, do you? Bankers own both sides of the conflicts. Paper vs. Gold (they own both) Capitalism vs Communism (they invented and own both) etc.
      Bankers will routinely blather about Gold as ‘a barbarous relic’ while at the same time planning a new Gold Standard.

      Of course I understand Gold Standards come in many guises. Nowadays it’s sold as ‘a free market for currencies’. It matters not. What matters is that the specie is completely controlled. What matters is that Central Banks own most of the known reserves and the Banking Families own massives stashes that are unaccounted for. They will lend the Gold into circulation via a full reserve banking system, meaning all the interest will again end up with them.

      They don’t care about a gold or paper monopoly, as long as it’s theirs.

      So no, no debunking here…….

      2. What you call a silly name is how the Banking Families have been called by the American Populists for the better part of two centuries. Even presidents have used that term. That you may not be aware of that does not make ‘a silly name’. Others call it ‘the New World Order’ or ‘the Illuminati’.
      You call this ‘degenerating into conspiracy’ and I call that ‘lalaland’.

      Ok, I’ll give you this: for rhetorical reasons I somewhat overstate the case: Austrians don’t ‘completely ignore’ the Money Power. They severely downplay it. They do talk about ‘elites influencing the Government’. And that’s why they want to do away with Government…..Some logic, haha.

      3. Interest IS the problem Kai: You just don’t realize (because Austrianism does everything to obscure this) that it is a wealth transfer from poor to rich.

      Germans have quantified this wealth transfer and it transpires to be 5 to 10 trillion per year globally. The poorest 80% pay this to the richest 10%. But it’s even worse: millionaires pay more interest than they receive to billionaires, who in turn pay more interest than they receive to trillionaires. Meaning all the money eventually ends up with the ultra rich.

      Do you realize there are trillionaires out there? Or do you believe Bill Gates is the richest man in the world?

      4. “Most of the depressions in the 19th century either didn’t happen or were much less severe than those post-FED”
      Lol :-)
      Do your homework. There were massive depressions. In fact: the 1907 depression was engineered by Morgan to have an excuse to create the Fed.
      Worse still, the Gold standards guaranteed structurally scarce money. And this is what the Populists have been resisting forever. Scarce money means economies working on less than full power forever.

      5. Please don’t ignore the point that I made there.
      We’re at five already Kai: you have debunked nothing. You are just scathingly doing away with everything I say.

      You’re just a new kid on the block massively overrating his knowledge, which is based on memorizing the words of saints like Mises and Rothbard.

      You made the big mistake of getting sucked in by a school of thought and you are now doing what everybody does, who makes that mistake: he’s regurgitating the same old arguments for ever, instead of studying ALL the schools out there, including Interest Free economics and creating your own conclusions and thoughts.

      Rothbard is dead. He was a well paid, well connected mind controller. He created, with the indispensable help of shady elitists, some silly ‘anarcho capitalism’, really macho stuff that has some attraction to hotheaded young men like yourself, who still believe they are immortal and who are not yet ready to think it all through to its logical conclusion: that you would be selling your kids in the free marketplace to pay off your debts and have something to eat if these goons get their way. Choice, you know. It’s all voluntary, right?

      I’ll leave it at that for the time being……..

      • Anthony

        I think it’s safe to say that most monetary systems have been banker operations. What you always omit is where banking started from, i.e. full-reserve deposits at goldsmiths. Fractional-reserve was considered a capital offence, and bankers who engaged in it were lynched. The question whether a deposit was a bailment or a loan to the bank wasn’t resolved until 1811, when an English court ruled it a loan. This was the first official stamp of approval, legalizing what had previously (and correctly) been considered a fraud.

        This had nothing to do with the gold standard or any other monetary standard. It had to do with the rights of banks to engage in credit expansion. Hard money put a limit on it because it made bank runs credible. The establishment of central banks (lenders of last resort) as well as the use of bank holidays were means to alleviate the risk and damage of bank runs. From there, cutting all ties to hard money and transitioning over to a complete fiat standard was just the final step. In this setting, credit expansion is completely unlimited and unchecked. Banks cannot run out of reserves, because the central bank can replenish them with a keystroke.

        It is therefore completely absurd to talk about the gold standard as a tool for bankers to control the world. Any element of hard money will restrain that control, which is why it was eventually abolished. It just took some time. If the bankers actually preferred gold to the present system, we would have gold. But they don’t, so we don’t.

        The idea that the bankers wanted a depression is utterly absurd. Thousands of banks went belly-up in the 1930s. That was completely right, because they were all insolvent. Insolvent companies should go bust, but it had nothing to do with the gold standard.

        Your dialectics is nothing more than baseless conspiracy musings. The issue isn’t about paper vs. gold, and the fact you actually think that reveals your lack of understanding what is actually important, i.e. the ability to engage in credit expansion. Nobody invented Capitalism (you really go to new lows with ever post). It is an economic system based on private property rights, but it should be clear to anyone that you are vehemently opposed to property rights.

        The gold standard is not sold as free-market currency. Free-market currency is whatever currency the market chooses to use. How can this fairly simple concept be so difficult to understand? Nor does it make any difference who owns what, as long as the market is free to choose. A government imposed gold standard is no more free-market than a government imposed paper standard.

        So you are completely debunked, mostly because you don’t have a clue what you’re talking about.

        Money Power and Illuminati are silly names, regardless of how popular they are. However, the point was that you keep ignoring the government side of the partnership. That is what happens when one uses silly names.

        So Austrians severely downplay the Big Business side? What exactly do you base this claim on? Read ANY Austrian text on money and banking, and you’ll notice the emphasis put on the business side of the partnership. The very term “corporatism”, widely used by Austrians, refers to the business side. Austrians also make distinction between actual entrepreneurs and political entrepreneurs, the latter being business people who get their money from government contracts. So you are demonstrably wrong, because you haven’t actually read an Austrian text in your entire life.

        Oh, I don’t “realize” what is the problem. Spoken like a true sect leader. You don’t even know what interest is. Tell me, have you ever heard the term “time preference”? You would had you ever read any Austrian texts, but since you haven’t I guess the term is completely alien to you.

        Name one single depression during the pre-FED are that comes even close to the SIXTEEN year long Great Depression. Or the stagflation that lasted through the entire 1970s, with rampant inflation and price and wage controls. Or the current depression.

        “You’re just a new kid on the block massively overrating his knowledge…

        And so we degenerate to absurd ad hominems. Very predictable. Rothbard was well paid? Really? Provide evidence, please. You’re just like REN. All you do is slander people who’ve you never read. Very honorable indeed…

        • Listen Kai,

          You come to this blog. You don’t read anything I write. I have documented who paid Rothbard when for what in ‘faux economics’. And not just Rothbard, Memehunter and myself have described the entire buildup of libertarianism and who is controlling it.

          You consider ‘conspiracy’ degeneration. So why are you here? If you cannot understand where we are coming from, don’t want to understand or presume we’re wrong, why waste our time?

          Austrianism, like Keynesianism and Communism cannot be understood without understanding of the conspiracy and dialectics. If you just brush that aside, that’s fine, but do that at your own blog.

          You’re just trolling if you do not care to take our arguments seriously.

          Go elsewhere! Have a good time with the millions out there who enjoy the Austrian mindgames without worrying about World Government, World Currency, 9/11 and WW3 and the Money Power behind it.

          • Anthony,

            I have ready everything you’ve written that I’ve responded to. My posts have been directly aimed at yours, sometimes even included quotes.

            As was concluded in the exchange with Memehunter, every source referenced to did nothing to contradict the fact that any support ever received by Mises or Rothbard by what you call “Money Powers” was utterly insignificant. This, of course, is evidenced by the fact they never got a paid position at any decent university, and that Rothbard’s dissertation was held up for years. For all your “documentation”, you still haven’t been able to explain why that was the case. Why is that?

            I don’t consider conspiracy to be degeneration (who is not reading here). I said ad hominems were.

            I do want to understand where you’re coming from, because one thing is crystal clear:

            You’ve never read an Austrian text in your lives. This is evidenced by your continual failure to state one single Austrian position correctly, and makes me wonder what you base your “critique” on. Another question that you for some reason have been unable to answer.

            And I would take your arguments seriously, if you in fact would make a serious argument. I’ve tried to get you to do this, for example by asking you about time preferences and the interest rate being a reflection of that.

            And to clarify, this is what I mean with degeneration:

            “Have a good time with the millions out there who enjoy the Austrian mindgames without worrying about World Government, World Currency, 9/11 and WW3 and the Money Power behind it.”

            None have been more opposed to world government than the Austrians. It was Henry Hazlitt who was the foremost critic of the Bretton Woods agreement, for example. It is the Austrians like Ron Paul who are the greatest and most vocal critics of the constant war mongering by the US and others. These are all well documented and easily verified facts, so why do you claim otherwise?

            • Kaj,

              You’re full of shit. rothbard worked for the Volker fund for years. He got paid ‘upper middle class wages’ according to his colleague there, Gary North.

              From the Volker Fund the ENTIRE libertarian ‘movement’ was built as you have clearly NOT read in ‘How the Money Power created Libertarianism and Austrian Economics’.

              You insist on making things go away by saying ‘I responded’, ‘no source’, ‘debunked’ without even getting close to doing so.

              Paul is parading as a man of ‘peace’ by saying Arabs did 9/11. His proposed budget did far more to weed out food stamps than Empire. That’s the real Paul. But you are engrossed by words and to you defending your position is more important than growth.
              Read up on Paul on my site, I have three major articles on him. Also read the comments for very interesting extra insights.

              Paul, by the way, does not at all resist World Currency. He knows, as we here at Real Currencies do, that Gold has always been de facto world currencyl.

              • “You’re full of shit”

                Wow, how scholarly. So what Rothbard worked for the Volker Fund? Is that an Ivy League university? No, its one of hundreds, if not thousands of various think tanks. You seem to think that Volker Fund was the most prestigious institution in the US. It wasn’t and it isn’t, and Rothbard was fired from following serious disagreements with its leaders. So this is a complete non-argument.

                To claim that Volker Fund created libertarianism is utterly absurd. Just look at how separate the Mises Institute is from George Mason University, not to mention the Cato Institute. The Austrians have always been the most vocal and scholarly critics of the current monetary and banking system, which is evident to anyone who has actually read their works.

                And when the HELL has Paul said the “Arabs did 9/11”? To his own detriment, he has always said that 9/11 was a consequence of US interference in the Middle East, the constant war mongering and ockupation of muslim countries.

                His budget cut the MILITARY EMPIRE. His cuts were almost all about drawing down the US military presence around the world. He specifically said that by cutting costs overseas you can tide over insolvent, unconstitutional and socially destructive domestic programs over a transition period. In other words: Cut militatary spending immediatly, phase out various welfare programs over time.

                Do you have absolutely no shame at all? How can you peddle such blatant lies?

                Why should I read any of your “major articles”, when it is clear you’re just peddling slander?

                • Why do you continuously assume I ‘seem to think this or that’?
                  I don’t believe the volker fund was in any way big. It was just a few men, sponsored trust that Volker left after his death.

                  that’s the real scream about the ‘libertarian grass roots movement’. It was built out of nothing by a very small group of men, Mises, Hayek, Rothbard, later Paul, Rockwell, with North as a notable lieutenant.. the efforts were coordinated by the top of the Money Power control structure: Kohlberg, Baruch. Nowadays Rees-Mogg, another Rotschild buddy. The Crypto Jewish Koch family (including daddy who was instrumental in creating the John Birch society) played a major role too.
                  The Volker fund did what the commies did: it created countless other ‘independent’ think tanks to create the impression of a movement. Even today all libertarian think tanks out there can be traced by with just 2 or 3 steps to the Volkerfund.

                  All this can be read in ‘How the Money Power spawns libertarians’, the sequal to the other article.
                  The Mises and Rockwell seperate? Really? How come they are plugging Rothbard so big? Haven’t you read ‘the catholic arm of libertarianism’? To see how Jesuit influences were so very important?
                  I think Memehunter pointed out Rothbard worked at the Volker fund for about 12 years or so before being ‘fired’, but not without adding later ‘it was the best job he ever had’.

                  No, Paul was taking maybe ten percent out of the military budget, but immediately 40% out of food stamps.

                  By the way, his cuts would have created a massive depression overnight.

                  • hit reply to read squashed text

                • Correct: Paul always maintains 9/11 was blowback because of what the US was doing. So Arabs did 9/11, as revenge. According to Paul.

                  Who, by the way, do you think did 9/11?

                  • Anthony

                    “I don’t believe the volker fund was in any way big. It was just a few men, sponsored trust that Volker left after his death.”

                    Glad to hear you say this. But if that is the case, why do you make such a big deal out of the fact Rothbard worked for the fund for period? From your comments it seems that the very fact he worked for the fund discredits him completely as an academic, and that you based on knowing that he worked for the fund can disregard everything he wrote (or knew what he wrote) without actually every reading a single line written by him.

                    The libertarian movement actually has its roots in classical liberalism, which was the predominant philosophy of many of the founders, Jefferson in particular. There are many great names associated with this school of thought, such as Bastiat, Turgot and du Tocqville in France, Adam Smith, Richard Cobden and John Bright in the UK, Mises and Hayek from Austria, Anders Chydenius from Finland and so on. In some ways, the roots can be traced back to the Spanish scholastics.

                    Rothbard was in many ways a sort of founder of the modern libertarian movement, heavily influenced by those classical liberals. He took their philosophy one step further, to the final logical conclusion, you might say, which is anarcho-capitalism. Rothbard in turn influenced Rockwell, Hans-Hermann Hoppe and many, many others. The very idea that they were bought and paid for by the bankers, as you’ve so laboriously and unsuccessfully have tried to show, is ridiculous on its face. Every single book Rothbard ever wrote on money and banking, ever single essay and article, in fact, was the exact opposite of what banking-industrial-congressional complex wanted to hear. That was the case with Mises too, and all those after Rothbard.

                    Again, this is evidenced by the obscurity of their careers. Had they had the full support of the wealthiest and most powerful banking families in the country, their careers had been very different. The very fact that the libertarian movement always was and still is a fringe element also proves this.

                    The thing is this: Either the Money Power elites have great, if not unlimited power but they never gave any actual support to Mises/Rothbard, or they did give significant support but they have no power. These are the only two possible explanations for Mises/Rotbhards academic obscurity and their utter lack of influence on US politics. There is now way for you to get around this.

                    Instead of digging in Mises/Rothbard, shouldn’t you be looking at who is and who has been backing all those who rose to great prominence and ACTUALLY had influence? Like the Fed Chairmen, the presidents of various FED banks, of the great financial institutions, the professors at all the Ivy League schools who have never failed to propagandize for more power to the big bank/big government cartel, the chairmen of the House and Senate committees, and the council of economic advisors to the President. Aren’t you supposed to be looking at them and who is backing them? After all, they’re the ones who influence decision makers or who are decision makers themselves.

                    Just log on to and you’ll see what they think about Cato, Ayn Rand institute and even George Mason University. Cato and ARI aren’t that fond of Rothbard either. In fact, the president of ARI said recently that libertarianism should have died with Rotbhard. The Mises Institute “plugs” Rothbard and Mises, the others do not, not to mention people like Walter Block and Hans-Hermann Hoppe.

                    “No, Paul was taking maybe ten percent out of the military budget, but immediately 40% out of food stamps.”

                    Please provide a source.

                    “By the way, his cuts would have created a massive depression overnight.”

                    Really? Please explain how, and while you’re at it, you can explain why cutting 2/3:s of the budget in 1945 not only did not create a massive depression, it yielded the most robust one-year growth in the history of the US: 1946.

                    As far I as I know, the hijackers have all been identified as arabs. I think 9/11 was a predictable consequence of US foreign policy, as was the bombings in 1993 and any number of other so called terrorist attacks.

              • Your constant use of propagandist techniques and inflammatory language reveal you as the intellectually-dishonest halfwit that you are.

                Ron Paul “claims” 9/11 was committed by Arabs? He claims, along with very nearly every single other thinking human being on the planet, that it was committed by Islamic extremists.

                He advocates withdrawing all U.S. troops to U.S. soil, and using them ONLY TO DETER AN IMMINENT EXISTENTIAL THREAT.

                Would you care to explain how he isn’t a man of peace without buzzwords like ‘parading’?

                • “Ron Paul “claims” 9/11 was committed by Arabs? He claims, along with very nearly every single other thinking human being on the planet, that it was committed by Islamic extremists.”

                  Well, as you may have noticed, there are those, including me, who believe ‘Islamic extremists’ had very little to do with it, except playing the patsy. Seems more likely the Zionists in collusion with the Cheney/Bush cabal was behind it.

                  That’s what the ‘Truth Movement’ was all about, before it was slyly renamed the ‘End the Fed’ Movement by Paul, Tom Woods and all the other Money Power idiots parading as the ‘opposition’……..

                  As long as people are blaming Arabs (‘islamic extremists’) for 9/11 not much has changed, or will change.

  11. Could any facebook visitor please tell me where the hits on this article come from?

  12. Antivenom to “Austrian” School poison:

  13. Antony, don’t you think it’s high time you make your home work and stop wasting people’s time!? Clarifications are plenty..only YOU have to make the effort to study these.

    • A usurious money supply is the eternal telltale of Money Power control Francis.

      That’s the most important message I put out there. Gold as currency will only circulate as interest bearing credit and most of the Gold is clearly under Money Power control.

      This cannot be explained away and believe me, very mighty men have tried to. They all failed.

  14. This post is a joke full of circular thinking and shifting definitions. Freedom is simple. -ATP

    • could you be a little more specific?

      • Chris permalink

        Protocol No: 20.

        Deal with the Jew and all these problems will go away.

  15. This a stupid and most dumbest shit I have ever seen. I started to counter argument it…(see below) but the author is probably too retarded to understand it. The article says a lot about the WEBSITE: REAL CURRENCIES…

    1. Bankers hate Gold because it is a barometer for their misbehavior. The Rothschild NEVER controlled the Gold market. They used it in their favor.. Gold doesn’t fluctuate in buying power…Gold is neither deflationary, nor inflationary. It’s the only money which has no counter party risk. Government is by definition the enemy of “the people” because it tends to grow as a seven headed monster and always serves itself instead of the people.
    2. Government is indeed the main problem. History learns that the less government the more WELFARE and the bigger Government grows, the more problems society encounters. You have to be blind, deaf and retarded to pretend that Government is neutral.
    3. Manipulation of the Volume of the Money Supply is indeed the main problem. The more money one create, the less it buys and the smaller positive impact on the economy…in the end (like now) the impact becomes negative.
    4. Nonsense…
    5. Inflation is the devil and bad. Somebody pretending it is not, is retarded. Exactly those countries with no or little inflation prosper (example: Switzerland).
    6. Price deflation is good because it makes life cheaper for all. Deflation is a consequence of capitalism: capital is used in conjunction with labor to manufacture goods in a cheaper way…

    • Well, although you fail the test quite badly, already in the first point (are you really, really sure the Rothschilds did not and do not control gold??), you have at least made the effort of trying to rebut these points.

      Point 3 is my main hobby: volume is not the worst problem. Read the Interest Free economics page please, you are missing out on something quite big.

      Point 6 is another clear indication you are badly infected with the Austrian nonsense. Declining prices are cool when they are the result of technology or more competition.

      However, the real definition of deflation is a tanking money supply. Since the Austrians always make the point that the real definition of inflation is a growing money supply, it’s actually quite nasty to use the ‘declining prices’ definition when it comes to deflation.

      Let’s face it: with a tanking money supply there is unemployment, wages under pressure and assets being liquidated by debtors desperately trying to reduce debt.

      Who is buying up all these assets for pennies on the dollar? The 99%?

    • lol, haha, you’re one of those gold dealers parading as the Free Media!

      Nothing to buy here, except some interest free credit my friend.

      Love Belgium though!

      • I am not a gold dealer and I have no particular love for Gold. Nor do I live in Belgium. I regret your reaction to mine is as small as Belgium is…and that by posting this kind of stupidities you’re misleading so many people. Do yourself and the world a favor and read a good book about economics!

        • Well I admit my second remark was a little cocky, but your ‘analysis’ of the article does not seem to require an answer much bigger than the Netherlands.

          How can you say you’re not a Gold dealer with such a site? You may not physically sell the stuff, but you plug it big time.

          • Your answer to my last reply is as stupid as your article.

            • The problem with any economy or money system is usury. That is what distorts everything. Granted, gold provides some discipline in the value of paper money, but it is the usury that is the economic poison that infects all economic systems. Usury has to be eliminated before any other system can work properly.

            • hmmm……are you sure this will help my much needed edification?

    • urbane permalink

      Agree, some people here really need to read “When Money Dies” to understand exactly why inflation is so toxic, why Gold (and Silver) is always trusted, and why separate unbacked currencies are never the solution, cause chaos, and ultimately fail!

      I have read loads of material on finance and money, over 4 years and money always comes back to a base of Gold (and also Silver), as clearly shown by John Exter’s Pyramid.

      The Federal Reserve, WW1 and French arrogance, were the primary causes of the Great Depression and all fiat currency has caused volatile devaluation since then; before the Federal Reserve, Gold backed world currencies ensured that inflation was trivial, and recessions were short and nothing like as severe.

      Read the book and wake up, or see your dream become a nightmare.

    • Do some research before posting BS. The Rothschilds have had a CORNER on gold FOR CENTURIES!

      • Absolutely George!

    • wearewatchinyouman permalink

      hahaha…Typical neo-liberal/Mises/Paul followers logic…. If you disagree with an argument I’m making you’re “too retarded” to understand.

      • Not at all…there is a fundamental reasoning and a bucket full of solid arguments….you should have taken the time to study these BEFORE publishing this remark.

  16. SeriouslySTFU permalink

    This may just be the dumbest shit I’ve ever seen in my life. You clearly know nothing about economics.

    • Yea, and everyone that comes here is retarded ‘cuz communist bankers should run the planet. They earned it right?

    • SeriouslySTFUIsAPAaidWhore permalink

      “You clearly know nothing about economics”.

      Economics as it’s taught in every major school of thought knows nothing about reality. It’s not a dismal science, it’s a bullsh*t science constructed on models that fail in real-life, over and over again.

      • You, sir, are a genius. You might be interested in my YouTube channel. I teach not what is taught in universities.

  17. Techy permalink

    I came to this article attracted by the pretentious title to argue with the only sound and scientific theory about the free-market economy. So far haven’t found any valid and substantial criticism to the fundamentals of what this author calls Austrian School. For example as Keynes’ General Theory was annihilated first by Hazlitt and more lately by Hunter Lewis.

    No surprise here. The arguments of the author are plain vanilla propaganda revealing that he doesn’t really know what he it trying to criticize or is conveniently avoiding it assuming the readers have also no idea. Maybe he thinks that most people form their opinions from mass media and Internet blogs? I cannot argue that this has been true for awhile but Ron Paul’s recent results indicate a turning tide. Maybe more and more find the courage to go over the volumes of “Human Action” by Ludwig von Mises and then follow through with “The Capitalism:..” by his student George Reisman both available free at and

    Once a person goes though this purgatory of mainstream “economics” lies no one, including this author with his bombastic and pretentious title can obscure the plain truth about the real mechanisms driving the economics of any society based on labor division and free exchange. Yes, including the governments messing with the free market (see why in “Meltdown” by Thomas E. Woods Jr.) Then one can see the arguments about the above fabricated “lies” for what they truly are – inept attempt to construct false arguments that then are “criticized” with counter- arguments and complete with the pretentious conclusion that somehow the author has refuted the Austrian school of economics.

    Only a true science can reliably predict future events, right? Ludwig von Mises in his treatise “The Socialism” written shortly after the bloody Bolsheviks coup in Russia HAS PREDICTED in detail how this system will evolve and why ultimately it will fail. At contrary, mainstream “economists” cannot predict economy turns and market busts even one year ahead so they need to fabricate mystical creatures as black swans etc.

    Now, feel free to call me names, to twist my words or make fun with my English. But you cannot really argue with the sound science of economics, cannot refute in substance any fundamental position thoroughly explained in the above books by von Mises and Reisman. Nor the author of this pretentious article can either.

  18. Unless interest or usury are done away with, there’s really no point in having lengthy discussions about the alternatives unless they do not involve interest. There is no alternative than to get rid of interest or the whole economic system will collapse under the weight of its own corruption. My guess is that almost anything will work that does not include usury.

    Common sense and natural law tell us that the interest-based systems are complete losers and makes slaves of everyone involved. Interest and usury is evil, and nothing good can come from evil. That’s where you make your stand.

    I wonder how many bankers would be bankers under the current system if they knew there was a special place in hell for those who charged usury. This is in an early Christian writing called the
    Apocalypse of Peter which was used in the early Christian church. (See Verse 30) It makes sense because usury is considered stealing and there’s really no way to get around it. I find it interesting that this work was removed by the so-called “early Church” because it seemed to offend a few people. I’m speculating that those people were the bankers and usurers of that time period.

    But even without any kind of writing or scripture, it should make good common sense that interest is stealing from the producers in any economy. The bankers think it is good for them, but they don’t realize that in violating God’s laws, they are securing for themselves a very miserable life on earth, and may be securing an extremely bad one in the next life.

    I cannot over-emphasis this enough. Nothing good comes from evil. The monetary system we have today is completely evil and it is because of interest or usury. We cannot get something good out of the bad.


    • libertydenied permalink

      Great stuff! I love your blog. I wish you’d consider going on Mike Montagne’s(MPE) radio show… It would be a great listen to hear you guys debate your approach’s to currency.

      • Mike has issues with debate. He has left comments here, but there so damn long it’s kind of hard to address any single thing he says. For me it boils down to this: should currency be issued in large lumps to a select few by way of a foundry, or should it be issued in small lumps as equally as possible to many? In other words – $100,000 to 1, or, $1000 to 100.

        • libertydenied permalink

          I agree he can be a little long winded…lol… also his constant charge of plagiarization can be a little off putting, but you can’t really blame the guy. I’d be pissed too if I felt like people were stealing my life’s work and not doing it justice. All that aside though I think a platform like radio is easier to engage in debate than print. I’d love to hear it. As far as your other point Philo; I definitely think it should be issued based on potential production alone and as equally as possible..

          • Hopefully Mike just adopts my approach soon. I won’t be pissed. Unfortunately, anyone with as much exposure as he has isn’t really positioned well for self preservation. In other words, he’s well within the enemies territory and quite visible. He’s just been firing blanks. Does he want to go out in a blaze of glory, or back off and start nuking the enemy from behind the lines under various pseudonyms?

        • That’s indeed a very fundamental question.

          My answer would be that it should equitably shared. There are a number of parameters, like assets, income and how much credit already has been enjoyed.

          • The role of the government should only be to ask if a person is intending to be an active producer within the region when considering issuing currency. Currently, we have people with no income because of our reliance on a currency driven economy. The only reason banks collateralize currency issuance is to create the illusion they are risking something.

            • “The only reason banks collateralize currency issuance is to create the illusion they are risking something.”
              Don’t forget their chance to grab the asset!

              • That is only an inconvenient stipulation for the bank. The credits acquired by the auction or sale of the asset simply balance out a portion of the debt the borrower has with the community. The rest of the debt that is defaulted on is collectivized loss among the community in the form of inflation.

      • I don’t have any solid opinions as to the actual structure after interest or usury is gone. Since we don’t see too many modern examples, this would have to be done by a lot of people smarter than me. I haven’t studied “social credit” so I can’t speak intelligently about it. I first heard about it through this blog. If you have a type of fiat currency, then how would the supply of money be controlled? Who would do it?

        All I know is that usury violates God’s commandments and His natural law because it is stealing. No economic system can survive that indefinitely. I’m guessing that you could leave the same system in place, but get rid of usury. Banks could manage the monetary system, but no contracts or transactions could include usury. But I don’t study things like this so I really can’t give a thorough opinion.


        • Just as an experiment, would you consider finding a nice secluded spot out in nature, drink two or three beers if you want, then cry out to God for revelation? Dance around, roll on the ground and sing praise. That’s how my journey began anyway. You’ve got to really sincerely convey your preparedness for reality. “I want the truth and I can handle it!” Let me know what happens.

      • thanks Libertydenied,

        Yes, it would be nice to discuss these things on radio. It’s indeed easier than texts, even for the readers, but especially if you have to write them.

        I appreciate Mike tremendously so perhaps we will one day!

    • Hopefully we can resolve the issue of monetary policy soon so we can move on to issues like how not-Biblical the idea of a literal place called hell is, and the idea of immortality of anyone not in Jesus Christ is.

      • There is always a spiritual fall out whether we like it or not. There is a reason why usury or stealing is bad; it doesn’t work and it goes against the natural order. That is the most important thing to know. Usury is wrong and it is stupid. You can’t fix stupid.

        This is a case where the solution is extremely easy; at least in principle. Stop the usury and the problems go away. How hard is that?

        A gold standard is arguably better than “fiat” money, but if interest is still present, that too will fail.
        It’s called natural law. If air were sucked off of the planet, we would all be dead in seconds. That’s natural law, and it is what it is.

        • Wow, you come here and your still a gold bug?

  19. Bankers love gold because they can use it to extract wealth without producing anything. Austrianism obscures the fact that the public currency is supposed to be issued by a public bookkeeper as opposed to a private bookkeeper. Every penny of a mortgage is created the second a borrower signs a promissory note for the mortgage. His balance is debited(negative signed numbers added) and a seller/lender balance is credited. The idea of mortgages being the vehicle for introducing/issuing currency is absurd. It just won’t happen. But, I suppose it makes sense if the idea of a high school graduate or an immigrant receiving a check from the government for a small amount seems absurd. “Interest”(embezzlement) is created the second the borrowers balance is debited and the bankers balance is credited, and the bankers do spend it, that’s why they have so much stuff.

  20. Social Credit is NOT inflationary, because a large portion of any money distributed directly to consumers from a National Credit Authority would be in the form of a price rebate.

    Further, Douglas did not want to eliminate interest on loans. Nor did he focus solely on interest as a cause for the gap between income and prices.

    Douglas said:

    “The rapturous iconoclasm of certain groups of monetary reformers’, to whom Usury”, the sparring-partner of the bankers “inflation” is the Scarlet Woman of Babylon, has had the inevitable effect of encouraging the financial authorities to abolish, for practical purposes, the interest paid on undrawn current balances, and deposit accounts. We do not say they would not have done it anyway – the one thoroughly sound feature of the banking system was its dividends to shareholders and its interest payments to depositors which I jointly with the insignificant mint issues, provided almost the only fresh unattached purchasing-power. It is obviously lost time to beg of our amateur currency experts to consider whether they really mean what they ask, which is, the replacement of unattached purchasing-power by loans. But they must not complain if we, and others with us, regard them as propagandists for totalitarianism. ”
    The Social Creditor, Oct. 27, 1945.

    Clearly, Douglas was not in favour of the elimination of interest on loans, and when on to state that the analysis by which certain monetary reformers believe that interest on loans is incapable of being repaid because they only create the principal of the loan in false. Banks create money when they spend, or pay interest on deposits. This money is not factored into any analysis of the monetary reformers who want to eliminate interest on loans.

    The reason that Douglas proposed a price rebate and dividend is based upon his A+B theorem, and the deduction that a form of purchasing power must replace the wage as capital replaces labour in production. Keynes reached the same conclusion as Douglas in his book “The General Theory of Employment, Interest and Money” when he stated:

    “Thus the problem of providing that new capital-investment shall always outrun capital-disinvestment sufficiently to fill the gap between net income and consumption, presents a problem which is increasingly difficult as capital increases. New capital-investment can only take place in excess of current capital-disinvestment if future expenditure on consumption is expected to increase. Each time we secure to-day’s equilibrium by increased investment we are aggravating the difficulty of securing equilibrium to-morrow.”

    Unfortunately for us, Keynes failed to recognize Douglas’ solution to this problem, which is the only practical solution – a price rebate and divident given directly to consumers.

    • I’m not too sure about SC not being inflationary. Many Social Crediters actually expect inflation also. The question is how problematic this inflation would be.

      I do realize full well Douglas didn’t want to end interest on loans.

      I do. The reason I support Social Credit is because it dampens the drain through interest to the Plutocracy:

      Or better: it ends the control of the Money Power of the money supply.

      Although I understand Douglas analysis and agree with it, it is not comprehensive: the poorest 80% of the Globe’s population pay 5 to 10 Trillion in interest per year to the richest 10% and most of it ends up with the richest 0,00001 percent.

      So while Social Credit is a very powerful system, it is far from perfect and it is a mistake to try to keep it ‘pure’ in the sense that it is the ‘only’ solution. It is not. It teaches us a lot and provides a good system, but I like to integrate it in a more General Theory of Money.

      • Nik permalink

        A Gap credit balancing effect would not be inflationary, but it would radically change the value system of prices and economic activity back to real world utility – in some cases this would seem inflationary, others deflationary.

        Earnt real world Purchasing Power would control future supply, the value system of artificial scarcity would be reversed as would that of superfluous abundance, thus attaining environmental stability while increasing the returns of economic industry to a societies wants & needs.

        A Free market for currencies is the only way to get there- talking about funding and propaganda issues is not talking about the role of a currency at all, that’s all well and good but every system will have it’s own real world consequences and propaganda/funding won’t change those a scrap. And that is what will matter with a free market for currencies.

        A much needed different & higher frequency of affairs then.

        • There already is a free market for money. Most money is not currency. In Canada, cash and coin only comprise approximately 3% of the money supply. Most money is created by banks through loans. This bank credit comprises the vast majority of the money supply, and is created by all sorts of different banks. If someone doesn’t like the money bank A creates, they can refuse to accept it. Only currency is “legal tender” in the settlement of debts, yet very few debts are repaid in currency.

      • Hi Michael:

        I’m in full agreement with you that a return to the “gold standard” is a serious mistake. I also believe that anyone who promotes a gold standard has a poor understanding of fractional reserve banking, and how banks create money. Most money is credit created by banks through loans. Even in a “gold standard”, the gold is not actually part of the money supply (or a very small percentage of it is if gold coins are actually used). The gold becomes the “monetary base” upon which credit is created. It is the banks “reserves”, just as cash and coin are now.

        No serious student of Douglas believes that Social Credit would be inflationary. There is a gentleman in the US who promotes “populist Social Credit” (I’m not really sure what that is besides a hodge-podge of contradictory ideas) who claims that Social Credit would be inflationary.

        One of the key components of Social Credit is the price rebate mechanism which lowers prices to consumers at the point of retail. In a Social Credit society, aggregate prices are falling – which is exactly what they should do as increased efficiencies are realized in production.

        Interest on loans would not be a problem if debt were not increasing exponentially. This increase in debt is the result of an accounting flaw Douglas discovered in his A+B theorem. In a Social Credit society income and prices would be in equilibrium (unlike now), so there would be no necessity for increasing debt. This would mean that people would be less likely to take on personal debt, and their interest burden would be greatly reduced.

        If you factor for inflation, interest rates are nearly zero right now. But people cannot afford to take on more debt. Exponentially increasing debt is one of the demonstrations that Douglas was accurate in his predictions based upon his A+B theorem. Douglas predicted this phenomenon (and many others) close to a century ago. I believe that Douglas was one of the greatest, if not the greatest, “economist” who ever lived, and he is to economics what Einstein was to physics.

        • Yes, I agree that theoretically there is no reason why SC would be inflationary.

          But on the other hand Government has been known to tamper with the money supply and also to allow the Money Power to work through it.

          That’s the main concern. That’s why I’m happy people are directly compensated for inflation through the handout itself.

          The concern that Government might not be the optimal guard of currency is legitimate. It is foolish to blame only Government, of course, like Austrianism, but we should not be all to enthusiastic about total Government control.

          • Hi Michael:

            I agree that we should not be enthusiastic about total government control of the money supply. In fact, I would argue that would be tyranny. It would replace one monopoly with an even more powerful one.

            Social Credit does not advocate total control of the money supply by the government. Most money would come into existence as it does now. What Douglas proposed is that consumers be given money directly by the government to account for an accounting flaw he discovered in his A+B theorem. Without this compensation mechanism, debt will continue to grow exponentially, because consumers are never given enough income to buy back all of production.

            Keynes recognized this flaw, but his policy proposals to correct for this flaw were elementary compared to Douglas. He recognized the absurdity of his recommendations when he stated in his book, “The General Theory of Employment, Interest and Money”:

            “Thus the problem of providing that new capital-investment shall always outrun capital-disinvestment sufficiently to fill the gap between net income and consumption, presents a problem which is increasingly difficult as capital increases. New capital-investment can only take place in excess of current capital-disinvestment if future expenditure on consumption is expected to increase. Each time we secure to-day’s equilibrium by increased investment we are aggravating the difficulty of securing equilibrium to-morrow.”

            A.W. Joseph, a Social Credit advocate, stated essentially the same thing in his address to the Birmingham actuarial society when he said:

            “Thus in order that the economic system should keep working it is essential that capital goods should be produced in ever increasing quantity relatively to consumable goods. As soon as the ratio of capital goods to consumable goods slackens, costs exceed money distributed, i.e. the consumer is unable to purchase the consumable goods coming on the market.”

            Only Douglas’ proposal to give consumers money directly, such that said money does not pass through the productive system and have a corresponding cost associated with it is the correct solution to solve this dilemma. The root cause of this problem is that labour is continuously being replaced by capital and technology in production.

            • Yes, but isn’t this problem a result of the fact that Capital is in the hands of the few? And that it ‘needs’ returns?

              “The root cause of this problem is that labour is continuously being replaced by capital and technology in production.”

              Shouldn’t we rephrase this to: The root cause of this problem is that Labour is not the owner of Capital and technology’?

              If Labor owned Capital all the added value of production would always return to the consumer, which is Labor.

              I would venture to say that Social Credit aims at compensating Labor for the problem, it does not solve the problem itself: that capital is concentrated in far too few hands.

              • Hi Michael:

                Social Credit gives consumers CONTROL over capital.

                Giving people “ownership” of capital will not eliminate the gap between prices and income. Wages, salaries and dividends (income) is always less than prices. Giving more people dividends will not lessen the gap between income and prices. Douglas demonstrated this fact in his A+B theorem.

                Further, I do not believe people want “ownership” of capital. They want the goods and services that capital creates. The owners of capital do not ultimately control its use, because if consumers do not demand its use, the owners go bankrupt, and the capital sits idle. By giving people adequate purchasing power to liquidate all of the costs of production, Social Credit would us all to access the fruits of capital.

                I think what you are talking about is Marxism. Marxists claim that the root of the problem is that “capital is concentrated in too hands of the few”. The problem isn’t that capital is concentrated in too hands of the few, but that consumers lack adequate purchasing power to liquidate the costs of capital.

                Ultimately, the consumer pays for capital, because all costs go into prices. Yet the consumer is forced to pay for capital twice, and this creates a gap between income and prices.

                I wrote an essay about this phenomenon on my blog:


                • Thanks Socred,

                  First this: as a Social Crediter you are undoubtedly often accused of Marxism. We give what we receive, so I’m not annoyed you would spring this silly label on me.

                  But let’s cut a deal: shall we save this label for Austrian Economics’ welfare for the rich and Obamanomics and its multi trillion hand out to banks, socializing losses while privatizing profits?

                  Marxism and Capitalism are two faces of the same coin: monopoly. That’s why Capitalism financed Communism.

                  “Marxists claim that the root of the problem is that “capital is concentrated in too hands of the few”.
                  They try to solve this by making everything the property of the State? That’s just one hand in my mind. I’m not too happy with the notion that ‘l’état, c’est moi’.

                  So I reiterate: is not the problem that capital is in too few hands, as a result of which all added value, either through interest or through profit ends up in these few hands?

                  If there were no profits and no interest, there would be no gap.

                  If the workers owned the plants and the banks, there would be no gap.

                  The Gap is created by a small group of financiers who mop up all the worlds wealth through usury and ownership of all the cartels that own all the major markets: Big Oil, Big Pharma, Big Food, Telecom, Automotive Industry. The profits of these cartels are siphoned off to treasuries that are used for black budget operations, not the normal economy.

                  Mind you, I support Social Credit, as it does address a large part of the problem and does restrict the wealth transfer, through compensation, not by addressing the root cause.

                  And this is not meant critically: Douglas was way ahead of his time in many respects, but his work IS 90 years old.

                  We should be on the lookout for every decent system and every decent analysis bringing us closer to ridding us of debt slavery. Social Credit surely fits that.

                  But it’s not the ‘final solution’ yet.

                  • Hi Michael:

                    I agree with you that “finance capitalism” and communism are two sides of the same coin.

                    I totally disagree with you that if there were no profits and income there’d be no gap.

                    The following is taken from Douglas’ “A+B and the Bankers”

                    “Note particularly that the question of profit has not entered into any of these transactions at all. In every case the factory representatives have merely endeavoured to re-coup themselves in money for charges which at some time or another have been incurred. But the vital fact is that this money does not exist. Only the price value exists; the money has been re-cancelled by the repayment of bank loans.

                    The matter may be stated thus: When a factory adds, as it always does add, certain “costs” to its “prices” for the use of its buildings, tools, and intangible assets, it creates a price value but does not create any purchasing power. The only new purchasing power which is distributed is that which did not exist before, i.e., the bank loan. Therefore we can say “The rate of flow of purchasing power is the rate of flow of money or credit being distributed through wages or salaries (A), but the rate of flow of prices is money distributed in direct costs, plus charges created in respect of money which does not exist. Consequently, A will not purchase A plus B (vide Credit-Power and Democracy, page 22). ”

                    Interest is just bank profit, so the attack on interest and profits is really an attack on all profits. I wasn’t claiming that you were a Marxist. I was claiming that this line of reasoning is the same as Marx’s. It’s the 10 will not pay for 11 argument. However, the argument that banks create the principal of the loan, but not the interest, does not take into account reciprocal spending by banks which also increases the money supply. In other words, when banks pay interest on deposits, or spend money for ordinary business expenses, this also increases the money supply.

                    While I concede that profits do create a gap between income and prices, this is not the only cause of the gap.

                    Douglas demonstrated that there were at least the five following causes of a gap between purchasing power and prices:

                    “Categorically, there are at least the following five causes of a deficiency of
                    purchasing power as compared with collective prices of goods for sale:—

                    1. Money profits collected from the public (interest is profit on an intangible).

                    2. Savings, i.e., mere abstention from buying.

                    3. Investment of savings in new works, which create a new cost without fresh
                    purchasing power.

                    4. Difference of circuit velocity between cost liquidation and price creation
                    which results in charges being carried over into prices from a previous cost
                    accountancy cycle. Practically all plant charges are of this nature, and all
                    payments for material brought in from a previous wage cycle are of the same

                    5. Deflation, i.e., sale of securities by banks and recall of loans.”


                    Therefore, if all the workers owned the “means of production”, there would still be a gap between income and prices.

                    While you may not consider yourself to be a Marxist, your analysis is “Marxist” in nature.

                    Douglas did not seek to change the “ownership” of capital, because administration of capital is not the problem, nor would its change be the solution. People don’t want to “own”, and therefore “administer” the capital (even if “common owership” was actually possible in effect). Ownership is best left in private hands, because it’s more efficient. What people desire is the “fruits” of capital (i.e. consumer goods), because people do not actually consume capital; its consumption occurs through depriciation in the production of consumer goods. People will have access to the “fruits” of consumption via a Social Credit price rebate and dividend. No change in “ownership” of capital need take place, because the owners of capital will produce exactly what the consumers (now armed with adequate purchasing power) desire, because if they don’t, they will go out of business.

                  • Tom Reubens permalink

                    Referring to the hypocrisy of Marxists/party-state monopolies over the means of production, you hit the nail on the head.

        • Actually, bankers understand physics better than anyone but they’re not going to teach it to you unless you’re their progeny or inducted into their cabal.

          • techy permalink

            Yean bPhilo anksters understand physics better than Einstein and Max Plank, really…

    • If anyone should be collecting interest on cash debt, it would be the guy with a bag of cash under his mattress. I know it doesn’t make sense when I say he’s actually the lender, but it’s true. That guy should be getting a check in the mail every month if anyone should.

  21. The idea of “hard currency” ie gold and silver as the circulating currency is too preposterous for serious thought. Let us read and learn that money is credit in circulation. The basis for that credit comes from Nationality. Globalism without nationality is heading toward a period of NO universally recognized credit consequently no universally accepted money. YIKES! Think about that!? Thanks Rduanewilling.

    • urbane permalink

      You appear to be backing yourself into a corner; Globalism is a just transnational corporations with no national loyalty doing international wages and resources Arbitrage; international trading has existed for many centuries, earlier it was done with Gold and SIlver, next Gold, and now devaluing fiat debt money.

      Gold is still the internationally recognized as the debt-free money of last resort, as proved by central banks around the world, China, India, Brazil, Russia, Iran etc., and the sneaky debtor Gold-secured German Euro bond proposal by Germany.

      I see no practical reason why Gold and Silver cannot become practical debt-free cash again, provided synthetic derivatives, fractional reserve debt and usury are declared contractually void, and work/goods are valued in pure Gold and Silver weight rather than bogus fiat numbers.

      Electronic weight money 100% backed by publically audited national Gold and Silver weight reserves would require relatively little Gold and Silver cash to be issued

      The UKP is also called Sterling because it historically used to be a troy pound of Sterling Silver in weight; A Troy Pound of Silver is now priced at over 200UKP (300USD), that over 99.5% destruction of value, this is partly why I will reject all arguments for inflation and fiat currency or any currency not 100% weight backed by something of stable value e.g Gold, Silver and valuable commodities.

      Sorry, you can’t sensibly value work based on just the hours worked or Marxist nonsense like need, the value of different types and skill of work is only revealed by trade.

      I have owned Gold and Silver for four years now and have seen its price in fiat money rise significantly along with a significant fiat volatility, not because of sustained Gold and Silver speculation, but because fiat currency is facing simultaneous deflation by debt payoff and inflation by QE, so far net inflation, while governments use statistical lies to hide the annual inflation, yet food prices keep rising.

      There are several presentations which show that Silver and Gold purchasing power for most classes of goods is far more stable over long time periods than for fiat currencies and other paper speculation. I’ll be astonished if the Social(ist) suggestions here work as well.

      I think a good stop-gap would be the Positive Money proposals, given these would phase out most of the Banksterism. However corporatism also needs to be stopped by getting rid of corporatist state support, revoking bogus corporate person rights, and limiting limited liability, so that corporation employees and stakeholders have to become much more responsible or face serious consequences.

      • The “Central” banks around the world, with few exceptions, are PRIVATE – not public Central banks. Libya’s bank was a PUBLIC Central Bank. Libya went from being the poorest country in Africa to having a HDI higher than Saudi Arabia’s, even though Saudi Arabia has much more oil. Libya was free from foreign debt. Other nations with Public, non Rothschild Central Banks are Syria & Iran. Are we detecting a pattern here?

      • Hello urban: Many of your comments show a sort of rational sobriety, and I’d love to see a new political system named just that. The Rational Sobriety System would require that currency be based on utility and value of exchange for CITIZEN’S of the sovereign State in which the Sobriety system was in lawful effect. All other intellectual drunks, circular logic freaks, and bullshit artists need not apply. Screw international banking cartels. We don’t “need” bankers; we need simple accountancy (verifiable records by real accountants) within a national and sovereign currency system.

        I’m all for a silver or gold currency that fits my pockets. That way I can evade the hunger pangs of some transnational banking system that can alter MY purchasing or ownership, with non-verifiable electronic bubbles. Paper money is convenient, but who prints the paper? It’s damn hard to counterfeit raw silver and/or gold weights. All other paper or bubble-backed currencies eventually represent non-verifiable value, silent partners, three way circle-jerks, loaded dice, and casino magic.

        The Real Currencies pages are full of great academic debate, and I suppose that’s all well and good. Yet the pages are not about currencies based on coherent utility of application. Economists and retailers of textbooks can differ or agree on the veracity of someone’s bullshit, but there are people starving over the famine of functional knowledge.

        Maybe someone here can check this man out: Law, Legislation and Liberty – Friedrich Hayek – Wikipedia

        “Law, Legislation and Liberty is the 1973 magnum opus in three volumes by Nobel laureate economist and political philosopher Friedrich Hayek. In it, Hayek further develops the philosophical principles he discussed earlier in The Road to Serfdom, The Constitution of Liberty.”

        There must be some reason why so many economists hate his work…

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