An actual country is an economic unit with a government. Balancing a countries "budget" should not be about the countries money supply primarily, but about the resources, capabilities and production necessary to the health of that country and its relations with its neighbors and trading partners. Money measures economic wealth and enables trade, taxes and sales of production. A country's budget is not solely about its bank account but about the people living in that country and their bank accounts. And in the modern world, no single country stands alone, rather we all must work together. Thus as Henry George prescribed 120 years ago and James Galbraith has demonstrated in his writings:
|“In a successful financial system, there must be a state larger than any market. That state must have monetary control – as the Federal Reserve does, without question, in the United States.” [Review of The Poisoned Challice]|
Privateering on the Money Supply is modern neo-colonialism
On the other hand this idea of monetary sovereignty is in Stark contrast to the equally old privateers project of privatizing money, its governance and its loot, being pushed around the world. Privateers in Governments and the press, academia and working for major finanical institutions, worldwide, use faulty economic ideas to justify what are dismissed by the Left as "neo-liberal" principles but are wildly embraced by super wealthy pirates and privateers; so called Conservatives. This "Neo-liberal viewpoint" teaches people that a country is like a house-hold that should be run like a business, while at the same time restraining it from accounting like a business or acting like a business -- for the sake of the country's creditors. This behavior pedals itself as good sense but it is actually for the sake of the pirates; wannabe aristocrats and ruthless businessmen. Indeed our current system of international banks, central banks and "neo-colonial" dependencies was framed during the Colonial era by large navies of pirates, first from Spain and later from Britain. Neo-liberalism is simply a repackaging of colonial propaganda and methods. A modern means of creating and maintaining an aristocracy founded on monetary power and class hierarchy.
Von Hayek's Totalitarian Economics
James Galbraith in his book "Welcome to the Poisoned Chalice" details the economic warfare waged on Greece by the IMF, World Bank, Other European Banks and the Euro Central Bank. I've detailed the economic warfare waged by Pinochet's Chile, Operation Condor, and what happened under Hayek's advice in the Southern Cone of South America. When Communist countries came apart under arbitrary totalitarian and hierarchial rule, it was neoliberal disciples of Friedman, Hayek and Greenspan who descended on those countries like Locusts to "reform them." That reform involved selling off monopolies as well as businesses that could be run under market conditions. In most former Communist countries liberal social services, free to the user education and health care, were also dismantled. The result was economic collapse, which in turn fed into further rounds of privatization. These policies were as totalitarian, in their own way, as the Communist regimes had been. As I quoted in my Article "Starve the Beast Destroy Democracy," it was deadly to those disappeared and tortured or murdered in black sites by the military rulers in those lands. My wife lived through that. I don't want a repeat of this on a larger scale here in the USA. As I noted in that article, Hayek & Von Mises both praised fascism. Von Mises:
“It cannot be denied that Fascism and similar movements aimed at the establishment of dictatorships are full of the best intentions and that their intervention has for the moment saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.” [See Beast post]
"Like Friedman, Hayek glimpsed in Pinochet the avatar of true freedom, who would rule as a dictator only for a “transitional period,” only as long as needed to reverse decades of state regulation. “My personal preference,” he told a Chilean interviewer, “leans toward a liberal [i.e. libertarian] dictatorship rather than toward a democratic government devoid of liberalism.”
And the author noted:
“In a letter to the London Times he [Hayek] defended the junta, reporting that he had “not been able to find a single person even in much maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.” Of course, the thousands executed and tens of thousands tortured by Pinochet’s regime weren’t talking.” [See Beast post]
Privateering a Road to Serfdom
For the Right wing "freedom" means something different than for the rest of us. So when James Galbraith refers to Hayek and the World Financial war being waged on commoners and their pretensions to having economic rights. He's on solid ground;
"this financial warfare [is] totalitarian, and writes that while its philosophical father is Frederick Hayek, the political forbear of this market Bolshevism is Stalin. The result is a crisis that “will continue, until Europe changes its mind. It will continue until the forces that built the welfare state in the first place rise up to defend it.” [See Beast post]
Indeed this notion that totalitarianism is a means to a better end expressed in Hayek's writings is the exact same totalitarianism thinking that Lenin and Stalin engaged in and that Altemeyer refers to in his writings. Supporters of these policies will do mental somersaults to justify oppression in the name of "freedom." Hayek believed that state planning would produce not “freedom and prosperity” but “bondage and misery,” but his solutions, privateering and deregulation, are worse than "state planning." And indeed a look at the folks who've applied Hayek's ideas shows that in every case deregulation produces "bondage and misery" as the State gives its power to private individuals. So Communist countries were like Pirate Kingdoms. But capitalist countries are the same, only under a privateering regime all the theft is legal and anyone who complains can be hung. So much for freedom without economic equity.
Indeed Stockman recounts Hayek referring to Republican Economic Policies:
“You see, one of Reagan’s advisers told me why the president has permitted that to happen, which makes the matter partly excusable: Reagan thinks it is impossible to persuade Congress that expenditures must be reduced unless one creates deficits so large that absolutely everyone becomes convinced that no more money can be spent.” Thus, he went on, it was up to Reagan to “persuade Congress of the necessity of spending reductions by means of an immense deficit. Unfortunately, he has not succeeded!!!”’" [See Beast post]
In his recounting of events with regards to the Greek crisis James Galbraith similarly recounts:
"As long as “the market” means keeping the high debt overhead in place, the economy will be sacrificed to creditors. Their debt claims will dominate the market and, under EU and ECB rules, will also dominate the state instead of the state controlling the financial system or even tax policy."
We could call this either BankoCracy, Cacocracy, Kleptocracy or simply privateering government. In Europe the Central Bank rules through abusive lending and collections. In the USA Congress does.
So around the world, through the IMF, the World Bank, the US Congress and the European Union's bank. Pirates are waging economic war on their people in the name of budgets, and economics. But this privateering is absolutely unnecessary. A well formed government asserts sovereignty over necessary services and public goods like money, and governs for the sake of everybody.
Monopoly Versus Freedom
The idea that the only choice people should have is between top down, privately run aristocratic rule, called monopoly; or top down, dictatorial rule of public monopolies by a centralizing State, offers people a false choice. People like Elinor Ostrom and writers from John Locke to James Galbraith, Post Keynesians and Modern Money theorists, offer alternatives to these false choices. For one thing money does not have to be issued with debt. Money is a form of debt and if monopolized by the Government merely needs to be regulated and redeemable for the stated value on demand. Backing it with Gold or Silver is pointless. It needs to be backed with goods and services, capital and the ability of people to pay their bills. Money should be managed for the common good. Whether in the form of a reconstituted Federal Reserve or directly via the treasury. Banks and central banks need to support government treasuries instead of treating them as either milk cows or second class citizens. And governments need to be sovereign over their currency. Tax excessive unearned income from privilege and managed wisely. See: [Front Money First then Tax it] Because if government ensures that everyone is paid for their labor, allowed to use their capital to keep the economy working, and money not hoarded or sucked out of economies than the magic of capitalism actually works for everybody. But that requires remembering that Capitalists are a bit like Dogs, if not reigned in they revert to their pirate, wolf-like, forebears.
Sources and References for this Post
- My Posts:
- Starve the Beast Destroy Democracy
- Are Central Bankers Pirates with a Conscience or simply Clueless?
- Front Money First then Tax it
- Michael Hudson's review of Galbraith
- ReviewMichael Hudson
- Tories and Whigs
- "Word Tory derived from the Irish toraidhe ‘outlaw, highwayman,’ from tóir ‘pursue.’ The word was used of Irish peasants dispossessed by English settlers and living as robbers, and extended to other marauders especially in the Scottish Highlands. It was then adopted circa 1679 as an abusive nickname for supporters of the Catholic James II." Also describes pirates, including legal pirates (privateers).
Further Reading, and materials for future posts
- "Do Central Bankers Know What They're Doing Anymore?" by Kevin Dowd
Draft published 11/3/2016, revised and this post published 11/29/2016