“He says, ‘You’re not going to be a dictator, are you?’ I said: ‘No, no, no, other than day one. We’re closing the border, and we’re drilling, drilling, drilling. After that, I’m not a dictator.’”—Donald Trump to Sean Hannity on being asked if he would abuse power after being re-elected
Once a dictator, always a dictator.
Power-hungry, lawless and steadfast in its pursuit of authoritarian powers, the government does not voluntarily relinquish those powers once it acquires, uses and inevitably abuses them.
Then again, the president is already a dictator with permanent powers: imperial, unaccountable and unconstitutional thanks to a relatively obscure directive (National Security Presidential Directive 51 and Homeland Security Presidential Directive 20), part of the country’s Continuity of Government (COG) plan, which gives unchecked executive, legislative and judicial power to the president in the event of a “national emergency.”
That national emergency can take any form, can be manipulated for any purpose and can be used to justify any end goal—all on the say so of the president.
It doesn’t even matter what the nature of the crisis might be—civil unrest, the national emergencies, “unforeseen economic collapse, loss of functioning political and legal order, purposeful domestic resistance or insurgency, pervasive public health emergencies, and catastrophic natural and human disasters”—as long as it allows the government to justify all manner of government tyranny in the name of so-called national security.
The country would then be subjected to martial law by default, and the Constitution and the Bill of Rights would be suspended.
For all intents and purposes, the Constitution has long been suspended, and we’ve been operating in a state of martial law for some time now.
The emergency powers that we know about which presidents might claim during such states of emergency are vast, ranging from imposing martial law and suspending habeas corpus to shutting down all forms of communications, including implementing an internet kill switch, and restricting travel.
Yet according to documents obtained by the Brennan Center, there may be many more secret powers that presidents may institute in times of so-called crisis without oversight from Congress, the courts, or the public.
Deploying the same strategy it used with 9/11 to acquire greater powers under the USA Patriot Act, the police state—a.k.a. the shadow government, a.k.a. the Deep State—has been planning and preparing for such crises for years now, quietly assembling a wish list of presidential lockdown powers that could be trotted out and approved at a moment’s notice.
Indeed, President Trump’s administration even asked Congress to allow it to suspend parts of the Constitution whenever it deems it necessary during the COVID-19 crisis and “other” emergencies. The Department of Justice (DOJ) went so far as to quietly trot out and test a long laundry list of terrifying powers that override the Constitution.
“Enemy” soldiers in World War 1 fraternizing at Christmas
“…the ones who call the shots won’t be among the dead and lame And on each end of the rifle we’re the same” — John McCutcheon
In World War I, as happens to be true in most American wars, the Christian church leadership joined in the patriotic fervor with very un-Christ-like, nationalistic and racial/religious domination stances. Astonishingly, religious leaders on every side of the conflict truly believed that God was on their particular side. And so the pulpits all over Europe, including British, Scottish, French, Belgian, German, Austrian, Hungarian, Russian and Italian reverberated with flag-waving fervor, with clear messages to their doomed warrior-sons that it was their God-given Christian duty to march off to kill the equally brain-washed young Christian soldier enemies, who were also certain that God was on their side. The 2024 Old Farmeru20… Old Farmer’s Almanac Best Price: $5.88 Buy New $5.55 (as of 01:47 UTC – Details)
Five months into the miserable death and destruction of the perpetually dead-locked trench war (featuring the now-infamous mass slaughter via artillery, machine gun and poison gas weaponry), the first Christmas of the war on the Western Front came around.
Christmas was the holiest of Christian holidays on all sides of the war, but in this time of homesickness and having to live in the cold, rain and snow, the first Christmas of the war had special meaning. December 24, 1914 reminded the soldiers of the good food, warm homes and beloved family relationships that they had left behind – and which they now suspected that they might never experience again. The physically exhausted, spiritually-deadened, combat-traumatized soldiers on both sides of No Man’s Land desperately sought some respite from the water-logged, rat-infested and now increasingly frozen trenches.
Christianity’s emphasis on the worth of the individual makes such power as Lenin claimed, and Washington now claims, unthinkable. Be we religious or be we not, our celebration of Christ’s birthday celebrates a religion that made us masters of our souls and of our political life on Earth. Such a religion as this is worth holding on to even by atheists.
Thank you for your support in 2023. Although you have kept me working yet another year, I find it encouraging that there are still some Americans who can think independently and who want to know. As Margaret Mead said, it only takes a few determined people to change the world. Perhaps some of you will be those people.
My traditional Christmas column goes back to sometime in the 1990s when one of my occupations was being a newspaper columnist. It has been widely reprinted at home and abroad. Every year two or three readers write to educate me that religion is the source of wars and persecutions. These readers confuse religion with mankind’s abuse of institutions, religious or otherwise. The United States has democratic institutions and legal institutions to protect civil liberties. Nevertheless, we now have a police state. Shall I argue that democracy and civil liberty are the causes of police states?
Some readers also are confused about hypocrisy. There is a vast difference between proclaiming moral principles that one might fail to live up to and proclaiming immoral principles that are all too easy to keep.
In the days of my youth Christianity was still a potent force in America. It was part of most people’s lives, whether they were believers or not, and it regulated their behavior. That is why in Atlanta during the 1940s and 1950s we did not have to lock our door at night, and boys and girls could be gone all day without parental supervision and be completely safe. It is why I, as a 5-year old, could walk a mile safely to school and return home safely. Today parents who allowed such independence would be arrested for “child endangerment.”
The power of Christian morality over behavior has faded substantially. Nevertheless, even today in the remains of our civilizational foundations many, if not most, people are still guided by Christian morality. As Christian tradition fades as the basis of behavior, barbarity will gather more strength and reign over us.
Liberty is a human achievement. We have it, or had it, because those who believed in it fought to achieve it and to preserve it. As I explain in my Christmas column, people were able to fight for liberty because Christianity empowered the individual.
The other cornerstone of our culture is the Constitution. Indeed, the United States is the Constitution. Without the Constitution, the United States is a different country, and Americans a different people. This is why assaults on the Constitution by the regimes in Washington are assaults on America that are far worse than any assaults by terrorists. There is not much that we can do about these assaults, but we should not through ignorance enable the assaults or believe the government’s claim that safety requires the curtailment of civil liberty.
In a spirit of goodwill, I wish you all a Merry Christmas and a successful New Year.
Paul Craig Roberts
The Greatest Gift For All
Christmas is a time of traditions. If you have found time in the rush before Christmas to decorate a tree, you are sharing in a relatively new tradition. Although the Christmas tree has ancient roots, at the beginning of the 20th century only 1 in 5 American families put up a tree. It was 1920 before the Christmas tree became the hallmark of the season. Calvin Coolidge was the first President to light a national Christmas tree on the White House lawn.
If you look into it, you’ll discover that this song, far from being a centuries old church hymn or folk song, was written in 1962 at the height of the Cuban Missile crisis. The authors describe it as a plea for peace. With this information, one can easily interpret the star in a different manner, and it becomes clear why a star would have a tail. The song is worth an extra listen with consideration after this revelation regarding the situation.
If you were to listen to the popular Bing Crosby version of the Christmas classic, “Do You Hear what I Hear?”, you’d be forgiven for thinking the song is a simple diddy about the nativity of Christ, a very appropriate topic considering that this is what the holiday is about. You might also, however, notice a few anomalies with regard to the lyrics that could clue you in to the less obvious intent of Noël Regney and Gloria Shayne, the authors. For instance, why does a star have a “tail as big as a kite”? What is this “voice as big as the sea”? That doesn’t sound like the silent night that is normally ascribed to the birth of Jesus; quite the opposite.
“If Chairman Wu were in power when Henry Ford was ruining the blacksmith, horse training and saddle making industries, she would have taxed the latter and subsidized the former. How about when computers took out the typewriter, carbon paper, and correction fluid (Wite-Out) industries?”
Madame Chairman Michelle Wu, Mayor of Boston, Massachusetts, has been supportive of offering a tax subsidy to landlords who convert their commercial real estate to residential units.
Why, pray tell, is she interfering with the free enterprise system (okay, okay, what little of it exists in Beantown) in this manner? Thanks to the Coronavirus (COVID-19), the demand for office space has declined precipitously. Business firms have found they can get the job done with at least some of their employees working from home, at least on a part-time basis. Thus, the lesser need for office space. This, of course, is a world-wide phenomenon, hardly limited to the United States, to Massachusetts, to Boston. But Madame Wu is taking the lead in this type of political response.
Talk about teaching grandma to suck eggs.
If Chairman Wu were in power when Henry Ford was ruining the blacksmith, horse training and saddle making industries, she would have taxed the latter and subsidized the former. How about when computers took out the typewriter, carbon paper and, correction fluid (Wite-Out) industries? This economic interventionist would undoubtedly have put her thumb on the scales once again, supporting the nerds and taxing their competitors. Then, there is the case of mobile phones supplanting, what, well, lots of stuff: cameras, telephones, flashlights, paper maps, etc. Again, this central planner would have rolled up her sleeves and helped this process along, in the precise direction it was moving anyway, without any of her help, thank you very much.
What is wrong with that? In each of these past cases, including the present one, she would have just been rendering the market more efficient. Helping it out, helping it along, as it were.
There are several problems here.
First, suppose that one of these days she guesses wrong about the movement of the market in the direction of consumer satisfaction. Then, she will have caused vast amounts of wealth to have been dissipated. But, you say, that so far she has predicted correctly. At least, as it now looks to most analysts, she is entirely correct on the need for conversion of commercial and industrial real estate to residential purposes.
Of course, it cannot be denied, entrepreneurs sometimes—alright, often—predict the economic future badly. The difference is, and this is crucially important, Madame Wu has no skin in the game.
No doubt Carlson and Greenwald favor a foreign policy of nonintervention for some good reasons that libertarians also embrace. But they favor it for a bad reason as well. Instead of favoring the taxpayers keeping their own money, Carlson and Greenwald want to spend the Pentagon’s huge budget on a gigantic, compulsory, inflationary, wealth-destroying, coldly bureaucratic, intrusive, and condescending welfare state if not outright government ownership and control.
We’re led to believe that today’s political struggles are largely a contest between populists and elitists. But something besides libertarians is missing from that simple tale: the elitists in populist clothing, or elitist populists. We have no better example than a conversation the other day between the leading “right” populist Tucker Carlson and the leading “left” populist Glenn Greenwald. (The quotation marks are to indicate that these tribal labels are seriously problematic.)
To their credit, Carlson and Greenwald consistently defend a noninterventionist foreign policy and free speech. However, advocates of full individual liberty should take care because these pundits voice positions that seriously trash individual liberty. See their views on the free movement of people and goods across national boundaries. Voluntary exchange is not a priority for Carlson and Greenwald.
Even knowing this, I was unprepared for what they would say. Carlson offered this (at 28;10):
I think a lot of people have awakened to the now-demonstrable fact that libertarian economics was a scam perpetrated by the beneficiaries of the economic system that they were defending. So they created this whole intellectual framework to justify the private-equity culture that’s hollowed out the country…. I think you need to ask, Does this economic system produce a lot of Dollar Stores? And if it does, it’s not a system that you want because it degrades people and it makes their lives worse and it increases exponentially the amount of ugliness in your society. And anything that increases ugliness is evil. Let’s just start there. So if it’s such a good system, why do we have all these Dollar Stores?… If you have a Dollar Store, you’re degraded. And any town that has a Dollar Store does not get better. It gets worse. And the people who live there lead lives that are worse. The counterargument, to the extent there is one, oh they buy cheaper stuff. Great. But they become more unhappy…. [The Dollar Store] is also a metaphor for your total lack of control over where you live and over the imposition of aggressively in-you-face ugly structures that send one message to you: which is you mean nothing; you are a consumer, not a human being or a citizen.”
There you have it. The market is an exploitative scam, and the Dollar Store, which many of us regard as a godsend, is an ugly, degrading, and dehumanizing snare. Who knew?
Where to start? Libertarian — in other words, consistent free-market — economics is a self-serving scam? Really? Got proof? Were Menger, Böhm-Bawerk, Mises, Hayek, Friedman, Kirzner, Sowell, Williams, Buchanan, Rothbard, etc. actually members of a cabal that was getting rich at our expense? Is Carlson having a laugh?
He would have been on firmer ground if had said that libertarian economics is used as a cover for elitist government interventions. But libertarians have said this roughly forever.
Central bank power has increased immeasurably with the removal of gold from the global monetary system. And as their power has increased, central banks have increased financial instability. This may have been unnoticed by everyone but the keenest observers, but the suppression of interest rates to the zero bound and below, followed by the rapid increase in interest rates to deal with the unexpected (that is by central bankers and their chorus of blind, deaf, and dumb monkeys) surge of price inflation is clearly down to policy failure.
Surely, it is now apparent that central banks are guilty of mismanaging the economy. By slashing interest rates to zero and in some cases to an unnatural minus figure, then flooding financial systems with currency-equivalent credit conjured out of nothing followed by rapidly increasing interest rates in an attempt to stem the consequences, central banks have bankrupted themselves and much of their entire economies.
Even though hapless economists and money managers are still in thrall to them, central banks have proved themselves to be unfit for purpose. It is time for a new system based on true economic demand for credit without state interference.
The ineptitude of the monetary planners is now sharply focused by events in Argentina, whose new president has vowed to close the central bank and introduce a currency board for the peso backed by the US dollar. Far from being a maverick politician, President Milei is being well advised. Currency boards work, imposing an automatic discipline on government spending.
This article opens up the debate between free banking without central banks under gold standards, and the fiat currency system which gives central banks the power of debasement. Commercial banking without central banks is the historical norm, and the evils of statist currency management is a more recent development.
Those who argue that central banks represent progress from free banking are clearly in the wrong.
Introduction
The new president of Argentina, Javier Milei, was elected on a platform that included closing down the nation’s central bank. He has been lauded by an eclectic bunch of free marketeers, monetarists, and even the IMF. So far, his monetary reform has included a 54% devaluation of the peso against the US dollar, which probably brings its official value close to the black market exchange rate. It is less of a devaluation and more an acceptance of reality.
Milei has made it plain that Argentina will adopt the US dollar as the nation’s currency through a currency board arrangement. Currency boards were originally the means by which some of Britain’s colonies tied their local currency to the pound. Operating mechanically and beyond the reach of meddling politicians, currency boards worked well. They also allowed free trade and import and export flows making exchange controls unnecessary. They are a quick fix for stabilising currency values, proved in practice to be extremely effective.
Under a currency board, a new peso will circulate backed at least 100% by US dollars. Pesos will be exchangeable for dollars and vice-versa at the holder’s option. It will cover not just banknotes, but sight deposits held at commercial banks. An issuing authority is required to discharge this duty by law, or at least with a clear mandate, precluding political interference. With the possible exception of acting as a lender of last resort, all the other functions of a central bank fall away, so it can be shut down. Where the dollars for Argentina’s currency board will come from is not yet clear, but like any fiat currency presumably the banking system will provide. In any event, dollars already circulate freely in Argentina, pesos being only money for the poor.
When “the establishment” sees its central plank, the fountain of its free financing removed inevitably there will be kickback. But Milei’s tactics are those of a boxer unexpectedly overwhelming his opponent. With the electorate behind him, he is raining rapid blows on the establishment, closing nine ministries, cutting subsidies, and cancelling tenders for public works projects. He appears to have learned the importance of acting quickly to continually keep the establishment off guard, unable to regroup and persuade Argentine’s socialistic media of an adequate response. It must be done early and quickly, while Milei retains the initiative and can always threaten opposition to his plans with a new plebiscite.
Perhaps the greatest danger to Milei is an army coup, which is the Argentine establishment’s normal way of eliminating the democracy problem.
Meanwhile, choosing the US dollar as the backing for a currency board has won him plaudits from foreign economists of various persuasions. The exception, perhaps, has been from the Asian hegemons, China and Russia who accepted Argentina’s membership of an expanded BRICS from next month. But they have kept quiet. From the US’s point of view, Milei’s election must be seen to be a positive development and a chance to throw a spanner into the BRICS works. But it is not so simple, because China recently helped the previous administration with a yuan swap line taken out with the people’s Bank to pay the majority of a dollar debt due to the IMF.
The swap is part of a pre-agreed line of up to 130 billion yuan with free access to the Argentinian central bank of 35 billion yuan of the facility. Abolishing the central bank will simply require the agreement to be novated to the finance ministry, so that shouldn’t be a problem. However, it appears that the delicacy between the previous administration’s ambitions to join BRICS alongside Brazil and Milei’s retrenchment to using US dollars are understood by Milei, because he is reported to being uncharacteristically diplomatic in his relations with China.
Milei will have to tread carefully over this thorny issue. As a free marketeer and said to be a disciple of the great Austrian economist, Friedrich Hayek, he almost certainly understands that the dollar is only a temporary monetary solution. Surely, from his libertarian instincts he observes US budget deficits and the dollar’s own debt trap in the context of its similarities with his own government’s profligacy and its debt traps.
Apparently, he is a fan of bitcoin, which confirms this understanding. A dollar currency board is only a temporary solution lasting for so long as the dollar doesn’t face its own crisis. Milei would be well advised to assess whether Argentina’s 61.74 tonnes of gold reserves are sufficient insurance for protection against the dollar’s demise, because it is increasingly likely that a Plan B will be required, possibly before the ink is dry on Plan A.
We will watch these developments with great interest, particularly the return to free banking, which we can define as banking without the controlling influence of a central bank.
Central banks are a recent innovation
Given that the Romans invented banking, and that Italian banks adopted the modern form of credit creation through double entry bookkeeping in the fourteenth century, commercial banking without central banking has a far longer history than with central banking. While the Bank of England existed as a central bank following the 1844 Bank Charter Act (it had for a long time previously operated as a commercial bank with the monopoly of the government’s business, which is not the same thing), and America’s Federal Reserve Board came into existence before the First World War, central banking per se spread more widely from then on, coinciding with the end of gold standards, particularly in Europe.
Just as a currency board makes a modern central bank redundant, it also makes them redundant for gold standards, which require a similar and simple function of issue control. The failures of the Bank of England in the years following the 1844 Bank Charter Act were down to its crude attempts at interest rate management. The Act, which was based on currency school precepts, assumed that the separation if the issue department from banking was the solution. It wasn’t, proved when the provisions of the Act with respect to gold cover for the note issue were suspended only three years later in 1847, then in 1857, and in 1866. The legislators and the bank itself did not anticipate that the run on its gold reserves would come not from the public submitting bank notes for sovereigns, but from deposit balances in the banking department being encashed.
The Bank made the further error, which persists to this day, of trying to manage interest rates in an economic context. Besides the real problem of no central banker actually understanding the business of economics, interest rates should have been managed in the context of maintaining gold reserves. At least modern currency board operators have learned this vital distinction.
Modern economists tend to dismiss currency boards, as well as free markets. Their solution to problems, mainly of their own creation, is to double down on regulations increasing their scope and complexity. An entire industry of regulators, policy managers and hangers on has been created to discharge invented functions.
Naturally, those employed in it support its continual expansion. For this reason, the practical simplicity of a gold standard and currency boards gets short thrift. This ignores the lessons of history, that the world evolved from a feudal state through the industrial revolution to a standard of life for the commoner which would have been the envy of kings only a century ago, all on the back of commercial bank credit. Yes, there have been upsets along the way: but the question to be addressed is whether commercial banks in their relationships with each other can minimise those upsets, or can governments through their central banks achieve a better outcome?
The monopoly over currency provision stems from the 1844 Bank Charter Act in English law, not adopted by the Scottish banks (Scotland has its own legal system) which to this day sees the major banks issuing their own bank notes, admittedly fully backed by their reserves at the Bank of England. While it was gradual, the withdrawal of the facility whereby English banks issued banknotes only served to consolidate the government monopoly over currency. Currency has come to be regarded as national money, and not a credit liability of a bank. The importance of this development tends to be overlooked. Very few are the economists today who understand that a banknote is actually a liability of the central bank, despite it still being evidenced as such in its accounts. They would not so readily take that erroneous view, surely, if commercial banks were still permitted to issue their own banknotes.
When a commercial bank issues banknotes, the notes are bound to have a similar rating to a deposit, the only difference is that a banknote is a promise to its unknown bearer. If the facility was reintroduced, it is certain that a bank would issue banknotes to rank as a substitute for the national currency. It may be that a bank would not take up this facility anyway, bearing in mind that London bankers ceased issuing notes in the 1790s, fifty years before their issue was banned in the 1844 Act. But there is no substantive reason why issuing bank notes should not be permitted, and if demanded by a bank’s customers, a commercial bank’s notes would simply circulate alongside notes issued by the government. Then, perhaps, economists would have a greater understanding of the credit status of banknotes.
The limit of statist involvement in credit should be to provide an updated version of the currency board, an issuing facility for banknotes and deposit balances totally backed by real, legal money, which is gold. The issuer must be charged with the sole responsibility of ensuring gold backing for its liabilities is always there. The issuer’s balance sheet would consist of notes and deposits as credit liabilities, and the assets entirely comprised of gold bars and coin. The profit and loss account would generate sufficient income from seigniorage to cover storage and minting expenses. And the directors of the issuer would be charged with managing interest rates purely with a view to maintaining gold reserves. It must be detached from all other financial activities.
In this way, credit generated through banking operations becomes a purely commercial consideration. Bank credit is a function of commercial banking, referenced to the rate set by the issuer by virtue of bank deposits held with it, but reflecting additional counterparty risks. To satisfy depositors’ likely demands for coin or bullion, a commercial bank can either maintain a deposit at the issuer gained by submitting gold in exchange or buy them in the market. This is sufficient to tie the value of commercial bank credit to that of the national currency, which unquestionably becomes tied to gold.
The error in the 1844 Bank Charter Act was to split the Bank of England into two departments, but under the same management. Its banking department was no less a credit operation than any commercial bank, and it was the inherent conflicts, particularly over the setting of interest rates, which led to the Act’s failures.
Whether the state maintains a banking presence in the commercial banking system becomes a separate issue. Management of economic outcomes by interest rate manipulation is a dead duck, given that the interest rates objective can only be to maintain gold reserves. But there is still the thorny question of the need for a lender of last resort. In his plans to abolish Argentina’s central bank, this is an important question yet to be addressed by President Milei.
Free market theory posits that this is unnecessary. In the knowledge that there will be no bail outs, bankers can be expected to pay proper attention to counterparty risk, and the faintest suspicion of impropriety would be immediately reflected in a bank’s credit rating in the interbank markets. And it is not beyond the ability of banks within the commercial network to deal with banking failures, because it is obviously in their collective interest to maintain systemic credibility. This is another lesson from the pre-central banking era.
The violence of Britain’s bank credit cycle abated in the decades following the Napoleonic wars due to improvements in clearing systems, as the chart of wholesale prices below shows:
A clearing system for the London banks was set up in the late eighteenth century, when for the first-time daily differences were settled between the banking members on a net basis. The Bullion Report (1810) reported that there were 46 private bankers who cleared a gross value of £4,700,000 daily by a net settlement of $220,000 in bank notes. This was a significant improvement on the earlier system whereby bank clerks walked around London, visiting other banks to settle claims. In 1854, joint stock banks were admitted into the London clearing system, and the Bank of England joined in 1864. By then, the system of settling balances in banknotes was done away with, replaced by bankers’ drafts settled twice daily with a final reconciliation in the late afternoon. Furthermore, over time other cities established similar clearing arrangements as well as intercity arrangements.
Over the time covered by these increasing refinements to interbank settling, wholesale prices became decreasingly volatile. In other words, as commercial banking became increasingly efficient as a system, the impact on prices from the bank credit cycle as credit was alternately expanded and contracted diminished. Given that the objective of a central bank is to ensure price stability, it amounts to evidence that this function is not needed.
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