But the greatest source of funding [for WWI] came, as it always does in wartime, not from direct taxes, but from the hidden tax called inflation. Between 1915 and 1920, the money supply doubled from $20.6 billion to $39.8 billion. Conversely, during World War I, the purchasing power of the currency fell by almost 50%. That means American unknowingly paid to the government approximately one-half of every dollar that existed. And that was in addition to their taxes. This massive infusion of money was the product of the Mandrake Mechanism and cost nothing to create. Yet the banks were able to collect interest on it all. The ancient partnership between the political and monetary scientists had performed its mission well.— G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve (259-260).
The money began to flow in January of 1915 when the House of [J.P.] Morgan signed a contract with the British Army Council and the Admiralty. The first purchase, curiously, was for horses, and the amount tendered was $12 million. But that was but the first drop of rain before the deluge. Total purchases would eventually climb to an astromical $3 billion. The firm became the largest consumer on earth, spending up to $10 million per day. Morgan offices at 23 Wall Street were mobbed by brokers and manufacturers seeking to cut a deal […] Each month, Morgan presided over purchases which were equal to the gross national product of the entire world just one generation before.— G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve (236).
When speaking of deficit spending, it is common to hear the complaint that we are saddling future generations with the bill for what we enjoy today. Why not let those in the future help pay for what will benefit them also? Don’t be deceived. That is a misconception encouraged by politicians to calm the public. When money is fiat, as the colonists discovered, every government building, public work, and cannon of war is paid out of current labor and current wealth. These things must be built today with today’s labor, and the man who performs that labor must be paid today. It is true that interest payments fall partly to future generations, but the initial cost is paid by those in the present. It is paid by loss of value in the monetary unit and loss of purchasing power for one’s wages.— G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve (162).
The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit…—
The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes…
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold…. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. It stands as the protector of property rights.
Alan Greenspan in 1967, long before he abandoned the principles of sound money.
The more I read, the more I realize that the Federal Reserve and its destructive shenanigans are behind much of the economic and geopolitical strife of the last 100 years.
Stop printing money. End the Federal Reserve.
Our government is a major contributor to poverty. Debasing the currency hurts everyone ultimately, but it hurts the poor first and foremost.
A great entry-level discussion of the basic myths about capitalism.
Opportunity Cost and Infinite Banking
This is a paradigm shift to how one views money and insurance—but once it clicks, it’s life changing. Do not simply take the mainstream financial planning world’s advice at face value.
This is a difficult book to classify, and thus to review. It’s not a book of economics, but rather about economics, particularly the modern focus on mathematics to the exclusion of ethics. It’s pretty abstract and philosophical. I almost gave up a number of times in the first 150 pages, as I slogged through Sedlacek picking out and commenting on the economic bread crumbs found in the most ancient of literature, the Epic of Gilgamesh, followed by Greek thought, Stoicism, historic Christianity, and the Enlightenment thought of Hume, Descartes, and Adam Smith.
One of most interesting chapters was on Adam Smith: for example, the views he is famous for advocating (the “invisible hand,” among other things) are not actually his own, and his economic ethics are more complex than commonly understood. The other fascinating section was his short discussion on how the contemporary Keynesian approach to the business cycle is anything by Keynesian—what he dubs “Bastardized Keynesianism”—i.e. that deficits are okay in time of decline as long as they are paid back out of surpluses. Obviously, that second half of the equation has been totally ignored by modern national economies, as we in the West continue to spend ourselves into oblivion.
Sedlacek calls out modern economists for their arrogance in attempting to explain virtually everything using exclusively mathematical economic models, arguing that have become just as dogmatic and unscientific as many religious people (supposedly) are. He calls for more ethics and more epistemological humility in his field, and what a welcome call it is. This book is a slow burn, and not too terribly exciting, but ultimately intellectually stimulating and satisfying.
Who knows how economic thought will change in the future? Therefore, economists should approach reality humbly. But this humility stands in direct conflict with an effort to explain all human behavior with a single principle, which modern economics has frequently attempted. Economic models often hang in an abstract world that does not take into account differing context (cultural, social, historical, or religious). This context is often completely missing in economics. But can you study human behavior without an understanding of the context? (302-303)— Tomas Sedlacek in Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street.
Models an sich (in and of themselves) are not able to convince us; nearly every worldview has a legion of sufficiently functional models at its disposal. The choice of particular economic theory therefore depends much more on the a priori worldview the individual is equipped with. This is already given by the fact that a paradigm, a standpoint, the axioms of the given model are not proven, but that an individual selects a school of thought that best corresponds to his or her worldview in the assumptions or conclusions for the given model—a fashion model, if you will. This choice can be completely irrational and emotive, based on the a priori sympathy with its assumptions or the expected results of the model. Models are therefore often accepted not on the basis of conforming to reality (none of them are realistic) but on the basis of harmony with a concept of the world, a sort of rhyme to a worldview, of how we believe or (often) want to believe. Even positive (meaning descriptive) models are, at their base, normative. In this regard, economics is also a faith—in axioms that are unproven, we must only believe. In an extreme approach, even economics becomes a religion. (302)— Tomas Sedlacek in Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street.
How to Treat Our Manic Depressive Economy: Tomas Sedlacek at TEDxThessaloniki
I have tried to show that economic thought in the course of history was always meaningfully influenced by philosophical and religious currents, and it always had ethical content. Economics, as we have come to know it from the work of its founding fathers, was like this.— Tomas Sedlacek in Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street.
Late, though, mostly in the twentieth century, economic thought was influenced especially by determinism, mechanical Cartesianism, mathematical rationalism, and simplified individualistic utilitarianism. The emergence of these influences changed economics into the form we know from today’s textbooks. It is economics full of equations, graphs, numbers, formulas…well, mathematics. In economics, we now find little of history, psychology, philosophy, or a wider social science approach. (285)