The Principals Of Sound Money: Madison, Hamilton, Tocqueville vs. Marx, Engels & Lenin

This essay explores the relation between Madison, Hamilton, Tocqueville and the ‘Masters of Suspicion’, known as Marx, Engles and Lenin.  How does political ideology either affirm or deny reality?  How does a particular political economy, a governance either secure the future for happiness or create a despotic regime? Can such principals be discovered by reason?  Are they grounded in nature?

Our Founding Fathers created an architecture of governance whereby centralized power was responsible to ‘the People’, this is often missing in the public’s understanding of our Republic.  We are not such much a Democracy as a Democratic Republic, for the passions that dominate factions can ruin any Empire.  Madison and Hamilton understood this far better than anyone.

Since the end of the Second World War, the States are compelled by the Federal Government to finance social engineering. The Fourteenth Amendment is used to construct and enforce a new relation between the individual and the Federal Government, this relation is known as federalism. We currently have novel understandings of positive rights, benefits that citizens may demand of its government.  Medical care, housing, tuition, education, or any relation regarding equality is now to be provided by the government.  Such intellectual errors is wrecking the foundation of our political economy.  Gone is the liberty, the self governance that created and sustained this great Republic.  Both the Commerce clause and Due Process clause are now dependent on such novel hermeneutics divorced from the mores, the habits of ‘the People’ illuminated by natural law.  We have lost our original understanding of the danger of tyranny inherent in human nature, and therefore Government.

Alexis Tocqueville revealed how this looks in “The Ancient Regime”:  “how does a despotism establish itself in a democratic republic?  It encroaches upon sentiments of liberties slowly under the guise of equality becoming more extensive, yet more mild.  It degrades men without tormenting them.  It reduces any Nation to a flock of timid and industrious animals, with the government as its shepherd.”

Welcome to our Brave New World!

Lenin remarked the the fastest way to create dependency is to destroy a Nation’s currency.  Sound financial and monetary policy allows every citizen to create and participate in both price discovery and the rational allocation of capital and labor.  If you remove this from the creative habits of any people, you enslave them.

The Obama Administration, like Lenin, is attempting to smooth out a business cycle by printing money.  This is like pushing on a string!  For the Government to print money it must either borrow against future growth or take it from its citizens in the form of redistribution, thereby eliminating both investment and immediate growth.  Where did such erroneous thinking come from?  John Maynard Keynes and his ‘General Theory Of Employment, Interest & Money’ was written in 1936, it gave both political and intellectual cover for Marxism, for Government ownership of production.  Keynes thought that government should intervene in the economy to maintain demand, with the goal of smoothing out business cycles.  There are two errors here.  One, Keynesian thought only works efficiently in centralized political economies.  Contemporary American serviced based economy is no longer centralized.  Two, Keynesians erred in believing that Government intervention outweighed any microeconomic harm to individuals.  (This is the intellectual cover given to Marxism under the benevolent guise of equality.)  Both errors reveal that Keynesian thought is a profound departure from classical economics as practiced by Fredrick Hayek and the Austrian School of Economics (ASE).  (Reagan was profoundly influenced by Hayek, Ludwig von Mises and everyone at ASE.  The Reaganite ‘Supply Side’  25 year boom that we just experienced had its intellectual credentials in ASE.)  Simply put, one cannot ignore price determination or distribution nor can demand drive employment or investment.

We are currently beholden to such Marxist thought in the Obama Administration.

The social impact of digital technology in a decentralized political economy is currently on display with both the Tea Party and the emergence of State parties comprised of lovers of the Tenth Amendment!  The Tenth Amendment explicitly reveals that our Central Government is one of enumerated limited powers.  This has profound implications for fiscal, monetary, social and political governance.  With the emergence of such citizenry this great Republic begins to shape both its future and its response to the intellectual errors that have destroyed this great Republic.  Both the Tea Party movement and the lovers of the Tenth Amendment movement show great promise.  Both parties understand the remedy required to restore the proper relation between the States, individual citizens and the primacy of Natural Law in guiding the application of Federalism.

For Kenyes, Government spending is the key component in determining demand.  For Reagan and the Conservatives, Government spending creates inflation, and inflation erodes the foundation of capitalism, distorts price signals, and radically destroys the relation between supply and demand.  We can now begin to appreciate the Reagan Revolution in advocating tax reduction, deregulation and a tight monetary policy of high interest rates to punish banks from leveraging (borrowing for immediate growth).  If both movements have understood anything better than Washington D.C. its this:  boom and bust cycles are a monetary phenomenon.  This means they are the creation of the Federal Government and its relation to its dependencies.  Fix the proper relation intrinsic to our governance, as demonstrated throughout our history, the Federalist Papers, the writings of our Founders and any realist assessment of history under Marxism and we return to the means of securing our future.

U.S. median income only grows when G.D.P. (gross domestic product) exceeds 3% over minimum of two years.  Our G.D.P. has been declining for fifty years.  How do you destroy a currency?  Excessive taxation, excessive spending and excessive borrowing.  THE CURRENT STATE OF OUR CURRENCY INDICATES  OUR DECLINE AS A SUPERPOWER.  This is witnessed in our parasitic relation to China.  We give it our Treasury Bills (secured debt) and we finance our Government Spending.  This is a disaster for we don’t have the growth to fuel our own spending initiatives.  We must restore the informing fundaments that maintains a stable currency.

Where do we begin?

We begin politically, as denoted above in the proper relation understood in federalism.  This has consequences fiscally in Congress!  We restore our defeated, worthless currency fiscally!

We begin to recognize that other nations will exceed our growth.  We may recognize this in acknowledging that publicly traded companies are completely detached from national economies.  We acknowledge that our economic data is meaningless if our means of exchange (our currency) is destroyed.  As of this writing, a single American Dollar is worth 1,200th of an ounce of gold.  When will we discover the political dimensions to our current fiscal dilemma?

Are there powers in respect to money given in the Constitution?  How do they inform any legitimate response?

The Constitution uses the word ‘dollar’ twice.  The definition of a dollar was codified in the Coinage Act of 1792 where a dollar was a value of a Spanish coin minted to contain 416 grains of silver.  This can hardly be used to shape a political response for our current problem.

Yet if we fortify ourselves to discover the political dimensions of our problem we have plenty of intellectual guidance in our Founders, who secured the blessings of liberty for generations strong enough to resist the temptation of despotic tyranny so often masked as benevolent govmint.

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About William Holland

Systematic Theologian/International Relations
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