Posts tagged capitalism

Mac Strong: Ok Michael! Thanks for sharing your perspective with me and the Manifest Liberty audience today!

Michael: Hello Mac. Glad to be here.

Mac Strong: As the author of the very well-reviewed and extremely well-cited work, “The Path to Tyranny” would you like to first list a few of your favorite historical figures throughout history and why?

Michael: Sure thing. Not really something I’ve thought about, but I do love reading about the American Revolution. In fact, my next book will be on that topic. With my interest in that area, men like George Washington and Alexander Hamilton have to be among my favorites.

Mac Strong: Interesting, Hamilton is getting hammered these days by most of the people I see opposing “tyranny,” due to his central banking ties. What’s your response to people with these sentiments?

Michael: My personal belief, maybe I should write a book on this, is that Hamilton became the villain because Adams and Jefferson were both looking to create one [a villain] and boost their own legacies. When the two started communicating again later in life, Jefferson was still popular, but Adams was less so after his unsuccessful Presidency.

So Adams blamed Hamilton for the collapse of the Federalist Party and Jefferson was all too willing to go along. This is entirely speculation because I have not yet done extensive research on this. But it is known that Hamilton was still quite popular at the time of his death. Besides, the banking system Hamilton created bears little resemblance to our system. I’ll be writing about that briefly in my next book.

Mac Strong: I’ll be very keen to read that analysis! He did advocate a central bank–and there’s no doubt he’s getting beaten up by many so called Patriots today; can you state a brief case for his defense? Particularly the difference between the central banking system he planned and today’s system?

Michael: The central bank of Hamilton was very different from ours. Most noticably, the US was based on the gold standard. They didn’t have fiat currency like we do now. So the central bank was restricted in how much it could do. Also, Hamilton’s bank did not issue currency.

Bank notes were issued by state-chartered banks and The Bank of The US basically regulated and endorsed those. Also, Hamilton’s Bank of the United States had no ability to set interest rates like ours does today. Very important differences.

Mac Strong: 1) gold backed, 2) State-run, 3) no interest rate control. Very good combination! Do you think there is a future in a commodity-backed currency?

Michael: I think we are most likely to move to a dual currency system. Most will use the Dollar, but people will start moving to gold. Right now, the Dollar is the sole legal tender. Eventually, people will start writing contracts payable in gold or using the value of gold payable in Dollar. So I’ll sell you something for an ounce of gold. But instead of giving me the gold, you’ll give me $1380.

Tomorrow, the Dollar price might be different, but it will be the same in gold terms. I see no reason things can’t move in that direction and they will if people see gold as being more stable than the Dollar. All currencies eventually fail. Will the US Dollar or Euro fail tomorrow, a year from now, or a century from now, I don’t know. But they will not last forever. That is just the nature of the world.

Regarding #2, The Bank of The US was a regulator. The Fed today also regulates banks, setting reserve requirements and the like. That role is the same and you can say that is a good role.

Mac Strong: What is your general opinion of the banking cartel and their role in history?

Michael: Banking in themselves is a good. They enable savings to be coverting into investment. They help move money from one part of the world to another. The problem with banks is when they start influencing the government to give themselves favorable treatment.

Of course, the same can be said for any industry misusing government power, but because the government has the power to tax, spend, and print currency, banking is inherently tied to the government. That’s why they supposedly created an independent Federal Reserve, to separate banking interests from political interest. Of course, we all know that is a fiction and politics and banking are intertwined.

I am very favorable toward the “End the Fed” movement, but that doesn’t mean I am in favor of immediately getting rid of the Dollar or ending all bank regulation, though those goals could be accomplished gradually. But in terms of printing money and setting interest rates, yes, we should get rid of the Fed. In other words, I am in favor of moving toward a Hamiltonian-style bank as a first step.

Mac Strong: Very interesting–we certainly have plenty in common. Do you think there will be a federal backlash against using precious metals as currency?

Michael: The Feds may not like private use of gold or silver as a currency, but it will be very hard to stop when they aren’t actually using hard currency. They simply have contracts using gold or silver weights which must be paid in Dollars.

Now, a losing side may take that to court and the government may say those contracts are invalid because only the Dollar can be used as legal tender, but it should not be too hard for an enterprising company to create a third party system wherein the money is deposited beforehand and gets marked-to-market every day to pay for the contract.

In other words, you’ll be combining the futures market with private contracts. It’s all very feasible if we allow the free market to solve economic and trade problems.

Mac Strong: Given the ineffective track records of the SEC and other regulating boards (“No One Would Listen” by Markopoulos is an amazing read on the Bernie Madoff tale and SEC complicity). How exactly do you see the free market rooting out fraud?

Michael: Government regulation gives us a false sense of security. We don’t do our own research and trust that the government is protecting us. The SEC rarely if ever catches fraud before people lose their money. We are spending money but getting nothing for it.

Mac Strong: So do you think the “regulation doesn’t work anyway so why try” is the best answer?

Michael: In a free market, nobody would trust anybody else unless they have earned that trust. You’d only buy a child car seat from somebody you know who makes quality products. Then you’d check reviews and read Consumer Reports who tested the seat for safety. Especially in this Internet age, we really don’t need all this consumer protection. All we need is access to information.

Mac Strong: Great analogy. Another ill cured by free access and a protected free press eh?

Most big gov advocates seem certain that the world will become ravaged in fraud, malice and collusion without the helping hand of govrenement regulators–how do you cool their heads? What methods and means are employed by the free market that limit these abuses?

Michael: I think we need regulation from the standpoint of disclosure. Banks should have to report their positions, assets and liabilities. But it should be up to us to decide what is the proper reserve ratio and the like.

Mac Strong: Does that infringe upon private property rights?

Michael: Are you asking: Does disclosure infringe up on private property?

Mac Strong: I am. There will be plenty of bankers who I can imagine using that defense to keep their books and private dealings secret.

Michael: Individuals or private companies won’t have to disclose anything. I shouldn’t have to tell the government or anybody what is in my investment account. However, we are talking about a business selling to a customer.

Such a transaction needs to be with full knowledge on both sides. If a bank is not disclosing important information, it is committing fraud by pretending to be a safe place to deposite money when it may not be. And I’m not talking about the government regulation that talks about reporting information once a month or quarter. In the case of banking, these numbers should be reported every day.

Mac Strong: I wholeheartedly agree.

Regarding property rights, another connection you make in your book I found especially valuable and largely under-discussed is the bridge between property rights, Natural Law, and economic liberties. Without one the rest are quickly eroded.

Michael: To me, it is quite obvious. If you can’t own property, how can you have the right to a free press. How can you print pamphlets or newspapers if you don’t own the property to produce those. If they are owned by society or government, they can restrict your use of those and you don’t really have the freedom to air your opinions.

There is an obvious difference between rights and benefits at the expense of others. My right to practice religion does not infringe upon any right you may have. However, if I am granted the “right” to free healthcare, somebody must pay for it. Either you must pay higher taxes for me to get the free healthcare or maybe the government will force you the doctor to provide it to me for a reduced cost. Thus, my free healthcare reduces your rights, which does not occur with true rights.

Mac Strong: An excellent observation that far too many people miss out on. A liberal’s “rights” are another person’s property

Michael: Exactly. Forget health care, just think of the money. The government is promising somebody a few thousand Dollars a year. That money must come from somebody else. It is taking may from Paul to pay Peter. Maybe that’s okay, but let’s call a spade a spade. Stop calling these things “rights” and let’s call them government welfare or benefits at the expense of others as I call it.

To quote my own book, The Path to Tyranny: “Today, politicians promise the right to high quality education, the right to free or affordable health care and housing, and many more so-called rights. These are not genuine rights. They are benefits at the expense of others. The rights to private property, free speech, and freedom of religion are true rights because they have no cost.

The “rights” to education, housing, and health care cost the providers who must supply them for free or at a discount, or they must cost other taxpayers to reimburse the providers. As a result of the government providing these new “rights,” the people have fewer choices as the government rations goods and services, businesses are burdened with more regulation, and costs rise as more bureaucracy is added to the system. Instead of the greater freedom and wealth promised, the people are poorer and become slaves to the government.”

Mac Strong: Great paragraph. What’s your reply to my friends who thinks that Democratic Socialism has been a success?

Michael: First of all, I assume your friends are mostly referring to European countries. Europe is a total mess right now. Bloomberg just reported today that France may lose its AAA bond rating and join the sovereign debt crisis soon. These countries are sick and its those social democratic policies that have done it. We in the United States are not immune either. Government at all levels is 43% of GDP here. We too are social democrats.

We didn’t have these problems when government was small. Now we do. Coincidence? Government doesn’t produce much. Most of their spending is wasteful or counter-productive. Yet government has become a larger share of our economy. As such, the free market has become small and that reduces our wealth production.

Where in the world has Democratic Socialism (or Social Democrats) as they called them in Europe been a success? Has it brought millions of poor out of poverty? No it hasn’t! Has it given millions of people more rights? No it hasn’t! Now, what has succeeded? CAPITALISM and REPUBLICANISM!

Capitalism has lifted billions of people out of povery and republicanism (small ‘r’) has given billions the rights to life, liberty, and property. Whereas socialism has killed hundreds of millions and social democracy has squandered the wealth created by those capitalism and republicanism.

Mac Strong: Great summary Mike. If you’re open to it, let’s take a radical turn, shall we?

I’ve read a fair amount of conspiritorial texts in addition to the more mainstream versions of history and they appear to make the case for underlying organizations playing major roles throughout history.

Have you encountered much to support theories that say an “elite group or groups” like the Council on Foreign Relations, Freemasonry or “The Illuminati” play much of a role in history? What do you make of the idea that Wall Street Bankers allegedly backed and financed Lenin before his work in the Russian Revolution?

Michael: I truly believe that people get the government they deserve. Ludwig von Mises wrote: “The tyranny of a minority can never endure unless it succeeds in convincing the majority of the necessity or, at any rate, of the utility, of its rule.”

The Nazis were elected into office. So were the Communists in Russia, though there was a civil war over which Communists, the Bolsheviks or Mensheviks, should be in power. Julius Caesar was very popular when he took over Rome. These demagogues generally take power with the consent of the majority or a large plurality of the people.

Maybe there are secret groups working in the background to convince the people, but it is up to the people. Therefore, the people need to be and stay educated and we can’t rely on the government to do that. If people don’t know the value of liberty they will trade it for the free gifts promised by demagogues.

Mac Strong: I certainly agree that we need to be educated–do you think part of one’s education should be in these “societies?” Or is their alleged influence exactly that: an allegation?

Michael: I don’t know and there is no way of knowing about these conspiracy theories. Maybe they are true but maybe not. How is one to know? And if you discover a conspiracy, maybe it was fabricated to cover up a different conspiracy. There is no limit to where you can go.

In the end, though, cabals amount to nothing in the face of the whole of the population. To ensure liberty you need two main ingredients: a population valuing liberty over the allure of free gifts and a republican system with rule of law, not men, and checks and balances. No conspiracy can win as long as those two things are maintained.

Mac Strong: That’s poetry my friend.

Michael: There is nothing you or I can do about these conspiracies. I can’t stop them or expose them. You can’t either. All we can do is spread the word of the value of liberty and republicanism (small ‘r’).

Mac Strong: I think there is a tremendous amount of truth to that statement. Are there any news topics you’ve read recently that really got you excited/bothered/interested?

Michael: I’ve been very busy working on my next book about the American Revolution. Haven’t announced details yet. Hope the book will be out in the summer. But I’ve been reading a lot about the different ideologies of the time. What were the political beliefs of Burke, Paine, Jefferson, etc?

Not just about what type of system is best, but where power comes from and how things should be altered when they need changing. Very interesting. I still have a lot more research to do, but I am enjoying Burke’s political philosophical beliefs. And I find Paine to be quite naive when it comes to government, which John Adams pointed out at the time. In school, we get such a cursory overview of these important ideological battles and it’s interesting to learn it in a lot more depth.

Mac Strong: Some are alleging that the Founders were actually liberal–especially Paine–are you finding this in your research?

Michael: It all depends on how you define liberal and conservative. Some, like Patrick Henry and Thomas Paine (who is not a Founding Father), were more “liberal” than others in that they wanted extreme change. Others were more “conservative” in that they wanted to mimic the British system. In the end, we got something in between.

As Hamilton said at the Constitutional Convention: “We are now forming a republican government. Real liberty is neither found in despotism, nor in the extremes of democracy, but in moderate governments.”

There is a real battle among American historians. We have the conservative wing that reveres the Founding Fathers. And we have a populist wing, led by Howard Zinn, that talks about the people’s contributions. Both are true but each paint an incomplete picture. I’ll be working on fixing that in my next book.

Mac Strong: That’s wonderful news Michael. Well, in the agreeable and valuable essence of moderation, perhaps that is a great place to end our chat today. I greatly appreciate you taking the time to speaking with us today Michael. Your wit and diligence is matched by your character.

Michael: Thank you for having me here. You asked some very enlightening questions. I hope I sufficiently answered them in the brief time I had. Fortunately, I spend much more time writing “The Path to Tyranny” so my thoughts there are more complete. But it seems like you’ll be even more interested in my next book.

Mac Strong: I certainly do enjoy The Founders, their passions, and discovering what their true beliefs were!

Mac Strong: Perhaps we can get together again soon to discuss your ideas and some other valuable commentary.

Michael: The book will be enlightening. I’ve read many many on the Revolution, but none from this perspective. Of course, I don’t want to repeat what others before me have done. We need to add new ideas and thoughts into the debate and help people rediscover what makes this country great. Have a great day!

Mac Strong: I am again fully in accord.
Mac Strong: A great day to you as well Michael!
Mac Strong: Take care

If you enjoyed this discussion, please visit Michael’s Blog, and check out “The Path To Tyranny” today!