A Challenge to Modern Liberals Regarding their Fealty to the Principles they Espouse

Great Debates
101

Of course.

Go to several different stores tomorrow with 44.29 in dollars (coins from the US Mint and Federal Reserve Notes), and see what you can buy. Then go to several stores with a one gram of gold, and see what you can buy. You wouldn’t be the first to try this. The results should not be a surprise to anyone with a functioning brain. With the money, you will be able to leave the stores after having actually made a successful transaction. (Because it’s money.) With the gold, you’ll be shit out of luck unless you encounter a whimsical owner. (Because it’s not money.)

Gold isn’t money anymore. It’s beautiful. It’s valuable. It’s possibly a wise part of a balanced portfolio (if it’s a very small percentage of the whole). But it isn’t money.

There are no laws that force people to use Federal Reserve Notes in their transactions, except for the payment of taxes.

You can conduct transactions with whatever legal medium both parties find agreeable. You can make payments with euros, RMBs, yen, gold, silver, cow chips, heads of cattle, ears of corn, grams of ear wax, toenail clippings, T-shirts stained with dog shit, or whatever other means of payment the other party agrees to. You can’t trade in severed human heads or thermonuclear arms or anything else brazenly illegal, but essentially everything else is on the table.

Gold is on the table. You can walk around with grams of gold in your pocket and try to trade them. There are no laws against this. You are perfectly free to do it. The only trick is getting the other person to agree. This is difficult to do in modern times, because gold is not money. You were correctly challenged on this point, and you attempted to offer three cites that you believed backed up this claim of yours.

The problem is that your cites are ridiculous.

They don’t claim what you think they claim. In fact, based on your post, we have no reason to believe that you actually read them at all, let alone read them carefully. The first cite you offer doesn’t say a goddamn thing about transactions with gold being illegal, because that is not at all true. And the Liberty Dollar guy got busted because he called them dollars and because he was (possibly) ripping people off. He could’ve called them Liberty Silver Ounces without fear of having The Man throw him in the hoosegow. It is completely legit to make and trade your own precious metal coins, you just have to be careful what you call them.

The second cite is probably your most ridiculous. It was written by Hayek in 1975, which is to say it’s nearly 40 years old now. I would guess it’s nearly twice your age. The funny thing is that it was true that people were not allowed to have contracts that stipulated gold payments… in 1975. The whole reason why private gold exchange of that sort was illegal was because of Bretton Woods, and after that system fell apart in the aftermath of Nixon stopping gold redemptions, the laws outlawing private gold ownership evaporated quickly. The gold market became totally free after Nixon finally destroyed the last tired vestiges of the gold standard. This is to say that for the entire time span that you’ve been alive, people have been free to make transactions with gold, and you never realized that because you’ve been reading ideological treatises that are nearly four decades old.

Jesus Christballs, man. Learn to live in the now. Old books might have valid theory, but the legal particulars are going to be way off.

People were saying exactly the same sorts of things ago 40 years ago when Nixon closed the gold window. And today?

The inflation rate under Ben Bernanke has been the lowest since the 1950s. Headline inflation even went briefly negative in the Bernanke era, again for the first time since the 1950s. Funny that the subtitle of your Hayek cite is: “A Way to Stop Inflation”. Thanks, Friedrich, but I think we figured that one out ourselves.

This is pure fantasy.

The amount of monetary base that the Fed has created stands at about 3.2 trillion dollars. That is the amount that could theoretically be printed up at the request of the banks who own it, but at this point, total currency in circulation is only about 1.2 trillion of the 3.2 trillion total base. When you say that “twenty trillion” has been printed up, you are off by a factor of 15 or more.

I know where you got your numbers, by the way. You misunderstood what you were reading because you simply don’t know enough about the system as it actually functions to have correctly interpreted it. It’s quite likely that the ideological hacks you were trusting to analyze this stuff got it wrong, too, but I’m open to the possibility that they got it right and you merely misread them.

I’m sure you’ve been reading both kinds of economic analysis, country and western.

You are profoundly ignorant on the topic of money. You make statements that are unambiguously wrong. At some point you’re going to have to face reality if you want to engage in an adult conversation. That means that instead of reading websites and books from people of the exact same narrow ideological persuasion, you’re going to have to start reading books by people who come to fact-based conclusions contrary to what you’d expect. You’re going to have to follow a chain of logic to its inescapable conclusion, regardless of how unappealing that conclusion is to your preconceived notions.

Anna Schwartz and Milton Friedman’s Monetary History of the United States is a good start, despite its age. (Learn from the theory. Don’t try to apply the legal lessons of the 1960s to today.) Friedman was libertarian, but not of the insanely stupid variety, so the book should be easier to swallow at first. But eventually, you’re going to have to start reading Keynesians, up to and including Keynes. They’re not right about everything (I’m not 100% Keynesian myself), but the simple fact is that sometimes the people who wear a different team jersey end up saying things that are true. This is one of those uncomfortable parts of life that grown-ups just have to deal with.

Almost.

He couldn’t call them “dollars”. The government is finicky about that. He could call them Super Happy Awesome Fun Tickets, and try to transact with those tickets. He could even get coining equipment and stamp out ounces of gold marked as Super Happy Awesome Fun Tickets (One Gold Ounce), and nobody in the government would blink. It’s the money thing that’s the tricky part. You can print your own money. You can coin your own money. You can transact with your own money, as long as the other partner agrees. But you can’t actually call it “money”.

The strict part of the process is banking, which is heavily regulated, but that is several orders of magnitude beyond the sophistication of the typical goldbug.

It was Expano Mapcase.

I remember this vividly, because the comment was so good I promised myself I would steal it one day. I haven’t yet, but I definitely will. Oh yes I will.

He’s referring to the nominal value of the loans the Fed made to private banks. But he doesn’t realize that, because he has no clue what he’s talking about.

Let’s say the Fed loaned a billion bucks to JP Morgan overnight. The next day, JP Morgan wouldn’t necessarily pay back the loan. Instead, the loan might be rolled over, so that they have a second overnight loan. Then it happens again the next day. Then the next day. The total amount of the loan outstanding is a mere one billion, but since the loan is rolled over every day, the nominal amount of total loans creeps upward by a billion every day.

Fed loans of this sort got up to twenty trillion dollars or more, but there was never anywhere near that much outstanding at any single point in time. The number got that big only because the same loans were rolled over countless times. It’s like a friend borrowing one dollar and paying me back next month, and then me claiming that he borrowed 30 dollars by counting the same dollar every day. It’s a comprehensive misreading of the actual situation.

102

jayarod7, I see that you’re referenced von Mises and the Austrian School several times, and seem to endorse their beliefs. Thus, I am puzzled to hear you call for the destruction of the state, as von Mises argued that government was necessary for freedom to exist. Your anarchist theory isn’t compatible with von Mises.

From Economic Policy

From Planning For Freedom

From Liberty and Property

Von Mises was deeply skeptical of the inherent benevolence of government; he wrote often how governments are liberal only when forced to be by their citizens, and that government was capable of using its power to inflict tremendous harm. But he never doubted that government was necessary.

103

The problem with your approach is that is suggests that first, our modern form of government is fundamentally different that governments in the past. I don’t believe that it is. The difference between different governments is usually the amount of restraints that society places upon them, thus some States can not get away with actions that other States might be able to.

What exactly is your fundamental objection to the Non-Aggression Principle?

I also want to be very clear that I am not advocating an armed revolution. What I am saying is that the Corporate/Banking/Government establishment is not fundamentally different from the ruling classes of previous ages. It would be wise of us to wake up and realize that this system has fundamental flaws and an injustice that is ingrained so deep within the fabric of the modern democratic State, that we should focus our efforts on dismantling the State and banking apparatus and replacing it with voluntary cooperation.

This is very much like my earlier example where it is as if you are saying “why must you be such an absolutist and claim that rape is wrong? Of course we need to have a little rape! We need to have the right balance between violent rape and consensual sex!”

No we should tolerate no rape at all in society. Equally, we should strive to eliminate the violence used against peaceful individuals.

Why does it make sense to be a wishy washy non-committal “moderate” on moral issues that are this profound and important?

104

It would lead to the collapse of society since all laws would be ignored, and therefore lead to a massive increase of violence so it doesn’t even fulfill it’s core goal of reducing violence and coercion. The real world is not amenable to ideologically pure solutions.

105

Let me turn the question back to you. Yes I know you assume all the horrors imaginable when human beings put down the guns and treat each other peacefully and respectfully. But in 2013 with a massive government, mountains of regulations and a Federal Reserve system that is printing trillions of dollars of “stimulus”, we live in sort of a Corporate tyranny in the present. Don’t you agree?

What has caused the government to be unable to effectively police the corporate and financial system? Before you make the erroneous claim that it was because Republicans cut all the regulations that is factually inaccurate. George W Bush increased regulations massively. We had in excess of a hundred separate agencies designed to provide oversight to the financial sector of our economy prior to the crash of 2008. Why did they fail?

Lets suppose that our choices are not no government at all on the one hand, and the expansive State we have in the present on the other but instead we could slowly introduce the free market to the financial sector rather than hoping for good regulations to come from corrupt politicians.

Do you not think that it would be a positive step to say that all banks, corporations and financial firms would no longer be subject to any bailouts or actions that would prevent potential bankruptcy? Would it not be a step in the right direction to stop all subsidies to favored businesses and remove barriers to entry for entrepreneurs to compete with existing companies?

These would be reforms towards a freer market. Yet progressives don’t seem to want to entertain these ideas, they just hope at some point a bill will be passed to “punish” the corporate criminals in some way or some strong regulations will be put in place that are more effective than all the regulations we already have in place.

Yet time and again these bills are written by the special interests to exempt themselves or protect themselves. Can’t you see how much easier it is to buy off the politicians than it is to compete and risk bankruptcy in the market?

How do you plan to deal with the existing Corporate tyranny we are currently experiencing, never mind your fantasies of corporate tyranny in a hypothetical free society?
Lastly, what if we didn’t have an anarchist society, but one with a very limited government. Its functions were limited to protecting people from those that violate the non aggression principle. But there was no central bank, no welfare state, no large military and foreign empire. It was a night watchman type of state with courts and a legal system designed to protect the citizens from private criminals including corporate criminals.

How then would corporations abuse the rights of the people? Such a free market would surely lead to more prosperity and less corporate abuse and coercion.

Think about this and answer carefully.

106

Okay, to facts and empirical evidence mean anything to you? Our dollar was pegged to gold from our founding until 1971. Got it? Did our entire society collapse? No we built the most prosperous society the world has ever seen with a robust middle class. How is that a failure? How did the gold standard hurt us?

Secondly, are you serious when you claim that we don’t have government growth which the American people are unable to curtail? Lets even suppose that a majority of Americans actually want the government to do everything they are doing (this is not the case). If the American people wanted to shrink the government, how would they do it? The Constitution doesn’t function as a limiter on government power any longer. Both of the major parties expand government massively. A good portion of the GOP base still vote for Republicans because they hate “big government”! What a joke. The Republicans have expanded government power more than anyone.

Even more serious is that the Federal Reserve can spend more money than the entire rest of the government and do it in secret. Do we vote for the Fed chairmen or members of the board? No. Can we affect who they give the money to? No.

So my statement is empirically valid that we have “unchecked” growth in government power and even if the American people wanted, they have no easy way of reversing the trend.

107

No. We have a too-small, weak and underfunded government; that is where much of our problem comes from. And while there are certainly government abuses of power, that has nothing to do with size.

Lack of desire and ideology.

Since I’m not fond of chaos, social collapse and starvation no, I don’t think it would be a “positive step”. Under that plan we’d be in the Second Great Depression; possibly even a bigger, nastier one than the original.

About all that can be done is to wait for the present elderly generation of right wing fanatics to die off.

Hardly, it would be a new feudalism, with corporate lords and employee serfs. “Obey or Starve” would be the motto of every corporation. And you’d still need a large military to keep the starving masses from staging a revolution, unless you intend to simply kill all of them. For all the noble sounding words, in reality you are proposing a government that has as its primary purpose being a big steel boot to stamp on any of the common folk who get out of line. The only point of your vaunted “non aggression principle” in this scenario is to remove the common people’s only remaining recourse or defense after you’ve stripped them of their nonviolent ones.

108

So I assume you deny that there were any major avoidable negative impacts on the economy prior to 1971 attributable to the gold standard.

109

Repeatedly. Booms and busts were far worse then. Recall the Great Depression?

They don’t want to curtail it, except for the other guy. “Get your government hands off my Medicare!” The anti-government movement is fundamentally in denial of reality.

By flinging themselves off cliffs so there’s fewer people to govern. Or something equally self destructive; our government is already too small, not too large to do what we want of it.

Yeah, suuuure it does. This is conspiracy theory stuff.

110

I will agree to the extent that it is the threat of violence or the knowledge that you will be met with retribution for your actions that prevents a good deal of crime.

So a police force designed to keep the peace, or laws that have penalties for those that initiate force are clearly just and moral in a libertarian society.

But this is completely different from a government which intitiates force against peaceful individuals. Can’t you see the difference? If I own a gun for protection and I kill an intruder that breaks into my home that is entirely different from going out and killing someone minding their own business.

Using force in self defense or in the punishment of a legitimate crime like murder or rape is completely justified and not at all a violation of the Non-Aggression Principle.

You seem to equate libertarian ideology, with a system of no rules, no laws and rampant chaos. There are laws in a libertarian society. There are courts and there are rules government society.

The Anarchist libertarian only believes that granting a monopolistic State with the task of enforcement and interpretation of these laws will lead to undesired ends, rampant corruption of the law and a less just and secure society. Thus, the law should be interpreted closer to the community. Your local government or community will have a legal system designed to protect its citizens with a court system and police forces. Other communities will be able to compete on the application of justice in their jurisdiction. Those communities which achieve the least amount of crime and are the least corrupt will be rewarded by new people coming to live in their legal jurisdiction.

The competition for justice will lead to better laws and a more accountable justice system in society.
That would be the anarchist libertarian solution. That, to you, would be the most extreme of libertarian thought. And yet there would be no rampant criminality. There would be far less than in today’s society.

The more “moderate” libertarian or liberal would advocate for a night watchman form of Federal Government, strictly restrained by an honest money system and a written Constitution. This government will be tasked with implementing a universal system of laws and justice that protect the peace and punish violators of anyone else’s person or property. Apart from that, the government would stay out of the way of private individuals exercising their liberty to be productive members of society in a voluntary market economy.

In either case, there would be no chaos, no “corporate genocide”, or any other fairy tale fantasy you can imagine.

In either case, the law would apply to businesses, and it would apply equally to businessmen or individuals unlike in a centralized State where justice is perverted to favor the powerful.

It would not be perfect but it would be far better than what we are experiences in the present.

111

Where’s William Jennings Bryan when you need him*? Seems like we want to crucify mankind on a cross of gold, eh?

  • Yes, I realize he was actually for going from a gold-only standard to a bi-metal gold/silver standard, but the basic principle stands - the gold-only standard sucked and the folks at the turn of the 20th century realized it. Adding silver was an attempt to improve the economy by changing the standard - though it still shared the same fundamental problems.

Also, Bryan arguing for the state in the Scopes trial is not exactly a great personal achievement, though I realize opinions vary on this.

112

I would say you are just so acclimated to the society we currently have, that you don’t recognize the effects of government on your life.

Have you ever tried to start your own business? Maybe you used marijuana for medical or even recreational purposes? Surely you pay taxes?

Whether you are consciously aware of it or not, food and gas prices have been rising considerably over the past decade. Do you have college loans to pay off? The cost of college tuition is directly proportional to the federal “aid” that is given, pushing up the prices to absurd heights.

Jobs are hard enough to come by these days, but ones that make a good wage with job security? Even harder. This is not an accident.

There was a book written recently (I can’t remember the name at this time) about how we are ALL criminals. Each and every American breaks dozens of laws on the books every month, mostly without knowing it. It is only the limitation of resources that prevents the government from locking up even more individuals who violated victimless crimes.

What about three strikes laws where you could end up in prison for life for being caught with pot three times? This only occurs in some parts of the country and is an extreme example, but the government could probably catch any of us on something and lock us up if they wanted to.

What about the IRS targeting curtain individuals and making their life a living hell for years? This has been happening for far longer than the recent story about conservatives being targeted.

Those are just a few examples. Most everything in this country, from our living standards to the opportunities we have in our lives are affected negatively but the State and the banking system. We just need to learn to notice it and not accept what is happening to us.

113

There are plenty of ways to be exploitative, coercive and destructive without being violent.

Regardless of theory and rhetoric, in practice that’s what it is; or a plutocratic dictatorship.

Nonsense. You end up with a dysfunctional nation, immense corruption, and a race to the bottom. The more local the government, the more incompetent and corrupt it tends to be, and the more easy it is for non-government powers like a corporation to control.

A neofeudalist state, with corporate overlords exploiting and abusing worker-serfs who can’t disobey without being starved to death, and can’t fight back because the government will crush them.

114

If that’s your way of saying I live in the real world, then yes, I agree. I’m living in reality and you’ve chosen a different path.

Actually I counted and that was no examples. You said coercive violence on a day-to-day basis and I asked for examples. Paying taxes doesn’t count unless an IRS agent punches you in the face everyday for a year.

115

<WHACK>

Guy#1: “Why the hell did that guy in the suit just walk up and punch you?!”

Guy#2: “IRS. There’s a tax credit for pugilism.”

116

I’d like to see better evidence for this. I don’t dispute it as such: I’m not going to declare “That’s Not True” without better evidence myself. I just am dubious, and would like to see this defended more rigorously.

Yes, I sometimes speed on the freeway.

California’s three-strike law was originally sold to us as applying only to violent felonies. They lied to us, and put a different proposition in front of us, which we, being idiots, passed. The “third strike” didn’t have to be a violent crime. People were put away for insane lengths of time for writing bad checks, or shoplifting. It was a stinking mess. Recently, we changed it to do away with that insane loophole.

However, at no point could “any of us” be locked up without due process of law. You took what could have been a good argument, and ruined it by exaggeration. Rein in the extremist rhetoric, and you have some good points. Your immoderation makes you much harder to take seriously.

117

Given all the old, unenforced laws on the books there probably are all sorts of laws we break without knowing it. And copyright laws as written are so restrictive that people casually violate them all the time without knowing.

But getting rid of most or all of the government to solve problems like that is like throwing your cat into a furnace to deal with its nasty flea problem.

118

This is the most elementary question imaginable. A gold standard prevents the expansion of money beyond the amount of gold that backs it. So it is a relatively fixed limit on the units of currency in circulation.

Under that type of system, if the government wants to expand and spend money, it only has two options. First, it can tax the people. Second, it can borrow from other nations.

In either case there is a limit. The people will only accept a certain level of taxation or they will revolt. Similarly, foreign nations will only lend us a certain amount of money and they will expect us to pay it back eventually.

With taxation, there becomes a very clear understanding of what government actually costs to the public. If people want a larger government, they have to pay more taxes.

Today, our monetary system allows the government another way of paying the bills after they have taxed the people as much as they will put up with and they borrow as much as foreign nations will lend us. They can then simply print the money and pay the bills that way.

There is no theoretical limit to how much paper can be printed. Eventually, hyperinflation is likely but this can take a very long time.

What this does is it allows governments to grow without any hard limit. Perniciously it fools the people into thinking they are getting something for nothing from the government. The cost is not readily apparent to the people, so they continually vote for bigger government, more handouts and so forth.

Then the politicians always say they can cut taxes for the middle class and poor but raise them for the rich (or not raise them at all for the GOP) which makes the people think they can have a huge government AND low taxes. Or that someone ELSE will be paying the bills just not themselves.

It should be pretty clear why this leads to an exponential growth in the State. Anyone who believes in some limit on government growth or who believe in accountability should be arguing in favor of sound money.

History has taught us that there are no restraints in spending without a commodity backing the money. The temptation to print money is SO powerful that politicians and special interests cannot resist. They will print until the currency becomes worthless.

If you had access to a machine to print dollars and everyone else in the country was guaranteed to accept them, wouldn’t you print yourself a lot of money? Everyone would. It would be worse than heroin.

First of all there are two separate terms. There is “price inflation” which is rising prices, then there is “monetary inflation” which means increases in the quantity of paper dollars. Monetary inflation usually leads to price inflation but there is a significant delay until the money circulates throughout the economy.

The Federal Reserve spend $16 Trillion dollars in secret bailouts that were only found out after the audit that Ron Paul and Bernie Sanders pushed was accomplished:

So monetary inflation has been growing in an unprecedented fashion. Prices in the economy have been rising, but that money has not yet been circulating in our economy (a lot of those trillions went to bailout overseas banks). There will be serious repercussions of all this money printing that we have yet to see.

Inflation IS worse. What you have to understand is that the CPI and other statistics the government uses to measure inflation have been continually changed and altered to under report inflation. And they don’t calculate food and fuel prices! How absurd is that? Prices for food and gas could be doubling every year but they would still report an inflation rate of 1%.

You should check out Shadow Stats:

If we calculated the inflation rate the way they did in 1990, it would be around 5% instead of 1%. If we calculate inflation the same way they did in 1980, it would be around 10% not 1%.

And if they calculated the CPI the way they did in 1971, it would be even higher.

There is a lot of deception going on in government regarding the reporting of these statistics.

Why don’t you look at consumer prices in 1971 versus 2013 and tell me how much inflation there has been in the last forty years? How much did a college tuition cost in 1971? How much did a new home cost? What about a stay in the hospital?

You cannot tell me that inflation has been negligible. Are you going to believe government statistics or your own eyes?

It is not the Gold Standard per se that would help these things, it is government fiscal policy and spending that has caused college tuition to rise to such an extent. But fiat money facilitates this spending.

As far as savings versus debt, fiat money encourages debt because the value of savings are wiped out with depreciation. This encourages people to get into the stock market to try to make some type of “return” to keep up with or beat inflation.

Under sound money, people could just hold dollars and know that they would be worth the same or more when they retire. No one can do that today.

“Soundness” in currency means it cannot be easily debased by creating more of it. Yes, if someone mines more gold, it can slightly affect the value of gold, but only in very minute amounts. With fiat money, more of it can be created at the whims of the people in charge of the printing presses.

It is not on you to determine that gold is or isn’t valuable. The reason it was used is that people throughout the centuries have decided that gold has value. If we all suddenly decide gold has no value, we could use any other thing that the people view as valuable as our currency. There is nothing special about gold except that it emerged as “money” in the market, meaning its use was not forced on people. Societies have voluntarily chosen to use gold throughout history.

I suggested you watch Tom Woods on “Economic Cycles before the Fed”:

119

In other words, it cripples the economy. That’s like trying to stop overpopulation by only producing a fixed amount of food; you end up with starvation.

Which is silly. You are crippling society in the name of crippling the government which is pointless. And even as stated it’s overoptimistic; no one would be loaning us money if we were crazy enough to go to a gold standard. You’d be turning America into North Korea; an economically collapsed starving hellhole.

Except it hasn’t.

Except as already pointed out, that’s not so.

120

I’ve smoked plenty of marijuana. Never had any problems, mostly because I was smart enough not to do it when there were cops around. It’s a remarkably good rule of thumb.