Well, in the spirit of the season, I thought I’d write a blog series in the spirit of the Dickens’ work. This is the first of a three-parter regarding our current American crisis. In this, the first, we are going to take a look at some of America’s past ghosts that are still haunting us.
The figure of Scrooge is an unhappy one; he has used greed to fill the void left from the emptiness of his existence. In this way, Scrooge is personifying what Scott Peck would later write in The Road Less Traveled that most neuroses are caused by a person’s attempt to avoid legitimate suffering. If Scrooge had but properly grieved the pain and loss that the Ghost of Christmas Past came to show him, then he would not have become the twisted and hated figure upon which the story opens.
It’s ironic that that hated figure actually had a lot of virtues that we as Americans lack; Scrooge was tight with his money and always in search of prudent ways to invest it. Americans seem to work more hours than Europeans, and in that way we should be able to identify with Scrooge’s desire to lose himself in his own work. But it seems we are not using the work as a means to gather financial security (which was his obsession.) Instead, it seems we work to pay off the debts that nevertheless seem to grow year-after-year. In that way, we’re a bit like Jacob Marley; having lived lives absent of the proper virtues, and are now so chained to a hated existence we cannot escape.
While Marley was forced to walk the afterlife in chains of his own making, our nation has gone into debt to foreign creditors. We have lost our willingness to save, and with it, our competitive edge. And now, even our industries. Our only strength now lays in our military superiority — and, unfortunately, history is rather mute of any empires that were able to pay for themselves off of foreign tribute alone. Bereft of owning our own capital, we cannot compete on the world stage, and so we will increasingly be forced to work for our foreign masters in an attempt to pay off our debts.
How did we get here?
Let’s talk a walk with the Ghost of Christmas Past and see if we can figure it out.
When our nation achieved independence, it featured a manufacturing and financial North complemented by an agrarian South. The North and South were natural complements to each other, but over time, their differences got the better of them. A war was fought to determine whether the South would be allowed to become independent from the North, or whether the North would be able to use its expanding influence to dictate terms to the Southerners.
The war proved expensive; far more expensive than either side anticipated. The Northern Government turned to the financial centers to loan it money, but that proved insufficient as the war drew on. So, they returned to the bankers, who then asked them for a favor. The first national banks were chartered during the Civil War, and the act that chartered them gave huge advantages over state-chartered banks. So much so in fact, that several banks switched their charter to become national banks. Next, the Government floated the idea of issuing unbacked fiat money, and which point the bankers asked for another favor: Greenbacks, the first ever fiat money issued, were declared to be legal tender for all debts public and private … save two. According to the laws then, interest or import duties had to be paid in gold coin.
The bankers knew fake money when they saw it, and they were content to let its inflationary power slowly deprive the people of their wealth — as long as the bankers themselves were able to increasingly acquire gold. By allowing this law, the US Government was giving the bankers a mortgage on the future earnings of Americans — and, to top it off, demanding that it be paid in gold.
After the war was won — thanks in no small part to the financial maneuvering of these newly-created national banks — the balance of power continued to shift in their direction. The Republican Party was dominant both during and after the war, and it had a very cozy relationship with banking interests. More legislation was passed under President Grant by which the US Government abdicated controlling its money supply to the national banking interests who were now allowed to expand or contract the amount of bank note currency in circulation according to whatever reasons they say fit. The power to create monetary-based booms and busts had been handed over to the bankers who quickly recognized it as yet another tool for influencing public policy. More than once, the national banks would greatly contract the money supply to incite a panic if they were not pleased with what the politicians in Washington were talking about.
The industrial revolution started booming, and with it came increasing worry regarding the power of large corporations. People grew especially fearful that large corporations would begin conspiring amongst themselves to confiscate wealth from the people. Consideration of antitrust legislation started being brought to the table; the most threatening trust of them all was the national banking system — dubbed by its opponents as “the Money Trust”; which was too smart, too powerful, and too subtle to be undone by a simple act of Congress. Instead, the Money Trust conspired to arrange for the formation of a government-sanctioned banking cartel — its crown jewel being a US Central Bank; privately owned, yet solely responsible for control of the US debt obligation: the US Dollar.
The Trust went to work; in no time at all, they had their allied Republicans in the House and Senate considering a plan to create the Federal Reserve. Surprisingly enough, President Taft took a rather un-Republican stance on the banking bill, refusing to support it, so, the bankers waited until the next administration. Do-gooder Woodrow Wilson defeated Taft to become one of the first Democrats since the Civil War to win the Presidency, and the bankers soon brewed a tempest in a teapot by having Congress call hearings meant to expose the abuses of the banking industry. What would happen next was a foregone conclusion; Congress found that the banking industry was abusive, in need of being cleaned-up — by the creation of a central bank and entrusting the bankers with its ownership.
From there we start to get to the history we all know. Under the Federal Reserve, the boom and bust cycle got much more exaggerated, and soon we had our first “Great Depression.” This prompted the bankers to again ask the Government for more power, and FDR was happy to comply in whatever ways they deemed necessary. And soon, it was insuring banking deposits, declaring bank holidays, even outlawing gold ownership by American citizens — but not American banks.
The bankers found a friend in Macroeconomists such as John Maynard Keynes who legitimized their control by theorizing that the operation of the free market was too unstable to be allowed to function on its own. But really, they were so powerful at this point that all that they had to do was pick the right person for their spokesperson. If Keynes hadn’t been around, they’d have found another patsy.
Keynes told a lot of lies in his theory. Chief among them was that savings was a vice, not a virtue, and that and investment funded by newly-printed money was just as good as an investment funded through odious savings. The bankers now became the national heroes of our society, ever-ready to stand firm in the face of market downturns and do what they have always done naturally anyway — create money in massive quantities.
(Most of the information I used for this blog post came from the excellent book, The Coming Battle: A Complete History of the National Banking Money Power in the United States which details the activities of national bankers in perverting our republic to further their own ends.)
Next time we’ll take a trip with the Ghost of Christmas Present and really assess how far this system has taken us. Until then.