This article was originally published by George Ford Smith at The Mises Institute.
“Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators, and beneficiaries from those of a professional-criminal class.” —Albert Jay Nock, Our Enemy, the State
“There is no such thing as ‘democracy’ that is not controlled to a large degree (or completely) by special-interest politics, and there never has been in the history of the world.”—Thomas J. DiLorenzo, “America’s Temple to Political Plunder”
“. . . virtue never has been as respectable as money.”—Mark Twain, The Complete Works of Mark Twain
Power and money heavily influence our lives. Everyone knows this, and most deplore it. Why has it always been true?
Pick your favorite outrage. The Epstein saga? The corruption of national elections? High taxes? The persistence of war? Depending on what mental resources you bring to the problem, and the problem itself, you might take aim at certain individuals within the government, with the object of keeping (or removing) your targets from the levers of power. You might think the CDC, FDA, or Federal Reserve is corrupt throughout, without rejecting the idea of the regulatory institution itself. Toss the bathwater, but keep the baby. Once power is grabbed, never let it go, unless it’s to make way for something more invasive.
A brilliant 2022 article about the Federal Reserve and its effort to tame price inflation criticizes the Fed for tinkering with a problem that requires a Paul Volcker approach. The article is on target as far as it goes, but it makes no mention of the Fed’s character as a legal counterfeiter, as a creator of money out of nothing to benefit the well-connected, yet it is absolutely certain the author is well aware of this fact.
Along with pushing for Paul Volcker’s famous attack, why not suggest a Ron Paul approach too? Freedom and prosperity were at a historical peak when his principles prevailed in the late 19th century. Abolish the Open Market Committee for starters. Then audit the Fed and repeal the 1913 act that birthed it. Criminalize fractional reserve banking because it’s a crime (embezzlement). So what if our corrupt overlords of the media, academe, and government would never go along with it? Austrian economics doesn’t suffer from over-exposure.
People outside the Rothbardian universe need to hear someone tell it like it is. Truth is not a popularity contest. Courage is best exemplified as one against the many.
When I ask people at random what they know about the Federal Reserve, the answer is usually some version of “The what?” If I say it’s an agency in charge of the country’s money supply, a few of them will mistake it for the Treasury, but most don’t care. If I add that it funds a significant share of the government’s wars, the responses I get, if any, are something like, “Well, someone has to pay for them.” If I add that it devalues the money in their pocket, some lose all interest in being polite.
There are a few (very few) who recall their government schooling and reply, “Wait a minute—wasn’t the Fed created to put an end to the panics of long ago?” When I ask them if they think that was a good idea, they wander in no-man’s land. “Well, the government had to do something, right? It might not be perfect, but the economy was at risk. I guess we’re learning by experience.”
Banking and money doesn’t interest the general public, even if we tell them they’re getting shafted. Even if we make a case that we would have had a far better world if the Fed had never existed. Even if I stress Vera Smith’s point in her dissertation, The Rationale of Central Banking and the Free Banking Alternative, “A central bank is not a natural product of banking development. It is imposed from outside or comes into being as the result of Government favours.”
Imposed by whom? And who benefits? Not dollar users. The Fed is a one-two punch—banking and government—and the rest of the population is their opponent. Why isn’t this widely understood?
David Stockman, in his bestselling The Great Deformation, justifiably excoriates the Fed for all kinds of sins but has a soft spot for its original charter. What was once a good idea has since become an instrument of exploitation and destruction.
Many limited-government libertarians reason the same way: We once had a government we could live with that respected our rights, but it has since grown into a monster. Their goal is to trim it down but keep the very part that allowed it to grow without restraint. They go by the name libertarians.
As with ordinary weeds, without getting rid of the root, the problems will only grow back again. Mises’s Human Action reflects the axiom upon which economic science is founded: “[Man] is not only homo sapiens, but no less homo agens.” The profession’s fascination with equations and statistics obscures this principle and sends it into a never-never land of forecasting.
In the US, we occasionally have had people in positions of power who were, to a large degree, honorable, such as Grover Cleveland. No president vetoed more bills than Cleveland, before or since, including his controversial veto of the Texas Seed Bill of 1887. He thus took a principled and courageous stand against government expansion. But such is the nature of the state that, as Nock writes, “the machine they are running will run on rails which are laid only one way, which is from crime to crime.”
In politics, the root is the state monopoly of violence, along with a duped citizenry. Eliminate that, and we have arrived, not necessarily at anarchy in the sense of chaos, but given the known forces of prosperity, more likely at free market governance, where security becomes another competitive service.
Government’s criminal nature is hiding in plain sight. You need to ask yourself if it’s incidental or foundational, then be prepared to explain why.
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