Have Fiat Money, Will Tyrannize

have fiat money will tyrannize by George Ford Smith. My fellow Americans, ask not what your country

can do for you, ask instead what your country has been doing to you and is likely to keep doing

to you for as long as it can buy with fiat money the votes of a majority. Gary North in history

revisionism, high priests of Woodrow Wilson's covenant. Gary North article focuses mostly on Woodrow

Wilson's influence on the inaugural addresses of Eisenhower and Kennedy and their meaning in the

world of 2008. As he observed, we have had one long war since 1917 with fed fiat money playing an

indispensable supporting role. Everything the government does cost money and it produces nothing

with which to acquire it. For 2025, it coerced a total of $5.4 trillion from taxpayers and dollar

holders but ended up spending $7 trillion producing a rolling deficit of $1.7 trillion.

The biggest fights have always been over whose ox gets gourd to fund it. Almost no one wonders

whether government as it stands should exist at all. When Wilson decided to impose democracy on the

world, he had the backing of two newly created theft mechanisms that he signed into law in 1913,

the income tax and the central bank. The first extracts wealth directly from those who own it.

The second takes its surreptitiously which, as Copernicus wrote in 1526,

is noticed by only a few very thoughtful people since it does not operate all at once and

add a single blow but gradually overthrows governments and in a hidden, insidious way.

Knowingly or not, Keynes in 1919 expressed a similar thought with his famous one man in a million

declaration. There is no subtler, no sure means of overturning the existing basis of society

than to debauch the currency. The process engages all the hidden forces of economic law

on the side of destruction and does it in a manner which not one man in a million

is able to diagnose. Americans like to think of themselves as sharp, incapable of being hoodwinked.

If they get scammed a second time, they blame themselves for not seeing it.

Fool me twice, shame on me. But most of them have missed the biggest scam of all,

the Federal Reserve System. Of the various reasons for missing it, the biggest one

is the conviction that market economies are vulnerable to harmful forces that only the state

and its central bank can avoid. Experts on the Great Depression, such as former Fed Chair Ben

Bernanke, build their arguments on the grounds that markets sometimes violate the fundamental

law of trade, production buys production, sometimes known as say's law, and needs supervision

and intervention to avoid this problem. When the roof began to fall in August 1929,

they were at a loss as to which intervention to pursue. They could have referred to the depression

of 1921 for guidance when the government watched as the Fed tightened, then eased.

As one economist explained, during this period there was nothing remotely like a fiscal stimulus

package, a tar program or even a QE policy designed to prevent economic collapse.

Deflation, seen as the villain in the 1930s depression, cured the earlier slump because

prices had been inflated. Most people who study economics at state-funded universities

treat the Fed as a necessary institution, not a scam. Their acquired expertise will include the

view that the Fed's Federal Open Market Committee has undertaken the formidable task of determining

interest rates that best promotes full employment and low inflation. The Fed has a superhuman

challenge and if it sometimes fails to please everyone, who could do better, but it goes deeper.

According to a FAQ section posted by the Kansas City Fed, the Fed has long viewed transparency

as a fundamental principle of central banking that supports accountability. If Fed operations

are transparent, most people are blind. The Fed's operations are largely a mystery to most people

and this is to its advantage. How the Fed conducts its mission.

It is commonly said the Fed prints money when it targets a lower Federal funds rate.

While this is true, it shrouds all the plumbing that makes it happen. The Federal funds rate is

the interest commercial banks charge when they lend money to one another for extremely short-term

periods, liberally overnight. It influences other rates such as rates for mortgages, loans,

credit cards and savings. The FOMC meets at least eight times a year to decide what to do about

the current Federal funds rate. Their discussions are augmented by the beige book report of conditions

in the 12 reserve districts. Lowering the rate means the Fed will print more money in its convoluted

manner to get the consumer price increases it wants. If it decides that prices are running too

high, it will pull money out of the economy by selling some of its securities. This is how it

attempts to lower or raise the Federal funds rate. Influencing the Federal funds rate is the

interest the Fed pays on the funds that banks hold as reserve balances at their Federal Reserve Bank,

which is the interest on reserves balances rate. If banks make more keeping their reserves

than lending them to other banks, the reason is likely a high IORB. Both the Federal funds rate

and the IORB rate are considered important tools for manipulating market prices.

Actual market prices sometimes defy Fed intentions to raise them as seen by the Moore's law

effects on computer technology. Fortunately for consumers, innovation can outpace monetary

debasement in specific sectors. The arsonist is seen as a fire fighter.

The Fed sets as a target a 2% inflation rate. It defines inflation as the rate at which the price

of goods and services increases over time. In other words, its job is to increase prices.

Price increases, not the Fed actions that increase them, are the measure of inflation.

And while many judge the results by the consumer price index, the Fed relies on the personal

consumption index, presumably because it covers more consumer spending than the CPI.

Please note, the Fed is not perceiving inflation and reacting to it. It is instead pursuing

inflation as a goal, as stated in its mandate. Quoting Chairman Powell, in conducting monetary

policy, we will remain highly focused on fostering a strong labor market as possible for the benefit

of all Americans. And we will steadfastly seek to achieve a 2% inflation rate over time.

It is pursuing, in other words, a steady 2% depreciation in the purchasing power of the dollar.

The Fed has been exceptional in this regard. Since my daughters were born in 1982,

consumer prices have risen roughly 235%. Its policy bias pushes people to spend rather than save,

even if it means they go into debt, savers get punished. As do people living on fixed incomes,

since savings are the pool from which investment draws, entrepreneurs are punished too. Yet

investment is the springboard of rising productivity and higher living standards. It sounds like a predatory

computer game, but its Fed policy. Inflation provides the wealth transfer. The interest rate juggling

is how it's accomplished. Changing definition. As discussed on the origin and evolution of the word

inflation, by Michael F. Bryan, published by the Cleveland Fed, inflation once had an entirely

different meaning. What was once a word that described a monetary cause now describes a price

outcome? This shift in meaning has complicated the position of anti-inflation advocates.

As a condition of the money stock and inflating currency has but one origin, the central bank,

and one solution, a less expansive money growth rate. But as a condition of the price level,

which may have originated from a variety of things, including a depreciating dollar, rising labor

costs, bad weather, or a number of factors other than too much money, the solution to and the

prudence of eliminating inflation is much less clear. Confusion accelerated after the publication

of Keynes's general theory in 1936. In addition to separating the price level from the money stock,

the Keynesian revolution in economics appears to have separated the word inflation from a condition

of money and redefined it as a description of prices. In this way, inflation became synonymous with

any price increase. The Fed thus escapes the public's scrutiny when prices rise. Conclusion.

If the modern global fiat regime began in 1971 with the Nixon shock and the

stagflation of the 1970s, it deserves applause. It was not an instant disaster. Fiat money as a

politician's best friend because it creates an invisible tax through the institutionalized depreciation

of currency. We shouldn't expect them to part with it, especially as their perpetual interest in war

demands ever greater funding. For more content like this, visit meises.org.