Human Action Principles

March 19th, 1995

Lecture Number Sixteen


I’m going to talk now about something that came up at the first session. It’s been on your mind. The problem is one of pollution, and in particular bad idea number 12. If the government does not maintain slavery, the natural resources will be squandered and land will be rendered uninhabitable by pollution.

Well, how do we deal with this one? If you think the problem of pollution is a serious one, you’re right. The potential for a pollution catastrophe is so great it threatens to destroy our entire species. Is it that bad? Yes, it is that bad. The source of this threat, however, is not industrial pollution. It is the regressive domino effects of political and bureaucratic pollution. The politicians and their bureaucratic agents possess the means to unleash upon mankind levels of pollution from which we may never recover.

These political and bureaucratic bosses have developed the three most dangerous and deadly technologies designed to kill through pollution known to man. The first technology you know about. That was a question I was going to pose to you. The first technology, threat number one, is the threat of nuclear warfare. If the politicians push the buttons that will launch their nuclear weapons, within just a few hours most of our planet can be rendered uninhabitable with nuclear contamination and pollution from which there will be no escape. Is this true? Is there any doubt in your mind? Okay. That’s pollution threat number one. If that was the only one, that’s big enough, isn’t it?

Pollution threat number two, you know about it, government-caused biological warfare. If the politicians launch their bacteriological weapons, this will unleash a viral and bacterial contamination and pollution that can overwhelm our entire species within weeks. There may be no recovery. Is it that serious? Yes. Is it a real threat? Yes. Am I exaggerating? No. That by itself, if that were the only thing wrong, could be a tremendous potential catastrophe, but there’s more.

The third pollution threat, number three pollution threat, is government-caused chemical warfare. If the politicians launch their chemical weapons, the resulting magnitude of chemical contamination and pollution will, like the others, be lethal for mankind. But there’s more.

Pollution threat number four, government-caused conventional warfare. Look at all the pollution that’s caused by conventional war. It dwarfs anything ever unleashed by industrial pollution. And much of the industrial pollution is military-caused industrial pollution anyhow. Look at the disasters in the Soviet Union, all those disasters. Most of them were the regressive domino effects of military experiments and military production that caused all kinds of nightmares in pollution. Am I right? Do you know something about the former Soviet Union? More about that is coming out now because it’s no longer a totally closed society. So, we’re finding out a little bit about what’s going on. We’re finding out about the inept political and bureaucratic screw-ups that led to the Chernobyl disaster. It was all bureaucratic screwups.

Well, why are all of us confronted with this incredible pollution crisis? This sounds like a broken record, but it’s because educated, intelligent, successful people do not understand the cause of things when the subject is human action. Therefore, they fail to apply the simplex solution to this complex crisis. There’s only one solution, the solution to pollution, continue to diminish the number of bureaucratic bosses and increase the number of consumer bosses. That’s the only thing we have to do. You say that’s all we’ve got to do? That’s it.

It’s a grand simplex solution. Expand the principle of free trade, which means the freedom to buy and sell throughout the world. Once you establish the total unrestricted freedom to buy and sell, every product that comes into the marketplace is a product demanded by whom? Consumer bosses. Producers only produce products for willing consumers. That is very important. Now, what kind of products are these consumers looking for? All of you know. Only those products that meet their most urgent requirements for greater satisfaction.

My dear friends, please take very careful note of this. Where there is free trade and a free market, the consumer bosses are not seeking greater satisfaction through the purchase of their very own nuclear, biological, or chemical weapons of mass pollution. A consumer boss does not want his very own ICBM. What does he want if he doesn’t want an ICBM? How many of you want an ICBM? How many of you wanted an ICBM before you ever heard of me? I don’t want anybody to think I talked you out of wanting an ICBM. What do you want? You want not an ICBM but a GMC. What’s a GMC? A truck. You want an RCA. What’s that? A TV. You don’t want an ICBM. The consumer boss does not want his very own H-bomb. Hey Charlie, in the basement, hey, you got to see this. Boy, look what I got. My own H-bomb. I bought it. It took my life savings, but I got my own H-bomb. Wait until Margaret sees this. Margaret says get that thing out of my house.

Please note, it’s political bosses demanding ICBMs, not consumer bosses. Right? Political bosses demand jet bombers. No consumer boss wants their very own jet bomber or the bombs that go in it, do they? Did I make a point? Did you get the point? Was it too obtuse? In order to end this threat from pollution, we have to obsolete war. In order to obsolete war, we must obsolete the demand among the educated, intelligent, and successful for the conservation of slavery. In the interest of our survival we are forced to abandon slavery. As society evolves from a social system of interventionism to noninterventionism, there will be a consequent evolutionary attenuation of the risk of nuclear, chemical, or biological warfare until the risk approaches zero.

A free market society can ultimately solve the problem if we can ultimately solve the problem of political contamination and pollution. It can also solve the lesser problem of industrial contamination and pollution, which in contrast is a minor problem. Do you see that? Compare one H-bomb going off in Kansas and the resulting pollution with what the worst industrial pollution is. It is no contest, no comparison. Do you see that? Is there any question in your mind? It’s not even close.

Over the years, various studies have been conducted throughout the world to identify the major sources of pollution. These studies show that the various bureaucratic agencies around the world are among the worst contributors to the various kinds of pollution. However, as government interventionism is attenuated, so will these government sources of pollution also be attenuated. Nevertheless, where there is private industry and high production, there can also be the unwanted byproduct known as pollution. This pollution may come in many undesirable forms, including water pollution, soil pollution, air pollution, and noise pollution among others.

In contrast, where there is little industry and little production there may be little pollution. However, the people who live there may be confronted with a larger problem than pollution, and that is what? They may be starving to death. If not faced with starvation, they may be living at the barest subsistence level of poverty. A man who lives with the worst Los Angeles smog is better off than the man who breathes clean air but who has nothing to eat.

I’d like to point out something. Some pollution is an unavoidable derivative of high production. There is no such thing as zero pollution. However, where there is a free market not only will industry flourish, but there will also be both the resources and the desire to attenuate the magnitude of industrial pollutants. The ultimate solution to this problem is to create conditions where it is profitable to minimize pollution and unprofitable to maximize pollution. A free market society will not allow pollution to run rampant simply because in the long run it is unprofitable for everyone.

The history of industrial technology has shown again and again that as technology advances, what was once an industrial waste product and source of pollution can be recovered and converted into a profitable product. Through higher technology you transform an unwanted byproduct and possible pollutant into a salable consumption product or industrial resource. It is done all the time.

In this short seminar, while you may think it’s long it’s relatively short, I don’t have time to give you historical examples of this. In my graduate seminars I have and will continue to discuss this problem of pollution and how in a free society we can deal with the problem effectively. But the main thing we have to do is terminate the four major sources of colossal pollution, and in every case it’s political and bureaucratic interventionism.

I’ll now discuss another one of the 13 bad ideas. A good example of political pollution is landmines. Even today, in Europe, you hear that every now and then somebody steps on a landmine from back in World War II or even World War I and gets themselves blown up. Is that pollution? Do you think that’s land pollution? No consumer boss would ever buy a landmine and plant it in the ground. Only a bureaucratic boss, a political boss has the mentality to demand landmines. And then they tax you to pay for the landmine. If you refuse to pay it, you will be fined, imprisoned, or killed. That’s the system we are indoctrinated to worship and to venerate.

Let’s discuss another one of the 13 bad ideas, bad idea number 7. If the government does not maintain slavery, many elderly citizens will be impoverished. As I’ve said, nature requires you to go after greater satisfaction, but nature does not give you any help on how to get greater satisfaction. Therefore, throughout your entire lifetime you are continually making decisions that you hope will cause you to acquire greater satisfaction. Every day, every hour it’s choice A versus choice B versus choice X, Y, and Z without end. The greater the range of choices available to you, the greater will be your opportunity to gain what you’re after, greater satisfaction.

In a free market society, every individual’s opportunity to make choices will be optimized. In your early years you’ll have to make a choice. Do you want to learn how to read? Yes or no. Your choice. Everyone will have this choice, to be literate or illiterate. When you embrace the opportunity to be literate, you have a new opportunity immediately thrust upon you. And that is what should you read or not read of the 5 to 10 million volumes that are now available to you because you can read? Before that it doesn’t matter because you can’t read any of them.

Since reading is a rather easy skill to master, the next choice, now that you’re literate, is do you want to understand the meaning and significance of the words that are written? Most people who are literate never get to that step. They just don’t get to that step. Ladies and gentlemen, your comprehension of what you read can be no better than the science you apply to make a qualitative analysis of the ideas and doctrines that you read. A quality of understanding can be no greater than your quality to comprehend causality.

Then, when you learn to both read and understand, suddenly a new question is thrust upon you. Do you want to learn how to write? If reading is a relatively easy skill to master, writing is not. Depending upon what you’re writing, it is many times more difficult to write than it is to read. The main reason to learn how to write is usually missed in schools. There should be more focus on writing than reading. In fact, the prime focus should be writing. If you can write well, then you can read in that order. Why is writing so important? What does writing teach you how to do that reading does not? It teaches you how to think through the articulation of language. We think with language composed of words and numbers. Ladies and gentlemen, if your language is inarticulate and imprecise, so will your thinking be inarticulate and imprecise. No exceptions.

Earlier I gave you the rule of articulation. If you can’t articulate it, then you don’t understand it. Most of the illiterate people in the world are inarticulate. Not all, just most. It’s easy to test this. Give them pencil and paper and see what they can articulate on any subject. Pencil and paper. Do it in language without even pencil and paper. Just let them get up and talk. Have them articulate on anything they think they understand. Have them explain it to somebody else.

The main problem in the United States is not that we have 50 million illiterate adults. The larger problem is with the other 50 million, or whatever it is, literate adults who are largely inarticulate. I say take anybody who claims they have knowledge of any subject, put them in a room with a table and chair, give them maybe a typewriter if you want or a computer with nothing in there except the computer software to run the word processor. You can give them a spell checker if you want, paper, magnetic tapes, whatever. And test them on the quality of their articulation on whatever subject they choose. Ask them to discuss the relevance of the Ming dynasty and its impact upon the oriental mindset or whatever it is that they think they understand or think is important. Articulate. Test them on the quality of their articulation. The point is no one can make you learn how to read or write or think. It’s your choice. Millions of people of all ages prove this every day.

Finally, the time arrives for everyone. Do you want to become a productive individual or a perpetual goof-off? In a free market society, everyone will have two choices. One, produce products so you can survive. Two, persuade someone else to give you products and services so you can survive. That’s your choice in a free society. And if you fail at both, you may die of malnutrition while you are young, in which case destitution will not be a problem in your later years. You see how that’s solved? Isn’t that a solution?

But if you decide to be a producer, then for how many years should you be productive? Will you stop producing on your 65th birthday or some other arbitrary age? After you stop producing, how will you survive? In a free society, the most rewarding solution for the greatest number of people will be to follow this advice. Don’t ever stop being productive. All of us like to retire when we are tired, but what if you are not tired? What do you do if you’re 65 and you’re not tired?

Here’s my prediction for the most common approach to retirement in a free society. One, most people will be able to financially retire sooner than today, but most people will continue producing for a longer period of years than they do today. It will be common to find people in their seventies and eighties and nineties who are still high producers. There will be at least three reasons for this.

One, progress in biology will enable more and more people to be mentally and physically strong beyond their seventies and eighties.

Two, a progressive domino effect of a free market society is that production flourishes to the point where the trend is for more and more opportunity for more and more producers. However, today we have spread the work schemes that prevent young people from working before a certain age and prevent older people from working after a certain age. What’s the fallacy here? The Montaigne dogma restated. In order for those between 18 and 65 to gain a job, those under 18 and over 65 must lose a job, a win-lose mentality, a win-lose paradigm. “A” can only profit when “B” suffers a loss. It’s all the same nonsense. The result is coercive legislation that prevents both teenagers and seniors from becoming producers.

Three, in a free society it will be more widely recognized that one of the sources of perpetual youth is perpetual production. I don’t claim to be able to prove this, but I think one reason so many people may die shortly after retirement is their productive goals are gone. I can’t prove that, but it seems to happen a lot. I predict that many people will prefer semi-retirement to total retirement. An individual who is semi-retired can work four hours of a morning shift while someone else works four hours of the afternoon shift. Many can work for four months, vacation for two months, work for four months, complete a two-month project at home, whatever.

If a human being, man or woman, prefers permanent retirement, if he has the means, it’s his choice at any age. If an individual does not have the knowledge to invest for his retirement, he can purchase professional assistance. Many financial institutions will specialize in retirement investment packages to fit each customer’s individual requirements. However, if all of this is taken care of on a voluntary basis, someone surely will ask this question. But what about the fellow who fails to provide for his retirement? Will this question come up? Yes.

If he’s too old or too sick to work and he has no other means of support, he could die of malnutrition. Therefore, to prevent this, it is commonly believed the government must provide a socalled Social Security system. Much has been written about this system both for and against, more than you could ever read in a lifetime. If the goal is security for the retired, then the system of Social Security is a false means. That is, the government system of Social Security is a false means.

From the beginning the system was actuarially unsound, which means the statistical calculations relative to life expectancy were unsound for one thing. To keep the Social Security system afloat the bureaucracy will be forced to pay beneficiaries more and more inflated and confiscated tax dollars. The system is funded with the violent mechanism of government, which robs Peter to pay Paul and robs Paul to pay Peter and robs Peter to pay Peter, Paul to pay Paul. How do you know it’s robbery? Well, robbers use guns and things like that, don’t they? A gunman will always take his cut and he will always claim they are providing an indispensable service. That’s the only difference between the bank robber and the bureaucrat, the bureaucrat claims he’s doing you a great favor. A bank robber is more honest. He doesn’t claim he’s doing a service for anybody. He says well, I’m just doing a bank job so I can get some loot and go to Vegas.

Remember, and it can’t be over stressed, especially to your kids, nature does not provide man with sustenance. Again, the sources of sustenance, are one, produce it, two, beg for it, or three, confiscate it.

One, to produce it means to create products and services that do not exist in nature. This includes trading for other products. It includes the services of raising a family.

Two, to beg for it means to convince a producer to provide you with sustenance. But there are some disadvantages to this approach. The begging will not provide you with a very high standard of living unless you’re really good at it, and some are. More important, you will always acquire greater selfesteem when you produce the products you consume rather than beg for the products that you consume. You always acquire more self-esteem when you produce, rather than when you beg.

Three, to confiscate it means to acquire your sustenance through some form of theft or fraud. In a free society, the opportunity for successful confiscation will be continually attenuated through time. I’ll discuss this in the next lecture.

These trends will be in operation simultaneously in a free society. One, it will become harder and harder to gain sustenance through confiscation and two, it will become easier and easier to gain sustenance through production. When confiscation becomes so very difficult and hard and tough, hardly anybody will try it. That’s what happens in a free society for reasons I’ll explain next lecture.

I want to discuss the subject of retirement security. And let’s give you a scientific conclusion on that. If the goal is the optimization of retirement security for the greatest number, then there is one true means, expansion of a free society and contraction of the interventionist society.

Now let’s look at bad idea number nine. If the government does not maintain slavery, inflation will destroy the value of the currency. Ladies and gentlemen, it would be difficult to find a subject in economics that has been more shrouded in mysticism and superstition than the subject of money. Wherever you find the phenomenon known as currency inflation, you will find something missing. The something that is missing is free trade, and the failure to understand the principle of free trade.

Wherever there is free trade every individual is free to trade whatever products he chooses to trade with whatever willing traders he can find. Believe me, it’s not that difficult. Whatever the traders in a free market decide to use as a medium of exchange is commonly known as money. As all of you know, it is money being traded for products that improves the efficiency of trading. Otherwise trading is limited to barter transactions. If society has only evolved to a primitive level of, let’s say, nomadic tribes, then you can get by with bartering seven good spears for say one good horse. That’s a pretty good trade. Seven pretty good spears for one good horse is a good deal. Don’t you think? I think so.

But with the evolvement of an industrial society money, as a medium of exchange, is an essential component of industrial success. You cannot have barter and an advanced industrial society. It is impossible or nearly impossible. Most people have been led to believe that there is something special about money that sets it apart from everything else. Dear friends, there is nothing special about it at all. It’s just another product. If you know anything about the history of money, you know that money has taken the form of everything from, you name it, seashells to heads of cattle.

Dear friends, it makes no difference in a free society what the people choose for a medium of exchange. If there’s an evolution that goes from the use of seashells as a medium of exchange to pieces of silver as a medium of exchange, that simply means that the traders now prefer pieces of silver over pieces of shell. It doesn’t matter what these traders prefer as money as long as they have the optimum choice to get what they prefer.

There are no serious problems at all with this free trading of money until something else happens, that is somebody comes along and they say we’re putting an end to your free trading and money. We are assuming monopolistic control of the issuance of all money. If any trader attempts to issue money on his own, the money will be confiscated and the issuer of the money will be fined, imprisoned, or killed. Any questions? Good. In fewer words, give us government issuers of money special privilege and give those private issuers of money the gun.

Now, in the United States there is a small minority of individuals who recognize that not only is the dollar an unsound currency, but that the present concept of the dollar is also unsound. They’ve been urging what they call currency reform. Many of these people are promoting a return to the old gold standard with a paper dollar exchangeable for gold. Although I share the concern of these people for the debasement of the national currency, they’ve completely failed to grasp the magnitude of the problem, because the government’s monetary policy is an integral part of its confiscatory policy. You cannot separate one from the other.

Professor F. A. Hayek is a winner of the Nobel Prize in economics and a former student of Professor von Mises. Professor Hayek writes, “With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people. It is not the government’s right to issue money but governments have forced upon the people their exclusive right to do so and forced the people to accept that money at a particular rate.”

Professor Von Mises himself was not at a loss for words on the subject of money, “Government is the only agency that can take a useful commodity like paper, slap some ink on it, and make it totally worthless.”  As you can see, Von Mises had a sense of humor.

I think you will find of interest the statement on government debasement of the currency by the most influential interventionist economist of the 20th century, which would be whom? The most influential would of course be John Maynard Keynes, known as Lord Keynes who was a lord of the realm of Great Britain. Keynes said, “There is no subtler, no surer 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.”  And so, Keynes is saying not one man in a million can correctly identify the cause of the government’s inflationary confiscation. That’s probably about the number that can understand it.

Those well-meaning people who would return to a monetary system of a government imposed goldbacked dollar are among those people who have not correctly diagnosed the problem. Ladies and gentlemen, even in the unlikely event that the government would return to the gold standard, don’t hold your breath, what mechanism within the structure of the government would prevent the confiscation of the people’s wealth through inflation from taking place all over again? Do all of you know the answer? What would prevent this? Nothing.

If the government can pass a law as they did in the 1930s saying the government will no longer honor its obligations to the holders of gold notes even though these gold notes had no expiration dates printed on them, even though these holders of gold notes only accepted them in trade on the assumption that at any time they could turn these notes in for gold at the U.S. treasury, if the government can repudiate its obligations to the holders of notes at any time, if it can repudiate its agreements with the people at any time, then what will prevent the government from going back on its word or from reneging on its promises whenever it is deemed to be politically expedient? What will prevent this? The answer, of course, is nothing. Murphy’s law, if it can happen, it will happen.

I’ll read you the wording on a twenty–dollar gold note that I hold. I wonder did I bring my gold note with me? I think I left that at home, but trust me, I have one. And it says, “This certifies that there have been deposited in the Treasury of the United States of America twenty dollars in gold coin payable to the bearer on demand.”

In the center of this gold note is engraved a picture of one of the ancient elders. President Andrew Jackson. To the left of Jackson in bold uppercase engraved letters it says gold certificate. Now, what is a certificate?

Is it more than a piece of a paper? What is it? What’s a certificate? A certificate guarantees something. What? The truth of something in writing. A certificate guarantees the truth of something in writing. And to attest to the integrity of this gold note it is even signed by the treasurer of the United States, N. O. Woods, and the secretary of the treasury, A. W. Mellon. It’s even dated twice. You can see it says series of 1928 and at the lower right, Washington, D.C. series of 1928.

Now my dictionary says in definition three of certificate, “Law, a statement written and signed, which is by law made evidence of the truth of the facts stated.”  And then in definition four it says, “U.S. a paper gold certificate issued by the federal government for circulation of money equal to and redeemable for gold to a stated value.”  Here’s a photocopy of the one that I own. That’s illegal to do that so don’t tell on me. I think it’s still illegal to photocopy a certificate.

What does all this mean? This certificate that I have here, this is a photocopy, but believe me, I have one. We’ll pretend that’s the real one, which I hold in my hand guarantees the truth of the fact “that there have been deposited in the treasury of the United States of America twenty dollars in gold coin.”

Just like this one here, which is one I also own minted in 1900, and I usually bring it and I hold it up so you can see that I have one.

This note is payable to whom? To the bearer on demand. Well, who is the bearer of this gold certificate? I am the bearer. How do you know? I’m bearing it. Does anyone think in this room that if I go to the Treasury of the United States as the bearer of this gold certificate and demand, just like it says to do, a twenty–dollar gold coin that they will give me the coin? As they say, good luck. When the federal government refuses to honor its guarantee by repudiating its obligation to me and the other holders of these notes, past and present, what is that government action called? What would you call it? It’s breach of contract. Another name for it is fraud. In street language it’s called swindle.

Now, the question was if the government returns to a gold standard, what will prevent the government in the future from dishonoring its word in the future just as it has consistently done in the past? It will only be a question of time before you would get what I call neo-swindle-ism. The idea of returning to a government-imposed gold standard is based upon a more general fallacy that somehow it is possible to limit the power of the government to confiscate from the people. What is not explained to students in school is that the entire United States government was established by our ancient elders a little over 200 years ago. It was set up for the purpose of confiscating the wealth of the people.

Now, if you think this is an exaggeration, that simply means you have not read the Constitution of the United States, at least from a scientific, rational perspective. Most students have never read it at all. How many of you have read the Constitution of the United States in its entirety? Well, half of you. But this is not a random sample of the population. Would you be surprised if half the adults in the United States have read the entire Constitution? Yes, you would be surprised.

When I was in elementary school, one of our assignments was to memorize the preamble of the Constitution, but nobody ever explained to us what it meant. Well, I’ll give you a little clue about that. I’ve already finished a lecture on education, but I’ll give you a little something to think about. In a school what do we do? We memorize things to feed it back to the professor on examination day. And those who do the best job of telling the professor what they want to hear get the best grades. Is that true? It’s true. Well, I’ll tell you something, dear friends, a lot of memory went into those grades we got, right? I did the same thing, stay up the night before the exam memorizing as much as I can. I’ll tell you something, friends. You only have to memorize something when you don’t understand it. Memorization is a substitute for comprehension. Students memorize their way through school.

Of course, when you’re a child, you’re not old enough to understand the Constitution. So, I also admit that if they tried to explain it to you, you probably wouldn’t understand it. There are certain things you can’t understand as a child because you haven’t had enough maturation. No adult can understand it unless the understanding is approached from a scientific perspective. You need a qualitative analysis of doctrines to get it. Now, since there are entire libraries on the subject of constitutional law, again I encourage you to save both your eyes and your valuable time. You could spend the rest of your life reading constitutional law and not begin to cover it.

I’ll read you one single sentence from the Constitution. It is all you need to know. Article 1, Section 8, “The Congress shall have the power to lay and collect taxes, duties, imposts, and excises and to pay the debts and provide for the common defense and general welfare of the United States, but all duties, imposts, and excises shall be uniform throughout the United States.”

Well, Congress it says shall have the power to lay and collect taxes. What is a tax? My dictionary says “a tax is a compulsory payment, usually a percentage levied on income, property value, or sales price for the support of government.” All right. That’s right out of the dictionary. What is a duty? My dictionary says a duty is, “a tax imposed on imports, exports, or manufactured goods.”  All right. What is an impost? My dictionary says “an impost is a tax, especially a duty, on imported goods. ”Finally, what is an excise? My dictionary says “an excise is a tax or duty on the manufacture, sale, or consumption of various commodities within a country.”

Freely translated, dear friends, Article 1, Section 8 authored by the ancient elders says that Congress shall have the power to lay and collect taxes, taxes, taxes, taxes. And so, the ancient elders who authored and signed the Constitution said if you follow these political and bureaucratic rules, then it’s okay for the Congress to confiscate from the people. And so, the Constitution establishes the supreme rules of political and bureaucratic confiscation.

These rules of confiscation have set forth the four universal political issues, which I’ve already given you. One, which politician should gain control of a government’s guns? Two, at which citizens should the politicians aim the government’s guns? Three, how much government aggression should the politicians impose against those citizens? And four, who should receive the special privilege and benefit of the confiscation?

The ancient elders said it was okay for you, in secret behind my back, to appoint your favorite gunman to confiscate from me, and if I refuse to give up whatever you have authorized this gunman to confiscate from me, then you further authorize the gunman to use whatever force against me that is necessary to consummate the confiscation which includes over my dead body. Remember, when you appoint one of these congressmen, you have appointed a confiscator. They even pay themselves a portion of these confiscated funds, don’t they? When these congressmen are elected to office, what is the very first official action he takes? Do you know? What’s the first thing he does? The first thing he does is take an oath of allegiance to uphold what? The Constitution of the United States, doesn’t he? He can’t even take office until he takes this oath. Is this true? That’s true of even the president. Freely translated, what has he done? He has sworn to uphold the supreme rules of confiscation from the people and to maintain the four universal political issues.

When I was in my twenties, I was commissioned by the President of the United States to be an officer in the armed forces, at which time I took such an oath of allegiance to uphold the Constitution. But at the time I did not clearly understand the Constitution from a scientific perspective and I most certainly did not understand what the swearing of an oath to uphold this meant.

The word allegiance is in your vocabulary. What does it mean? Webster’s New Collegiate Dictionary says “allegiance is the obligation of a feudal vassal, a serf in other words, to his liege lord, the fidelity, the duty owed by a subject or citizen to his sovereign or government.” Now, the word allegiance comes from the Middle English liege. A liege was a feudal serf bound to feudal service and allegiance to feudalism, which was allegiance to slavery. When I gave my oath of allegiance to uphold the rules of confiscation set forth by the Constitution, I was giving my allegiance, not unlike the feudal slave, to uphold the rules that impose slavery.

One of the perplexing problems confronting the ancient elders in authoring the Constitution was how to delimit, that is fix the limits of the power of a government agent to confiscate from the people. One of these attempts is called the Bill of Rights or the first 10 amendments to the Constitution. Today almost every educated intelligent adult who has thought about the problem is an advocate of limited government. In other words, they do not believe that the government agent should have unlimited power to confiscate from the people. Every educated person believes this.

So, if you are an advocate of limited government, before you congratulate yourself, I would like to point out, so is almost everyone else. The fundamental fallacy associated with the concept of limited government, limited confiscation, is the belief you can limit the confiscation by setting up rules of confiscation. But at the very instant you set up a constitution that constitutes the rules of confiscation, you set up the four universal political issues.

Dear friends, wherever good men or bad men impose upon mankind the four universal political issues, there will always be regressive domino effects of confiscation generating more confiscation. An inevitable trend will follow that will continue to increase the magnitude of the confiscation and expand the scope of the confiscation. The phenomenon is not unique in the United States since the rules of confiscation were established by the Constitution in 1787 but will apply wherever you attempt to limit the confiscation with rules.

The question is how do you delimit, fix the limits of the power of win–lose government agents to confiscate from the people? How do you do this? What rules of confiscation could ever be established to prevent the confiscation of the people’s wealth through, for example, monetary inflation? Even if we get a gold dollar all over again, what is to prevent neo-swindle-ism? Nothing. There are no such rules. I mean look at this joke. How many have heard that there’s a limit on the national debt? How many of you have heard of this? Now, what do they do when they’re getting ready to exceed the threshold of the limit? What do they always do? They pass another law raising the limit. The only means there is to maintain the integrity of any monetary system is to maintain the integrity of free trade. This means that every product, including money, is allowed to be freely traded by all members of a free society. Of course, someone will raise the question in a free society what would protect the holder of money from being swindled by the issuer of money? The only true protection you could have would be the protection that a free society offers. Where there is a free society you also have the optimization of free market competition. This means that no private issuer of money will have an exclusive monopoly on its issuance. Each trader in the marketplace can choose whatever money he wishes to exchange for his product or service as optimization of choice is the most effective protection available from any potential fraud.

If an entrepreneur wants to mint a million one-ounce gold coins of a guaranteed weight and fineness and sell them to traders, traders may find them to be a useful medium of exchange. The same entrepreneur may choose to keep another million ounces of gold on deposit in the company vault. And then he issues one million notes each that say pay to the bearer of this note on demand at any company office, one troy ounce of gold, .999 fine. That’s the purity. The value of the gold is relative to the weight and the purity. He may also sell these notes to traders who may find them to be a useful medium of exchange.

But let’s assume the worst case, you go to the company office bearing a company note for one ounce of gold, and just like the note says to do, you as the bearer of the note demand one ounce of .999 gold in exchange for the note. And for whatever reason they refuse to give you the gold. Could this happen? Yes, there’s no law of nature to prevent it. Well, let’s assume there are a million other people who are holders of notes just like your note. When they learn that the company refused to give you your ounce of gold, will this get their attention? What do you think? You bet. And unless these million note holders can quickly determine that the whole thing was a mistake, there will likely be a million note holders demanding the company to exchange their notes for gold, all with the hope they can somehow get their notes exchanged for gold before it’s too late if it isn’t already too late because by the time you hear about it, it could be too late, right. There was a run in the bank and the others got there first.

Now let’s look at the possible explanations for what happened. We’ll cover all the bases of the possible scenario. One, the whole thing was a mistake. You get your gold the next morning with a profuse apology from the management for their mistake. Could this be one outcome? Is this possible? Or two, through mismanagement the company’s resources are depleted, therefore, they could not meet the note bearer’s demand for gold. However, the company was insured. Thus, you and the other note holders get their gold. Could this be another possible outcome? Yes. Three, through intentional fraud the company refused to honor the notes, but they are ultimately honored since the notes were insured against loss. Could that be another possible outcome? Yes. Four, the company is not insured and some or all of the note holders cannot exchange their notes for gold. Could this be an outcome? Yes.

The first thing you have to recognize is that politicians never make good on their promises, not in the long run certainly. Another point we have to understand is that money can only have two sources. One, it evolves in the marketplace and is a derivative of mutually voluntary market exchanges or, two, it’s a derivative of bureaucratic interventionism that is imposed upon the people at gunpoint. That covers all possibilities.

Wherever the government imposes a monopoly on the issuance of money it is only a question of time before the government takes advantage of its monopoly by intentionally inflating the currency. The government forces the people to accept its monopoly money as a payment for all debts. On any federal reserve note you can read it yourself, “This note is legal tender for all debts, public and private.”  What does that mean? If you lend $10,000 to the government or some private party and 20 years later they pay you back with dollars that are only worth one-tenth the market value of what they were when you originally made the loan, then that’s tough. You lose, buster. The government will tell you you’ve been legally paid. Any question? Good. Is that what they will do? Yes. All that’s really happened is you have been legally swindled. Perhaps the term swindled, maybe that’s unfair. I don’t want to be unfair.

When the government resorts to currency inflation, it only does so to pay for debts it has incurred that it cannot pay through the usual tax confiscation method. When the government spends more than it can collect through taxation, it makes up the difference by paying for the deficits through the debasement of the currency which causes the inflation. The taxes are just one more form of government confiscation, and inflation is simply another form of taxation that the government resorts to. When they can’t get it through direct taxation, they get it through indirect taxation called inflation. All inflation is indirect tax imposed upon you at gunpoint while the government continues to confiscate from the people. This should come as no surprise since the government is only doing what it was designed to do in the first place.

Win–lose government is designed to be a mechanism of violent confiscation of choice. If it’s not confiscation of the people’s choice, then it’s not win–lose government, it’s win–win government. Well now, Mr. Snelson, you haven’t said anything about the possibility of win–win government. No, I haven’t, but I will. There’s only one alternative to the government’s destruction of the value of imposed monopolistic currencies. The principle of free trade and free exchange must be applied to all products, including the issuance of money. In a free society, even if there is a company that issues notes or IOUs that it does not honor through intention or unintention, if these notes circulate as a medium of exchange, it will not be the only medium of exchange. No company will have the monopoly to issue all of the money to the exclusion of anyone else who wants to do it.

Furthermore, a company cannot just arbitrarily create money in the first place. In order for something to become money, they must first acquire a track record of market acceptance as a medium of exchange. If traders in the market begin to suspect that there is a circulating currency that is not sound, they will demand that it be discounted before they will accept it in payment. And if they have no confidence in it at all, they will reject it altogether. The buyer’s ultimate protection is what? The ultimate protection of every buyer is you don’t have to buy. If he fears paper currency and notes, he can accept payment in gold, silver, or other medium of value.

The recognition that government control of the money supply and its monopolistic status is a concept alien to freedom is a relatively recent discovery. We’ve only known about this recently. It is a conclusion that we had to evolve through experience. It’s taken us thousands of years to figure this out.

Now, let’s talk briefly about the free market society and money and then we’re going to be finished for the day here. It’s the last topic I want to quickly discuss today. In the 1940s a man named E.C. Riegel writes in his work Flight from Inflation, the Monetary Alternative, he says, “Since no social order has heretofore been predicated upon the principle of a nonpolitical monetary system, it follows that its promulgation will require a revolution in thought and action.” He continues, “We need not educate the people on money or economics. We need not tear down the present political monetary system. No governmental or political action is called for if we will realize that only private enterprise can organize and conduct a true monetary system, one that will be stable and sound and inflation proof. We need but set it up and the people will not be slow to secede from the false and join the true.”

Of course, that brings to mind, well, who will set it up and so forth. In the case of money you have a classic example of government interventionism preempting private initiatives to solve the problem. Remember Sparks’ principle. I’ll give it to you again. It’s not until an activity has been freed from monopoly that creative thought comes into play.

One of the great enhancements of the international benefits of free trade will arrive, my friends, when people in different nations, catch this, can trade with one another using the same money system. Since it will not be a money system imposed upon them at the point of a gun, they will only use it as a medium of exchange because they can see the many benefits to be gained. It’s important to recognize, as E.C. Riegel pointed out, in order for the people to make use of a nonpolitical money system, they do not have to understand the technology of it. They do not have to understand the wizardry of the government’s monopolistic money system that Keynes claims is so subtle not one in a million gets it. The people only have to understand one thing, product A is superior to product B. This will require neither special education nor special intelligence.

Furthermore, to establish a non-political money alternative will not require any special fanfare. In order to implement what I call a significant chunk of freedom it will not be necessary to make a lot of noise. In contrast, the politicians, as you know, are good at making a lot of noise. They do capture most of the headlines, don’t they? Read the first 10 pages of every daily newspaper and it’s almost exclusively devoted to what the politicians do.

Mark Twain said it better than anybody. He said “noise proves nothing. Often a hen who has merely laid an egg cackles as if she’s laid an asteroid.” Only Mark Twain can say it so well. The great and significant achievements in history, my friends, hardly ever make noise. Their introduction is usually low-key. The technologist Reginald Fessenden, gave the world the first radio broadcast of voice. He achieved a revolution in communication on December 24th, 1906 with the world’s first radio broadcast of voice and music. Did he change the world in a dramatic way? You bet. But he made so little noise in doing it most of you have never heard of him. George Eastman achieved a revolution in photography in 1888 by converting a wagon full of photographic plates and chemicals and equipment into a mere handheld Kodak box camera. Was this a revolution in photography? You bet. Most people today have no knowledge of what George Eastman did. In fact, a great many of the people who are professional photographers, if you give them a little quiz on what did George Eastman contribute to your profession, most of them flunk. What did anybody contribute to your profession? Most people flunk by the numbers. They don’t have a clue as to what’s going on. Even in the area where they earn their own living they don’t know what’s going on or where it came from.

When a non-political money system is financially introduced in the marketplace, that event probably won’t make much noise. It won’t make hardly any noise at all, but it will put in place a major chunk of freedom. A free society must evolve chunk by chunk. There can be no revolution from societal slavery. One day it is a chunk of societal freedom, the next day freedom is an evolutionary goal.

One of the essential missing links or connections to the achievement of freedom will be a non-political money system. It is a necessary and essential prerequisite to the ultimate obsolescence of war. It is that important. If we cannot have a free money system, we will never obsolete war. We will never do it.

The monopoly of money is an integral part of a mechanism of confiscation, the political monopoly of money. This means we are forced to extend the principle of free trade to include money as we include every exchange. The preservation of the integrity of free trade will render war obsolete. It is impossible to abolish war by political decree or to outlaw war by political law. But we can obsolete war and we do not have to make a lot of noise doing it in the process. Nevertheless, if we obsolete war quietly, the impact will be large.


© Sustainable Civilization Institute 2010