williambanzai7's picture




By: Michael O'Malley, George Mason University

I’ve always liked this image, an illustration done by political cartoonist Thomas Nast for a book called Robinson Crusoe’s Money, written by David A. Wells in 1876. The cartoon captures an important transition in American culture, a new way of thinking about exchange and money.

Americans had used paper money to finance the Civil War—the government simply printed money and insisted that you had to take it in payment. It was “legal tender” for all debts. For Lincoln and his allies, it was better than raising taxes, but for more conservative Americans paper money was an immoral fraud, an act of wishful thinking. “Gold Bugs” wanted to burn all the paper greenbacks and return to gold as money.

Nast captioned the cartoon “Milk Tickets for Babies, in Place of Milk,” and as you can see it’s a powerful critique of the idea of paper money. “This is milk by act of Con. [gress]” “This is not a rag baby but a real baby, by act of congress.” Nast often referred to paper money as “the Rag Baby,” a valueless fantasy, and in this cartoon he wants to attack the whole idea of symbols that “stand for” something else. He’s being a “Gold Bug.”

But it’s a very backward looking, reactionary cartoon. “This is a cow, by act of the artist.” Well, it would certainly be possible that if an artist painted a really fine cow, the painted cow would be worth more than the real cow. And in the commodities markets of New York and Chicago, traders regularly bought and sold beef and pork “futures”—not actual existing cows, but paper representations of cows, bets on what cows would be worth in the future. The buyers and sellers would never see the actual cows, and in fact in the futures market the actual cows did not yet exist; they were just paper.

Similarly, in the marketplace a piece of paper, a deed, can represent a house and lot, can “be” a house and lot perfectly well. Anyone with money could buy a house without ever even seeing the house—the paper, the deed, would to all intent and purposes “be” the house.

The cartoon suggests how the American economy was becoming more “virtual” in the Gilded Age, and how uncomfortable that made people feel. In the cartoon Nast imagines back to the world of barter, a world where a bushel of apples was a physical bushel of apples you traded for a real sack of wheat, not the world where a bushel of apples was a paper symbol traded by strangers who gave you other paper symbols in return. He’s upset about the way the sign, the symbol, seems to be confused with the thing it symbolizes.

But the economy of his day was moving more and more towards the virtual, and today most people have no idea at all what money “really is.” We use it every day, we use credit cards, and there is no “real money,” just blips of data.

The cartoon is a powerful example of how wrenching economic transformation can be. Nast is deploring a world where nothing has any stability, where anything can be anything. It’s a lot like the world we live in today.



I must confess that until relatively recently (circa 2008), I never gave too much consideration to the pros and cons of fiat currency. I might have even included fiat money among the great technical advances of modern civilization.

Now, however, I have come full circle. It is not quite the uneasiness with "virtuality" expressed by Nast and the "goldbugs". It is the realization that the system is inherently corrupt by its nature.

Just like it is impossible to expect markets to self regulate fraud. It is too tall an order to expect a fiat based monetary system controlled by the privileged class and their bankster/money changers, to exercise any self restraint. It simply is not in their nature.

In the end the result is another form of high falutin confidence game. A PhD shell game couched in the kind of bombastically smooth oratory exemplified by Bernanke's speech yesterday.

I read that speech several times and was vexed.  Is it so easy to get shilled into the trap of allowing seemingly elegent verbiage to logically imply an outrageous conclusion, even when the facts as you know them are screaming to the contrary.

Helloooooooo, everything is not A.O.K. and the situation is not improving! Helloooooo, the bailouts are not being implemented at zero cost to taxpayers! Helloooo banks are covering their asses not financing a recovery. Helloooooo, pumping shitloads of money into a finite economy results in price increases!

The central banking midgets who manufacture this PhD horse shit are diabolical.  There is no other way to put it. Either they truly drink and believe their own kool aid or they are skillful liars and thieves of the nobeliest Goebellian order.

It reminded me of yet another diabolical American intellect who to some, looked perfectly reasonable on paper...




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Sathington Willougby's picture

Collusion between criminals nets you a cartel and add politics you get law ordained crime syndicates.

Yen Cross's picture

 i'M LONG REAL ESTATE.  Bla Bla I know.

williambanzai7's picture

At least it's not your Weiner.

CompassionateFascist's picture

WB7 is great...but Nast is greater still. Even here there is evidence of a downward spiral...

williambanzai7's picture

I have adopted Nast as one of my role models along with Jimi Hendrix, Bruce Lee and Alfred E Neuman.

Trifecta Man's picture

Now this shows you have your ACT together.  Now you are cookin'.

williambanzai7's picture

I try to monitor all frequencies ;-)

Aristarchan's picture

Most of WB's cooking is done by Geishas. They know what hits the spot with him.

Aristarchan's picture

Ted was a little pedantic when it came to building bombs.

williambanzai7's picture

It's kind of bizarre that his shack is now housed in a museum. How many people get to have their shack in a museum ;-)

Aristarchan's picture

Not many...which is also evidence of how the bad infects our society and how even evil deeds can make you an anti-hero of sorts. Ted K. was a Luddite....a technophobic Metropolisian who even spurned technolgy in the fabrication of his mail bombs....which established an unmistakable MO for him that nailed him to the wall (after his brother turned him in). His manifesto was a voluminous hodgepodge of PhD nonsense. What him and a Bin laden had in common was the warped idea that a society that did not conform to their own visions of what it should be, should be destroyed. The Una-Bomber was a little more selective in his targets, since he thought the  publishing of his manifesto would sway the common man to his thinking. Bin laden knew better...he thought we all should die. It is just a matter of degrees of the same psychosis.

StychoKiller's picture

When technology advances(?) to the point where people can design their own (cyborg?) children, I think you'll agree that Kazcynski was right.

williambanzai7's picture

I already agree with his basic premise. I disagree with his violent tactics.

williambanzai7's picture

Yes, and soon we will see Bin Ladens lair in a museum next to Bernankes.

Aristarchan's picture

The Paks say they are going to demolish it...but I doubt it. Five years from now, American tourists with fanny packs and digital cameras will be thronging through it, snapping pictures of fake blood-stains (painted on the floor by Pakistani Tourist Administration), and watching Bin Laden's old TV showing him watching himself. Everything comes full-circle.

Raymond K Hassel's picture

William, this is perhaps your best post ever; and I say that as one who considers you the best contributor on ZH.  It deeply resonates, moreso than usual.  Those gut feelings that started to creep up in late '08, and then finding out none of it was really new, and then trying to figure out how you never even thought of it before - you captured it.  Your work is priceless, and appreciated.  Thanks   

williambanzai7's picture

Tnx Raymond

Actually it began with me in 2007. I even bought Greespans book thinking WTF is going on here. That is when I started asking myself what does the Fed really do?

I can't stand it when I see something that I don't understand. I immediately hit the books.

I realized with Greespan how difficult it is to haul these people to the carpet.

Then the market blew up.

Aristarchan's picture

And then....Jamie Dimon became an American hero....go figure.

williambanzai7's picture

I have had all of Jamie Dimon I can take. He is a schlemiel just like the rest of them.

Freddie's picture

Humpty Dumpty looks like that POS, lib Dem, ex-Goldman Corzine.

Ted Kazinski (sp?) is smarter than Bernake and slightly less of a terrorist.

williambanzai7's picture

One of his Michigan professors said only 10 or 12 people in the country could fully appreciate his dissertation.

Element's picture

Una-Printer? ... anti Industrial society agenda ... yup ... it all makes sense now ...

williambanzai7's picture

Yes, the universality of the PhD mind.

Liquid Courage's picture

Howcome someone as intelligent as you are does not know the meaning of the phrase "beg the question"?

Begging the question (or petitio principii, "assuming the initial point") is a type of logical fallacy in which the proposition to be proven is assumed implicitly or explicitly in the premise.


The "dumbing down", particularly as it applies to the well-worn logical fallacies employed by "them", needs to be resisted wherever it's encountered, so I make no apologies for my apparent pedantry.

GottaBKiddn's picture


Very well, I apologize for masquerading my conclusion as a proposition.

So should you, for your use of the ill-chosen "Howcome".

If I may say so.



Aristarchan's picture

O, tis a precious apothegmaticall Pedant, who will finde matter inough to dilate a whole daye of the first inuention of Fy, fa, fum".

- Thomas Nashe

GottaBKiddn's picture


We all take slightly different roads to get to where we happen to be, and yet the convergence of paths, like a waterhole, comes here.

One thing that frustrates me is how long people see something that they know is diabolical, and yet almost refuse to believe that it is accomplished purposefully. If we see a bank robber with a bag of money, we wouldn't say that he just happened to have a bag of money, we'd say he stole it. But when a Ph.D lies outright about robbing the bank, we say that it is maybe just a misunderstanding that the smart people will eventually work out for the benefit of all.

The media whores, politicians, and professors are just the same, they're lying.



williambanzai7's picture

It is very difficult to get the man on the street to understand what is happening.

We came close in 2008, but the Obama feint neutralized the threat.

Next time...

Aristarchan's picture

Right into the White House, of course. Can I get a dinner invite? I promise not to slobber much.

falak pema's picture

Do you remember that Peter Sellers movie...Being There?....

Henry Chinaski's picture

I love this blog and everyone in it. Pretty much.

Yes I have been drinking.

williambanzai7's picture

Give me another triple shot of that stuff.

BlackholeDivestment's picture

I love you too Chinaski, now put down the milk bottle slowly and back away.

LOL!!!'s so twisred and sick at this point, you must laugh. It's a freaky Kaiju Beach Party.

P.S. I love the whole Masonic ''A'' on the poster. People forget about things like the ''Anti-Mason Party'' and Secretary of State William Seward etc... If I recall, you will not easily find Lincoln's Second Enagural picture, Booth is in the upper right hand corner of the picture and the four conspirators that were hung are right under the podium.

Cruzan Stomp Revival's picture

Facinating insights by O'Malley on simulacrum in modern societies and how disorienting it can be. It does of course beg the question: just how far afield can the simulacrum get before people recoil from it? IMO, we are at the very limits of abstraction.

99.99% of folks don't think of this; they simply accept -- without hesitation-- abstract things in everyday life as if it were the article itself. ZHers don't, which makes us a very odd bunch.

Virtual stock certificates, electrons representing dollars on a server for your bank account, credit cards, GLD, SLV, CDOs, unbacked paper money in your wallet and on and on. I've backed away from this world, and maybe I didn't have to, but I'd sure hate to beat the crowd to the fire exits when/if they agree with me. 

williambanzai7's picture

Think about what having the ability to corrupt digital storage means as a form of weaponry. How far have they managed to get in designing such weapons? Who is they?

It's in the news practically every day.

Aristarchan's picture

We are entering a new age of data warfare. Nobody knows who is waging it. It may be countries, institutions, individuals, and groups of individuals with an aim nobody is sure of. And, it may well be all of the above. And, it is not just digital storage, It is corruption of OS interfaces, and likely, OS's themselves. And some of it may not be ideological or based on national security issues. Some of it may be pure greed. Look at it this way. Your car now has a computer. That computer is operated by thousands of lines of code that is not available to you or a mechanic....only the error outputs are. What is to keep say, a GM, from entering lines of code that causes your vehicle to start having problems after the warranty has run out? What prevents the code form reporting say a valve body failure to a mechanic? nothing but honesty. That valve body, with labor, will cost you $800.00. What, in the end, prevents another car company from hacking into a competitor's sold autos via wi-fi or a cloud, and causing them to fail in warranty? Not much....except car computer security, good you think that is?

How long before it happens to airplanes, trains, power systems?

How long before it happens to foreign nukes? (US nukes are ringed in tightly by digital, analog, physical and many other means of security).

It is the next battlefield...something the Pentagon is well aware of.

williambanzai7's picture

I see in today's news that Citis accounts have been breached.

Aristarchan's picture

Saw that. The existing security methods of almost everyone appears to have been rendered totally ineffective. A friend of mine who works for SAIC tells me they are taking all sensitive data and moving it to isolated, off-line computers...have been for several months. If SAIC is doing it, so is DoD and probably all secure contractors. NSA has always kept sensitive data on an in-house system not connected to the outside, but I bet they are monitoring the firewalls of all other agencies who do tech sharing with them. Something monumental has happened, WB, when it comes to secure systems, and nobody is talking about it much.

chindit13's picture

You possess a wide body of knowledge, a seemingly infinitely curious mind, and a wealth of life experience not so common on this site.  I always stop at your comments, and am always glad for having done so.  Should you at some future date decide to more widely share your thoughts, whether on this site as a contributor or elsewhere, I'll be a happy and regular reader.

falak pema's picture

and its animated with "three stooges on a wild goose chase" humor;


As for the upcoming battle of Internet control, cloud computing hold, and IP repression...we are in for a world information control what's new in that...Look at Rupert Murdoch and Pravda...

Liquid Courage's picture

Keynes purported that the judicious, enlightened application of monetary policy could achieve the miracle of "turning stones to bread".

Ever wonder where he got that idea?

Luke 4

   1And Jesus being full of the Holy Ghost returned from Jordan, and was led by the Spirit into the wilderness,

   2Being forty days tempted of the devil. And in those days he did eat nothing: and when they were ended, he afterward hungered.

   3And the devil said unto him, If thou be the Son of God, command this stone that it be made bread.

   4And Jesus answered him, saying, It is written, That man shall not live by bread alone, but by every word of God.


Thanks, Maynard.

blindman's picture

and this too.
Saturday June 4 3:00pm
1 hour
Public Affairs
Get Up; Stand Up with Dr. Bruce Levine. Are Americans a “Broken People?” What happened to the outrage we displayed in the 1930s and 1960s? Why are people in other nations which are considered far more regressive then the USA – like Egypt – so much more actively involved in the political and economic happenings in their nations? ..