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An Open Challenge to Paul Krugman: Were America’s Founding Fathers Wrong for Advocating Death for QE Measures?
In light of the US Central Bank’s (I refuse to use their
misleading self-anointed US Federal Reserve moniker) most recent grandstanding
policy decision that has been referred to as "QE light" that precedes the inevitable
QE2 launch sometime in the not so distant future, I present an open challenge
to Paul Krugman and all like minded economists, Nobel prize winning or not,
that support the monetary policy of dollar debasement. This will be a
straightforward challenge issued by our Founding Fathers, in particular the
first US Treasury Secretary, Alexander Hamilton, who scripted the US Coinage
Act of 1792. The one question I want to see Mr. Krugman and his supporters
answer is this:
“If monetary debasement can truly create economic recovery,
why did our Founding Fathers establish, in the US Coinage Act of 1792, that any
persons discovered to be deliberately debasing US money ‘shall be guilty of
felony and shall be punished by death’?”
Note that the punishment was not imprisonment, not even hard
labor, but death. Why did our Founding Fathers, who had just gained freedom
from the draconian monetary policies of the British monarch King George through
the American Revolution and the Treaty of Paris in 1783 deem that monetary
stability could not be separated from the conditions of freedom? Why did they
deem the act of monetary debasement so insidious that anyone found guilty of
deliberately debasing US money would not be imprisoned but should be punished
by death? And why is monetary debasement today accepted as the “right thing to
do” and “normalized” by prominent economists like Paul Krugman?
So this is all I ask of you Mr. Krugman - to repudiate
Alexander Hamilton and explain why he was wrong. I don’t want the employment of
deft politician-utilized “block and bridge” techniques that fail to ever address the question, or responses that entail long-winded dissertations on the
relationships between monetary base, monetary supply and monetary velocity that fail to answer the question. Please merely be so kind as to answer the one question inspired by Alexander Hamilton and posed to you above and explain your position.
On August 3, 2010, I posted a 3-part video series in regard
to the Central Banks’ use of ideological subversion to mislead the masses. Step
two of the process of ideological subversion requires the participation of
academics to disseminate deceit if the deceit is to not only be widespread but successful
in taking root in the consciousness of society. The role of academics in
shaping the discourse about the rationality of monetary debasement is critical
to the belief system embraced by young impressionable minds for decades into
the future as once a false belief takes root it is spread from one generation
to the next. In other words, the widespread adoption of the erroneous belief
that monetary debasement is beneficial to the economic health of nations would be
impossible without you, Mr. Krugman. The Bank of Japan is another Central Bank
guilty of executing the act of monetary debasement for decades. And again,
academics that reside both within and outside of Japan ensure that the Japanese
do not understand how monetary stability is inextricably linked to their most sacrosanct
right of freedom.
For those of you reading this that understand why the
enforcement of monetary stability is central to your freedom, and I’m sure
there are many of you, you must realize that you are among the very small
minority of the world’s population that understands this. I have posed this challenge
to Paul Krugman because he has the extremely powerful bully pulpit of the New
York Times, Princeton University and mass media distribution channels to disseminate his opinion, to hundreds of millions, that monetary debasement is of great benefit to recovering
economies.
Today, academics have drawn the focus away from the
immorality of the monetary debasement component of quantitative easing by
refocusing discussions on the useless debate of whether or not QE assists
economic recovery. This type of useless debate only serves as a distraction
tactic to draw attention away from the more paramount issue of whether QE
destroys the wealth of citizens and therefore is an enemy of freedom. So with this in mind, let us look at the
exact language of the US Coinage Act of 1792, scripted by the first US Treasury
Secretary and one of the Republic of America’s founding fathers, Alexander
Hamilton.
Section 12. And be it further enacted, That the
standard for all gold coins of the United States shall be eleven parts
fine to one part alloy; and accordingly that eleven parts fine to one part
alloy; and accordingly that eleven parts in twelve of the entire weight of each
of the said coins shall consist of pure gold, and the remaining one twelfth
part of alloy; and the said alloy shall be composed of silver and copper, in
such proportions not exceeding one half silver as shall be found convenient; to
be regulated by the director of the mint, for the time being, with the
approbation of the President of the United States, until further provision
shall be made by law.
Section 13. And be it further enacted, That the standard for
all silver coins of the United States, shall be one thousand four hundred and
eighty-five parts fine to one hundred and seventy-nine parts alloy; and
accordingly that one thousand four hundred and eighty-five parts in one
thousand six hundred and sixty-four parts of the entire weight of each of the
said coins shall consist of pure silver, and the remaining one hundred and
seventy-nine parts of alloy; which alloy shall be wholly of copper.
Section 14. And be it further enacted, that it shall be
lawful for any person or persons to bring to the said mint gold and silver
bullion in order to their being coined; and that the bullion so brought shall
be there assayed and coined as speedily as may be after the receipt thereof,
and free of expense to the person or persons by whom the same shall have been
brought.
Section 19. And be it further enacted, That if any of the
gold or silver coins which shall be struck or coined at the said mint shall be
debased or made worse as to the proportion of the fine gold or fine silver
therein contained, or shall be of less weight or value than the same out to be
pursuant to the directions of this act, through the default or with the
connivance of any of the officers or persons who shall be employed at the said
mint, for the purpose of profit or gain, or otherwise with a fraudulent intent,
and if any of the said officers or persons shall embezzle any of the metals
which shall at any time be committed to their charge for the purpose of being
coined, or any of the coins which shall be struck or coined at the said mint,
every such officer or person who shall commit any or either of the said
offenses, shall be deemed guilty of felony, and shall suffer death.
On March 20, 2009, in the article “Fiscal Aspects of
Quantitative Easing”, Mr. Paul Krugman wrote:
“The big policy news this week has been the Fed’s decision
to buy $1 trillion of long-term bonds, going beyond the normal policy of buying
only short-term debt. Good move…”
“The Fed is, however, creating a new liability: the monetary
base it creates to buy these bonds. In effect, it’s printing $1 trillion of
money, and using those funds to buy bonds. Is this inflationary? We hope so!
The whole reason for quantitative easing is that normal monetary expansion,
printing money to buy short-term debt, has no traction thanks to near-zero
rates. Gaining some traction — in effect, having some inflationary effect — is
what the policy is all about.”
“I’m not complaining; I think quantitative easing (it’s
really qualitative easing, but I give up on trying to fix the terminology) is
the right way to go.”
One thing is clear, Mr. Krugman. Either those men that are universally accepted to be among the greatest
American patriots of all time were terrorists for desiring the sentence of death for anyone that
destabilized money, OR you are massively wrong. Both of you cannot be right.
Your defense of your position needs to repudiate the very founding fathers of
the REPUBLIC (not the democracy) of America and needs to explain why you are
spreading a diametrically opposing viewpoint to the wishes of America’s
founding fathers.
When prominent academics such as yourself, Mr.Krugman,
support monetary policies that our Founding Fathers believed to be tyrannical,
this supports a misguided and delusional belief system, the mistakes of which
are exponentially multiplied by financial journalists that ensure that
misinformation becomes not myth but part of a new reality that bankers desire. I
cannot recall the hundreds of times have I seen misleading headlines like “Japanese
markets fall sharply in the last month on the back of a strengthening Yen” (or replace "Japanese" with another nationality and "Yen" with another nation's currency).
Such headlines, by nature, imply that a rising Yen is undesirable when in
reality, such policy is enormously beneficial to a nation of savers. Monetary
debasement punishes anyone that saves their money instead of spending it right
away. Financial journalists, unable to comprehend monetary policy accurately
because of academics that spread deceit instead of truth, continuously script
headlines that fall victim to the con game of ideological subversion.
Quantitative easing is a banker-created euphemism for
monetary debasement. Please explain to Alexander Hamilton, Mr. Krugman, why he was so wrong (Author's Update, August 23, 2010: This statement has been amended
here. This statement originally referred to Hamilton as a patriot, but I
have since been rightfully and astutely reminded by many that Hamilton was an agent of the
European Rothschild banking cabal that helped the Rothschilds establish
the First Bank of the United States and the Second Bank of the United
States, both Central Banks - a fact of which I was aware but escaped my
memory momentarily when I wrote this article. However, the argument against monetary debasement and the intricate link between sound money
and a nation's freedom still stands). Billions that have been subjected to and
that have suffered a much lower standard of living as a result of monetary debasement
policies enforced by Central Banks
around the world await your answer. If we are going to emerge from this global
monetary crisis with a sustainable solution that benefits all citizens of the
world as we all desire, you must not remain silent in responding to this
question.
About the author: JS Kim is the Chief Investment Strategist
and Managing Director of SmartKnowledgeU, a fiercely independent
wealth consultancy company that guides investors in the best ways to invest in
gold and silver as well as other strategies to profit from the progression of
this global financial crisis. His Crisis Investment Opportunities newsletter
has significantly beat all major developed stock market indexes since the first
day of its launch, outperforming the Australian ASX 200, the UK FTSE 100 &
the US S&P 500 each by more than 140% to 150%* during the period of June
15, 2007 to August 26, 2010 (*in a tax-deferred account).
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All this love for Hamilton. He wanted a central bank. He wanted to make sure that only the central bank could debase the currency. Yet you hold him up as someone who wanted a strong currency?
Great Britain was printing continentals during the war. They were creating inflation setting us up to never trust the printing press again.
If we don't pay taxes and the government doesn't borrow is the government bankrupt? NO! It has the printing press. It can print as much money that it needs.
The banker who loans the government at interest is the one dependent on our government to have us borrow our own money. Hamilton knew this and kept us on a path of "needing" a central bank. He's the counterfeiter not the US government.
@Theinterest & @tamboo,
You two are absolutely correct and I was wrong to call Hamilton a patriot. I forgot my history for a second. Hamilton did conspire with the Rothschild banking cabal to establish the First Bank of the United States, a central bank which Thomas Jefferson vehemently opposed. Hamilton again was instrumental in helping establish the Second Bank of the United States as well when Congress refused to renew the charter for the First Bank of the United States. Thanks for reminding me of this. Still, my argument that debasement of money causes loss of economic freedom still stands. My argument was that the tenets of the coinage act should apply to central bank monetary policy as well for monetary stability is a basic tenet of individual freedom.
i'll get the ropes, let's start lining the bums up for hanging..
DOW/SP500 daily charts are now bearish.
So the downtrend I first mentioned in early May this year, can now resume.
http://stockmarket618.wordpress.com
Why does Krugman have any credibility?
It is the Volker syndrome. You did something incredible thirty years ago but today you are no longer relevant. The same thing happen to Elliot Ness, he captured Al Capone and basically had an uneventful remaining life.
Go away Krugman.
The TV series was largely an exagerration. He had lots of dirt on Capone, but none of Ness' stuff was what put Capone away.
Poetic (Founding) Justice = death is a coming for 'em, and it won't be of natural causes. I hear hemp rope makes a nice sound when twisting under weight..
"On August 3, 2010, I posted a 3-part video series in regard to the Central Banks’ use of ideological subversion to mislead the masses."
Not that I agree with quantitative easing or other central bank policies but I think it's important to point out blatant propaganda and rhetorical lies. So to you and your article and "ideological subversion" where does it say that the founding father were infallible like the Pope? Their vews on slavery and a variety of other matters including the need for a Senate were clearly in error. So in sum make you own arguements and leave Alexander Hamilton out of it.
The great debate between Hamilton and Jefferson over the purpose of government, which animates American politics to this day, was very much about economic policy. Hamilton was a compulsive statist who wanted to bring the corrupt British mercantilist system – the very system the American Revolution was fought to escape from – to America. He fought fiercely for his program of corporate welfare, protectionist tariffs, public debt, pervasive taxation, and a central bank run by politicians and their appointees out of the nation’s capital."
http://www.lewrockwell.com/dilorenzo/dilorenzo151.html
I wanted to bring up that Hamilton was a scumbag but I figured focusing on the debasement = death was enough at the moment.
Without excellent opposition Jefferson and the Anti-Federalists would not have achieved such great heights for the sake of human freedom.
Didn't some of those people own slaves?
argumentum ad hominem -- invalid
Too late! That happened in 1964 and 1982. Silver removed from coinage, and copper removed after that. Who gets to swing from the gallows for that?
A central point of Keynes' economic theory was that the market rate of interest was too high and that society could prosper even more if interest rates were far lower. His answer was to allow government to create so much money that it drove the market rate down. This is the flip side of the same coin: infinite quantities of money will suppress the market rate of interest to zero. The reasons that liberals (er, "progressives"), support such foolishness is that it plays to their core yearning: their unsustainable plans and programs are only made possible with an infinite supply of money.
While liberals (er, "progressives") delight in scolding the rest of us about "sustainability", their spending habits are always unsustainable. They make the fatal mistake of confusing money with wealth and this leads them to think they can print prosperity. Margaret Thatcher was right: liberals eventually run out of other people's money and when they do, we are stuck with no productive assets and a heavy debt to repay.
The founding fathers were far wiser than liberals (er, "progressives") can ever bring themselves to admitting.
Maybe it was also because Hamilton knew that the key to creating an expansive federal government was its ability to fully control the value of money, so it could expand credit without having to worry that the consequences.
Not to get all your tea-bags in a twist, but qualitative easing and counterfeiting (i.e. debasing) have serious differences. QE is done within the purview of the Federal Government and the chartered Fed. While debasing, as referred to by AH, concerned counterfeiting coins, which was a grave concern for all governments in the 16th through 19th centuries. (If you want to read a good book on counterfeiting, try Newton and the Counterfeiter by Thomas Levenson.)
Yes, I know what you will say, the Fed is in essence counterfeiting. Well, the law sees it differently so quit pissing in the wind with that argument.
The title to your post is very misleading. The founding fathers did not advocate the death penalty for federally sanctioned QE.
I know, this is a nuanced argument and that certain Republican of the tea drinking ilk are allergic to nuance and arguments that require a certain amount of parsing.
BTW, this is not a defense of QE 1 or 2, or Krugman or the Obama administration or the Fed. So, save it if you intend on attacking me via that route.
Last time I checked, the FED is NOT part of the Government, and the Government is REQUIRED to follow the Constitution -- full stop. The founding fathers didn't think the NEEDED to directly advocate the death penalty for the US Government intentionally violating the Constitution. The naively assumed that the people would REVOLT against that type of action. That is why the US military and Government officials swear to "uphold and defend the US Constitution from ALL enemies foreign and DOMESTIC".
Sorry you fail civics 101.
Wow, not too bright are you. Here is a civics lesson. Congress via the commerce clause has very broad authority to enact legislation that effects US Commerce. Under the purview of US Commerce is the control of the US monetary supply. Therefore, Congress was empowered to create a goverment chartered entity to control US monetary supply, which it did via the Federal Reserve Act.
http://en.wikipedia.org/wiki/Federal_Reserve_Act
Now, you might not like how the Fed is controlling US monetary supply (frankly, I am not a fan either), but that does not mean the Congress and/or Fed is acting unconstitutionally.
I always get a kick out of it when some Hutaree militia type attempts to school people on Constitutional law based on some luuuurning via the Glenn Beck show. Stop it. You only embarass yourself.
...
Ya know, I don't care if we have missing-tooth, finger in ear, nutter-butters complaining about the treasonous mother-fuckers who are fucking this country. We need ALL the sheep to get PO'd. The system was twisted, by design, so anyone with an IQ under 120 wouldn't understand it. Maybe, pardon them for that flaw..
btw, fucking a 5yo is not unconstitutional either. Some things are wrong and need righting.
You make a good point. Sometimes I get too fired up. I agree, just because something is not unconst., does not mean it is good for our union.
Lex mala, lex nulla. The US Central Bank is unconstitutional, created outside the enumerated powers of the Congress. All other debate is pointless.
TP, sorry.
DP, sorry.
Any other plays in your troll handbook?
Troll? Merely because I disagree with you and the author of the post? No, a troll would tell you to go fuck yourself you dim-witted jackass.
Oh, ok, all other debate is pointless. So, we have WaterWings claiming it is unconstutional. Done and done. Who needs SCOTUS? Thanks for clarifying.
Either we have righteous institutions that can only be blamed for being run by benevolent, yet imperfect beings, or we accept the fact that men will always conspire for power and monetary gain. Which is it?
...Ah, the 'good ol days'.
VIVE LA GUILLOTINE!
Oui
Did anyone hear about the guy in Quebec (Canada) whose house was sitting on the largest gold deposit in the country? The mining company bought out everyone in the small town but him.
Long story short, rather than upholding property laws, the courts somehow decided in favor of the mining comapny & the town & the province & the country and kicked him out.
Money decides. Freedom and Justice are dead :(
Let's just say it how it is: the supply of, control of, distribution of currency in the United States has been captured and co-opted by a few institutions. These institutions have bought off everyone they needed to, including Presidents, have put in place ideological lackeys to carry out their every need.
Of course debasement is a tax on the People's labor. Of course it benefits only those who took bad bets, fucked up, and need bailing out. Of course they are going to cover it up at any and all cost, at each and every level, to not be found out.
God have mercy on these fuckers when it all comes down on them.
God: Noted
“If monetary debasement can truly create economic recovery, why did our Founding Fathers establish, in the US Coinage Act of 1792, that any persons discovered to be deliberately debasing US money ‘shall be guilty of felony and shall be punished by death’?”
Why did Bugs try to cap Capone?
One thing i always get confused when people referring to our
Founding Fathers. Let’s say right now we can’t imagine what will be in the year of 2099 but we always references to some1 who are 2-3 centuries old.
Their vision was limited only to their time and possibility to predict several decades ahead , not the centuries.
I am not saying that something cannot be universal regardless of the time/space , but making our founding fathers as prophets does not seems to hold the base.
It doesn't take a prophet to understand the divergence over time between sound money and unsound money regimes, merely an understanding of monetary and political history operating under the maxim "power corrupts."
Money power was intentionally separated from political power by creating sound money that could not be influenced by political fiat. This is why the penalty for debasement was death, as it was clear to them from history that it transferred power from the people to the money masters and their political puppets.
The concept of an incorruptible monetary standard is universal in written history. The gold/silver standard is the highest quality distillation of the ideal. The FFs only needed to draw from the repeated lessons of Maiden History. The gov't oversteps its limitations and then blames the Constitution for the subsequent failure. LOL.
Yesterday an old friend on Facebook shot back at me: "They are dead over 200 years! Why should we follow them anymore?!"
Eat a twinkie and go back to sleep.
GREAT POST, JS!
Keep fighting the good fight.
JS Kim's Open Challenge is based on the fallacy of appeal to authority, among other things.
"Either those men that are universally accepted to be among the greatest American patriots of all time were terrorists for desiring the sentence of death for anyone that destabilized money, OR you are massively wrong. Both of you cannot be right"
Fallacy of false dichotomy or false choice. JS Kim is obviously trying to provoke a response in order to raise his own profile, or else gain notoreity for criticizing a known public figure.
Although I can accept the premise that quantitative easing is the fiat monetary equivalent of gold coin debasement, this article is completely devoid of nuance and relies heavily on charged rhetoric and soapbox theatrics.
And your point is...?
The truth is that our country would be better off now if we had followed that law and swung a few Federal Reserve Chairmans from the trees of Central Park.
No no can reason with that douche Krugman. What a tool.
Didn't we get off of gold/silver coins -- paper is being debased, not coins, and it seems as if the treasonous aspect of the wording relates to putting lesser amounts of gold/silver in the coins (stealing).
So you would also have to prove that the Fed members were actively looking to partake in the above activities.
All you did was bold the parts that fit your narrative -
Please explain why we EVER got off gold/silver coins in favor of a fiat system.
One word - FRAUD.
Fiat is the defacto enabler of fraud and to absolutely assure the monetary system is "fallible" (manipulation). This keeps the door open for self-preservation of those that "run" the system.
Look at government sponsored failure rewarded again and again for all you need to know.
Look again at "reform" that's toothless and does zero to address that self-preservation.
Because it takes away the power of money creation from the "many" to the "few".
The people that did it were the "few".
The price of silver exceeded the value of the silver in coinage. The replacement of 90% silver coinage with clad coins changed that.
Note: Today, a cent and nickel costs more to produce than the value of the coins. In the cent it is the combination of labor + materials that exceeds 1 cent. In the nickel it is the cost of the actual metal in the coin that exceeds its face value.
Action to take: Remove all pre-1982 cents from your pocket change and all the modern nickels. Same as picking out the pre-1965 coins from your pocket change back then. The days of cherry-picking your change have now caught up with economics.
Direct result of "printing" more paper money, which debases it's value against hard commodities like Silver and Gold. This is the problem with trying to exploit Seigniorage.
That's pretty much how the process works out.
Look at the uncirculated Presidential Dollars now being stored... all for the seigniorage.
I believe it's because we ran out of money back in the 70s, that is, money that is back by gold, and decided to simply remove the backing and turn the printing presses on. That's what caused the oil crisis back then. The Saudis weren't dumb. Somehow, we 'convinced' them to turn the pumps back on.
Please correct me if I am wrong.
You are on the right timeline. Go back a little further.
http://en.wikipedia.org/wiki/Federal_Reserve_Act