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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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I think you make an important point. I suspect (but am not 100% sure) that the founding fathers intended the word 'debase' to mean minting/selling an underweight coin. DEvaluing the BASE metal via alloy. Nothing would make me happier than bitch-slapping that weasel Krugman, but I suspect that this line of attack is a red herring. Above, Shameful claims that he's a paid mouthpiece, which I've wondered as well. Could he actually believe the crap he spouts? I think it's possible.
Since when has the Gov followed the law or Constitution? Not in all my days on the earth anyway. An appeal to the law or history won't work, and besides get with the times. After all the modern portray of the founders is only of racist slave owning white men possessing no virtue whatsoever, so they have already inoculated the public against that appeal to some extent. Krugman is just a payed mouthpiece to help keep the serfs docile about money matters. I happen to despise the man, and don't think they could stoke the fires of hell hot enough for him, but that's just my opinion.
It seems that any law can be broken or disregarded; any individual freedom or right can taken away in the name of 'national security' now. Evidence of this is all around us now, especially with Patriot Acts I and II being some of the most egregious in recent history.
We are a nation of men and not laws, and it's been that way for a long time now.
The patriot act is the big joke on Americans, and affirmed again and again by Congress throwing citizens under the bus.
Guess what, if you think PA is egregious you would be utterly amazed at what is happening through corporations (like Google).
Scouring is BIG BUSINESS and law enforcement are BIG CUSTOMERS.
I can pay Google tolet me "listen" for anything and everything, and they happily oblidge.
The joke is on you for thinking intrusion is only the Patriot Act -- ITS CORPORATIONS MAKING MONEY ON YOUR RIGHTS (or lack of). In other words everyone wins but you. Government is ENTRENCHED in the communications business.
Tell me, what happens with autosave information in Gmail? It's parsed for keywords (national security) and handed over the cash register with all your other email/voice/etc keyword "hits" and you are profiled by the NSA.
Same with ZH, the digital correspondence in this post crosses international lines, and is parsed and quantified by the NSA.
Where's the encryption on ZH anyway?? How many dipshits are sending their passwords in clear text across the world? All of us.
The various congressional banking acts have eliminated the effectiveness of the clause. With the death of the clause being the Federal Reserve Act. One cannot pretend that administrative acts, legislation and court decisions do not affect the constitution.
thank you for this post. i have shown people the U.S Constitution and the coinage act both are still the law of the land. I ask everyone that comes to this site to post the the question asked here to every thing paul krugman writes on the web.
What good is the law of the land when there is no rule of law?
The only rule is that he with the most money has replaced "founding fathers," sound monetary principle, and the rule of law.
How many fags of fraud are in jail? Can I count them on two hands yet??
NOPE!
Face it, laws are for suckers, illustrated very clearly by every move of corporations and government.
I'll give you my best guess as to why the government is pro-inflationary (mildly so as a general rule, extremely so when necessary).
In the short term, their revenue is derived from property taxes (asset valuations) and sales taxes (economic activity). When real estate valuations fall, government is incentivized to reinflate those assets ASAP in order to make up for the budget shortfalls that occur from lower property taxes. Economic activity is encourage in the short term by lowering interest rates (which also helps real estate vis-a-vis the fixed income behavior of the underlying mortgage). I
In the longer term, inflation is an inducement towards economic activity (chasing greater risk/yield) and a great way to diminish the burden of debt borne by picking winners and losers. BTW, if your a bondholder on the long end of the curve you've gone from being a winner to a loser.
To some extent inflation works against reinflating real estate because, again the mortgage component prices like a fixed income instrument. However, there are ways around this such as going variable or getting a really good fixed rate for a long period of time. At that point it doesn't matter because you've already bought the house!
Inflation is how 'we' pay for war.
The founding fathers just smoked ganja on their hemp farms, Paul Krugman has a PHD and knows better then Thomas Jefferson. Paul Krugman should be on Mt. Rushmore yes we can, yes we can;::sarcasim::
"To counterfeit is Death."
http://image3.examiner.com/images/blog/EXID45370/images/resized_counterfit_pic1.jpg
I post things on his blog. You should too.
this article belongs on his blog.
This is one of THE BEST articles I've ever read on ZH!! Many thanks Mr. Kim and Tyler
And, you might wonder why he got the Nobel Prize? Because the committee are a bunch of fucking communists... Ron Paul, bring on the revolution!
The Act made it a crime for the officers of the treasury to intentionally debase the coinage for the purpose of keeping the gold/silver for themselves. Not relevant to the situation, but a cute historical tangent.
The government prints money under the noble auspice of keeping public sector employment afloat - which is the moral equivalent of "keeping the gold/silver for themselves" as the benefits/harms of inflationary policy are unequally distributed.
ENTIRELY RELEVANT
Exactly. Online trolls are great for helping one craft a solid, concise, relevant verbal argument. Without their opposition we would be prone to weakness; losing the attention and faith of our intended audiences. So it is the act of debasing upon which we can focus. If committed the death penalty would apply: hung, shot, decapitated, poisoned, dropped from a helicopter at great heights. Monetary gain is secondary.
Thank you, SKU, for drilling down to such an important law. This should be on the mind of every American citizen.
Death to tyrants!
The Act also stipulates that a silver dollar be approx 24 grams of pure silver (or 27g of alloyed) which would make it about $14 at todays prices...a 93% debasement.
Of course the non-manipulated price of Silver is probably at least $100.....and will be sometime reasonably soon
Mr. Krugman is a prime example of "free speech"....
Lots of blabber knowing that there will be no accountability....
....................
Here is my challenge to Krugman....
Note this Krugman....
Valuation = Income + Debt
So just how is it that an economy actually improves when policy negatively impacts the equation ?
As simple as this is...this is the way it is....
...................................
True economic improvement hinges on valuation improvement....
...................................
When every single change in policy negates the equation...and on the other hand the polys blabber just the opposite....
What does this suggest ?
....................................
Another issue is accountability....
Academs and media sales people are protected from accountability....
You ...and others of your ilk....should be very thankful for this....
Whatever gathers eyeballs and sells media...? Right ...Krugman ?
Value = Income + Debt.... Where did you get this bullshit, Yahoo.com?
Of course Debt is a negative number. This is a reasonable way to value a productive asset (not necessarily all assets/commodities). The future value of the net income stream minus the future value of any overhanging debt.
It is of no surprise that you think as you do....
Just another dull witted JJ Public.......who emits one sentence blabber...as if anybody cares what you think....
In a public forum it is obvious that one must keep things simple....
However...although there are only three parts to the equation...you have proven yourself totally inept of understanding the simplest of arguments...
FO...RETARD
All valuations are a purely subjective exercise, and are not suitable for any equation, as there is no way to quantify human desires, let alone form them into a mathematical truism.
Mr. Krugman is a prime example of "free speech"....
Lots of blabber knowing that there will be no accountability....
That is, free speech for Paul Krugman.
Anyone else has to have their free speech rights reduced- especially if he doesn't like what they said.
Does this law still stand on the books? If so I have some silver I'd like the Treasury to coin for no fee.
No it does not.
See the work of Antal Feteke for more info on this. It is his second pillar.
http://www.professorfekete.com/default.asp
Also, ask krugman to define a "dollar".... You did forgot my favorite part though...where they fix the Silver:Gold ratio at 15:1.....
Got a rope, got a tree, gonna hang pushers of Q E !
Actually fixing the ratio of gold and silver was one of the few mistakes the founders made in writing the Constitution. Gresham's Law comes into play because foreign creditors will demand payment in the undervalued metal thereby creating a scarcity in one versus the other. Simply having bimetallism without the peg solves this problem.
Krugman is flogging his syndicated column and other money earners before he is outed as the fool he is, truth or economics has nothing to do with it. He will probably get a good run and make a packet. I doubt he cares about blogs listing his economic shortcomings as MSM is where the money is.
Krugman will only care when the noose is slipped around his neck.
in 2008 they debased the investor..was it to beat down the great unwashed??
"Under my thumb "was the mantra as Hank marched the frat boy president trembling to the cameras to praise the bail outs not kill them.
Obuma the result.
"Under my thumb" the elites blatant show of power. while debasing what little wealth remains in American public hands..FRN's
made worthless is the goal.
nice!!!
The Founding Fathers were right on the money! So to speak. They knew what would happen and have been proven correct!
Yes they warned america about a new king george and then we get G.W.Bushie !!!!!
America founding fathers have built the country based upon Christian Protestant principles. It did work spectacular.
Now, America, for the last 100 years, transfered itself into a country utilizing Hebrew principles (money changing).
We do not have any more freedom of speech but we have freedom of pornography and theft. The results become quite obvious even to blinds and fools.
Sorry, you need to re-read history and the Bible. Loaning at interest was not allowed among the Jews. Money-changing was performed during the Roman rule, to allow the Jews from around the empire to exchange their coins for shekels. Of course some folks took advantage of this (not that the Jews are unique at all in this manner) and violated Hebrew law -- which was the whole point of Jesus "cleansing the Temple".
The only thing that matters is "one cannot serve two masters."
It's quite obvious to me that money is the master most serve.
Risk, investing, interest (debt) are all principles that were accepted and even some were encouraged in the Christian bible (however not the Torra).
could be that Abigail Adams ( John Adam's wife) was the inspiration for this Coinage act. She traded notes and bonds of individual states and made a fortune because she had inside info on their quality. She bought up the coinage of states whos coin value was less than that Massachusetts, Vermont for example, and held that coinage knowing that the nation was going to have One currency and all state coins would be traded in for new coins at EQUAL value. In short, she debased the value of the new coins and did so with inside information. Won't even go into what she had John bring back from France in the "diplomatic Pouch" avoiding shipping and duty only to sell in Boston to consumers.
The Founding Fathers did indeed try to give their baby the best rules to live by after observing the coruption in the world they lived in. This new breed of Fathers would likely be called traders by them for what they have done to that baby.
traders, traitors, the difference is becoming indistinguishable.
JS Kim-----Thanks for posting on ZH----as usual your position is spot on! Do you really expect a response from Krugman?
The Fed mouthpieces would never deign to give such an argument credence by participating in the debate.
Krugman wasn't aware of the existence of the housing bubble, and was surprised by the financial crisis.
He is singularly unqualified to even have the debate.
Seriously, if you had read PK during the course of the past ten years, you would know how wrong that statement is, quotes in a vacuum aside. While the proverbial and literal houses were being built on sand, he was quite vocal in criticism of Greenspan and Bush for substituting ever increasing home prices for actual, sustainable economic growth.
Do I agree with all of his positions? No, but call a spade a spade. In the days before ZH, he was the go-to guy for refutations of the economic perversions evidenced by market movements.
I call him a dumb ass.
OK I call him a politicized weasel, who would sell his mother for some more letters in front or after his name. That and bushels of money of course.
I have a bridge for sale.
WW , great news, i need a bridge. Do you still accept accept green bits of paper?
Hanging bridge!
"it’s really qualitative easing, but I give up on trying to fix the terminology"
Actually, Krugman is correct on this point.