Thursday, August 22, 2013

#0 The Classical Monetary System - Richard C.B. Johnsson

The Classical Monetary System According to the German School of Monetary Freedom
September 28 2005
by Richard C.B. Johnsson, Ph.D.

[Editor's note: The author makes frequent use of the word discount in most instances referencing the lending of money on “commercial paper” - usually a bill (invoice) payable within a short period of time. In our VEN nomenclature, a bill is a credit contract, payable within a year. Longer credit contracts include a note payable within 7 years and a bond payable within forty-nine. We further commend that the Notes for this paper near the end of this post, provide useful information.]

Perhaps far too many people have tried to describe and assess the monetary system and the use of money, since, obviously, the way this has been done is as diverge [sic] as any topic possibly can be. Some have called money evil, while others have called it a blessing. Some believe that the current money monopoly of Central Banks worldwide have led to an undue restriction on the issue of money, while others, rather to an excessive supply of money. Is money cheap or dear? Is there too much money or too little? Everyone can’t be right, but there might be seeds of truth even in apparently opposing views.

Among all these monetary thinkers, a German professor called Heinrich Rittershausen (R for short) has made one interesting attempt at explaining the meaning of money and it’s use. Personally, I think it is one of the best introductions to the subject and I will here try to restate it, blend it with the works of some other thinkers of the same vein, but also relate it somewhat to some other common views.

This essay will focus on the fundamentals of what we might call ‘The Classical Monetary System’.

EVERYTHING IS FIRST PAID FOR WITH BILLS (IOU’s)

One of the merits of R’s introduction, as described early on in his article ‘Unemployment as a problem of turnover credits and the supply of means of payment’ from 1934, is his starting point. For now, let’s simply presume that he has in mind a situation where either

(1) a producer buys from another producer in order to use those goods in production and/or resell them, and/or
(2) a consumer buys from a producer goods destined for final consumption.

That is, simply ordinary trades of goods, but without any wage payments and for example dividends. We will soon return to those, don’t worry.R then simply starts by saying:

How can one best explain money and credit transactions under such simple conditions? We need merely assume that EVERYTHING IS FIRST PAID FOR WITH BILLS.”

This is a highly original starting point that needs some elaboration. The more common way of looking at things, as for example in Carl Menger’s seminal 1892 article ‘On the Origins of Money’1, is to say that certain physical goods evolved into being the most accepted means of payment, be it seashells, butter, seeds, cattle or precious metals, and thus became money. But R states that the bill, not a physical commodity, is the way we should conceptualize a payment is first made. Different, no doubt. It is of course beside the point if people actually started by using shells or bills; what matters is the understanding of money and credit transactions.

How did R reason? He continued:

Thus, through the sale of my products, I acquired a CLAIM FOR THE SALES PRICE, an ASSET IN MONEY. The thus acquired asset is here, as in the modern economy, the NATURAL MEANS OF PAYMENT OF THE INDIVIDUAL, which, in principle, suffices everywhere.”

In other words, if you as a producer sell something you bill another producer. This kind of quite ordinary short-term credit, the IOU, is an asset to you as seller and a liability to the buyer. This IOU thus becomes your natural means of payment.

This short-term credit is important because it provides time for the buyer to in turn sell her goods to yet another producer. For this she will also receive an IOU, and this IOU will then serve as a natural means of payment on the day that the first IOU is due, to you. This process goes on until a producer sells finished goods for final consumption. Then the person, as is customary also today, has to provide means of payment up-front, i.e. immediate payment. That would end this particular granting of short term credit. It should be noted that it is this kind of credit that allows producers to have goods in storage for other producers or consumers to buy.

R explains how in the old days, it was common to make most trades within certain short periods of time every year, for example at the annual fairs. At these fairs the IOU’s would circulate and before the end of the fair be settled. Any remaining positive or negative balances were settled by means of cash, like for example coins (Menger envisioned people having paid the whole balance in cash). For the kind of settlement involved at the fairs, someone was designated to keeping the record of the reciprocal IOU payments.

People were of course both seller and producers at that time, at least we have assumed so by leaving out the instance of wage payments. Thus, with the IOU asset you buy either goods for production or for final consumption and cash is used only for the difference between income and expenditure.

About this, R states:

It is clear that this method of payment, which existed for centuries, served best for the exchange of goods. Moreover, it could NOT be DISTURBED BY FOREIGN INFLUENCES, unless a shortage of paper or ink arose.”

This method of payment did indeed ease the barriers to trade. Just imagine the deadlock that would occur if everybody would need an IOU or cash to pay up-front. That surely would inhibit trade. And R is also right in pointing out that this method of payment is totally unaffected by what happens in other parts of the country or the world, at least as long as there is a small but sufficient amount of cash available to settle the balances (and ink and paper).

Since this was the system that existed for centuries, I believe it is justified to refer to it as the ‘classical monetary system’. But there are of course further ingredients worth describing.

THE IOU BECOMES UNSUITABLE; ENTER BANKNOTES

It should be clear by now that a certain amount of credit is fully in line with the classical monetary system, indeed a necessary part of it. The kind of short-term credit involved should generally be regarded as free of interest, just as short-term credit is today whenever billing is involved.

This reciprocity is however often limited in applicability. It requires that the traders are familiar with each other. It requires at least that the person or persons that keeps the IOU records can provide the necessary mutual reassurance. Here is a clear role for an intermediary, and as the Venetian medieval history tells us, the persons that provided this service to the trading parties were often sitting on a bench at the square. The Italian word for bench – panca – is said to have provided the term for those intermediaries, i.e. the bank and the bankers (or whatever they might be called). They have historically had a very important function of providing trust were there where none, of providing IOU settlement instead of cash payment (or even direct barter). The banker generally also had more contacts with other traders than individual traders themselves. The banker also and largely knew their commercial situation. Thus his bills were more widely acceptable and he was able to discount the bills of individual traders if necessary (at the going rate of discount, possibly adjusted for the specifics of each case).2

But there was one decisive change, according to R, that the use of IOU’s as means of payment could not cope with – the abolition of the guilds. Under the guild system, the ordinary worker often received “the major part of their income in free board and lodging at their master's house and a single payment at the annual fair.” Thus, for most of the year there was no need for paying the ordinary worker and the annual payment at the fair could be settled within the IOU system, else with cash.

When the guilds were abolished there arose a need to continuously pay the ordinary worker a cash wage, often weekly. But where would the master obtain such small amounts of money so often, and on top of that, often in advance of selling the product? After all, the IOU’s naturally reflected something of the magnitude of a year’s labor for several persons. The IOU’s became unsuitable as means of payment.3

The next step in the classical system was the introduction of note-issuing banks. “From 1695 onwards the SCOTTISH NOTE-ISSUING BANKS created the BANKNOTE and thereby established the modern money and credit system,” R informs us. What they did was to take those rather large and heterogeneous bills, discounting and converting them into smaller amounts on typified pieces of paper.

Thus, as soon as the producer received an IOU he could take it to the bank, the bank would discount it and provide smaller banknotes in return. In this way the producer still could be able to pay the wage earner, and the banknote was an invention that helped ease these new barriers to trade. The banknotes were signed by the bankers in order to reassure the receiver of their worth. The bank in this way assumed much of the credit risk (there is still the risk involved in trusting the banker).

But while this credit, i.e. the IOU bills, are due within a certain amount of time, most often at least a month, wage payments often are due sooner than that. Taking the IOU’s to the bank and exchanging them for banknotes also solve this. The bank discounts “the later due bills with IMMEDIATELY DUE ONES”, as R puts it. Thus, the banknotes also help bridging the very important problem of advancing wages.

For the services of

(1) providing typified notes in small denominations,
(2) providing reassurance and
(3) bridging the time gap between the payment of wages and incoming sales revenue,

the bank would naturally charge a fee. However, interestingly, there would still be no general need to charge interest4.

BANK TURNOVER CREDIT AND GIRO

We have already noted that the IOU’s serve as short-term credit between buyer and seller. But the banks, in discounting the longer-term IOU’s for the shorter-term banknotes, also extend credit, so called turnover credit. And as R put it:

Genuine turnover credit is only granted on the proceeds of goods already sold.”

This kind of credit is extended to all producers except for the retailers, who as a rule receive payment up-front. And R continues:

While circulating, the banknotes, thus put into trading, represent the equivalent to the products sold by the manufacturer but which have not yet got into the hands of the ultimate consumer.”

But how does this turnover credit, including the use of banknotes, end? How do the banknotes flow back so that the credit can be ended? This is, according to R, “almost still more important” than how the banknotes get into the circulation in the first place. It turns out that the goods sold by a producer at $100, and discounted at $100 by the bank, will remain in circulation until the day the final purchases are made in the stores. These purchases correspond to the wage earners consumption as well as the producer’s own consumption (as far as it is also paid out from the discounted bills in banknotes, like for example in the form of dividends), all paid with banknotes. As R notes:

On the day of the sale to the ultimate consumer, THE PATH OF THE GOODS ENDS AND THE REFLUX OF THE NOTES BEGINS. Then the goods have been removed from the storekeepers' shelves and require no further financing.”

The retailer than pays their due debts – remember he has no turnover credit so it would be the due IOU’s – with the banknotes. The previous producer in line, for example the wholesaler, has already discounted the very same IOU’s to be able to pay wages in banknotes of smaller denominations. He will use the banknotes to release him of his turnover credit and obtaining his own IOU’s, i.e. simply by reversing the initial deal. In this way the banknotes would reflux until they reached the last producer, for example the manufacturer, who simply would use the banknotes to pay off the turnover credit (he has no IOU’s since he is first in line).5

Below you find a circulation chart that might be one way of describing the flow (it is taken from John Zube’s Peace Plans No.41).

The circulation of goods, service, bills and money, steps 1 – 14

1. A to B: Consumer Products
6. A to D: Wages & Fees in Notes
11. B to C: Banknotes
2. B to A: Bills of Exchange
7. D to E: Banknotes
12. C to B: Bills
3. C to A: Banknotes
8. E to D: Consumer Goods & Services
13. C to F: Other Banknotes
4. A to C: Bills of Exchange
9. E to B: Banknotes
14. F to C: Own Banknotes
5. D to A: Labour & Services
10. B to E: Consumer Goods


A Factories, Employers and Productive Cooperative Enterprises (1, 2, 3, 4, 5, 6)
B Various Wholesalers and Distributors (1, 2, 9, 10, 11, 12)
C Note-issuing Scottish Bank, reckoning but not redeeming in gold.(3, 4, 11, 12, 13, 14)
D Workers, Labourers and Cooperators, Professionals and Tradesmen (5, 6, 7, 8)
E Retail Shops and various Service Providers (7, 8, 9, 10)
F Clearing of stray notes with other such issuing centres (13, 14)

R continues by noting: 

Hence the circulation period of the sold goods BEGINS approximately when the corresponding wages [or dividends etc] are paid and it ENDS through the transfer of the goods into the hands of the ultimate consumers, exactly AT THE POINT where the notes in the pockets of the wage earners (and other consumers) are spent and begin their reflux. 

The circulation period of the goods and that of the commercial bills, that is, the length of the goods credit and the circulation period of the banknotes, must therefore have been approximately EQUAL in the classical banking ideal.”

Hence, the turnover credit would last as many days as it takes for the notes to be spent on final consumption, with an addition of the time it takes for the notes to flow back. This means that the turnover credit always will be of the short-term character. R puts it this way:

According to the admirable classical system, a turnover credit is thus merely an exchange or conversion credit in which inconvenient means of payment are transformed into convenient ones or claims from sales are transformed into claims against a bank. All the disturbances under which today's credit system suffers, cannot happen under this system as discount or exchange credits, to state it again, are only granted for as many days as are needed to get the goods from the sale at the factory into the hands of the ultimate consumer. This period coincides with the number of days for which the wage earners (or dividends earners etc.) retain the banknotes in order to have enough means of payment until next pay day.”

Now, of course, there is no guarantee that the two periods coincide all the time, especially since it is possible that money can be hoarded [saved]. But it seems R was of the view that there was a strong tendency for these to coincide.

R then explains how the giro system [checks and checking accounts] in fact forms an integrated part of the classical monetary system:

We have so far assumed in our sketch, that the entire payment circle is achieved entirely with banknotes. But today we see a large part of all payment transactions conducted in the much more simple and cheaper cash-less method of GIRO TRANSACTIONS: The retailers, who (in 1934) received from the 45 milliard Reichsmark of wages and salaries in Germany, in 1927, almost 40 milliard Reichsmark, do not attempt to bundle up these notes and dispatch them by registered mail to their suppliers (usually in other locations). Instead, THEY PAY THE DAILY TAKINGS ALREADY ON THE NEXT DAY into the nearest deposit and cheque bank and use the credit balance thus gained FOR TRANSFERS TO THEIR SUPPLIERS.”

Here R mentions what would be the checking account credit, apparently a 19th century invention. The significance of this is perhaps not that the checks themselves could serve as means of payment, but rather that the bank granted this kind of credit up to an amount corresponding to the older turnover credit [the payment of a bill with a check cleared at the bank]. This would save both the owner of an IOU and the bank the trouble of each time having to go through the process of discounting the IOU’s, thus replacing the turnover credit (at least up to the amount of the checking account credit) [no overdraft is allowed].

Finally,

NOTE circulation and giro accounts COMBINED, however, have remained as elastic as, previously, the note circulation was on its own. Both ARISE from a TURNOVER CREDIT and DISAPPEAR through its REPAYMENT. Both are independent of the amount of savings deposits and of capital accumulation in a country and, also, independent from the intake of foreign credits. It is thus incorrect to speak of the necessity to accept foreign turnover capital. Both (note circulation and giro accounts), do not represent a fundamental change compared with the previous simple bill of exchange circuit, but merely a refinement.”

Hence, as R explains, the giro and checking account credit were not changes but rather refinements of the classical monetary system. There probably are other financial inventions and innovations that probably would fit into this system, but we have to keep in mind that R wrote this back in 1934. It would also be of no real use in pointing out later inventions and innovations, since that wouldn’t alter the description of the classical monetary system.

PREVENTING BOTH INFLATION AND DEFLATION

From all of this, R then draws the following very important conclusion:

By this correspondence of the origin of the goods with the origin of the money circulation, and of the end of the goods with the end of the money circulation, […] a MUCH MORE PRECISE QUANTITATIVE REGULATION OF THE MONEY CIRCULATION is achieved, as well as a much more certain exclusion of unsuitable credit demands, than can ever be offered by the CURRENCY THEORY and the policy to stabilise the price level […].”6

The amount of money would correspond to the goods sold but not yet into the hands of the final consumer, i.e. the producer’s goods. This is as close a connection you can get between real production and money.

As R points out,

always as much money is issued under this system as goods are produced and, continuously, as much money is withdrawn from circulation as goods are consumed.”

In case fewer goods are sold, the IOU’s will amount to a smaller sum, and the bank will issue fewer banknotes. In case more goods are sold, the IOU’s will amount to a larger sum, and the bank will issue more banknotes.

Hence, the close connection between real production and money also implies that prices on average would be quite stable, a feature surely lacking in today’s era of high price inflation7. One caveat would be, as mentioned shortly above, that the money also can be hoarded [saved]. That would disrupt the correspondence R tries to determine, so that more money actually could flow into circulation than out. But at the same time, if the money is hoarded [saved], they aren’t spent on goods and services and thus don’t affect the price level. Thus, after all, the price level would tend to be quite stable.

Despite R advocating such a close connection between real production and money, a prominent monetary economist like Nobel Laureate F.A. Hayek [Austrian School], referred to among others, R and Henry Meulen, another economist with similar ideas, as two in “a long series of cranks with strong inflationist inclinations” [a JEER!] because they allegedly “all agitated for free issue because they wanted more money” (emphasis in original in the author’s 1976 introduction to his book ‘Denationalisation of Money’).

Hayek included R in a statement that says

without exception they all believed that a monopoly had led to an undue restriction rather than to an excessive supply of money”.

It seems to me that R rather was of the opinion that the restrictions on the free and decentralized issue of means of exchange hampered trade and exchange, while at the same time too much money was issued centrally. We could use Ulrich von Beckerath’s 1935 analogy to make R’s point clearer:

The supply of a country with means of payment may also be compared to the supply of a large and hilly park with water, If the gardener is restricted to using only one large and fixed water pipe, then it is inevitable that the hills should remain dry and the valleys become swampy.”

It seems to me Hayek’s critique of R totally misses this crucial point.

THE GOODS WARRANTS

This restatement of R’s view of the classical monetary system might seem superfluous, especially since R’s own presentation isn’t much longer. However, even trained monetary economists like Tyler Cowen and Randall Kroszner (in their 1994 book ‘Explorations in the New Monetary Economics’) seem to have misunderstood it even though they clearly had read R’s 1934 piece. Instead they focus on the so-called ‘goods warrants’.

The goods warrants basically are a kind of note that anyone in particular can issue and pay its suppliers and employees. For example, a company might issue a $1 note saying that it will accept it at face value [in real FRN dollars] as payment for it’s goods and services. Thus, if a supplier or employees receive such notes, they can in turn pay their suppliers or their final consumption. A particular company is only able to issue as many notes as they have goods or services at hand, lest the notes will circulate at a discount [here, Johnsson uses the word in its more familiar sense of giving back less than face value in exchange.] They will then not continue to be accepted by suppliers and employees at face value. Thus, also in this case there’s a close connection between real production and money. The value of the outstanding notes are corresponding to the value of the existing supply, they are backed by real goods; hence the name goods warrants. The difference really is that instead of relying on the banknotes, the company issues their own notes, notes that they and only they are bound to accept at face value.

The goods warrants are in some ways less convenient than the use of banknotes, etc. in the way described above. They would, however, be favorable under conditions where the ordinary banking system has failed to provide proper means of exchange. Clear examples of this would be during the early 1920’s German inflation and the Great Depression. This is also the time when R was writing about all of this, as was Ulrich von Beckerath and Walter Zander, two other proponents of goods warrants8. And indeed, the classical monetary system had only recently been abolished, generally in the years before WW I.

There is an interesting account of the use of goods warrants from the 1890’s US, as evidenced by John DeWitt Warner’s ‘The Currency Famine of 1893’9. Here Warner explains how, by circumventing the legislation, banks and individual companies were able to handle the 1890’s currency crises. They did this by issuing what basically was goods warrants of different denominations. Warner provides numerous examples of such ‘clearing certificates’ and below you will find two.

The first, was issued in 1893 by what probably is a major New York clearinghouse, amounting to the considerable sum of $20,000. The second is perhaps even more interesting since it is issued by an ordinary manufacturing company and amounting to “only” $1. Also note that it says ‘Pay Bearer’, i.e. that the company will pay anyone who presents this goods warrant, the equivalent of “One Dollar of Swift Merchandise at Retail”.

Warner shows how such goods warrants helped solve the currency crises of the 1890’s. And we have to keep in mind that the reason for the need for such goods warrants was the failure of the existing system, or as Warner put it:

Our people found themselves not merely drained of currency but forbidden by most carefully drawn statutes to utilize the expedients which would have been most natural and most effective. No civilized nation has ever experienced such a currency famine. None has ever found itself so fettered by positive law in its efforts to rescue itself. None ever so promptly rose to the emergency. Never was there so prompt a return to normal conditions.”

Thus, the goods warrants are more than simply a creation in the minds of writers like R, Beckerath and Zander, but rather the old classical monetary system in times of emergency.

For all intents,” Beckerath wrote in 1935, “there is nothing novel in the principle of placing orders and in the reflux of paper money through the execution of an order. The old private banks of issue, first and foremost the Scotch, habitually applied it, though not always in a form clearly recognizable by us.”

Tyler Cowen and Randall Kroszner have put forward the only critique I’ve found of the ideas of R, Beckerath and Zander. As mentioned above, for some reasons they focus exclusively on the goods warrants, and don’t discuss the foundations of these, i.e. the classical monetary system. They write:

Advocates of the goods warrants system do not address adequately the incentive problems and inconveniences that arise under their system. […] Consider first the issue of incentives for inflation. Firms which issue goods warrants have a subsequent incentive to raise their prices to lower the real value of the outstanding warrants held against the firm. Knowing this, traders might refuse to accept the warrants. […] A second problem with goods warrants concerns the issue of calculational [sic] convenience. When traded on the secondary market, goods warrants may not circulate at par.”

First of all, had they taken closer account of what R wrote, the fears of inflation might have been less acute. But it seems to me like a mistake to say that suppliers and employees would refuse to accept goods warrants at par simply because the issuer might abuse the trust and raise prices. It seems more likely that they would refuse to accept goods warrants at par from such issuers that are known to have abused the trust before. There is no justification for believing that such refusals would be general or even common, and Warner’s evidence clearly helps discarding such worries.

Secondly, while it might be true that discounted goods warrants might be inconvenient for calculation, we would have to put it in context. The context is situations like the 1890’s US currency crisis, early 1920’s German inflation and the Great Depression, i.e. situations where monetary calculation has been extremely cumbersome by deficiencies in the existing system. It seems that some calculational problems would most likely be more attractive than no trade at all. Anyhow, as I see it, the goods warrants are only an emergency version and fringe application of the classical monetary system. As John Zube put it:

The goods warrants system is primarily designed to overcome monetary crises and to normalise all monetary transactions by the granting of short term credits in form of goods warrants and other clearing certificates.”10

CONCLUDING REMARKS

This ends my outline of the classical monetary system for now. My plan is to continue it in various ways, notably the effects of the monopolization of the note issue, the differentiation between means of payment and the value standard, the relation to other ideas I find interesting, or simply whatever comes to my mind. Like clearing. (Important disclaimer; I want to make it absolutely clear that although I might find the classical monetary system as presented by R quite interesting, I would never dream of imposing it on anybody. Indeed, that would be the antithesis of it all. I do, however, advocate everyone’s right to experiment in this important sphere of life (indeed, in all spheres of life). If other people would like to have something totally different, I support that, at least as long as they don’t impose it on others. Finally, and this might be beside the point of this essay, but the close connection between real production and money in the classical system also has a strong ethical implication; if you want money, you better produce and sell something useful to others. It is the kind of reciprocity involved in the old Latin motto ‘do ut des’ – I give in order to receive. How attractive!)

NOTES

1 Economic Journal, volume 2 (1892), p. 239-55, available at for example
http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/menger/money.txt.

2 Regarding the time aspect of bills, John Zube states (in his Peace Plans No.41): “The commercial bills here discounted run, as a rule, only for 2-3 months. If any longer period were used, then the used notes would not be fast enough drawn out of circulation and could thus depreciate. Too short a circulation period, 2 or 3 days, in the extreme, would, usually, not give them sufficient time to complete the circuit. There is no hard and firm rule on this except that the circulation period must be relatively short and that one must hold on to the free market rate for exchange media as a guide - like with any other turnover and pricing of goods and services.”

3 Here we have the wage payments, as promised. But here is another very important implicit observation. When the producer in the guild system, i.e. before the general rise of wage payments, sold something at for example the fair, he received sales revenue. If he then deducted the cost of the goods he bought – he didn’t actually pay the workers any money apart from the single payment at the annual fair – he would end up with the amount of profits he had made. This amount would be stated in  purely monetary terms and would be the result of accounting. Thus, there were profits but no wages (once again, apart from the single payment at the annual fair).

This last is very important since it shows that profits preceded wage payments, not the other way around, as both the Ricardian and the Marxian versions of the labor theory of value claims. This fact has later more explicitly and with much more emphasis been noted by George Reisman in his 1996 book Capitalism. Profits are not deducted from wages through some kind of exploitation. Wages are instead paid out of the sales revenue and profits.

4 Neither would it be necessary to do any discounting either, although likely if the IOU’s were somewhat less short-term and/or if the bills were risky.

5 Ulrich von Beckerath put it this way in 1935: “Let us assume that our isolated State possesses one or more well managed banks of issue; that these banks are authorized or indeed bound, to make advances in notes on orders placed, most especially for wage payments and other production costs to be paid in cash. We should then observe a complete correspondence between the circulation of money and that of goods. Expressed differently, solvency would be general and follow from the system of production on, orders placed. Artisans, manufacturers, laborers, farmers and others, would produce commodities and bring them to this country's sales establishments where they would lie waiting for the purchasers. Then the employees would present themselves a second time at the shops, but this time as buyers. They would buy the goods they had ordered, pay for them in notes, and take them home. With the notes they had received the shopkeeper would then pay their wholesalers: and with their own profits they would also make purchases, i.e., they would get rid of their notes in other shops. In their turn, the wholesalers would pay their manufacturers or farmers with the notes they had received and also indulge in purchases with their business gains. But the manufacturers, farmers, and other producers are precisely those persons who received the notes in the shape of advances from the bank of issue. They are now in a position to repay these advances, and this also in notes. The repayments having been made, the banks would destroy the returned notes and thus the circulating process would be at an end. It is true that the country would have then no saleable goods and no circulation media; but the process of production might be at once resumed.”

6 The “currency theory” is that of the famous Currency School, often seen as opponents of the Real Bills Doctrine or the Banking School, i.e. the doctrine R is an adherent of. Stabilization of the price level is the ruling doctrine today, no doubt about that.

7 The high price inflation of today becomes obvious if one looks at it in a cumulative way. 2% price inflation becomes almost 50% price inflation in 20 years. Thus, 2% is pretty high price inflation.

8 See particularly Beckerath’s 1935 “The Practical Realizations of the Milhaud Proposals” and “Must Full Employment Cost Money” and his 1938 “Compensation Money and Public Insurance”. Zander wrote in 1935 a very interesting article called “A Way Out of the Monetary Chaos”, in which he discusses many interesting aspects of goods warrants that I will not cover here. See also Zander’s 1933 article “Eisenbahngeld und Arbeitslosigkeit”, and his 1933 speech “Der Kampf der Wertpapierbesitzer”, the latter containing many practical and theoretical points of interest, not only particular to Germany of that time.

9 Published in Sound Currency, Vol. II, No. 7, New York, March 1, 1895.

10 See What Has To Be Changed In The Constitutions Of All States To Make A Lasting Peace Possible And How Can These Reforms Be Realized?, by John Zube, 1962, on-line at http://www.butterbach.net/epinfo/peace.htm.

Wednesday, August 21, 2013

#D: The Basic Law of Contracts - E. C. Riegel

E. C. Riegel
Human freedom is constituted in freedom of contract and in a monetary economy, fidelity of contract is based upon fidelity of the money contract. Since all contracts are expressed in terms of the money unit and the stability or meaning of the money unit depends upon the fidelity of the money contract, it is manifest that the whole superstructure of contracts and hence the whole social order rests upon the basic law of the money contract.

When a money exchange system is instituted, the participants enter into it per force of the necessity of escaping whole barter. They have found that to split barter into two halves, namely, the process whereby one trader (the buyer) receives value and the other (the seller) receives an interchangeable credit instrument, exchange is facilitated and as exchange is facilitated, so production is promoted and wealth increased.

The participants in a money exchange do not explicitly enter into contract with each other, but there is an implicit contract, even though they be unconscious thereof. As stated, money exchange springs from the necessities of trade and thus an unscientific system is acceptable in the absence of a better one.

That is why money exchange has proceeded by empiricism rather than by science. If we would end the method of trial and error and thus end the destabilization of the multifarious contracts upon which our life depends, we must understand the money contract.

The Implied Compact

When the seller accepts money in exchange for a value he has surrendered to the buyer, he expects to be able to secure an equivalent value in turn when he tenders money. But he does not expect that return to come to him from the one who received value from him. Hence there is no contract between buyer and seller. What or who is it then that gives substance to the promise that the money holds? It is the NECESSITY, common to all competitive traders, which obliges each to enter the market with goods and services and bid for money, which is indispensable to each. This free competition stabilizes the power of the money and thus assures the holder of money a value equivalent to that which he surrendered. Two stipulations are necessary to accomplish this:

a) the buyer must have appropriate limitation of money issuing power.

b) he must be dependent upon his power to effect sales competitively.

The basic compact, then, exists between each of the traders and the central money administering authority that the above named stipulations will be respected. Such observance excludes the administering authority itself from the issue power and all institutions of government that depend upon the taxing power rather than upon the competitive selling power.

With governments controlling the issue power of money, with indulgence by themselves, it is obvious that the basic law of contracts is violated, thus threatening the entire social order.

E. C. Riegel

Monday, August 12, 2013

#47 Paul Drockton Quotes – 8-11-13


Sometimes one can learn a lot from someone's quotes. On 9 July [2013] I had occasion to speak with Paul Drockton and really must have made an embarrassing impression as to my knowledge the said episode of his show was never rebroadcast. Some of my colleagues said that this demonstrated the duplicity of Republic Broadcasting (RBN) and that I shouldn't bother listening to them ever again. But I am not as young or impatient and though it is far from perfect, RBN serves a valuable purpose.

We'll discuss the issues of that night's exchange probably right along with Paul's quotes. But I want it understood from the outset that on most matters I would probably be in agreement with Paul Drockton (and would certainly recommend him if one is interested in acquiring any gold or silver). But as is often the case, where one may differ with a possible friend, it is far better to have it out in the open, rather than to seek the illusion of compromises, for there can't be any on the road to truth, which we remind our readers, is the ultimate authority, whatever it turns out to be. Below, the blue will be quotes by Paul Drockton. My comments will be in black.

Correction, Crash or Collapse? - Source [18 June 2014: No longer available.] 

A Correction is made when something is trying to get back on course. A crash occurs when something fails to get back on course. A Collapse is the result of multiple corrections leading to multiple crashes while ignoring the proper course.

Technical talk concerning securities, to indicate something that is supposed to be corrected by ... policies and activities largely sanctioned by the Austrian economists. To us they are of the same coin as the Keynesians, both public relations campaigns run by the same people, with hundreds of years of history behind one [15th century] and a few hundred years experience [18th century] for the other, the intentions of both to gain and control your money. The professional world of banking and finance knows nothing else.

But another observation is contained in Paul's words; the potential investment customer (someone who wants to make something on his money without having to do something himself to earn it), is led to believe by his stock broker that certain realities regarding securities trading are “proper courses” all by themselves, as they believe that the market is clean and runs according to natural laws, when as all the world should long since have begun to recognize, it isn't and doesn't.

The problem with a House of Cards is that it is made of paper. The difference between our economy and a House of Cards is that the cards use a higher quality of paper.

Drockton (and many like him, he's not the only one out there) would very much like everyone to trade in whatever government “scrips and slugs” they might be carrying around for his clunky precious metals pieces. He has never indicated to me on any of his programmes that he understands money at all the way E. C. Riegel or I have and quite frankly if you don't see it our way, you're going to lose. Drockton has nothing new to offer and his solution is still controlled by people in far away offices in cities far from where anyone else lives. They determine what a piece of gold or silver is worth in exchange, not he or I. That was just one question Drockton failed to answer correctly, when he should have been agreeing with me. I'll repeat it then: the prices of all precious metals are set by people who claim to own more of it than anyone else and they live and work in London and New York among other places.

How much is an ounce of gold worth?
Worth in what?
How about in dollars?
Well, it depends on the value of dollars.

And we know that dollars (and all other government issued money) will automatically lose value, because all government money is issued by people who have no business issuing it; the governments. Paul Drockton and a lot of other people out there keep saying that fiat currencies are what cause inflation when in fact government spending does. It is the fact that all currencies are government issued that matters not whether they are created by “fiat.” If the government decided to issue its own unbacked notes, they would be unbacked because the government has nothing to sell that anyone wants to buy, it would not matter if their money were backed by gold or silver, that would not limit their issue. The Constitution IN ERROR allowed the government to BORROW MONEY and that's what they have done and will do until they are unable to do so.

But if precious metals have been such a safe bet, why have the prices of gold and silver been falling since March, if not before that? Who is to say that gold will not be a lot cheaper next year than it is right now and in spite of this that everything else will be rising in price? If the people in London and New York want to close down the precious metals markets or make it difficult to buy or sell precious metals at any prices other than theirs, and they have and so they can, then what are Drockton's customers getting when they buy precious metals except an asset with diminishing value (at least in the short term) or at least one that is determined by other than normal market factors? ... and after this we still think most people should be owning some gold and silver.

The Best time to leave a Burning Building is Before the fire starts.

Take the hint. We agree here. Get out of the stock and bond markets and stay out!

Fascism is when Big Banks and Corporations use Big Government and Big Media to steal your stuff. Communism is when they use your neighbour.

Clever, but the reasons the latter are able to use your neighbour is that the “Soviets” have made normal situations into life or death desperations because no statist, whether socialist light or hard line commie, knows what the hell they're doing when it comes to running any business and are oblivious to the obvious lessons of “too big to fail;” that indeed there are limits to size that effect efficiencies and responsibilities to scale for every human enterprise. Smaller is better and redundancy and competition enhance freedom and give more people more responsibility where it needs to be exercised, in each local situation. By the way, democracy actually reduces freedom, meaningful freedom for each individual. Who cares about the freedom of groups?

Money isn't the root of all evil. Evil is the root of all evil.

Yes, we agree and our blog is intended largely to counter this widespread notion. However Paul, it is less easy to love one's “scrips and slugs” than shiny pieces of precious metals and it was the “love of money” that was the root of all evil, and as you probably know already, no organized evil is likely without money. Go back and read your Bible and take a good hard look at what the good book teaches regarding gold. Take in particular a look at Exodus 32:9 where it is recorded that Israel's sin in worshipping a golden calf caused the Almighty to consider destroying them and starting over with Moses! God did not make gold to be admired. The real purpose of money, to measure value, is best suited to the least valuable and least likely to be worshipped of any substance. Money is only the yardstick and nothing more.

The Psychopaths decided to give America back to Mexico after the Americans decided it wasn't worth fighting over.

Except that it wasn't something decided just yesterday. The psychopaths, using their extra money, bought time enough to run a long term project to dumb down the American public to accept what they had decided to do a long time ago, to give America (or a large part of it) back to Mexico.

The Federal Reserve masquerades as a government entity with an eye on the common good, when in fact, it is a private corporation bent on destroying both the common and the good.

... and the present American Federal government masquerades as a constitutional republic. Why anyone in their right mind would think that returning the money issuing function to a Treasury department within this government makes any more sense, should be placed on notice that those of us in the hinterlands (whether they be the graveyard suburbs or graveyard cities) no longer have any faith in ANY government to serve the common good, as we are awake to who has always run things from behind the scenes for their own profits and benefit, not ours.

Mass surveillance is necessary only when you run out of things to steal.

Now, all they want to know is how best to herd us. They still imagine that they can and will. So far history has pretty much proved them right.

A Pessimist bets on Gold, a Realist bets on Silver. Betting on Paper gives Optimists a bad name everywhere.

These once again reference securities markets vs. precious metals. Drockton might believe (as do I) that ultimately precious metals prices will climb and not come back down. But neither of us controls the money, so determining just how and when that might happen is not possible for any but the insiders.

An Opportunist exploits the weaknesses of others. A Global Corporation does it for a hefty profit.

We have characterized selfishness, in order to get a useful definition, as specifically the deliberate taking advantage of others for personal gain. But sometimes someone sees potential value in what someone else discards as trash. If the person who acquires another's trash makes more out of it than the originator, we would consider that entrepreneurial rather than opportunistic. An entrepreneur by the way is just French for businessman.

Meanwhile, even if they may have started this way, no mature corporation serves any other purpose but to enrich its officers and shareholders. Actually making, growing or doing something for a living is a secondary consideration. If they want to become more profitable, they just scale back and raise prices. They assume the monopoly position they have gives them time to reap profits before anyone can fill the void. At certain scales, nobody can or would, so they have the market to themselves. But if any corporation had to deal with full liabilities to its customers, employees and frankly to anyone they put out of business, since this was accomplished though unfair advantages granted by some state, none of them would be in existence. Corporations are statist supported dinosaurs that should rightfully go extinct.

The Fed will stop printing money when they run out of trees.

There are all kinds of ways of being smug, Paul; saying something that sounds important but is actually irrelevant. The Fed will print money or allow more digits on a bank's electronic memory (that requires no additional trees, Paul) as long as it suits their purposes and that is all. They have a monopoly. If it suits them they will cause fewer ... monetary tokens to be produced and circulate. If the Treasury gets the job of running our money, they will have a monopoly. But as the government has grown in size it has become, by fiat of nature, more inefficient (it wasn't efficient to begin with) and irresponsible (it was always that too). The real issues Paul are who gets the money the Fed creates and we know that most of it goes to whomever the government says, since they are the biggest buyer in this economy (as many governments are in theirs around the globe). You or I do not decide who gets that money. THAT my friend is the issue and nothing else.

Some men who fight organized religion recognize the true motives of the wolves in sheep's clothing. Men who fight organized religion on behalf of big government or corporations merely work for a different set of wolves.

Agreed. While we're at it we recommend getting out of these organizations and beginning to think of alternative ways of living for ourselves and our children and grand children, something far beyond the commercial cultural wasteland of the present age. We are aware of the jeers and discount them, recognizing that under all of them lies the implied threat of violence. The prepared among us will counter any overt violence, as we shall remind any detractors, this is not Russia and will not behave as they did after 1917 (since most were disarmed they were slaughtered as animals by the tens of millions!) despite how much high fructose corn syrup and other poisons they may seek to impose upon us.

If I had a paper dollar for every time someone used the word money, I still would have nothing.

Wrong Paul, don't be an idiot! As long as someone will take your paper, or digital money, it will still buy something and THAT is what you will end up with, whether it turns out to be worth less than the same thing a week, a month or a year ago. The theme you're trying to strike is that saving up any of THEIR money is going to mean that it will never keep up in value with inflation (caused entirely by government spending) and will buy less in the future than it does now. But you can certainly not claim that your silver or gold ounce buys today what it did back on ... 2 November 2011, because they do not and there is no guarantee that they will buy more next year because neither you nor I control the prices of these things.

Real wealth is measured in Troy Ounces.

NO IT IS NOT! Real wealth is measured in the income it generates, period. End of story! No gold or silver qualifies, unless you are one of the rare few who rent their precious metals, therefore they aren't wealth AT ALL. Your saying so over and over and over again is not going to change reality. Gold and silver do not produce income therefore they are NOT wealth, period, end of story!!!

The best place to donate to those bent on destroying our country is Wall Street.

Well, you could perhaps give your money away to some fool foundation and that would perhaps be worse, but what Paul is saying here is what we say; you will lose your money on Wall Street because it isn't set up to benefit the little guy AT ALL. Therefore get out and stay out!

Cities are built on manufacturing. When you send your manufacturing overseas you are building another country's cities at the expense of your own.

There used to be other reasons for cities to be where they were, long before there was any manufacturing. Perhaps those reasons will succeed again, but America would have to return to the way it was back in the 1880's. We think it's headed there anyway. As for our outsourcing and offshoring, that was the inevitable result of allowing “too big to fail” rather than “letting nature take its course.” As we've seen, and shall continue to see, the unwinding of the American Empire should reveal the extent to which we have allowed government and corporate hubris to determine national directions, rather than the millions of simultaneous decisions made by each individual at every local level in the economy.

Free Trade is another word for Treason.

Among one of the more pathetic and idiotic remarks Paul made to me that night back on 9 July was “we don't need trade.” Now, I really don't think he intended on saying this, so I'll give him the benefit of the doubt. Paul and I would agree that we don't need “Free Trade” the way it has been conducted, again solely for the benefit of the bigs at the expense of everyone else. What we need is to recognize that nature imposes its own limitations and when certain ventures have state licencing, can get away with dodging any responsibility for anything they do, and can enforce a ridiculous expectation for riches for doing absolutely nothing requiring any effort, etc. while at the same time grinding down members of the labour force, who according to them aren't worth paying more than is absolutely necessary to feed them (Ayn Rand and her ilk think this way), sooner or later the injustices of these situations will result in failures and when the bigs fail they bring a lot down with them. They should have failed sooner. However we can and would do better without them as whether these institutions were designed to produce anything or not, at present they are merely enriching the few at the expense of the many.

Mohandas K Ghandi had a philosophical plank called Swadeshi. Briefly stated, this was “that spirit in us which restricts us to the use and service of our immediate surroundings to the exclusion of the more remote.” This meant that he regarded as sinful a local person's refusal to buy locally before considering buying from someone in a distant location. Americans used to feel this way, but financial pressures changed their thinking. Of course some things cannot be had just anywhere and they must be purchased from where they are produced. You may notice all kinds of coercive tactics being discussed by governments and think tanks, especially those connected to the United Nations, to restore some notion of only certain localities being allowed to grow or produce certain things. This is an age old strategy to make every locality interdependent rather than independent in the cause of political, social and economic control by and for the elites and for no other reasonable purpose. We are against all of this, every last bit of it, because it is coercive and benefits the few who do relatively nothing for their “take” or is it “rake?”

Here are Ghandi's 7 Deadly Sins. See which ones we are as a world currently committing: 

Wealth without Work
Pleasure without Conscience
Science without Humanity
Knowledge without Character
Politics without Principle
Commerce without Morality
Worship without Sacrifice 

Now that I've expressed some differences, perhaps we can find a basis for working together. We see how Solomon caused silver and gold to become as the stones on the ground, how he was able to lower the prices of better goods, by causing them to be produced through encouragement and TRADE. One thing he did not do is make gold and silver the basis of trade relying on interest paid to those who fraudulently created bad notes representing gold and silver they did not have; the original Ponzi scheme at the heart of the present banking model. That was the Babylonian contribution that has been our bane ever since.

Rothbard lied, and his followers continue to LIE, that gold and silver were freely chosen by our markets and would be again if there weren't any paper (or digital) substitutes. There is no volunteerism possible within this paradigm. If I write too many checks, eventually they bounce and that's the end of it, while the government gets to write all the bad checks it wants, right now out beyond $16 billion [No, $16 TRILLION!] and nobody sees what's wrong with this. It isn't the material of which money is made that matters AT ALL Paul. It's who gets to issue the money that matters and it's the only thing that matters. Why can't “the smartest patriot in America” get it?

David Burton
dpbmss@mail.com

Saturday, August 3, 2013

#0 How The Establishment Will Attempt To Bring Down The Liberty Movement

[With a touch of irony, we note that the American flag has nothing to do with Liberty and more to do with the British East India Company Inc.]
Brandon Smith   Source   July 25th, 2013

How does one destroy an idea? Further, how does one destroy the truth? Corrupt governments have been struggling with this dilemma since men wore loincloths and worshiped fire. Fortunately for those of us in the “lower strata” of social organization, honorable ideas and indelible truths have a life of their own. Even when a culture as a whole remains oblivious and unguarded, the facts tend to rise to the surface one way or another. The reality which elitists at least partly understand, is that the truth cannot be destroyed, but it can be forgotten, at least for a time.

This is a never-ending process. New generations arise, greater awareness builds, old but astonishing concepts of freedom are rediscovered, and the machine must struggle once again to keep the cogs in line. The truth is a metaphysical force. When you do battle with the truth, you do battle with the universe, and the universe’s Kung Fu is superior to your Kung Fu.

Oligarchs and tyrants still attack the foundations of natural law and natural liberty by conning the public into believing that these inherent belief systems are “antiquated” or “passe”, but this strategy has a limited effect as long as strong freedom champions exist. Liberty based movements and organizations are often tenacious, intelligent, socially savvy, and much more willing to sacrifice themselves for their cause than the enemy is willing for his cause. The truth, when wielded by formidable warriors, rolls forward like an high velocity electric storm.

Because of this dynamic, criminal governments and their puppeteers have taken a simpler path, moving to cripple and defame the speakers of truth in a manner that they hope will stain and sully the truth itself.

In the past decade, the Liberty Movement has grown beyond all expectation. Millions of people have been jolted from their intellectual sleep to discover a nation and a world on the brink of economic, political, and moral collapse. They have seen beyond the veil. They have been disgusted. And now, they are preparing to fight back. Among those with open eyes are certain standouts; those individuals and groups who were railing against the establishment and its maniacal methods long before it was fashionable. These men and women are leaders, in the sense that they are teachers rather than managers. They do not control the movement, but they do INSPIRE the movement. It is the most dedicated and the most uplifting of activists that the system tends to target in order to demean the core strength of the overall movement and tarnish its reputation.

A recent and malicious example is the subversive electronic planting of false evidence in an attempt to connect organizations like Oath Keepers, We Are Change, and PANDA to illicit and illegal pornographic materials:

This is only one method of attack in the arsenal of slander and destabilization, and while the culprits behind the action are not yet known, the strategy is very similar to government run demonization campaigns of the past (just read up on the history of Cointelpro). The following is a list of tactics commonly used by governments to divide activist groups, reduce their momentum, or cripple their image in the public eye…

Low Hanging Fruit

A tactic used over and over again by federal agents is the “grooming” of unaware stooges, or people only loosely associated with a particular organization, otherwise known as “low hanging fruit”. This is done through carefully planned suggestive questions by undercover operatives. These questions will usually be designed to elicit an incriminating response, which is then used to arrest the activist and smear the organization he belongs to by association. For instance, if someone you have not known for very long (meaning less than several years) asked you:

If the SHTF, what buildings would you blow up and how would you do it?”

Or…

Which local cops do you think you would take out if you had to and how would you do it…?”

Then there is a good chance you are talking to a fed, or an informant with a wire. Charges are built using the concept of “conspiracy”, meaning, if they catch you on tape discussing anything that might be construed as committing a specific crime, you can be arrested and charged. This is exactly how the FBI pursued their case against Hutaree Militia members in 2010, which eventually fizzled. However, federal agencies have been very successful in many other incidences. Anyone participating in Liberty Movement activism should remain vigilant, and should never enter into hypothetical discussions of specific violent actions.

Image Destruction

To stop good men from doing good things, you can kill them, but this is messy and creates many questions. If possible, it is better to simply damage their public image as “good men”. That is to say, if you make good men criminals in the eyes of the public, then no one will ask questions when you use force against them later. The sad reality is, many people WANT to believe the worst in others. Much of humanity is infected with apathy, compliance, and nihilism. They live empty lives pandering like beggars for scraps from a soulless system. They claim they want to believe in honor, courage, and clarity, but when confronted with a person who actually exhibits these qualities in abundance, they secretly feel ashamed of their own inadequacies.

A substantial part of our society revels in the snuffing of heroes, because they never want to admit how cowardly they personally are in comparison. The fall of a hero makes them feel better about themselves.

Defamation works because people assume in most cases that slander is true without evidence to support it. Depending on the nature of the supposed crime, the stain may never go away even after vindication in a court of law. If you want to poison the citizenry against a particular freedom group, why not create false accusations of thievery, rape, murder, terrorism, child pornography, etc. among its members?

Planting Evidence

Evidence planting is an old favorite of evil men, but in the digital age, such corruption has taken on more elaborate life. Computers are layered storage devices, and most computer users never deal with or touch a majority of these layers. As the Snowden/NSA scandal has now made abundantly clear, the government has the ability not to mention the legal framework to allow infiltration of your computer’s underlying structure. They can remove whatever information they wish, and, they can ADD whatever information they wish. A computer could be secretly laced with incriminating data without the user being aware.

Furthermore, arrested activists have no ability to monitor their home environment. Whatever is “found” within the home can immediately be used as evidence against the owner, even if the home has been placed out of the owner’s control. Law enforcement officials are not necessarily required to search a person’s home under owner supervision. Anything can be planted at anytime.

Make The Legal Appear Illegal

The following video was discovered within the DHS/FEMA HSEEP website archives. It portrays an imagined scenario using fictional news footage in which “militia members” are raided by federal officers under the guise of stopping terrorism:


Take note that the DHS lists semi-automatic firearms, ammo, night vision, and flak jackets as “contraband” in the video. These are all perfectly legal items today. Arrests of those within the liberty community are often accompanied by a display of stockpiled weapons, as if the stockpiling of firearms is illegal. Household chemicals, fertilizers, or reloading gunpowders are commonly presented to the public as “bomb making materials”.

During a crisis, prepping could easily be labeled “hording”, and those with the good sense to organize for their own survival might be treated as “selfish” or “treasonous” for refusing to surrender their stockpiles to emergency management bureaucrats to be parceled out as they see fit. In this way, the establishment uses the fears of the populace to open morally relative doors. That which was normal and legal before is made illegal without the law ever actually being changed.

Scatter Gun False Flags

Large scale complex false flag operations used to be a tried and true fallback for despotic regimes (I recommend deep study into the exposure of Operation Gladio for a greater understanding of how False Flags function). Lately, though, intricate false flags seem to be backfiring on the establishment. The Boston Marathon Bombing did produce an opportunity to test run large scale martial law tactics in a populated area not seen since Katrina, but the event was incredibly sloppy. Most Americans are at least partially suspicious of the nature of the attack and the government response, including the fact that the two main suspects were longtime FBI informants.

False flag events will certainly be used against the Liberty Movement, but I believe this will be done using multiple smaller scale attacks with less players involved, like a spray of shot from a scatter gun. The “crazed constitutionalist gun-nut” fantasy will be trotted out over and over again in random shootings, bombings, cop killings and so on. The media will make it seem as though stepping outside of your home is certain death by way of “right wing extremism”. Targets will be random and unassuming, giving rise to fears that anyone, no matter where they live, could be next.

Night Of Long Knives

Beyond the realm of defamation lay physical action. Every tyranny in history finalized authority using a “wiping of the slate”, as it were. Political opponents are swept away in the night, or killed in their beds in a meticulously organized and coordinated assault. This may seem like an outmoded style of government aggression, but it is still used today. Once again, the raids on members of the Hutaree Militia were handled exactly like a Night of Long Knives scenario, using multiple groups of officers in three separate states. Regardless of what you might think of the Hutaree, the point is that the establishment is training its law enforcement to use such tactics and use them in advanced ways.

Prominent Liberty Movement proponents should prepare for the worst, harden their homes, and build a strong local community in case such an event arises. The process of “decapitating the leadership” of ideologically opposing organizations is a mainstay of oligarchy. In the U.S. today, the existence of the indefinite detention and rendition provisions of the NDAA and the “enemy combatant status” applied to classified White House assassination lists means this concern is not paranoia, but a cold hard reality of life for any American standing against the system.

Good Guys And Bad Guys

In order for any government or corporate aristocracy to take control of a culture, it must first assert itself as relevant. It must at least appear useful to the people, so that it can gain their support. As long as the state is viewed as the “bad guy” in the public mind, there can be no dominance. A new bad guy must be engineered, and who better to present as the great villain than your most effective political adversaries.

There will come a time in the near future when the demonization campaigns of the DHS or the SPLC [Southern Poverty Law Center] today will seem like a cakewalk. Count on it. The best our movement can do for now is to expose each misstep of the establishment, and continue to weaken their position. Every time we call out a propaganda initiative, or derail it in advance of its inception, we reduce THEIR public image, and cement our own.

It’s a bit ironic, but usually what evil men want most is to be seen as saviors; as guardians and protectors. They want to be seen as benevolent knights in shining armor coming to rescue the poor oblivious multitudes. When any information war hits it’s climax, the goal of either side is to maintain the moral high ground. We already have it, and thus, they have to take it. How they will seek to do this is at once predictable, and horrifying.

You can contact Brandon Smith at: brandon@alt-market.com

Alt-Market is an organization designed to help you find like-minded activists and preppers in your local area so that you can network and construct communities for mutual aid and defense. Join Alt-Market.com today and learn what it means to step away from the system and build something better.

To contribute to the growth of the Safe Haven Project, and to help us help others in relocating, or to support the creation of barter networks across the country, visit our donate page here.

Please Spread The Word And Share This Post