WEBVTT NOTE The Link Between Degenerating Currency and Degenerating Culture 1 00:00:00.000 --> 00:00:05.000 You don't know me, so you don't know if that was worthwhile or not. 2 00:00:05.000 --> 00:00:10.000 As opposed to my esteemed colleagues here, this is not a scholarly paper in that sense. 3 00:00:10.000 --> 00:00:13.000 I'm much more of a street economist, as you will see. 4 00:00:13.000 --> 00:00:17.000 I'm a self-trained Austrian because I didn't learn any of this in graduate school, 5 00:00:17.000 --> 00:00:22.000 and I don't think anybody does, although these days it's becoming a little more popular. 6 00:00:22.000 --> 00:00:27.000 I was warned once by Thomas DiLorenzo to not let it be known that I was an Austrian 7 00:00:27.000 --> 00:00:31.880 I'm an Austrian at the University of Colorado until after I had achieved tenure, but I 8 00:00:31.880 --> 00:00:37.080 just teach a drive-by course in free market economics to the MBA students, so that will 9 00:00:37.080 --> 00:00:38.080 never happen. 10 00:00:38.080 --> 00:00:44.440 I have a fairly large family, I'm very vested in the future, many children, and I've noticed 11 00:00:44.440 --> 00:00:48.040 that the difference between when I raised my first sets of children, who are now in 12 00:00:48.040 --> 00:00:53.600 their thirties, and my youngest who are now teenagers, the culture has become so toxic 13 00:00:53.600 --> 00:00:57.960 This is increasingly difficult to raise children in a moral sense in today's 14 00:00:57.960 --> 00:01:02.600 society and it made me think what is going on what's going on policy-wise 15 00:01:02.600 --> 00:01:06.640 what's going on culturally what are all the indicators showing us and where does 16 00:01:06.640 --> 00:01:10.280 that come from so I kind of started thinking to myself when I started 17 00:01:10.280 --> 00:01:14.400 researching and analyzing and I came up with this idea and it's more of a 18 00:01:14.400 --> 00:01:19.200 hypothesis here I believe I've got some proof of it but I'm welcome to welcome 19 00:01:19.200 --> 00:01:23.440 your feedback in particular my email address is on the bottom of this front 20 00:01:23.440 --> 00:01:30.440 This is not original, is it? We start with an axiom. A self-evident truth that Thomas Jefferson would say. Something like, man acts. People engage in conscious human action. 21 00:01:53.440 --> 00:02:10.440 Human action involves moral choices. Man can act morally, and by definition of morally, I mean voluntarily, or immorally, and by definition of immorally, I mean coercively. 22 00:02:10.440 --> 00:02:20.940 Now in a natural state of liberty, government is by definition limited to securing man's natural rights to life, liberty and property. 23 00:02:20.940 --> 00:02:23.940 That is the central role or function of government. 24 00:02:23.940 --> 00:02:29.940 And as I read more and more of the anarcho-capitalist literature, the more I'm wondering if even that is true. 25 00:02:29.940 --> 00:02:35.440 Well, the fact is that free societies choose moral voluntary behavior. 26 00:02:35.440 --> 00:02:42.440 It's the natural choice of a free society, and in fact Tocqueville mentioned that you couldn't have a free society without the moral base. 27 00:02:42.440 --> 00:02:55.440 And this morality is degenerating around us, and I'm going to eventually draw the linkage between that degenerating culture and morality and the degenerating currency with which we use to trade our economic goods and services. 28 00:02:55.440 --> 00:03:03.440 The immoral course of behavior in this natural state of liberty is by and large shunned. It does occur occasionally, but the community frowns upon it. 29 00:03:03.440 --> 00:03:09.440 People are not rewarded for it, generally, and bad things end up happening to bad people, usually. 30 00:03:09.440 --> 00:03:16.440 I think of my wife's family. They're pioneers that came across the Northern Plains and settled and built cities out of the wilderness. 31 00:03:16.440 --> 00:03:23.440 Minneapolis, Sioux Falls, Fargo. People of Norwegian background. Very poor, very illiterate farm people. 32 00:03:23.440 --> 00:03:31.440 Tremendous, deep, rich culture morality. They would no sooner lie or cheat from each other than they would do anything. 33 00:03:31.440 --> 00:03:40.440 I mean, it's inconceivable to them, today's culture, where even lies are part of the jokes that are passed around on our modern media. 34 00:03:40.440 --> 00:03:45.440 Advertising, you see them in advertising, look at your advertisements these days for products, goods and services. 35 00:03:45.440 --> 00:03:54.440 It's become the norm to make a joke out of lying to somebody about some product. Something is happening here. 36 00:03:54.440 --> 00:03:58.440 Well, here's what Thomas Jefferson had to say. 37 00:03:58.440 --> 00:04:06.440 The principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale. 38 00:04:06.440 --> 00:04:10.440 It is the ultimate taxation without representation, is it not? 39 00:04:10.440 --> 00:04:13.440 Spending your grandchildren's money before they're even born. 40 00:04:13.440 --> 00:04:16.440 Spending the wealth that hasn't even been produced yet. 41 00:04:16.440 --> 00:04:18.440 How could this happen? 42 00:04:18.440 --> 00:04:21.440 Because from America's founding until World War I, 43 00:04:21.440 --> 00:04:23.440 Total government in the U.S. economy, 44 00:04:23.440 --> 00:04:26.940 and this is the best we can do with what little data we have going back, 45 00:04:26.940 --> 00:04:30.440 commandeered perhaps 5 to 10 percent of the economy. 46 00:04:30.440 --> 00:04:36.440 Total government, federal, state and local combined, 5 to 10 percent. 47 00:04:36.440 --> 00:04:40.440 With that, we defeated the greatest military power in the history of the world, 48 00:04:40.440 --> 00:04:43.940 established the nation, grew coast to coast and border to border, 49 00:04:43.940 --> 00:04:48.440 created the freest, most prosperous society in the history of man, on our own. 50 00:04:48.440 --> 00:04:57.440 What that means, if it was 5 to 10% of the economy was the coercive sector, 90 to 95% of human economic action was voluntary. It was the moral sector. 51 00:04:57.440 --> 00:05:07.440 There was no net accumulation of government debt. Deficits in one time period were offset by surpluses in a later time period. It was a matter of fundamental morality. 52 00:05:07.440 --> 00:05:13.500 But then, the moral basis of American society, and I'm proffering this, started to change 53 00:05:13.500 --> 00:05:19.240 about in 1913, a very interesting year, when two things occurred simultaneously. 54 00:05:19.240 --> 00:05:23.460 The 16th Amendment, the U.S. Constitution, was the beginning of the end of formal property 55 00:05:23.460 --> 00:05:27.960 rights, the idea that you had a right to the fruit of your labor. 56 00:05:27.960 --> 00:05:31.200 As is fundamental a property right as any other you can imagine. 57 00:05:31.200 --> 00:05:36.220 That was over, as of 1913, when it was decided the coercive sector could come and take the 58 00:05:36.220 --> 00:05:44.220 Until then, every Supreme Court decision had argued that you could not have a national federal income tax. 59 00:05:44.220 --> 00:05:48.220 It was against the concept of property rights. So something broke there. 60 00:05:48.220 --> 00:05:54.220 Then we had the simultaneous founding of the Federal Reserve System, which was the beginning to the end of another right, 61 00:05:54.220 --> 00:05:58.220 the right to a hard currency. Well, how can that be a right? 62 00:05:58.220 --> 00:06:05.220 Well, if we are to engage in voluntary trade and contract and engage in economic activity and action, 63 00:06:05.220 --> 00:06:10.220 We must have some sound unit of account, a hard currency. 64 00:06:10.220 --> 00:06:13.220 And here's what Ludwig von Mises, one of my favorite phrases, 65 00:06:13.220 --> 00:06:19.220 Sound money was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. 66 00:06:19.220 --> 00:06:21.220 You see, it was a constraint. 67 00:06:21.220 --> 00:06:27.220 A hard currency is a constraint on that coercive sector of the economy. 68 00:06:27.220 --> 00:06:33.220 Ideologically, it belongs in the same class with political constitutions and Bill of Rights. 69 00:06:33.220 --> 00:06:36.220 Right to a Hard Currency 70 00:06:36.220 --> 00:06:40.220 Which brings me from the axiom to the postulate to my theorem. 71 00:06:40.220 --> 00:06:42.220 So you see how I'm trying to be Aristotle here. 72 00:06:42.220 --> 00:06:44.220 And here it is. 73 00:06:44.220 --> 00:06:48.220 A degenerating currency contributes to a degenerating society. 74 00:06:48.220 --> 00:06:54.220 Now I'm not saying that a society will degenerate if and only if you have a degenerating currency. 75 00:06:54.220 --> 00:06:57.220 I'm just proffering that it contributes to it. 76 00:06:57.220 --> 00:07:00.220 Certainly we've had degenerate societies in the past with hard currency. 77 00:07:00.220 --> 00:07:02.220 We've had moral societies without it. 78 00:07:02.220 --> 00:07:12.220 How? With a fractional reserve fiat currency, government no longer needed to tax or borrow in order to spend. 79 00:07:12.220 --> 00:07:18.220 This was a founding disconnect from the role of government in securing rights to life, liberty and property. 80 00:07:18.220 --> 00:07:24.220 Now, it could just print and spend. But it didn't do too much of it at first, and it just kept ramping up. 81 00:07:24.220 --> 00:07:29.220 Keep in mind that the true tax is the percentage of resources that is commandeered by the government. 82 00:07:29.220 --> 00:07:34.700 Government. That's the tax rate. It's simply measured by calculating government spending 83 00:07:34.700 --> 00:07:38.980 as a percent of total spending. It does not matter. It does not matter whether you say 84 00:07:38.980 --> 00:07:44.060 the tax rate is 10% or 20% and I collect it here and there. You just take the total spending. 85 00:07:44.060 --> 00:07:48.300 That's the resources commandeered out of the private sector as a percent of the total resource 86 00:07:48.300 --> 00:07:52.820 base. So you can say, oh, you know, we only have a 20% tax rate here. We'll take a look 87 00:07:52.820 --> 00:08:04.020 This commandeering of resources can now be accomplished through the printing press. 88 00:08:04.020 --> 00:08:09.460 Even Keynes acknowledged this, that inflation is the most stealthy of all taxes, that not 89 00:08:09.460 --> 00:08:15.380 one man in a thousand even recognizes its occurrence. 90 00:08:15.380 --> 00:08:21.300 So within one generation of this 1913 event, we have the Great Depression, where the welfare 91 00:08:21.300 --> 00:08:50.300 A Cultural-Political-Economic Death Spiral Begins 92 00:08:50.300 --> 00:08:55.300 Society then demands more free lunches, leading to more fiat currency. 93 00:08:55.300 --> 00:09:03.300 Over generations and generations and generations, the moral basis, the very foundational principles of voluntary trade are eroded. 94 00:09:03.300 --> 00:09:06.300 The state crowds out the moral behavior of the individual. 95 00:09:06.300 --> 00:09:09.300 The state becomes both the parent and the spouse. 96 00:09:09.300 --> 00:09:14.300 Eventually, young women and men begin to have children without the means to support them. 97 00:09:14.300 --> 00:09:19.300 Does anybody know the out-of-wedlock birth rate as of 1962? 98 00:09:19.300 --> 00:09:24.180 Somebody would care to guess it here in the audience. It was the 6%. And that was true 99 00:09:24.180 --> 00:09:30.900 amongst all ethnic groups, black as well as white, Hispanic in America. 5 to 6% is now 100 00:09:30.900 --> 00:09:37.020 up to around 35 or 40 and some subcultures 70 or 80%. Out of wedlock birth sky rock, 101 00:09:37.020 --> 00:09:42.980 the family degenerates. Behaviors are disconnected from consequences. The social safety net grows 102 00:09:42.980 --> 00:09:48.300 along with the government printing presses. People are empowered to internalize benefits 103 00:09:48.300 --> 00:09:51.420 but externalize the costs of their behavior. 104 00:09:51.420 --> 00:09:54.620 Moral hazard becomes the norm for society. 105 00:09:54.620 --> 00:09:58.580 How many people would engage in this cultural behavior 106 00:09:58.580 --> 00:10:02.980 if they did not believe that somebody else was going to pay for the consequences of their behavior? 107 00:10:02.980 --> 00:10:06.980 This used to be a self-regulating culture. 108 00:10:06.980 --> 00:10:09.620 So, going back to the idea of the state, 109 00:10:09.620 --> 00:10:12.980 crowds out the moral behavior of the individual. 110 00:10:12.980 --> 00:10:17.060 A nation birthed in liberty slowly transforms into a fascist state. 111 00:10:17.060 --> 00:10:23.200 And by a fascist state, I mean a classic definition of fascism, the complete conjoining of business and government. 112 00:10:23.200 --> 00:10:24.860 Sound familiar? 113 00:10:24.860 --> 00:10:30.080 Government choosing, picking winners and losers. Some investment banks are more worthy than others. 114 00:10:30.080 --> 00:10:33.380 Some manufacturing companies are more worthy than others. 115 00:10:33.380 --> 00:10:35.280 Business is not immune. 116 00:10:35.280 --> 00:10:40.380 Take a look at the current financial meltdown and bailout. Fiat currency allows profits to be privatized 117 00:10:40.380 --> 00:10:45.860 while losses are socialized. It allows the federal government to start controlling the economy like that. 118 00:10:45.860 --> 00:10:51.580 Rothbard recognized this certainly in the Great Depression, America's Great Depression. 119 00:10:51.580 --> 00:10:55.940 He has a section in Chapter 10 called The Spread of Collectivist Ideas in the Business World. 120 00:10:55.940 --> 00:10:59.340 I teach in the MBA program at the University of Colorado. 121 00:10:59.340 --> 00:11:02.820 You would think, at Colorado Springs, 122 00:11:02.820 --> 00:11:09.460 one of the most pro-free market libertarian capitalist cities in the nation, 123 00:11:09.460 --> 00:11:15.220 of the most pro-free market capitalist nation in the world perhaps at one time, 124 00:11:15.220 --> 00:11:22.720 You would think this would be normal, but I have to be very quiet in that business school, okay? 125 00:11:22.720 --> 00:11:31.220 Murray pointed out that, sorry Mr. Rothbard, Dr. Rothbard, the Swope Plan to compulsively cartelize American business, 126 00:11:31.220 --> 00:11:37.060 brought to us by General Electric in the 1930s, was endorsed by the U.S. Chamber of Commerce. 127 00:11:37.060 --> 00:11:42.020 In Colorado Springs we call them the U.S. Chamber of Communists. 128 00:11:42.020 --> 00:11:46.460 More and more businessmen become political entrepreneurs rather than market entrepreneurs. 129 00:11:46.460 --> 00:11:52.060 And this is a reference to Thomas D. Lorenzo's work in How Capitalism Saved America. 130 00:11:52.060 --> 00:11:53.660 Liberty is lost. 131 00:11:53.660 --> 00:11:58.840 Since political liberty cannot be disconnected from economic liberty, even my least favorite 132 00:11:58.840 --> 00:12:04.080 founder Alexander Hamilton understood this, power over a man's substance is power over 133 00:12:04.080 --> 00:12:05.080 his will. 134 00:12:05.080 --> 00:12:10.020 Hayek simply restated that to be controlled in our economic pursuits means to be controlled 135 00:12:10.020 --> 00:12:18.020 in everything, because man acts, man faces trade-offs, opportunity costs, economics is 136 00:12:18.020 --> 00:12:23.360 our lives, it's what we do, the scarcest of all resources is not land, labor, and capital, 137 00:12:23.360 --> 00:12:28.860 it is our time on earth, and what we do with that time, and everything we do is something 138 00:12:28.860 --> 00:12:35.040 we can't do, so we must economize on that time, and Hayek pointed out the ultimate sanction 139 00:12:35.040 --> 00:12:39.940 of a planned economy is the hangman, Wyatt eventually, no matter how much of a big grin 140 00:12:39.940 --> 00:12:45.700 and Happy Filing Smith's face that comes to us with, it ends up with the guns pointed at our heads. 141 00:12:45.700 --> 00:12:48.340 Now even atheists can be prophets. 142 00:12:48.340 --> 00:12:52.820 Here's today's headlines from 1957, Ayn Rand Atlas Shrugged. 143 00:12:52.820 --> 00:12:55.140 I'm going to read it because this is powerful. 144 00:12:55.140 --> 00:12:59.380 When you see that trading is done not by consent but by compulsion. 145 00:12:59.380 --> 00:13:04.580 When you see that in order to produce you need to obtain permission from men who produce nothing. 146 00:13:04.580 --> 00:13:09.060 When you see that money is flowing to those who deal not in goods but in favors. 147 00:13:09.060 --> 00:13:17.060 When you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you. 148 00:13:17.060 --> 00:13:25.060 When you see corruption being rewarded and honesty becoming a self-sacrifice, you may know that your society is doomed. 149 00:13:25.060 --> 00:13:32.060 There's my theorem. A degenerating culture contributes to a degenerating society. I believe I've proved my point. 150 00:13:32.060 --> 00:13:35.060 I have some final thoughts here. 151 00:13:35.060 --> 00:13:39.620 Norman Thomas, six-time U.S. presidential candidate for the Socialist Party of America, 152 00:13:39.620 --> 00:13:45.620 quote, the American people will never knowingly adopt socialism, but under the name of quote liberalism, 153 00:13:45.620 --> 00:13:52.420 they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened. 154 00:13:52.420 --> 00:14:00.820 Now he and Gus Hall, Gus Hall was to the left of him, of the U.S. Communist Party, they both quit American politics, 155 00:14:00.820 --> 00:14:11.820 Agreeing that the Republican and Democrat parties by 1970 had adopted every plank of the Socialist party platform and they no longer had an alternative platform on which to run. 156 00:14:11.820 --> 00:14:19.820 Their mission was accomplished. And now let's go back to Frederic Nietzsche because he says something that's very interesting. 157 00:14:19.820 --> 00:14:29.820 The state is the coldest of all cold monsters. Coldly it lies too. And this lie creeps from its mouth. I, the state, am the people. 158 00:14:29.820 --> 00:14:36.820 Everything about it is false. It bites with stolen teeth.