“Our whole system of banks is a violation of every honest principle of banks. There is no honest bank but a bank of deposit. A bank that issues paper at interest is a pickpocket or a robber. But the delusion will have its course. … An aristocracy is growing out of them that will be as fatal as the feudal barons if unchecked in time.”
– John Adams to Benjamin Rush: Dec. 27, 1810
This line from John Adams, one of our greatest Founding Fathers and our second president, should chill the back of every American’s neck. The reasons are twofold: first, what was only an experiment in his day has become a matter of course in our own; and second, the issue of currency is the true source of the calumny that is our national debt.
To be upfront, I am not a financial expert, nor do I pretend to be one. However, as an avid reader of history, I frequently run across sentiments very similar to those above, particularly among our founders. They very clearly distinguish between “money” (i.e. typically gold and silver, or notes backed by gold or silver) and “paper,” which was simply that: paper governments printed to “pay” their bills but which tended to destroy their currency in the process because they weren’t backed by anything.
Nowadays, many are under the impression that our national debt is a fiscal (i.e. “spending”) problem. But this assumes that the problem is that the government simply wants to spend too much. The real problem actually goes much deeper: It is that the government has EVERY INCENTIVE to spend too much, because “money” (i.e. paper bills from the Federal Reserve) are cheaper than they have ever been before. In other words, the cost of adding debt to our nation’s balance sheet is very cheap at the moment, thus allowing the government to appear (at least for now) benevolent to the people with more and more programs.
Why is this? It is essentially because our government is addicted to money that has no worth other than what the government says it has. We have a monetary system based on fiat currency, from the Latin word for “decree” – it is worth what the government says it is. This is why if you look at our “money” today, it says that each bill is “Legal Tender,” whereas for most of American history, it would say something to the effect that the paper bill could be exchanged for gold or silver, i.e. something that had real value. This way, our government can appear to be benevolent to the people with new programs and “assistance,” but it is in fact destroying the currency, and thus the very labor of the people through the invisible tax of inflation.
Fiat currencies have been the ruin of governments for centuries, from France in the 18th century, Great Britain in the 19th, Germany in the 20th, among numerous other examples. They allow governments to print “money” out of thin air, but since the money is not backed by anything, it lowers the value of the currency in the process. This is why, according to our federal government’s own Bureau of Labor Statistics, it would take $12,428.85 in today’s “money” to equal $10,000 in 2004 “money.” That’s about a 20 percent loss in value in just 10 years. So where did it all go? In short, it was stolen through the invisible tax of inflation brought on by national debt. Or as Adams put it, we have been the victims of a “pickpocket or a robber,” our own government, and its nefarious banker, the Federal Reserve. And here is the truly disturbing part: They did it simply by spending more. They didn’t even have to pass a new tax. There was no debate about this new tax; it was only about new “spending.” But what we got was new spending and new debt AND a new tax, all wrapped up into one. Those are the true consequences of national debt. And the most disturbing part? The least among us are the ones hurt the most as the few dollars they have are drained of their value, even though our government is justifying this horrific national debt in the name of supposedly helping those least fortunate.
Jefferson remarked that to preserve the independence of the people, “we must not let our rulers load us with perpetual debt.” He said the only choices were between “economy [frugality] and liberty, or profusion [printing ‘money’] and servitude. If we run into such debts … we must live … on oatmeal and potatoes, have no time to think, no means of calling the mis-managers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers.” Remember that the next time a politician calling for more spending also is decrying the falling behind of the middle class.
Perhaps most prophetically, Jefferson predicted the result of such ruinous public debt: “… the bellum omnium in omnia [‘war of all against all’]. … And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.” In other words, immense national debt eventually leads to what we would today call “class warfare,” the “war of all against all” Jefferson spoke of: poor against rich, rich against poor, the middle class against both, as each class attempts to secure its own position and its own benefits. In such a turn of events, Jefferson said that “the bulk of society is reduced to be mere automatons of misery, and to have no sensibilities left but for sinning and suffering.” The commensurate and palpable deterioration in our own national morality would seem to confirm this prophecy.
So, my fellow citizens, let us not kid ourselves: our national debt is fundamentally a monetary problem, not a fiscal problem. Spending less is only a band-aid. The cure is to rid ourselves of the banking kleptocracy headed by the Federal Reserve that enriches and thus controls our government, which passes off its crimes in the name of “helping the people.” Unless we, as citizens of this great but quickly foundering country, recognize that our national debt is actually theft from the people, which in the process corrupts our morals and harms the least fortunate to enrich the most fortunate (the “aristocracy” referred to by Adams), we will never again be a free people or a free republic.
Remember that when you pay your taxes this year.