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It was 1790 and
the revolutionary National Assembly in Paris was worried.
Complaints were
reaching the Assembly from all over France, that business was stagnant, sales
were down, people were without work, and there was a great scarcity of money.
This was quite
natural, because all business slows down when the prevailing source of
Authority is under question. The Bastille prison had been taken the prior
year by a revolutionary crowd and all sorts of ugly things were being said
about King Louis XVI and his pretty young Queen, Marie Antoinette.
But this was the
"Age of Reason" and the most educated, intelligent and reasonable
people in France were members of the revolutionary National Assembly, which
gathered daily in Paris.
The Assembly put
their highly educated heads together and came to the conclusion that a
scarcity of money was quite intolerable and that the Assembly must really do
something about it.
"What do we
have highly educated brains for, if we can't solve the problem of a scarcity
of money? Without a doubt, Reason can overcome this problem."
So the members
of the National Assembly thought about the problem of the scarcity of money,
and came up with a splendid idea: "Let us create the necessary money,
and things will go swimmingly."
Thus was born
the "Assignat". Out of the collective wisdom of the Assembly, the
Assignat was born as a claim upon the vast extension of lands recently taken
by the State of France, from the Catholic Church. What could be more solid
than a claim upon the lovely lands of dear France?
The Assignats
were soon printed up, with various denominations of monetary value in gold
Francs.
At first, the
Assignats circulated alongside gold coin at par value. But soon enough, the
exchange value of the Assignats against gold began to fall.
Thus began a
nightmare episode that lasted seven years.
The first issue
of Assignats did not relieve the problem of business being in a funk. So a
second issue followed the first; and then another, and then more, and thick
and fast they came at last, and more and more and more, falling, falling,
always falling in value against gold.
The highly
intelligent gentlemen of the Assembly decided that this fall in value of
their Assignat must be the work of wicked, unpatriotic people who should be
severely punished.
The Assembly
decreed that a merchant should be punished by being sent to the galleys or to
the guillotine, if he should venture to ask a customer who wanted to know the
price of bread, with what money he planned to pay for the bread - whether it
was with gold coin or with Assignats?
The Assembly
created a national net of spies to hunt down the wicked hoarders of gold,
confiscate their gold and have them part with their heads with a short, sharp
shock on a big, black block.
In the meantime,
the more intelligent of the citizenry took out enormous debts in Assignats,
with the certainty that their value would soon plummet; with borrowed
Assignats they purchased all sorts of things of lasting value, such as real
estate, art and jewelry. In due course, the value of the Assignat fell to
next to nothing and the debts were wiped out. Enormous wealth was transferred
from the mass of the ignorant to the few who were able to see what was going
on.
Eventually, the
common people of Paris found that bread was hard to come by. Starvation set
in, and the Parisian government had to provide rations of bread for the
multitude - rotting, wormy bread.
In 1797 Napoleon
came to power in France. He put a stop to the very reasonable plans of the
highly educated men of the National Assembly, and declared that henceforth,
only gold would be money.
In the center of
the Place Vendome, where today there stands a great column surmounted
by a statue of Napoleon, a huge bonfire consumed piles of freshly printed
Assignats and the wooden printing machinery which fabricated them.
The highly
educated and eminently reasonable men of the National Assembly had succeeded
- in the mighty work of bringing France to its knees. But not one of those
men, responsible for the colossal disaster, was ever known to have said about
it: "We were mistaken".
2016: Why is it
1790 all over again? Because just as in France in 1790, today we have a set
of conceited men running the world's economic policy on the basis of a flawed
intellectual construct. In 1790, the flawed construct was the Assignat.
Today, the flawed intellectual construct is the irredeemable dollar and its
derivative currencies.
In 1790, gold
was the enemy of those conceited men, because the depreciation of the
Assignat against gold revealed the falsity of the Assignat; so the National
Assembly did their best to suppress the use of gold by violence against its
owners. Today, gold is once again the enemy of our conceited masters: gold,
whose value threatens to expose the falsity of the irredeemable dollar.
In 1933, the
value of the dollar in gold was 1 1/2 grams. Today, the value of the dollar
is only about 2 1/2 hundredths of a gram of gold. Our conceited masters are
struggling to keep their intellectual construct, the irredeemable currency
which is the dollar, from plunging in value to thousandths and
ten-thousandths of a gram.
Like the
Assignat, which in 1797 fell to a value of zero grams of gold, the dollar faces
the same inevitable fate. And since the rest-of-the-world's currencies are
derivatives of the dollar, they too will become worthless.
The fundamental
flaw in the thinking of the conceited members of the National Assembly of
France in 1790 was their mistaken idea that they could invent a money more
suitable than gold to achieve the prosperity of France.
Today, the
fundamental flaw in the thinking of our conceited Masters of the Universe is
the same as that which blinded the members of the National Assembly in
France, in 1790: they are convinced that their intellectual construct, the
irredeemable dollar, is far more suitable than gold for use as money.
The conceit of
the majority of the members of the National Assembly in France in 1790 led to
the total prostration of the economy of France in the course of seven years.
The conceited Central Bankers of today will without a doubt achieve a world
sunk in economic prostration. But don't expect any one of them to ever say
"We were mistaken".
So that's why It's
1790 All Over Again.
* * *
Conceit: over-high
opinion of, too much pride in, oneself or one's powers, abilities, etc. (OED)
Reference: Andrew Dickson
White "Fiat Money Inflation in France".
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