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The science which today is called economics was originally
called political economy, meaning that it was a combination of politics and
economics. This has always seemed a little strange to me.
Economics is the science of creating wealth. We cannot say that
politics is the science of destroying wealth (although sometimes it seems
that way). However, we can say that improper politics is the science of
destroying or stealing wealth and proper politics is the science of
safeguarding the right of property.
What
these observations do, however, is to show the close connection between the
two sciences. All life is about satisfying our needs. For that we
need goods, and the formal definition of economics is the science of scarce
goods. Scarce here means not universally available. A free good
(the opposite of scarce) is available without effort or cost. Air, for
example, is a free good. All you have to do is open your mouth and
breathe.
But
as it happens, most of our goods are not free. They require effort to
produce. And given the traditional incentives of eating, living indoors
and wearing clothing, most human beings are willing to accept that deal.
At
this point, however, enter the face of evil. There be some vile,
dastardly creatures who seek their economic goods from others by stealing
that which these others have produced. Back in the Dark Ages (an evil
time) a class of men (the Medieval Aristocracy) organized criminal gangs to
abuse, torture and rob the common people of their day. These men called
themselves governments, and they gave the Dark Ages its name.
All
of this was ended by the British libertarians, such as John Locke and Oliver
Cromwell, who helped the British people achieve liberty and democracy.
It was on the basis of Locke’s teachings that the Government of the
United States was founded on the basis of protecting, among others, the right
of property. Under this system the United States became the wealthiest
and happiest country in human existence.
But
in 1880, a “new” political system was created in Germany on the
principle, “Rob from the rich to give to the poor.” This
system never accomplished what it promised, but it did manage to get the idea
of “rob” across as the purpose of government. Somehow, in
the minds of these people, robbing became something good.
This
system was imitated in the United States by FDR in 1933, and since that time
there has been the party of rob here in the United States whose goal has been
to “redistribute the wealth,” meaning to use the government not
to protect the right of property but to violate it.
The
phrase political economy was used in the late Middle Ages because the
aristocracy used government to rob from the people and redistribute wealth to
itself. Of course, the medieval aristocracy did not want to admit that
this was what they were doing. If you have the guns, knives and
battle-axes on your side, not only can you rob the other guy, you can make
him repeat all kinds of lies about what a nice guy you are.
However,
upon deeper reflection the medieval aristocrats did not have as many guns,
knives and battle axes as they thought. They did win most of their
battles through most of the Middle Ages, but then the day came when their
world came to an end.
In
the 1780s, Thomas Jefferson and Thomas Paine had gone to France preaching
democracy and liberty. When the king of France made the mistake of summoning
the representatives of the nation to debate an important national issue (the
budget), Jefferson told the common people that they, not the clergy or
feudal lords, were sovereign. A century earlier, King Louis XIV had
told the people of France, “The State, it is I.” But in
1789, the people said to the King, “”We are
sovereign.” And soon the King and the Aristocracy did not have so
many battle-axes as they had thought. Indeed, now it became apparent
that the people outnumbered the aristocrats by 100 to 1. In a short
time, the aristocrats had been driven out of the country, France had become a
democracy, and the King, who had chopped off so many of the heads of the
people of France, had his own head chopped off as well.
This,
of course, is a strange conclusion. We started with the observation
that the aristocracy was abusing the people of France for economic
reasons. And now we are forced to the conclusion that, although this
had been the normal practice for 1,000 years, the power of the aristocracy
was very limited. As noted, they were outnumbered by 100 to 1.
How could this happen?
The
answer is very simple. Indeed, it is an old cliché, something so
hackneyed and old fashioned that everyone overlooks it.
THE PEN IS MIGHTIER THAN
THE SWORD.
And indeed, so inured have people become to this important truth
that they have failed to notice that it explains most of the great battles of
history. For example, it was taken for granted prior to 1789 that
aristocrats could easily defeat a peasant army. But that was the time
when the pen (wielded by the priests) was on the side of the
aristocracy. By the 1780s, the pen was wielded by enlightenment
intellectuals, who were on the side of the people.
You
all know of Napoleon’s victories. But you have been told (by
lying historians) that these victories were won by Napoleon’s military
genius. Not so. Napoleon won most of his victories from
1795-1812. And this was the period when the ideology of the day favored
democracy and the rights of man. However, as time went by, Napoleon
started listening to sycophantic intellectuals (who were telling him that he
was a genius). At the time of his early victories, the Austrian and
Prussian armies he faced had no freedom in their own countries. These
soldiers knew that, if they lost the war, they would get more freedom.
(A good example of this was the fact that, when the French conquered Karl
Marx’s home town, they abolished communism and substituted private property.)
By
1815, Marx’s home town had abolished communism, and it was apparent to
most Frenchmen that Napoleon had ambitions to make himself a hereditary
dictator. That is the real reason that Napoleon met his Waterloo.
Using
these principles, that most actions of most human beings are motivated by the
desire for wealth and that the pen is mightier than the sword, we can
understand the military and political events of the past 2 centuries.
In the early 20th century, a new group of intellectuals arose, a
group which, like the medieval priests, wanted to steal from the common
people and give to the aristocrats. However, these intellectuals did
not imitate the medieval priests. Just the opposite, they pretended an
ultra-modern, scientific orientation.
Take,
for example, John Maynard Keynes. He called his economic theory
“the new economics.” However, Keynesian economics is
nothing more than mercantilism, which was precisely the old economics.
Keynes is famous for introducing mathematics into his economics (although he
did not know any mathematics). That is, Keynes was a con artist, and
the mathematical language is intended to intimidate the reader and frighten
him into giving in to anything that Keynes said.
In
previous articles, I have chronicled the different predictions that various
prominent Keynesians have made at various times. There was John Kenneth
Galbraith’s prediction, in early 1955, that the stock market was going
to re-enact another 1929, Henry Kaufman’s prediction, in 1982, that the
country was about to suffer an important “depression,” another
“depression” (by Ravi Batra) in 1990 and an incredible bull
market (“DJI 36,000” by 2002-4). And, of course, to this
very day believers in the N.Y. Times prediction of a “great
recession” in 2008 sit and wait for the enormous decline in prices
(which will never come), just as they waited for the reenactment of the 1929
crash in 1955.
The
modern intellectuals follow the same tactic as the medieval
intellectuals. They constantly fabricate new arguments to justify
robbing from the average American. In turn, they are rewarded by these
fraudulent intellectuals.
In
words of one syllable, the modern intellectuals are continually lying to the
people. Like any other liar it is necessary for them to continually
invent new lies. This has all happened before. For example, the
lies of the medieval aristocracies included the claim that God had had a
child via a mortal woman; however, the inference was to be avoided that God
was a male. A powerful argument in favor of this was that, if you
didn’t agree with it, then they would torture you to death. On
top of this, not only had the woman been a virgin prior to conception, but
she remained a virgin after the act of conception. Add also the
fact that the Christian God, like the Jewish God (but unlike his pagan
counterparts), did not have a physical body or the requisite sex organ with
which to perform said act of conception.
A
study of these lies shows that it is getting more and more difficult for the
new intellectuals to continually invent new lies. To succeed in
today’s world, it is necessary for people to have a more complete grasp
of events and an in depth knowledge of science. For example,
approximately one-third of today’s subject matter (the sciences) in
normal colleges is true. Another one-third (social sciences) consists
of deliberate lies. And a final third (humanities) consists of
intellectual rubbish. In sum, a good one-third of all college-educated
people are able to discuss intellectual matters seriously and can spot a
poorly reasoned argument.
 
Over
the past 10 years, the price of silver has multiplied by a factor of 7.
The people needed by the paper aristocracy are those who repeatedly fall for
the lie of the day. But these people repeatedly lose their money in the
financial markets. When corresponding things happened back in the
Middle Ages, the people who could not see reality as it was would either
starve to death (for lack of food) or die in one of the many wars of the day.
Today,
however, there is a premium on seeing reality as it is. For example,
when we bring up the galleons of the Spanish Armada of the late 16th
century, we find that ammunition did not fit the gun bores, that food was not
stored properly and was not preserved on the trip, that the cannon could not
be properly aimed, etc. In words of one syllable, the people of that
day could not function properly and therefore died.
Howard
Katz
The Gold Speculator
Howard S. Katz is the
editor/publisher of the One-handed Economist, a financial letter which
combines fundamental and technical analysis. He was a bug on gold in the
1970s and became a bug on gold again in late 2002.
Subscribe to the Gold
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