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Our
transition from more-or-less free country to police state is accelerating.
The NSA's
Utah data mining facility, ever-tighter restrictions on offshore
accounts, the Internet
"kill switch", the Patriot Act's many assaults on the Bill of
Rights, the militarization of local police, the spread of drones for domestic
surveillance; each has a role in the high-tech updating of a very old idea:
that the state is paramount and the individual a slave to public order and
national power.
But why is
this happening now, rather than in 1950 or 2050? The answer is that we're
reaping the whirlwind that always accompanies fiat currency. We created a
central bank in 1913 and freed it from the constraint of gold in 1971. Give
the government or the big banks the power to create money out of thin air and
you eventually get a dictatorship. "Eventually" just happens to be
now.
Laissez Faire
Books' Wendy McElroy covers some of the theory behind this idea in a recent
review:
Paper Money = Despotism
"Fiat" is money with no intrinsic value beyond whatever an issuing
government is able to enforce. When it enjoys a monopoly as currency, fiat
inevitably turns the free market functions of money inside out. Instead of
being a store of value, the currency becomes a point of plunder through
monetary policies such as quantitative easing. Instead of greasing society as
a medium of exchange, the currency acts as a powerful tool of social control.
The second harm is far less frequently discussed than inflation, but it is
devastating. The personal freedoms that we know as "civil
liberties" rest upon sound money.
In his
classic book The Theory of Money and Credit (1912), the Austrian economist
Ludwig von Mises argues, "It is impossible to grasp the meaning of the
idea of sound money if one does not realize that it was devised as an
instrument for the protection of civil liberties against despotic inroads on
the part of governments. Ideologically, it belongs in the same class with
political constitutions and bills of rights."
A key reason
Mises viewed sound money as a necessary protection of civil liberties is that
it reins in the growth of government. When a government prints money without
the restraint of competing currencies -- even if the restraining
"competition" is a gold standard -- runaway bureaucracy results.
Wars are financed; indeed, it is difficult to imagine the extended horrors of
World War II without governments' monopoly on currency. A white-hot printing
press can finance the soaring numbers of prisons and law enforcement officers
required to impose a police state.
Floods of
currency can prop up unpopular policies like Obamacare
or the War on Drugs. That is why government holds onto its monopoly with a
death grip. In The Theory of Money and Credit, Mises observes, "The gold
standard did not collapse. Governments abolished it in order to pave the way
for inflation. The whole grim apparatus of oppression and coercion,
policemen, customs guards, penal courts, prisons, in some countries even
executioners, had to be put into action in order to destroy the gold
standard."
Another way a
currency monopoly threatens civil liberties is by permitting government to
monitor virtually all transactions through the financial institutions with whom it maintains an intimate partnership. Total surveillance
is a prerequisite to total control, which is what the government wants to
establish as quickly as possible. For example, prior to establishing the
Suspicious Activity Report (SAR) in 1996 -- a form that financial
institutions submit to the U.S. Treasury -- banks were required to
automatically report any transaction over $10,000. Now any activity deemed
"suspicious" is vulnerable.
The monopoly
facilitates a vicious attack on privacy and has become a main building block
of the American surveillance state. As libertarian Mark Hubbard stated,
"Civilization is a movement toward privacy, a police state the opposite,
and tax legislation has become the legislation of our new Big Brother
states."
Much of the
tracking is a pure money grab, but it is also an attempt to ferret out and
punish "unacceptable" behavior, like dealing in drugs or
politically dissenting. Indeed, it is criminally naive to believe the
government will not use these massive and valuable data to target its
critics. Thus, people can be discouraged from speaking out. Controlling the
information, however, means controlling the currency. Otherwise, anyone could
mint gold coins in the middle of the night and release them covertly into the
wild.
Some thoughts
I was going
to start this article with a sentence like "Every time you turn on the
news there's another story about the growing intrusiveness of the US
surveillance state." But that's not actually true. When you "turn
on" the news, which is to say watch it on TV, you see little or nothing
about this. It seems that all those "corporate media" complaints
are accurate. America's evolving police state infrastructure is one of the
biggest stories of this lifetime, yet the mainstream news organizations seem
to be ignoring it.
Now that
we've created the infrastructure, all that remains is for some
desperate/corrupt future leader to flip the switch. From that moment on,
every communication in and out of the US will be captured, logged and mined,
and each citizen will have a growing file that details their social,
professional and financial activities. The state will set about silencing all
emerging threats through intimidation, financial pressure (our hyper-complex
tax code will be weaponized and turned on anyone
who speaks out), and, when all else fails, the designation of dissenters as
terrorists and their imprisonment without trial. All the tools are there,
just waiting to be used.
In this
scenario, social media will useless as a counterweight to Big Brother. When
every communication is monitored, an attempt to organize a protest via
Facebook will just create a list of people to be rounded up.
Can dystopia
be avoided? Short of electing Ron Paul on a platform of tearing it out by the
roots, it's hard to see how. But McElroy does have one suggestion that's
aimed at the heart of the fiat currency dictatorship: end the state money
monopoly and let other currencies circulate:
Yet the best
solution to the harms caused by fiat is often dismissed even by staunch free
market advocates; namely, allow the private issuance of money that freely
competes with fiat as currency. This would involve removing all prohibitions,
other than fraud, abandoning monetary controls such as legal tender laws and
all reporting requirements. In turn, this might well eliminate the Federal
Reserve, although people would be free to accept whatever money they wished.
The currency
monopoly is vital to both the rise of a police state and the targeting of
individual civil liberties. In arguing for a free market in currencies, it is
important to claim the moral high ground by stating and restating what should
be obvious: Civil liberties require sound money. And nothing ensures the
quality of a commodity as surely as competition.
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