Video: A street conversation between a Ron Paul fan and the Daily Knell
Following our recent article on the control of the Libertarian movement by Money Power, we have received several comments from Libertarian sympathizers over the last few days. These comments are generally similar in that they offer the typical Libertarian and Austrian objections to the viewpoints expressed on this blog. In an effort to avoid repeating ourselves and to expose our ideas in a different format, we propose the following xtranormal video, which presents a dialogue between a typical Libertarian sympathizer and a Daily Knell blogger. Enjoy!
Libertarian sympathizer meets Daily Knell blogger
Related:
How Money Power controls the Libertarian movement in the 21st century
Analyzing Austrian economics memes: Who benefits from the anarcho-capitalist utopia?
Old Rothschild- and Rockefeller hands controlled the Libertarian-Communist dialectic
The Daily Knell 
Reblogged this on Recovering Austrians.
So I’m relatively new to your site (I went digging for some background on Mr. Wile a week or two ago (amazing timing…I must have intuited someone was writing about them). I’ve liked a lot of the hooks there, but have been shocked that they promote people such as Paul, Uribe, Craig Roberts, et al.
Often we researchers find holes in someone’s (or some group’s) ideology; even more often we find links when tracing less transparent motivations and conflicts of interest.
So, being aware of weaknesses of both the progressive left and the libertarian right, not to mention the Jekyll & Hyde Hegelian dialectic that calls itself the two party system, I am curious to know what (if any) solutions you think can get rid of this behemoth oligarchy.
Where do you think individual solutions lie and how do you suggest that individuals of all net worth (i.e. only a couple thousand dollars) protect their purchasing power from the 100 year central bank policies of incremental inflation, monetary debasement, debt slavery, etc.?
Thanks
We suggest visiting Real Currencies for potential ways to reform our monetary system and possibly get rid of Money Power. Please note that we do not provide personal financial advice.
In general, we are not against physical gold as a long-term store of value. However, physical gold (or more generally commodity-based money) is not an optimal means of exchange due to its scarcity. Moreover, any gold standard or gold-backed currency involving the printing of “paper gold” notes in excess of the quantity of gold backing them is essentially dishonest.
For more on this, see:
Reply to the Daily Bell: Gold porn, lies, and misrepresentations
Yeah, I read that link after I posted that comment last night. Thanks. I am also a near 4-year reader of FOFOA, so I was just hoping you’d go a bit more into depth, not attempting to solicit or bait you into the “salaciously immoral and illegal” act of financial advice 🙂 I also am against a gold standard, but hence my question re: store of value and debt slavery.
Also, do you see a future likely scenario of current debts denominated in a future gold standard (i.e. debt slavery via the new gold standard)? If so, should people who have student loans attempt to pay those off at all costs before such a standard should be implemented?
As an aside, their global tactics have been brilliant, making it so that no currency could be seen as a safe haven globally while they control the bulk of gold and silver (and other rare and precious metals). With no currency to turn to, it must be a new global (or regional) currency and it “must be” gold backed! (ha!).
An upcoming gold standard is definitely a possibility, as you probably know:
One can only speculate as to what will happen, but it seems likely that a hyperinflationary episode will precede the arrival of a “global gold standard”: even if one is not a follower of FOFOA, it is logical to assume that the elites will first need to create a currency crisis before implementing their global currency (gold-backed or not). If this is the case (and this seems like a good guess at this point), debtors may have a window of opportunity to pay their remaining debts before a global currency is implemented. But obviously it is risky to try to predict the future in this situation. Again, this should not be treated as “personal financial advice”…
100% backed, full reserve banking are the purest (most hardcore) form of libertarianism/Austrian economics thought.
Anything less than that is false or “massaged” libertarianism/Austrian ideology.
Scarcity is a basic tenet of money, scarcity is the “moneyness” itself….with no scarcity there can be no money, economy iself is the management of limited resourse (labor, land, natural resources).
Money scarcity mimics the the economic concept of limited resources, this is why gold worked to well for centuries.
Scarcity is good as long as is not centrally managed and piloted.
The state and the elite wanted “flexible” money since the age of time,,,as long as they control the supply.
Look at the situation where we live now…..for the vast majority of the population money is scarce and precious but for the selected few, money is dispensed like candies…..
Just look at the rise of inequality since the abandonement of the “gold plated” Bretton Woods system…it was a very imperfect and faulty system and we can do much much better than that but it beats what we have by a mile….
Even under 100% backed full reserve banking, the bankers end up owning everything in the long run if the currency is issued as interest-bearing debt. Fractional reserve banking is obviously a problem, but it is not the core issue.
Also, you apparently do not make a distinction between the store of value and the means of exchange in your comment. There is no reason why the means of exchange should be scarce, or why the amount of credit available to a community should be limited by the availability of a commodity. In fact, it could be argued that gold did not work well as a means of exchange due to its scarcity – this may be one reason why credit was already the most important form of money in the 19th century under the gold standard.
See: Analyzing Austrian economics memes: Who benefits from the anarcho-capitalist utopia? for more on this.
I discovered your site recently. I independently arrived at many of the same conclusions expressed on the site, but I long ago abandoned referring to these people as “libertarians,” a co-option of a venerable term, and instead refer to them as what they are: neoliberals. I think it is very important to always speak about Milton Friedman when you speak about Ludwig von Mises because their political aims were the same, yet their economics could not be more different. But economics IS politics, which suggests that both the Austrian School and Chicago School promote the same ends, i.e., the furtherance of what you call the Money Power.
http://taojonesing.blogspot.com/2010/09/neoliberalisms-one-two-punch.html
Interesting blog, thank you.
An insightful quote from your article:
“Given that socialism and Keynesianism were responses to the great damage produced by laissez-faire economics had produced, there was no way to return directly to it in the form of the Austrian School of ecnomics. The Chicago School of economics was therefore created to provide an incremental move away from Keynesianism economically and an incremental move towards neoliberalism politically. The Chicago School exists to prove once and for all that government intervention into the money supply and the economy can never work and will always lead to disaster (but not until after eliminating the gains the common people reaped due to government intervention). Once the Chicago School’s economics do their work and flame out spectaculary into a truly Great Depression, the answer will be and must be the Austrian School’s economics. After all, we know from Milton Friedman’s revisionist history that the Great Depression was caused by the “government” interference of the Federal Reserve, so what’s left but to bend over for the all-knowing god of the market and hold your ankles (and never mind that man behind the curtain).”
Dear Daily Knell
Can you tell me how the theories of FOFOA fit into this conspiracy? They seem to be totally wedded to the idea that only Gold will be of any value with their “FreeGold” idea.
Does their idea hold water or is it built on a foundation of sand.
FOFOA claims to simply try to predict what will happen, and not necessarily to actively push for a reform of the monetary system. We agree with FOFOA that a gold standard is not necessarily “honest”, and we make a distinction between physical gold and “paper gold”. Also, FOFOA distinguishes between the two essential functions of money (in addition to being a unit of account): the means of exchange and the store of value (for which physical gold is clearly well-suited), a distinction that some Austrian proponents, such as the Daily Bell, do not seem to recognize.
However, we don’t agree with your interpretation that FOFOA only sees Gold as having any value: it would be more accurate to say that he sees a sharper distinction in our future between the means of exchange (a role which will still be fulfilled by fiat currencies, according to FOFOA) and the store of value (which will be exclusively physical gold according to FOFOA).
Our position at the Daily Knell is clear: if banks are allowed to issue their currencies as interest-bearing debt-based currencies which must be borrowed into existence, then it does not matter that much if these currencies are made of electronic digits, paper, or gold – the banks will still end up owning everything in the long run. But physical gold can still be an effective store of value as long as it is kept outside of the banking system (i.e., no gold loans, and no fractional-reserve banking based on gold). We are essentially in agreement with FOFOA on that last point.
In your video two males are talking. Here’s their FIRST exchange on the subject:
Dude 1: “Austrians always talk about central bank printing. But did you know that 97% of the money supply is created by commercial banks – not by central banks.”
Dude 2: “Really?”
Dude 1: “Yes”
This implies that Austrian economists are NOT talking about commercial banks’ role as creators of fiat-money in a central banking environment. This is not true, of course. Austrian/free-market economists wrote, write and talk about it at length – all the time. Why you would suggest otherwise in your video seems baffling.
[Our point stands that many Austrians over-emphasize the role of central banks and ignore or neglect the role of commercial banks. Just look at the Daily Bell.]
It took me ONE minute to google numerous relevant references. Here’s one:
“The commercial banks lend in terms of the reserves created by central bank debt holdings. The central bank and the government protect com- mercial banks from bank runs by depositors.
(…)
Commercial bank inflation causes the economic boom, which persuades capitalists to misallocate capital, including capital purchased with bank debt. Commercial bank inflation produces this widespread error among entrepreneurs by temporarily lowering the market interest rate below the originary rate, i.e., the rate which allocates the production of present goods vs. future goods in terms of consumer demand for both forms of goods.
(…)
The market-enforced readjustment of prices—consumer goods vs. capital goods—is called a recession. It is the outcome of a prior State-authorized expansion by commercial banks of the supply of credit money. It is the free market’s response to a prior interference of the free market’s money supply by State- licensed, State-protected fractional reserve banks.”
(…)
To the extent that a national government adds another layer of protection from free market sanctions in the form of a central bank cartel that has the power to issue money—sometimes called high-powered money, because it serves as legal reserve for the expansion of commercial bank credit—responsibility shifts from commercial bankers to central bankers.”
Gary North, “Mises on Money”, 2002
You can read it for free here:
Click to access Mises%20on%20Money_Vol_3.pdf
Here’s another one – Mises Wiki on Fractional reserve banking: “Fractional-reserve banking (or FRB) is the widespread banking practice in which only a fraction of a bank’s demand deposits are kept in reserve and available for immediate withdrawal (as cash and other highly liquid assets), whilst the remaining cash is lent out to borrowers (and so is never actually available for immediate withdrawal to legitimate deposit-holders).[1][2][3][4] The bank in effect lends out most or even all of the funds it receives in demand deposits, whilst at the same time guaranteeing that all deposits are available for immediate withdrawal upon demand. Fractional reserve banking is currently legal and practiced by all commercial banks.
The practice of fractional reserve banking expands credit and therefore also expands the money supply (demand deposits and cash) beyond what it would otherwise be in a stable money system. Due to the prevalence of fractional reserve banking, the broad money supply (deposits created via the issuance of loans plus cash) is a much larger multiple than the amount of “real” paper currency created by the country’s central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the excess reserves kept by commercial banks.”
http://wiki.mises.org/wiki/Fractional_reserve_banking
[How does this “debunk” the video? The Libertarian sympathizer even says that “Many Austrians are against fractional-reserve banking” in the video.]
Now, look at your video, stop at any point and cross-check the information given with austrian writings. There, you’ll find that, indeed, each and every point you make is debunked in a matter of minutes – in many cases your points were debunked before we were even born.
[You have an interesting definition of “debunking”.]
Maybe you want to try this fact checking thingy by yourself BEFORE posting your next video/article/website …
[Maybe you should check for whom some of your beloved Austrians were truly working before promoting some of their propaganda.]
Memehunter: “Our point stands that many Austrians over-emphasize the role of central banks and ignore or neglect the role of commercial banks. Just look at the Daily Bell”
AA: Your first point in the video was to imply that Austrian economists are NOT talking about commercial banks’ role as creators of fiat-money in a central banking environment. I pointed out that this is plain wrong and provided evidence to that effect.
Memehunter: “How does this “debunk” the video? The Libertarian sympathizer even says that “Many Austrians are against fractional-reserve banking” in the video”
AA: See above answer.
Memehunter: “You have an interesting definition of “debunking”
AA: You made a claim. I disproved it. Debunking 101. Feel free to find that “interesting”.
Memehunter: “Maybe you should check for whom some of your beloved Austrians were truly working before promoting some of their propaganda”
AA: Yeah, they all worked for the Zionist-Pharisaic-Talmudist-Kabbalist-Sabbatean-Satanist conspiracy, right? That’s probably the reason why Austrian economists lived in obscurity for decades with not even one among a thousand people who had heard about them or their school of thought altogether. The conspirators clearly love Austrians.
By the way, did you notice how the GOP changed rules at the last moment to enable Ron Paul and possible follow-ups as presidential candidates? RP – Some elite stooge, eh?