Deprived of their privy members. Fit, for usurers and counterfeiters.
- From: Bret Ludwig <bretldwig@xxxxxxxxx>
- Date: Thu, 27 Dec 2007 23:40:24 -0800 (PST)
INSTITUTIONAL ADVISORS DECEMBER 20, 2007
Tax Rip-Offs and a Remedy for Reckless Central Banking
Bob Hoye
Institutional Advisors
posted Dec 27, 2007
One would have hoped that financial rip-offs committed by medieval
princes would have been permanently shelved when liberal enlightenment
ended the divine right of kings.
Recent imperious announcements by Messrs. Greenspan and Bernanke to
use the "printing press" to inflate anything they can should be
considered startling only in the resort to honesty. Euphemisms for
currency depreciations started with the original promoters of the Fed
and the tout was that a "flexible" currency would prevent serious
financial contractions.
Regrettably, since the doors of the Fed were opened in 1914 there have
been many financial crises and the dollar has lost 95% of its
purchasing power. Particularly ironical is that since originally
touted as an agent of stability, financial volatility has increased
and has continued to the remarkable violence in the sub-prime sector,
for example. This is a subset of the lengthy experiment in artificial
"investments" otherwise known as derivatives.
On the very big picture, long-dated rates in the senior currency have
ranged from the low of 1.85% in 1941 to the high of 15% in 1981.
During the 200 years prior to the chronic attempt to artificially
lower interest rates, the range was 2.25% to 6.00%.
Obviously, imposition of ambitious policymaking has introduced
extraordinary volatility, and in a separate article we have pointed
out that while the commodity and financial markets have suffered many
severe contractions, the concept and practices of central banking have
never been corrected.
Nineteenth Century liberals, so rational and principled in their
views, could not have imagined the greedy craft developed by many
modern governments in confiscating private wealth earned by
productively working citizens. Are we seeing medieval financial
tyranny replicated by today's proponents of the divine right of
bureaucrats? A look at history provides perspective, and, although
outrageous when imposed, the passage of time makes early examples of
princely finance somewhat amusing:
The colourful Richard I (1189-1199) sold property to finance his
joining the crusade of Peter the Hermit. Upon returning, he took it
back on the pretense that originally he had no right to sell it.
The infamous King John (prompted the Magna Carta in 1215) introduced
the clever plan of imprisoning and ransoming the mistresses of
priests, confident that the funds he could not obtain from their greed
he would from their lust.
Edward I (1272-1307) confiscated money and silver or gold plate from
monasteries and churches, faked a voyage to the Holy Land and, in
keeping the money, refused to go.
Edward IV (1461-1483) was described as the handsomest tax-gatherer in
the country; and when he kissed a widow because she gave him more than
he expected, it is said she doubled the amount in hopes of another
kiss.
Henry VII (1485-1509) was fiscally sound and approached wealthy
families with two arguments. If the household was not extravagant in
expenditure, then he attacked what they had saved by thrift; while if
they lived extravagantly they were considered opulent and could afford
any exaction. Named after his minister of finance, the ploy was called
"Morton's Fork".
A broader form of wealth confiscation capable of tapping even the poor
was accomplished by currency debasement and extreme examples in
ripping off everyone provoked severe social disorder. No matter what
method employed, financial outrage prompted the evolution of
parliament as a necessary means of constraining fiscal ambitions of
the governing classes.
The struggle between individual freedom and authoritarian state
proceeded until the late 1600s when growing commercial wealth and
political power in London began to become influential with its
financial common sense. The specific event that formalized the victory
over the ancient status quo was the "Glorious Revolution" of 1688,
which maneuvered the pro-business and Protestant William of Orange
into the British Crown and displaced James II as the last absolutist
king. How refreshing this was is indicated by the oppressive politics
of his and his predecessor, Charles II. Starting with the restoration
of the monarchy with Charles in 1660, both kings were bribed by France
to change the culture of England - consistently in an authoritarian
direction. Scornful remarks by miffed establishment were similar to
those directed to the pro-business movement today.
No matter how imaginative or despotic princely financing was, it can't
compare with the long- running compulsion to spend other people's
money by today's bureaucrats and politicians, virtually unrestrained
by the checks and balances of constitution or mainstream media.
But before expanding this point, consideration should be given to the
other event that formally ended the old world, which was the beginning
of modern finance with the incorporation of the Bank of England in
1694. As history shows, central banking is fine when disciplined by a
convertible currency and, when not, it becomes a tool of state
ambition to confiscate wealth though currency depreciation. That the
dollar has lost 95% of its value exceeds most princely devaluations
and, like those, has been no accident.
Indeed, recent Fed announcements to "print money" could be an attempt
to go for the final 5%. While many outside central banking would
consider this as infinite folly, it is uncertain as to how long this
endeavour will maintain credulity in even academic circles.
Regrettably, modern financial agencies such as the Treasury or Federal
Reserve System have become as corruptible as their medieval
counterparts.
Fortunately, history provides some antidotes to governmental abuse of
the productive sector. Short of rebellion, the most effective of
course has been to force government and its financial agencies to be
accountable to the taxpayer. As for those who have wrecked the
currency (also a government responsibility), Dante, in his Inferno,
reserves a special place in hell for "false moneyers".
The Anglo-Saxon Chronicles record something equivalent, albeit more
temporal:
"1125 A.D. In this year before Christmas King Henry sent from
Normandy to England and gave instructions that all moneyers ... be
deprived of their members ... Bishop Roger of Salisbury commanded them
all to assemble at Winchester by Christmas. When they came hither they
were then taken one by one, and each deprived of the right hand and
the testicles below. All this was done in twelve days between
Christmas and Epiphany, and was entirely justified because they had
ruined the whole country by the magnitude of their fraud which they
paid for in full."
-The Laud Chronicle (E)
Fortunately, history indicates that the public will eventually figure
out that no matter how beguiling the claims about currency management
and taxation are, the gambit has been mainly to confiscate private
savings. They will then demand the return of sound money and
accountable government.
http://www.321gold.com/editorials/hoye/hoye122707.html
http://www.wvwnews.net/story.php?id=2765
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