Statist History – Precious Metals and Money

History is amazing and incredibly interesting. There are so many stories scattered through out it full of interesting characters. History is also powerful. The knowledge of the past can dictate the decisions of the future. History is a powerful tool for controlling those around you and that makes it one of the most abused tools used by the state. If you can manipulate the past, you control the future. Sometimes these manipulations are tiny. They have been repeated so often they start to become offhand remarks passively accepted as truth. This is partly why historians make such terrible economists most of the time and it’s why the state is so interested in retelling its story.

Now I grew up loving history. It was my favorite subject in school and I loved to watch whatever was on the History Channel. Like a lot of young boys, I was really interested in medieval histories and characters. As I have grown, I can only laugh at the “history” being retold by the likes of the History Channel and others like them. Recently they posted an article about coins. I was interested so I read it. The article was about why coins have ridges on them. The problems I have is with a couple of off hand remarks about economics and policy.

FDR and the Confiscation of Gold:
The remark that bothered me was “The U.S. Mint stopped producing all gold coins during the Great Depression, thanks to an executive order from President Franklin D. Roosevelt”. This seems like an innocent enough statement and it is true. But I find it interesting that the reasons for this incident are not even mentioned. FDR made an executive order that affected the economic activities of everyone. With the confiscation of gold, the president was able to fix gold at a $35. This price fixing of gold was part of the Bretton Woods Agreement finalized after World War II.1 The point was to have fixed parities between the U.S. dollar and other industrialized currencies. This market manipulation of course produced a lot of problems.

“The problem with these flat lines is that they imply that monetary authorities were able to keep the actual gold price fixed at the precise level they specified, and conversely, that the purchasing power of the dollar remained constant. This was not the case, as the market price for gold often differed from the official $35 price, sometimes quite significantly, and the dollar actually lost value against most goods, even though it was officially fixed versus gold.”1

As can be seen, like most central planning done by government, the desire to fix prices and control market forces was a losing battle. This was a big deal. This executive order changed economics and most scholars are content to say “well FDR banned gold (leaving only a small amount for “decorative” purposes) to get us out of the depression and it worked!” When you really understand economics and you see this incident in history, you see there is far more to tell. The story is not as simple as “FDR gave an executive order and everything worked out.” But this is exactly the story told by mainstream historians and economists. I actually don’t even remember this incident being mentioned in my history classes during my education so to some educators, this incident (executive order number 6102) is not even worth mentioning. Like I already have said, there is a reason for this and the reason is to retell history as favorable to the actions of the state (thus justifying further actions in the future by the state).

This confiscation of gold done to the American people was insidious in nature. People were told (coerced) to give up any gold coins and bullion they may have in exchange for paper money. These paper bills had always been transferable back into gold in the past so the people went along with it, trusting that this needed to occur in order to get themselves out of the depression. What they didn’t understand was that this money would be devalued and they would never get their gold back. Eventually, only central banks would be able to exchange dollars for gold (this was the need for the $35 fixed gold price) and “that link to gold would be severed in 1971.”2

But why did the government need all this gold? Because they were worried about another gold run.3 The value of gold was creeping above the fixed price which meant that trust in the gold-clause notes was waning. Foreign banks holding U.S. gold-clause notes began presenting them in exchange for physical gold. There was not enough gold in reserve at the Federal Reserve and a gold run was not going to be acceptable to the “wise leaders” so they bailed out the Fed by taking the American people’s gold and forcing them to use the notes. Of course this would artificially boost the “trust” in U.S. notes and artificially bring the parity of gold to gold-clause note back to a “desirable” exchange ratio in the eyes of U.S. leaders. Along with that, there would be more gold in reserve should other central banks wish to exchange the notes they held for gold. This meant that the President and those like him could manipulate the dollar to their liking (of course it would be in the interest of you and me right?). “Shortly thereafter he also embraced the Thomas Amendment, giving him open-ended authority to drastically reduce the gold content of the dollar; that is, to trash the nation’s currency.”

This confiscation of gold and coercion in the use of poor and devalued currency was the nail in the coffin for stable money (the first major nail was hammered in 1913 with another big one in 1971 when the U.S. abandoned gold all together in favor of fiat currency).

So “thanks to an executive order from President Franklin D. Roosevelt” as the History Channel puts it, the age of easy credit and idiotic inflation at the expense of you and me started to really take off. Central banking and fiat currency would eventually take off as the new age of monetary policy and wisdom. And this is why history is so important. The cheerleaders of the state will always retell history in two ways. This incident suffers from both ways. They will mention an incident in history and make it out to be a trivial thing. A pivotal point in history becomes an offhand remark, a footnote at the bottom of the page. The average and uninformed reader blithely brushes this aside and blindly accepts the conventional wisdom. When in reality, it was an important misstep and if the average student of history truly understood its implications, would not accept the states presentation of history. The other way is to totally change history. Those are the people that view this point in history and the policies adopted by FDR as important and necessary. They tell a warped version of history devoid of valuable facts and full of rhetoric and misinformation. They cherry pick data and make the mistake of thinking correlation means causation.

And then there is the proper way to do history. That is the way Mises suggested. “History should teach us to recognize causes and to understand driving forces; and when we understand everything, we will forgive everything.”5 History is made up of people pursuing various ends, and to view history apart from this is to scandalously treat it in a disrespectful way. History is understanding motives. Why did this occur? Why did these people want this? What was their endgame? What ends were they trying to accomplish? The state however, looks back at history with it’s own ideas and falsely imposes them on the past in order to justify it at this moment and in the future (historians sympathetic to the state then have the audacity to say they hold no biases). The confiscation of gold by FDR and the state was complicated and deserves more than a footnote of history. If we are wise, we would look back at it and pinpoint it as a pivotal point in history where legislation lead to undesirable ends. Unfortunately, this does not portray government and its economic policies in a favorable light. So history will always be a battle ground between the state and those in opposition to it.

1. Koning, John P. “The Losing Battle to Fix Gold at $35.” Mises Institute. Mises Institute, 18 Feb. 2009. Web. 29 Mar. 2015. <>.

2. Woods, Thomas E., Jr. “The Great Gold Robbery of 1933.” Mises Institute. Mises Institute, 13 Aug. 2008. Web. 30 Mar. 2015. <>.

3. Carr, Daniel. “FDR’s 1933 Gold Confiscation Was a Bailout of the Federal Reserve Bank.” FDR’s 1933 Gold Confiscation Was a Bailout of the Federal Reserve Bank. Moonlight Mint, n.d. Web. 30 Mar. 2015. <>.


5. Mises, Ludwig Von. Nation, State, and Economy: Contributions to the Politics and History of Our Time. New York: New York UP, 1983. Print.

Episode 10 of The Logical Anarchy Podcast – Drug Policy

The Logical Anarchy Podcast – Drug Policy

We talk about the Drug War and current events!

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The “Good Cop” Debate

It is a common fact you hear thrown around that the United States has the largest prison population on the planet. I want to start with this idea in the debate about whether there is such a good thing as “a good cop.” The U.S. has 1,362,028 people in state prisons. 237,000 of those inmates are in there for drug offenses. There is 216,326 people in federal prisons with a little less then half, 94,600 people, incarcerated for drug offences. 721,654 people are in jail, 293,342 people are serving sentences while the other 428,312 people are awaiting trial. There are 70,792 kids in juvenile detention centers with 4,986 serving time for drugs.1 Out of the numbers I have listed, that is 2,264,044 people locked in a cage with 336,586 of those people locked up for drugs (that is not counting those that are awaiting trial for drug offenses). Another figure has the U.S. at 2,193,798 as its prison population.2 No matter what number you use, the U.S. still has more people in prison than China (which of course has an even larger general population). China has 1,584,498 people in prison. Russia is third with 874,161 people in prison.2 The reason I say this is for two reasons. The critical thinker should look at these statistics and laugh at the claim that the United States is “the land of the free.” Secondly, the critical thinker should also note that the laws that are “broken” in the United States, mostly drug laws, are draconian in nature.

Let us move onto another figure that has to do with law enforcement officers and the drug war. How about no knock raids and SWAT operations? From 2011 ro 2012 the ACLU released a report regarding 800 SWAT deployments across 20 different local, state, and federal law enforcement agencies.3 The findings should concern people. 62% of these swat raids were for drugs. Just under 80% of these raids were for serving warrants. This means that SWAT teams were not taking down school shooters and terrorists, but people suspected of a crime and yet to be convicted of one. In 36% of these raids, no contraband was found. That means 36% of the time, police kicked down a door to the private property of an individual to find absolutely nothing and leaving the property owner with a headache, a ruined life, or dead. Let us also clarify that the burden of proof in order to get a warrant for a no knock raid is incredibly low (practically nonexistent).

This is all for drugs and the fact that the government doesn’t like that certain people put certain things in their own bodies. The war on drugs is a war on you and a declaration that you do not own yourself. These are laws designed to create money for state governments and law enforcement through unjust civil asset forfeiture laws which require you to prove you knew nothing about drugs in order to get your property back. This changes the burden of proof and gives incentive to law enforcement agencies to pursue only certain kinds of crimes that will be profitable to them. Are they going to raid the suspected drug dealer and seize his house and car or are they going to look for the rape suspect? Since there is a conflict of interest involved here, the answer should be clear. Police are going to give priority to whatever is going to make them money… And that isn’t catching the thief or the rapist.

So what does all this mean for the debate about good and bad cops? We can see that many laws are unjust and corrupt and are designed to create revenue for the state at the expense of non-violent offenders engaged in victimless crimes. Robert Higgs makes this argument about police. Every officer has agreed to enforce these laws many of which are unjust and wicked. Therefore, every cop has agreed to be an enforcer of unjust, wicked and corrupt laws written by unjust and wicked politicians. What does this mean? It means that there is no such thing as a good cop. Plain and simple.

These officers are the ones throwing people in prison for non-violent drug offenses. They are the ones swelling the prison population beyond that of even those supposed barbaric and less free nations. They are the ones kicking down doors, throwing grenades in cribs and burning babies. They are the ones that get away with such behavior.4 Therefore, we can most assuredly put to rest the debate as to whether there are good cops and bad cops. All cops are bad by the nature of the laws they have sworn to enforce.

Now let us not confuse something here because I can see it coming. On a personal level, not all cops are evil. Some sign up because they really do want to protect and serve. But ignorance of the wickedness of your profession is not a good enough excuse to not deem the job immoral. When you make a living by ruining the lives of those around you that are not hurting anyone, you are in a criminal profession.

1. Wagner, Peter. “Mass Incarceration: The Whole Pie Tweet !function(d,s,id){var Js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);;js.src=”//”;fjs.parentNode.insertBefore(js,fjs);}}(document,”script”,”twitter-wjs”);.” Mass Incarceration: The Whole Pie. Prison Policy Initiative, 12 Mar. 2014. Web. 23 Mar. 2015.

2. “World Prison Populations.” BBC News. BBC, 20 June 2005. Web. 24 Mar. 2015. <>.

3. Balko, Radley. “New ACLU Report Takes a Snapshot of Police Militarization in the United States.” The Washington Post, 24 June 2014. Web. 25 Mar. 2015. <>.

4. McLaughlin, Elliot C. “No Indictments for Georgia SWAT Team That Burned Baby with Stun Grenade.” CNN, 7 Oct. 2014. Web. 25 Mar. 2015. <>.

Episode 9 of The Logical Anarchy Podcast – The Federal Reserve

The Logical Anarchy Podcast – The Federal Reserve

We talk about some current events and the Fed! We have to apologize for the technical difficulties in this episode, about half way through the episode there is a buzzing I could not get rid of. We will get that fixed before next weeks episode so please excuse it in this episode.

Suggested Reading on the Fed:

End the Fed by Ron Paul

The Theory of Money and Credit (LvMI) By Ludwig Von Mises

What Has Government Done to Our Money? by Murray N. Rothbard

What Has Government Done to Our Money? by G. Edward Griffin

Essential Reading: The Road to Serfdom by F.A. Hayek

It is no lie that F.A. Hayek is one of my favorite thinkers from the Austrian school of Economics. Hayek won the Nobel Prize in economics in 1974 for “pioneering work in the theory of money and economic fluctuations and for… penetrating analysis of the interdependence of economic, social and institutional phenomena.” Needless to say, Hayek was an amazing and intelligent man. His explanation of the business cycle and its causes have been indispensable in countering the wrong headed thinking of his day all the way to now.

Click here to see the book
on amazon.

One of my favorite works by him (also one of his easier reads) is The Road to Serfdom. It isn’t a particularly long read but it is full of nuggets of information. Through out the book Hayek discusses the connection between central planning and tyrannical governments. Every chapter is a thorough defense of free market ideas and economics that even today, stand the test of time.

Today as it was then, the ideas in this book are seen as blasphemous to mainstream wisdom… Which should tell you right there that it is full of great ideas and arguments.

In Hayeks time, same as today, people viewed socialism and government planned economies as the answer to all of their woes. The poor, we are told, can only be protected if we “redistribute” wealth. The consumer can only be protected if we “properly” regulate industry and commerce. Even today we find new excuses to regulate the voluntary exchanges that occur between individuals with excuses like feminism, environment protection and income inequality. Today really is not too different from Hayek’s day in 1944. The same arguments are used and Hayek destroys them all.

“Freedom to order our own conduct in the sphere where material circumstances force a choice upon us, and responsibility for the arrangement of our own life according to our own conscience, is the air in which alone moral sense grows and in which moral values are daily recreated in the free decision of the individual. Responsibility, not to a superior, but to one’s own conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of the things one values are to be sacrificed to others, and to bear the consequences of one’s own decision, are the very essence of any morals which deserve the name.”
– F.A. Hayek, The Road to Serfdom

So many ideas are fleshed out in a way that is easy for the reader to understand. I think one of the most important chapters is on how socialism invariably leads to fascism. Hayek rightly notes how the Nazis of his day embraced socialist planning by controlling the means of production and planning the economic decisions for everyone. We can all agree that fascists regimes like those of the Nazi’s are very undesirable, yet we still trudge along paths that lead us to a similar end.
If you are a veteran student of the Austrian school, or completely new to it’s ideas, you cannot go wrong by reading this book. Do your self a favor and read a classic piece of literature on political philosophy and economics.