Analysis of Liberal Oppression VI

money and finance

I've previously set forth some of the oppressions that the liberal ruling class has committed. As I wrote,

To paraphrase Marx, it is high time that the ordinary middle class sets forth an indictment of the current ruling class, and enumerate the vile oppressions and dominations and injustices it has created during its rule of about 100 years.

So I have discussed its injustice committed with respect to socialism, big government, the war on the middle class, the war on religion, education, welfare, government pensions, the homeless, transportation. Now let's look at:

Money. Back in the day money was basically gold and silver and copper coins. The value of the money reflected the value of the coins. This notion was inflated into a glorious principle in the era of the Gold Standard, that all paper money and bank accounts should be convertible on demand into gold.

This system works pretty well as long as there aren’t any wars. In a war, the warring parties usually appropriate as much of the wealth of the people as is possible: through the issuance of debt and also the printing of paper money. The result would be that the nation’s currency, the pound or the dollar, would decline in value relative to gold: inflation. In the long 19th century governments tended to attempt to revalue the currency upward in a policy called “resumption,” resuming the pre-war gold price. The result is “deflation” which is experienced by debtors and wage-workers as a monstrous oppression: debtors because they are forced to repay more than they borrowed and experience this as injustice, and workers because their employers tried to reduce their money wages, and the workers experience this as injustice.

After the Napoleonic Wars the Brits restored the pre-war value of the pound sterling, and the result was the Captain Swing riots and the Tolpuddle Martyrs. After the Civil War the Yanks restored the pre-war value of the dollar and the result was the Crash of 1873 and the Long Depression. After World War I both Brits and Yanks restored the pre-war value of their currencies and the result was the 1926 General Strike in Britain and the Crash of 1929 in the US.

After World War II the Yanks pretended to keep their pre-war gold price at $35 per ounce. But ordinary people were not allowed to exchange their dollars for gold: only central banks coud do that, and not too much. Eventually this scam broke up in the financial crisis of 1971 when the US officially went off gold. But the result was inflation. Gold that was priced at $20 per ounce before World War I is now priced in late 2022 at about $1,600 per ounce. So the dollar is worth one percent of its 19th century value.

I maintain that this inflation is unjust because it hurts middle and low income people — and especially women — that do not own assets like real-estate and stocks.

Finance. Now for a quick lesson in finance, from Walter Bagehot in Lombard Street: A Description of the Money Market published in 1872 after a major financial panic. Bagehot argued that to avoid panics the credit system needed two things to work. First of all, loans must be properly collateralized, so that if the loan is liquidated the lender will recover his investment by acquiring the collateral for the loan. Secondly, the borrower must have the means to service the loan. If either of these notions are ignored then, in a financial downturn, people in the money market will be afraid to buy loans, because they will worry about the quality of the loans out there and the ability of borrowers to service their loans. This worry is called a "loss of confidence" and you will hear a lot about it during any bear market.

Now back in 1913 the US passed the Federal Reserve Act to provide the United States with a central bank so that the panic of 1907 could never happen again. It was unconscionable that the United States should have to rely on a "money trust" headed by private banker J.P. Morgan when threatened by a financial panic. It needed a public "lender of last resort."

Only in the next two financial crashes the bureaucrat in charge of the Federal Reserve Board did not act as lender of last resort. In 1929, the Chairman of the Fed was Roy A. Young. In September 2008, when Lehman Brothers failed, Fed Chairman little Ben Bernanke said that he didn't have the legal power to act as lender of last resort and bail out Lehman Brothers. The Dow Industrials started losing 500 points a day, every day. Can you spell "loss of confidence?"

Is Ben Bernanke a coward and a poltroon? I think so.

You can see what this is all about. In its efforts to help would-be homeowners the government has raised housing prices, engineered at least one bone-shattering financial crash, and almost certainly made things worse.

There is a word for this sort of thing. Injustice.

Next up: Transgenderism.