Economics, Character, and Gold Standard

Economics, Gold Standard, and National Character

Dinner Topics for Tuesday

“It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free.” ~ Edumund Burke 

 Note: As of 2009, "In God We Trust" is still on the new dollar coins, but not on the front. Only on the back. It seems to be a sign of the times--a slippery slope? A reflection of our national character? We ought to keep an eye on the minters. Maybe next time it will be gone altogether. ~ C.D.

“It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free.” These words by Edmund Burke have been the unspoken standard in our civilization since America was founded. By standard I mean a definite rule or principle by which things are measured. Gold or silver standard simply means that paper money is backed by a precious metal of intrinsic value.

Once there was a time when the standard of currency was measured by gold or sterling silver. The pound sterling, which is the name of Great Britain’s currency, comes from its early use of the silver standard. Sterling silver is defined as having a fixed standard of purity or conforming to the highest standard.

Gold Standard

Throughout the nineteenth century, America and Europe experimented back and forth with gold and silver. Seeking more monetary stability, the United States, along with many other nations, accepted the gold standard in 1873. Not long afterward, Silver Certificates were also issued, which could be redeemed in silver dollars and bullion (bulk metal). In 1933 the US discontinued the gold standard and maintained Silver Certificates, which continued until the death of President Kennedy in 1963.  In 1968 President Nixon ended both the gold and silver standard.

The gold standard prevented governments from printing too much paper money, and causing inflation (over-priced goods and services due to too much money in circulation). Governments were also limited in flexibility to create monetary policy and stabilize financial shocks. However, financial shocks are often caused by the very monetary policies that governments like to create. The free market, when left free of interference, will correct itself from time to time. The impact of these corrections can be proportional to the degree of fiscal responsibility exercised by a nation’s citizens and government. Those nations with robust economies tend to keep taxes low and minimize interference with the free market.

Today most nations use fiat money, which is money that has no intrinsic value, and is used only as a medium of exchange.  Our only standard has been the confidence of the world that the US will honor its debts. Our monetary policy is based on our good character—ability to keep promises—to pay our debts. How are we doing?

Without a standard of gold or silver, good character without greed is the only thing that keeps our government from debauching your money by paying debts with printed money. We presently have many elected officials who are now devoted to restoring fiscal responsibility to our monetary policy. It will take a long time to undo the damage of recent years.

To protect long term investments against inflation, you may look into savings of some kind. IRAs and Certificates of Deposit currently yield 3-5 percent, if your bank is giving you a “good deal.” Banks are now investing more in gold, which can yield ten times that much. Some financial institutions lend money to irresponsible people who cannot pay their loans, but reward the frugal with an insulting three pennies on the dollar of their savings.

Character

Some individuals use tax money to support immorality; some huge corporations take tax money that they don’t need. Other multi-million dollar businesses run their production lines around the clock, every day of the year, endangering the safety of their employees for lack of sufficient rest. In a past era, the only businesses which never closed were hospitals and fire departments. Now everyone stays open all the time. Why? Greed. They lose money if they close one day a week so their workers can be with their families.

The government is a product of the people; its character is representative of the national character. In the United States, the government is supposed to be accountable to the people. The people used to be accountable to God.

The silver standard is no longer with us. Nevertheless, “In God We Trust” is still engraved upon our currency. In the modern era, even an age of relativism, the quest for sterling character still begins at home. The true individual worth built in the family circle ultimately influences entire nations.

Sterling character is not measured in money. At the end of the day, it is not what we acquire that matters, but what we become.

Copyright © 2011 by Christine Davidson

Bible Study, Economics, and Stress

Economics and Bible Study: A Way to Calm Economic Stress

 Dinner Topics for Monday

Elijah and the Widow

Unemployment continues to rise; people despair of finding jobs. We all see the gloomy forecast before us continually. It is not easy to keep from being oppressed by fear. But this is not the first economic depression in history. How did people handle it in the past?

As always, we can look to history and gain understanding for our present circumstances. In this case, Biblical history is very enlightening. The first example is the story of Elijah and the widow of Zarephath. Because of Israel’s wickedness, God had sent a great drought upon the land.

When Elijah entered Zarephath, he saw a woman gathering sticks and asked her to bring him water. While she was at it, he asked her to bring him bread.

Sadly she told him that all she had was a handful of meal in a barrel and a little oil in a cruse. She was preparing a small fire that she might make one small cake. She and her son would then eat that last cake, and die of starvation.

Elijah told her not to fear, and to go ahead and make him a cake first. He promised her that God would bless her, so that the barrel of meal would not waste, and the cruse of oil would not fail until rain came again upon the land. She did so, and as promised, the meal and oil were sufficient, and she and her son were sustained.

The widow acted in faith, and she was blessed, miraculously.

When I read this story recently, it reminded me of a time several years ago when a leader in my church made us a promise: if we would faithfully pay our tithings and offerings (generous offerings to the poor), we would always have enough. I have always found that to be true. But that leader’s words were not his alone; rather they are a promise from God, as seen in the next example, where the Lord is speaking to the people through His prophet, Malachi.

Malachi told the people they had robbed God. How? They had robbed God in tithes and offerings; therefore the whole nation was cursed. Note that when the people withheld their tithes and offerings, their whole nation was condemned.

Dallin H. Oaks observed, on the other hand, that when many citizens of a nation faithfully pay their tithes, they “summon the blessings of heaven upon their entire nation.”

Note the marvelous promises God gave to Israel if they would but give Him the mere tenth that is His. He challenged the people to bring their tithes to the church, and watch his promise be fulfilled. Just watch me, God said, and see how I will “open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it. And I will rebuke the devourer for your sakes.”

What can we learn from these moments in history? Has this nation robbed God? How much of this economic downturn is due to consequences of unwise choices made by many people? Blessings are the result of obedience to the laws upon which they are predicated.

“Return unto me, and I will return unto you,” God told the people. When the people of a nation turn from selfishness and entitlement, and once again honor the Giver of the blessings they seek, He “returns” unto them, abundantly. Moses told the nation to “Look to God and live.”

Generations, now, have not been taught these epic stories, so the nation as a whole is being forced to learn things the hard way. The wrongs will not be righted quickly.

In the meantime, we as individuals can do something about it. Tithes and offerings will protect us and the fruits of our labors from the devourer. If we look to God, we need not fear, for we will be blessed.

Copyright © 2010 by Christine Davidson

Download More Epic Stories

Economics and Timeline: Character Deficit

Dinner Topics for Tuesday: Economics without Character

 

 “It’s the Economy, Stupid.” The now-trite phrase from the Clinton Era still doesn’t answer some nagging questions. Exactly what is “stupid”? And, is the economy only about money?

 

The answer to the multi-trillion dollar question of what is “stupid” is obvious. But what happens when the economy is only about money? 

History gives us many examples, for which there is room here to give a few.

1789

Unlike the American Revolution, which was about liberty, the French revolution, put simply, was about vengeance of poverty against wealth. Certainly, not all the “noble” class had noble character. On the other hand, a small but sufficient number of the peasant class possessed so little good character that they became mass murderers. The result was the death of thousands of innocent people, including children, and destruction of a huge portion of the French culture. Why? For money.

1939-45

In addition to the obviously racially and politically motivated Holocaust, Hitler and his regime had thousands of elderly people and birth-defective babies murdered. Why? The State did not want to allocate necessary money to keep them alive.

Christmas Eve, 2009

President Obama's administration, together with a spineless Congress forced the first phases of Obamacare into law, using un-Constitutional means. Why? Money, and power. The result: destruction of the Constitution and people’s liberty.

March 7, 2011

Dr. Daphne Austin, British socialist health care official, said that 23-week premature babies should be left to die. Why? “We’re spending an awful lot of money on treatments” for them. (Blaze.com)

March, 2011

Madison, Wisconsin. Governor Scott Walker, manifesting the restraint of frugal character, tried to increase responsibility in the management of his state’s budget. Some of the changes affected unionized public-sector jobs, only to place some features on a more equal scale with those jobs in the private sector, held by taxpayers. Union mobs, surely not representing all union members, issued death threats, verbal abuse, and injury to persons who disagreed with them, and stormed the state capitol, leaving a wake of filth, trash, and destruction costing millions of dollars to repair or clean up. Why? Money, and greed.

What is the missing factor in each of the above economic “equations?” Character. The list of examples would fill volumes. It is an unalterable lesson of history: a national economy without character ends in destruction.

Copyright © 2011 by C.A. Davidson

President Obama, Economics, and Milton Friedman

Dinner Topics for Monday: A Lesson in Economics

One sound bite is two minutes of Milton Friedman schooling Phil Donahue and his audience in greed and capitalism and virtue.  Before that, though, I want to play for you a sound bite of "Barack Hussein Obama!  Mmm!  Mmm!  Mmm!" reading the audio version of his book, The Audacity of Hope.  This is Obama talking about a sermon by Reverend Wright that moved him.(Rush Limbaugh)

OBAMA:  It is this world, a world where cruise ships throw away more food in a day than most residents of Port-au-Prince see in a year. Where white folks' greed runs a world in need. Apartheid in one hemisphere, apathy in another hemisphere. That's the world on which hope sits.

RUSH:  He was quoting Reverend Wright, and he said that's for me, man, I love that.  White folks' greed runs a world in need.  So let's go to 1979, ancient times for many of you.  We may as well be going back to the Roman Coliseum for this.  Nineteen seventy nine, I was 28.  Ancient times for many of you.  Phil Donahue interviewing Milton Friedman, and they had this exchange.  And Donahue starts off wanting to know about greed and capitalism.  Here it is.  And listen to this.

DONAHUE:  When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have-nots, when you see the greed and the concentration of power, did you ever have a moment of doubt about capitalism and whether greed's a good idea to run on?

FRIEDMAN:  Well, first of all, tell me, is there some society you know that doesn't run on greed?  You think Russia doesn't run on greed?  You think China doesn't run on greed?  What is greed?  Of course none of us are greedy. It's only the other fellow who's greedy.  

The world runs on individuals pursuing their separate interests.  The great achievements of civilization have not come from government bureaus.  Einstein didn't construct his theory under order from a bureaucrat.  Henry Ford didn't revolutionize the automobile industry that way.  In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about, the only cases in recorded history are where they have had capitalism and largely free trade.  If you want to know where the masses are worst off, it's exactly in the kinds of societies that depart from that. 

 So that the record of history is absolutely crystal clear that there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

DONAHUE:  But it seems to reward not virtue as much as ability to manipulate the system.

FRIEDMAN:  And what does reward virtue?  Do you think the communist commissar rewards virtue?  Do you think  Hitler rewards virtue?  Do you think American presidents reward virtue?  Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout?  Is it really true that political self-interest is nobler somehow than economic self-interest?  You know, I think you're taking a lot of things for granted.  Just tell me where in the world you find these angels who are going to organize society for us.

DONAHUE:  Well --

FRIEDMAN:  I don't even trust you to do that.

RUSH:  Milton Friedman back in 1979 schooling Phil Donahue, and everybody else who heard that on the notions of virtue and greed and just basically upsetting Phil's applecart.  Phil wasn't smart enough to know it was happening. He's still running around lamenting the accident of birth. If he'd been 30 miles south he would have grown up in poverty.  Anyway, we wanted to play that for you and recognize Milton Friedman.

Milton Friedman:  "If you put the federal government in charge of the Sahara Desert, in five years there will be a shortage of sand." 

 Milton Friedman:  "Underlying most arguments against the free market is a lack of belief in freedom itself." 

Another Milton Friedman quote:  "Most of the energy of political work is devoted to correcting the effects of mismanagement of government."  

Boy, isn't that true? Pass another law.  Government comes along and creates a program.  The program is an absolute disaster.  Government says, "That's gotta get fixed."  Government says, "Okay, we'll fix it."  And it compounds itself, one error atop another. (Rush)

Another Milton Friedman quote:  "Nothing is so permanent as a temporary government program."  

I'll tell you, the guy was great.  He was a genius.  He lived into his late eighties.  He would have been a hundred years old this week. (Rush)

President Obama, Romney, and Capitalism

A Little Lesson in the Basic Economics of Capitalism

Dinner Topics for Thursday

 

Romney Defends Capitalism

ROMNEY: I'd like to talk about something else that President Obama has been doing. He's been practicing crony capitalism, and if you want to get America going again --you've got to stop the spread of crony capitalism. He gives General Motors to the UAW. He takes $500 million and sticks it into Solyndra. He stacks the labor stooges on the NLRB so they can say "no" to Boeing and take care of their friends in the labor movement.

ROMNEY: We started a number of businesses. Four in particular created 120,000 jobs as of today. We started them years ago. They've grown -- grown well beyond the time I was there -- to 120,000 people that have been employed by those enterprises. There are others we've been with, some of which have lost jobs. People have evaluated that since, well... (chuckles) since I ran four years ago, when I ran for governor, and those who have been documented to have lost jobs lost about 10,000 jobs. So 120,000 less ten means that we created something over a hundred thousand jobs.

ROMNEY: There's nothing wrong with profit, by the way. That profit...

AUDIENCE: (wild cheers and applause)

ROMNEY: That profit went to pension funds, to charities. It went to a wide array of institutions. A lot of people benefited from that -- and, by the way, as enterprises become more profitable, they can hire more people. I'm someone who believes in free enterprise. I think Adam Smith was right, and I'm gonna stand and defend capitalism across this country throughout this campaign. I know we're gonna hit it hard for President Obama, but we're gonna stuff it down his throat and point out it is capitalism and freedom that makes America strong.

People Pursuing Their Own Self-Interest is How This Society Grows and Prospers

Rush Limbaugh transcript

CALLER: Yeah. Thank you, Rush, for taking my call. I've only been listening to you for about three years now, but I gotta tell you, you literally saved me from myself and my own doubts. You know, when I was younger, my parents were the kind that when they had problems, you know, the whole family helped out.

RUSH: Yeah?

CALLER: And now, you know, I'm only 36, but with a lot of people that I work with my own age, it just doesn't seem we have that mentality today that if you have problems, you work 'em out together. You know, everybody's out for themselves. I'm a little nervous talking about it.

RUSH: Well, you see, when everybody's out for themselves, it means that everybody's out for everybody else. That's what that means. It's precisely what it means. Anyway, very kind of you to say that. I appreciate it. Thank you very much.

RUSH: I had mentioned to a caller that everybody working their own self-interest is how everybody helps everybody else out -- and sure as shooting, I go to the e-mail, and blistering attacks from people, "You don't know what you're talking about! That's the problem with you rich people, you're so selfish! All you do is care about yourself and somehow you think that's gonna bring everybody else along! Oh, you don't know what you're talking about!" (sigh) It's amazing to me how woefully inept our economics education has been in this country. Let me define how that happens. Let me explain to you how that happens.

Adam Smith wrote about this. Adam Smith had a book called The Wealth of Nations. It was published in 1776, by the way. That year might remind some of you people of something: 1776. In The Wealth of Nations, Adam Smith wrote the following: 

"It is not from the benevolence of the butcher or the brewer or the baker that we expect our dinner, but from their regard to their own interest." 

When you go to the grocery store, say you go to the meat counter and there's a guy behind the meat counter and you order, do you think that the guy is there to help you, purely and simply? I mean, in doing his job, yeah. You order something, and he provides it for you.

But what's he doing? He's trying to feed his family. He's looking out for himself. He's selling you something, hoping you buy it, because that helps him. He's looking out for himself. At the same time, accommodating you. So in just that one example: The butcher looking out for himself, he doesn't... See, the left wants you to believe that the guy selling meat should sell it to you at no cost so that he doesn't profit from what he's selling or the guy selling the TV set and the dishwasher, whatever, should sell it at no cost. Because if the guy makes a profit on it, then you have been screwed, and he's using you and taking advantage of you and ripping you off! When the truth is he's not giving you a dishwasher to be nice to you. He's not selling you a TV set to be nice to you!

His job isn't to make sure you've got a television set. His job is to make sure he's got one. His job is to make sure his family has food. Everybody benefits in the bargain. I'm not saying the guy behind the counter is selfish. What I'm saying is, him looking out for himself benefits everybody he comes in contact with. It's undeniable, and there must be a profit in the route, otherwise there's not gonna be a guy behind the counter. There won't be any reason for him to be there. How does he go home and feed his family if he sells you whatever it is you're buying at the same price it cost him? (New Castrati impression) "But, Mr. Limbaugh, it's inherently unfair that something should cost me more than it costs somebody else." Well, then why don't you go down the street and try to find it at a cheaper price?

Maybe there's some other butcher selling your filet mignon at a cheaper price. Maybe he's trying to attract more customers with a cheaper price than your butcher, and maybe this guy with the lower price is selling even more filet mignon to more people and more people are benefiting from the lower price! "It's still a profit, Mr. Limbaugh, and that's obscene and it's unfair and it's outrageous," and this is what we're up against, folks. These are the people and that's the kind of thinking that Barack Obama -- our president -- is inspiring, this New Castrati character of mine. They're real, they're out there. They're on the Occupy Wall Street march. 

They're in America's classrooms.

Hello, some of them might even be your … kids) until you get hold of 'em and get 'em straightened out. That's why there's a difference in "selfishness" and "self-interest," but everybody looking out for themselves -- not in a selfish way, but in a self-interest way -- benefits everybody else. The guy behind the counter selling a television set, he's gotta make sure there's a lot of them there to handle the demand. He's gotta make an investment in having a stockroom full of the things that people might want. He's gotta take a risk in how many to buy and what kind, based on the best evidence he has of what people are gonna want and what they're willing to pay. This is so common sense, I can't believe I'm having to explain it!

But we have to every day, because the Mr. Castratis, the New Castratis are everywhere, and the education system is putting them out at geometric portions. They're pumping 'em out, pumping 'em out illiterate people -- economically illiterate people on purpose and by design -- by the millions each and every year. In the same book, The Wealth of Nations, Adam Smith also wrote that the butcher or any producer, quote, "intends only his own gain, and he is in this -- as in many other cases -- led by an invisible hand to promote an end which was no part of his intention. And by pursuing his own interest, he frequently promotes that of the society more effectively than when he intends to promote it."

In other words, the butcher may not have the slightest idea what's happening. The butcher selling you a cut of beef may not have the slightest idea what he's actually doing, but we are all part of an intricate web where we all prosper and benefit from the self-interest of others, not the selfishness. The Wealth of Nations was also an argument against government control. England at the time had chartered monopolies back in 1776. The king decided what companies would do what. That's what Obama wants! Folks, this country was fought for independence from people like Barack Obama, if you must know it, in straight between-the-eyes terms. Barack Obama, if he gets where he wants to go, will become the equivalent of King George from whom our ancestors fled to found this country.

That's what we've done.

That's who we've elected.

We've elected a whole party of these people. He doesn't act by himself, either. When Barack Obama acts in his own socialist self-interest he's got a whole bunch of buddies in the bureaucracy, in the Senate, in the House, in certain governorships who are doing the same rotgut. They're trying to expand their power and their government, and they can't produce anything, as I said in the first hour. Barack Obama -- from the tie to the shoes to the suit to the airplane he flies to the food he eats -- doesn't produce one item of it, and he couldn't if his life depend on it; and here he is attacking, in his speech yesterday, the system that produces it.

  Self-interest is the "invisible hand" that Adam Smith writes about. Self-interest is the invisible hand. It's what is not seen.

But today self-interest has become greed, self-interested is said to be selfishness and greed and so forth. I'm gonna tell you something, folks -- and, again, if you're a moderate, independent, Democrat; you hate me, you're just tuning in out of curiosity; you haven't been here very long -- hate me all you want, but I don't lie to you; and I am here to tell you: The invisible hand -- self-interest, everybody pursuing it -- is how this society grows and prospers and how everybody participates in it. The greed and selfishness in this country is in the White House. You'll find the greed and selfishness at all levels of government. They'll think nothing about taxing you into poverty. They will not do with one penny less from one year to the next.

Why do they get to say what you're worth? Why do they get to say what you have to pay? Why do they get to define what's "fair" and what isn't? Who are they? Why do you put such blind faith in incompetent people you've never met, instead of yourself? Why do you want to trust somebody who's not interested in your self-interest? Why do you want to trust somebody and give your life over to people who don't care about you nearly as much as you ever will? Is it easier than working? Is it easier than facing the daily rigors of life? For those of you who hate me (been told to hate me), I'll give you some reason to here, for the fun of it. I'll tell you another truth: Self-interest, capitalism, has fed more people than charity ever has.

Capitalism and self-interest has fed and clothed and driven -- however and whatever you want to describe -- more people than charity ever has. "Are you putting down charity, Mr. Limbaugh?" No, I'm not putting down charity. I'm trying to educate you idiots. I'm putting down what you believe in.

You know why there wasn't any meat in the GUM store in the Soviet Union? 'Cause it didn't matter to the guy behind the counter. There was no profit in providing meat or toilet paper or whatever. They did it the way Obama wants to do it! They did it the way Mr. New Castrati wants to do it. No profit. Whatever is there costs you whatever it costs whoever to put it there -- except there was never very much there, because there was no incentive to have it there.