When the bestriding Colossus of Murray N. Rothbard departed this mortal coil, he left the rest of us with the hallowed gift of his thoughts, his books, and his ideas, as well as an occasional secret desire to wear bow ties, and the happily-reverberating sound of that anarchic cackle.

However, to those few, those lucky few, who knew him dans le flesh, he also bequested various fractional stamps of his personality, in the manner of Albus Dumbledore with his fictional last will and testament, and his gifts of hidden Hallows and Horcrux detroyers to his favourites.

One Rothbard disciple must have received the Palladium Scalpel to dissect false argument; another evangelist will have picked up the Gold Baton to drive the movement forward; a third acolyte will have earned the Platinum Compass to direct the whole Misesian shooting match.

But what did Thomas E. Woods receive from this last will and testament of the Bow-Tied & Bespectacled One?

After reading Rollback, his latest best-selling book, I think it has to be the multi-faceted Silver Reluminator of anti-government invective and incisive wit, particularly as regards the unwanted rediscovery and revelation of inconvenient historical truths and hastily buried politically-embarrasing lies.

Fortunately for the rest of us, who have nothing but state-approved history books to learn from, Woods has employed this mighty guiding tool to show him where to dig in the obfuscated historical record turfed over constantly by endless shovel-ready phalanxes of court historians and other pelf-consuming tax eaters who dig in shifts for the ongoing victory of the state and their own demarcated spoil from the take.

For example, when examining the creation of the world’s welfare states, in the latter half of the book, Woods provides much raw data, and then the sensible state-ignored conclusions which arose from these detailed researches:

“He [Charles Murray, social scientist] wanted to know why it should be that ‘the number of people living in poverty stopped declining just as the public-assistance program budgets and the rate of increase in those budgets were highest’. He went on to explain why, counterintuitive as it may be, we should in fact expect this result.”

Woods follows this up, later:

“Another way to approach it is to recall that at least two-thirds of the money assigned to government welfare budgets is eaten up by bureaucracy. Taken by itself, this would mean it would take three dollars in taxes for one dollar to reach the poor. But we must add to this the well-founded estimate of James Payne that the combined public and private costs of taxation amount to 65 cents of every dollar taxed. When we include this factor, we find the cost of government delivery of one dollar to the poor to be five dollars.”

We have seen the same large-scale of growth in the ‘welfare industry’ in the UK, with literally millions of people earning good salaries in the provision of government welfare, with the commensurate accompanying growth of the numbers of UK citizens in poverty. And yet the broken machine continues to grow like Topsy, even in these supposed times of austerity, as rival government factions squabble over this totemic issue, like demented ferrets in a bag, all claiming to be worthier than their rivals (about driving more people into poverty at ever increased cost).

However, Woods goes beyond the usual utilitarian arguments as to why we should re-privatise welfare, after a century of escalating government failure, with higher costs and those ever-higher amounts of poverty. He examines government motivations for taking over welfare in the first place, beyond even the usual ones of providing favours for friends — with nice fat central government agency positions; providing local government clientelles with salaried sinecures; and the straightforwardly-corrupt naked buying of votes.

As in the UK, United States welfare systems are based directly upon those created by Otto von Bismarck in nineteenth century Germany. But why did this martial Prussian introduce the first pilot programmes of European state welfare? Was it because this Teutonic Iron Chancellor possessed a soft mushy heart?

Hardly, according to Woods:

“When Otto von Bismarck introduced wide-ranging social insurance in Germany in the 1870s, he did so for the express purpose of buying the people’s loyalty to his regime. An enervated, spiritless people is far less likely to rise up against parasites who live off their labor, even when that regime is exploiting and robbing them blind, if they have been conditioned to believe that they cannot live any other way.”

Rollback thus subducts the usual flim-flam of conventional state-school history books and rolls it back to reveal the core of poisonous mendacity which lies at the heart of every modern nation state, thus foiling the phalanxes of state-salaried intellectuals paid to defend it, who remain frozen in indecision as to what to do with Woods; should they castigate him, repudiate him, or freeze him out through ignorance?

Whichever way these Dementors turn, in their sneering hatred of the burning Patronus light shone upon them by Woods, he will keep up with his necessary work regardless, because that is the inescapable gift of the Silver Reluminator.

Once through the earlier restrained U.S.-centric chapters, the lessons exposed by Woods in Rollback become increasingly familiar to those of us in England and Europe, as he accelerates his text, which grows ever more pointed as the book rolls on, until by the end of the book the initial soft boxing gloves have been replaced by the kind of adamantine morning star last seen in Peter Jackson’s Return of the King, as wielded by the Witch King of Angmar on the Fields of Pelennor over the dying body of Rohan’s King Theoden.

To paraphrase the entire book, Woods attacks the following neo-socialist position, which I’m sure most of us have had to endure at the occasional dinner table or three over the past year or two: “All of the world’s problems have been caused by uncaring selfish extremists like you, and the brutal free market that you so callously defend.”

Woods retorts this mind-drained position with the following question: ‘What free market?’

In a way, Rollback is almost a sequel to his earlier polemic, Meltdown; it could even have been entitled Meltdown II by a less imaginative editor. However, only in the same fashion that you could have given Lord of the Rings a different title as well, such as The Hobbit II.

As Gandalf deals with the problem of a dragon in The Hobbit, Meltdown deals directly with the single draconian problem of state control over our lives, which is the failure of centrally-planned socialist banking, peopled by its over-manned host of bumbling bureaucratic commissars and their mistaken belief in state-loving Keynesianism.

Rollback bypasses all such outer symptoms caused by a shadowy Necromancer pulling on the more usually hidden strings of state failure — where the Bank of England is regarded as an exalted pin-sharp über-capitalist entity of omniscient accuracy as opposed to its actual nature as a state-owned socialist organ of morally haphazard ineptitude — and goes straight for the throat of the Sauronic nation state.

He charts its insatiable grasping desire to drown us all under its life-destroying socialist controls and cloak us forever in a choking ashen layer of self-aggrandising tyranny, pelf-taking, and general imbecility, as can be witnessed by any coerced foot soldier in any state army, since the dawn of time.

This book will therefore be a delight to more than the Austrian hardcore who were going to buy it anyway, but anyone else who wants an honest and straightforward answer to the following simple question: ‘What is going on and how do we fix it?’

Woods kicks off in a suitably ebullient post-existential Rothbardian mood of glee:

“A systemic crisis is poised to strike an unprepared America, as the federal government is forced to renege on its impossible promises. It will no longer be the godlike dispenser of bounties, the miracle worker that summons bread from stones.”

What I love about the passionate Woods, almost the Michael Bublé of Austrian economics, is the way you can hear his spoken voice sing through the timeless medium of ink on paper.

You can hear this controlled emotion again on the next page:

“The scale of the coming inevitable spending cuts will be unlike anything Americans have ever experienced during peacetime. Americans have never seen federal spending scaled back. Even when the newspapers speak of ‘budget cuts’, the don’t actually mean the budget will be lower than it was the previous year. They mean only that its rate of growth is falling. Government is never cut. But it will be.”

Are you listening Mister Cameron? Are you listening Monsieur Sarkozy? Are you listening Frau Merkel?

Having soaked up that unquenchable Rothbardian optimism, which came along with the Reluminator, Woods lays a contrarian message on the line:

“Federal bankruptcy, in short, may turn out to be one of the best things that ever happened in America.”

Go brother!, as we say in Henley On Thames.

When lambasting Barack Obama, in the second chapter, and the anointed one’s crass busted programme of ‘Change We Can Believe In’, initially mild-mannered words begin to reveal more of an exposed toothsome edge:

“The Obama economic program has perpetuated and intensified the problems that are sinking the U.S. economy. Those parts of it that can be legislatively reversed, like the health-care plan, ought to be promptly repealed. Those parts that cannot, like the ‘stimulus’ package, ought to be refuted and ridiculed. The nicest thing we can say about the president’s economic program is that it is only one in a long line of presidential programs that have wrecked Americans’ futures in the name of helping them.”

That Woods brands the spectacularly inept Keynesian voodoo of Obama as an ‘economic program’ is only due to his innate Catholic politeness. Later in the book, once Woods has moved through a few gears, he is much less conciliatory.

We really start chomping into the beef, in Chapter 3:

“It was not the ‘free market’ that failed us. It was a ginned-up housing market, overheated from political manipulation and artificially low interest rates courtesy of the Federal Reserve. Governments do not ‘smooth out’ or eliminate business cycles. They cause and exacerbate them. They then cite problems they themselves caused as good reasons for them to expand their authority.”

This is straight from the playbook of Von Mises himself, the Master, who always reckoned that one bad government intervention would always deserve another, until a previously free happy situation became wrapped in a red-tape thicket of monstrous stupidity and nonsense, as witnessed by the appalling mess that is the British government’s holy sacred cow of its own National Health Service.

Obviously, we can also look at our rail system, education system, legal system, or welfare system, here in England, to witness this ratcheting effect of government cost, waste, and incompetence, but at the heart of all this ongoing failure lies a government’s underpinning ability to print money out of thin air, to fund this oafishness and power-grabbing foolishness in the otherwise crushing face of economic sense.

This underlying truth is never far from the roving cross-hairs of Woods. On page 42, always a significant number, the book unmasks the creature from Jekyll Island, as the Gollum hiding in the mithril mine, with Woods plunging a glowing Numenorian dagger through the solar plexus of the U.S. central bank.

“The other culprit the establishment has tried without success to exonerate is the Federal Reserve System, the U.S. central bank that holds government-granted monopoly privileges. Had the Fed not repeatedly intervened to push interest rates down, the market would have stopped the housing bubble in its tracks. Faced with an inordinate demand for mortgage loans, banks would have found their supply of loanable funds rapidly depleted. As a result, interest rates would have shot up, and further speculation in real estate would have been arrested. These high interest rates would also have encouraged people to save, and those increased savings would have provided the genuine wherewithal for any further home lending to take place. The role of the Fed was much more significant than that of the U.S. government itself, since without the wherewithal to finance these home purchases, attempts to manipulate the housing market on the political side would have hit a natural brick wall.”

Woods then eviscerates the rotten carcass of the mercantilist idea of ‘too-big-to-fail’, before examining the case of Bernie Madoff and the utter uselessness of captured regulators, especially the process of giving them more and more rope for them to hang the rest of us with, on every unearthed example of regulatory failure.

In the private entrepreneurial world, failing businesses have their resources removed until the failed entrepreneurs in charge are forced to become employees again, just like the rest of us.

Only in government is it possible to grow fatter and better resourced, the more you fail, leading to the perverse incentives that so plague all government affairs. What happens to a private school that fails, asks Woods? It goes bust. What happens to a government school that fails? It receives more tax funding.

It is this Mad Hatter economics that is sucking the life out of our western economies, and until we reverse this process, we will continue our long-term decline, to be replaced in economic ascendancy by the much more sensible people of the East.

After thus pulling back the green silk curtain in the Emerald City, and fully revealing the central planning role of the failed Federal Reserve and other satellite central banks, Woods then aims an elvish spear or two at that other arm of U.S. Imperium; its military:

“The F-22 was sold as a stealth fighter. But it keeps showing up on radar systems — and even if it didn’t, the thing is huge, … ‘The only way to make the F-22 stealthy,’ says retired Air Force Colonel Everest Riccioni, ‘is to tear the eyes out of enemy pilots’ heads.’ It wasn’t until 2010 that the program was finally scrapped. Over the life of the program, some $65.3 billion was spent, which translates into over $356 million per plane.”

And you thought Gordon Brown was a massive waster of other people’s money? No wonder the ghoulish former British prime minister spends so much of his time in North America, these days, to really experience what government waste is all about, ready for whatever tarnished pot he is eventually awarded for his wretched services to world socialism.

Woods then tackles an area close to my own heart. If you were to award me a magic wand and allow me to abolish just one government fiefdom, it would the one in which it melds the fluid minds of children to believe in the sanctity of government. Joseph Goebbels would have called my abolition target the ‘State Propaganda and Child Indoctrination Department’, though Guardian readers who make their living in it might prefer to call it the ‘State Education Department’:

“Schoolchildren are taught a version of history worth of Pravda. Governments, they are convinced, abolished child labor, gave people good wages and decent working conditions; protect them from bad food, drugs, airplanes, and consumer products; have cleaned their air and water; and have done countless other things to improve their well-being. They truly cannot imagine how anyone who isn’t a stooge for industry could think differently, or how free people acting in the absence of compulsion and threats of violence — which is what government activity amounts to — might have figured out a way to solve these problems.”

Okay, so I would like to be greedy, being so intrinsically selfish, and claim a second wish to also abolish the Bank of England and replace it with absolutely nothing at all, but what I find strange about this, is that a typical undergraduate at an English university would nod their head with you if you said, ‘it was terrible when Adolf Hitler took over private schools in Germany, to indoctrinate German children,’ but finds it inconceivable to imagine government being kicked out of the education sphere here in England. Because, as Tom Woods points out:

“Under the free market, children were condemned to live lives of hard labour. Before the rise of industrial capitalism, children spent their days picking flowers and skipping through meadows. Then capitalism appeared and whisked the children away into lives of miserable toil. Only our wise public servants could have rescued them from this cruel fate.”

Woods immediately counters this fanciful nonsense with a quote from Von Mises:

“‘It is a distortion of facts,’ he wrote, ‘to say that the factories carried off the housewives from the nurseries and the children from their play. These women had nothing to cook with and to feed their children. These children were destitute and starving. Their only refuge was the factory. It saved them, in the strict sense of the term, from death by starvation.’”

You will never see that lesson relayed in any English state school, however, or even in many of the few remaining private ones, such is the defenestrating stranglehold that Whitehall has taken over child indoctrination, via its national curricula and state-sanctioned key stage criteria, to strangle the ability of anyone to think or, God forbid, disagree with the official civilised positions on everything, including perhaps the ruthless evil capitalist exploitation of Peruvian basket weavers and the selfish societal denial of sustainable development for cardboard windmills.

Even in Harry Potter, that most quintessentially English experience, one of Voldemort’s stated aims, when he takes power, is to take Hogwarts under the direct control of government to ensure that all wizard children are ‘correctly educated’, and this is quite clearly seen by one and all as intrinsically evil, as is the earlier failed takeover of Hogwarts by Cornelius Fudge.

But in the real world, such a government takeover is seen as being ‘progressive’ and ‘necessary’. And this is what I love about Woods. He is able to articulate this Austrian incredulity in such a way, that possibly, just possibly, even a Guardian reader might be just able to spot the blindingly obvious incongruity of such a vital sensitive service as a child’s education being under the control of tax-fed bureaucrats and self-serving politicians.

Woods is also able to slay other sacred socialist magical beasts, for instance, that regular paean of Neil Kinnock, Britain’s former Labour Party leader, that we should be more like Sweden, which even the redoubtable P.J.O’Rourke once labelled as ‘Good Socialism’.

Woods differs from these mighty opinions:

“In 2008, Swedish Prime Minister Fredrik Renifeldt urged his countrymen to face facts: Swedish prosperity had been built up by the free market, and the much-vaunted Swedish welfare state merely drew parasitically upon that wealth until the country was forced to begin returning to the market economy once again. Wealth that ‘took a hundred years to build was almost dismantled in twenty-five years,’ he said.”

And there’s much more in that vein, which helps contribute a downpayment towards the entrance fee.

And so Woods continues, with the ‘Myth of Good Government’, the ‘War on Drugs’, and finally, how the state can be rolled back from its current pre-eminent position in the United States (or at least how this inevitable rollback can be accelerated and neutralised, to avoid the U.S. government retaliating upon Americans and the rest of the world, as its funding and power base shrinks).

Yes, this a very ‘American’ book. However, if like me you believe that the idea of America is still where proper liberty may once again flower in this world, in somewhere like an independent Texas, an independent Oregon, or an independent New Hampshire (or as Hoppe says, somewhere even smaller, like just one single free American city) then that flowering will partially be due to the indefatigable work of Thomas E. Woods and the books he has written, such as Rollback.

Although this common sense work may be optional for Europeans — though full of ideas which I think they will still find useful — it is absolutely essential for all Americans, and anyone else who believes in Doug Casey’s America, as opposed to Barack Obama’s United States.

If such a second American Revolution as described above should ever come to pass, involving honest money, peace, prosperity, and freedom, then Thomas Woods could even match his namesake, Thomas Paine, the rebellious Englishman from Norfolk who helped create the original successful revolt from Britain, with his similarly radical pamphlets, in 1776.

Rollback will help Woods stake that claim.

Just to nail that claim home, he even spares room, in the final paragraphs of the final chapter, for this lengthy quote from economist Professor Kevin Dowd, on the matter of debt repudiation, as delivered to an audience of younger people, in Paris, in 2009:

“You can play by the rules your elders would impose on you. You can expect to pay higher and higher taxes, work harder and harder to stand still, and get less and less back in return for yourselves — a life little different from slavery — and then the system will collapse anyway.

Or, alternatively, you can fight back. There is no law of nature that says you have to honor checks that other people write at your expense. You are not slaves — you are slaves only if you choose to submit to slavery. You can repudiate those checks….

Let’s be blunt about what I am suggesting. I am suggesting that if default is inevitable, and if default is more damaging the longer it is delayed, then it would be a good idea to consider embracing it. We should lance the boil, as it were, and kill off the scam — sooner rather than later.

Do you want a life of toil and slavery, followed by ultimate destitution, or do you want to stand up for yourself and fight for the chance of a decent life? It’s your choice.”

Woods concludes:

“It is the choice facing America.”

I would contend, that it is the choice facing everyone in the West.


Philipp Bagus: The Tragedy of the Euro

by Andy Duncan on 26/03/2014


The world centre of gravity of the Austrian Economics movement has long been the United States, especially since Ludwig von Mises arrived there on August the 3rd, at the age of fifty-eight, in a turbulent 1940.

The 1998 Spanish publication of Money, Bank Credit, and Economic Cycles, by Jesús Huerta de Soto — followed by the English translation in 2006 — then helped to revive European claims of an Austrian equality with the United States, particularly with the trans-Atlantic returns of Hans-Hermann Hoppe and Guido Hülsmann, after long periods of residence in North America.

In particular, a burgeoning growth of the Spanish echelon of the global Austrian movement — initially under the wing of Professor Huerta De Soto — may be starting to prove that a few years in the United States is becoming an option, rather than a requirement, for an Austrian academic to be taken seriously as a heavyweight intellectual force.

Thus we discover the rising talent of Philipp Bagus, and the publication of his landmark book, The Tragedy of the Euro.

This brilliant monograph, written in crisp classical English, flows like a rising tide.

It begins with a description of the rise of the European Union, which was always a dialectic, claims Bagus, with four classical liberal freedoms of movement on one side of a divide; these liberal freedoms covered goods, capital, people, and the provision of services. These four virtues then clashed up against the many vices of socialism, and particularly the desire for new imperial satrapies, especially given the WWII fall of colonial European empires and their replacement by the all-embracing and invisible empire of the American government, particularly after the Suez crisis.

Just before his first chapter, Two Visions for Europe, Bagus removes his gloves and goes straight for the throat, in the best uncompromising style of Von Mises himself; this is perhaps a delight to all of the writers at The Daily Bell, in Switzerland:

“In reaction to the [recent financial] crisis, the political class has tried desperately to save the socialist project of a common fiat currency for Europe.”

Once he has established his outright grip in this manner, Bagus refuses to let go throughout the entire book. Essentially, he claims that the fundamental schism at the heart of the EU project is one of a classical liberal Roman Catholic Church model engaged in a do-or-die struggle with a socialist Roman Empire model. From its Capitoline Hill inception in Rome, in 1957, upon the very site of the Temple of Jupiter Optimus Maximus, the EU project has thus always been doomed to be one of conflict and strife, driven by a perpetually unsatisfactory compromise between these two bitter rival forces of the human condition; liberty and tyranny.

On top of this conflict comes the later antagonism between the Austrian-influenced post-war Germans and their economic miracle, combined with the Saint-Simon socialist French and their desire to rebuild the empire they had lost when the Wehrmacht crushed their Napoleonic republic in 1940 (a military conflict in which Mises himself was swept up as he managed somehow to keep just one bus journey ahead of the Panzers on his terrifying road to New York). Bagus is uncompromising:

“The real reason the German government, traditionally opposed to the socialist vision, finally accepted the Euro, had to do with German reunification. The deal was as follows: France builds its European empire and Germany gets its reunification. It was maintained that Germany would otherwise become too powerful and its sharpest weapon, the Deutschmark, had to be taken away — in other words, disarmament.”

After this first layer of his intellectual pyramid is built, Bagus delves into The Dynamics of Fiat Money, in his next chapter. In a Michelin-starred culinary mix of monetary history, contemporary politics, and Austrian Economics, Bagus makes a bold prediction:

“Governments started to get heavily involved in banking. Unfortunately, interventions are a slippery slope, as Mises pointed out in his book, Interventionism. Government interventions cause problems from the point of view of the interventionists themselves: begging for additional interventions to solve these additional problems, or the abolition of the initial intervention. If the course of adding new interventions is chosen, additional problems may arise that demand new interventions and so on. The road of interventions was taken in the field of money, finally leading to fiat money and the Euro. The Euro begs for political centralization in Europe. The end result of monetary interventions is a world fiat currency.”

God forbid that should happen, though the world elites may try it on with us for a while before that power-grab collapses too, just as their precursor fiat currencies are collapsing today in the face of their endless money printing to bail themselves out from a gigantic mess of their own greed-fuelled creation.

After explaining this end-game strategy, Bagus details how we got to this point, in one of the clearest expositions of the Austrian Business Cycle Theory that I have yet to read. Indeed, he leads us towards the intriguing idea that the intertwining of central banking and fiat currency, with expansive state war, epitomised by both world wars, is much more than a coincidence:

“After the collapse of Bretton Woods, the world was dealing in fluctuating fiat currencies. Governments could finally control the money supply without any limitations to gold, and deficits could be financed by central banks. The manipulation of the quantity of money has only one aim: the financing of government policies. There is no other reason to manipulate the quantity of money.”

Yes, the diamond-hard spirit of Von Mises is alive and well, and living in the home of Francisco de Vitoria and the other Spanish Scholastics, from which Mises and the other early Austrians, such as Menger, also drew much inspiration.

But one impregnable bastion still stood between the nascent world government elites and their rotten self-serving dream of unlimited money printing and a world Soviet financial gulag — which in my opinion is a hopeless dream anyway, as it will quickly go the way of the Soviet Empire — and that was the post-war Wirtschaftswunder Germany of Konrad Adenauer and Ludwig Erhard, and the semi-granite rock upon which this economic miracle was built, the German Bundesbank.

Yes, although the Bundesbank did inflate its currency, like all other central banks, its intimate knowledge of the consequences of Weimar caused it to inflate a lot less than the rest, with perhaps its only rival to fiat currency hardness being the Swiss National Bank. Bagus explains how the destruction of this bastion was approached, in his third chapter, The Road to the Euro:

“Not surprisingly, governments and central banks wanted to escape the ‘tyranny’ of the Bundesbank. The system finally failed. The declaration of surrender was made when the [European Monetary System] corridor was amplified to ±15 percent in 1993. The Bundesbank had won; it had forced the others to declare the bankruptcy. It had followed its hard money philosophy and not succumbed to the pressure of other governments. Anyone who inflated more than the Bundesbank was showing its citizens a weak currency. The Deutschmark, in turn, was respected throughout the world and very popular among Germans. It brought relative monetary stability not only to Germany, but to the rest of Europe as well. The Deutschmark, of course, only looked stable in comparison to the rest. It itself was highly inflationary and lost nine tenths of its purchasing power from its birth in 1949 to the end of the EMS.”

Of course, this begs a simple question about all of the various intellectual pygmies who call themselves ‘servants of the people’ within the various European governments. If they truly wished to serve their peoples — rather than serve themselves as masters — then instead of being jealous about German financial success and the relative prosperity of the German people, they should simply have copied German policies rather than deriding the Bundesbank for being too effective at making ordinary people wealthier and happier, at the cost of preventing politicians from engaging in their endless dreams of aggrandising themselves, at the cost of everyone else, via unlimited money printing.

In fact, Bagus makes this point clear in his final paragraph in his second chapter:

“If Europeans had just wanted monetary stability and a single currency in Europe, Europe could just have introduced the Deutschmark in all other countries. But nationalism would not allow for this. With a single currency, there were no embarrassing exchange rate movements that would reveal a central bank’s inflating faster than its neighbors. For the first time there was a centralized money producer in Europe that could help to finance government debts, and open new dimensions for government interventions, and redistribution of wealth.”

However, the ‘problem’ remained of how to get the German people to give up their ‘evil’ independent Bundesbank and its relatively honest-money policies? Obviously, German politicians would go along with the plan. Exploitative elites in different countries have always felt more at home with other exploitative elites, rather than with the exploited hoi polloi who pay the taxes to make their lives comfortable, who share merely a language and a physical geography with ruling elites, rather than the same attitude towards life; the politicians and civil servants of our current EU may require translators — if they lack fluency in the lingua franca of English — but they get on much better with each other at their cloistered conferences than they do with their respective peasant rabbles beyond the gates.

This is the trick Bagus believed the elites settled upon:

“The implicit blaming of Germany for World War II and making gains as a result was a tactic that the political class had often used. Now the implicit argument was that because of World War II and because of Auschwitz in particular, Germany had to give up the Deutschmark as a step toward political union. Here were paternalism and a culture of guilt at their best.”

Indeed, you may have noticed yourself that for several years it almost became a Rite of Passage for world elite members to make the required pilgrimage to Auschwitz, to really nail the point home, with Gordon Brown, of course, being several years too late.

More, however, was needed than the promised removal of a continual drip-feed of collective guilt (as if people born decades after WWII should ever really consider themselves blameworthy for what other people did before they themselves were alive). The endless drone about Auschwitz was the stick; but what about a carrot to sweeten the bitter pill of the Euro?

This was constructed in the form of the ‘Stability and Growth Pact’, in which other non-German members of the Euro would be forced to jump rigorous financial hurdles and to pass continuing acid tests, to prevent the Mediterranean La Dolce Vita lifestyle — fuelled by the printing presses of the peseta, the lira, and the drachma — from diluting the iron-hard rules of the soon-to-be ex-Bundesbank.

It was all a despicable sham, of course, and nobody believed any of it, especially the lying politicians of Germany, even when it was being put together. But as they say with the eternal hope of marriage; proceed in haste and repent at leisure. The German people were thus hoodwinked into giving up their precious Bundesbank, which had served them so well since 1948:

“The Stability and Growth Pact was not as harsh as Theo Waigel had suggested. When the SGP was finally signed in 1997 it had lost most of its disciplinary power. The result prompted Anatole Kalteksky to comment in The Times that the outcome of the Treaty of Maastricht represented the third capitulation of Germany to France within the century, citing as well the Treaty of Versailles and Potsdam Agreement.”

As Mark Twain said, history usually fails to repeat itself, but it does often rhyme.

Moving into his fourth chapter, Why High Inflation Countries Wanted the Euro, Bagus gets much more technical and produces lots of charts and graphs to detail and highlight his developing thesis. He does, however, continue in the same refreshing Misesian vein within the text:

“Governments of Latin countries, and especially France, regarded the Euro as an efficient means of getting rid of the hated Deutschmark. Before the introduction of the Euro, the Deutschmark was a standard that laid bare the monetary mismanagement of irresponsible governments.”

In the fifth Chapter — Why Germany Gave Up the Deutschmark — Bagus drills deeper into the cunning plan to part the German people from their wealth and their independence, via the machinations of their rapacious and power-hungry politicians, eager to seek further baubles from the EU bureaucracy and a luxurious financial independence from their rotten capricious voters.

The Bundesbank thus had to be destroyed, to allow the dreams of Keynesians within governments everywhere, to flourish and prosper:

“Mitterand, France’s president from 1981–1995, had hated Germany in his youth and despised capitalism. The French patriot was a staunch defender of the socialist vision of Europe and geared his policies toward defending France against the economic superiority of its Eastern neighbor. Germany’s superiority was based on its currency. Mitterrand’s intention was to use Germany’s monetary power for the interest of the French government.”

So, a relationship built on love and trust then. It was surely bound to last.

Of course, the plan would never have worked without the duplicity of German politicians:

“The Euro allowed German politicians to rid themselves of stubborn Bundesbankers, promising the end of the bank’s ‘tyranny.’ More inflation would mean more power for the ruling class. German politicians would be able to hide behind the ECB and flee the responsibility of high debts and expenditures.”

As you might say in a high quality jazz club after listening to a particularly dense and interwoven melody; “Nice”.

Bagus finishes his fifth chapter with a summation of what the Euro has really been about all along:

“In sum, the introduction of the Euro was not about a European ideal of liberty and peace. On the contrary, the Euro was not necessary for liberty and peace. In fact, the Euro produced conflict. Its introduction was all about power and money. The Euro brought the most important economic power tool, the monetary unit, under the control of technocrats.”

Bagus is particularly scathing about the political gnomes and bureaucratic dwarves of the various exploitative tax-eating classes, who are currently trying to rescue their own miserable political careers by wrecking the economic futures of their exploited tax-paying classes. For instance, he has a lot to say about that quisling betrayer of the German people, Angela Dorothea Merkel:

“Merkel herself stated that: ‘If the Euro fails, the idea of European integration fails.’ Her argument is a non sequitur. Naturally, one can have open borders, free trade and an integrated Europe without a common central bank. Here Merkel showed herself to be a defender of the socialist version of Europe.”

The rest of the book then contains a brilliant and detailed analysis of the relationship between the Federal Reserve and the European Central Bank, and the political interconnections between the two, as well as an up-to-date breakdown of how the Euro crisis has developed over the last three years. Bagus also explains how the ECB is stoking up the fires of future European conflict in its bid to help the EU create a strait-jacket Force majeure political union.

At the end of his tenth chapter, The Ride Towards Collapse, Bagus neatly summarises the current situation after an interesting discussion of the concept of ‘qualitative easing’, the evil twin of ‘quantitative easing’:

“The European Union has become a transfer union. Interest rates that most governments have to pay on their debts remain at a high level. Sovereign debt levels are still on the rise. The future will tell us if the situation was sustainable.”

In the next chapter, The Future of the Euro, Bagus clearly and succinctly answers the following set of questions:

“Have we already reached the point of no return? Can the sovereign debt crisis be contained and the financial system stabilized? Can the Euro be saved? In order to answer these questions we must take a look at the sovereign debt crisis, whose advent was largely the result of government interventions in response to the financial crisis.”

No stone is left unturned, as they say, though Bagus does it in as few words as possible.

In summation, most living Austrian authors fall into one of three broad camps; the Misesian traditionalists, the Hayekian cerebralists, or the Rothbardian essentialists. I can only say that if forced to pick one of the three, I believe the spirit of Von Mises still lives on within the pen of Bagus. For example, was this written by Mises or Bagus? (The clue is in the last sentence):

“As Austrian business-cycle theory explains, the credit expansion of the fractional-reserve-banking system caused an unsustainable boom. At artificially low interest rates, additional investment projects were undertaken even though there was no corresponding increase in real savings. The investments were simply paid by new paper credit. Many of these investments projects constituted malinvestments that had to be liquidated sooner or later. In the present cycle, these malinvestments occurred mainly in the overextended automotive, housing, and financial sectors.”

Or is the directional style of Bagus a combination of all three broad camps, plus something new? Are we going to have to invent a new term, such as ‘Bagusian’, to create an evolving fourth camp? If we get three books of this quality, in sequence, then I feel we may be forced to deploy such a term.

To wrap up, in his conclusion, Bagus outlines all of the various possible futures he believes the Euro may possess in various different random universes. Its outcome is in the lap of the Gods, he thinks, as to which one of these universes the Euro will finally enter, though he outlines one or two of the more likely predictions and why he thinks these will be favourite with the bookmakers.

I will let you download, buy, or in some way imbibe this required-reading book, to find out what the details of these predictions are. However, I think we all know the general conclusion; all fiat monies ultimately end up as worthless. The interesting part of the story is how they get there.

And if you want to know the illuminating and interesting history (and future) of the Euro, and how it interconnects with the planned world fiat money — which you can call ‘the Bancor’ or ‘the SDR’, though I prefer ‘the Soviet’ — then you must read this book.


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