Written by Rudy J. Fritsch exclusively for SouthFront.
Chairman Mao is frequently quoted as having said ‘Power Comes from the Barrel of a Gun’. As in many (not all) other things, he was right… but this statement begs the question; where does the Gun come from? Today ‘Gun’ means much more than gun and bullets; it really means sophisticated weapons like cruise missiles, military aircraft, combat ships, precision bombs, etc. etc. ad infinitum.
If we think about this, we can see that much lies behind ‘Gun’; metallurgy, mathematics, technology… industrial capacity… and wealth. Guns are expensive, and a society that wants or needs ‘Power’ needs many Guns… and this implies much wealth poured into weapon production… as well as an economy with the strength and depth required to produce and acquire Guns.
The study of wealth and its ramifications is called economics… often called the ‘dismal science’… dismal because most people doing the ‘science’ of economics are academics, not entrepreneurs. Theorists, not practitioners; like celibate monks writing marriage manuals.
Wealth is necessary but not sufficient for the acquisition of real military power. Economics (wealth) defines one aspect of military strength; but other factors are essential. Saudi Arabia has one of the highest military spending budgets on the planet; yet if you look at the conflict in Yemen, where the poorest Muslim nation on Earth is defeating the vaunted Saudi military, this fact becomes crystal clear.
Morale, ethics, determination, motivation are key factors; but as I intend to show, these very same factors… morale, ethics, determination, motivation that are essential to military success are the very same factors necessary for economic success… and it all starts with honest money.
Empires rose and fell many times in Human history; every rise was accompanied by the circulation of honest money… and every fall was accompanied by dishonest money.
The Roman Republic used the Denarius as its common currency. Originally one Denarius was minted from 6.8 Grams of Silver (the Gold Solidus was also Roman money, but of much higher value; the Denarius circulated most as its value was far more suited to daily market transactions). By the time of Nero, one Denarius contained less than 3 Grams of silver… debasement of the currency ran parallel to the debasement of the Empire.
The British Empire ran on the Gold Sovereign; indeed, the Classical Gold Standard and the whole British Empire ran on 250 Tons of Gold bullion held in London vaults… (Today Fort Knox claims to have over 8,000 Tons of Gold on hand) and on Gold Sovereigns in free circulation… until WWI. At the time of WWI, paper Pound notes started to replace Sovereigns in circulation… and the British Empire started to collapse.
The US Dollar was originally modeled on the Spanish Thaler; a one ounce Silver coin. American Eagles (Gold coins) had a face value of ten Dollars. Silver has not been used as US money since the nineteen sixties, and Gold Eagle coins are not in circulation. Even simple ownership of Gold by US citizens was outlawed by President Franklin Roosevelt.
The US dollar has seen continuous debasement since WWI, when the Federal Reserve was inaugurated; and paper Dollars started to replace Gold coins as ‘money’. The purchasing power of the US Dollar today is less than 5% of the original Dollar note… a note originally redeemable in Silver or Gold. The US Dollar is failing… as is the American Empire.
Clearly there is correlation between monetary debasement and the failure of empires and the collapse of societies; yes, ‘correlation is not causation’… but it is also true that without correlation, there can be no causation. As for which leads, monetary debasement or cultural collapse… this is a ‘which came first, the chicken or the egg?’ question and is irrelevant. What matters is the concurrent collapse of honest money and society… and the certainty that only honesty in society and money can save us.
Rudy Fritsch was born in Hungary, and fled Bolshevik tyranny during the Hungarian Revolution of 1956. His family had lived through WWII and the consequent Hungarian hyperinflation, thus he has intimate experience with financial destruction. As mainstream economics “The Dismal Science” made no sense to him, he ended up studying Austrian economics, the only school of economics grounded in the realities of Human Action. Holding a master’s degree in Monetary Science, he came to admire Professor Antal Fekete’s work and made a firm commitment to help preserve and disseminate his legacy. After attending Professor’s ‘Gold Standard University Live’, Mr. Fritsch authored a book titled “Beyond Mises” that is meant to bring New Austrian Economics and the Gold Standard to the understanding of non-economists.
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