Monthly Archives: February 2012

Where Does Money Come From?

February 29, 2012   Shaun Connell   No comments

Federal Reserve

Where does money come from? The answer is so simple that many people find it confusing. In this article, we’ll be talking about a specific source of money creation — that of fractional-reserve banking used by almost every saver and borrower in the West.

For the most part, money is created out of thin air by banks literally printing new money when they create new loans. When the bank gives out a loan for a house, it’s printing the money. When a bank gives out a loan for college, it’s printing the money. That’s where nearly all money originates — banks “loan” it into existence.

It works like this: the bank has lots of money on hand from depositors. As long as the bank keeps money from depositors on hand, the government allows banks to “print” a certain amount of new money for loans — up to a certain fraction of whatever money they have on hand from deposits.

For example, if the fractional-reserve requirement is 10%, then the banks can literally print $90 new dollars for every $100 they have in deposits. In the end, this ends up expanding because the money is deposited at other banks who are able to create new money from that money as well.

Don’t worry if this sounds muddled — it’s a tricky topic. We’ll explain it in simpler terms below.

How Lending Creates “New” Money

Here’s a simple description of what happens when a bank makes a loan by Lloyd G. Reynolds, an economist from Yale University:

“What happens when a bank makes a loan? A company applies for a loan of $1 million, and the bank agrees. The company gives the bank a piece of paper promising to repay the loan after, say, six months. The bank gives the company an addition of $1 million to its checking account. Money supply increases. When the time for payment comes round, unless the loan is renewed, repayment is made by deducting $1 million from the company’s checking account. The central principle is simple: Making a loan creates money, while repaying a loan extinguishes money.

This looks very easy and profitable — the bank just creates money by a stroke of the pen. So why not create as much money as possible? The difficulty with this idea is that when people and companies have checking accounts, they are likely to use them. In addition to writing checks, they may want to draw out part of their deposit in cash. So a bank must have some cash in the vault, and a place where it can go for more cash if necessary. In short, a bank must have reserves.

Where money comes from reveals a lot about who is really in power, what our economy is based on, and how we should react.

But What About the Deposits?

Some argue that the banks aren’t actually printing new money — they’re just lending money out that’s been deposited. This is, unfortunately, not true. The reason is that deposits are money that can be requested at any time by any specific individual. With the exception of a bank run, an individual can redeem his balances at any time he wishes from the bank.

Let’s pretend the system was a little different. Let’s assume there’s a man named John and a bank named Bank of Mainstreet. Now let’s assume that every dollar John deposits in the bank is actually a golden coin with a special serial number on it that he is able to withdraw whenever he’d like. The bank has to be able to give him ever actual dollar he deposits whenever he asks.

Now let’s say that  someone decides they need a loan and they go to the bank. Is the bank able to give out those dollars in that loan? Of course not — John might ask for his money at any time. Giving out new loans isn’t possible in such a system because John has a right to “his” money in that bank’s vault.

Is this what’s going on in the current system? Not quite. Something extremely different is occurring. When you deposit money in the bank, you don’t have a specific claim to a specific dollar — you just have claims to a specific amount of dollars. That’s the point of money in the first place, after all.

So what is happening in the system? It’s a little different. John is depositing his “dollars” usually in the form of checks and other types of money, and simply has a guarantee that he’ll be able to get out an equal amount of currency whenever he chooses. The money is still “in” his account. If the bank makes out a loan with “his” money, that doesn’t mean his account goes down — his account is still “filled” with money and he can stop saving whenever he’d like. In a sense, it can be seen as a type of double counting. The bank can give out loans — without emptying his bank account.

His deposits aren’t the only source of the new money being lent out. His deposit is just the cap on the new money being lent out. Banks can only lend out money in smaller amounts than what they have in deposits, but that doesn’t mean the deposits themselves are actually shrinking at all — new money is just being created at a smaller ratio than 1-to-1 to deposits.

The Federal Reserve completely agrees with the notion that deposits are not the “source” of loans. That’s why the Federal Reserve Bank of New York wrote the following:

‎”Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower’s IOU.”

This is the source of new money in the system. Deposits are important because they cap how much money can be “invented” — but banks don’t lend out deposited money. They lend out money that never existed before. 

How Fractional-Reserve Banking is Similar to Double Counting

Money is a collective accounting trick. It’s when plenty of people decide to mess with their books in such a way that it makes bartering exponentially easier. It’s when cattle farmers and truck manufacturers agree to “barter” with something that allows them to quickly turn around and barter with other people and corporations. They’re not trading trucks for cows — they’re trading trucks for money, and that money was traded for with the cows. Money is the accounting “middle man”.

Of course, at some point in history, bankers and political leaders realized they could manipulate this. It’s an accounting trick, so why don’t they just add it whenever they’d like? Whey don’t they mess with the “supply” of money and create their own? And that’s the source of inflation.

It could be said that fractional reserve banking is double-counting, something that occurs a lot in the modern financial world — and something that makes financial risk explode. Ellen Brown, JD explains:

 ”In the shadow banking system, as in the old fractional reserve banking system, the collateral is being double-counted: it is owed to the borrowers and the depositors at the same time.”

This “double counting” works until there’s a bank run. Then the whole house of cards collapses. That’s why the federal government tries to back bank accounts through the FDIC. Of course, that just begs another question — where would the FDIC get the money during a bank run? But that’s another question for another time.

How Fractional Reserve Banking Creates Price Inflation

Some might be unimpressed by the above explanation, and believe that it doesn’t matter if the new loans are “technically” new money because they’re capped by deposits. After all, if you can still pay everything back, who cares? The answer is simple: what happens to the “new” money when it’s printed? The answer: it can be deposited in a new bank and the process begins to repeat itself.

Remember the above story about John and his coins with serial numbers? That’s not going on right now. Instead of there being a set amount of dollars, the banks can print money as long as they have enough deposits, and a lot of the money they print will end up being new deposits.

Remember, loans that banks give out aren’t just raw cash that disappears or something. It’s usually just another checking account that will switch to some other bank’s account. After they “print” the new money, that money is deposited somewhere else again — increasing more printing during healthy economic times. That makes the money supply go up.

As Chris Martenson explains:

“Since any bank can loan out up to 90%, the bank in our example manages to locate a single individual that wants to borrow $900. This borrower then spends that money by giving it to another person, perhaps his accountant, who, in turn, deposits it in a bank. Now it could be the same bank, or a different bank, but that really doesn’t change how this story gets told at all. With this new deposit, the bank has a fresh $900 to work with, and so it gets busy finding somebody who wants to borrow 90% of that amount, or $810.”

In other words, people are spending tons of money that didn’t exist before, meaning that there’s more money in the system but roughly the same amount of stuff. That causes price inflation.

Why This Really Does Matter

The entire system is bizarre and it often takes someone a while before they “get it”. I’ve heard literally dozens of people say, “That just can’t be right because that’s nuts.” They’re right about one thing: it is nuts.

But it’s also true. Such a system where money is only created through debt means that our economy is based on debt. And debt is based on interest. This means our entire economic system is based on society paying rent to the financial class. It’s no surprise that the financial class has grown exponentially over the last few decades.

Ludwig von Mises, a beloved Austrian economist, was right when he said:

“Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.”

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Are We About to Enter a New Recession?

February 26, 2012   Shaun Connell   No comments

About five months ago, the Economic Cycle Research Institute made a new call that had them receive plenty of praise and criticism — they predicted we were about to start entering a new recession. Since then, we’ve had plenty of economic indicators hit 20+ month lows, including their monthly coincident index.  Meanwhile, the government has reported “positive” and yet misleading reports about the labor market, as I’ve written about at my business websites here and here.

But back to the ECRI. They claim they’re the “world’s leading authority on business cycles” whose “state-of-the-art analytical framework is unmatched in its ability to forecast cycle turning points.” Perhaps they’re right, or perhaps they’re wrong. We’ll know more in the next year.

Meanwhile, check out this interview where Lakshman Achuthan, their chief economist and spokesperson, explains and defends the notion that we’re entering a new recession.


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The Original Intent of the Second Amendment

February 13, 2012   Shaun Connell   No comments

God is no tyrant. There is a constitutional right to keep and bear arms. There are very few topics as open-and-shut as the meaning of the Second Amendment.

Literally all evidence from the founding fathers shows that there was a consensus as to what the original intent and the original meaning of the Second Amendment was. The Second Amendment was written to keep the power in the hands of the people.

Its intent was to ensure that every person was able to take up arms and join other people to fight off tyrants, invaders, or unjustified insurrections. Its meaning was that the government couldn’t infringe on the right of the people to keep and bear arms — no gun bans or restrictions on the people at large.

Here’s the text of the Second Amendment:

“A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.”

Before we look over what the implications of the Second Amendment are, let’s look at some quotations from the founding fathers themselves about gun control and the constitution’s protection of the right to keep and bear arms.

The States Request an Amendment on Owning Firearms

When the constitution was written, there was quite a bit of backlash from people who wanted the constitution to include certain strong limitations on the new government. They wanted explicit protections of the freedom of religion, freedom of speech, freedom of the press, freedom against unwarranted searches and seizures, and, of course — the right to keep and bear arms.

The request to protect the right to keep and bear arms was almost universal and requested in plain English. There’s no way to confuse the meanings of the requests. Let’s look at the texts of some of the actual requests and proposals.

New Hampshire’s convention requested the following addition to the Constitution:

“Congress shall never disarm any Citizen unless such as are or have been in Actual Rebellion.”

They weren’t alone. Antifederalists in Pennsylvania’s wanted an amendment to, requesting the following be agreed upon:

“That the people have a right to bear arms for the defence of themselves and their own state, or the United States, or for the purpose of killing game; and no law shall be passed for disarming the people or any of them, unless for crimes committed, or real danger of public injury from individuals…”

Three different states, New York, Rhode Island, and Virginia, each required similar proposals and their requests included these exact words: “That the people have a right to keep and bear arms”.

That the founding fathers wanted the right to keep and bear arms protected was obvious. They believed that the militia was the only real defense against liberty. They didn’t trust standing armies or their government — they wanted a country that really was just “the people” with the power, in the end.

Founding Father Quotes on Gun Control

The views of the founding fathers wasn’t minced either. They believed that the right to keep and bear arms was an important right — that the right of the people to be able to repel invasions and topple tyrants was a fundamental natural right.

An ancestor of mine, signer of the Declaration of Independence, and uncle to Robert E Lee, it was Richard Henry Lee who wrote the following in The Pennsylvania Gazette in 1788:

“To preserve liberty, it is essential that the whole body of the people always possess arms and be taught alike, especially when young, how to use them.”

The American hero Patrick Henry, the man who spoke fire for the cause of liberty, said in the constitutional debates:

“The great object is that every man be armed.”

Even Alexander Hamilton, the “liberal” of the day, wrote in The Federalist Papers at 184-188 that:

“The best we can help for concerning the people at large is that they be properly armed.”

The great philosopher statesman Thomas Jefferson wrote in a letter to William Smith in 1787:

“What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance. Let them take arms.”

Their values were clear. They wanted an armed populace because they knew an armed populace was a free populace. This is why they passed the Second Amendment with the text of, “the right of the people to keep and bear arms shall not be infringed.”
But that’s not all. Let’s look at further proof — let’s look at what they specifically said about the Second Amendment, and not just the idea of gun ownership.

Founding Father Quotes on the Second Amendment

The founding fathers debated the constitution ferociously — including the Bill of Rights and the Second Amendment. The following is what they said specifically about the Second Amendment at the time it was written.

Statesman Zachariah Johnson, at the Virginia convention in 1788, explained in no uncertain terms what the Second Amendment protects:

“The people are not to be disarmed of their weapons. They are left in full possession of them.”

In an article on the Bill of Rights in 1789, the Philadelphia Federal Gazette published the following discussing the Second Amendment:

“… the people are confirmed by the next article in their right to keep and bear their private arms.”

Later that same year, the Philadelphia Independent Gazetteer published the following, quoting Sam Adams on the Second Amendment:

“And that the said Constitution be never construed to authorize Congress to infringe the just liberty of the Press, or the rights of Conscience; or to prevent the people of the United States, who are peaceable citizens, from keeping their own arms…”

James Madison, who is known as the “Father of the Constitution” wrote the following in the Federalist Papers, No. 46:

“[The Constitution preserves] the advantage of being armed which Americans possess over the people of almost every other nation…[where] the governments are afraid to trust the people with arms.”

Of course, some people believe that the Second Amendment only protects the “militia” when it comes to gun ownership. This just begs the question: who are the militia? The Second Amendment itself is clear: “the people” is the group who have their rights protected. The militia are the people, of course.

But don’t take my word for it. After all, we’re after the original intent and now the original meaning of the Second Amendment. Let’s see what the founders said about the “militia” and who it is comprised of.

Founding Father Quotes on the Definition of “Militia”

John Adams wrote in “A Defence of the Constitutions of the United States” that the right to keep and bear arms was an individual right, but that military action had to be sanctioned by the laws, of course — not just any “revolution” would be legal, of course. He explains explicitly:

To suppose arms in the hands of citizens, to be used at individual discretion, except in private self-defense, or by partial orders of towns, countries or districts of a state, is to demolish every constitution, and lay the laws prostrate, so that liberty can be enjoyed by no man; it is a dissolution of the government. The fundamental law of the militia is, that it be created, directed and commanded by the laws, and ever for the support of the laws.”

This is a limit on the militia — not a limit on gun ownership itself. In other words, you have the right to own firearms, but not to just shot anyone you want or start a coup because you’re restless. This is just common sense, and even the most radical pro-gun thinkers would agree with such a limit. Your right to shoot guns ends where the property of others begins — that’s just how it works.

But some try to stretch this “limit” into meaning that the government can outlaw guns. Besides the obvious point that this goes against “the right of the people to keep and bear arms” on a blatant level, it also is unfounded — because militia rights are peoples’ rights. That’s because the militia is, in fact, the people.

That’s why the political economist Tenche Coxe — someone who was originally a loyalist during the revolution — even proclaimed the following in The Pennsylvania Gazette in 1788, while the debate was raging:

“Who are the militia? Are they not ourselves? Is it feared, then, that we shall turn our arms each man against his own bosom. Congress have no power to disarm the militia. Their swords, and every other terrible implement of the soldier, are the birthright of an American…[T]he unlimited power of the sword is not in the hands of either the federal or state governments, but, where I trust in God it will ever remain, in the hands of the people.”

And then even more bluntly, George Mason, yet another founding statesman, defined the militia during the Virginia convention to ratify the constitution in 1788:

“I ask, sir, what is the militia? It is the whole people, except for a few public officials.”

The evidence is devastating. Any historical “expert” who believes the original intent and meaning of the constitution didn’t protect an individual right to keep and bear arms is likely lying — either subconsciously to himself or consciously to your face.

After all, the Second Amendment plainly states, “the right of the people to keep and bear arms shall not be infringed. To an honest man, the debate should be over.

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Romans 13: Rulers Should Enforce Natural Law

February 12, 2012   Shaun Connell   No comments

God is no tyrant. One of the most abused and misunderstood texts in the entire Bible is a passage from Romans 13, written by Paul – formerly Saul of Tarsus.

Conservatives and tyrants alike have used this passage to rationalize obedience to tyranny likely for the last two thousand years. Conservatives see it as a blanket statement — that governments have the “authority” to punish sin just because it’s sin.

Tyrants see the text as a beautiful passage that essentially gives them the ability to trample sinners — and that pretty much means almost everyone and everything is regulated, including sex in the bedroom.

In the text of Romans 13, Paul explains the following:

Let every soul be subject unto the higher powers. For there is no power but of God: the powers that be are ordained of God. Whosoever therefore resisteth the power, resisteth the ordinance of God: and they that resist shall receive to themselves damnation.

For rulers are not a terror to good works, but to the evil. Wilt thou then not be afraid of the power? do that which is good, and thou shalt have praise of the same: For he is the minister of God to thee for good. But if thou do that which is evil, be afraid; for he beareth not the sword in vain: for he is the minister of God, a revenger to execute wrath upon him that doeth evil.

Wherefore ye must needs be subject, not only for wrath, but also for conscience sake.

For for this cause pay ye tribute also: for they are God’s ministers, attending continually upon this very thing. Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honour to whom honour.

Before we look at the other sections for additional context, let’s discuss exactly what these 7 verses mean in the context of who was writing them, and where he was located:

  • Paul lived in the Roman empire — a tyranny.
  • Higher powers don’t punish good actions.
  • There is no authority but God’s.

Romans 13 is discussing higher powers — moral authority. It’s discussing government in its proper function, not in all of its functions. Nero was “established” by God only in terms of causualty — Nero was still an evil man doing evil things, and God does not ordain what is evil. This is why in Hosea, God says:

“They have set up kings, but not by me: they have made princes, and I knew it not.”

This is not a contradiction at all. This is simply an explanation that not all princes are the higher powers. Some men are kings in name only. It was CS Lewis who said:

“The king is under the law for it is the law that makes him king.”

This is why “evil government” is not what Romans 13 is discussing — not at all. That’s one of many reasons our founding fathers fought the king of England — they knew he had no special “higher power” over them as subjects, because they understood natural law, at least on a basic level.

But what does this mean? What’s the meaning of Romans 13 if it doesn’t mean that we are to obey evil governments? On a basic level, Romans 13 is not about all politicians, all governments, or all laws. It’s a broad generalization. It was not necessarily written for those establishing governments — it was written for those who are subjects to governments. Because of that, the reference to government was put in simple and general terms for the sake of communicating the real idea: the idea of non-rebellion, of being peaceful, of not randomly starting trouble.

But what is useful about the passage? What can we gain if we are trying to establish a government? The answer is simple. We keep reading. This is the part of Romans 13 that conservatives and tyrants alike forget to read when talking with those who understand liberty:

“Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.

For this, Thou shalt not commit adultery, Thou shalt not kill, Thou shalt not steal, Thou shalt not bear false witness, Thou shalt not covet; and if there be any other commandment, it is briefly comprehended in this saying, namely, Thou shalt love thy neighbour as thyself.

Love worketh no ill to his neighbour: therefore love is the fulfilling of the law.”

How do you fulfill God’s law in relation to the “higher powers” established on earth? Simple. Worketh no ill to your neighbor. What should you do because of government? Simple. Don’t commit adultery, don’t kill, don’t steal, don’t lie in court, don’t covet (the root of almost all social crimes and conflict) — in a sentence, love your neighbor as yourself.

To put this in a phrase that we’re used to hearing, do not encroach on other person’s or their property.

This doesn’t mean that “God’s law” says it’s alright to smoke pot, necessarily. It doesn’t mean that it’s moral to do whatever doesn’t hurt other people. That’s a question of another aspect of God’s law — loving God and following His commandments — only that’s not at all what the “law” is discussing above, because it’s specifically talking about the “higher powers” established here on earth among men.

Note that Paul is writing specifically and exclusively writing about our relationship with others. The higher powers exist in a social context, not a private one — they exist to regulate social behavior, not private behavior. They exist to outlaw adultery (contract violation — though the consequences are different in the New Testament than the Old Testament). They exist to outlaw murder. They exist to outlaw fraud. They exist to fight covetousness – in the context of almost every crime that exists.

A Response to Conservatives

Many conservatives will likely find fault in what I’m saying here. Their argument could be summarized as “governments must ban ‘action’ sin so long as there’s not an exception found in the Bible.” This completely misses the point — that the “wrongdoing” mentioned above is in the context of between people — hence, love your “neighbor”. It’s about rules for how we interact in relation to killing, stealing, and contracts. It’s about natural law.

When I say “natural law”, I mean those social obligations related to coercion that we can deduce through nature, reason, and conscience, as Paul discusses. There’s much more to this, of course, and not all things that are “unnatural” violate natural “law”.

This reference to natural law isn’t just something I’m making up, of course. Paul refers to it several times throughout Romans — the book where Romans 13 is located. Here’s what he said in Romans 1:19-20:

“Because that which may be known of God is manifest in them; for God hath shewed it unto them. For the invisible things of him from the creation of the world are clearly seen, being understood by the things that are made, even his eternal power and Godhead; so that they are without excuse.”

Here’s what Paul then said in Romans 2:15:

“Which shew the work of the law written in their hearts, their conscience also bearing witness, and their thoughts the mean while accusing or else excusing one another.”

So yes, the ruling powers — the governing authorities — have the right to use the sword against those who do wrongdoing to their neighbor. But nothing else. This means if someone is growing pot on their farm, no one has the authority to unleash deadly violence on them. If anything, that would be incredibly evil itself — a direct violation of Romans 13 of not stealing.

Selling pot to a college kid is no more immoral than selling brownies to a fat kid, and if anything, we should be more worried about the good health of the fat kid, because in America fudge and sugary foods kill far more than pot ever could. Conservatives who believe they are following through with Romans 13 to punish all sin are simply wrong. The Bible doesn’t encourage or condone violence against all sinners. Jesus literally said the opposite.

Don’t laugh at my fat kid comment — just watch the news. Many people are taking the principle of “ban all bad things” to heart, and yes, it leads to tyranny. What a shame.

The motivation for violence isn’t just that it’s “sin” — it’s that it’s wrongdoing to others. In other words, it’s a violation of the rights of others. If you believe the bible, you should believe in life, liberty, and property. God’s law is perfect, and this is just one more example of how perfect and interconnected it all really is.

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Gun Control Facts: Why Gun Control Always Fails

February 09, 2012   Shaun Connell   No comments

betterdeadFree men must be able to defend themselves from robbers, killers, and tyrants. And that’s why gun control is both unconstitutional and evil. The Second Amendment to the US constitution explicitly states:

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.

Over the following week, I’ll be going over the topic of gun control, the Second Amendment, and why gun control in all its forms is immoral, unconstitutional, and deadly.

Essentially all historical evidence points toward a gun control being unconstitutional. Essentially all national case studies show that banning guns increases crime. And a basic understanding of natural law should show us why the right to keep and bear arms is the most fundamental implication of life, liberty, and property.

To learn the basic facts about gun control, read the following articles:

The Second Amendment doesn’t exist so the people can kill deer. That’s just a nice side benefit. The 2nd Amendment exists so the people can kill politicians and their cronies. And that’s why statists fear the 2nd Amendment. It’s their kryptonite, and they know it.

It’s the last beacon of hope for a people faced with the inevitable threat of tyranny. It helps thwart off crime, invasion, and unpopular policies. Those who support it scoff at those of us who believe it’s vital — even though they scoff at essentially centuries of historical event after event of unarmed people becoming chattel slaves.

If this isn’t a new topic to you, and you already understand our position and agree with it, please spread this page by clicking the “share” button to the top or bottom of the page, and by clicking the “+1” button to the right of the title of this article. Doing that greatly helps us get more traffic and make a difference defending your right to keep and bear arms.

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Why Did the South Secede?

February 02, 2012   Shaun Connell   No comments

why did the south secede History is important. Through it we can understand our future, understand politics, understand economics, and understand almost everything a little better. And that’s why having a proper understanding of historical events is important — having a warped view of history gives us a warped view of the present.

Of all of the misunderstood events in history, the American Civil War is probably the worst of the lot. Most students believe that the South was fighting to keep all of the slaves in bondage, while the benevolent Yankees were fighting to free the slaves in captivity — nothing could be further from the truth.

History books are written by the victors. This simple-yet-powerful sentence explains why the “winners” of every war rarely are seen as the “bad guys” for quite some time after the war.

The winners get to rewrite the story to cast themselves as heroes whether they deserve it or not, and that story is going to be a powerful one. My intellectual hero — Richard Maybury — explained it in simple terms:

‎”In our government-controlled schools we are taught that Lincoln was our greatest president because his war ended slavery and saved the Union. As usual, the other side of the story – the side that reflects poorly on the government – somehow gets lost.”

Let’s take a look at the real story — what Lincoln really said — and what the real reasons were for the South deciding to secede.

Freedom vs. Slavery?

The modern narrative that most people are taught is that the North wanted to abolish slavery and the South wanted to keep it in tact. This is demonstrated in movies, magazines, books, and perpetually taught in elementary schools, high schools, and college. It’s also dead wrong.

Abraham Lincoln flat out rejected it, saying in his first inaugural address:

‎”I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists.  I believe I have no lawful right to do so, and I have no inclination to do so.”

Later in his presidency, Lincoln wrote the following:

“If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that.”

The motivation of Lincoln was consolidating political power — not freeing the slaves. The notion that he was trying to free the slaves from the get-go is a complete fabrication. Lincoln also was a racist, even though he thought slavery was wrong, and explained so in a debate with Douglas before he was president:

“I am not now, nor ever have been in favor of bringing about in any way the social or political equality of the white and black races. I am not now nor ever have been in favor of making voters or jurors of Negroes, nor of qualifying them to hold office, nor of intermarriages with white people. There is a physical difference between the white and the black races which will forever forbid the two races living together on social or political equality. There must be a position of superior and inferior, and I am in favor of assigning the superior position to the white man.”

The notion of Lincoln being a benevolent color-blind freer of slaves is simply not true. It’s a fantasy cooked up by the men who won the war. After all, if you’re telling your grandkids that you waged a war that killed 600,000 men, that destroyed the city of Atlanta, and millions of people were wounded, it doesn’t sound good to say “we did it for political power”.

If the above wasn’t enough, Lincoln also made it clear that the black regiments in the military were to be used as cannon fodder. He used them like animals — to be killed before his precious white troops. He even explained such in a letter during the war in 1863:

“I thought that in your struggle for the Union, to whatever extent the negroes should cease helping the enemy, to that extent it weakened the enemy in his resistance to you. Do you think differently? I thought that whatever negroes can be got to do as soldiers, leaves just so much less for white soldiers to do, in saving the Union.”

The Civil War was not over freeing the slaves. The victor writes the history books.

Why the South Really Seceded:

So what were the real reasons the South seceded? The following should be helpful to understand:

  • Anti-South Party. The GOP was anti-southern. For the first time in the nation’s history, a political party was based on location rather than just different views. The south was demonized. That meant that their future of political influence was questioned because they had slaves. The impacts here would be much, much more than just slavery, as explained above “vote yourself a farm, vote yourself a tariff”.
  • Anti-South Tariffs. In the 1830s, the US government passed tariff essentially forcing the South to buy products from the North. Meanwhile, the South had to compete against the global market. The tariff laws were written in such a way as to force the South to enrich the North. This was feared to get worse and worse, especially since Lincoln — a member of the new “anti-South” party — was elected.
  • No Nullification. Nullification and other “state sovereignty” rights were essentially run down, ignored, or made impossible — this means the original “government” the South was agreeing to essentially didn’t exist. The “strong central government” camp had become much more powerful than the state-sovereignty camp, at least in DC.
  • Capping Southern Influence. Refusing new slave states to be created was essentially a political move that destroyed Southern influence — southern influences were suddenly capped, while northern influences could continue to grow and get more and more of an influence in congress. The North was soon to completely overpower the North in the federal government, leaving the South in a position where they were essentially forced to do whatever the North wanted.
  • Structure of Government. The North repeatedly was trying to change the constitution to make the senate elected by popular vote rather than state legislatures. They succeeded after the war. This was a huge change in the structure of government — the state governments are now not represented by the federal government. This was an attack on states across the board. The South wanted state sovereignty, and the North wanted the federal government to more able to regulate the internal affairs of the states — and not just in slavery.
  • No Need for the North. The South rightly believed that there simply wasn’t a reason for the South to need the North. Since they were being politically isolated and economically exploited, they believed there was nothing keeping them to stay in the North. They also believed that leaving the Union at any time was their contractual right.

Was slavery wrong? Absolutely. It was wrong. But the war wasn’t over freeing those already enslaved. Lincoln said this. If the South stayed in the Union, there’s a good chance that slavery would have existed for decades longer, because there was no constitutional way for the North to abolish slavery without the South’s consent — and they weren’t going to do that.

The Civil War wasn’t over “freeing the slaves”. It was about politics and regional influence — the North and South were at odds, and the South believed it was better off alone. Were they right? There’s no telling.

Slavery was a great crime against millions of people. It was wrong on a fundamental way. It was inhumane, evil, and disgusting. But “ending slavery” simply wasn’t what the war was about.

History is written by the victor, and nothing could be more clear than this being exactly an example of that. Other wars and events are also “told” in a lopsided manner in the textbooks. World War I, World War II, the Great Depression — many of these stories usually ignore basic historical facts, and are told in such a way as to glorify our government. When reading about history, always remember that the real story might be very different than the story in the book.

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How the Feds Make Some People “Artificially” Rich

February 01, 2012   Shaun Connell   No comments

The following was written by Sam Paul, a student at New Saint Andrews College.

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The Occupy Wall Street movement has it all wrong. By targeting corporate America, they let the real culprits slide. The federal government, through inflation, and the consequent income distribution that follows, has thrown an inordinate amount of economic support for a minute percentage of the American populace.

Put bluntly, the federal government transfers wealth from the not-as-successful to the already-successful. The process by which this inequality comes about follows a few steps.

1. Overspending

Government spending, in 2010, reached $6 trillion, though the total amount of money acquired through taxes that year was only $2.1 trillion (US Budget Historical Tables, published by the US Government, and also usgovernmentrevenue.com.). The same sources predict that 2012 will see spending of $6.3 trillion, despite the austerity that our politicians on both sides of the aisle are promising. Obviously, the deficit has to be accounted for somehow.

2. Borrowed Funds

In order to compensate for the extra spending, the government borrows from vendors and other beneficiaries. These on-budget deficits require the US Treasury to borrow money by selling Treasury bills, notes, bonds, and savings bonds to the public (The Bureau of the Public Debt’s Office of Public Debt Accounting). Competitive interest rates allow the public to see these as investment opportunities. (Note: Far better investment opportunities exist. Click here.)

When investors choose to redeem the securities, the government obviously has no choice but to honor the agreement. And this is where the endless cycle begins. “The Federal Reserve in turn monetizes the debt by buying Treasury securities in the marketplace. It pays for those securities by creating bank reserves–money–from nothing, or as John Maynard Keynes suggested, by performing the ‘miracle … of turning stone into bread.’” (Sheldon Richman, Foundation for Economic Education)

Considering legal tender laws, which obligate citizens to recognize the currency chosen by the government, and our fiat-money system, where the currency isn’t backed by anything other than government promise, this system shouldn’t surprise many of us. This is true inflation.

3. Uneven Entry of Funds Into the Market

People instinctively know that inflation is harmful, but few really understand why. After all, if the printing of more un-backed money raised prices across the board evenly and without predisposition, then inflation would be little more than an inconvenience. We’d have to gradually add more zeros to the end of our purchases, but since we’d be making more and saving more, it wouldn’t really impact anything—if the prices were raised equally. Ludwig von Misis made this point in his lecture, “The Non-Neutrality of Money”.

This, however, isn’t the case. In reality, inflation is harmful because the extra money enters the market at certain points. With the extra cash, the government pays specific contractors and welfare-state beneficiaries (Sheldon Richman, Foundation for Economic Education). As a result, these organizations and corporations have been given increased spending power that didn’t previously exist.

Ludwig von Misis explains:

“But even in the end the different commodities are not affected to the same extent. The process of progressive depreciation has changed the income and the wealth of the different social groups. As long as this depreciation is still going on, as long as the additional quantity of money has not yet exhausted all its possibilities of influencing prices, as long as there are still prices left unchanged at all or not yet changed to the extent that they will be, there are in the community some groups favored and some at a disadvantage…. As long as the inflation is in progress, there is a perpetual shift in income and wealth from some social group, to other social groups.”

The side effect of government overspending and inflation is an artificially engineered creation of buying power, market share, and ultimately, wealth. We might label it as a government redistribution of wealth. But since the currency and subsequent economic influence didn’t exist before, the process is one step closer to ultimate government influence: It’s an unsustainable government creation of wealth.

And this is the injustice. The uneven entry of magically created funds into the market is the root of the harmful effects of inflation. It’s the means with which government can continue to operate despite a multi-trillion dollar deficit.

Surprisingly, this is also the one actual injustice that the Occupiers of Wall Street have blunderingly and misguidedly stumbled upon. They just don’t know it.

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