[Updated April 30, 2012]

[September, 2011 Essay, "Debt Default In America," Follows Note On Novel. May, 2012 Essay, On "Blame & Envy Cocktail," Tops Menu.]

A Challenge To 21st Century "Liberalism"


Truth Based Logic Presents
Return Of The Gods


By Jacob van Flossen
Cover

Novel epitomizes the spirit & understanding of this web site: What happens as Federal entitlements continue to explode! Confusion, intrigue, suspense & violence, illustrate social & psychological dynamics that led to the Obama Revolution--changes, which threaten the continued existence of America.


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In the midst of a Kiplingesque day of reckoning--theme & title taken from the Kipling poem "The Gods of the Copybook Headings," who return "with terror & slaughter" whenever a people follow the false Gods of the Market too far down the path of wishful thinking--normal men & women pursue survival, love & romance; while conspirators on both the Left & Right maneuver for advantage.


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CONSERVATIVE INTELLIGENCE CENTER

Essays On Social, Economic, Political, Legal, Cultural, Ethnic & Philosophic Issues

CURRENT FEATURE
[A Perspective On Our Time.]

Debt Default In America

September, 2011 Feature--Truth Based Logic Domain


Synopsis
Discussion of "debt default" in context of downgrade of U.S. Government securities & debt ceiling debate. What is debt default? America since 1933. Moral & Economic questions.

In recent weeks, there has been some discussion over how to handle the soaring public debt of the United States; how that debt--its extent & the method by which it is managed--affects the credit worthiness of the United States & the likelihood of default on that debt; finally, the effect of such phenomena on the future economic well being of the people of the United States. There was also a hue & cry, when a popular financial rating agency issued a minor downgrade of the quality of that debt.

In this essay, we will focus on the question of debt default, debt ratings or evaluations & Constitutional, philosophic & moral issues involved with such. We will also suggest that the Standard & Poor evaluation of present Federal debt offerings remains absurdly high; that the recent downgrade was both late & inadequate, continuing a fantasy that misleads savers & investors, while accommodating demagogues & scoundrels.

Basic Premises

While we cite the most relevant provisions of the United States Constitution, the whole document should be studied in connection with this discussion--particularly the full context in Article I, Sections 8, 9 & 10, from which the following passages are taken. Understanding context is always essential to perceptions required to rebut common misconceptions, promoted in political circles & circulated in the mass media. (Note the Constitution in the linked articles, that follow.)

The power to borrow money on the credit of the United States is specifically set forth in the second paragraph of Article I, Sec. 8. The fourth & fifth paragraphs of the same section read:

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

The functional linkage of money with weights & other measures was no accident. Clearly the context of those short paragraphs proves a desire that money have a fixed value, standardized as other measures used in commerce; a specific value that the Government is supposed to protect.

The fourth paragraph of Article I, Sec. 9, provides:

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

While the Sixteenth Amendment now permits tax on incomes, proportioned to income not census, it does not alter the fundamental thrust of the Constitution against punitive policies that penalize some people for the benefit of other people.

The first paragraph of Article I, Sec. 10, provides in part:

No State shall . . . coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any . . . ex post facto Law, or Law impairing the Obligation of Contracts . . .

Clearly, the Founders intended to prevent any State from undermining the monetary standard, or impairing the obligations of contracts--the bargains that a free people make with one another.

Under this precisely crafted, even handed, approach to fiscal & monetary responsibility, the Founders' posterity--as well as those who joined them in the days when we were less harshly governed, less crowded & less dependent upon the leave of politicians & bureaucrats to follow our individual lights;--all prospered beyond the prior expectation of any of the constituent human stocks, represented here, in their lands of origin. The Founders' system worked. We have not done so well, since we turned from that clear vision to the quackery of Keynesians, who have altered our measures--the monetary standard--taking much of the predictability out of economic decisions.

The subject is debt default. Let us define it! Surely, when one person loans another money; or sells goods or services for a future promise to pay; or buys the debt obligations of a government, public agency or private obligor, there is (or certainly was, before Keynesian manipulation became acceptable) a reasonable assumption upon the part of one extending credit, that he or she will receive back equivalent value for the value extended. Anything less, most clearly, impairs the obligation of a contract. Have holders of debt, denominated in a sum certain in U. S. Dollars, been receiving back equivalent value for their extensions of credit since the 1930s? Perhaps during very brief, deflationary periods. But what has been the norm?

Debt Default In America

Since 1933, we have repeatedly defaulted on our debts in real economic terms. We may pay a "dollar" for a dollar owed, but that dollar has been often devalued--first abruptly by FDR from 1/20.67 to an ounce of gold, to 1/35 ounce of gold; and then, by fits & starts, after Nixon was forced to abandon the gold exchange standard in 1971, to the Bernanke/Obama dollar, now worth less than 1/1750 to an ounce of gold--an over 98% decline.

In earlier looks at money & gold (below), we noted a decline in dollar value, since 1930 &/or 1933, at compound rates in excess of four or five percent--certainly destructive. But except for the Roosevelt devaluation from a gold dollar at 1/20.67 to the ounce, to a gold/exchange dollar at 1/35 to the ounce, we did at least maintain a partial gold standard until 1971--providing some protection to debt holders during that period. Now, if instead, we compare the early 1971 dollar to the present Bernanke/Obama dollar, we have a 98% devaluation over just forty years. That works out to a loss compounding at better than 9% per year--a rate of default, catastrophic to anyone trusting in his Government to do a job it was created to do.

Does this not raise both profound moral & economic issues?

Moral & Economic Issues

The moral issue, here, is more serious even than the economic, which we have already characterized as catastrophic. The United States are supposed to be governed under a Federal Constitution, established by free citizens. Yet present Government policy--and the Federal Reserve's Monetary powers are controlled by the Federal Government, even though the Federal Reserve actually belongs to the member banks;--Government policy has deliberately placed an additional burden on all who have extended credit, even those investing in a forlorn hope to provide steady income for their widows & orphans. This conscious undermining of the value of savings & investment, by cheapening the measure, the monetary standard, is absolutely indefensible as a moral proposition. America's savers, investors, her producing sons & daughters, have a right to the fruits of their labor & ingenuity. Plundering that expectation, in this manner, is the moral & legal equivalent to appropriating their labor against their will--effective theft & involuntary servitude.

This would be true, even if the theft were only a small percentage of reasonably expected value. But as we have shown, the rate of value confiscation has been cataclysmic. No one can justify this under a Constitution, ordained & established to "secure the Blessings of Liberty to ourselves and our Posterity" (Preamble)!

Let no utilitarian collectivist (no Jacobin, Marxist, Bolshevik, Fabian or Nazi demagogue) suggest that there is actually true economic benefit to America--other than to politicians & bureaucrats & a bought following--in creating this enormous uncertainty as to the true value of all contracts, all bargains & economic commitments. Anyone with a modicum of common sense will see in an instant how that uncertainty must hamper the quick decision making that was once the essence of a free market; the ability to adjust rapidly to ever changing conditions; the very qualities, essential to actually deal with such changing conditions as lead to the imbalances that stifle constructive progress.

The monetary quacks are as detrimental in a strict material sense as in that moral, ethical, one. We will continue to suffer them, only to our imminent demise as a significant factor in the annals of human history.

William Flax




May, 2012>>
Blame & Envy Cocktail--Demagogues' Path To Power

April, 2012>>
"Diversity" In Context: Reality vs. Leftist Fantasy

March, 2012>>
World Government? Norman Cousins & Surrender By Subterfuge!

February, 2012>>
Conflicting Views On Core Premises For A Social Order

January, 2012>>
Pseudo Pragmatism--Political Folly, Foreign & Domestic

December, 2011>>
"Occupy Wall Street": Fruits Of Corrupt Education

November, 2011>>
Reality--Paths To Success & A Path To Failure.

October, 2011>>
Socialist Macro Policy Effects On Specific American Subgroups

August, 2011>>
Egalitarian Collectivism Sabotages Human Potential

July, 2011>>
Pursuit Of "Diversity," A Return To Babel?

June, 2011>>
Gold & Money In America, II [Understanding Fiat money!]

May, 2011>>
Freedom Of Choice? Gulliver Discovers America!

April, 2011>>
Libya, America & The Law Of Nations

March, 2011>>
A Better Way [How To Avoid Economic Crises!]

February, 2011>>
Social Security? Threats To Social Security Continued

January, 2011>>
Social Security? The Enemy Of Social Security!

December, 2010>>
Job Creation Or Egalitarianism

November, 2010>>
Perception Of Reality--Or Lack Of It

October, 2010>>
Plastique In The Foundation--Honor & Martin Luther King

September, 2010>>
Time--Oft Neglected Dimension In Social & Economic Analysis

August, 2010>>
A Place For The America We Knew?

July, 2010>>
American Essentials

June, 2010>>
The Ultimate Insult--Another Perspective On Egalitarianism

May, 2010 Continuation To April Feature Above>>
Return To Ground--America, Built On Experience & Reason

April, 2010>>
Cloud Dancing--Social Medium For Scoundrels, Neurotics & Dolts

March, 2010>>
The Keynesian Harvest, 2008 & Beyond

February, 2010>>
Trust In Government Or Education? Those We Dare Not Trust

January, 2010>>
Saving For A Future

December, 2009>>
Gold & Money In America

November, 2009>>
Leftist Intolerance--2009

October, 2009>>
Health Care--The Real Issue

September, 2009>>
Health Care Or Armageddon?

August, 2009>>
Self-Destruction--A Conditioned Reflex?

July, 2009>>
Gaming The Question--Staple of Demagogues

June, 2009>>
The Better Term: "Liberal" Or "Mipip?"

May, 2009>>
"Social Justice"--What Is Not Social & Not Just

April, 2009--Economics Of A Sociopath>>
Keynes & The Keynesian Appeal

March, 2009>>
Addiction: An Economy Dependent Upon Easy Credit

February, 2009>>
The Function Of Money--A Medium Of Exchange

Keynes At Harvard--New Edition Exposes Economic Quacks In Education & Government

Congress & The Regulation Of Commerce

January, 2009>>
Conservatives In 2009--Living With Obama

December, 2008, Conservative Political Future>>
America: Clear Vision Or Confusion, Fear & Corruption

November, 2008>>
Obama & The Week After: A Dissent

October, 2008>>
Obama: Community Organizer

September, 2008>>
The Price Of Egalitarianism

August, 2008>>
Reflections On An Unfortunate Milestone--The Accidental American

July, 2008>>
Our Duty, If Present Trends Continue?

June, 2008>>
Conservative Political Dilemma--2008

May, 2008>>
Leftwing Chickens Coming Home (The Obama Phenomenon)

April, 2008>>
Race & Ethnic Politics--America, 2008

March, 2008>>
Playing With Matches: Peter Pan In The Great Rift Valley

February, 2008>>
The Real Issues: You Decide

January, 2008>>
Ron Paul--A Response To Common Questions

December, 2007>>
Ron Paul--Let The Second Phase Begin

November, 2007>>
Liberty: The Basics

October, 2007>>
John Edwards & A New Bondage

September, 2007>>
Bicentennial Ignored [Bringing In Others To Do Work Americans Do Not Want To Do]

August, 2007>>
International Relations: The A & Q Personality

July, 2007>>
Ron Paul For President

June, 2007>>
The Responsibility Factor

Letter To Senator Lindsey Graham

May, 2007>>
Putting 'Diversity' In Context: Reality vs. Leftist Fantasy

April, 2007>>
The Greatest Mischief Ever Wrought

March, 2007>>
Redefining Victory--Turning Quick Victory Into Pursuit Of Fantasy

February, 2007>>
Reason Or Compulsion--The Future At Stake

January, 2007>>
Talk With Your 'Kids' About Drugs, Truth & Family Purpose

How The Left Creates Hate In America>>
Promoting Hate--A Case Study: SPLC In Action

December, 2006>>
Conservative Dilemma: Rove Directed Republican Disaster

November, 2006>>
Death Of The Community

October, 2006>>
'Clueless'--Dangerous Intellectual Confusion Of A President

September, 2006>>
A Vicious Circle--A Corkscrew Into The Heart Of America

August, 2006>>
Beyond Contemptible: George Bush's Address To The NAACP

July, 2006>>
Tactics To Redeem America's Betrayed Heritage

How Not To Preserve America>>
President Bush On Immigration--May 15, 2006

June, 2006>>
Oil & Economics 101

May, 2006>>
Iran--How Not To Address Sensitive Issues

April, 2006>>
Social Reform: Confusion Or "Unintended Consequences?"

Fanatics Try To Take Over A Conservative Educational Organization>>
A Fire Bell In The Night

Compassion Or Compulsion? Further Effort To Clarify Truth

Police/Community Relations--Origins Of A Problem

Context--The Essential, Nearly Lost, Attribute Of Reason

George Washington & George Bush Debate Foreign Policy

The Neo-Con Phenomenon

Studies In Fanaticism>>
Understanding Facets Of Fanaticism

Senator Reed's Powerful 1925 Attack On America's Developing Era Of Intrusive Government>>
The Pestilence of Fanaticism

Senator Reed On "One Man, One Vote" Majority Rule>>
Majority Rule

Racial Denial Hurts Everyone>>
Racial Denial In America--Life & Politics In A Pavlovian Kennel

October, 2004--Response To Trial Lawyer's Misuse Of Clients' Trust For Political Purposes>>
Response To James G. Sokolove

Destroying Cultural Continuity--The Leftist War On Social Cohesion

European Union--Letter To The Conservatives Of Europe

War On Terror>>
The Shortest, Surest Path To Victory

War On Heritage: How To Fight Back>>
The Big Truth

Assault On American Youth>>
Boy Scouts Of America & A Leftwing Agenda

Attack On Role Models; Tactics Of Confrontation That Undermine Heritage>>
Civil War, Reconstruction & Creating Hate In America Today

American Declaration of Independence--With Study Guide

Tribute To Leading Virginian Of The 20th Century (Rebuke to his critics)>>
Senator Harry F. Byrd, Sr.

Meltdown Of Traditional Motivation--Suicidal Rage In American High Schools>>
School Killings vs. "Something of Value"

Moment Of Truth, Youth, Guns, National Sovereignty & The American Future>>
America In The 22nd Century

Conservative Debate Handbook>>
Introduction

Chapter One---A Simplified Overview of the Constitution

Chapter Two--The Right To Keep & Bear Arms

Chapter Three--Leftist Word Games & Religious Freedom

Chapter Four--James A. Reed of Missouri's Summary Of League Of Nations Debate

Chapter Five--The Rape Of Tolerance (How The Left Keeps Indians and Negroes Dependent)

Chapter Six--James A. Reed Address on the "Voice Of The World"--Case Against Disarmament

Chapter Seven--The Lies Of Socialism

Chapter Eight--The Feminist War On Love & Reason

Chapter Nine--The Moral Bases Of A Political Society

Chapter Ten--Universal Suffrage: Threat To Liberty, No Guarantee of Virtue

Chapter Eleven--The Battle Over Patterns Of Personal Identification

Chapter Twelve--The Political Spectrum

Chapter Thirteen--How To Recognize The Bigot In The Argument

Chapter Fourteen--Economics & Common Sense

Chapter Fifteen--Immigration & The American Future

Chapter Sixteen--Myths & Myth Makers In American "Higher" Education

Chapter Seventeen--Issues In The Debate Over Abortion

Chapter Eighteen--An American Foreign Policy

Chapter Nineteen--"Civil Rights" vs. A Free Society

Chapter Twenty--Medicare--Panacea Or Death Potion?

Chapter Twenty-One--The Semi-Autonomous Family

Chapter Twenty-Two--Perspective & Focus--A Closer Look

Chapter Twenty-Three--Notes On Method & Purpose

Chapter Twenty-Four--Senator James A. Reed Demonstrates Effective Use Of Irony & Satire

Chapter Twenty-Five--Democracy In The Third World, Destructive Egalitarian Myth

Chapter Twenty-Six--A "Progressive" Income Tax--Destructive Socialist Misnomer

Chapter Twenty-Seven--The Persuasive Use Of Images

Chapter Twenty-Eight--Public Schools: Issues & Reality; Education & Politics

Chapter Twenty-Nine--Cause & Effect, Avoiding Obvious Error

Chapter Last--Conservative Potpouri

Postscript--A Note Of Caution As To Other People's Motives

Kosovo:>>
American Foreign Policy At The Crossroads

"How The Welfare State Works!">>
Welfare State

To Restore Reverence Of The Fathers In Public Schools>>
George Washington Thanksgiving Project

More Relevant Now Than Ever>>
George Washington's Farewell Address

Classic Treatise On State & Federal Relations>>
John C. Calhoun's Fort Hill Address

Rudyard Kipling On Absurdity Of Modern "Liberalism">>
"The Gods Of The Copybook Headings"

Kipling's "An Imperial Rescript"

Absurdity of Feminism>>
Feminism Rebuked

Emotional Basis For Modern "Liberalism" (Social Democracy), Communism & National Socialism>>
Compulsion For Uniformity

How the Left undermines Jewish & Christian Faiths>>
Cult Of "The Holocaust"--Golden Calf Of The 20th Century

Edgar Allan Poe Rebukes British Utilitarians>>
Poe On Bentham & Mill

Edgar Allan Poe Essay On Art Of Creative Writing>>
The Philosophy Of Composition

Our Developing Literary Corner

Constitution of the United States of America

Truth Based Logic Introduction

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