A century of fascism…

A Century of Fascism

Editor’s Note:

This issue features another contribution from James Turk, the founder of Goldmoney. As I noted in the introduction to his previous guest submission last month, I consider James to be the world’s top expert on the past, present and future of gold as money.
 

In this two-part essay, he proves to also be an eloquent student of political history, particularly in how governments always trend toward greater control, even authoritarianism, and how gold acts as protection from these encroachments.
 

I hope you enjoy the following first half of James’ commentary, and stay tuned for the second half next week.

— Brien

A Century of Fascism

By James Turk

In 1922 Benito Mussolini became prime minister of Italy, putting that country on a path that had global ramifications. He was the world’s first fascist leader.
 

Other fascists soon followed with fanciful promises that were varied but tuned in to what people wanted to hear. Their problems would be solved, whether the restoration of order, removing risks from an uncertain future, the grant of financial aid, and other siren songs that at first blush might appear to improve an individual’s condition. All could be delivered if the citizenry just relied on their government. A broad swathe of people placed blind faith in these promises, allowing their fascist leaders to simultaneously expand the role of government in economic activity and embark on policies that made the State superior to the individual, overriding peoples’ inalienable natural rights expounded by the luminaries of the Age of Enlightenment.

Fascism became just a new twist on a well-worn theme — authoritarianism. Regardless of the name given to the political structure — fascism, dictatorship, autocracy, etc. — they all require strict obedience to the State at the expense of personal freedom, which raises the following questions about government today.

• Do individuals control their government as envisioned during the political awakening in the 17th and 18th centuries that put America on a course different from monarchial Europe, manifest in the transitory period (1) that was the initial outcome from the anti-federalist interpretation and implementation of the American Constitution by its framers?
   
• Or as now prevails in most of the world geographically, has the State usurped power and is controlling its citizenry to the detriment of an individual’s liberty, which is the never-changing, never-ending outcome of fascists and other authoritarians?

For Americans these questions were answered in a speech in May 1948 by the father of Wall Street legend Warren Buffett. Congressman Howard Buffett explained that the link between money and liberty is inextricable, and he stated unambiguously: “For if human liberty is to survive in America, we must win the battle to restore honest money…unless you are willing to surrender your children and your country to galloping inflation, war and slavery.” (2) He concluded:

“The paper money disease has been a pleasant habit thus far and will not be dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect. I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease here may take many years to run its course...When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others.”

Whether an economy based on paper-money (bank notes) or a bank deposit currency, or both, the outcome is the same. When government controls the currency through the banking system, together they inevitably debase the currency. Because of the control imposed on them from regulatory oversight, banks must comply with government diktat so they can continue operating, and their reward is increasing profits. Governments pursue this path to expand their power, with the result that liberty is diminished, hence the need for honest money.

The End of American Exceptionalism

French political scientist Alexis de Tocqueville described America as “exceptional” following his tour of the country nearly two centuries ago, and the term stuck. The political structure of a nascent union between the then 24 sovereign states and a federal government with limited sovereign power was truly unique as was the belief in the merits of self-government practiced in accordance with natural law.

Rather than subjecting the citizenry to the caprice and excesses of a ruling elite, the ideals of the Age of Enlightenment centered on self-reliance and liberty, with a purposeful focus on natural order. This rational path enables each person to improve their situation in life to facilitate their individualist pursuit of happiness. This goal can be achieved without depriving anyone else of their freedom by following the precepts of natural law.

These ideals are described by Britannica.com as follows (I have edited the tense to make clear that these ideals are still alive today):

“Central to Enlightenment thought were [are] the use and celebration of reason, the power by which humans understand the universe and improve their own condition. The goals of rational humanity were considered to be [are] knowledge, freedom, and happiness.” (3)

After winning its War for Independence, America embodied these ideals in a political structure formalized by a written Constitution in which the states delegated seventeen of their sovereign powers to a federal government. In effect, the alliance created by the states for the mutual benefit of their citizenry was built upon three pillars manifest by:

1)    a common market,
 

2)    their joint/shared defense, and
 

3)    a single, common currency comprised solely of gold and silver coin.

For everything outside of these areas, the states then reserved in the 10th Amendment all powers not delegated to the federal government “to the states respectively, or to the people,” namely, the citizens of each state.
 

The framers of the Constitution recognizing these three shared interests of the states and aiming to protect everyone’s inalienable right to life, liberty and the pursuit of happiness had tactfully crafted in that document a finely judged balance of political power exercised between a state and the federal government, but this arrangement did not last long. Federal power grew as the framers passed away and a new generation of power seeking federalist leaders began railing against the constraints of the federal/state structure and the Constitution itself. (4)
 

Over time these radicals with the acquiescence — whether wittingly or not — of state governments and the polity upended the balanced political structure implemented by the framers. The trend toward greater personal freedom advocated and initiated by the luminaries of the Age of Enlightenment was reversed. Self-reliance and personal responsibility for one’s own decisions were being eroded by an ever-greater reliance on the federal government, and its expanding control of Americans’ daily life. This new path becomes clear when viewing the federal government’s intervention in economic activity, the escalation of which can be seen in the following chart from NTU.org. (5)

U.S. Federal Government Spending as a Percent of GDP

From its founding until 1910, the federal government’s role in economic activity is insignificant. Thereafter, it expanded to become the dominating economic force by its participation in the economy and growing control of it. The federalists (who by then had relabeled themselves ironically as ‘progressives’) were rapidly becoming the main political power and sought even greater control — like the fascists in Europe — with economic intervention and regulation. The Great Depression was their springboard.
 

Economic booms and busts are an outcome caused by the banking system. As pointed out by political scientist James Sundquist, (6) until the Great Depression the inevitable bust following economic booms was of concern to the private sector, not government. That laissez-faire view changed with the economic upheaval in the 1930s. Widespread deprivation led to the radicalization of voters that provided the opportunity for authoritarians to use their growing political power to propagandize a different path and assume fascistic control of economic activity by putting the federal government in league with money center banks and mega-corporations. (7) Today’s behemoth federal government that controls to some degree every American’s daily life no longer resembles the institution with limited sovereign power the states formalized with the Constitution.
 

Nobel Laureate Friedrich von Hayek explains in his brilliantly insightful book, The Road to Serfdom, penned during the waning years of the Second World War, that wars expand the power of the modern State because the national planning to fight the war continues even during times of peace, which is an outcome clearly seen on the above chart.
 

This perennial government planning then expands the social-welfare State over time, with harmful unnatural results. Economic activity is impeded by the growing State as people and resources become less productive as a consequence of government intervention. Because the government does not create consumable goods and services, it is an economic burden on the productive sector of the economy.
 

Then as the government grows, interest groups become increasingly numerous and powerful, leading to political corruption. Wars, foreign policy tensions and economic crises can propel demagogues and dictatorial leaders to further expand State powers to everyone’s detriment. In Hayek’s words: “Emergencies have always been the pretext on which the safeguards of individual liberty have eroded.”
 

Hayek noted that only over time does the subtle damage inflicted upon the productive economy become evident. The visible growth of the State arising from socialist programs and the nationalization of industries, with central planning and public ownership, leads slowly but inevitably to totalitarianism. Many countries are now on that road, even in America. Long reigning as the bastion of capitalism, free-markets and limited government, it no longer is exceptional. The liberty of its citizens has been eroded by the 1930s fascism that continues to underpin the country’s political structure and economic activity.
 

Throughout America’s transition to consolidated federal power, the Enlightenment ideals became increasingly neglected and by the end of the 20th century largely lost. They are now considered to be a mere passing event of history with even the respected Encyclopaedia Britannica identifying them in the past tense. Nevertheless, these eternal principles that put the citizenry in control of their government will always guide humanity and therefore remain the touchstone of lovers of liberty everywhere.
 

Next: “Fascism’s Link to Gold Market Manipulation”

1. This transitory period was clear to Thomas Jefferson, who shortly before his death in 1825 wrote to William B. Giles: “I see…with the deepest affliction, the rapid strides with which the federal branch of our government is advancing towards the usurpation of all the rights reserved to the states, and the consolidation [i.e., accumulation] in itself of all powers, foreign and domestic.”
 

2. https://www.fgmr.com/wp-content/uploads/2017/02/Howard-Buffett-explains-sound-money-4-May-1948.pdf
 

3. https://www.britannica.com/event/Enlightenment-European-history
 

4. An example is the issue of Greenbacks (fiat currency) during the Lincoln administration, which were deemed unconstitutional by the Supreme Court in Hepburn v. Griswold (1870). Another example is the 17th Amendment (1913), after which Congressional senators were elected by popular vote rather than appointed by each state’s government, downgrading their role intended by the framers to preserve for the states those sovereign powers not delegated to the federal government. That same year the Federal Reserve Act was passed, creating a central bank that anti-federalist framers had resisted.
 

5. https://www.ntu.org/foundation/tax-page/government-spending-in-historical-context
 

6. The Decline and Resurgence of Congress, James L. Sundquist, 1981.
 

7. In his Farewell Address to the Nation in January 1960, President Eisenhower warned: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the [corporations of the] military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.” In recent years attention has also been directed beyond the military-industrial complex to Big-Tech and Big-Pharma corporations’ increasing influence on government and their bilateral cooperation.

Note: Watch for Part Two of James Turk’s “A Century of Fascism” analysis next week. In the meantime, CLICK HERE to order James’ remarkable new book, Money and Liberty: In the Pursuit of Happiness & The Theory of Natural Money.