Saturday, August 21, 2010

Lessons from History

The cause of violent social disorder and government upheaval has not changed since the fall of the Roman Empire or the rise of Hitler or Pol Pot. Overthrow of a government involves dividing the people into classes and then getting the poor uneducated class to destroy the educated middle class. Class warfare resulting in anarchy and blood lust like the Rwandan Genocide is known as "Helter Skelter."

In Rome's case, one of the first steps involved the military. The Marian Reforms instituted by Gaius Marius were laws that waived the property requirement for men wishing to serve in the legions. Those recruited under these laws would receive their equipment from the State, and serve a sixteen-year term of service (which was later raised to twenty). After that, they would be granted land upon which to settle. In addition, allies (foederati) who volunteered were granted Roman citizenship after the end of their service. The Marian Reforms also created class within the military ranks. Roman Citizens were well armed while Foederati and poor classes may only be given slings. The slim chance of surviving 20 years on the front lines without armor or uptodate weapons and eventually becoming a Roman citizen was all it took to support the "lottery-based" system.

After being weakened by the Alaric and the Goths, Attila and the Huns, and Gaiseric and the Vandals, the Roman Empire was finally fragmented by the infiltration of Rome by Germanic Barbarians/Foederati who were brought into Rome as marginalized illegal aliens through Social Welfare programs and subsidies. These Federal Troops were contracted to provide warriors to fight in the Roman armies in exchange for food, gold, weapons, and eventually land in the Empire. Alaric was the first to lead barbarian Foederati hordes against the Empire Later, Odoacer in collusion with Emperor Zeno, led the Barbarian Foederati who lived in Italy in an insurrection against the Romulus Augustus promising them control of a 1/3 of Italy.

Rome was economically weak because of a huge trade deficit with China as well as huge social welfare programs promising free grain and entertainment (roman games). Rome was sending all its gold to the East in exchange for silks, cotton, china, spices, and wild animals. Rome had also outsourced grain production to Egypt. Despite higher and higher taxes, so much gold and silver was being sent to China, Emperors started debasing and diluting the currency. Also, because of the huge trade deficit with China, Rome lacked the wealth needed to pay and train a professional army. At that point, Western Roman military strength was almost entirely reliant upon foederati units. When the Empire was bankrupt, they no longer had money to pay the welfare, the Foederati were perfectly placed to bribe and manipulate to stage a Coup attempt. This is the power of impoverishment.

This kind of thing really works when the middle class stands up and says, "in order to save the government from bankruptcy, we no longer can afford social welfare for the poor." The poor who have become dependent upon the subsidies focus their anger on the middle class and against the government. The entitled masses will support any leader who stands up and makes promises to continue the welfare.

So, do we see the American and European governments following in the footsteps of Rome?

REVOLUTIONARY WAR-- Was fought over control of our own currency and debt. The colonies, before the Declaration of Independence, were forced to borrow money from the Bank of England. Consequently, the colonies were eternally financially indebted and in bondage to England. The Constitution allowed the US to issue its own credit and currency on more fare terms. Too bad the US continued FRACTIONAL RESERVE LENDING and USURY and eventually gave up all control of money creation via the FED

CIVIL WAR--Was fought over the issue of PROTECTIONISM. The North didn't use slaves, but instead depended upon industrialization to produce the goods and services to drive the economy. The North used the power of the TARIFF to protect domestic industry and manufacturing from cheap goods brought in by the East India Trading Company (WALMART), which were produced by slave labor in India.

The South never industrialized at first because their economy ran on slave labor. Eventually, everyone realized the machine out-muscled the man and the South saw that it needed to industrialize to keep up with the North. However, they resented having to pay higher prices for machines from the North, and they resented the TARIFF, which prevented them from getting imported goods shipped in by the East India Trading Company at the cheaper price.

Fixing America depends on learning these 2 critical lessons of the Revolutionary and Civil wars. First, we need to take back control of the creation of our own money and the issuing of credit.

1. End the FED
2. Replace Fractional Reserve Banking with Full Reserve Banking
3. Allow US Treasury to collect fee on all money created and not just a fraction as they do now.
4. Allow local and state banks to borrow directly from the US Treasury (No money middlemen)
5. Switching to Full Reserve Banking will create a huge immediate demand for US dollars. Therefore the US could print 14 trillion dollars to meet the demand and pay all its debts this one time.
6. End the Income Tax. The ability to collect prime or a fee on all money created and not just a fraction will create huge revenue for the federal government.
7. With no debt to pay interest on, we could finally balance the budget.
8. At some point, switch back to gold and silver-based currency
9. Rebuild domestic manufacturing infrastructure based on a policy of complete national self-reliance.
10. End the HUD/FHA amortized home mortgage which is a major driver of inflation. In today's system you only gain equity if the price of the house goes up during the first 10-20 years on a 30-year loan ===> INFLATION.
11. Instead of usury, have local banks charge a fee for a home loan, and let borrowers bring 10% down and go in with the bank as part-owners. Each month the borrower pays the bank, earning equity from day -1 and a small fee until the borrow becomes 100% owner of the property. Any missed payments end up being subtracted from the borrowers equity and become profit for the bank. Default and Repossession occurs only after the borrower becomes totally divested of the property and not upon the first missed payment like today. This sets up an immediate reverse mortgage if needed.
12. Use Tariffs to prevent foreign governments from dumping cheap goods on our markets that are produced via child labor, sweat shops, and polluting the environment.
13. Use Anti-Trust Laws to break up companies that are too big to fail.
14. Use Bankruptcy Laws to allow failed companies to restructure and downsize and come back stronger and never give bailouts.

FULL RESERVE BANKING would end the volatility and perpetual banking failures that have plagued the US economy throughout its history. Because of inflation, Banks have to hold stocks instead of cash to maintain the fractional reserves upon which they lend. If there is a manufactured economic downturn then stocks lose value, banks lose reserves and cant lend.

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