Financial Oligarchies vs. State Power | Michael Hudson

My articles about the origins of credit, money, and interest share a common frame of reference. From the inception of economic practices and enterprise in the ancient Near East, through classical antiquity and medieval Europe to today, wealthy classes have sought to transform themselves into an oligarchy that controls government and religion to protect, legitimize, and increase their wealth, especially their rent-extraction privileges as creditors, monopolists, or landlords.

 Marcus Licinius Crassus (115 – 53 BC): 

general, statesman, the richest man in Rome, and a textbook oligarch.

 

We see the same struggle through the ages, with financial elites opposing any government power capable of restricting their self-serving rent-seeking and creditor power at society’s expense. We see it today in the pro-creditor economic policies of the International Monetary Fund, the World Bank, and the ‘libertarian’ ideology, all of which seek to centralize power to allocate resources and plan economies within the financial sector instead of democratic governments. Today’s neoliberal idea is to eliminate government authority (except where it is controlled by rentier sectors) and let banks in the privatized financial sector control money and credit, which is the most important public utility.
 

That should be the context in which one examines every epoch’s economic view of the world, above all its perspective concerning how ‘free’ a market should be and just whose freedom is being endorsed. This has been the great question throughout the history of civilization—from the Bronze Age Near East, when rulers regularly proclaimed Clean Slates debt cancellations to restore economic order and check incipient oligarchies, through the five centuries of civil war in the Roman Republic and Jesus’s fight against the emerging Jewish oligarchy, to today’s civilizational struggle between the NATO West, dominated by U.S.-oriented rentier oligarchies, and the global majority now centered on the BRICS.

 Rare Anomaly: Populist Pariah Oligarchs Proclaiming to Serve the Common Good —  September 2, 2024.

China’s government has financed its remarkable industrial takeoff without having to borrow from private creditors. There was little money to borrow from its domestic population, so the Bank of China printed its own money. Unlike typical financial practice, it did not demand personal wealth be pledged as collateral because stock and bond holdings or substantial real estate did not yet exist. The government did not need to turn to bondholders to increase its public spending—and in any case, there were no domestic bondholders to borrow from in the wake of its Revolution. China did what any sovereign national government can do—what Abraham Lincoln did in the Civil War. It simply printed the money.

 

Quoted from:
Michael Hudson (September 1, 2024) - Reshaping Christianity and the Modern State: A Journey from Usury to Fiscal Power.

 

See also:
Stephen Mitford Goodson (2017) - A History of Central Banking and the Enslavement of Mankind.

Legality and Legitimacy | Carl Schmitt

Carl Schmitt ranks among the most original and controversial political thinkers of the twentieth century. His incisive criticisms of Enlightenment political thought and liberal political practice remain as shocking and significant today as when they first appeared in Weimar Germany.

 

Carl Schmitt (1888 — 1985), » among the most original « , e.g.:

 » The emptiness of mere majority calculus deprives legality of all persuasive power. «

 

Legality and Legitimacy was composed in 1932, in the midst of the crisis that would lead to the collapse of the Weimar Republic and only a matter of months before Schmitt’s collaboration with the Nazis. Schmitt questions the political viability of liberal constitutionalism, parliamentary government, and the rule of law. Liberal governments, he argues, cannot respond effectively to challenges by radical groups like the Nazis or Communists. Only a presidential regime subject to few, if any, can ensure domestic security in a highly pluralistic society.

Quoted from the introduction to the 2004 first English translation of

Carl Schmitt (1932) - Legality and Legitimacy.

 

November 24, 2023 - In the People's Republic of China, Central Bank Digital Currency (CBDC) is linked to citizens' mandatory digital ID. If somebody drives over the speed limit, the speed camera system automatically deducts a fine from their digital wallet.

 

November 24, 2023 - President of the European Central Bank (ECB), Christine Lagarde, announces the launch of the European CBDC — the digital euro — which will enable unelected technocrats at the ECB to program how, when, where, on what and by whom it can be spent, including the imposition of social credit, carbon allowance and vaccine passport systems. And despite the lie that 'cash is here to stay', you can be absolutely certain that megalomaniac technocrats such as Lagarde have every intention of gradually phasing out cash altogether, so eventually people will be forced to use CBDCs. European Union citizens already face imprisonment or fines for engaging in cash transactions above €1000, but the introduction of the digital euro will facilitate financial totalitarianism on a scale that would make even George Orwell wince.

 

November 24, 2023 - Christine Anderson, German Member of the European Parliament, explains how CBDCs, in conjunction with digital ID, will be used to exert absolute control over the population: » If you don't comply, they will just shut down your bank account. And it's not like it hasn't happened before. Look to Canada ... There were people standing up for their freedom, for their right not to get some unknown substance injected into their arms. They shut down their bank accounts. So if there was no cash, what are you going to do? They can just eliminate you with a flip of a switch. It's as simple as that. «

 

 

» This would imply to castrate humankind and to degrade it down to the pitiful level of the Chinese. «

Friedrich Nietzsche (1888) answering to Immanuel Kant's 'eternal peace' ideas in his Ecce Homo. Why I am a destiny.

The Rulers and the Ruled | Gaetano Mosca

Gaetano Mosca (1896) - Among the constant facts and tendencies that are to be found in all political organisms, one is so obvious that it is apparent to the most casual eye. In all societies — from all societies that are very meagerly developed and have barely attained the dawnings of civilization, down to the most advanced and powerful societies — two classes of people appear — a class that rules and a class that is ruled.

 

[...] In reality the dominion of an organized minority, obeying a single impulse, over the unorganized majority is inevitable. The power of any minority is irresistible as against each single individual in the majority, who stands alone before the totality of the organized minority. A hundred men acting uniformly in concert, with a common understanding, will triumph over a thousand men who are not in accord and can therefore be dealt with one by one. Meanwhile it will be easier for the former to act in concert and have a mutual understanding simply because they are a hundred and not a thousand. It follows that the larger the political community, the smaller will the proportion of the governing minority to the governed majority be, and the more difficult will it be for the majority to organize for reaction against the minority.

"I can certainly call myself an anti-democrat, but I am not an anti-liberal;
indeed I am opposed to pure democracy precisely because I am a liberal.
I believe that the ruling class ought not to be monolithic and homogeneous
but ought to consist of elements which are diverse in regard to origin and
interests; when, instead, political power originates from a single source,
even if this be elections with universal suffrage, I regard it as dangerous
and liable to become oppressive. Democratic Jacobinism is an illiberal
doctrine precisely because it subordinates everything to a single force,
that of the so-called majority, on which it does not set any limits."

[...] What happens in other forms of government — namely, that an organized minority imposes its will on the disorganized majority — happens also and to perfection, whatever the appearances to the contrary, under the representative system. When we say that the voters ‘choose’ their representative, we are using a language that is very inexact. The truth is that the representative has himself elected by the voters, and, if that phrase should seem too inflexible and too harsh to fit some cases, we might qualify it by saying that his friends have him elected. In elections, as in all other manifestations of social life, those who have the will and, especially, the moral, intellectual and material means to force their will upon others take the lead over the others and command them.

[...] From our point of view there can be no antagonism between state and society. The state is to be looked upon merely as that part of society which performs the political function. Considered in this light, all questions touching interference or noninterference by the state come to assume a new aspect. Instead of asking what the limits of state activity ought to be, we try to find out what the best type of political organization is, which type, in other words, enables all the elements that have a political significance in a given society to be best utilized and specialized, best subjected to reciprocal control and to the principle of individual responsibility for the things that are done in the respective domains.

"Who says organization, says oligarchy. [...] Historical evolution mocks all the
prophylactic measures that have been adopted for the prevention of oligarchy."
Robert Michels, 1911

[...] Any political organization is both voluntary and coercive at one and the same time — voluntary because it arises from the very nature of man, as was long ago noted by Aristotle, and coercive because it is a necessary fact, the human being finding himself unable to live otherwise. It is natural, therefore, and at the same time indispensable, that where there are men there should automatically be a society, and that when there is a society there should also be a state — that is to say, a minority that rules and a majority that is ruled by the ruling minority.

Quoted from:
Gaetano Mosca (1896) - The Ruling Class (Elementi di scienza política).

See also:

 Robert Michels (1915) - Political Parties: A Sociological Study of the Oligarchical Tendencies of Modern Democracy (Zur Soziologie des Parteiwesens in der modernen Demokratie).
Vilfredo Pareto (1916) - The Mind and Society (Trattato di sociologia generale).

The Magic of Money | Hjalmar Schacht

Hjalmar Schacht (1967) - Man needs money and cannot exist without it. The diabolic magic of money is here clearly visible. It has helped mankind to make immense strides in economic development, and has at the same time enslaved him. Regression to a money-less condition, or the modern method of exchange by means of money any kind of money, but still money - these are the alternatives. Money plays the role of the sorcerer's apprentice - created to serve a master who cannot now rid himself of his indispensable sprite. It is the master now. 

Hjalmar Schacht (1877 – 1970), President of the Reichsbank.

[...] Modern paper money, the banknote, is backed by its creator, the State. It is true that John Law, the inventor of paper money, recommended a kind of cover based on landed property, but Law too saw that the principal security for paper money lay in confidence in the government, which has legal control over all kinds of things which would provide security. The failure which put an end to Law's measures was not so much caused by a paper money inflation, as by a collapse of speculative activity in the shares of the overseas enterprises he had founded. The value of his paper money was not based on these public companies, but only on their relationship with the state. Law rightly recognised that money, if it does not consist of tangible metal, is purely an internal affair of the national state. This remains true today.

For this reason there is no such thing as international currency. It is unlikely that it will ever come into being. International money would have to be granted the status of legal tender in all countries in which it circulates. In all these countries it would have to be possible to settle every state and private obligation in this currency. Any institution controlling this. currency irrespective of whether it is a bank or a government department would dominate the world an unthinkable situation. Currency is the most nationalistic factor in political life. Every central bank responsible for issuing it is dependent on the government of the country by whose laws it was instituted, and which makes its notes legal tender in the country's home territory.

The granting of credit is unthinkable without a central bank. No central bank can be allowed to act against the government of the country. The government is over the central bank, and influences its policies. It is thus also in a position to inflate the currency by taking up too much credit with the central bank. No international central bank could countenance such a situation. It cannot permit one of the governments with which it is associated to misuse its facilities unless every other government is in agreement. This however is a condition which cannot be reconciled with the fight of all against all in time of economic difficulty. No state will surrender so much of its sovereignty that its partners or competitors are given the power to prescribe its economic and financial policies. Standing over and above central bank and government, both of which are led and administered by changing personalities, there is a higher, impersonal, and substantially necessary law: the stability, the constancy of value, of money. This higher law has in the past granted the central banks an autonomous, independent position. Governments change, and can pursue good or bad currency and credit policies according to whether or not it is to the advantage of the party in power. 

 

Schacht in an Allied internment camp, 1945.
"Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking".
Schacht replied, "You should come to Berlin. We don’t have money. That’s real banking".

[...] Even if common currency is regarded and desired as the crowning achievement of the European Common Market, it would be wrong to leave the relationship between the government and the central bank out of account. [...] The closer the economic ties between various countries, the easier will it become to reach agreement on currency policies. Whether these will ultimately lead to a unitary currency will always depend on the extent to which the participants are prepared to surrender their sovereignty. Here in fact is the Common Market's chief problem.

Quotes from:
Hjalmar Schacht (1967) - The Magic of Money

Who Ever Sets the Price of Gold and Silver | Stephen Mitford Goodson

There was an increase in trade and Rome became one of the most prosperous cities in the ancient world. [...] bronze coins represented national money and were paid into circulation by the state and each was only of value in as much as the symbols on which its numbers were recorded, were scarce or otherwise. This money was thus based on law rather than the metallic content. [...] This can be considered as an early example of the successful use of fiat money.

While fiat money is much criticised in some quarters, for example by the followers of Austrian economist Ludwig von Mises, there is nothing wrong with it, as long as it is issued by government, not by private bankers, and is carefully protected against counterfeiters. Non-fiat money, in contrast, has the serious drawback that who ever sets the prices of gold and silver, i.e. private bankers, can control the nation’s economy.

[...] in September 45 BC, Caesar found the streets and cities crowded with homeless people, who had been forced off the land by usurers and land monopolists. 300,000 people had to be fed daily at the public granary. Usury was flourishing with disastrous consequences. [..] Caesar fully understood the evils of usury and how to counter them. He recognized the profound truth that money is a national agent, created by law for a national purpose, and that no classes of men should withhold it from circulation so as to cause panics, in order that speculators could advance the rates of interest, or could buy up property at ruinous prices after such panic.

Caesar introduced the following social reforms:

1. Restoration of property was done at the much lower valuations which held prior to the civil war (49-45 BC).
2. Several remissions of rents were granted.
3. Large numbers of poor citizens and discharged veterans were settled on allotments.
4. Free housing was provided to 80,000 impoverished families.
5. Soldiers’ pay was increased from 123 to 225 denarii.
6. The corn dole was regulated.
7. Provincial communities were enfranchised.
8. Confusion in the calendar was removed by fixing it at 365¼ days from 1 January 44 BC.

His monetary reforms were as follows:

1. State debt levels were immediately reduced by 25%.
2. Control of the mint was transferred from the patricians (usurers) to government.
3. Cheap metal coins were issued as the means of exchange.
4. It was ruled that interest could not be levied at more than 1% per month.
5. It was decreed that interest could not be charged on interest and that the total interest charged could never exceed the capital loaned (in duplum rule).
6. Slavery was abolished as a means of settling debt.
7. Aristocrats were forced to employ their capital and not hoard it. 

These measures enraged the aristocrats and plutocrats whose “livelihood” was now severely restricted. They therefore conspired to murder Caesar, the hero of the people. 

 

The 'Ides of March' Denarius (43/42 BC), a declaration of the Republic's 'liberation' from tyrannical Caesar.
Ironically, Brutus appears on the obverse professing he killed Julius Caesar on the Ides of March.
This is one of the most sought-after coins from the Roman world.

Quotes from:

Stephen Mitford Goodson (2019) - A History of Central Banking and the Enslavement of Mankind.

 

See also:

Stephen Mitford Goodson (2017) – How The Banking System Works.

 Alfred Deahl (2020) - Money Talks: A Very Short History of Roman Currency.

Stephen Mitford Goodson (1948 - 2018) was a South African economist, author, politician and former Director of the South African Reserve Bank. He was the leader of South Africa's Abolition of Income Tax and Usury Party, and stood as a candidate for the Ubuntu Party in the 2014 General Elections.

Financial Fascism - The Elimination of Physical Currency

“Fascism should more appropriately be called Corporatism because it is a merger of
state and corporate power.” ― Benito Mussolini, 1932

Paul Joseph Watson (Aug 28, 2015) - The Financial Times has published an anonymous article which calls for the abolition of cash in order to give central banks and governments more power. Entitled "The case for retiring another ‘barbarous relic’", the article laments the fact that people are stockpiling cash in anticipation of another economic collapse, a factor which is causing, “a lot of distortion to the economic system.”

“The existence of cash — a bearer instrument with a zero interest rate — limits central banks’ ability to stimulate a depressed economy. The worry is that people will change their deposits for cash if a central bank moves rates into negative territory,” states the article. Complaining that cash cannot be tracked and traced, the writer argues that its abolition would, “make life easier for a government set on squeezing the informal economy out of existence.” Abolishing cash would also give governments more power to lift taxes directly from people’s bank accounts, the author argues, noting how “Value added tax, for example, could be automatically levied — and reimbursed — in real time on transactions between liable bank accounts.”

Totalitarianism of the European Financial Oligarchy - Votes change nothing!

The writer also calls for punishing people who use cash by making users “pay for the privilege of anonymity” so they will, “remain affected by monetary policy.” Dated bank notes would lose their value over time, while people would also be charged by banks for swapping electronic reserves for physical cash and vice versa. The article echoes an argument made by Kenneth Rogoff, former chief economist of the International Monetary Fund, who has called for high denomination banks notes such as the €100 and €500 notes to be phased out of existence. Rogoff attended a meeting in London earlier this year where he met representatives from the Federal Reserve, the ECB as well as participants from the Swiss and Danish central banks. The issue of banning cash was at the forefront of the agenda. Last year, Rogoff also called for “abolishing physical currency” in order to stop “tax evasion and illegal activity” as well as preventing people from withdrawing money when interest rates are close to zero. 

The agenda to ban cash was also discussed at this year’s secretive Bilderberg Group meeting, which was attended by the Financial Times’ chief economics commentator Martin Wolf. Former Bank of England economist Jim Leaviss penned an article for the London Telegraph earlier this year in which he said a cashless society would only be achieved by “forcing everyone to spend only by electronic means from an account held at a government-run bank,” which would be, “monitored, or even directly controlled by the government.” In the UK, banks are treating the withdrawal of cash in amounts as low as £5,000 as a suspicious activity, while in France, citizens will be banned from making cash payments over €1,000 euros from Tuesday onwards. The withdrawal and deposit of cash over the amount of €1,000 euros will also be subject to ID verification. “There is no more egregious anti-liberty economic policy imaginable than banning cash,” writes Michael Krieger. “Of course, if cash were involuntarily “ended,” there would be a surge in demand for physical gold and silver, which would then necessitate a ban on those items. Then the cycle of economic and financial tyranny would be complete, and crawling our way out of it, nearly impossible.”