C.J. Maloney
Click here to read the rest.
Robert Higgs
Historians have always known, however, that the true story was nothing like this patriotic fable dispensed each year on December 7 for popular consumption. Not long ago, I briefly reviewed some of the elements of this history, linking my statements to some of the most reliable histories publicly available to one and all. (See also my account of how U.S. economic warfare provoked the Japanese attack.) It behooves every educated American to learn this honest history and to pass it along to others when an opportunity arises, because the myth has long contributed, and continues to contribute, to a false view of the U.S. place in the world and to a grave misunderstanding of U.S. foreign policy. Ceaseless dissemination and widespread acceptance of this view is the very model of how the U.S. government tends to do foreign policy: provoke foreigners to attack Americans, then tell the American people that foreigners have attacked us for no reason and therefore we must strike back to defeat them or at least to teach them a lesson about treating the United States with deference.
Along with the myth of Munich, the myth of the Pearl Harbor attack has performed magnificently in keeping Americans dumb and belligerent and in preparing them to sacrifice their children’s lives in the service of the ruling oligarchy. Unless the American people can rise above these historical myths, they stand little chance of freeing themselves from those who would make them the living, breathing but unthinking means for the attainment of their masters’ ends.
Robert Higgs
Foolhardy procedures which are divorced from economic realities, or whose economic implications are not understood by their promoters, do not perforce become sanctified and wise merely by designating them as “action”; tilting at windmills does not draw water.[W]hen a recovery program, which, while it may appear effective, depends for its efficacy upon much the same kind of “cheap money” inflation which . . . was the main cause of the recession from 2007 to 2009, then the present recovery must ultimately prove as illusory as the boom from 2001 to 2007, and it is the duty of economists to pierce the veil of illusion.
Certainly the recovery movement to the date of this writing [December 2010] is a peculiar one: it is shot through with anomalies. With [more than 15 million estimated to be] unemployed . . . with governmental relief rolls still at high levels, . . . there very obviously is something wrong, somewhere.
The fact would seem to be that the authorities who are undertaking the “management” of the current recovery, and congratulating themselves that prosperity is returning because they “planned it so,” are utterly oblivious of the fact that recovery is being engineered largely by the same means which produced the last boom – and recession. With this difference: whereas the banking system during the recent boom was producing an investment credit inflation by extending credit to business men and corporations, Government is now assuming the role of inducing new deposit currency in the banking system and thereby producing a consumption credit inflation. The Federal Government, instead of private corporations, is issuing the bonds which the banks are now purchasing, thereby inflating the deposit currency structure all over again. These “created” funds are in this instance being used principally to finance consumption expenditures through relief disbursements, make-work projects, and the like. . . . [T]he current inflation tends to conceal and to preserve the fundamental disequilibria which so prolonged the recession after 2007 and which we are now carrying over therefrom without having once squarely faced the problem of correcting them.
Notice, however, that the foregoing commentary, except for the terms in bold font, was written not yesterday, but, in its final form, in 1937. The authors, C. A. Phillips, T. F. McManus, and R. W. Nelson, placed this commentary, along with a wealth of related evidence and analysis, in their unjustly neglected book Banking and the Business Cycle: A Study of the Great Depression in the United States (New York: Macmillan, 1937). The quoted passages, which appear on pp. 212-14, originally read as follows:
Foolhardy procedures which are divorced from economic realities, or whose economic implications are not understood by their promoters, do not perforce become sanctified and wise merely by designating them as “action”; tilting at windmills does not draw water.
[W]hen a recovery program, which, while it may appear effective, depends for its efficacy upon much the same kind of “cheap money” inflation which . . . was the main cause of the Great Depression, then the present recovery must ultimately prove as illusory as the New Era of the ‘twenties; and it is the duty of economists to pierce the veil of illusion.Certainly the recovery movement to the date of this writing [February 1937] is a peculiar one: it is shot through with anomalies. With [8 million to 12 million estimated to be] unemployed . . . with governmental relief rolls still at high levels, . . . there very obviously is something wrong, somewhere.
The fact would seem to be that the authorities who are undertaking the “management” of the current recovery, and congratulating themselves that prosperity is returning because they “planned it so,” are utterly oblivious of the fact that recovery is being engineered largely by the same means which produced the last boom—and depression. With this difference: whereas the banking system during the ‘twenties was producing an investment credit inflation by extending credit to business men and corporations, Government is now assuming the role of inducing new deposit currency in the banking system and thereby producing a consumption credit inflation. The Federal Government, instead of private corporations, is issuing the bonds which the banks are now purchasing, thereby inflating the deposit currency structure all over again. These “created” funds are in this instance being used principally to finance consumption expenditures through relief disbursements, make-work projects, and the like. . . . [T]he current inflation tends to conceal and to preserve the fundamental disequilibria which so prolonged the Great Depression and which we are now carrying over therefrom without having once squarely faced the problem of correcting them.
When policy makers repeat in the early twenty-first century the same mistakes they made in the 1920s and 1930s, and when mainstream economists fail to understand that these policies are misguided now, just as they were then, one can scarcely argue that the mainstream understanding of business fluctuations has advanced at all during the past eighty years. Indeed, the typical macroeconomist today is much inferior to Phillips, McManus, and Nelson, in no small part because today’s economists, owing to the high level of aggregation they employ in their theoretical and empirical work, miss what is most important for understanding business booms and busts: policy-induced structural disequilibria and malinvestments.
David T. Beito
My article for the Independent Review (co-authored by Linda Royster Beito),"Selling Laissez-faire Antiracism to the Black Masses: Rose Wilder Lane and the Pittsburgh Courier," is now available. Lane (who was the daughter of Laura Ingalls Wilder, author of the Little House on the Prairie books) combined zealous support for free markets and lmited government with a hard-hitting critique of racism. Many thanks to Damon Root for his commentary.
Here is the first paragraph of our article:
The ideals of liberty, individualism, and self-reliance have rarely had a more enthusiastic champion than Rose Wilder Lane. A columnist and popular [and daughter of Laura Ingalls Wilder, author of the Little House on the Prairie books], she held firm to her beliefs when faith in big government was at high tide. Through her book, The Discovery of Freedom, ([1943] 1984a) became a key transitutional figure from the Old Right of the 1930s to the modern libertarian movement. Of equal fascination but much less known today is Lane's sustained effort to promote laissez-faire ideas in columns for the Pittsburgh Courier, the largest black newspaper in the United States. Although Lane was white, she used this unusual venue creatively to promote the philosophy of limited government, During World War II especially, her outspoken activism generated headlines. She was not only investigated by the FBI for"subversive" remarks, but denounced by Walter Winchell, the leading national syndicated columnist, journalist and radio commentator in the country.
Mark Brady
David T. Beito
Jeffrey Rogers Hummel
C.J. Maloney
