Speaking in the past tense, Ode Magazine says this of distributism: “The distributists saw private property as the salvation of society, and its concentration in too few hands as the greatest scourge.” But far from being an extinct school of thought, distributism is on the rise in the marketplace of ideas.

What is Distributism?

Distributism—also known as distributivism and distributionism—is an economic philosophy formulated by Roman Catholic thinkers in accordance with the principles of Catholic Social Teaching. It holds that the “means of production and distribution” should not be owned collectively (as with socialism), nor allotted haphazardly by the free market (as with capitalism), but dispersed widely among the general populace. In this way, it is like socialism in that it attempts to keep capital out of the hands of “capitalists,” but like capitalism in that it affirms the desirability of private ownership. Distributism is equally scornful of Wal-Mart and the welfare state, and thus has appeal to middle-America populists.

Distributists also support a guild system for the regulation of business, and are opposed to for-profit banking. The philosophy emphasizes radical decentralism to the extent that it holds that nothing that can be done by a smaller unit should be done by a larger unit. If a town can produce its own bread, for example, then it should not trade for bread produced elsewhere. In this way, it rejects the basic tenets of Adam Smith’s capitalism.

Distributism: From Left to Right

Distributism has its roots in the nineteenth century but reached its greatest heights in the mid-to-late twentieth century as the economic philosophy propelling the Catholic Worker Movement. Then, distributism was considered a “left-wing” phenomenon, but now its strongest constituency is on the far right of the American political sphere. Indeed, full page ads for distributist books have been featured on the back cover of the last two issues of The American Conservative.

The American Conservative (TAC) is a paleoconservative publication, and paleoconservatism differs from neoconservatism in that the former is staunchly antiwar: you will not find praise for Dick Cheney within TAC’s pages. But unlike libertarianism, the other antiwar philosophy of the right, paleoconservatism is ambivalent (at best) towards free-market capitalism. Paleocons are traditionally opposed to free trade and strongly support immigration quotas. More shockingly, they tend to support limited nationalization of industry: this month’s issue of TAC features an editorial in favor of “bailing out” the U.S. auto industry.

Generally, however, paleoconservatives are unconcerned with economics. Their chief causes are non-intervention in foreign policy (which, when combined with their anti-free trade views is correctly considered “isolationism”) and the promotion of “traditional values.” These concerns dovetail nicely with distributism, which supports the Christian Just War doctrine (under which virtually no wars are justified) and the primacy of the “Trinitarian” family consisting of one man, one woman, and their children. Thus, paleocons—which are far from being insignificant in number—who are exposed to distributism are likely to find the philosophy tailor made for the preexisting prejudices.

So What’s Wrong with Distributism?

So what’s wrong with distributism? Well, as theological ethicist Dr. Todd R. Flanders told the audience of an Austrian economics scholars conference in 2000, distributism isn’t really an economic theory at all, but an ethical one. Distributists have no coherent or practical plan for implementing their vision of a society of widely diffused property ownership; they only hold that it is morally just.

But is it really? Distributists refer to capitalism as “neo-feudalism,” but in reality, what they propose is a return to pre-capitalistic, medieval life. Their antipathy for the division of labor—that basic Smithian principle that has brought so much prosperity to the world—is grounded in a Marxist understanding of “worker alienation.” Indeed, distributism could be considered a kinder, gentler Communism, and we all know how well that worked.

A Preemptive Defense

The danger presented by distributism may be minimal, but that is not to say it’s non-existent. Big ideas have a way of sweeping over the world quickly, particularly in times of economic and political turmoil—times we are likely to be facing in the very near future. The economic ignorance fostered by a century of public schooling plays right into the reactionary creed of distributism. Its appeal to the Left, which thinks capitalism has failed; and to the Right, which blames the welfare state; makes it a potentially unifying force for anti-capitalists.

As a preemptive defense, capitalists must educate themselves on distributism and refute arguments made in favor of its core tenets: protectionism, socialized banking, occupational licensure (the guild system), glorification of smallness for smallness’s sake, etc. Free-market capitalists must articulate their arguments in a way that convince would-be distributists that their goals are best served by a truly free-market economy in which unhampered property rights are the foundation of ethics and prosperity.

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Clearly, this system is not sustainable. In fact, “the system”—the global “U.S. Dollar Standard”—isn’t failing, it has already failed. The country and the world is currently engaged in the greatest mass-delusion in all of human history, as the hard truth—that the United States government and its people are bankrupt—is just too much to handle. But the longer we take to admit reality, the worse things will be. In fact, the misplaced “Hope” that “Yes, We Can” get out of this mess and return to the way things were is enabling a massive redistribution of wealth as the power elite engage in a “run on the state.”

Where Does Money Come From?

One thing that must be understood is that virtually every single dollar in circulation, both in greenback and electronic form, was created out of debt. Once upon a time, dollars were theoretically backed by gold, and thus the only way for the Federal Reserve to create new dollars (at least in theory) was for it to have a corresponding store of gold. In reality, the Fed created way more paper dollars than it had gold backing them, and this is what led to the gradual abolition of the gold standard. Since then, every new dollar created has been backed by nothing more than the promise of someone to repay it. Where would this someone get the dollar to repay the one the Fed created for him? With more new dollars also created by the Fed, of course!

It doesn’t take a Nobel prize winning economist to realize that this system has been doomed from Day One, although at least one living Nobel laureate—John Nash, the subject of the movie A Beautiful Mind—has come around to the pro-gold standard view. After all, if (almost) every dollar in circulation is based on debt, then the system demands that people remain in debt. If everyone were debt free, then the money supply be shrunk to its pre-Fed era levels, and as we all know, deflation (shrinking of the monetary base) is the greatest of all evils.

Or at least that’s what Ben Bernanke and most mainstream economists think. In reality, deflation is a good thing, but that’s neither here nor there. The point is that the only way for the federal government to make good on its obligations—to say nothing of bailing out all of these dysfunctional firms—is to go deeper and deeper into debt, thus instructing the Fed to print more and more money. The inevitable result of this is hyperinflation and the erosion of the dollar’s value to zero. This will probably happen sooner than any of us are expecting and with little warning. But there is still something we can do.

The Inevitable Demise of the Dollar

The dollar still has value today because people are willing to accept it in exchange for real goods and services. This is primarily due to the slight of hand the government employed over the first 58 years of the Fed’s existence, gradually removing the dollar’s tie to gold. Secondarily, people accept U.S. dollars because they have to by law. This is the meaning behind “legal tender.” And thirdly, people accept U.S. dollars because the U.S. government accepts them in payment for taxes.

But as the inflationary effects of the Fed’s hyper-aggressive expansion of the money supply begin to be felt, and as foreign creditors race to dump their dollars on the world market, people—even in America—will become less and less accepting of the dollar. The currency will lose essentially all value once it is no longer stable enough to plan even short-term purchases. You’ve undoubtedly heard stories about inter-war Germany in which stores would have to adjust prices several times a day to adjust for inflation. Barter becomes the new money during an economic environment such as this. “But that couldn’t happen here.”

Time To Take Our Monetary Medicine

The only way for the federal government to avoid this fate is to come clean right now and admit that it is bankrupt. Then, just like any insolvent corporation, it could begin liquidating its assets and dividing them up among its stakeholders, pro-rata.

After abolishing the Fed and cutting off all monetary expansion, the first step of the liquidation process would be to refund (a) all of the FICA taxes paid by living individuals who have not yet begun to collect Social Security and Medicare, and (b) the difference between the value of FICA taxes paid and benefits received by current retirees. These payments would be made in the form of dollar-denominated vouchers for claims on government property and would signal the end of the Ponzi scheme known as the welfare state.

Secondly, all outstanding federal debt obligations (bonds, bills, and notes) would be redeemed at face value using a similar voucher program. These vouchers would effectively expand the money supply, but given that they would dramatically reduce the long-term obligations of the now-defunct federal government, it’s not clear how much of an inflationary effect they would have.

Third, all federal government property—lands, buildings, businesses, government agencies (which would be privatized via sale), military weaponry, etc.—would be auctioned off. State governments, which would pick up the slack in the federal government’s demise, would be some of the primary purchasers of these assets.

Fourth, all remaining dollars would be redeemed for the gold and silver held by the Fed and Treasury. This monster known as the federal government would be no more, and if (and only if!) they wanted a new federal government, the states could voluntarily set one up—just as the first federal government was initially created.

This may seem like a radical proposal, but what’s the alternative? If you think the ship can be righted, you’re living in a fantasy world. We have been conditioned to look at the federal government like Big Brother, but in reality, it is a lazy, mooching friend we let stay on the couch one night but then moved in and ate us out of house and home. We don’t need and probably can’t afford friends like that, and the federal government is no exception.

In truth, “structural unemployment” is created by the misallocation of financial resources resulting from the Federal Reserve’s fiat-money central banking regime and other government interventions into the economy, most notably minimum wage laws. Under a gold standard and laissez-faire, there would be real full employment. But of the myriad cockamamie government intrusions into the market unnecessarily causing unemployment, one that deserves special focus amid the current economic depression is unemployment insurance.

From Textbooks to Real Life

Let’s make this personal. I have a younger brother, of whom I’m very proud, who decided to start his life over in Medford, Oregon, 2,300 miles away from his home in South East Michigan. Moving out there with nothing more than he could fit in his car, he quickly got a sales job at Circuit City. A few weeks later, he was promoted to a management position. That was a little over six months ago now.

Now, as you know if you keep up with the business press, Circuit City declared bankruptcy a while back and is now on the verge of being forced into liquidation. Many of the firm’s stores have been closed, but my brother’s in Medford, OR is still open—for now. If they are shut down, then my brother will receive 80 percent of his wages for a full year as part of Oregon’s unemployment insurance program. The only catch: he can’t find another job in the meantime.

Now who in their right mind would want to find a new job given this scenario? Imagine your boss coming in and telling you he has to cut your pay by 10 percent—but the good news is, you only have to work one day a week. Ninety percent of your pay for 20 percent as much work would seem like a pretty good deal, wouldn’t it? How about 80 percent of your pay for zero percent as much work? Who would screw up a sweetheart deal like that by going out and finding a new job?

Disincentivizing Work

Theoretically, of course, my brother could find a job that offered him higher pay. In that case, he might be smart to take it. But when a company goes bankrupt, one of the factors contributing to their insolvency is that they were paying inefficient employees too much money. My brother is a great salesman, but he’s undoubtedly the exception to the rule. After all, if Circuit City were paying their employees the “right” amount, they wouldn’t be going under. If they were overpaying by, oh say 20 percent, then their former workers from Oregon would have a hard time finding new jobs that paid them as much as they’ll receive just for staying home and doing nothing. Where is the incentive to find work?

This mismatch of incentives doesn’t apply only to firms that have gone belly-up, either. Even employees who are laid off have generally been paid too much: if their marginal utility was higher than the wage they were being paid, then the company would have kept them—so of course they’re going to have to take a pay cut to find another job! Why, then, does the government incentivize not finding a lower-paying job?

President-elect Barack Obama, of course, wants to extend unemployment benefits across the nation (and who knows, maybe the world, too). This is obviously a prescription for extended mass unemployment and a deepening of the current depression. If the government must intervene, and apparently it must, then the concept of “wage insurance” makes a lot more sense.

Wage Insurance: An Alternative Idea

Wage insurance is a program whereby displaced workers receive benefits—but only once they find a new job. For example, if a factory worker who had been making $20 per hour were laid off and got a job at a convenience store for $10 an hour, wage insurance would make up part (or all) of the $10 differential between his previous wage rate and his new, lower wage rate. Over time, this benefit would be scaled back as the worker learned new skills that would presumably result in salary increases.

Now as you can see, unemployment insurance incentivizes not finding a job, while wage insurance incentivizes actually procuring employment. Which one do you think would do more to get us out of recession? Even better, unlike unemployment insurance which could never be handled by the free market (due to its incentivizing of bad behavior), wage insurance could be: workers could pay optional insurance premiums for individualized wage-insurance policies. Insurers would be happy to underwrite these moral hazard-free contracts.

Contrast this to our current situation: productive workers are forced to sacrifice their earnings through reduced wages and higher taxes to subsidize the unproductive and non-working. Only the government could set up such a perversely counterproductive and destructive scenario and call that which ails us—over-regulation—a miracle cure.

The Political-Media-Banking Complex

Even though they’re the ones who will be taking us off the deep end, we can’t blame Obama and the Democrats for our sorry state of affairs. Clearly, the Bush administration bears the bulk of the responsibility, and the Reagan and Nixon-Ford administrations played their parts as well. In fact, it’s the hole that Nixon began digging for us with the closing of the gold window in 1971 that will ultimately burry the U.S. dollar.

Under the gold standard, every $35 represented an ounce of gold in the Federal Reserve’s coffers. Of course the Fed played tricks with accounting and created far more paper dollars than it had ounces of gold backing them, but there was at least some limit to the extravagance of their monetary machinations. All this changed on August 15, 1971 when President Nixon unilaterally reneged on America’s promise to redeem Federal Reserve Notes (a.k.a. U.S. dollars) in gold. Since then, the Fed’s ability to create money out of thin air has been entirely limitless.

The Fed’s rampant inflation has become so commonplace that the vast majority of financial journalists don’t even take notice of it. The federal government is deeply in debt, so where does it get the money to fund all of these bailouts? Few bother to even consider the question, and those that do assume the bailouts will be paid for with tax revenue. Pundits who are a little more on the ball might understand that the bailouts and “stimulus” won’t be paid for with taxes, but by issuing new government debt, but even this misses the point. That debt is largely “monetized” by the Fed, which is just a fancy way of saying the Fed creates new money out of thin air to pay the government’s bills. So how much money has the Fed created in this manner in the past three months? The answer is quite shocking.

How Money is Measured

M0 is the measure of the nation’s monetary base. It includes all physical currency such as notes and coins, as well as accounts at the central bank that can be exchanged for physical currency. This is the strictest of monetary measures, and the one least susceptible to rapid increases. M1, by contrast, adds bank reserves and checking accounts to the money supply, while M2 also tags on savings accounts, money market accounts, and CDs under $100,000. M3, which the Fed stopped tracking because the increases were too large to explain, is the most liberal measure of money supply, as it includes all CDs as well as institutional money market accounts, Eurodollars, and repo agreements.

The important takeaway from the monetary lesson above is that M0 is the most conservative measure of the money supply available and is completely indisputable: it is the physical currency in circulation or in the coffers of the Fed. It exists in reality, not electronically. And here’s the scary reality: for the period ending December 3, the Fed had increased the M0 money supply by as much in thirty days as it had in the previous eighty-three years! The amount of money in circulation was 74% higher on December 3, 2008 than it was on September 3, 2008. And here’s where it gets even scarier: each one of those $268 billion new dollars in print can turn into ten new dollars via the process of fractional-reserve lending.

This is not a conspiracy theory, but the cold hard facts. Many ancient civilizations met their doom by holding on to superstitions the likes of which we think our society is somehow above. But the truth of the matter is that all but a tiny fraction of Americans hold fast to the most absurdly false religion imaginable: the notion that prosperity can be created at the printing press. In 2009, this myth will be shattered once and for all.

The response to Blagojevich’s arrest was universal shock and dismay—or feigned versions thereof. After all, is it really that surprising that a politician would put his own self interests ahead of his constituents’? Isn’t that what congressmen and senators do every day in Washington? In fact, there’s a case to be made that Blagojevich is truly a rare breed: an honest politician.

The Sad Reality

FBI tapes allegedly catch Blagojevich saying how “valuable” a U.S. Senate seat is. A senator has more resources available to him than even a large-state governor, Blagojevich said, and if someone didn’t want to give him something “of value” in exchange for the appointment, he was going to just take it for himself.

In response to these caught-on-tape comments, U.S. Attorney Patrick Fitzgerald said this was a “sad day for government.” Sad, indeed, for the true believers in civics-class propaganda, for the true nature of the state was exposed. Now they’ll be quick to “make an example” of Blagojevich and return to business as usual: doing exactly what he was trying to do, just more covertly.

Why Are Senate Seats so Valuable?

But why is a U.S. Senate seat so “valuable?” Senators are paid $169,300 a year, but this is not the “value” to which Blagojevich was referring. No, the true “value” of a senate seat is measured in the millions—maybe tens or even hundreds of millions—of dollars; and that’s because senators routinely engage in the selling of favors. They call it something else, of course, but make no mistake about it: extortion and receiving bribes are a senator’s primary activities.

Remember how the $700 billion bailout was defeated in the House of Representatives only to be passed, overwhelmingly, by the Senate just a few days later? Why is it that congressmen were so much more willing to listen to the will of the people than U.S. Senators were? Could it be because senators’ statewide campaigns attract bigger money that has to be repaid in the form of votes? Only by bribing a senator can a few thousand dollars be turned into millions—after all, the Senate isn’t spending its own money…it’s spending yours!

Is What Blagojevich (Allegedly) Did Really That Bad?

So we’ve established that the mock horror at Blagojevich’s indiscretion is unwarranted. His only “crime” was being blasé about the true nature of government. In fact, maybe it would be better if politicians were, like Blagojevich, more out in the open with their buying and selling of favors.

In his classic book, Democracy: The God That Failed, Austrian economist Hans Herman Hoppe makes the case that monarchy is a better form of government than democracy. Although Professor Hoppe himself is an anarcho-capitalist, he sees monarchy as preferable to democracy because kings took pride in the “ownership” of their countries. Since they were able to pass on their kingdoms to their heirs, they didn’t loot as aggressively as democratic rulers—who, by comparison, “rent” their kingdoms—do today. Blagojevich was simply trying to collect a rental fee.

Just a Symptom of a Greater Illness

“This conduct would make [Abraham] Lincoln roll in his grave.” That was another whopper from Attorney Fitzgerald. Lincoln, of course, was a corporate lawyer who believed strongly in Henry Clay’s “American System” of central banking, protective tariffs, and corporate welfare—the system of looting that now makes senate seats so valuable. And it was Lincoln’s invasion of the South that led to the abolition of state sovereignty, a fait accompli with the passage of the 17th Amendment, which ushered in the direct election of U.S. Senators. I hardly think “Honest” Abe—who illegally suspended habeas corpus, jailed Northern dissidents, shut down opposition newspapers, and unconstitutionally assessed an income tax and printed the nation’s first fiat money to fund his war—would be half as outraged as the modern punditocracy pretends to be.

Indeed, in all of the feigned horror misses the point: U.S. Senate seats are too valuable. The way to fight corruption is to make them less valuable, and the way to do that is to take power from the federal government and give it back to the states and the people. A good start would be the repeal of the 17th amendment, which would return the election of senators to the state legislatures. This way, senatorial candidates would serve in their original role as “ambassadors of the states,” and would be looking out for state interests, not always seeking to expand federal power (and thus, bribery income). Blagojevich is a corrupt politician, to be certain, but his corruption is just a symptom of the larger problem: an unconstitutional and overreaching federal government.

What is the FDIC?

Before we can explore why the FDIC is so bad, we must first understand what exactly it is. Most people are familiar with the FDIC’s supposed “insurance” of bank deposits up to $100,000 per account. This number was actually raised to $250,000 recently, in a typically asinine move by the political establishment to make bank accounts “more secure.” In reality, of course, raising the cap made accounts less secure, but depositor wealth has never been safe since the passage of the Federal Reserve Act in 1913 anyway. After all, it doesn’t take a genius to figure out that you can “game the system” by putting exactly $250,000 in any number of separate accounts, and a loophole that huge is typically indicative of a sham system—and that’s exactly what the FDIC is.

Why? Because banks are required to deposit just a tiny fraction of customer deposits into the FDIC fund. Since fractional-reserve banking makes every bank technically insolvent, it doesn’t take much for a bank to lack the physical funds necessary to redeem demand deposits. Each time a customer deposits $10 in his checking account, a bank can lend up to $9 of that money—effectively creating it out of thin air. What happens when the customer writes a $10 check and the borrower who was lent the $9 defaults on his loan? The FDIC doesn’t have even close to enough money to cover widespread defaults and bank runs.

The FDIC’s Books

How much does the FDIC have? About $35 billion. What is the total value of all FDIC-insured accounts? About $8.8 trillion, or over 250 times the size of the FDIC insurance fund.

The takeaway from this is that your money is not safe—the FDIC is a joke. Its purpose is political, to give cover to the legalized counterfeiting of the Federal Reserve. Bank customers are given a false sense of security that there is a “fund” somewhere that insures them against bank failure, when in reality, that fund can only cover a couple of small bank failures a year. If bank failure becomes an epidemic, then it will be the Fed that will make good on customer deposits—by firing up the printing press. Sure, you’ll get every last dollar of your deposit (up to $250,000) back, but the purchasing power of each of those greenbacks will be lessened by the Fed’s monetary expansion. Inflation, of course, is the Fed’s day-to-day business.

Could there really be a nationwide run on the Federal Reserve System and its member banks? Sure, there could be. A handful of bank runs typically produces a domino effect, which is why FDR needed to declare a “bank holiday” in 1933 as a precursor to Glass-Steagall. But setting that aside for a moment, the fact is that it wouldn’t—or should I say won’t—take too many bank failures to totally bankrupt the FDIC.

It Won’t Take Much to Break the Bank

In 2008, there were twenty-five bank failures. The FDIC itself now lists 117 banks as “troubled.” LewRockwell.com blogger Chris Brunner estimates the number of “vulnerable” banks at 424, with 95 “in very serious danger of collapse.” But going back to the FDIC’s own list of 117  troubled banks, Brunner estimates their total insured deposits to be $76 billion, or more than twice the FDIC’s entire insurance fund of $35 billion.

Fractional-reserve banking is an inherently bankrupt system. It allows a bank to lend $9 for every $10 it has on deposit. The borrower can then deposit his $9 check with a second bank, which can then lend $8.10 of it, etc. Each time the bank issues a fractional-reserve loan, it is effectively creating new money out of thin air. Ultimately, as much as $90 can be created for every $10 on deposit in the banking system.

The Federal Reserve Act established a system whereby this process of counterfeiting would be legalized and controlled. Once the dollar’s last remaining ties to gold were severed in 1971, the writing was on the wall. The chickens are finally coming home to roost: the dollar is going to zero, and there’s nothing the sham known as the FDIC can do about it.

Support for abolishing the Federal Reserve System is mounting every day. Hundreds of anti-Fed protesters convened on the Federal Reserve Bank of Detroit, where they joined former Governor Jesse Ventura, The Creature of Jeckyll Island author G. Edward Griffin, and Libertarian Scotty Boman in calling for a return to the gold standard. Eleven thousand people broke into several impromptu chants of “End the Fed!” at Ron Paul’s Minneapolis counter-convention this past September, and Google searches for “Austrian Economics”—the school of economic thought most vociferous against fiat money and central banking—are have spiked dramatically in the past year. This all begs the question: Why are so many people suddenly interested in what has for years been considered a “boring” subject? Well, it wasn’t always viewed that way.

Monetary Policy: Once a Burning Issue

The presidential elections of 1896 and 1900 were almost entirely about monetary policy. The “conservatives,” for lack of a better term, were the “hard money” camp—they supported a strong gold standard. The “radicals” wanted a government-managed fiat-money system much like we have today—only they were naïve enough to believe it would be to the benefit of the working man, rather than a vehicle to serve the interests of the elite. And finally, there were the “moderates”—those who favored a middle-of-the-road position in which silver would be coined in addition to gold, thereby causing inflation which, believe it or not, the moderates and the radicals thought was a good thing.

All three of these constituencies existed primarily within the Democratic Party. The “conservatives” were in fact the classical-liberal wing, led by staunch gold man Grover Cleveland. The “radicals” were Midwestern farmers who had broken with the Dems in the previous election and formed the Populist Party, winning 5 percent of the electoral vote in 1892 and nearly costing Grover Cleveland the election. Stepping in to “unify” the party was William Jennings Bryan, a staunchly anti-gold populist but loyal Democrat who did not go as far as the Populist Party. Instead, he was a “silver fusionist.” Bryan won the Democratic nomination in 1896 and 1900, losing in the general election both times to William McKinely (who was nominally pro-gold), and changing the Democratic Party forever, for the worse.

Now think about how much has changed since the turn of the 20th century: disputes over monetary policy were the basis of a third-party presidential campaign that grabbed 8 percent of the vote and won five states, led to a civil war within the Democratic Party and the realignment of the two-party system, and were the major issue discussed in at least two consecutive presidential elections. The American people were engaged and educated, and didn’t fall for bogus platitudes about “change,” “mavericks,” “yes, we can,” and “country first,” etc.—they understood the real issues that affected their daily lives, and nothing could possibly be more critical than the money question.

Why The Monetary System is So Important

And why is that? Well, when the government has control of the monetary system, it can manipulate it for the benefit of some and to the detriment of others. Ultimately, this government manipulation is always to its own benefit and at the expense of the people.

For example, under a hard-money gold standard, paper dollars can only be created if there were real gold coins to back them. Thus, unless there is new gold, there can be no new money. Inflation—which is correctly defined as the expansion of the money supply—did occur under the gold standard as new gold was mined, but only very slowly. As a result, there was no “price inflation” whatsoever. That’s because the advances in technology and accumulated capital more than offset the rate of monetary expansion, and thus, consumer prices went down a little year after year.

But when the government claims for itself the right to print paper money out of thin air—notes that aren’t backed by gold—and uses its military might to force people to accept those notes, there is a recipe for exploitation.

Inflation = Theft

Think of it this way: Imagine there is $1 trillion in total world currency. Paper money itself, of course, is worthless—it’s what you can exchange the money for that’s important. So if the total money supply was $1 trillion, then all of the world’s wealth—all the factories, the natural resources, the finished goods, etc.—would be worth $1 trillion. Now what happens when the government creates $0.1 trillion new dollars? It doesn’t expand the supply of factories, resources, and goods—only the money that the values of those items are denominated in. All existing wealth would now be worth $1.1 trillion, since the total wealth would still be equal to the total money supply. Only now, the $1 bill in your pocket would be worth $1/$1.1 trillion instead of $1/$1 trillion—you’d have just been robbed of 10 percent of your purchasing power.

And that purchasing power doesn’t just disintegrate—it’s redistributed. First, it goes from you to the government, just like a (hidden) tax. And then it goes from the government to its favored industries. This is why corporations spend so much time and money lobbying Congress instead of developing more competitive products: it’s easier to bribe the government to give them your money than it is to convince you to part with it willingly in exchange for better products and services.

Clearly, the intelligence of the average American has fallen precipitously since the elections of 1896 and 1900. But the fact that people are beginning to wake up to the problems caused by the Federal Reserve System is a hopeful sign. The only question is: is it too late? Can the dollar be saved by the political action of the president and the Congress, or must we wait for the entire global financial system to completely melt down so we can start over? If you’re an optimist you can hope for the former, but as a realist, I think the latter is the better bet.

There is a shared consensus among conservatives and liberals about who the greatest presidents were. This consensus is not shared by free-market libertarians. With an emphasis on their economic policies, I have compiled a list of the 10 Worst Presidents from a libertarian perspective. I will share #s 6-10 in this blog entry, and #s 1-5 in a future post. So, without further ado:

10. Theodore Roosevelt : Selecting #10 was difficult, and T.R. just narrowly edged out the “dishonorable mentions” of John Adams, James K. Polk, and Herbert Hoover. Like historian Thomas E. Woods says, we’ve had better presidents than Theodore Roosevelt, and we’ve had worse presidents — but we’ve never had a crazier president.

T.R., says Austrian economist Thomas DiLorenzo, was obsessed with war and killing. He was the first president who totally eschewed the foreign policy of Washington and Jefferson and said that the U.S. needed to be the world’s policeman — he even warned of the “menace of peace.” He imposed price controls and unprecedented regulation, and championed “progressive” reforms that came into being with the 16th (income tax) and 17th (direct election of senators) amendments.

The only thing that saves Roosevelt from ranking “higher” on this list is that he (thankfully) presided over a relatively calm period of American history. After leaving office for four years, he campaigned for the White House as a third-party candidate in 1912. If he had won, America would have certainly plunged into the unnecessary World War I much earlier, and who knows what the outcome would have been.

9. Ronald Reagan : Although the Gipper mouthed libertarian rhetoric, the facts are that he imposed one of the greatest tax increases in U.S. history (taking away many tax deductions and raising the payroll tax), ramped up the disastrous War on Drugs, and accumulated more debt than all of the previous 39 presidents combined. His fiscal policies, along with his appointment of Alan Greenspan to chair the Fed, sowed the seeds of America’s monetary ruin.

8. George W. Bush : Bush-43 was not “the worst president ever” by any objective standard. But he was among the worst and, by his own stated objectives, a total failure. After all, this is a president who began his second term by trying to privatize Social Security and ended it by socializing the banking sector. Bush’s two terms were characterized by massive federal-government growth, huge deficits, expensive and immoral wars, the Medicare prescription drug benefit (which is bigger than Social Security and will eventually bankrupt the nation), the loss of civil liberties (i.e., the Patriot Act), and the nationalization of “education” (No Child Left Behind). Bush will leave the White House by turning it over to Democrats with huge congressional majorities. Fail.

7. George Washington : The first truly sacred cow on the list, George Washington is typically above criticism. But it was he who appointed the initial federal judiciary, and he stocked it with Federalists to the exclusion of his political adversaries. This meant that anyone who was skeptical of the new Constitution — which increased central power over the states from the original Articles of Confederation — was automatically disqualified. In practice, this led to a judicial monopoly of monarchists and nationalists that lasted well into the long Jeffersonian reign of 1800-1860. Also, Washington signed the (unconstitutional) first Bank of the United States into law, and led an army against his own citizens to crush the Whiskey Rebellion. Imagine George W. Bush doing that!

6. Richard Nixon : In addition to his well-known criminality, lying, and illegal warring, Nixon truly deserves our ire for his imposition of price and wage controls and “closing of the gold window” — making the U.S. dollar into a pure fiat currency. In fact, it was in protest to these things that the Libertarian Party was founded in 1971.

So there’s the list: Four Republicans and one Federalist. But if you think I’m letting the Democrats off the hook, you have another thing coming — four of the five Worst are Democrats. Check back next week to see who they are.

Ultimately, the issue comes down to whether or not an unborn baby (i.e., a fetus) is an individual with rights. If he/she is, then abortion should be criminalized. If he/she is not, then it should be a completely unregulated procedure.

That’s the moral side of abortion. But what about the economic, or utilitarian side? The authors of Freakonomics made the case that abortion was a societal good in that it led to a drop in crime rates. But did it really? Here’s a contrary view:

Students of economics know that people make decisions based on incentives. If something costs more, then people are less likely to do it. The illegality of abortion, whether right or wrong, made the “cost” of sex higher than it is today. When abortion was illegal, women could still theoretically get an abortion if they really wanted one, but they faced criminal penalties and greater expense, not to mention the comparative difficulty of procuring the service. The nation-wide lift on America’s forty-five state abortion ban “lowered the cost” of sex for women, and for men — who had previously been expected to marry a woman should she become pregnant. Roe v. Wade specifically lowered the “cost” of unprotected sex in the pre-AIDS era, undoubtedly contributing to the explosion of STD rates.

Now when something becomes cheaper, people do more of it. Making no moral judgment on the behavior, the fact is that Roe v. Wade did lead to a a massive increase in casual sex. This put tremendous pressure on girls to have sex — after all, they could always have an abortion if they got pregnant, right? And if they decided to keep their baby — as many did — then the man in question could wash his hands of the situation: “it was her choice — she could have had an abortion!”

This Austrian analysis of “human action” is supported by statistics and is the subject of a chapter in John Lott’s Freedomnomics , an answer to Freakonomics . Out-of-wedlock birth rates soared from 5 percent pre-Roe to 16 percent in 1989. Amongst African Americans, the rate went from 35 percent to over 60 percent. And these children from single-parent homes were much more likely to engage in violent crime later on.

The idea that legalized abortion led to the births of fewer unwanted children, and that this led to a drop in crime makes intuitive sense. However, upon deeper inspection, it just isn’t true.