‘We just create worthless electronic money out of nothing. Then we lend it out and charge interest out of it. Then we make them give us their houses and real wealth when they cannot pay. LOL!’
But now that nasty little game is over…
‘We just create worthless electronic money out of nothing. Then we lend it out and charge interest out of it. Then we make them give us their houses and real wealth when they cannot pay. LOL!’
But now that nasty little game is over…
In the comments section of the previous post I mentioned a Swede I read in 2009. In internet forums that claim to defend the West, that was the first time I heard about the coming fall of the American dollar, something about which I also commented in the previous discussion thread.
The prediction that the hegemony of the United States will soon end with the fall of its economy, something that would free Europe from US troops (for example, the gringo troops in Germany), is such music to the ears of dissidents that ten years ago I dispatched those theories as wishful thinking. That’s why I can understand that visitors to this site are so sceptical that the dollar will fall. But there is something that happened precisely in 2009 that I must confess.
The guy referred to called me over the phone, from Sweden to Spain (ten years ago I was living in Gran Canaria), and we talked about one hour on various topics. Repeatedly I told him, again and again, that I did not think the dollar was going to tank. My scepticism was based precisely on the fact that such prediction seemed sent to us by a fairy godmother, which smelled like wishful thinking.
The Swede was disappointed by my persistent scepticism and that was the last time we spoke on the phone. However, the YouTube sources cited were there, in the text that the Swede had left. (Recently Blake Hood, writing in Volkish and speaking precisely about the Swede’s text wrote: ‘This is an edited version of this epic post from the blog West’s Darkest Hour. Go read the whole thing’.)
So I started to watch online discussions between Keynesian economists and the economists of the so-called Austrian school, to which belong those who believe that the dollar is going to tank. After watching approximately one hundred YouTube discussions I changed 180º with respect to my original scepticism and realised that those who predict a great financial calamity in the United States are right.
Take into account that the economists who belong to the Austrian school cannot be accused of self-deception for the simple fact that nobody among them, as far as I know, is a white nationalist (only the latter long for a glitch in the Matrix). The conclusions reached by the Austrian economists are based on facts and an interpretation of the facts, especially in matters of economy, energy and the environment.
Those who are as sceptical as I was when I lived in Spain would do themselves a favour if they listened, with due attention, the accelerated course by Chris Martenson (pic left). If you do, keep the very important quote of Dr. Albert Bartlett in mind, as I’ve noticed that white nationalists still think in linear, non-exponential terms (i.e., the collapse won’t be gradual: it will unfold very rapidly).
A couple of days ago, I wrote elsewhere on the comments section of this site:
And talking about the eschaton, yesterday I watched a clip of an Austrian economist who fears a dow jones crash next Monday. (Hope he’s wrong as I still have to publish a couple of books this year…).
Alas, it happened this Monday.
This original canvas signed by Antonio Zucchi (1726-1795) is a landscape in Flemish style, now very near from the desk where I work for this blog.
My friend Jake F. interviewed me last year. These are his words: “The below text is of a scripted interview I was to conduct with C.T. of The West’s Darkest Hour. Due to unforeseen circumstances we could not record. However, Cesar graciously offered to allow this interview to be published on The Right Stuff”.
Jake: Hello, and welcome to Manifest Destiny! This is Jake and I’ll be your host today. I have the privilege of bringing you a rare interview with C.T. of The West’s Darkest Hour. What Cesar brings to the table is rare combination of principled fearsomeness and refined sensibility. This interview will serve as an exposition and clarification of his thought for an unfamiliar audience. Questions and answers were composed in advance for purposes of clarity. As always, thank you for listening and enjoy.
Cesar, please give us a brief overview of your background and journey to your present ideological positions. Which books, authors, films, and music inspired you?
Cesar: Thanks for having me here, Jake. I’ll answer straight to the point.
Both of my parents were artists but since my middle teens they became abusive as hell, and I was the target of this abusive madness, which of course destroyed my young life. I explain the tragedy in two books, Hojas Susurrantes and the one I’ve just finished, Exterminio. Both comprise almost half a million words and soon I’ll start the third of the trilogy. As a matter of fact, my sister died this year. In my latest book I claim that her death was probably related to the trauma we endured in our teens.
With my books, I believe, I’m starting a new literary genre. If I manage to finish the third one I will be the first writer in history who analyzes his extremely abusive family in a million-word trilogy.
As to which books and films inspired me, I’d say that 2001: A Space Odyssey exerted a major influence since I watched it in 1968. I was 10 years old then. It was before the abuse at home. After my family became so destructive, Childhood’s End by Arthur Clarke made a huge impact in my life. Still later, the books of Alice Miller helped me to understand my evil family.
With regard to music, since I was a small child I listened to Mussorgski and Stravinsky. Mussorgski’s Dawn over the Moscow River was my first love. Later I discovered Beethoven.
Jake: You seem to be heavily influenced by psychohistory. Could you briefly define it for our audience? What insights have you gleaned from it? What faults have you found with it?
Cesar: This is my interpretation of psychohistory: Most adult children of extremely abusive parents become mad. Really mad I mean: like the magical thinking of the tribes since prehistoric times. And there are cultures that are far more abusive than others.
Psychohistory is a term used by the American Lloyd deMause to research child abuse through recorded history. The meta-perspective provided by psychohistory helped me to contextualize what happened in my family. The problem with deMause is that he’s a rabid liberal, some would even argue that he’s a Jew, like Alice Miller. In the only chapter of my trilogy that has been translated to English I try to Aryanize psychohistory away from deMause’s crazy liberalism.
Jake: You make incisive criticisms of psychiatry as a pseudoscientific field which often fails to draw upon or selectively draws upon neurological research. How specifically is it wounding our people? How deeply do such wounds go?
Cesar: Curiously, Kevin MacDonald used to teach child psycho-pathology in the university before his recent retirement. I don’t know if MacDonald knows that psychiatry is an “iatrogenic” profession, which means that psychiatric drugs often cause a much more serious mental condition for the client than the original distress or disorder.
For instance, there are international studies that show that people in third world countries, with few resources to purchase so-called anti-psychotics, fare much better for those diagnosed with schizophrenia. In other words, so-called anti-psychotics are iatrogenic: they only worsen the original disorder. My blog contains scholarly references to support this claim, but it is something you won’t ever hear in the media, not even in the outlets of white nationalism.
One of the things that I find exasperating while trying to communicate with white nationalists is that, in addition to the pseudoscientific racial and gender studies, there are other pseudosciences. Psychiatry is one of them. Nationalists are completely clueless of the fact that this pseudo-medical profession has as much scientific basis as the study of UFOs.
Let me expand a bit on this.
Those plugged in the Matrix believe that schizophrenia is the product of a chemical imbalance. Unplugged dissidents know that mental disorders are not a biomedical condition. A computer analogy is helpful here. Imagine a technician who doesn’t believe in the existence of computer viruses in the software. This guy always tries to fix computers by messing with the hardware. That’s exactly what psychiatrists do: they are in denial of the existence of the “software” in the human mind, so to speak. So they treat every mental disorder as a brain disorder. For psychiatrists, biology is destiny. Trauma does not exist, or is irrelevant. Only the genes matter.
But psychiatry cannot demonstrate any biological marker, genetic, chemical imbalance or otherwise, in any of the major psychiatric disorders. That’s why neurology, which is real science, is separated in the universities from psychiatry, which is not a science but a big, big business.
Also, all pseudosciences present their central concepts as unfalsifiable hypotheses, that is, hypotheses that cannot be refuted through the scientific method. What most people ignore is that psychiatry also presents its main concept, mental illness, as an unfalsifiable hypothesis. This is explained in detail in one of my scholarly articles.
Jake: You’ve written extensively on child abuse and its racial implications. Chiefly, that non-Whites are much more likely to abuse their offspring and much more likely to do it in horrific ways. Besides obvious things (like removing Judeo-liberal media or moving to a Whiter area) what advice would you have for racially conscious White parents?
Cesar: If you have in mind abusive parents, you cannot educate them. They are simply unconscious of their abuse. In my latest book for example I have published my mother’s entire diary. It is shocking to see that throughout her diary, mostly about the 1970s, she had no clue whatsoever that she was driving her children mad.
In an ethnostate it would be possible that the child finds a window of escape from abusive families through the Hitler Youth. But even in an Aryan ethnostate would-be parents should be taught not to abuse their kids. Together with the Hitler Youth, education for young couples that are about to marry is the only way that occurs to me that children won’t be abused in the future.
Jake: In the past, you have discussed a collapse scenario as presenting the best or only chance Whites will have to exercise the Fourteen Words freely. What if the collapse never comes? What do you think about the collapse as a mythical trope for “fringe” political movements or causes?
Cesar: I have referred to psychiatry as a pseudoscience that the average white nationalist is unaware of. But there are other pseudosciences taught at the academia that nationalists also ignore. Another example is Keynesian economics, that presently influences not only the academia but the Federal Reserve and the banking system.
You cannot have a thriving economy by means of the current system of huge debt and huge spending. The United States has a debt of almost 20 trillion and if the Fed starts Quantitative Easing 4 it will dwarf the previous QEs combined. QE, of course, is newspeak for inflation: expanding the currency supply, the paper dollars. Sooner or later the dollar will hyperinflate because of this astronomic expansion of the currency supply.
Those economists who reject the crazy paradigm that rules the financial world predict that the crash will happen in this decade. And this means something like the depression of 1929. But unlike 1929 there are millions of Negroes out there, especially in the big cities. After the financial accident they’ll chimp out, and contribute beautifully to the collapse of the System. By the way, have you seen the Jew-movie Imperium?
There is a movie character, the one that “Harry Potter” betrayed, hehe.☺ Well, with his group this character tries to produce what he calls “The Event”, which supposedly would awaken whites, a big act of terrorism.
In real life this is not necessary. The Event is coming nevertheless. And not from racists like us, but from the blunders of the Fed and the international monetary policies.
If by December 31 of 2020 the crash has not happened I will recognize I was wrong. But what if I am right? Because if I am right you should start obtaining coins of silver, and if you can afford it, coins of gold. Even the commercials of Fox News are advertizing this.
Jake: Nordicism is a particularly loaded term. Who exactly are the Nordic peoples? Are they a distinct sub race located only in certain White countries? Do they form the upper crust in every White society? Or are they something else entirely?
Cesar: In my opinion white nationalism or Altright, however you want to call it, is fake. The real thing is National Socialism. Unlike the Nazis people in the Altright are like the republicans: they have granted amnesty to millions of non-whites from Mediterranean Europe. The Germans of the 1930s knew better: the standard for whiteness is the Nordic type.
A pundit from Barcelona in Spain has developed a new racial classification that clarifies this matter. He basically says that the European race is divided in three primordial races: the European Nordid White (“White Nordid”), the Nordid Central Asian Redhead (“Red Nordid”), and the Near Eastern Armenid. The white race is actually a mixture of two or more races.
So we cannot say, “This person is a pure white” but “This person has a mixture of A, B and C races in such proportions.” With terms like Aryan we designate a mixture between White Nordid and Red Nordid and its mild crossing with non-white Armenids or Mongolids—usually people of Germanic and Slavic origin.
While the ideal white is a White Nordid with a Red Nordid, we cannot say that those whites who have some Armenid or Mongolid genes are non-whites. However, we could say they are non-whites if they contain a few drops of Congid blood, that is, Negro genes; or substantial Armenid or Mongolid blood.
In the new racial classification the phenotype is more important than genetic studies. Therefore, based on phenotype we can say that many of us Meds are not properly white. Some of them are, yes. I’ve seen girls as beautiful and Aryan in Spain as in the Nordish countries. But not in the proportion I’ve seen such women even in Texas. Many Meds are mudbloods, something that the Germans knew very well. So well in fact that inter-marriage between the mudbloods and the Nazis was discouraged.
Since this is a scientific subject, I recommend those who want to understand nordicism to study carefully the most scholarly article in my blog. It’s under the title Gens alba conservanda est, which is Latin for “the white race must be preserved”. Alas, most white nationalists are anti-nordicists. They are still under the grip of the egalitarian ideology that has destroyed the West. Most of them sincerely believe that all whites are created equal.
I would recommend they read William Pierce’s only non-fiction book, Who We Are, to grasp my point. Pierce was not a white nationalist. Like the Nazis he was the real thing. The biggest surprise that the reader will find in his book is that the founding stock of the ancient Greeks and Romans was Nordish, real whites.
Jake: Much like Dr. William Pierce, you postulate a Witches’ Brew (essentially a convergence of catastrophic trends) theory of factors leading to the gradual and sometimes rapid extermination of our race. What ranks near the top that most of our people are missing? Conversely, what are we greatly overestimating?
Cesar: For those who accept the premises of Who We Are it is clear that the main enemy of whites are whites themselves, especially the civilizational decadence that comes from wealth-over-race policies.
I have lived in Mexico more than half a century. Latin-America is very similar to Mexico if you visit the countries to the south of Mexico. What the Spaniards and the Portuguese did in the Americas, mixing their blood since the 16th century, was the product of greed, of lust for gold. It was also the result of the universalist creed of the Catholic Church, which considered the Amerindian women as “souls” to be “saved”.
The Iberians that conquered the continent also brought the Inquisition, which persecuted crypto-Jews. But even in Judenfrei New Spain these two factors, economic greed and universalist Christianity, destroyed the gene pool of the Spanish.
White nationalists ignore the history down the south of the US because it breaks their little narrative. Their narrative is that Jewry is the main factor of white decline. The fact is that there are other major factors beside Jewry that nationalists are ignoring. Christianity is one of them as demonstrated in the history of Judenfrei Spain and New Spain.
Jake: On a related note, you’ve produced a volume of writing on different strains of Counter-Semitism. Could you go into more detail on this taxonomy of Counter-Semitism?
Cesar: The Jewish problem is one the most serious problems of the West. For centuries and even millennia Jews have been a hostile minority in the West. There’s no question about it. Just see how they lobbied for a century to open the gates of non-white immigration into the United States. Just see the role they played in the Holocaust on non-Jews committed by the Bolshevik Jews. Just see who controls the anti-white media and how the kikes have been trying to prevent that whites wake up.
The problem itself shouts for a final solution of some sort. This is an aspect I don’t differ much from white nationalists. We both try to find radical solutions to the problem. We agree on the medicine.
But we disagree on the diagnosis. For me it’s clear that the Aryan problem caused the Jewish problem, and not vice versa. Perhaps the best analogy would be to see the Aryan problem as an HIV virus, and the Jewish problem as an AIDS-related infection like pneumonia. Kill off the bacteria if you want. I won’t complain about Alex Linder’s solution. But if you don’t eliminate the virus, you may still have a Judenfrei society that commits racial suicide, as happened here in Latin America.
It is simply untrue, as Andrew Anglin of The Daily Stormer recently wrote, that “physically removing the Jews will solve every other problem”. No. Our ancestors removed the Jews from New Spain and just look at the mess that Mexico is today: those ancestors still committed ethnic suicide, and on a continental scale!
Jake: From your research, what are the strengths and weaknesses of Nietzsche’s thought in general and in to furthering the Fourteen Words?
Cesar: No Nazi tract that I know mentions Nietzsche, but Hitler sort of admired him. Before Nietzsche lost his mind in January of 1889 his concept on the “revaluation of all values” was very handy. I use it a lot in my anti-Christian trolling. I’ll talk about this later in the interview.
Jake: Blake asks: In your writing, you refer to temples and priests of the Fourteen Words. Please expand upon these concepts. What would be the vocation and training of such a priesthood?
Cesar: Here we must recall what my Spanish friend Manu Rodríguez told me: We need to create the Aryan community, an ecclesia, which by the way we never had. Ecclesia, you know, was the principal assembly of ancient Athens.
The Aryan ecclesias need to thrive in our towns and cities, Manu told me. Our “priests”, for lack of a better word, won’t be experts in theology but in history, anthropology and Indo-European cultures. A priest of the 14 words must teach the Western tradition to his young pupils.
Nowadays, without money to build temples like those in Greece and Rome, we can only organize barbecue gatherings like those of my favorite character in the movie Imperium, hehe.☺
Jake: Your upcoming work From St Francis to Himmler has piqued my interest. Based upon the title alone, it is reminiscent of William Gayley Simpson’s journey from being an itinerant Franciscan to a fanatical Aryan racialist. To what extent are you familiar with his work Which Way Western Man? What is it actually about if not your own voyage?
Cesar: I have not read Simpson’s journey but From St Francis to Himmler will be the third and last volume of my autobiographical trilogy.
Francis is the most beloved saint for many Catholics. When I was abused by my father, who admired St Francis, as a defense mechanism I developed a sort of piety inspired in this Italian saint. After the abuse, the doctrine of eternal damnation, that I internalized from my father, destroyed my image of a benign God. The spiritual odyssey from my adolescent piety, to Himmler’s exterminationism, will be the axis of my last book. It is exactly that: an odyssey; the story of a long, long night of my soul.
Jake: For you, White Nationalism was merely a stepping stone to a much sterner and more disciplined National Socialism. Many American White Nationalists enjoy National Socialist iconography and pageantry, as well. What is the line of demarcation between these two ideologies? Is White Nationalism even an ideology or could it more accurately be described as a sentiment? How can American Whites steeped in republican, individualist beliefs adapt to a more “collective” or duty-oriented belief system? What about National Socialism is non-essential or merely adapted to Germanic norms? Finally, which National Socialist texts are American White Nationalists missing or refusing to read?
Cesar: Instead of responding question by question let me say that the line of demarcation is what George Lincoln Rockwell did: he formed a fascist party. White nationalists don’t do anything of the sort! If Rockwell had not been assassinated, radicals like Dylann Roof would have found a warm home and a healthier way to channel their hatred.
Individualist Americans will radically change, and I mean radically, when the convergence of catastrophes is already under way: something that will happen in the second half of the century. I refer to the tectonic-plate, apocalyptic convergence between energy devolution and a political crisis in the West. That collision will create a real mountain.
If “Our race is our nation” then, theoretically National Socialism is doable among Anglo-Saxons, not only among Germanics. Rockwell saw this clearly and he was right.
The most important book to awake whites is the one that Tom Goodrich wrote: Hellstorm: The Death of Nazi Germany. I believe that any honest white liberal who reads it will break, in his mind, the media narrative about the Second World War. Once you nuke the media narrative, I would recommend a Nazi textbook for young readers, Faith and Action by Helmut Stellrecht. It is available online.
Jake: Blake asks: Many White Nationalists advocate the creation of an ethno-state or ethno-states for White-Aryans to seek refuge in. They often fail to mention whether this goal is their highest aim or merely a tactical one. Assuming White-Aryans had the capability to do with the Earth as they wish, what should they do? You’ve been called quite a few names for suggesting that Earth should be made a Whites-only planet. How do you respond to this?
Cesar: I don’t remember the names I was called. Perhaps I missed those threads? In the book that I’ve just finished, Extermination, I explain why the human race is a failed species. Most of them deserve extermination, save the most beautiful Aryans with good heart for nature, the children and the animals.
Extermination is a subject that has only been partially explored in fiction, at the end of The Turner Diaries. It is time to speak out in the genre of non-fiction, as I just did with my latest book, which will be available in Spanish this month or the next one.
I had said that I was inaugurating a new literary genre. But I omitted to mention that, if completed, my trilogy goes well beyond such autobiographical genre into a philosophical system. From this point of view, exterminationism is more than an odd subject: it is what we may call the Significant A of the coming Overman. But let’s change the conversation to a more “normal” subject.
Jake: Rock music is controversial within racialist spheres. You take an uncompromising stance against it for a host of reasons. Two that come to mind are its negro roots and repetitive notes. But, rock has been so heavily appropriated by Whites that even negroes flee from it now. At what point does White ownership (in terms of content; we know Jews dominate the music industry) erase a genre’s origins? Is this even possible? Are there any healthy modern White music genres? Many would defend folk and electronic music as the latest resurgence of authentic White culture in music. Do you agree? Finally, which classical composers or performers would you suggest to a modern White wishing to expand his or her tastes?
Cesar: Folk music is OK but not what the Nazis called “degenerate music”. Even nationalists have been unable to recognize that such music is used by the System to degrade the spirit of whites, to control them. A passage from 1984, written before the birth of rock, was prophetic. The music in the totalitarian world, Orwell says: “had a savage, barking rhythm which could not exactly be called music, but resembled the beating of a drum… The proles had taken a fancy to it.” Of course, the people of the Altright would be degenerate proles from the Nazi point of view: they listen so-called Retro-wave music.
As to which classical composers, I’d recommend starting with Walt Disney’s 1959 movie Sleeping Beauty. Its soundtrack contains a masterful edition of the music of Tchaikovsky’s ballet. But the trick is not adding classical music to your repertoire. The trick is subtracting degenerate music from what you listen.
I have always compared degenerate music with degenerate sex. A guy just cannot have a healthy marriage with a lovely wife and children and, at the same time, indulging himself in escapades in gay bars. The degenerate side of both sexual lifestyles and music tastes must be completely cut off from our way of life.
Jake: On several occasions you’ve described the Sublimis Deus papal bull as the original sin committed in South America. Could you give us some background on this proclamation? Was it a logical extension of Christian doctrine or an aberration?
Cesar: It was an expansion of the Church’s universalism, where all races can enter the church. “Catholic” in fact means universal. But the original sin was not the Pope’s bull. The original sin of the Spanish and the Portuguese was, as I said, the lust for gold and silver in Mexico and Peru. The Catholic bull that allowed Iberian whites to marry the brown natives was a very serious, mortal sin; but not the original one.
Jake: Lately, the phrase “Pathological Altruism” has been used to describe a weakness of the White-Aryan psyche. Is this valid and sufficient? Do you agree with Dr. Sunic and Pierre Krebs that a universal Christian memeplex is the source of our vulnerability, instead?
Cesar: I don’t know much of Krebs but Sunic is quite smart. He does not only blame Christianity as a more elemental factor of white decline than Jewry; he actually says that capitalism is the main factor.
I believe he’s right. And I must add that Americans love Mammon too much to purge the Jews! Once more, the Aryan problem has created the Jewish problem. Pro-whites must read Who We Are to contextualize historically the claim that wealth-over-race policies is suicidal, even when no Jews are present. March of the Titans by Arthur Kemp also reaches the same conclusion.
Jake: Blake asks: How do we as a race combat our predisposition to choose wealth over a sound society? Alain de Benoist notes that critics of immigration must also critique capitalism lest they contradict themselves. What must be done to slay Mammon once and for all? Or, at the very least, restrain him?
Cesar: Mammon will die in this century of natural death. I not only believe that the financial collapse is coming this decade. I also believe in peak oil and energy devolution later in this century. Once oil is depleted, corporate capitalism can no longer be the economic paradigm for whites, especially after the racial wars change bourgeois whites into blond-beast warriors.
The paradigm of the future lies in farming. Using an image of the penultimate chapter of The Lord of the Rings, I would say that the new paradigm lies in a return to the bucolic Shire. By the way, that very important chapter, “The scouring of the Shire”, was not filmed in Peter Jackson’s version of The Lord of the Rings. In the book, which I read, the war at the Shire actually happens after the One Ring has been destroyed. The ring is metaphor for gold…
Jake: What are your thoughts on the so-called manosphere? How should Aryans approach courtship in a day and age where it’s too early to procure Sabine women yet too late to find a young woman that isn’t a pod person? On a related note, how should White-Aryans answer the homosexual question?
Cesar: A lot of what is said in the manosphere is true. I’ve started to elaborate a guide for the priests of the fourteen words. He should not discuss with Jews, non-whites or women. He should even try to avoid talking with white Pod women.
Recently I discovered a YouTube blogger, Turd Flinging Monkey. I was shocked to learn about scientific facts that concern all white males that I didn’t find in the more formal writing of Roger Devlin. Yes: Turd Flinging Monkey is an anti-racist, clueless blogger about the Jewish question. But there’s something in his manospheric rants that merits scrutiny. After I finish the corrections of my book I’ll see all of his videos.
Courtship is impossible for the moment except if you move to an Amish or Mennonite community. So what can we do before the collapse of the rule of law, a rule that prevents Aryans from abducting and raping the Sabine women? The blogger Turd Flinging Monkey simply recommends masturbation. Well, well…☺ I prefer to be a workaholic to avoid thinking in sex.
As to homosexuality, it is a pity that some open homos in the Altright are not ashamed of talking publicly about their degeneracy, as if it was normal. Shame on them.
Jake: Unlike most pro-Whites, you stand by Heinrich Himmler with few reservations. What can we learn from him? How does he stand in relation to more “mystical” figures on the Right like Spengler or Yockey?
Cesar: I know almost nothing of Spengler except that he refused to support Nazi ideas of racial superiority. Yockey was a great essayist but the style he chose for his famous book, the very one which gave the name to the recent film Imperium, is too philosophical for my taste.
What I like of Himmler is that he volunteered to do the dirty job, extermination. I identify with Uncle Heinrich because, like him, I don’t look Aryan. But when he visited a specific town in Norway he admired them so much because of the purity of the Aryan breed there.
I believe that later in this century, when the demographic bubble pops as a result of energy devolution, Himmler-like exterminationism should become the religion of the Blonde Beast. Only the best should survive. I envision throughout the Earth the beauty that Hitler and Himmler saw in specific Nordish towns, a return to the Shire so to speak after the death of capitalism.
Here comes handy Nietzsche’s concept about the transvaluation of all values. Remember that I call atheists “Neo-Christians”. When millions of adolescent whites change their T-shirts from Che Guevara to Himmler, you will know that the race is already saved. I can only hope that my books will help young whites to revaluate their fucking values.
Jake: Are pro-Whites approaching the subject of Holocaust revisionism correctly or incorrectly? How should it be approached and why?
Cesar: Incorrectly. One must start with the Holocaust committed by the Allied forces. I sincerely believe that any nationalist who has not read the abridged edition of Alexander Solzhenitsyn’s The Gulag Archipelago and Tom Goodrich’s Hellstorm is a historical fool.
It is not only that after the Second World War the Germans were dishonestly demonized. The biggest secret of our times is that the astronomic crimes of the Allied forces dwarf what the Germans did. What the United States and the Soviet Union did in times of peace was more monstrous than the crimes attributed to the Germans in times of war—precisely because the Allied Holocaust was perpetrated in times of peace! I am talking about the crimes committed by Eisenhower and the Soviets from 1945 to 1947. Most people are unaware of this Holocaust. I would dare to say that if whites do not atone for the genocide perpetrated on the German people they will go extinct.
The root problem of white decline is Christian meta-ethics, what I have been calling “Christian axiology”. National Socialism revaluates such meta-ethics back to the mores of the ancient Greeks and Romans. This cannot happen as long as whites are Christians and neo-Christian atheists.
When the Aryan race reaches maturity, probably in the next century, the calendar must be changed from Jesus to Hitler. Anno Domini will start with the Fuhrer’s birthday, not with the crucified rabbi. White nationalists are incapable to reach this level of priesthood today because they are part of the problem as well as part of the solution.
Jake: Looking North, what are your thoughts on Donald Trump and the Alt-Right? What advice do you have for the average Alt-Rightist? What ideological pitfalls should he avoid that we haven’t already discussed?
Cesar: Alt-rightists might have their 15-minute fame after Trump wins. But when things get really nasty after the dollar collapses the proles will look after more masculine voices, those filled with hatred. Real hate I mean. Not the VDARE, American Renaissance or the Radix Journal types but The Daily Stormer, Neonazi types.
Jake: What is it like being a White or Aryan Man in Mexico? What has been lost in Mexico’s de-Europeanization process? Can the average “race-neutral” or un-awakened American White fathom what a majority colored country is like day in and day out? More broadly, what do we have to lose that we don’t know we have to lose?
Cesar: Recently Donald Trump visited my own town, Mexico City. But Latin America, not only Mexico, is too far gone. Nothing can be done here down the South. You guys have half a century of polluting your blood but there are still millions of pure whites in North America. Here down the south these guys have half a millennium of mestization, and in 500 years no intellectual voice has ever been raised against this genocide of Iberian whites! I can speak volumes on the subject but a single anecdote will be enough.
Recently, a meeting was organized by my former classmates of the Madrid School in Mexico that graduated forty years ago. This was a school founded by those who fled from Francisco Franco after the civil war. Two of my whitest schoolmates, blond and very handsome four decades ago, married mestizo women and formed mestizo families. I was shocked! Presently the young students of the Madrid school, who used to be mostly white in my teens, have become brownish. The second generation! Almost all white Latin Americans have already become Body Snatched Pods. Even Argentina and Uruguay are gone.
In the US you at least have Fox News. In Spanish-speaking countries, Spain included, there’s not even one media outlet that sides Donald Trump. Nothing! What remains of Iberian whites are like Jeb Bush: they’re happily marrying dwarf Latinas. Our only hope is that a tough ethnostate is formed at the North and then proceeds to conquer so-called Latin America.
Jake: Where can our listeners find your work online? Where can they purchase your books? What parting message do you have for our listeners?
Cesar: They can google “chechar” (that is, c-h-e-c-h-a-r) and “WordPress” and they’ll hit a blog, “The West’s Darkest Hour”. My books are linked at the top of my blog.
My parting word is simple: I am not a white nationalist. I am a guy to the right of Himmler. Only one of my books is in English, Day of Wrath that I dedicated to you. Since it will take some time for the rest of my books to be translated to English, read instead William Pierce’s books and see for yourselves how an American also rejected Christian ethics.
It is uncommon that white advocates write about the financial chaos that is coming, a real winter for the West. Below, some excerpts from an article by Tom Shackleford published yesterday on Rebel Yell and republished today on Occidental Dissent. At least southern nationalists are taking notice of the widow opportunity that will be opened for whites to reclaim their societies. After all, to paraphrase the character who died yesterday in the most popular TV series, ‘Chaos is a ladder’. (For more information on the coming financial chaos see here.)
As the crisis begins to set in, the Federal government may seek to bail out individual public programs based on political expediency. This will prop them up in the short term, but only delay the inevitable. It’s possible that this could be attempted on a national, comprehensive scale.
Our national debt stands at nearly 20 trillion, increasing by roughly 1 trillion each year. Debt service already eats 6% of the budget, even though interest rates are below 2%. There isn’t a defined limit on how much debt the US can take on, but doubling or tripling the debt just for pension bailouts would eventually push us over the invisible line of confidence. Nobody is sure where it is, but it’s out there. After it’s crossed, a debt crisis will ensue. This is especially serious for retirees since SS and pension funds own so much sovereign debt.
What if there’s a market crash?
In 2008, governments and central banks were able to avert a depression and the failure of every major bank by borrowing trillions to bail them out, slashing interest rates to zero, and creating money to buy up trillions more in assets to artificially keep prices high. This was a temporary fix (they’re still doing it) that has set the stage for a bigger calamity in the future. When the next crash inexorably arrives, they will be unable to employ this strategy a second time.
This could happen in 2 years or 2 days but it will eventually occur. As before every crisis, the dominoes are in place. What tips them over and when is unknown. It could just as easily start in Europe as the US. The consequences will be as unprecedented as they are profound. In the very least, many retirees will see the value of the pensions and private plans they depend on plummet. The ability to fund SS will also come under pressure. Many people will feel desperate and cheated, with nothing to lose. Rocky times are ahead.
Why is this never talked about?
I really doubt that rising presidential hopefuls like Kamala Harris or Cory Booker even understand compound interest to the point where they could perform a simple calculation. Many others understand that this issue is a real downer. “MAGA” or “I’m with her” sound much better than “You’re screwed and I have no solution”. The MSM is reluctant to discuss it because underfunded pensions implicitly call into question the wisdom of gibs and expensive 3rd world population transfers. However, the Alt-Right should be focused on it.
We’ve grown exasperated watching the latest Islamic atrocity or chimpout fail to move the needle. The sheep must be impoverished in order to become receptive to reality. Cheer up. Angry, destitute retirees are our army of White Walkers waiting to bring a rotten, unsuspecting world to an end.
Hidden Secrets of Money is a free video series hosted by Mike Maloney, bestselling author of Guide To Investing In Gold & Silver. The premise is simple: In order to try and predict the economic future, you must first learn to interpret the past.
The series [Hidden Secrets of Money] begins at the level of complete novice, but quickly guides the viewer through thousands of years of monetary history and economic theory, while correlating events from the ancient past to today.
If you enjoyed the first chapters of this book about the history of money [Guide To Investing In Gold & Silver], you will love this video series in which you can travel with Mike to over eighteen countries learning how to protect your financial future by looking into the past.
Watch the series for free and gain access to exclusive bonus reports and videos at www.HiddenSecretsOfMoney.com
by Mike Maloney
Greed, War, and the Dollar’s Demise
With the outbreak of World War I, as with all the historical examples we’ve already covered in this book, the combatants halted redemption in gold, increased taxes, borrowed heavily, and created additional currency. However, because the United States did not enter the war for almost three years, it became the major supplier to the world during that time.
Gold flowed into the U.S. at an astounding rate, increasing its gold stocks by more than 60 percent. When the European Allies could no longer pay in gold, the U.S. extended them credit. Once the U.S. entered the war, however, it too spent at a rate far in excess of its income. The U.S. national debt went from $1 billion in 1916 to $25 billion by war’s end.
The world currency supply was exploding.
After the war, the world longed for the robust trade and economic stability of the international gold standard that had worked so well before the war. Thus, throughout the 1920s most of the world governments returned to a form of the gold standard. But the standard employed wasn’t the classical gold standard of the prewar period. Instead, it was a pseudo-gold standard called the gold exchange standard.
Governments never seem to learn that you can’t cheat gold. During the war, many countries inflated their currency supplies drastically. Yet when they tried to return to gold, they didn’t want to devalue their currency against that gold by making the number of units of currency (gold certificates, or claim checks on gold) match the number of units of gold that backed that currency. So here’s their “solution”:
After the war, the United States had most of the world’s gold. Conversely, many European countries had large supplies of U.S. dollars (and depleted gold reserves) because of the many war loans the U.S. had made to the Allies. Thus was decided that under the gold exchange standard, the dollar and the British pound, along with gold, would be used as currency reserves by the world’s central banks and that the U.S. dollar and the pound would be redeemable in gold.
In the meantime, the U.S. had created a central bank (the Federal Reserve) and given it the power to create currency out of thin air. How can you create currency out of thin air and still back it with gold, you ask? You impose a reserve requirement on the central bank (the Federal Reserve), limiting the amount of currency it creates to a certain multiple of the units of gold it has in the vaults. In the Federal Reserve Act of 1913, it specified that the Fed was to keep a 40 percent reserve of “lawful money” (gold, or currency that could be redeemed for gold) at the U.S. Treasury.
Fractional reserve banking is like an inverted pyramid. Under a 10 percent reserve, one dollar at the bottom can be expanded, by layer upon layer of book entries, until it becomes $10 at the top. Adding a fractional reserve central bank, underneath fractional reserve commercial banks, was akin to placing an inverted pyramid on top of an inverted pyramid.
Before the Federal Reserve, commercial banks, under a 10 percent reserve ratio, could hold a $20 gold piece in reserve and create another $180 of loans, for a total of $200. But with the Federal Reserve as the foundation under the banking pyramid and having a reserve requirement of 40 percent, the Fed could put $50 in circulation for each $20 gold coin it had in the vaults. Then the banks, as the second layer in the pyramid, could create loans of $450 for a total of $500.
With the new gold exchange standard, foreign central banks could use dollars instead of gold. This meant that if the Federal Reserve had a $20 gold piece in the vault, and issued $50, then a foreign central bank could hold that $50 in reserve and, at a reserve ratio of 40 percent, issue the equivalent of $125 of their currency. Then when that $125 hit the banks, the banks could expand that to $1,250 worth of claim checks, all backed by a single, solitary $20 gold piece. That means that the real reserve ratio (the ratio of real money that could be paid out against their currency) was now only 1.6 percent.
Now there was an inverted pyramid, on top of an inverted pyramid, on top of an inverted pyramid. This was highly unstable. Ultimately, the gold exchange standard was a faulty system that governments imposed on their citizens, which allowed the governments to act as if their currencies were as valuable as before the war. This was a system that was destined for failure.
The rise of credit culture
But every pyramid scheme flourishes in its early days, and so did the gold exchange standard. With all the new currency available from the central banks, the commercial banks generated many new loans. This abundance of currency led to the greatest consumer credit expansion thus far in American history, which, in turn, led to the biggest economic boom America had ever experienced. In a very real sense, credit put the roar in the Roaring Twenties.
Before 1913 the vast majority of loans had been commercial. Loans on nonfarmland real estate and consumer installment credit, like auto loans, were almost nonexistent, and interest rates were very high. But with the advent of the Fed, credit for cars, homes, and stocks was now cheap and easy. The effect of low interest rates combined with these new types of loans was immediate; bubbles sprang up everywhere. There was the Florida real estate bubble of 1925, and then of course the infamous stock market bubble of the late 1920s.
During the 1920s, many Americans stopped saving and started investing, treating their brokerage account as a savings account, much like many Americans treated their homes in our most recent housing bubble. But a brokerage account is not a savings account, nor is a house. The value of a savings account depends on how many dollars you put in. But the value of a brokerage account or a house depends solely on the perception of others. If someone thinks your assets have value, then they do, but if they don’t think they have value, then they don’t.
In a credit-based economy, whether the economy does well or does poorly is largely based on people’s perception. If people believe things are great, then people borrow and spend currency, and the economy flourishes. But if people have the least bit of anxiety, if they have doubts about tomorrow, then watch out!
In 1929, the stock market crashed, the credit bubble burst, and the U.S. economy slid into depression.
The mechanics of a depression
The popping of a credit bubble is a deflationary event, and in the case of the Great Depression it was massively deflationary. To understand how a deflation occurs, you need to know how our currency is born, and how it can join the ranks of the dearly departed.
When we take out a loan from a bank, the bank does not actually loan us any of the currency that was on deposit at the bank. Instead, the second the pen hits the paper on that mortgage, loan document, or credit card receipt that we are signing, the bank is allowed to create those dollars as a book entry. In other words, we create the currency. The bank is not allowed to do it without our signature. We create the currency, and then the bank gets to charge us interest for the currency we created. This brand-new currency we just created then becomes part of the currency supply. Much of our currency supply is created in this way.
But when a home goes into foreclosure, a loan gets defaulted on, or someone files bankruptcy, that currency simply disappears back into currency heaven where it came from. So as credit goes bad, the currency supply contracts, and deflation sets in.
This is what happened in 1930-1933, and it was disastrous. As a wave of foreclosures and bankruptcies swept the nation, one-third of the currency supply of the United States evaporated into thin air. Over the next three years, wages and prices fell by one third.
Run, baby, run
Bank runs are also enormously deflationary events because when you deposit one dollar into the bank, the bank carries that dollar as a liability on its books. It someday owes that dollar back to you. However, under a fractional reserve system, the bank is then allowed to create currency in the form of credit (loans), in an amount many times that of the original deposit, which it carries on its books as assets. As we’ve discussed, under a 10 percent reserve, a one dollar liability can create another $9 of assets for the bank.
This is normally not a problem, as long as the bank isn’t loaned-up to the maximum amount permitted. With just a small amount of “excess” reserves, the bank can cover the day-to-day fluctuations because most of the time deposits and withdrawals come close to balancing out.
But a serious problem can develop when too many people show up to make withdrawals at the same time without the counterbalancing effect of the relatively same amount of people making deposits. If withdrawals exceed deposits, the bank will draw from those “excess” reserves. Once those “excess” reserves have been used up, however, fractional reserve banking is then thrown into vicious reverse. From that point on, to be able to pay out one dollar against deposits, the bank must liquidate $9 of loans. This was what was happening in 1931, and it was one of the major contributing factors to the collapse of the U.S. currency supply.
Also, prior to the advent of the Federal Reserve, the public had about one dollar in the bank for each dollar in its pockets, and the banks kept one dollar of reserves on hand to pay out against each $3 of deposits. But thanks to the Federal Reserve, by 1929 the public had $11 in bank deposits for each dollar in its pocket, and the banks only had one dollar on hand to pay out against every $13 in deposits. This was a very dangerous situation. The public had lots of deposits and very little cash, and the banks also had very little cash to back up those deposits.
By November of 1930, bank failures were more than double the highest monthly level ever recorded. Over 250 banks with more than $180 million in deposits would fail that month. But this was only the beginning.
The largest single bank failure in U.S. history happened on December 11, 1930. The sixty-two-branch Bank of the United States collapsed. This failure would have a cascading effect, causing over 352 banks with more than $370 million in deposits to fail in that month alone. Worst of all, this was before deposit insurance. People’s entire life savings were lost in the blink of an eye.
Then, to top it all off, on September 21, 1931, Great Britain defaulted from the gold exchange standard, throwing the world into monetary chaos. Foreign governments, along with businesses and private investors from the United States and around the world, began to fear that the U.S. might follow suit. Suddenly, there was a dash for cash.
Within the U.S., banks were running out of gold coin, and at the same time tremendous outflows of gold began to leave the vaults of the Federal Reserve, destined for far-off lands. The pyramid scheme that was the gold exchange standard began to crumble. To stop the bleeding, the Fed more than doubled the cost of currency in the U.S., raising the rates from 1.5 to 3.5 percent in one week.
As a result, between August 1931 and January 1932, 1,860 banks with $1.4 billion in deposits suspended their operations.
However, 1932 was an election year. Three long years into the Depression people were desperate for a change, and in November, Franklin Delano Roosevelt was elected president. Even though his inauguration wouldn’t be until March, rumors started flying that he would devalue the dollar. Again gold flowed out of the vaults as foreign governments, foreign investors, and the American public lost even more faith in the dollar, and the most devastating bank run in American history began. But this time the American public wouldn’t be fooled.
As Barron’s put it in its March 27, 1933, issue: “It has been aptly observed that the stages of deflation since 1929 have been the flight from property (chiefly securities) into bank deposits, next a flight from bank deposits into currency, and finally, a flight from currency into gold.”
Incredibly, the currency supply of the United States was falling so fast that if it continued at that pace for a year only 22 percent of it would remain. The U.S. economic outlook was dire, and it seemed as if the dollar would fall into oblivion.
On March 4, 1933, Roosevelt was inaugurated, and within days he signed executive proclamations closing all banks for a “bank holiday,” freezing foreign exchange, and preventing banks from paying out gold coin when they reopened. A month later he signed an executive order requiring U.S. citizens to turn over their private property (gold) to the Federal Reserve, in exchange for Federal Reserve notes.
On April 20, he signed another executive order, ending the right of U.S. citizens to buy, or trade in, foreign currencies, and/or transfer currency to accounts outside the United States. On the same day, the Thomas Amendment was sent to Congress, authorizing the president, at his discretion, to reduce the gold content of the dollar to as low as 50 percent of its former weight in gold. It was enacted into law on May 12, and then amended to give Federal Reserve notes the full “lawful money” status.
But there was still one major hurdle to overcome before Roosevelt could devalue the dollar: the infamous gold clause.
During the Civil War, President Abraham Lincoln had to come up with a way to pay the troops and introduced a second purely fiat currency to the country the greenback dollar. When it first appeared, the greenback was worth the same amount as gold notes. But by the end of the Civil War they had fallen to just one third of the value of the gold-backed dollar. Many people who had made contracts or taken out loans before the war in gold notes paid them back in depreciated greenback dollars. Of course this was cheating the creditors and many lawsuits were filed.
After the end of the Civil War most contracts contained a “gold clause” to protect lenders and others from currency devaluation. The gold clause required payment in either gold or an amount of currency equal to the “weight of gold” value when the contract was entered into. The big problem for Roosevelt was that most government contracts and obligations also had this clause written into them. So devaluing the dollar would also increase the cost of government obligations by the same amount.
So at the behest of President Roosevelt, Congress passed a joint resolution on June 5 defaulting on the gold clause in all contracts, public and private, past, present, and future. In essence, the government simply said to American citizens and businesses, “We don’t have to pay you.”
Outraged by what he viewed as the government’s blatant disregard for Americans’ rights, Senator Carter Glass, chairman of the Senate Finance Committee, lamented, “It’s dishonor, sir. This great government, strong in gold, is breaking its promises to pay gold to widows and orphans to whom it has sold government bonds with a pledge to pay gold coin of the present standard of value. It’s dishonor, sir.” But Senator Thomas Gore of Oklahoma put it even more succinctly when he said, “Why, that’s just plain stealing, isn’t it, Mr. President?”
But these protests fell on deaf ears. On August 28, 1933, Roosevelt signed Executive Order 6260, outlawing the constitutional right of U.S. citizens to own gold. To keep from having to default on its commitments (declare bankruptcy), and to keep concealed the fraud of fractional reserve banking, the banking system’s only choice was to get the government to make gold (the legal money of our constitution, an inert, inanimate element) illegal for U.S. citizens to own. Roosevelt gladly obliged.
First under threat of publishing the “gold hoarders”—names in the newspaper, and then under threat of fines and imprisonment, the United States of America, land of the free and home of the brave, ordered its citizens to turn over their own private property (the money in their pockets) to any Federal Reserve Bank. As far as I can tell, no one seems to know exactly who penned these proclamations and executive orders. But one thing was now clear. The government was no longer a government of the people, by the people, and for the people. Instead it was a government of the bankers, by the bankers, and for the bankers.
But there was still one more dastardly deed to be done.
On January 31, 1934, Roosevelt signed an executive proclamation effectively devaluing the dollar. Before this proclamation it took $20.67 to buy one troy ounce of gold. But now, since the dollar instantly had 40.09 percent less purchasing power, it took $35 to buy the same amount of gold. This also meant that, with regards to international trade, the government had just stolen 40.09 percent of the purchasing power of the entire currency supply of the people of the United States—all with the stroke of a pen. That is the power of fiat currency.
The worst part of this whole situation is that people who followed the rules and turned in their gold as decreed were the ones who suffered the most because those who illegally hung on to their gold realized a 69.33 percent profit due to the pressures Roosevelt’s policies applied on the dollar. Less than 22 percent of the gold in circulation was turned in, however, and it seems not a single person was arrested or prosecuted for hoarding.
But despite the efforts of the U.S. government, gold won in the end. Gold and the will of the public forced the government’s hand. By forbidding the U.S. population from laying claim to any of its own gold, and by devaluing the U.S. dollars, the United States was able to avert international runs on the dollar and was able to continue international trade under the gold standard. By declaring the claim checks on gold held by U.S. citizens null and void, and by requiring more claim checks from foreign central banks to purchase each unit of gold, there was now a far lower multiple of claim checks to gold, and the fractional reserve system was once again manageable.
[Note of the Ed.: In his books and audiovisual materials, Maloney loves charts. Here we are not reproducing Chart 2. U.S. Monetary Base and Gold Reserves, 1918-1935, but the curious reader can see it: here.]
By devaluing the dollar from one twentieth of an ounce of gold to one thirty-fifth of an ounce, the value of the gold held by the U.S. Treasury now exactly matched the value of the monetary base. This meant the dollar was once again fully backed by gold. It also meant that there was no reason for gold to continue being illegal since there was now enough gold to pay out against every paper dollar in existence, and the dollar could have been fully convertible into gold once again.
Gold had once again revalued itself, not with the knockout blow and the death of the currency as in previous chapters, but this time by a technical knockout. To halt the implosion of the U.S. banking system and to regain the trust of our international trading partners, gold had forced the government to devalue the currency by stealing from its citizens, and it had once again accounted for all the excess currency the banking system had created. Gold was still the undefeated heavyweight champion of the world.
But all the pain and suffering could have been avoided. Gold and silver require discipline and constraint from banks and governments, and both banks and governments resent gold for it. Numerous factors contributed to the Great Depression, but there was only one root cause. Governments around the world, along with the Federal Reserve, foreign central banks, and commercial banks, all tried to cheat gold.
by Mike Maloney
I hope by now you’re beginning to see a pattern develop. In all the examples I’ve shown you so far (and there are plenty more), the pattern is the same:
But surely something like this can’t happen to the United States, you might say. We are, after all, the greatest country in the history of the world. Beyond that we aren’t an empire. We don’t conquer nations; we spread democracy.
We may not be an empire in the traditional sense of the word, but when it comes to economic issues, we operate like one in many ways. This is why I believe that not only will the United States decline and see its dollar crash; it’s already on its way. Let’s take a trip down memory lane and see how the United States got to this point in history.
Dread the Fed, the Golden Rule is dead
The beginning of the end for the United States economy started with the inception of the Federal Reserve. The Fed, as it’s called, is a private bank, separate from the U.S. government, with the power to dictate our country’s fiscal policy. Since the Fed’s formation, the U.S. dollar has become nothing but currency.
From roughly 1871 to 1914, when World War I began, most of the developed world operated under what is referred to as the classical gold standard, meaning most of the world’s currencies were pegged to gold. This meant that they were also pegged to each other. Businesspeople could make plans and projections far into the future, ship goods, start businesses, and invest in foreign lands, and they always knew exactly what the exchange rate would be.
On average over the period when the developed world was on the classical gold standard, there was no inflation… none, zero zip, nada. Sure, there were a few booms and busts, inflations and deflations. But from the beginning of the classical gold standard to the end, it averaged out as a zero sum game. The reason? Gold: the great equalizer.
Here’s why: When countries experienced economic booms, they imported more goods. The imported goods were paid for with gold, so gold flowed out. As gold flowed out of the countries, their currency supplies contracted (that is monetary deflation). This caused these economies to slow down and the demand for imports to fall. As the economy slowed, prices fell, making these countries’ goods more attractive to foreign buyers. And as exports rose to meet foreign demand, gold flowed back into that country. Then the process started all over again, the value of currency—based on gold—always moving up and down, in a narrow range, maintaining the equilibrium.
During the classical gold standard our currency was real, verifiable money, meaning that there was actual gold and silver in the Treasury backing it up. The currency was just a receipt for the money. Then, in stepped the Fed, one of the most notorious and misunderstood institutions in the history of the United States.
The difficulty with the Fed is that there’s a lot of information out there, which is one reason why it’s so controversial. There are two very polarized camps when it comes to the Fed. On one end you have the government, which trusts it to regulate the U.S. economy. On the other end, you have the conspiracy theorists, who believe, in no uncertain terms, that the Fed will eventually bring about the collapse of the U.S. economy.
Well, I’m here to tell you these “crackpots” are not as crazy as they may seem. For one thing, the Federal Reserve is not a government agency. It is a privately owned bank that has stockholders to whom it pays dividends. It has the power to actually create currency from nothing, and it is shielded from audits and congressional oversight. As former senator and presidential contender Barry Goldwater pointed out, “The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”
Not so humble beginnings
Famed Austrian School economist Murray N. Rothbard, the vice president of the Ludwig von Mises Institute, distinguished professor of economics, and author of twenty-six books, opens his book The Case Against the Fed with the following:
By far the most secret and least accountable operation of the federal government is not, as one might expect, the CIA, DIA, or some other super-secret intelligence agency. The CIA and other intelligence operations are under control of Congress. They are accountable: a Congressional committee supervises these operations, controls their budgets, and is informed of their covert activities.
The Federal Reserve, however, is accountable to no one; it has no budget; it is subject to no audit; and no Congressional committee knows of, or can truly supervise, its operations. The Federal Reserve, virtually in total control of the nation’s monetary system, is accountable to nobody.
Here’s how it all got started. You might call this the not so humble beginning.
In 1907 there was a banking and stock market panic in the U.S., aptly called the Panic of 1907. It was widely believed that the big New York banks known as the Money Trust had been causing crashes, and then capitalizing on them by buying up stocks from rattled investors and selling them for tremendous profit just days or weeks later. The Panic of 1907 was a particularly devastating one for the U.S. economy, and there was an outcry by the general public for the government to do something.
In 1908 Congress created the National Monetary Commission to research the situation, and to recommend banking reforms that would prevent such panics, as well as to investigate the Money Trust. Senator Nelson Aldrich was appointed chairman, and immediately set out for Europe, spending two years and $300,000 (that’s $6 million adjusted for inflation) to consult with the private central bankers of England, France, and Germany.
Upon his return, Senator Aldrich decided to take some time off and organized a duck hunt with some friends. The friends he invited on vacation with him were the who’s who of U.S. economic power, the very New York bankers he was supposed to be investigating: Paul Warburg (Kuhn, Loeb & Company), Abraham Pete Andrew (assistant secretary of the treasury), Frank Vanderlip (president of the Rockefeller-lead National City Bank of New York), Henry P. Davison (senior partner at J. P. Morgan), Charles D. Norton (president of the Morgan-led First National Bank of New York), and Benjamin Strong (head of J. P. Morgan Bankers Trust, and to become the first Federal Reserve head).
It is estimated that these men represented one quarter of the world’s wealth. The retreat took place on a little island off the coast of Georgia called Jekyll Island. But there wasn’t much duck hunting; instead Aldrich and his distinguished guests spent nine days around a table hatching a plan that eventually created the Federal Reserve.
Here is what some of the attendees had to say about that meeting:
Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundreds of miles South, embarking on a mysterious launch, sneaking on to an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance.
I am not romancing. I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.
B. C. Forbes, Forbes magazine, 1916
The results of the conference were entirely confidential. Even the fact there had been a meeting was not permitted to become public. Though eighteen years have since gone by, I do not feel free to give a description of this most interesting conference concerning which Senator Aldrich pledged all participants to secrecy.
Paul Warburg, The Federal Reserve System: Its Origin and Growth
There was an occasion, near the close of 1910, when I was as secretive, indeed, as furtive, as any conspirator. I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System. We were told to leave our last names behind us… We were instructed to come one at a time and as unobtrusively as possible to the railroad terminal on the New Jersey littoral of the Hudson, where Senator Aldrich’s private car would be in readiness… The servants and train crew may have known the identities of one or two of us, but they did not know all, and it was the names of all printed together that would have made our mysterious journey significant in Washington, in Wall Street, even in London. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress.
Frank Vanderlip, in The Saturday Evening Post, February 9, 1935
Secrecy was so important to the attendees of this summit because Aldrich, as the chairman of the National Monetary Commission, was charged with investigating banking practices and recommending reforms after the Panic of 1907, not to conspire with the bankers on a remote island. So the bankers who were under investigation for needed reforms got together with the chairman of the congressional investigating committee (the guy that was supposed to investigate the suspects) at a secret meeting on an isolated island and concocted a bill, the Aldrich Plan, for a private central bank that they (the suspects) would own. When the bill was presented to Congress, the debates raged.
In one debate, Congressman Charles Lindbergh was quoted as saying, “Our financial system is a false one and a huge burden on the people. I have alleged that there is a Money Trust. The Aldrich Plan is a scheme plainly in the interest of the Trust. Why does the Money Trust press so hard for the Aldrich Plan now, before the people know what the Money Trust has been doing?”
But the Aldrich Plan never came to a vote in Congress, because it was a Republican-backed bill and the Republicans lost control of the House in 1910, and the Senate in 1912.
Not accepting defeat, the bankers essentially took the Aldrich Plan and changed a few details. In 1913 a nearly identical bill, called the Federal Reserve Act, was presented to Congress.
Again the debates raged. Many saw this bill for what it was: a prettied-up version of the Aldrich Plan. But on December 22, 1913, Congress gave up its right to coin money and regulate the value thereof, which was given it by the Constitution, and passed that right to a private corporation, the Federal Reserve.
The Fed and the death of the dollar—fractional reserve banking
Since the Fed opened for business in 1914, the currency of the United States (the U.S. dollar) has been borrowed into existence from a private bank (the Fed). The reason I say “borrowed” into existence is because every single dollar the Fed has ever created is owed back to that bank, with interest. The Fed creates all currency, not the U.S. government, and lends it out to the U.S. government and private institutions—with interest. Now you may be asking yourself, “If we pay back all the currency that was borrowed into existence, but we still owe the interest, where do we get the currency to pay the interest?” Answer: We have to borrow it into existence. This is one reason why the national debt keeps expanding. It can never be paid off. It is mathematically impossible.
But even more disconcerting is the way the Federal Reserve creates currency:
In the Fed’s own words, published in a 1977 paper called Putting It Simply, “When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money” Of course, as you know by now, I would beg to differ. They are creating currency, not money.
And once those newly created dollars are deposited in the banks, the banks get to employ the miracle of fractional reserve banking.
Here is fractional reserve banking in a nutshell. All banks have a reserve requirement, meaning they must keep a certain amount of currency on hand for withdrawals and such. If the reserve requirement set by the Fed is 10 percent the bank must keep 10 percent of the currency deposited on hand just in case someone wants to make a withdrawal; however, they are allowed to loan out the other 90 percent of those deposits.
Here’s the kicker. They don’t actually loan out the currency that’s in the accounts. Instead they create new fiat dollars out of nothing and then loan them out, which means they too are “borrowed” into existence. In other words, when you deposit $1,000, the bank can create 900 brand-new credit dollars with nothing but a book entry, and then loan them out with interest.
Then, if those brand-new loaned dollars are deposited in a checking account, the bank is allowed to create another 90 percent of the value of those deposits, and then another 90 percent of that. Then the process is repeated, and round and round it goes.
Coincidentally, the same year that the Federal Reserve Act was passed, there was also an amendment added to the Constitution: the Sixteenth, which created the dreaded income tax.
Before 1913 there was no income tax. The entire government was paid for by tariffs (duties on imports) and excise tax (taxes on things like alcohol, cigarettes, and gas). These taxes, and only these taxes, generated enough income for the government to operate. However, because it didn’t generate enough income to pay the interest due to the Federal Reserve, the income tax was created.
Welcome to the rabbit hole. Welcome to your new context.
by Mike Maloney
The wealth of nations
In studying monetary history to identify cycles, it is necessary to examine both sides of the coin so to speak. The temptation is for people to blame all their woes on their government. Certainly governments are often at fault when it comes to inflation through fiat monetary policy, but one must never forget that in the end we are ultimately the ones who consent to our government’s rule. History is full of examples of greed leading a populace to do incredibly stupid things. Indeed, we don’t need government to ruin our economy. We can get by just fine by ourselves, thank you.
The best example I can think of is the tulip mania of 1637.
A tulip is still a tulip…
In order to understand the absurdity of this moment in history I’m about to share with you, you simply have to ask yourself: Would I pay $1.8 million for a tulip bulb? If the answer to that question is yes, then please put this book down and get some professional help. Otherwise, read on and see just how crazy the public can become.
Everyone thinks of tulips when they think of Holland. Then they think of beer. What many people don’t know is that tulips are not indigenous to Holland. They were imported. In 1593 the first tulip bulbs were brought from Turkey to Holland. They quickly became a status symbol for royalty and the wealthy. This developed into a mania, and soon a tulip exchange was established in Amsterdam.
Very quickly this mania turned into an economic bubble. You may find this comical; in 1636 a single tulip bulb of the Viceroy variety was traded for the following: 2 lasts (a last is 4,000 pounds) of wheat, 4 lasts of rye, 4 fat oxen, 8 fat swine, 12 fat sheep, 2 hogsheads (140 gallon wooden barrel) of wine, 4 tons of beer, 2 tons of butter, 1,000 pounds of cheese, 1 bed, 1 suit of clothes, and 1 silver goblet.
At its very peak in 1637 a single bulb of the Semper Augustus variety was sold for 6,000 florins. The average yearly wage in Holland at the time was 150 florins. That means that tulip bulbs were selling for 40 times the average Hollander’s annual income. To put that into perspective, let’s assume the average U.S. salary is $45,000. That means that a tulip bulb in today’s terms would cost you $1.8 million.
Soon people began to realize how absolutely crazy the situation had become, and the smart money (if you can call anyone involved in this mania smart) began to sell. Within weeks tulip bulb prices fell to their real value, which was several tulip bulbs for just one florin.
The financial devastation that swept across northern Europe as a result of this market crash lasted for decades.
John Law and central banking
Another great example of a society replacing its money with an ever inflating currency supply is the story of John Law. John Law’s life was a true roller-coaster ride of epic proportions.
Born the son of a Scottish goldsmith and banker, John Law was a bright boy with high mathematical aptitude. He grew up to be quite a gambler and ladies’ man, and lost most of his family fortune in the course of his exploits. At one point, he got into a fight over a woman and his opponent challenged him to a duel. He shot his opponent dead, was arrested, tried, and sentenced to hang. Being the knave that he was, Law escaped from prison and fled to France.
Meanwhile, Louis XIV was running France deeply into debt due to war mongering and his lavish lifestyle. John Law, who was now living in Paris, became a gambling buddy with the Duke d’Orleans, and it was at about this time that Law published an economic paper promoting the benefits of paper currency.
When Louis XIV died, his successor, Louis XV was only eleven years old. The Duke d’Orleans was placed as regent (temporary king), and to his horror he found out that France was so deep in debt that taxes didn’t even cover the interest payments on that debt. Law, sensing opportunity, showed up at the royal court with two papers for his friend blaming the problems of France on insufficient currency and expounding the virtues of paper currency. On May 15, 1716, John Law was given a bank (Banque Générale) and the right to issue paper currency, and there began Europe’s foray into paper currency.
The slightly increased currency supply brought a new vitality to the economy, and John Law was hailed as a financial genius. As a reward the Duke d’Orleans granted Law the rights to all trade from France’s Louisiana Territory in America. The Louisiana Territory was a huge area comprising about 30 percent of what is now the United States, stretching from Canada to the mouth of the Mississippi River.
At that time, it was believed that Louisiana was rich in gold, and John Law’s new Mississippi Company, with the exclusive rights to trade from this territory, quickly became the richest company in France. John Law wasted no time capitalizing on the public’s confidence in his company’s prospects and issued 200,000 company shares. Shortly after that the share price exploded, rising by more than 30 times in a period of months. Just imagine, in a few short years, Law went from a gambling addict and penniless murderer to one of the most powerful financial figures in Europe.
Again, Law was rewarded. This time the Duke bestowed upon him and his companies a monopoly on the sale of tobacco, the sole right to refine and coin silver and gold, and he made Law’s bank the Banque Royale. Law was now at the helm of France’s central bank.
Now that his bank was the royal bank of France it meant that the government backed his new paper notes, just as our government backs the Federal Reserve’s paper notes. And since everything was going so well, the Duke asked John Law to issue even more notes, and Law, agreeing that there is no such thing as too much of a good thing, obliged. The government spent foolishly and recklessly while Law was pacified with gifts, honors, and titles.
Yes, things were going quite well. So well, in fact, that the Duke thought that if this much currency brought so much prosperity, then twice as much would be even better. Just a couple of years earlier the government couldn’t even pay the interest on its debt, and now, not only had it paid off its debt, but it could also spend as much currency as it wanted. All it had to do was print it.
As a reward for Law’s service to France, the Duke passed an edict granting the Mississippi Company the exclusive right to trade in the East Indies, China, and the South Seas. Upon hearing this news, Law decided to issue 50,000 new shares of the Mississippi Company. When he made the new stock offer, more than 300,000 applications were made for the new shares. Among them were dukes, marquises, counts, and duchesses, all waiting to get their shares. Law’s solution to the problem was to issue 300,000 shares instead of the 50,000 he was originally planning, a 500 percent increase in the total number of shares.
Paris was booming due to the rampant stock speculation and the increased currency supply. All the shops were full, there was an abundance of new luxury goods, and the streets were bustling. As Charles Mackay puts it in his book Extraordinary Popular Delusions and the Madness of Crowds, “New houses were built in every direction, and an illusory prosperity shone over the land, and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching.”
Soon, however, problems started to crop up. Due to the inflation of the currency supply, prices started to skyrocket. Real estate values and rents, for instance, increased 20-fold.
Law also began to feel the effects of the rampant inflation he had helped create. With the next stock issue of the Mississippi Company, Law offended the Prince de Conti when he refused to issue him shares at the price the royal wanted. Furious, the Prince sent three wagons to the bank to cash in all of his paper currency and Mississippi stock. He was paid with three wagonloads-ful of gold and silver coin. The Duke d’Orleans, however, was incensed and demanded the Prince return the coin to the bank. Fearing that he’d never be able to set foot in Paris again, the Prince returned two of the three wagonloads.
This was a wake-up call to the public, and the “smart money” began to exit fast. People started converting their notes to coin, and bought anything of transportable value. Jewelry, silverware, gemstones, and coin were bought and sent abroad or hoarded.
In order to stop the bleeding, in February of 1720 the banks discontinued note redemption for gold and silver, and it was declared illegal to use gold or silver coin in payment. Buying jewelry, precious stones, or silverware was also outlawed. Rewards were offered of 50 percent of any gold or silver confiscated from those found in possession of such goods (payable in banknotes of course). The borders were closed and carriages searched. The prisons filled and heads rolled, literally.
Finally, the financial crisis came to a head. On May 27, the banks were closed and Law was dismissed from the ministry. Banknotes were devalued by 50 percent, and on June 10 the banks reopened and resumed redemption of the notes for gold at the new value. When the gold ran out, people were paid in silver. When the silver ran out, people were paid in copper. As you can imagine, the frenzy to convert paper back to coin was so intense that near riot conditions ensued. Gold and silver had delivered a knockout blow.
By then John Law was now the most reviled man in France. In a matter of months he went from arguably the most powerful and influential force in society back to the nobody he was before. Law fled to Venice where he resumed his life as a gambler, lamenting, “Last year I was the richest individual who ever lived. Today I have nothing, not even enough to keep alive.” He died broke, in Venice, in 1729.
The collapse of the Mississippi Company and Law’s fiat currency system plunged France and most of Europe into a horrible depression, which lasted for decades. But what astounds me most is that this all transpired in just four short years.
The Weimar Republic—a painful lesson learned
By now you’ve learned the kind of damage fiat currency can cause. Now let’s look at another example and identify the silver lining (no pun intended), and how such extreme situations can actually present opportunities to acquire vast wealth.
At the beginning of World War I, Germany went off the gold standard and suspended the right of its citizens to redeem their currency (the mark) for gold and silver. Like all wars, World War I was a war of and by the printing press. The number of marks in circulation in Germany quadrupled during the war. Prices, however, had not kept up with the inflation of the currency supply. So the effects of this inflation were not felt.
The reason for this peculiar phenomenon was because in times of uncertainty people tend to save every penny. World War I was definitely a time of uncertainty. So even though the German government was pumping tons of currency into the system, no one was spending it—yet. But by war’s end, confidence flooded back along with the currency that had been on the sidelines, and the ravaging effects worked their way through the country as prices rose to catch up with the previous monetary inflation.
Just before the end of the war, the exchange rate between gold and the mark was about 100 marks per ounce. But by 1920 it was fluctuating between 1,000 and 2,000 marks per ounce. Retail prices shortly followed suit, rising by 10 to 20 times. Anyone who still had the savings they had accumulated during the war was bewildered when they found it could only buy 10 percent or less of what it could just a year or two earlier.
Then, all through the rest of 1920 and the first half of 1921, inflation slowed, and on the surface the future was beginning to look a little brighter. The economy was recovering, business and industrial production was up. But now there were war reparations to pay, so the government never stopped printing currency. In the summer of 1921 prices started rising again and by July of 1922 prices had risen another 700 percent.
This was the breaking point. And what broke was people’s confidence in their economy and their currency. Having watched the purchasing power of their savings fall by 90 percent in 1919, they knew better this time around. They were smarter; they had been here before.
All at once, the entire country’s attitude toward currency changed. People knew that if they held on to their currency for any period of time they’d get burned… the rising prices would wipe out their purchasing power. Suddenly everybody started to spend their currency as soon as they got it. The currency became a hot potato, and no one wanted to hang on to it for a second.
After the war, Germany made the first reparations payment to France with most of its gold and made up the balance with iron, coal, wood, and other materials, but it simply didn’t have the resources to meet its second payment. France thought Germany was just trying to weasel its way out of paying. So, in January of 1923, France and Belgium invaded and occupied the Ruhr (the industrial heartland of Germany). The invading troops took over the iron and steel factories, coal mines and railways.
In response, the German Weimar government adopted a policy of passive resistance and noncooperation, paying the factories’ workers, all 2 million of them, not to work. This was the last nail in the German mark’s coffin.
Meanwhile, the government put its printing presses into overdrive. According to the front page of the New York Times, February 9, 1923, Germany had thirty-three printing plants that were belching out 45 billion marks every day! By November it was 500 quadrillion a day (yes, that’s a real number).
The German public’s confidence, however, was falling faster than the government could print the new currency. The government was caught in a downward economic spiral. A point of no return had been passed. No matter how many marks the government printed, the value fell quicker than the new currency could enter into circulation. So the government had no choice but to keep printing more and more and more.
By late October and early November 1923, the German financial system was breaking down. A pair of shoes that cost 12 marks before the war now cost 30 trillion marks. A loaf of bread went from half a mark to 200 billion marks. A single egg went from 0.08 mark to 80 billion marks.
The German stock market went from 88 points at the end of the war to 26,890,000,000, but its purchasing value had fallen by more than 97 percent.
Only gold and silver outpaced inflation. The price of gold had gone from around 100 marks to 87 trillion marks per ounce, an 87 trillion percent increase in price. But it is not price, but value, that matters, and the purchasing power of gold and silver had gone up exponentially.
When Germany’s hyperinflation finally came to an end on November 15, 1923, the currency supply had grown from 29.2 billion marks at the beginning of 1919 to 497 quintillion marks, an increase of the currency supply of more than 17 billion times. The total value of the currency supply, however, had dropped 97.7 percent against gold.
[Note of the Ed.: In his books and audiovisual materials, Maloney loves charts. In “Chart 1. Price of 1 Ounce of Gold in German Marks from 1914-1923” he depicts the Weimar Republic hyperinflation from one to a trillion paper marks per gold mark. We won’t be reproducing his charts in this site, but the curious reader can see them: here.]
The poor were already poor before the crisis, so they were affected the least. The rich, at least the smart ones, got a whole lot richer. But it was the middle class that was hurt the most. In fact, it was all but obliterated.
But there were a few exceptions. There were a few who had the right qualities and cunning to take advantage of the economic environment. They were shrewd, adept, and nimble, but most of all, adaptable. Those who could quickly adapt to a world they had never seen before, a world turned upside down, prospered. It didn’t matter what class they came from, poor or middle class, if they could adapt, and adapt well, they could become wealthy in a matter of months.
At this time, an entire city block of commercial real estate in downtown Berlin could be purchased for just 25 ounces of gold ($500). The reason for this is that those who held their wealth in the form of currency became poorer and poorer as they watched their purchasing power destroyed by the government. On the flip side, those who held their wealth in the form of gold watched their purchasing power increase exponentially as they became wealthy by comparison.
Here is the important lesson: During financial upheaval, a bubble popping, a market crash, a depression, or a currency crisis such as this one, wealth is not destroyed. It is merely transferred. During the Weimar hyperinflation, gold and silver didn’t just win, but smashed their opponent into the ground, by delivering yet another devastating knockout blow to fiat currency. Thus, those who held on to real money, instead of currency, reaped the rewards many times over.