Monday, January 30, 2017

Slowness of Gold to Adjust to Needs

Slowness of Gold to Adjust to Needs
Thomas Allen

    A major argument against the gold standard is “the slowness with which its supply adjusts itself to genuine changes in demand.”[1] (This is a major reason for Hayek’s opposition to the classical gold standard.) As this argument goes, an increase supply of gold often becomes available after it is no longer needed. Nevertheless, this increase in the stock of gold remains permanent and provides a basis for excessive expansion of credit even when the demand for credit falls.
    First, although newly mined gold entering the market varies and can vary significantly, it is generally around 2 percent of the existing gold stock available for monetary use. Such a large stock tends to stabilize general prices. Whenever more gold is needed for monetary uses, it flows from the gold stock available for nonmonetary uses. Conversely, whenever gold is no longer needed for monetary uses, it flows back to the gold stock available for nonmonetary uses. (When gold flow is a problem, the cause is usually a poorly run credit system or governmental intervention.)
    Second, if the government does not intervene to prevent prices from changing, prices and wages will adjust to match the available quantity of monetary gold. When production rises faster than the money supply, prices generally fall as happen during the last quarter of the nineteenth century. Typically, manufacturers do not like to see their prices fall in nominal terms, so they pressure the government to intervene to prevent the decline. Most governments are only too eager to oblige because intervention increases the power and prestige of the rulers. Likewise, wage earners do not like their wages to decline in nominal terms even if their purchasing power is increasing.
    Perhaps the most common argument against falling prices, especially for farmers, who are usually in debt, is that previously acquired debt does not also decline with declining prices. Thus, an undue burden is created for the debtor. He borrowed money of less value, buying power, and must now repay with money of more value. However, if the purchasing power of the monetary unit is rising faster than farmer’s income is declining, then the undue burden vanishes. The farmer still comes out ahead; he can buy more with what he earns though his income has declined. The same is true for the wage earners and manufacturers who are debtors.
    Third, and most important, this problem of supply adjustment is greatly alleviated when the gold standard is accompanied by the real bills doctrine and local banks are not restricted in expanding and contracting their bank notes and checkbook money used to buy real bills of exchange. When a financial panic or the need for more cash occurs, banks can issue more bank notes and checkbook money so long as a demand for money exists. When the supply of gold begins to increase, banks can begin contracting their bank notes and checkbook money to bring the supply of and demand for money into equilibrium.
    Furthermore, flexible credit money can smooth out seasonal monetary demands and changes in interest rates. Moreover, it greatly reduces the movement of monetary gold from one region to another.
    When properly used, bank credit money prevents prices from falling without causing them to rise. Local banks should increase bank notes and checkbook money as the demand for money increases and contract them as demand declines. Gold serves as a check. If too many bank notes or too much checkbook money is issued, they will be redeemed for gold. If too few are issued, people will deposit less gold in banks.
    When the real bills doctrine is allowed to operate freely, it greatly alleviates, if not eliminates, the perceived problem caused by the slowness with which the gold supply adjusts to changes in demand. The problem with the supply of gold adjusting to the demand for money occurs primarily when governments interfere with the expansion and contraction of bank credit money under the real bills doctrine. Governmental intervention caused most of the monetary problems in the United States and Great Britain during the latter part of the nineteenth century and in the world following World War I.

1. Hayek, Individualism and Economic Order (Chicago, Illinois: Henry Regnery Co., 1948) , p. 211.

Copyright © 2016 by Thomas Coley Allen.

Friday, January 20, 2017

Poor on the Velocity of Money

Poor on the Velocity of Money
Thomas Allen

    Henry Varnum Poor (1812-1905) was a financial analyst and founder of a company that evolved into Standard & Poor’s. He was a proponent of the real bills doctrine. Like Anton Fekete, he saw the Quantity Theory of Money as a highly flawed theory. (In Money and Its Laws, he discusses flaws in the Quantity Theory of Money.)
    The velocity of money is the rate at which a given amount of money changes hand during a specific time. It measures how fast people are spending.
    Poor contends that the velocity of money, which was gold when he wrote, has no effect on its value. Even when representative money (bank notes) is included, velocity has no effect on money’s value. Thus, the number of times that money changes hands during a day, a week, or a month neither increases nor decreases its value.
    Money only changes hands when goods and services are being sold. As the selling of goods and services increases, the velocity of money increases. Poor wrote, “The relationship of one to the other, both in quantity and activity, must be uniform.”
    Poor considers money to be capital and the representation of capital. If it were not capital or its representation, it is a scale of valuation — “an instrument of commerce like a set of weights.”
    The Bullion Committee,[1] which was a proponent of the Quantity Theory of Money, contended that “the effective currency of a country depends upon the quickness of circulation and the number of exchanges performed in a given time, as well as upon its numerical amount.” Poor strongly objects to this assertion. He illustrates the absurdity of the Bullion Committee’s statement with a barrel of flour. If the Bullion Committee’s conclusion were true, then “one barrel of flour, by the rapidity of its circulation, may serve the purpose of three barrels.” Poor concluded, “The quantity of money must always be in ratio to the exchanges that are made.”

1. The Bullion Committee was set up after the Napoleonic Wars to provide recommendations for stabilizing British finances and returning Great Britain to the gold standard.

Copyright © 2016 by Thomas Coley Allen.

More articles on money.

Tuesday, January 10, 2017

Black Privilege

Black Privilege
Thomas Allen

    Whites are accused of having “White Privilege,” which supposedly gives them all sorts of advantages over and at the expense of Blacks. “White Privilege” is the unearned assets, advantages, and benefits that White people have merely because they are White. Whites have had some advantage by custom. However, as shown below, Black Privilege really does give Blacks material and legal advantages over Whites today.
    In “White Privilege: Unpacking the Invisible Knapsack,” Peggy McIntosh identifies 50 things that she considers “White Privilege.” Some of them are absurd, irrelevant, and insignificant. A few insult Blacks. Some result from the desire of Blacks to be thought highly of by other Blacks. Even a few are wrong: The opposite is true. However, a few are correct, but not because of discrimination per se, but because statistically Blacks are more likely to commit crimes than Whites.  Several are problems created by integration: As Blacks want to integrate into White society, they should be expected to adapt to White norms. (This is like a person seeking to become a citizen of another country. He needs to adapt to the norms of his new country instead of expecting everyone in his new country to adapt to his old norms.)
    Some so-called “White Privilege” result from Whites on average being more intelligent than Blacks on average and differences in behavior. (Genetics influences both behavior and intelligence.)
    Of the few who seem to define “White Privilege,” most seem to define it as some sort of Marxism with class exportation being replaced with race exportation. Whites have not earned what they have; they have stolen it from Blacks and other people of color. Their ingenuity, intelligence, initiative, relatively high moral and ethical standards, etc. account for nothing. Whites have what they have solely because of their skin color.
    The following is a short, but incomplete, list of Black Privilege.
    1.    Congress has established federal agencies whose primary purpose is to promote and protect special rights, privileges, and immunities for Blacks while denying them to Whites.
    2.    The federal government has spent billions of dollars to increase the intellectual development of Blacks.
    3.    Blacks have Black caucuses. However, Whites do not and cannot have White caucuses.
    4.    Blacks have enslaved Whites to support them. Whites support about a fifth to a third of the Black families. Whites are forced to pay for Blacks desiring not to work and for their sexual promiscuity, i.e., Whites are forced to support the offspring of Black sexual promiscuity. Thus, Blacks have enslaved Whites for the benefit of Blacks.
    5.    Blacks receive a standard of living given to them by Whites that far exceed what they would have if their ancestors had not been forcibly brought to America. Yet most seem ungrateful for the standard of living that Whites have given them. Whites have built their standard of living themselves. No other race gave it to them.
    6.    Blacks, who are genetically less endowed than Whites, claim and often do receive the production of Whites, who are genetically more endowed than Blacks. Thus, Blacks are entitled to receive more than they deserve based on their efforts, intelligence, and talents. They are entitled to receive more than they deserve because of their race.
    7.    A White landlord can refuse to rent to a White without fear of penalties. However, if a White landlord refuses to rent to a Black, he risks civil rights violations. Therefore, refusing to rent to a White is easier for a White landlord than refusing to rent to a Black.
    8.    Blacks receive preference in the allotment of public housing.
    9.    Blacks receive preferential treatment for college entry. Colleges and universities admit less academically qualified Blacks over more academically qualified Whites. When compared with Whites, on average Blacks with much lower Scholastic Achievement Test (SAT) scores are admitted to universities.
    10.    Colleges and universities hold Whites to a much higher standard than they hold Blacks. That is, they practice “affirmative grading” to ensure that many more Blacks graduate than would occur if they had to meet the same standards as Whites.
    11.    Colleges and universities admit Blacks at a much higher rate than they admit Whites.
    12.    Some universities pay Blacks to meet normal standards, but they do not pay Whites to meet these standards.
    13.    Blacks have Black colleges and universities. However, Whites do not and cannot have White colleges and universities.
    14.    Blacks can easily find institutions (Black colleges and universities) and academic courses (Black studies, etc.) that give attention only to Blacks. No such institutions or academic courses exist for Whites.
    15.    Blacks can have Black dormitories where only Blacks are allowed to reside. However, Whites cannot have White dormitories.
    16.    Poor Blacks are more likely to receive more educational money than gifted Whites.
    17.    Blacks receive special scholarships to elite private schools and preparatory schools.
    18.    Scholarships, fellowships, internships, and training programs are reserved for Blacks. None are reserved for Whites.
    19.    Instead of raising Blacks to the academic level of the average White in public schools (perhaps because they cannot be raised to the level of Whites on average), the academic level of public schools has been lowered to the average level of Blacks.
    20.    The SAT has been recentered so that Blacks score higher. Recentering gives the appearance that the Black-White gap is being closed.
    21.    In predominately White schools, Blacks can associate with each other. However, in predominately Black schools, Whites cannot remain together.
    22.    A whole month, “Black History Month,” is set aside each year specifically to study Blacks. No month is set aside specifically to study Whites. The other eleven months are integrated with a bias toward studying non-Whites.
    23.    The only American to have his own federal holiday is a Black man, No White American has his own federal holiday.
    24.    Blacks dominate basketball. Moreover, Blacks have a genetic advantage over Whites as boxers.
    25.    Blacks receive preferential treatment in employment. Most companies and especially governments and large corporations often hire and promote lesser qualified Blacks instead of more qualified Whites.
    26.    For many jobs requiring applicants to pass a test, the score required for a Black to pass is lower than the score required for a White to pass.
    27.    Whites need a higher intelligence than Blacks for many job categories. Thus, Blacks are more numerous in these job categories than they would be if hiring were based solely on intelligence.
    28.    Blacks are much more likely be employed in professional and technical occupations than Whites with the same level of intelligence.
    29.    When competing for a broadcast license, Blacks are given preference to Whites.
    30.    Banks and insurance companies are required to subsidize loans and policies for Blacks. However, they are not required to subsidize loans and policies for Whites.
    31.    Some Blacks have become rich extorting money from corporations with the threat of a racial boycott, often with the support of mainstream media. If a White attempted such extortion, he would risk criminal charges and would be condemned by the mainstream media.
    32.    The inclination is to treat Blacks as some kind of amoral natural beings. Institutions are the blame for Black crimes and not Blacks themselves. Therefore, Blacks are not moral agents. Thus, Black criminals are not responsible for their crimes because they are victims of White racism and injustice. However, Whites are held fully responsible and accountable for their crimes.
    33.    In high profile cases where a Black accuses a White of a crime, most Blacks and Whites with authority or influence side with the Black accuser even if the evidence proves the accuser wrong and the White innocent. Moreover, the White remains guilty even if he proves his innocence. The only evidence needed to prove the White person guilty is his race. (An example is the Duke University lacrosse rape incident.)
    34.    A Black is less likely to be arrested for a crime than a White who commits the same crime.
    35.    Police are less likely to shoot Black suspects than White suspects in the same situation.
    36.    Black jurors often find a Black defendant innocent even when the evidence overwhelmingly proves his quilt and even when the victim is Black. They do so because of the defendant’s race.
    37.    Blacks loot stores with little or no penalty during riots, which may explain why staged protests led by Blacks often end in looting riots.
    38.    If a Black person is killed by a policeman, rightly or wrongly, the mainstream media and politicians elevate it to the highest level of importance for weeks, months, or even years. If a White person is killed by a policeman, except perhaps a short article in the local news, nothing much is heard about it. Politicians ignore it.
    39.    When a Black attacks a White, the race of the attacker is seldom mentioned. However, when a White attacks a Black, the races of the attacker and the victim are emphasized. Thus, Black-on-White crime does not show anti-White feelings while White-on-Black crime proves White racism.
    40.    The mainstream media fail to report crimes of Blacks against Whites.
    41.    The average White is much less likely to assault a Black while the average Black is much more likely to assault a White.
    42.    Blacks kill and rape many times more Whites than Whites kill and rape Blacks.
    43.    Blacks are rewarded for bad behavior, whereas Whites are punished for it.
    44.    Whites are condemned for exercising their freedom of association when they decline to live or deal with Blacks. Blacks are not condemned for declining to associate with Whites. Contrariwise, they are often supported in their decision not to associate with Whites.
    45.    Blacks can forcibly associate with Whites regardless of how Whites feel about the association. Moreover, Whites cannot refuse to associate with Blacks if Blacks want to associate with them. Yet Blacks are free to refuse to associate with Whites. (William Polk writes, “If the Negro is entitled to lift himself up by enforced association with the white man, why should not the white man be entitled to prevent himself from being pulled down by enforced association with the Negro?”[1])
    46.    Most Whites feel compelled to claim that they have Black friends and neighbors even when they do not. Blacks have no such compulsion to claim White friends or neighbors. To the contrary, they often feel compelled to deny that they have any White friends or neighbors.
    47.    Black churches can have politicians deliver political speeches and request funds without risking an IRS investigation or losing their tax exemption status. White churches risk an IRS investigation and loss of their tax exemption if their pastors include something in their sermons that the federal government considers political — and what is not political today?
    48.    Blacks who have made minor contributions to civilization are exhorted as making contributions so great that civilization would not exist without them.  On the other hand, Whites, who have made contributions so great that civilization as we know it would not exist without them, are barely mentioned or ignored.
    49.    Blacks can cower 200,000,000 Whites with a single word: “racist.”
    50.    Most Whites feel compelled to deny that they are racists though by definition they are racists merely because they are White. Blacks have no need to deny that they are racists because by definition Blacks cannot be racists.
    51.    Blacks can talk frankly about race; Whites cannot.
    52.    Blacks can overtly discriminate against Whites without penalties. However, if Whites discriminate, or even appear to discriminate, against Blacks, they risk heavy finds and ostracism. Thus, Blacks can legally discriminate against Whites, but Whites cannot legally discriminate against Blacks.
    53.    Blacks are taught to love their race and, to some extent, hate the White race. They are taught to be proud of themselves. On the other hand, Whites are taught to hate their race and to love the Black race and to be ashamed of themselves. Thus, Blacks can be proud of their race while Whites must be ashamed of theirs.
    54.    Blacks can embrace being Black and will be supported and complemented by both Whites and Blacks. If Whites embrace being White, they will be condemned and accused of being racists by both Whites and Blacks.
    55,    On racial issues, Blacks are more likely to be supported by other Blacks than Whites are by other Whites. Many Whites will side with the Blacks.
    56.    While Whites are publicly degraded and ridiculed because of their race, Blacks are esteemed and venerated — especially in schools and universities.
    57.    Blacks have Black beauty contests. However, Whites do not and cannot have White beauty contests. All beauty contests that admit Whites must also admit Blacks.
    58.    Black is beautiful whereas White is ugly or at least irrelevant.
    59.    As the old Black man said, “I am glad that I am not White because Blacks know how to enjoy themselves and have fun; Whites do not.”
    60.    Blacks can say the word “nigger” with immunity. Whites are condemned and can lose their jobs or worse if they say or write “nigger”; they must use the phrase “the N word” in place of “nigger” even in a direct quotation. Moreover, Blacks can use derogatory slang terms like “honky” and “cracker” without penalties.
    61.    Blacks can tolerate heat and humidity better than Whites. Moreover, Blacks have a genetic advantage over Whites at reproducing in the lower latitudes.
    62.    Blacks have higher self-esteem than Whites.
    63.    Black lives matter with the inference being that White lives do not. Some even argue that White life is evil and wrong.
    64.    The feelings and desires of Blacks nearly always trump the feelings and desires of Whites when the two clash.
    65.    Whites are always required to change to accommodate Blacks. However, Blacks are almost never required to change. Thus, Whites are expected to adapt to or at least to accept Black norms. However, Blacks are not expected to adapt to or accept White norms.
    66.    A Black is more likely to have his voice heard in a group of Whites than a White, in a group of Blacks.
    67.    If a Black has a dispute or altercation with a White person, mainstream media and much of the alternative media will side with the Black even if the evidence is overwhelming in favor of the White. However, if a White has a dispute or altercation with a Black person, mainstream media and much of the alternative media will side with the Black even if the evidence is overwhelming in favor of the White.
    68.    Racial classifications beneficial to Blacks are acceptable while those that are not are suspect and are usually rejected. The reverse is true for Whites.
    69.    Blacks and Whites can speak and write about the virtues of Blacks without repercussions. However, if a White speaks or writes about the virtues of Whites, he is condemned as a racist.
    70.    Blacks get to blame Whites for all their shortcomings, problems, and failures. Many self-hating Whites joined them in placing the blame on Whites. Nevertheless, Whites commonly blame themselves for their shortcomings, problems, and failures.
    71.    Blacks are not responsible for their misdeeds, nor are they the blame for their misdeeds. Whites are the blame for the misdeeds of Blacks. Moreover, Whites are responsible for the failures of Blacks; Blacks have no responsibility at all.
    72.    Victimhood has great value in America today. Blacks are automatically victims, and Whites, regardless of economic or social status, are automatically oppressors.
    73.    If Dr. Everett Ramsey is correct, God holds Whites to a much higher standard than He holds Blacks.
    74.    A Black man has been deified in the United States. No white American has ever been deified.
    75.    Blacks have been elevated to a deity while Whites have become the cancer of the universe.
    The great North Carolinian, Chub Seawell summarized the whole Black privilege movement when he said, “The Ku Klux Klan comes marching down the street with a big banner saying ‘white power,’ and the media have a sort of running fit and yells ‘racism.’ Then the NAACP comes marching down the street with a big banner saying ‘black power,’ and the media call it ‘human rights.’” John Galt expressed the same sentiment, “If White people go out and march for black rights, they are hailed as having ‘social conscience’. . . . yet let three White people get together and proclaim their pride in being White men and Katy bar the damn door. They’ll be called KKK radicals, skinheads, racists, redneck and every other foul name that some minority scum can think up.”[2]
    As shown above, Blacks have many rights, privileges, and immunities that Whites do not and cannot have. Blacks receive all sorts of preferential treatment, such as quotas, set-asides, lower standards, efforts to recruit Blacks, and race-norming tests. They receive cash payments for which Whites are not eligible. In short, American society values Blacks more highly than it values Whites. Being Black means receiving hundreds of thousands of dollars in cash, benefits, and privileges denied Whites. Thus, being Black is popular and beneficial while being White is verboten.

1.  Carleton Putnam, Race and Reason: A Yankee View (Public Affairs Press, 1960; Cape Canaveral, Florida: Howard Allen Enterprises, second printing 1980), p. 28.

2. John Galt, Rise! (1989), p. 9.

More articles on social issues.

Copyright © 2016 by Thomas Coley Allen.