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Among the many problems staring our society in the face is the imminent meltdown of the financial and monetary system. There are numerous facets: uncontrolled government spending and intervention; a looming sovereign debt crisis; the enormous, Byzantine derivatives complex; the insolvent banking system; the growing power of the BRICS countries; and on and on. Putting all the pieces together is a daunting task.
Standing ready to assist us in this labor are the great thinkers of the field. Among these must be counted the incomparable Friedrich August von Hayek (1899-1992). He is best known as one of the founding fathers of the Austrian school of economics, and the outspoken nemesis of John Maynard Keynes. Hayek demonstrates conclusively how Keynesian economics—that web of misconceptions and mythology in which the West is now trapped—is dysfunctional and guaranteed to fail. But Hayek goes far beyond this level of analysis. He goes deeper, burrowing into every rabbit hole of socialism and interventionism to expose the ideological and spiritual foundations of this perennial challenge, not merely to the financial and monetary system, but to civilization in its entirety. I am reprinting below a post that I wrote about him in 2007, on the original AWOL Civilization blog. * * * The Extended Order of Human Cooperation No blog on the deterioration of Western culture would be complete without a tribute to Friedrich August von Hayek (1899-1992), the great Austrian-born economist and philosopher. When one considers the breadth of his work and the acuity of his analysis, he may very well be the preeminent sociopolitical thinker of the 20th century. No one has been such an outspoken advocate for liberty, or such a devastating foe of all forms of socialism—what Hayek often calls "collectivism." In The Counter-Revolution of Science (1952), he deconstructs the illusions of the early socialist thinkers, notably the false doctrine of “scientism," the misapplication of scientific methodology to social phenomena, particularly history. History, Hayek explains, is not a real thing, subject to the methods of the natural sciences. If we are to undertake a study of zebras, we need not hesitate to employ these methods. We see before us a type of animal that is clearly distinguished from other species. There can be little doubt that a zebra is a zebra. Our subjects behave in accordance with the characteristics of their kind. They cannot change themselves, and there is no emotional or intellectual bond between researcher and subject. All this is completely different when it comes to human history. Our subjects do not behave in a predictable fashion, and they can remake themselves. There are many bonds (and enmity) between researcher and subject. But most importantly, the creation of history is itself a subjective act. The actors are implementing what they believe to be “their" history of the moment; moreover, each individual has a different perception of his own behavior, his neighbor’s behavior, and indeed everything else occurring in the world. To say that this phenomenon is subject to laws in the same sense as natural laws is a serious error. In The Road to Serfdom, written during World War II, Hayek demonstrates that Communism and Nazism are two sides of the same collectivist coin. He traces the careers of the National Socialist (Nazi) leadership, showing that they were socialist in every sense of the word. In fact, many were prominent “left-wing" socialists or communists who embraced the swastika as Hitler rose to power. Hayek thereby dismisses the influential myth that the Nazis were some sort of ultra-conservative movement. In The Constitution of Liberty (1960), perhaps his magnum opus, Hayek lays out a philosophical blueprint for a 20th-century society based on liberty. This book is the modern heir to the ideas of Locke and Adam Smith. The Fatal Conceit (1988) is a general critique of socialism, in which Hayek shows that “rational" planning is doomed to failure. The very first paragraph sums up much of his thinking: “This book argues that civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread…” When I read Hayek, I am always struck by his vast command of history, culture, philosophy, and economics, as well as by his matter-of-fact tone. His attitude is distinctly non-ideological; he is never the advocate of a party or “program.” Hayek warned us about flirtation with the wily seductress that is collectivism. Will we take heed?
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Bitcoin is again capturing headlines, due to its recent dramatic surge in price, and to the notable personalities and institutions that have hitched their wagon to the crypto train.
Who invented it, and why, are questions open to debate. What seems incontrovertible, however, is that Bitcoin is a massive speculative bubble, a latter-day tulip mania, a Ponzi scheme that requires ever-increasing infusions of new cash. This need is so great that the bagholder of last resort may very well be that endless fount of liquidity, the U.S. government itself. Witness the declarations of President-elect Donald Trump and others indicating the possibility of purchases by the Treasury. Moreover, it appears that enormous sums are already being channeled from Bitcoin into government bonds, via “Tether.” Does anyone still claim that Bitcoin is a form of money? In the heady early days, many naive Libertarian types succumbed to the hype, proudly announcing a “digital gold,” a ticket to financial freedom, beyond the control of rapacious governments and central banks. Although most of the major players currently are big-money types who cynically (and now openly) manipulate the suckers, one can still find die-hard coiners of the old school. In a recent debate, Peter Schiff went head-to-head with Robert Breedlove, a youngish defender of the faith. Schiff easily demonstrated that Bitcoin is in reality “nothing,” and has none of the key characteristics of true money. The one exchange between the two men that stuck in my mind was related to the notion that a good money must have value. Both debaters were in agreement on this point. Schiff, however, emphasized that the object used as money must have a value apart from and prior to its use as a monetary instrument. Naturally, gold fulfills this requirement (and all others); Bitcoin does not, because it has no existence, so you can’t do anything with it, other than buy and sell it. It has a price, but it has no value. The response of the crypto advocate: “value is subjective.” In other words, it has value because we say it does. No need for any practical application in the physical world—that’s dinosaur thinking. Subjective value, forsooth! Bitcoin is a widely-touted alternative to fiat currency. A delicious irony presents itself: Does this "subjective" business not sound suspiciously like the basis of the fiat dollar, indeed of all fiat currencies? Here, take this piece of paper with a number printed on it, backed by nothing, but don't worry, the government says it has value. Somewhat reminiscent of modern art, is it not? A silly person tapes a banana to the wall and calls it art. You say: Wait a minute, it doesn't fulfill any of the requirements of art. Ahh, my friend, don't you fret, it's all subjective. Come to think of it, there are countless examples of collapse along these lines, where reality and quality go out the window. Welcome to the modern world. Ersatz everywhere you look. I wonder just how far the level of intellect had to decay, in order to reach this cerebral wasteland devoid of logic and rational thought. How far did the decay need to progress before huge numbers of otherwise bright and educated people signed up for the digital utopia? They can already live most of their life on line: shopping, social interaction, entertainment, even the carnal pleasures. Why not have money exclusively on line as well? The digitization is already well advanced, so let’s push it just a bit further, and erase any remaining link with “meatspace.” Instead of Bitcoin, they should have named it Smartcoin. Everything else, from cars to refrigerators, is becoming smart; in other words, subject to endless complication and breakdown. The transition from crypto currency to central bank digital currency (CBDC) is obvious at this point. Put it in the basket with lockdowns, social media censorship, unrealized capital gains, elimination of cash, destruction of small business—all paving the way for the digital gulag. You say you want to deal with real people using real money? Hahahahaha….. |
Dystopian literatureWelcome to the blog! While you're here, check out the six dystopian novels by Gary Wolf. His latest is The Cubist Supremacy. 
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