From the Easy Chair

Inflation

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 13-214

Genre: Speech

Track:

Dictation Name: RR161AF59

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161AF59, Inflation from the Easy Chair, excellent colloquies on various subjects.

[Rushdoony] This is R. J. Rushdoony, Easy Chair number 163, February 11, 1988.

This evening Otto Scott and I are going to discuss inflation. In spite of all the propaganda to the contrary, inflation is still very much with us. And the Reagan administration has not defeated it. It has only increased it.

Now before going into the subject of inflation, it is best to understand a few things about it. Inflation is the increase of the money supply. It is a subject that is important to us because we have been in a time of inflation since Roosevelt took office. One of the things that inflation does is to give relief to those who are in debt at the expense of those who are creditors.

I am going to read, before we begin our discussion, something from a book published first in 35 and again in 36. So it is over 50 years old. The author was Freeman Tilden. The title of the book A World in Debt. And this is what he said, and I quote:

“The vital prerequisite of an effective inflation which will result disastrously to the creditor position is the intent to falsify the true economic position of a nation or to relieve the debtor at the expense of the creditor. Where there is no such intent there may be a temporary inflation, not harmful, possibly beneficial. And it will contract itself when its work is done. Inflation, whether bank, credit or paper money cannot be effected until the larcenist purpose is generally comprehended,” unquote.

I would like to comment very briefly on what Freeman Tilden said at that point. When Roosevelt took office in the early 30s he immediately began a vast increase of the money supply, a vast increase of available credit. But because people at that time did not have larceny in their hearts and they were badly burned by the collapse, they did not buy his inflation. As a result, prices did not go up and people refused to go along with the inflation until after the war when the returning veterans wanted everything and wanted it quickly.

But his definition of what makes inflation work is important. It is larceny in the heart. It begins with larceny on the federal level and then the people buy it. They go into debt, because going into debt is the honest way, supposedly, of stealing.

However, in the end it is the people who are robbed by the federal government because as inflation proceeds they are progressively gutted through taxation as well as inflation.

Well, I am going to stop at this point. Otto, do you want to make some general comments including a comment on whether or not we have had inflation in the last few years?

[Scott] Well, yes we have had inflation, I think, but longer than that, Rush. There is an old account book in my maternal grandfather’s home and he worked on the brick yards. And I noticed that around 1910 or so he made about 12 dollars a week which was a considerable wage in those days.

[Rushdoony] A very good wage.

[Scott] His home only cost 720 dollars. He paid cash for it. At that rate it was about the cost of a year and a half salary, a year an a half income. If homes today were selling at a comparable ratio they would be selling at, say, 30, 35,000. But 12 dollars a week supported a family. Three or four cents could buy a meal in a restaurant. A dollar was a fair sized note. Ten dollars a very big note and so forth.

So what we are talking about here is an inflation which took a big spurt under Roosevelt, but which had been steadily growing, because that 12 dollars a week became 25 dollars a week when you and I were young men. Twelve hundred dollars a year was a fair salary for a working person, postal salary, you might say.

Then in 1967 or so I did an article of discussing the role of scientists in the rubber industry and I interviewed the directors of various rubber research institutes. These were men who graduated in the top percentile and they were recruited by the big rubber companies at 125 to 150 dollars a week in 1939. In 1967 when I interviewed them, the same institutes were recruiting the same caliber of young graduates, young scientists, mostly chemical chemists and so forth had 1000 to 1500 a month, which was a factor of 10. Now we find that has been doubled again so that... well, more than doubled. High priced law firms last year were beginning young men at 60,000 a year. I don’t know what the rubber companies are offering, but I would suppose somewhere between 40 and 50,000 a year for the top grade.

So we are getting into boxcar numbers. Now if we look at inflation in other countries we find that it runs its full course in roughly three generations. And if we go from let’s say 1913 until now we are about 80 years old, a little over that, more or less. So we have another decade to go in which we could, if the parallel holds up, see what the economists call the chute in which everyone loses faith in the money.

[Rushdoony] Yes. It is true, as you have said, that inflation is a long standing thing in this country. Some years ago I did quite a bit of reading and studying and I thought for a while of writing a book on the coinage of the United States in the early years and what happened. And I did write two or three chapters and I don’t know what this happened to them, but what was especially interesting to me was the way business was conducted from the time of George Washington to within not too many years of Lincoln.

We had in those early hears a half penny piece. We had a penny. We had a two cent piece. All three of these were copper. Then we had a silver three cent piece, a five cent piece of a half dime as it was called. We had the dime and we had the 20 cent piece.

Now most of the business was conducted with the first three or four coins, because each of them would buy quite a bit so that a dollar bill was very great wealth. It was a lot of money. Moreover, when we first started to mint gold coins our first coins had no denomination, because they were in terms of weight. And later when we did give a denomination the 20 dollar gold piece of double eagle was one ounce, 90 percent fineness gold. The eagle or 10 dollar gold piece was half an ounce and so on down. So it was a very hard money oriented culture that we had and what happened was at first the half cent went out of circulation and then the three cent and then we had a nickel instead of a half dime which had been silver. And the 20 cent piece went out. And, of course, now they are saying that the penny is obsolete and the nickel, maybe the dime, because parking meters have gone up to a quarter.

So we are seeing some dramatic changes in the whole outlook of the country and von Mises once commented on the fact when somebody said there is not enough gold or silver in the world to provide currency and he said after inflation goes for a while there is not enough paper in the world to provide money. And states are the only agencies that can take perfectly good paper, print them into money and make them worthless.

[Scott] Well, that is ... that is fascinating. I didn’t know about all those coins. A half dime I know about and some of the others. But all of them I didn’t know.

But, as you recall, both of us ran across an old book on American money about three or four years ago beginning with the continental dollar, the paper dollar. And I will never forget the congressman then who said, “Why should we ever have any problem with money? We just get a quire of paper and print whatever we need.” And although this has been to an extent a hard money country in the past, it was also always a country where the people felt that money should be made plentiful and our banks put out all kinds of paper all through the history of the United States. And they are still doing it, of course, through the federal reserve.

Now I remember interviewing Bill Friedman who is a remarkable man. He went into the banking business when he was about 12 or so as a gopher, I suppose you would say in a Chicago bank and he wound up in his 80s highly respected, very successful banker and a loan officer.

And one of his early tasks was to take a big bundle of various bank notes and tat is what a bank note was—a piece of currency put out in the name of a bank—down to the clearing house in Chicago where they would osterize them some fashion or another and put them all together. I am not quite sure myself how it worked. And some of these banks would fail. Some were better than others and some were known across large areas and some were only regional. And from the beginning, therefore, there has been a sort of a poor man’s greed, you might say, regarding the whole issue of money in the United States. We had several problems, I think, which led to this.

When we got rid of the aristocracy, we also got rid of the idea of an aristocracy which was probably a mistake. But a hereditary aristocracy, of course, runs thin and doesn’t hold up, but what Jefferson referred to as an aristocracy of merit really should have replaced the hereditary aristocracy and it didn’t. What we used instead nationally speaking was money so that a person with money became worth more in every sense than the person without money which wasn’t a very good idea. But it set off a mad scramble, which we have never really overcome.

[Rushdoony] Yes. That is very true. Of course, John Law was the great innovator within western cultures of paper money. And ironically he was a Scot who propagated his ideas in Britain where they were never ready to go along with him all together. Now, in a sense, you could say the whole idea of an inflationary currency first began in Britain with the Bank of England. But the Bank of England over the decades and now a couple of centuries, has always been a bit better controlled. So they never went to the excesses that took place in France when Law was accepted there and which debauched the economy of the country. And Law’s ideas were picked up throughout Europe and used.

In this country paper money came in the back door. The idea of stealing from a crook, so to speak, is very, very dangerous, because you become a crook in the process. And the thing that started the paper money craze in this country and Benjamin Franklin was one of the great advocates of it to his dying day, a bad influence in that area. At any rate, the British had give a monopoly on trade with America and other places, the East India Company and other groups and as a result American seamen were barred from going abroad and bringing in goods at the best possible price.

So it was destroying American trade. And when the ships would come, the East India Company ships, it would mean that as they sold things that were illegal for Americans to buy elsewhere or to trade for, America would be stripped of its natural resources, whatever coinage, gold or silver, they had accumulated. So since the acts of the various state or colonial legislatures were valid until the king overturned them—he had the veto power—and that took a few months with the sailing vessels of that day to carry the acts to London and then to come back with his signature or veto. And they were valid until he vetoed them.

So the colonial legislatures decided we will get even with the East India Company and these other groups. We will pay them off in paper or {?}. So they passed paper money laws to get at these British monopolists. But it became an addiction and the common people began to love it. So with the war, of course, it created all kinds of problems and it was with difficulty that they got the hard money clause through. But they left a loophole in that they allowed the banks the power to create paper money. And almost every depression in American history until this century was created by the banks with their paper money.

[Scott] Well, let’s go back to John Law for a minute. A fascinating story. Did you know that Law gets credit? He gets too much credit. It is true that he introduced the idea of paper money to the regents in France and that he convinced the regent and various and sundry others that based upon the power that... the value of the land, I believe, that would back the paper money. But that wasn’t sufficient for the French of that day, because it was a period when God and silver was {?}. So therefore they said the paper money that was printed and circulated would be backed by gold. And on that basis it was accepted.

Then when one of the of the nobles had enormous amount of this paper money to send his servants and a carriage to the French treasury and said, “I want to redeem this,” the government reneged and refused to pay off and that is when the whole thing fell apart.

[Rushdoony] Yes.

[Scott] Now that reminds me very much of the United States. Mr. Nixon was confronted with a run on gold. Our dollar was still redeemable in gold by the central banks, not by the individuals by the United States, but by the central banks. And the central bank of France in particular which has always had a great fondness for gold, the French love gold, made a big run on the Nixon administration treasury for gold. And then he closed the gold window.

[Rushdoony] Yes.

[Scott] And said we will no longer honor our promises. Prior to that, of course, Mr. Roosevelt had done that to the people. He had done what the regent in France had done. He had said the American dollar is to be backed by gold. And Mr. Roosevelt was the one who said, “Not only will the dollar no longer be backed by gold, but the citizens of the United States will no longer be permitted to own gold.” And the Supreme court of the United States upheld him in this confiscation of property. And that was a court which was then described as too conservative.

[Rushdoony] Yes.

[Scott] It was a court that had spaghetti for spines.

[Rushdoony] Well put.

[Scott] Because when ... when he sent them the package, when they stood for a little while they resisted, he threatened to pack them, the caved in, bingo, a bunch of noodles.

We have, then, done, we have repeated some historic crimes. Now when the government of France reneged, when the king reneged and Law was ruined together with everybody else, the people of France never again regained their faith in that particular {?}.

The Bourbons lost the allegiance of the people of France.

[Rushdoony] Yes.

[Scott] That was 1715 and it took until almost 1790 before the results really emerged. How long is that? Eighty... 80 years roughly, 84 years.

So the United States government reneged in 1932, 33, reneged in 1933, because if I remember correctly {?} homeless until the year after the election.

I am not sure that the people of the United States today have any faith in the government of the United States.

[Rushdoony] Not much, that is for sure.

[Scott] Not much. How much could you have? My mother put 80,000 dollars into World War II war bonds in 1942.

[Rushdoony] That was a lot of money then. Tremendous.

[Scott] And she let it sit in the bank and never told us about it until she died at the age of 83 a few years back and, of course, she never dreamed that the government of the United States would steal the value of that money from her. But it did.

[Rushdoony] Yes. Yes. Well, today we are coming into the latter stages of inflation and the payoff will come before the end of this century, if not some years before the end, because inflation always results in some kind of dramatic collapse.

The men in Washington believe that they can negate past history, that what has happened in the future does not necessarily have to happen again. And basic to that premise is the belief that there is no God, that there is no law in the universe, that man can govern reality and remake it as he chooses.

[Scott] I have a good quote on that. I have an interesting publication here called Understanding Defense. I hadn't seen it before. Somebody mailed it to me. And it is an independent newsletter. Most of it seems to be fairly interesting, but he has got some... one paragraph here which really caught my attention. He says, “While the dollar in its worst case, cases has fallen about 50 percent against the mark of West Germany, our third largest trading partner, and 43 percent against the franc of Switzerland, our 16th largest partner, it has risen nearly 140 percent against the peso of Mexico, our fourth largest trading partner and almost 240 percent against the currency of Brazil, our 12th largest partner. Against our largest partner Canada the dollar has fallen under eight percent and not even 30 percent against Japan our second largest partner.” Those figures he says are taken from the 14th of December, 1987.

Well, that is a very interesting way to put things, because when he says that our dollar has risen against Brazil, of course, we are talking about a country where the inflation rate is 1000 percent.

[Rushdoony] Yes.

[Scott] And when it has risen against Mexico, the Mexican peso is dropping like a stone everybody knows. And what we are looking at here is a statistical description of an artificial world...

[Rushdoony] Yes.

[Scott] ...which is totally remote from anything real.

Now economically speaking, if ... talk about our economic circumstances is almost impossible, because, for instance, we don’t know the cost of our agricultural products because of the immense subsidy given to the agricultural sector. We don’t know what it costs to raise what. And therefore we have no idea of what pricing mechanism is at work, nor do we know anything about these other currencies in relation to ours. What we are talking about is a bunch of paper. None of them are backed by anything. It is not even when you come right down to it money. If you move from one of these countries to another, you have to declare how much you had when you came in and how much you are leaving with.

It is as though we have a bunch of company stores and a bunch of corporations running us all and they are issuing their own cigar coupons and telling each one of us what we can buy with them.

Well, how can you make economic sense out of this sort of a world? What is the real value?

[Rushdoony] Yes.

[Scott] What do we use as a standard?

[Rushdoony] Yes and every attempt is made to prevent the one real standard in the economic scene from registering properly, that is the price of gold. So you have dumping of gold by central banks apparently it is reported regularly in order to depress the price so that it will not reveal weakness of the paper currencies. So that is a further fraud that is practiced, to give an artificial strength to the paper currencies in relationship to gold.

[Scott] Well, if the central banks still use gold.

[Rushdoony] Yes.

[Scott] The bankers tell us that gold is not really collateral. One of the things recently that has upset the gold market has been an agreement by one of the large banks to lend a mining company money using one million ounces of gold as collateral. I think 400 million dollars or something like that, 400 dollars, I think is what they are willing to lend. I am not positive about the figure. It is a large amount of money. And that has upset the whole banking system.

[Rushdoony] Yes.

[Scott] Because it is the first crack in what was a boycott against the use of gold as collateral. Bankers across the country have said you cannot bring gold into here. We won’t lend you any money on the gold. Even though the price of gold keeps going up.

[Rushdoony] Yes.

[Scott] Even though they will take your house, even though the house has got termites all over it. They won’t take gold.

[Rushdoony] Yes.

[Scott] And this, of course, is puzzling except that what you are talking about is a solid union position, because otherwise everything in the bank would become worthless.

[Rushdoony] Yes.

[Scott] Now on the other hand the Wall Street Journal recently said, in an editorial headed, “Good as Gold,” and did you read it?

[Rushdoony] No. You didn’t give me last Friday’s.

[Scott] Ah, oh, well, I am sorry.

[Rushdoony] I watched for it, but Friday’s paper didn’t appear.

[Scott] Oh, it is home. I will bring it tomorrow. I apologize, because it is the lead editorial. It says, “Good as gold.” And it had some kind things to say about Jack Kemp because Kemp recognizes that gold is a standard of value and it also has some kind words for Mr. treasury secretary Baker. It is saying that maybe a basket of securities including gold might stabilize the monetary situation. And it also says something about the European bankers who are wondering about the use of paper {?}.

So after years and years of disdaining the whole subject, the {?} writers of the Wall Street Journal have finally decided that things are scary enough to start talking about using gold.

[Rushdoony] Well, Otto, I have a story that will match that, I think, because back in the late 60s and early 70s a very good friend of mine, you know him, Bert.

[Scott] Oh, yes.

[Rushdoony] Worked out a very good deal for his better customers. If they would buy a sack of silver dollars they would be purchased on a loan from the bank of 700 dollars per bag. And you paid 300 or 400 depending on the price of silver. This was before silver began to rise. And I think when he started it a bag of silver dollars was 1050. So you only paid a 50 dollar premium. So at that price you paid 350 dollars. The bank loaned 700 and held it as collateral. Well, when the board of directors at the bank met and they learned that there were hundreds of bags of silver dollars in their vault, they were horrified. Wasn’t that dangerous lending money something like that? And he was told by the bank vice president who had been in charge of this, “We have only loaned out 700 dollars for thousand dollar bag. Yes, but what if the price of silver collapse?”

[Scott] How could it?

[Rushdoony] Yes. It is legal tender.

[Scott] How could it collapse?

[Rushdoony] It can never go below...

[Scott] A dollar is a dollar.

[Rushdoony] Yes. So they still could not comprehend it. I should add that a popular movie star was one of the board members of that bank, so you know how much intelligence there was in that board.

The federal government, of course, finally killed that kind of deal and said they could not borrow on money.

[Scott] Is that so? They couldn’t borrow on money.

[Rushdoony] On the money of the United States, silver dollars.

[Scott] You know, the bureaucratic mind is something that I will never understand.

[Rushdoony] Can you imagine feeling that loaning 700 dollars on 1000 dollars in silver is somehow bad banking?

[Scott] Well, we are getting...

[Rushdoony] No wonder our banks are in trouble.

[Scott] I had a fellow tell me just a few days ago that he wanted to rent a car for cash. And the car rental agency got quite upset and said he would have to post a large bond before they would do it.

[Rushdoony] Well, Dorothy and I saved up for years to buy a house. We didn’t have charge accounts or anything so we had no credit. And we were making a down payment of four times the required amount and we had it there in a check and they were turning us down, because we had no credit. And I said, “Isn’t it an evidence of credit that we are starting off with four times the amount you are calling for?”

Well, you may have something there, the bank loan officer said.

[Scott] Well, we ... there has been a slip, a slippage, I think, in the caliber of the people involved.

[Rushdoony] Yes.

[Scott] Just as an experiment about a 10 months or so ago, my daughter has a ... I took out an insurance policy payable in 20 years when she was five. And when she was 24 and a few months I said to the banker, “Perhaps you want to lend my daughter some money and accept this insurance policy as collateral, because it will be due in another year and she looks healthy and if she isn’t and something happens to her, I am the beneficiary and I will have the money from the policy.”

And he said, “Well, I will have to ask the central office.”

And it is impossible to have better collateral.

[Rushdoony] Yes.

Well, they are so far afield. They have been brought up in terms of a debt mentality and a paper mentality and they don’t understand reality anymore.

[Scott] What they are up to is mortgaging houses.

[Rushdoony] Yes.

[Scott] They can understand a home mortgage, equity loan they call it. They won’t call it a second mortgage, but they are hung up on this. It is the only thing they want to lend on.

[Rushdoony] There is a story that I remember from my grade school days. I think it was written by H. G. Wells about the man who had one eye and he lived in a valley where all were blind and the persecution he endured and he had finally to flee for his life because they insisted that reality was not what he said it was.

[Scott] That has all the ring of truth.

Well, it is true. Bankers are not businessmen. Bankers are bankers. There is an entirely difference. I mean they will lend you money if you don’t need it and if you get in trouble they want you to pay off right away.

[Rushdoony] They are bookkeepers and not very good ones at that.

[Scott] Well, right now, of course, they have been encouraged by the American government to lend money all around the world. Now part of the reason that they were able to lend the money was to pick the dollars. The money that the Arabs put into the banks which the bankers then use as a basis to lend to the most ridiculous people, to various black African nations, to the Soviet Union. Nobody knows how many billions of dollars have gone to the Soviet Union.

[Rushdoony] Yes.

[Scott] ...both through their satellites, you know that Poland owes over 27 billion dollars and it was unable to pay its interest a few years ago as you recall and it was allowed to reschedule the interest. In fact, I believe another loan was given it so it could pay the interest on the 27 billion.

[Rushdoony] You mentioned in just in passing bank loans and foreign loans. Going back to Tilden whom I quoted earlier, he wrote, “Nations cannot without danger become creditors of other nations to any amount whatever. No loan from one nation to another nation can possibly bear merely commercial significance. From the very nature of the state as opposed to that of individual or the corporate group. The loan will be political. Wherever such political loans are in vast amounts, the result will probably be, though by indirection, a war. And wherever a nation has deceived itself into thinking that a political loan is a commercial venture and cannot undeceive itself, the resulting fury of that disappointed creditor will reek itself inevitably upon world commerce, which is to say, upon itself as well the debtor. It follows that no nation should ever make commercial loans to other states,” unquote.

[Scott] Well, what we have done is historically speaking is to repeat the error of the Spaniards. When Spain got this enormous river of gold and silver from the New World, it used that money in an attempt to solidify Spanish power in Europe. And, of course, it was like pouring water into the sand. The people took the French and the Italians and everybody else took Spanish gold and silver and enjoyed its use and forgot about Spain. In fact, they turned to hate Spain because they expected Spain to get something in return which they weren’t willing to pay.

[Rushdoony] Yes.

[Scott] Now in 1928 when the United States cut off credit to Germany it started the Depression. Central Europe collapsed without the American subsidy. And the whole thing swung around like a big boomerang to hit the markets of New York and so forth.

Right now Castro is organizing all the Latin Americans to default. What can the United States do if they do default? Nothing. We can’t... we can’t invade them.

[Rushdoony] Right.

[Scott] And I understand by reading Franklin Sander’s newsletter The Money Changer, that there was a seminar sometime, I believe, this summer in Colorado in which they discussed one immense central bank for all the western countries. And the issuance of the new currency. Of course, you know that the common market has already issued a gold {?}.

[Rushdoony] Yes.

[Scott] ...which nobody has accepted and nobody has used. But it is there. And the Wall Street Journal once in a while carries a little ad for anybody who wants to buy one. So they are talking about putting all the central banks together.

Well, what difference does that make? It sounds like those agencies that say consolidate your debts. I owe... often wonder if you consolidate your debts to the agency and they charge you a fee, you owe more than you did before you consolidated.

[Rushdoony] Yes, yes.

[Scott] So what... what are they talking about?

[Rushdoony] Yes. Well, some years ago about the time of the crash, the 1929, I think I was in the sixth grade, in world history in those days we were taught about the Spanish Empire and its blunders and how that was the worst possible thing any state could do trying to buy power by passing money all over the world. And this always tickles me when I think about it. They said as a culminating insult to economic reality, they imposed the {?} tax on their people.

[Scott] Oh. Well, really...

[Rushdoony] You never get that I history now.

[Scott] No. it is interesting, because the Spanish Empire is the empire that we most closely parallel. Now, of course, the Spaniards were great fighters to begin with. They didn’t get that empire through a trade in commerce. They got it through war. And at one point the United States was a fairly warlike nation, but it has now decided that it can buy its way into security. It reminds me of that story in Gibbon about the wealthiest man in Rome when the praetorian guard was making Caesars.

[Rushdoony] Yes.

[Scott] And he paid the guard to make him Caesar and they did for one month and then when he was at a banquet they came in and cut off his head.

Now money is not power.

[Rushdoony] No.

[Scott] It is only power in a stable society in an organized and secure civilization. Then money is influential and money has its uses. Real money, of course, makes men free of the state.

[Rushdoony] And the problems Spain had was that it was unearned wealth.

[Scott] Ah.

[Rushdoony] They got it from the Incas and from the Aztecs.

[Scott] And slave labor.

[Rushdoony] And slave labor and they didn’t work for it. And it immediately falsified their economy and their life. It destroyed them.

[Scott] Very important point. It brings up the gold rush. Somebody recently wrote a book called And the Word Rushed In about the gold rush. And I talked to the author, a very interesting man, because it took him 20 odd years to write the book. He said it became a source of great embarrassment. People stopped asking him how it was coming and I am glad to say that it was a good book when he finally finished it.

[Rushdoony] Yes, it was.

[Scott] It had a good sale. But he said it changed the American psyche, because tales of instant unearned wealth began to float through the country and they get rich quick myth began with the American gold rush.

[Rushdoony] Yes.

[Scott] And Thoreau who was not one of my heroes nevertheless said a very bright thing. He said, “It makes of God a moneyed gentleman who throws gold sovereigns in the dust for peasants to squabble over.”

But it is true. The Spaniards lost all their respect for work.

[Rushdoony] Yes. And it is interesting that the Spanish inflation, unlike any other inflation in history was not with funny money.

[Scott] No.

[Rushdoony] It was gold.

[Scott] That is right. It was with good money.

[Rushdoony] It was with good money, but no work.

[Scott] But what they did with their money at home, they built nunneries, they built monasteries, the built cathedrals. They built churches and they built schools. Now I don’t care how educated you are, you cannot educate yourself into wealth.

[Rushdoony] Yes.

[Scott] That is not real wealth.

[Rushdoony] And it became a sign of a gentleman that you did not have to work.

[Scott] Absolutely. And...

[Rushdoony] It corrupted Spain.

[Scott] It has begun to be the same sign here.

[Rushdoony] Yes.

[Scott] You have to go through college. You have to have your degree. And you don’t stain your hands fixing automobiles or painting houses or digging ditches or anything of that sort. You have to be... well let’s see. We have got more people lending each other money than any country, I guess, that has ever existed.

[Rushdoony] Yes. It is a service economy. Everybody is taking in a neighbor’s washing and that is how they stay wealthy.

[Scott] Well, of course, it doesn’t have to go all the way over the cliff. If we were to pull up at any point and establish a sound currency a great many of our problems, economically speaking would begin to diminish very rapidly.

[Rushdoony] And if we had not made the foreign loans we have and the foreign subsidies we would have no debt.

[Scott] We would have no deficit.

[Rushdoony] Yeah.

[Scott] We... we ... we have ... it wasn’t international ... it wasn’t national welfare that put us down. It was international welfare.

[Rushdoony] Yes.

[Scott] The worst part of this is that we gave it to the worst people.

[Rushdoony] Yes.

[Scott] We didn’t use it to seed Capitalism. We did it to seed Socialism and a great deal of it, of course, has gone into weapons of war and we have provided not only the weapons, but the money to enable various despotic governments around the world to kill their people and oddly enough our media keeps praising the worst of these despots while it heaps contempt upon those countries that are doing some thing more honest.

[Rushdoony] How much would you say we have lost in dollar value in the last two years?

[Scott] Well, over all 50 percent.

[Rushdoony] Fifty percent. And most people aren’t aware of it.

[Scott] Fifty percent of everyone’s fortune has evaporated in the international market place.

Now, of course, when we talk about making... making... printing more money, we have to consider credit cards. That is money. And we have to consider all the various instruments of money. So we have M1, two and three and so forth. We have all... our forbearers would have been amazed at the idea that you and I could write out money in the form of a check, make our own.

[Rushdoony] Well, we have created a great many instruments and the instruments are now ruling us. They have altered the attitude of people toward us, money, towards spending.

[Scott] Well just look at the sums of money. When Barbara Walters was given a million dollars a year it was considered newsworthy enough to put on the front page of all the papers of the country. But to not... today people like Don Rather are getting two and a half million a year.

[Rushdoony] Yes.

[Scott] Or more. And we have Bill Cosby who has apparently made over 50 million and all these enormous sums just keep rolling out like French francs used to sound to us or Brazilian millgraves.

Eric Danish who is in his 80s talks about the German inflation. He remembers it. He said they stole all the lead pipes out of the buildings. They took the brass door knockers off they doors. He said one of the members of one of the friends of his family had a golden chain, a watch chain and he lived by selling the links from the chain. And I recall seeing in one of books of the period a scientist in Germany writing a letter to a friend in England saying that he couldn’t afford a subscription to the magazine and his friend sent him an English pound, the subscription price, and it was enough for him to live for a month with it, because the pound was backed by gold.

[Rushdoony] Yes.

[Scott] And so was the franc and so was the American dollar. And the... the mark was backed by nothing.

But the difference is that in those days you had these strong currencies. Today there isn't any. All our money is like the Soviet ruble. The fact that other countries will exchange it for us or with us is, of course, temporarily very fine. But unless we put a floor under this, the next administration of the United States may find itself handling a problem larger than it can confront.

[Rushdoony] Well staying in Germany and the inflation of 23 was the pigs of the farmers walk on Persian carpets.

[Scott] I bet they did, too.

[Rushdoony] Because people were selling prized possessions for a little bit of food. And I.... Dorothy and I when we were in southern California would see a couple occasionally. They had been very wealthy in Hungary. This was before World War II. They had been driven to school both of them, before their marriage to one another, by chauffeurs. That is the kind of wealth they came from. During the war they were reduced—they were a newly wed couple—to using an American double eagle, 20 dollar gold piece, to buy a rat, the only thing they could purchase to eat.

[Scott] Well, I remember being in Italy at the end of World War II when practically all the money was counterfeit. You had to be an expert in Italian money not to be stuck with a handful of counterfeit. So your first purchase often was last purchase, because all your change was counterfeit and you couldn’t buy anything else. And I ... I remember that in Amsterdam there were three armies there at times standing on the {?} and in the course of an hour being offered every commodity human and inanimate that is possible to imagine. And to see the economy collapse and to see what people do is an unforgettable experience.

[Rushdoony] Yes.

[Scott] Now here we are with all this luxury, Mussolini style buildings and so forth all over the place. And it just seems that nothing really bad can happen, which is to argue that the law of gravity doesn’t operate in American air. It does.

[Rushdoony] Well, the best part of all of this is that ultimately it is not Washington nor Moscow nor London nor Paris that is in control, but God. And there is a judgment in every area of life including the economic sphere. So that inflation destroys the people and the nation that uses it. So we are going to see a destruction of all these civil governments and the central banks that are using this kind of larceny to further their goals.

[Scott] Yet we look at Germany which came out of World War II absolutely ruined, its cities in rubble, its people destitute, the German people paid an enormous price for following Hitler.

[Rushdoony] Yes.

[Scott] Millions upon millions of them were killed.

[Rushdoony] Yes.

[Scott] Their property destroyed. They were disbursed. They were humiliated. They were disgraced and {?} and then they said, “Now we are going to do things the honest way under Gerhardt.” They put up an honest currency. They went to work and, of course, they got help from the United States in the terms of credits, technological assistance and so forth. But fundamentally they went to work.

[Rushdoony] Yes.

[Scott] And now they are rich and powerful, only half the nation.

[Rushdoony] Yes.

[Scott] Is now again a big factor in central Europe.

[Rushdoony] Yes, which means that without the same devastation, with everything in tact. If we adopt the same kind of determination and a work ethic, we will accomplish far more.’

[Scott] No question. We will go up like a rocket. This country has probably got the greatest number of highly skilled and intelligent people that any society has ever produced. The very mixtures of the American society have created a dynamic people.

[Rushdoony] Yes.

[Scott] The only problem is that we have ... as {?} said, “The Americans are wonderful, but,” she said, “they lack conceptual thinkers.”

As a nation we have never produced great philosophers. We have never really produced outstanding spiritual leaders. The Americans don’t like to add things up. Most of the men that I know work hard want to watch football on the weekends, want to talk shop and then if the subject gets onto something larger their eyes glaze, turn into orphan Annie eyes. The pupils disappear. But the thing is if... if things get tough, we are going to have to add things up.

[Rushdoony] Yes.

[Scott] And if we add things up, I think we will come out the right door.

[Rushdoony] And I think that is what is happening right now. I do believe that we are a part of something that is happening in the United States that is going to turn this country and with it the world around. I believe in the providence of God we have been given the greatest opportunity of centuries at the time when we are in the crisis of centuries. So it is important in particular for Christians to become more responsible in this sphere, because the economic sphere is very important.

We were talking about death a while back, you recall. And I pointed out and I would like to point out again that one of the tragic facts is that the average evangelical Christian is more in debt than his atheistic neighbor.

[Scott] Is he relying on God to pay his debts?

[Rushdoony] He is relying on God and because he usually is a harder worker he has a greater borrowing capacity. So he had made himself more vulnerable and we have got to turn this around. I am glad that we are hearing from people who say that as a result of what they have learned from us, they are working to get out of debt or have managed in the last year or so to get out of debt.

[Scott] That is great, because, you know, if you pay off your mortgage ahead of time you are out of debt that much sooner and you pay less.

[Rushdoony] Yes. Yes.

Well, our time is just about up. Are there any last words you have to offer us?

[Scott] Yes and very interesting. You remember on our trip to England listening to the devastation wrought by debt among families over there?

[Rushdoony] Yes. Yes.

[Scott] We don’t... you know, the... all the stories in the press about the causes of divorce, money is never mentioned. Isn’t that interesting?

[Rushdoony] It is the number one factor.

[Scott] Of course it is.

[Rushdoony] And it isn’t mentioned because the very people who study them and the ministers who work with them or the social workers are as much in debt as possible. So it is not something they wan to discuss or admit is real.

[Scott] I guess that would be true.

[Rushdoony] Yes.

[Scott] If the pastor is in debt, he is not going to give a sermon against it, is he?

[Rushdoony] No. No, he certainly is not. It is like the man who was preaching—maybe you know this old story—he was very angry because his umbrella was missing and he was sure somebody had stolen it from the church clothes room, cloak room. So he decided to preach a rousing sermon on the 10 Commandments and afterwards one of the deacons asked him why he didn’t let them have it and had been so mild and talked about forgiveness of sins instead? And he said, “Well, brother, when I got to the commandment, ‘Thou shalt not commit adultery,’ I remembered where I left my umbrella.”

So I think that is why ministers don’t talk about debt. They have a bad record there.

Well, with that terrible story...

[Scott] It really is, by the way.

[Rushdoony] Yes, it is. But I was making a point about debt and I thought this story would explain why they don’t preach about debt.

We will say good night and God bless you all.

[Voice] Authorized by the Chalcedon Foundation. Archived by the Mount Olive Tape Library. Digitized by ChristRules.com.