Law and Dominion

Money, Inflation, and Morality

Professor: Dr. R.J. Rushdoony

Subject: Law

Genre: Speech

Track: 07

Dictation Name: RR264A2

Location/Venue: ________

Year: _______

Our subject in this session is money, inflation, and morality. Money today is simply a state issue of paper stamped with a denomination. It is fiat money, it is state created with a state imposed value. Fiat money always has and always will be inflationary money. It has an arbitrary and an artificial value, it is counterfeit money. True wealth has behind it the accumulation of work, or thrift, of inventiveness and character. A well cared for orchard, a vineyard has a continuing value as a producer of food. The paper value of that farm will vary in terms of taxes, inflation, and the market for its produce; but it also varies in terms of what is called money.

When money is fiat money we falsely assume that a house or a farm has increased in value when in reality all that has happened is that the money has grown cheaper. And what we are seeing today is the increasing cheapening of money by means of inflation. The real value of goods and of services and of buildings and farms has not changed, the value of money has. We have seen a steady depreciation of the value of money since the beginning of the Federal Reserve system, since World War II and especially since the Vietnam War.

As a result, to protect our assets people have moved away from paper money and from bonds into short term notes, building, land, gold and silver, and tools. But now we’re seeing the decline of the value of stocks and of buildings. We are seeing a growing decapitalization of our society. I mentioned in the previous session that capital is not only money but it includes work, thrift, character. Inventiveness. Intelligence.

But today capital is being destroyed by our social order, which taxes monetary wealth, which depreciates the value of work, and which is one way or another penalizes character, thrift, and intelligence. We’re seeing the rate of inflation exceed the rate of savings. We are seeing savings taken by federal loans and bonds; and they do not go in the creating of new jobs. To illustrate: in the early nineteen seventies the capitalization required for a new job was roughly one hundred thousand dollars. In other words, to create a new job required in the form of the land that was used or the building, the tools the education -everything that went into creating a new job- the materials out of which something was to be produced, the average was one hundred thousand dollars.

However, since nineteen seventeen we have seen two dramatic factors affect the economic sea. One, the tremendous cost of regulations. Meeting all kinds of state and federal standards. There have been companies that have spent three to five million dollars trying to get a permit to put up a new plant and then been denied it. All that goes into the cost of a job.

Then inflation goes into the cost of the job, so that today we may conservatively say that it costs two hundred and fifty thousand dollars in fresh capital to create a new job. And then money is not there! Not only are old jobs being decapitalized by bankruptcy and by the debt structure but the new capital is not there to create new jobs. And so, we are in an economic crisis. It takes capital to create new jobs, and what do you do when there is no capital?

To try to create it by taxation and federal grants? We just had a tremendous sum allocated in the proposed budget for more loans to get the housing industry under way. Where will that money come from? From us, as taxpayers! And because the cost of those new houses will rise all the more we will be less and less able to afford them. But more new jobs will be created then ostensibly by taxing us all the more, we are being decapitalized at the same time as inflation and regulations are raising the price of every new job.

Jobs are being priced out the market. There is not enough capital to create them.

The federal deficit is decreasing new jobs by sopping up so much of the available money, and the hope is receding of anything resembling a balanced budget. One commentator recently said, and his name Robert D. Benn, in writing on the receding mirage of the balanced budget in the most recent issue of Public Interest and I quote: “We can no longer have and no longer do have specific allocations for a specific agency in the federal budget. Once we said we need so much for this and we allocated it, but now it does not work that way any longer! Rather than giving an agency a specific amount of money for a specific program congress decides what types of people are eligible for what levels of benefits under that program!

How much money is actually spent depends on how many people apply and how much the benefits for each one costs. How much is spent on such a program each year also depends upon economic conditions such as unemployment and inflation. And how much we should budget for these programs next year depends upon what we think will happen to these economic factors. What we end up paying is not at all constrained by what number was used in that budget.” Unquote.

He then goes on to say, and I quote: “Uncontrollable spending is not only uncontrollable it also increases uncontrollably.” Unquote.

We see thus the debauchery of what pretends to be a federal budget. It is no longer a budget but simply granting licences in certain areas for spending. And we see increasingly the budget dedicated to irrelevant and evil causes. I do not know how many of you get the conservative digests... How many of you do? Some of you but not enough. John Loughton, a very good friends of Chalcedon is the editor and a recent issue was devoted with help from Howard Phillips- one of our very strongest friends, head of the conservative caucus- to where federal funds are going.

Let me read to you a list of some of the beneficiaries of our funds. The (abolcomates?) clothing and textile workers. The AA (ephabel?) CIO, Appalachian council. American friends service committee. Why don’t they talk about the separation of church and state on grants like that? The association of community organizations for reform now are acorned, the council on foreign relations. Well, the Rockefellers do need to our money. [audience chuckles]

The feminist press, the Gray Panthers, the international union of United Auto Workers, the league of women voters of the United States, the National Association of Farm Workers Organization, the National Council of Senior Citizens, the National Retired Teachers association, the Pacific Foundation, the Sierra Club, and so on. The entire issue this past month of conservative digests simply listed organizations receiving our funds, and the amounts they are receiving. In that same month Howard Phillips stated and I quote:

President Reagan’s top economic advisors yesterday abandoned the traditional republic stance that government deficits are the main cause of inflation. Warning that it would be disaster if any basic changes were made to the president’s economic policy, calling for a new perspective on the budget the council of economic advisors suggested that instead of a goal of a balanced budget the nation should be prepared to accept a deficit of sixty billion plus.

Having asked for too little in the way of spending cuts the Reagan administration is now decided to change it’s economic philosophy rather than it’s strategy for implementing that philosophy on which candidate Reagan campaigned.” Unquote. Howard Phillips has documented the fact that the homosexual or gay rights movement in this country and the feminist movement and a great many others were able to get off the ground and function and become powerful with federal grants.

This is not all. Planned Parenthood with it’s abortion stance and it’s educational program for sexual freedom, it’s lobbying for tax payed abortion and for radical social change has very extensive federal financing. For example, in nineteen eighty the Planned Parenthood federation of America took twelve point eight million in tax dollars. More than half it’s budget. It’s one hundred and eighty-nine local appellees raised --received-- fifty-eight million total. Their combined budget was a hundred and twenty-two million.” Unquote.

Thus, both the national and the local affiliates are financed by us. Planned Parenthood has not been hurt by the Reagan Administration. In fact, Planned Parenthood of Washington -if you’ll pardon me for getting a little into the ridiculous- had the week of February 14-21 of this year, 1982, declared National Condom Week by Mayor Barry. In a mailing they said, and I quote: “Yes, it is the fourth annual rubber disco. Now the previous ones had not been official but we’ve advanced so much that now it was an official district Columbia week. Admission is free with a condom and an invitation which can be picked up at the men’s center of planned parenthood.

This fabulous dance will be held at the beret disco tech, decorated with a rainbow of different colored blown up condoms, the height of festivities will culminate with a condom blowing contest. The winner of which is to receive a prize.” Unquote. Now at the same time that this is being done with our tax money, tax dollars are being used a million dollars or more at every trial to persecute Christians, Christian churches, Christian schools and children. Well with such moral insanity we can hardly expect an honest money, an honest economy, or an honest budget from the federal government. The financial movement of our modern age has meant the abandonment of the gold standard and the monetization of debt.

Money now represents debt, not wealth! And the transition from capitalism and the free market to socialism has been made easy by fiat money and debt living. Banking is no longer warehousing, it is fractional reserve banking. Moreover we have seen on a large scale in the last decade not only massive foreign aids as before to marxist countries, but banks encouraged to make massive loans to these countries. The estimate is that by nineteen eighty in the decade of the seventies, the New York and other banks, primarily New York banks, had lent eighty billion dollars to the Marxist countries.

Their default would destroy the banking system unless of course, with spectacular inflation -runaway inflation- we wiped out that debt. Poland defaulted on it’s loan the beginning of this year. Just the interest payment, seventy-one million dollars. Washington decreed that the taxpayer would pay the New York banks, and so Washington payed the banks of New York to keep Poland going. And at the same time we recommended to the international monetary fund and to the world bank increased loans which will come out of our giving to those agencies. To both Poland and Romania, as well as to other countries.

Just a couple of weeks ago the president of (Zaer?) an African country, perhaps the most corrupt of all, was in Washington DC and New York with his entourage. They spent two million dollars of our loans just celebrating in New York and Washington DC. Meanwhile, they were in default of two hundred thousand dollars on an interest payment due almost a year ago. And when a congressman rose to protest that kind of indulgence and to say “let us strike (Zaer?) from our current foreign aid, the man was rebuked by an administrations spokesman.

This is economics?

(Selsomane?), a Brazilian economist said not too long ago and I quote: “If I owe a million dollars then I am lost. But if I owe fifty billion the bankers are lost.” Unquote. This is another version of the old proverb, “Make a small loan and you have a debtor. Make a very large loan and you’ve got a partner.” Now that tells us something about the international scene. We have been making immense loans as a federal government and as bankers. To the third world and to the marxist countries. We are now in partnership with them as a result, and this explains a great deal of our foreign policy. We are in partnership with them and in war against the people: us.

The federal government is at war against you, not against the soviet union, nor against Poland. We frown on what Poland does, but we pay their interest. We supply wheat to the soviet block, without which they would have food riots in a very short time and the regimes would collapse! But then what would happen to our loans?

As the federal government and through the banks. And so we continue to prop them up, we are in partnership.

We’re not only extending and increasing the loans, we’re moving factories into the Iron Curtain countries to help their economies. Next time you buy a pair of Levi Strauss jeans remember, they have moved from San Francisco to Hungary. They are one among many. After all, you get what amounts to slave labor in those countries and you can produce more cheaply.

The morality of these loans by banks and by the federal government must be seen as basic to humanism. Humanism, you’ll remember I said, believes in fiat money, in fiat morality, in fiat values. The state therefore seeks as God to create value and to create productivity and prosperity, and this outlook, that man can create in every area, is basic to modern banking. The banks loans to the U.S.S.R by the New York and other banks are, to us, insane. Civil governments have never in any era been safe borrowers. You and I cannot declare that we refuse to pay without having economic consequences.

There will be a foreclosure, what we have will be taken from us. But this does not happen to civil governments! Do you know that in eighteen seventy-five the state of Mississippi defaulted on loans; the main possessors of those bonds were English investors. Those investors are still trying to collect from the state of Mississippi. They have an organization which keeps working away at it. And what is the done written into its constitution the provision that those loans shall never be repaid by any future government. The idea of any civil government paying off anybody is absurd! They don’t! We’ve never paid off Europe on countless things, I’ve just cited Mississippi. And Europe never paid off the war debts from World War I or World War II. Nobody that runs a government ever thinks of paying off.

Paying off is a luxury that works for a while to keep the suckers happy but in time there is a cancellation. It is interesting that when in the course of World War II Nazi Germany was broadcasting into Britain and attacking the Western world and it’s economics, it criticized savagely classical economics and the gold standard. And when Lord Canes was asked about those broadcasts and what should be done with them he said “Nothing. We have to agree that at this point the Nazis are right.”

And so that philosophy through Lord Canes and others was made a part of the economic order of post World War II. We did not oppose the Nazis on their national socialism, their economics. We are today a fascism country increasingly we have the facade of freedom.. but behind it, through regulations and controls we have socialism. Brown rather than red socialism, indirect socialism. And the false premise of all this kind of thinking is that state created money and loans can create prosperity. Hence there must be state loans to all the world and the banks must loan also, and the banks having the same philosophy believed they can buy loans to Poland and to Romania, create such a wave of prosperity and in the far East and in Zaer, that the whole world is going to blossom with economic prosperity.

It is blossoming with uncollectable debts.

Money cannot produce. Fiat money cannot produce nor create the productive man, the man of character. But unearned money can capitalize a weak man and a weak economy. And today inflation is decapitalizing all the world, and basic to that inflation is bad money. But the primary decapitalization begins with bad religion, and bad morality.

When Franklin Delano Roosevelt took office one excellent economist named Tildon wrote a book predicting what was to come. The title gives the prediction: A World In Debt. And he made this statement: “Inflation only works, not just when the state seeks to promote it, but when the people have larceny in their hearts. Because basic to all inflation is larceny, larceny by debtors, by people who want to pay off good debts with bad money.”

It begins with bad religion of which antinomianism is a key factor. Because if we do not believe that God’s law rules the world we’re going to believe that man can make his own laws as he goes along. And then we fly in the face of common sense because we believe that the world is going to be what we make it.

I said that the record of history demonstrated that loans to states are the worst loans that can be made. But listen to what David Rockefeller said a while back, and I quote: “In terms of straight credit risk the presumption is that there is greater continuity of government in certain socialist states than in non socialist states.” Unquote. What does that mean? The best risks are your socialist countries, because they’re not readily overthrown. But if you lend to a republic it’s government can be voted out of office! So make your loans to the most socialist nations.

But what Rockefeller totally forgot about in his thinking, and this is the reason why Chase national bank is one of our endangered banks -thanks be to God-, is that loans to a non productive country are non productive loans. And the soviet empire and its satellite states are all non productive. And no loan to them has been or can be productive.

But, as the old saying which we encounter through the ages has it “Whom God would destroy he first makes mad.” And there are a lot for mad men running around now governing economies. If there is a future it must be capitalized. It requires a theological and an educational capitalization first! This is why we established Chalcedon. We want to capitalize the world, theologically and educationally.

I believe that capitalization is under way. The very fact of the growth of the Christian school movement, so that it would appear that if they do not succeed in destroying it by nineteen ninety-nine or the year two thousand the public schools will have disappeared.

That is significant. What is significant too is that there is a major move now by the Black community into Christian schools. In our next journal of Christian Reconstruction we will give you some stories of that. Pastor Melvin Hodges, whom I know in Baton Rouge Louisiana has a superb Christian schools on a foundation for black Christian education which is starting Christian schools in numerous areas. One of our Chalcedon men who is here, Howard (Ahmanson?) has had a hand in an excellent school in Los Angeles.

Los Angeles has a black mayor, but that has not saved Mrs. Jenkinson from unbelievable harassment from the city. They do not want to see black education prosper. Nor the black community move out of the public schools. But it’s happening, and it’s one of the most important indications of what the future is.

We are seeing thus a dramatic change, and by the way let me add we are seeing a dramatic revival going on today in the black communities all over the country. In Los Angeles one of the church there, again I know the pastor, Doctor E.B. Hill, and you’ll read about him I believe also in the next journal which doctor Kelly is editing. He has started a Christian school who has started a training school for adults has told every member that they must work to convert every person on their block. On one block they had only an elderly blind black woman, but she worked, and she got together a prayer meeting of women in time and finally they converted a hundred and sixty-one of the hundred and sixty-two people on that block. And that young man was so upset by all these amen brothers on the block, he moved away! [audience chuckles]

But they found out from the truck driver where he was moving and they called up that block and told them “Meet him when he arrives and help him unload!”, and when that man got there he found people waiting at the house to help him unload, saying “Praise the Lord, brother, we’re here to help you!”. [audience laughs uproariously and then applauds]

And he said, “Is the whole world going crazy?!” Well. E.B. Hill says: “Either we’re going to convert the people in the ghettoes or the revolutionists are. And it is his goal in this decade to reach into every ghetto in the United States. Every inner city area. And he has a helper now to do it: Bunker Hunt. A dedicated Christian. They’ve begun work in Denver and in Dallas, and they plan to spread out across the country.

That is capitalization on a ground level. Making capital out of human beings who can then recapitalize with their character in this country. There is a tremendous movement out there, and there is a tremendous counter movement and that’s why I’m in the courts so often. As the powers of statism seek to destroy this movement, to control it, to put it out of existence so that they can be free to continue their plans for a humanistic world order.

But we are told by scripture that the earth is the Lord’s in the fullness thereof, and we know that the enemy is doomed to failure. The only question is, will we take over? That is our responsibility. And God willing, we of Chalcedon intend to do all we can to arm the people of this country to take over this nation and the world for Jesus Christ. Thank you. [audience applauds]

[audio ends.]