Monday, March 29, 2010

A Timely Parable

I found this little tale, written by Hugo Salinas Price, at a site devoted to Mexican silver money. Our current out-of-control deficit spending is enabled only because gold no longer backs our currency. Richard Nixon removed the last such tie for international purposes in 1972, while FDR did it for all domestic purposes in 1934, so there is blame enough for both political parties for the unconstrained spree which has resulted. For the first time ever, Moody, Standard & Poor and the other rating services are threatening to downgrade the triple-A rating of U.S. Treasury bonds, and just a few weeks ago, Warren Buffett's Berkshire Hathaway was able to borrow long-term money at a rate lower than the Treasury is able to get in the open market. These are warning signs -- a sort of canary in the coal mine, if you will -- that we cannot continue on the present course which President Obama and the Democrats are taking us. Read Mr. Price's little parable, and see how apt it is:

It has been revealed to me that there is life on a planet within our Galaxy. Among the living creatures on this planet are humanoids – that is, beings that bear a great similarity to humans on this Earth, but who do not appear to be intelligent, as we humans are, but rather sub-human in their reasoning faculties.

These humanoids are at present quite busy building large structures such as bridges and tall buildings with concrete, which they invented many years ago, but without the use of reinforcing bars, or rebars, as we call them.

Of course, since we are intelligent, we know what has to be the result of their efforts: continual collapses which cause these poor humanoids great grief and disappointment.

It appears that in the remote past these creatures did use rebars in concrete constructions, but an influential politician whose name is recorded in their history as “Nicson” finally decided that concrete did not require rebars to give it tensile strength, and therefore banned their use.

At the present time their media of communication are filled with discussions on how to prevent concrete structures from collapsing, with consequent disruption of life. The situation is very distressing.

Some commentators in the editorial pages of the well-regarded newspaper “Cement Times” recommend closer supervision of the building of concrete structures; others recommend more transparency regarding building methods, while some recommend that buildings be constructed in such a way as to prop each other up, to avoid collapse. In the meantime, no formula has been found to remedy this plague of collapsing buildings.

A very few of these humanoids are mentioning the fact that when rebars were used, long before Nicson, buildings did not collapse. Scarcely any attention is given to these “rebar bugs”, as they are derisively referred to by the élite of the inhabitants, who are venerated as well-informed and expert authorities in the matter. The rebar-bugs have a spokesman who goes by the name of “Paulum”, but they seem to be fighting a losing battle against the sub-human intelligence of the majority and those wielding political power.

Rebars are regarded by the cement manufacturers’ representatives as old-fashioned and unnecessary, and in fact, as “barbarous relics”; they allege that reverting to use of rebars would hamper the economy, because it would slow down the building industry, which is thriving because buildings are collapsing daily and of course, have to be rebuilt. Besides, they argue that rebars are “too scarce”.

Indeed, it might be suspected that the “Federal Cement Manufacturers’ Association” has an interest in retaining the present mode of rebar-less construction. Their disdain for rebars speaks louder than words of their sub-human nature, for by the simple expedient of allowing the use of rebars, which they have banned completely, they would find an undoubtedly efficacious remedy to the parlous situation which prevails on their planet. However, it is apparent that there is no wish to accept the application of this remedial measure on the part of the Federal Cement Manufacturers’ Association, or the “Fed” as they call it.

Such is the travail now prevailing amongst the humanoids of that remote planet. There is nothing to be done; they must be allowed to suffer. Perhaps they may, in the course of millenia, eventually acquire human intelligence.


  1. A.S.,

    You have exposed yourself; you are fundamentally a Libertarian. A return to the gold standard sounds all well and good. However, all those that have made this a point of their political stance have yet to offer any substantial way in which we as a nation can make this switch. There are problems not just with international effects but also with internal effects of trying to go back. There are no countries of economic import (if any countries at all) on a precious metal based standard. There is not enough extant precious metals to effect a switch back. It would be a good thing to have a fixed basis for the worth of our currency but an impractical goal to achive.

  2. deck, I agree with you: from our present situation, a return to a gold standard would be, alas, well-nigh impossible, given all the factors you cite -- and more. I put this up more to show the hopelessness of the current course rather than to offer a prescription for its cure -- which would require not only sound analysis, but international cooperation, as you acknowledge. That cooperation will come, if at all, only when things have gotten so bad that people can see the wisdom in having an incorruptible international standard of exchange.

    By the time that happens, the world's economy will have imploded enough that the available gold supply would probably be more than adequate to sustain it for a decade and more, while it regained the trust needed for mutual exchange. And yet, if things get bad enough, I admit that such a day may never come.

    The point is not that, having plunged over the cliff to a standardless monetary system in 1972, we can arrest the ensuing decline in midair. The fall will have to be completed, to the very bottom. The hope is that by the time everyone has experienced that calamity, an incorruptible standard will start to look good again, and whoever manages to survive will see the wisdom in wanting to go there.

    In such a scenario, the word "libertarian" no longer applies. The libertarians were long ago left standing on the cliff, hollering "Stop! Don't go there!" (And that was me, I confess, some thirty years ago when I had to try to run a business requiring letters of credit with interest rates running at 18-22%.) We're over the cliff now, and libertarian principles can no longer rescue us. Soon it will be "Every man for himself!"

  3. This parable might be applicable to other "we can't go back" dilemmas. Once a worldview change has settled in, it becomes difficult to see even the possibility of a return to the old worldview, until the next revolutionary worldview change or "paradigm shift" occurs. It is hard to let go of the current worldview. Is it something in our stiff necked nature, or is it simply a case of brainwashing?