Thomas E. Woods, Jr., is the New York Times bestselling author of 11 books, including The Politically Incorrect Guide to American History and Meltdown (on the financial crisis.) A senior fellow of the Ludwig von Mises Institute, Woods has appeared on MSNBC, CNBC, FOX News, FOX Business, C-SPAN, Bloomberg Television, and hundreds of radio programs... (Read More)
The end-the-Fed movement is the natural outgrowth of free-market economics. The Federal Reserve is a government-created institution with government-granted monopoly privileges. Its interventions into the economy give rise to the boom-bust cycle, etc. If you’re a reader of this site, chances are you know the arguments already. (If you’d like one, here’s a really brief primer I prepared as my opening statement in a debate on the Fed.)
The correct argument against the Fed is not that we need the federal government to create our money more directly rather than delegating the task to the Fed, but that is the Greenbacker objection to the Fed. No free-market person thinks this way. No one who takes liberty seriously thinks this way. This naivete on the part of the Greenbackers is especially hard to believe since so many of them are 9/11 Truthers. That means their position is this: we believe the U.S. government conspired to kill thousands of its own citizens in the interest of furthering its imperial ambitions, but we think they are the best people to trust with the creation of money.
Not all Greenbackers are Truthers, to be sure, but the position is terminally naive all the same.
The purely free-market position is the complete separation of government and money. The Fed’s problem is not that it isn’t creating enough money, as the Greenbackers would have it. The Fed’s problem is that a government-privileged monopoly is creating any money at all.
How would the complete separation of government and money work? This overview by Prof. Jeffrey Herbener explains it.
I addressed a few of the main Greenbacker claims in Why the Greenbackers Are Wrong.
The reason I bring up the subject this morning is this. Someone posted on one of my Facebook pages a link to an anti-Woods article by a Greenbacker. When I went to look into who this person was, I found that his Facebook profile was mostly a list of quotations about money. Most of them are crankish statements by non-economists, but there are some by American statesmen. As usual, these quotations are fakes.
I have never seen any intellectual movement that is so sloppy about quotations. No effort is made to track down these quotations to primary sources. The movement has no scholarly standards. Even the documentaries that supposedly represent the movement’s best work are strewn with fake quotations.
Here’s the first fake I noticed in his profile:
The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. – Abraham Lincoln
What is the source of this suspiciously modern-sounding quotation? Apart from other Greenbacker websites, I mean. What is the primary source? Can you find it?
Of course you can’t. It doesn’t exist. It is a statement by Gerald Grattan McGeer, a writer you’ve never heard of, in 1935.
Now look at how many Greenbackers have cited this fake quotation.
Here’s another one that he and his colleagues use:
History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance. – James Madison
Want to track down the primary source for this statement? Don’t bother. Madison never said it. This is a statement by a writer named Olive Cushing Dwinell in 1946. Doesn’t pack quite the punch when it’s attributed to an obscure writer of zero import rather than the fourth president of the United States, does it?
Given the Greenbackers’ benign view of government, it’s no surprise that many of them are eager to persuade themselves that we’ve had a few good presidents who have tried to stand up for the people but were tragically stopped by the bankers. This eagerness, in turn, generates further fake quotations — this one, for example, attributed to Woodrow Wilson: “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”
The first two sentences of this quotation are entirely fabricated. The rest come from a book Wilson published in 1913, before the Fed was even created. Yet the quotation is routinely given as evidence that Wilson regretted creating the Fed. He didn’t. He was proud of it.
Then there’s this Jefferson quotation that a lot of Greenbackers use: “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.”
This one is a total fake. The terms “inflation” and “deflation” are anachronistic here, for one thing, not being in use in Jefferson’s time.
Now there are plenty of anti-national bank quotations one can find from American statesmen, so why use a fake one? I suspect the answer is that this fake quotation goes after the “private banks,” which Greenbackers oppose. So now Jefferson is made to look like someone who wants the government, not the “private banks,” issuing the paper money. But Jefferson was a hard-money man to the end, calling for the retirement of all paper money and its replacement with specie, and writing the introduction to the English translation of Destutt de Tracy’s hard-money treatise.
Here’s another one, this one supposedly by Andrew Jackson: “If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations.”
Want to find me a primary source on that? (And by the way, as to whether paper money is constitutional, see my resource page.)
Nearly every quotation I have seen from the Greenbackers that purports to come from an American statesman is a fake, and usually an obvious fake. Yet these folks are taken in by them, and do not bother to investigate them.
If they can’t be bothered to carry out this most fundamental obligation of the scholar, how can we believe they have fulfilled the far more laborious task of studying economics beyond the slogans of their fellow Greenbackers? Their record makes me skeptical. You should be skeptical, too.