While I live I will Never Resort to Irredeemable Paper: Napoloen

In Revolutionary France it took a man like Napoleon to stop the hyperinflation that had occurred in France because those in power kept printing money in the hope it would solve their economic problems.

Over the weekend I found time to read a shortened version Inflation destroys the French Economy of a book entitled, “Fiat Money Inflation in France” by Andrew Dickson White . It’s subtitle is, “How it Came, What it Brought, and How it Ended”.

This shortened version was,

“… read before a meeting of Senators and Members of the House of Representatives of both political parties, at Washington April 12th 1876.” So they know!

At the end of the book we read it was Napoleon who ending the fiasco.

“When Bonaparte took the consulship the condition of fiscal affairs was appalling. The government was bankrupt; an immense debt was unpaid.  The further collection of taxes seemed impossible; the assessments were in hopeless confusion….

War was going on in the East, on the Rhine, and in Italy, and civil war, in La VendAe.  All the armies had long been unpaid, and the largest loan that could for the moment be erected was for a sum hardly meeting the expenses of the government for a single day.  At the first cabinet council Bonaparte was asked what he intended to do.  He replied, ”I will pay cash or pay nothing.” From this time he conducted all his operations on this basis.  He arranged the assessments, funded the debt, and made payments in cash; and from this time–during all the campaigns of Marengo, Austerlitz, Jena, Eylau, Friedland, down to the Peace of Tilsit in 1807–there was but one suspension of specie payment, and this only for a few days.  When the first great European coalition was formed against the Empire, Napoleon was hard pressed financially, and it was proposed to resort to paper money; but he wrote to his minister, ”While I live I will never resort to irredeemable paper.” (Bernanke please note)

He never did even when he met his Waterloo 🙂

Today we have the likes of Bernanke and his mates at the other leading (a misnomer if ever there was one) central Banks all printing money to repeat what France did during the Revolution. They should be all forced to read this paper on Inflation in France.

At the time Andrew Dickson White booklet outlines,

“… the history of the most skillful, vigorous and persistent attempt ever made to substitute for natural laws in finance the ability of legislative bodies, and, for a standard of value recognized throughout the world, a national standard devised by theorists and manipulated by schemers.  Every other attempt of the same kind in human history, under whatever circumstances, has reached similar results in kind if not in degree;
all of them show the existence of financial laws as real in their operation as those which hold the planets in their courses.”

Inflation is not visible yet. Banks are not lending money but using it to speculate in the stock market and making money off the FED with surplus cash. Once that money moves into the economy price inflation is the likely result. As Mr White states the initial effect of printing money appears to fix the economy. But if does not last. So more money is printed. The longer term effect can lead to economic catastrophe as inflation destroys the wealth of those most vulnerable to it, the working and middle classes.

If printing money is the panacea for fixing recessions why are we paying taxes? Surely we can just pirnt money as we need it and let the people keep their hard-earned money? 🙂

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