Mandeville, LA – Exclusive Transcript – This is relevant today because we are in this similar situation. This is why when Ron Paul says he believes foreign policy is the biggest issue that we have to confront and why so many of you, again leading politicized lives, say the same thing to me and that I’m wrong and Rand is wrong and any of those that are non-interventionists and are not for big war and big military, that we’re wrong and dangerous and a threat. No, you’ve got that wrong. You’ve got it backwards. Paul is correct. Check out today’s transcript for the rest…
Begin Mike Church Show Transcript
Mike: One of the things I was reading yesterday — I must confess I have had this book sitting in my mini-library. Andrew, do you know where a gentleman’s auxiliary library is?
AG: I would assume that would be the bathroom.
Mike: Thank you. Do you have an auxiliary library?
AG: Does it count if it’s like magazines?
Mike: You’ve got Sports Illustrated and Maxim in there, don’t you?
AG: Yeah, some Rolling Stone, things like that.
Mike: I guess that counts. So I’ve had John Zmirak’s book Wilhelm Ropke: Swiss Localist, Global Economist in the auxiliary library for two years. Marty the cop sent it to me. For some reason, the Lord just works in mysterious ways. I thank and praise him and give him all glory for my discoveries on this, because I know I’m not smart enough to do any of this. For some reason, I was reading a story that you sent me last night in the rundown. The question, as the story had phrased it was: Were Obama’s economic policies endangering his own legacy? In other words, has he taxed and spent and borrowed at such a level that he has endangered any possibility that there can ever be an economic recovery on his watch? I think the answer to that is yes, an unequivocal yes. There is not going to be a recovery. The reason that there isn’t going to be one is because we have to re-accumulate capital. You’re not going to re-accumulate capital, according to the Austrian School model, until the interest rates go back up, until it is attractive to accumulate capital. Right now it is attractive to spend it. You don’t want to hold it. If you hold it because of the threat of inflation or because of the devaluing of the currency, you’re playing with fire. You don’t hold it.
For some reason, after I read that story, and I had been reading Roepke, Zmirak’s book on Roepke, I got to the chapter where he discusses what happened to Germany after the end of the war. And what were some of the things the Germans were doing before and during the war that the allies stupidly, foolishly continued the policy of? I was amazed to find that the allied commanders were a bunch of central command socialists. They favor central command of the economy the exact same way the German Nazi party had. Roepke was sitting there writing — people were starving to death in Deutschland at the end of the war. It wasn’t because they didn’t have the resources; it’s because we were participating in materially centrally planning their economy. I was reading this and was fascinated by it.
For people that are conspiracy theorists and believe that people like Obama, men like Obama and those that have been orchestrating this — James Antle can tell us a lot about this when he’s on the program next hour, about the inexorable explosion in growth in the amount of money that the general government leviathan spends every year. This can add some fuel to the fire. I also found it sobering if not scary that Zmirak was reading and channeling Roepke, and that Roepke was warning, as was von Mises and other Austrians during the 1930s, that the militarization of the economy would ultimately have to result in many of the horrific things that the Germans had to resort to after they instigated a war.
This is relevant today because we are in this similar situation. This is why when Ron Paul says he believes foreign policy is the biggest issue that we have to confront and why so many of you, again leading politicized lives, say the same thing to me and that I’m wrong and Rand is wrong and any of those that are non-interventionists and are not for big war and big military, that we’re wrong and dangerous and a threat. No, you’ve got that wrong. You’ve got it backwards. Paul is correct. The Austrians in the 1920s and 30s warning about the Germans were correct. This is fire that we’re playing with. I’ll read just a brief section of this book that’s enlightening.
Attempting to isolate the central flaw shared by Nazi and allied policies …
Mike: Just imagine, the United States, Great Britain and whoever else was an ally, I believe Russia was at the time an ally, pursued national socialism as an answer to Germany’s post-war economic problems.
Attempting to isolate the central flaw shared by Nazi and allied policies, Roepke pointed to a phenomenon he called repressed inflation. [Mike: If you’ve been wondering, as have I, how is it that we have not had rampant inflation just yet, I can explain it to you, because Wilhelm Roepke, the Austrian economist, can explain it to you. We can see it happening in history.] Roepke pointed to a phenomenon he called repressed inflation. The Nazis, in order to keep up an artificial full employment, and to fuel a series of economic booms while tooling up for their war effort had felt free to print Reichsmarks, [Mike: Money in other words, dollars. Sound familiar?] expanding the money supply recklessly. So as to prevent a repeat of the great inflation of 1920-22, the event which had fatally undermined the legitimacy of the Weimar Republic, the government imposed [Mike: This was according to Roepke.] a most rigid control of prices, wages, investments and exchanges. In this way, collectivism and inflation became intertwined. Inflation made possible the waste and disorder of collectivism, and collectivism made it possible to have inflation without runaway prices, wages, and exchange rates.
Mike: All of those things that are being done like Obamacare, like the control of the oil and gas supply, like the increase in every measure that you could possibly attack in leviathan spending, on social welfare programs, whether it’s food, direct assistance, education. It doesn’t matter what it is, wherever they put the money, they’re putting the money there because they have to. If they stop putting the money there, then immediately the effect of inflation must take hold. They are avoiding it with the partially-imposed price and wage controls that we have. Zmirak writes, again, in the book Wilhelm Roepke, a biography of the great Swiss economist, the author of The Humane Economy — he wasn’t just an Austrian economist. He was a Catholic, Christian Austrian economist, a little bit different stripe than von Mises.
These controls the totalitarian government can enforce with great rigor through the gestapo, thereby militarizing the whole economic life of society. Price, wage and exchange controls exemplified the type of intervention and economy Roepke considered the most disastrous, since they were in no way conformable with the system of prices, the only means by which consumers can influence production. As a result, money loses its functions of directing and harmonizing the economic process and equipping it with the necessary incentives to ensure maximum production of the right kind of goods. In a state of repressed inflation, the money has lost its nominal value, except in the eyes of the polis. An underground barter economy must begin to replace the open economy [Mike: Sound familiar] where worthless money chases scarce, rationed goods. In post-war Germany, this fact became inescapable since occupying powers could not resort to the gestapo’s brutal means of repressing underground transactions. The result was a complete collapse of production and a reversion to a primitive, pre-medieval barter economy. Billions of meaningless Reichsmarks circulated as they had during the great inflation, which theoretically could be used to purchase the strictly-rationed goods at fixed low prices.
Mike: You can read the rest of it yourself. The lesson there to be learned is that the military part of the state is a part of the state. That is the most dangerous to your living. That is not to say that your sons and fathers and uncles that are serving are a bunch of tinhorn despots. That is not the case. I do not believe most of the German people were that were in Hitler’s army. I’m not comparing the two either. I’m simply restating the history. You can go back beyond Germany and back into the other countries that had standing armies, including the German neighbor, the Soviets. The danger that is posed by a standing army of such mammoth size and an army industry of such mammoth size, think about that. The wages and prices that are spent in the acquisition and maintenance of our vainglorious “defense” are all centrally controlled. They are controlled by the State. That is socialism. That is national control of the means of production, classically defined. What happens when madmen seize control of the means of production, ladies and gentlemen? Dangerous times. This is why the foreign policy question is the most important one of all.
End Mike Church Show Transcript