Breaking the Demopublican Monopoly

by Nelson Hultberg

One of the popular theories of the 20th century was that political freedom and economic freedom can be separated -- that a nation can regiment its economy and monetary system with centralized controls and still remain politically free. History, however, is proving this premise to be a sad illusion. And today's Washington D.C. is a most obvious example.

Like a modern day Cyclops with one eye and a stunted brain, our Federal Government now grows fatter and fatter every decade as it corrupts the forces of freedom and the soundness of our money in its lust for hegemony both domestically and internationally. Grunting and belching, regimenting and taxing, spending and consuming with the abandon of a drunken Caesar, this gargantuan beast has, in the span of 90 years, transformed a once productive marvel and manufacturing leader of the world into a decadent debtor nation hell-bent to follow Rome into the dustbin of history.

The two levers of power that have allowed Gargantua to grow into such a hideous beast were given to it in 1913 with the enactment of the Federal Reserve and the progressive income tax. These two institutions destroyed the idea of "limited government" that the Founders had given us in 1787. The Federal Reserve was granted the legal power to create paper money and thus rob Americans of their wealth surreptitiously.

With Richard Nixon's closing of the gold window in 1971, this power then allowed the Fed to inflate the currency at will, which has increased Washington's capacity to depreciate the dollar even further and rob Americans of their wealth even faster. The progressive income tax gave to the Federal Government the power to seize unlimited earnings from productive Americans to buy voter support from a vast horde of special interest groups.

These two institutions were the death knell of a free and prosperous republic. With the ability to print money and confiscate our incomes, the Federal Government was thus able to grow exponentially over the past century -- well beyond the strictly constrained power that the Founding Fathers intended it to be.

Its power has been greatly exacerbated along the way by the merging of our two parties, the Democrats and the Republicans, into carbon copies of each other. These two supposedly separate institutions have become nothing but two divisions of the same party -- the Demopublican Party. They never oppose each other on fundamental goals, only on specific details on how to implement the same goal. And their common goal is to expand the power of the Federal Government via more and more taxation, spending, pork and privileges. AFR hopes to change this.

If we, the producers of America, wish to stop this travesty of tyrannization over our lives, we must challenge the two institutions that give Gargantua its power to grow unabated. We must mount a relentless political attack against the policies of PAPER MONEY and PROGRESSIVE TAXATION. The merging of Big Government and Big Banking into a combine has, for 90 years, crucified us on a cross of paper and progressivity! And it will continue to do so until it is exposed in a clear enough way to attract large numbers of voters.

We submit that the means to that exposure is the formation of a third political party based upon radical monetary reform and radical tax reform that will vigorously challenge the Demopublican monopoly over American politics. If these two simple yet profound premises would become the foundational pillars of such a third party challenge, Americans would have in their grasp a political force that could storm the Bastille of Washington. We could take back our country from the Demopublican elites who ride around in black limousines and confiscate our hard-earned money to perpetuate their power lust.

How could such a political party do this, you ask, when all third party movements of recent memory have been such glaring failures? George Wallace in '68, John Anderson in '80, and Ross Perot in '92 and '96 all went down to resounding defeats at the polls. The answer is that all third party challengers make two very serious mistakes that automatically doom them to defeat. Avoid these two crucial flaws, and a political movement could be fashioned that would force Washington's Demopublican establishment to alter its oppressive control over our lives and our economy. Let's examine why this is so.

Keep in mind, our two political pillars of reform are to be: 1) restoration of a "gold backed currency" and 2) enactment of an "equal rate tax system." It is upon these two policies that we as a people can regain the vital freedoms we have lost and then restore the manufacturing prowess of our nation. Let's first analyze these two pillars to see why they are so important in restoring freedom and productivity, and also so mandatory if we are to strip Washington of the power it has over our lives. Then we will investigate what the two mistakes are that have to be avoided in order for a credible political movement and party to come into being.

The First Pillar of Reform

1) RESTORATON OF A "GOLD BACKED CURRENCY." What type of monetary system can a society possibly have when its government officials and federal bankers can simply print money up at will? What level of stability will there be for the prices and wages of that society? What level of confidence in the future will there be among the people?

History clearly teaches us that no stable, prosperous country can remain so very long if it leaves the control of its money supply up to the machinations of corruptible men in power at the government's Treasury and central bank. The temptation is simply too great for such men to promote excessive monetary expansion in order to create an illusion of prosperity so that the electorate will reward them with four more years in office.

Such temptation began in 1913 the minute the ink was dry on Congress' legal authorization of the Federal Reserve banking system. It was then greatly expanded with Roosevelt's confiscation of gold from Americans in 1933, along with his initiation of J.M Keynes' "new economics." This led to the disastrous spending policies and inflation-deflation cycles that we now endure. Ever since World War II ended, Fed currency expansion has resulted in our economy suffering from annual price inflation of 1%-13%, all under the Keynesian "necessity" of massive government spending and intervention into the economy. The Fed's monetary policy under Republican and Democratic administrations alike has always been to pump more credit (i.e., debt) into the system because according to Keynes and his academic progeny, this is the only way to maintain a prosperous economy. This assumes that the creation of money in paper form will increase wealth. It will not. Wealth is created by men and women engaging in productive enterprises -- planting and harvesting crops, running efficient factories, conveying services to their fellow man, etc. It cannot be created by government printing presses. All that will come about with such moonshine economics is a boom-bust economy in which inflationary periods and recessionary periods alternate over and over until finally the debt level becomes too overwhelming for the people to tolerate. At this time, the country and its economy must then go through a prolonged liquidation of such debt, i.e., a severe recession or depression of multi-year duration.

The Keynesian monetary philosophy of trying to increase demand with increases of fiat money is what led to the runaway inflation of the 1970's and to the hallucinatory bubble economy of the 1990's. We are now in the initial stages of a long curative unwinding of the extreme economic dislocations and malinvestments that were brought about by such fallacious policy.

Unless this unwinding is accompanied by radical monetary reform, we as a country are doomed, like Sisyphus rolling his stone up the hill and down again for all of eternity, to merely repeating the Keynesian fallacies. This means constant boom and bust cycles intermingled with periodic depressionary collapses well into the future. The only way to avert the recurrence of such instability and corruption is to restore a monetary standard other than the whims of federal bankers and bureaucrats. History has shown that standard to be gold.

Whether the restoration of such a standard takes initial shape as merely reenactment of the Gold Cover Clause as James Sinclair suggests, or as something deeper and more revolutionary as the Austrian School economists Ludwig von Mises and Murray N. Rothbard have advocated, is not important at this juncture. How quickly to implement the process can be worked out by the relevant experts involved as our cause progresses. The important point to be emphasized at present is that we as a country can no longer allow money to be created by a fascist cartel of bankers and bureaucrats in Washington via printing presses and computer entries.

Our goal is to abolish the Federal Reserve and its monopolistic control of the banking system and return to a full gold standard as quickly as possible. For a detailed explanation of how this could be brought about, see Murray N. Rothbard's easy to read book, The Case Against the Fed. It can be purchased at: Mises.org online store.

The fixed pegging of the dollar to gold was, up until the inception of the Federal Reserve in 1913, the customary means of establishing a sound currency. It is not perfect, but it is far less imperfect than the arbitrary fiat money system that we now employ. History has told us time and again that gold is a chain of discipline around the appetite of government.

The great majority of economists in our government and in our colleges today will naturally attempt to deny the necessity of such a step, becoming almost apoplectic upon hearing that a gold standard is being advocated. They will go to great lengths to try and convince their audiences that the economy's money supply must be continually inflated in order to produce growth. But this is totally erroneous! America's productive growth during the 19th century was spectacular, and there was no Federal Reserve pumping unconvertible paper money into the system at all.

For example, the Consumer Price Index decreased by 30% from 43 to 30 between the years 1800 and 1913 (an average of 1/4 percent per year). This was because the money supply of this time, being tied to gold, was next to impossible to expand with a printing press in excess of the growth of goods and services. As a result, there was no upward pressure on prices.

In contrast, today we no longer use gold as money, but paper printed by the Federal Reserve as it sees fit. As a result, the Consumer Price Index increased by 1,663% from 30 to 529 in the years 1913 to 2000. This was because the money supply was created at a far faster rate than the production of goods and services -- all of which should tell us quite clearly that government money managers are not reliable and never will be, and that a fiat paper money system will never be stable. [The above percentages are taken from The World Almanac 2002, p. 103.]

When the above figures are combined with other vital 19th century statistics, we readily see that the Keynesian claim of "growth needing inflation" is a fallacy. During the 19th century due to the dollar being backed by gold, we enjoyed gently deflationary prices (the beneficial kind of deflation) and yet also rapid economic growth of all goods and services. America's GDP increased over 500% in just the years 1870 to 1913, averaging 4.3% annual growth, and real wages for the workingman tripled. In comparison, we average about 2.5% annual growth today, real wages are stagnant, and we are plagued by inflationary prices brought on by the Federal Government's relentless monetary expansion, with a possible gargantuan credit collapse now looming ahead to balance our government created excesses. [These figures are taken from The Statistical History of the United States from Colonial Times to the Present, Fairfield Publishers, 1960, pp. 91, 141, 409, 413.]

The Keynesian claim of monetary inflation being a requisite for healthy economic growth is thus totally in error. So also is its claim that only with government control over the currency and banking system can we have "stability" in our economy. Growth will take place very nicely without government inflation of the money supply; and what's more, it will be real growth, not the frenzied, speculative, boom-bust kind of growth our Great Society dreamers have given us. As for stability, how can any logical observer of the 20th century claim that the Fed's inflationary monetary policy has given us stability? Yet this was the publicly announced reason for the Fed's creation in 1913. It was going to be the great "stabilizer" of the banking system and our economy. Yet it has brought us precisely the opposite.

The reason the collectivists throughout the country oppose the stable monetary policy of a gold-backed currency is because they know their ever-expanding welfare state is tied directly to inflationary monetary policy. Without the ability to egregiously inflate the money supply year after year, the vast panoply of big government programs could not be financed because American citizens would not pay for such fiscal extravagance with taxes. Without such welfare programs, the collectivists' egalitarian dream of a Great Planned Society, regulated and manipulated from Washington, is dead.

The future of a free America lies in ending the Keynsian inflation-deflation cycle. This requires the restoration of a gold-backed dollar. The answer to so many of our problems would come if we would just end monetary inflation by the Fed. Prices of goods and services would stop relentlessly rising. Excessive labor union demands would subside. Capital formation would increase. True prosperity would result. Poverty would shrink at a faster pace. Yet life would churn at a more moderate and predictable pace. The elderly would be able to keep the security they worked for. And we could all get off this infuriating treadmill of never quite catching up with our bills. In general, life would again be stable, productive, and free rather than the speculative, frenzied, Washington managed economy that has evolved under the whip of collectivist-liberal ideology.

The fate of a free country lies in the strength of its monetary system. The strength of a country's monetary system lies in the independence it has from government control and in its utilization of a fixed standard (such as gold) to back its issuance of paper notes. The independence it has from government control and its use of a fixed standard depends upon the rationality and will of "we the people." Do we still possess that necessary rationality and will in America? Or are we so myopic and decadent that we will tolerate being led down the path of Keynesian pseudo-economics until every last vestige of our free system is laid to waste in a nightmarish Brave New World future?

The Second Pillar of Reform

2) ENACTMENT OF AN "EQUAL RATE TAX SYSTEM." The fundamental principle of the Declaration of Independence, which undergirds our political and legal systems in this country, is that all citizens are to possess equality under the law. Our whole concept of rights is based upon their being equal for all citizens of the Republic. This was the guiding star that spawned America and which sustained her through the first 125 years of her existence. In 1913, however, there took place a most shameful default on this concept of "equal rights under the law" when our Supreme Court judges allowed a progressive income tax to be enacted by an increasingly socialist minded Congress.

This default by the Supreme Court was challenged at the time by numerous outraged legal minds, but due to the socialist sentiment that had taken over the culture at the turn of the century, their challenge did not prevail. Too many powerful voices had gotten swept up in the egalitarian vision of Marxist philosophy, and they decided that government's purpose was to coercively implement such a vision. Tax policy became one of the tools with which to bring about such a leveling of society. Collectivist irrationality won the day, and it has lasted for 90 years, despite the fact that a progressive rate tax is clearly unconstitutional.

The reason why a progressive rate tax is unconstitutional in America is because different classes of society are assessed different rates under such a system, which denys American citizens an equal right to the disposal of their property (i.e., their income) and thus denys them equal protection under the laws of the land.

America is based upon each citizen's equal and inalienable right to life, liberty and property. How else does one preserve his life, enjoy his liberty and maintain his property than through the production and the consumption of his own income? If the State can take an arbitrary and unequal percentage of our income because 51% of the people deem it desirable, then we don't have much of a "right" to the use and disposal of our property, do we? We have only the "permission" for that use and disposal, and then only so long as we dutifully serve the reigning mobocracy in the manner it deems desirable.

If we are to uphold the idea of all men possessing equal rights under the law, then there can certainly be no justification for our present PROGRESSIVE tax system. It is dictatorial and contrary to everything for which America stands.

As the renowned Scottish economist, J.R. McCulloch, stated over 150 years ago, "The moment you abandon the cardinal principle of extracting from all individuals the same proportion of their income or of their property, you are at sea without a rudder or compass, and there is no amount of injustice or folly you may not commit." [J.R. McCulloch, Taxation and the Funding System, London 1845, pp. 141-143.]

Our own Thomas Jefferson astutely summed up such reasoning when he wrote, "The true foundation of republican government is the equal right of every citizen, in his person and property, and in their management." [Letter to S. Kercheval, 1816.]

Under our present system, the blindfolded Goddess of Justice has been allowed to peek. "Tell me first who you are and what you earn," she says, "then I will tell you how the tax laws apply to you." This is privilege and arbitrary law, the harbingers of every tyranny throughout history.

This then is the moral and philosophical case for abolishing the progressive income tax. It is simply unjust, unconstitutional, illegal, and dictatorial. But in addition to the philosophical case, there is also a very powerful practical reason why abolishing the progressive income tax is so important. This is because with progressive rates ended, there would no longer be any incentive for voters to try and gain their life’s status by relentlessly increasing government spending, i.e., by redistributing wealth from the pockets of their neighbors.

The great majority of Americans do not understand it, but the major cause of explosive government spending is our use of progressive tax rates to redistribute wealth. This is because the progressive income tax permits large constituencies of voters to pay ZERO TAXES and equally large constituencies to pay NEXT TO ZERO TAXES. These two groups comprise approximately 40-45% of today's adult population. Thus, a progressive income tax spawns a "something for nothing" voter mindset that dominates all elections.

When large groups of voters are allowed the privilege of paying nothing and next to nothing in taxes, an irresponsible electorate will inevitably evolve to demand a steady expansion of government services. This is basic human nature and one of the cardinal laws of economics. If government benefits are free (or nearly free), demand for them will be infinite. Consequently, in every election there is an automatic 40-45% base of voters who always favor those politicians who propose increased government spending!

Overcoming this infinite demand for government spending will be impossible until we radically reform the tax system and eliminate its "something for nothing" aspect. This means ending all deductions, special breaks, loopholes, and rate progressivity. This will necessitate the adoption of a simple equal rate tax that does not convey favors to anybody.

Since voters would then have to pay for all government subsidies and pork barrel programs proportionately out of their own pockets, they would lose their overwhelming desire for such subsidies and programs. They would begin to favor politicians who advocate reduction of government instead of its constant expansion, because this is the only way they could get their own taxes reduced and more freedom into their lives. But as long as they pay zero taxes or next to zero taxes, they will continue to favor politicians who offer more programs and more pork every November at election time.

The People's Budget study (Regnery, 1995) showed that $400 billion in waste could easily be chopped from the Federal budget and not sacrifice any "essential programs." If this were done, a simple flat tax could be brought in at 10% as revenue neutral, and then could be steadily reduced ever lower as government spending is reduced in the future. And such spending reduction would automatically take place in a political environment that required everyone to pay out of his own pocket for services. The key is that everyone who votes must pay the "equal rate" tax. In this way, a complete reversal of voter desires in future elections (from more federal spending every year to less federal spending) would be brought about.

Once government spending is reduced to a level that could be financed by a 6% or 7% flat income tax, then the system could be easily converted to a consumption tax. This would allow us to abolish the IRS and collect a small national sales tax through the state sales tax agencies already in place. And even a national sales tax could eventually be phased out and replaced by tariffs as the Founders originally advocated. Accompanying our shift to a consumption tax would be a Constitutional amendment repealing the 16th Amendment and forbidding Congress to tax income in any way. This would end the Federal Government's ability to confiscate our property with gestapo agencies such as the IRS.

But the first step in this process must be to abolish PROGRESSIVE rates. A uniform tax rate is the only way to restore a responsible electorate and legislature, which is the only way to substantially reduce government. It is the only way to end the scourge of "infinite demand" for more government programs every election year. And thus it is the only way to eventually rid the land of the income tax and the IRS! Therefore, our second pillar of reform must be to end the policy of PROGRESSIVE taxation and its "something for nothing" mindset that is stultifying our nation.

These then are our two paramount goals -- a gold-backed currency and an equal rate tax system. These are the TWO PILLARS that must be used to form the foundation of any political challenge of the Demopublican establishment. Radical monetary reform and radical tax reform are the great unifying causes that can break the stranglehold that state authoritarianism and its collaborators have over American politics. The statist Bastille can be assailed with the battle cry of "Gold money and equal tax rates!" We at AFR believe Americans are ready to listen in large numbers.

How to Structure the Necessary Challenge

As we previously stated, a third political party needs to be launched. Let's call it the Liberty Party. It is to be based upon the above two pillars of reform; but it must be a party that is viable. It must avoid the two serious mistakes of all conventional Third Party challenges.

Ross Perot's Reform Party, The Libertarian Party, and the Constitution Party (formerly the U.S. Taxpayer's Party) have appeared at times to be a start toward genuine political reformation. But all three have failed to gain adequate support because they have structured themselves upon one or the other of two flaws: 1) instant idealization, or 2) instant victory.

1) Campaigning on "instant idealization" is the flaw of the Libertarian and Constitution Parties. This means that these two parties both have ideal visions of the way that society should be politically organized, and they attempt to implement their visions all at once through the political process. They ignore the fact that politics is a game of incrementalism, that it is not an arena in which an ideal society can suddenly be voted into place.

For example, when asked what tax policy they advocate for the country, Libertarians reply that the income tax should be totally abolished and government should be stripped down to a minimal state that can exist upon excise taxes and tariffs. Now this is a beautiful vision of a truly limited government. It would be wonderful to have an America like that. But this is not a political platform to be gained through a political campaign; it is rather an "ideal" that perhaps could be approached in a hundred years or so. The members of the Constitution Party respond in the same way. Both of these parties wish to instantly implement their visions of the ideal in total. There is no acceptance of the need for incrementalism that all of politics is based upon. As a result, both of these parties are marginalized as foolishly utopian. They end up getting at best 1% of the vote every year. They remain obscure fringe voices. No national media pursue them, no big money flows into their coffers, and they are never invited to the televised debates.

Thus, by trying to run their campaigns on a platform of full implementation of their ideological vision of the ideal society, these two parties doom themselves to continual ineptitude. The solace that their members fall back upon is that at least they are functioning as an educational organization to spread the ideas of freedom to the electorate. But even that function is pretty meager, for only sparse audiences of curious spectators and hard core loyalists ever show up at their confabs. In other words, since they have no national media pursuing them, and since they never get invited to the debates, they really don't do much educating of the electorate. The bottom line is that because they campaign on "instant idealization," they fail.

2) The desire for "instant victory" is the flaw of groups like the Reform Party that Ross Perot founded. Because of its desire for immediately winning the Presidency, the Reform Party ended up becoming nothing but a Demopublican clone. While the Libertarians project too much radicalness, the Reform Party projected no radicalness. They ended up with no substantive differences ideologically between themselves and the Demopublicans. Because they wanted to win right away, they had to offer only more of the same statist pabulum of their opponents. They were thus reduced to running on the notion that they would somehow govern the monster welfare state better because they would bring "better personnel" to Washington. Their experts and bureaucrats would supposedly do a more professional job of confiscating our money and throwing it down the rat holes of political boondoggles. Needless to say, this did not excite the electorate who didn't see the need for still another big government party. The bottom line is that because the Reform Party campaigned on a platform designed for "instant victory," it failed.

How to Make the Liberty Party a Success

These are the two crucial mistakes that any challenge of the establishment must avoid. If the Liberty Party is to succeed, it must offer radical enough change to separate itself from the Demopublicans, but not so radical that it becomes marginalized like the Libertarians. This will negate any chance of instant victory. But here is the all-important key. By keeping its radicalness to a minimum (e.g. advocacy of gold money and equal tax rates), we believe that the Liberty Party could garner 15% of the vote, which would qualify it for the debates every year and bring national media to hang out on its front doorstep. It would thus have a national podium to disseminate its ideas out to 100 million voters, and it would scare the pants off of the Demopublicans. In no time at all, Demopublicans would be offering their own gold backed currency and their own 10% flat tax. If they didn't, we believe that the nation's voters would increase their support every year for the Liberty Party until either the Demopublicans relented and enacted the two pillars into law, or the LP achieved parity with the Demopublicans and actually won on election day. Either way, the Liberty Party would win because its two pillars would be implemented. With implementation of the two pillars, Big Government would die, and freedom would be reborn.

So a Third Party does not have to win office to win its cause. But it does have to avoid the two pitfalls of marginalization and becoming a clone. If it is headed by someone of prominence with the necessary gravitas, and if it achieves the right blend of radicalness, there are 15 million voters in America who would join such a party, which would get it into the debates and make it a powerful force to reckon with. As a consequence, American politics would then be dramatically opened up to the ideas of freedom and limited government. As things stand now, such ideas are not even discussed. This is because all third parties make one of the two crucial errors mentioned above, and consequently become marginalized and never listened to, or they become clones with nothing different to offer. They, therefore, never become a potent enough threat to the Demopublicans to motivate them to alter their policy proposals.

As to who should be the presidential candidate of the Liberty Party, we at AFR cannot conceive of a better choice than Congressman Ron Paul of Texas. He embodies everything that America was formed and built upon -- sound money, strictly limited government, and a mind-our-own-business foreign policy. He has the necessary political savvy and gravitas and would be acceptable to easily 15% of the American people as an inhabitant in the White House. He has legislative experience. He's a pro who knows his way around Washington and Congress.

Congressman Paul has stated that if he were to run, he would choose Walter Williams as his running mate. This would be a superb combine. Williams is is a renowned scholar who is brilliant, articulate and witty and stands four square for a limited government, free-market philosophy. He has no political experience, but he's only going to be running as the VP. Besides his sparkling intellect and affable personality will shine with all voters and TV viewers just as Adlai Stevenson did in the 1950's.

These two prominent free-market advocates then are AFR's choice to lead a third party challenge. They have the power to gain admission into the debates, which is the all-important goal of our Liberty Party -- access to 100 million Americans with our two pillars of reform, "gold money and equal tax rates." Once in the debates, our cause would proceed dramatically. Can you imagine the Machiavellian, two-faced Demopublican candidates trying to defend the Federal Reserve and progressive taxation against the likes of Congressman Paul and his glib partner Williams on nationwide TV? Especially as the greatest economic crisis in our history becomes more and more entrenched in the next decade.

It is in times of great crisis that men and women are most open to radical new policies as answers to their problems. Well, the next 10 years are going to be dominated by severe economic and political crises, perhaps some of the worst in history, and you can bet the collectivists will be demagoging their nostrums to the voters. We will need our ablest, most articulate spokesmen in the national debate to counter their avalanche of statist-fascist economic proposals. We can count on the neo-con Republican Party to offer about as much opposition to the advocacies of the left as the Taliban did to American firepower. Their strategists will fall cravenly in line to emulate all leftist legislation because they are philosophical bedfellows. So it is crucial to get our spokesmen into the debates, and the "two pillars strategy" of gold money and equal tax rates is what will get them there.

Our most important political priority today is to convince the American people that their allegedly "two party system" is a sham. It has been irreparably bought out by the neo-cons and the Big Bank--New World Order crowd. It is statist to the core and dragging us toward dictatorship. It is our enemy, not our liberator. Neither Republicans nor Democrats will ever move toward LESS government unless they are confronted with a credible third party competitor that poses a threat to their rule by bringing the truth to 100 million voters in dramatic style. We at AFR believe Ron Paul and Walter Williams are the ones to do just that. These two great Americans are the political hope for our country.

Make One Grand Unification

What the Demopublican power brokers fear most is a unified, credible effort from the political right -- a real grassroots freedom party that does not make the mistakes of marginalization and cloning. They subconsciously sense that millions of Americans would explode in righteous wrath and loyalty to such a party. Demopublicans know that the third parties of the left such as the Naderites will never be a threat to their rule, for the left's message of open socialism is still blatantly alien to the American people. But the political parties of the right pose a serious threat because their vision potentially lays bare the illegitimacy of massive Demopublican statism. Their vision hearkens back to the real meaning of America, to the Constitution we have so shortsightedly abandoned, but still value in our hearts and souls. But such a threat lies wasted year after year because marginalization and cloning dominate all third parties.

To sum all this up, we need a grand unification of all third parties in the U.S. that value free enterprise and limited government. We need to quit playing the game as amusing larks, media curiosities, and footnotes in history. Make one party and base it on the two pillars of "gold money" and "equal tax rates." Accompany it with several hot button issues such as "restoring a non-interventionist foreign policy" and "cracking down on immigration." Then structure the rest of the platform upon conventional Demopublican fare. Such a party, with Ron Paul and Walter Williams at the helm, would have a powerful galvanizing appeal, which would allow it to capture 15% of the vote every year that it ran. The fear that would rise up in the establishment crowd would be heart pounding. Their corrupt game of buying votes through debasement of the currency and confiscatory taxation would be over. The authoritarian state would, within a decade, crumble like the Berlin Wall. The black limousine boys would have to hightail it out of Washington and start earning a real living.

Millions of voters would rally around such a cause. At least 15% of the American people are thoroughly fed up and firmly committed to AFR's monetary and tax reform pillars. They want a radical, rational program that will offer them freedom, order and justice in their lives. They want a party that will end Gargantua's relentless expansion and domination of our society.

The time has come to form a Liberty Party that actually has the ability to make a difference. We could inject the two greatest issues of our day -- gold money and equal tax rates -- into the living rooms of 100 million Americans every election year. This beats all to hell the quaint little gatherings in front of a few faithful followers that contemporary third parties get. This would be big time, TV oriented, major league politics. It would rock the nation, it would make history, and most important, it would stop the growth of the Leviathan cold.

Freedom and Pax Americana

by Nelson Hultberg

"Whom the gods wish to destroy, they first make mad," goes the ancient saying. If this is true, then our leaders in Washington are headed straight for the cuckoo's nest. There is a virulent, hubristic madness consuming our political elites in this first decade of the 21st century. It manifests in the intrusiveness of the Nanny State, in the relentless debasement of our currency, in the manipulation of our markets, and in the outrageous taxes that sap the entrepreneurial vigor from our lives. But scariest of all, it manifests in the employment of unbridled power to remake the world's divergent cultures, religions, and systems into American democracy clones.

Power, our Federal Government has -- political, bureaucratic, police, military, monetary, and taxing power. It has had such power in excessive amounts for over a century now, and it has grown quite ruthless in wielding it in order to pursue its goals. Its primary goal is HEGEMONY over other regions and countries, as well as over American citizens themselves. This should not be surprising. This is what tyrannical governments have been doing for thousands of years. Since the days of the ancient Pharaohs, they have sought to control their neighbors as well as their own citizens, and they have justified their behavior by insisting that "peace and stability" were their aims. But power is their real aim. And sadly, individuals become ciphers in the process. This is what is unfolding once again, as it has countless times in the past. Study the annals of man from the Sumerian kings, to Alexander the Great, to Frederick Barbarossa, to Napoleon, Stalin and the modern despots, and the major leitmotif of the entire panorama is PURSUIT OF POWER by governments over individual citizens.

Beginning of the Madness

With the onset of the War on Terrorism, our Federal Government has now ratcheted up its drive for hegemony both domestically and worldwide. In September 2002, the Bush administration released its new National Security Strategy, which was a sweeping agenda to mount a retaliation against the terrorist threat from Islam. But it was also something else; it was the first implementation step for the vision of Pax Americana. This vision has its origin in the controversial 1992 Pentagon report by former under secretary of defense Paul Wolfowitz titled, "Defense Planning Guidance." In it, he called on America in the post Cold War era to alter its foreign policy aims from merely defense of our nation to actively pursue a reshaping of the world -- in short, get involved in nation building whenever and wherever it would appear to benefit us. Now that we are the only superpower in the world, we must seize the opportunity to bend as many nations as possible to our will, to our values, to our form of democracy. Only in this way, can we truly promote "peace and stability" for ourselves and our allies. Only in this way can America heed the call to national greatness that falls on the shoulders of singular superpowers.

The Wolfowitz doctrine has been refined and sophisticated during the past ten years by high level pundits of Washington such as Bill Kristol and Robert Kagan of the Project for a New American Century (PNAC). The refined version now has numerous aggressive foreign policy goals for America to pursue. Reduced to its fundamentals, this doctrine is meant to make America into an imperialistic power and to be proud of it. It is defined by Kristol and Kagan as "benevolent global hegemony." One of the most important of the PNAC goals is the imposition of democracy upon as many nations as possible -- especially nations of the Middle East -- through both stick and carrot methodologies. If a nation can be bribed into democracy, all well and good; but if it can't be bribed, then it is to be bludgeoned. Democracy has become our new god, the raison d'etre, the salvation of our lives. It is now the curative for all the world's ills from war, to poverty, to cultural primitiveness. Spread its healing principles to mankind, and we can build a heaven on earth. Such is the madness that now consumes our Federal Government.

Washington today is trying to turn everyone into Americans," writes Richard Maybury in his July issue of Early Warning Report.

"No one makes any secret of the fact that Washington sees Iraq as a test case for [its imposition of democracy] plan. George Bush boasted about it in his February 26th speech. He intends to spread the American Way throughout Arab lands, to 'transform that vital region.'"

Because the heathens lack democracy, they are prone to breed extremism and hatred, they war on their neighbors, and most importantly they wish to blow up people and buildings in America. According to the Kristol-Wolfowitz PNAC model, terrorism has its roots in the non-democratic political ideologies of the Third World, especially in the theocracies of the Middle East. Thus, the first order of the new Pax Americana is to bring those we deem as heathens to democracy, to modernize the poor devils, and while we're at it teach them the beauties of a more materialistic culture. Since democracy is the summum bonum of our day, we have the duty to impose it upon those who are backward. The fact that the British felt the same call to duty in their imperialistic dreams of the 19th century goes ominously unnoticed by our punditry. What is the difference between the Kristol-Wolfowitz vision and the expansionist policies of Benjamin Disraeli and Queen Victoria in England of the 1870's that promoted war against the Afghans and the Zulus? British style colonization may not be the goal of the PNAC vision, but the curse of world hegemony is, just as it was in the days of Pax Britainia.

History does not repeat precisely, but it does in general principle. And Washington is repeating the sins of the past while our pundits pusillanimously blank out. Our Federal Government has divorced itself from the true meaning and purpose of America in both its domestic and its foreign policies. It is to be feared as a despoiler among nations and men. It has crossed the Rubicon into imperial overreach.

In an article in January of this year, I wrote that I saw the coming Iraqi war, whether it was to unfold horrifically or painlessly, as just the beginning of a whole series of Islamic-Washington clashes over the next 10 to 20 years. I stated that genuinely healthy economies are not spawned from protracted periods of war. And that this is what lies on America's horizon for a long time to come. So better load up on gold and silver in whatever manner your risk tolerance allows. And spread the word about the hubris that is causing it all. That is what sane men do in times of upheaval. If the world wants to go insane, it has that prerogative. But the wiser heads of history always refuse to take part, and they always look to protect themselves from the insanity. I see no reason to change that view. In fact, the events unfolding since then have only reinforced my conviction that there is so much ignorance and arrogance ruling Washington today that only a catastrophic denouement that extends for years can rouse the intelligentsia from their madness. Only through a cathartic crash of historic proportion can the necessary changes be brought about in our national perspective to restore freedom, sound money, and proper foreign policy.

The Costs of Empire

Trade and fiscal deficits are now exploding like Krakatoa and St Helens to pay for the delusions of our leaders. Years of prodigality that would make Louis XIV blush have gutted our national savings and sanity. Washington's welfare bureaucracy is today's Versailles Palace. Gold leases, swaps, deceit, and MANIPULATION are now the tools of Greenspan's Fed -- so terrified are his governors of the unmitigated horror awaiting the nation because of their 90-year experiment in dollar alchemy. Greenspan has become nothing but a gussied up Keynesian medicine man -- mixing interest rate tonics, Forex cathartics, bond purchase elixirs, and snake oil monetization into a putrid witch's brew to try and cast just the right spell over the economy to somehow turn fractional reserve dross into gold. But the laws of nature are not to be conned. The Fed's credit money is still debt, and it will not move an economy already suffocating in debt. 'Sir' Alan sold out his youthful principles to ride around in the black limousines, and now he has only a shaman's bogus remedies with which to try and salvage his place in the history books. He gave up, with the sale of his principles, the only instrument that could save the nation -- gold. His recondite speeches, so popular among the sycophants of Washington during the go-go nineties, are now seen for what they always were -- self-serving gobbledygook and mystification to further perpetrate the power of the Federal Government in our economic lives.

The Federal Government's fiscal deficit will come in somewhere between $300 and $400 billion this year, while the trade deficit will exceed $500 billion. According to Bill Bonner, the estimates on what the Iraqi regime change will ultimately cost range anywhere from $27 billion to $1.92 trillion. With the Federal Government's track record for "honest statistical evaluation," what are the chances that its final bill is closer to the $1.92 trillion figure than the $27 billion figure? Pretty damn good, I would say. Does anyone with a semblance of a brain still think such gross fiscal insanity can be rectified with "monetary policy," that such debt will not have to be purged through an excruciating economic collapse? Sadly yes, there are those that do. They ride around Washington in black limousines and pour forth, to media lackeys and talk show barkers, the most disingenuous fallacies of our age.

To compound the problem of trade and fiscal deficits that Demopublican statism has brought us via its 30 year orgy of buying votes with paper dollars, we now add the cost of empire. Heathens are not converted cheaply. Our Iraqi venture is beginning to settle into the morass of guerrilla resistance a little more each week. And guerrilla resistance, as the Russians found out in Afghanistan, can go on indefinitely. Its like the irrationality of the stock market; it can stay predominate far longer than a nation's treasury can stay solvent. What glee our enemies must be experiencing at sight of obtuse Americans trying to fathom why the Shiites do not care to adopt our democracy and our Constitution. As Maybury points out, they have their own Constitution. It's the Koran, and it has ruled them for over a thousand years. Yet Kristol-Wolfowitz, et al imagine that they can overturn 1400 years of metaphysical tradition with gung-ho American lectures. I have a bit of bad news for Kristol-Wolfowitz, et al. Change in a culture's metaphysical views takes place over centuries, not months and years. It moves like a glacier sliding across a continent. And it does not respond to the butt end of a rifle. Yet the madness has already been launched and cannot be retracted now. So America will have to play this game out. It will be, in my opinion, a game that will cost us hundreds of billions of dollars and many lives lost literally on the battlefield of the Mideast cauldron, as well as untold lives lost morale-wise on the home front as our economy slouches toward bankruptcy and an Argentine future because of our government's ever-extending reach beyond its financial and spiritual supply lines.

Because Keynes mesmerized our leaders in college, they do not grasp the critical role that savings play in creating productivity in a healthy society. They believe that consumption is the engine of economic growth, and that paper money can ignite it forever. They thus do not understand why military expansion, such as we are now embarking upon, must ravage a nation whose people are in debt up to their eyebrows in the domestic arena. They do not understand that a nation devoid of savings (as America is now) has extended itself beyond its capacity to finance "global hegemony." They believe in the power of printed money as if it is actual wealth. The Keynesian virus has done this to them.

Washington's original estimate was that a successful regime change would require the stationing of our troops in Iraq for 1-2 years. Then the estimate gradually became 4-5 years. Now President Bush merely tells us that Americans face a "massive and long-term undertaking" in rebuilding Iraq. Has anybody in the media noticed how specific the estimates were to sell the Iraqi venture, and now how vague the estimates are to sell the idea of a protracted American occupation? Does anybody remember LBJ and Vietnam, Clinton and Bosnia? For god's sake, they're all the same -- these despicable Demopublicans!

What is so aggravating today is to have to endure the dupes who buy into the establishment fiction that America has a "two-party" political system. Wake up Americans! We as a country are slowly evolving into a dictatorship. Both political parties -- Democrats and Republicans -- are at fault here. Both parties have abandoned the principles of a free society, and have adopted the collectivist-arbitrary law approach that undergirds all the tyrannies of history. It matters not whether it's LBJ or Nixon, Carter or Reagan, Clinton or Bush. Both parties have become merely subdivisions of one party because they are the same in principle. They both promote a subtle brand of economic fascism -- equivalent to Mussolini's corporate-statism. The difference is that Republicans emphasize the foreign policy arena, while Democrats revel in the domestic arena. But they both spread Big Brother omnipresence once in power.

This is what we in the libertarian/conservative movement (now led by Ron Paul and the Liberty Committee in Congress) have been preaching for 30 years, that both parties have been taken over by collectivism and arbitrary law. But America was founded upon individualism and objective law -- in other words law that is the same for everyone, that is Constitutionally limited in its scope, that requires self-reliance. Yet we have slowly throughout the 20th century evolved into our present Demopublican system of law that is different for different people, i.e., arbitrary, and which foments ever-increasing dependence upon government. It is a political system that is based totally upon the conveyance of privileges to special groups. Once such a system of law is taught by the intellectuals in the schools, and accepted by those who are subservient among the populace, then the rest is only a matter of time. A dictatorship will develop where once there was freedom throughout the land.

It is this unleashing of "arbitrary law" that has led us to centralized government and rampant power lust, which has now led us to compulsive hegemony and Pax Americana. This is what has created the chutzpah to imagine that those we deem as heathens should be purified with "democracy," despite the fact that both their rights and the rights of American citizens are usurped in the process. Our establishment pundits, of course, are busy defaulting on their responsibility to remind the American people about such truths. This is their nature -- to blank out on all hard truths so as to continue to feed at the trough of Power. Attending palace dinners and courting the favor of Washington bigwigs is what excites our establishment media.

This obsession with hegemony is why we are still in Korea 50 years later. It is why we are still in Okinawa, still in Taiwan, still in Bosnia, still in Germany, still in NATO. It is why, as Richard Russell points out, we have major foreign bases in 36 countries and more than 260,000 troops stationed overseas with 50,000 military personnel on carriers constantly prowling the oceans. [With the Iraqi occupation, the 260,000 troops overseas are now in the neighborhood of 400,000.] All told, Russell reports, our military has more than 800 bases of various sizes around the world, including 60 major ones. There are 189 nations in the UN, and we have our military in 140 of them! [January 15, 2003].

A military presence of 400,000 troops dispersed to 140 of the 189 member nations of the UN! This certainly has to be defined as imperial overreach! This may not be the pursuit of empire in the conventional sense because we claim no territorial ambitions as Rome and England before us. But it is an insane over-extension beyond our supply lines; it is pure madness. We are now the world's Imperial Super Cop. The implementation of such a role in the Middle East will require decades of occupation. Just think of that prospect -- our troops stationed in Iraq for decades! It cannot help but create virulent enmity among the rest of the Islamic world and spawn even more terrorist attacks upon our shores! Millions of Muslims throughout the Middle East will simply solidify further their conception of us as vile Crusaders come to dominate them once again. Over time, we will be seen as modern day Roman legions hanging around afterwards to subjugate them. We will become as popular with the Arab street as the presence of toxic waste is in a community's water supply. All this to get rid of one tin-pot dictator? Great nations fall precisely because of this kind of blindness, this kind of ivory tower imbecility that the Kristols and Wolfowitzs of history always feel so eager to heap upon their fellow men.

What Is to Come Because of This?

Edward Gibbon wrote his History of the Decline and Fall of the Roman Empire over two hundred years ago. At the end, he concluded that modern civilization was too complex to fall. He was most indubitably wrong. All civilizations are prone to falling because they are comprised of flawed humans who, because they possess but a tiny flash of existence, are driven to seek all manner of aberrancies to gratify their desires -- to live, drink and be merry for tomorrow brings one's demise. Power lust is the most lethal of the aberrancies because it so often involves masses of humans, giant bureaucracies, wars, and warped visions. Will we in America be able to avoid Rome's path? Viewing the world from today's perspective, one would have to say the chances are not good that we will. Of course, this could change. History is not set in stone; it is the result of men's choices. If we were to experience a return to reason in the aftermath of the upcoming world breakdown, it is quite conceivable that out of the wreckage there would come a rebirth of freedom and sound money again. It won't be the result of our establishment thinkers, however. It will come from the contrarians of the world -- thinkers such as Ludwig von Mises, Richard Weaver, Thomas Sowell, Murray Rothbard, Ayn Rand, Rose Wilder Lane, etc.

One thing is certain; the new policy of Pax Americana will bring all Americans less and less freedom. This is already manifest in such legislative monstrosities as the USA Patriot Act. What an insult to name a legislative bill that opens the door for Big Brother with a term immortalized by the Founding Fathers. But this is the pathological nature of our government in Washington. It must now use tyrannical "newspeak" to pass its bills.

The USA Patriot Act is a giant step toward that Orwellian world awaiting us in the future. As Nancy Chang, Senior Litigation Attorney at the Center for Constitutional Rights, describes it, "the Act sacrifices our political freedoms in the name of national security...by consolidating vast new powers in the executive branch of government."

"The Act grants the executive branch unprecedented, and largely unchecked, surveillance powers, including the enhanced ability to track email and Internet usage, conduct sneak-and-peak searches, obtain sensitive personal records, monitor financial transactions, and conduct nationwide roving wiretaps."

"The Act permits law enforcement agencies to circumvent the Fourth Amendment's requirement of probable cause when conducting wiretaps and searches that have, as a 'significant purpose,' the gathering of foreign intelligence."

"The Act allows for the sharing of information between criminal and intelligence operations and thereby opens the door to resurgence of domestic spying by the Central Intelligence Agency." [cited by Jennifer Van Bergen, "What the Patriot Act Means for Americans," -- April 4, 2002

Big Brother is coming! And his omnipresence is being promoted by both Republicans and Democrats. Pax Americana is the straw that will break our economy's back. The debt load it heaps upon our already sated budgets will have to be monetized. Interest rates will reverse their present trend and begin a long-term rise. Large holdings of foreign capital will be repatriated. The Dow and the S&P will drift southward toward 3000 and 300 on the charts, even though the PPT will be hard at work trying to shore them up. Competitive currency devaluations will begin to spread around the world, as each nation scrambles to keep pace with America's weak dollar policy. Arabs will relentlessly dump dollars to counter American hegemony in their back yard, which will steadily drain foreign capital and cap any and all equity rallies. Greenspan will be faced with the dreaded "deflation of assets" that he is so fervently trying to avoid with his bubble creation policies. The Fed will then have to face the rock-and-a-hard-spot choice that they have been avoiding for two years. They will have to resort to actually printing up money, rather than just jawboning about it. They will have to ignite inflationary prices. They will do this because it will be their only option.

Will such Fed capitulation then bring on hyperinflation? According to Kondratieff theory, it would be almost inescapable. But this writer is just skeptical enough of formal theories about the future in a messy world to entertain doubts. There are far too many variables that flow in and out of the arena, that cannot be totally comprehended as to their impact, to state with certainty that deflation must result, and that hyperinflation must follow. All we can say is that the future will be one of SEVERE CRISIS. Whether that crisis is deflationary or inflationary, or a combine of both, depends upon how Washington's cornered rats react to the dilemmas of the upcoming years, and what measures of response come from other nations. Men and nations have free will, and history has a way of interminably fooling its prophets. It's as inscrutable as a cat.

One thing we can probably predict is that China will patiently sit in its cat bird seat and gladly accumulate all the gold that our bullion bank ignoramuses in New York keep dumping onto the market. China's historical respect for the metal was never quite obliterated by Keynesian doctrine as ours was here in the West. The rulers in Beijing wish to be a premier regional power at the very least, and perhaps even assume America's place as the world's reigning superpower. They know that such dreams will come about only if they attain economic dynamism, and economic dynamism is tied irrevocably to a strong currency backed by gold. So they patiently accumulate, and watch with appreciation the American death dance on Wall Street and in Washington.

Pax Americana is now official. It is openly proclaimed by powerful intellectuals and scholars in the establishment circles of Washington. It will guide both Republicans and Democrats alike in the upcoming years. It will result in monstrous debt burdens and the gradual erosion of America as a superpower. It will bring us $1,000 gold, and maybe much higher. A great nation has taken a step toward historical oblivion. The path is not irreversible, but it will take a great awakening in this next decade to avert America's fall. The Keynesian chickens that FDR set loose are finally coming home to roost. The laws of nature that Jefferson and Madison so wisely built upon, and which we so ignorantly scorn, are still there behind the scenes working their magnetic hold over our decisions. They are eternal. If an American renaissance is to take place, it will come only from a restored respect for those immutable laws that the Founding Fathers understood so well.