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An Open Challenge to Paul Krugman: Were America’s Founding Fathers Wrong for Advocating Death for QE Measures?


In light of the US Central Bank’s (I refuse to use their deceitful self-anointed Federal Reserve moniker) most recent grandstanding policy decision that has been referred to as QE light that precedes the inevitable QE2 launch sometime in the not so distant future, I present an open challenge to Paul Krugman and all like minded economists, Nobel prize winning or not, that support the monetary policy of dollar debasement. This will be a straightforward challenge issued by our Founding Fathers, in particular the first US Treasury Secretary, Alexander Hamilton, who scripted the US Coinage Act of 1792. The one question I want to see Mr. Krugman and his supporters answer is this:

“If monetary debasement can truly create economic recovery, why did our Founding Fathers establish, in the US Coinage Act of 1792, that any persons discovered to be deliberately debasing US money ‘shall be guilty of felony and shall be punished by death’?”

Note that the punishment was not imprisonment, not even hard labor, but death. Why did our Founding Fathers, who had just gained freedom from the draconian monetary policies of the British monarch King George through the American Revolution and the Treaty of Paris in 1783 deem that monetary stability could not be separated from the conditions of freedom? Why did they deem the act of monetary debasement so insidious that anyone found guilty of deliberately debasing US money would not be imprisoned but should be punished by death? And why is monetary debasement today accepted as the “right thing to do” and “normalized” by prominent economists like Paul Krugman?

So this is all I ask of you Mr. Krugman – to repudiate Alexander Hamilton and explain why he was wrong. I don’t want the employment of deft politician-utilized “block and bridge” techniques that fail to ever address the question, or responses that entail long-winded dissertations on the relationships between monetary base, monetary supply and monetary velocity that fail to answer the question. Please merely be so kind as to answer the one question inspired by Alexander Hamilton and posed to you above and explain your position.

On August 3, 2010, I posted a 3-part video series in regard to the Central Banks’ use of ideological subversion to mislead the masses. Step two of the process of ideological subversion requires the participation of academics to disseminate deceit if the deceit is to not only be widespread but successful in taking root in the consciousness of society. The role of academics in shaping the discourse about the rationality of monetary debasement is critical to the belief system embraced by young impressionable minds for decades into the future as once a false belief takes root it is spread from one generation to the next. In other words, the widespread adoption of the erroneous belief that monetary debasement is beneficial to the economic health of nations would be impossible without you, Mr. Krugman. The Bank of Japan is another Central Bank guilty of executing the act of monetary debasement for decades. And again, academics that reside both within and outside of Japan ensure that the Japanese do not understand how monetary stability is inextricably linked to their most sacrosanct right of freedom.

For those of you reading this that understand why the enforcement of monetary stability is central to your freedom, and I’m sure there are many of you, you must realize that you are among the very small minority of the world’s population that understands this. I have posed this challenge to Paul Krugman because he has the extremely powerful bully pulpit of the New York Times, Princeton University and mass media distribution channels to disseminate his opinion, to hundreds of millions, that monetary debasement is of great benefit to recovering economies.

Today, academics have drawn the focus away from the immorality of the monetary debasement component of quantitative easing by refocusing discussions on the useless debate of whether or not QE assists economic recovery. This type of useless debate only serves as a distraction tactic to draw attention away from the more paramount issue of whether QE destroys the wealth of citizens and therefore is an enemy of freedom. So with this in mind, let us look at the exact language of the US Coinage Act of 1792, scripted by the first US Treasury Secretary and one of the Republic of America’s founding fathers, Alexander Hamilton.

Section 12. And be it further enacted, That the standard for all gold coins of the United States shall be eleven parts fine to one part alloy; and accordingly that eleven parts fine to one part alloy; and accordingly that eleven parts in twelve of the entire weight of each of the said coins shall consist of pure gold, and the remaining one twelfth part of alloy; and the said alloy shall be composed of silver and copper, in such proportions not exceeding one half silver as shall be found convenient; to be regulated by the director of the mint, for the time being, with the approbation of the President of the United States, until further provision shall be made by law.

Section 13
. And be it further enacted, That the standard for all silver coins of the United States, shall be one thousand four hundred and eighty-five parts fine to one hundred and seventy-nine parts alloy; and accordingly that one thousand four hundred and eighty-five parts in one thousand six hundred and sixty-four parts of the entire weight of each of the said coins shall consist of pure silver, and the remaining one hundred and seventy-nine parts of alloy; which alloy shall be wholly of copper.

Section 14. And be it further enacted, that it shall be lawful for any person or persons to bring to the said mint gold and silver bullion in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and free of expense to the person or persons by whom the same shall have been brought.

Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.>

On March 20, 2009, in the article “Fiscal Aspects of Quantitative Easing”, Mr. Paul Krugman wrote:

“The big policy news this week has been the Fed’s decision to buy $1 trillion of long-term bonds, going beyond the normal policy of buying only short-term debt. Good move…”

“The Fed is, however, creating a new liability: the monetary base it creates to buy these bonds. In effect, it’s printing $1 trillion of money, and using those funds to buy bonds. Is this inflationary? We hope so! The whole reason for quantitative easing is that normal monetary expansion, printing money to buy short-term debt, has no traction thanks to near-zero rates. Gaining some traction — in effect, having some inflationary effect — is what the policy is all about.”

“I’m not complaining; I think quantitative easing (it’s really qualitative easing, but I give up on trying to fix the terminology) is the right way to go.”

One thing is clear, Mr. Krugman. Either those men that are universally accepted to be among the greatest American patriots of all time were terrorists for desiring the sentence of death for anyone that destabilized money, OR you are massively wrong. Both of you cannot be right. Your defense of your position needs to repudiate the very founding fathers of the REPUBLIC (not the democracy) of America and needs to explain why you are spreading a diametrically opposing viewpoint to the wishes of America’s founding fathers.

When prominent academics such as yourself, Mr.Krugman, support monetary policies that our Founding Fathers believed to be tyrannical, this supports a misguided and delusional belief system, the mistakes of which are exponentially multiplied by financial journalists that ensure that misinformation becomes not myth but part of a new reality that bankers desire. I cannot recall the hundreds of times have I seen misleading headlines like “Japanese markets fall sharply in the last month on the back of a strengthening Yen”. Such headlines, by nature, imply that a rising Yen is undesirable when in reality, such policy is enormously beneficial to a nation of savers. Monetary debasement punishes anyone that saves their money instead of spending it right away. Financial journalists, unable to comprehend monetary policy accurately because of academics that spread deceit instead of truth, continuously script headlines that fall victim to the con game of ideological subversion.

Quantitative easing is a banker-created euphemism for monetary debasement. Please explain to Alexander Hamilton, who surely is rolling over in his grave after reading your words Mr. Krugman, why a great American patriot like Alexander Hamilton was so wrong. Billions that have been subjected to and that have suffered a much lower standard of living as a result of monetary debasement policies enforced by Central Banks around the world await your answer. If we are going to emerge from this global monetary crisis with a sustainable solution that benefits all citizens of the world as we all desire, you must not remain silent in responding to this question.

About the author: JS Kim is the Chief Investment Strategist and Managing Director of SmartKnowledgeU, LLC, a fiercely independent wealth consultancy company that guides investors in the best ways to invest in gold and silver through the progression of this global financial crisis. His Crisis Investment Opportunities newsletter has significantly beat all major developed stock market indexes since the first day of its launch, outperforming the Australian ASX 200, the UK FTSE 100 & the US S&P 500 by 308.89%, 304.87%, and 300.85%* during the period of June 15, 2007 to May 12, 2010 (*in a tax-deferred account). JS also maintains an investment blog, the Underground Investor, in which he presents financial knowledge rarely covered by the mainstream media.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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