We have been discussing the consumption of capital. Last week, for example, we concluded with:

“We see people eating more of the seed corn.”

Morally, socialism is the enslavement of man to man. If you create something, they want not just to take it from you, but to render you unable to create anything else. They declare that the ideal is “from each according to his ability.” This is about the most perfect expression of envy ever put into words. By envy, we mean the hatred of the good for being the good. We mean the sort of person that if he sees you have something, he wants to take it. Not so much to have it for himself, but to deprive you of it.

Economically, socialism is the system of capital consumption. It cannot produce—witness the consistent starvation in every socialist utopia ever. These socialist paradises were hailed as socialism while it seemed to be working, while the capital lasted. Then the capital was finally depleted, and the socialist apologists bleated that it wasn’t true socialism. Venezuela is an example of this.

There are two means of getting people to consume their capital. One is the plain old dictatorship. The strongman commands it. And anyone who disobeys, or merely questions it, is disappeared to a gulag. Shooting dissidents is effective, so long as the people buy into the philosophy of socialism. When they stop, which usually occurs when the capital runs out, watch out. Thousands of statues of Stalin toppled. The Berlin Wall toppled.

While Stalin and Mao were mass-murdering their citizens by the tens of millions, the West was developing an alternative means to the same end. The West implemented plank #5 from the Communist Manifesto, otherwise known as the central bank. Here in the US, it’s the Federal Reserve. Every country has one, the Bank of England, the European Central Bank, the Bank of Japan, the People’s Bank of China, etc.

The central bank does not order professionals to labor in the work camps. It does not condemn people to build railroads through the frozen tundra improperly dressed for the cold. It does not torture people in secret dungeons if it suspects they are Traitors to the Revolution.

It manipulates people with perverse incentives. We have used this quote before, from John Maynard Keynes, arguably the Godfather of our monetary system.

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become “profiteers,” who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds [236] and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”