Fabian Socialists and You
Audio transcript from a 73-minute talk, given circa 1973, by Gary Allen. Audio can be found on YouTube: https://youtu.be/TVmp57wY7uM.
Books mentioned in the talk:
- The Great Deceit, by Zygmund Dobbs
- The Open Conspiracy, by H.G. Wells
- Communist Manifesto, by Karl Marx
- Keynes at Harvard, by Zygmund Dobbs
- Fabian Freeway, by Rose Martin
Alright, I’m going to talk to you a little bit this morning about categorizing America’s enemies into three rather definite groups. The three groups are these: The first group: overt revolutionaries, second group: Fabian socialists, and third group: Insiders.
The first group: overt revolutionaries. These are the ones that are most easy to see. They usually shout what they believe, destroy the government, destroy the country. These are people who profess to be communists. They say they’re the most easy to spot, and they are the least dangerous to the country—least dangerous of the three groups.
A lot of attention is focused upon them, but their chances of actually overthrowing this country are zilch.
Group two is the one that we’re going to concentrate most on today: Fabian socialists. And we’ll define that in a minute. Fabian socialists are not a rock and roll group. It is a philosophy. And you have heard, I’m sure, a lot about the Insiders. In fact I wrote a book about the insiders called “None Dare Call It Conspiracy”, which I hope you will read or reread. I still reread that book every once in a while. I have to because I gotta give a speech or something, and it’s amazing how much you can learn by going back over something. And there’s a lot in that book.
But you know, when you talk about a conspiracy, when you talk about the Insiders, there is a whole mountain of circumstantial evidence that any honest person can look at and say there’s no question, there is a group of Insiders that manipulate the America government and to some degree the American economy from the very highest levels. But there’s never been an Insider who has confessed. There is no evidence that I know of, and I’ve looked pretty hard, that you could ever take any of these people into court and convict them.
It’s kind of like going along a golf course and you see a lot of divots in the ground. And you know that somewhere in front of you there’s a lousy golfer, but you haven’t seen him yet.
But there is another group of conspirators that we have definite proof, proof that would actually stand up in court if being a revolutionary were, in itself, a crime. These are the Fabian socialists. The Fabian socialists within the United States have almost overwhelming control of education, as Alan [Stang] just spoke of, of the mass media, the government bureaucracy, and certainly a lar..[distortion breaks up the audio].. clergy. Sometimes they even sneak into tape recorders.
Now, most people who are Fabian socialists have never heard the term. When I got out of Stanford University, I was a Fabian socialist. I’d never heard of it. I’ve talked to people who major in political science in universities and ask them, “How much do you know about Fabian socialism?” And they say, “What’s Fabian socialism?”
If you go to try to find books on Fabian socialism there have only been 2 or 3 ever written. You go to any political science textbook in college and look for the term Fabian socialism, and if you can find it in there write me a letter. I have never seen one reference to it. And yet the Fabian socialist philosophy has been probably the most important philosophy in the United States over the last 30 to 40 years.
Most Fabian socialists consider themselves to be liberals. The socialists found out a long time ago that the word “Marxist” or “socialist” has a bad connotation, so they stole, and I mean literally stole, a good word: “liberal”. Many of you may not be aware of the fact that people like ourselves in the last century were liberals. Liberals were people that believed in a limited government and maximum freedom for the individual—the very opposite of socialism. And a little after the turn of the century, the socialists found out they weren’t getting anywhere calling themselves socialists so they started saying, “Well, we’re the true liberals, because we’re going to build a big government and we’ll make that government work for the individual.” In other words it was just total twisting of the real situation.
When I got out of Stanford I thought I was a liberal. I was a Marxist. I taught history at the high school level. I taught my students Marxism. I was just exactly what Alan Stang got through telling you about. And yet, and this is an important thing to remember, I did not know what I was doing. A teacher, when he goes to teach in high school, or junior high, he can only teach what he’s been taught. Before I would give a lecture to my students, I’d go dig out my notes from my history classes at Stanford. And then I’d go tell my students. I can remember some of the things I used to say about how Franklin D. Roosevelt saved the nation, and things that now just make me absolutely cringe.
Total lies. But I didn’t know they were lies when I was teaching them. If some irate parent had come in and accused me of being a Marxist, I probably would have decked him, because being a Marxist is terrible. I didn’t know what a Marxist was. I thought I was a liberal. I *was* a Marxist. And most teachers today are Marxists and do not know it, because they have no idea what Marxism is. We’ll go into a little more of that later.
I’d like to go into just a little bit of the history of the Fabian socialist movement. Towards the end of the last century in Europe, there were a number of Marxist parties. And they got into a philosophical disagreement among themselves. And the main bone of contention was whether you could bring communism to a country, whether it had to be through a revolution, or whether it was possible to bring it to a country through the ballot box, or through evolution. You might say that there was the violent people and the nonviolent people. And you had a lot of professor types who were dedicated Marxists and they believed in building the socialist state, but the idea of blood in the streets was sort of repulsive to them. You know, these were sort of dandy types. And they said well we think that there’s another way to bring it about. This philosophy was particularly strong in England where some of the intellectual types believed that it would be impossible to bring about an armed revolution within England. And they felt that the only way that they could build a communist state in England would be gradually, using the ballot box rather than taking up guns and manning the barricades.
These people formed a group in 1894 in England called the Fabian Socialist Society. One of the most prominent individuals in the Fabian Socialist Society is a world-famous playwright, which you may have heard of and certainly by the time you finish your education you will have heard of, named George Bernard Shaw. George Bernard Shaw made the statement, and I’m quoting here, “As a founder of the Fabian Socialist Society, I am basically a Marxist communist.” Now I would say that’s being pretty blunt about it. But these people said, we don’t want a revolution. We want to do it slowly. We’ll do it by the ballot box.
You may remember George Bernard Shaw wrote a play called “Pygmalion” which was later made into a very famous stage play and movie under the name, “My Fair Lady”, which is a delightfully entertaining thing. And I remember taking my wife to see the movie and as we were leaving I said to her, I said, “Well did you spot the commie line in that?” And she about crowned me. We had this wonderful entertaining evening and I, here I’d spotted the communist conspiracy in there. I think she thought that was the ultimate in paranoia. But actually if you have seen My Fair Lady, it’s about a professor who takes a girl out of the slums and retrains her and passes her off as a princess. The whole theory being, if you change the environment you change the individual. So there was a communist message in there but I don’t think that should keep you from seeing the play or the movie. It is a delightful bit of entertainment.
The Fabian socialists started out in England and they made no bones about what they were up to. As a matter of fact, on the cover of this book, “The Great Deceit“, which goes into how the Fabian socialists took over education, on the cover it has a copy of the mural that appears in the Fabian Socialist headquarters in England. And it has a flag back here, it says “FS” for “Fabian Socialism”. And carrying the flag is a wolf in sheep’s clothing. Now if that’s not telling you what they’re up to—a wolf in sheep’s clothing—I don’t know what is.
Another very famous member of this Fabian Socialist Society was H.G. Wells. You may remember H.G. Wells, a very famous historian, also wrote a lot of, I guess maybe he was one of the first science fiction writers. He wrote a book called “The War of the Worlds” which was quite famous. But he was a devoted Fabian socialist, and he wrote a book called, “The Open Conspiracy” in which he talks about the fact that what they are doing is they’re changing socialism from a revolution into a method of takeover by the use of bureaucracy.
The Fabian idea was, “Look, the first thing we’re going to do is we’ll get our men in as the key professors at the leading universities. Now, all the most talented of the young people go to these universities and what we’ll do is, in the classroom, we will convince them that socialism is the one and only true answer to all of men’s problems. And then as these students graduate from college, some of them will go into business; others will go into the clergy; some will become college professors; some will become politicians; some will go into the government. And they will take their socialist beliefs with them.”
And their theory was, and it is a very true theory, that if you take over education with your philosophy, over a period of generations you’ll take over the country. And they chose as their symbol, the turtle—moving always slowly, ever onward. And they were satisfied to take 50 or 100 years to make the world socialist.
But they knew if they controlled education, eventually they would get control of the mass media, of government, the clergy, which of course is just exactly what has happened. And Wells set it out in his “The Open Conspiracy”. They didn’t even deny it. And we talk about the fact that there’s a conspiracy even if there were no Insiders, there is an admitted conspiracy to build a one-world socialist super state. Wells even talks about it in “The Open Conspiracy” here. Here he’s talking about the use of religion to build this. He says:
“The modernization of the religious impulse leads us straight to the effort for the establishment of the world state as a duty, and the close consideration of the necessary organization of the effort will bring the reader to the conclusion that a movement aiming at the establishment of a world directorate.”
A world directorate. In other words the United Nations as world government. So these people, it wasn’t any mystery. They were willing to put it in writing because they felt that so few people would take them seriously and do anything about it. And in here he says, what we must do if we are to build this world socialist directorate, this world state, is we have to destroy the belief in religion. We have to destroy patriotism, and we have to destroy the free enterprise system.
I’m sure everybody here has heard of the Communist Manifesto by Karl Marx, written in 1848. Very few people, unfortunately, have read it. I would imagine that most Americans believe that this is some kind of a book about throwing molotov cocktails and making bombs, and how to assassinate people and that type of thing. The Communist Manifesto isn’t about that at all. The communists, on page 55 of this edition of the Manifesto, sum up their entire program in what we might call the 10 commandments of communism; 10 ways that Karl Marx said you would build the communist state.
1. Abolition of property and land
2. A heavy, progressive, or graduated income tax
3. The abolition of all right of inheritance
4. Confiscation of the property of all immigrants and rebels
5. Centralization of credit in the hands of the state by means of a national bank
6. Centralization of the means of communication and transport in the hands of the state
7. [the audio doesn’t have a number 7, which would be: Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.]
8. Equal liability of all to labor
9. Combination of agriculture with manufacturing industries. Gradual abolition of the distinction between town and country
10. Free education for all children in public schools.
In other words, if you want to brainwash somebody you gotta get them into the schools. That’s one reason why you never want to have Federal schools. I don’t think you could find a dictator in the history of the world that hasn’t wanted to control education.
Alright, these are the 10 points of the Communist Manifesto. Is there anything in there about throwing a bomb, or assassinating leaders? No, these are all things that can be done by the ballot box. The Communist Manifesto is essentially a Fabian document even though it was written 30 years earlier. All of these things, of the 10 points that are in here, many of these have already been at least partially adopted in this country; things like the progressive income tax, setting up a central banking system. These things have all been done through gradualism in the country and by the ballot box. So you can establish a communist country without calling it communism, and without a revolution.
You do it 3 ways. Through taxation, controls, and government planning. The Fabian socialists have done that in this country. They’ve done it all in the name of liberalism. The Fabians have always been rather kind to the communists. As a matter of fact, right after the Bolshevik Revolution in Russia the British sent an army in there to try to put down the Bolsheviks, and the Fabian socialists who had control of the labor unions threatened a general strike in England if the British did not pull their army out of Russia. And so the British *did* pull their armies out of Russia and they turned over all of their arms and ammunition to the communists, and the communists used it to gain final control of Russia. So if it hadn’t been for the Fabian socialists, there may never have been a successful Bolshevik Revolution in Russia.
How about the Fabians and the Insiders? They said there would be a great threat to this country if there were no Insiders and all we had were the Fabians, because the Fabians’ goal is to set up a communist state. But the Fabians need money. Where do they get their money? The Fabians operate in this country through a number of organizations like the, what started out as the Intercollegiate Socialist Society, which later changed its name because of the word “socialist”, that operates through the ACLU and dozens and dozens of other fronts. All financed by foundations primarily the Ford Foundation, the Rockefeller Foundation, and the Carnegie Foundation.
And here we have the Insider, super-rich capitalists provide the money in this country for the Fabian Socialist movement. They’ve even gone so far, the Fabian socialists set up their own school in the 20s in England called the London School of Economics. And one of the major financiers of the London School of Economics has been the Rockefeller Foundation.
Now isn’t it interesting, here you have these super-rich capitalists financing a movement which is ostensibly going to take their money away from them. These same Insider organizations have financed the takeover of education by the Fabians, including particularly the production of textbooks, the very same thing that Alan Stang just finished telling you about. So you have a very strong interlock between the Insiders and the Fabians.
Now how did the Fabians get from England over to the United States? Well, there was a, even as far back as 1890 there were some Fabian groups that were started in the United States, but the big push really came right after World War I when some English Fabian socialist economics professors received appointments to teach economics at Harvard University.
Harvard University, then as now, was the most prestigious college in the United States. And Harvard trained many of the professors for other colleges. So if you took over Harvard, eventually you would have a tremendous influence in almost every other major university in the United States because Harvard trained the professors for these other schools.
Gradually, the Fabians took over the economics department of Harvard University. They also moved in to school of education at Columbia. Columbia was for education what Harvard was for these other things. Columbia provided the professors at the other schools of education around the country. So if you took over the Columbia school of education, your philosophy would eventually permeate every other school. And I’m sure you’ve all heard of Dewey, who started at Columbia, and came out with his theories on progressive education that literally swept across the country.
The next major inroads made in this country by the Fabians came during The New Deal. Franklin D. Roosevelt was elected in 1932 and you remember he tremendously expanded the government bureaucracy. They set up all of these alphabet-soup government agencies: the Agricultural Adjustment Agency, the, probably 100 different new government agencies. These agencies then hire bureaucrats to run them. And all of the Fabians, all over the country, then became government bureaucrats. There must have been a shortage of college professors there for a few years.
It was very easy during The New Deal for Marxists, whether they be communist revolutionaries, or Fabian socialists, to get into the United States government, because nobody was trying to keep them out. And when you read the history of the 1930s in this country, you think that the communists, that there must have been millions and millions and millions of communists in this country. Well, there were quite a few in the labor unions and whatnot by the end of the 30s, but it wasn’t really so much how many communists there were. It’s where they were. They went into the government. The communists, Marxists, and the Fabian Marxist communists all went in under The New Deal.
Then something very important happened as far as we’re all concerned. At about that time there was a Fabian socialist economist from England named John Maynard Keynes. One of the most important people in history, even thought most people have never heard of him. Keynes’s father was a Fabian socialist. Keynes all his life was promoted by the Fabians. And he came up with a new idea for running an economy. And today in the classrooms across the country, professors teach, and I was taught in my Econ classes that John Maynard Keynes was a capitalist economist who came up with a system to save free enterprise.
Now ladies and gentlemen, that is just an absolute, outright lie. John Maynard Keynes was a Fabian socialist. He wrote a letter to a friend in which he said, “My new system will be the mercy killing of free enterprise.” He bragged that his system would kill free enterprise and yet millions of college students in the United States are told that this guy came along to save free enterprise.
John Maynard Keynes was partially responsible for the creation of the Federal Reserve system in this country. He was at the founding of the International Monetary Fund after World War II. And his theories are taught in virtually every economics class in the United States. And he was a Fabian socialist and we’ll remember that a Fabian socialist by definition is basically a Marxist communist, but a man who believes that we’ll bring it about through the ballot box, through gradual change, instead of revolution.
A year and a half ago Richard Nixon said, “In economics, I am now a Keynesian”, which is just another way of saying, “In economics, I am now a socialist.”, or “I am now a Marxist communist.”
What was Keynes’s theory? Well, in a simplified form it was this. He said if business is bad, then the government in its budget should run a deficit. In other words, it should spend more money than it takes in in taxes. And he said that deficit will stimulate the economy and will get it going again. And he said in good years, when business is good, and the government is running a surplus, then it should cut government spending. So you stimulate the economy in bad times, and you put the brakes on in good times.
Well that’s a reasonable-sounding theory isn’t it? Of course if it worked, our economy should be so fantastic now that everybody should be a billionaire. Because we’ve run something like 35 deficits in the last 39 years. Now even if this theory was sound as a theory, in reality it is not sound–for the very reason that politicians like to spend money, and they don’t like to tax because spending money tends to make voters happy and taxing tends to make voters unhappy.
So, Keynes’s theory of, you spend money in bad times and you cut spending in good times has turned out to be, you spend more money all the time. This causes inflation. I think we’re all familiar with inflation. I can just try to think of something out of my own lifetime that might have meaning to you and I remember going to the movies in 1943 when I was 6 years old, and it cost me 6 cents to go to a movie. And then one terrible, horrible day it went up to 7 cents. What’s going on! And then a few months later it went up to 9 cents! And we’re getting incensed. Terrible! And then it went to 11 cents, and 14 cents. I don’t know what it is today, but isn’t it 75 cents for a child to go to a movie? [sound from audience] Depends, but I don’t think anybody’s going for 6 cents anymore. For that you can thank the theories of John Maynard Keynes.
Almost every day you hear about how terrible inflation is, and three fourths of the people in the United States believe that inflation is the country’s number 1 problem. And yet, if you go out on the street and ask people, “Well, what is inflation?”, they don’t know inflation is. Almost always, if you ask somebody, if you ask your friends, “What is inflation?”, they will tell you something like this: “Well, you know wages go up and prices go up, and then wages to up again and then prices go up again.” And on and on and on you have what is called the “wage/price spiral”. Everything is always going up. Who’s at fault for this terrible wage/price spiral? Well if you talk to a Democrat [he means Republican], he’ll tell you it’s those labor unions! They always want more money without doing more work. And you could go to Republican, oh pardon me, if you go to a Democrat he’ll tell you it’s big business that’s at fault. Big business, those greedy capitalists are always raising their prices! It’s the big businessmen that are causing inflation. And you go to a Democrat [Republican] and he says it’s the unions! Are you…gees…you go to a Republican and he says it’s the unions! So Democrats blame big business, Republicans blame unions. And the truth is that neither big businessmen nor unions cause inflation, because inflation is *not* the wage/price spiral.
Now if you people can track me for the next 5 minutes, you will understand more about economics than 99 percent of the people in the United States. Let’s talk about the wage/price spiral. Let’s take the wage part of it. Let’s say there’s 90 of you in the room and I’ve got a job list for all of you people. It’s all going to take 1 hour for each of you to do your job. And I’ve got a plate of cookies up here. I’ve got 90 cookies. There’s 90 of you. And I say, “All right. You all go out and you do your jobs and you report back here in an hour, and you’re going to get your wages. Your wages are one cookie.” So zoom, you’re all out of here, you’re picking up trash, cleaning up your cabin, doing all the things. You come back here, say now you get your wages. Everybody gets a cookie. Alright, tomorrow, we meet the same place, say, “Alright guys, I’ve got 90 cookies here. I want you to go out, do your hour’s work, then you all get your cookie.” And we’ve got some agitator here in the front row and he stands up he goes, “Wait a minute, I’m not going to go pick up trash for 1 cookie. No way. I want 2 cookies or I don’t pick up the trash.” And all the rest of you jump to your feet and you say, “Right on! 2 cookies or we don’t pick up the trash!” Alright, I’ve only got 90 cookies and now you people want 180 cookies to go pick up trash. Now I’ve got just 2 choices don’t I? I can either give you people 2 cookies, and you [different group] don’t get any cookies at all. Tough rocks kids! You’re outa work. Or I gotta go to the cook in the kitchen and say, “You gotta bake 90 more cookies.”, because there is no way, and it agrees with me [laughter]. There is no way that I can turn a plate of 90 cookies into 180 cookies. There’s only one guy that could do that and He’s gone. I’ve either got to take some of your cookies away from some people to give you more, or I’ve got to back more cookies. Alright, that’s exactly the way things are in the big economy. If you guys want to go from $2 an hour to $4 an hour, everybody wants a raise in pay, there’s just so many dollars to pay the wages in. What happens? If I’m going to pay everybody more money, I’ve got to have more money pay it don’t I? I mean that’s not a theory–that’s physics. The government increases the money supply.
In 1932 there was $136 dollars for every man, woman, and child in the United States, in circulation. Since that time, based on the theories of John Maynard Keynes, the government has been printing more, and more, and more money. Now today, there is $2100 dollars in circulation for every man, woman, and child in the United States. In other words, the government went out and baked a lot more cookies. But, what’s happened? You don’t go to the movies for 6 cents anymore. Now it’s 75 cents or a dollar.
Alright, the wage part of the wage/price spiral. You can’t have a general increase in wages for everybody unless they is more money available to pay them. It’s that simple.
Alright, how about prices? Let’s pretend we’re all at an auction. And I’m going to auction off this watch. [Seems to take it from someone in the audience] Too bad. From each according according to his ability, to each according to his needs. I needed a watch. You had it. That’s Marxism. Alright we’re going to auction off this watch. And you all take our your wallet. You count up and see how much money you have that you can bid on the watch and these other things that I’m going to sell you. I’m going to sell you a U.N. t-shirt, I’m going to sell you that deer on the back wall. You can imagine how hard that deer was running when he hit that wall to come through like that [laughter].
Alright, so we’re auctioning things off, and you’ve got so much money in your wallet that you can spend. Then right in the middle of the auction, through the back door, bursts your friendly government bureaucrat. And he’s got a great big bushel basket full of Monopoly money, and he’s “Here’s a handful for you, and a handful for you, and here, everybody gets a handful of this new Monopoly money.” Terrific! You say, “Gees, I only had $10 before to bid on things, and now I’ve got $20. Terrific, I’m twice as well off aren’t I?” Right? Wrong! Because everybody else has got more money. So what happens? We start the bidding on the watch and people not only use the money they had in their wallets, they use all that new money that that government bureaucrat handed to you. So now the watch, instead of selling for $2, sells for $4. Why? Because the money supply was increased.
If you go home and look up the definition of “inflation” in your dictionary, it doesn’t say anything about the wage/price spiral. It says “A rapid increase in the supply of money”. The money is then used to bid up wages and prices, because our economy *is* an auction. The economy of the United States is a gigantic auction in which millions of bids are made for different goods every day.
The cause of what the Establishment calls inflation: when you watch David Brinkley on television every night. He says, “Well, we had 3% inflation last month.” He is misusing that word. He’s talking about prices went up 3%. The cause of inflation is literally the inflating or the increasing of the money supply. Increasing the money supply without increasing the amount of goods causes the price of goods to go up.
Now if you understand this concept of the cookies and the auction, and understand that the wage/price spiral, or what the liberals call inflation is the effect, it is not the cause. The cause is increasing the money supply. And this goes back to the theories of John Maynard Keynes who said increasing the money supply will stimulate the economy. It hasn’t stimulated the economy. As I said before, geez we’d all be rich if it stimulated the economy.
Alright, where does money come from? Well, you know it is very fashionable today to blame cattle raisers, to blame farmers, gas station attendants–all of these people–for inflation. They don’t print money. A guy that raises cattle doesn’t print money. A guy that raises onions doesn’t print money. Automobile manufacturers don’t print money. The only people that print money is the government and their controlled banking system, the Federal Reserve System.
The politicians blame everybody but themselves for what is called inflation. When the Democrats blame the big business and when Republicans blame unions, they are either stupid or they are demagogues. The only people that are at fault for increasing the money supply is the government. They are the only people that can counterfeit money legally.
Now to go just a little bit into the background of money. Money started out back thousands of years ago, I guess nobody really knows how many thousands of years. And there was a barter system. You know, maybe you owned some cows, and you would trade butter to somebody in town who made shoes. And it was just strictly a trade. Well, this works to a limited degree but what if the show maker wants butter, but you who own the cows don’t want butter, you want furniture? It starts getting complicated doesn’t it? So what they said is we need some kind of a medium of exchange so that the guy that makes shoes can pay for the butter with some kind of money that is exchangeable for the guy that wants…the farmer that wants to buy furniture or something else. So that’s how money came to be used.
But money hasn’t always been these pieces of paper. Money started out, there were lots of things used throughout history for money. They settled on gold and silver primarily as money. Why gold and silver? Well, it was scarce, and it wouldn’t rot, and it was universally wanted by people. In other words, let’s say I’ve got a cow for sale, and this gentleman here offers me a bushel basket full of leaves for my cow, and this gentleman offers me 5 ounces of gold. I say, “Gee, should I take the gold or should I take the leaves?” Now, if you’d taken economics at Stanford like I did they’d say take the leaves, [laughter], because that gold is bad stuff!. But farmers were smarter than Econ professors. They wanted the gold. And so gold came to be universally accepted as money.
But once the politicians got involved, they didn’t like gold being used as money. Why? Well you can’t make gold out of nothing. You can print lots of these, but you can’t create gold out of nothing. Now John Maynard Keynes and his theory said we’ve got to get gold divorced from money. It used to be, up until 1934 in the country, money was backed by gold. Gold coins actually circulated. You can still buy them at coin collector shops. And the government had billions of dollars of gold and behind every one of these dollar bills was 1/35 of an ounce of gold. And they could only print so many of these because they couldn’t print these unless there was gold behind them.
Well, boy the politicians thought that’s just terrible! We can’t have inflation if we have to back our money with gold. So Franklin D. Roosevelt called in all the gold. He said well, we’re in an emergency and we’ll give it back to you in 90 days. But in the mean time we’ve got to hold it for you. So be patriotic and turn it in. And lots of naive patriotic people walked down with their gold and gave it to the government. And then Franklin D. Roosevelt said, well we can’t give it back to you until the emergency is over.
Now that 1934 emergency is still on. They still haven’t given it back. Now they print lots of these.
Now the wage/price spiral really started going out of control about 6 years ago when Lindon Johnson totally removed all gold backing, even in theory, from the dollar. Now how much money can they print? Well, how much paper can they get their hands on? I mean they can literally make everyone of us a millionaire. Probably everybody in this room will be a millionaire in 10 years. And you thing, wow! Man, am I going to live it up! Well, that’s true, but probably when you go down to McDonald’s for a hamburger it’s cost you $100,000 bucks. And this is not as absurd as it sounds. You know I can imagine, if I told people back 25 years ago, when we were paying 6 cents to go to the movies, that someday people would be paying 75 cents to go to the movies they’d have thought I was nuts.
There have been many, many examples in history where we have had runaway inflation. It got so bad in Germany after World War I that wives would bring bushel baskets to their husband’s factory at noon and get the bushel basket filled up with their husband’s morning wages, and then would run down to the grocery store to spend the money before it became worth less. New money was printed every day.
It got so bad that they didn’t even print both sides of the paper, because it wasn’t worth the ink. And you can find examples of 10 billion Mark stamps, the equivalent of a nickel stamp, 10 billion Marks. Once this thing starts going it goes, and goes, and goes, and goes.
The government creates money 2 main ways. One, through the Federal Reserve System. It lets banks increase the money supply. And the other way is by running up the national debt. I don’t want to get overly complicated here, but in essence what happens, suppose that you could go down to Sears and Roebuck and Co. and buy everything there that you saw that you wanted, and then run home, go down in your basement, turn on a printing press and turn out the money to pay for it. Why, my gosh, you could get everything you wanted, right? This is essentially what the United States money system is.
The government spends the money, goes in debt, and then creates the money to pay for that debt. If the government goes 10 billion dollars in debt this year, it will create 10 billion new dollars to pay for that debt. In other words, we have a money system whereby the more money the government spends, the more money there is *for* it to spend. My wife would love that system for herself. The more money she spent the more money she’d have to spend–terrific.
But remember, all of that new money goes out and bids up the wages and prices for everybody else. When Richard Nixon became president of the United States the national debt was aproximately $250 billion dollars. Today it is $375 billion. In words, a third of our national debt has come just, of all the debt we have had since 1793, about a third of it we have accumulated in the last 5 years. Richard Nixon has run up $125 billion dollars in debts. That means that by the time it goes through this progress of the new money being created, there’s $125 billion new $1 dollar bills out there, or their equivalent in credit, input into the auction.
That’s why the cost of living is up a third since Richard Nixon has been in office. Now Richard Nixon used to say if you run debts you cause inflation, and then he started running them. He said well we’ll stop this, we’ll have wage and price controls, which he had originally said he would never do. And he had a very good analogy. He said to put wage and price controls on an economy when you are increasing the money supply is like bolting down a lid on a boiling cauldron, and then stocking the fire with more logs underneath. And that’s just exactly what it is.
Now 1 of 2 things is going to happen. If you have a cauldron full of boiling water and you clamp a lid on it, and then you throw more logs on the fire, 1 of 2 things is going to happen. Either you’ve got to take the lid off after a while and let the water boil over, or the cauldron is going to explode. So what did Richard Nixon do? Well we had phase 1 where he put the lid on, and phase 2 where he took the lid off and it all boiled over, and now hamburger that was 65 cents a pound is 85 cents a pound.
Inflation has been compared to, has been called the economics of addiction. It’s like a dope addict. A guy that shoots heroin has to have a bigger jolt all the time to get the same kick. It’s the same thing with inflation. In order for the government to keep things rolling and not to have a depression, they have to keep inflating the money supply faster and faster and faster. And they’re caught in a dilemma. If they stop the inflating we have a recession, or a depression. You know the difference between a recession and a depression? A recession is if your neighbor is out of work. A depression is if you’re out of work. The government just doesn’t call them depressions anymore. They call them recessions because it doesn’t sound as bad.
But, inflation, once you start inflating, you keep on inflating more and more and more and more, and things get worse and worse and worse and worse. And then you have people screaming for controls. This is what inflation causes. It causes controls, rationing, and higher taxes. You watch now, there’s a lot of talk now about, “Well, we’ve got to have higher taxes to take some of this money out of circulation.” Which of course is a total fraud. What they’re saying is, “We’ll take the money away from *you* and let the government spend it.” It’s alright if the government spends it but it’s bad if you spend it type of thing.
Well we know from history, and even from the last 6 months or a year that controls don’t work. To stop inflation the government has to stop the printing presses. They’ve got to stop the money machine. They’ve got to balance the budget. If we do that we will have a recession because everybody now is hooked on the more and more money being put into circulation.
Now a politician looks at it this way. Unemployment is worse than inflation, and “I don’t care what happens as long as the cauldron explodes after I am out of office. Pass it on to the next guy. Try to keep the thing going on some sort of a basis until I’m out of office.”
That’s why these Fabian socialists that came in under Franklin D. Roosevelt with the Keynesian system knew that once they got the country started on it, it would be almost impossible to get us off. Even if you change administrations. And the Democrats go out and Republicans come in. You don’t start with a clean slate. The new guy inherits all of the problems that the old guy had.
So Richard Nixon, instead of deciding to take his medicine, it’s kind of like the Democrats got to go out on the binge and Richard Nixon would have to take the hangover. And Nixon said I won’t want to take the hangover. I’m going to go off on another binge. Let the next guy have the hangover. And this goes on and on and on until eventually the thing destroys itself.
So as far as what you people can do to understand what is going on, you can make tremendous progress in recruiting–I don’t think that the John Birch Society has ever had as great an opportunity for recruiting as it has right now, because the wages and prices going up, what people think is inflation, is hitting almost everybody. These shortages which are directly related to inflation are hurting everybody. Now people are willing to listen. Now almost everybody knows something’s wrong, and we can explain to them what is wrong.
I have a very close friend who majored in economics at Stanford. He’s a millionaire. He’s a major contractor. He builds 500-unit apartment buildings. And he told me the other day, he said “I did not understand money until I joined the John Birch Society.” Now people want to understant money, so we have a tremendous opportunity.
It is the Fabian socialists, the people who admit that they are a conspiracy to set up a socialist world, who gave us the Keynesian economics that have caused the runaway inflation that we’re having now and the shortages, the scarcities that we’re having.
There are 2 books that I would heartily recommend that you read. The most important book, I think, and when I was just beginning in the conservative movement I read this book 4 times. It’s called “Keynes at Harvard“. It’s put out by a group of Harvard alumni. It is not the easiest book to read, but there is nothing in there that is beyond your comprehension. It is just fairly small type and there’s a whole lot of names in here and what not, but I think this is just about *the* most important book there is to read.
Another book–a great handbook for the Fabians–is “Fabian Freeway” by Rose Martin, which goes into the history of the Fabians, particularly in the United States, the organizations which they control, the people that have been very important to the Fabian movement. I haven’t thrown a lot of names at you this morning because I don’t think that that’s all that important. It’s their philosophy that is important and how successful they’ve been.
I’ll throw it open to questions now, if everybody’s sufficiently confused.
Yes. [Listens to question from the audience that can’t be heard]
Well, again we get into this thing…the idea of the multiplier was, in Keynes theory that for instance if you deficit spent 1 dollar, by the time it got going through an economy in which there was unemployment, that that $1 would create $4 worth of new jobs, new assets, and what not. And I think we can just tell by looking at the economy, we’ve had all this fantastic deficit spending since Keynes’s theories first came in, we’ve had something like $350 billion dollars of deficit spending. And if that all created 4 times that amount of new jobs and new assets it would be absolutely no unemployment and we’d all be rich. I mean obviously it’s a theory that is false. If you want to get into the technical aspects of that there is a very good book that dissects Keynes from an economist’s standpoint by Henry Hazlitt in which he goes into that multiplier theory to quite a great extent. But that sounded to feel that gee if we spent $1 we create $4 worth of new goods and… let’s try it. And they’ve tried it $350 billion dollars worth and we’re worse off than we were. And now it costs you 75 cents to go to a movie instead of 6 cents. Terrific. If they were right you should be able to go to the movies for a penny.
Yes. [Listens to question from the audience that can’t be heard]
Okay. I will try. Gold acts as a brake upon the politicians. If they have to have 1/35 of an ounce of gold for every dollar they put in circulation then they are limited as to the number of dollars they can put in circulation by the amount of gold that they have. In other words, if you had a billion ounces of gold you could only print 35 times that amount of money. But, what they have done is say, “Well gold has nothing to do with money.” And when you say that gold or silver has nothing to do with money, that means they can print as much money as they can find paper. And they seem to be able to find a lot of paper. Politicians hate gold and silver because that keeps the politicians honest. It restricts the amount of money they can spend. And they don’t want to be restricted because they stay in office by going out and buying votes, indirectly, with government money. They’ll go out and say, “We’re going to build a new dam in this area. And we’re going to build this in this area, and we’re going to build that in this area.” And it’s going to be spent, money spent by the government. Where does the government get money? The government can get money only 1 of 3 places. It has to tax for the money. It has to borrow the money. Or, print the money. Now, when they borrow the money, when they borrow it through the Federal Reserve system it is the same as printing the money. So, from a practical standpoint, it gets down to there’s 2 ways that the government gets the money it spends. It’s spending, I don’t know, it’s spending several billion dollars a day now. What’s the…$268 billion dollars I think is the budget this year. It has to get that $268 billion dollars, in reality, from 1 or 2 places. It has to tax for it, or it prints it. Now if I go to you and I say, “Look, I’m going to build a dam in your district and therefore I’m raising your taxes.”, then you say to yourself, “Gee, I’m not too sure I want my taxes to go up. I don’t want the dam that bad.” But if I go to you and say, “Look, I’ll build a dam in your district and your taxes aren’t going up.”, you say, “Well, gee, that’s keen. I’m getting something for nothing.” But in reality you’re paying for that in the long run when you go down to the grocery store and all this increased money that the government has printed drives the prices of everything up. Clearer now? Thank you.
Alright, you get into a sort of a compli…the question is, why do we have a recession if we stop the printing presses? You get into a kind of a complicated economic thing there called malinvestment. During–and I’ll try to see if I can simplify that–during an inflationary period a lot of businessmen could go out and, let’s say I own a factory, and inflation is going on, business looks good. So I go to the bank and I borrow money to expand my factory, but the…say I make widgets. Every Econ 1 class you make widgets. Alright I think, well I’m going to expand my factory and I’m going to borrow the money and make more widgets. Then when the government stops printing the money, then that new demand for the widgets doesn’t exist. So I have over-expanded. Businesses during an inflationary period tend to over-expand and then when the inflation stops they’re caught, and they can’t sell that extra stuff they geared up for, and so then there’s unemployment. So that’s why it’s a vicious circle. It’s like a heroin addict should never take that first shot. You should never take the first shot of inflation because once you start on this thing, you stop it you’re going to have a reaction to it. Now obviously, the sooner you stop the better off you are because it’s going to be worse if you do more of it. You know, if you’ve got a $10 a day habit and you’ve gotta kick that habit, that’s not as bad as trying to kick a $100 a day habit or a $200 a day habit. So, the longer you go the worse it is. But people, the tendency of people and politicians is to say well, we’ll just have some more of the good stuff and we’ll forget the bad stuff and this is why the Keynesian theory was, you print more money in bad times and you stop it in good times. But in the practice they just print mo…they print more money in bad times and more money in good times both. And it goes on and on and on until eventually we’re going to get to the point where, you know, a hamburger at McDonald’s is going to cost you $100,000. Maybe you ought to buy a McDonald’s franchise.
Yes. Pardon? [Can’t be heard clearly]
Cut it? Alright you’ve been a very great audience. I will be around here the next few days. Any more questions I’ll be happy to answer them for you on an individual basis. Thank you very much. [applause]