August 31, 2015
On Friday, August 28th, Jim DeMint gave this speech to a group of economists and monetary policy experts at the American Principles Project Summit in Jackson Hole, Wyoming:
Listening to our experts talk about the challenges and potential solutions for our monetary system reminded me of an old pastor in our church who would read a profound Bible verse from the pulpit on Sunday mornings, hesitate for a moment with his head down, then look up and say, “If that doesn’t light your fire, your wood is wet.”
That’s the way I feel after listening to the many experts here today. My fire is lit. This is an issue I’ve studied and worked on in Congress for years, because I believe that America’s monetary system is the Achilles heel of the greatest nation in history and the world’s economic system.
We all know that there is something seriously wrong when trillions of new dollars are created out of thin air to bail out big banks, stimulate the economy and buy government debt. And something is dangerously wrong when the political and media class are even afraid to discuss it.
Gaining public support for changing our destructive monetary policy will be challenging, and it will require reformers to speak in terms Americans understand, and for reformers to understand that this will be a long and difficult battle that we can and must win.
I like to keep things simple, so please allow me to start tonight with a simple question, “What is money?” You know, the paper in our wallets that we use to buy things? Who decides what it’s worth? The fact is, the people who use money to buy and sell things decide how much it’s worth. We decide how much money we are willing to trade for the things we want. And sellers decide how much money they will require before they give us their products and services. Employers and workers also have to agree on how much money the employer is willing to trade for the services provided by the worker.
Money works as a market, or at least it should. Money is a proxy for something of value. If sellers have a product that is in high demand and short supply, the perceived value of the product increases and the seller can require more money from buyers. On the other hand, if there is an oversupply of a product and soft demand, the perceived value of the product declines and the amount of money required for a trade will decline significantly. In a free market, the dollar price of products and services changes based on supply and demand – based on how we perceive the value of goods and services. This dynamic is good and healthy for our economy. But when the actual value of money is altered by a central committee in Washington it is not healthy… in fact, it can be dangerous.
When I was a teenager nearly fifty years ago, I valued money based on the things that were important to me. For me, one dollar equaled three beers and a Slim Jim. These items were in high demand for me, and fortunately in large supply … even though being under age sometimes created challenges to the free market. Today, however, one dollar will not buy one good IPA, and that has a great deal to do with our monetary policy.
In the 19th chapter of Leviticus, Moses lists many of God’s commands for His people, including many of the original 10 Commandments. One of the commands he highlights relates directly to our discussion today. “Do not use dishonest standards when measuring length, weight or quantity. Use honest scales and honest weights.” When a customer in ancient times put a pound of grain on the scale, he had a right to expect an honest weight on the other side of the scale to confirm its value. That’s what our money is supposed to be: an honest standard to measure value – not something a government agency creates out of thin air because it doesn’t like the unemployment rate or because the Treasury wants to bail out banks.
The battle for sound monetary policy sometimes seems as daunting as a one-handed climb up the Grand Tetons which surround us in such majesty.
It can be discouraging. When you’re climbing a mountain, especially a sheer one, the only thing in front of your face is… more mountain.
If you were to judge the terrain ahead only by what you can see at the moment, you might think the hillside rises forever—an eternal, unavoidable and, perhaps, hopeless struggle.
Too often our politics perpetuates broken institutions because all that we see is the obstacle in front of us. Life without the mountain is unimaginable.
Many people are heavily invested in this mountain called the status quo: the government institutions work for them, and they’re afraid that if anything is changed to make the system work for everyone, they’ll lose power or money. Others build their careers justifying our dysfunctional government systems, and denigrating those who fight to change them.
I have felt their slings and arrows. Few in Washington can even imagine a world without the mountain.
So it falls to the visionaries to see beyond the peak: to tell us about the landscape that is possible for future generations.
I am pleased to have been invited to this gathering of visionaries today.
When it comes to our nation’s monetary policy, the mountain has seemed so high—and so permanent— that it has taken great wisdom and tenacity to see beyond it.
The mountain is a dangerous slope of boom and bust cycles—of stagnation and lackluster recoveries. It is built on the arrogant conceit that government can create wealth; that designated experts possess the perfect knowledge required to manipulate money for the common good; and that markets cannot sort themselves out without the coercive influence of technocrats.
That is an ideological cliff: the slope is treacherous and the conceit is false. The purpose of this Summit in Jackson Hole—unlike the one held concurrently by the Federal Reserve—is to give Americans a glimpse from the summit of the mountain that now blocks their view, and to establish the framework to engage voters and our political leaders in the most important fiscal and economic debate of our generation.
All of us here are determined to return our nation to a sound monetary footing, and to establish a system where wealth is honestly gained and honorably guarded. But we should be prepared to face the slings and arrows of those making outrageous fortunes from the status quo.
Many of you have faced these attacks for years:
• For decades, anyone who thought that our currency should reflect more than a fiat value was dismissed as a hack.
• Anyone who proposed that the ultimate arbiters of our economy should be the American people (via their public buying and selling) rather than a select few meeting behind closed doors, was labeled a conspiracy theorist.
• Anyone who suggested the same competition that exists between the products we buy could also exist in the monies we use to buy them was called naïve.
Well, guess what? The shortsighted slanderers were wrong. And you, the persistent, clear-eyed visionaries, were right.
All of these concepts have always been fair game for consideration. And today they are as vital as ever for the future success of our monetary system and our economy.
No one seeking our nation’s highest office—and there are many, at my last counting—can seriously contend without addressing these issues.
Centralization of monetary and financial power can be just as damaging to our freedoms as centralization of political power—and just as allergic to sunlight.
It creates the perception among Americans that their economic futures are out of their control. Unfortunately, this perception is increasingly accurate.
Of course, in Washington so many things are intertwined. Massive public debt, loose monetary policy, high taxation, high spending, and corporate welfare are all part of the shaky house of cards that constitutes our government’s irresponsible finances and interference in the economy. It is hard to separate one card from the others without endangering the whole corrupt structure.
Yet we must separate them and rebuild on sounder footings if we are to be a prosperous and free country.
Fortunately, more people have become alarmed by our current state of affairs, and we’ve even seen some small but bold moves toward a democratic monetary system—like the Bitcoin phenomenon—which, as you might expect, has been met with calls for more regulation and government oversight. As with every new advance, it frightens the people at the top.
It reminds me of a story I heard about a meeting back in the ‘80s where people from the Postmaster General’s office proposed that this new thing called electronic mail—since it was “mail”—should be managed by the US Postal Service. Can you imagine?
Thankfully, Reagan’s staffers laughed them out of the room, and it never came about. But the fight to decentralize our money has other parallels to the Postal Service, believe it or not.
In the 1840s, early libertarian and abolitionist Lysander Spooner was outraged at the high price of US Mail delivery—it cost almost as much to send a letter as to ship a barrel of goods in freight. So he decided to start some competition. He founded the American Letter Mail Company and vastly undercut the high price of stamps.
It worked; so, naturally, official Washington brought suits against him as a criminal.
The government tried to forbid railroads from carrying mail for private companies, but the courts disagreed. So Congress and the Postmaster General engaged in a price war with Spooner. This was great news for the American people.
By the time the government had forced Spooner out of business, he had forced them to mark down stamps to 3 cents—and the price didn’t change for the better part of a century. When the Postal Service is finally laid to rest, I think Old Mr. Spooner should be on the last stamp they issue.
It just shows that it is possible to compete with a government monopoly and improve the lives of your fellow citizens. It is possible to look past the mountain.
I do not know whether the climb ahead of us stops at a rules-based monetary system, or leads to an entire re-examination of Reserve banking. I do not know whether our money will only be valued as a reflection of our economic power, or tied to a commodity only King Midas could inflate.
The final answers to these questions I leave to you, who have already seen the vistas beyond. What remains is to continue telling our countrymen to carry on a little farther, so that their vision, their future, and their prosperity might increase.
As your guest here today, I don’t want to impose upon your hospitality by taking too much of your time or by getting the conversation off track onto other topics.
But it seems to me that the economic problems confronted at this conference, especially the debasement of monetary policy over the last century, are a subset of a larger crisis.
At its root is a presumption among our country’s political and cultural elites that they can override the wisdom and experience accumulated by mankind over the last several millennia.
Their vision, such as it is, has been broad indeed. It has encompassed – and tainted –not just economics but many of the social and ethical foundations of a free society.
The men who made the mountain we must scale weren’t just John Maynard Keynes and John Kenneth Galbraith. Long before them, there was Auguste Comte and others who preached the supremacy of a managerial elite.
There was John Dewey, whose disciples continue to indoctrinate America’s future teachers in his anything-goes relativism at our great universities. And of course, there was the team of Marx and Engels, who knew that the economic liberty of individuals was based upon the bourgeois family order.
To destroy the former, they set out to destroy the latter.
All of which is to say this: Anyone who tackles the mountain, from whatever angle, should be considered an ally.
We need all the help we can get in order to answer the question posed decades ago by Bob Dylan:
How many years can a mountain exist before it is washed to the sea?
How many years can some people exist before they’re allowed to be free?
Let us reply: Not much longer, Mr. Dylan. Not much longer.