A Century of Fascism

by James Turk

In 1922 Benito Mussolini became prime minister of Italy, putting that country on a path that had global ramifications. He was the world’s first fascist leader.

Other fascists soon followed with fanciful promises that were varied but tuned in to what people wanted to hear. Their problems would be solved, whether the restoration of order, removing risks from an uncertain future, the grant of financial aid, and other siren songs that at first blush might appear to improve an individual’s condition. All could be delivered if the citizenry just relied on their government. A broad swathe of people placed blind faith in these promises, allowing their fascist leaders to simultaneously expand the role of government in economic activity and embark on policies that made the State superior to the individual, overriding peoples’ inalienable natural rights expounded by the luminaries of the Age of Enlightenment.

Fascism became just a new twist on a well-worn theme – authoritarianism. Regardless of the name given to the political structure – fascism, dictatorship, autocracy, etc. – they all require strict obedience to the State at the expense of personal freedom, which raises the following questions about government today.

• Do individuals control their government as envisioned during the political awakening in the 17th and 18th centuries that put America on a course different from monarchial Europe, manifest in the transitory period(1) that was the initial outcome from the anti-federalist interpretation and implementation of the American Constitution by its framers?
• Or as now prevails in most of the world geographically, has the State usurped power and is controlling its citizenry to the detriment of an individual’s liberty, which is the never-changing, never-ending outcome of fascists and other authoritarians?

For Americans these questions were answered in a speech in May 1948 by the father of Wall Street legend Warren Buffett. Congressman Howard Buffett explained that the link between money and liberty is inextricable, and he stated unambiguously: “For if human liberty is to survive in America, we must win the battle to restore honest money…unless you are willing to surrender your children and your country to galloping inflation, war and slavery.”(2) He concluded:

“The paper money disease has been a pleasant habit thus far and will not be dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect. I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease here may take many years to run its course…When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others.”

Whether an economy is based on paper-money (bank notes) or a bank deposit currency, or both, the outcome is the same. When government controls the currency through the banking system, together they inevitably debase the currency. Because of the control imposed on them from regulatory oversight, banks must comply with government diktat so they can continue operating, and their reward is increasing profits. Governments pursue this path to expand their power, with the result that liberty is diminished, hence the need for honest money.

The End of American Exceptionalism

French political scientist Alexis de Tocqueville described America as “exceptional” following his tour of the country nearly two centuries ago, and the term stuck. The political structure of a nascent union between the then 24 sovereign states and a federal government with limited sovereign power was truly unique as was the belief in the merits of self-government practiced in accordance with natural law.

Rather than subjecting the citizenry to the caprice and excesses of a ruling elite, the ideals of the Age of Enlightenment centered on self-reliance and liberty, with a purposeful focus on natural order. This rational path enables each person to improve their situation in life to facilitate their individualist pursuit of happiness. This goal can be achieved without depriving anyone else of their freedom by following the precepts of natural law.

These ideals are described by Britannica.com as follows (I have edited the tense to make clear that these ideals are still alive today):

“Central to Enlightenment thought were [are] the use and celebration of reason, the power by which humans understand the universe and improve their own condition. The goals of rational humanity were considered to be [are] knowledge, freedom, and happiness.”(3)

After winning its War for Independence, America embodied these ideals in a political structure formalized by a written Constitution in which the states delegated seventeen of their sovereign powers to a federal government. In effect, the alliance created by the states for the mutual benefit of their citizenry was built upon three pillars manifest by:

• a common market,
• their joint/shared defense, and
• a single, common currency comprised solely of gold and silver coin.

For everything outside of these areas, the states then reserved in the 10th Amendment all powers not delegated to the federal government “to the states respectively, or to the people”, namely, the citizens of each state.

The framers of the Constitution recognizing these three shared interests of the states and aiming to protect everyone’s inalienable right to life, liberty, and the pursuit of happiness had tactfully crafted in that document a finely judged balance of political power exercised between a state and the federal government, but this arrangement did not last long. Federal power grew as the framers passed away and a new generation of power seeking federalist leaders began railing against the constraints of the federal/state structure and the Constitution itself(4).

Over time these radicals with the acquiescence – whether wittingly or not – of state governments and the polity upended the balanced political structure implemented by the framers. The trend toward greater personal freedom advocated and initiated by the luminaries of the Age of Enlightenment was reversed. Self-reliance and personal responsibility for one’s own decisions were being eroded by an ever-greater reliance on the federal government, and its expanding control of Americans’ daily life. This new path becomes clear when viewing the federal government’s intervention in economic activity, the escalation of which can be seen in the following chart from NTU.org.(5)

From its founding until 1910, the federal government’s role in economic activity is insignificant. Thereafter, it expanded to become the dominating economic force by its participation in the economy and growing control of it.  The federalists (who by then had relabeled themselves ironically as ‘progressives’) were rapidly becoming the main political power and sought even greater control – like the fascists in Europe – with economic intervention and regulation. The Great Depression was their springboard.

Economic booms and busts are an outcome caused by the banking system. As pointed out by political scientist James Sundquist(6), until the Great Depression the inevitable bust following economic booms was of concern to the private sector, not government. That laissez-faire view changed with the economic upheaval in the 1930s. Widespread deprivation led to the radicalization of voters that provided the opportunity for authoritarians to use their growing political power to propagandize a different path and assume fascistic control of economic activity by putting the federal government in league with money center banks and mega-corporations(7). Today’s behemoth federal government that controls to some degree every American’s daily life no longer resembles the institution with limited sovereign power the states formalized with the Constitution.

Nobel Laureate Friedrich von Hayek explains in his brilliantly insightful book, The Road to Serfdom, penned during the waning years of the Second World War, that wars expand the power of the modern State because the national planning to fight the war continues even during times of peace, which is an outcome clearly seen on the above chart. This perennial government planning then expands the social-welfare State over time, with harmful unnatural results. Economic activity is impeded by the growing State as people and resources become less productive as a consequence of government intervention. Because the government does not create consumable goods and services, it is an economic burden on the productive sector of the economy.

Then as the government grows, interest groups become increasingly numerous and powerful, leading to political corruption. Wars, foreign policy tensions, and economic crises can propel demagogues and dictatorial leaders to further expand State powers to everyone’s detriment. In Hayek’s words: “Emergencies have always been the pretext on which the safeguards of individual liberty have eroded.”

Hayek noted that only over time does the subtle damage inflicted upon the productive economy become evident. The visible growth of the State arising from socialist programs and the nationalization of industries, with central planning and public ownership, leads slowly but inevitably to totalitarianism. Many countries are now on that road, even in America. Long reigning as the bastion of capitalism, free-markets, and limited government, it no longer is exceptional. The liberty of its citizens has been eroded by the 1930s fascism that continues to underpin the country’s political structure and economic activity.

Throughout America’s transition to consolidated federal power, the Enlightenment ideals became increasingly neglected and by the end of the 20th century largely lost. They are now considered to be a mere passing event of history with even the respected Encyclopaedia Britannica identifying them in the past tense. Nevertheless, these eternal principles that put the citizenry in control of their government will always guide humanity and therefore remain the touchstone of lovers of liberty everywhere.

Fascism’s Link to Gold Market Manipulation

George Orwell explained that “All tyrannies rule through fraud and force, but once the fraud is exposed, they must rely exclusively on force.” Consequently, many believe that police and armies are the primary tool of authoritarians, but fascists and others of that ilk know that it is money first and foremost that equates to the absolute political power and the domination over others they seek. After all, police and soldiers remain loyal to the ruler only if they are sufficiently paid to feed themselves and their families.

As fascism took hold in the 1930s and these authoritarians aimed to secure their position, their control of money was essential. To achieve this nefarious target, gold – which has served humanity well since pre-history – needed to be displaced in commerce by money-substitutes: paper currency (i.e., banknotes) and bank deposits. The reason is simple.

People determine the value of tangible assets, which require labor, time, and capital to produce. Even when suppressed, so-called “black markets” emerge to determine a free-market value of tangible assets by operating outside of government purview. In contrast, authoritarians can manipulate – as the Federal Reserve and other central banks continue to do to this day – the purchasing power of bank liabilities, which are nothing more than bookkeeping entries created with the stroke of a pen or the typing into a keyboard. Consequently, as an initial step to gain the absolute control they sought, gold was confiscated by Mussolini, Lenin, Hitler and Franklin Roosevelt and prohibited from use as currency.

In America the misnamed 1934 Gold Reserve Act provided the ‘legal’ context(8) for this theft as well as the framework for the subsequent manipulation of gold and silver markets. Section 10(a) states the absolute power being assumed. My edits are inserted to undo the wordsmithing employed that intended to make this fascist legislation appear not only above board, but beneficial:

“For the purpose of stabilizing [manipulating] the exchange value of the dollar, the Secretary of the Treasury, with the approval of the President [but without approval by Congress], directly or through such agencies as he may designate [the Federal Reserve, selected money-center banks], is authorized, for the account of the [uncontrolled slush] fund established in this section, to deal [intervene in markets without restriction] in gold and foreign exchange and such other instruments of credit [all bank liabilities, non-bank gold and silver certificates, and derivatives] and securities [shares, Exchange Traded Funds] as he may deem necessary [the grant of unlimited power] to carry out the purpose of this section [the usurpation of absolute power by the federal government].”

This extraordinary power grab is the culmination of decades of agitation by the newly named progressives seeking centralized federal power. Their shredding of the Constitution under the guise of stabilizing the value of the dollar is a big lie, as illustrated by the following two charts.

They present – indexed to a base of 100 – the price of crude oil, which is a proxy for energy that is the cornerstone of the global economy and essential to today’s standard of living. These two charts reveal the deceit of the Roosevelt administration as the Gold Reserve Act was forced on the American people. The unstated goal of this usurpation disguised as a ‘law’ is political power and control. The claim to stabilize the exchange value of the dollar is a ruse.

Chart 2 shows the rising price of crude oil when viewed in terms of national currency, yet it is remarkably stable when measured in gold. Throughout these seven decades, a gram or an ounce of gold could purchase more or less the same quantity of crude oil, which is a feat that no national currency came close to matching after their last formal links to gold were severed in 1971. Gold preserves purchasing power over long periods of time, which is an essential requisite of money.

Chart 3 presents the same data on a log scale to illustrate the volatility in the price of crude oil. Note that the volatility is the same in all four currencies. The rising trend of the national currencies simply reveals the debasement of their purchasing power compared to gold.

Since the last links to gold were ended in 1971, the powers of the Gold Reserve Act have not resulted in any stabilization in the exchange value of the dollar, nor could there be. The crude oil price rises and falls, which is inevitable because it is impacted and determined by four forces, any of which can change over time. These are the demand and supply of crude oil, interacting with the demand and supply of the currency used to measure the oil price. It is how markets work, and volatility is the result. The interplay of these four forces is unpredictable, except to say that nothing has a ‘stable’ price.

Governments and their captive central banks – contrary to their pronouncements and the claims of the Gold Reserve Act – are not needed to manage the exchange value of the dollar or any other national currency. The reality is the opposite. They debase the national currency to increase the power of the State through the theft of purchasing power from the hands of people in the productive economy, what today is called inflation.

What these two crude oil charts clearly reveal is the ongoing debasement of these three national currencies, confirming that “the purpose of stabilizing the exchange value of the dollar” are words chosen to deceive, not achieve. It is gold, nature’s money, that best achieves the least volatile exchange value.

Because gold is natural money, it does not need to be managed. This principle is not new and was intuitively and widely understood up until the appearance of 20th century fascism and the propaganda from its proponents seeking to change the nature of currency and commerce to favor State power and control. This observation by London banker Henry Thornton in 1802 still rings true today.

“We assume that the currency which is in all our hands is fixed, and that the price of bullion moves; whereas in truth, it is the currency of each nation that moves, and it is bullion which is the more fixed.”(9)

Policymakers use central banks to deliberately pump up the quantity of bank liabilities circulating as currency to give big government the purchasing power it seeks, to the detriment of its citizens. This currency debasement is obscured when people measure prices in terms of a national currency rather than gold because they lose sight of the cause of national currency debasement, which is government control of the currency and its abandonment of natural money.

Transitioning Back to Gold and Away from Fascism

Five consecutive polls going back to October 2021 reveal that over 70% of Americans believe the country is headed in the wrong direction.(10) It is not unreasonable to deduce the sources of this dissatisfaction. There is the growing burden of costs and regulations imposed by the federal government on the productive sector of the economy and most people’s everyday life. Then there is an ever-inflating dollar currency people are forced to use that steals their purchasing power and their time spent laboring to earn it.

Britain recently left the European Union to free itself from mindless, costly – and some say autocratic – policies of distant bureaucrats in Brussels. The rallying cry of the Brexiteers to “Take Back Control” states a political aim that is likely to become as important in the decades ahead as “No Taxation Without Representation” was in the 18th century.

Taking back control is the goal of all individuals who love liberty and seek to live their life in harmony with the precepts of natural law and unfettered by State interference. After a century of fascism and its harmful consequences, it is time to take back control, and fortunately, in America there is a clear path to achieve that goal peacefully by lawful means.

Because liberty rests on its inextricable link to an unfettered gold market, free of government manipulation, taking back control begins by overturning the Gold Reserve Act in either of two ways. Congress and the President can pass a new act to revoke this 1934 law, which at present seems unlikely. Alternatively, the Supreme Court declares the Gold Reserve Act to be unconstitutional, and its recent Dobbs Decision gives one hope.

Adherence to the 10th Amendment is clear in the language used in Dobbs. It is language applied to such a politically charged matter that I never expected to see in my lifetime:

Decision: “Held: The Constitution does not confer a right to abortion; Roe and Casey are overruled; and the authority to regulate abortion is returned to the people and their elected representatives.” [Emphasis added]

Society is diverse, and harmony comes from understanding that there are different views of every aspect of life and the control of one’s own body. By the same logic, people take different paths in their pursuit of happiness, which is diversity that should be encouraged provided there is adherence to the precepts of natural law. In response to this heterogeneity, the framers wisely decided that the states should delegate to the federal government only those seventeen of their sovereign powers needed to achieve the three areas where they shared interests – commerce, defense, and coinage. Everything else was left to the states or the people. It is time to return to the American people an economy and commerce based on gold and silver as required by the Constitution.

It is noteworthy that the Court’s analysis in Dobbs relied on the “history and tradition” of the union of American states to determine the components of an “ordered liberty.” When viewing the turmoil in economies around the world using money substitutes, there is no denying that gold and silver coin are indeed essential to achieving an ordered liberty, which the framers of the Constitution clearly understood and achieved with Article I Sec. 8 & 10 declaring that the money of America shall be gold and silver coin.

In today’s world where common sense itself is under attack, a logical analysis to today’s problems is needed to understand where we are, how we got here, and what has worked in the past. The fascist underpinnings of the American economy are not going disappear overnight or by themselves nor will the country’s return to constitutional money. People benefitting from the present situation are unlikely to give up their position of privilege and power willingly. A transition is not going to happen unless people make it happen.

Turning again to the prescient words of Congressman Buffett: “I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Also, those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. You must be prepared to meet their opposition intelligently and vigorously.”

___________________________________________________________________________

1. This transitory period was clear to Thomas Jefferson, who shortly before his death in 1825 wrote to William B. Giles: “I see…with the deepest affliction, the rapid strides with which the federal branch of our government is advancing towards the usurpation of all the rights reserved to the states, and the consolidation [i.e., accumulation] in itself of all powers, foreign and domestic.”
2. https://www.fgmr.com/wp-content/uploads/2017/02/Howard-Buffett-explains-sound-money-4-May-1948.pdf
3. https://www.britannica.com/event/Enlightenment-European-history
4. An example is the issue of Greenbacks (fiat currency) during the Lincoln administration, which were deemed unconstitutional by the Supreme Court in Hepburn v. Griswold (1870). Another example is the 17th Amendment (1913), after which Congressional senators were elected by popular vote rather than appointed by each state’s government, downgrading their role intended by the framers to preserve for the states those sovereign powers not delegated to the federal government. That same year the Federal Reserve Act was passed, creating a central bank that anti-federalist framers had resisted.
5. https://www.ntu.org/foundation/tax-page/government-spending-in-historical-context
6.  The Decline and Resurgence of Congress, James L. Sundquist, 1981.
7. In his Farewell Address to the Nation in January 1960 President Eisenhower warned: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the [corporations of the] military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.” In recent years attention has also been directed beyond the military-industrial complex to Big-Tech and Big-Pharma corporations’ increasing influence on government and their bilateral cooperation.
8. Autocrats operate with the pretense of legality by ignoring natural law and changing administrative law to serve their aims. “We can never forget that everything Hitler did in Germany was ‘legal’…” Martin Luther King, Jr., Letter from Birmingham Jail, 1963.
9. An Enquiry into the Paper Credit of Great Britain, Henry Thornton, 1802.
10. https://www.documentcloud.org/documents/22156173-220455-nbc-news-august-poll-82122-release

James Turk is the founder of Goldmoney. His latest book is “Money and Liberty: In the Pursuit of Happiness and The Theory of Natural Money.”