I came across two things today while surfing the internet that would seem to have no logical connection to one another, yet that are strangely linked. A quote from the famous economist Milton Friedman and a fiat money scheme called Bitcoin that is making news in Europe due to the Cyprus banking crisis. Friedman and fiat money aren’t generally associated with one another.
First, I read another article referencing the jobs works program with spoons story that always gets falsely attributed to Milton Friedman. Falsely in that it wasn’t his original idea, he was merely reinterpreting it. You can always find stories on the internet that generally reference either George Will or Stephen Moore talking about the Friedman quote. More on that in a minute.
Second, I was reading today’s blog post from a good friend of Spellchek, the Asylum Watch. You’ll need to go there and read his post to get the basis for this post as he covers the Bitcoin story.
Here is the George Will version of the Milton Friedman spoons story.
The one idea that we seem to have dropped, happily so — remember the phrase was “shovel-ready”? We were going to create government jobs.
It put me in mind of a great story Milton Friedman used to tell. He went to Asia in the 1960s and was proudly taken by the government to see a public works project. They were building a canal. He was struck everyone was digging the canal with shovels. Friedman says, why no heavy earth-moving equipment?
They said, oh, this is a jobs program. So Friedman says, why don’t you give them spoons instead of shovels? I think we understand, now, the sterility of government trying to create jobs.
Now, my intent here is not to posthumously knock Milton Friedman for not originating the spoons story. In fact, you can’t find a direct quote anywhere from him, only the retelling of his story by others, so maybe Friedman gave credit for it that wasn’t retold. Regardless, the originator of the quote was William Aberhart, a politician from the Social Credit party of Alberta, Canada. Here is his quote.
On September 13, 1935 William Aberhart gave a speech to the Canadian Club in Toronto. He recounted an anecdote in which he delivered a version of the saying: 4
One of the school graduates came to me to pay his respects to the school; he told me he was in charge of helping on one of the Dominion air ports. I said to him, “I suppose you use modern machinery in your air ports?”
“Well,” he said, “if we used modern machinery in the establishment of air ports there would be very little need of men to help us to do it, for they would do it so rapidly and easily that there would be no need of man labour. We give them picks and shovels and put them out to do it in the old-fashioned way.”
I smiled and said to him: “It would probably be just as well to give them spoons and forks; it would take them still longer to do it.” It seemed to me so ridiculous; we let modern machinery rust at the road side or air port and make those men bend their backs in order to give them the purchasing power to buy the necessities of life, and hardly that.
As you can see, the spoons story has been around for some time. It’s just strange that an iconic quote attributed to Friedman actually came from a fiat money redistributor like Aberhart. There are other versions circulating as well – http://quoteinvestigator.com/2011/10/10/spoons-shovels/#more-2826.
What was strange was the tie-in between the social credit origins of the spoons story to this new Bitcoin money scheme. If you haven’t ever heard of
social credit before, it is essentially a philosophy to equalize production with consumption. I’ll quote Gary North to explain it.
The Social Credit movement began in 1917. The fundamental
idea of Social Credit is that capitalism suffers from a major
flaw: it does not create sufficient bank credit to allow consumers
to buy the entire output of industry.
North wrote an entire book on social credit theory that will explain why it, along with the variations of it we still see today, won’t work.
Admittedly, this is some pretty “dry” stuff to read. However, the point is that we always see new variations of fiat money schemes. Anything that eliminates fractional reserve banking certainly sounds good on the surface and you’ll easily get followers to take notice if there is a way around it.
As North also pointed out in his book.
As the reader will see, I regard the real-bills doctrine as
erroneous and fractional reserve banking as immoral: legalized
counterfeiting. Thus, I am also opposed to Social Credit economics
and all of its inflationary first-cousins.
Any fiat money system that is inflationary can be traced back to social credit style theory. John Maynard Keynes bought into it. Certainly, Obama buys into it as do all supporters of economic activity through artificial manipulation. The stimulus spending for example. In fact, if you’re really bored, here is a link to the platform of the Alberta Social Credit League. It’s a bit scary to see how much of what our government is doing today to our economy is directly out of this platform. Good socialist ideas never die, they just resurface over time.
Now wait, you say, Bitcoin is actually a deflationary system. It begins as inflationary and then later deflates. There simply isn’t space here in a blog post to rationalize monetary systems. North’s book on social credit is over 300 pages alone. Just suffice it to say we need, as Ron Paul always says, honest money. No manipulation. Anything else leaves the door open for the common man to get fleeced.
At any rate, I found it a little wierd to see Friedman indirectly connected to a fiat money scheme.