Q&A February AD 2013

Question: In December you defended those businesses called “vulture funds” by the Prefect of the CDF, comparing them to legitimate collection agencies. If those holding the bad debts were willing to sell them at a discount, what would be wrong with the UN, the World Bank, or the IMF buying it and allowing the debtors to pay the money back over time? Doesn’t US foreign aid do some of this?

Answer: From a moral point of view, one must question all forms of foreign aid, including loan guarantees, payment reductions, and bailouts.

Foreign aid is not given to individual foreign citizens, but to foreign nations—or perhaps we should say “foreign regimes” for those in charge ultimately get to decide how the money is used. Foreign aid rarely benefits the poor of the target countries. The money doesn't go directly to those in need, or even into the national economy. It may wind up in the Swiss bank accounts of the politicians, may be used for the military persecution of some element of the population, or to reward the cronies who support the regime in power. Even goods like medicine, food, clothing, and blankets can be used to curry favor with supporters—or they can be sold on the international markets. Those not in power may resort to violence and revolution in order to get “their share” of all this money and influence.

Foreign aid may encourage more of the same irresponsible behavior that got the country in economic trouble to begin with. Many governments engage in Ponzi schemes to buy favor with the working class. The recent rioting in Greece had to do with bailouts contingent on raising retirement ages and lowering benefits to economically supportable levels, instead of additional borrowing to pay current and future benefits. No one wants to go back to work after retiring, or to take a cut in benefits. Socialist regimes generally encourage population control (for they inhibit full production), and a declining number of future workers are required to pay for those receiving benefits. Payments into government retirement systems are often spent as they are received instead of being prudently invested. For example, here in the USA, the “lockbox” for the Social Security “trust fund” contains mostly government IOUs. As the working population declines, it becomes more difficult to make payments on those IOUs.

Often there are immoral strings attached to foreign aid, like contraception and abortion to limit growth, and euthanasia to eliminate “defectives” and “useless eaters.” Recipient nations may be required to enact politically correct legislation limiting the rights of religious believers, parents, gun owners, or those espousing unpopular ideas.

Beyond asking whether or not foreign aid is beneficial for the target country, we ought to ask where the money comes from. There are two sources—both found in the Communist Manifesto—“progressive” taxation and centralized credit mechanisms that debase whatever is being used for money.[1] Both are forms of theft. It is not the UN or the US that produces the wealth required to give foreign aid. Wealth must be taken from those individual people who produce it—and government’s way of doing this is to threaten draconian penalties for those who refuse to pay their “fair share.” The greedy “one percent” we hear about pay roughly 37% of all income taxes. The greedy “five percent” pay almost 60%, and the bottom fifty percent pay almost nothing![2] Some of the people in the top brackets may be very altruistic, but such a disproportionate system of payments would collapse without the threat of violence. If you don’t pay your “fair share” you go to jail. A man who accosts you in the alley with a gun and demands your money is a thief—a man with a gun and a badge (and maybe a uniform) is a government agent!

From the Ten Planks of the Communist Manifesto

2. A heavy progressive or graduated income tax.

5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.

The other way in which money is gathered for foreign aid (and a lot of other not so beneficial things) is by monopoly central bank inflation of the money supply. This seems a little better than direct taxation, for there is no man with a gun and a badge (unless you use some alternative to the government’s monopoly money). No gun is needed, for the government just borrows the money into existence from the central bank, which makes it from “thin air.” The fellow who does this at home is a counterfeiter –the public servant who does it is a banker. But gun or no gun, the result is the same. Dollars, pounds, lira, yen, franks, or whatever the currency unit—more of them in circulation makes each one worth less. Whatever is in your wallet, strong box, bank account, or 401K lost some value in the time it took you to read this.

Using government provided Consumer Price Index (CPI) data, an item purchased for $1.00 in 1913, when the Federal Reserve was founded, would cost $23.19 today.[3] The government that borrows the money into existence also decides what to count in the CPI. Food and fuel prices, for example, are considered too volatile to include in core inflation statistics.[4]

So far, we have been talking about foreign aid given by the US (or other national) government. What happens if the UN or the International Monetary Fund (IMF) provides the aid?

The UN doesn’t produce anything. It receives dues from member nations—which in turn extract money from productive people. The UN keeps talking about imposing global taxes directly. Fox News predicts a treaty to allow a UN tax on buying or selling stocks and bonds or exchanging currencies, a tobacco tax, and asset tax on the “wealthy,” a tax on offshore oil and gas wells, a “carbon tax” on airplane operation, and another “carbon tax” to help poor nations cut their carbon emissions.[5] Perhaps there will be an Internet tax through the ITU.[6]

“The power to tax is the power to destroy,” wrote Supreme Court Chief Justice John Marshall 194 years ago.[7] Perhaps “the power to enslave” would be more correct. The UN has a terrible track record of genocidal wars, graft, corruption, of being anti-life and anti-family. Check out UN Agenda 21 if there is any doubt.[8] A UN with the power to tax would be dangerous indeed. Certainly, anyone who disagreed with it would be crushed—with a global government there would be nowhere on Earth to flee.

Even more frightening is the idea of a world central bank. (Modernist Rome thinks this is a good idea!)[9] With taxation there is always the possibility of revolt. Taking money out of people’s wallets through central bank inflation rarely draws notice by most people. Will there ever be a world central bank? Will it become the global regulator of business, the arbiter of what nations may and may not do, the administrator of global “stimulus” and bailout programs, the international bankruptcy court? The reality is that the IMF has already begun to function as though it were a central bank!

Member nations provide the capital assets of the IMF. In return they receive “special drawing rights (SDRs). The SDR was originated in 1969 as a reserve asset that countries could use under the Breton Woods agreement to stabilize the foreign exchange rates of their currencies. But in recent years the IMF has begun to administer the SDR in much the same way as the Fed administers the US dollar. In 2009 the IMF began to issue bonds denominated in SDRs—China which is tiring of dollar investments promptly bought $50 billion worth of these bonds. Technically, the IMF is said to be “leveraging its balance sheet,” creating assets out of thin air, or based on fiat money created out of thin air by national governments. Worse still, the IMF has issued its own paper fiat money, SDRs printed on paper in the form of currency and backed by nothing.[10]

There is no reason to suppose that a world government would be any more moral that the nearly two hundred nations that govern the world today. Globalism does not equate to government by angels. Human beings are fallible and subject to corruption—and more likely to be corrupted when their power is above all others. The UN demonstrates this abundantly!

But still, the question remains: “What can good people do to help the poor people of the world—the ones in economies unable to help themselves?

Eliminating foreign aid would help remove oppressive regimes from power, and give local economies the chance to develop. Instead of foreign aid, the wealthier nations should encourage private investment in developing countries—private investors investing in free enterprise in the target countries. Private investors are more likely to invest in countries relatively free of corruption and “red tape,” putting further pressure in oppressive regimes.

All nations should discourage tariff arrangements that make it difficult for companies in developing nations to compete in international markets. Import tariffs raise prices in the prosperous nations and make it difficult for the developing nations to raise capital and create a growing economy. The prosperous nations can remain innovative and productive by reducing taxes and regulations on their own industries—they can trade their innovations to the newly made prosperous developing nations of the world.

The nations of the world should return to hard currencies which do not devalue, leaving everyone except the elite with less value for their hard earned fiat currencies.

One last thought: sell the UN building in New York, and distribute the proceeds to start-up companies in the developing countries.

Gun Control?

Question: What is the Catholic Church's teaching on gun control? A Novus Ordo friend says that he has seen articles issued by the US bishops and the Vatican that support Obama's gun confiscation initiative.

Answer: Given the strong correlation between modernism and socialism their support for left wing ideas is to be expected. Calls for gun control are based on emotion rather than logic, and are often advanced by those advocating strong government control of society. It was not surprising that the call for a “international authority with the necessary competence and power...” comes just a few paragraphs before a call for gun control in the mis-named modernist Catechism of the Catholic Church.[11]

Life and property are God given rights, and people have the right to protect both. Killing in self-defense is not among the offenses against life enumerated in Exodus xxi, and the following chapter even leaves blameless the man who kills a thief in the night.[12] Saint Thomas justifies killing in self-defense by the principle of double effect: of the two effects, the survival of the one attacked is intended, but the death of the attacker is not.[13] In Moral and Pastoral Theology, Henry Davis, SJ writes:

A gun is a tool. It may legitimately be used for defense, for hunting, or target shooting. The fact that a tool can be misused does not make its possession or proper use immoral. The automobile, the hammer, the knife, and the lead pipe all can be used to kill people, but no one seriously suggests banning them.

The hope for something less than the death of the assailant makes the gun an ideal tool for self-defense for the mere knowledge that an intended victim has a gun, or even might have a gun, is often enough to prevent the crime. This is why “gun free zones” are such a bad idea—they are good places to commit a crime, for they make it far less likely that anyone will be able to defend themselves. Cities with strong gun control laws are no safer than those without, and indeed, they are often more crime ridden. New York, Chicago, and Washington D.C. are prime examples. While correlation does not prove causality, there is often a correlation between gun control measures and higher crime rates.[14] Brazil has strong gun restrictions, and:

To a lesser degree things like gun safes and trigger locks also favor the armed or physically more powerful criminal—very unlikely that he will give you a sporting chance to get your gun out of the safe and unlock the trigger. A high-tech lock that keys on your palm print or whatever will make a gun useless to your wife and family. All but the youngest children should be aware of household guns, and the procedures for being safe around them.

The gun is a great equalizer—good for protecting weaker and elderly members of the family—but also for convincing the criminal to retreat or to remain for the authorities. Since we are trying not to kill the criminal, the stopping power of a gunshot wound is mere easy to estimate than the number of blows required with a blunt object.

Large magazines are essential for defense against multiple home invaders (no sporting chance to reload!), particularly if one does not have the time and money to become an expert marksman. (Good also for the hunter of dangerous game.) Forget about buying an “assault rifle”—they are in the imagination of the liberal media and politicians—rifles that fire a three round or continuous burst are available only to the police and military. “Military style” weapons look like those used by the military.

To their credit, the US bishops got one item right in their plan: “5.Make a serious commitment to confront the pervasive role of addiction and mental illness in crime.”[16] However they ignored the related problem of school gun violence being caused by psychotropic medicines prescribed for students with “attention disorders,” and other such modern ailments. Most of the school shooters you have heard about were on prescribed medications: Ritalin, Prozac, Paxil, Zoloft, and such.[17] Perhaps we need a return to more traditional methods of holding students’ attention and preserving classroom discipline, instead of expecting it to come out of a pill bottle.

Finally, history teaches us that gun control was the prelude to virtually every modern totalitarian regime. When the jackbooted troops come goose-stepping through town, they prefer the populace to be unarmed.