James Leroy Wilson's blog

Friday, May 12, 2006

The Power of Faith

Brooks Agnew's interview with Tracy Twyman on Freemasonry and money is posted at her website. Excerpt:
[F]iat currency, which the US dollar is an example of, is an inherently alchemical and magical thing. Fiat currency is any type of money in which the value of the unit exists by declaration of the government or bank that issued it, unlike money made from precious metals, which has intrinsic value. The American dollar, like all fiat currency, is valuable because the government says it is, and because the American public accepts that it is. Thus, our money derives its value from faith. It is inherently ethereal and spiritual.

12. In what way is fiat currency alchemical?

Alchemy is a widely used term, but I think it can be generally described as the art of turning something of little value into something of high value. This can mean changing the quality of something, just as alchemists tried to turn lead into gold. It can also mean greatly increasing the quantity of something. Many alchemical operations involve taking a small amount of gold as a seed and multiplying it through the alchemical process. This is what happens with money in the modern banking system, and in a capitalist economy.

It is my belief that the Freemasons and their colleagues who have been responsible for creating the United States, designing the dollar bill, and engineering our economy have understood the principles of alchemy, and have purposely chosen to construct our economy upon these principles. They are the principles of creating worth from worthlessness, and for creating a large volume from a small one, using the power of faith. I submit that the creation of money by the Federal Reserve, and its exponential increase by the procedures of the banking system, is analogous to the creation and increase of gold in alchemy. The power of money to transform almost any thing or situation into another is similar to the alchemical power of the so-called “universal agent” or “Philosopher’s Stone.” Fiat money is perhaps the only thing that truly means nothing except in relation to something else - that is, what it can buy, or be converted into - and yet it is the most powerful force within our lives. This matches descriptions of the “Azoth”, or secret essence of life spoken of in alchemical texts. The members of the Federal Reserve Board are in many ways like sorcerers, conjuring wealth seemingly out of thin air and distributing it at will to transform the American economy according to their desires.

Economists of the Austrian school believe that money should be backed by something of instrinsic value, like gold. This isn't surprising; Austrian economics is little more than an exercise is logic. The "invisible hand" that brings greater wealth is, to them, the division of labor: the more efficiently goods and services are provided to more and more people, the better off we are. More and better goods, over a fairly brief period of time, come to those with lower incomes. To other schools of economic thought, however, it appears that fiat currency - where the dollar is based on nothing but the faith that it has value - is the engine of growth: the more money people have, the better off they are.

There are drawbacks both ways. If the dollar is tied to gold, and goods and services increase more than does the gold supply (which increases very little from year to year), prices fall. While good for the consumer, this is not so good for the producer. (For instance, when grain prices fall, farmers lose their farms.) In other words, more goods and services are competing for a limited supply of (gold-backed) money.

On the other hand, under fiat currency, we would find the opposite problem - especially when the government runs budget deficits. The Federal Reserve just "prints up" more money to finance the deficts. This means more money is created and being circulated into the economy at a rate that surpasses the increase of goods and services. More money competes for those goods and services, meaning prices rise. And this is bad for the consumer, whose wages almost always never keep up.

Did the Masonic architects of our monetary system understand the principles of alchemy, as Twyman says? I actually kind of agree with this in spirit, if not in application. I do believe it is possible to create something out of nothing, or worth from "worthlessness." I think, however, this is a question of energy, not of money. We seemed to do fine, over all, in economic growth and invention during the period of the gold standard. Since we've been off of it completely since the early 1970's, there is evidence that were better off, but also evidence that we're worse off. Over all, I believe that fiat currency is inherently inflationary, and inflation makes serfs of us all.

That is to say, with fiat money, the value of the dollar will eventually fall to zero.


  1. While good for the consumer, this is not so good for the producer. (For instance, when grain prices fall, farmers lose their farms.)

    I doubt I'd put it quite that way.

    What really is happening is that, as goods...let's say, grain...because "cheaper"...indicating more abundant, then the price acts as a signal to these farmers to redivert their land to other uses.

    They'd only lose their farm if they didn't heed the signals...which is what happens to any business that doesn't do the same thing.

  2. As prices go down, (in a gold based economy) they go down for all, producer and consumer alike. What else changes?

    On another matter entirely...

    The people that get caught in either an inflationary or deflationary economy are the ones that can't see what's going on, the switch from one to the other, so as to plan for the new one in advance.

    But I'm oversimplifing to make a point.

  3. I understand all that. But while falling prices is overall a good thing, it doesn't seem that way for those who lose their profit margins - even if it's their own fault. That's why there's agitation for central banks and inflationary policies.

  4. I see fractional reserve banking as a form of black magic, especially under a fiat currency. The fiat currency makes the magic "coincidental" so that no one can see behind the curtain.

    The deflationary "problem" is actually an illusion. If prices fall on grain (because of either increase in production or decrease in demand) under a gold standard, it's a visible fall in prices. Under a fiat currency system, the price is still falling, it's just invisible if enough currency is pumped into the system.

    Now there is a real economic factor at work, which is the accelerator factor. If there is inflation, then savings declines and consumption increases, which is good for already existing producers/suppliers, especially of goods with a fixed or highly inelastic supply (such as farmers, mining companies, oil companies, logging companies, real estate speculators).
    This happens because money today becomes worth much more than money tomorrow.
    This is also an illusion, but a systemic one, and a self-fulfilling prophecy.

    If the channels in which the money floods the system are tightly controlled, this illusion takes on a certain reality, as productive factor prices are bid up without the extra currency actually hitting the hands of most consumers until much later.
    It's a method for creating monopolism/protectionism.