Part II

"There are three periods at which the world is worthless: the time of a plague; of a general war; and of the dissolution of express contracts."—The Senchus Mor (An ancient Celtic law-book)

In this series of installments on the subject of debt, we endeavor to thoughtfully examine a subject that, though perhaps overworked on the one hand, is entirely overlooked on the other. Rather than examining the superficial aspect of debt as most writers on the subject do, we intend at looking at the very depths of this phenomenon and uncovering valuable wisdom on how it comes about, how it destroys the very foundation of any civilized nation's economy and moral fiber, and how it can be prevented in the future. Ours is a very grave and somber subject, but one which none of us should avoid on that account. As advocates of gold and a gold standard, wecan all surely appreciate the beauty and veracity of Tilden's wisdom on this subject.

Picking up where we left off in our examination of the nature and implications of debt, we give our attention now to its moral and civic qualities. Tilden expounds these qualities with great insight and eloquence when he writes, "…borrowing is nearly always a substitute for, and prevents the performance of, some virtuous or husbandlike act…Debt usually displaces, in the conduct of the borrower, patience, or self-denial, or energy, or social adjustment, or initiative, or even the willingness to work."

It is this torpor-inducing quality of debt that makes it most pernicious. A society or economy based primarily on the principles of free enterprise, the progress and prosperity of that society will always be directly proportional to the diligence and industry of its citizens. These qualities of industry and diligence are themselves moral and economic qualities that are greatly desirable, for without them one can never attain any kind of prosperity. Thus, whenever diligence and industry are undermined, the public wealth is itself jeopardized. How greatly, then, should debt be abhorred by the citizens of a free country! Debt does more than anything else to render its victims (in our case, the debt-strapped U.S. consumer) to a carefree, spendthrift, lazy mass of creatures who will not delay their material gratification by toiling and saving when they can so easily enjoy the fruits of someone else's labor here and now—and without cost!

It is Tiden's belief that debt is both a symptom and a cause of social, moral and economic decline in any society that ever welcomes its embrace. When a country makes the fateful decision to become a debtor nation, it rarely happens in a day—it is usually a slow, gradual process that takes time to unfold. At the root of this collective decision to accept debt, there is almost always a contempt of and ignorance of the true nature of money. Since the monetary system of nearly every centralized democracy is controlled by centralized usury (i.e., bankers) which delight in creating money by fiat, the ordinary citizen comes to accept this and even believes it to be natural. Whenever gold is cast aside contemptuously from being the standard by which monetary value is measured, society has taken the first step toward debtorship and must necessarily suffer the consequences. Writes Tilden: "…[Central banks are] guided by keen political instinct. [They] crave power, and [know] that one of the easiest roads to power is through placing prominent men under obligation" through indebtedness. Aside from making available easy-access loans, one of the ways in which banks procure this universal state of indebtedness is to print money, which has the effect of constantly diminishing its value. Thus, even the industrious, saving class among the people suffer since the value of their savings is continually eroding. And to what avail? That the usurers might "lay in wait to buy at reduced price[s]," says Tilden.

"The tendency of all interest-bearing debt is to lodge in the hands of the most financially able, and to leave the rest of the people in poverty that borders upon slavery. This tendency is controlled, or aborted, in modern times by legislation directed against the creditor class (through it seldom pretends this, preferring to mask itself as some newfangled social improvement scheme) or by a manipulation of the currency standard," writes Tilden. He adds this warning: "When the debtors…[see] themselves about to be sold into bondage for their financial errors, they [will start] a fight. And, depend on it, there [will] always [be] political factions ready to use malcontents toward a change of government." This surely will be our heritage once the credit (i.e., debt) bubble implodes later this year.

Tilden best summarizes our present installment with these words: "Economics, in the modern sense, though not as Aristotle understood it, is distinctly a short-range affair. This can be clearly seen by its definitions, so many of which become wholly inadequate from one period to another, though they served well enough and were acceptable during their time." And just as surely as the economics of yesteryear gave way to the "New Economics" of our day, so too will our present economics make way for another when our debts come home to roost.