[This article is excerpted from a 30,000-word memo to the Volker Fund, 1961. The full memo is available in Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard edited by David Gordon.]

The Road to Civil War

The road to Civil War must be divided into two parts:

On last night’s Kudlow & Co., the host heaped praise on the author of a Forbes.com op ed. The lovefest begins around 5:30 and keeps going right until the end. I had to remind myself several times that “there’s no I in PRI.” Er, “team.”

The Federal Reserve is trying a range of new tricks to push new forms of lending as a means of preventing what they fear may otherwise be a major collapse in financial markets. What all these strategies have in common is an unwillingness to come to terms with the reality that the crisis is based on real factors and can’t be merely papered over without grave consequence to economic health. The engine of economic growth is not money, however, but real savings.

Almost everyone has something to say about the current crisis and the serious trouble our little greenback friend is in. We are about to be reminded that empires do not fall because of barbarians at the gates, wars of civilizations, or free trade. It’s the inflation that kills them.

It’s civic baseball season again, that time of the year when we are reminded that everything we believe about how society works is wrong, at least in this area if not in all areas. Let’s start with the most obvious point — obvious once you think about it. The idea that cities must provide this service is a deeply entrenched part of civic life. Hardly anyone questions the need to loot taxpayers to build large sports complexes, maintain them all year, pay referees, and generally administer this vast apparatus requiring millions in funding. Why? The reason usually given is that sport programs are a good thing, they bring the community together, they provide an outlet for kids, and socialize them into important life activities such as … playing sports. How can anyone oppose such a wonderful and essential thing?

Encouragingly, the mainstream economics profession has been prating for some time now about the connection between the “rule of law” and economic prosperity and growth. Most libertarians might take this increasingly popular term as mainstream code for “freedom and property rights,” as I do.

The Federal Reserve is trying a range of new tricks to push new forms of lending as a means of preventing what they fear may otherwise be a major collapse in financial markets. What all these strategies have in common is an unwillingness to come to terms with the reality that the crisis is based on real factors and can’t be merely papered over without grave consequence to economic health. The engine of economic growth is not money, however, but real savings. If the pool of real saving is declining or stagnating, then the economy — also in terms of GDP — will follow suit, irrespective of what the Fed is doing.

Yes, that’s right: The Freeman. This was the original, as edited by Albert Jay Nock in the early 1920s. It was radical, far-reaching, topical, and bracing in every way. Here we have a collection of what Nock himself considered to be the best of that journal, with many of the articles (probably even half) written by Nock himself. Don’t expect anything conventional from this volume.

The slowdown of the American economy and the ensuing devaluation of the US dollar deliver gloomy headlines as timely as weather forecasts. The weakening currency may excite entrepreneurs anticipating increased exports. As well, it might have a stimulating effect for American professionals who are paid in return for our services. However, the total effect is negative insofar as it will curb the trend toward the expansion of the international division of labor.