Progressive Monetary Policy: Hate the Rich Mentality Leads To Downplaying Lottery?

By Douglas V. Gibbs

The liberal left acts like they hate the wealthy, so they play this game where their goal is to tax the rich, punish the rich, and get you to vote for them because those liberal politicians are willing to side with you in your hatred of those awful rich people.

This idea of soaking the rich is nothing new, and born from the desire to create a socialistic system where there is actually only two classes: the ruling class, and the peasant class.

Alexander Hamilton used similar arguments to create his national banking system, of which the federal reserve was modeled after.  His crusade for a national bank, as in the case of the progressives when the federal reserve was created, was actually covering for something even bigger.  The idea was one of collectivism.  The economic planners believed they could somehow work around the laws of supply and demand, enact price controls, expand the monetary policy with greater controls in place, use protectionism to force businesses to act as they dictated, use high taxes, and so forth.  In Hamilton's day it was all facets of mercantilism. Today, such an economic system is called socialism.

During the early twentieth century when the Progressive Era had really begun to roll, the drive to create the federal reserve was accompanied by the 16th Amendment, which gives us our Income Tax, and the IRS. The idea to get the people's support was not to sell them on what was really being done, which was a greater centralized control over the money supply, but to herd the people into a socialist corral through a campaign of class envy and class warfare.  If only they could get people to quit dreaming of becoming successful, and instead hate the wealthy, and demand that the government "soak the rich" with taxes.

The Income Tax, after being shot down by the courts in the late 1800s as unconstitutional, rose up again in the form of the Bailey Bill.  The idea, however, was not to actually create an income tax that used progressive schemes to "tax the rich," but to make the people think that the conservative republicans were against such a tax in order for the democrats to gain political leverage in the upcoming election.  In reality, such a tax was needed to fund the new monetary policy that was being created through the Federal Reserve Act, and the progressives figured once they gained control of both Houses and the presidency, they could put such a policy in place.

The republicans saw what the democrats were doing, and dared not even go near the Bailey Bill. They knew that the democrat strategy, when the republicans voted against the bill, was to say, "See how those republicans are in the pockets of big business and the rich? They won't even try to make those wealthy folks pay their fair share in taxes!"

Instead, the republicans pushed for an amendment to the Constitution to create an income tax. The conservatives were fully convinced that once the proposal got to the States it would be rejected during the ratification process. Then, the republicans could reject the Bailey Bill using the argument that they were just doing what the States want, as confirmed by their rejection of the proposed income tax amendment.

The democrats and the progressive republicans, however, pulled a fast one on the conservatives, and claimed the 16th Amendment was ratified, the Secretary of State signed off on it, and the income tax became law. . . even though a full three-quarters of the States did not actually ratify the amendment.

With the new income tax against the rich, which later under progressive democrat Franklin Delano Roosevelt during the Great Depression became a payroll tax on everybody, the new central bank called the Federal Reserve went into high gear.

The intellectuals and business elite were actually united in favor of a central bank, partly because the progressive politicians were promising them to be a part of America's coming "imperial glory."  This seemed very possible after the United States acquired the colonies in the Philippines, Cuba, and Puerto Rico.  Publications like Essays in Colonial Finance advocated opening up new markets around the world, using military force if necessary. The progressive policy of protectionism had led to the overproduction of goods by domestic manufacturers, and they needed a way to dump their excess products.  A central bank, with the assistance of an income tax, could help these big businesses by supporting the costs of getting those products off their hands.

After the recession of 1907 the academics had been calling for a central bank so that the government could create a monetary monopoly.  These American intellectuals hailed the superiority of European central banking systems over the American system.

More importantly, for these statists, the creation of the federal reserve and the income tax, combined with the spirit of empire and the call to "soak the rich," became an ultimate victory for the societal engineers because the moves, combined with the 17th Amendment, also ultimately led the nation in a direction of abolishing States' Rights altogether.  After all, the two main forces in the way of fundamentally changing this nation into a progressive society was the voice of the States, and the people's opinion.  The people could be taught to embrace slavery through progressive policies, but the States needed to be eliminated from the picture if socialism was going to have a chance in America.

The immediate results of these progressive monetary policies were disastrous.  The new funding mechanisms enabled Woodrow Wilson to plunge the United States into the European war, a war that Wilson had promised to keep us out of when campaigning, which in the end provided, at the cost of blood and finances, no benefits other than chest beating and avenues to gain more control by the administration upon victory.  By the end of the war countless lives had been lost, and the nation was teetering on the edge of a great recession.

Presidents Harding and Coolidge, conservative republicans, reduced taxes across the board, reduced spending, and eliminated the regulations placed upon businesses that refused to play ball with Wilson's progressivism. What resulted was the Roaring 20s, one of the most prosperous decades in American history. Behind the scenes, however, through the federal reserve, the progressives were at work, and by the end of the decade the federal reserve's monetary expansion led to a boom-bust cycle that enabled, as the economy boomed, too much cheap credit that made too many businesses overcapitalized.  More production capacity than is warranted by consumer demand was created, and the only way out was through a liquidation of some of that capital. . . which, combined with President Hoover's increase of taxes, increase of spending, and implementation of heavy regulations and excessive public works projects, ignited the stock market crash and the Great Depression.

During the hundred-plus years after the Constitution's ratification to the creation of these progressive policies the consumer price level in the United States remained fairly stable.  We were told the purpose of the federal reserve and progressivism was to ensure price stability, yet the mercantilistic dance between some big corporations and the federal government has done nothing but cause cycles that have led us through a Great Depression, and a large number of severe recessions.

Business-government partnerships where some corporations will receive funding from the government, while others do not, is a system of favoritism for companies that play ball with the government.  Such policies allows the federal government to control the private sector in a manner very similar to Mussolini's fascism in Italy prior to World War II.  Masks are used to fool the people, to make them think these actions by the government are necessary to save us from economic collapse, and that "all" corporations are greedy and dangerous.  The more recent actions of mercantilism by the federal government have been labeled bail-outs, and loans; the latest examples being the billions of dollars pumped into green technology with the intention of creating full government control over energy while eliminating an industry that the government sees as an obstacle. . . oil.

Another mask used is the claim that the government is in the people's corner. They claim they are just trying to make sure those rich and powerful pay their fair share.  The liberal media, and left-leaning academia, have joined the party, promoting class envy between the average citizen and the wealthy.  The "ruling elite," however, are lying, because they truly don't think that all of the wealthy should "pay their fair share."  Only the ones that don't buy into the federal government's policies. The federal government is simply positioning itself to gain control over the wealth of this nation by pulling in closer those that play ball, while eliminating those that don't.

The "hate the rich" ruse is in line with the Marxist battle of the proletariat and the bourgeois.  The populace is being taught that the wealthy is the enemy, and you want no part of it.  Dependence upon government is much more important, because of the "equity" it creates.  That said, even aspiring to be rich through lotteries are now being downplayed by the media. "You don't want to win the lottery," they tell us.  "With all those riches comes headaches and problems."  Besides, the liberal media seems to be telling us, we are too stupid to be able to handle such wealth.  We are gamblers, and undisciplined children unable to manage our affairs properly without the government intervening. You don't want to be rich, be it by success in the business world, or through the lottery.  You just leave all those headaches to the elite, who know how to handle such responsibilities.

And while the government is at it, they will control all of the money, tell you how to eat, tell you what activities to participate in, and all of that jazz - after all, once Obamacare is in place, you won't have a choice in the matter.  Then, we will be one big happy collective homogeneous mass controlled by a ruling elite that presumes to know what is best for us, even if they are exempt from their own rules.  Of course, whoever refuses to obey the ruling elite's wisdom will, in that instance, be restrained by the body politic, and be made to comply - all the while the progressives call their opposition the harbingers of authoritarianism.

-- Political Pistachio Conservative News and Commentary

The Bailey Bill of 1909, and the Creation of the Federal Income Tax - Political Pistachio

Thomas J. DiLorenzo, Hamilton's Curse (New York: Three Rivers Press, 2008), Chapters 6, 7, and 8

Murray Rothbard, Man, Economy and State, and Power and Market (Auburn, Alabama: Mises Institute, 2004), p. 220, 248

The Terribly Sad True Stories of Lotto Winners - The Atlantic Wire/Yahoo News

5 Reasons You Really Don't Want To Win All That Lottery Money - Credit Cards.com/Yahoo Finance