Why Today’s Crisis forces a Re-Evaluation of “Value”

By Matthew Ehret

Today’s international crisis has caused the world to confront a major blind spot in thinking which has gone unchecked for far too long: The belief that money holds intrinsic value.

Not only has the reality of insufficient medical infrastructure across European and American nations cause a sudden alarm (despite the trend occurring for decades), and with trillions of dollars printed to provide money to families, businesses and factories, the fact is beginning to emerge, that money is something which can be created at will. Under this new reality, money itself is being recognized as a means to achieve goals and sustain life and not something to worship.

This doesn’t of course mean that flooding the world with money is a good thing, and in fact doing so thoughtlessly may actually create more destruction through hyperinflation as the current $4.5 trillion bailout package to Wall Street banks unfortunately endangers.

We thus find that the greatest crisis facing humanity is not caused by the market crisis, or even the coronavirus per se, but rather society’s profound inability to understand the source of real from fictitious value. In order to come to a better understanding of this problem, let us leap back in time and revisit two similar moments of existential crisis which nearly saw the dissolution of the United States of America and briefly review how great leaders of the time were able to change the course of history through their profound understanding of real vs fictitious “value”.

What is REAL Value? Lincoln and FDR Revisited

“The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”

These words were uttered by none other than America’s 16th president Abraham Lincoln as he fought to take federal control of credit vis a vis the “greenbacks” that not only allowed him to win the war of secession but also construct the greatest infrastructure and industrialization programs of history driven by the trans continental railway. The dramatic success of Lincoln’s “American System” not only saved the union, but spread successfully across the world from Japan’s Meiji restoration, Russia’s trans Siberian rail development, Bismarck’s Zollverein in Germany and Sadi Carnot’s France. This powerful spread of what Friedrich List called “the American System of Political Economy” nearly annihilated the money-worshipping system of Adam Smith’s Free Trade doctrine from the earth and only failed in this task due to an array of conveniently-timed assassinations, wars and revolutions [1].

The world spun out of control between the murder of the “last Lincoln republican” William Mckinley in 1901 and the meltdown of the U.S. economy known as the great depression of 1929-1933.

Amidst this dark period, Franklin Roosevelt called for the Democrats to claim the legacy of Lincoln from the corrupt republican party which had become the party of Wall Street during the roaring 1920s. During his March 4, 1933 inaugural address, the president rallied the American people saying:

“I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.”

As I have outlined in my recent paper A Lesson from 1933, FDR took control of credit in a similar manner as Lincoln by forcing the Federal Reserve to obey a national mandate for the first time since the private bank was set up in 1913. He did so by imposing his ally Mariner Eccles into the position of Chairman who understood that money had to create infrastructure and industrial growth in order to acquire any claim to having actual “value”. This was a stark break from the “hands off/laissez-faire” policy of President Hoover and his JP Morgan-run cabinet. FDR also emitted Lincoln-styled productive credit through the Reconstruction Finance Corporation (RFC) to fuel the New Deal. The RFC issued over $33 billion in low-interest loans by the end of the war (more than all private banks combined).

Describing his moral philosophy of political economy, FDR stated:

“We seek not merely to make government a mechanical implement, but to give it the vibrant personal character that is the very embodiment of human charity. We are poor indeed if this nation cannot afford to lift from every recess of American life the dread fear of the unemployed that they are not needed in the world. We cannot afford to accumulate a deficit in the books of human fortitude.”

What is missing today

Today’s America is confronting an existential crisis similar to that which both Lincoln and Franklin Roosevelt battled in their time but with an important difference.

While today’s crisis combines elements of all previous crises of 1861-1865 (Civil War), 1929-1933 (Great Depression) and 1938-1945 (WWII), the current period finds a presidency which has demonstrated an inability to FOCUS with a clear mind on principled solutions. Instead we find modern leadership that is trapped within contradictory impulses.

While FDR and Lincoln understood that VALUE was located in the physically productive forces of labor which sustained and improved the lives of people and gave the constitution’s pre-amble a real living character, today’s North American and European leadership has displayed a far greater ignorance to this basic fact of life. The vital difference between “need” vs “want” which has been obscured by decades has resulted in a loss of moral judgement necessary to properly put out the fires threatening to unleashing chaos.

The new multipolar alliance led by Russia and China have demonstrated what modern day New Deal policies can do. The Belt and Road Initiative as well as the Strategic Eurasian Partnership, Polar Silk Road and bold space exploration projects all reflect the type of principles of win-win cooperation and long term planning that characterized both FDR and Lincoln earlier. This system exists as a form of a life raft for anyone wishing to escape the fate of the Titanic and embark on a new epoch of growth and cooperation.


[1] Before his assassination, President McKinley exemplified his philosophy of money saying: “Then they say `everything would be so cheap,’ if we only had free trade. Well, everything would be cheap and everybody would be cheap. I do not prize the word `cheap.’ It is not a word of hope; it is not a word of comfort; it is not a word of cheer; it is not a word of inspiration! It is the badge of poverty; it is the signal of distress; and there is not a man in the audience, not a white-haired man, who, if he will let his memory go back, will not recall, then when things were the cheapest, men were the poorest…. Cheap? Why, cheap merchandise means cheap men, and cheap men mean a cheap country; and that is not the kind of Government our fathers founded, and it is not the kind their sons mean to maintain. If you want cheap things, go where you can get them…. We want labor to be well paid.”

Feature Image: The ceremony for the driving of the last spike of the Trans-Continental railway at Promontory Summit, Utah, May 10, 1869


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One Comment Add yours

  1. Dear Matt and Cynthia, I love your work. Last year I had a great conversation with Matt on Nov.22. But at the time I didn’t realize my camera was poor. Now I have a good one. Is there any possibility we could have another one with either one of you or both? I have learned so much from your output and I have some questions that I never have seen asked by any of your interviewers. Would you be up for it?

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