Wow thanks EBH for the posts, this is really intricate and will take me a while to absorb all this. I have some questions but let me present my premises first.
The “Root of Money” speech defines money as a measure of a man’s ability to produce wealth. The U.S. dollar is the world’s strongest currency, even throughout this economic morass, because we are by far still one of the most productive peoples on this earth. (This is due to a couple of factors, including having enough law and order to support a capitalistic machine, along with good old American work ethics and ingenuity.)
For whatever reason (jealousy, evil, greed, etc.) there are always attacks on the producers by the non-producers. This happens both internally within the nation as well as globally, with other nations like China trying to pick on us. FDR tries to control the producers by taking us off the gold standard. There is some conspiracy theory Saddam Hussein tried to take oil off the dollar standard to weaken the U.S. Now they are trying TARP like you say to inflate the currency. I would argue that in all cases they have failed or will fail, because you can’t stop a producer from producing; it is against his very nature. As long as you have enough producers, our economy (and country, and way of life) will remain strong.
I am wondering if the real reason we feel more and more bankrupt is not so much inflation but because people have less faith in each other. When more and more producers go Galt, or turn into looters and moochers, by Anconia’s definition, the currency will be worth less and less.
To me this reasoning seems independent of the other cause which is the inflation caused by TARP. Or are they related in some way that I am missing?
Ironically if my premise is right, then all you have to do to kill an economy is demoralize the producers or make them disappear. (Just look at what happened to Zimbabwe the former “breadbasket of Africa”.) So I think it is the social and cultural wars which will destroy this country more than any of the financial manipulations you mention. Falsely credentialing workers (affirmative action), adding more and more regulation (SOX), taxing the productive and rewarding the incompetent, increasing socialization, all will be much more successful at demoralizing producers.
What do yall think? Sorry this argument is not more succinct but I am still trying to put it all together. And it’s late. :)
Now as to your premise that the reason we feel more & more bankrupt is not related to money, but to the morality of the dealings between individuals. I would direct you back to the The Money Speech where Francisco says, “Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value...It is not the moochers or the looters who give value to money.” In the first two paragraphs to the speech, Francisco delivers the idea of Value to money. So we must understand what value and values are, in order to properly appreciate money.
What is value? We learn through the money speech it is your work, your efforts, your life energy and that is what gives value to your money. Since we are no longer on the gold standard, all the government can do is inflate the currency...which decreases the value of the dollar. Decreases the value of your efforts. They have now stolen your value from you without ever taking a physical dollar from you by making your dollar worth less. TARP is a redistribution of unearned wealth. You said, “I am wondering if the real reason we feel more and more bankrupt is not so much inflation but because people have less faith in each other.” Francisco actually agrees with you when he talks about, “Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money...” I would say people have less faith in each other because they are breaking the moral code of money. Being in debt, devaluing the dollar, failing to pay your mortgage, mismanaging your company and then expecting the society to bail you out.
I agree we feel more and more bankrupt both financially, but also morally. Why, because others are breaking the moral principle of money. Wealth redistribution breaks the moral code of money. Inflation is the physical result of the disrespect of money and thereby the disrespect and devaluation of your production. The code that holds each of us with respect to our efforts to produce. So, like Hank Reardon and Dagney you will work harder, smarter, put in more time, create more but...how much faith/hope will they put in? Even producers have a breaking point.
Let's look at some of the words used in the Speech: hope, honor, honest, good will, mind, effort, productivity, recognition, and respect. I like the paragraph that talks about inheriting money.
So I would say your premise is correct and Francisco is trying to teach us that money is nothing but a tool of men's moral code.
Going Galt does not devalue currency. The only way to devalue currency is through inflation. Going Galt and removing your own wealth from the market should technically fight against inflation. You are taking money out of the system, not pumping it in. Of course, unless the whole country goes Galt, the individual efforts of this tactic do little to stem inflation or as many here like to say, Starve the Beast.