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Source link: http://archive.mises.org/16593/pre-fascist-italy-tax-and-borrow-and-spend/

Pre-Fascist Italy: Tax and Borrow and Spend

April 22, 2011 by

The balanced budget passed away definitely in 1911, not to return again until a revolution had swept from the people of Italy their freedom. FULL ARTICLE by John T. Flynn

{ 4 comments }

Ohhh Henry April 22, 2011 at 12:49 pm

Speaking of Italy, in the immediate post-fascist era it seems that a remarkable scam was perpetrated by the Italian government. As I understand it, they counterfeited their own treasury bonds (or whatever they called them) and issued the same serial numbers twice. I suppose this is what helped reduce the Lire to the joke of western European currencies in record time. But in the short term it must have provided a lot of ready cash for buying up property and paying off other debts.

That would be merely a trivial footnote, except that there are bizarre stories surfacing every few months about allegedly counterfeit US treasuries, in amounts of hundreds of billions of dollars, and always in Italy. The first case was a couple of Japanese men caught near the Swiss border, one of whom was allegedly connected to the Bank of Japan. The other incident that I heard of was in a part of Italy closer to the Adriatic Sea, with hints of involvement with mafiosi and/or some kind of Balkan connection. There is so much secrecy and obfuscation involved that I can’t pretend to have any idea what is really going on, but I don’t see how this could point to anything but a disaster impending for the USD and following that a major political upheaval possibly along the lines of the descent of pre-fascist Italy.

I suppose that some of the seized US treasuries are actually genuine (the ones carried by the Japanese) and that there is some kind of secret, indirect process being followed by which foreigners can redeem their bonds for cash while their governments simultaneously announce their continued faith in the USD. This process presumably involves the use of intermediaries, who subtract a generous cut from the proceeds in order to save the foreign central banks and sovereign wealth funds from having to walk right up to the cash window at the NY Fed (or wherever they would go). The US Fed or Treasury Dept would of course not be fooled by counterfeit certificates, knowing fully well what they look like and which serial #s were sold to which parties. But the need for secrecy means the recruitment of middlemen, and middlemen will not have the same information at their disposal. Hence, the opportunity for counterfeiters such as the mafia of various countries with connections in or near the pipeline leading to the USA in which paper bonds are turned into paper cash (and soon afterward I presume into gold, farmland and energy shares). The definition of organized crime of course is extremely broad and includes governments and both official and renegade departments within those governments. Who knows which gangsters, of which countries and with which official associations, have spotted the opportunity to get in on the ground floor of the biggest financial swindle in history – the death (or assassination?) of the USD. One might suspect the Italian mafia (fingered in the news reports), and the mobs allegedly based in Albania, Israel, Russia, Japan and of course the military-industrial-intelligence bloc in the good old USA.

Another possibility is that the bonds are not actually being redeemed, but are being shown to lenders as proof of collateral in order to secure loans (for example by the governments of PIIGS). Presumably the teams checking the borrowers’ creditworthiness have neither the special knowledge to detect fake treasury bonds, nor do they have any particular motivation to do so when what they are doing is essentially just shoving central-bank bailout money out the door as quickly as possible while skimming off the top as much as possible in the form of fees and bonuses.

These are just the speculations of someone who is entirely ignorant of the workings of finance and banking other than what is gleaned from occasionally reading articles at mises.org, LRC and goldbug sites. I would like to hear other people’s speculations, theories or facts surround this and similar cases. As you can see from reading this article about pre-fascist Italy, the danger is very real.

Austrians certainly know the fundamentals of what is going on – namely printing money as quickly as possible in order to stave off ruin while the knowledgeable few snap up real property. But the “conspiracy facts” as Rothbard would say are also highly interesting, not just for knowledge’s sake but because exposing the facts might help some of us from avoiding the worst effects of the inevitable disaster.

Kain-Z April 22, 2011 at 5:29 pm

All those problems were because they didn’t print enough money. There just wasn’t enough money to support all that government investment so they should have printed more of it. GDP rises by the amount of government investment, so they should have used up all the trees in the country to print money to fund government investment. That would also have created lots jobs for tree cutters and press crankers.

Weimar April 22, 2011 at 7:09 pm

Theoretically yes, practically no. They would have hit the same wall the Weimar Republic did – mechanical printing presses limited in the speed in which they could print currency and wheel-barrows that could only hold and transport a limited quantity of currency. Today, however, there are no such issues. “Currency” is “printed” at the speed of light as electronic entries in computers and banking and transactions can, and often do, occur completely electronically. Ergo, thanks to modern technology, we CAN print enough money fast enough as well as store and transact the amounts necessary! Paper currency and coin – barbarous relics!

Print, baby, print! – Dr. Ben Bernanke

Paul B April 23, 2011 at 8:03 am

This history seems to be lost on the government of the United States. The spending at the government level on unwanted programs,defense and the attempt to save what remains of the private sector will if continued send the country into depression. Your article needs to be sent to the politicians who are ignorant to history or feel that they are above it.

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