🔸8.2 Nature's Law
Why does man continuously have to shelter himself from hurricanes of his own making? Andrew Dickinson White’s book, Fiat Money Inflation in France, examines in great detail a time in the past when “experience yielded to theory, plain business sense to financial metaphysics.” In consternation, Henry Hazlitt, in the introduction to the book, ponders man’s repeated experiments with inflation:
Perhaps the study of other great inflations — of John Law’s experiments with credit in France between 1716 and 1720; of the history of our own Continental currency between 1775 and 1780; of the Greenbacks of our Civil War; of the great German inflation which culminated in 1923 — would help to underscore and impress that lesson. Must we, from this appalling and repeated record, draw once more the despairing conclusion that the only thing man learns from history is that man learns nothing from history? Or have we still time enough, and sense enough, and courage enough, to be guided by these dreadful lessons of the past?
We have given this question due thought and come up with the conclusion that apparently it is one of nature’s laws that man at times will refuse to accept the rest of its laws. If this assumption were untrue, the Elliott Wave Principle may never have been discovered because it may never have existed. The Wave Principle exists partly because man refuses to learn from history because he can always be counted upon to be led to believe that two and two can and do make five. He can be led to believe that the laws of nature do not exist (or more commonly, “do not apply in this case”), that what is to be consumed need not be first produced, that what is lent need never be paid back, that promises are equal to substance, that paper is gold, that benefits have no costs, that the fears which reason supports will evaporate if they are ignored or derided.
Panics are sudden emotional mass realizations of reality, as are the initial upswings from the bottoms of those panics. At these points, reason suddenly impresses itself upon the mass psyche, saying, “Things have gone too far. The current levels are not justified by reality.” To the extent that reason is disregarded, then, will be the extent of the extremes of mass emotional swings and their mirror, the market.
Of the many laws of nature, the one most blindly ignored in the current Elliott Supercycle is that, except in cases of family or charity, each living thing in the natural setting either provides for its own existence or is granted no existence. The very beauty of nature is its functional diversity, as each living element intertwines with the others, often providing for many others merely by providing for itself. No living thing other than man ever demands that its neighbours support it because that is its right, as there is no such right. Each tree, each flower, each bird, each rabbit, each wolf, takes from nature that which it provides and expects nothing from the efforts of its living neighbours; to do so would reduce the flourishing beauty of those neighbours and thus of the whole of nature in the process. One of the noblest experiments in the history of mankind was the American structure of human liberty and its necessary environment of free enterprise capitalism. That concept freed men from being bonded by others, whether they be feudal lords, squires, kings, bishops, bureaucrats or mobs demanding free bread and circuses. The diversity, richness and beauty of the experiment have stood out in the annals of history, a monument to one of the greatest laws of nature, the final burst of achievement in the Millennium wave.
The Founding Fathers of the Republic did not choose the pyramid capped by an all-seeing eye as the seal of the United States on a whim. They used the Egyptian symbol of cosmic truth to proclaim the organization of the perfect society, a society based on the knowledge of human nature and the workings of natural law. Over the past one hundred years, for political reasons, the meanings of the Founders’ words have been distorted and their intentions perverted, eventually producing a social framework quite different from that established. It is ironic that the decline in the value of the dollar bill, which bears the seal of the United States, mirrors the decline in values within its social and political framework. As of this writing, in fact, the dollar’s value relative to that in 1913 when the Federal Reserve Board was created is twelve cents. Depreciating currencies have virtually always been accompanied by declining standards of civilization.
Our friend Richard Russell describes the problem this way:
I firmly believe the world’s troubles would be solved (and the earth would resemble heaven) if everyone would take total RESPONSIBILITY for himself. In talking to hundreds of people, I don’t find that 1 in 50 holds himself up, takes responsibility for his own life, does his own thing, accepts his own pain (instead of inflicting it on others). This same refusal to take responsibility spills over into the financial sphere. Today, people insist on their right to everything — as long as you and I pay for it. There’s the right to work, the right to go to college, the right to happiness, the right to three meals a day. Who promised everyone all those rights? I believe in freedom of all kinds, except where freedom becomes license and inflicts damage. But Americans confuse freedom with rights.
Lord Thomas Babington Macaulay, British historian and statesman, whom we quote in part, correctly ascertained the root of the problem over a hundred years ago in a letter to H. S. Randall of New York dated May 23rd, 1857:
I heartily wish you a good deliverance. But my reason and my wishes are at war, and I cannot help foreboding the worst. It is quite plain that your government will never be able to restrain a distressed and discontented majority. For with you the majority is the government and has the rich, who are always a minority, absolutely at its mercy. The day will come when, in the State of New York, a multitude of people, none of whom had more than half a breakfast or expects to have more than half a dinner, will choose the legislature. Is it possible to doubt what sort of legislature will be chosen? On one side is a statesman preaching patience, respect for vested rights, and strict observance of public faith. On the other is a demagogue ranting about the tyranny of capitalists and usurers, and asking why anybody should be permitted to drink champagne and to ride in a carriage while thousands of honest folk are in want of necessaries.
I seriously apprehend that you will, in some such season of adversity as I have described, do things which will prevent prosperity from returning; that you will act like people who should in a year of scarcity devour all the seedcorn, and thus make the next a year, not of scarcity, but of absolute famine. Either some Caesar or Napoleon will seize the reins of government with a strong hand, or your Republic will be as fearfully plundered and laid waste by barbarians in the twentieth century as the Roman Empire was in the fifth; with this difference, that the Huns and Vandals who ravaged the Roman Empire came from without, and that your Huns and Vandals will have been engendered within your country by your own institutions.
The function of capital (seedcorn) is to produce more capital as well as income, assuring the well being of future generations. Once squandered through socialist spending policies, capital is gone; man can make jam out of berries, but he can never reconstitute the berries.
As this century progresses, it becomes clearer that in order to satisfy the demands of some individuals and groups for the output of others, man, through the agency of the state, has begun to leech off that which he has created. He has not only mortgaged his present output, but he has mortgaged the output of future generations by eating the capital that took generations to accumulate.
In the name of a right that does not exist within the laws of nature, man has forced acceptance of paper that represents nothing but costs everything, he has bought, spent and promised at an exponential rate, creating in the process the greatest debt pyramid in the history of the world, refusing to acknowledge that these debts must ultimately be paid in one form or another. Minimum wages that deny employment to the unskilled, socialization of schools that smothers diversity and discourages innovation, rent control that consumes housing, extortion through transfer payments, and stifling regulation of markets are all man’s political attempts to repeal the natural laws of economics and sociology, and thus of nature. The familiar results are crumbling buildings and rotting railroads, bored and uneducated students, reduced capital investment, reduced production, inflation, stagnation, unemployment and ultimately widespread resentment and unrest. Institutionalized policies such as these create increasing instability and have the power to turn a nation of conscientious producers into a private sector full of impatient gamblers and a public sector full of unprincipled plunderers.
When the fifth wave of the fifth wave tops out, we need not ask why it has done so. Reality, again, will be forced upon us. When the producers who are leeched upon disappear or are consumed, the leeches who remain will have lost their life support system, and the laws of nature will have to be patiently relearned.
The trend of man’s progress, as the Wave Principle points out, is ever upward. However, the path of that progress is not a straight line and never will be unless human nature, which is one of the laws of nature, is repealed. Ask any archaeologist. He knows.
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