John Steward of Jesus
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The Racetrack

April 2, 1981

To keep its profitable racetrack open, the authority which “creates” money must always have some of us saving imaginary “dollars,” and others of us borrowing “dollars” for spending.

To prevent runaway inflation, it must persuade some of us to increase our “dollar” savings, and thus to postpone the day when we will receive real wealth.

The means of persuasion include tax incentives for life insurance, Keogh plans, IRA plans, pension plans, municipal bonds, and capital investments, as well as ever higher interest rates, which all create the illusion of ever greater rewards for those who wait for the wealth they have earned. Patriotic war bonds are excellent means.

At the same time, to prevent a crashing deflation, it must persuade others of us to borrow and spend “dollars,” to promise to do whatever work will be necessary to obtain the borrowed “dollars” plus interest when due, and to pledge our real wealth as security for this promise, either directly or through taxes.

The means of persuasion include interest subsidies, guarantees, insurance funds, tax incentives, and lower interest rates, all to stimulate borrowing by mortgagors, students, farmers, small businesses, crippled industries, crippled cities, institutions, foreign countries, unemployment funds, and especially the federal government. Patriotic wars are excellent means.

Just as a racetrack operator whose patrons have lost their assets might accept work pledges from those patrons, while persuading the winners to save their winning tickets until a later payoff date, so the authority which “creates” money must obtain new promises to work, while persuading those who have already worked to save their “dollars” until a later payment date.

So long as we are working to pay debts, and saving “dollars,” the races will go on,

When we realize that the result of all our work is that real wealth is disappearing while the number of is increasing, we will stop placing bets at the racetrack.

Much of the wealth produced by the workers who are now saving “dollars” has disappeared, and those working today are directly or indirectly committed to work longer than the rest of their lives to pay all the debts.

Soon the ridiculous and tragic impossibility of keeping the racetrack open will become apparent to all, and people everywhere will experience the greatest financial crisis since the dawn of history.

Whether the crisis comes through inflation or deflation will depend on whether the savers or the borrowers are disillusioned first.

Who bets correctly on the terminal race and claims the wealth of racetrack patrons will depend on which of these trends becomes dominant: (1) We try to buy real wealth with our “dollar” savings, or, (2) We stop pledging real work and wealth to borrow “dollars.”

Interest rates may trigger the starting gun for the final race at the track. Low interest rates will discourage savers and trigger the gun for runaway inflation, with the dollar prices of goods racing along an endless track into the sky. High interest rates will discourage borrowers and trigger the gun for runaway deflation, with the dollar prices of goods racing into the chasm toward zero, as all “dollars” vanish in payment of debts to the racetrack.

The starting guns are loaded. The jockeys are mounting the horses. The officials who select the starting gun are studying the latest public opinion polls. The patrons are studying the odds and placing their bets. Some have changed their bets. The stakes and the risks are high. The crowd is restless.

Meanwhile, those who choose not to risk their futures at the racetrack should think in terms of real wealth rather than in terms of betting tickets called”dollars.”

The outcome of the final race will not destroy the family which has no debts and has put its savings into food, grain, livestock, clothing, housing, land, machinery, tools, gold, silver, or other forms of real wealth. These are the fruits of productive labor.

If we remain a free people, then, when the racetrack operators ask for their grand reopening, either the borrowers or the savers of “dollars” will be financially crlppled, if not ruined.

My prayer is that, through a remnant of self-reliant, freedom-loving, benevolent people, God will preserve liberty.