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The Eve of the European Revolution

The following article by Benjamine Fricke, IWP Class of 2013, was published by the Political Developments Research Center.

The post-communist world is changing and we are witnessing the end of the post-World War II order for the West. The past 70 years of peace and stability in Europe lasted longer than the order created by the Congress of Vienna; however every order will eventually fail through the decadence it inevitably creates as a byproduct.

Every order needs an economic and a power base to protect and justify its existence. Every revolution was brought about by poor socio-economic management and a rupture between the people and the ruling regime. The French Revolution is a formidable example of how much financial illusion can change a whole continent forever. The economic trigger for the French Revolution began in 1716 when John Law, a Scottish financier, convinced the French government to grant him permission to establish a bank which could issue paper money backed by precious metals, such as gold and silver. The French government welcomed this tremendous inflow of money because the royal coffers were nearly empty due to the extensive amounts spent on war and Louis XIV’s opulent lifestyle. Law convinced the French nobility to invest in bonds issued by his bank which were ostensibly backed by the existence of gold in the Louisiana territories, a French colony at that time. Of course there was never any gold found in Louisiana and the French nobility ended up drained of their resources and destitute. This became known as the Mississippi Bubble.

While we have enough distance today to wonder how such a scheme could work we see it happening again every day in the eurozone. Increasingly more fiat money is being pumped into the economy without any backing from real assets. Today we are witness to a new type of inflation that had not been discussed openly before: an asset and government bond inflation. The stock market is shooting to new highs and greater amounts of money are invested in financial products every day. Yet, paradoxically these are but symptoms of the eurocrisis, and of a dysfunctional economic and financial system globally and in the eurozone in particular.

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