note:  John Law is considered by many
to be the father of monetary inflation. 
He is also considered to be
the father of modern finance.
Because I am writing on the subject
of monetary inflation,
I thought it only proper
to begin with John Law
and his Mississippi "land bank"
as a further introduction
to this subject,
as follows:

I was about fifteen years old
when I received,
what I thought to be,
the oddest and most useless
Christmas present imaginable.

It was from my new step-father
with who I was to have a very stormy relationship
for the next several years,
until we made peace with one another,
permanently and genuinely.

It was a book.

I was known to be a voracious and avid reader
from the time I was about five years old.

I couldn't get enough books
and I was a maniac for learning
as much as I could
as fast as I could
(that hasn't changed).

The title of the book was:

Extraordinary Populare Delusions
and the Madness of Crowds
by
Charles Mackay, L.L.D,
first published in 1841.

I sort of took it as a reference to me.

That is to say that I was insane
and should read up on the matter.

Such that I was more insulted rather than appreciative
to receive such a gift.

A good example of youth being wasted
on the young,
if ever there was one.

The book sat in my room,
in a pile of numerous other books
on far more interesting subjects,
at least where I was concerned,
at that time.

Then one day I finally picked it up
in order to figure the full import of the insult
which I thought had been hurled at me.

Imagine the shock
as I opened the pages
and read the following excerpt
which I shall quote,
about my direct lineal ancestor,
John Law.

How direct?

Well, my maternal grandfather
bore the name "Law"
as his middle name.

His initials were JLH,
with the L standing for Law.

That was the maiden name of his mother.

Very direct, as it turns out.

So, I was immediately captivated
upon seeing my great, great, great
(and some more greats)
Grandfather described as follows,
on the very first pages of the book:

"The personal character and career of one man
are so initimately connected
with the great scheme of the years
1719 and 1720,
that a history of the Mississippi madness
can have no fitter introduction
than a sketch of the life of its author John Law. 
Historians are divided in opinion
as to whether they should designate him
a knave or a madman. 
Both epithets were unsparingly applied to him
in his lifetime,
and while the unhappy consequences
of his projects were still deeply felt. 
Posterity, however,
has found reason to doubt
the justice of the accusation,
and to confess that John Law
was neither knave or madman,
but one more deceived than deceiving,
more sinned against than sinning. 
He was thoroughly acquainted
with the philosophy
and true principles
 of credit. 
He understood the monetary question
better than any of his day;
and if his system fell
with a crash so tremendous,
it was not so much his fault
as that of the people
amongst whom he had erected it. 
He did not calculate the avaricious frenzy
of a whole nation;
he did not see that confidence,
like mistrust,
could be increased almost ad infinitum,
and that hope was as extravegant as fear.
How was he to foretell that the French people,
like the man in the fable,
would kill,
in their frantic eagerness,
the fine goose he had brought
to lay them so many golden eggs?
HIs fate was like that which may be supposed
to have overtaken
the first adventurous boatman
who rowed from Erie to Ontario.
Broad and smooth was the river
on which he embarked;
rapid and pleasant was his progress;
and who was to stay him in his career?
Alas for him! the cataract was nigh.
He saw, when it was too late,
that the tide which had wafted him
so joyously along
was a tide of destruction;
and when he endeavoured to retrace his way,
he found that the current was too strong
for his weak efforts to stem,
and that he drew nearer every instant
to the tremendous falls.
Down he went over the sharp rocks
and the waters with him.
He was dashed to pieces with his bark;
but the waters,
maddened and turned to foam
by the rough descent,
only boiled and bubbled for a time,
and then flowed on again
as smoothly as ever.
Just so it was with John Law
and the French people. 
He was the boatman
and they were the waters."

Knave or madman?

Yes, that is the question, NOT!

For time has proved him both right and wrong
time and time again.

He was just another
who was so far ahead of his time
and so far ahead of his fellow men
that they did not know what else to call him
other than "crazy".

So, without intending to,
John Law had laid down
the means and methods
which have been used by the,
so-called Federal Reserve Board,
ever since.

Their claim being that they could
tame,
calm,
and control
the wild animal spirits
which sit locked up inside of every human
until some type of stimulus
strikes against them
and causes them to show
what had been hidden deep inside
for the entire time.

Fear and greed.

Both able to get so out of control,
so fast,
as to make one shake their head
in astonishment
at seeing such a sight.

Ever since he showed what could be done
with a little bit of financial alchemy
everyone else has wanted to get on board
to learn just what it is that he knew,
that made him so fabulously wealthy
during his lifetime.

As a matter of little known fact,
he is the one where the term
"millionaire" originated from.

For that was his nickname,
"The Millionaire".

That was long before the currencies
became so debauched
that a million is far less
than it was in his day.

Today he might need to be called
"the trillionaire".

But following him,
everyone who had considered the matter,
wanted to become a millionaire
and a new word found it's way
into the common parlance,
with no one ever even considering
where the word originated.

Because he provided the foundations
and the blueprint for everything
which has transpired since,
I think it may be worthwhile
to stop for a moment
and to look at exactly how his system worked,
so that we may see better
what it has evolved into
since his day.

So, with that introduction,
it is time for me to get a cup of coffee,
and to get some work done,
following which I hope to return
and to tell you more
about the machinations
of this early genius of modern finance.


vw

6-17-13
10:36 a.m.
Monday
Ventura, California, USA