Historical Response #21: Ellen Brown Still Refuses to Offer Statistical Evidence Regarding Money and Prices on the Island of Guernsey.
Ellen Brown cited a beloved myth of the Greenbackers, the island of Guernsey, which supposedly has had fiat money and no price inflation for 200 years. I pointed out that she offered no proof. Here is what I wrote.
The Greenbackers have cited Guernsey for over 70 years. They picked a tiny island for which no detailed price studies exist, and then drew huge conclusions. If you go to Wikipedia's article on Guernsey's currency, you will read this.Until the early 19th century, Guernsey used predominantly French currency. Coins of the French livre were legal tender until 1834, with French francs used until 1921. . . .In 1827, the States of Guernsey introduced 1 pound notes, with the Guernsey Banking Company and the Guernsey Commercial Banking Company also issuing 1 pound notes from 1861 and 1886, respectively. The commercial banks lost their right to issue notes in 1914, although the notes circulated until 1924. Also in 1914, the States introduced 5 and 10 shilling notes, also denominated as 6 and 12 francs.
So, Guernsey used French money in the era of "no inflation." It also used commercial bank notes. The Greenbackers always neglect to tell us these details. The story of Guernsey's pure fiat money flies away into the land of convenient and unverifiable legends.
In short, I said that the Greenbackers have never offered any statistical proof for the existence of this supposedly debt-free, government-issued, pure paper money nation that has never experienced price inflation. Guernsey is a fairy tale for grown-ups. It is fake. I think my position was is clear. She tries to make it unclear.
21. The island of Guernsey had fiat money without inflation.Your link is bad.
What are you claiming I said, it had no price inflation or there was no inflation of the money supply? Here is how my text reads, and I believe it is correct (a modest price inflation is not considered "troublesome"):
During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.6
First, she said that I provided a bad link. She did not say which one. I offered two links. Both were live when I posted them. I checked today (Nov. 2, 2010). Both are live.
Second, in her response, she still offered no evidence. She did refer to her original footnote #6. Let's pursue this.
She originally cited a 2001 article by David Kidd. She gave its title in the footnote, but no book or magazine where it was published. She offered only a link. That link is dead.
She posted her response to me in early October 2010. By then, she knew the original link was dead. How do I know this? Because, in an August 4, 2010 article on the Left-wing Huffington Post site, she referred to the Kidd article. She put a link to it from the Archive.org cite, which is a repository of dead articles. Here is the link:
Third, what evidence did Mr. Kidd offer back in 2001? None. He wrote only this:
A little place that has escaped the clutches of the banks by issuing its own interest-free money is the little island of Guernsey. By controlling its own money supply from 1816 onwards, Guernsey was able to avoid the century old trap of borrowing when it didn't have to. The island has had a stable and prosperous economy for over one hundred and fifty years. Guernsey's income tax is only a "flat" 20%. It has no public debt, no GST, no VAT, no inheritance tax, no capital gains tax, and almost no inflation.
Greenbackers quote each other, as if this were proof of anything except their lack of primary source documentation.
Who is David Kidd? Just another Greenbacker. He also wrote:
Government Issued, Debt Free Credit: Most problems would be overcome if the government simply issued credit, like it does with banknotes and coins, debt free. Especially when the government itself is the borrower. It already has the constitutional power to do so. Why it should have transferred this lucrative right to privately owned banks is difficult to understand unless things like bribery and blackmail are considered. Conspiracy theorists point out that two American Presidents, Abraham Lincoln and John Kennedy were both assassinated whilst they were attempting monetary reform.Nationalising the Banks -- bringing them under government ownership and control - appeals because amongst other things it could result in banking profits being shared by all the people.
This is the same old stuff: Abrahan Lincoln, the Greenbacker (not true) and President Kennedy, the Greenbacker (not true).
Is Kidd an economist? No. Is he an historian? No. He is supposedly an engineer and a computer programmer. http://dkd.net On his personal page, in his long list of interests, he does not mention monetary theory, nor does he say where he graduated from college as an engineer. There is a picture of him driving a go-kart. http://dkd.net/davekidd/dkiddp.html
Fourth, her other source is a brief reference to Guernsey in an obscure book on America and Third World debt, written by a British Greenbacker. He cited no primary sources on the statistics of Guernsey's money supply and its price level, as denominated in the local currency and the other currencies that were used in Guernsey.
Once again, I am calling for evidence that is based on a detailed history of Guernsey's monetary statistics and prices, written by a trained economic historian or a statistician. Until then, the story of Guernsey's 200 years of debt-free pure fiat money -- government-issued paper, not bank notes -- and stable prices remains a fantasy tale promoted only by Greenbackers.