Keynes and Copernicus: the debasement of money overthrows the social order and governments

The United States Senate moves toward the confirmation of Janet Yellen, now posited for next January 6th, as chair of the Federal Reserve System. Let us in this moment of recess reflect on eerily similar observations by two of history’s most transformational figures:  John Maynard Keynes and Nicolas Copernicus.

One of Keynes’s most often-cited observations, from his 1919 The Economic Consequences of the Peace, chapter VI, contains an indictment of policies very like those which the Federal Reserve System has been implementing for the past dozen, and more, years.  These policies in slow motion are, in the opinion of this columnist, at the root of  the very political, social, and cultural dysphoria — uneasiness or generalized dissatisfaction — predicted by Keynes:

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

An almost identical point was made almost four centuries before Keynes by iconic savant and polymath Nicolas Copernicus.

Copernicus commenced a study composed for the Prussian and Polish governments around 1525, On the Minting of Money, with these words:

ALTHOUGH THERE ARE COUNTLESS MALADIES that are forever causing the decline of kingdoms, princedoms, and republics, the following four (in my judgment) are the most serious: civil discord, a high death rate, sterility of the soil, and the debasement of coinage. The first three are so obvious that everybody recognizes the damage they cause; but the fourth one, which has to do with money, is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.

This does not imply plagiarism by Keynes.  The coincidence between Keynes’s “[To debauch the currency] engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose” and Copernicus’s “[The debasement of coinage] … is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way” is, however, striking.

Keynes, like Copernicus a paradigm-shifter, was himself extraordinarily erudite.  It is not impossible the young Keynes came across Copernicus’s work (which reportedly was first actually published in 1826).   The question as to whether Copernicus’s Essay may have inspired Keynes’s observation must be left to authentic scholars such as Lord Skidelsky.

The similarity may be merely that of “great minds working alike.”  This columnist has found but one direct reference by Keynes to Copernicus.

Keynes (whose thinking was mostly, although not exclusively, opposed to the gold standard) was fascinated by one of Copernicus’s most accomplished scientific successors, Sir Isaac Newton.  Newton, also, achieved iconic status, both for his contributions to physics and, as Master of the Mint of Great Britain, as the architect of the modern classical gold standard. Newton’s gold standard was designed along Copernican principles of close correlation toward nominal and intrinsic value.  It served the world very well for almost 200 years.

Keynes was to have addressed the Royal Society of London’s gathering to celebrate the tercentenary of Newton’s birth, an event delayed by the war.  Keynes died a few months before he could present his remarks.  Maynard’s remarks, Newton, the Man, were presented by his brother Geoffrey (and thus might even be characterized as Keynes’s last words).  A brief excerpt:

Why do I call [Newton] a magician? Because he looked on the whole universe and all that is in it as a riddle, as a secret which could be read by applying pure thought to certain evidence, certain mystic clues which God had laid about the world to allow a sort of philosopher’s treasure hunt to the esoteric brotherhood.

[H]e became one of the greatest and most efficient of our civil servants. He was a very successful investor of funds, surmounting the crisis of the South Sea Bubble, and died a rich man. He possessed in exceptional degree almost every kind of intellectual aptitude – lawyer, historian, theologian, not less than mathematician, physicist, astronomer.

As one broods over these queer collections [of Newton’s alchemical writings, which Keynes collected], it seems easier to understand – with an understanding which is not, I hope, distorted in the other direction – this strange spirit, who was tempted by the Devil to believe at the time when within these walls he was solving so much, that he could reach all the secrets of God and Nature by the pure power of mind Copernicus and Faustus in one.

As for Copernicus, On the Minting of Money has been translated into English several times yet those translations remained difficult to obtain for students of the monetary arts and sciences.  It has remained mostly the property of elite historians.  Scant and intriguing references were limited to all-too-brief articles such as “Treatise On the Minting of Coin and Copernicus views on economics” by Leszek Zygner of  Nicolaus Copernicus University.

The full text of Copernicus’s fascinating and invaluable essay remained elusive, that is, until last month.

Laissez Faire Books published a meticulous and fresh English translation from the Latin, with prefatory remarks, bibliography, and invaluable critical apparatus by classicist Prof. Gerald Malsbary. (The volume was co-edited by this columnist and by his  fellow columnist Charles Kadlec, with a foreword by Reagan Gold Commissioner Lewis E. Lehrman, whose eponymous Institute this columnist professionally serves).

From Prof. Malsbary’s Prefatory Remarks to Copernicus’s Essay on Money:

NICOLAS COPERNICUS the astronomer embodies the modern scientific ideal: the revolutionary revealer of a new, verifiable scientific theory that shocks our conventional perceptions. However, it is not very widely known, outside of Eastern Europe at least, that Copernicus also spent about twenty years working on economic theory. His treatise On the Minting of Money (Monetae Cudendae Ratio), was first printed in 1826, three hundred years after its composition in 1525–1526. At the time, the semi-autonomous ecclesiastical region between Poland and Prussia where he lived (Varmia) was undergoing a political and economic metamorphosis, and his judgment and expertise (a fruit of the best late Scholastic and Humanist learning) was summoned by the Prussian and Polish governments to help stabilize an inflated currency. Was his insight into monetary matters as revolutionary as his astronomy?

Keynes: “The process [of debauching the currency] engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”  Copernicus: “[The debasement of coinage] … is noticed by only a few very thoughtful people, since it does not operate all at once and at a single blow, but gradually overthrows governments, and in a hidden, insidious way.”

Malsbary: “Was [Copernicus’s] insight into monetary matters as revolutionary as his astronomy?” In a word, yes.

Madame Yellen?  Whether one follows Keynes or Copernicus … it is time to return to the principle of meticulous monetary integrity — as exemplified by the classical gold standard — to restore legitimacy both to to the social order and to government.

This article was previously published at


  • Oorrigan says:

    Shame that, as usual, Keynes was BSing – there is no record anywhere of Lenin ever having said anything like this, but then facts never intruded upon our man’s penchant for glib statements.

    And, forgive me, but did Newton not get wiped out in the Bubble? ‘ I have learned to calculate the movements of the celestial bodies , but not the madness of men’ and all that?

    Otherwise, all very true, of course: dishonest money is the root of all evil.

  • Several hundred words from Ralph Banko just to tell us that excessive inflation has serious repercussions. I think we all worked that out.

    On the other hand a steady two or three percent inflation doesn’t do much harm. In fact it amounts to a tax on those who have large amounts of money sitting in the bank, but cannot think of anything to do with it. I’m all in favour of that tax.

    • Craig Howard says:

      In fact it amounts to a tax on those who have large amounts of money sitting in the bank, but cannot think of anything to do with it. I’m all in favour of that tax.

      Mr. Musgrave, as well as being gravely wrong about the dangers of monetary inflation in general, also apparently believes in the old fallacy that money just “sits” in the bank.

      Can he possibly believe that all the while making comments on sophisticated monetary discussion boards?

    • 2% inflation means that your savings half in purchasing power every 35 years – the approximate working lifespan. 3% it halves in 21 years. This is money, pensions, savings that have had tax paid on and have been forced to accept as legal tender are unable to realistically save in any other form, routinely causes hard working fixed income pensioners to live in penury wondering why their hard work and going without failed.

      Only a ‘monster’ a sociopath (as Ayn Rand put it) could agree that is a satisfactory outcome.

      • Jamie says:

        Your savings only halve in value if you put them under the mattress (or I suppose for some pensioners who have fixed annuities but this would not be over 35 years generally, and you refer to a working lifespan i.e. not pensioners). If you invest your savings in a mixture of shares, bonds, or even a building society account, then your savings would grow over most periods of the past 50 years in real terms, making you better off, not worse off, over that period.

  • Paul Marks says:

    As usual Ralph Musgrove is an error.

    In fact an “inflation rate” of zero (calculated by some price index) may do vast harm – after all prices in the shops and so on (all a price index measures) did not go up when Benjamin Strong’s (New York Federal Reserve massive credit money inflation of the late 1920s – yet this was the cause of the boom-bust that led to the Great Depression.

    More recently Mr Greenspan defended his credit-money monetary expansion (the old definition of the word “inflation” – before the “price index” nonsense of Irving Fisher) on the grounds that prices were not going up much in shops.

    The credit money expansion that is the cause of the present crises – which will get worse (a lot worse)

    Frank Fetter refuted this stuff about monetary expansion being O.K. as long the “price level” was not rising – he refuted 80 years ago.

    Yet it is still being trotted out – and I find it rather irritating to see it here.

    “I’m all in favour of that tax” – meaning a de facto tax on people who save (savers being hated by Collectivists – Fascist as well as Communist).

    Then you should not be here Mr Musgrave.

    This is a site for people who believe that lending should be from real savings – not from credit-money bubbles.

    Whether they are “Red” monetary expansions, or “Black” ones.

  • Paul Marks says:

    As for debasement.

    If only we lived in such innocent days.

    Then (in the time of the great astronomer) any person (who gave it a thought) could tell good money from bad – and “bad money drives out good” only when the Exchange Rate is rigged (“fixed”).

    Today all money is debased (utterly so).

    • John Spiers says:

      If money is properly defined, then it cannot be debased, but what we commonly call money today has been so stretched to cover the whimsical and ludicrous, that yes, utterly debased.

      I wish we would use terms properly, so we would understand better, think more clearly, and express more precisely.

      Happy New Year!


  • Paul Marks says:

    Too possibilities Mr Howard – either Mr Musgrave knows perfectly well that what he wrote is absurd (in which case the fool is ME – as I let him “wind me up”, under my respectable Jewish family name the wild Irishman is always fighting to get out).

    Or Mr Musgrave really does not know what he wrote was absurd – even after all this time (for example the Alan Greenspan mess – “but there is not much inflation, so my policy can not be doing any harm……”) in which case the gentleman should not be here.

  • Craig,

    I’m well aware of the fact that not all money placed in a bank just “sits” there: i.e. the bulk of it is loaned on while some just sits there. I left that point out of my above comment for the sake of brevity.

    The above two types of deposit are well and truly mixed up under our existing system, which means that banks can make risky loans by using money that is supposedly just sitting there and is supposedly 100% safe. The distinction between money that is for safekeeping and in contrast, money which depositors want loaned on is completely open and explicit under the banking system advocated by Positive Money, Lawrence Kotlikoff and others.


    Re your objections to a tax on savers, I’m afraid the entire taxation system is riddled with taxes on savers. E.g. capital gains tax is a tax on the profit that savers make with their savings. Savings in the form of housing / property is taxed: the more valuable your house, the more council tax you pay. And third, Estate Duty is a tax on savings.

  • Paul Marks says:

    Mr Musgrove – your idea that monetary expansion is not harmful if there are “stable prices” (or prices going up by “3%”) is false.

    Even if you reject economic theory, it is hard to see how you can also reject the practical experience of the consequences of a “non inflationary” monetary expansion in 1921 and 1929 (both of which astonished Irving Fisher – and were exactly what Frank Fetter had predicted) as well as 2008.

    As for the idea that existing taxes on savings justify an inflation tax on savings – or that money lent at interest is “doing nothing”……

    “Words fail me Conscript Fathers….”

  • chuck martel says:

    Maybe I’d like to leave my “large amount of money sitting in the bank” to provide me with the liquidity to make a purchase at short notice or to give me a little insurance for some unforeseen emergency, like a colonoscopy or a blown piston on my garden tractor. Nevertheless, it’s my money, my savings, and no one anywhere has the right to diminish it through monetary manipulation just as no one has the right to simply steal it off my kitchen counter.

  • Thomas Jefferson:-
    “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

  • Paul Marks says:

    Thomas Jefferson was a hard money man (gold and silver coin) – so I do not see him talking about an “issuing power”.

    As for whether the “issuer” is owned by the government or not….

    The Bank of England has been 100% government owned since 1946 – did not improve it (if anything made it worse).

    Putting the banks totally under the government thumb? Both Argentina (Peron) and France (in the early 1980s) tried that – did not do good.

    It is the POLICY of monetary expansion (of trying to fund lending other than by REAL SAVINGS) that is the folly – not whether the government or private crooks are doing it.

  • Paul Marks says:

    Yes Ayn Rand had a way with words.

  • Paul Marks says:

    Yes John – that is the correct quote (similar – but with important differences).

    And by “banking establishments” was not meant an ordinary bank – but a government backed central bank a “Bank of the United States”.

    The apple of Mr Hamilton’s eye.

    Which Jefferson (and most other people) opposed.

    A bank which is above the normal laws of contract and is linked (even when not owned) by the government.

  • Paul Marks says:

    Yes John – we need to get away from these special names (“Dollars”, “Pounds” and so on) and get to objective language, certain weights of commodities of certain levels of purity.

    Physical descriptions – not political ones.

  • Ralph Benko says:


    Two eminent monetary scholars, Michael V. White and Kurt Schuler, published in a 2009 issue of the Journal of Economic Perspectives “Retrospectives: Who Said ‘Debauch the Currency': Keynes or Lenin?”

    It is very thoughtful and concludes persuasively that Keynes had good grounds to believe that Lenin did, in fact, make the attributed statement.

    This has been a matter of some controversy and I flag it as of possible interest for you.

    Tally ho!

    Ralph Benko
    Washington, DC

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