Other elementary texts will continue to be effective in conveying economic basics, but Peter Schiff and his brother, Andrew Schiff, have a story to tell, an extension of a tale first developed by their father, Irwin Schiff. There’s nothing quite like a story to get people turning the pages. FULL ARTICLE by by George F. Smith
Source link: http://archive.mises.org/14465/how-an-economy-grows/
How an Economy Grows
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After reading Schiff’s book … I decided that it would be the easiest way to introduce my son(13 years old) to Austrian Economics. He couldn’t put it down and finished it in a day. This sparked many great conversations and questions. Once he had finished it I proudly explained to him that he now understood more about economics than most of those in our Federal Government including our president. It also served as a starting point to explain Natural Law, non aggression principle, etc.
My daughter is six and she knows more about economics than Obama.
Do you mean that literally? I’m sure you don’t. So w hat do you mean? The difference between a six year old and an adult is that adults understand that answers are never easy or obvious.
How does gold-based money work in a growing world economy? Current per capita gdp is about $3000. Does the supply of gold have to change proportionally if world gdp goes to $30k per capita? What do you do about fractional reserve banking. How does limited money affect velocity (10x in my example) and is that important? How about deflation with constant money chasing 10x gdp?
Why would supply have to change? All that would happen is that one ounce of gold would buy 10x more goods, but more likely a system of competing currencies would expand supply up to the level of demand. Full reserve banking is not incompatible with credit, it is simply a more honest way of doing it.
You’re right in that the velocity of money would be much higher if we bundled it up and dropped it from helicopters. What’s the terminal velocity of a bundle of 100s anyway?
After 1492 Spain grew her economy by raiding South and Central America. After the 1776 rebellion the US grew her economy by killing the Indian People and stealing their assets and land. T%hen cam “Manifold Destiny” and the Monroe Doctrine under which we pragmatically stole assets from the “Banana Republics.”
England stole from India, China, and Africa. The Dutch stole from the East Indies . . . thats how national economies grow – mostly by theft of labor and assets.
So the average person in Spain was better off because of the raids of South and Central America? How so, what did that provide them exactly? Those who actually did the raiding and had gold due to this were able to purchase more things but the inflation from all that raiding drew goods away from others who would have bought them instead.
The same applies to your note about the US and to the European colonization. There was certainly enough land that was unclaimed for individuals to have done what they needed to have a better livelihood.
On the question of “theft of labor” while I certainly recognize that slavery had some benefits I think the costs probably outweighed them from the beginning. The proof of this is that when government stopped subsidizing slavery by catching the slaves in other countries slavery ended on it’s own. And even in slavery the slaves still had to be fed and tended to in some way. Due to the lack of incentive on their part, they almost certainly didn’t work as hard as they would have in their own interest either.
While theft may benefit the thief in the short run the long run effect is that both sides suffer. While people can misuse their freedom to take advantage of others, both sides lose. However, this in no way undermines the Libertarian approach to economics. This is why the government can serve a good purpose, to uphold personal property rights and liberties.
The reason theft never works in the long run is because it is actually a waste of resources. Remember, people are the most valuable asset that a nation possesses. In addition, the variety of cultural and intellectual resources are lost when one group over comes and decimates another group. In this way, both sides lose. Nevertheless, I will reiterate that theft is not part of the Libertarian economic approach and does not invalidate the premise it is based upon.
In conclusion, economies do not grow, in the long run, as a result of theft. You are not taking into account the opportunity cost that is suffered by the apparent victor. There is always a cost paid. In the case of theft a positive relationship of free trade with another people group that has their own resources to benefit both groups is lost.
So the US government and the white people did not benefit from the theft of the Americas? Dream on, man… this is where Rettoper gets it right.
No, we didn’t benefit from the “theft of the Americas” which is a ridiculous statement.
While I absolutely disagree with the forced migrations that were done this wasn’t the way the majority of land was put into use by “white people” in the US. Much of that land was not being used just as much land even today is not in use by someone. First-use or homesteading rights was the primary method of claim, which is entirely legitimate.
On the matter of the forced migrations and the land that was actually stolen, I disagree that it was a net benefit. If instead of stealing the land/property/etc. white people had coexisted and traded with Indians voluntarily more often it would have been to their benefit much more than what actually occurred. You are looking only at the positives of stealing land, without any of the negatives. “White people” had to endure many acts of aggression from Indians due the aggression of their own stupid government.
Only with your false notion that Indians owned every piece of the continent can you determine that we benefited from the theft.
The hunter-gatherer tribes maintained their forage by physical violence against other tribes. Then the Anglo’s came and bested them and set up a formal system of title recognition. Boo effing hoo.
“Theft” is a term slung around by sentimentalists who, ironically, would probably not last long as hunter-gatherers.
A much underconsidered part of economics is the role of technological progress. However much the free market may be shown to have worked in this story none of it would have succeeded had the original inventor, comined with others of his ilk, not invented things from fishing nets to automatic mass water pumping (& desalination) plants. Hopefully in future the island will be able to afford to launch solar power satellites & will not find the government banning GM foods.
Thanks for the summary and review. I already have bought multiple copies of this great, great book. I do plan on introducing it to my children, and/but I don’t know a single adult who I know who doesn’t benefit from taking the two hours to read this fun and interesting book.
If you have a general fall in prices, you must have a drop in wages as well.
But I agree with you that it is a good kid’s book and leave it at that.
If productivity is increasing, wages do not have to go down with prices.
If prices decrease then one should not need as high of an income to purchase the same goods. However, Greg has a valid point. Wages do not of necessity have to decrease just because their is a decrease in prices. This is a fallacy that is postulated by the modern economists, that deflation is bad for an economy. If production is increasing due to innovation then naturally deflation would result.
Peter Schiff might be onto something with the fish-backed money idea: Only accept banknotes that smell like fish!
Would I be wrong to guess that “Mrs. Paul” plays a major role in Usonia’s financial world?
http://www.mrspauls.com/
“We can either return to gold or we can pursue the fiat path and return to barter.”
Murray Rothbard
Could Murray really have said something that dumb?
1) Government money need not and should not be backed by anything other than its taxing authority otherwise the government would be favoring a private money or private money form such as precious metals over other private money forms such as common stock. Furthermore, government money should only be legal tender for government debts (taxes and fees), not private ones.
2) Private monies should only be good for private debts not government ones.
Government is force and the private sector is voluntary cooperation. It is morally impossible for them to share a single money supply be it fiat, gold or whatever.
Oh the genius! Simply breathtaking!
Had you considered that Murray Rothbard really isn’t the one that’s “dumb”?
Sione
Had you considered that Murray Rothbard really isn’t the one that’s “dumb”? Sione
No, Rothbard wasn’t dumb but I am beginning to suspect he may have suffered from a cultural fixation with gold which after all is just a shiny, scarce metal with limited industrial use. Gold fever does seem to be a legitimate pathology.
BTW, I learned a lot from Rothbard, a favorite of mine, but I’m learning a lot more from Moses, Solomon and other prophets of the Old Testament. It’s strange that the Austrians (many of whom I presume are Christians) prefer agnostic Jewish economists to believing ones such as Moses who preached against usury (between fellow country men) and for debt forgiveness.
Economic laws are agnostic, just like the laws of physics are agnostic. If you step off a high cliff you will likely get injured or die. If you control prices, of which interest is an example, you will get predictable results. If you look through the Bible, Old Testament or New, you will find every economic law operating just as they do now. There were reasons for Moses preaching against usury, but that didn’t change the results of abusing the economic laws. My favorite economic lesson in the Old Testament is in 2nd Kings, when Samaria was under seige, highlighting the tremendous power of supply and demand on prices. The bible is not an economic treatise, but if you look at it from an economic perspective, you can find all of the economic laws in action.
The problem with much of religion is that good intentions are substituted for economic reasoning, knowledge of reality, and the laws which govern nature and society. When bad methods are combined with good intentions, the results will always be bad results. Whether you look back to ancient Summeria, the Roman Empire, 18th Century England or contemporary America, the results are the same. The Ten Commandments fall right in line with libertarian principles. Life, liberty and property are firmly embedded there.
Nothing that the agnostic Mises proposed ran counter to the Ten Commandments or the requirements of Christian faith.
“WTF” = World Tennis Federation?
Common stock is a private money form that does does require borrowing or lending, much less at interest. Rather than reap wealth, it shares it at the same time as it consolidates it for purposes of scale. As for government, it is absurd that it ever borrow what it can issue debt and interest free.
Sorry Dan. the above comment was meant for Daniel below.
typo: “does, does” should be “does not”
The problem with much of religion is that good intentions are substituted for economic reasoning, knowledge of reality, and the laws which govern nature and society. Dan McLaughlin
In the case of the Bible, I have yet to find anything that contradicts sound economics and it says a lot about economics such as (off the top of my head):
1) loaning at interest to one’s fellow countrymen.
2) honest weights and measures
3) inflation
4) hoarding of money
5) food speculation
6) the importance of generosity
7) debt forgiveness
8) the importance of diversification
9) the folly of centralized government (1 Samuel 8)
10) the separation of government and private money supplies (“Render to Caesar”). You might think this is a stretch but it would solve a lot of problems.
11) provision for the able bodied poor (gleaning)
12) other provisions for the poor such as the 3rd year tithe.
13) “Thous shalt not steal”
14) “Thou shalt not bear false witness”
By the way, fractional reserve banking is based on systematic, government backed violation of 13) and 14). Now wonder it leads to serious problem.
As for usury, it is 1) mathematically impossible after a while and 2) unnecessary with a more modern money such as common stock.
Agreed, any good currency is that which the market chooses. If it’s gold then fine, if it’s something else then why not.
I’m afraid some pseudo or misguided libertarians will try to sneak a de facto government enforced precious metals standard through such as requiring them for taxes. Gary North, for instance, said this:
“The government does have the right to establish the form of money that citizens must use to pay their taxes. The government should limit itself to a statement regarding the weight and fineness of the tax coins. If private enterprise produces coins that meet these standards, the government must accept such coins as valid for the payment of taxes. The government lawfully controls the form of taxation; but it should not have any power to monopolize the production of coins. Governments have always asserted this authority, and they have always done so to the detriment of liberty.” Gary North from http://www.lewrockwell.com/north/north895.html
Ron Paul, for all his talk about alternative currencies, only mentions gold and silver that I’ve heard. There are several other potential alternative monies that require no precious metals and in the case of common stock, no usury either.
Usury?
WTF?
Maybe Austrians (even the Christian ones) prefer logic to assertion… I don’t remember Moses studying economics.
Logic is precisely what refutes the use of gold as anything more than a barbaric form of money. For instance, using a commodity for money means that as long as it is used as money it is no longer a commodity and if it is used as a commodity then it is no longer money.
But you might say “No, the purpose of using gold as money is its insurmountable and known scarcity, not its value as a commodity.” OK, except the scarcity of gold has varied widely such as when the Spanish conquered South America and during the California Gold Rush. Also, shall the money growth rate depend on something so seemingly arbitrary as the mining rate of gold?
But then you might say, as Rothbard did, that any reasonable amount of money is adequate since prices will adjust. However, that would give, in the case of a fixed or slowly growing money supply, a perverse incentive to hoard rather than invest money since hoarding would be risk free and investing is not.
Ayn Rand had a gold fetish too despite her so-called logic. A cultural thing it appears to be.
Your “logical” arguments against gold are easy to refute:
“…using a commodity for money means that as long as it is used as money it is no longer a commodity and if it is used as a commodity then it is no longer money.”
One of the several requirements that make a commodity useful as money is for the marginal commodity value derived from exchange to be greater than the marginal value derived from direct use. In a sense gold can be considered as nature’s artwork. Like man-made art it is appreciated more for its aesthetic/sentimental appeal than as a factor contribution in a physical process to achieve a distinct non-aesthetic end. Fungible gold’s measurability, durability, and divisibility allow it to be the artwork most suitable for use in indirect exchange. The first quantity of gold that one holds, being the most highly valued, will likely be hoarded (constituting one’s reservation demand), while any secondary quantities will be used for exchange. In this way an appropriate commodity (such as gold) can be used simultaneously as both money and as the commodity itself, an object of art.
“Also, shall the money growth rate depend on something so seemingly arbitrary as the mining rate of gold?”
A free money-market selection of gold as the commodity money would imply both an increase in its marginal valuation (since the number of tax-free uses for it would rise) and an increase in the rate of gold production. In this circumstance the gold production rate would not be arbitrary. After a long transition period the percentage growth rate of the gold supply should (after making a few simple assumptions) grow to approach that of the growth rate in general physical productivity. The smoothness of the gold discovery rate would depend on the level of gold mining investment and the geographical diversity of the exploration. A universal adoption of gold as money would be optimal for averaging out the variations in local gold investment and discovery rates.
“But then you might say, as Rothbard did, that any reasonable amount of money is adequate since prices will adjust. However, that would give, in the case of a fixed or slowly growing money supply, a perverse incentive to hoard rather than invest money since hoarding would be risk free and investing is not.”
Rothbard’s statement about the market’s ability to adjust to a change in money supply cannot be taken as a statement that the market will be indifferent to volatility in the money supply. This volatility would lead to unanticipated variations in the purchasing power of money and therefore hinder economic calculation. The free market determination of a suitable money commodity would take commodity volatility into consideration: less volatile commodities would be preferred over more volatile commodities. My previous argument shows why gold would be among the least volatile commodities. A decline in money purchasing power variation would naturally lead to a decline in market uncertainty and in money’s reservation demand (i.e. less hoarding). Therefore the selection of gold as the money commodity would not tend to increase the degree of hoarding.
Finally, a regular productivity-driven growth in the free market money supply would not favor hoarding over investment. In this case the two concepts are orthogonal and therefore cannot compete with one another. As the per capita supply of gold and goods rise the marginal value gap between gold’s use for exchange and use as pure “art” widens and the fractional level of “perverse” hoarding will decline. The level of investment is determined completely by the trends in social time preference—trends that in this case would be independent any trend in money hoarding.
Had you considered that you suffer from a fixation with arbitrary religious belief? Religion, after all, is just a set of random myths, fictions, legends, propaganda and sundry disconnected notions melded into any interpretation emotion and bigotry generates, without rational basis or logical use. Religion is an illegitimate pathology.
On the other hand the writings of Von Mises and Rothbard are directly relavant to economics. They are rational and logical and reality based. They are firmly addressed to evidence of reality. They make no demand for blind faith belief, impossible miracles, a super-natural realm of the unreal, suspense of disbelief, mental compartmentalisation, self-deception, double-standards and the like. They do not feature spirit-monsters, hobgoblins, ghosts, angels, magic men, devils, imps and the like running around making impossible stuff up (it is strange that in this day and age people actually profess to believe in such bilge).
Economics is not a social science that takes basis from religion. That is, economics does not presuppose religion. Nevertheless one can to employ economic theory to understand the real effect of the application of such misguided notions as compulsory elimination of interest. Hint: such an approach is a form of theft.
Final point: Moses was nothing more than a regional military tyrant, a torturer and mass killer, in context every bit as evil as Saddam.
Sione
On the other hand the writings of Von Mises and Rothbard are directly relavant to economics. Sione
Yet didn’t they both (I’m not sure about Mises) reach the absurd conclusion that gold should be used as money? Rather than worship the God of the Old Testament (who BTW, is very much concerned with justice, mercy, liberty, kindness etc. as anyone who reads it knows) it seems they have instead constructed a very elaborate justification for worshiping gold!
Nevertheless one can to employ economic theory to understand the real effect of the application of such misguided notions as compulsory elimination of interest. Hint: such an approach is a form of theft. Sione
This is my challenge to the Austrians: Let’s have that free market in private money creation you claim to desire including gold, usury and even fractional reserves but including my favorites common stock and Mike Rozeff’s “Wal-Mart Money” and we will SEE whose money depends on compulsion. It won’t be mine, it will be yours, as Gary North tacitly admits when he wrote that the government should REQUIRE that taxes be paid in gold.
F Beard writes,
“I’m afraid some pseudo or misguided libertarians will try to sneak a de facto government enforced precious metals standard through such as requiring them for taxes. Gary North, for instance,…” and goes on to quote Gary North from a recent article.
Isn’t it true that Gary North is a dedicated. practicing Christian gentleman? Mr Beard may do well to consider. Interestingly, Gary North has written an in-depth commentary regarding economics during biblical times. Is Mr Beard familiar with that? Frankly, the quality of economic scholarship from Gary North is far superior to F Beard’s nonsense.
Turning now to Gary North’s actual comment. He writes,
“The government does have the right to establish the form of money that citizens must use to pay their taxes. The government should limit itself to a statement regarding the weight and fineness of the tax coins. If private enterprise produces coins that meet these standards, the government must accept such coins as valid for the payment of taxes. The government lawfully controls the form of taxation; but it should not have any power to monopolize the production of coins. Governments have always asserted this authority, and they have always done so to the detriment of liberty.”
Mr Beard would do well to consider the context within which the statement resides. Recently I read this,
“Art 1, Section 8 of the US Constitution assigns to the US Congress the power, “To coin money, regulate the value thereof,
and of foreign coin, and fix the Standard of Weights and Measures”.”
Reckon that was what Gary North had adopted as premise for his article? Likely it was.
Again, consider context.
–
While many libertarians are anarchists, they are not exclusively so. Some support the notion of limited government restricted by a strong constitution. It is to be recommended that Beard acquaint himself with libertarian thought and the present debates within libertarianism.
To conclude, it would indeed appear that Mr Beard is the misguided one here.
Sione
Some guy read the entire book “How an Economy Grows and Why It Doesn’t” by Irwin Schiff” on YouTube. Very good. Check it out.
http://www.youtube.com/watch?v=bFxvy9XyUtg
F Beard
There is nothing “absurd” about using gold as money. Your implication is itself an absurdity.
Gold possesses physical attributes which suit its application as a store of value or a medium of exchange- its use as money. There is nothing absurd in employing it in that capacity. Many millions of people have done so for extended periods of time.
The employment of gold as money is not “worship”. There is no “worship” in my exchanging a gold coin with Siotu (at the general store) for a pack of Rothmans. Your implication that employing gold as a store of value, or as a means of exchange, is somehow “worship” is silliness.
You clearly have a very restricted and badly warped understanding of economics. Certainly you don’t have a clue about what the Austrian School teaches. Hint: go read what the Austrian economists actually write about fractional reserve banking.
—
Anyway, I am intrigued. Tell us all about YOUR “money.” That should be entertaining.
Sione
Anyway, I am intrigued. Tell us all about YOUR “money.” That should be entertaining. Sione
Actually, it is not “my money” since the common stock company was invented around 1602 with The Dutch East Indies Company. I just seem to be the first person to come to the conclusion that common stock itself need not be traded using an intermediary form of money. It can easily serve as money itself. It thus can bypass all the limitations of conventional money such as the need for usury, gold or fractional reserves.
Let’s see why common stock would trounce other PRIVATE money forms on a level playing field:
1. Common stock as money requires no borrowing or lending; assets and labor are simply bought with new stock issue. The commandment against usury between countrymen (Deuteronomy 23:19-20) is thus obeyed.
2. Wealth is shared at the same time it is consolidated for purposes of economies of scale. This broadens the base of those with a stake in free market capitalism.
3. All price inflation is born by the owners of the corporation since by definition they become owners upon accepting the corporation’s money, common stock. There are thus no innocent bystanders, an important moral and social stability feature.
4. Common stock as money requires no gold but could easily accommodate it for dealing with primitives. However, as today, much of the assets of the corporation would be performing assets not non-performing ones such as gold is.
5. The holders of the money are by definition owners of the corporation and may vote on new money (stock) issues. On one hand, the money holders might not wish to risk deflating the value of their stock. OTOH, perhaps they see an investment opportunity that justifies the risk. Notice the issue of new money is not artificially constrained as the case is with gold as money yet inflation is not likely either.
6. Fractional reserves are not needed as is almost always the case with gold based monies. Common stock is thus a non-fraudulent form of money.
7. Without lending or fractional reserves, deflation is not a risk.
8. Common stock is a true store of wealth since a healthy corporation is always adopting to the needs of society.
9. The perceived volatility of common stock is caused by the unstable and unjust money system that our economy is founded on. Ask yourself, does the underlying value of a corporation really fluctuate as wildly as its stock price? And if it does, is it not because our economy and thus consumer demand is unstable too?
@Del Lindley,
Bravo! That was an excellent argument for a very weak case! I doubt a Jesuit could do better. Them arguments were far fetched but you fetched em. If I ever needed a criminal defense lawyer, I might consider you.
After a long transition period the percentage growth rate of the gold supply should (after making a few simple assumptions) grow to approach that of the growth rate in general physical productivity Del Lindley
So one part of society wastes their time digging up the medium of exchange when simple pieces of paper (or fraud resistant electronic tokens) and the rule of law would easily suffice? And to do it in an environmentally friendly fashion would be even more expensive.
You remind me of why I rejected gold as a medium of exchange, a kind Australian lady expressed her concern about South African gold miners to me. It took time, but eventually I knew there had to be a better way.
But let’s have that true free market in PRIVATE money creation we should all want and we shall see, shan’t we?
Right, very cute.
Perhaps these arguments would not seem so far fetched if you would consider the future more carefully. Currently most gold production comes from the hard rock mining of specific gold deposits. As time goes on such deposits will become relatively scarce and a greater fraction of gold will be extracted as a byproduct from non-gold mines. The world’s largest producing “gold mine,” the Grasberg mine in Papua Indonesia, is mined primarily for its copper. Since we are already “wasting time” digging up copper and other vital industrial metals/minerals, we might as well waste a little more time and effort and extract the gold. Over time the correlation between gold production productivity and general productivity must therefore increase.
Is this too far fetched a concept to grasp?
Perhaps these arguments would not seem so far fetched if you would consider the future more carefully. Currently most gold production comes from the hard rock mining of specific gold deposits. As time goes on such deposits will become relatively scarce and a greater fraction of gold will be extracted as a byproduct from non-gold mines. Del Lindley
That sounds like a bug not a feature. Again we have the growth in a money supply tied to the mining rate of gold. Absurd, but worse; as gold becomes more difficult to mine, more effort and expense must be expended to obtain it and somehow this is good? Would not a growing population and economy need more money and not less?
The world’s largest producing “gold mine,” the Grasberg mine in Papua Indonesia, is mined primarily for its copper. Since we are already “wasting time” digging up copper and other vital industrial metals/minerals, we might as well waste a little more time and effort and extract the gold. Del Lindley
Sure, but then turn around and waste that precious gold as money tokens?
Over time the correlation between gold production productivity and general productivity must therefore increase. Del Lindley
Good one! And plausible too. With economic progress, gold mining should become more efficient even as the low hanging fruit is exhausted. But what guarantees that the new technology will improve rapidly enough keep up with the general economy? And what if the correlation is that the rate of economic growth is LIMITED by the mining rate of gold (if used as money) ? And what if mining becomes too efficient and produces a glut of money? Would not that cause price inflation? From whence this superstitious belief that the production rate of gold will ALWAYS or at ANYTIME be optimum for the maximum economic growth rate?
Is this too far fetched a concept to grasp? Del Lindley
Nice effort but the use of gold as money is a desperate attempt to solve problems such as over-issuance that could and should be solved with liberty instead. Our problems with money is not that it is too easy to produce (it should be; is high cost a good thing?) but that some people have a monopoly on its creation and of course, abuse it.
Thanks for the chat. I suspect your arguments are the best that can be marshaled and I mean no offense to you, but they are pretty lame.
But as I usually conclude, let’s let a truly free market in private money creation decide the issue. That is all any true libertarian should desire.
“Would not a growing population and economy need more money and not less?”
Phew.
“superstitious belief”
Yeah. I guess a lot of people just can’t figure out what money is. What can you do?
Yeah. I guess a lot of people just can’t figure out what money is. What can you do? mpolzkill
Money is a mind boggling topic; it is not surprising that people have trouble understanding it. I don’t claim to completely understand it myself. But we don’t have to completely understand money if we will only agree to have a truly free market in private money creation. Let the government issue money backed only by its taxing authority but only legal tender for government debts, not private ones and let the private sector create and use monies that are only good for private debts. Who can object to that but tyrants?
Within your response you have committed so many elementary errors that there is no point in continuing this “chat” at the level that I had presumed appropriate. While your heart may be in the right place, your head has a lot of catching up to do. So instead of coming to these pages to pontificate on your personal beliefs, you should consider making the effort to better understand basic monetary theory, ideally from the Austrian perspective. Without the proper theoretical grounding you are destine to run in circles and end up with nothing for your effort. Newton’s wasted effort on alchemy is a good example. Attempts at monetary alchemy will fare no better.
Within your response you have committed so many elementary errors that there is no point in continuing this “chat” at the level that I had presumed appropriate. Del Lindley
Nice parting shot but you have failed to convince me (as well as others I presume). I HAVE demonstrated a knowledge of Austrian economics. I used to be one in fact. None of you have refuted me. My secret? I read the Bible, particularly the Old Testament since that is where ignorant folk believe the Lord is vulnerable to criticism. Proverbs 8
Attempts at monetary alchemy will fare no better. Del Lindley
Ezekiel 7:19
‘They will fling their silver into the streets and their gold will become an abhorrent thing; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD. They cannot satisfy their appetite nor can they fill their stomachs, for their iniquity has become an occasion of stumbling.
Micah 6:8
He has told you, O man, what is good;
and what does the LORD require of you
but to do justice,
to love kindness,
and to walk humbly with your God?
This is what I call a great book and also a very great book-review! What I liked the most is a very forgotten concept, that we should start considering again!
In the past, only people who paid taxes could vote (and in effect, and please correct me if I am wrong as I am neither a US citizen nor an historian, I think the American indipendence had something to do with the fact that colonies had to pay taxes to England without though having full political rights). There has always been a link between tax payment and political rights, until somebody thought it wasn’t fair and changed that. And I hope that it wasn’t in his intentions to leave our states and countries in the hands of irresponsible voters (and I say irresponsible because that’s what they are: not-responsible for the consequencies of their actions and decisions!).
I would then be more than favorable to restrict political rights to people that are more interested in use them in a wise manner. And linking them to taxation is at least an efficient way of doing it. Though a question remains: should political rights be restricted to those who pay taxes, or should they also be proportional to the amount of taxes paid? In other words, in such a case, should a person who pay more taxes also have more votes?
Though a question remains: should political rights be restricted to those who pay taxes, or should they also be proportional to the amount of taxes paid? In other words, in such a case, should a person who pay more taxes also have more votes? Tommaso Rossi
Let’s just cut to the chase and limit voting to members of the government backed counterfeiting cartel in the government enforced monopoly money supply, shall we?
The terror to fractional reserve bankers, being thieves themselves, is that the government, acting in the interest of their victims, might steal back some of their ill-gotten loot.
When we have genuine capitalism in the US, instead of banker fascism, then the need for socialism will wither away.
F Beard
Common stock money.
It is only as good as that which backs it. As with any organisation, a company is only as good as the decisions and actions of those who control it, who operate it, who provide labour and services and commodities to it etc. The “money” is only as valuable as the company’s performance in the open marketplace. For example, when a superior competitor comes along and replaces the company’s product in the preferences of customers, then the value of the company as asset declines and with it the value of the “money.” If the company goes belly up, then the “money” is near worthless. The trouble with common stock money is its volatility, with its underlying value changing constantly. Another problem is that the life-cycle of any company is finite. After the company ceases to exist the “money” becomes near worthless. Hardly a safe haven to save your retirement wealth in, for instance.
As an example, recently a company I know about went into receivership. The staff and all their specialist knowledge moved to other businesses and activities. The assets, which included specialist machinery, were put on the market and offerred for sale. So far not everything has sold. I am aware of a CNC 4-axis mill which was purchased new for ~US$770,000, having a book value of some US$695,000, selling for some US$45,000. An excellent press, originally valued at US$100,000 (new 8 months ago), has gone for US$2,000. The assets of the company are likely to receive mere cents on the dollar (rule of thumb is 15c, although in this instance it is going to be a lot less for a variety of reaons).
If any “money” had been issued and backed by this outfit, well, it would hardly qualify as a good store of value. Nor is it a safe medium for trade. Take note that over 75% of businesses are unlikely to survive into Y5. In this regard the attributes of common stock money are far from ideal.
You state that “assets and labor are simply bought with new stock issue”. If you mean that the new company issue paper out of nothing in order to pay for these items, then you are going to find significant problems with your scheme. For a start, what the newly set up company is doing is relying upon the credit of its labour and asset providers. Assuming they are prepared to accept the company “money” as payment, there is no guarantee that others will similarly accept the risk. Most people will be averse to providing goods and services for risk paper. If the company collapses the asset providers will be right out of pocket. As above, second hand machinery is worth a lot less than new. Labour already expended is worthless. So those providers too will be bilched. Squabble over the risiduals gentlemen! Good luck and may the best of you retain your teeth!
Contrast that with 100% gold backed money. In this instance the holder can always make demand for the asset -gold. The gold can be delivered up to him physically and entirely (contrast: how do you deliver up 0.00452 of a CNC lathe or 0.6295 of a block of land or 0.011 of a building?). The advantage he has is that he can immediately trade the gold for other commodities, goods and services. Gold is liquid and divisible. The value is immediately known by all parties involved in the transaction. The value of such money is tied, restrained to a real liquid and immediately tradeable physical asset, in this case the gold.
In a free economy I would expect that there may well be those who would choose to trade equities. Indeed some may try to use these as a form of “money”. However it is unlikely such “currency” would replace real money (as in 100% gold backed) or even become a common substitute. The responsiblity of divining the present worth of the backing company, partaking in stockholder oversight and so on exerts cost. Easier and more convenient for most to avoid that burden and the associated risk.
Sione
Nice thoughtful reply. However, you have apparently missed point 9:
9. The perceived volatility of common stock is caused by the unstable and unjust money system that our economy is founded on. Ask yourself, does the underlying value of a corporation really fluctuate as wildly as its stock price? And if it does, is it not because our economy and thus consumer demand is unstable too? FB
As for gold backed money, its value, beyond its commodity value, depends on government privilege as witnessed by Gary North’s recent statement that the government should require taxes to be paid in gold and/or fractional reserves which also requires government privilege to succeed.
As for those milling machines, with a true free market in private money creation, we would not have a nationwide boom-bust cycle that depresses their prices during the bust. So, the good assets of even a badly run corporation would still obtain a good price thereby putting a floor on that corporation’s stock price.
So I remain convinced that common stock is an (the?) ideal private money form. Nice try though.
The responsiblity of divining the present worth of the backing company, partaking in stockholder oversight and so on exerts cost. Easier and more convenient for most to avoid that burden and the associated risk. Sione
Each private currency would have a market determined exchange ratio to the government’s currency which would allow their ratio to each other to be determined. Modern communications and computers would allow such determinations to occur in real-time.
For a start, what the newly set up company is doing is relying upon the credit of its labour and asset providers. Assuming they are prepared to accept the company “money” as payment, there is no guarantee that others will similarly accept the risk. Most people will be averse to providing goods and services for risk paper. Sione
Well, there is no avoiding the need for sufficient capitalization for a company. Initially a startup might have to accept other, more established corporations’ money, till they themselves are established.
I would like to say a few words in honor of Irwin Schiff, father of the authors, and author of the original, HOW AN ECONOMY GROWS AND WHY IT DOESN’T (1985). Mr. Schiff is currently serving a prison sentence for writing seven books calling attention to some of the crimes of the criminals in charge of the criminal enterprise run by mafia chief, Uncle Sam. Since Irwin was not one to mince words and called a thief a thief, he could not be tolerated living in touch with a computer with which he was sure to spread his anti-theft (viz., tax) rhetoric countering the b.s. put out by the IRS and its flackies (aka, bureaucritters, robes and pols). Taken by his captors at the age of 78, Irwin will be 91 when his term is up. I doubt if he is wasting his time. I fully expect him to publish three or four new books about the criminals who have him upon his release.
Here from Wiki are Irwin’s first seven books. The Great Income Tax Hoax contains the best history yet to be written on the U.S. income tax and its predecessors.
Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes (1992) ISBN 0-930374-09-6
The Great Income Tax Hoax: Why You Can Immediately Stop Paying This Illegally Enforced Tax (1985) ISBN 0-930374-05-3
How an Economy Grows and Why It Doesn’t (1985) ISBN 0-930374-06-1
The Social Security Swindle: How Anyone Can Drop Out (1984) ISBN 0-930374-04-5
How Anyone Can Stop Paying Income Taxes (1982) ISBN 0-930374-03-7
The Kingdom of Moltz (1980) ISBN 0-930374-02-9
The Biggest Con: How the Government Is Fleecing You (1977) ISBN 0-930374-01-0
http://en.wikipedia.org/wiki/Irwin_Schiff
If you wrote books with those kind of titles, you’d be in prison too. It’s not good to fool with Uncle Sam’s revenue, First Amendment pseudo-protection to the contrary notwithstanding.
F Beard
In a free market the value of a company will still vary significantly. Companies succeed and fail. Some fail completely and go under. Some are taken over by other firms. Some succeed wildly. The value is not static and never will be.
The volatality of common stock ultimately comes down to how well the company succeeds (or fails) in the free market. As with any organisation, a company is only as good as the decisions and actions of those who control it, who operate it, who provide labour and services and commodities to it etc. When a superior competitor comes along and replaces the company’s product in the preferences of customers, then the value of the company as asset declines.
Your point nine fails to address any of this.
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Again, North’s comments were made within a certain context. I suggest you familiarise yourself with the US Constitution rather than expect a foreigner to have to explain it to you.
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Gold backed money is far superior to using company equity as “money” for reasons previously outlined (among others). Assuming a free market, there is nothing to stop me from issuing my own money and backing it with gold. This does not require any government priviledge whatsoever. I merely issue the notes and ensure I back them 100%.
Regarding tax, it is a form of theft. That has nothing to do with gold. Theft is a crime which has no place in a free market, let alone a free society.
You write, “As for those milling machines, with a true free market in private money creation, we would not have a nationwide boom-bust cycle that depresses their prices during the bust. So, the good assets of even a badly run corporation would still obtain a good price thereby putting a floor on that corporation’s stock price.”
The prices of second hand machinery is severely reduced on account of the necessary efforts in reallocating the machines to new use. It costs time and money to remove the machinery, store it, then advertise and market it, generate leads, find a buyer, make a sale, finance the sale, transport the machinery to the new owner, recommission it, prove it out, adapt it to its new manufacturing task and so on. Tools, fixtures, lubricant, specialist staff, etc. etc. etc. all have to be sought and mobilised and put to work with the machine. This is all risky and costly. I am aware of firms which will never purchase second hand machines, no matter how keen the price. They don’t want to deal with the potential problems. Other firms will take on second hand machines but ONLY if they have a use for them and ONLY if the price is keen. They require a bargain. This results in price discounting, a value reduction…
Production machinery is not really very universal, but tends to be rather specialised. The more specialised it is, the more it costs to purchase in the first place and commensurate with that, the more specialised it is, the less it returns at sale. There is significant risk and effort involved in dealing with it (the purchaser really has no firm idea what state the machinery is actually in, until he’s been running it for some time- by then he’s tens or hundreds of thousands of dollars down the path, having already invested irreversibly). A purchaser discounts the price on the machine for these reasons (among others).
It is a similar situation with other asset classes as well. For example, second hand computers etc. Significant losses of value are not at unusual.
Companies go out of business all the time. Many fail during the boom. Most do not make Y5 regardless. Sometimes (often) companies fail due to the activities of competitors offering better price, better specification, better quality or who know the market or relevant technology (or new technology) better and exploit their superiority to good effect. The value of the equity of a failed business has no bottom floor except zero. By the time staff salaries as well as secured and unsecured creditors are paid it is not uncomon for there to be nothing left to pay out the stock holders. Hence the common stock “money” is worthless.
The floor is zero, nothing, nada, zilch,… That is a risk to be aware of.
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Quoting, “Each private currency would have a market determined exchange ratio to the government’s currency which would allow their ratio to each other to be determined. Modern communications and computers would allow such determinations to occur in real-time.”
Right. First premise is the existence of govt interference in the economy. So noted.
Let’s see, a cup of coffee is going to cost GM$3 in the morning and by tomorrow it’ll be something else, say GM$5. Meanwhile VAG$0.50 gets you the same cup of coffee, and VAG$0.45 by mid-afternoon (right after the GM$ is withdrawn from the market altogether- good luck if you were holding any of those). This is an insurmountable problem for people like Siotu down at the general store. He wants to sell me my pack of Rothmans. He doesn’t want to work out the relative value of various stock “money” types I may happen to tender and divine whether it is safe to accept a particular type or not. He isn’t interested in spending his valuable productive time working out whether he needs to get some types of “money” exchanged right soon or whether his suppliers might accept it or not or whether it is safe to hold on to let alone accept etc. etc. etc. etc. All he wants to do is put it in the till…. and then use it to buy something or use it to store wealth.
Forget using government to shore up such schemes. Assumming there is any government at all, it should be separated from economic control in similar fashion to separation of church control from state.
Now, according to your own comment (#5) your “money” is inflationary. All it needs for that to happen is a vote… So poor Siotu needs to be a highly informed stock watcher and he needs to always be cogniscant of what money he has in the till (especially when one of the family is running shop). He needs be most careful to be aware of any possible shareholder meetings coming up- just in case he ends up with some of that “money.” He also needs to be concerned about the borrowings and debts (note that issue is deadly important) that the companies he happens to hold “money” from may be carrying. Rather than a shop-keeper, he needs to be a stock analyst! Poor Siotu. Poor Mrs Siotu. Poor Siotu junior.
In conclusion, your scheme remains marginal at best, unfeasibly difficult and too risky for most people.
Sione
In a free market the value of a company will still vary significantly. Companies succeed and fail. Some fail completely and go under. Some are taken over by other firms. Some succeed wildly. The value is not static and never will be. Sione
Did I ever say the value of a company is static? Even the value of gold is not static since it depends on supply and demand too. If (and you should) want perfect security then trust in the Lord, not an idol of gold or anything else.
The volatality of common stock ultimately comes down to how well the company succeeds (or fails) in the free market. As with any organisation, a company is only as good as the decisions and actions of those who control it, who operate it, who provide labour and services and commodities to it etc. When a superior competitor comes along and replaces the company’s product in the preferences of customers, then the value of the company as asset declines.
Obviously. Yet without a nationwide boom-bust cycle, the good assets of even a badly run organization should always fetch a good price.
Your point nine fails to address any of this.
My point is that the perceived volatility of stock is mostly an illusion; it is our money supply and economy that is volatile. Why does even the stock price of a good corporation fall during the bust?
Again, North’s comments were made within a certain context. I suggest you familiarise yourself with the US Constitution rather than expect a foreigner to have to explain it to you.
Greenbacks, which are an ideal GOVERNMENT money form, were never found un-Constitutional. In fact, some may still circulate today as debt and interest free money (but not as paper currency).
Gold backed money is far superior to using company equity as “money” for reasons previously outlined (among others). Assuming a free market, there is nothing to stop me from issuing my own money and backing it with gold. This does not require any government priviledge whatsoever. I merely issue the notes and ensure I back them 100%.
True. But then you would depend on loaning that gold at interest to obtain a profit. It is a non-performing asset. Better you should buy a tool and equipment rental shop and back your money with the ability to redeem it for rentals of those tools and equipment.
Regarding tax, it is a form of theft. That has nothing to do with gold. Theft is a crime which has no place in a free market, let alone a free society.
Yet government (and taxes) will not go away any time soon NOR should it since it is the only plausible way to compensate for and perhaps reverse the past injustices of our current fascist money system.
You write, “As for those milling machines, with a true free market in private money creation, we would not have a nationwide boom-bust cycle that depresses their prices during the bust. So, the good assets of even a badly run corporation would still obtain a good price thereby putting a floor on that corporation’s stock price.”
The prices of second hand machinery is severely reduced on account of the necessary efforts in reallocating the machines to new use. It costs time and money to remove the machinery, store it, then advertise and market it, generate leads, find a buyer, make a sale, finance the sale, transport the machinery to the new owner, recommission it, prove it out, adapt it to its new manufacturing task and so on. Tools, fixtures, lubricant, specialist staff, etc. etc. etc. all have to be sought and mobilised and put to work with the machine. This is all risky and costly. I am aware of firms which will never purchase second hand machines, no matter how keen the price. They don’t want to deal with the potential problems. Other firms will take on second hand machines but ONLY if they have a use for them and ONLY if the price is keen. They require a bargain. This results in price discounting, a value reduction…
Production machinery is not really very universal, but tends to be rather specialised. The more specialised it is, the more it costs to purchase in the first place and commensurate with that, the more specialised it is, the less it returns at sale. There is significant risk and effort involved in dealing with it (the purchaser really has no firm idea what state the machinery is actually in, until he’s been running it for some time- by then he’s tens or hundreds of thousands of dollars down the path, having already invested irreversibly). A purchaser discounts the price on the machine for these reasons (among others).
It is a similar situation with other asset classes as well. For example, second hand computers etc. Significant losses of value are not at unusual.
Companies go out of business all the time. Many fail during the boom. Most do not make Y5 regardless. Sometimes (often) companies fail due to the activities of competitors offering better price, better specification, better quality or who know the market or relevant technology (or new technology) better and exploit their superiority to good effect. The value of the equity of a failed business has no bottom floor except zero. By the time staff salaries as well as secured and unsecured creditors are paid it is not uncomon for there to be nothing left to pay out the stock holders. Hence the common stock “money” is worthless.
The floor is zero, nothing, nada, zilch,… That is a risk to be aware of.
OK, excellent points, but some assets such as land should not be affected much by bad management. As for moving the equipment, there might be no need to move it out, just the bad management.
Quoting, “Each private currency would have a market determined exchange ratio to the government’s currency which would allow their ratio to each other to be determined. Modern communications and computers would allow such determinations to occur in real-time.”
Right. First premise is the existence of govt interference in the economy. So noted.
In fact, to have minimal government interference in the economy, it is necessary for government to have its own separate currency otherwise it would favor some private money or money form such as Gary North’s gold coins. “Render to Caesar what is Caesar’s” seems appropriate.
Let’s see, a cup of coffee is going to cost GM$3 in the morning and by tomorrow it’ll be something else, say GM$5. Meanwhile VAG$0.50 gets you the same cup of coffee, and VAG$0.45 by mid-afternoon (right after the GM$ is withdrawn from the market altogether- good luck if you were holding any of those). This is an insurmountable problem for people like Siotu down at the general store. He wants to sell me my pack of Rothmans. He doesn’t want to work out the relative value of various stock “money” types I may happen to tender and divine whether it is safe to accept a particular type or not. He isn’t interested in spending his valuable productive time working out whether he needs to get some types of “money” exchanged right soon or whether his suppliers might accept it or not or whether it is safe to hold on to let alone accept etc. etc. etc. etc. All he wants to do is put it in the till…. and then use it to buy something or use it to store wealth.
If we ever have that true free market in money creation, we will see just how practical common stock as money is. What it boils down to is why would people borrow at interest what should be nearly costless to produce? Also, for a cup of coffee, a STAR$2 would be more appropriate. One might refuse any money he had no direct use for thus avoiding exchange uncertainty.
Forget using government to shore up such schemes. Assumming there is any government at all, it should be separated from economic control in similar fashion to separation of church control from state.
Agreed!!! It is Mr. Gary North who appears to want the government to shore up the value of gold. So, can gold prosper as a purely private form of money or not? Are gold-bugs libertarians or fascists?
Now, according to your own comment (#5) your “money” is inflationary. All it needs for that to happen is a vote… So poor Siotu needs to be a highly informed stock watcher and he needs to always be cogniscant of what money he has in the till (especially when one of the family is running shop). He needs be most careful to be aware of any possible shareholder meetings coming up- just in case he ends up with some of that “money.” He also needs to be concerned about the borrowings and debts (note that issue is deadly important) that the companies he happens to hold “money” from may be carrying. Rather than a shop-keeper, he needs to be a stock analyst! Poor Siotu. Poor Mrs Siotu. Poor Siotu junior.
I’m sure specialists would arise to make things simple for Mr. Siotu.
In conclusion, your scheme remains marginal at best, unfeasibly difficult and too risky for most people.
It might take time to work out the kinks and to gain general acceptance but it would eventually prevail over usury and gold, I would bet.
Gold as money is barbaric, environmentally destructive, a waste of human effort, a tool of the usury class and apparently, per Mr. North, needs government propping up to survive. Its perceived advantages have been rendered obsolete by technology and the rule of law.
My conclusion is that it would not survive very long in a true free market in private money creation. Probably 10 years or less as a significant money form.
And let me add that if Mr. Siotu doesn’t want to accept common stock monies and finds that gold-based money is too rare since few are fool enough to borrow it into circulation, then he may choose to only accept the government’s money. Mike Rozseff’s “Wal-Mart Money”, which I alluded to with the tool rental company, might also be a good option for him.
F Beard
Trust in the Lord! Might as well attend seances, conduct human sacrifices, murder non-believers and worship the entrails of disembowelled goats (all activities that religious white people have been known to undertake). Such silliness is merely an expression of malevolent incompetance. We are dealing with money- a man made.
You write, “Yet without a nationwide boom-bust cycle, the good assets of even a badly run organization should always fetch a good price.”
Not so. The assets receive only that value a purchaser is prepared to pay. As disclosed previously, there are reasons why such assets are worth small fractions of the original purchase price. Put it this way, the potential market is limited. It consists of diverse, geographically separate, discrete, risk aware leads. In order to be interested enough to view the assets (and in particular the specialist items such as CNC machines) the potential buyer needs to have an actual use for the asset or an expected use in the foreseeable future. After that the buyer has to be enticed enough by the deal to put his money down. That is, he needs to consider it worth the time and resource investment to make purchase. The pool of such individuals and organisations active as purchasers at any time is small. It is recommend you go attend a second hand CNC machinery auction to see for yourself. That would be illustrative.
Now here is the rub. With demand restricted to a modest pool of savvy, informed individuals (experts in their field) who do not have to buy anything, prices bid low. The company “money” ultimately is going to rely on what these guys pay for any asset. Whether boom or bust the residual is around the 15% mark, often far less than that. It is not the company or the holders of company “money” who decide what value to assign to the assets. It is, ultimately, the buyer- the guy who opens his wallet. Whether you or anyone else considers what he offers “good” or not is completely irrelevant.
Now contrast this with gold. In a free economy the potential market for gold is every person who trades or saves. Gold is liquid, divisable, permanent and easily traded immediately. The value is set by tens or even hundreds of millions of individuals conducting trillions of transactions constantly and continuously. The pool is large and relatively non-volatile in population. The social inertia of a large population tends to result in stable value for specie, such as gold.
Put it this way. I’d rather take gold based money than General Motors “money”. I’d rather save my retirement in gold than in a Cincinnati Millacron 4-axis mill. When I retire the gold will still be as it was- a tradeable valuable store. GM likely won’t exist. The Millacron will be obsolete, flogged out, ready to scrap (assuming it still exists).
Quoting, “My point is that the perceived volatility of stock is mostly an illusion; it is our money supply and economy that is volatile. Why does even the stock price of a good corporation fall during the bust?”
Of course company value is volatile and it is no illusion. Variability would occur in a free economy. The compnay value depends on what people subjectively consider of the company at any time. It depends how the company is behaving in the market (succeeding or failing). It depends how the company’s competitors are behaving (succeeding of failing). It depends what the pool of customers prefer (and they can be most fickle).
For example, let’s take Jaguar Car Company. Assuming a free economy with Jaguar selling cars within it. The wonderful XJ-12 (X300) is doing reasonably well and now Jaguar start planning a replacement. They decide that what their customers want is a larger car, taller, with more high-tech and a radically new styling approach. The moment that decision is made, the value of the company alters. For the moment the greater public don’t have this information, but various insiders do (and they are in exactly the position to exploit it- deliberately or not). What they do on the open market with Jag$, who they quietly inform (pillow talk etc.)and so on, that changes the value of Jag$. As more people become aware of the new model development, so the Jag$ is exposed to more and more volatility. Will the new car be any good? It is going to be a change of design direction, they say. Will customers like that?
Meanwhile, as expectation for the new model launch builds, sales of the existing model slow and the company begins to offer steep discounts to clear the last of the old ‘uns. Value of company changes as profitability slumps. Ah, but along comes Mr Packer. He’s always good for a flutter. he reckons the new car is going to be OK, a really big seller, just the new direction the company’s customers are looking for, that new car will be most profitable. He concludes that Jaguar is trading under-value right at the moment. So he starts hoarding Jag$ as fast as he can. Value changes.
But there is trouble. As the various OEMS and suppliers of components and tooling to Jaguar start to receive plans, solid models and sample parts to quote, as orders for these components, parts and tools begin to occur, various members of their staff start to realise just how risky the new car really is. Some of these people are experts in their fields. Some of them are experts in Jaguars. Some are enthusiasts. Pretty much all of them has an opinion and they all talk… Word gets out. The car is behind schedule. The electronic systems are a big step forward. Will they be reliable in service? There are problems with passing the crash tests. The chassis is not made of steel but bonded aluminium and it isn’t rigid enough in torsion. It has some unexpected resonances and some unusual modes of excitment. The styling is radically different from anything ever attempted before in this class of car- let alone by Jaguar. And so on.
As each piece of information circulates, the subjective evaluation of the company by interested and even by disinterested people alters. The value changes.
Mercedes Benz, realises that Jaguar is about to abandon its traditional niche of grace, pace and space. It is aiming to emerge into the regular luxury car market. MB designers set to work on a four door coupe with four round headlights. In other words they develop a German version of a traditional “Jaguar”. They get it on the market before Jaguar are ready with their new model. MB is able to do this by exploiting an existing floor pan and transfer line to make what is, from a manufacturing point of view, little more than a model variant of their existing S-class sedan. Sales volumes for existing Jaguar model slow to a trickle. Value of company alters sharply within hours of the surprise publication of photographs of the beautiful new MB sedan.
Management of Jaguar realise that market conditions are changing so quickly that their best option is not to build the car in Britain at all. Instead they agree to move the entire production line to a city in China. In this way the production facility is closer to the emerging market centre of luxury car sales and they can also make significant cost savings. New car is to be known as Jag Wha. Value of company changes when the announcement is made…
Soon enough there is a vote to issue another Jag$350,000,000 in order to pay for the company’s move over to China. As the announcement looms there is huge volume in trade of Jag$ as people make their own subjective valuations of what they reckon it is all worth and what they expect the future is going to bring for Jag Wha. To state the obvious- inflation is in process.
The perceived volatility of the stock is not illusion. It is exactly the result of subjective valuations being made by market participants in response to changing circumstances, information, preferances, occurances, influences etc. In a free market some of these would not be present, but others most certainly would be.
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Regarding North’s comments. He is likely a minarchist (which I’m not) operating within the context of the US Constitution. You still require clarification from him so you’d best email him and make enquiry.
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My point regarding the issuance of gold backed money is intended to illustrate the non-requirement for government priviledge.
Were I to be issuing gold backed money in a free economy I would not necessarily be doing it to make profit directly from the issuance. Anyway, the gold is a store of value as was my intent. It performs the task exactly as required.
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“In fact, to have minimal government interference in the economy,” etc.
There should be none whatsoever.
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Quoting, “What it boils down to is why would people borrow at interest what should be nearly costless to produce?”
Ah, here it is. In the end you are after something for nothing. Realise that goods and services are not costless to produce. Expect to pay for them. Similarly, if a any person wants to borrow something he’d better be prepared to pay for it. The lender us orividing him a service, the use of the something.
The principle is similar to renting. For example, I travel down to Melbourne. When I get out of the airport I walk over to Rent-A-Roughy and ask Mario for a car. I want his Eldorado convertible. “And not the 472 this time, I want the 500,” I tell him. Now I get to run around in that for a week and when it’s time to go home I take the car back. Along the way I stop and fill the tyres with air, top up the oil, go to a drive-thu car-wash, fill up the petrol tank and make sure there is no rubbish left in the car. When I return the car to Rent-A-Roughy, Mario calculates that the car rental is exactly AU$1,205 all in. That’s what renting that car costs and that’s what I pay Mario.
If I’d wanted to rent his money (that is, borrow it) instead of the car, I can expect he’d charge for that in similar fashion. Fair enough. If I want it, I have to pay for it.
Quoting, “Also, for a cup of coffee, a STAR$2 would be more appropriate. One might refuse any money he had no direct use for thus avoiding exchange uncertainty.”
So you expect everyone reduced to a form of bartering. The convenience of money is universiality. If I have no STAR$ I don’t need to run around constructing a series of barter swaps to get some. Nor do I need to work out that right now STAR$1 is worth GM$4 but that rate is not fixed, hence requires constant vigilance. I don’t need to concern myself with the possibility that my customer wants to pay me in VAG$ but I have no direct use for that (I need ROTHMANS$ and some HEINIKEN$ as well) so he can’t pay me for my services.
What a disasterous mess.
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Regarding “specialists” making things easier for Siotu.
He’d need to gain experience in order to learn which “specialists” to trust. And he’d have to pay for their services. All most costly indeed. Remember all he wants to do is operate the general store. He isn’t a sophisticted equities analyst. He isn’t interested in that sort of thing in the slightest.
On the other hand it remains a far superior option for him to deal in specie backed money exclusively. Gold comes to mind.
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As to your final paragraph- baseless assertion. You utterly lack the direct experience in business let alone finance to make such sweeping assertion and come to such fantastical “conclusion”.
Sione
The social inertia of a large population tends to result in stable value for specie, such as gold. Sione
Sure. I’m sure gold will be accepted by primitives long after it is abandoned by more civilized folks.
Have you ever wondered why government fiat has any value at all? Is it not because the government requires that taxes be paid in it? In fact, legal tender laws for private debts are not really necessary (and should be abolished, btw).
“In fact, to have minimal government interference in the economy,”
There should be none whatsoever.
Fat chance of that. So the question remains how to minimize its impact, not whether or not there should be any.
Ah, here it is. In the end you are after something for nothing.
If this were the age of duels, I would call you out for that remark (well maybe not, you would get to choose the weapons; a random choice would be acceptable though or maybe just a boxing match to bloody your nose at the risk of mine).
Realise that goods and services are not costless to produce. Expect to pay for them.
Duh, you don’t say, I had no idea.
Similarly, if a any person wants to borrow something he’d better be prepared to pay for it. The lender us orividing him a service, the use of the something.
Of course. But what you fail to fully realize is that if we are all allowed to produce money, backed by whatever capital we may have, the need to borrow a common medium of exchange is eliminated. It would be an advance form of barter made possible by computers and modern communications. Yes, a common medium of exchange is very convenient but how is it to be chosen? You would pick gold based on its long history and social inertia despite all the silliness that goes with it such as digging it up only to rebury it in bank vaults. Frankly, a well managed government fiat currency makes much more sense. There is no problem with government fiat other than the fact that fractional reserve bankers are allowed to leverage it and that it is currently (and unnecessarily) legal tender for private debts.
As to your final paragraph- baseless assertion. You utterly lack the direct experience in business let alone finance to make such sweeping assertion and come to such fantastical “conclusion”.
Just my opinion of course. However, it is irrelevant. I don’t insist that I am correct only that the free market should decide, not Gary North. While I do believe that gold and usury are obsolete and that common stock and other forms of money are the wave of the future, I only bring up those points so we don’t end up with a de facto government gold standard ala Gary North. Otherwise, I would be very pleased to let the free market be the first to inform you of your obsolete thinking.
F Beard
As I said, you want something for nothing.
The notion of having everyone issuing their own money contains all the same problems that your previous notion of company “money” does. If anything, the severity of the problems are much worse. Uncertainty is greater, risk is higher, convenience is far reduced, universiality is all but eliminated, valuations become hugely volatile and arbitrary, storage of wealth enormously difficult, inflation and other fraud guaranteed on a collosal scale, etc., etc., etc.,…
An item that bears consideration is that the issuance of “money” backed by the asset of an individual means that the holder/s of the “money” is/are the rightful owner/s of the assets. The issuer is in debt to the holder/s of the notes. Rather than a costless or near costless “creation” of “money” (or what you are really after, free wealth) the issuer has put himself in the situation where the assets he used to own now belong to another party. He is in debt. The holder/s of the notes may seize the assets, take possession of them, leaving the issuer without. Of course, the holder/s may determine that the regular payment of rent (interest) to them is a preferable arrangement.
Nothing free in this life!
BTW a benefical function of interest (or usuary as you like to call it) is to act to halt or collapse the inflationary pyramid your scheme would otherwise tend to bring about.
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Fiat currency makes no sense, not unless you are a supporter of frauds and criminality.
The best policy is to allow private money to evolve with no government intereference in economic matters. It is not necessary for government to set monetary standard (although the US Constitution awards such a power to the Federal Government this is not a necessary function of government, assuming such an entity is to exist in the first place).
Certainly in a free economy you’d be free to try out a variant of your idea. Whether it caught on or not would all be up to the preferences, choices, actions of millions of individuals. My expectation is that the trading of equities and various forms of barter would remain the domain of specialists and enthusiasts, a strict minority.
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As for your tendency to violence, seek professional assistance before you do yourself or someone else harm.
Sione
As I said, you want something for nothing. Sione
I believe it is you and other gold-bugs who wish something for nothing and in the case of Gary North, via government privilege which is what I am concerned about since I am a libertarian.
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The notion of having everyone issuing their own money contains all the same problems that your previous notion of company “money” does. If anything, the severity of the problems are much worse. Uncertainty is greater, risk is higher, convenience is far reduced, universiality is all but eliminated, valuations become hugely volatile and arbitrary, storage of wealth enormously difficult, inflation and other fraud guaranteed on a collosal scale, etc., etc., etc.,… Sione
Problems a truly free market could not sort out?
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An item that bears consideration is that the issuance of “money” backed by the asset of an individual means that the holder/s of the “money” is/are the rightful owner/s of the assets. The issuer is in debt to the holder/s of the notes. Rather than a costless or near costless “creation” of “money” (or what you are really after, free wealth) the issuer has put himself in the situation where the assets he used to own now belong to another party. He is in debt. The holder/s of the notes may seize the assets, take possession of them, leaving the issuer without. Of course, the holder/s may determine that the regular payment of rent (interest) to them is a preferable arrangement.
Banking 101. A nice, concise summation, despite the false accusation that I am a vulgar inflationist or think a free lunch is possible.
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Nothing free in this life!
True. What I am doing is trying to prevent theft via government privilege for gold or any other private money form.
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BTW a benefical function of interest (or usuary as you like to call it) is to act to halt or collapse the inflationary pyramid your scheme would otherwise tend to bring about. Sione
In a free market in private money creation, people and companies could issue all the money they wished but the price inflation would only be born by those who accepted the money. Issuers would have to be careful to issue and spend wisely. Transparency would be a vital component to achieve market acceptance for a money.
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Fiat currency makes no sense, not unless you are a supporter of frauds and criminality. Sione
As long as we have government and to have a truly free market in private money creation, it is precisely necessary for government to issue its own fiat money in order to avoid favoring a private money or money form.
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The best policy is to allow private money to evolve with no government intereference in economic matters.
Agreed.
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It is not necessary for government to set monetary standard (although the US Constitution awards such a power to the Federal Government this is not a necessary function of government, assuming such an entity is to exist in the first place).
Certainly in a free economy you’d be free to try out a variant of your idea. Whether it caught on or not would all be up to the preferences, choices, actions of millions of individuals. My expectation is that the trading of equities and various forms of barter would remain the domain of specialists and enthusiasts, a strict minority.
Let’s see, shall we?
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As for your tendency to violence, seek professional assistance before you do yourself or someone else harm.
Not really a problem but the Bible amply warns those who read it against a love of violence such as:
The LORD tests the righteous and the wicked, and the one who loves violence His soul hates. Psalm 11:5
As I said, you want something for nothing. Sione
Not true but what do the gold-bugs wish for? To sit on a hoard of gold that appreciates in value as the economy grows (assuming it would) but the money supply doesn’t? To loan it out at interest that must be continually mined from the earth? To use it as a source of liquidity in a game of fractional reserves?
No, probably not. What most of them probably want is to just be protected from price inflation. That is certainly understandable. But a contracting or stagnant economy is a very high price to pay for inflation protection. What good is money in the bank if one must spend it to survive after one loses his job?
A far better solution is just to abolish legal tender laws for private debts, abolish fractional reserve lending in the government’s money and allow alternative private currencies. That way, if the government over issued its money, only that money would suffer loss of purchasing power; private monies would be unaffected.
“Problems a truly free market could not sort out?”
Yes, and the easiest and most convenient means is to employ gold as specie.
“In a free market in private money creation, people and companies could issue all the money they wished but the price inflation would only be born by those who accepted the money.”
That amounts to criminal fraud. I note that you would allow the victims of inflation to be penalised for being deceived by the fraud rather than pursuing the inflationist for committing the fraud in the first instance. Interesting. Kinda like persecuting the victim of rape for being raped. Just and moral indeed. I could draw that analogy somewhat further but I’m not in such an uncharitable mood. Suffice to point out that such a scenario does not correspond with a free market, let alone libertarianism. It violates the NIOF Rule.
Think on it.
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“But a contracting or stagnant economy is a very high price to pay for inflation protection.”
Spoken (or rather, written) like a money crank! You assert that an economcy would stagnate if it relied on gold as specie. For a start the historical record demonstrates this is wrong. Best recommendation to you is study Mises carefully. Read him well for you have a lot to learn.
It is noted that you have repeated several assertions, none of which bear serious scruitiny or stand up to reasonable examination. I’ve pointed out a few unavoidable of the problems (there are so many others) for your scheme. You’ve delivered no substantive point or offer of evidence or serious analysis or example by way of reply. Your reponse is along the lines of “wait and see” evasions, rhetorical musings and argument by insistence. That just aint good enough. Just for a first step you’d need to demonstrate from first principles that ALL issues are solvable and indicate how that would actually be accomplished. Until you can, the scheme remains a fantasy construct with no relevance to reality.
Economics is the study of an aspect of reality, of that which is encountered in the real, existent, physical world. Economics does not presuppose any religion. In this regard it is atheist, though moral. Best not to attempt to distort it with religion then.
Sione
“Problems a truly free market could not sort out?”
Yes, and the easiest and most convenient means is to employ gold as specie. Sione
Sure, a common money supply is convenient but convenience isn’t everything. But let the free market decide. Is that an evasion or a moral principle?
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“In a free market in private money creation, people and companies could issue all the money they wished but the price inflation would only be born by those who accepted the money.”
That amounts to criminal fraud. I note that you would allow the victims of inflation to be penalised for being deceived by the fraud rather than pursuing the inflationist for committing the fraud in the first instance. Interesting. Kinda like persecuting the victim of rape for being raped. Just and moral indeed. I could draw that analogy somewhat further but I’m not in such an uncharitable mood. Suffice to point out that such a scenario does not correspond with a free market, let alone libertarianism. It violates the NIOF Rule.
Think on it.
It is you who should start thinking. Is monetary inflation always bad? What if the increase is less than the rate of economic growth in that money supply? Who then is cheated by price inflation? Would not prices continue to fall (in that money) in that case? And if monetary inflation is always bad then shouldn’t gold mining be banned? And if common stock is the private money form used then the money recipient becomes a part owner of the issuing corporation as soon as he receives the money (common stock). He may suffer temporary price inflation (willingly, I add) but assuming the new money (common stock) was issued to purchase valuable assets or labor then the price inflation would only be temporary and the value of his money should appreciate afterwards.
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“But a contracting or stagnant economy is a very high price to pay for inflation protection.”
Spoken (or rather, written) like a money crank!
I’m pretty well demonstrating that the gold-bugs are the true cranks and no libertarians either as in the case of Gary North. But let the free market decide. Another evasion or a challenge?
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You assert that an economcy would stagnate if it relied on gold as specie. For a start the historical record demonstrates this is wrong. Best recommendation to you is study Mises carefully. Read him well for you have a lot to learn.
I’ve read Rothbard and learned a lot. Truly I stand on his shoulders (or at least his knees). If he were alive today, I doubt he would object to what I say. Being a just man, I believe he would immediately see the justice of common stock as money.
As for stagnation, maybe, maybe not. I have no objection to the use of gold as a purely private money form. I would be very glad to see common stock and gold compete head to head on a level playing field.
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It is noted that you have repeated several assertions, none of which bear serious scruitiny or stand up to reasonable examination. I’ve pointed out a few unavoidable of the problems (there are so many others) for your scheme. You’ve delivered no substantive point or offer of evidence or serious analysis or example by way of reply. Your reponse is along the lines of “wait and see” evasions, rhetorical musings and argument by insistence.
So what? I don’t insist people use common stock as money only that it be allowed on a level playing field with all other private money forms.
That just aint good enough. Just for a first step you’d need to demonstrate from first principles that ALL issues are solvable and indicate how that would actually be accomplished. Until you can, the scheme remains a fantasy construct with no relevance to reality.
Why should I go to the trouble of spelling out what the free market would demonstrate to you in exquisite detail?
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Economics is the study of an aspect of reality, of that which is encountered in the real, existent, physical world. Economics does not presuppose any religion. In this regard it is atheist, though moral. Best not to attempt to distort it with religion then.
While I have learned a lot from agnostic Jewish economists, they have always had a blind spot or two that ironically the Jewish Bible corrects.
Proverbs 8
F Beard
I’m afraid your common-stock-money scheme is not as promising as you’ve made it sound, and gold would make a perfectly adequate money; certainly a superior one to common stock.
Firstly, common stock is not very durable–it’s printed on paper after all. Secondly, it’s not divisible. You can’t purchase something with a faction of a share, but can only make whole number transactions. This factor all but assures that common stock would not arise as money. On the other hand, gold is both durable and divisible, so in competition as money between gold and common stock, it does not take a seer to predict that gold will win out.
Your main economic objection to gold as money seems to be that it is difficult to produce, so productive resources are wasted digging gold out of the ground which could be used more efficiently. This position is untenable. As long as the return on money production (its purchasing power) is higher than its cost of production, money will be produced. This is the case for any money. The costs of production of any good represent the trade-offs between production of that good and production of other goods using the same factors of production and are imputed from consumers’ valuations of each of those goods. This means that if the production of gold is cost-effective, then consumers value the new gold above whatever else would have been produced with the factors of production employed. Thus, there is no waste of resources when gold is used as money.
If I left some critical point out, please let me know.
I’m afraid your common-stock-money scheme is not as promising as you’ve made it sound, and gold would make a perfectly adequate money; certainly a superior one to common stock. Thinker
Maybe so, I just insist that a truly free market in money creation make that judgment, not the government.
Firstly, common stock is not very durable–it’s printed on paper after all. Thinker
So are deeds of title.
Secondly, it’s not divisible. Thinker
Actually more so than gold. The stock could initially be issued in very small denominations and if they appreciated too much in value then a stock split could be performed.
You can’t purchase something with a faction of a share, but can only make whole number transactions. Thinker
See above
This factor all but assures that common stock would not arise as money. On the other hand, gold is both durable and divisible, so in competition as money between gold and common stock, it does not take a seer to predict that gold will win out. Thinker
Fine. Let’s just have a fair competition and we shall see.
Your main economic objection to gold as money seems to be that it is difficult to produce, so productive resources are wasted digging gold out of the ground which could be used more efficiently. This position is untenable. As long as the return on money production (its purchasing power) is higher than its cost of production, money will be produced. Thinker
But what is the value of gold besides limited industrial use and for jewelry? And if it is used for those purposes then it is not available for use as money.
This is the case for any money. The costs of production of any good represent the trade-offs between production of that good and production of other goods using the same factors of production and are imputed from consumers’ valuations of each of those goods. This means that if the production of gold is cost-effective, then consumers value the new gold above whatever else would have been produced with the factors of production employed. Thinker
True, I just object to any artificial addition of value to gold via government privilege such as requiring its acceptance as taxes. Let gold stand on its own if it can. My bet is that it can’t in the long run.
Thus, there is no waste of resources when gold is used as money.
Only if the gold is freely chosen as a money form in a truly free market in private money creation.
All I insist on is a true free market in private money creation. Then folks could choose gold, common stock, Mike Rozeff’s “Wal-Mart Money” or whatever for use as money. Paradoxically, this requires that the government accept no private money or private money form for taxes or fees.
F Beard
“Firstly, common stock is not very durable–it’s printed on paper after all. Thinker
So are deeds of title.”
Deeds of title are not used as money. They may be used as money-substitutes (specifically banknotes), but in that case, they will be tied to a durable commodity.
“Secondly, it’s not divisible. Thinker
Actually more so than gold. The stock could initially be issued in very small denominations and if they appreciated too much in value then a stock split could be performed.”
There are a couple problems with this idea. Firstly, gold is very divisible. About the smallest unit of gold you can get is a grain, and that is very small. Second, in order for the stock to be a realistic money, it would have to be viable as one before it started appreciating. To overcome the divisibility problem, you need an initial stock issue of sufficient quantity that a single share will not purchase much of anything (some particularly inexpensive goods may be too cheap, but these will necessarily be few for your proposal to be practical), and even then, you cannot purchase something which costs 2.5 shares or has some other rational cost greater than 1, so divisibility is still an issue.
All of this assumes that only one corporation’s stock is being considered as a potential money. If you allow more corporations (which you ultimately must), then the difficulties multiply.
“But what is the value of gold besides limited industrial use and for jewelry? And if it is used for those purposes then it is not available for use as money.”
I’m not a gold expert, but I don’t know of any other uses for gold as a commodity. Those two uses do give it quite substantial non-monetary value, however. As for its alternative uses, I don’t see any problem. Steel may be used for quite a few different purposes, and if it is used for one it cannot be used for others–all this means is that the return on the various uses for steel will be the same in general equilibrium. The same goes for gold and its alternative uses. Of course, the economy is never in general equilibrium, but that no more makes gold inefficient as money than it makes steel inefficient in its various uses.
“Let gold stand on its own if it can. My bet is that it can’t in the long run.”
You are of course free to bet on whatever money you wish. However, we can predict that common stock would make rather poor money, whereas, based on both theory and experience, gold would make a rather good money. Thus, just as a bit of entrepreneurial advice, and supposing that we can ever establish a free market in money, it’s probably not a good idea to place your hopes in common stock as opposed to gold.
F Beard
You write, “Why should I go to the trouble of spelling out what the free market would demonstrate to you in exquisite detail?”
Because it is upon he who asserts the positive that the burden of proof falls. That is, since you are asserting the positive, it is up to you to provide the proof. What this means is that the burden you face is what you were challenged to produce. You can’t shrug the burden off in the delusional pretence that a biblical miracle will occur and your ideas will all work out because the free market will somehow prove them on your behalf. What a fantasy!
I wrote that, “Just for a first step you’d need to demonstrate from first principles that ALL issues are solvable and indicate how that would actually be accomplished.”
And that is, as indicated, only the first step. You’d need to go right through your entire scheme demonstrating all of it from first principles as workable, non-fraudulent, non-deceptive, not “something for nothing” monetary crankism, not criminal, universal, convenient, liquid, stable, reliable, etc.
Given your claims that YOUR scheme would win out in a free market you’d also need to demonstrate, again working from first principles, that it properly belongs in a free market, that it could exist within it and that it would indeed win out as the best form of money.
Despite your on-going insistences, repetitions, charmless blind-beliefs and unreliable assertion you have failed to achieve ANY of this.
So, the challenge is there. You must bear it.
Sione
F Beard,
The thing about any form of money is that is a tool. It is not an end in itself. One of the great problems we have as a culture is that we have fetishized money. And the pernicious greed which seeks to collect money for the sake of “having more than” is very destructive towards the common good. It is, to my mind, the great disease of capitalism. As for your ideas about common stock as money, the divisions of private monies vs. government monies, and gold/silver as the monetary base, here are my thoughts:
I think that the key concept that drives all money-based markets is “debt.” When you say “fractional reserve banking” you are referring to private-bank debt creation. The Federal Reserve Bank of the USA is a private corporation. The money they issue are notes for the extinguishing of debt. The money is not stock in the corporation. That stock is not available to all but a few elites capitalists. The “money” which is used to buy goods and services is functionally indistinguishable from the “credit” that banks give you to buy things.
The problem with 100% reserve bank lending, whether it be private common stock money or gold/silver coinage, or whatever else, is “limited growth.” That is, we have placed constraints on the creation of debt, which is essential for funding entrepreneurial ventures. Imagine a gold vault which can only lend out gold deposits. It lends 100 oz to you to fund your new business. You spend the gold to buy equipment, hire workers, etc. Ultimately you go bankrupt, and the liquidation sale returns only 25% of the gold. There is now a 75 oz hole in the bank’s vault. Who will fill the whole?
Well, the only way to fill the hole is if other loans the bank made returned interest in gold. If there is no “usury” as you demand, there are no interest payments, thus there is nothing to offset the losses of failed loans. Loans are speculative by nature. Without an interest rate, there is no incentive for lenders to take risk in new ventures.
In such a world as you propose, there are no debt markets, only equity markets. For an entrepreneur to get funding for a venture, he would have to sell pieces of himself to fund a start-up, or he would have to join an existing corporation who could finance him. The problem with the “equity” only world you propose is that it gives capitalists and corporations even more power over the “have-nots.” Why would anyone loan you money to buy a house? A car? Rent-to-own? Maybe I’m missing something?
Volatility is mainly a function of debt levels relative to underlying assets. You argue that extreme fluctuations in common stock money won’t happen because there will be no debt-fueled speculation. However, uncertainty also creates volatility, and stable stock valuations require honest accounting. Fraud creates excess volatility. So, any healthy system must remove incentives to fraud. Accounting standards and independent auditors are vital.
Even so, humans will speculate, it is our nature. The goal is not to eradicate speculation and volatility, merely to keep it at healthy levels. It’s like driving a car. If you manufacture cars so that we can’t drive faster than 25 MPH, we will have a slow trip. If you don’t fine people heavily for speeding, people will drive faster and faster, and the roads become more dangerous. I don’t think that the answer is to force all cars to drive 25 MPH. And I don’t think that outlawing interest bearing loans is the answer, either. Yes, our system is now an out-of-control drunk driver bent on a self-destructive crash course, and yes, we need an intervention and new rules. I will wait for comments before going further…
The thing about any form of money is that is a tool. It is not an end in itself. One of the great problems we have as a culture is that we have fetishized money. And the pernicious greed which seeks to collect money for the sake of “having more than” is very destructive towards the common good. It is, to my mind, the great disease of capitalism.
I don’t judge people’s attitudes toward money. My own belief is that a true free market in private money creation would teach very many moral lessons such as the value of investing over hoarding, the wisdom of diversification, etc.
As for your ideas about common stock as money, the divisions of private monies vs. government monies, and gold/silver as the monetary base, here are my thoughts:I think that the key concept that drives all money-based markets is “debt.” When you say “fractional reserve banking” you are referring to private-bank debt creation. The Federal Reserve Bank of the USA is a private corporation. The money they issue are notes for the extinguishing of debt. The money is not stock in the corporation. That stock is not available to all but a few elites capitalists. The “money” which is used to buy goods and services is functionally indistinguishable from the “credit” that banks give you to buy things.
I would not ban fractional reserve banking except in the government money supply. People would be free to practice it in their own private money supplies.
The problem with 100% reserve bank lending, whether it be private common stock money or gold/silver coinage, or whatever else, is “limited growth.”
True.
That is, we have placed constraints on the creation of debt, which is essential for funding entrepreneurial ventures.
False. Debt is not necessary for funding entrepreneurial ventures. If I have capital and issue my common stock as money for future expansion, then where is the debt? I’ve exchanged a share of my company for additional assets.
Imagine a gold vault which can only lend out gold deposits. It lends 100 oz to you to fund your new business. You spend the gold to buy equipment, hire workers, etc. Ultimately you go bankrupt, and the liquidation sale returns only 25% of the gold. There is now a 75 oz hole in the bank’s vault. Who will fill the whole? Well, the only way to fill the hole is if other loans the bank made returned interest in gold. If there is no “usury” as you demand, there are no interest payments, thus there is nothing to offset the losses of failed loans. Loans are speculative by nature. Without an interest rate, there is no incentive for lenders to take risk in new ventures.
I would not ban usury. I merely point out it is unnecessary due to the superiority of common stock as money.
In such a world as you propose, there are no debt markets, only equity markets.
False. I propose a true free market in private money creation and you accuse me of tyranny? Let’s have a debt based vs equity based money competition; it would be very instructive.
For an entrepreneur to get funding for a venture, he would have to sell pieces of himself to fund a start-up, or he would have to join an existing corporation who could finance him.
So what? Is the entrepreneur morally entitled to steal purchasing power from the general population via government backed fractional reserve banking?
The problem with the “equity” only world you propose is that it gives capitalists and corporations even more power over the “have-nots.”
More power than their current power to steal purchasing power from the “have-nots” via the government backed counterfeiting cartel? IMO, the reforms I propose would greatly lessen corporate power to loot wealth rather than share it.
Why would anyone loan you money to buy a house? A car? Rent-to-own? Maybe I’m missing something?
Why would I need to borrow money in the absence of a government backed counterfeiting cartel that drives up prices for all?
Volatility is mainly a function of debt levels relative to underlying assets. You argue that extreme fluctuations in common stock money won’t happen because there will be no debt-fueled speculation. However, uncertainty also creates volatility, and stable stock valuations require honest accounting. Fraud creates excess volatility. So, any healthy system must remove incentives to fraud. Accounting standards and independent auditors are vital.
Accounting standards would be unnecessary for equity based money. Accounting standards are merely to justify and limit the issuance of debt based money are they not? Are they not just an agreement between thieves of purchasing power( the FR banks)?
Even so, humans will speculate, it is our nature. The goal is not to eradicate speculation and volatility, merely to keep it at healthy levels. It’s like driving a car. If you manufacture cars so that we can’t drive faster than 25 MPH, we will have a slow trip. If you don’t fine people heavily for speeding, people will drive faster and faster, and the roads become more dangerous. I don’t think that the answer is to force all cars to drive 25 MPH. And I don’t think that outlawing interest bearing loans is the answer, either. Yes, our system is now an out-of-control drunk driver bent on a self-destructive crash course, and yes, we need an intervention and new rules. I will wait for comments before going further…
My goal is to eliminate tyranny in money creation, not eliminate risk taking or outlaw interest charges. Why do you persist in putting words in my mouth? Before you go further, I wish you would reread what I have said. You presume way too much.
F. Beard,
Yeah, I was just putting out questions to you because I wasn’t quite clear on how firm your views were on the topic of debt. I wasn’t trying to put words in your mouth. I just need to ask a lot of questions to understand new concepts.
So, to be clear, you are basically just proposing that government or the FED does not have a monopoly on legal tender? I like that idea. But if you allow fractional reserve banking of private money and usury, I don’t see that the systemic problems are addressed. There will still be a tendency for debt levels to get too high and for boom/bust cycles. Another question is can I use government money to pay private debts? If not, why not? And what legal limits are imposed on the sovereign issuer? Can the government flood the economy with as much money as it wants?
So, to be clear, you are basically just proposing that government or the FED does not have a monopoly on legal tender? I like that idea.
No. I am proposing that ONLY the government should issue legal tender and that it be legal tender ONLY for government debts.
But if you allow fractional reserve banking of private money and usury, I don’t see that the systemic problems are addressed.
Fractional reserve lending depends on some form of government privilege to survive, I would bet. Remove those privileges and FR banking is doomed, imo. Usury would persist longer, but the free market would eventually shrink it to insignificance.
There will still be a tendency for debt levels to get too high and for boom/bust cycles.
Any remaining boom-bust cycles would be localized and not affect the whole economy.
Another question is can I use government money to pay private debts? If not, why not?
Sure you can, as long as the other guy agrees to accept it.
And what legal limits are imposed on the sovereign issuer? Can the government flood the economy with as much money as it wants?
Yes, it may, but without legal tender laws for private debt, the population may refuse the governments money.
I just need to ask a lot of questions to understand new concepts.
Sure. Ask away.
Fractional reserve lending depends on some form of government privilege to survive, I would bet. Remove those privileges and FR banking is doomed, imo. Usury would persist longer, but the free market would eventually shrink it to insignificance.
These are strong claims. Please provide your reasoning. I would expect funds to flock to large money center banks that people had confidence in merely because of their size. These banks would issue money as common stock. Perhaps this money would attain a premium above net asset value. The credit they issued in the form of shares is only as good as its share price. I know the theory is that the free market equilibrium would keep such overextension of credit in line.
The problem with common stock money is this — it turns everyone into a stock trader. Most people don’t want to be stock traders. But they do want the convenience of digital/paper money. Therefore, the public will tend to gravitate towards government money or central bank type money. People will still want a basic standard unit of exchange. The simplest solution would be to use government money. Of course, in theory, if a large bank offered sounder money, there would be a market preference for that money. In which case, the bank would have an incentive to remain relatively conservative, while still leveraging the market premium for their money.
However, there will be no regulation of other common stock money issuance. There will still be rampant debt market speculation, derivatives, swaps, etc. I think the idea of private stock money as a competitor to government monopolized money is a fine one is worth pursuing. I just don’t think it will solve the financial stability problem. Please explain why you are so confident it will.
To repeat a post from another thread….it seems appropriate here, sorry for the
repetition.
If the pro-FRBie position, that there is no fraud, or any other misdeeds
involved in FRB is correct, why are banks the only ones who are allowed to do
it? If there is nothing wrong with making a scarce economic good available to
multiple parties at the same time, why can’t everyone do it? Why only banks?
As that, oh so clever fellow, perfesser Selgin loves to point out, the banks
make it clear that the only relationship between them and their customers is
that of creditor and debtor, nothing else. Curiously, in common parlance the one
borrowing the money is usually called the customer, not the other way around. I
guess that makes the bank my customer when I deposit money in my account. Why is
it illegal for me to treat my ‘customers’ the same way the bank treats its
‘customers’?
It is a commonly accepted point of law in free countries that if an activity
is legal, then it is legal for everyone, not just for the cronies of the powers
that be. Lets take a look at FRB from the idea that these activities should be
open to everyone, after all, they are harmless, if not outright beneficial to
society.
I notice that I can get a checking account that pays a small rate of
interest, 1% on the one I am looking at. I take this $100 bill I have here, in
front of me, to the bank and open an account. Then, because there is nothing at
all wrong with telling someone else that they also have access to that same
money, I go to a second bank. At bank 2 I open an account by writing a check for
$100 on the first account. Then I go to a third bank and write a check on bank 2
for $100 and open another account. I follow this pattern until the one hundredth
bank, at which point I write a check on that bank for $100 and send it to the
very first bank. I now have 100 accounts, each with $100, assets and liabilities
balance. I have done nothing wrong according to FRB.
Following the methods described so elquently by the pro-FRBies, I use my
right to temporarily delay transfer of funds in what is, after all, just a loan,
to make sure that all of the checks clear in order and in rapid succession. This
is called good banking practices. The original $100 circulates through the
accounts, cascading from one to the next like the water in M. C. Escher’s
wonderful drawing of those waterfalls.
By continuing this pattern of check writing in a timely manner, accounting
for the time involved in clearing transactions, I can keep every account
continually at $100. The banks, my customers, are not hurt in any way, because
they each have the use of the original $100 in exactly the same way that THEIR
customers have the use of any other depositors money under FRB. They turn around
and loan out the money from my accounts, at higher interest than they are paying
me, to multiple customers just as I have done with them. Prosperity flows from
my actions like water from a holy spring.
At the end of one year each account has earned $1 in interest. A total
return of $100 on an original investment of $100 , not bad at all. Resisting the
temptation to take my honestly earned profits to Ms. Bunny”s Sartorial Parlor
and Club for Gentlemen, I instead gather up all the interest and add it to the
first $100 in bank number one. I continue as before, but now I am writing checks
for $200. At the end of the second year I have honestly earned $200 in interest,
which I add to the first account once again, doubling my wealth once again.
Still resisting the charms of Ms. Bunny, I follow this pattern for 15 years, at
which point every account balance reads $1,638,000. If you doubt it, do the
math, $100 doubled 15 times. Think of the prosperity I have brought to all of
those bankers.
But alas, I can no longer resist the pleasures of Ms. Bunny”s Sartorial
Parlor and Club for Gentlemen, so I allow the checks to clear one last time, in
order, and write no more, one at a time I close the accounts, in reverse order,
until I get back to the original account. The original account which holds only
my original $100 and all of the honestly earned interest over the 15 year
period. The original account which now has $1,638,000 none of which was stolen
from anybody according to the tenets of FRB. It seems Ms. Bunny and I will have
a fine time indeed.
Imagine now, if you will, everyone in the world following the tenets of FRB,
as is their right in a free society. Why, in a single generation poverty would
be erased, all mankind would be so wealthy that no one need ever work again. We
would all, each and every one, bask in luxury and ease. Does it sound a little
too good to be true?
This is the nub of the issue, the very heart of the fraud that is FRB. If
every person were allowed to engage in the practises that make up FRB, the
entire system would collapse. If every person were free to create credit money
according to the tenets of FRB our banking system and monetary system would
obviously collapse, we would be reduced to a barter economy. Those who practise
FRB are like the burglar who complains when he is robbed, they insist that only
they should have this particular license to steal. FRB is sustainable only if
its practises are restricted to a lucky few, it requires that others be
prevented by law from doing the exact same thing. Governments are only too happy
to oblige their owners in the banking industry. After all, what is a government
if not a gang claiming the exclusive right to steal and murder?
I am truly amazed at the individuals who claim that FRB would never arise in
a free market, one of them even said “there would be no incentive to engage in
FRB”. FRB is wildly profitable up to the point that it fails, much more
profitable than honest banking has ever been. Typically, when it does fail, the
executives who rewarded themselves with outrageous salaries and the stockholders
who received outrageous dividends, get to keep that money. It is the depositors
who lose out. The adage “crime doesn’t pay” holds true only so long as a society
actually makes the activity criminal. Saying that FRB would disappear solely
from the competition of honest banks is the same as saying that armed robbery
would disappear solely from the competition of honest labor, no need to make it
illegal.
If you truly believe that FRB is honest and legal, then you should support
the right of every individual in a free society to engage in these activities.
Imagine, every single one of us free to engage in FRB….
Yours Truly, the heretic and poor lost soul, Sy Akhplart
Well said. OF course, FRB is a game of musical chairs, and the winners are the ones who are friends with the guy whose hand is on the needle. I agree that F. Beard’s proposals would not eliminate FRB or any fraud. He would probably argue that since the central bank or government no longer has a monopoly on FRB that competitive FRB, which as you explain is by definition unsustainable, would run itself into the ground. Look at the history of the USA in the 1800′s post-Jackson. We had no central bank, and a multitude of wildcat banks which issued their own private money, engaged in FRB and there were intermittent panics every few years and countless bank failures and ruined fortunes.
No matter how many panics and failures we go through, after every crash there is the temptation to start the cycle over again with fresh capital, create “free money” then close shop before the next crash. I just don’t see F Beard’s reasoning for why the free market would solve the problem of FRB, financial instability, or usury for that matter. How does he explain the USA 1800s post-Jackson? FRB and usury were not eliminated by the free market.
I absolutely loath FRB, ban it if you wish. I advocate common stock monies yet I fear no competition from FRB or usury. I just insist the competition be fair.
However, I prefer that the free market crush FRB to make the lesson an absolute one.
In other words, FRB is not worthy of being outlawed.
How does he explain the USA 1800s post-Jackson? FRB and usury were not eliminated by the free market. sandorbg
A favorite trick of bankers is to convince the government to accept their money for taxes. Also, the FR banks often persuaded governments to suspend specie redemption. So, we have never really had a true free market in private money creation in the US,imo. Why? Because until the Greenbacks, the US government never issued its own exclusive money separate and distinct from private money forms.
Fractional reserve lending depends on some form of government privilege to survive, I would bet. Remove those privileges and FR banking is doomed, imo. Usury would persist longer, but the free market would eventually shrink it to insignificance. FB
These are strong claims. Please provide your reasoning. sandorbg
Bank runs would keep any purely private fractional reserve banks in check. The banks themselves would keep each other in check. With no “lender of last resort” able to conjure reserves out of thin air, the banks would have to be very careful about increasing their liabilities (money) lest a competitor buy them up and demand redemption. Historically, private bank leverage has been limited to about 2-1. As for usury, it is a rent for a medium of exchange. With direct trading of common stock monies, there would be no need to rent a medium of exchange.
I would expect funds to flock to large money center banks that people had confidence in merely because of their size. These banks would issue money as common stock. Perhaps this money would attain a premium above net asset value. The credit they issued in the form of shares is only as good as its share price. I know the theory is that the free market equilibrium would keep such overextension of credit in line.
If the money was truly bank common stock, then the current holders of it (the corporation owners) would insist that any new issue of it be for sound investment. But who would wish to borrow common stock anyway? It might be very difficult to repay. And why would a corporation lend its stock when the purpose might be to sell it short? So for those reasons, I expect conventional banking would soon shrink to a small size. Corporations would simply spend new stock into circulation, not loan it.
The problem with common stock money is this — it turns everyone into a stock trader. Most people don’t want to be stock traders. But they do want the convenience of digital/paper money. Therefore, the public will tend to gravitate towards government money or central bank type money. People will still want a basic standard unit of exchange. The simplest solution would be to use government money. Of course, in theory, if a large bank offered sounder money, there would be a market preference for that money. In which case, the bank would have an incentive to remain relatively conservative, while still leveraging the market premium for their money.
Like I said, I am no tyrant; let people use whatever they wish for money. But in the long run, sans government privilege, the most just money forms would win. That leaves out fractional reserves and usury, imo.
However, there will be no regulation of other common stock money issuance.
The usual laws against fraud and insolvency would be enforced.
There will still be rampant debt market speculation, derivatives, swaps, etc. I think the idea of private stock money as a competitor to government monopolized money is a fine one is worth pursuing.
Let the buyer beware and diversify prudently.
I just don’t think it will solve the financial stability problem. Please explain why you are so confident it will.
Look at what we have now, a single government enforced monopoly money supply. All of our eggs are in one basket. Is that wise? A free market in private money creation would allow other money solutions to be tested and the best ones to survive.
I find it interesting that in a libertarian society that allowed FRB and also
accepted pope Kinsellas arguments against intellectual property, counterfeiting
would not be a crime.
Yours Truly, the heretic and poor lost soul, Sy Akhplart
The distinction between those is that between property and externalities. Counterfeiting (in the strict sense) means you are lying to your customer regarding the good you are selling to him. It is the buyer’s understanding of the nature of the good that determines whether a violation of rights occurred or not. FRB criminalisation and IP on the other hand are based on the assumption that the transaction is hurting some arbitrary third party (e.g. “public” or “author”), and that third party’s opinion regarding the nature of the goods determines whether a violation of rights occurred or not. The problem with the latter approach is that (almost) any transaction whatsover causes some third party to disapprove of it. Why should their opinion be relevant from a legal point of view?
If I trade my perfect copy of a fractional reserve note for a loaf of bread,
that transaction is between me and the person with the bread, no one else is
involved. How is my representation of the value of my note at all different from
the representation made by the issueing bank of their versions of the same note?
Yours Truly, the heretic and poor lost soul, Sy Akhplart
There is no such thing as a “perfect copy”. That notion is a utilitarian and a subjective one, describing a situation where someone finds the copy usable for the same purpose as the original. Even if you create something that a numismatics specialist cannot distinguish from a note issued by the Treasury, they still differ because the latter was issued by the Treasury whereas the former has not. What is relevant from a praxeological point of view is:
- whether the recipient of the note considers the origin of the note a defining factor of the good
- whether the recipient was correctly informed by the seller regarding this factor
Fraud only occurs if the recipient considers origin to be a defining factor, and if the seller did not correctly portray this to the recipient.
The causal effects of any action extend to infinity. If I buy a loaf of bread, that has an adverse effect on all other sellers of goods, because I cannot spend that money on their goods anymore. It is a result of scarcity and is reflected by the notion of opportunity costs: if I perform action A, some other actions will become unavailable. Some people would benefit more from me performing action A than other actions, and these are adversely affected by my choice.
The problem is not the value, but the origin and whether the recipient considers the origin a defining factor of the good. He might, or he might not. It is up to him. Just like you can try to make a picture that looks like one painted by Picasso and sell it. There is nothing wrong with that per se. However, if you sell it to someone expecting an original while claiming to him it is an original, you commit fraud. This has nothing to do with copying. If you sell a rock while misleading the buyer into thinking that it is an apple, that’s fraud too.
Errata:
Make that:
Some people would benefit more from me making those other actions rather than A, and these are adversely affected by my choice.
Further, if the issuer of the notes I copy has not made an explicit contractual
obligation to redeem each and every note for a specific amount of
some commodity, then they have no legal grounds for complaint. There is a well
established common law principle which basically says “no harm, no foul”. If
they made no ‘guarantee’ of the ‘value’ of the notes then I have not harmed them
at all.
Yours Truly, the heretic and poor lost soul, Sy Akhplart
Even if the act of copying in your example might not be in a property rights violation, the act of pretending it is an original might be fraud (see my previous examples). Furthermore, even if there is no fraud, it still might have adverse effects (negative externalities) on other market participants, for example by altering the prices of goods or people’s perceptions regarding features of existing goods and services.
I’m not suggesting that negative externalities should be made illegal. That’s not the point of my argument. My general point is that negative (as well as positive) externalities are an omnipresent phenomenon and changing the definition of property rights does not eliminate them. My more specific point is that people often convolute externalities with property rights violations and that logically the definition of property rights must precede the question of whether a violation occurred or not. Concentrating on the fact that an action has an effect that some people disapprove of is deceptive because that is an unavoidable component of human action. It’s flawed logic.
Funny how selective you are in your use of ‘externalities’, bankers are not
accountable for the consequences of their ‘externalities’, but non-bankers are
to be held accountable for equivalent ‘externalities’. Once again, FRB is based
entirely on a priviliged status granted to a few, and collapses if everyone is
allowed to follow its practises.
Yours Truly, the heretic and poor lost soul, Sy Akhplart
This is a gross misrepresentation of my argument, indeed completely missing the point I’m making. My point is that whether an action represents a violation of property rights follows from the definition of property rights rather from the fact that it makes someone worse off than the alternatives. Any action whatsoever makes someone worse off than some of the alternative actions the actor could have pursued, yet it is not true that all actions whatsoever violate property rights.
Can you please exactly explain what you mean by the word “equivalent”? I carefully phrased the conditions that fraud needs to fulfil: the buyer must receive a different good than he requested, and the seller must mislead the buyer regarding the nature of the good. How is this related to market value of other goods that are not a part of that transaction (“inflation”)? It isn’t. It’s more like if you are the first guy in the world to buy an iphone for, say 500$, but their price later diminishes after other people buy iphones too. You cannot sue Apple back for loss of purchasing power of the iphone due to their infation the supply of iphones. Unless, of course, they promised to buy back the iphone for the original price but subsequently declined.
The Hoppe-Kinsella approach to property rights states that one has the right to the physical integrity of that property (rather than, for example, the value of the property). Therefore, it does not follow that if printing a nice picture on a piece of paper decreases the purchasing power of other pieces of paper that look like it, that represents a violation of property rights.
One could make the argument that FRB or central banking misrepresent the nature of the good or service to their customers, and therefore are fraud. I am not fully convinced this is the case. On one hand, it says on the US dollar notes that the issuer is obligated to exchange the note for “xxx dollar(s)” (whatever that means). You could argue that if they do not exchange it, they are perpetrating fraud. On the other hand, there is no such text on the euro notes. Issuing euro notes does not obligate the ECB to anything. Yet, since the inception of euro as cash in 2002, its exchange rate vi
Austrians often argue that commodity money evolved through a market process and governments took them over, and replaced them with fiat money through force. Yet it does not follow that currencies created from scratch rather than by takeover of existing notes are fraud too. Also, legal tender laws have usually very little direct force involved. Unless you are a bank, you are probably not required to accept legal tender for any reason whatsover (unless you are receiving money from the government of course). They still skew the picture though due to exchange rate manipulation, accounting laws and network effects.
Also, fractional reserve banks do not print their own money, rather they increase the money supply by extending credit. Credit is just an entry in a database. It is not a currency note. I fail to see how from the fact that changing an entry in a database has an adverse effect on the purchasing power of a currency note one can draw the conclusion that the owner of the currency note is defrauded. He is not a party to the contract, nor is the physical integrity of his note infringed.
Again, my whole point is that a definition of property rights is a necessary prerequisite for the conclusion whether an action that adversely affects someone is a violation of property rights or merely a negative externality. I contend that a lot of people skip over this point and rush their conclusions. This approach is erroneous.
Personally, as explained above, I am unconvinced that the various Austrian property theories lead to the conclusion that FRB or central banking are inherently fraudulent, but I also admit that this could be due to vagueness of the concepts involved (and due to government and banks convoluting the mattter further) rather than due to any strict logical aspect of the problem.
I repeat, the conclusion whether FRB and central banking constitute fraud can only be made after a definition of property is formulated.
The problem with libertarian society is that it encourages cartel behavior and predatory capitalism. Which is what we have anyway. It would just be more untrammeled. The idea that eliminating the “monopoly on force” held by the state would level the playing field is an illusion. Instead of a monolithic mafia state you will merely have competing warlords and gangsters, each with their own fiefdom. By making everything legal except force and fraud, you do not eliminate force and fraud. You still have a civilization held hostage by terrorists.
You cannot enforce a libertarian ideal any more than you can enforce the laws we have now. If people choose to flock towards centralized standardized institutions like the church, state, or central bank, it is because they want the hard problems of life taken care of for them — mental health, physical health, and property preservation. The more responsible individuals are in aggregate, the more they can dispense with laws and government. So in theory, as humans become more enlightened, the state withers. But even as the state withers, there will still be the need to defend ourselves from the threat of force. To this extent, a balance of power is desirable in the markets and geopolitics.
Libertarianism cannot and will not thrive on a widespread level until a balance of power regarding the threat of force has been established, and the international community is mobilized against terrorism. And yes, I know most states are de facto terrorist organizations by their very nature. The idea of justified pre-emptive strikes is abhorrent and is the greatest setback towards an ideal of communal political freedom.
This relates to the discussion of the money problem, because money is a functional proxy for a claim on resources, and money mobilizes armies, whether they are humans or drones. So the money problem is central to the solution. We do need a free market in money creation. We all need to be allowed to issue our own money for private transactions to truly level the playing field. But that’s not enough, because third party transactions will still require standardized stable units of exchange, which emerge only through institutions or at the very least treaties between millions of people (institution by proxy). Without international laws restricting the size of banks or limits on balance sheet leverage (FRB), the libertarian ideal will still tend towards the same outcomes we see today — concentration of power in the hands of a few. Those who have the most capital will tend to consolidate their power. This is the lesson of history to date. If there are no internationally agreed-upon rules of the game, we are de facto endorsing the actions of predators and terrorists. Political economy boils down to game theory.
I would add that terrorism and the threat of force is not restricted to physical attack. In fact, most of it is now conducted financially. So we really need to figure out how to strip private banking cartels of their control of the money supply. How can we best accomplish this when even “educated professionals” refuse to acknowledge or address the problem? I’ve taken to boycotting the Dems and Reps, boycotting credit cards, sending FRB videos to every one I know. What else?
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