Tell me, do you think that the value of a secured line of credit has the same value as an unsecured line of credit? why would the two be different? does the equity in a secured line only represent a potential asset or does it represent an actual asset and how, do you think, does that add to the value of the total line? please do tell.

I could point out that the present value of a future income stream is equal to the current selling price of the asset, so that counting both the stream and the asset is double-counting, but you were already talking about quacking ducks and barking dogs two posts ago, so I’ve obviously exhausted your patience.

Stock and rent dollars are backed by the actual real assets held by those owners PLUS the future potential income.

Fed Dollars are not back by any actual real assets, ONLY the future potential income.

You asked for someone to tell you:

“any important difference between these rent dollars of mine and the green paper dollars that we all use”

and I am telling you that the important difference is one of actual vs potential.

Use it as you will.

Or you could take the correct view, as explained in every finance text, which is that a potential stream of future payments has value today. Thus stocks are backed by potential future profit streams, my rent dollars are backed by potential future rent streams, and fed dollars are backed by potential future tax streams.

Well, there are only so many ways to explain that a duck is a duck so its getting redundant to say the same thing over and over. Either you are going to see the duck as a duck or as something that it is not, either way the duck will still quack no matter how much you claim it should bark.

The Duck:

Your $300K dollar loan from a bank OR your issue of $300K in rent dollars are both backed by the use/utility that land brings to those other productive people, therefore both the $300K loan or the $300K rent dollars are backed by the land.

The value of the rent dollars are backed by the land.

If the land is rendered useless (via flood, fire, pollution, infestation, condemnation etc.) so too would be the rent dollars you issued and the mortgage note the bank held against the loan (assuming you spend the money on the land).

The value of the mortgage loan is backed by the land.

The land backs both the value of the mortgage loan and any rent dollars you issued.

Land, and the things people use it for, is what backs any derivation or proxy one can think of concerning its use in any way shape or form.

The NOT-a-Duck:

A “secure stream of future tax revenue” that “only exists because there are productive people in the world” conflates the potential with the actual.

A potential is not an actual. Land is actual. “Future tax revenue” is a potential.

Therefore, Fed dollars are only backed by a potential i.e. by nothing

I expect that you understand that I myself might be a worthless, unproductive slob, but that if I own vacant, unimproved land worth $500,000 (swindled from an old lady), then I can walk into any bank and easily get a loan for $300,000 or so, based only on that land. I could also issue about $300,000 of my rent dollars against that land without much trouble.

Of course productivity matters, but not necessarily MY productivity. My land has value because other people are productive, and their productivity creates a demand for my land.

It’s the same for the government. They might be thugs, and taxes might be nothing but protection money. But a government with a secure stream of future tax revenue with a net present value of $500,000 can easily get a $300,000 loan, and just as easily issue $300,000 in Fed dollars. Naturally, that tax stream only exists because there are productive people in the world.

I disagree. Productivity is all that matters. An asset is, by definition, valuable only because of its productivity. If your building was not able to produce rents because of condemnation then it would cease to be an asset. Likewise, if the US taxpayer was no longer able to produce goods to tax then they would cease to be an “asset” of the Federal Government, as repugnant as that sounds it is no less true.

Take Social Security and Medicare/Medicaid for example, obligations the government has made which are presumably backed by its assets right? What are those assets backed by? US Treasuries. What are US Treasuries Backed by? Taxes. Where do taxes come from and who will pay them? The people who will produce the good and services that the government has spent on their behalf, NOT some government printing press. If the obligations exceed the productive capacity of those who are producing then the difference must come from somewhere or the obligations would not be met. There would be no “cakes” for anyone to “eat”. The difference comes from our investment capital, the stock seed that generates future returns. If the obligations consume all of the investment capital faster than it can be produced you have bankruptcy, the physical inability to satisfy the obligation.

If productivity does not matter, as you seem to be asserting, then our nation’s fiscal problems should be solvable via a government printing press, the fact that it cannot be solved that way is proof that your position is false, that there is a very real physical difference between the value of a rent dollar backed by a real physical asset you call your land vs. the value of a Fed dollar backed by a promise to deliver an asset that has not yet been brought into existence AND which the government has not yet appropriated.

It doesn’t matter how I got the ability to collect rent on the land, and it doesn’t matter how the government got the ability to collect taxes. I can take my promise of future rents to a bank and the bank will lend me money on it. The government can do the same with its promise of future taxes. Nobody will ask us how we came into possession of our assets, or whether we have been, or will be, ‘productive’.

And when the government and I each start issuing dollars (backed by rent or taxes), the only thing anyone will care about is how much our assets are worth. The value of those dollars will be determined only by the value of the assets that we back them with, and not on our productivity.

Well, we are in agreement that inconvertable does not mean unbacked. I would say its more like a loan default than outright fraud. But, that still does not erase the distinction between government assets vs private assets.

In your example, no matter how you came by the land, via right or by fraud, the person you got it from must have done something to establish claim of title, either by homestead or by purchase, or by fraud of someone else who did. At the end of the line someone had it by right for it to be appropriated.

Moreover, if the government improved your land, where did it get the funds to pay the workers and buy the materials to build it? Those things must have come from somewhere, so who produced them for the government to take and to use to make your improvements. No matter how you approach it, there is simply no such thing as a free lunch. The goods that paid the taxes must have come from somewhere by some means, NOT from the government fiat issue of paper.

The beauty of a free market is its freedom to choose which system is more preferable. There is certainly no valid principle that would prohibit an FRB bank just as there is no valid principle that would prohibit one with 100% reserves.

Calls to enforce one over the other is contrary to freedom, and to capitalism.

Suppose my land is all vacant, and I got it by swindling an old lady. The net present value of all future rents is $500,000. The government, on the other hand, built roads, waterworks, etc., and the present value of the taxes that it will be able to collect from my land is $500,000.

I can safely issue up to about $300,000 of rent dollars against my rents, and the government can safely issue about the same against its taxes. If either of us exceeds that amount, people will start to worry about our reckless behavior, and the value of both of our dollars will fall. If our issuance exceeds 500,000, then inflation is certain.

Just for fun, I might try issuing about $10,000 and use it to buy 10,000 oz. of silver (assuming 1 oz. sells for $1) and then announce to people that I stand ready to convert my rent dollars to 1 oz. of silver. That might actually work for a long time, as long as nobody demands more than 10,000 oz. at one time. But eventually, I’ll suspend convertibility into silver and return to my old system of just accepting them for rent. The fun will come when the folks at Mises.org, observing that my rent dollars are no longer CONVERTIBLE, wrongly conclude that they are UNBACKED. Obviously, inconvertible does not equal unbacked, but that wouldn’t stop them from yelling “Fraud!”, “Thin air!”, “Counterfeiter!”, “Crude inflationist!”, etc.

I see we are just going to circle around this issue. You wrote:

“Just as my rent dollars are worth something because they are backed by rents receivable, the Fed’s dollars are backed by taxes receivable.”

Your “rents receivable” are, in turn, backed by the land capital you own/control. The land exists and it has improvement value that represents work ***already*** done (e.g. buildings).

“Taxes receivalbe” are, in turn, backed by goods whose improvement value has yet to be, value that represents work ***not yet done***.

When you say that your rent dollars have outrun your assets you are stating that the value of the ***existing*** assets you CURRENTLY own is less than the outstanding claims you have made against it, hence each dollar value is less. simple math yes, but the point is that those dollars, even being less in value, are stil backed by an asset that EXISTS (your land).

When you say that a Fed dollar has outrun the governments assets you are stating that the value the government’s assets, which it has not yet appropriated, is less than the outstanding claims they have made against……who?….what? the government itself? its “assets”? but its “assets” are future receipts. the “outstanding claims” are against its own citizens future production, which DOES NOT yet EXIST. so it is not backed by ANYTHING.

perhaps you can make a case that it owns land (not nearly enough to cover) but I would like to see you try asking for federal land in “exchange” of your dollar, see how far that goes and be sure to let us know