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http://www.lewrockwell.com/orig6/karlsson5.html The Futility of Inflation-Targeting by Stefan M.I. Karlsson http://www.lewrockwell.com/rozeff/rozeff76.html A Few Pitfalls of Statist Economics by Michael S. Rozeff http://www.lewrockwell.com/decoster/new-socialist-man.html Will The Federal Reserve Create The New Socialist Man? by Karen De Coster and Eric Englund http://www.lewrockwell.com/bonner/bonner264.html The Bank of Bernanke by Bill Bonner http://www.mises.org/store/Making-Economic-Sense-P283C18.aspx?AFID=1 Making Economic Sense AUTHOR: Rothbard, Murray N. To Whom It May Concern: Above are links to the latest round of articles professing ‘Economic Wisdom” from Lew. Rockwell.com So much of what flows, currently, from that site is cause for me to read and pass on because, in my opinion, it is valuable information in preparation for current decisions leading to future realities. So much of the content in those articles is fiction, busy work, waste, cost without benefit, and fraud, again, in my opinion. What confirms my opinion is the lack of any discussion, from them, on the contentious contradictions in their text, their words, their ideas, and their professions. Go knows I’ve tried to inspire debate, or, I know and that will have to be good enough for me and whoever else is interested in reducing costs for greater benefit. Half truth: Invest in gold. The purchase of gold with dollars is not necessarily an investment. It can be an exchange of ink and paper for ink and paper. It can be an exchange of digital numbers for digital numbers. It can be an exchange of ink and paper and digital numbers recorded on a hard drive for a shipment of gold to your house. An investment of gold can be a purchase of gold to be used in constructing a valuable product, such as an electronic device that utilizes the efficient properties of gold for conducting electricity, and then that new product could increase the value of gold and thereby cause the investment to be an economically beneficial investment. Investment is an increase in value above cost. If there is no increase in value above cost, then, it is not an investment; it is waste or cost spent for less than nothing in return. The professors blame others for ignorance, apathy, waste, etc. and, of course, they are not infected with those same tragic qualities. Often, the professors proclaim, the stupid people spend more than they earn or those professors accuse the scum bags of not having enough sense to save. This is funny to me. Spending more than a person earns is a twist of words as is the whole concept of saving. This is part and parcel to what could be termed Scarceonomics or The Scum Bag Theory of Economics. It is institutionalized prejudice. Like this: I know and you don’t. I am good and you are bad. I do right and you do wrong. I am pure and you are tarnished. I am true and you are false. I create wealth and you destroy wealth. I save and you spend. I earn and you take. The Scum Bag Theorist almost to the man will not entertain any notion that they may need to look in the mirror as they profess their indictment of the Scum Bags but certainly they have no problem entering the holy light of praise for their honorable station at the head of all that is good. Spending more than a person earns is the reason why gold appears to be a good investment. We are all victims of this falsehood. Gold, the actual possession, maintenance, and security of that possession of gold make gold an effective storage of wealth. Any crook can steal gold and become wealthy so long as the crook can keep the other crooks from stealing their gold. The cost associated with securing cold against theft is a cost that depreciates the value of gold. Someone with a whole lot of gold, for example, will need to hire a bunch of people to stand guard on their gold and as likely as not those guards will need to be guarded. Someone with a little bit of gold will need to hire less people to stand guard on their gold and as likely as not those guards will need to be guarded. If a person did nothing else in their life but spend all their time guarding their gold the fact remains that if the gold is stolen, then, the gold is gone. That is not an investment and it can be a costly thing to imagine gold as ‘saving’. The half truth is supported by greater falsehood. In fact a falsehood cannot exist without some truth. So the whole business of professing the value of gold as money is itself a falsehood that is supported by the fact that gold is simply a possession requiring the cost of security, and no more. Gold is not valuable as money, certainly not valuable as currency, which is another confusion that supports the falsehood of gold and money, and, these half truths are further supported when comparing the gold business to the counterfeiting paper money business. The professors of the soundness of the gold money business, not to be confused with the gold as commodity business, proclaim that gold is much better as money than the current business of the Corporate, or Nation State, or Fascist State control of a paper currency monopoly. Like any shell game, or bait and switch fraud, the gold money advocates point out the evils of paper counterfeit money and then inject the false virtue of gold money. To see this clearly it may help to utilize the gold money advocates logic to defeat their logic but first it must be understood that money and currency are two words and not one word. One can confuse currency with money and that is another bait and switch fraud. One more step backwards: A possession of anything of value must be acquired in some manner and there are a few possible methods. A gift from nature where the apple falls from a tree into your hand is one method. Forcibly robbing the apple from the person holding the apple is another method. Convincing the person holding the apple to give up the apple for nothing in return is another method. Finding an apple tree, itself a possession and then expending further cost, it costs time and energy to find the apple tree, to pluck the apple from the tree is anther method of gaining the possession of the commodity known as APPLE. Savings, if this can be understood, is acquiring, possessing, and securing something of value. It may also help to view our own bodies as a acquisition, we were born, as a possession, we live, and something to be secured, we eat, sleep, and try to be happy enough to keep on living. Note too that the people who insist upon getting something for nothing are the people who increase the cost of securing our savings; or possessions. One more note before moving on to the fraud called gold money: The people who create more possessions, more commodities, can save all their own excess production, they can give away that excess, and they can exchange their own excess production for anything anytime so long as someone else is willing to exchange something for something. My next chore has been written before, in other words, and submitted to the Austrian Economics Forum without inspiring any comment. Whoever reads the following can respond here and I’ll link that post for clarification. I’m exchanging what may be nothing and therefore nothing is expected in return. Falsehood is pervasive. Suppose that a person stumbles upon a field of gold in a remote location. The idea is not to imagine a sunken or buried treasure of Spanish gold since those finds are often very difficult to posses in the current day and age. Imagine a remote part of some obscure state where pure gold just happens to be exposed on the surface and it is a simple matter of taking a pick and chopping off chunks. Suppose now that the person fills a few semi-dump trucks with the stuff and begins to go about possessing this gold. Can it be seen clearly that a few problems exist? How does someone posses the pick and the trucks? Would the person be more inclined to build a fence first and hire some guards? Would it be better to falsify the find so as to limit the interests of the guards? Tell the guards that the possession is an ancient set of fossilized foot prints perhaps. I’m going to add a few competitors. Next to the gold farmer hiding and guarding his gold is another person who found oil bubbling out of the ground. Now there are two businesses nearby each other where both are inclined to spend costs in the endeavor to secure their possessions. One may want to hide their possession while the other may want to simply get the most stuff out of the ground as possible. Call it a race. I’ll call it a rat race if you don’t mind. The third competitor notices a gap between the two fences between the oil and the gold businesses and that new entrepreneur also notices that both businesses are spending a lot of cost running equipment. Electric generators are making electricity and trucks are delivering refined petroleum fuels. Electricity is running water wells. Fuels are running vehicles and equipment etc. Both existing business must leave their property to get supplies in exchange for their wealth. The gold business goes to the nearby bank, a long distance away and exchanges gold for pieces of paper. The oil business goes to the nearby refinery, a very long distance away, and exchanges oil for pieces of paper. Both businesses then go to the gas station to get fuel for the return trip and truck loads of fuel for their businesses. Food is also exchanged for paper or, perhaps for digital records of data on electronic devices at the various stores and the bank. The third competitor views the flow of stuff in and out of the site as he or she stand between the two fences. The situation is current and continues for days on end. The third competitor begins calculating some numbers and realizes that the oil business and the gold business is gaining lots of paper or digits on the hard drive at the bank. Oil is helping the gold business and gold is helping the banking business. The third competitor has an idea and sets about to make the idea a reality. Something is needed to set the reality in motion so the entrepreneur takes out his economic theory book to find that necessary something. The instruction book suggests a need for money so the person goes to the bank. The bank will not lend any paper because the entrepreneur has nothing of value to exchange for money. Even if the entrepreneur did have something of value to exchange for money, according to the bank, and confirmed by the economics instruction book, the bank will charge more money from the entrepreneur if money is rented or borrowed. In other words the entrepreneur has to pay a cost for borrowing money and that cost must be paid each month or the person would be subjected to the loss of what the person did posses. In other words the bank deal demands both a continuous flow of money monthly from the person and the bank will, most certainly, take from the person, by force, any possession that the person possesses if the flow of money does not continue flowing from the person to the bank. The person doesn’t like the deal and the person puts the economic rule book in the trash. The entrepreneur is back to square one after wasting a whole lot of time and energy however the idea remains to be an obviously good idea so the person doesn’t simply give up. The person checks for other economic ideas in history and finds a quote from Benjamin Franklin. Here: http://www.perfecteconomy.com/pg-parable-of-perfect-economy.html This: "It's quite simple. We have created our own currency." What a novel idea, the entrepreneur thought, I’ll do that. Now, it must be said, that the person, the entrepreneur, is not destitute by any means. He or she has a brain, a conscience, an ability to add and subtract, and a willingness to earn his possessions enough, in the past, to have the right connections to survive and therefore he or she does have some wealth to spend as he continues working at this normal job. The entrepreneur begins to build his new business one step at a time. The entrepreneur first goes to the local government to find out if the space between the two remote locations is for sale and finds, much to his surprise, that the area isn’t even recorded on that state ledger. The claims for the lands fenced in on the oil and the gold business are pending so the entrepreneur puts his name in the hat for the fee of doing the paper work. The entrepreneur liquidates his retirement insurance policy and purchases a bank of solar panels, a wind generator, a hydrogen gas electrolyzer, and a plasma arc hydrogen based fuel generator. All three components are modest in size and productivity. The entrepreneur also purchases the hardware to keep the flow of electricity moving and all the storage bins for the waste and fuel. Then the entrepreneur hires some professional workers to help put the new business up and running between the gold and oil businesses out in the remote wilderness far away from all the hustle and bustle of city life. The entrepreneur also builds a modest office with a shower and a bed. Please don’t get too caught up in the calculations which are a simple function of time. The entrepreneur can start the business with no initial investment whatsoever or work toward it as the entrepreneur accumulates possessions of value at his day job; making more and spending less, or savings if you prefer, the person must earn, fraud, steal, or convince. The convincing part is next and the accumulation of an existing but modest business helps convince the oil and gold business to agree with the new business. The entrepreneur then creates a proposal to take to the existing oil and gold businesses. First on the list is a name for the new business and a few choices are considered. The Energy business, the Currency business, and the Power business are considered and since I’m choosing I’ll call the business Power-Independence. A meeting is set-up and the proposition is presented. Power-Independence proposes to create script to sell to the oil and gold business. One unit of paper currency is worth on hour of electricity and or one hour of fuel at a standard rate measurable in Watts. In other words the entrepreneur is selling a piece of paper that can be used to buy electricity or fuel. The oil and gold business men are floored with this proposal at first as it directly attacks their current business. The oil business man or woman cannot believe the audacity of someone claiming to be selling a piece of paper for a future purchase of fuel, by God, he or she is in the fuel business! The gold business man or woman is similarly aghast at the proposal since gold is money and paper is…paper. Both existing businesses are in the Power business for Christ’s sake. The entrepreneur is prepared to back up his product with logic and action saying that the price of the script will be half what they are currently paying for each Watt of power. The oil and gold businesses can purchase only enough script to equal half the cost of running one of their power generators, which happens to be less than the current capacity of the Power-Independence business. Buy the script and cut the cost of one of each of your electric generators in half now if you are skeptical and as a bonus, says the Power-Independence business, I’ll remove all your waste products for no charge. You have a high cost associated with waste removal now. Look at the mess that that waste is causing on your property. I know that it is far fetched to get an oil or gold business man to cut their costs in half but this writing assumes that logic can persuade a reasonable mind to consider possibilities that do not exist in the instruction book. Both the gold and oil business people agree to buy the script and buy enough for a one year voluntary contract. If at any time in the year, according to the contract, the Power-Independence company defaults, then, the Power-Independence company will agree to refund the script for whatever money the oil and the gold businesses demand and they demand, on paper, paper dollars; the current currency. The Power-Independence company now has enough money to buy insurance, buy the cable needed to hook up his business to the other businesses, buy the regulator and current recording hardware, and start sending power at the agreed upon rate. When the recording hardware registers one unit of script, then, the existing business is charge one unit of script to be sent back to Power-Independence. The recording hardware is checked by each business person and the box is sealed against tampering. The Sunlight and Wind create electricity when sunlight and wind flows and any excess electricity, especially when the sun and wind are busy, turns water and sewage into fuel. The fuel can be used to run the existing generators, as per the contract, when sunlight and wind are currently not flowing. The fuel can also be used to heat water, heat the buildings, and cook food; but that contract hasn’t been signed yet. The entrepreneur collects his script as the electricity flows. Fuel production increases and requires more storage, usage, or a throttling down of production so a new contract is proposed, after a few months, to supply new fuel at half the cost of propane to each new business. Now the entrepreneur has too much fuel and no where to spend it so the person doesn’t need to crate script to sell it, in fact, the extra fuel costs more to keep it than it costs to stop producing it. The entrepreneur does need more labor to help run the business which is mostly automated without the fuel product. So the Power-Independence business sells fuel to gain dollars to pay an employee and the price of that fuel can as much as the cost of the employee so long as the price for that fuel is less than the current price of fuel; like propane or natural gas. In other words: free sunlight and free wind create electricity at the cost of the Solar Panels and Wind Mills, once they are paid for, minus the maintenance costs, the excess electricity, which would be dumped for a loss of not used, the excess electricity turns water and sewage into fuel, and the excess fuel, not used on the site for heating and running generators, the excess fuel flows to those who need cheap fuel. The oil and gold businesses can’t see the writing on the wall as the flow of gasoline and the flow of dollars slow down because they cannot see much at all as their current efforts are busy and focused on current problems like low wage worker complaints, equipment break downs, interest rates, etc. Meanwhile the script can be traded between the oil and gold business if one needs more electricity than the other and once the script runs out, then, it is gone; never to return unless someone figures out the value of it. |
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