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Fox
Joined: 04 Mar 2009
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 Posted: Thu Oct 14, 2010 3:30 pm Post subject: |
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| The Happy Warrior wrote: |
| Fox wrote: |
I really am not fond of how often Libertarians attempt to argue their way around reality using vague technicalities based on their own personal definitions of words. It doesn't make for good discussion. People very clearly value fiat money, and the reason they value it is very clearly that government-enforced legal tender laws make it an effective means of exchange. Trying to argue that said money has no value is as such a futile effort. Far better to focus purely on why you think your proposed alternative is superior. |
When you say 'Libertarians' you mean ontheway or visitorq. Be honest. |
Yes, I do. As much as the word might apply in some sense to people like yourself or mises, I have a hard time thinking of you as "Libertarians." Just fairly reasonable individuals who lean towards conservatism on many matters. I've been using this particular word in that sense for a long time now, it's just easier. If making that clear helps make my position clearer, I'm happy to clarify, and although I know you consider yourself a Libertarian to at least some degree, you'll just have to remember I'm not using the word in reference to you.
| The Happy Warrior wrote: |
We've had a fiat currency for about 40 years now, I think since Nixon in the 70s. My sense is that fiscal accountability went off the rails a little after that time, and only briefly returned with Clinton. And he exerted a lot of political capital to simply balance the budget.
Defenders of fiat have a greater burden than their opponents. Fiat currency is the new thing, from a historical perspective. |
I agree there's a substantial challenge there, but I'm not sure we'd agree about what that challenge is. I don't think defending the idea that a well-managed fiat currency would be effective is particularly difficult. The challenge is defending the idea that a government like ours can be encouraged to manage it effectively in the long term. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Thu Oct 14, 2010 11:55 pm Post subject: |
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| Sergio Stefanuto wrote: |
| Imposing a gold standard on a population is immoral. If the worst came to the worst and the fiat currency system collapsed (that is, if we started printing these), competitive markets would determine any replacement. Gold might well emerge is a leading candidate anyway - and so be it - but there might be a handful of winners. |
Imposing any kind of monetary standard is immoral. A government monopoly is every bit as immoral as a private one. Private metal-backed currencies should be allowed to compete freely on the market against government money (whether paper or metal backed). Anyone should be allowed to issue any currency they wish, and anyone should be free to decide whether they want to accept it or not. It goes without saying that fraud should punishable under the law, but any currency, whether private or public, that becomes debased must be allowed to collapse on its own. Buyer beware. Anyway, as long as the government requires taxes to be paid in its own currency, it will have 'value'. Ultimately paper currencies would probably collapse over time though (due to bad monetary policy and a loss of confidence in them) and be replaced by sounder private metal backed-currencies.
Forcing people to accept any debased currency is akin to theft, but in reality only the government is powerful enough to enforce its will on society as a whole. In fact the US government during the FDR administration went so far as to try and confiscate the public's gold and force people to accept paper money as compensation. If that isn't theft, I don't know what is.
http://en.wikipedia.org/wiki/Executive_Order_6102 |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Oct 15, 2010 10:14 am Post subject: |
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There are many different systems that could work. Gold won't work if the state devalues against gold.
Right now, the whole world wants a cheap domestic currency. Whereas economics textbooks teach that nations compete on productivity, comparative advantage and innovation, the reality is that nations compete on subsidies, devaluation and similar. It would be much better if we had a regime of fixed rates OR a respected hard-money for settling trade. Then nations would sink or swim due more to their contribution.
The Plaza Accord, where the USD was devalued against the Yen did not result in a decrease in the balance of trade with Japan. It continued to get larger. The same will happen with China, probably.
Capital controls are on their way back. Globalization will reverse. The Fed is printing and the money is going to emerging markets. Those markets are trying to protect themselves from this hot money. The system is not working.
So, buy gold. Damn right. Look what happened with the SGD:
http://www.marketwatch.com/story/singapore-tightens-policy-currency-hits-record-2010-10-14
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HONG KONG (MarketWatch) � In a surprise move, Singapore�s central bank said Thursday it would widen the trading range of its currency in order to send it higher, following the release of data showing economic growth is cooling.
The move sent the Singapore dollar to a record high against the U.S. dollar. |
Dollar sold off and capital went to SGD. That tells us that Krugman et al are wrong. Capital will abandon the USD. Capital will abandon the USD in the blink of an eye. This is a very unstable situation. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Oct 15, 2010 11:27 am Post subject: |
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| visitorq wrote: |
Imposing any kind of monetary standard is immoral. |
Alright, I'm sympatheitc to the libertarian view of things but I'm leaving you all behind. Money is a creation of law. Gold *can* be money but paper can be money.
Aristotle:
"Money exists not by nature but by law"
The problem we have isn't with money it is with usury. The usury is ruining our society. The usury is destroying our money. This is neither libertarian or pastafarian or whatever. It is what it is. Government and private organizations push this. What this isn't is populist (which I think I am). Anyways, Aristotle on usury:
The most hated sort (of wealth getting) and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest. And this term interest (tokos), which means the birth of money from money is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth, this is the most unnatural. (1258b, POLITICS)
...those who ply sordid trades, pimps and all such people, and those who lend small sums at high rates. For all these take more than they ought, and from the wrong sources. What is common to them is evidently a sordid love of gain... (1122a, ETHICS)
http://www.monetary.org/usurytalk.htm
The money lenders are the problem. The banks - the very existence of these money-creating banks - are the problem. Money is a public good. Not a private creation. I think. My views are evolving. Gold as money could be better and it could be worse. It depends on who is running the system. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Fri Oct 15, 2010 11:40 am Post subject: |
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^Good post. I'd probably now get a lot more out of reading Plato (in terms of food for thought) than I did back when I was an undergrad just looking for an exam grade.
Edit: I meant Aristotle - it's been that long.
Last edited by caniff on Fri Oct 15, 2010 12:23 pm; edited 1 time in total |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Oct 15, 2010 12:16 pm Post subject: |
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Here's a couple interesting vids:
http://www.youtube.com/watch?v=bGTBJI1ZO6Q
http://www.youtube.com/user/councilonsper#p/u/10/3uWCOvnOtTI
He makes an excellent point that Austrian Economics has been rendered irrelevant by the dissolution of savings. He's right. The Austrians are excellent critics of the present system but they don't have the solutions.
He also makes the point (that I've been making) that economists don't consider balance sheets. Economists behave as if the opposite side of a balance sheet does not exist. This is probably deliberate, as the economists need Fed and NBER money for their meaningless research. If you want to know how the economy is functioning ask an accountant to look at the data and not an economist.
http://monetary.org/
^ An excellent resource for the 'lost science' of money. They're focused on debt, usury and reform.
If they're right, and I am starting to think they might be, our economy (economies) are literally a scam set upon us by an overclass of usurious parasite bankers. I've been going on about loans in the off topic forum, trying to convince people to disrespect their debts (as the wealthy do). In my opinion, the only moral action is to disassociate oneself from the system in as much as is possible. Take no debt. Zero debt. If you have debt work like a mo-fo to get rid of it without paying. There are countless ways (less student debt) to have debt radically diminished and/or discharged. Have no face on the matter. Selfish emotional intensity. This is the ultimate act of rebellion in a society based on debt. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Fri Oct 15, 2010 12:29 pm Post subject: |
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Doiuble post from the computer-illiterate.
Last edited by caniff on Fri Oct 15, 2010 12:42 pm; edited 1 time in total |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Fri Oct 15, 2010 12:39 pm Post subject: |
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| mises wrote: |
| There are countless ways (less student debt) to have debt radically diminished and/or discharged. |
Any projections on the future of the student loan system?
Here's an article from a western Mass. very left-leaning free publication on the subject (if you're interested - it's kinda long):
http://www.valleyadvocate.com/article.cfm?aid=12585
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Paternalism was at the root of the idea, dating from the 1970s, that student loans were defaulted on more than other types of loans�a belief amped up by anecdotes about a few doctors and lawyers who finished their training and promptly staged phony bankruptcies to shed their student loans.
Yet a GAO report done in the late 1970s, when student loans could be discharged in bankruptcy after five years, showed that the default rate on student loans was only 1 percent (for purposes of comparison, the rate of delinquency on home mortgages at that time hovered around 4.6 percent, while the rate of foreclosure was .4). Nevertheless, the regulations about student loan dischargeability were tightened so in the 1990s and again in 2005 that now even many private student loans, as well as federally backed loans, can never be discharged in bankruptcy.
In other ways as well, students have been treated like children who don't deserve the same protections as "adult" borrowers. Particularly in the 1990s, after the largest student lender, Sallie Mae, had turned from a government entity with Treasury Department oversight to a private lender, protections were stripped away. Not only was discharge in bankruptcy eliminated; student loans were even exempted from state usury and truth-in-lending laws. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Oct 15, 2010 12:40 pm Post subject: |
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Good article.
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| "Trapped in limbo with a $120,000 tab on my head," one poster writes, "I have been told frankly by my lenders that with all my interest and the 30-year repayment program (because I can't do it any other way right now) I will be paying somewhere in the range of $500,000 and one million dollars. All in the name of a dream wherein I would become a journalist, at a meager $25,000 salary, chasing stories and serving the public.... I had the thought of killing myself many times, but the realization that my loan's responsibility would merely fall onto the shoulders of my co-signer (my mother) is what really keeps me going." |
This is fuc$ing immoral. Non-dischargable debt assigned to the hopes and dreams of 18-21 year olds who can't make a plan two weeks in the future yet are encouraged to take 30 year 100k+ debt for a degree. What 18 year old can calculate compound interest? Do they teach that skill in school?
What will happen? These debts will continue to pile up unpaid. The government will find some way to screw the little guy while the top of the usury tree gets paid. Just like with the mortgage problem. |
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Fox
Joined: 04 Mar 2009
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| Posted: Fri Oct 15, 2010 4:29 pm Post subject: |
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| mises wrote: |
| What 18 year old can calculate compound interest? Do they teach that skill in school? |
I learned it in high school. I don't think the unethical nature of these contracts is reliant on the age or education of the people taking them. These contracts are inherently unethical, designed specifically to turn as many people as possible into interest milk-cows by preying on their desire to improve their lot in life.
All debt needs the possibility of discharge, and frankly I'm also becoming more convinced than interest as a system is just wrong, not because of any abstract argument about the nature of money, but because it allows for the possibility of unlimited and endless cost for a strictly limited service. |
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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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| Posted: Fri Oct 15, 2010 9:47 pm Post subject: |
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| Fox wrote: |
| recessiontime wrote: |
| fox, The removal of a threat is not payment, it's not a value. the negation of a negative is not a reward, it's not a value. The withdrawal of government thugs is not an 'incentive'. |
And yet, for all you complain of fiat currency being valueless paper, you'll accept it if paid in it, as will everyone else. There's clearly an incentive occuring there. Further, people hoard this paper currency; they clearly place value on it. As you've said, there's nothing inherent about the paper itself that makes it worthy of such value. Thus, the value people place on it must be derived from somewhere, and that "somewhere" is the government.
I really am not fond of how often Libertarians attempt to argue their way around reality using vague technicalities based on their own personal definitions of words. It doesn't make for good discussion. People very clearly value fiat money, and the reason they value it is very clearly that government-enforced legal tender laws make it an effective means of exchange. Trying to argue that said money has no value is as such a futile effort. Far better to focus purely on why you think your proposed alternative is superior. |
When I talk about value I'm not talking about some artificially imposed value that the government imposes on horse dung or paper. Gold has a lot more value to people than paper or horse dung. Paper can only be used to burn or print on and it's all around us, it is not scarce. Gold on the other hand is scarce and this scarcity gives it value. Yes you can impose value on something like paper but it is artificial at best. This is not some libertarian vague technical semantics I am arguing, this is simply an important distinction people have to make about reality.
I can put a gun to you and force you to convert to Islam but you probably won't really believe in the 'value' of it's knowledge. Your argument is completely flawed because you would actually bite the bullet and say something ridiculous like "Islam's wisdom is valuable, because if I didn't believe in it, I'd be killed." The same thing can be said about paper money, you merely go along with it because it is forced upon you, not because you genuinely believe paper is valuable.
When it comes to a point where people are carting piles of paper money to go shopping they eventually come to their sense and realize how valuable their fiat money is. That's when the system collapses and even at the point of a gun, people don't want to accept paper money. Most people on the street have no idea why money is used for an exchange of goods and services other than the fact that other people accept it. But when a nightmare inflation happens like in 1924 Germany, people 'get it' on an instinctive level.
"Why am I trading in millions of dollars just for a loaf of bread?"
"Why is the shop keeper unhappy about accepting my money for the loaf of bread? Why is he hoarding all of the food and keeping the shelves empty?"
"Oh, I get it, our money is worthless."
That being said, yes paper money could possible work. It's just every government doesn't have enough discipline to contain themselves from inflating the supply. You mentioned before that having a gold standard doesn't work because governments doesn't have the discipline for it, well the exact same can be said for paper money. In fact, it's much easier to be tempted to print paper when you want to, a lot harder to print something like gold or silver that is finite on the planet. By accepting paper, people have basically put their wealth at the mercy of the government that can essentially print when they want to and destroy savings which are important to build a working economy. This is essentially what you and I are complicit in, namely because there is nothing we can do about it. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Oct 16, 2010 6:50 am Post subject: |
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| Quote: |
| I learned it in high school. |
I don't remember if we were taught how to calculate it. I didn't take the accounting electives and I assume it was taught in those classes.
| Quote: |
| ...because it allows for the possibility of unlimited and endless cost for a strictly limited service. |
I agree. [/quote] |
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Fox
Joined: 04 Mar 2009
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| Posted: Sat Oct 16, 2010 5:07 pm Post subject: |
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| recessiontime wrote: |
When I talk about value I'm not talking about some artificially imposed value that the government imposes on horse dung or paper. |
That's fine, but it means you're making a value judgment of your own about what sort of "value" is real vs. artificial. I'm not entirely unsympathetic to such ideas in principle, but something being "artificial" isn't enough on its own for me to condemn it. Plenty of very useful things are artificial.
| recessiontime wrote: |
| Gold has a lot more value to people than paper or horse dung. |
And yet, you yourself posted a video of a man vainly attempting to sell a gold coin at vastly under its market value, and seemed to agree with his premise that people in general "don't know what gold is worth." It seems to me that the average person doesn't value gold as much as you think they should, and given value is a personal judgment rather than something intrinsic in an object, this is meaningful.
| recessiontime wrote: |
| Paper can only be used to burn or print on and it's all around us, it is not scarce. Gold on the other hand is scarce and this scarcity gives it value. |
Paper has limited value and is not scarce, but legal tender can be as scarce as the government wants it to be. If scarcity itself gives value, then legal tender can be just as valuable as gold, or even more so. Of course, I don't feel scarcity alone gives value, and I don't think you do either; the dung of an endangered animal might be scarce, but I don't think it's particularly sought after by the general public despite all that.
| recessiontime wrote: |
| I can put a gun to you and force you to convert to Islam but you probably won't really believe in the 'value' of it's knowledge. |
Correct, but I'd value the choice to convert, since it allowed me to avoid impending doom. Indeed, at that moment in time, said choice would be of more value to me than probably anything else on the planet.
| recessiontime wrote: |
| Your argument is completely flawed because you would actually bite the bullet and say something ridiculous like "Islam's wisdom is valuable, because if I didn't believe in it, I'd be killed." |
Recessiontime, if there were genuinely people commonly going around with a gun giving pop-quizzes on Islam, knowledge of Islam would be valuable. Indispensably valuable. I don't see how one can even begin to argue with that. I'd personally memorize every damn word of the Qur'an if it meant not being shot in the head.
| recessiontime wrote: |
| When it comes to a point where people are carting piles of paper money to go shopping they eventually come to their sense and realize how valuable their fiat money is. |
If people are carting piles of money to go shopping, the fiat currency in question has been extremely poorly managed. I'm obviously not trying to defend a poorly managed fiat currency. I made that clear from the start; if we're going to go fiat, we need a certain measure of discipline.
| recessiontime wrote: |
| That being said, yes paper money could possible work. It's just every government doesn't have enough discipline to contain themselves from inflating the supply. |
As I said.
| recessiontime wrote: |
| You mentioned before that having a gold standard doesn't work because governments doesn't have the discipline for it, well the exact same can be said for paper money. |
That's not exactly what I said. What I said was, if a government lacks discipline, a gold standard won't stop them in the long term, and if a government has discipline, a gold standard isn't required to reign them in. |
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blackjack
Joined: 04 Jan 2006
Location: anyang
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| Posted: Sat Oct 16, 2010 5:22 pm Post subject: |
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| Fox wrote: |
| recessiontime wrote: |
| You mentioned before that having a gold standard doesn't work because governments doesn't have the discipline for it, well the exact same can be said for paper money. |
That's not exactly what I said. What I said was, if a government lacks discipline, a gold standard won't stop them in the long term, and if a government has discipline, a gold standard isn't required to reign them in. |
I think fox wins |
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recessiontime
Joined: 21 Jun 2010
Location: Got avatar privileges nyahahaha
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| Posted: Sat Oct 16, 2010 7:49 pm Post subject: |
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Fox, you can call it whatever you want - legal tender, government paper it's still paper and it is abundant and calling it something else does not change this fact. You've mentioned the biggest problem with fiat currency that "legal tender can be as scarce as the government wants it to be." This is why it's scarcity is artificial and not real because at any moment they can just print more out. They cannot do the same with precious metals at the moment as it is absurdly expensive to do so, all the government can do is abandon it and turn to something that is a lot more maladaptive.
I feel like we are going in circles over this value issue. The knowledge of the Qu'ran is not valuable to you or I as it has no real world application, I'm sure agree with this. But in the context of a madman pointing a gun to you it has situational or artificial value at best and this is only in this extreme context.My point is that artificially imposing value on something does not work as eventually the laymen come to realization that there is a discrepancy in the attributed value and get fed up with it.
If you were in a theocratic state that forced you at the point of the gun to believe in Islam, I'm sure you would - only for the moment. Eventually I would imagine you would leave that state and without the gun pointed toward you, you'd toss that Qu'ran out somewhere. It's the same with fiat currency. Sure it takes people a while for the system to deteriorate but it always does, the same way Islam does not work and makes these countries fall behind technologically relative to the rest of the world. The same can also be said about zombie banks that the government props up at the expense of tax money. The same can also be said about the massive inflation and wealth stolen by the advent of fiat currency. You cannot make what is worthless valuable through the use of force as eventually through the use of force you will run out of victims to take advantage of.
Anyway, it seems clear to me you agree that the government is unfit to manage currency as they lack the discipline for either, be it paper or gold & silver. So what now, separation of state and economy like Ayn Rand advocates? Sounds terrific. |
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