Archive for the ‘Government’ category

My Appearance on ‘Live All Your Life’ with Cody Limbaugh (Part 3)

July 2, 2014

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My Appearance on ‘Live All Your Life’ with Cody Limbaugh (Part 1)

June 19, 2014

On Government and the State

April 28, 2014

In political philosophy circles it is often said that it is very important to define your terms so that confusion can be minimized. One instance where I think that this is of the utmost importance–which also happens to be a certain pet peeve of mine– is in the case that presents itself when speaking about government and the state. It is often the case that these two terms are used as synonyms, but I believe this to be incorrect.

The terms themselves have very important conceptual implications, and conflating the terms ignores their grammatical nature and can lead to faulty conclusions. That the state has served the role of government in society for much of human history is no implication upon the term government with regard to the term’s meaning. Since many continue to use the terms state and government synonymously, I must address this error.

While almost everybody in political philosophy circles knows that the state is an entity that serves as the monopoly of governance in a particular region, most do not take notice of the fact that governance occurs in many other areas of human thought beyond that of the state, as well as the fact that in referring to the state we can also separately refer to the concept of governance.

Please, let me give just a few examples …

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If you have any sort of normative order that is under discussion, say, that of property rights itself (or more specifically, that of libertarian property rights), then that is a governing order, it’s a system of government that prevails in a society. The only difference is that these norms (or ought statements) are generally apodictic rather than simply dictated statements in their justification (though this is not always the case, it is the goal in the theorizing about such things). Obviously, in the case of the state, this is entirely reversed, the laws that are dictated are merely statements–more specifically they are dictates (statutes) by the monopoly on governance; the state–but they are certainly not apodictically true, nor is that even the goal, thus they do not meet the criteria of laws at all; they are arbitrary dictates.

The same dynamic also finds itself present in the realm of positive statements, such as those of economic theory. Economics itself relies upon certain laws and understandings, that of which are always grounded in positive or is statements. Certainly the laws of economics govern (steer/guide) the actions of men in a world of scarce resources, this is necessarily the case because such laws are apodictically true. Economics is nothing other than the study of the government of humans acting in a world of scarcity, and indeed, one cannot violate the laws of economics: It’s literally impossible to do so. One could certainly say that the laws of economics comprise a government of human affairs (that these laws govern the reality of man vs nature, that they are apodictically true laws, one cannot contradict them in action). In contrast, it makes little sense to, say, propose the statement that the law of scarcity has no economic impact, or that something is scarce merely because it has been made so by policy functions (e.g. a shortage due to such a policy).

The difference between dictates and policies on the one hand, should never be confused with laws and governance on the other. This distinction between root concepts and foundational ideals cannot be overstated, because it is often the case that in one realm of human thought where these things are entirely understood, that in another realm of thought the understandings of the prior gets tossed to the wayside in favor of very bad ideas. 

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One must ultimately understand the etymology of words, as well as the evolution of language, in order to find meaning in the same. In the case of the term govern, it is a verb that simply means to steer or guide people or things. At its root, it is formed from the idea that certain laws prevail or are true in reality. For instance, it would not be too bold to say that the law of supply and demand governs prices, or that the law of gravity governs the attractive relationship of bodies. This is obviously true. However, for some reason, the verb govern takes a twisted turn in many people’s mind once you modify it with the suffix –ment to become a noun.

It is this noun-character (as well as the reality of the state) that often leads people to conflate government with the state as synonyms. They are both nouns, after all, and certainly the state has undertaken the government of society throughout a great part of human history. But it takes one of more astute care and attention to realize what is going on here.

The state is an actual entity (at least it is linguistically referred to as an entity), so it is a concrete noun, whereas government is an abstract noun, which is a concept. So right here we can see can see a pretty large difference between the two grammatically, but the real interesting part is in the root word to suffix transition that occurs (from govern to government).

Probably the best words to use as analogues to the word govern are those of the words excite and entice. These are transitive verbs, just like that of the word govern, and they require a certain object (or objects) in order for reference to them. One simply cannot use a transitive verb without referring to some thing. So let’s modify them into abstract nouns!

In order to stay consistent, I will modify all of these transitive verbs into abstract nouns by the usage of the modifying suffix –ment (which is defined as, “forming nouns expressing the result or means of action”). Since English grammar is the governing structure that gives meaning to the words of English, the point should be quite clear.

The transitive verbs excite and entice are modified into the abstract nouns excitement and enticement. Clearly, we could not conflate these abstract nouns with concrete nouns, such that we could call the state “the excitement” or “the enticement”, rather we are left with resorting to using the preposition of to combine the two. So it is perfectly acceptable to say something like “the excitement/enticement of the state”, but it is not acceptable to refer to the state as “the excitement/enticement”. The same is true of the word government, it cannot be used as a synonym for an entity because of its grammatical nature (i.e. abstract nouns vs concrete nouns).

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Anarcho-libertarians often run into problems when discussing their chosen political philosophy with statists, and this is often due to this very dynamic of conflating the terms state and government. This leads one to believe that what the anarchist is saying is that they do not believe in law or order, when it is exactly the opposite that is true. Certainly anarcho-libertarians do believe in laws, they just do not believe in arbitrary laws (such as legislated statutes, or mere dictates); and just as much, they also believe in governance, they just do not believe in monopoly governance, such as the state. The anarcho-libertarian’s system of laws is based upon libertarian property rights in conjunction with the non-aggression principle, which together form a rather robust system of government.

For the anarcho-libertarian to deny government, this only plays into the claims by statists that anarchy is chaotic and lawless (a Hobbesian state of nature of all against all, thus justifying the need for Leviathan; the state) when this is very clearly far from being the actual case. As I am often fond of saying: “I’m all for big government, but I have zero tolerance for the state”. Let a statist try that one on for size.

Humanitarian Murder: It’s a Gas

August 29, 2013

Here we are yet again at the precipice of war.

Some may not fully remember that we’d been here not too long before, that the narrative is almost exactly the same, and that we’ve been lied to by our “angels” holding the reins of state power ad infinitum for time immemorial.

Will Americans fall for it once more?

The war drums beating, the speeches and punditries spoken, and every fashion of ridiculous justifications and moral reasonings having been proffered, all being flashed in front of your eyes in the blue-light sparkle of your big-screen television; and all of this by the tiding media whose only life-support is the very government establishment that wishes to propagandize and impose its powerful influence upon the minds of each and every one of us, all in order to gain the political support to destroy those “evil” inhabitants of the other side … the enemy. How truly collectivist of them.

However this –like so many other wars and aggressions that have occurred before it– is being sold as a “humanitarian” effort; one to save the children, the mothers and fathers, and indeed the people of Syria.

“We’re only here to help, we mean you no harm”. Right?

There could be nothing further from the truth, and I am here to tell you why.

Of Bombs and Men

There simply does not exist any such thing as a “humanitarian war”, it’s a contradiction in terms. It’s much like saying “humanitarian murder” or “slavery freedom”. War is exactly what it says it is: nothing more than one state’s inhabitants (or military powers) killing the inhabitants that live within another state’s monopolistic region of power, or vice versa. You can tidy it up with soft language such as “conflict” or “engagement” as well as many other fanciful terms, but it all means the same thing: War!

Of what value is the reasoning of humanitarianism when innocent people are amongst the dead and killed by such “humanitarian” actions? I say none.

A bomb is an indiscriminate weapon of terror, a true “weapon of mass destruction”. There simply is no way to control who exactly it is that will be killed by such a weapon.

Sure, you may kill a “bad guy”, but you also may (and probably will) kill a lot of innocent people along with him. In fact, this is often the case, as the statistics of the US government’s drone war, and indeed all of its wars and aggressions over the past century, have proven all too poignantly.

To put things into perspective, those few that are supporting this military action in Syria are essentially saying this:

Person A: “They’re killing innocent people over there, we must do something”

Person B: “What do you suppose to do?”

Person A: “Kill innocent people over there”

Clearly, this is not a cogent argument in favor of humanitarianism (the supposed justification for US military intervention in this conflict).

The Gaseous State

The world is being told that Assad is using chemical weapons against his own people (sound familiar?), but to be sure, there has yet to have been any proof of this.

Yes, we do know that such weapons have been used (by whom?), but as Justin Raimondo has shown in his recent reporting, there is much ambiguity with regard to who has been using them. Further, the inspections by the UN had initially been curtailed, all in an effort to rush to another war without ample evidence of wrongdoing (or any evidence at all). Recently the inspectors were in the region, but were only there to establish that chemical weapons were released, not to assign blame, and the US is hinting that it will ignore the UN Security Council regardless.

The appeal by the President for Congressional support, I think, is far more of a political than a legal move. He’s essentially doing nothing more than spreading out the blame and putting on a show to convince the people that he’s consistent with US jurisprudence. He’s already indicated that it is his belief that he does not need to consult the Congress on these matters, so it only makes sense that his motives are entirely political in nature.

If they want war, then war is what they will have.

Indeed, many have been speculating that it is the US-supported “Rebels”, not Assad, who had a “gas”. In fact, some have even been suggesting that this is a “false flag” event; though I certainly cannot verify this any more than I can verify that it was Assad or the Rebels that used chemical weapons. But it is well-known that the US government has been supporting the Rebels (who are affiliated with the US government’s bogeyman “Al Qaeda”) both financially and militarily, that it is the US government that imposed the “red line” ultimatum on the use of chemical weapons about a year ago, and that due to this it is the US that has the most to gain by such a chemical attack by Assad’s government. Cui Bono?

While I do not discount any of the possibilities presented, I still cannot help but question whether any of these things are even relevant at all when considering the supposed particulars of the US government’s “war plans”. They are much more worrying.

Reign of Terror

So what is the US government’s strategic military play? Why, it’s to bomb the snot out of the Assad government’s supposed chemical weapons regiments (if we are to take their word on it). And of course, it will last “hours not days“, just as we’ve been told before in the case of Iraq.

This seems pretty straight forward in many people’s minds, until they think about the consequences of such a thing. If you bomb a chemical weapons facility or the Syrian military forces used in chemical weapons warfare, would that not release the same chemicals that were supposedly used by Assad’s government “against his own people”? Indeed it would!.

So we are left with a situation where the proposed military plan of the US government is to release into the air the same chemical toxins in which they are accusing the Assad government of perpetrating, but the US government is declaring it as a matter of foreign policy (they deny it, but it is unavoidable if what they say is true). Yet the justification of such an action is based upon a synonymous case. This justification is not much different than saying, “well, they’re killing each other, so why can’t we kill people, too?”. It seems that US “humanitarianism” has come full circle (which is to say it is no humanitarianism at all).

However, what if the US government’s military bombs these supposed chemical weapons regiments, and then no fallout happens at all? I would say that this is the smoking gun that this whole story was a claptrap fabrication to begin with.

“Hey, maybe the WMD’s are over there? Nope. How about over here? Nope.”

What If?

What if it is true what we are being told, that Assad really did use chemical weapons against his people? Does this give any justification for US involvement?

I say no. The only justification for violence is in the case of self-defense. In this case, Syria represents no danger to the United States, and especially not to the subjects that live within its (the US government’s) borders.

To interfere in Syria would certainly result in civilian deaths, there simply is no way of avoiding that. Since that is the case, then the US government would then have innocent blood on its hands, and there is simply no justification for that, because that is supposedly the very thing that it purports to avoid (or protect from).

Ah, but what of US interests? This is a question always bandied about by no other than those within the halls of power. I never hear any of those who are subject to the rule of US politicians and bureaucrats worrying much about interests abroad of which they have no real interest.

Instead, they’re far more worried about how to feed their family, have a good life, raise their children, and do what all of us wish to do in this life. You know, just like your regular, everyday Syrian is.

Whenever you hear the term “US interests”, that means only one thing: the interests of the ruling class, the elites. Trust me, you aren’t part of that club, nor will you be (unless you can become a sociopath in good speed).

The World Gone Insane, US Style

I don’t know if you have noticed, but the US and Israel have been pretty keen on getting into a war with Iran. Whether it be sanctions, or in the case of Israel, actual bombings and network viruses. So it comes as no surprise to me that Iran just so happens to have a mutual defense treaty with Syria.

I cannot say for sure, but if I were to guess, I’d say that this whole Syria fiasco is premeditated. That the entire purpose of striking Syria is to get Iran to make a move, that way the US government can say, “see, the Iranians are crazy, they attacked us in Damascus when all we were doing was trying to help the Syrian people”.

Syria is today essentially the breeding ground of WWIII, and it couldn’t have been better-calculated considering the state of the world’s central powers (“after all, WWII got us out of the depression”, they so ignorantly repeat, ad nauseam). The Western nations are essentially trying to live out a new world war based upon a false belief that the victor will be the US and it’s allies (just like in the old days), and can thus sustain its hegemony both politically and economically, and move toward a more centralized world state.

What they never counted on was the fact that their lies are like paper flies to the flame. Nobody is buying what they’re selling anymore. Much of the world has finally slipped the reins of the gatekeepers, information flows like hot butter, and all statements are now documented and shared for all to see. There is nowhere to hide in the digital world of information.

Of True Humanity

The true humanitarian position on any question of war is to reject it entirely: war is nothing more than the creation of the collective state, not the individual constituents thereof. US military involvement in Syria will do nothing more than complicate matters not just in Syria, but also the entire region. Indeed, the same politicians who speak so proudly of “democracy” have no problem imposing it upon others (through death and destruction), but when it comes to their own countrymen, it is but a whisper.

Today, only 9% of Americans support any intervention in Syria, and this number is low for good reason: Americans simply do not trust their government anymore. They’ve been through Iraq, they’ve seen Afghanistan, they saw what their political “leaders” did in Libya when Hillary Clinton declared, “we came, we saw, he died”, and every other boondoggle since 9/11. Americans know deep down in their hearts that their rulers are all “full of it”, that they’re only out for their own interests at the detriment to all, and all of this through the power of the state (their ruling nest).

America’s rulers don’t care about what they preach, they only care about themselves and their own.

The simple fact is that most regular folks know true humanity and most Americans are just regular folks. Even in this world of propaganda and false truths, people can see the inhumanity espoused by their statist overlords. Further, due to the lies and distortions spoken by their rulers over time, they’ve all seen time and time again how they’ve been played: the “seeing through the fog” is becoming all the more common in this world of free-flowing information.

Americans are finally finding their humanity, if only at the final hour. I can only hope that it is not too late.

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Addendum:

While it is said that the only justification for violence is self-defense, this might lead one to question whether of not it is justified to come to another’s defense. Indeed it is justified, but one must understand the difference between doing so within a specific case and doing so within the realm of warfare. So in order to avoid confusions of what I meant when talking about the justifiable use of force, I must be more specific.

State warfare always kills uninvolved third-parties, those who have nothing directly to do with the decisions and actions of their respective state.

For instance, in the case of interpersonal conflict we might come across a case such as this: Person C witnesses a situation in which person A is aggressing toward person B (he’s holding a gun to his head, or something similar). It is entirely justified for person C to come to person B’s defense (but he is not obligated to do so). We can easily identify the aggressor (person A), the victim (person B), and the defender (person C).

However, in state warfare, these lines are blurred to the point of illogic. There is simply no way of identifying the particulars of each case, because warfare is indiscriminate. The actions of states are both collectivist and nationalist in nature, thus the individual is erased from the equation. There simply is no way to determine the merits of an individual case, instead we are left with rationalizations of why it is okay to kill innocents. It’s really horrible and twisted when you really give it some thought.

Obviously, one cannot claim a humanitarian position if their actions must ultimately result in the deaths of uninvolved third-parties (innocents). That’s an absurd position.

To take an opposing position is akin to saying that just because I live in the same apartment building as my neighbor, and my neighbor kills somebody’s sister, then the brother of that woman is entirely justified in leveling the entire apartment building (along with all of its contents and inhabitants).

But many actually up the ante, because their position ultimately says that ANYBODY that takes issue with my neighbor killing that women, they (anybody) also now have justification to bomb my apartment building (along with all of its contents and inhabitants).

A Response to Absurdity

March 24, 2013

Dr.Tom Woods recently posted to his blog an excellent essay “Why the Greenbackers are Wrong” detailing the illogic of the Greenbacker position, with emphasis on the common claims by the Greenbackers that: due to the fact that our current money system issues money at interest that there is no way that all loans can be paid back, as well as the claim that this same dynamic also results in a situation whereby bankers ultimately end up with all of the money in the economy. Of course, I completely agree with Dr. Woods’s conclusions, but it goes without saying that there is a small group of people, the Greenbackers, who don’t (agree).

In the comments section of that essay was a commenter who goes by the handle of “CUnknown” that made a rather sad attempt to refute Dr. Woods. This commenter essentially wrote a very long-winded response but ultimately he said very little in terms of substance.

Instead of being disrespectful to Tom by cluttering up the comments section of his blog, I will instead post my rebuttal here (and then post the link as a reply to our economically ignorant friend, CUnknown).  My method will be simply to quote his statements followed by my response, I will then end with a conclusion.

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“I come from a background of experimental science where theories are formed and disproven routinely. In economics, I think theories would come and go much quicker if the relevant experiments could only be carried out. We can perform economic experiments in our heads all day, but until the experiments are actually tried in real life, economic theory is fairly meaningless in my opinion.”

By “experimental science” I can only assume that you’re referring to the natural sciences.

As Mises said, “Nothing could by more mistaken than the now fashionable attempt to apply the methods and concepts of the natural sciences to the solution of social problems.”

Unlike the natural sciences, there are no mathematical constants in human action.  You could put the same actor in the same situation in two separate time periods, and that actor could choose entirely different courses of action in each case due to the incalculable subjective valuations of that actor given the alternatives.  Further, the purpose of all human actions is to change one’s current state for a more preferable state, in economics the preference of this state over another less satisfactory state is due to the seeking of what is called “utility” (i.e. the perceived happiness that one state provides over that of the alternative; the removal of a fealt uneasiness provided by that good).

There simply is no cardinal measure of utility, because it is entirely subjective to the individual and it will be differentiated by the choices presented to him (as well as an infinite possibility of concerns that may cause an actor to choose one action over the other), yet all human actions are rooted in a choice between courses of action in order to gain utility (this will be different in all cases and between all individuals, based upon the subjective valuations at the moment between two courses of action). Utility can only be talked about in terms of one course of action being more highly valued than the next course of action and so on down the line of possible course of action; utility is entirely ordinal.

Austrian economics, a school of thought within economics, is based upon a priori axioms to come to praxeological truths about human action.  It is an apodictic science in that all of its logical deductions are irrefutable and are independent of experience.  For instance, the core of Austrian theory is the action axiom which states simply that “humans act”.  This is irrefutable because in order to attempt to refute it the critic must himself act.

The process of praxeology is to build upon axioms such as this to explain the actions of humans in their seeking of various ends in a world of scarce means.  So, we might be able to say something like “humans act, and they act to increase utility”, but we cannot say what those actions may be, nor can we say whether those actions are correct or not in terms of, say, morality (the purpose of economics being to explain purposeful action, not to form value-judgements upon those actions).

Praxeological statements, the basis of Austrian economics, can easily be said to be more scientific than those of the natural sciences, because they are free from future refutations and they hold true for all cases and times posed.

Further, the use of economic data to explain such actions is equally as useless in forming economic truths as is viewing a photograph to determine the mind-state of the person in the photograph.  Economic data only shows us a snapshot of time, but it doesn’t tell us anything about the incalculable number of actions and valuations by the billions of humans who caused such a result.  Economic data can only be used to elaborate upon an established theory, but it is entirely useless in forming theory, because it only shows us the results of action, not the apodictic certainties that determined such actions (by the billions of actors within an economy).

You show your complete ignorance with regard to the purpose of economic science. This isn’t surprising considering the rest of your response.

One thing that I find very disturbing is that you essentially say that we should experiment with society to find the best course of action.  This is spoken like a true tyrant.  What if your hypothesis is wrong?  What if your hypothesis results in the deaths of millions?  Would you not feel that this experimenting with the lives of millions or billions of people might not be the correct way to engage in social science and analysis? Or would you say that we should try another experiment or make tweaks to the existing one?

I find this opinion of yours with regard to how to engage in social science to be repulsive, and it only shows that you aren’t to be viewed much differently than the Lenins, Stalins, Hitlers and Mao Zedongs of this world. Truly sickening!

“… as long as we are on the same side, as long as we want to end the Fed and fix the main causes of our economy’s malaise, I don’t care very much your preferred method for doing so”

Tom’s preferred method is to allow people to engage in economic activity under voluntary means (i.e. without force or coercion). Considering that you wish to impose your beliefs upon others through dictatorial social experimentation, it is no surprise that you do not very much care for his method.

“I am strongly supportive of return to the gold standard, especially a modernized ‘basket of commodities’ approach. I think this would be much better than our current system for a number of reasons, but I also think this system would end in a spectacular failure. A very instructive failure. The failure of a modern gold standard would hopefully show everyone that the only way to ensure economic prosperity is the adoption of a debt-free, elastic fiat currency.”

That’s nice that you support a gold standard, but I don’t know that Tom would agree. Tom’s position (which he alluded to) is to allow the actors within the market to voluntarily choose what mediums of exchange are to be used, as well as what is to be the money. In fact, as Tom has already explained, this is how money came about in the first place.

The only reason that most Austrians talk favorably of gold is that it has been historically shown to be one of the commodities chosen by the free market as both a medium of exchange and as the money, thus they use it as the money in their economic modeling. However, this doesn’t mean that it must be the money, nor does it mean that we should impose laws declaring it as the money.

Tom has already shown that the free-market position supports a debt-free money. Commodity money is debt-free money, and its supply is not able to be manipulated for the benefit of special interests so long as it is not controlled by the monopoly state and/or by an institution granted a monopoly by the state apparatus. As for an elastic fiat currency, any amount of money (so long as it is divisible enough to facilitate transactions) will do, there is no economic benefit in arbitrarily changing the supply of money.

Why does the supply of money have to be arbitrarily increased or decreased, this you do not explain. However, history has been quite clear in revealing that all fiat currencies have been manipulated for the benefit of special interests, to the detriment of the rest of society. Also, the manipulation of currency is at the root of the business cycle, thus you are ultimately calling for the continued malinvestments that lead to a boom and a bust within the economy, as well as the theft from the people of their purchasing power. This is unsurprising considering your opinion on experimenting with the lives of others.

In a free market, the supply of money will be a reflection of the demand for money, as well as the available productive means for the same. If for some reason there is more demand for money, the producers of the commodity money will increase production to meet that demand. If demand is less, then production will be lessened. This is true of any other good that we demand, free market money is no different.

“If I’m wrong, and the gold standard works great, I would be very happy. I would become one of the biggest proponents of the gold standard around, so I am admittedly a little hurt when Tom Woods calls my opinions “wrongheaded” and says my “naive confidence” is ‘beneath the dignity of a free people.”‘

Why are you hurt by Tom’s statement that a fiat money is beneath the dignity of a free people? Haven’t you already expressed zero concern with freedom or voluntary exchange by declaring that you wish to experiment with the lives and prosperity of others by the use of force and violence by the monopoly state (i.e. a government fiat currency)? Obviously, if you’re going to impose a fiat currency on everybody, then you must have a mechanism of force and violence to ensure that those who refuse are punished, thrown in a cage, or killed. Is this consistent with a free society?

“I would hope that supporters of the gold standard would lend me the same courtesy and support a debt-free government-run fiat system, -if such a system were tried and proven to work- just as I would support a gold standard under the same conditions.”

Once again, Tom doesn’t support a government coerced gold standard, he supports a free-market in money.

Luckily, commodity money has many times been shown to work throughout history. The only cases where a commodity money system has shown evidence of not working as theorized is when fiduciary media was pyramided on top of it through fractional-reserve lending, it was manipulated by the sweating or clipping of coins by the state, through the imperial plunder of other nation’s commodity money, or by the fixing by the state of the value of the commodity in question (see Gresham’s law).

” I can’t help but think there is an ideological blindness at work here, and an irrational hatred for anything government-run, that would prevent acceptance of such a system by some libertarians, including Tom Woods. Being ideological in this way is not helpful, in my opinion.”

Who is being ideologically blind here? Really? Certainly not Tom. His position is to allow people to decide voluntarily what to use as the money to facilitate their exchanges.

It isn’t a “hatred for anything government-run”, rather it is the logical understanding of both the inefficiencies inherent to government-run endeavors and that all government actions are rooted in violence and force. You show your ideological blindness by ignoring this, instead believing that those who hold the reigns of power in government will always act in an altruistic fashion, or that they are essentially free of self-interest and corruption. History and human self-interest aren’t on your side here.

The simple fact is that the state is a monopoly of force and violence and all of its actions are rooted in force and violence. As such, it is the central institution by which people will lobby its agents to impose their will upon others. In fact, that is the exact thing that you are wishing to do when you say that we should have a government-run fiat currency; you’re attempting to impose your beliefs upon others through the use of force and violence rather than allowing people to freely and voluntarily exchange their goods and wears as they see fit. In other words, your position is not at all compatible with a free society, it is instead the position of a tyrant and/or a dictator.

“I know I am somewhat of an anomaly, a Ron Paul supporter who also happens to be a socialist …”

I must ask, if you’re a socialist then why do you support Ron Paul? Everything Ron Paul stands for is antithetical to your chosen ideology. My personal opinion is that you’re lying, that you aren’t a supporter of Ron Paul at all. I may be wrong, but I doubt it.

“I want to start by saying that there is nothing wrong with fiat money per se. It has worked perfectly well, in many times in world history, and I think even the most ardent goldbug would admit that fiat system could work well, if those in charge of it were completely trustworthy.”

Why are you referring to “gold bugs”? Certainly Tom is not a gold bug, so why would you even mention it? Also, every fiat currency has failed throughout history (just as the current fiat currencies are showing signs of failure), so no, neither Tom nor I will come to the conclusion that a fiat system could work well because it interferes with economic calculation and it is the root of malinvestment (and thus the cycle of boom and bust), it has also been manipulated for the benefit of the political elite and their cronies, all to the detriment of the rest of society.

You say that a fiat currency could work if those in charge are completely trustworthy. Right here you are admitting that your position is both illogical and impossible– your position is based upon a fantasy.

Why didn’t you say this earlier, it would have saved much time if you had admitted that you live in a land of fantasy.

“What concerns Tom Woods primarily, I think, is that this system is ripe for abuse … I will say that, yes, it is a concern, but that our current system (and even a gold-standard system) can be, has been, or is being abused gravely.”

Who or what has been the source of this abuse, might I ask? During the days of gold and/or silver money, was it not the kings that clipped and sweated coins? In the American gold system, was it not the states that suspended the payment of specie when it was clear that the banks had issued more fiduciary media than gold held in their vaults? In the world of fiat currencies, was it not the government that increased the supply of paper money, thereby stealing the purchasing power from the people through devious means? In today’s FRB system, is it not the Treasury who continues to sell securities through primary dealers in order that it can continue to function beyond its means (as well as heap this debt upon the people)? Is it also not the government who has granted the Federal Reserve its charter?

I think that you are entirely missing this trend.

“Still, his argument is highly misleading and mostly wrong.”

If it is, you certainly haven’t proved that.

“It’s certainly possible to pay all the debts in this 100% reserve gold-standard system, if only because there will be so many fewer loans made!”

Actually, that is not it at all. The reason that the debts can be paid is that such payments are an intertemporal flow of funds (i.e. it is not a stock concept). When Tom showed the example of how available credit would decrease, he was only showing that there is a natural limit to how much credit can be expanded, not how the loans can be paid back. The reason that all the loans can be paid back is that the payments on loans is a process that occurs over time, and that so long as the debtor is adding-value (i.e. he is earning an income beyond his costs), he can continue to service the debt until it is fully amortized. This is true of all loans at all times and in all cases.

For instance, take the case of only two actors within an economy, where one is the creditor and one is the debtor. The loan between the parties is for 10 clams at a rate of 10% interest to be paid back one year later (total principal and interest is 11 clams). Obviously, the debtor didn’t have 10 clams at the beginning of the contract, that is why he borrowed the ten clams from the creditor, so it benefits him to borrow the 10 clams (it is 10 more than he had). However, it is clear that he can simply engage in labor to produce 11 clams over the course of that year and thus pay off that debt. He has added value to the economy, because where there were only 10 clams at the beginning of the period, there are now a total of 11 clams produced over the course of that year. He added-value over time.

Now, you might say that the creditor is the ultimate beneficiary of this arrangement, but that would be to ignore the fact that at the beginning of the contract the debtor received 10 clams more than he had, and that he only had to part with one clam (one year later) in exchange for those 10 clams in the present. However, the net increase to the economy was 11 clams (resulting in 21 clams total), thus this benefits both parties because both parties were able to consume more clams than they had at the beginning of the period. Both parties benefited, but that would make sense because that is the entire purpose of exchange (for both parties to benefit), otherwise they would not have engaged in the exchange in the first place.

Further, if the borrower, instead of simply borrowing the clams so that he could engage in leisure he used those clams to sustain him for a period so that he could build a clam-catching device, then clearly he will be better off in the future because of this (he used that borrowed savings to invest in capital). The reason is that he can now catch far more clams with his clam-catching device than without, thus he has improved his state both now and in the future. This would not have been possible if he had not borrowed those ten clams that the lender saved, because he would not have had those clams to sustain him so that he could build that device. The best part is that it only cost him one clam to improve his state in this way, yet now he can consume many more clams today and in the future.

Even more, if our borrower in this case can now produce more clams with his clam-catching device than he can consume, he can now sell these surplus clams to the other party for other goods, or he can save them so that he can invest his efforts into building other capital goods such as a net to catch fish, a pole to pick coconuts, or even build a small hut to live in.

“Our modern economy relies on credit to keep the wheels turning, and going to such an inelastic system as a 100% reserve gold-standard would surely destroy any modern economy. This would mean shutting off the vast, vast majority of loans in this country. Credit would dry up, and we would be reduced to an artificial poverty, in spite of our incredible industrial and technological capacity. There just wouldn’t be enough money and credit to go around to keep our economic engine running. Whatever system we choose, it absolutely must allow for creditworthy people to receive credit, otherwise it unnecessarily hinders the economy.”

This is so confused and wrong, I don’t even know why you are engaging in this discussion, you clearly don’t know what you are talking about. A modern economy operates by the same economic laws as any other economy at any given time. There is nothing different in today’s society that necessitates credit more or less than, say, the economy 100 years ago.

Would there be less loans issued if we were to eliminate fiat currency right now? Probably, for a period of time until the economy adjusted. However, I don’t know that you could say that this would create general poverty, just as it is true that merely increasing the amount of money in the system does nothing to increase general prosperity, it only gives the illusion that there are more savings at a given time, that is until it is realized that that is not the reality, that there wasn’t really as much savings as originally thought (just more money was printed) and a general downturn results.

Increasing the supply of money, ceteris paribus, does absolutely nothing to increase the amount of scarce goods within an economy, it only bids up the prices of certain goods within the economy, thus causing more investment (due to the seeking of profit) in those areas showing artificially inflated prices. We saw this with the housing bubble, the dotcom bubble, the stock bubble in the 20s, the tulip bubble, and every other bubbles throughout history. The fact is that at any given time there are a finite amount of resources to go around, and that increasing the supply of money only serves to distort the price system that is used by the players within the market to make rational decisions as to the best and most economical allocation of these scarce resources.

Essentially what you are calling for is the continued misallocation of scarce resources, the continued malinvestment of capital, and the continued up and down pattern of the general economy that is referred to as the business cycle. In truth, what you are calling for is less prosperity on net for all people, because these distortions to the economy have real consequences, one of which is the wasting of scarce resources on projects that can never see completion. It is no wonder that you don’t have any respect for economics, because you are entirely ignorant of economics.

What the Austrian position is is to allow prices to find their levels naturally, without interventions into the supply of money or credit, such that the availability of credit and the prices of the various scarce goods is a true reflection of the actual state of the economy.

“It is technically true that the bankers would not end up with all the money. As Woods says, “presumably even bankers need to buy things at one point or another, so the money would be recirculated into the economy in any case.” So they wouldn’t end up with -all- the money, just the vast majority of it. The entire economy would revolve around meeting the needs of bankers, because they are the only people with money to spend, the rest of us being reduced to fighting over their scraps.”

In a free market where the banking system is not given a government-granted monopoly on the creation of money and credit, how exactly will the banks end up with all or most of the money? Can you prove this? That’s a rhetorical question, because you of course cannot prove this because it is an intellectually bankrupt idea.

Without government favor, banks perform two (important) functions to an economy. The first is the safe warehousing of money, the second is to act as an intermediary between savers and borrowers. The payment of their services as a credit intermediary is where they make their income in such a case, some of which is used to pay interest on deposit accounts (in order to entice people to deposit their money at this bank rather than the other bank). The profit that they earn is the difference between the two. So where exactly in this relationship do the banks end up with all or most of the money in the economy? It seems to me that they are only earning a small percentage of the total money supply, and they are earning this by providing the very important services of warehousing and the intermediation of credit, just like any other service provider.

You apparently have no idea what you are talking about and are simply making statements that aren’t grounded in fact or logic.

“I’m not breathing easy when the quantity of money and credit shrinks drastically and probably well over 90% of what is left is in the pockets of bankers.”

By what mechanism does the quantity of money within an economy shrink? By what mechanism does the quantity of credit shrink? And where in the heck did you come up with this 90% figure?

The only way that the supply of commodity money shrinks in a free market is if it is physically destroyed or it is instead valued for its direct use rather than it’s use in exchange, there is no other way (see Tom’s distinction between use-value and exchange-value).

Now, I will admit that in a fractional-reserve system that the money supply shrinks as loans are paid back (either through the calling-in of loans or amortization of the loan term), and the Fed can certainly sell the assets on its balance sheet to decrease the supply of money in the economy, but this certainly has nothing to do with any sort of free market money system.

I thought that you had a scientific background, yet here you are making arbitrary statements not grounded in anything to do with fact or logic.

“In the remainder of the piece, Woods goes so far as to actually defend the Fed and the current banking system against the arguments of money reformers. He claims that all debts in our current system are payable at once, which they clearly are not, and I believe Ron Paul would agree with me on this. Where would the government come up with the money to pay back the national debt all at once, without printing it? For those who own homes, are most capable of paying back their mortgage immediately? Can most students just decide to pay back their student debt all at once by “living within their means.” Of course not. There is simply not enough money in the system to pay back all debts at once, a basic fact that Woods ignores.”

No, Tom never once defended the Fed or the current banking system. Your reading comprehension is quite horrible. Please show me a single place where Tom defended the Fed or the current banking system … Oh, that’s right, you can’t.

Also, loans are always time-based instruments, to be paid back over a period of time, if this were not true there would be no purpose for loans in the first place. However, in a commodity money system, certainly all loans could be paid at once– this would be an unlikely scenario– because the sum of all loans will always be less than the total of the money supply (remember, commodity money is debt-free money free of monopoly). The entire idea of a loan is that party A gives party B something that party B does not currently have, and then at a later date party B returns either in kind, or at the agreed upon terms at the initiation of the loan. Often, a loan also has interest on top of the principal, but this is merely the ratio of the mutual valuation of present goods vs future goods (the difference between the two is the discount). As with a loan, interest is an entirely time-based concept.

Once again you show your ignorance with regard to credit, as well as the difference between stock and flow concepts.

Admittedly Tom never addressed the fact that the base money created by the Fed is done by purchasing government Treasuries at interest, and I believe that this may be the source of the Greenbacker’s statement that not all loans can be paid back at once. However, my simple answer to this is “so what?”. Don’t pay it, the banks made a bad bet on lending to the US (certainly there is a case to be made with regard to odious debt). But even still, when would there ever be a situation in which all loans within an economy would be called in all at once? Hmm, never.

But even if they did (call in all loans simultaneously) and not all of the debt could be paid in fiat, then certainly the creditor would then be willing to negotiate for other assets rather than lose out completely. So, certainly all the loans could be paid back simultaneously in this case. And in the cases of a collateralized loan (such as a mortgage), the bank simply takes the collateral and the obligation to the debt is erased.

However, it still doesn’t follow from this that we should put the monopoly government in charge of a paper fiat currency, because certainly they will cater to their cronies and will certainly inflate away as all governments in the past have. Plus, a government-run fiat currency is only one step away from our current system, so there would be a strong push by the banks to lobby for a return to the current system (that this happened in the past is a good indicator that it would probably happen again).

So you certainly aren’t making any case against a free market money here, because a free market money is both debt-free and without a monopoly issuer/enforcer (it is the people’s money), thus it is the furthest from any single entity’s control.

“Woods then tries to use the argument of recirculation to defend the current system. He claims that bank profits will recirculate or trickle down back to the people, who can then gather the money to make their next interest payment by saving and working hard. Why bankers don’t need to work to make money, he never discusses. But average people are supposed to work, and work very hard, while foregoing the consumption and leisure that their work allows the higher-ups to indulge in.”

Um, no. That is not at all what Tom said, you’re injecting ideas that simply were not present in his statements. He merely showed that the idea “the banks will end up with all the money” is ridiculous on its face because bankers also need to consume (all humans must necessarily consume, otherwise they’d surely die of starvation).

Also, I have shown how bankers earn their money in a free market, by either the safe warehousing of money or as an intermediary between borrowers and savers. This is a service that not only makes it much more efficient for borrowers to find savers (or vice versa), but also an efficient means for providing the safety of people’s savings (not everybody can afford to directly purchase a safe or private security services to safeguard their money; economies of scale are a boon here). To say that this is not work or that it is not something valued by society is very naive, and it would be just as ignorant if you were to state that consultants don’t work or that doctors don’t work (these are simply services, as well).

“Woods claims that “when people pay banks interest on their loans, these interest payments themselves will in large measure be spent into the economy by employees of the bank” and that this will be enough to allow the commoners to make their interest payments. Woods must believe that banks pay their employees very well indeed, and that their CEOs and executives don’t hoard most of the profits to themselves, where it will sit in interest-bearing accounts, stocks, and derivatives that take even -more- money out of the productive economy and into their pockets. Yes of course, “in large measure” this money will be recirculated. Certainly. I don’t think Woods understands some basic facts about modern life if he really believes this statement.”

Once again you inject ideas into Tom’s statements that simply aren’t there. He never said that the expenditures of bank employees are what allow the rest of people to make interest payments, you said that. What he did say is that it is ridiculous to think that the banks will end up with all of the money because the entire purpose of money is exchange for goods, thus the bank employees will obviously spend that money to receive goods for their own consumption, and the seller of those goods will receive the money in return. What allows people to pay back loans is adding value above cost either by making profit or by reducing consumption (i.e. saving), it has nothing to do with banks “recirculating” the money. Nice straw man, though.

Further, you talk of investing as if it is a bad thing, but little do you know that saving and investment is the source of capital, and capital is the source of consumer goods, thus the more capital that an economy has the more that the economy can consume on net (and usually at a cheaper cost). That banks invest into capital is a boon for the whole economy, because without that we would be living a much poorer existence. Further, it doesn’t matter who does such investing (whether it be bankers or Joe Shmoe on the street), this increase in the available goods for consumption through investment is true no matter who does the saving/investing, and it is what allows us to consume more goods in the present and in the future.

Also if the banks are investing into stocks and other financial instruments, what do you think happens to that money? What, do you think it just sits there doing nothing? That’s preposterous. Rather, the money invested into stocks and other investments is used to invest in capital, to research and develop new products for the future, to hire new workers, and many other beneficial things for society. That you don’t understand this is very telling.

“Yet even if true, even if there is some recirculation, this is not enough. The Fed and Congress must continually pump literally trillions of dollars back into the banks and the economy through QE, low interest rates, and deficit spending for our system to be functional at all. This fact was not discussed in Wood’s piece. Perhaps he thinks that we could cut off the deficit and QE entirely, and raise interest rates without causing any negative impact on the economy at all? To think, he was accusing -me- of having naive confidence.”

He didn’t discuss this because it has no relevance to the basic premises that he was refuting: that the banks will not end up with all of the money, and that interest makes it impossible to pay back all loans.

Absolutely Tom is against deficit spending, QE, and artificially low interest rates. However, I don’t think that anybody claimed that cutting off these things will not have negative effects for those who benefit from it, but this is only transient and will mostly effect only those who benefit directly from it.

I thought that you were against the banks, yet here you are attempting to support the systems that keep the banks afloat (unjustly I might add).

Whose side are you on again?

“We are slaves to an ever-increasing spiral of debt, and Wood’s arguments do not hold water. The only escape I can see is through a debt-free, elastic money system. But I’m happy to try other systems.”

Yes, we are slaves to this ever increasing debt, but what entity is the enabler of this? Certainly, if the government did not continually bail out the banks, cover for their fraudulent behavior, and put the American people in the position of being responsible for the bad decisions of the banks, then this would not even be an issue. The banking system’s failures have been socialized, yet you’re in favor of socialism. The government is the enabler of this debt-slavery dynamic, yet you have confidence in government being the issuer of money. In other words, you are clearly showing that you aren’t logically consistent, yet you claimed earlier that it is Tom that is naive.

“The only system I am completely against is the status quo, that Woods spent half of this article defending.”

Right, because everybody knows that being against any monopolies in the issuing of money or credit is the “status quo” position. Are you hopping mad?

——————————————————————————————————-

Clearly this fellow who goes by the name of CUnknown is not only ignorant of economics, but he is also ignorant of logic. Not only has he shown that he clearly did not understand Dr. Woods’s paper, but he also has shown that he does not believe in intellectual honesty. He straw-manned Tom more than a few times, injecting claims that were never spoken by Tom, and he completely missed concepts that any person that is even marginally familiar with economics would understand. I really wish that more people in this world would first understand the topics that they wish to refute, but alas, that is not the world that we currently live in.

I will leave you with this quote by Murray Rothbard, because it really elaborates upon the beliefs of those within the Greenbacker movement. One can only hope that they take this quote seriously and improve their intellectual rigor on the subjects in which they wish to discuss.

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Why Do I Even Try?

October 29, 2012

In case none of you are aware, I am dirt poor. I’ve done well in the past, but over the course of the past 5 years I have barely been able to earn $27,000 per year working. After taxes, this amounts to about $20,000 net income per year. Yep, that’s mighty poor.

A few days ago I became aware that the total welfare spending per household is roughly $60,000 per year, more than double my gross salary. Now, since I live in a small 300 sq. ft. efficiency apartment in the middle of the ghetto, I often get a good view of what it is like to live in government housing, and it is quite luxurious compared to my condition. Further, since I often shop in the same stores as those who are on the public dole, I also get a view of the expenditures of those on food stamps. I’ll just say that while I can only afford to buy a few items per week, those that I see using their food stamps typically have a cart (or carts) full of food.

It is so very depressing to risk your life day in and day out at work, busting your ass, and dealing with the detrimental effects of hard, laborous work, only to find that you’re being taxed to subsidize people so that they can live twice as well as you are. Even worse, they don’t even have to lift a finger to live twice as well as I do, other than filling out the paperwork.

One might suggest that I find another job. No shit! I’ve been trying to find something better for two years now, and nothing is doing. With my qualifications I could work for government or a government contractor, but why would I do that when I can make almost as much money to fill out some paperwork and sit on my ass? Further, if I did find a job that paid more, that would just piss me off more, because due to the progressive tax schedule, I would be subsidizing these people even more than I am now. It should go without saying that working for government and/or living on the government dole are equivalent in my opinion, and both are in direct violation of my personal code of ethics.

I guess that I’ll just have to accept the fact that my life will be spent serving the purpose of allowing others to live off of my labor, in a much better state of affairs than I.

Update: After a brief correspondence with Dr. Thomas Woods, it appears that I forgot to account for bureaucracy. So, let us assume that bureaucracy absorbs roughly 50% of the total figure (an assumption that I believe is too generous), so that only $30,000 is getting to these families to sit on their ass. That still means that they are essentially taking in more than me, yet I am the one subsidizing them. There is something really wrong here.

Mike Rivero And The Master Dilemma

October 28, 2012

I tend to peruse quite a variety of websites, most of them are news aggregation sites, many of which have an underlying agenda. I don’t necessarily agree with the agenda behind these sites, but they are often very good at posting news stories that you just don’t see in the mainstream, thus making them quite a valuable resource. One of these sites is Michael Rivero’s WhatReallyHappened.com.

Now, I will admit that I agree with some of the things that Mike talks about, though I often disagree with him economically, especially on monetary matters (he’s a Greenbacker). However, what I want to talk about is the tag line that he has on the front of his site, which reads “No Government Can Serve Two Masters”.

What he is referring to in this statement, I believe, is the fact that the state of Israel has far too much influence on the United States’ government. On this point I agree. However, Mike also talks a lot about democracy, and it is clear that he is a firm supporter of democratic government (something that I see as the scourge of the Earth). It should be quite clear to any thinking person that there is a contradiction in Mike’s beliefs here.

Clearly, if no government can serve two masters, this implies that it cannot serve many masters, or more specifically, that government can only serve one master. So, what Mike is essentially saying by “no government can serve two masters” is that democracy cannot possibly be a preferable form of government (democracy being predicated on many masters forming a majority position). In fact, one could make the claim that such a phrase is in support of monarchy and/or dictatorship. It is possible to interpret the phrase as government should serve no masters, but due to familiarity with Mike’s support of democracy, this clearly isn’t the case.

Of course, I know that this conclusion is not the intent that Mr. Rivero has in making such a statement, but simple logic dictates as much.