It don't matter

Have finished reading Herbert Spencer's "Principles of Sociology" all four volumes. It took awhile to digest it all. But my conclusion, now, is that a Republic is only necessary in a militant state, where concepts such as 'balance of power' has any meaning. In an industrial state, or industrious world - a biospherically provident and sustainable one - where all relationships are cooperative and not coercive, there is no necessity for any 'balancing of power'. Government is for nothing other than organizing large scale projects like highways, railroads and migratory corridors. At present, they are impoverishing the people of our country with their monetary policies that make a two year old seem mature, and then begging us to work harder - when we are already the most productive people on earth. Cough! The party doesn't matter. Perhaps they should stop partying, tea and crumpets or beer and pizza, it doesn't matter, and start doing something constructive. They are too cowardly to do what really needs to be done though (outlaw interest and secure the long term value of our fiat money). Send some more boys off to their graves instead. It looks brave!!

Break Time

Holy Smokes Batman the economy is in flames!

Well, that about sums it up. It's been awhile since I posted to this Blog. I don't know what my problem is. Probably because I have been too busy reading and learning to take the time to regurgitate. The latest antics in governance and our bewilderingly ridiculous monetary policy, however, put an end to my regurgitation abstinence. Geez can we get any dumber? First, as in previous blogs I spelled out, there is no principle upon which to charge an interest on a fiat money. The only effective way to curb lending is to limit the net quantity of loans that can be dispensed. The problem with this is that then the government is given the chance to decide who does and who doesn't get money for their loans. This is way too much governmental interference in the market. However, it is okay for government to allow interest on a fiat money, which it is their responsibility to ensure the value of.

If interest is charged on a fiat loan, then the value is not the same on either end of the loan now is it? A Bank is a business just like any other, and it definitely has a right to profit, but there is still no principal upon which to base interest, since money is no longer 'capital', though the authorities, once this was true, chose to start calling money 'capital', maybe to build our confidence in it? (because we couldn't possibly have any confidence in our government supporting the value of their fiat money). Banks can charge a fee for managing loans and other banking activities, but the word and the phenomenon 'interest' has no business in our economic system. Money, being NOT capital, actually competes against capitalism, which is what the fed was originally supposed to prevent money from doing. But the government likes its little power collection and likes to keep up its hobby of regularly adding to it.

So, we continued the use of interest, after the Kenesian system of holding interest below the rate of profit, failed due to the influx of gold in exchange for weapons during WWI, to keep borrowing restricted to responsible ventures and hold speculation to a minimum, with usurous interest rates. This system, at least kept government from deciding which of their cronies would get the latest loans.

Now, that we are free of the problems associated with the vagaries of gold markets and have switched to a fiat money, where we can actually control the supply, we still insist on using exhorbitant interest rates to restrain borrowing, rather than limiting the money supply and holding the interest rate below the rate of profit to diminish the interest of banking in making loans, which would have the effect of increasing the restrictions on borrowing naturally anyway. What effect could this infinite money supply have on the stock market other than stagnate it. (corrected for inflation, it has actually gone down since the introduction of the inflation causing fiat money. And no one has figured out why yet!)

What is happening right now is exactly what the reason for using interest to manage borrowing, rather than money supply, was pretended to work against. Government gaining the power to determine who does and who does not get loans. If the interest rates go down, and government gets to decide who does and who does not get the sweet loan packages, obviously Diebold will be near the top of the list. Government appointing to the boards of Fannie Mae and Freddie Mac is, in essence, government choosing who does and who does not get loans, according to the rules of their faction.

Now, one of the fallacious arguments in support of interest is that a loan can default and then the lender is out. Besides the fact that money is actually created when a loan is taken out, and the rationale of why it has to be paid back in the first place is still a little vague, this is not interest, it is insurance. If we had credit insurance, then the insurance companies would have to compete for our business, and the value of this 'credit insurance' would fall under market place influences. If banks had to compete with other banks to provide a minium cost at which to service our loans, then this service cost would fall under market control too.

What this eliminates is the nonsense that with a restricted money supply, the 'value' of money puts a 'price' on money. How silly is that? Money is already the measure of value, and this value is only valid if it remains constant, which is the government's promise with any fiat money. Putting another 'price' on money adds one price to another and changes the value. Value is a measure of scarcity. If the money supply is well regulated, there is just enough money in the economy and there is no 'scarcity' of it, so there is no additional 'value' or 'price' of money that must be added on. Actually, our constant and steady rate of inflation is absolute proof that there is constantly too much money in the economy, so there is definitely no scarcity of it and no reason whatsoever to pretend it is scarce just to invalidate its promise to hold value by adding to its price. Silly?

Another argument that banks give for lending money at interest is that 'they might be able to use the money more profitably elsewhere at a later date and won't have it'. Well, there are two problems with this, the first is that I could use this same argument at the grocery store to get my (organic) groceries for free. The larger problem is that this money does not even exist until I take out the loan and sign the paper promising to pay it back. In our monetary system, money is created by the taking out of a loan. So the bank never had the money in the first place, which suggests that the bank should be paying us to take out loans by that argument. However,interest free money would not hold us in bondage to debt, preventing us from organizing better financial institutions and governmental institutions.

Now, it must be remembered, what John Adams and Niccolo Maciavelli and others reminded us of, that Liberty is defined by the class that is in power. In the Convention speeches, there was a clear message as to which class was in charge. In the Democrats, Liberty was about improving conditions at home and diminishing bondage of the mass of us humans. In the Republicans, there was a very clear and obvious distinction made between "people" and "workers". Most citizens won't make that distinction, but it is very important to understand that "workers" are NOT "people" in the eyes of certain candidates. This is classism at its historical clearest. The "people" are the upper financial classes, which may not even include normal corporate executives, if they actually do anything, since any form of work would render them 'low class' according to Veblen's definition of the Barbarian temperament. This "people" class are the owners of resources and the financial manipulators, and for the Republicans, serving them is the only vision they can imagine.

I believe, though I'm not positive it was John Adams who warned us that 'governments, once in power, will attempt to take away powers from the other classes, and once it wins a large concession, it will take another and another in rapid succession usurping, in that manner, ALL the power before anyone knows what has happened. And, then, it is too late to do anything about it. The financial bailout is nothing other than such an attempt. Monetary policy, the faulty ('faulty' used here as a palliative) system that has our flow of goods and services up in a tyrannical bunch, is set by the same clowns in government currently purporting to save US from THEIR so-called system. By the way, isn't Bush the leading expert in causing bankrupcy? The very same who managed to lose a 32 million dollar bailout gift in one year? So, how in hell can we trust this guy with 699 billion?

My suggestion is that we use this opportunity to put an end to interest, in the nominal sense and devise a real, market based lending system, maybe call it, oh, the wage system. Which allows the goods and services produced in the market place to exchange efficiently, rather than putting that huge delay on them. In this way, capitalism, that system by which goods and services are produced, will not have to compete against the feudalist system by which goods and services are rendered scarce to build the egos of megalomaniacs. And the wealth of the nation will be improved, rather than putrefied.