Thursday, October 29, 2009

Fiat money in the real world

I read an article by a bleeding heart journalist who was scolding fiscal conservatives on their worries over how much fiat money the privately owned Federal Reserve is printing or declaring into existence. I don't have an exact quote from this guy but he was basically making the case that printing money can feed and house the poor and so forth.

The journalist in question happens to have his picture above his column and his face is always frozen in a look of deep thought as you read his shallow cogitations and I guess it is arrogance on his part that makes his columns interesting. He does fish a bit deeper into some issues that most writers see as backwaters and he is arrogant enough to think that he understands them well enough to speak with confidence on them.

This is what is interesting and revealing because on this issue he was unwittingly playing the role of the child making observations on the naked emperor. We have lived so long with fiat money that most people never give it a second thought. At best they are barely familiar with how it works; they might know that it is based on supply and demand, but it doesn't register that it is also dependent on trust.

American culture is a youth culture, or rather a culture that worships youth I should say as we all watch the spectacle of the boomers growing old without the grace of dignity. Youth culture despises history so nobody can listen for ten minutes while you try to explain how usury was not allowed in The West until after the Protestant Reformation.

In the old days usury involved actual loans of gold backed by hocked jewels and so forth, but eventually the lenders found they could just issue papers called banknotes and that they could issue more money out in notes than they had in gold. They kept making their system run leaner and leaner until they only had a small amount of actual gold compared to how much they had out in the form of banknotes.

Countries have always issued coins with less gold in the coin than the face value declares it to be worth, and people had long become accustomed to the practices of usury which we now call banking.F.D.R. with his fascist tactics finally broke the thin connection between gold and money in the American mentality so it was easy for Nixon to stop trading silver for all those now worth less dollars that other countries were trying to cash in the 70's.

The reason that Nixon had to refuse the practice of exchanging silver for paper dollars, a practice that made our paper dollars "good as gold" was because the Fed had printed too many of them. Too many dollars were chasing to few ounces of silver. Instead of "silver certificates" we now have dollars backed by the "full faith and credit" of the Federal government.

If your only commodity that you have left that you are exchanging for dollars is "full faith and credit" you had better at least act like that means something lest folks start pondering that little phrase. In other words the reason the government jolly well better not keep printing money past a credible amount is that nobody will buy those dollars with real goods.

In the real world people trade real things of value only for other things they think have equal or greater value. Right now the dollar is the most convenient way to store wealth, pay employees, buy goods; it is the only way to pay taxes.Because the United States is bigger than 1930's Germany it would take quite a bit to get to the point where a wheelbarrow of cash was traded for a loaf of bread, Children played with paper money in the streets and employees were paid daily and even twice daily.

But it is Titanic-sinking hubris to think that we are too big to have to go around icebergs or rather that we are so big and grand that we can proceed as though what happened in Germany can't happen to us. So in the real world printing infinite amounts of fiat money will not feed and house the poor - it will only destabilize our confidently balanced house of cards and cause a world wide panic that will make their previously small sufferings look like they were eating cake.

In the end we need a new way of storing wealth, exchanging value and paying employees. We need families to provide the bulk of charity and Christian love to do the rest.

Mostly government infrastructure was "created or saved"

When the stimulus bill was proposed by the socialist Republican/Democrat power structure we were told that the purpose was to create jobs right now by borrowing money to pay-forward repairs to infrastructure as well as make strategic improvements.

By infrastructure we were given to understand that they were talking about "roads and bridges." We were told scary stories about bridge co lapses, studies on traffic gridlocks, and fairy tales about efficient rail transport.

These were all proper goals of government and would have to be built or repaired sooner or later and why not right now when folks are out of work and these things would be paid for with dollars that were about to experience a massive devaluation?

While I'm always and everywhere against government spending beyond their budget, and I think the that roads are usually best built by the most local government possible, in this case I thought that they had at least made a good case. I was and am still against it, but I could see how a person without fixed principles could think this was a good idea.

I thought in the long run it would have a harmful net effect, so I opposed it on principle,but I thought they had made a convincing case that the negative net long term effect would be minimal and the short term effect would help a lot of people.

It turns out though that instead of building physical infrastructure the Obama administration is mostly building Federal government infrastructure. This is harmful in the short term, mid term and long term. It is also being financed by the last bit of credit our government has.

This means that they will not be able to later fund the physical infrastructure they said we need. It also means that any funds they raise from increasing taxes will be wasted on new federal employees that we didn't need before and won't need in the future, but will prove hard to get shut of none the less.

As to the new phrase "created or saved" it is such an affront to the sensibilities that one doesn't even have to go to the obvious question of how do you prove you saved a particular job. No, my chief objection is to the idea that a president can create or save meaningful work. Other than by hiring a few personal staff members how does he do this?

If the work is meaningful then it neither needs a hero to create it nor to save it. Everything else is "make-work" that is both meaningless and futile in that it costs taxpayers more than it benefits them. Also the money stays longer in the low-velocity public sector which drags a capitalist economy down by lowering the number of times that money changes hands per year.

Can a politician create meaningful jobs by perhaps singing to the American people to stimulate the economy as one does garden plants? Not even by singing on T.V., radio, and Internet could a president stimulate the economy on a day to day basis. About the only thing a president can do is set up favorable long term conditions by cutting the taxes and red-tape that smothers our small businesses, and protecting our manufacturing sector from unfair trade.

Intergenerational debt; women and minorities hit hardest.

Massive intergenerational debt, if you think about who will pay for it, will hit folks who tend to live longer, and folks who are young or will be born in the future.

It is well known that women tend to outlive men by quite a few years; if you doubt me ask yourself how many widows you know verses how many widowers you can think of.

Next who has been having children, especially multiple children, and whose children are most likely to have multiple children? Answer minorities (and those crazy Orthodox Catholics who although a minority are not a favored minority so they don't matter.)

So I have to wonder why the headlines aren't screaming "Massive intergenerational debt; women and minorities hit hardest. This headline should be followed by an article explaining how only racists and sexists could back this kind of spending.

Hmm, this is the problem with a partisan media; their attacks on candidates that favor traditional values are suspect and when liberal politicians are in office their short-comings are not brought to public attention at all.

This sort of thing just serves to fuel up the DNC V.S. RNC - you must take a side dynamic. The effect of this culture of Lies and exaggerated hit-pieces sucks everyone in to take a side and focus on winning the next election rather than the real issue which is changing the trend of our country.

Our country has been and is trending toward government backed collectivism; bigger box stores, every restaurant is now a chain, all our small stores,farms and banks are disappearing. Our bigger and bigger businesses are being tied down by a full figured national socialism which is a hybrid of capitalism and socialism or the predictable result of government backed capitalist collectivism.F.D.R. may have started the government on the path of destroying small businesses through regulation compliance costs that deliberately targeted small businesses, but every government since then has either done nothing to stop it or has furthered it with a government supplied easy-money policy.

The easy money destroyed family financed businesses and the new businesses that were created in this destruction soon found the money had strings attached. Now the government has tacit control of every company that is "Too big to fail", but maintaining these businesses costs money. The debt is growing so fast that it is getting to a tipping point at which it will not be able to be paid off and now it seems that none of the fakes actually cared about women and minorities after all.

Wednesday, October 28, 2009

Homosexuality activists' complaint eye opening

Homosexuality activists in their push for same-sex marriage, have a tactic - they play called the "Love card". While it is ridiculous to pretend that acts that are neither serving, unitive, nor procreative are love, this claim is however quite eyeopening on a similar issue. They contend that not being able to "marry" the same-sex person they live with deprives that person of the "thousand rights and benefits" that are only extended to married people. In order to protect their lover they need to be able to offer them these all of these rights and benefits.

This sounds to me like they are saying that it actually does take that ole piece of paper to prove you love that someone you wish to "live" with; or rather that if you really do love someone, rather than shack-up you would want them to have all of the protections and advantages provided by the marriage certificate.Only self interest, which is anathema to true love, could keep one from wanting another to benefit in this way.

I think the gay activists are inadvertently making this statement about people with heterosexuality who are in the similar situation of shacking-up; they are saying that it is unloving to not look out for the other persons best interest by making sure they get those "thousand rights and benefits." They are saying that cohabitation among other wrongs is claiming to be in eternal love while keeping the get-away car idling.

So either they and their buddies in the press, by implication, are making a judgement against shacking-up or they are disingenuous activists who don't care about contradictions in their logic. They are too busy throwing everything up against the wall and seeing if any of it sticks. The media would defend to the death the claim that living-in-sin is somehow just as good as covanental marriage, so it is fun to catch them inadvertently admitting that true lovemaking can only be physically expressed in the marital embrace.

As to the test-drive theory of love I have to say it can't be recommended by anyone who understands the basic psychology of decision making. Spiritually it thwarts the natural grace of the Sacrament and thereby kills a thousand small joys commonly enjoyed by all generations up until the 1970's.