Son of QE2, This Time It’s Deadly

It is perhaps a feature of human life that the things you laugh at as a kid are the things you tend to be, do or think as an adult.

As a kid who was always very interested in both politics and economics, my favorite objects of derision were the gold bugs and the UN opponents.  As we know more about the UN, from the rampant corruption that vanishes billions and manages to make things even worse in the third world countries and other kakistocracies in which it purports to intervene to child prostitution and exploitation of natives by UN troops or envoys, I find myself thinking the old guys who said “UN out of the US” were perhaps much brighter than I gave them credit for.  (To be honest, unlike most of the kids today who are getting this soft-lit version in school and the idea the UN is some kind of super hero – I never thought it was good for much but talk-talk, but I thought as such it was inoffensive, and perhaps a show of good will.)

As for the gold bugs…

Years ago, at a panel at world fantasy, I found myself the only writer with three editors at the table.  I don’t know if I mentioned that economics is my hobby?  Well, in any case, it clearly wasn’t these editors hobby and they were all older than I.  Which shouldn’t matter, as they weren’t old enough to explain this: when currency came up, to a man (well, there were two women and one man, the man is the one who was vocal about it, though) they insisted that US currency represented a certain amount of gold.  To guffaws from about a third the audience (yes, a third) the male editor continued to argue that our currency was gold based.

As I disabused him of this notion, his eyes grew wide and panicky and he said, “You mean there’s nothing behind that paper but that the government says so?”  His expression of almost comic-book terror said it all.  “We’re depending on the word of politicians to make our life-savings worth something?”

When I said yes, you could feel the collective shudder in the room.

There are many reasons this was thought a good idea at one time.  I’d like to point out at that time, most of the people also thought that eugenics were a bang up idea and that eventually all of life would be run by a few people at the top, who would be kind of super-engineers of society and make sure we didn’t have any of those little stumbles that we, unenlightened, are prone to.

Yes, there are people who still believe that later one.  Mostly they’re politicians.  And you don’t want me to go into detail on why they’re wrong, because I refuse to swear this early in the morning and before coffee.

Part of the reason, of course, was the idea that gold is not actually correlated to the value in society.  Pratchett does a great job of explaining this in Making Money.  Of course, he doesn’t address the weaknesses.

But the point of people who moved us to a fiat currency was that gold as such is not used to make enough of our goods and wealth to correlate to how much wealth there is in a society, and that it would be better to create a currency that represented the actual wealth of a nation.

This is all well and good, except, how does anyone know what wealth a nation has?  Look, let’s leave aside doctored news reports, controlled press as was common in the old-USSR or voluntarily(?)-controlled press as we seem to have here.  Let’s leave aside funny reports doctored to show less unemployment or more job growth than there is, which get quietly (or not) revised downward when no one is looking.  Let’s assume everyone in this equation is honest (yes, even politicians.  Shush now, this is a fairytale) and therefore what we’re looking at in reports and activity and movement of work and value in society is what it is.  How do we know how much wealth there is?  Even if we appoint very smart men to look at it, how do we do it?

Companies have very smart men looking at them too, to determine their value, and betting with their own money which keeps them honest.  They’re called investors.  And how many times is a company pretty papier mache looking like solid stone?  And that’s a company, not something as solid as a nation.

As for gold… not, it has no intrinsic value beyond that which we humans give it.  Which means what?  Unless we’re dealing with aliens, the creatures in this world needing to transact business are humans, and humans always do seem to value gold, which means a certain amount of gold seems to have a certain price which tends to be higher than other commodities.  But I’m not a stickler.  I’m okay with the diamond standard, or the rare Earth standard (except if possible the standard should be non-consumable, even when used in applications and its value shouldn’t be dependent on our current level of technology) or some other, odder standard, provided we are all agreed on it and use it.

Yeah, I know.  That’s crazy talk.  Next I’ll go into guns and canned food.  (Both of which, incidentally, are a good idea, right about now.)

You’ll say after all the whole world is on fiat currency (just about) and look how well it’s worked and how well everything runs, and hasn’t the economy grown?

Yeah, yeah, yeah, but…

I’ve spent the last week incandescently angry.  Not just about the embassy attacks and the blatant and infantile lie that it was all about a movie (shh, go to sleep children, it was all about a movie.  Nothing to worry your pretty heads about it) nor even the craven response of arresting an American citizen because the movie supposedly offended foreigners (as if offense should ever be a reason to curtail our first amendment.)

The other reason for my rage was the so called QE3 – quantitative easing three.  For those who don’t recognize the deadly reality behind the cutsy abbreviation – this time …  no, wait, I have to do this movie style: QE 3, this time it’s open ended.

Yes, Sarah, but what in heck is quantitative easing?

Quantitative easing means the economic giants in charge of deciding how much our economy is really worth have decided our economic troubles are REALLY just a lack of pretty printed paper.  Ie. That there’s more value in the society than our paper is representing.  In fact, they’ve decided the money supply is too tight and that’s the problem.

Part of the reason they decided this is optics.  Printing more money sends the stock markets up, and that looks good on paper, though I’ll note all the increases in the last few years have barely kept up with inflation.

Inflation?  Yep.  That means how much more money you need to buy a good or service.

But why would you need more money?

Because ALL the cash in circulation represents ONLY a certain value: the value of the economy.  And our economy is not in fact expanding, even as they are running the printing presses at full speed and indefinitely.  (They’re also using that new cash to buy foreclosed homes, which you know, is the economic equivalent of eating your own boogers and calling it supper.  Never mind.)

Our economy in fact seems to be contracting, not expanding.  So what increasing the money supply does is have more dollars chase the same good/service, which by laws of supply and demand which these magnificent geniuses of finance have never heard about, means that prices go up.  Which means… all of us that have a little money in the bank because, say, our income is massively irregular?  Or those of us who agree on contracts for a fixed amount that might not be paid for years?  We – all of us – just got a little poorer.  The supergeniuses of finance just reached into our pocket and stole from us.  And smiled.

But wait, there’s more.  Insofar as an economy and a monetary system is not just a way to ease transactions between people but a contract with the future – you invest, borrow and such from people twenty or more years ahead by having something that will keep its value into the future – we’re breaking our contract in a spectacular way.  Whether the economy or civilization itself can survive this remains to be seen.

But wait, there’s more.  As mentioned, our fiat economy is dependent on other fiat economies.  In addition to running our printing press non-stop, we’ve also burrowed from China, a controlled economy with a controlled press, whose politicians are answerable to no one.  Yes, the supergeniuses in charge thought this was a bang-up idea.  Don’t you?

Turns out some of China’s economic expansion might have been… slightly exaggerated.  And by “slightly” we mean of course massively.

So, where does that leave us, that we founded our ghost economy on China’s ghost steel?

Do I need to tell you?

Maybe we’ll get lucky.  Maybe it will all crash down without a massive blood bath.  But if it does, it will be no credit to the supergeniuses in charge of our finance.

Now, keep in mind “Fiat” means “let it be made”.  These men think they can wave a wand and conjure an accurate representation of the value in our society out of thin air.  They think they’re that smart.  But they believed in the assurances of a communist country.

Do you feel the confidence, yet?  No, neither do I.

And I think the whole world is headed to a headlong crash with reality.  And suddenly I don’t feel like laughing at goldbugs.

330 thoughts on “Son of QE2, This Time It’s Deadly

  1. I’ve been stockpiling food, myself – against inflation, or a breakdown in supply after (insert cause here), just by purchasing basic things in massive bulk quantites at Sam’s Club, lately: oil, flour, pasta, sugar, canned tomatoes, rice, beans. Oh, and canning and preserving a great variety of pickles and other things. Making cheese, brewing beer and wine at home. I tell people that oh, it’s part of getting into the mind of the 19th century, because such people otherwise get laughed at as ‘preppers’. (Really, the regular commenters at my old digs on Open Salon have been quite derisive about this tendency). But it’s really because I am seriously worried about what will happen, without warning. At least, we can eat. (Note to self – stock up on dog and cat food, next trip.)

      1. It is hard for us too because of my medication (it terrifies me) and because of my food needs (fresh not canned). I have been eating canned food every once in awhile, but it is not good for me.

        My imagination gets carried away with me sometimes. I could last for a few months,but with my particular disease I will waste away and then can’t move. I would probably last a year more or less.

        1. Curious, Cyn – why are canned foods not good for you? Is there something unusual, or is it high sodium content?

          1. Hi Wayne – High sodium content actually. My disease has done a number on my kidneys. Plus it looks like there may be another problem BPA, but I haven’t seen it as a problem yet. 😉

            I’ll go fast because my kidneys are compromised. I never realized how fast a person can die when the kidneys go until I experienced it. (kidneys went… but I made it to the hospital).

            1. Hmm… Sounds like dried veggies might be the way to go, if you want to stock up. I’ve bought stuff from bulkfoods.com, and their mixed vegetables are great for soup.

      2. I have the same problem. Discovered Mountain House freeze-dried meat and eggs, no carbs (according to the listing). There’s also weightlifter-style protein powder, too.

        More importantly, I know people who know people who have a still 😉

        1. “More importantly, I know people who know people who have a still”

          Liquid gold, go talk with someone who lived during the depression, ask them the surest way to make cash money during it. Chances are three answers will come up; trapping or hunting furbearers (compare fur prices from then to now, most types of furs were worth about as many dollars then as now, but a dollar was worth a whole lot more), scrapping iron (which the standing joke was we were sending our scrap iron to Japan, they were making bombs out of it to send back, people still kept hauling in scrap, because prices were high and it was a way to make actual cash), and making ‘shine.

          1. Even better, I know how to build a still, and make mash. I can also do about a dozen other things, so even though I’m old and disabled, I’d be worthwhile adding to a colony. If I can bring my library, I can name my own price. 8^). Knowing how to do such things as properly skinning an animal to retain the hide, how to build snares and traps, HOW TO TRAP for food and profit, and some excellent gardening tips, will be a lot more valuable than knowing anything but basic chemistry, and medicine. I even remember some folk medicine.

            Right now, Jean and I are house-hunting for a house all on one level. We’ve reached the age where running up and down stairs is painful. We want a minimum of five acres, and I’d prefer a minimum of 40. I’d be quite happy with “40 acres and a mule”. I’d want to keep the mule around to remind me why I hate government.

          2. Your comment about scrap iron made me think of the copper scavenging that’s been going on for the past few years. I live in Vegas, where I can see several stalled out “ghost” construction sites from the 215 beltway. One of them has — or, had — a copper dome that my wife noticed was losing its metal section by section over a few months. The last slice disappeared a few months ago, and the caretaker has capped it with some sort of temporary green plastic.

            1. Copper, like other precious metals has been skyrocketing in price. The last scrap copper I sold (last fall) I got over $4 a pound for. I park in a rock pit where people come and shoot a lot, last fall and again this spring I picked up over $50 worth of brass in about 15 minutes; when I got back to my truck early and had a few minutes to kill waiting on somebody. Since then I have noticed that there is never any left laying around, somebody else figured out it is an easy way to make a few spare dollars. With so many people out of work people are scrimping and scrounging for any way to make a few extra dollars. I used to go to estate auctions on occasion, and would often pick up a truckload or two of scrap iron for a $20 bill, now if you go to an auction there are at least a half a dozen ‘scrappers’ there.

      3. I buy dog food by the ton, so I am generally stockpiled for that. And cats (unless they are inside cats who have been declawed) can generally take care of their own food supply, you may want to supplement to keep them your friends and close to keep local vermin under control (vermin populations are liable to explode if there is a major meltdown, and many types of stockpiling will attract them also), but if you miss a couple days feeding, or can only give them leftover treats, they will survive fine.

      4. I was thinking about this, while you don’t normally eat carbs, it might not be a bad idea to stock some anyways. If it comes down to eat carbs or starve, I assume you would rather eat carbs and deal with the sideeffects later. (Note, practically my only stocking of carbs is flour, beans, and potatoes, oh and canned soup). If you do home canning, canned veggies, canned fruit (although these usually contian sugar) and canned meat are good noncarb items to stock. Also a freezer with an alternative source of power, while not really portable can stock fairly good sized amounts of meat and veggies in a fixed location. Of course if you are depending on a generator for that alternative power, remember our government has deemed we need ethanol in our gas, which creates problems with stocking fuel for the generator.

        1. No. It will put Dan on full diabetic and it will probably kill me in short order, as well as making my hands unusable with eczema. this is why I said it wasn’t a diet, it was a need. I used to stock beans, mostly, and rice, because you can live on that A LONG time.

          1. Beans and rice will become important trade commodities, but your right, I would stock useable items first (I did not realize Dan was diabetic, that is liable to cause serious problems in a meltdown). If it all falls completely in the pot, there will be fresh meat on the hoof, and while not feasible for everyone, there will be at least semi-professional hunters that will trade meat for other commodities they need. Finding such a person to deal with after the meltdown however, might be a problem, as Ron mentioned, making alliances ahead of time will be the best route to survival for most people.

            1. he is not ACTUALLY diabetic. How do I put this? He was diagnosed diabetic, then we cut carbs to almost nothing for two years and he went into a program of rigorous exercise that made him lose 130 lbs. Right now he’s keeping his sugar normal without meds. It’s entirely possible with high activity AND without massive quantities of food, he’d be okay on rice and beans, but we’d rather nor risk it when diabetes could become, as you put it, an emergency of its own. My case is that for whatever reason my digestion of carbs activates eczema — right now on my hands — this progresses very rapidly to all raw flesh all the time. Yeah, dried veggies, but also I need to get Dan a good bow. He was an archer in college and there’s no reason he can’t use a bow to hunt.

              1. One – somewhat labor intensive – option is pemmican. Not the brand name bars that taste like cardboard, but the original article that tastes a little bit better. Dried meat + rendered fat = 20 year shelf life emergency rations. The meat should be sourced from something grass-fed, and then dried (not cooked at all: the heat from cooking causes the vitamin C to break down) and pulverized. Mix 50/50 by volume with rendered fat from the same or similar grass fed source (the fat should be rendered at as low a temperature as possible to preserve the nutrient profile), cool, store in an airtight container. One can add a small amount of dried fruit (usually berries) when mixing it up, and then salt to taste when eating. Supplement with leafy greens whenever possible, but pemmican made in this way provides what you need, in a dense, portable material that has a very long shelf life.

          2. Chickens and stock the ingredients for feed (not the feed itself, it spoils quickly). Keep a few now with the facilities to expand the flock quickly.

            1. Is there a consensus “prepper” bible that everyone swears by? I’ve thought about setting some stuff aside, but I certainly don’t have time for pickling, etc. More along the lines of stocking and cycling through stuff that needs to get used.

                1. The dross is the problem. For the same reason I don’t have time to pickle anything other than myself every other Friday evening, I don’t have time to sift dross 🙂

                    1. Oh fer goodness sake — just buy yourself a good Boy Scout Manual, preferably one written before 1950. Get the Eagle Scout Manual as well, if possible.

                      Barnes & Noblesse Oblige offers multiple version of US [Military] Survival Guides in their remaindered section.

                    2. The “Foxfire” books are pretty good. You have to take some of what they talk about with a large dose of salt, but about 70% of it is useful. I wish I could find all 9 volumes I used to have… They disappeared about the same time as my high school yearbooks, which I lost to a flood. I don’t remember them being part of it, though.

          3. Rice is one food I just cannot eat, now that I’m a full-fledged diabetic. We’ve been doing some experimenting, trying to find what foods are better and which ones not to eat. I’m limited to 150 grams of carbohydrates a day. There are days when I eat three meals and two snacks, and my carbohydrate consumption is still under 100 grams. One of the “interesting” aspects of our experimentation is that, regardless of how many carbs I eat, if my pain level goes above a 6 (which it does frequently), my blood sugar goes up 10 to 15 points, too. I had a “9” morning the other day, and my blood sugar was 242. Normal for me is around 120. I do what I can to keep my pain level down, but sometimes Mama Nature doesn’t cooperate. Cold fronts with moisture are killers!

          4. There’s always pemmican: red meat dried to jerky, pounded/ground to powder and mixed with tallow. Takes some effort to make, but it’s shelf-stable at room temperature for years if you’ve gotten all the water out that you could.

    1. Is it “prepping” when you live in tornado/ice-storm/blizzard alley? Or in a hurricane corridor where you don’t get the “house knocked flat” but the “power poles flat for a week?” Didn’t think so. That’s how I explain it. And it is quite true.

      1. I don’r want to get into an argument regarding Latter Day Saints’ theology (from a cultural Anthropology/Sociology POV, theology is irrelevant anyway — it is how you treat with the material world as a result of that theology that is important) but there are a lot of people sneering at Mormons right now (and paying big fistsfuls of $ to see The Book of Mormon on Broadway) who are going to be first in line begging for a bite of something before this is all done. And cursing them when reminded of their prior discourtesies.

        Just sayin’.

        1. RES – my parents have gone overboard. There entire house is filled with prepper stuff (the hunch over to walk down the small hallway) and yes, they are Mormon. They don’t rotate the stuff so who knows how much of it will be spoiled when they actually use it. (another problem with storing food).

          My family actually think that we will come home if there is a crash. I am far enough away that we won’t get there (and don’t want to). They have become hoarders.

          Plus if there is rioting etc, the rioters/criminals will go straight to the homes that they know have food etc. If I was prepping I would keep that tendency quiet because many people in our area are not the nice folks and would get worse in such a crisis.

          1. Remember the saying, “If you have bullets you can always get beans”? Well, going along with that, preppers need to remember, if you have beans you better have bullets.

                1. Yeah, those reports are rather disturbing.

                  Regarding the storage life of prep food – it depends on how it is packaged. Most well-dried foods, stored in airtight containers protected from light will last a LONG time. As will properly canned foods (I don’t know about storebought, I’m talking about home-canned in jars). Other things, again, depend on how and what.

                  1. Ummm… have you heard that some government agencies who should not need bullets are buying thousands of them?

                    No. I had not heard thousands. I heard millions and, recently, billions.

                    1. But you were hearing about those agencies that deal with law enforcement, like the IRS and the EPA. Those agencies who don’t deal with law enforcement are only ordering thousands, I think the Census Bureau only ordered something like 167,000 rounds. Somewhere I had a list that included number of rounds ordered as well as calibre, brand, and weight of bullet. It was from an article that wasn’t concerned about why, such agencies were ordering so much ammo (or any ammo in some cases) but was doing a comparision of different bullets, and why the government was ordering this or that design.

                    2. According to the business news magazine my husband read (can’t remember the name right now – old brain) the gun and ammo manufacturers are working three shifts just to keep up with the demand and still supply the government. I think king zero is preparing to declare martial law when he loses the election. He has 10 weeks to screw things up even more before he is out of office.

                    3. Yeah, what does the Department of Health and Human Services need with 400,000 rounds of hollow-point ammunition? Why does the Environmental Protection Agency (EPA) need with multiple SWAT teams? And yet, the State Department won’t allow government employees to have ammunition in their weapons in areas where rioting is frequent. I’m beginning to think our government has ideas it shouldn’t be having, and needs to have a choke-collar placed around its fat, quivering neck.

                    4. My opinion too Mike– I wondered (I have a vivid imagination) why those bullets would be needed. I can only thing of one thing –against its own citizens. So what are they going to do to make us all that mad– I can think of a few things… food always comes to mind.

                  2. When we were canning food we rotated about every five years. Anything longer and you can have problems imho. I know it can last longer, but you need to check the glass bottles (and cans).

              1. Keep in mind that if you buy food from the usual bulk prepper supply houses, the gobmt will have access to their lists, and when the anti-hoarder legislation is decreed, they will visit you.

                1. I should clarify that a) yes, he *is* a friend, of the second move type, and b) I meant he stockpiles bullets, not that he would use them to steal food. That is a humorous joke. Or, apparently, a non-humorous joke.

            1. Bearcat,
              Let me continue with the theme of being prepared but not paranoid — not that anyone here is.
              Someone pointed out that we are neither independent nor dependent as a species. We are interdependent. It helps to prep by forming aliances before hand also.
              I am part of a 7 sibling family all married and mostly living close to one another as an example.
              Ron

              1. I find a bright “oh, I’m just setting up my bug-out box– you know, like if there’s a flood, or the power goes out for a week, or any kind of natural disaster? You just load up and go, and I figured while I was doing it I’d buy stuff I use anyways in bulk to save money, and then if I can’t get to the store we have enough food for a week! That’s about how long the flood was a couple of years back, wasn’t it?”

                However, I also tend to do my insanely cheerful thing with that, and will natter on for thirty minutes about how my mom worries if we don’t keep supplies in the car during the winter. Girls can get away with it much easier.

                1. Guys can get away with it also, but if a guy natters on inanely for thirty minutes he isn’t considered a ditz, he is considered either gay or bughouse nuts. Most guys have a problem with being considered either one.

          2. Cyn, I have been chuckling a little, hope you don’t mind. A friend from work, Jim, and his RN wife – have a year’s worth of food stocked neatly in the basement. The problem, of course, is that most of the neighbors know they are Mormon. And Jim and his wife have no handguns.

    2. Everyone should read “Alas, Babylon”, by Pat Frank. There are some excellent suggestions – and a few warnings – in that book. I don’t think civilization will collapse, but it will get VERY interesting.

      Actually, there is one commodity the US has that it could sell and cover much of our debts. The US owns anywhere from 20% to 90% of the land in the western US – from Texas to Montana, west to the Pacific ocean. At $1000 an acre, they could almost pay off the national debt. Include the land in Alaska, and we COULD cover it. Of course, the enviros would go absolutely berserk, but that might be a good thing. Maybe someone will finally realize the enviros are absolutely bat-s$$$ crazy, and can safely be ignored.

      1. While I totally agree in theory, the problem with that is that China would be the one buying large portions of that federal land, and I don’t want a foreign power, especially a communist one, owning large portions of this country (actually an outright majority in my state).

        Of course if they would actually manage the land, and the Forest Service would log, and use practices designed to make a profit instead of practices designed burn as much money as possible, while driving the timber workers nuts and not placating the enviros; they could make fairly significant amounts of money, that could be put towards the national debt. While not paying it off such practices could actually produce enough to make a dent in it, and combined with sensible exploitation of energy sources like oil and natural gas, and of course budget cuts, we could go a long way towards paying it down.

        1. If China’s management and safety record in their own country indicate anything I would be none to hopeful.

            1. with lead or arsenic in the base chemicals of the food–
              except we are having problems with arsenic in our rice (look up today’s news story about arsenic in rice in Texas).

              1. It is said that the Chinese trade ambassador told the Indonesian official who was complaining about the lead content in Chinese export items, ‘Get over it.’ (Well, not those exact English words.)

                1. As I recollect, it was considered extremely rude and insensitive for them to disrespect Chinese culture by imposing foreign norms and standards.

                  1. Well, did you hear about that shipment of lead from China that was turned back at the US port because it was contaminated with children’s toys?

                    Thank you, thank you – I’m here all week. Try the veal and don’t forget to tip your waiter/waitress.

              2. Please don’t fall for the Green’s scare mongering. Arsenic is in most of our foods and water and our bodies are very efficient at removing it.

                1. I do know that… because there is a bit of arsenic in apple seeds and so forth. I think though that this rice thing has higher arsenic levels because the rice was grown on former cotton fields. Although I think there is a lot more lead, arsenic, and other metals in Chinese products and food that come to the US.

                  As for the eco-terrorists (I refuse to use a perfectly good color word on politicalists), they think we should either be dead because we are not a part of nature. Or that we should become vegetarians… If they force that on me, I’ll turn into a carnivore-human 😉

                  1. I have little patience with being told we’re not part of nature by the same people who also say we’re nothing but hairless apes. Can’t have it both ways.

                    1. Yeah, but we’re “the killing ape” — born bad, you know — unlike all the other apes who… um… are also killing apes.
                      You know they’ve internalized the whole paradise, fall, and species guilt thing and if they just got (traditional) religion instead of making their own, they’d be FAR less obnoxious.

          1. Sorry, I was unclear, I meant if our FS would actually manage the land, I was NOT saying we would be better off if China bought it and managed it.

        2. Bearcat – China is neck deep in a heap’o-trouble situation itself right now, and I don’t think they’ll be buying much of anything. I’m sure there are tens of millions of plain old US citizens that would buy 40 acres at a time, without having to sell that land to a foreign country. I’d swap my social security entitlement for 40 acres, if I get to pick the acreage. I wouldn’t even ask for the best that’s available — just something I could live on.

  2. I don’t want to live in interesting times either. The male editor hadn’t been living in the world for awhile. I think the change from the gold standard was 1973. Before that if you had significant amount of gold it could be considered illegal and confiscated. **stories from the dark side of the fam.

    I saw the that they were printing more money and felt a sinking in my stomach. I knew what that meant. Our money will soon be worth as much as a Greek Drachma or something else.

  3. Sarah,
    Like you I went to one of those big schools whose grad school of business is well known. Maybe you don’t think so; but, we really had much the same education simply because we were interested and we paid attention. Maybe we only had an outhouse in which someone had left a thick economics text. The point is, for both of us the learning material was handy and we made time to assimilate it.
    I’ve been following the economic situation and also the current political campaign. Yesterday, I suddenly realized that I’ve seen all of this before.
    Now, it is true that whatever economics we know does help follow the conversation but in truth you and I first heard this story back in grade school; yeah, grade school not grad school.
    Remember the story of the grasshopper who wanted to play all Summer while the ant was getting ready for the Winter? Then, sure as shooting, along came Winter and the grasshopper was begging the ant for food and shelter.
    All this campaign and economic discussion comes down to is the grasshopper and the ant. The grasshopped tells us we should vote for him, the ant wants us to vote his way.
    What I notice is this: the ants were predominately in charge of this country from 1787 to 1901. At the end of that time we were economically the most powerful country in the world.
    The grasshoppers took over with the advent of Theodore Roosevelt and excepting 2 presidents (Coolidge & Reagan) have been in charge ever since. Since then we have had scientific and technological progress but a downhill slide politically & economically.
    Why did it take so long for the grasshoppers to break the country? Because if you start with the strongest & richest country on the planet there is a lot of momenteum to overcome — it takes a long time to break it.
    There are two comments left to make:
    -Be of good cheer. Winter is coming but the ants will survive and we will be rid of the grasshoppers. Heinlein was right about the human race culling itself.
    -Be wary. Grasshopper eggs will hatch in the coming Spring.
    Ron

    1. I suspect that now a days if they tell the children the story of The Grasshopper and the Ant is told it is told about the hard industriousness of the collective ant colony is their salvation.

    2. It’s funny you should mention this as I’ve been telling people for about two years that one of things you need to know to understand our current situation is the tale of the ant and the grasshopper. Except the story has been twisted so that the grasshopper’s imprudent behavior is now unimportant because his needs trump his behavior and by the revelation that the ant didn’t really grow the food he’s gathering and storing for winter. Somebody else did that.

      “The ultimate result of shielding men from the effects of folly, is to fill the world with fools.” – Herbert Spencer

      1. The Spouse and I have long pondered the result of making stupidy or imprudence a worthwhile survival tactics.

  4. With the news that much of the steel in China that was promised against loans has turned out to be “ghost” or fraudulent, there is some wonder how much of the world’s assets are real.

    Cars, houses, and land are real, but what happens when the “inventory” exists only on some paper. What is the bank going to do? What can people do when the banks are doing the same thing. Securitizing the already securitized?

    You know this sounds just like the Social Security “lock box”. Just another 1 inch thick 3-ring binder with some paper promises in it, but nothing real behind it.

  5. A little math of population vs. purported economy told you that the China bubble was just that, going back ten years or more. How many cell phones does a small rural village need? One. As in India, someone gets one and rents it out. Ditto lots of consumer goods. And once information started getting out four years ago about the land riots, a safe assumption (based on Cold War percentages) was that if the West heard about one, there were probably at least four or five, at the very least. Anyone betting on China or India to bail out the planet’s economy needs to wake up and smell the fermented fish sauce. And that is if you still think that China has the best economic interest of the US/ EU/Australia at heart. In which case I’ve got a small supply of unicorn fleece that I’m willing to offer in private treaty sale.

  6. Sarah:
    Yup. Fiat Money is lots of fun for the Chattering Classes! No need to order the Mint to mix cheap metals with the expensive, before stamping out the new run of Coins…
    By the by, the 2012 Canadian Looney, the C$1 Coin, will not work in the coin operated washing and drying machines in my building! And those coins are really, really shiny, too. So, even though our Prime Minister is an Economist, and knows better, the urge to make coinage cheaper is too strong…

    1. I recall when the new quarters came out, slightly smaller and lighter as well as customized for all the different states. They wouldn’t work in vending machines either.

    2. Two weeks ago I checked out the US dollar vs Canadian dollar. US 99 cents to the Canadian dollar. Not so long ago, this was $1.40 US to $1 Canadian. When my son moved to Tokyo in 2002 to attend university, the yen/dollar ratio was 120 yen do the dollar. It’s now under 80.

      Reality is reality. QE1, QE2, and now QE3 print dollars out of thin air. Poof! like a fairy with a wand. However, these wizards deflate the value of the US currency every time they print money. They just hope they will be retired federal employees with nice monthly checks before the sh_t hits the fan. Here’s another piece of history. In 1974, rates paid at Treasury auctions exceeded 9% and continued to do so until Volcker and Reagan beat inflation back in the early 1980s. I know. I was there, a young supervisor at the Treasury Issues Department at a branch of the Cleveland Federal Reserve.

      My neighbor is retiring soon and we are thinking we could build a small barn between our backyards for a small pony or donkey, plus room for a two-wheeled cart. There’s a lot of grass around, plus with a few bags of oats, we could make out if there’s no gas for autos. Luckily we live only a mile from a large hospital, so the donkey ought to get us there in 45 minutes. Just a thought.

      1. They just hope they will be retired federal employees with nice monthly checks before the sh_t hits the fan.

        They just hope they will be retired federal employees with nice monthly inflation adjusted checks before the sh_t hits the fan.

  7. Excellent blog post. We’ve been trying to store up some canned goods but we’re so strapped for cash right now it’s nearly impossible. 😦

  8. Whenever I see the pump price of gasoline (and my, isn’t it interesting that with prices-per-gallon far higher than we’ve ever seen before the news media has lost interest in reporting on this topic?) I wonder whether the price of gas has gone up or the buying power of the dollar has fallen. A bit of both, methinks.

    The reason gold has value is that it is easy (thanks, Archimedes!) to determine whether a quantity has been diluted. You can’t eat it, can’t do nothing with it but look at it. But if you cut it with baser metals you sure can get caught. And unlike paper money, if you catch somebody with their thumb on the scale …

    1. I could beat any simple specific gravity test, though, and make money, because Osmium, Rhenium, and Iridium are all more dense, yet less expensive, than Gold. This means that I could add them with appropriate amounts of Lead to meet the correct density, then cover the result with Gold.

      So make sure you have chemical tests available, too.

  9. I understand the incandescent rage, being one of those people who has an irregular income and saves his money to live on through those times when I have nothing coming in I have to agree. (Although with the advent of incandescent lighting, lampposts have gotten much taller, it will prove a challenge for the lynch mobs, possibly they will have to improvise)

    As for the editors thinking that their money was still backed by something, I can understand that too. I was born AFTER 1973, but when I went to school it was still taught that the gold standard was how money worked, when I argued this, one teacher insisted that although there wasn’t enough gold to cover the amount of dollars out there, this would never be a problem, because not enough people would ever trade their paper money in for gold at the same time to strip Fort Knox. (if your thinking “Huh, what was he smoking?”, I have to agree)

    1. Couldn’t agree more, Bearcat. This mess was set in place by Richard Nixon (yeah, I was alive at the time). At the time, gold was pegged at $300/oz. Czech out the prices of all the precious metals now – Gold at $1800, Silver at something like $80.

      Something most people don’t realize is that most computers have a significant amount of gold in them. It’s not enough to melt down to a salable quantity unless you have hundreds of old computers, but it’s there. Electronics has been the only industry to benefit from ending the gold standard, but they’re moving away from gold connectors to something else, because gold’s become too expensive.

      Gold is also used extensively in satellites, both for shielding and for connections.

      1. That is one reason for the rule about requiring 50 years for Current Events to become History. It has taken that long for JFK’s executive order enabling unionization of government employee to demonstrate what a disaster that is, and that long for LBJ’s Welfare State to reveal the full extent of its stupidity. Nixon’s lighting of the currency fuse was a trifle shorter, but only because currency is readily tradable on world markets.

        I recall back in the Eighties reading WSJ editorials pushing for a (semi-)return to the Gold Standard through what was called “Purchasing Power Parity” — creation of currency “market-baskets” of commodities which would allow currencies to be valued against an absolute (sorta) scale. Gold, electricity-hours, oil and basic comestibles would be components of that basket

  10. Stocking up is especially hard if you’re thinking about moving in the near future.

    I took up gardening as a hobby a couple of years ago. Gets me away from the computer for a bit of exercise. And of course, I’ve always got hurricane supplies. _Excessive_ hurricane supplies. 😉 Prepping? Me? Oh certainly not!

    1. Pam,
      Several have made comments about being called a “prepper.” Being called a prepper is nothing compared to dealing with the “Grasshoppers” when Winter comes and they get really hungry. I don’t advocate being paranoid but I don’t think we want to tell anyone we aren’t prepared to share with.
      Ron

      1. Especially if you live in a city . . . and in some ways, suburbia can be just as bad. When I was a scout leader, we’d do food drives. The number, the percent, of homes without a single can of something to give was mind boggling. I think a third of all suburbanites live on pizza delivery.

        1. actually I arrived at this conclusion last time we were house hunting. Most kitchens are beautiful and unusable, including stuff like carpet on the floor. You can’t live like that unless all you do is warm up ready-meals. Another indication is that the new microwaves — and my fancy stove, too — now have more ready-settings for heating up pre-prepared than anything else.

          1. While I quite see (and agree with) your larger point, I would argue that one occasionally sees carpet in bathrooms, but I don’t know that indicates that people don’t do anything in them that might get the floor wet. 🙂

                1. Carpet anywhere, for me, if it’s something you can’t roll up and take to the cleaners or wash yourself the moment something unsavory gets on it. Used to have a cat who had the tendency to pee where she shouldn’t have. I shudder imagining living in a place where I would be unable to go for bare floors + perhaps a couple of strategically placed small rugs at most whenever the situation might demand it.

                  1. Fortunately, by the way, fitted carpets were only a temporary fad with Finns. You sometimes still see them in office buildings and houses last done over during the early 80’s or so, but otherwise carpets here are always something you can change to a clean one when the cat, or the kid, throws up or pees or spills the milk on it.

                    We are also one of those societies where people take their shoes off when they come in, in private homes. May have something to do with that. Fitted carpets just aren’t as easy to keep clean as bare floors are.

            1. Snerk. 🙂 My folks’ house had carpet in the kids’ bathroom when we moved in. After three overflows, out came the carpet. Warm underfoot in winter did not balance “running fans into bathroom for hours to dry padding.”

          2. Amazing. Even my house, which has carpet even in the bathrooms, doesn’t have it in the kitchen.

          3. Imagine my shock when I toured one house in a rather nice neighborhood. The real estate agent was at her wit’s end, I kept rejecting houses and she just could not understand why. I kept telling her we are book people and book people need places to put their books. We also wanted a decent kitchen and I wanted a place for a garden. This house had a ‘library’ so she thought I might like it. The library had ornate and highly dimensional wood paneled walls on two sides, was open on one end to the hall and the other was made up of glass doors. I was not impressed. We got to the kitchen. The only cabinets it had formed a shallow U-shape with a counter along the outside wall, above that and arching over were windows that would have made tor a decent half of a greenhouse. (It looked over a terraced back yard of paved patios.) There was a small bar sink at one end of the counter and no stove or oven and cook-top.

            1. Clearly, the woman didn’t understand the concept of “book people”. She thought you were talking about having a few books and a nice place to look at them, instead of needing rows of shelves like the stacks of a municipal library.

              The kitchen, though, sounds like an offense against all that is right and good.

              1. No bloody kidding … when I think library, I think wall to wall, floor to ceiling bookshelves, with a window-seat, a small fireplace, a small round Victorian-style library table in the middle of it, some deep comfy chairs and a worn antique persian rug on the floor. Oh, but I can dream.

                But a kitchen, without a cooktop and oven? (crosses self hastily) That’s contrary to everything good and holy. I’m an awful snoop about ordinary and new luxury houses going up around where I live, and the top o’the line model homes boast Tuscan-style kitchens with restaurant-quality ranges, and all the trimmings. Most of the time they won’t be used except for holiday meals, or when they bring in a caterer to do a big dinner party.

                No cooktop or stove … (wanders away, muttering sadly to self.)

                1. When I dream of a library it generally falls to a cross between Professor Higgins’ in the film of My Fair Lady and the public library attended by Marion, the lady librarian, in the film of The Music Man. I do have some fondness for Frank Lloyd Wright’s private library/work room and John Adams’ library as well — so I might be a little flexible. It just has to have lots of room for books, which we measure by the yard, not the volume. And an enormous comfy chair. Away from the cold night air.

                  There was one house I tried very hard to figure a way to fit in, it had a beautifully maintained full sized Viking stove. But the house lacked room for the books. Sigh.

                  1. By the yard, not volume? Us, too. When they packed us out of our last overseas (ulp, in 1990) the packers had a pool going on how many cases of books there would be, eventually. It topped out at 65 … I don’t know who won, but I gifted them with a case of beer anway.
                    The tour before that, (in Greece) my next-door neighbor came to sit with me, while the packers were doing there thing; she was English, but fluent in Greek, and she suddenly began laughing as she was listening to the packers. Two of them were teasing the third, who was doing books, and he was bitching, “Books, blooks, books … there’s even bloody books in the kitchen!” I told her to tell him where else would I keep the cookbooks, and that he was lucky there wasn’t a shelf in the bathroom, otherwise there would have been books there, too.

                    1. When we moved to current house, almost ten years ago, we had 250 book boxes. We’ve added some books. Fortunately with electronic, I can get rid (?) of some and intend to, otherwise we’d just never move.

                    2. Given enough book sales, and if I can unload that California real estate, I’ll probably settle on some little retreat in the Hill Country, and move my things to it box by box, gradually – and leave the present house to my daughter….

                  2. I have come to the conclusion that, barring lottery win, I’ll never have my two story circular tower library, where Dan and I can have tea by the fireplace on winter afternoons. But in my heart, that’s my library.

                  3. Actually, though, I could take a room that was otherwise acceptable, because I figure I can build my bookshelves to my own specs.

              1. To be fair here, I LOVE my counter top oven/microwave combo; that and a couple of hot plates, would never need a proper range; and it’s all disabled friendly, since it’s easy to aquire a table/counter at a level that’s convenient, far safer than depending on not sliding off the perching stool at least.

                Also, in regards to the department of evironmental protections having swat teams . . . In many states it is illegal to keep certain animals privately, it does not stop many a person from doing so, especially those of the less law abiding nature (or else they would pursue the proper permits) and the Epa’s swat team is called in to deal with the animal component on raids iirc.

                1. In many states it is illegal to keep certain animals privately
                  More accurately, it is illegal to be caught keeping certain animals privately.

                2. Yeah, SWAT teams have been called in for a LOT of situations that didn’t, and from available evidence weren’t likely to, rise to requiring that level of coercive force. All the ‘cool kids’, even the Dept of Education, do it…

          4. It’s a popular quick fix for floors that would take more time and/or money to actually make the floor attractive: lay carpet down everywhere. It’s ridiculous, but they do it…Usually just roll it over the old floor, too.

                1. My wife’s grandfather started his own kitchen and bath company back in the 60’s and by the time he retired in the mid 80’s, they were one of the most demanded contractors in the St Louis area. This kitchen and bath guy insisted on carpet in every room of the house, including kitchen and all bathrooms…including the one in the basement that was used by family members using their big pool.

                  The kitchen carpet was definitely a high-traffic, low-profile type and the carpet in the basement was similar to astroturf, but all of his floors were completely covered.

                  I’ve got tile in my kitchen/bathrooms. The only upside I can see to having carpet in the kitchen is what happens when a glass meets ceramic tile with the force gravity driving it.

                  1. The carpet in our kitchen seems to be the kind you put on decks.

                    It’s also in the laundry room.

                    ….My daughter spilled milk on it, and I had to cover it with baking soda. You should have SEEN the color it turned, even though I’ve cleaned the @#$#@ thing before. Now I’m kind of grossed out to be walking on it.

                    1. I can’t have carpet. If we move to a place with carpet we’ll have to rip it up. Carpet and pad are NEVER dust free, and I’m allergic to household dust. (Yes, yes, I’m just designed for survival aren’t I? But see, I have no intention of dying, so that’s fine.)

                    2. my only problem with rugs is Euclid. Euclid is so neurotic we’re fairly sure he thinks he’s a teapot. One of his tenets of faith is that any scrap of fabric on a hard surface means he should pee there. Ah well. How long do cats live? This too shall pass.

                    3. You have just forfeited any right to complain about anybody else’s puns.

                      My thoughts run toward the kitten or puppy who learns that a properly done charge across the tile and leap onto the rug enables surfing.

                    4. Baking soda, vinegar, baking soda, vinegar, water, laundry soap, dry it out… and I still want to get them cleaned professionally.

                      Heck, I go barefoot on dirt with less worries.

                  2. Glassware can break on carpet — we have been there when a five gallon jug of water shattered in our living room. It takes forever to dry out, and if you don’t you’ll have mildew. Then to be sure there is not a single shard of left waiting for small feet!

                2. No stove AND only a small bar sink. I am not sure the place was up to doing more than very light snack prep and micro waving in disposable ware, everything eaten off of disposable with disposable. I have wondered if maybe the original owners were in the restaurant business and had no need of a kitchen at home?

                  1. What are you calling a bar sink? When I think of the term bar sink, I think of the stainless steel, very deep, utility type sinks that they use in bars and restuarants.

                    1. I think it’s the one that is actually on the bar, not in a bar– look kind of like the ones you find in pull-trailers? Maybe six by eight by a hand deep?

                    2. I have worked in a restaurant and ran a kitchen at a boarding school part time my senior year. What you describe is what I would call a pot washers sink, big enough for those massive stock pots and baking sheets. No this was a bar sink of the type set in a mini bar, used to rinse citrus, knives and tools. It was a small, shallow, stainless steel sink which would make the sink at an Embassy Suites look generous. And, yeah, if you were very careful you might do a plate, sideways, if it was sandwich sized.

      2. Ron,

        Don’t tell anyone that you aren’t prepared to share with and to share with anyone that they tell and so on. In other words don’t tell anyone you don’t absoulutly have to.

        1. I don’t like the term, Prepper, it makes everyone sound shallow – too close to Preppy for me. I know it sounds extreme, but having lived all over the world, I understand how quickly stability can become radically unstable in a few days. I just like to be aware of what is truly valuable to survival and what isn’t. If things go to hell in a handbasket, especially if king zero is re-elected, money isn’t going to mean a thing. Valuables will be trade items, food, water, shelter, and protection. Maybe I have read too many post cold war science fiction books, but I have also seen people become animals at the threat of instability in the government too.

  11. There is a class of investment that offers little in the way of growth (capital gains) or glamour but does promise a steady flow of dividends or coupons. This class of investments is known derisively as “widows and orphans” funds because it is so much relied upon by investors planning to provide for those dependent upon them. In a general way, the present price per share of such funds is the PV (Present Value) of the income stream of the expected cash flows.

    Inflation severely reduces that PV, because a dollar in the hand is worth less than a dollar a year from now, or ten years from now in direct proportion to the (anticipatable) rate of inflation. Thus, inflationary policies reduce the value of funds intended to support the dependents for whom those trusts and pensions were intended to provide.

    The Democrat Party has, over the last few decades, pursued inflationary policies (decades? Oh heck, go back to William Jennings Bryan and his “Cross of Gold” speech.) Inflationary economic policies are based on the same principle as “green energy” and perpetual motion: you can get more out than was put in. Republicans are not, generally, much better (and whether they are at all better probably depends on whether you think this a cherished conservative principle or the default position once the Dems grabbed the “blow up the dollar” hill.) But “controlled” inflation has long been a core principle of the Democrats.

    Which raises the question: why does the Democrat Party hate widows and orphans?

    1. This, plus the near-zero interest rates, have been disastrous for anyone who saves and anyone who lives on bonds, which means the elderly are being hit very hard right now.

      1. I’m newly retired, not exactly elderly yet, but ditto for my husband and me.. We don’t have gubmint retirements, or private sector retirements, either, because he was a hi-tech engineer and moved with the technology. So, we put a little away every year in 401Ks or bonds. Not working out so good. Interest is under 1% and we get almost nothing from the money we saved to supplement retirement.

        I am going to air a gripe here, pardon folks. The current wisdom is that the president saved GM with the government bailout. What you probably don’t know is that GM was savable by private investors as part of legal bankruptcy proceedings.. GM had many wonderful new factories among its assets. During bankruptcy, assets are sold to buyers and unworkable labor contracts are re-negotiated. This happens in countries with advanced economies and the rule of law.

        How did GM get those wonderful new factories? Secured bondholders lent GM money. How did the president’s auto czars treat these wonderful secured bonholders? Took the money and kicked them in the teeth. My retirement account held GM bonds. I lost 90 cents on the dollar, while lower “claimants” like the UAW now own 40% of the new GM. Hugo Chavez-time?

    2. I thought the following from Theodore Roosevelt’s 1896 speech The Menace of The Demagogue might be of relevant. (The speech also addresses the problem of the theories of socialism, Tolstoy, Karl Marx and Proudhon.)

      Instead of government of the people, for the people and by the people, which we now have, Mr. Bryan would substitute a government of a mob, by a demagogue, for the shiftless, and disorderly and the criminal and the semicriminal. The fight for free silver, that is, the fight for that species of dishonest money which its advocates euphoniously call cheep money, is after all only one phase of the fight against civilization which is being waged by the opponents of decent government in this campaign. There are, of course, many sincere and honest men who follow Mr. Bryan’s standard because they believe that the coinage of free silver would help the economic situation and consider this the overshadowing issue of the campaign. But these men by themselves would not be formidable foes. They do not make up the bulk even of those who follow Mr. Bryan on the financial issue alone. (//)

      With the majority of the men who want cheap money the silver dollar is desired, not because of any abstruse theories about the benefits of bimetallism, but because it is the first step toward that money. Mr. Bland, Mr. Weaver, and all the old time Greenbackers, or soft-money men, whose motto was ‘to wipe out the national debt as with a sponge,’ form the backbone of those supporters of Mr. Bryan who are drawn to him by his financial theories. These men champion a silver dollar because it is cheaper than the gold dollar just as they would champion a copper dollar rather than one of silver if copper could be made an issue at the moment. What they really want is irredeemable paper money. In other words these curious beings, who sometimes possess good hearts and sometimes not, but who always possess foggy brains, think that the money is of value precisely in the ratio of its being valueless. Gold and its equivalents possessing the greatest value, and forming, therefore, the currency of all the prosperous civilized communities, seem to them undesirable. They want money that is cheap; that is not so valuable. They like the silver dollar, as compared to the gold dollar, because it is worth only half as much; but they like a paper dollar even more because it is not worth anything. They seem to have the curious inverted idea that the minute we can get money that is not worth anything it will turn out to be able to purchase everything. (//)

      If there was anything in this theory one of the most prosperous communities that ever existed should have been the Confederate States just before the collapsed of the confederacy. There was any amount of money, such as it was, in the Confederacy then and prices were on a scale which should surely have satisfied all who wished to see them high. A pair of boots cost three thousand dollars, and a carpenter’s wife who went to market had to fill her basket entirely full of flat money if she expected to bring it home half full of anything else. Nevertheless, the people were in a condition of wretchedness and starvation such as we now can hardly conceive. It really does not matter much as to the quantity of money as to the quality of the money in a country. It is the quality of the money that is of importance and the circumstances of the people. The real point is that the credit of the country should be good and that it should contain those things of which money is merely the measure of value. BLOCKQUOTE>

  12. Yes! to all of this (it’s so refreshing to find people who like and understand economics!) More random responses:

    I suspect Pratchett will show the weaknesses of paper money in the sequel. I think there’s a reason he’s holding off on writing Raising Taxes, he’s getting a research lesson just watching world events right now.

    I’d have a hard time not swearing, too, at what is so wrong with a few “enlightened” super-engineers running society. Worth a blog right there, but would probably require writing two versions: the first version, and the one that could be published. Ties in with what I consider the most evil words in the English language: For your own good.

    The main reason I saw for losing gold as the standard is that there just isn’t enough gold, while a currency can be increased with the size of the GDP to stay standard in value. Using a resource as the basis means locking up a bunch of stuff in a vault, which seems wasteful.

    I define currency as a ticket entitling the bearer to a percent of all the goods and services. The more tickets that exist, the less they’re worth because each one’s percentage goes down, or vice versa. Thus, the trick is to balance the number of tickets to the existing amount of goods and services (I’m still scratching my head about how an “acceptable” level of inflation came about (well, I know why there’s inflation – because politicians like to buy votes – but why it became acceptable is beyond me.))

    Yes, last week was infuriating! (What kind of world is it when the US arrests a man for making an insulting film, but France is gleefully publishing insulting cartoons?) QE3 kind of snuck in there and got lost with all the other news, but that’s just as bad as everything else. I haven’t bothered to check current money supply versus the GDP (or whatever the best measure would be), but yes, guaranteed, our income is dropping.

    Yes, the stock market going up is not a sign of a thriving economy. It’s a sign of desperate people looking for a relatively inflation-proof haven for their savings.

    1. “I define currency as a ticket entitling the bearer to a percent of all the goods and services. The more tickets that exist, the less they’re worth because each one’s percentage goes down, or vice versa. ”

      I like that.

    2. Not enough gold? There’s $3 trillion in gold under Pikes Peak and Cripple Creek. Unfortunately, gold would have to be worth $2000/ounce to pay for removing it. There’s still plenty of gold elsewhere in the Rockies, as well. A friend of mine is working a claim in Victor that’s producing 30 ounces a week, at a cost of $1100 an ounce. The Democratic leadership is against a gold dollar for one reason, and one reason only: they can’t control its value. That is anathema to the Democrats: they want to control EVERYTHING, and are trying to do so with the laws they pass. They just took over health care. If that stands, they’ll try to take over something else. If it fails, they’ll try to do it again.

  13. Gambling is a tax on people who are bad at math. Inflation is a tax on people who are good at math. (Or, alternatively, inflation is a tax on people who are bad at politics.)

    For a fun, science-fictiony look at how hard currencies, or even the idea of them, reveal Bagehotian/Keynesian economics for the fraud that they are, try:

    http://unqualified-reservations.blogspot.com/2009/01/gentle-introduction-to-unqualified_29.html

    A sample:

    “Let’s start with a science-fiction scenario. Long ago, the Andromeda Cloud was ruled with an iron fist by the Fourth Empire, a basically Nazi-like operation based on a secret, now-lost, and thoroughly evil hyperdrive technology powered by burning kittens. For currency, the Fourth Empire used the sol, a swastika-stamped disk of moolium – an artificial element produced only in the kittendrive’s exhaust stream.

    Deafened by their own fascist death disco, the Fourth Empire’s spaceführers fell long ago, and with them went the evil secret of the kittendrive. But moolium is nearly indestructible. Thus, Fourth Empire sols are scattered throughout the Cloud and form an ideal galactic currency, whose supply is fixed for ever and cannot be forged or counterfeited.”

    Another interesting idea which Moldbug explores in several essays is the idea that modern (“Bagehotian”) banking relies upon a form of time travel to work at all. It’s called “Maturity Transformation.” It is, depending on how you look at it, either time travel or alchemy. What it isn’t, in any sense of the words, is scientific, logical, or safe. It is the cause of all bank runs and, other than natural disaster and/or war (if you consider war an unnatural disaster) the cause of all economic downturns in modern economies. And yet, ninety-nine people in a hundred who were capable of grasping the concept in the first place would respond to any assertion that it was not the natural order of the universe, let alone dangerous and illogical, much the same way they would respond to an assertion that gravity is just a theoretical construct. They wouldn’t argue that Bagehotian economics were superior to some other sort: they wouldn’t understand, or accept, that there were any other kind. Obviously, this can only be the result of a massive mind-control (fnord) conspiracy.

    So the whole thing is science-fictional from beginning to end. Scary.

    1. And may I just add that “…[A]nd with them went the evil secret of the kittendrive.” is, by my lights, one of the greatest phrases ever coined in English, or any other language.

      1. The Kitten Drive is remarkably simple: Onboard the ship is a room. The walls of the room link to cameras on the outer hull, providing the room with a view of the surrounding space. Into this room is placed a kitten. When one wishes to travel to another point in space, the camera introduces a Small, Shiny Object (could be a toy; could be a simulation of a can opening; etc.) just “behind” the video image of the point to which one wishes to travel. The kitten, being a kitten, is capable of moving between two points without covering the space between — this is why cats can be across the house asleep when one opens a can of cat food, and be underfoot before the lid is fully off. So, the cat sees the SSO, and decides to investigate it; but as that would require leaving the Warm Comfy Space of the ship, the kitten drags the entire ship along with it, thus allowing the ship and its contents (kitten included) to travel between two points in space instantly, bypassing the light-speed barrier in the process. The one drawback of this drive is: When the kitten becomes a cat (sometime between 1 and 2 years of age), the cat becomes unreliable, and requires replacing.

  14. Speaking of living in Interesting Times, they won’t get any more boring with people (other authors, mind you…why does it seem like horror writers tilt overwhelmingly left?) posting that they “stand for all”, a dig at Romney’s 47% thingy, and then asked what issues were important to her FB friends. I replied that 16 trillion in sovereign debt was important to me and that all other issues were academic. She replied…

    I appreciate you sharing your sentiments Scott… The debt you speak of has more to do with International Bankers than our President. Something that will not change REGARDLESS of the man that sits in office… As a result I choose a President that sits on the same side of the table as I do on ISSUES that are important to ME! *CHOICE *EQUALITY and creating jobs IN THE UNITED STATES OF AMERICA! (NOT shipping them off to China… which not only TAKES MONEY OUT of our country BUT also creates MORE DEBT here!) Again… Thanks for sharing.

    1. Authors and other creative occupations tilt overwhelmingly left for a variety of related reasons. Science-fiction writers are an exception in that it is not “overwhelmingly.”

        1. I think there’s a good thread there. The giants of the field in its youth were neither particularly leftist nor particularly shy about the problems with leftism. Also, like the Western, classic science-fiction tends to celebrate the individual of accomplishment and ambition. Since to this day many readers and writers discover SF through their work, there is a tiny bit of acquired immunity passed along. Not much, but some.

        2. Traditionally SF has drawn from engineers for its writers. There is a term for engineers who are unrealistically optimistic: indicted for mass deaths.

                1. Exactly. You have no idea of the lateral pressure tolerances of a glass you didn’t fabricate yourself out of materials you are familiar with. Better to have double or triple redundancy, than have to go for an equally unreliable paper “towel”.

              1. I thougth it was:
                Engineer Answer: “The glass is inappropriately sized for the task.”
                Or
                Engineer Answer: “Water? I ordered Beer!”
                🙂

      1. I would have to disagree, other than fantasy, I would say that SF is MOST overwhelmingly left-leaning. It is just that many on this blog predominately read either a select group of classic SF authors, or Baen, who prints what sells, regardless of political leanings (what a novel concept for a merchant, wonder why no one else follows suit?). Note that Baen has a name for being rightwing, much of this is simply because no other major SF/F publishers will publish anything by an author who isn’t hanging far off the left side of the political wagon; ergo all the good publishable authors who range from center to far right, migrate to Baen as their only option in traditional publishing. Baen then happily trots down to the bank to cash the checks, ignoring the sneers and jeers from those other well dressed publishing houses preaching on the street corner; with their hats turned up at their feet for handouts.

        1. “Note that Baen has a name for being rightwing” Every time I hear that I want to point the person to the thoughts of Tam of View From the Porch and her commenters on the subject. Some highlights:
          “My favorite was the guy […] who implied Eric Flint somehow wasn’t authentically Left Wing because he wrote for Baen. Listen, you patchouli-reeking tea-room radical, Flint’s a frickin’ card-carrying Trotskyite! You get any farther out the left wing than that, you’ll trip over the winglet and fall off.”
          “He strikes me as the kind of Bolshevik who believes in the worker keeping his rifle next to his lathe, in case he needs to remind the bosses in the Party of their duty.”
          Authors like these (Flint, Correia, Kratman, and especially our esteemed hostess) are why I love Baen so much. They take books from great authors and sell them to people who like to read fun books. They understand their business!

          1. I believe I might have mentioned once before getting in an arguement over Baen being right-wing, when I pointed out that Eric Flint wrote for them, they informed me he was a ‘right-wing communist.’

          2. Here is my favorite from the comments there;

            “Baen books is the gutter. And I wouldn’t say they publish ‘science fiction’. More like ‘science fantasy'(just like what Banks writes).. if it has FTL and implausible aliens, it’s science fantasy.
            A fun gutter to crawl in, but still.. a gutter. Unless you run into Tom Kratman piece.. god. that guy’s weird.”

            1. First, if you haven’t sent that to the Colonel, do, or post in the Keller. He needs to laugh more.

              Second — this is what I was talking about or trying to before — for most of the right of the field “science fiction” has become “stories that are no fun at all, but take place in the future and often are a long slog of navel gazing. Oh, yes, they also give us a greater chance to hate humans as a whole.” Don’t get me started, I don’t want to write about this to– Oh, cr*p too late. These people eschew the idea that the future is full of possibility by the reason that we might yet discover more and better things. They want the future to be just like yesterday, only rustier. And yet most of them would think their motto is “Forward” — think we should tell them to turn around?

              1. This is why even though my default setting is “misanthrope,” on alternate days my favorite short story is The Toynbee Convector.

                “O future’s bright and bounteous spires, arise!”

                We’re so close. We really are. We could coast the rest of the way in on fumes and glory. But you can’t even coast when people are digging in their heels and shouting “No! It’ll never work! We’ll never make it!”

    2. Um, there is so much wrong with her reply, I don’t know where to begin. Is she just a total fluff-brain?

      1. I don’t know, but I would imagine so, but for authors without a back-catalog and a good name to brandish, I think it’s fluff-brained to go political on Facebook anyway.

        I responded thus:

        The debt has everything to do with executive (this and previous) budgets. They write the budgets and the legislative passes it into law. Any deficit spending (ie, spending more than you take in) must be borrowed. None of that (up to the borrowing part) has anything to do with international bankers. The previous administration ran up the sovereign debt through overspending (new entitlements/unfunded wars, etc) and was called unpatriotic by our current administration’s executive…who then went on at 5T more. I call that more of the same and, again, it’s got nothing to do with International Bankers. They don’t write our budgets.

            1. Politeness is more effective at educating, too (I always have hope that we can teach people). Saying things like, “Math isn’t your strong point, is it, kitten” just makes them angry.

                  1. That was Bill Buckley’s main tool. Debate them with polysyllabic sesquipedalian multiple clause phrases and they can’t claim you’re fence-post dumb. Their brains are incapable of correlating obvious education and different views because such erudite education is supposed to instill the correct politics.

      2. Yes, she is, but it’s not her fault: the poor thing never had a chance. The ability to reason yourself out of a position you were not reasoned into is a rare one and, arguably, not very beneficial to the possessor.

      3. As I’ve told others, there is a huge number of otherwise intelligent people out there who are somehow totally invested in the Progressive mindset, to the point that they won’t listen to facts.

        Also, many of these people reflexively believe anything that is presented by either the traditional media or their party leadership, and don’t try to evaluate things for truth on their own. I’m currently in an argument with one of them on Facebook, after someone posted some stupid response to Romney’s “47%” quote.

        1. the cut off is not intelligence. It’s orneriness. When all the media, the education-industrial complex and the “experts” spoke with a unified progressive voice which they did largely until the internet (though talk radio made some inroads) well educated people who wanted to be “good” and “belong” had no option but to believe it. remember man is a tribal animal. It takes an amount of plain orneriness to say “Whatever, you can go to h*ll, I’ll go to Texas”

          1. Yes – how many people out there spout opinions solely because they fit with the person’s image of him/herself, or lets them into the cool crowd? (And let’s face it, the left wing is much cooler, much better at advertising and other surface details, it’s where the artists hang out (granted, because artists professing the wrong opinions can’t get in).

            (And why is it that the people who know the fewest facts about reality are the ones shouting the loudest?)

          2. My good fortune I wound up in Texas, hey? On the other hand, being that I am not a well-known author (yet!) but do have a modest backlist, I try to avoid going all political on Facebook and other venues. I don’t really want to kick potential readers in the teeth – as they might otherwise pick up a book of mine, read it, enjoy, and begin to think about some of my subversive and understated messages about individual responsibility, the duty to your community and fellow persons, and the grand and glorious political experiment that is the United States. I mean, hey – they might just!. It helps too, that my books can be read as Westerns and or/romances, too. Sometimes you can catch more flies with honey than with vinegar.

            1. I’m not actually trying to post stuff like that on FB, and note even on my blog I keep it non-partisan mostly — I just hate people who come up with “international bankers” as an excuse … on both sides.

              1. I just hate people who come up with “international bankers” as an excuse

                I haven’t been published yet because international bankers prevent the gate keepers from publishing more books.

                …actually it’s because I’m not done writing it yet and, thus, haven’t tried to publish it…

                But I’M DAMNED SURE the international bluebloods are in the mix somewhere.

                1. Is THAT what it is? I thought it was my failure to get my beta-readers’ revisions done (and my terror at taking the next steps, like finding an editor). Them international bankers are sneaky!

                  1. If you think International Bankers are sneaky, wait until you find out what the Trilateral Commission has been up to. *working hard to look grave and serious* And then there are the Bilderburg members . . .

                    1. Illuminati, Dragons and Templars. Also the Phoenicians and probably the Council of Venice, with interference ran by shady mega-ultra-uber conglomerates.

                    2. Do you use bleach to get the space greys to come out in the wash, or does it require something a little more exotic?

                    3. OMG man, stop being evil. If you bleach the space grays they become white, and do you not know that white colonialists — from space or otherwise — are worse than any other colonialists? (The rest of our race. we’re all colonialists. No really. So are most creatures on Earth.)

                    4. Colonialism is evil, evil, I tell you! We all need to move back to Europe, or is it Asia, or Africa? Wherever we originated, heck we all need to go back to the Garden of Eden! Then we just need to make sure we kill all the Cain’s before they can kill the Abel’s; and we’ll all be able to live happily ever after.

              2. “[I]nternational bankers” is their “polite” term for Jews. Queen Isabella hocked her crown jewels to finance Colombus’ first voyage, but what they leave out is that she and Ferdinand then told all the pawnbrokers to get the H out of their country, and btw, don’t bother packing.

                1. One good quick test for conspiracy theory is to add the phrase “and Jews” to whoever it is is being blamed for whatever it is they’re being blamed for. If the resulting phrase makes sense, you may be looking at a conspiracy theory as opposed to an actual argument. It’s not dispositive either way, but it’s a pretty strong tell.

                  In the instant example, “International Bankers and Jews” makes sense. Indicates possible conspiracy theory. I personally don’t much care for chiropractors. “Chiropractors and Jews” doesn’t make sense. Probably not a conspiracy theory.

                  The root of this test is of course the Nazi’s blaming Germany’s economic woes post WWI on “speculators and Jews.” Whenever anybody blames “speculators” for anything, you should just automatically add “and Jews.” That’s where they’re coming from nine times in ten and the tenth time they’re just idiots.

            2. UM? Those hard working industrious German settlers of the Texas hill country and bits like this:

              “Not an easy thing to be these days,” Houston rumbled, “It’s the hardest choice to make,
              Becker; between the difficult but correct–and that which seems most inviting, but wrong. And when it calls you to go against your friends? Houston says it is a rocky path, a rocky path indeed.”

              1. Well, you can see that can be read and approved in several ways. One of my favorable reviews on that book was by a writer whom I assume (based on her own book) was very, very lefty-lib politically correct, and she LOVED it. All those nasty Confederates, persecuting the free-thinkers, you see.

                  1. Thank you, CACS – I sneak in those currently politically-incorrect concepts whenever I can … in the book after, I go into the concept of the cattle drives as a business … and the chief motivator of it all as a businessman and entrepeneur! Radical, eh?
                    But one of my alpha readers is still reeling from what I had my characters say about the Comanche… Poor woman, she’s all about the Indians being these poor, gentle harmless friends to all and in one with the natural world, viciously persecuted by the angry racist Dreaded White Man (TM). Sigh. She doesn’t know that my characters were really on the more Indian-tolerant end of the scale.

                    1. The Comanche were a kind, gentle and harmless people. For certain values of kind, gentle and harmless. I mean, compared to the Aztecs, Mayans and Incas … Shucks, the Comanche were as kind, gentle and harmless as High School debutantes or five-year -old boys.

                    2. RES – yep At least the Commanches didn’t rip out the hearts of enemies and others on an altar… I don’t remember what they did… but they were warriors. I did read some of the accounts when I was a young girl. Some of them were horrifying.

                    3. I have a good collection of historical accounts, including a collection of captivity narratives by Gregory Michno “A Fate Worse Than Death” – I couldn’t honestly read more than one or two at a time – the experiences of survivors and captives were generally so awful. One of Michno’s heretical suggestions is that – the reason that the troopers and militia fighting against the militant tribes post-Civil War were so brutal in the final wars against the various tribes, was that the individual Westerners and Texans had about twenty-five or thirty (or more) years of memories of atrocities by Indian raiding bands against women and children … who, by the view of mid-Victorian sensibility, were non-combatents.Constantly finding the bodies of mutilated children and mutilated and gang-raped women probably did not do much to incline frontiersman towards the path of peace regarding the local Tribes.

                    4. Those people who believe it is all the White Man’s fault, and the Noble Savages never did anything bad except in retaliation for worse atrocities performed first by White Men drive me nuts. (we all know the Indians lived in peace and harmony with nature and their fellow tribes, until the White Men came along; right?)

                      Yes there are cases of Indians raising captive white children, and treating them well by their standards, but they were the exception, not the rule. Generally it was much more convenient and entertaining to kill such children, than to hassle with capturing and breaking them. Now I’m not saying all Indians were bad, or the white men never did anything wrong; but people need to face reality. The settling of the West, and relations with various Indian tribes is some of the most well documented history avialable, just because all the documentation (thousands of journals and personal notes, letters written to relatives, as well as documentation by government explorers such as Lewis and Clark, reports written by Army officers, magazine and newspaper articles, and many others tell the story) doesn’t agree with their preconceptions doesn’t mean they can dismiss that documentation as baised and racist.

                    5. Sigh. Some Indians were more ‘anti-social’ according to our view than others. (Appreciated your throwaway line about the Cherokee doing business almost to point of delivering a proper bill.) I believe that many observed that the Comanche were particularly fierce. The Spouse tells the story of some twenty years ago catching Bill Maher’s new ABC program. Robbie Robertson, formerly of The Band, whose mother was of predominantly Mohawk decent, was one of the guests on the show. Bill Maher started waxing poetic about how we’re forcing Indians, the most spiritual people on earth, run casinos. Every single one of the guests, with Robertson at the lead, accused him of stereo-typing.

            3. It’s OUR good fortune you came to Texas, lady!
              Buy my first Sarah Hoyt book, come to her blog as a newbie, and there’s Julia, already well settled in. That figures!

                1. Well, I have two – my legal name, and the one that I do book-stuff by. I’ve been doing stuff under a nym for so long, that by now, it’s really real to me.

    3. Scott,
      I spent the last 10 or 20 years of my career in consulting to manufacturing. The defense for Romney is full simple. No one lets a consultant in the door unless they have their backs totally against the door. If Romney fired 40% of the workforce that is only another way of saying he saved 60% of the jobs instead of firing them all.
      As to jobs going overseas, the Dems were in office when they passed the laws making that advantageous.
      Around 1979 or 80 Scientific American ran a cover article announcing the plan to send manufacturing overseas whie we kept the white collar jobs and service jobs. Look it up.
      Ron

    4. There speaks, the ME ME ME first crowd. Screw everyone else, as long as I get what I want then I don’t care who is in the white house. So much for her humanity.

    5. As a result I choose a President that sits on the same side of the table as I do on ISSUES that are important to ME!

      There is the problem in a nut-shell. Too many voters vote for what’s important to THEM, instead of what’s good for the NATION. Self-centered, sanctimonious, and not too bright also fit. Choice? There are more choices in the US than anywhere else – they’re usually enshrined in our laws. “Equality”? We already have equality of opportunity. You CANNOT legislate equality of results. Does this person know that the CHOICES made by the current president and his administration are directly responsible for DESTROYING more than 2 million jobs “IN THE UNITED STATES”? As Robert Heinlein said, “There is no such thing as a free lunch” – TANSTAAFL. Yet a third of American adults believe that if they get something from the government, it’s “free”. I think it’s time for the “red” states to pull away from the “blue” states and let them collapse. We may want to bring the separation down to the county level, and let the consequences happen. Begin with California. We may or may not want to pick up the pieces afterwards.

      1. Except that the issues she speaks of, that matter to her, are ones that her choice has a pretty poor record on, or won’t make a difference either way. She’s just decided that he’s the one because he’s all Hopey-Changey and cool and in style, and therefore he MUST be for all the things she thinks she’s for.

      2. They “stand for all” but want “a President that sits on the same side of the table” as them? No, Mike, there is no such things as a free lunch, but that isn’t what they’re seeking. Like Animal Farm‘s pigs, they’re planning to eat your lunch, and your dinner too. They may stand with Boxer, but what counts occurs when they sit down to divide the goods.

    6. Jobs in America? Like in the lightbulb industry, coal-fired electric power industry and solar-panel industry?

      As for her apparent (in)comprehension of international finance … This is more proof that arguing on FaceBook just makes you dumber, wasting time attempting to engage intelligently with the unequipped. Might as well try to breed a gelding to a hinny.

  15. I, too, am livid about the lilly livered coward we have in the white house who is willing to sell us out to save his own butt. I am furious that the countries we spent BILLIONS on are turning against us. And I am all for moving out of the region and letting Israel have full rein in sorting out the morons over there. Don’t EVEN get me started on all the lies that king zero and his slithering minions keep trying to force down the throats of the American People. (Breathing deeply, calming down.)

    As a Mormon, yes one of those people, I have always tried to have at least a six month supply of everything we would need to eat to survive. I generally have a years supply of canned foods, pasta, rice, beans, cooking oil, etc. This site says it better. http://providentliving.org/self-reliance?lang=eng

    As members, we have been encouraged to get out of debt, have food storage, and also things like clothing, medication, etc. My husband and I also stockpile things like whisky and other alcoholic beverages, because they make good medicine base for things and they are good for trading and bartering in a dangerous society. We also have guns, lots of them, and lots of ammunition. I am currently looking in to learning how to use a bow and arrow for both hunting and self defence. I want a cross bow, but they are hard to come by and VERY expensive.

    Financially, we have diversified as much as we can. We own several small businesses so if one thing goes under, the other will take up the slack. We have credit cards, use them once every few months to keep them active, but pay them off as soon as the bill comes in. But we try to do most of our business in cash. Except for our rental property, our businesses are cash based income. We also invested in gold and silver. Oh, and we are over insured on everything, just in case we need it.

    Within a few months, we will have all our houses paid off, except for the one we live in now, so we will always have a place to live. All of our cars are either paid off, or nearly so, and we will never buy a car with credit again. Working on a bolt hole in case everything goes to pot. Our assets need to be portable, easy to trade or bargain for, and worth something to people who want to survive.

    We are not paranoid (much), so much as aware and careful about our safety and future. So, getting out of debt, and staying out of it, getting a stockpile of survival gear and food, and arming yourself for protection (Hal and both have carry permits) are the top three things we worry about.

    1. That’s how we work financially too. The only big aching spot is housing, because we never caught up with it. If I won the lottery or had a bestseller (short term. Long term we have better plans) I’d buy a small place, paid off, for the reason above.

      1. The one problem with housing is property taxes. Mine have been going up steadily, especially recently, and are now more than half of what my mortgage payment was.

    2. Karron, please reconsider: Pakistan, Iraq, Afghanistan, Jordan, Lebanon, Syria, Iran, Saudi Arabia, Egypt, Libya, Algeria, and Tunisia were never “with” us — they were for themselves, and themselves only. They took our money and didn’t do things overtly against us, while fighting us every way they could clandestinely. They played us for suckers, and our government gleefully went along. It’s cost us over $1 trillion in the last ten years or so. We’re now seeing the “TRUE” nations, not the deceitful ones that gamed us. It’s not fun, but it’s real. Time for US to acknowledge the truth, and act accordingly.

      1. I understand that the Middle Eastern culture is all about smiling in your face while stabbing you in the back. When it comes down to it, only Israel stands as our ally. And king zero managed to muck that up royally. I don’t want to send another penny to any of those countries. I don’t want to have anything to do with them. I suggest we take a hands off approach, only getting involved to help protect Israel. The rest of them can slide right back into the dark ages for all I care. Especially those we helped the most. I want king zero OUT of office, because he would rather side with the killers and creeps than stand with America.

      2. I might suggest that Lebanon is not for Lebanon, nor has it been for quiet some time. It has been taken over by a bunch of people who are against Israel … and us. But mostly against Israel.

    3. As a mormon, how do you calculate 6 months supply of ammunition? Do you presume that the looters get tired of trying to sneak around the dead bodies, or do you clean them up, so that your hiding place looks inconspicuous?

      1. That’s not something the Church addresses (the membership is very diverse, despite appearances). If you really want to know, I know some people that I could ask for good estimates. For a simple approach, the answer is always “more”.

        1. I would think the amount varies according to a number of factors, such as terrain, anticipated number of shooters, ambient population (in event of Zombie assault, make that: ambulatory population), weapons preferences (automatic uses ammo more profligately than semi-, for example), targeting preferences (distance versus close) and whether the local supplier is offering a “but two, get one free” special on claymores.

          1. Keep in mind that resupply may be difficult in the event of total civilizational collapse and few people die with “Huh – I guess we didn’t need so much ammo” on their lips.

      2. I have FAR more than a piddly little six months of ammo, Donm. Any dead bodies are cleaned up, no use leaving a stinky mess to attract predatory animals and humans, now is there? I don’t believe that guns and ammo are on the accepted list via the Church, but I think almost every single LDS man I know, outside of cities where it isn’t allowed, own guns, hunt, and are strongly motivated to protect their families. I also know more than one woman who is just as capable at all those things as the men, including me. I may be old, short, fat, and falling apart, but I am meaner than a stepped on snake if someone threatens me or mine. I don’t have to see perfectly to use a rifle with a scope or a shotgun.

  16. WHO created the US debt? Here’s who!

    112th Congress1 $103 billion per month
    111th Congress $147 billion per month
    110th Congress $63 billion per month
    109th Congress $45 billion per month
    108th Congress $48 billion per month
    107th Congress $23 billion per month

    Source: White House
    Google: White House 2013 Budget Table 7.l

  17. I’ve got to run to a doctor’s appointment, but this article greatly intrigues me. Sarah, you can come back about 4PM and say all those words you couldn’t say earlier. I’m sure most of us are adult, and would actually enjoy your take on current nonsense.

  18. Is there any way to subscribe to the comments without commenting myself?

    Anyway, I’ve been saying we’re on the Plastic Standard for years now.

    And I hope that this feeling of impending doom turns out to be false, like others have.

    1. Yes – it is in the default options available through the WP toolbar. It’s been so long since I stumbled into it i forget the precise steps, and I lack time today to diddle it through and confirm the steps.

  19. See? I’m slow with wit. It just occurred to me that, with the low-key way QE3 has been initiated, no big announcements, other events making it even less noticeable, you could have titled this, “QE3: Silent bu Deadly”.

    (Runs very fast) 🙂

  20. With the US, China and Europe experiencing slowing economic growth and Europe in recession, worldwide demand for oil is down, yet the price is up? How can that be? The answer, my dear Watson, is QE3.

    Economic stimulus measures such as QE3 lower the value of the U.S. dollar and other fiat currencies. From that, investors flee paper assets for commodities such as oil, grains and precious metals.

    With economic growth projections low in the United States, China, and India, and with Europe in a recession, oil has reason to slip. But speculators, as a result of QE3, helped push the price of oil toward $100 a barrel.
    http://finance.townhall.com/columnists/johnransom/2012/09/19/thank_you_mr_president_despite_recession_oil_prices_continue_to_rise/page/full/

  21. How Much U.S. Debt Does China Really Own?
    “Debt to China”
    Copyright © 2009 Creators Syndicate
    The largest portion of U.S. debt, 68 cents for every dollar or about $10 trillion, is owned by individual investors, corporations, state and local governments and, yes, even foreign governments such as China that hold Treasury bills, notes and bonds.

    Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury.

    In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund’s holdings of nearly $3 trillion and the Federal Reserve’s nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy.
    http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

    Kind of scary to have so much of our debt held by other countries that may or may not be all that friendly in the long run. Chinese, like Middle Eastern people, smile in your face and stab you in the back. Only they pick your pocket at the same time. There is nothing the Chinese like better than feeling they got the best of someone in a deal. You should hear the bargaining that goes on in the Lanes in Hong Kong! (I became very good at bargaining and learning the best way to read the sellers. Got some smashing bargains that way.)

    The Feds sending out what amounts to play money to “ease” the debt and encourage a boost to the economy didn’t work out all that well either.

    1. Of course, that debt held by individuals, corporations, pensions, trusts and subsidiary governments means that when we cut interest rates all those depending on the cash flows have to tighten their fiscal belts. And when we inflate the fisc the holders of the bonds find that the ratio of foam to coffee in their financial latte has gotten worse.

      The economy is a horrendous complex Rube Goldbergian device and whenever we try to pull a few strings it inevitably delivers a kick to our fundamentals.

    2. Good news is, if China demands payment real sudden, we can pay them back with worthless paper, then revalue the currency. That is what FDR did with gold (but not with china) in 1933 when he moved us off the gold standard.

  22. My Doomsday Clock is set to half-past-don’t-give-a-f***-anymore; I intend to take advantage of the riots by standing in the middle, picking out random passers-by, and shouting “There’s another one!”, then hanging back and watching the Mob do what the Mob does naturally.

    Remember: One way of defining “Human Wave” is “a moving wall of ablative meat”….

    But then, one of my favorite historical figures is Joseph Fouche; so my Cynic Card has bee thoroughly punched.

  23. Marc,
    You are so right. If your readers take a look at Carroll Quigley’s Evolution of Civilizations, or go to YouTube.com and listen to Peter Diamandis or any number of other sources they will find we are on the razors edge of a new Renaissance — in fact it has begun.
    Carroll Quigley also gives the reason for a lot of the irrational conduct we witness. Our civilization has ended a cycle, it is starting a new one. At this time we have a lot of population that wants to quit working and live off the seed corn. Traditionally at this time in the cycle we do have a lot of irrational conduct.
    I don’t think you actually said so but in my opinion our immediate future is inheriently far too bright to allow some demagoging politicians to spoil it for us.
    One last point. The beginnings of new cycles, or Renaissances, according to Dr. Quigley, tend to be interesting times full of sound and fury, so, get out your John Galt, or Lazurus Long, T-shirt and get ready for the adventure. It is a coming even if we put down the demagogs. (spelling?)
    Ron

  24. best closed loop food source. Hydroponic vegetable garden with enough excess to feed a dozen rabbit or so. Greens from the hydroponic garden feed the rabbits, the cages of which are positioned over a pond filled with your favorite fish, the rabbit dropping feed the fish, the rabbit and fish excretions fertilize the water which is used to feed the hydroponic garden.
    You get vegetables, fish and rabbit meat.

  25. I started buying gold and silver in about 2004 after looking at what was going on with government spending, and discovering Mises and Freidman. I’ve done well, but I can’t help remembering what happened in 1933 when FDR simply made it illegal for citizens to own gold after the dollar went pfft, and pegged the value at $35…where it sat until Bretton Woods about 40 years later.
    I’ve got it, but what do I do with it if worse comes to worst? Black market, I suppose.
    The Great Depression didn’t lead to armed insurrection, but I’m not so sure about the next one.

    1. I’m wondering if anyone else is thinking along the lines I am. I am working hard to build a “buy and hold” portfolio of stocks. Naturally I don’t want to get caught having to sell some stock during inflationary periods. Has anyone thought of using gold or silver as a counter-cyclical investment? That is during ordinary periods when all goes well and gold is cheap to buy gold or silver. Then during crisis when gold is usually expensive to sell gold or silver to protect oneself?
      Does that make any sense to anyone?
      Ron

      1. The problem is that when the crisis arrived and people lost confidence in paper money, gold started to shoot up. So FDR just said “Gold is now worth $35/oz, and you must turn it in to the US Government, and we will give you $35 in paper money for it.” And it stayed at $35 by government fiat for 40 years, while inflation bubbled merrily away. If you had buried it in your back yard in 1933, you would just about be breaking even now, 80 years later. I’ve been a serious and relatively successful investor (meaning I’ve beat inflation) since the early nineties, and to be frank, this is the first time I’ve had no clue what to do in the market. It’s tempting to roll over everything into a short on the S&P 500, but I don’t have the guts.
        As noted above, maybe it’s time for 40 acres, a mule, and a lot of survivalist books and supplies. Oh, and guns and ammo so you can keep it.

        1. If you’re in an area that you feel confident will stay stable in the event of catastrophe (eg the Mountain West), you might consider long term real estate. Buy homes, possibly with a medium to large lot, and rent them out. If you’re really confident in the resiliency of the area, you might consider light commercial property as well. Regardless, put your money into things that hold value, that are useful in all circumstances – real estate, knowledge (classes, books, training), tools, practical home improvements (eg fix the roof, update the wiring and plumbing, go off grid), food, etc. Above all, invest time and effort in people you can trust; build relationships with family and/or close friends that you are certain you can count on when the Schumer hits the fan. With them, you can weather any disaster big or small, and they make life more pleasant whatever the situation.

      1. He’s a macroeconomist specializing in monetary policy and the Great Depression. He’s been writing almost daily on one subject, the Great Recession, since 2009. There’s evidence in plenty of his posts. You have to dig a little. He has important introductory posts in his sidebar for newcomers.

    1. I challenge you to find ONE significant scholarly field where I cannot refute any argument you care to produce by saying, “How can you say so much about X without referring to Y? I don’t think you’re as well versed in X as you like to believe, peasant.”

      I further challenge you to write a short blog post about any given X and refer to every single significant Y related to X which will not allow me to make the above assertion about your post.

      TL:DR: The universe and its denizens are not required to agree with your assessment of how important any given thing is.

  26. I know that horrified response when finding out that there’s nothing behind the money but the politicians’ word. I had it too. But I was about 17, and that was over 4 decades ago.

    Doesn’t anyone teach economics in high school any more?

    1. Doesn’t anyone teach economics in high school any more?

      It is rare, and then presented rather irrationally. The Daughter, early in college, took part as a tester for a ‘game’ to be used as part of a plan for teaching economics. From her description the goal was to properly distribute goods among people. When she told me about it I asked her if she knew that it was teaching socialism. She did.

      1. CACS,
        Who is kidding who? If the self selected Brahman caste that runs the Republican & Democrat parties are seeking people to be clerks and soldiers — in other words easily led and incapable of thinking for themselves how would they arrange that except by use of the public schools and what theory of government would they advocate excepting one led by a “leader” cast? Whether you call it a welfare state, socialism or communism matters little. Even if you switch the entire country to Islam it will all be the same. In fact I can see some advantage to the Brahman in having a docile & illiterate population under sharia law.
        If you notice, no matter how well you do in public school or what honors you accumulate you always end up as a high class servant. You never rise to an actual leadership position.
        Further if you analyze the tax code you will find we do not tax the wealthy so much as we clobber the guys making enough they might someday get wealthy.
        Sorry, if I’ve popped anyone’s balloon.
        Ron

  27. Gold? What Gold?
    I heard yesterday that Buffett is selling off at a prodigious rate. I assume he is doing what he has done in the past — culling his holding to keep cash. Then if the market collapses as he predicts he will buy back. I don’t intend to sell anything but I am scratching for cash so I can buy when it bottoms. Comment?
    Ron

  28. saintonge235
    John Dewey’s goal was to transform our school system to train a good class of employees and soldiers to maintain a caste of self selected American Brahman. If you analyze our school system’s results in that fashion you will see they do a bang up job.
    Ron

    1. We aren’t doing that well with our High School graduates as a whole, not even taking in account the rate of drop-outs. Many an employer will tell you that the schools are not turning out very good or capable workers. I suspect that the military has found that the pool of qualified soldiers at that level is smaller than could be wished for as well.

      1. We have classes to get folks their GED in boot camp, and the multiple-choice tests require only very basic reading skills…and some folks still can’t manage them. I know we were all exhausted, but some of the levels of failure….!

      2. CACS,
        Take a look at John Tayor Gatto’s Underground History of Education. Mr. Gatto has the room to give this subject the length it deserves. He spent 35 years as a teacher in the NY City school system. He also was NY city teacher of the year 3 times and the NY state twice.
        Very briefly John Dewey etal discarded a system that produced a complete education for skilled workers small businessmen in 8 years to extend childhood to 8 more years and in some cases 12 more. No, they are producing exactly what they mean to produce.
        Ron
        BTW, Mr. Gatto’s book is free, or was when I read it. Look on line for a copy.

        1. When I met them I found Mr. Gatto quite the gentleman and his wife a pistol. If you ever get the chance to hear Mr. Gatto speak do try and take advantage of it.

  29. Let’s get to the basics. In the Robinson Crusoe economic environment, the accumulation of gold, silver, or money is utterly useless and worthless because it cannot be used for food, shelter or clothe. It is only in a trading economy where these things have value for the purpose of trade. Participants of the marketplace ascribe value to things and this value exists only in the imagination of the mind not in assets. This value is the same value whether it is ascribed to gold, silver, oil, or a piece of paper with George Washington’s image. It’s not for armchair theorist to decide what has value and what doesn’t, but to observe and try to understand what marketplace participants really do. In a trading economy (which is 180° opposite of Robinson Crusoe economics) money actually becomes the premier asset when most people live entirely by trade.
    Next, the fractional reserve banking practice: that mother of all pyramid schemes. During the last credit bubble trillions of dollars of money was created out of thin air in the mortgage market. During deflation, in the reverse process, the same trillions of dollars are destroyed and value vanishes into thin air leaving behind nonperforming debt, and national politics generally ratchets left.
    There is no difference between the trillions of dollars created out of thin air by fractional reserve banking and the trillions created by Federal Reserve; both are perfectly interchangeable except for the debt factor.

    There is nothing wrong with the fed printing money to replace the destruction of dollars from the shrinking pyramid. However, this resource should be used entirely for large tax cuts including payroll tax holiday that allows the private economy to retain its earnings for paying down debt and repairing the balance sheet as well maintaining consumer demand and investing. But politicians being politicians and spending money is equivalent crack cocaine to the average political hack (payoff to supporters), quite naturally, they will want stimulus by government spending in spite of the fact the Japanese experience was failure.

    Big Government proponents should be asked this question: why are you willing to accept large government deficits for public sector spending versus the same size government deficits, through tax cuts, that would allow the private sector to retain earnings for economic activity, which ultimately produces income that supports all the public sector expenditures?

    Sure do hate to be so brash, but until conservatives understand macroeconomics in the form of open system, conservatives are not capable of providing an appropriate (free market free trade capitalism) answer to the periodic collapses of that mother of all pyramid schemes.
    Open system explanation that needs to be updated and revised: http://economics102.blogspot.com/

    1. There is nothing wrong with the fed printing money to replace the destruction of dollars from the shrinking pyramid. However, this resource should be used entirely for large tax cuts including payroll tax holiday that allows the private economy to retain its earnings for paying down debt and repairing the balance sheet as well maintaining consumer demand and investing.

      So the solution to a bubble is reinflation??????

      Paying down debt with devalued dollars is a good idea for the debtor, but sorta gives the debt holder the shaft.

      Payroll tax holidays are demonstrated to increase consumption, not investment — and since the dollar is devalued the increase in consumption merely retains buying power, at best. Meanwhile, the unfunded liability for the programs ostensibly funded by those payroll taxes — Social Security and Medicare — grows.

    2. Above I posted a part of a speech by Theodore Roosevelt, The Menace of the Demagogue, I suggest that you read it.

      The said picture of George Washington was initially only found acceptable as tender because it was treated as a promissory note from the government which could be exchanged for, first gold, and then silver. That was why, when I was a child there were the words ‘silver certificate’ on the top of the bill. Paper money, modern coinage, stock certificates, bearer bonds, etc.are not valuable in and of themselves, they have value because they represent something else believed to be of ‘real’ value.

      There have been booms and busts before. In housing bubble the ‘value’ of houses was a result of a bidding war over the standing stock. Buyers chose to stick their necks out and borrow all they could to purchase houses because they were sure that the prices would not go down. Owners then borrowed against the theoretical gains in their home’s value to do whatever. Banks loaned money to buy houses and gave subsequent loan with houses used as collateral with a similar assumption. The situation was compounded when the very people in the government who were assigned oversight insisted that everything was just fine and then pressured the bank to extend credit lines to more even people. Money was not created. People who had no understanding of history or economics were running the show, and many succumbed to a false belief that ever increasing value was possible. And so, eventually, like all bubbles it burst.

      The value people place upon an item is subject to change. Take housing: If you are sure that the market value will go up you may be willing spend more, being sure that you will recoup the extra expense. To you that house appears worth what you chose to pay. But there is always a risk that something will happen and no one will be willing to pay you as much as you bought the house for in the first place. That does not mean that any money disappeared. For the government to print money based on the lost market value would be ridiculous — it would be backed by spent dreams.

      Finally I will observe that this place has a largely libertarian bent and are not Big Government proponents.

      1. The housing bubble also happened because the Community Reinvestment Act, which pretty much ordered banks to give money in low-income loans, funneled a huge amount of money into the housing market that otherwise would not have gone there. Since new houses can’t be built all that quickly, that caused prices for existing houses to go way way up.

        I actually applied for a mortgage in the late 90’s; I’m not low income, but I was still frightened by the amount of money the bank was willing to lend me, way more than I felt comfortable borrowing. I was smart enough to say no, I’ll stick with a much lower amount, but I’m sure a lot of people weren’t and got themselves into trouble that way. (But I have to laugh at “predatory” loans, as they were called. I’m sorry, no one stuck a gun to anyone’s head and forced them to take too much money. That’s just a way to excuse peoples’ greed.)

  30. This is a good article, and I believe that your very close to the complete picture.

    RE: “Quantitative easing means the economic giants in charge of deciding how much our economy is really worth have decided our economic troubles are REALLY just a lack of pretty printed paper. … But why would you need more money?”

    The reason those people believe that we “need more money” is that large portions of the money supply are not in motion. President Obama has appointed essentially the entire Federal Reserve Board, and the majority believe that Americans save too much [!]. On top of that, corporations have vast amounts of cash on hand, but they aren’t investing. Getting the economy going means letting those supplies of cash rot on the sidelines while they create money out of thin air and put it in motion. Additionally, if this sparks inflation, consumers will start spending on hard goods (like guns and canned food) before the money goes dissolves.

    The other problem this solves is that liberals are driving up the debt about $6B per day. If we actually paid interest on the debt, the public would take notice, and paying the interest would squeeze out all other spending. It’s more fun to spend like a fleet of drunken sailors and pay for it with a hidden tax: debasing the currency effectively taxes the money in everyone’s pocket without having to pass a tax increase. We’re financing about 2/3 of the new debt by printing money.

    Besides, these people believe that the State knows how to allocate resources (i.e. wealth) better than you. Undermining your wealth to pay for their ideas fits perfectly with their view of the world.

    The downside is an increase in inflation, but since liberals control the government statistics on inflation and most of the Media, they can keep the public outrage to a minimum. Besides, this is an emergency.

    1. To your government planners:

      With so many un- or under-employed there are far fewer people who can spend on those market driving big-ticket items. They’re having a hard time with the price of basics, like food and energy. And those who are employed, but see dark clouds ahead, would you advise against saving? Bet there are a bunch at BofA employees who are not looking forward to a big holiday season this year.

      So QE-1 and QE-2 have resulted not resulted in the market moving. So we are going to dump QE – 3 on top of the situation and expect the constipation to suddenly break? Glory!

      The Spouse and I knew a fellow who was inclined to party in all the various ways of the late 1960s and 1970s. When he had a bad reaction he didn’t think about what caused the problem. He would just up the dosages and add whatever else was at hand to the mix. Never a smart plan.

  31. I read so much, yet after a lot of reflection there are only a few teachers that I take to heart.
    The story of the Ant and the Grasshopper is certainly one such. Another is a Hungarian who is about my age, Mihaly Csikszentmihalyi, who can be found on YouTube.com under the broad heading of the TED lectures is another. His familiars refer to him as Mike C, or so I’ve been told. He wrote a book on psychology called Flow.
    In a way Mike C justifies the ant. Mike C believes we are happiest when we are doing something that demands all of our attention, all of our skill and a high degree of exertion. However his lecture at TED explains that if we push that too far we get a negative effect.
    If you will indulge me, I used to travel from manufacturing firm to manufacturing firm teaching guys how to run a manufacturing firm. One of the subjects I would teach is the effect of the work pace on morale. Normally the industrial engineering average or 100% pace is the easiest. Faster is a strain, paradoxically so is a slower pace. It seems like the human is wired to work at what the industrial engineers call 100% pace.
    The great paradox is that if workers are allowed to work slower, I used 70% as an illustration, the worker will report that it is tiring and will want to slow down. It doesn’t work.
    I suspect that phenomenon has something to do with the observations made by Mike C.
    You may think I’ve wandered off the subject but I think not. Today we have roughly 45% of Americans working at less than at their best effort. Just as in Mike C’ and my observation they feel very tired and unmotivated. They want more and bigger handouts.
    Today we have politicians willing to play to that left end of the Bell Curve. If they are successful we are facing a crack up.
    I strongly recommend listening to Mike C’s lecture. You will find it at Youtube.com listed as “Mihaly Csikszentmihalyi: Creativity, fulfillment and flow ”
    Ron

  32. I think J Peachy said most of what I’m about to say, but I typed most of it already so I’m going to post it anyway :).

    I am not a monetary expert. However, it seems to me that monetary policy–both gold backed and fiat–can and do cause problems in our and any economic system.

    Ms. Hoyt mentions that economics are a hobby for her. Me too, although probably to a lesser degree. I often find it useful to go back to the base idea behind economics: Economics concerns the production and distribution of goods and services. Note that at the most basic level economics does not assume monetary use. Thus you can have an economic system that results in the production and distribution of goods with no money at all. Two such systems might be a barter system (where people trade what they produce for what they need) or a commune system (where everybody produces what they produce, puts it in the big communal pot, and takes what they need). So why money? In this view, the real purpose of money is to provide an abstraction which enables the production and exchange of goods (hopefully) much better than in a barter system or a commune. It’s pretty easy to see how in a barter system I might have trouble putting together a trade (or even a multi-participant trade) to get me (and everybody else) what I need as a trade for what I have (my products or labor). Also, the money gives a way for the system to signal to me and others what generally is needed to be produced or done–if I can’t sell my product or labor for money, that’s a clue to me that I need to make a different product, change the nature of my labor, or go somewhere else. It’s also pretty easy to see in a communal system how I might either simply decide not to bother producing or serving or might produce or serve in useless ways assuming I didn’t need money to get what I need. (I have read that the pilgrims initially had this problem. They were operating in a communistic system and young men were doing things like gold prospecting instead of buliding shelters and working fields.) I think money also has a nice benefit of spurring innovation, in the sense that if I can make a brand new product (or do a brand new service) that is beneficial, I may be able to get money (and thus a reward) for it in a way that isn’t really straightforward in a nonmonetary system.

    So money, in an economic system, has a purpose of being a means of exchange. What’s the best way to do that? I think a ‘gold bug,’ as Ms Hoyt says, would say that money should be based on something with ‘intrinsic value’ (or at least is pretty much univerally valued by people) that has properties mentioned by Ms. Hoyt (‘except if possible the standard should be non-consumable, even when used in applications and its value shouldn’t be dependent on our current level of technology’). There are indeed problems with this. The simplest problem I can think of is that population and production grows faster than available gold, and changes unevenly. There is more labor available and more food produced and more products manufactured and more software created faster than there is more gold mined. And the production increases are by no means steady, linear, or even monotonic. If you stick to the same amount of money representing the same amount of gold, you are basically ensuring a deflationary environment, where you are much better off to keep money instead of spending it, and thus you are often better off to not produce anything which takes money to produce.

    A related problem is (as fiat currency people would point out) ‘tight money.’ I read a really interesting case study on this, where a group of young urban professionals were exchanging babysitting vouchers to go on date nights while leaving kids with friends. The problem was that people had very few (or no) vouchers, so they were only using them extremely rarely. An economist fried suggested they inject more vouchers (not previously earned by somebody doing babysitting) into the system, and it worked. More couples used the vouchers, went on date nights, and thus gave other couples a chance to earn more vouchers to use themselves. The thing of value here was a night of babysitting, produced and consumed by the couples, and the vouchers were the money. With more vouchers in circulation, more goods (babysitting nights) were both produced and consumed. The extra vouchers were introduced by ‘fiat’ and lubricated the system, but no actual babysitting nights were created by the vouchers–just the inducement to use them. It’s also pretty obvious here that just giving everybody 100 vouchers would probably not work either.

    There is, of course, the obvious issue of what really has ‘intrinsic value.’ Gold heretofore has been valued by lots of people across lots of time, but that’s not guarantee in the future. As Peachy describes above, you can’t eat it, live in it, or get service from it. It only has value if people will trade you what you need for it. If there is no food or there are barbarians at the gate, gold’s value has gone way down.

    There are obvious problems with fiat currency too. Governments can clearly do things to inflate the currency or (ala the housing bubble) create extra money out of thin air which turns out in the longer run not to be exchangeable for other useful things at some point down the road. This type of thing clearly makes it really hard to conduct transactions which involve long time frames. (Can/should I really borrow or lend money to buy or sell a car if I can’t tell how much in goods and services the money I pay back or receive back is likely to get me?) The giant government debt definitely seems related to the fact that we have fiat currency, and definitely points towards the government inflating their way out of that debt (wouldn’t that simply be slow motion default of the debt).

    One important point, I think, is that monetary collapse does not guarantee economic collapse. Our farmers would stop producing food and our truckers would stop transporting it if we tried to force them to do it for worthless currency which they then couldn’t get what they needed to live and produce. But I think a more likely scenario is that if currency becomes worthless the ingenious Americans will find a way to cooperate and still produce the food and get it where it needs to go (with big but not fatal disruptions). The collapse of the housing market was pretty bad, but the result for the vast majority of those of us caught up in it was not being homeless and starving to death, but either a pretty big loss of home equity and/or having to go to live somewhere cheaper or move back with family. The banks presumably lost a lot of money too. I think more people should be punished for making bad loans, but the main point here is that it was a huge housing bust that didn’t turn us into starving street dwellers. We got an oversupply of overvalued housing, and that (eventually) had severe economic repercussions. As long as we keep (at least reasonably) free markets and law and order, we shouldn’t need to hoard.

    I don’t have a perfect solution, but I do think there are big problems with both a fiat money supply and a gold standard. Maybe money should somehow be tied to a broad basket of goods and services (with some way to realize when those goods or services each become more or less expensive to produce). Maybe there is a free market solution where multiple entities issue and back different fiat currencies. For example, although the ‘company store’ of mining history was clearly evil, nowadays a Wal-mart or Target gift cards are just as good as cash to me, up to some point (thousands but not tens of thousands of dollars), as I shop there and can find stuff I’m going to have to buy. It seems to me conceivable that there are institutions nowadays, especially with information technology where it is, that could provide competing viable alternatives to government backed or gold backed currency.

    1. Nope, sorry — too long, tedious and tendentious for a comment on somebody else’s blog. Post it at your own blog, few here have the leisure or inclination to dismantle specious arguments intruding in a casual discussion.

    2. Economics is the study of how people behave in relation to the production and distribution of goods and services.

      Money is simply a convenient way to represent the value of goods or services as perceived at the time of the agreement to the exchange. Money is easier to move around and does not rot, or spoil or die. Gold has been traditionally used as it does not rust, does not tarnish and is relatively rare and hard to fake.

      As to the problem of the young men in the pilgrim community failing to spend their time at useful things for the community, it was not for want of the doing. People work hardest if they see some measure of benefit accruing to themselves, then to their family and finally to their community. If the crop is to be split in even shares throughout the community, each individual is likely to ask themselves why it would be wise invest more of their work than the basic share required of all? So, according to Plymouth’s Governor Bradford’s journal, the men spent their time hunting, fishing and working on their own homes. Once people were assigned their own plots more food was produced.

      1. Yes, the main problem with communal labor – if everyone’s responsible for it, essentially no one’s responsible for it. At best, the work falls to the level of the worst worker – why do more work than anyone else if you get no reward for it? (Applies to union labor, too, everything’s at the lowest common denominator, no extraordinary workers allowed, or at least recognized.)

      2. Makes sense. Also interesting (in the context of QE2/3/whatever) that the determining factor in production had nothing to do with money (fiat or gold based) but with ownership of property and ownership of the fruits of production.

  33. WordPress refuses to recognize me without a log-in to post. This has been a very bad cyberday for me and I am more than commonly grumpy. WordPress is NOT making me happy.

  34. For those who object to strictly gold based money, because speculative fluxuations in gold could distort the money supply, the answer is a commodities market basket. Take the top 50 standard commodities currently traded on commodity exchanges. Set physical amounts for each, based on $200 of each commodity at current market prices. Then insist monetary policy keep the value of that physical comodities basket stable, at $10000 for the whole physical basket. If one commidaty fluxuation is balanced by an opposing change in other commodities in the bloc, then you dont have a problem. But if they are all going in the same direction, like now, you have a definite monetary supply problem, and the money supply should be adjusted. This insures our money is still based on tangible assets, and thus is always a store of stable real value, and stops fiat money inflation or deflation, but does not subject us to monetary supply swings caused by speculation in any single commodity.

    1. The problem I see with this approach is that it is still open to manipulation, because the make up of the basket can be modified. This is what we’ve seen done with the inflation measurements. Inflation has been under-reported for years because food and oil prices were removed from consideration.

      I’m not saying it shouldn’t be tried; heaven knows we need currency tied to something. I’m just griping that it isn’t perfect. 🙂

    2. What happens when a commodity becomes easier to produce due to technological improvement and thus less valuable compared to the other commodities in the exchange? Think cotton gin or asteroid mining brings in lots of platinum. Does that mean everything else needs to get a little bit more expensive? It seems like is should just be the case that that commodity is cheaper and every other commodity remains the same price.

      1. Depends – if the new cheaper commodity means I can produce more of it, demand will rise for any related commodities that it’s often used with, and they might very well get more expensive to a degree. It would depend on how rare they are and how much demand there is for them. Increased demand, with no other changes, usually means a higher price.

        1. And of course there is another kind of change in markets — obsolescence. For example: the builders of pay phones and phone booths have had an ever decreasing market in the last decade.

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