alajac

The Intrinsic Value of Nothing, Part 1

Both the Austrian and Hamiltonian systems are based on lies. See my previous post for argumentation.


On Oct 29 12:45 PM RiskAverseAlert wrote:

> Still, sir, I have said this before in this forum and I should say
> it again: the Austrian school is one whose principles best suit a
> fascist social arrangement, whereas a Hamiltonian credit system best
> suits a nation whose foundational principle seeks to form a more
> perfect Union, establish Justice, insure domestic Tranquility, provide
> for the common defence, promote the general Welfare and secure the
> Blessings of Liberty to ourselves and our Posterity.

The Intrinsic Value of Nothing, Part 1

John Lounsbury,
You make a good and very important point, even if you are not arguing it as elegantly as my anal mind requires.

"Intrinsic value" is not the same as "utility value": yes, things like air and food have a UTILITARIAN value for beings with bodies that need such things in order to continue surviving, but that is NOT the same thing as intrinsic value in and of itself regardless of whether humans exist or not (which is what Paco said in the 2nd paragraph of his "Good Theory": "I want you to try to imagine a universe in which no sentient creatures exist. How much would a “car” be worth?").

Which points put the whole problem with Austrian economics (which is also your main point) : it only works in a world where people aren't made of flesh and bone that must be fed and clothed. In our REAL world, whoever is the furthest economically from destitution ALWAYS has the better bargaining position and can ALWAYS hold out for a better deal, and thus there is NEVER an exchange with both parties "willing participants": one is always MORE extorted BY LIFE to strike a bad deal than the other. "The other" is often a corporation, as corporations are actually NON corporeal (kind of a misnomer there), and thus do not need to consume anything but the lives of their employees.

And that is why "Austrian economics" and "physics" should NEVER be mentioned together in the same sentence except to point out that "with one, you can do stuff" (like annihilate innocent Japanese civilians and American POWs in Hiroshima and Nagasaki), and "with the other one, you can't".

That said, try this for size: nobody (especially including "the Austrians") has come up with a commonsense definition of government that is infinitely scaleable, such as

Government: "One or more persons who claim natural resources, are willing and able to defend their claim on those resources, and make and enforce decisions regarding the allocation of those resources."

Per that definition, EVERY government is the "de facto" owner of everything (including EVERYONE) within its domain (governments subsequently create "de jure" ownership in order to get resources into the hands they believe will be most productive and thus most conducive to the government's prosperity and longevity), and thus no government EVER needs to borrow to fund its operations and to facilitate commerce (except for foreign exchange, a topic we will address at a later date); all it needs to do is to "monetize" the wealth it already owns. Our government's creation of "a monopoly over money" and its relinquishment (to the Federal Reserve central bank in 1913) of the creation of money were due to the fact that the banking industry assumed ownership of the U.S. Federal Government after "We, the People" lost the SECOND American Revolution (usually referred to as "Shays' Rebellion") and have used the U.S. Federal Government ever since to enrich themselves at the expense of everyone else (major corporations and media being "virtual subsidiaries" of the banking industry due to their need for financing to fund their operations), mainly by means of loaning us our own money "at interest", a process which has resulted in the transfer of 95% of the value of the 1913 dollar into the pockets of U.S. Treasury bondholders.

Several things need to happen to address the situation in which we currently find ourselves:

1. Take the printing press back from the U.S. central bank (the Fed), and legalize a "free market" in banking and money while removing all of the government support and protections the banks currently enjoy. The new money will be mainly electronic ("e-bucks", credited to a debit account for every economic entity, as needed), with maybe some 1's (with Tom Paine's picture on them) in circulation.

2. Existing Federal Reserve dollars are to be taken in and credited in the new e-bucks and then used to retire the U.S. National Debt. In order to address the wealth disparity that has resulted from the last 200 years of "banking ownership of everyone else", we may want to limit the amount of Fed dollars we credit from any one particular economic entity (like "Goldman Sachs" or "China"); those enties could either hold on to their Fed dollars or else trade them in via their depositors, shareholders, or citizens by distributing their excess Fed dollars in equal amounts to those entities.

3. Implement a version of Tom Paine's "Agrarian Justice" plan (modified to incorporate the above "commonsense definition of government") by sending every legal resident at least $1000 per month as compensation for their government's impairment of their "right to free access to land". (Minus such a right, a "right to life" is nothing but an empty phrase and a free ticket to "the land of wage slavery".) This compensation should and must replace ALL other forms of corporate and personal welfare and subsidies.

4. Head off inflation by charging an "infrastructure maintenance fee" of up to 1% (but probably much less) on every electronic debit transaction (whatever is required to remove as much money as is being added each month). Eliminate ALL income-based federal taxation (and the IRS as well).

On Oct 27 10:58 AM John Lounsbury wrote:

> Paco - - -
>
> Good article, but I have a philosophical bone to pick.
>
> You wrote:
>
> "Nothing in this universe has intrinsic value; every single thing
> you possess, want to possess, use, can use, have used, can offer,
> have offered, or will offer is valuable only if someone else finds
> it valuable."
>
> You have defined value in terms of exchange. I would argue that is
> too narrow a definition. There are things with intrinsic value independent
> of any medium of exchange. Exchange is merely one way, but not the
> only way, to define value.
>
> I maintain that anything necessary for my existence has intrinsic
> value. Air to breathe, water to drink and food to eat have intrinsic
> value. The value has a binary measurement: either I have these things
> and exist or one is missing and I don't exist.
>
> Most economists make their definitions based on commerce. The basics
> of existence don't come into the equation, except for a few fringe
> operatives who play with things like "happiness indexes".
>
> Ultimately, all of the "commercial" definitions of value are secondary
> to the "existence" definition of value. We lose sight of that and
> many externalities result, which repetitively blow apart the best
> of economic theories. Throughout history societies and civilizations
> have failed because of resource exhaustion. They thrived on commerce
> and decayed on the basis of not sufficiently supporting existence.
>
>
> There absolutely are things with a real intrinsic value.
>
> I know this is outside the scope you intended to address, but I just
> had to have my rant.

Why Gold, If Deflation Is the Threat?

"THINK OF WHAT YOU'RE SAYING,
YOU CAN GET IT WRONG
AND STILL YOU THINK THAT IT'S ALRIGHT..."

The move in gold has been entirely due to dollar weakness, in euros gold has done squat. In a deflationary period (note: in the Detroit area we are getting bigtime deflation in grocery prices, but then we actually have grocery store competition in this region), the value of the dollar will go up, hence, gold will go down. Period. At some point the trends will reverse, but gold could be a lot lower by that time and never get back to these gold prices. In any event, I would not buy gold (or miners) until it at least is making new all-time highs (or is selling for less than $400/oz).

In 2006 I was sending out warnings which compared the current Nasdaq to the Dow of the later 1930's, now I see that analysis all over the place. Upon further cogitation, I have concluded that the 1938 comparison only goes so far (even though the percentage changes of the drop and the snapback rally have been almost identical to the Dow of 1938): the rest of the story is that the market is ALSO going to act like the market of 1930, where the snapback rally was followed by a drop of another 80% from the new "lower high"; the analogy I've been using is that of a rollercoaster, where after the first dip the cars get towed up a big hill to the top of the REALLY BIG DROP!

Now the real fun begins.

A Must See Movie: 'Zeitgeist Addendum' Explains the Fiat Money System

I watched the video previously and my feeling was that good info was being used to promote another very bad idea. Electric cars will be viable when they are (relatively) cheap enough ON THEIR OWN to make a compelling sales pitch unnecessary. "CO-caused global warming" is BS: what warming there is is due to undersea volcanic activity (which we can't dso squat about), and, anyway, solar activity is far more important a factor regarding whether the earth becomes an ice berg or a hothouse (and we can't do anything about that either).

Regarding fiat money, we have it because money tied in a fixed relationship to a metal has ALWAYS led to deflation and depressions.The problem is not the fiatness, it's the fact that that value of the money gets drained off due to the interest costs. The solution is to cut the middleman (the Federal Reserve) out: we can create and distribute our own fiat currency without charging oursleves anything at all. We've got the technology today to distribute all new money via equal-dollar disbursements to every legal U.S. resident. That is the least we should be doing to get things back on track.

There's a whole plan that will "fix the system" (way better than the Zeitgeist guy's fascist agenda) on the "alajac" page at u4prez.com.

Surprising Call for Return to the Gold Standard

ps. Regarding the banks needing a commodity-backed currency in order to keep them honest:

All we have to do is require them to declare their asset-to-debt ratio and quit letting them hide behind FDIC insurance. If the ratio is too low they will lose their conservative depositors, leaving them with speculators who want the juiced returns and are willing to take the risk, as it should be.

The problem is the GOVERNMENT'S legal obfuscation of the actual state of the banks affairs, not the bank's leverage and risk. The problem is on the government side and that is something we can do something about: we can stop socializing the losses and stop hiding the risks that specific banks are taking. And it doesn't take a commodity-backed currency to do that.

Surprising Call for Return to the Gold Standard

The human body creates new blood all the time without "blowing up", nor does it need to visit a "loan shark" (like the Federal Reserve) to take out a loan in order to pay for the needed new blood.

Creating/destroying money by means of debt "juices" the system both on the upside and on the downside: great for Wall Street traders but tough for the rest of us. (Actually not so tough for me as I issued my first "crash imminent: go to cash this minute" email on June 3, 2008, having been warning my readers of its approach since November, 2006 due to the historic correlation of the collpase of the Housing index with stock market crashes.)

There isn't anything the Fed does for us (except for putting us in deep into debt) that we can't do for ourselves for free.

The human body regulates itself by draining off excess liquidity: we can do the same thing by replacing the Federal Income Tax (and ALL other income-based taxes) with an "infrastructure maintenance fee" of about one-half percent on all electronic transfers (the exact percentage could be set by a computer similar to the way Milton Freidman suggested we get rid of the Federal Reserve and regulate the money supply automatically).

Lastly, the market will keep going down, making new lows (interspersed with the occasional bear market rally) until the death of the "job model" of economic resource distribution is recognized. Neither commodity-backed money nor "trickle down" bailouts will help, though both will be tried. Only when governments start pumping money to the people like the human body pumps blood to the cells (consistently and debt-free) will the crash end. Oil will hit $20 and the DJIA may hit $400 before that happens.

Is Hyperinflation on the Horizon?

$5 trillion is just "a spit in the ocean" of unwinding debt.

99% of the posters on here and 100% of "our beloved leaders" have not the slightest clue how we got here and where we are going.

This crash has (uncoincidentally) occurred at the same time as the final death throes of the "job model" of resource distribution. "Dollar up, stuff down" until that situation gets recognized and handled.

See details of my "how to fix the economy" plan in other comments of mine (use the most recent version for brevity's sake) on seekingalpha, but briefly:

Replace the Fed dollar with a USG debt-free, totally-fiat dollar, and put all new currency into circulation via equi-dollar distributions to EVERY legal US resident,

Replace ALL government corporate and personal subsidy programs (including all Minimum Wage laws) with $1000 per month to EVERY legal US resident,

Rescind laws that hide the inherent fraudulence of fractional-reserve banking (like FDIC deposit insurance),

Replace the Federal Income tax with a one-half percent electronic transfers tax (no exemptions; avoidable by use of cash or barter).

There are a few other ideas but when the above steps are adopted by the US and other governments, the downwave will end and the world will start on the next 200-year upswing. And until something very much like this plan gets implemented, the price direction (including for gold) is down. And it does not matter a whit how many trillions of dollars are "created" in the interim.

Why Gold Stocks Failed (And Why I'm Still Holding On)

You say ``In a deflation, gold should hold its value``. Where did you get that idea? In a deflation, prices of everything drop. The only thing that goes up is the value of cash.

Maybe it`s because the commodity is less liquid than the shares and can be artificially supported by `people` (to put it politely) like you.

Gold ETFs: What Went Wrong With Conventional Wisdom?

Deleveraging is not inflationary and printing money is not either if more debt is being destroyed than is being created to take its place. As long as that condition continues, the dollar will gain and gold and everything else will drop or drift lower. I can`t believe how few people `get` that.

Regarding `manipulation`, if something is so illiquid that its price can be manipulated, then obviously there isn`t enough demand for it to go up in the face of people that want it to go lower. The real manipulation was springing that finance deal the day before options expired, crushing all those put positions with no warning. Very mean, but that`s how the big boys play. Always watch your back, They will steal your lunch. Actually that`s the whole point of the game isn`t it?

Write in alan jacquemotte for President to show your support for ending the Fed`s monopoly on money. Look up `colonial scrip` on wiki for more info.

Bullion Shortage and Spot Prices Tell Two Different Gold Stories

Retail is buying overnight and buying coins. Smart money is selling the pops. In a deflation, all commodities go down. Not hard to figure unless you have a fixed idea that is wrong.

US Government: No Surprises Left

In every failed rally there is a point where the longs think that the selloff has been overdone and they stage a big rally that also fails and usually spectacularly so. I think gold is a good short here. Gold needs inflation, not deflation, in order to bring in enough retail buyers to sustain a rally. Gold is in a 4th wave rally of its pullback and 4th waves fail. (I also called the 2nd wave top on gold in mid-July.)

Here`s how we should replace the Fed and its Debt-Money.

HOW TO FIX THE ECONOMY (change the system, not the faces)

a plan to stimulate the economy, lower taxes, start paying off the National Debt,
alleviate poverty and decrease crime

by replacing our OLD economic system with a NEW system based on

a new and debt-free U.S. currency to replace Federal Reserve Debt-Money,

a 0.5% tax on electronic transfers to replace the Federal Income Tax and the IRS,

and $1000 per month privatization compensation (non-Fed $) for all legal U.S. residents

There is NO BENEFIT AT ALL in having a Central Bank (well, none for us) compared to having the U.S. Treasury print and distribute our own debt-free money to ourselves. THE ONLY DIFFERENCE between having a central bank or not, is that ``One system costs us 95% of our wealth every hundred years and puts us and our posterity into mind-boggling debt until the end of time``... and the other doesn`t.

So the first thing we need for our NEW SYSTEM is our own, debt-free U.S. Government fiat currency, backed by all the property within the nation`s borders. Obviously I disagree with those who insist that `only gold is real money`. The hoarding of gold-backed money has led to and prolonged many U.S. economic depressions which explains why the U.S. has tried and abandoned `the gold standard` many times over the years. ``Bad money drives out good`` means people will always wind up using as money whatever has the least actual value that will still be accepted by others to facilitate trade. Debt-Free fiat money will work just as well as Federal Reserve fiat Debt-money, but without all the nasty side-effects.

Another problem with the OLD SYSTEM is that income-based taxation creates wasteful tax avoidance behavior, requires an expensive tax reporting industry and an intrusive collection bureaucracy, and is, arguably, a form of `involuntary servitude`. Under our NEW SYSTEM, we should replace all income-related taxes with a one-half percent, automatically-collecte... electronic transfer tax (also known as a `debit tax`) which will be avoidable by transacting business using cash or barter. This will not only rid us of the IRS (saving the billions currently spent on `tax reporting`), it will also end the current penalization of work and entrepreneurism, as well as freeing up untold billions currently spent on `tax avoidance`. A debit tax is `more just`, corresponding closely with ``benefits previously-obtained`` rather than penalizing labor and industriousness, and (as it can be legally avoided, even if only inconveniently so) this debit tax can be considered ``voluntarily-paid``. A small electronic transfer tax will also act to discourage excessive short-term market speculation and should be able to raise enough revenue to begin paying off the National Debt. The tax should be either paid with the new debt-free money or exchanged for it by the Treasury with tax revenue on Federal Reserve money being used to start retiring the National Debt.

As argued by Tom Paine in his 1797 essay ``Agrarian Justice``, the third problem with the OLD SYSTEM is that, because governments privatize all of their claimed property (allocating it however they like), everyone winds up being denied free access to all property (other than that which has been specifically allocated to them) without being compensated for that loss. That`s not a problem for those with access to capital and property ownership, but for the rest of us, it is totally unfair and creates a slanted playing field upon which wealth gravitates to the already wealthy and the well-connected. However governments allocate their property, every method has the same result of `denial to everyone of free access to all land`. It has taken 200 years for this injustice to be acknowledged in a place and time where something can be done about it and when events have conspired to make rectification not only just, but vital to our economic survival. Just as compensation for eminent domain takings are provided for in the 5th Amendment of the U.S. Constitution, governments should provide compensation for denying everyone `right of free access to all property`.

Thus, in order to remedy this, we must elect a Congress that will PAY EVERY LEGAL U.S. RESIDENT `Adequate and Equal Compensation for Denial of Free Access to U.S. Property`, compensation which can FUNCTIONALLY REPLACE ALL FORMS OF PERSONAL AND CORPORATE WELFARE AND SUBSIDIES, including rescinding Federal Minimum Wage laws and phasing-out the Social Security system. (Once everyone is getting `Denial of Free Access` compensation their whole lives, most people will be able to save enough to be able to comfortably cease working at some point in their lives.)

Our NEW SYSTEM should pay $1000 per month (of our new, non-Fed, non-Debt-Money) to every legal adult resident. Compensation for minors should be held in a trust fund to avoid incentivizing `baby factories`. Since everyone gets the same amount of compensation, this plan is not wealth redistributive, but will give the least wealthy the biggest relative monthly percentage increase of wealth. Because when people HAVE something, they have something to lose, we can expect a reduction in all sorts of crime under our NEW SYSTEM as well as better childcare, less poverty, more rural homesteading, better maintained urban areas, less intrusive and cheaper government with lower military-related expenses and a safer world in general. Once this NEW SYSTEM gets going, I expect residents of other countries will insist their governments either copy our NEW SYSTEM or else apply for U.S. statehood as Texas did in 1845.

HEALTH CARE...The AMA and FDA work to constrain competition in order to maximize the medical and pharmaceutical industries` ability to extort unconscionable prices for services and substances that should be affordable out-of-pocket. We need to train up thousands more doctors and other healthcare professionals and to decriminalize and unbridle access for adults to WHATEVER drugs adults want, obtained from WHATEVER source adults decide thay want to obtain them, for WHATEVER purpose those adults wish to use them, and let the market work to make prices of normal medical help and pharmacology affordable.

SEND A MESSAGE to candidates running for Congress in 2010 and 2012 (that, in order to get elected, they will need to support a change to a NEW SYSTEM, whether exactly like my plan or not) with a MASS WRITE-IN CAMPAIGN that `blows socks off` from DC to LA. I will be registered as a Write-In Candidate for US President in Michigan, and in other states as I get help with other states` registering processes. Pass this message along to several people every day (or, even better, to everyone you know today, and to everyone you meet from now on). IF EACH OF US EVERY DAY CONVINCE EVEN ONE OTHER PERSON TO JOIN US, OVER ONE BILLION PEOPLE WILL BE `ON BOARD` IN 30 DAYS. (Seriously. Grab a calculator and start doubling from 1.) For an e-copy, or to ask questions or volunteer, write me at alan_jacquemotte@yahoo... or P.O. Box 183393, Shelby Twp, MI 48318.

Return of the 'Super Dollar'?

Maybe these ARE high interest rates compared to what is coming. Remember Japan`s zero interest rate for how long with no benefit? That says deflation to me. and also to Michael Shedlock, last I checked.

Betting on $1000 Gold in September

I meant to say "don't give A dammit".

Betting on $1000 Gold in September

Those could be "covered call" sales rather than long calls. in that case the market maker would be inclined to find a pretext to spike the price so he can sell the postition; after that he don't give dammit.

Dow-Gold Ratio: Very Different 'Bull' Markets

I think you may be surprised at how rising deflation sinks all boats.