My scholarly reading over the Thanksgiving weekend included Parade Magazine, that annoying little tabloid that newspapers use as a device to get you to sort through the Sunday advertising supplements. The inside page this week offered the following quote by Tina Fey:
The beauty of self-doubt is that you vacillate between extreme egomania and feeling like ‘I’m a fraud,’ … You just try to ride the egomania and then slide through the impostor syndrome. I’ve realized that almost everyone is a fraud, so I don’t feel that bad about it.
Now that is refreshing. Fame is a net that catches but a few fish out of a large school. There are far more talented people who are not famous than those we know about. With the advent of electronic self-publishing, we now have access to a wider assortment of better books that those now only published because the authors are famous. But they won’t sell unless the authors get lucky.
The worst part of fame and fortune is the “fortune” part, where people who inherit money learn to value themselves as worthy of the inheritance. I experienced this first-hand with a family in Montana comprised of hacks and nuthatches, each imagining him/herself exceptional, each carrying a load of sycophants on board, myself among them. Thank God for past tense.
Here’s something funny, as long as I am rambling: Bob Woodward’s book, off to the left here, is the only one in his long line that I have ever read. It was enough. It was crap. Woodward is running on fumes, and makes his living now sucking up to the very people he supposedly toppled from power years before. (Ask yourself why a famously tight-lipped cabal of schemers would allow anyone inside to observe their dealings.)
Bob Woodward, fraud. (And if he sucks up to power now, was he also doing so then? Just wondering.)
Another, pictured to to the right: Steve Forbes is the champion of the “free enterprise” system that has rewarded him for being the son of a man who made fortune by sucking up to power. That would be his dad Malcolm, the biker to the right. But honestly, Forbes Magazine under Malcolm was interesting. The guy on the left is also interesting, full of spirit and probably cognizant of the fleeting nature of fame. The guy on the right is boring and full of himself, who has accomplished exactly nothing of note in his life, and who would be nothing without that Dad.
Speaking of which … the downward procession of ability as seen below … each man a little less talented than the one to his right, climaxing with #43.
George W. Bush is a complete idiot. It’s interesting to see his idiotic book, Decision Points, being torn apart by reviewers who would have praised it if he were still in power. Speaking of sucking up.
Odd thing about the Bush family – even going back to Prescott, there just doesn’t seem to be much talent there, but they are always around. Nixon backers wanted H.W. to be Nixon’s running mate, but he chose Spiro Agnew as “assassination insurance.” People urged Nixon to appoint H.W. as vice president when Agnew was taken down, but he chose the near-dead Gerald R. Ford instead. “W.” is every bit as talented as Prince Charles, but somehow was elevated to the post of president. That’s neither luck nor talent, but rather that name “Bush,” a royal family.
Which brings me to my powerful conclusion: Luck has a lot to do with success and fame, and money helps the progeny. Sarah Palin is lucky and famous and extremely untalented, and the offspring are going to drive us crazy for years. Remember Pete Rose …. Jr.? Jacob Dylan? Emilio Estevez? Dean [Paul] Martin? Sean [Ono] Lennon? Would we even know those names if they were left to their own talent to succeed?
I have no problem with success or talent. I have no problem with luck. I think my only problem is with offspring and hangers-on.
Thus endeth the ramble.
50 thoughts on “Spare us the offspring”
…Luck vs Talent
If you were born a Prince of England, your life would be completely different then being born a son of some immigrant to America.
But you do not believe talent is luck! So some kid who is abnormally tall gets millions for pushing a ball through a ring is not luck…. (roll eyes)
But that is the extent of luck.
Everyone has been given something “lucky” when they were born.
What you do with it for the rest of your life is up to you.
“…almost everyone is a fraud….”
That Tina Fey quote reminds me of what a reporter at the New York Times said when Reagan was elected: “I can’t understand it. Everyone I know voted for Carter.”
What Tina meant was, everyone she knows is a fraud. Which brings me to my first comment: Stop wasting your time studying these people—the Tina Feys, the Bob Woowards, the Forbes, the Bushes. They are all urban people sunk in power and welath. They are not genuine people. They live outside themselves. They live only for people like you to take notice of them.
Now here is a really good segue for you:
“Ah, fuck the working class. You could waste your whole life trying to get their heads right. Who cares? It’s all a power trip.”
“I don’t know.” Steven took another sip of coffee, then pushed the cup away as if disgusted with it. “It just doesn’t make any sense having power over a bunch of imbeciles. That doesn’t seem to be a very big power trip.”
“They’re just imbeciles themselves. Look at Agnew. He’s a fucking genius, right? But they can skim off all the cream. That’s where it’s at.”
“OK, but after you have a dozen cars and houses and millions in stocks and bonds, what good is any more?”
Peter shrugged. “Don’t ask me. It must be all psychological, like being king of the hill or something. Hey, speaking of imbeciles, did you hear what that astronaut said when he went walking around in space?”
“Is this one of your asinine jokes?”
“No, man, this really happened. He got out there and said, Boy, what a view. Can you believe that? Boy, what a view.” Peter’s voice turned squeaky. “Boy, what a view.” He cackled until water seeped from his eyes.
Steven smiled, then chuckled. “Like going to the Grand Canyon and saying, Boy, what a hole.”
“Yeah, right, right. Exactly.” Peter rubbed his eyes. He worked his curly but thin beard with his hand, forming it into a more distinct point. “Hey, what’ve you got for classes today?”
That excerpt was from a manuscript that I am proofreading. The time is 1969. Even college kids back then knew how things worked, so why are you still going on about it?
Anyway, the important point is—and this is the segue—no mainstream literary agents will represent the book. No one will touch it. And that is why it is going to be published as an ebook on Amazon.
I was going to nail you about voting for Kerry(inherited/married wealth) but then realized that your vote probably went to Nader.
Who, by the way of siphoning off Kerry votes, put Bush in the White House.
Funny how those things work out.
Yeah, I did vote for Nader, no regrets about that. As it is my vote, I cast it where I please.
And, as Obama carries forward with Bush policies, can you imagine that Kerry might well have been Bush before Bush? Why should I think that any prominent Democrat will challenge power?
Um, no, Adding Nader’s votes to Kerry’s in all the states he lost would not have produced another state win for him.
So voting for Nader was a very safe protest vote. If’n you’re into protest votes that is.
And remember that the googlizer is your best friend when seeking out facts like this, Big Ingy.
You’re losing your credibility with your throwaway one liners. Clean it up, man. Clean it up.
The idea of a “safe” vote (translation: meaningless) is abhorrent to me. It is my intent that it do damage to the existing one-party-two-right-wing structure. It is frustrating to me that the Nader factor has been neutered.
Did Nader stop Gore? I only wish. Are we worse off because Bush triumphed in 2000 and 2004 and Gore and Kerry lost? We cannot know. I only doubt it sincerely.
Ah, go on, Trotsky. You would give anything to go back to 2000 or 2004 or even 2006 before the Democrats took over the Congress. Those were the days, right? Low unemployment and low inflation, rising home values, increasing retirement portfolios—you name it, it was good.
Now, after four years of Democrats in Congress and two years of the Magic Mulatto, what do you have? Let me help you spell it: D-E-P-R-E-S-S-I-O-N.
It was that simple? It’s just a matter of which branch of The Party is in power?
Yes, silly you.
Any economist will tell you that, ultimately, beyond fiscal and monetary policy, the economy runs on confidence. And businessmen and investors run for cover whenever the Democrats gain power.
An economic depression is simply a no-confidence vote on the future.
Again, so simple! (Pounds head)
Yes. So why ain’t you rich?
Is that what I am supposed to want?
Yes. If you were rich, you could realize all your nefarious dreams.
But, warning: Along the way to getting rich, you might start to see things differently.
the economy runs on confidence
The economy runs on trade of value.
This economic depression must occur when the value of trade becomes disrupted.
It has become disrupted because of systemic perversion of economic calculation.
By the artificial suppression of interest rates, entrepreneurs have misread the economy believing the cheap money represented improved productivity.
Such improvement in productivity, however, has not occurred.
Say’s Law: “We trade products for products”
– and when the Entrepreneurs seeks such trade for his newly created goods, he finds there is no productivity to trade for.
He must then clear is mal-investments, close shops and plants, fire people, go bankrupt, etc. – this is what we call a recession or depression.
All true, and there are probably another dozen ways to explain economic expansions and contractions. Personally, I prefer the credit cycle for an explanation, something that you seem to have touched on, above.
However, this is Trotsky’s World. You need to keep it simple. You really cannot talk hard economics around here.
While I have your attention, try this hypothetical related to confidence:
Assume two normally functioning economies (yes, I know, whatever that means). Call them Economy A and Economy B. Assume everything is going along fine in both economies statistically speaking: average levels of GDP growth, average unemployment, average interest rates, etc., etc.
Suddenly war breaks out. Economy A booms and Economy B collapses. How do you explain that without invoking the idea of confidence in the future versus no confidence?
Yes, it is I who oversimplifies.
There are dozens of ways to explain natural phenomena, but claiming that it is due to fairies, Greek Gods, or magic isn’t particularly useful.
Mises offered -so far- the only coherent explanation for boom/crack-up cycles.
He questioned how could all entrepreneurs systemically make the same mistake at the same time.
He surmised and discovered that the cause must also be something systemic – that is, the manipulation of the central component of all economies – the manipulation and access to money.
I’ve noticed that occasionally too….
No information regarding economic manipulation of either economy, their enforced interest rates, the goal and purpose of either central bank, their reserves, internal resources, external trade requirements, etc.
But the argument against “confidence” as an economic determination
-humans act to mitigate risk, and profit by accepting it. This fact counters any argument that “confidence” plays any part in economic stability.
Risk to someone is balanced by the mitigation of that risk by someone else and vis versa.
It is dynamic negative feedback loop – and as such cannot explain depression/boom cycles.
Back when I was working in the markets, someone at the Federal Reserve used the term “exogenous shock” to explain why things sometimes go haywire in an economy without warning.
That is what I am talking about in my hypothetical example of war causing one economy to boom and the other to collapse. It all comes down to human perceptions, faith, and, yes, confidence. In my hypothetical, it is the confidence that one side is going to profit from the war or win it, and the other side is going to be ruined, even though no man can possibly know the outcome, and both economies were doing fine before the war broke out.
I reject the idea of any single, formal explanation for booms and busts. Your central bank thesis is fine. After all, money is the fundamental commodity in any economy. But why did you assume there was a central bank in my hypothetical example?
In the Panic of 1907, America had no central bank. (The country was already in recession and World War I was seven years away.) The entire system went haywire when bank depositors lost confidence in the banks, first the New York banks, then banks across the nation. Confidence.
In the Panic of 1907, we are not talking about the “mitigation of risk.” We are talking about total risk aversion triggered by a total loss of confidence.
Because, for most of the economic history of the world, the nations have had central banks.
The fractional reserve system was well in place. True, the FED did not exist – but the banking system cartel did.
In the late 19th century, the Supreme Court legalized limited liability incorporation.
With the creation of limited liability corporations, the ability to exercise more risky and immoral behavior – with negative consequences mitigated and no mitigation on the “upside” by the limited liability.
The banks over-extended credit – a regular and common tactic of any fractional reserve system.
The ability to earn profit on money that was created out of thin air is a temptation that few bankers can resist.
With the heavy banking regulation at the time, the ability of real banking competition was wholly prevented.
When the credit bubble bursts – as it always did – the sudden contraction of the money supply risked the solvency of the banks. As all banks were fractional, this solvency crisis of a few banks created a domino effect on all banks.
To forestall loan losses, large banks stop issuing loans, the money supply shrinks drastically. The small banks can’t compensate by issuing more loans to keep up the money supply.
Fractional reserve banking is an inherently unsound business. A banks runs all the time under the threat of insolvency.
Any rumor of a bank’s potential failure, then all depositors rush to withdraw their gold (at that time). No fractional reserve bank has that much cash/gold on hand, so the rumor of insolvency enforces the insolvency.
But this “rumor mill” has no effect on a 100% solvent (non-fractional reserve) bank.
Thus, it is NOT the rumor that is the problem – it is the fractional reserve system itself that creates the very condition that demands confidence to exist.
The fractional reserve banking creates the condition of the Greater Fool – who is the last guy to the bank who will not get his money.
Such a condition does not occur in a 100% reserve banking system – there is no Greater Fool as everyone’s capital and money is accounted -either as a loan or as a deposit.
So I see your position in analogy:
“A man is playing Russian roulette – therefore it is the pull of the trigger that eventually kills him”
My position in analogy:
“Do not play Russian roulette and no pull of a trigger can kill him”
Before 1913, recessions were caused by:
1. limited liability incorporation, which encourage irresponsible behavior by bank owners and management
2. regulation of the banking industry
3. a few large banks acting as a cartel
4. fractional reserve banking is an inherently unsound banking model
After 1913, recessions were created with full force of law via the Federal Reserve.
Recessions are *NOT* a natural free market phenomenon. They are artificially created by the financial industry under the protection of the State.
The market quickly recovered by the end of the year, through its natural corrective mechanisms.
Thanks, but I really had no need for a mini-lecture on how the banking system works, either before or after the Federal Reserve. And I think that subject is off topic, anyway.
We were talking about a nebulous concept called “confidence.” In my opinion, it makes no difference if any economic entity is sound or unsound. Once people (investors) lose confidence in the entity, the end is certain.
I leave you with this quote from today’s news. The story was about the uncanny similarities between the US financial crisis of 2007-2008 and what is happening today in the euro-zone.
It’s eerie how similar that process has been. It just does not instill confidence.
— Peter Kenny, Managing Director, Knight Capital Group
I hope you caught the keyword there.
Yet another who predicts the future based on the past. And somehow you got rich? If that were the key, we’d all be swimming in sawbucks.
I smells me a charlatan.
Be serious. When it comes to investing, some future events are no-brainers, like GM going bankrupt.
How could you live all your life in a capitalist society and not get rich?
You really have no clue how to make money, do you?
Please demonstrate your acumen by describing the coming “no-brainer” events that we should all peg our investments on.
I’m holding you to it. I’ll write about it in one year.
BTW – you do not get that “getting rich” is not foremost in most people’s mind, do you. That’s projective thinking on your part, that we must all think in the manner that you do.
And again, anonymous guy, we do not know who you are. A reasonable man might suspect a fraud.
Ah, go on, Trotsky. Either tell us you never learned a thing about American capitalism, and that is why you are a perpetual whiner at age 60; or that you decided at age 40 to become a hippie and live like a parasite.
You know I have it made. And you know I have shared my secrets of success with anyone who would listen.
I want everyone to have enough money so that they do not think and act like a pathetic worm. I even want you to stop crawling around and get with the program.
So then, you got nuthin’.
You mistaken Mark seriously.
Yes, Mark whines.
Yes, Mark is greedy and wants more.
Yes, Mark wants more without having to work more for it.
Mark has it made in the shade.
He lives on a beautiful mountain, breathes fresh air, hears bird chirps, and not car horns bellow.
The man is among the richest men I know. If I could, I’d love to be his neighbor (at about 10 miles down the road).
We are comfortable, but not rich – we are in our sixties, and do indeed live on a mountain and hear the birds chirp. You sound jealous. This is our life, and we are very happy. Ask me forty years ago if this is where I’d be, I’d have laughed. Luck has a lot to do with life.
If we were neighbors, we might be friends. You never know. The Internet has a way of dis-inhibiting, making nice people seem like assholes. It also allows for pseudonyms that allow for “people” being nothing more than literary devices.
Is “Black Flag”, like Judas Iscariot, a mere literary device?
Not at all! More like admiration and an example of what I’d like to have too.
You need to play more Poker.
Luck does not make a life. Over a lifetime you will have about as much good luck as bad luck.
It is how you play when your hand is good AND how you play when your hand is bad that makes the differences in your life.
Of course! We are friends already!
I do not have to agree with you to be friends with you.
It is symbolic.
I asked a well-know Freedom fighter what would be the Universal symbol of freedom.
Whatever is the opposite of surrender
Mark is rich
It appears you did need a lecture – since you still hold to some fallacy of “confidence” being an economic driver.
So you are saying a solid business – cash flow, cash on hand, sales – is no different that a business that is insolvent, teetering on bankruptcy, and losing sales?????
You are very confused.
Investors don’t leave a business that is producing profit. This not example of being “confident” – it is an example in investor thinking and action.
A business that is failing will lose investors. This is not an example of “lack of confidence” – it is an example in investor thinking and action
You appear to be wondered by self-evident things.
Of course there are similarities between the US and European economies – they both are premised on Keynesian economics!
He is as confused as you are.
When a business or an economy relies on “confidence”, you are in a con game run by con men.
(If you didn’t know “con games” and “con man” all derives from “confidence game” and “confidence man”)
Hope YOU caught the keyword there….
“So you are saying a solid business – cash flow, cash on hand, sales – is no different that a business that is insolvent, teetering on bankruptcy, and losing sales?????”
Yes, precisely, when it comes to investor confidence. More than one solvent bank or business or even nation has gone down the tubes when investor confidence collapsed.
Google “confidence in economics,” and see what you come up with. Just a sample follows.
We are instinctively fearful of reckless talk about depressions, and we try to support one another’s confidence. We like the idea that modern scientific economics seems to show that all recessions end in due course.
For now, our common efforts at building confidence appear to be working somewhat. But the economy has still not recovered, by any means.
We may hope that our resorting to euphemism and belief in timetables of business cycle recoveries work better to restore confidence than they did in the ’30s.
— Robert Schiller, Professor of Economics and Finance, Yale University
“What if a Recovery Is All in Your Head?”
The New York Times, 11/21/2009
Read about “animal spirits” (confidence) here:
We will never really understand important economic events unless we confront the fact that their causes are largely mental in nature.
It is unfortunate that most economists and business writers apparently do not seem to appreciate this and thus often fall back on the most tortured and artificial interpretations of economic events. They assume that variations in individual feelings, impressions, and passions do not matter in the aggregate and that economic events are driven by inscrutable technical factors or erratic government action.
I’ve been reading Akerlof and Shiller’s new book on the importance of animal spirits, and in particular on the key economic role played by confidence. In this light, I found these poll results quite thought provoking.
In February 2008, pollsters asked the US public to identify the world’s leading economic power; 41% chose the US, followed by 30% opting for China. That was before the fall of Lehman Brothers. By November last year, the order had reversed: 44% now though China was the world economy’s top dog, as against 27% for the US.
— Mark Thirlwell
“The economics of confidence”
Market confidence is a valuable commodity in tough economic times. And governments will try just about anything to inspire some.
–Open Source Dot Com
“Open Economics: Inspiring confidence through transparency”
American consumers do not expect to be feeling any more confident in six months’ time, a widely watched index revealed today, underlining the hurdles facing a recovery in the world’s biggest economy.
–The Daily Telegraph (UK)
“US economy fears as consumer confidence plunges”
Or you can buy the book!
“How the Economy Works: Confidence, Crashes and Self-Fulfilling Prophecies”
Max, with all due respect, you are a kook.
A business that is solvent cannot “go down the tubes” because of a lack of confidence – if it does then it was not solvent!
If a rumor about your solvency destroys your “solvency” then you were not solvent, were you?
You were lying to your investors and the public about the real state of your financial state – you were conning the public.
It matters not what Google finds, if what it finds is wrong.
Confidence is a con game. If you need to rely on confidence for your business success, you are a con man.
I do not invest due to confidence. I invest in the business and its products and sales. You can invest in con games if you like.
OR …. are you equating “trust” with “confidence”? (Such as “I have confidence you are a honest man and will repay my loan”)
They ALWAYS end in due course…. not because “suddenly” we have confidence, but because humans -by their nature- strive to better their own lives.
People do not work to have worse lives – they work to have better lives. This drive lifts the People up out of the ditch and back on to the road of prosperity.
When the People believe that they can get something for nothing is usually when they crash back into the ditch.
It will not.
It cannot not.
It cannot not until productivity increases.
No amount of whistling by the graveyard will dispel the failure of the US to improve its economic productivity. Too many people believe that other people owe them their living.
When that notion is finally crushed, economic recovery will begin.
Yep, all Keynesian who are witnessing the total collapse of their theories all around them. I am not surprised they are grasping for fiction as an explanation.
Rail against the wisdom of the world all you want. I rest my case.
In a world run by lunatics, it is folly to be wise.
First economics is not investment – this is like saying to a scientist “go build that fusion reactor if you know how fusion works” – one is science, the other engineering.
One is economics, the other is investing.
Investing requires in-depth analysis of the company and its products/services. This has little to do with “economics”.
The events that are “no brainer”
Inflation is coming – big time.
The FED will continue to buy Treasury bills and inflate the money supply, and will do so into high inflation (15%+)
Then when it hits 20%, one of two things will happen. The FED knows if it goes higher then 20%, it threatens to go out of control – hyper-inflation – and with that, will destroy the money.
Thus, it will have to stop buy Treasury bills, and force the government into the capital markets to fund its debt.
This will dry up all capital – causing a massive recession. Banks will fail – but the FDIC will no longer be able to get funds from the FED as the FED has stopped the printing presses.
Massive retraction of the money supply will toss the economy into the Great, Great Depression.
The FED continues unabated in buying Treasury (or the Congress nationalizes the FED). Hyperinflation hits. Money dies. Without money, the division of labor halts. Without the high division of labor, no highly industrialized economy can operate. The economy stops. The trains stop. The trucks stop. There are no goods – no food, no fuel, nothing.
Within two weeks, there is no more food on the shelves, no gas in your car, no water in the municipal water pipes, no electricity. (If you’ve ever been to Kinshasa, Congo – you can see how a 5 million population city lives without light, water, fuel).
Millions will die. You will die.
It will be the end of Western civilization
“It will be the end of Western civilization.”
Like the last 25 times?
I’m still waiting for the beginning of Western Civilization.
As long as a society believes they can do violence on non-violent men to obtain their needs and wants, real civilization will remain a pipe dream.
No highly industrialized nation that has not lost a major war has ever suffered hyperinflation.
Thus, I do not know what “last 25 times” you are pointing to – no example has ever existed.
Hyperinflation destroys money. Agree or disagree?
Money is the central commodity in an economy. Agree or disagree?
Without money, the division of labor collapses. Agree or disagree?
Without the division of labor, the advanced economic society of the Western world collapses. Agree or disagree?
You live because you do not have to find your own oil, nor grow your own food, nor source your own water. If you suddenly had to do this, you will fail. Failure in these matters is death.
You are not alone. 95% of the West is urban, not rural. 95% of the population would be – at this is the key – in the same dire straits as you.
The sudden collapse of the US and Europe into hyperinflation would be the end of Western Civilization as we know it.
“The sudden collapse of the US and Europe into hyperinflation would be the end of Western Civilization as we know it.”
Oh, OK. “As we know it.” Nothing like adding a little modifier to a hyperbolic statement. And “as we know it” means what, as we know it in our own lifetimes? Our parents’ lifetimes? George Washington’s lifetime?
My point was that Western Civilization has had some fairly huge setbacks in the past that prompted impulsive (or cynical) people to declare it was all over for the West. Much of this doom saying, especially since the Middle Ages, has used Christian eschatology as a framework. Even in modern times, atheistic and secular writers have borrowed from the Christian End Times Playbook, the Swine Flu pandemic and Global Warming being two very recent examples.
You seem to be doing the same thing using economics as your bogeyman. All you are talking about with your hyperinflation scenario is the potential for a large urban die-off. (And, please, do not try to characterize me as one of the first victims of an economic collapse. I live in, and off, the country. My survival and that of my children is certain.) Such a die-off is not a big deal. It has happened before and will happen again. Besides, there are too many people in the world, anyway, and history has shown that living conditions are demonstrably better for everyone after a large segment of the population dies off. The Black Plague of the 14th century would be your best example of that.
So, it is OK with me if you want to spin your tales about Western Civilization’s end. As a historian, I have read quite a few, and I always get a kick out of them. But, to paraphrase an old market trader’s saw (“Don’t bet against the Fed”), don’t bet against the West.
1. Hyperinflation destroys money. Agree or disagree?
Agree, if you are talking about fiat currencies; otherwise, disagree, since there are many kinds of “money.”
2. Money is the central commodity in an economy. Agree or disagree?
Agree, in a modern economy; otherwise, disagree, for a barter economy.
3. Without money, the division of labor collapses. Agree or disagree?
Not sure. The division of labor on a large scale is a relatively recent phenomenon in history. I would have to know what you claim is the relationship between money and the division of labor.
4. Without the division of labor, the advanced economic society of the Western world collapses. Agree or disagree?
Probably disagree. The thesis of my professional paper, “Complex Men to Complex Machines: The Division of Labor and Function Replacement in the Industrial Revolution” (1994), was that the division of labor has evolved since the mid-18th century to the extent that human physical and mental energy are nearly superfluous elements in the means of production. Also, see Herbert Marcuse, “An Essay on Liberation” (Boston: Beacon Press, 1969), pp. 49.
Oh? Please point to the examples of “other” money in this economy?
Do you see the US/Western Europe as a barter economy?
If not, your comment of barter is irrelevant.
When answering, it helps if you would remember the topic that triggered these questions…..
The ability to transact over long distances and future-time requires money.
Division of labor economy is one whose prime feature is long distances between suppliers and between the supplier and consumer and purchases in advance or by credit (future-time).
You cannot trade your potatoes in Idaho for running shoes from New York in a barter economy.
I would completely disagree with your thesis on the basis of your synopsis – if there is an online copy of it, I’d like to read it however.
“Oh? Please point to the examples of “other” money in this economy?
Gold, silver, and my 18-year-old Vietnamese housekeeper.
Really, I cannot take this discussion seriously, anymore.
You are no economist.
Gold, silver etc. are not money in this economy
They are commodities, and maybe they are valued, but they are not money.
Take a gold coin to your local grocer and try to pay for your food with it.
He will either send you away until you come back with dollars OR he will significantly discount your gold coin in buying your groceries (ie: he charges you extra for the pain he has to go through in changing your coin into dollars).
Mises defined money in 1912.
Money is the most marketable commodity
This identifies the central benefit of money: a means of exchange.
Contrary to the standard textbook accounts, money is not a measure of value. There is no measure of value. Value is subjective. You could as easily measure your love for your children.
Also contrary to these accounts, money is not a store of value, although it is a valuable thing to store. There is no store of value. There is at best continuity of price.
Money is a unit of account.
Mises argued that money arose out of voluntary exchange. A commodity that had been sought and bought for attributes other than its use as a means of exchange became a commonly accepted means of exchange. This created new demand for it. Individual decision-makers created “money” out of whatever commodity that was the most sought.
As such, history has shown that these commodities such as salt, sea shells, rocks, wheat, etc. all were money at one point in history, but are not money today.
History has shown that gold and silver were once money, but are not money today.
Hope that gets you on the right page, Max!
No – I meant at that point in time. Some people would survive and start over – but the Western Civilization would end.
To understand where I am deriving my scenario, please Google :”Dark Winter” – a scenario of a biological attack in North America.
The breakdown in social order – precipitated by the collapse of labor (that is, everyone stayed home) was the most devastating consequence.
The conclusion: it was not the attack that killed people – it was the withdrawal of the people out of the economy that created the conditions for a national disaster.
From that lesson: the destruction of money – and the return to barter, even for a short time, will collapse society. Without the vast economic trade, society would screech to a halt in days.
Without money (thus only barter) there is no way you can get the goods you need to live. Society would screech to a halt in days.
Dark Winter’s lesson: it is not that attack that kills, but the collapse of the division of labor that kills.
I am not preaching some religion.
If you are not aware of the social implications of economic order – I’d suggest you pick up a few books about it.
You are a dangerous man to your children.
Matt, you will die. Your kids may live, but only if you sacrifice yourself for the time between social collapse and social order.
You cannot make oil into fuel. You have no idea how the chemisty of oil production works, let alone know how to build a distiller.
You do not know how to hitch a mule to a plow, let alone know how to build a plow that can be hitched to a mule.
You are historically ignorant.
You are richer than the Kings of England 250 years ago because of the world’s people and their works.
To claim that a die off will help you is so incredibly short-sighted, I am surprised you claim you are an economist.
You terribly misunderstand history.
We are not a rural nation, nor economy. The 14th Century was all rural. Today, almost no one is rural.
To equate the 14th century conditions to today’s consequences is so wholly bizarre, I can barely believe you actually presented it as an argument.
I will bet against the FED and in favor of the West.
We will not see the hyperinflation, the FED WILL stop their antics (option #1, above) and thrust the economy into a deep, long depression. The Federal government will dissolve into irrelevance, with the State and local governments rising to fill the gaps.
It will no longer be People looking to Washington for a handout, but to their neighbors – and the deal will have conditions applied to it
“You are historically ignorant. You terribly misunderstand history.”
Yeah, that happens a lot when you graduate summa cum laude, Phi Kappa Phi, and Phi Alpha Theta. History is Greek to me!
Other than Saint John, who obviously ate some bad shellfish while visiting the Isle of Patmos, I think no one has ever described The End Time in such detail as you have.
I just hope you have not spent a lot of money planning for it.
Thanks for the compliment!
Yes, analysis of the chain of future events takes a lot of time and thinking.
The problem I have found, however, is most are like you – completely oblivious to the cause/effect/consequences that are swirling around you.
You made a point about religion – and yet, it is you who is holding the faith – that is, an irrational belief – that by some “trick” the FED and the government will make it all better.
You do not want to do your analysis of the scenarios – because your faith will be shattered.
You are a man falling without a parachute – praying to God for a miracle.
I just hope you haven’t tied your kids to the same “air” parachute ….
You are daft.
You pull some reference to the 14th Century as an example for the 21st Century.
And you believe this reference has some merit.
And you believe you understand history and its lessons.
Are you sure you just didn’t buy your degree from an online supplier?
Since it is obvious both your history teacher and your economic teacher failed to deliver you certain lessons, allow me to fill in those gaps.
The division of labor through voluntary cooperation is the heart of the free market system. Every modern economy is defined by an advanced division of labor.
This means that every modern economy has a monetary system that is widely used by virtually every member of the population.
Without money, the division of labor is primitive. We are not primitive.
A monetary collapse would make us primitive.
The problem is, we have gotten rich by replacing the economic skills suitable to primitive societies with the highly specialized skills that earn our salaries today.
Those skills no longer exist except in tribal societies. They take many years to learn under parental guidance.
Today, the monetary system is digital.
It is also fractionally reserved. It monetizes debt.
Without debt in the modern economy, there is no money.
With the substitution of bank entries for gold and silver coins, the modern economy has placed itself at the mercy of debtors.
If the debtors ever stop paying off their debts, the market value of their debts will fall to zero: no stream of future income.
If the value of the debts falls to zero, the value of capital that serves as the legal basis of the monetary unit will fall to zero.
There is no money apart from monetized debt in the modern economy.
The value of debt in hyper-inflation falls to zero.
For the free market voluntarily to move from the modern fractional reserve banking system which is based on debt to a gold coin standard that is not based on debt would require either the collapse of the monetary system or a long period of inflation in which people voluntarily switch to gold.
In both cases, the present debt-based money — and every promise based on it — would be destroyed.
A collapse of the monetary system would collapse of the modern division of labor. The modern division of labor is what keeps 90% of us alive. Maybe it doesn’t in some tribal African setting, or some tribal setting an Outer Mongolia.
But urban life is sustained by the division of labor.
If the system really froze up, and banks could not clear their accounts with each other at the end of the day, our credit cards would not work.
Without our credit cards, we could not pay our debts. Yes, we could write a check, but the checks would bounce. The meaning of a monetary collapse is that no existing bank accounts would be paid off.
We -suddenly- couldn’t get delivery of anything supplied by trucks.
Think of the problem facing a company that supplies gasoline.
How will the company be paid by the gas station that takes delivery of the gasoline? By currency? What company is going to allow a trucker to take tens of thousands of dollars worth of gasoline to deliver to a gas station, and have the gas station attendant pay him in cash? Would the company ever see that truck driver again?
There are over 2 million truckers on the road at any given time. Do you think they would do their jobs reliably and efficiently if they were paid in cash at the end of every delivery?
I am describing the breakdown of urban civilization when I describe the inability of truckers to be paid digitally.
Urban civilization would grind to a halt within a week.
Every city would run out of food in a week.
This assumes that there would not be a run on the supermarkets, which there would be.
People would not pay digitally; they would not pay at all.
They could not pay in cash because they don’t have very much cash.
To think that Americans in cities would sit idly by, waiting for the government to do something, when they could see the local supermarket being stripped by looters, is naive.
We live in an urban civilization.
This civilization is totally dependent on a digitally operated fractional reserve monetary system that is based entirely on promises to pay.
It ever the promises to pay cannot be fulfilled, the entire banking system will turn into the subprime mortgage crisis for all of its operations.
Under such a situation, how much money would you put in your local bank? Besides, you are paid in digits. Your employer could not pay you. The customers could not pay him. The entire division of labor would collapse within a month. I may be too optimistic here. In some cities, it would collapse within days.
How many people have the skills to survive on a self-sufficient farm? Maybe the Amish could. But the Amish could not survive the looters.
The survival movies always have roving gangs that steal everything, killing anybody they choose, kidnapping young women, and generally getting away with murder. That is exactly what would happen. Only well-armed, well-disciplined local farm communities would be able to retain the fruits of their labor. It would not be cheap to do this. They would probably be attacked several times by such gangs.
In a crisis of life and death, when the police cannot be paid, criminals see their opportunity. To imagine that we would live in a community of sweetness and light when the police cannot be paid is to imagine nonsense.
I realize there are some people who think they could survive in such a situation – like you, Max.
They had better be on their rural properties today. They had better be accepted by their neighbors today. Their neighbors had better be ready to defend themselves, overnight, when the monetary system breaks down.
A person cannot easily warn his neighbors about this threat today, because nobody is going to believe it. His neighbors would regard them as a crackpot. This is exactly the positioning an outsider trying to become an local insider wants to avoid.
So, under the conditions I have described, only a handful of people with the skills necessary to survive under such conditions will find themselves living in the kind of community that is able to defend itself at the point where the monetary system literally collapses.
You probably are not in that small group.
The cost of moving into the bayou country of Louisiana is simply too high for me even to consider. I would always be an outsider. I don’t like mosquitoes. I don’t like alligators. I don’t like living outside the modern division of labor.
Neither do you.
A good introduction to this is the first half of James Burke’s first segment of Connections. Rent it.
So, let us not be romantic naive fairy tale believers.
We should hope and pray that the monetary system continues to operate. Bad as it is, it is better than nothing.
We have to hope that the transition back to a full gold currency standard will take place within the confines of a society which has maintained the division of labor. A banking collapse would be the greatest human catastrophe since Black Plague.