Yesterday CNN’s Candy Crowley interviewed Gov. Scott Walker of Wisconsin about, among other things, the current push to increase the minimum wage. He kept saying that the minimum wage should not be “artificially increased.” The implication, obviously, is that increasing the minimum wage messes with free markets.
It is true that the minimum wage prevents employers from paying as little to workers as they would like to: nothing. Slavery is the highest state of capitalism.
What is interesting to me is that a right-winger like Gov. Walker only uses the artificiality meme to refer to an increase in the minimum wage. This implies that the minimum wage it’s self is inherent, perhaps set by God?
Of course, perhaps he actually believes that, many conservatives do. But he can’t say that because the minimum wage itself is so popular among both liberals and conservatives. Which forces him into an unfortunate, embarrassing rhetorical box.
Furthermore, interference with free-market forces have impacts on the high-end of the labor-management scale as well. For example, Gov. Walker recently and controversially pushed through a prohibition on the right of state workers to go on strike and bargain collectively. Shortly this is also an artificial interference with the natural state of affairs. Even in a totally free-market, anarchistic economy, workers have the ability and the right to withhold their labor in order to pressure their employers for higher wages and better working conditions.
In other words, “artificiality” only applies to upward pressure on wages for the 99%.
34 Comments.
1. Ted, blog problem. Sometimes, when I log in, I get stuck in a loop. I log in, but the system doesn’t register that I’ve logged in, so I have to try to log in again, and the system doesn’t recognize that I’ve logged in, so I have to try to log in again …
2. This invokes the drone operator item as well as the artificial minimum wage item. Chomsky really is on to something; control the language and you control the debate. Example 1: you mention that the drone operator “mocks” the government’s version. Mocks is a laden word, isn’t it? It implies a sort of emotionalism, often tinged with fault. That is, the one who mocks is sometimes the one in error. I say the drone operator criticized or faulted or picked apart or ably pointed to the government version’s many lies and inaccuracies.
Example 2: The “free market.” It doesn’t exist. Sez wikipedia: “A free market is a market economy in which the forces of supply and demand are not controlled by a government or other authority.” So no government oversight of restaurants? Dairies? Slaughterhouses? Airlines? Who does the government think they are to tell me I can’t bury toxic waste in a hole in the ground, where it will leach into the water table?
We have to be careful with the words. Any talk of “free market” should always include the explanation that the concept is a fantasy. Discussions of criticism of government drone programs should throw in the phrase “murder of innocent children” or some such. One of the reason so much of the public isn’t outraged is because there’s so much media blandification of issues that should have us all shocked and outraged.
Hey, Alex – I agree we don’t have a free market, but the things you mention aren’t the reason. Market forces still apply even with government oversight … always assuming the gov’t applies said oversight evenly. e.g. All airlines have the same obligation to keep their planes in running order, so they all have the same costs to pass on to their customers.
But this article highlights one reason we don’t: wages are artificially depressed so that the top 1% can skim off more of the profits. This is a form of collusion, and it’s theoretically illegal – but just try getting it enforced.
This is missing the point. What almost no pol will admit is that the entire system is artificial. What could be more artificial than printing ‘money?’ Same as when Obama passed his “Credit Card Bill of Rights,” the rich will find a way out. In this case, out of any minimum wage increase by increasing product and service prices, which will strain workers’ pockets and force another wage increase…
The ‘collapse’ will come. But it will be the failure of the dollar that causes it, not revolution in the streets. Actually, let’s raise the minimum wage as high as possible. The sooner the dollar crashes, the better. the real free market, the real money, gold, will not be denied. We will return to the gold standard whether we think it is a choice or possible or whatever. It has always been. Fiat currencies are unsustainable. Our fate was written as soon as the bankers created the Federal Reserve a century ago…
This will be the first time the whole world falls with one currency though.
I am having the same login problem as Alex.
Ok, I’m probably the only person here who actually works in the mining industry and is actually involved with designing new gold mines. Talk to any gold miner who mines on an industrial scale and they will be the first to tell you DON’T put your money in gold. They’ve all lost lots of money in their youthful years buying gold. Gold has no inherent value. It’s nearly useless in manufacturing. As a currency its just as much a human philosophical construct as the paper currencies you deride. The only difference is the gold supply is limited. This severely hurt economies that use it because your economy can never grow beyond its gold reserve. The brilliance of paper currency is that it allow expansion only limited by human genius not by the reserves ancient super nova left us.
That last post was a little opaque. Here what I mean: assume our economy doubles its production this coming year. Suddenly we have twice as much stuff but the same amount of gold. In theory, prices should drop in half because merchants will want to sell their unsold inventory. However deflation is terrible for the economy. Humans will refuse to have their wages cut in half, so people just won’t make the extra stuff. The economy get frozen. Growth stops. As population increases everyone has to split the same gold and we all get poorly.
luckily this doesn’t have to happen because we invented paper money. The economy doubles production, government just needs to print more money, wages can stay constant, everyone keeps buying, and our economy is allowed to grow.
Agreed. Gold is just a pretty rock. It only has value if everyone agrees that it has value.
Instead of a gold standard, how about a gravel standard? Then everybody would have an above-average income. If you want a new Cadillac, no problem, just scoop up a bunch of your driveway, take it down to the dealer & pick out your new ride.
Anyone can lose money in any investment. Risk mainly comes from ignorance and yours is showing. Come back after you’ve studied your history. ALL ‘money’ without backing fails. People always wake up eventually realizing the debasing of their money and have a run on the currency back into precious metals. If gold is doesn’t have real value, why does this always happen? Inflation is built into the fiat currency system. It is designed to rob us peons. You think the economy is ‘growing,’ but things do not really go up in value consistently. Real value is more or less constant. You are looking at price increases caused by inflation. The Dow is not ahead of real inflation figures. Here’s a basic economic truth: the more dollars they print, the less each one is worth. You’ve been hoodwinked. The elite wants us to think that constant upward growth is natural and beneficial. Whether it is real estate or the stock market, the free market corrects and revalues those bubbles down. Gold is PRICED over 3x it was ten years ago because the dollar is weakening.
There are no massive deflationary or inflationary events on a classic gold standard. But on paper? Great Depression deflation–caused by the US government attempting to keep our trade surplus with Europe with low prices by keeping gold in vaults, out of circulation instead of matching it by expanding the currency supply. See, gold causes trade deficits and surpluses to balance out, and we tried to cheat it. Or the massive inflation in the 70s, courtesy of deficit spending by LBJ, and Nixon’s taking us off the gold standard entirely. Or my favorite, France printing its way out of war debt in the 1700s led to a decades long depression, and we all know what happened in France in the late 1700s.
There is no beginning to talk about, to fix our financial problems without the realization, the admission, that we need to be on the gold standard and that gold WILL revalue itself as it always has. All paper fails, gold always wins.
Oh, and Andy, one more very important fact: the Fed has increased the currency supply since the millennium many times over. Did the economy really grow that many times in these few years? You suggested we just print more money to account for ‘growth,’ right?
What about a temporal standard? Currency valued in seconds, minutes, hours, days and years.
You get “paid” 40 hours a week. Sure would make you think before you spent 1 hr. 12 minutes on a latte, wouldn’t it?
@Jack – if you want to refute my post, then you’ll have to tell me what’s wrong with the gravel standard.
Here’s a hint. Let’s say we were stranded on a desert island together, no idea when we’ll be rescued. One side’s got a grove of coconuts, bananas and oranges. The other side’s got a gold mine. I say we draw a line down the middle. Which side do you want?
@jack – re: “Come back after you’ve studied your history. ”
Good place to start: tulipomania.
I have a scenario for you, CrazyH. Let’s pretend we live in a society, and you have a choice of a few oranges or a few ounces of gold.
Fine. I’ll refute your ridiculous gravel standard as if it deserved an answer. There is a shitload of fucking gravel, and we can always come up with more. It would be like a paper currency but heavier.
I fail to see how knowing about a particular historic mania proves you know anything about gold. View history through its lens and all is clear. Yeah, people did a lot for tulips. They do a lot for paper too. Then they wise up and the bubble bursts.
When the Deutschmark failed, 25 ounces of gold could have bought an entire commercial block in downtown Berlin.
Sorry I couldn’t capture the inanity and laziness of your post with my own.
@Jack – the whiffing sound you just heard was the point going WAY over your head.
No, gold & silver do not have any intrinsic value other than some application in electronics. You keep insisting they do – yet all of your examples are of the ‘greater fool’ variety. It’s only worthwhile as an investment if you can find somebody later who will pay you more for it than you paid for it originally. That’s the exact opposite of ‘intrinsic’ – your vocabulary word for the day is ‘extrinsic’ (look it up)
Refutation of this point should be easy, even for you. All you have to do is list a few uses for gold which would justify its high price. (No, Jack – uses other than selling it to greater fools, which includes using it to back a currency.)
“Precious” metals only have value because we agree they do – same as with that piece of paper that says $’100′ on it. It’s only intrinsic value is in snorting your coke and blowing your nose afterwards, yet you can take it down to the kwik-e-mart and exchange it for a bunch of beer and chips, because Apu likewise believes in its value.
Your fascination with pretty rocks is no different than a 17th century investor’s certainty that a tulip bulb had a value far out of proportion to its intrinsic value. It worked just fine so long as everyone else thought the same way.
You said, ” Let’s pretend we live in a society, and you have a choice of a few oranges or a few ounces of gold.” That’s simply begging the question – you’re obviously assuming that gold is valuable in that society. Okay, I assume that I live in a society which values eating more than looking at pretty rocks, in which case I choose the oranges.
Let’s try another thought experiment. I’ll take out my magic wand, swish, flick, “expecto bullionum” & transform all the gravel in the world into gold.
If your assertion about gold’s intrinsic value is true, then everyone in the world is now a millionaire and can live a life of ease. Right?
I get that you think you’re really brilliant in deriding ‘shiny things,’ but you’ve simply demonstrated both that you are not an astute investor and are ignorant of the history of gold. Your point? That you think recognizing the value of gold is akin to tulipomania? Thanks for the chuckle. ‘Hey this one time people thought tulips were really valuable so that invalidates all of history of people valuing gold. My point just went over your head. I’m amazing!’
Your magic scenarios are pointless. In times of economic uncertainty, people turn back to precious metals. Enjoy being left behind.
Good luck maintaining your smugness years from now when you are destitute, wishing you hadn’t been so obtuse and just bought some damn gold when you had the chance. But hey, the less people buy early, the better off I’ll be.
@Jack: “…you think recognizing the value of gold is akin to tulipomania?”
:: rolls eyes ::
No, Jack – it’s that believing in the value of gold is the exact, same, thing as believing in the value of tulip bulbs. (as anyone with a fourth grade reading comprehension level could tell you from context alone, and long before now.)
You’ve been given ample opportunity to show us why you believe that shiny rocks are so valuable. Yet time and again, you’ve chosen derision over answering a direct question. That makes it pretty obvious you don’t actually have an answer (which we already knew)
Yes, people in the past believed in the magic value of shiny rocks. They also believed in magic spirits. And yes, you can still make a good living pandering to suckers who haven’t learned any better. That proves nothing more than the fact that P.T. Barnum severely underestimated the birthrate.
Now why don’t you just waddle back to the trailer park and remind aunt mommy why she stopped buying the cheap condoms?
It’s plain who is really slow here. The reason your tulip analogy is not a point at all is because tulips never had that much value and the market corrected them down. Gold and silver are vastly undervalued now and the market will correct them up. Understanding the economic power of real money has nothing to do with magic. If you don’t think gold has intrinsic value by your definition then silver certainly has. It has myriad industrial uses. Gold is more valuable because it is a dozen times rarer. It is also nice in that it does not tarnish. What you guys can’t figure out is that its value is in that it is limited, beautiful, and it keeps well. Gold doesn’t have to be any more than that. The point is that it does not matter WHY gold is valuable. It always has been unlike fucking tulips and paper. A fourth grader could understand that.
You make it sound like it was ancient superstition that precious metals are valued. The price of gold exploded in the inflation crisis at the end of the 70s by almost 25 times. Silver almost 50. But hey it’s not like the Fed is constantly running the printing presses today.
Such an inflated level of hubris, condescension, ignorance, and bile deserves no further response. I’m glad the likes of you will be left behind.
Money’s utility only exists in stable economies/societies. ALL currencies, regardless of what they are based on, are vulnerable to devaluation or becoming worthless overnight. ESPECIALLY in disaster situations. If you’re starving, all the gold in the world is useless. If you’re one of the groups Hitler’s goons are looking for, your bank account has probably been seized. That gold you have physically in your possession? That’s still yours. (Today’s Times had a story about a kung fu movie producer — died at 106 — who had the foresight to bury $4 million of gold, jewels and currency in his backyard. After the war, he was able to retrieve it all.)
Gold’s big selling point is that it can’t be counterfeited, is universally considered acceptable, easily carried, etc. You can try to fake gold, but there are straightforward tests (chemical and physical). Also, the price of gold usually fluctuates in step with a currency, so if you buy $100 of gold today (that is, about 20 loaves of bread worth), if hyper inflation hit next year, and the price of bread went up to about $1000 a loaf, that $100 of gold would probably sell for about $20,000 (that is, about 20 loaves of bread).
Most investing boils down to the same thing: you are trying to minimize risk. Risk of what? Dying cold and hungry in the bad part of town, unable to get to a doctor. When/If the collapse comes, the ones who will do the best are the ones who are in a position to SURVIVE indefinitely without the NEED for money.
After the Collapse? I suspect whoever has hidden away 50,000 rolls of toilet paper is going to be one rich bastard.
Obviously, precious metals are not the only thing worth holding onto. But almost in any collapse scenario, they would be damn useful. Until then, if you’ve got your money in bonds, savings, mutual funds, or CDs you’re getting eaten alive. Probably not even half keeping up with real inflation. Once most people realize they should’ve gotten into gold and silver when their life savings are worthless, it’ll be too late for them. Bernanke is terrified of a deflationary Great Depression again. Since we are spenders as opposed to savers, same as the 1920s, that is where we are headed. We’ll all stop spending, and then he’ll drop his dollars from copters until we finally start spending again and then that massive influx of cash will kick hyperinflation into high gear. O Dollar, we hardly knew ye.
Naturally, Walker speaks with artificial corporate persons, whose speech is money, or who’s money is speech, while calling wage negotiations with natural persons artificial.
Fortunately for him he doesn’t spend much time developing a coherent world view. If he did he would have a continuous headache and need opioids like Limbaugh.
The private space industry has plans to bring hundreds of tons of platinum and gold from asteroids to Earth.
Won’t they be surprised when the neighbors complain about them letting their gold piles drift onto their property, making a big nuisance mess.
Gold from the New World brought back to Spain caused a great crash when the value of gold crashed from so much in circulation. Gold inflation.
Can corporate leaders be so stupid? Count on it. They bought and sold the fake crashing paper derivatives, didn’t they? They still do.
CEOs aren’t really very smart. they’re only barely smarter then the dummies who think CEOs are geniuses.
Good point about the New World gold. However, bringing gold back from space? What would be the point? The purpose of the endeavor would be to make profit. If you come back from space with any significant amount of precious metals, you wouldn’t be able to sell it for anything other than a reduced price. (No one buys sno-cones in the winter.)
If the go-to-space-for-gold thing takes off (no pun intended) whatever gold is recovered will be meted out very slowly and carefully. For a similar business model, see diamonds.
Tulipomania et al.
I think we’ve conflated money, investment, speculation and the economy. These are, correctly, four separate entities.
Money: Bits of paper. It has no value. It’s an agreed upon standard, like an inch or a pound. Nothing else. Here’s a bit of paper that we will agree has a notional value of five, um, dollars. Change the printing around and it’s five, um, euros. (Magic!)
Investment: A method of using money to attempt (with a reasonable degree of probability) to obtain more money. It requires research and commonsense and some luck. Trolleys were a great investment, until special interests got rid of them all almost overnight for the oil industry. Almost all investment research leads to the same fundamental: Don’t put all your eggs in one basket.
Speculation: See investment, but remove the heavy lifting of doing any research. The people buying bitcoin right now for instance, are speculating. There is a small chance the bitcoin will increase significantly, but what’s more likely is that it has pretty much reached its stable point (or will plummet, wiping out most of its value).
The economy: The place where the exchange of money occurs.
Tulipomania? If you got in at the right point and out again at the right point (i.e., investment research), tulipomania was great.
All investment is about getting in and out at the right time. Those guys Andy mentioned that lost money in gold? Probably got in like the rest of the herd when it topped off in the eighties.
As far as putting all your eggs in one basket, true diversification happens across investment categories. So the regular guy has stocks, bonds, and mutual funds. He thinks he’s diversified, but it’s all paper and when the market crashes, he crashes. Diversification means across investment classes. Real estate, commodities, private businesses. On top of that, the most successful investors FOCUS their money on certain bets. Oh, and the stock market will probably crash when boomers start pulling from it for their retirement. Too many people will be selling at the same time and not enough buying. It’s pretty simple.
I like your post, but you’ve conflated money and currency. Money has actual intrinsic value: gold and silver. Money can be used as currency, but currency is not necessarily money just because regular people call it that and think of it that way. Currency must keep moving like a current. We use it to purchase something that has value or the system locks up. I don’t think you guys appreciate what a bizarre time we live in with the currency being completely free-floating worldwide courtesy of Nixon. Usually gold is anchored to some state currency but no more. At least Gerald Ford gave us back the legal right to own gold, which FDR stole, which is exactly what he did. Come congressmen of the time called it just that. FDR stole the American people’s gold and then robbed them of its value by manipulating the price and kept us from legally owning it for decades. Swell guy.
Tulipomania. People finally realized something was very wrong and got out of tulips and the market corrected their price down to their actual value of almost nothing. Same as any other mania/bubble. Smart guys get out while its high and everyone still wants in because other asset classes are cheap by comparison and can only rise afterward. Wealth isn’t destroyed, only transferred.
Hey, Alex – Nice encapsulation, there. I would add ‘goods and services’ to your definition of ‘economy.’ though. An economy can exist independent of currency (as I suspect you realize)
I suspect you got my point better than the slower members of our little clique.
Tulipomania was a bubble, the price based only on other speculators driving the perceived value up. Then somebody said, “It’s just a flower for fuck’s sake!” and the prices plummeted. Okay, I’m glossing over details, but the economy did collapse when the bubble burst.
The dollar: “Then somebody said, ‘It’s just [paper] for fuck’s sake!'”
It’s always nice to have my points proved for me.
uhhh … Jack?
We’ve never disagreed about the fact that a dollar is only a piece of paper. Alex & I have stipulated that several times.
At least try to keep up, m’kay?
The reason gold was historically used as money is because it is hard to counterfeit. This is really the only requirement for money, it has to be hard to counterfeit. Gold itself has no more intrinsic value than say gravel as some humorously posted earlier. Actually gravel has a lot of intrinsic value if you’re pouring concrete, gold has some value for jewelry and stereo plugs I guess.
anyone this is beside the point. Money is nothing more than an efficient medium of exchange. We could all just barter for goods directly but this would become very inefficient. Btw: historically it is absolutely not true that gold was distilled wealth everywhere. American Indians for example had shells and other things they used to exchange goods. The Aztecs and Incas had little notion of gold as distilled wealth. They’d probably would have been a lot better off if they’d left the stuff in the ground instead of using it for decoration.
anyway I absolutely stand by my earlier comments about the growing economy. Since the 1970s the US economy has exploded. Productivity rises every year. The amount of goods we produce, which do have intrinsic value unlike gold in vaults, is vastly more than in 1970 and grows every year. The problem is, the corporations and CEO are capturing all the extra wealth we’re creating and keeping it for themselves by holding down our wages. They’re also using automation to eliminate workers and outsourcing the most labor intensive low value adding activities. None of this has anything to do with currency. Its all about tax structure and union busting.
CrazyH, if you really understand that then why do you mock gold and silver? It is an inverse relationship. If the currency is not valued then precious metals will be. It is stupid simple. Talk about ‘keeping up’ and points ‘flying’ over one’s head.
Andy, corporations are not keeping wages down. They are keeping them stagnant. Regular people lose because of inflation, which would not happen on a gold standard. You are again confusing fiat currency (paper issued without asset backing) and money (gold and silver). This currency system only benefits the powerful as well it should because they made it. They legally counterfeit and rob us all. I repeat that no economic issue can be understood without the context of central banking policy of ‘money’ printing. There are many more reasons to use gold other than it being hard to counterfeit. Good lord. The economy is not growing. We are experiencing a shadow or hidden crash. You can’t see it because you only measure by inflating dollar prices. On top of that every government statistic is manipulated from CPI to unemployment. It is all done to mask the failure of the dollar because if the public found out there would be a run on it and obviously the powers that be like this system the way it is. They are depressing the gold supply. They think they are brilliant economic masters but a reckoning is at hand.
Ok, I hope I’m hitting the correct replay button. This thread manager is confusing!
Jack, I think you have it exactly backwards. Moderate inflation– around 4% per year (which is inline with what we have in the US) is good for the middle class and bad for the wealthy. The reason is that the middle class has a lot of debt particularly in the housing market. Inflation will reduce the burden of that debt for those smart enough to lock in a 30 year fixed rate in the last few years. This will help a lot of Americans and hurt a lot of banks and independently wealthy people. If your pops gave you 100 mil and you never want to work in your life than you sure as hell don’t want the government devaluing that 100 mil. If you’ve owe a bank 200K for your house or you have 60K of student loans and your interest rate is fixed, well, devaluing the money doesn’t sound so bad. I suspect this is why Republicans are so freaked out by government debt and “qualitative easing”. They want to keep their millions and they want the middle class to pay the bankers. Of course from an economic prospective, inflation helps business too. It lets your employer give you a stealthy pay cut. Good for business, not so good if you have a job, but a lot better than being out of work which is what the deflationary gold standard would do. I suspect the wealthy don’t care much about the job creating effects of inflation. That whole job creators thing is total BS. Most super rich got that way by inheriting their money.
Is the economy growing? You bet it is! Just look at all the stuff the typical American has. Real stuff with unquestionable intrinsic value. How many color TVs did people have in 1970s? Maybe 1 if you were rich. Today a good percentage of the population carries a color TV in their pocket, has one in the living room, another in the bedroom, and a few in their office. That’s just one example, but if you look at just about any product, you can’t deny that we have a whole lot more of that product today then we did at the time of the Gold standard. Fiat currency is what makes that possible. Without fiat currency, the amount of stuff we can have is directly tied to how much gold we can dig up out of the ground. As population grows, we need an expanding money base otherwise we all get poorer as the same pie is divided into smaller and smaller pieces.
The most powerful bankers in the world got together and hatched the Federal Reserve. The government does not own it. In fact, it borrows the dollars at interest, meaning the debt can never be repaid because to pay off the interest would require more borrowing. It is always the elites, the government that begins a fiat system because it allows them to invent money. The allure of inventing currency has proven time and again too great to resist. They create inflation. Of course it is to their benefit. Do you think it is a coincidence that the middle class has been shrinking since the 70s when we went off the gold standard?!
I know you’re smarter than this, Andy. A 100 millionaire doesn’t have it all in cash! He owns things that provide income and appreciate over time ahead of inflation. C’mon, man. Here’s the problem with thinking we are limited by the gold supply. Gold revalues itself. Each ounce would just be worth more. It would buy more stuff.
Again, 4% is not the true inflation figure. When the entire currency supply is multiplied many times over as it has been…does that equal 4% a year? Then through the magic of fractional reserve banking the supply is inflated even more. When you get a loan, the currency DID NOT EXIST. The loan is entered onto the books when you sign. Banks lend money they don’t have. Do you honestly think that banks would loan money if it were a losing bet?! Forget your mortgage–you’re paying higher energy and food prices yearly with probably a stagnant salary. No let’s talk about your mortgage. If the only thing you care about is the interest rate, I have news for you: the bank knows you’re a sucker. Read the fine print. You’ll be paying FAR more than that. And when the inflated real estate bubble burst? Ordinary Americans found their homes underwater. Inflation is the greatest challenge a regular American faces. Rich people? They just raise the prices. What do they care?
It won’t even take a country demanding dollars for the T-bonds they own. Our trade partners simply have to STOP BUYING them for the dollar to tank. That’s it. ALL the world’s central banks are in on manipulating the currency and economy. Long term trade deficits are not allowed by market forces. All of these policies are attempts to cheat the market. It is an artificial system, and the longer it stands, the greater the crash will be.
There are many ways in which gold and especially silver are having their prices depressed by banks. Far too many ways to list here.
The market cannot be denied forever. Gold will force us back onto its standard. It’s price will again account for all the currency.
The point about color TVs. Are they REALLY a sign of wealth? No. They’re a sign of an increase in the standard of living perhaps, but even that’s negotiable. Without TV, what did people do? Holy hell, they read books and magazines, they read the paper, they built ships in bottles. They played board games and cards. Etc. So now we all sit like slugs watching six hours of crap.
The problem with the economies isn’t the gold standard or lack of one. We’re still not all on the same page on this one. Ahem. The issue of intrinsic vs. extrinsic value is a SUBJECTIVE one. John D. MacDonald put it well in one of his books: a man who’s dying of thirst values a glass of water differently than a man whose house is on fire. In the first case, the glass of water has great value to the man. In the second, none because a single glass of water won’t put out the fire.
Money, however, (printed bits of paper) is OBJECTIVE. It’s got a single, unified value. $20 is $20. Why? Because money is an abstraction that has been reified as paper and base metal. There are lots and lots of things that can step in as a stop-gap: chickens, hides, gold, silver, turquoise, shells, etc., but the reason money is used is because it’s centrally regulated. If we went to a chicken-based economy, EVERYONE would be raising chickens. And what would happen? The purchasing power of a chicken would plummet.
I am suspect not so much of monetary policy (because most people accept money as a faith-based issue, very few actually debate or consider the issues of QE or deflation etc.) but of corporate behavior abetted by the Internet. That’s where the collapse will come from. We’re seeing signs of it already.
We have a Black Death of job destruction occurring. Jobs disappear all the time. And jobs are created. But the activity is no longer lateral or upward. It’s downward. Has to be. Why? Because we have a 14% U-6 unemployment rate. These people aren’t out of work because they choose to be. Office workers can’t start picking fruit. Nor can they hope to gain entry to those few union-protected jobs that still exist (fun fact: the countries with the highest standard of living are all massively unionized. Look at northern Europe).
At some point, there will be no more wiggle room. Target stay in business by having a steady stream of people buying cheap plastic crap. How much (or rather, how little) does Target’s revenue per customer have to drop to wipe out their business model?
Amazon.com? How many people do they need buying something every day, to keep in business?
The 1%, as Amazon, Target, Apple, etc. will learn, simply don’t buy enough to keep them afloat. Nor do they pay enough in taxes to pay for fire, police, roads, mail, libraries, water, etc. Those gated communities the rich will retreat to? Oh, it will take a while, but eventually, they’ll run out of supplies. Most rabble, you see, are uneducated. But when the middle class goes under, it will be a rabble with the highest literacy rate in history. They will know how to find the blueprints showing how to shut off the water. They will know how to find the hidden exits. They will be able to scrounge up acetylene torches to cut through gate bars.
I hope I’m there to see it all.
I hope you’re here too. We’re not that far off, you and I, Alex.
I am definitely not comforted by the fact that the most powerful people in the world control the currency and have the printing presses in overdrive. That’s not responsible central regulation. Precious metals don’t need to be centrally regulated at all because they cannot be printed at will.
The other main problem with this system is that exact fact that it IS faith-based. The faith will crack, and many events can trigger it, then billions will suffer.
As for chickens, well, I’d say the bigger problem with them is that they’re alive so they cost money to maintain, are dirty, and have to be contained. It is not without reason that many things have been used as currency in history, but none so much and so consistently as gold and silver.
Where’s exkiodexian when I need him to help me defend capitalism and real free markets? Ha. I guess I’m getting a taste of what it’s like to be him on here. Well, for all I know he’d be disagreeing with something I’ve said.