Big response, sorry 'bout that!
I've already considered fiat money reforms like the Monetary Reform Act, a long time ago, and rejected them. I'm happy to have my opinion challenged, which is why I asked you sincerely why specifically I should read Zarlenga, and you responded with a litany of name calling
and insults. So I'll ask you again, what makes Zarlenga's ideas special?
Since you asked with sincerity, and since merely stating that he seriously challenges Austrian and Neoclassical ideas on what and how money is and works is not enough, let me give a survey of why I think Zarlenga's ideas are so interesting.
His main work is "The Lost Science of Money". The title is longer than that, but let's just call it by an acronym for now, TLSM. (btw, I am reading Murray Rothbard's main work "Man, Economy, and State", should be another long haul of a read).
Chap. 1 of TLSM goes over the origins of money. It makes a strong case that money originated due to religious practices related to temple sacrifice.
Chap. 2 goes over Rome's bronze nomisma money system. He goes over how Lycurgus revolutionized the money system of the ancient world using bronze coins (among other things). How Rome used nomisma instead of gold (which was locked away in Eastern Temples) and grew from a small village to a world
power because of it. The chapter goes into the basic history of all the different forms of money used by Rome, including Gold.
Huh, funny how the last money Rome used before it fell into a dictatorship of the Caesars was... Gold.
Chap. 3 Covers a monetary view of Rome's decline. Too many things to cover about this chapter. It is anything but kind to gold as money, I can assure you of that.
Chap. 4 Goes into post Roman systems of money that existed on Continental Europe. Charlemagne is covered in some depth, both the good and the bad. Venice and the recurring East/West silver to gold ratio scheme are covered (on one side silver to gold is valued either higher or lower, then merchants
buy up one of the two where it is cheaper, travel to where it is more expensive and repeat over and over again).
I could go on like this for a while, perhaps though I should go to a section of the book that you will really not like.
Chap. 24 "Proposals for U.S. Monetary Reform", the section titled
'The Austrian School - "A leap backward"' and the section after it,
'Ayn Rand and the libertarian free market theology'.
Well worth the read. Here is a nice quote: "Dr. Von Mises denies not once but several times that his theories can ever be disproved by facts. This point of view represents a leap backward to Platonic Idealism or one of its offspring in various disguises." -- Arthur C. Harwood.
You admitted ignorance of fundamental methods of central banking, their most regressive, punitive,
and kleptocratic activities.
I admited ignorance (whether being 'fundamental' or not is another story) of exactly how QE works in practice. I did not admit ignorance, nor do I condone, many of the other ways in which the current banking system is a rippoff, of which I am well aware of, both now and in the past.
QE/ZIRP is something not done very often, so it amounts to one of their many methods that is regressive, but one that is much less important to understand then their average every day kind of swindles. In fact, to understand QE/ZIRP and the implications of what those actions mean, one must first understand normal FRB. QE/ZIRP is not fundamental to FRB, it is one of those last ditch efforts to prop up a failing FRB system.
You have overstated your case. Buh-bye!
Activities that are utterly impossible without the existence of fiat money,
Opinion, plus,
ALL FORMS OF MONEY ARE FIAT!
at the same time you slandered goldbugs, who advocate a form of money which directly prevents this.
Slander, hmmm, well, I would have to be giving out false information with malicious intent. I have neither malicious intent nor is the information I have been putting out, to the best of my knowledge, inaccurate. It would be more of a slander for me to say that I think the Goldbug position is awesome,
because then at least I would be lying. All the same, since I did not slander, I hope you won't mind if I state the following.
I think the intentions of many a goldbug are for the betterment of society. I think your intentions are of this nature too. I have no doubts about this. I think you have read some authors who did not look at history and thought they could reason through everything, as if by magic using only deductive logic without needing inductive reasoning. I think the Austrian School is from the same intellectual heritage as the Neoclassical school, which they so revile.
I think this all would be funny if the people in the District of Criminals did not use many of your positions as a foil so that when they want no government oversite (e.g. of financial dealings), they use Libertarian 'ideas', but when they want to feed at the trough of government largesse, they use socialist 'ideas'. The school you belong to amounts to nothing more than a way to create talking points to be desiminated on talk radio and MSNBC. How sad.
You might want to check the definition of the words you use before you use them. Even more so if they are of an accusatory nature. The best fit would be that I tried to discredit goldbugs. I will continue to do so and without apologies, just as you try to discredit my positions. It is called debating.
If you don't understand something so basic, then your anti-gold position has little credibility.
Wow, what circular logic you have. If I don't agree that the only way to do things is the goldbug way, then I do not have any credibility in having an anti-goldbug position. You should try out for the star chamber, or be one of the Judges in a Kafkaesque courtroom. Your skills would be put to good use there.
Please explain how the checks and balances against the abuse of seigniorage would work under yours or Zarlenga's system, and how it would contradict the historical reality that all fiat currencies have ended up in the dustbin of history in fits of war and economic chaos.
Sure thing!
Let me explain my system, if you are really curious about Zarlenga's monetary reform ideas, you should be able to look him up on your own. I think you said you have and rejected them, so, in point of fact, that would probably be a waste of time.
My own system has some checks and ballances (just like the US Constitution does, "A republic if you can keep it." or some such quote). Banks would originate money through loans. The amount owed would be more than the amount of money created (use the Fractional Reserve too, but set top interest rates and reserve ratios in stone somewhere, never to be altered, ever!).
To ballance the debt equation, I would have the government keep track of the amount of interest paid to banks and have it as a requirement that the government spend the same amount of money into existence (no debt attached, and only taxes ever allowed on monopolies and land rents). To ballance the creation of this money I would have governments tax this amount out of existence so that pools of money are not created. In order that banks do not collude to deny loans or originate too many irresponsibly I have two checks.
In order that banks do not collude to deny loans en masse (as happened during the great deppresion), I would have government banks that work on the Pennsylvania system of banking. These government banks would always play by the same rules no matter what the economy is doing.
In order for banks to not engage in control fraud (which as I understand it is the practice of making irresponsible loans quickly in order to make a quick buck while hiding loses using accounting tricks), I would have all loans mandatorily covered by some set aside quantity of money. Every loan would have to have minimum default conditions.
If a loan is in default, the loan principal that is left unpaid comes out of the set aside money (maybe call it reserves if you want) by the government automatically. It would then be up to the banks to try and seek redress for unpaid loans in the courts with the government otherwise washing its hands of the whole thing. Since bankers could loose bank money if a loan is not repaid, then hopefully only responsible loans would be originated.
Other loan practices would get modernized. Banks could not charge for overdrafts for instance. They know damn well how much money is in an account. If the account does not have the money, the check should simply not be completed. Other charges would be made illegal, whichever ones are the most onerous and regressive (such as psionl0's fav of the early payment charge), would also be made illegal. Banks would be required to charge flat rates, period. If a borrower is late, the amount that is late though can be charged in the conventional manner of paying off interest first.
That is about it. I am sure I have not thought of everything, but you do what you can. Zero-sum money.
The choice to save in gold and silver is a cynical endictment of human nature, a resounding vote of no confidence in politicians and banksters alike. Trust in men to not abuse the vast power of seigniorage, or in political and legal systems to ostensibly prevent this is the epitome of faith-based religiosity.
Cynical is right; cynical of the rule of law; cynical of the idea of functioning society; most importantly though, cynical of the idea of the rightful excercise of economic justice. There is no magical cure to creating equitable economic systems, it is a hard slog all the way up a steep hill.
Every time an advance is made toward money that works for the people, there are forces that work very hard to return them to slavery to gold or debt inducing currency. Sometimes the leaders of a nation come upon the ideas of the greek money theoreticians and their later commentators. They enact these systems and they work wonders. Lincoln using the Greenbacks, winning the war; Hitler creating his form of money and rebuilding Germany when everyone else was going through a depression; The Colonists using their scrip and having a high employment rate. I would guess these examples are either foreign to you or have been cynically perverted to show they did not work, when in actuallity they did.
Hitler got defeated in war (thank goodness), Lincoln got assasinated by a cabal of racist Knights of the Golden Circle (an antecedant form of the KKK) and most likely involving England in some way, and the Colonists winning the war forgot how good scrip was because during the war it was counterfeited
by the British in high numbers. There are other examples. The British themselves had an excellent form of money in their tally sticks (lasted quite a while and your grandma would have loved it!).
I could go on to talk about the example of Rome's money, but I am sure you already must be frothing at the mouth.
Because the price of entrusting men to manipulate the general price level is neither desirable, nor cost-beneficial for society at large. Ben Bernanke's central planning has failed everyone but the super-rich, but its not really his failure, it's ours for accepting the system that enabled him under your false premise.
Ah, in one sense we are in agreement on this. That is why I go more for the Pennsylvania banking model then the Greenbacker model. I have no problem with some central authority that clears checks (I am not sure if you would disagree with that either), but I think the price of things should be set by
a well regulated market. The 'well' in there means not too much and not too little. Balance, Ma'at, harmony, etc. is the goal.
No regulation and you get criminals running the show. Too much regulation and you have average people being gangsterized by government bureaucrats out to make a buck. The current system has eggregious examples of both. Mostly, no, or too little regulation in financial markets (you know the SEC deletes its files of possible wrongdoing!) while gangster government happens on farms and small businesses.
The problem with Gold is it will lead to a moribund economy. It has happened before, and it will happen again. Those who hold the gold will get to make the laws. They will concentrate gold in fewer and fewer hands until the economy comes to a crawl. The way out of this morasse is not gold and it is not central banking.
Sounds reasonable. Why do we need to entrust instutional counterfeiters then?
It is hillarious you bring up counterfeiting and the institution of banking. I myself made a similar sort of analogy and had a million people respond negatively. I tried to explain how a counterfeiter who made money and lent it out, with some additional caveats, would be no different than a banker in the current system in a purely mechanical sense.
I guess I should say that the institutions as they exist now are not counterfeiters in the direct sense of the word, as to be a counterfeiter they would have to be creating an illegitimate copy of something, say a particular kind of money. By definition alone one could consider that impossible.
When the Bank of England says this piece of paper is a Bank of England note * tada * it is a Bank of England note.
Back to your question though. I put my trust in the lessons of history. History shows that the best monetary systems that have existed in the past were of the Greenbacker kind or the Pennsylvania Banking System kind.
So you distrust bankers, but you trust politicians implicitly, or at least the system of political accountability. I'm beginning to get the picture. I don't share your trust. I would point out that "spending money and taxing it back into nothing" is nonsensical. When the government emits fiat money, it consumes scarce resources from the market. When the government expropriates money, it consumes scarce resources from the market. When it does both, its a tax, each time, unless you're implying that conventional tax revenues should get destroyed, which would make no sense.
I trust the lessons of history if properly understood. Balance is that ever elusive goal. A money system might be working very well for a certain class of people, and then for political, but not economic reasons, it might just go away, to be replaced by something else. Colonial Scrip worked very well for the average person in the colonies. It did not work so well for the oligarchy in England.
Spending money and taxing it back to nothing is nonsensical huh? Let me tell you why I think it is a perfectly sensible option. The reason is simple, the only legitimate function of money is to allow for the efficient exchange of goods and services (perhaps also as savings for later years too). If you have money that comes into existence for a while (costing as little as is possible, oops, that gets rid of gold!), serves that purpose, and then goes out of existence. Where is the problem?
Scarce resources from the market... wow, that is a doozy. There are resources put forward to creating money, I do not think I could argue against that. Right now the FIRE sector does take up too much of the economy, but that does not mean it would have to do so in every system. The term scarce in there is only for effect. Freaking economists love to say scarcity because then they go out and make things scarce that really are not to increase profits. Nice little scam they have going (diamonds are a good example of this btw).
Money is like the oil in your car. It would be nice if your car could run without oil, but it can not. The gears would all grind to a halt. What do you need to make trade? You need people to do work (labor), often you need machines to do some kind of job (capital), some raw resource to do work on (land), and very importantly, a method of agreement about how to trade (money).
I advocate taxing monopolies and land rents, both of which amount to taxing the cream off the top of the economy, the profits that are made only through owning something and not made by working or using something. Then I even want to redistribute it back into the populace at large, but I am accused of
gross mismanagement for squandering precious scarce resources. ROFL.
Making heterogenous people agree about things is what government is good for, lest we devolve into some brutish state of subsistence living. If the cost of this is a little overhead, I am well prepared to take it. If that cost becomes onerous though, then I am going to seek to change it so that it is not. That is all I am really about when it comes to this money question.
I'll take crazy. It's paid well this decade.
Yes, unfortunately this is true. All the crazy banksters like Greenspan who worshiped at the feet of Ayn Rand would agree with you.
All the best to you all!
