Saddens me that legitimate discussion degraded into United States bashing.
"You" "You" "You" (directed toward Americans)
Where is the WE in the world?
[quote=hewittr]
However, there is no need to sincerely hope that Capitalism falls - it’s unsustainable, it’s reached it’s limits to growth in it’s most essential comodity (oil) and is already falling. Capitalism is in terminal decline (or collapse) cannot be revived in anything like it’s current form.
Oh my gosh! Lionelorford doesn’t know the difference between socialism and capitalsm, so he’s blaming the collapse of socialism on capitalism. Central banking is right out of Marx’s Communist Manifesto. We are not living under a capitalist system by any means. The book should be titled "Peak Socialsm."
What a great irony. The former socialist nations of Asia are growing wealthy through capitalism and the former capitalist nations in the West are sinking into socialist poverty.
[/quote]
I think our country engages in acts of both capitalism and socialism. I don’t think this nation has ever experienced one or the other exclusively. This nation has aspects of so many ideals, and to identify this country by one particular theory would be a vast mistake. One of the reasons why this country is having such a hard time finding a solution is because they cannot identify the problem(s). To be able to identify the problems requires one to identify from what system did the problem originate? One system? Systems within systems? Systems within systems of systems? They have their hands full in Washington.
Hello Again:
Just to clarify, I wasn’t advocating WW3 or war. Or who would win/lose.
I hate wars. We went to war in Vietnam on faulty intelligence (read in James Bandofrd (?sp) Body of Secrets). Irqaq - more faulty intelligence, no WMD’s other than the ones Dony boy Rumsfield sold them in the 70-80s in the days where he used to hug Sadam.
I was just trying to bring to light that 53% of our budget/taxes/desretionary spendimg goes to "defense" spending. If we can’t print money out of thin air I’m thinking we are going to be down to one general and one F-18.
In the news I see things indicating that some countries might take advantage of this (i.e. another Cuban Miscle crisis sort of a tension) here as Russia flexes its muscle closer to the US.
Personally, I can’t imagine the powers that be allowing any standard other then print baby print to stand in the way of a "defense" budget. http://perotcharts.com/issues/ slide 12-16 (hat tip to, forgot who kindly posted this, but great watch indeed. By the way, Perot’s real estate comp is in financial trouble).
I hope that clarifies my point of view, I wish we had a gold system or anything that isn’t a print baby print system - but until there is "better" diplomacy (read any semblance of diplomacy, in other words when Condi and W retire thie a$$ kicking boots) I just don’t see anything like this (a gold standard) happening.
Just my 2 cents…
Damnthematrix:
It is true that our system has been built on debt. But true capitalism does NOT require deeper and deeper overall debt to exist. Capitalism, in its purest form, works out of savings (yes, we don’t really do much of that now). It means that someone, somewhere, produces more than they consume and therefore has saved up capital that they are willing to lend out to someone to finance a project. Today, there is no savings because, unfortunately, there doesn’t absolutely need to be. The Federal Reserve will just print up all the money and more that we could ever want…
LaFanze,
Thankyou for your considered response. I will reiterate a major point of my "granular and specific" work (thanks for the praise):
"Capitalism is a monetary system in which all money is created as interest bearing bank debt, through a system known as Fractional Reserve Banking."
This is the very nub of the issue. Capitalism is a system whereby money is created by private banks as interest bearing debt, rather than by the government. This is like saying that the USA is a country in North America bounded by Canada to the north and Mexico to the south. Yes - you can make nit picking exceptions like saying “what about Hawaii and Sarah Palin Land?” but this is for all intents and purposes, it’s true. You could also validly say that America is far more than a country as it’s worldwide influence is all pervading. The same is true of Capitalism.
StudentOfJefferson – I’m very glad that you confront me on this point, but Capitalism and Fractional Reserve Banking are the same beast. One cannot exist without the other. The very name Capitalism means the accumulation of capital – otherwise known as money. This is no “falsehood”.
Most people (particularly Americans) believe that Capitalism and Free Enterprise are the same thing. Nothing could be further from the truth. Capitalism subverts free enterprise by concentrating all enterprise into the hands of the rich elite who hold the capital. I thoroughly support free enterprise and rigorously oppose Capitalism.
So thanks respondents, apart from this debate and other minor issues like the difference between hope and optimism, there has been little substantive criticism of my work.
BTW - the election of Barak Obama has restored my hope that America can once again be a force for positive change in the world rather than systematically destroying it. The situation under Bush has been, for the rest of the world, truly hopeless. All through this terrible era, I have lost hope that America could revive its democracy, but I have never lost my optimism. I was wrong in losing that hope. LaFanze, I will reconsider this wording because you have pointed out the possibility of being misunderstood.
This will probably be my last post to this string, so please respond to me via the contact on my website if you have anything important criticism to add.
Warm Regards to all,
Lionel
lionelorford: When Bush says we have "free markets" and "capitalism" it is no more true than when he says we are invading Iraq to retain liberty at home. It’s doublespeak from an evil serpent of a President. But don’t let his misinformation campaign fool you.
I don’t know about you, but I don’t have a mortgage or a car payment. I actually save money and that’s how I buy things. Capitalism does not require fiat fractional reserve money. It requires savings that can then be loaned out.
Ok, now you have me pondering capitalism without a central bank. The premise that a central bank/fiat money is required for an INCREASE in capital makes sense to me on the surface. If a society and it’s economy are to grow, then an increasing suppy of capital seems to be necessary.
How does overall capital increase without a central bank? Is there no currency, only barter? Competing currencies? Say, gold, bananas and seeds?
Nice, thought provoking stuff here.
MarkM:
As Chris points out, any currency system imposes its own biases on society. A commodity based currency would largely base wealth on the amount of a commodity you controlled.
If the real economy was growing and producing more goods and services, miners would tend to be stimulated to mine for more gold. Likewise, if the economy was going into a contraction, with fewer goods and services, there would be less of a need to increase the money and miners would tend to abandon mines and simply meet their basic needs (food, etc.) The point is that gold is a luxury that serves very little practical purpose to society. As a result, people only tend to be capable of mining for more gold when the economy is strong enough to support the miners. If the economy weakens, the mines tend to close.
It would be practically difficult to base a currency on a commodity that is doomed to depletion (such as oil) because eventually the amount of currency would shrink to extremely low levels that would probably not serve society’s needs. Additionally, oil is harder to transport than gold.
While imperfect, a gold standard would be fairly stable because (unlike oil) the gold supply does not change much at all each year. Additionally, gold is not a basic human need and humans would only tend to acquire it once they had met their needs (food, shelter, etc.) and had a surplus. Gold does not degrade with time as it is highly resistant to corrosion.
The simple bottom line, though, is that the supply of gold is largely market driven. Thus, the power is in the hands of the people and the market. This makes the money supply less prone to manipulation at the hands of the elite banksters.
Again, gold is not perfect, but I contend that it works far better than paper fiat. And we can all rest assured that gold has been highly valued since the days of King Tut in Egypt. I could be wrong, but I don’t know of any fiat system that has lasted more than 50 years. With gold, goes economic freedom. With fiat, the money supply invites corruption.
For the definitive defense of a gold standard and its necessity for liberty and freedom, read this essay by Alan Greenspan, written many years ago, before his apparent corruption: here
Mike
Lionel says:"Capitalism is a monetary system in which all money is created as interest bearing bank debt, through a system known as Fractional Reserve Banking."
Not even close.Capital comes from savings and profits, not from manufactured money.
It makes perfect sense when you think about it. Imagine your ship sank and you landed on a deserted island. Your first priority would be to find food and water. Once you build up a surplus, that gives you time to say find flint to make cutting tools. When your surplus of food and water runs out, you forage for another surplus. Then you have time to build cutting tools. This process repeated countless times is how wealth is created. The lesson is: one must save to produce. One cannot consume more than he produces.
Lionelford’s definition creates a fraud whereby the federal government can spend without the constraint of taxes. It is the root cause of inflation and unsustainable as we are now learning. If we tried something like that it would be called counterfeiting and check kiting. Fractional Reserve Banking is a euphemism for embezzling, where your bank takes your deposits, your property, and loans them out to other parties. This builds up a debt pyramid that is destined to collapse. Living standards have to drop to get in balance with the massive increase in debt and the consumption of previous wealth.
Another way of describing Fractional Reserve Banking is to imagine you are the treasurer of your church and you have a gambling habit. So you take money out of the church treasury with the intention of paying it back with your winnings. It’s not hard to figure out how that will turn out.
BTW - the election of Barak Obama has restored my hope that America can once again be a force for positive change in the world rather than systematically destroying it.
I’ll give Lionel one year before his hope turns into despair. Obama is better suited to be a televangelist.
Capitalism…fractional reserve banking…socialism…free marketism. These are all ideological models and most of you argue your points from a specific perspective. All these perspectives could easily point to components and mechanisms that are this, that, or the other…the current system is an amalgamation of various perspectives…the only constant is that wealth (especially cross-generational) equals power which equals to political influence and control. The utopianism of free marketites is as absurd as the utopianism of socialists. They, or any other utopian ideology, depends upon assumptions of underlying human behavior…"this would work if everyone just behaved like…". In the end, any societal stucture, markets included, are human creations…they don’t exist outside of human behavior. And I will repeat something I have stated in other discussions on this site…we will always end up with a complex, entangled, and rigged system no matter what. People will always game ANY system and this will always be those that accumulate wealth. The best bet is to preserve democracy above all and this is not acheived through any one economic ideology.
hewittr: Thank you, you made the savings case better than I did. You are right on.
ajparrillo: I understand your point and actually the Founding Fathers realized that a Republic form of government often doesn’t last very long because somebody does come along and game the system. But a democratic republic, with free markets, is the ideal we should be striving for. Do you really want to be enslaved? I think it is safe to say that the Republic and the free markets haven’t failed, but it is time that we actually return to them, because we have strayed far from that path.
It isn’t the free markets or the republic that is flawed, it is frankly the morality and integrity of the people in the system. It’s been said that you get the form of government (or I can extend this to be monetary/economic structure) you deserve.
For the people who think the banksters really are acting in everyone’s interests, there isn’t too much I can say, other than "open your eyes." But for everyone else, the time now is to take a stand and raise some awareness. We are losing our economic and personal freedoms every minute as the banksters get more and more power.
"Yes, we did create the near perfect republic. But will they keep it? Or will they, in the enjoyment of the plenty, lose the memory of freedom? Material abundance without character is the path of destruction." — Thomas Jefferson
Mike
AJ
I just explained the logical sequence that must occur in a real capitalist economy: savings, production and wealth. No other sequence is workable and you call that ideological?
Whether a society follows that model doesn’t preclude one from having a viable theory, a thinking model from which to understand how a market economy works and to be able to recognize why they don’t work.
If one were an auto mechanic, he would not know how to repair a car unless he knew cars work. To understand how market economies work, does not mean one should be frustrated because people don’t follow the model. To an objective thinker, an understanding of markets presents investment opportunities out of human failure.
I see a lot of ideologues on this site. The show it by their self-righteousness and frustration about how people should behave. An objective thinker tries to understand how people do behave, so he can navigate his life to some positve outcome.
I hope I cleared that up.
Funny how some Americans get so touchy when their country gets criticised… suddenly becomes "America Bashing". Call it what you like, I spent twelve months in the US and quite liked it, but I wouldn’t live there. Especially NOW! That’s my opinion, and there’s no way you’ll change it. IMHO, when I read about "America Bashing", I detect an American with the guilts… 
caroline_culbert, ajparrillo, rvwainscott: All good input to digest and consider and keep in perspective.
hewittr and StudentOfJefferson: Thanks for the time you’ve taken to gather and communicate your thoughts.
I really appreciate the discussion on these forums: the passion with which you all speak, and the time you take to put it together.
PS: I work with a guy who’s last name actually is “Bond”…if he were to become president, maybe we could see the emergence of Bond Bonds…If pronounced carefully, America may be able to trick China into letting it pay its debt in chocolate…this will work…
StudentOfJefferson (Mike),
I think that you probably know enough about Jefferson and should become more a student of Martenson (Chris). I would have thought that everyone responding on this site would thoroughly understand the content of the Crash Course, but you do not get it – yet. Obviously, you are thinking about these issues, which means that you are on the path to uncovering the simplistic and erroneous cultural myths regarding Capitalism that we have all grown up with.
“I actually save money and that’s how I buy things. Capitalism does not require fiat fractional reserve money. It requires savings that can then be loaned out.” Sorry Mike – just flat wrong all counts.
The “money” you save is fiat money, of which every last penny was created as bank debt. Even if you say – “But I’m clever – I have my money in gold” – you still have to buy and sell that gold in fiat money, which is a requirement of the law – The Federal Reserve Act, if you are an American.
Capitalism is 100% dependent on fractional reserve money (money created as bank debt). As I have previously emphasised - Fractional Reserve Banking (FRB) is the primary defining characteristic of Capitalism. FRB can expand money supply without limit – it most certainly does not “require savings that can then be loaned out”.
Capitalism arose out of the need to expand money supply, largely in order to facilitate the expansion of business opportunities created by the colonisation of the New World. Strong room keepers, many of them jews in the early days, caught on to the idea that you could lend out more paper money than you actually held in gold, charge interest on it and nobody would be any the wiser. Obviously, this conjuring trick did not go unnoticed for very long and the practice was regarded as evil and fraudulent by many. But none the less, without the expansion of money supply that it created, growth of business opportunities was not possible. Nobody really wanted it to stop because they were all benefiting. There was also a major issue of who had the right to create money – the bankers or the monarch. Since ancient times issuing money had always been the right of the king alone.
The matter came to a head in 1694, when the English Parliament, dominated by the wealthy elite, fell into dispute with King James II over who had the right to create money. The big money boys found another royal with some claim to the throne who was a Capitalist – William of Orange. In a bloodless coup that came to be known as the Glorious Revolution, James was forced to flee the throne and William arrived simultaneously from Holland to take the throne of England. With his support, the Bank of England was formed shortly afterwards.
This was the beginning of legalised FRB, the first legal fiat money. Capitalism kicked into “full steam ahead” mode, no longer restricted by any limitation of money supply, and Britain became the most powerful empire in history. A very similar story unfolded in America, where chaos reigned in money creation during the 19th century. Finally, in 1913, Woodrow Wilson capitulated to the power of big money and allowed the formation of the Federal Reserve system and America went on to become the most powerful empire in history, even surpassing its mother – the British Empire.
Although many, such as Andrew Jackson have riled against the evil of paper money, they failed to realise that this money was the very basis of their wealth. FRB and paper money arose out of the need to expand money supply faster than it was possible to expand it through mining gold. Without this monetary expansion, the development of America would not have been possible.
“If the real economy was growing and producing more goods and services, miners would tend to be stimulated to mine for more gold” - true to a very limited extent.
Firstly, as we have seen recently in oil, as growth in demand doesn’t mean that such demand is able to be met. There has never been any shortage of demand for gold, always a shortage of supply, which is what makes gold valuable.
Secondly, it’s all about productivity. If a large part of the economy is dedicated to mining gold, that productivity can not be used to generate goods and services elsewhere that would have real value to society. If we had a true gold standard currency, we would be chronically short of money supply, which would be highly deflationary and economically disastrous.
That is why my proposal is not to eliminate fiat money, but for the right of banks to create and control our money be withdrawn and money to be created by ‘we the people’ through our governments as required to match the needs of the economy. The fundamental problems of Capitalism – the requirement for exponential growth to meet the burden of interest, the concentration of vast wealth and power in the banks and the instability created by unregulated and mismanaged expansion of credit for short term gain – could all be eliminated.
Lionel
[quote=hewittr]
Lionel says:
"Capitalism is a monetary system in which all money is created as interest bearing bank debt, through a system known as Fractional Reserve Banking."
Not even close.Capital comes from savings and profits, not from manufactured money.
[/quote]
That would only work in a simpler society, like the one of the 50s and 60s. Once we engaged in ridiculous pursuits like going to the moon, a TV in every room, and SUVs in every McMansion, that all went out the window…
Consumerism must be slain, and it will be slain… just watch this space!
Student, Thank You for your efforts.
Posted by student below:
[quote]
It isn’t the free markets or the republic that is flawed, it is
frankly the morality and integrity of the people in the system. It’s
been said that you get the form of government (or I can extend this to
be monetary/economic structure) you deserve.
Here is a primer. It really is simple.
http://www.scribd.com/doc/8009736/Irwin-Schiff-How-an-Economy-Grows-and-Why-It-Doesnt
Capitalism is 100% dependent on fractional reserve money (money created as bank debt).
A falsehood does not become a truth by repitition.
The matter came to a head in 1694, when the English Parliament,
dominated by the wealthy elite, fell into dispute with King James II
over who had the right to create money. The big money boys found another royal with some claim to the throne who was a Capitalist – William of Orange.
Yes, that’s when the fraud began.
That is why my proposal is not to eliminate fiat money, but for
the right of banks to create and control our money be withdrawn and
money to be created by ‘we the people’ through our governments as
required to match the needs of the economy.
Fiat money has failed every time it was tried. Your scheme is no better.
A viable capitalist economy needs a tangible standard of value; precious metals have withstood the test of time. There is no need for the money supply to expand beyond what can be mined. The benefit is that as production expands, prices would go down and consumers would be encourage to save.
There has never been any shortage of demand for gold, always a shortage of supply, which is what makes gold valuable.
There is always a price at which there is no shortage. You have an inflationists mentality. That’s what got us into this mess.
Sorry Lionel, you’re conflating honest capitalism with government fraud and calling it a failure of capitalism. Your logic is confused.
Let me try to explain it this way, Matrix. You can’t consume what hasn’t been produced. You can’t produce without savings to produce from. This is fundamental to an understanding of real capitalism and fair to call it a law of economics.
That would only work in a simpler society, like the one of the 50s and
60s. Once we engaged in ridiculous pursuits like going to the moon, a
TV in every room, and SUVs in every McMansion, that all went out the
window…
That’s besides the point. That law of economics cannot be revoked without unintended consequences.
Consumerism must be slain, and it will be slain… just watch this space!
Christians has been fighting consumerism since Christ was born. You’re wasting your time and energy. Mr. Market is much better at those things.
A pessimist is a well informed optimist
That motto is getting annoyingly repititive, like War is Peace, Freedom is Slavery, ignorance is Strength. A pessimist is a pessimist is a pessimist.
So hewittr, in a world where we all save like mad and accumulate savings (I actually remember the days when I had several thousand dollars in the bank… oh so long ago!), where does all this growing pile of money come from?
[quote=hewittr]
That motto is getting annoyingly repititive, like War is Peace, Freedom is Slavery, ignorance is Strength. A pessimist is a pessimist is a pessimist.[/quote]
Just for you, I have changed my signature to another annoying one!