Sorry about skipping out on finishing my post yesterday, but I thought I would continue a bit more on the subject of money
Lastly, the free market cannot and will not ever deliver everything we want primarily because it is 100% based on a failing debt-based monetary unit. Under different money I might hold a different view (depending on which one was the dominant form) but for now I simply have no faith that a debt-based free market will deliver the right things for a sustainable future. The profit motive is good for some things, but not everything (charity is one example). For some things we have to make our decisions based on other considerations besides an ever-increasing flow of money units.
In the context of a debt-based fiat monetary system Chris references above, he is entirely correct. Economics in general doesn't say anything about "mandatory growth" as a requirement, but when you have the economy lubricated by debt-based fiat money, comprising 1/2 of all transactions - as money is bought by selling goods/services and money is sold in return for goods/services, save direct barter and charity, and this money requires infinite growth.
The rate/volume of new money being loaned into existence must be greater than the rate/volume of loans being retired. Why? If new money is created out of thin air, old money paid back is being sent into “a black hole”. Private banks act as both the birthplace and slaughterhouse of the lions share of our money.
If the interest on old loans is being paid back with the principle of new loans, this is pure Ponzi. If the rate/volume of new loans created is less than the rate/volume of dollars of old loans being retired, the money supply shrinks. This forces people to compete for fewer and fewer dollars in circulation. This has STAGGERING socio-economic impacts. It pits us against each other fighting for the remaining dollars in circulation. If this continues - i.e. people do NOT take out new loans and hunker down to pay off old ones - our monetary unit collapses in hyper-deflation. This is the ugly structural defect in our system.
I really don’t mean to sound pedantic, but I can’t think of a subject more muddled, obfuscated, and riddled with fallacies other than the subject of economics and money amongst the public in general.
When man began to improve methods of production via trial and error, sharing knowledge, and building efficiencies by harnessing their energy with the resources available, the concept of economic surplus came about. Man plowed the land with his bare hands and sticks and maybe could come up with a meager sustenance. They lived day to day or paycheck to paycheck. The next move was to learn how to harness animal labour to assist in the production of goods and services. This continued with the Industrial Revolution and so forth. I don’t want to posit a 6000 year historical walkthrough as it is WAY beyond the scope of this post and doesn’t really serve any point.
The point is, man could inject 1 unit of energy, but produce maybe 1.2 units of energy back, as an example. Surplus. What did he do with this surplus? He figured out that he could increase his standard of living by taking the surplus he produced and trading it for other’s surplus he didn’t produce. Thus the first primitive markets were born. Barter based markets. The first hints of the benefits of the division of labour and specialization came about. For example, a blacksmith could trade his goods and services for things he didn’t produce; wheat, corn, whiskey, clothes etc etc.
Some of us know the inefficiencies of barter. It is described as a “double coincidence of wants” where A had to have what B wanted at the same point in time at the same geographical location. In order for a trade to take place, A had to value what A possessed LESS than what B had. Conversely, B had to value what B possessed LESS than what A had. Next they had to agree the quality and volume of what the other had was sufficient. All of these things had to be met in order for honest trade to take place. Clearly this was a clumsy system.
The second issue with barter based systems was the difficulty in establishing “price” or the measurement of time, labour, and the resources required to bring a product or service into being in relation to the other. For example,
- 50 eggs is worth 1 chicken.
- 1 cow is worth 100 chickens, or 1/100 of a cow = 1 chicken <-- How is the latter settled? Which part of the cow? Can market actors agree? Not likely.
- Therefore, 1 cow is also worth 100 x 50 eggs = 500 eggs.
The question becomes, in this primitive market, what's the egg price of butter, the butter price of bread, the bread price of a plow, the plow price of a horseshoe, the horseshoe price of whisky, and so forth. Very cumbersome, very difficult.
As MARKET initiated demand for the simplification of trade came around, there were commodities that began isolating themselves as they had unique properties that made them better. For example, butter was widely needed, but was easily divisible and relatively portable and durable (not really, but back then it could be stored for longer periods of time than say, fish or meat). It could have been salt. Tobacco. Manure. Whisky. You get the picture.
Once this form of universally demanded commodity gained widespread recognition amongst market actors, it had a spiraling upward effect of acceptance in the market as a desirable commodity as it had the universally accepted property of being exchangeable for all other commodities! The first crude form of money was devised. Trade was lubricated via this mechanism as it was an indirect mechanism of exchange where goods and services could be acquired (bought) by selling butter to A and A could take that butter and sell it to B in return for his goods and services either now…or at some point in the future. This was a new concept! What’s that? A medium of exchange, thus a store of value and a unit of account? Any economics 101 textbook defines that as money.
Whew! Hope you are still with me.
As markets expanded via transportation improvements (i.e. roads, wagons, clipper ships etc) and the number of goods and services available increased, some forms of money were displaced and others evolved. If market A had salt in abundance but in Market B, salt was so scarce it was used as money, the first traders from market A to market be (first to market) would race back home, gather all the salt they could, and (carefully?) buy up as much commodity they knew market A valued. Market B? Inflation or hyper-inflation. Wasn’t pretty.
So this type of monetary evolution continued, finally culminating in precious metals as they met a number of desirable characteristics in ALL markets:
- Portable - Can transport high value in a relatively small volume of space.
- Durable - Drop a gold bar in the ocean, and save erosion, it didn't react with anything and it should be there in a 1,000 years.
- Fungible a.k.a interchangibility - One unit of weight and purity has equal value as another unit of weight and purity.
- Divisible - When divided in half, has the same value as the whole. This is why diamonds suck as money. 2 x 1/2 carat diamonds != a 1 carat diamond, even assuming equal colour, clarity, and cut.
- Universally acknowledged in all markets participating in trade with each other.
- Scarce - If it weren't , it wouldn't have value would it?
- And no one could create it out of thin air, NOR had a monopoly on the production of it. Contrast that with today....
Contrast this type of money with the type of money we have in place today. Back then, money was backed by a tangible asset that took real work to produce. Asset-based money. Today? As you are aware, created via debt by the State/Banking cartel.
So how did the usurpation of free market money come about and be replaced by the State/Banking cartel’s pogrom? That’s another post. I’ll spare you unless there is enough interest. Think on this: Why is it the unit of accounts we use today (dollar, peso, mark, pounds etc) all trace their roots back to some weight of precious metals? What happened? Why were they replaced by the State/Banking cartels paper or electronic bits? I’ll provide the shortcut: State violence. Not all at once, but a creeping succession of financial and banking policy wonks looking out for the public good? Not so much.
The profit motive is good for some things, but not everything (charity is one example).
Profit is a term usually thought of in the Gordon Gecko vein. Profit is conflated with exploitation or greed. This can be true, but what is profit? I don't give to charity in return for money. I "profit" a.k.a. receive value a.k.a seek out a "plus" factor when I help my fellow man. The spiritual reward and satisfaction of helping others is my profit. I get more out of the transaction of giving then I put into it, otherwise the trade - yes, it is a trade - would not take place. I pay for membership to Chris Martenson because I get more out of it than the money I possess is worth to me, otherwise no trade could take place.
In the absence of the State, would all charity die? Would you be more or less inclined to donate time and money, connect with your community, if you were allowed to retain your money instead of being siphoned off by State violence, or would you flip your tax returns back to the government thinking your contribution to your community is complete? Such is the soul-killing logic of the State, “I don’t need to help others! That’s why I pay my taxes!”
A true free market does not preclude charity. Up here in Canada, there are 38,000 registered charities in SPITE of the welfare state. I read ENDLESS charitable events being flogged by my local paper. There was a huge one recently called the “Polar Bear Dip” where people plunged into the frigid waters of Lake Ontario. They raised nearly $200,000 dollars. Charity is voluntary trade too.
What is a free market? We need a good definition. To me, a free market is about the voluntary relationships between members in that market, whether local, national, or global in the absence of coercive/violent forces.
A free market is about Community. Relationships. Respect. Self-reliance and inter-dependence. Caring. Sustainability. It’s too bad that term has been hijacked to mean exploitation, inequality, and so forth.
Like you said Chris, and this line resonates powerfully with me, “The narrative needs to change”.
I’ll close with a cogent analysis of voting (as precipitated in post #3) written by Robert Lefevre:
In ancient Athens, those who admired the Stoic philosophy of individualism took as their motto: "Abstain from Beans." The phrase had a precise reference. It meant: don't vote. Balloting in Athens occurred by dropping various colored beans into a receptacle.
To vote is to express a preference. There is nothing implicitly evil in choosing. All of us in the ordinary course of our daily lives vote for or against dozens of products and services. When we vote for (buy) any good or service, it follows that by salutary neglect we vote against the goods or services we do not choose to buy. The great merit of market place choosing is that no one is bound by any other person’s selection. I may choose Brand X. But this cannot prevent you from choosing Brand Y.
When we place voting into the framework of politics, however, a major change occurs. When we express a preference politically, we do so precisely because we intend to bind others to our will. Political voting is the legal method we have adopted and extolled for obtaining monopolies of power. Political voting is nothing more than the assumption that might makes right. There is a presumption that any decision wanted by the majority of those expressing a preference must be desirable, and the inference even goes so far as to presume that anyone who differs from a majority view is wrong or possibly immoral.
But history shows repeatedly the madness of crowds and the irrationality of majorities. The only conceivable merit relating to majority rule lies in the fact that if we obtain monopoly decisions by this process, we will coerce fewer persons than if we permit the minority to coerce the majority. But implicit in all political voting is the necessity to coerce some so that all are controlled. The direction taken by the control is academic. Control as a monopoly in the hands of the state is basic.
In times such as these, it is incumbent upon free men to reexamine their most cherished, long-established beliefs. There is only one truly moral position for an honest person to take. He must refrain from coercing his fellows. This means that he should refuse to participate in the process by means of which some men obtain power over others. If you value your right to life, liberty, and property, then clearly there is every reason to refrain from participating in a process that is calculated to remove the life, liberty, or property from any other person. Voting is the method for obtaining legal power to coerce others.
Please click the link in my signature where I go over some details of Agorism which goes hand in hand with the spirit of what I have written here.
Thank you for your time and attention and apologies for my long windedness.
