The War On Cash: Officially Sanctioned Theft

News & Current Events Public News & Current Events
,
1

You’ve probably read that there is a “war on cash” being waged on various fronts around the world. What exactly does a “war on cash” mean?

It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.

These limits are broadly called capital controls.

The War On Cash: Why Now?

Why are governments suddenly acting as if cash money is a bad thing that must be severely limited or eliminated?

Before we get to that, let’s distinguish between physical cash—currency and coins in your possession—and digital cash in the bank. The difference is self-evident: cash in hand cannot be confiscated by a “bail-in” (i.e. officially sanctioned theft) in which the government or bank expropriates a percentage of cash deposited in the bank.  Cash in hand cannot be chipped away by negative interest rates or fees like cash held in a bank.

Cash in the bank cannot be withdrawn in a financial emergency that shutters the banks, i.e. a bank holiday.

When pundits suggest cash is “obsolete,” they mean physical paper money and coins, not cash in a bank. Cash in the bank is perfectly fine with the government and its well-paid yes-men (paging Mr. Rogoff and Mr. Buiter) because this cash can be expropriated by either “bail-ins” or by negative interest rates. 

Mr. Buiter, for example, recently opined that the spot of bother in 2008-09 (the Global Financial Meltdown) could have been avoided if banks had only charged a 6% negative interest rate on cash: in effect, taking 6% of the depositor’s cash to force everyone to spend what cash they might have.

Both cash in hand and cash in the bank are subject to one favored method of expropriation, inflation. Inflation—the single most cherished goal of every central bank—steals purchasing power from physical cash and digital cash alike. Inflation punishes holders of cash and benefits those with debt, as debt becomes cheaper to service.

The beneficial effect of inflation on debt has been in play for decades, so it can’t be the cause of governments’ recent interest in eliminating physical cash.

So now we return to the question: Why are governments suddenly declaring war on physical cash, the oldest officially issued form of money?

The first reason: physical cash has the potential to evade both taxes as well as officially sanctioned theft via bail-ins and negative interest rates. In short, physical cash is extremely difficult for governments to steal.

Some of you may find the word theft harsh or even offensive. But we must differentiate between taxes—which are levied to pay for the state’s programs that in principle benefit all citizens—and bail-ins, i.e. the taking of depositors’ cash to bail out banks that became insolvent through the actions of the banks’ management, not the actions of depositors.

Bail-ins are theft, pure and simple.  Since the government enforces the taking, it is officially sanctioned theft, but theft nonetheless.

Negative interest rates are another form of officially sanctioned theft.  In a world without the financial repression of zero-interest rates (ZIRP—central banks’ most beloved policy), lenders would charge borrowers enough interest to pay depositors for the use of their cash and earn the lender a profit.

If borrowers are paying interest, negative interest rates are theft, pure and simple.

Why are governments suddenly so keen to ban physical cash? The answer appears to be that the banks and government authorities are anticipating bail-ins, steeply negative interest rates and hefty fees on cash, and they want to close any opening regular depositors might have to escape these forms of officially sanctioned theft.  The escape from bail-ins and fees on cash deposits is physical cash, and hence the sudden flurry of calls to eliminate cash as a relic of a bygone age—that is, an age when commoners had some way to safeguard their money from bail-ins and bankers’ control.

Forcing Those With Cash To Spend Or Gamble Their Cash

Negative interest rates (and fees on cash, which are equivalently punitive to savers) raise another question: why are governments suddenly obsessed with forcing owners of cash to either spend it or gamble it in the financial-market casinos?

The conventional answer voiced by Mr. Buiter is that recession and credit contraction result from households and enterprises hoarding cash instead of spending it.  The solution to recession is thus to force all those stingy cash hoarders to spend their money.

There are three enormous flaws in this thinking.

One is that households and businesses have cash to hoard.  The reality is the bottom 90% of households have less income now than they did 15 years ago, which means their spending has declined not from hoarding but from declining income.

While Corporate America has basked in the glory of sharply rising profits, small business has not prospered in the same fashion. Indeed, but some measures, small business has been in a 6-year recession.

The bottom 90% has less income and faces higher living expenses, so only the top slice of households has any substantial cash.  This top slice may see few safe opportunities to invest their savings, so they choose to keep their savings in cash rather than gamble it in a rigged casino (i.e. the stock market).

The second flaw is that hoarding cash is the only rational, prudent response in an era of financial repression and economic insecurity. What central banks are demanding--that we spend every penny of our earnings rather than save some for investments we control or emergencies—is counter to our best interests.

This leads to the third flaw: capital -- which begins its life as savings -- is the foundation of capitalism. If you attack savings as a scourge, you are attacking capitalism and upward mobility, for only those who save capital can invest it to build wealth. By attacking cash, the central banks and governments are attacking capital and upward mobility.

Those who already own the majority of productive assets are able to borrow essentially unlimited sums at near-zero interest rates, which they can use to buy more productive assets, while everyone else--the bottom 99.5%--is reduced to consumer-serfdom: you are not supposed to accumulate productive capital, you are supposed to spend every penny you earn on interest payments, goods and services.

This inversion of capitalism dooms an economy to all the ills we are experiencing in abundance: rising income inequality, reduced opportunities for entrepreneurship, rising debt burdens and a short-term perspective that voids the longer-term planning required to build sustainable productivity and wealth.

Physical Cash: Only $1.36 Trillion

According to the Federal Reserve, total outstanding physical cash amounts to $1.36 trillion. 

Given that a substantial amount of this cash is held overseas, physical cash is a tiny part of the domestic economy and the nation’s total assets. For context: the U.S. economy is $17.5 trillion, total financial assets of households and nonprofit organizations total $68 trillion, base money is around $4 trillion, and total money (currency in circulation and demand deposits) is over $10 trillion (source).

Given the relatively modest quantity of physical cash, claims that eliminating it will boost the economy ring hollow.

Following the principle of cui bono—to whose benefit?--let’s ask: What are the benefits of eliminating physical cash to banks and the government?

Benefits To Banks And The Government Of Eliminating Physical Cash

The benefits to banks and governments by eliminating cash are self-evident:

  1. Every financial transaction can be taxed
  2. Every financial transaction can be charged a fee
  3. Bank runs are eliminated

In fractional reserve systems such as ours, banks are only required to hold a fraction of their assets in cash.  Thus a bank might only have 1% of its assets in cash. If customers fear the bank might be insolvent, they crowd the bank and demand their deposits in physical cash. The bank quickly runs out of physical cash and closes its doors, further fueling a panic.

The federal government began insuring deposits after the Great Depression triggered the collapse of hundreds of banks, and that guarantee limited bank runs, as depositors no longer needed to fear a bank closing would mean their money on deposit was lost.

But since people could conceivably sense a disturbance in the Financial Force and decide to turn digital cash into physical cash as a precaution, eliminating physical cash also eliminates the possibility of bank runs, as there will be no form of cash that isn’t controlled by banks.

While the benefits to banks and governments of banning physical cash are self-evident, there are downsides to the real economy and to household resilience.

In Part 2: What To Do With Your Cash Savings, we’ll look at the most influential forces in play in this war, and consider strategies for preserving purchasing power, avoiding bail-ins, fees and other threats to cash savings.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

This is a companion discussion topic for the original entry at https://peakprosperity.com/the-war-on-cash-officially-sanctioned-theft/

2

I would say it's more ethically consistent to consider taxation theft as well (it's just velvet glove stealing). It doesn't matter if it's taken for the "social good," the fact is the money is taken whether you agree or not. I like to think of the principle of taxation in the school yard: a high minded student believes many other students need bigger lunches, so he bribes and manipulates a bunch of bullies to threaten other more "privileged" students to distribute some of their lunch (and convinces the students it's their duty to have their lunches taken). That's obviously simplified, but illustrative of the principle of taxation. Essentially, it's OK to threaten and coerce all people in a geographic area if we say it's for the greater good. With the greater good argument (violence now, supposed benefit later) you can rationalize just about anything. The problem isn't the desire for "social programs" it's the initiation of force.

3

Danny, many will agree with you, and while I see the potential for a Tyranny of the majority abuse of democracy to impose the will of the many on the wealth of the few, I discern a qualitative difference between "taxation with representation" and bail-ins engineered by unelected central banks. 

4

Taxation is just a sophisticated form of theft. A sophists theft. It's not direct and it's backed by pomp, history, and tradition; but behind all that is still a threat to obey or be punished by a nonconsensual entity. As for legitimate "representation" I don't see how that can be maintained when the taxation principle relies on initiating force (it's not taxation if you can choose to pay). Theoretically, it's possible to get everyone in a geographic area (surely not the size of most countries) to agree to an institution providing XY and Z at a yearly fee, but when said institution is a government, and their laws are continually changing, they are granted the right to initiate force, and you can't opt out, then you're not really dealing with representation. To legitimately represent an individual, an institution/individual needs documented consent, and that certainly can't be true for the state. We're all simply born into a state and then told repeatedly it represents us.   

5

Danny-

To legitimately represent an individual, an institution/individual needs documented consent, and that certainly can't be true for the state.
I've never found this argument compelling, because its not only individuals that have an interest in how things go, society at large has an interest too.  One might argue, society's interest is larger and more pressing.  The needs of the many, etc.

I've heard from people who espouse the uber-individualistic view - they assume that lawsuits after-the-fact can provide society with redress in cases of misconduct.  Of course, if you know anyone who is lawsuit-proof (and I certainly do), you will realize that this technique just doesn't work when it meets a truly sociopathic individual.

Some people just need force to coerce them not to be selfish jerks.

As for what defines a "selfish jerk" - well that's all about society's norms, which as you correctly point out, we are all born into.  We didn't have a vote to be born wherever we are, we just appeared, and we are dealing with it the best we know how.  You didn't choose your country, your religion, your parents, your economic level, or your race.  (Well, some people believe you did choose…but that's up one meta-level and we'll ignore that for a moment).  You got dealt a hand, dropped into a pre-existing society with the rules it has developed over time, and now you get to play it out for this lifetime.

Whatever philosophy you come up with to replace what already exists in society, it needs to be able to deal effectively with both sociopaths and psychopaths.  If you've ever dealt with either one, they really don't pay attention to much other than force.

Naturally self-interest is a powerful motivator which can be harnessed to society's benefit, so individual rights need representation to provide a nice balance.  But requiring everyone to provide documented consent for everything?  Not gonna work.  Fails on the human factor: corruption, and sociopathy.  Just like communism, actually - two sides of the same coin.

6

I had an idea for a fanfic script for Joss Whedon's Firefly series.  Mal lands the ship at a spaceport.  Kaylee is sent out to get supplies and refuel the ship, but she doesn't return after several hours.  Suspecting trouble, Mal and Jayne go looking for her.  Can you guess where they find her?  Waiting in a long line to exchange cash for Alliance credit!  Yes, the Alliance is phasing out cash.
Back in the real world, I think we can all agree the reason for the elimination of cash is the empire is in serious trouble.  The 0.01% has been asset stripping and the bill has come due.  Guess who pays?  We need to resist this.  A few things come to mind.

  1.  Hoard physical Federal Reserve Notes.  As long as they're accepted, they'll be the easiest way around bail ins and other confiscation.  Until things get really nasty, that is.

  2. Gold and silver coin.  Obvious.  The downside might be that this form of transaction could be outlawed.  This would put holders of bullion in a de facto black market.  Expect sting operations, warrantless searches, etc.  On the upside, after the complete demise of the current monetary system, bullion might again be legal and thus serve as a bridge over oppressive times.

  3. Local currencies.  These too could be outlawed, but until then they could work locally to keep commodities moving.

  4. Ledgers.  Way back when people used to keep records of exchanges and then at the end of the year there would be a reckoning where all debts are settled.  The idea was to balance everything out on paper and make up the differences with as few exchanges as possible.  Coin money or some other high value commodity was used to fill in the gaps, not as the main medium of exchange.

  5. I'm sure people smarter than me could think of other things like crypto currencies provided the network and blockchain wouldn't be hacked by the banksters.  Or US marshals could show up and confiscate the whole thing.  In the interim a local network of secure servers could operate over the net provided there are no backdoors in the OS.  I'm thinking Debian or some open source software.

All of these solutions would be vulnerable to confiscation, fines, and imprisonment.  I guess at some point the 99.99% is going to have to establish something outside of the law to protect our wealth.  As long as we play by the rules, we risk having our wealth confiscated.  When the time comes to try to function outside the sanctioned monetary system, there will be no looking back.  We will all be de facto criminals under the old rules.  I would suggest making a move sooner than later while it's still somewhat possible to transact without surveillance.

Back to Firefly.  Mal is all sorts of perplexed about how to run his ship and make payroll.  What to do?  Maybe Badger can help.  He must be feeling the pinch.  Sure enough he does.  And this is where it gets interesting.  Badger sees the writing on the wall and decides it's time to become a Browncoat.  Mal chides him for coming late to the fight.  Badger retorts that it is now in his interest to rebel.  In a cash economy it didn't matter who ran the government.  Badger's connections and Mal's leadership combine to organize a guerilla style revolt against the Alliance.  I can imagine River Tam as some sort of ninja operative for the Browncoats.  Jayne would get off on shooting things.  Mal and Zoe would be soldiers again. Wash would have to choose between staying with Zoe or leaving the revolt. Inara would quit Serenity, but regret it.  Kaylee would develop as a harder, edgier sort of character.  Booke would continue on as mentor/sage and Jayne would still wonder how he knows so much about how to conduct a rebellion.  Badger would become president of Persephone.  Of course, if the series hadn't already been canceled, it then would be.  

7

Banning physical cash allows the state to inspect EVERY transaction with computer analysis. What could be bad with that???

8

It's a fine balance between a state that limits the predation of sociopaths (its proper role) and a state that uses force to impose a system that benefits the few at the expense of the many.  Unfortunately, banning cash and bail-ins are examples of the latter.

9

I really appreciate the incisive analysis by CHS and the additions of DaveF and DurangoKid especially.
I'd like to piggy back onto the comments of Dave above.

Some people just need force to coerce them not to be selfish jerks.
and
Whatever philosophy you come up with to replace what already exists in society, it needs to be able to deal effectively with both sociopaths and psychopaths.  If you've ever dealt with either one, they really don't pay attention to much other than force.
I believe that to most here at PP this will be clear.  But there is one group where this is not clear.  This is the GREEN Meme (Spiral Dynamics).   Unfortunately my own family is heavily represented in the group where this is not clear.  They are deeply spiritual, and talk about Gandhi, Martin Luther King, Jr., prayer, raising one's vibrational state, spiritual protection and staying close to God at all times.  None would ever consider shooting a gun (a litmus test for GREEN).

GREEN is the level were a person becomes sensitive to others.  Empathy is strongly awakened and honest warmth, kindness, deep mutual respect and caring for others comes to life. Instead of looking for victory, a win-win outcome is sought. You care about the other person and you do not want them to be defeated so you look for an outcome that is kind and good for everyone. A GREEN Meme approach is very helpful in eliciting cooperation from others.  A team is formed where members honestly care about each other.  Many stories of winning enemies over into friendship exist.

The newly discovered power of love is intoxicating.  It seems all powerful.

Love conquers all.

I have always been able to get myself out of a bad situation by looking the other in the eye and talking respectfully.  They feel my good will and won over into friendship.

With all of the Memes, we grow out of them as we find the limits of their effectiveness and are forced to seek to find a more effective way of thinking.  The sociopath/psychopath requires GREEN to evolve.

My understanding here is that the pillars of the GREEN Meme (love, mutual respect and kindness) function through the capacity for empathy, to awakens trust and belonging-ness. 

The psychopath has does not have this capacity.

Love, mutual respect and kindness are just not effective in dealing with sociopaths/psychopaths.

A psychopath has NO PROBLEM AT ALL HURTING any person.

The Gandhi Defense (appealing non-violently to the other persons compassion) only works when the other has the capacity for empathy.   In the case of India, the press carried the inhumanity of the occupation to the people of England who were horrified at what their military was doing.  The sociopathic elements of the military were reined in by the populous who DID have the capacity to empathize.

However, when the press is not present, and the sociopath/psychopath feels that acts are unseen or hidden, expect unrestrained violence.

 

 

10

I agree with you to a degree, but I don't see how a state solves the problem. The state inherently grants some individuals much greater power than others. Why accept power to do "righteously" immoral things in the hands of few regular (often more megalomaniacal) people in the name of society. People are people, and power corrupts. Also, in a government there's no real competition, and the policing is done internally, so any expectation of effective "checks and balances" is folly.
Also, "the needs of them many" is such a sophistic concept. Any smooth talking pragmatic person can come up with any excuse to benefit the "needs of the many." If you don't follow a principle, say the non-initiation of force (which is rational and we already follow, largely), then you can't say any government (From the USSR to the USA) is doing wrong. They are simply trying to initiate force on people, for "our" benefit, to the best of their ability.

Yes, but why do you need a central, inherently coercive institution to prevent people from being selfish jerks. Again, this is like saying you need a bully in the schoolyard to threaten and steal from everyone to stop a few sociopaths nobody likes anyway. Are there no other ways to stop or discourage selfish jerks? What about social ostracism, guns/pepper spray, or private security systems? 

Absolutely true. But how does that legitimize intuitions that act immorally? For instance, if one is born into North Korea (extreme example, I know) and has to figure out how to live, does that mean all that is imposed on him is OK?

It's interesting that you say "philosophy" here, because recognizing the initiation of force as immoral does deal effectively with sociopaths. The problem is that nearly everyone recognizes that in their personal, day-to-day life and then makes a giant exception to a powerful, centralized institution. THAT does not deal effectively with sociopaths, in fact, it gives the smooth talking or rich ones a shield to gain power.
 

11

For the conspiracy minded amongst you…first the Bandidos vs Cossask shoot'em up in Waco, now up to four gunmen attack the Dallas Police Headquarters building (update - lone whackjob patsy has been identified, move along)…all smack in the middle of the Jade Helm theater of operations (East Texas). Coincidence? You decide.
Assailant Attacks Dallas Police Headquarters With Automatic Guns, Pipe Bombs (ZH)

https://youtu.be/DcOUUEDtpXM

https://youtu.be/qD-n9nXe8AE

12

Danny-
Life goes in cycles.  At the beginning of the democratic cycle, people are involved and they act as a check  on the acts of government.  Cycle goes on, people grow complacent, and government gets to do things more on its own.  Power corrupts, and it gets repressive.  People then suddenly become more interested - either that, or they turn into slaves.  A tipping point is reached, and people either act as a check on government once again, or they get a dictatorship.

Ultimately, society itself is the check on government.  It just has to care enough to fulfill its function.  And that level of caring changes over time.  Our collective behavior and desires oscillate like any other natural phenomenon.  Some generations want revolution, others want to just get along, etc.  TIde goes in, then it goes back out again.

Given the changeable nature of man himself, to imagine that there is some steady-state architecture where all will be well, forever, just because everything is privatized - or conversely, because everything is under the control of the state - is to run straight up against history that counsels otherwise.  No architecture really outlives the founding fathers.  The grandchildren of the revolution don't feel that same burning desire to water the tree of liberty.  At least not until the cycle turns once again.

The architecture that society has evolved is a mix of different approaches; some private, some public.  This compromise seems best to me, so that the system itself doesn't become a mono-culture.  As society changes in composition and behavior from one generation to the next, it can either emphasize a public approach or a private approach, as it sees fit.  It can try stuff out to see what works best.

The "everything should be privatized" gang makes one key assumption: there must be an incorruptible instrumentality that oversees the laws of the country protecting the rights of individuals alongside companies.  In other words, they assume no corruption exists.  (No doubt you'll find some hair to split with this, but without such an instrumentality, the "everything should be private" scheme falls apart because by far the best private ROI comes from corrupting that instrumentality, and we end up with crony capitalists complete with company stores, all armed with "private security" that reports to each CEO.  Is that worse than a dictator backed by an army?  Nope.  But its certainly no better.)

Likewise, the communists assume that everyone can be motivated to work hard for some amorphous concept of "collective good" rather than for personal gain - and that the leadership of said collective effort is also not subject to corruption.

There.  Now I've gored everyones ox.

We are the problem and the solution, not architecture.  We have to care.  Once that happens, a bunch of things get fixed really quickly.  Until that happens, nothing will change.

13

Agreed, I've found that the promoters of various political and economic ideologies try to force a simplistic single narrative on everyone else in the world. Further analysis of these simplistic narratives always reveals some incorrect understanding about how the underlying processes supporting society actually work or how human nature works. Even the arch freedom-loving capitalists do the same in assuming that we should all be content going out and starting up our own companies, or working for some other company, to "produce" wealth so that we can fairly earn our own share of the pie and in doing so bring the overall wealth of society up through the free trade of our produced wealth – all of course mediated by some one-dimensional measuring stick they call "real money". Not that this approach doesn't have a place in society since that is generally how ecological wealth is transformed into economic wealth that allows us to live and enjoy toys, but I like to take things back to ecological roots and compare our societies, and ideologies about how societies should operate, to what our ancestors experienced in tribes in the African savannah. I mean, genetically we are identical to those historical people. Doing this usually reveals great insight.

The problem is, there are few absolute laws governing our societies and economies at the higher level political organization scale. About the only scientific ones that still govern are the laws of physics and ecological thermodynamics. The rest is pretty much up to us.

Looking through the lens of thermodynamic ecology, I've always thought of the one-dimensional political left-right sliding scale (communism vs. capitalism) to be the modern manifestation of the conflicting motives (enticements?) that hunter / gatherers would have experienced 10's of thousand of years ago. Imagine a hunting party consisting of a group of men who go out and spear down a couple large game. Their incentive would be to eat one of the killings while away from the rest of the tribe, and not tell anyone, leaving only a few carcasses to bring back to feed the rest of the village – ("oh sorry, the hunt wasn't very good today"). Similarly, a group of women (sorry to be sexist here but I think that is generally how the workload was historically divvied up) out picking berries or working the fields would have an incentive to gorge themselves out in the field and bring back a lesser amount to feed the rest of the village. Of course if game and berries are plentiful then the hunters and gatherers can not only gorge themselves but still have enough left to provide plenty to everyone in the village (interestingly this may be an explanation of why Canada has generally been seen to be a caring society – it has one of the lowest population to natural resource ratios in the world, next to Russia, which of course fell into communism so that screws everything up). Being nice and generous is always easy when you have access to all the resources you need.

In this case, the hunting and gathering parties are the "capitalists" of today: they go out and invest the effort and time to harvest living things to consume – they supposedly "produce" wealth, even though all they're doing is harvesting ecological production. They operate with a very positive EROEI; the energy they expend on their hunting parties is much less than the energy they bring back to power the village. This is exactly analogous to modern economics since 97% of all economic activity is powered by burning dead things no different than the deer carcasses and blueberries or firewood the capitalists of eons ago "produced" (an undeniable and uncomfortable fact that every economist, from left to right, will try to weasel out of acknowledging). The rest of the tribe back in camp constituting the children, elderly, the sick, the bureaucrats running day to day affairs, the maintenance men working on huts and making ovens, the babysitters, or just the plain lazy, represent the rest of society that needs to be supported by the hunting and gathering parties' very positive EROEI's.

The villagers do of course do valuable work in organizing the village and they deserve to be kept alive due to their contributions and the fact that they are people deserving dignity. Furthermore, the hunting parties need to have a home base, and a bunch of men roaming around hunting isn't going to be able to procreate for future generations by themselves, so they do have obligations to provide for the rest of their village. This is what taxation is all about. While some of the villagers can be expected to "pull their own weight" privately, not supported by taxation, by trading their plumbing or construction or babysitting or medical services for some meat, berries or firewood collected by the roaming parties, many of them cannot – the sick, elderly, orphaned, or lazy. These people are analogous to whom the government is supposed to help via taxation of the "producers". It's always been the case that the villagers were able to be supported by the hunter gatherers. I see no reason why that should no longer be the case. How our societies radically differ today is that technology has greatly reduced the amount of people needed to do the hunting and gathering, and relegated most of the rest of us to village activities, doing things that really aren't totally necessary for the survival of the village (well, actually, now these activities ARE necessary for village survival, due to our sheer overpopulation and the need to organize the village very efficiently otherwise disease and anarchy would run rampant)

Is my analogy a simplistic one, just like the others? To some extent yes. But it is a valid one since it describes how energy and resources move through society from ecosystem production through harvesters, through secondary "producers" in the village, to waste out the other end, back into the ecosystem. That hasn't fundamentally changed in 10,000 years.

What's also happening today that is generally new to humanity is that as world resources run out, the villagers are blaming the hunter gatherers, and vice versa. But that problem is coupled with 0.01% of the villagers (the bankers and corporate oligarchs) having gained control and ownership of all village and hunting affairs. The 99% is relegated to virtual slavery due to lack of direct access to resources, and a forced participation in a thieving monetary system that constantly steals their wealth and maintains them in near poverty. Since the economy cannot grow due to ecological constraints (if demand picked up then prices for the resources would increase and send demand back down), the whole economy just stutters along on its downward trajectory with everyone blaming everyone else in pointless inane political diatribe, and few understanding where the real problems lie: 1) diminishing resources, and 2) thieving bankers.

14

I am appreciative of your insights and warnings and guidance Charles and Chris and others.  I am having a complete deer in the headlights reaction because I am terrified of moving cash anywhere out of the bank. Oh to change olds ways of thinking is hard, this has been the safe haven for me since the crash…it will take me time too much time to accept having to move any of it elsewhere. Simple phobic avoidance. I am terrified.
Sand Puppy you are spot on. I wanted to share this link to a letter written to Hitler by Gandhi around WWII which expressed then Green thinking clearly. M. Gandhi signs it "I remain your friend…". I am a big fan of M. Gandhi. He was no fool and at least he took some action instead of standing by and watching things unfold. Nonetheless it may not have been the right approach.  Normal people project their goodness onto others…just as psychopaths project their darkness. 

http://www.theguardian.com/culture/interactive/2013/oct/12/mohandas-gandhi-adolf-hitler-letter

15

Several years ago I was fortunate to interact with a Hutterite colony in Manitoba.  For those who are unfamiliar with Hutterites, they are closely related to the Amish and Mennonites religiously, but they believe in forming collective "colonies" that practice communism.  They also openly embrace new technology.
In a Hutterite colony there is provided housing, food, clothing, and medical attention for no cost.  All this is provided by the efforts of the collective.  There is no individual money.  It is under the control of the elders of the colony. In the foreground is always the religious aspect of good behaviour, hard work, honest dealings, respect for elders, etc. It is a very patriarchal society with men completely in charge.

Interestingly, approximately 50% of the young people leave this system and 50% stay. It is a classic argument between collective and individual effort.

One thing that really stood out for me was the fact that, although everyone is supposedly equal, that is simply impossible.  Among the young, the better looking, more athletic, more outgoing were covertly being groomed as the next "leaders" as well as naturally assuming leadership roles in many small ways.

My takeaway from this experience is that life is not fair.  The challenge humans face is to try to set up systems that reduce that unfairness as much as possible.  It is a never ending struggle.

 

16

The cycles you describe are the best we can hope for under nation-states. However, I think even this process is not what happens in reality. Even if we assume that "people are involved" at the beginning (and you have to remember, many individuals have an interest in government growth, and they get to vote too), so what? What's the best they can hope for? They may follow the news and debate the best way to use political power, but in the end people are simply hoping the individuals they want in power make the best decisions (or protect and benefit their particular sector). And then, if they don't like what's going on, they pay no matter what. It's the antithesis of effective human action, counting on unaccountable middle men to supposedly protect and serve us. What is a realistic mechanism to keep such an institution at check; and if you can agree the initiation of force is wrong, why ever set up such an institution in the first place?

I think this is an interesting ideal, but again, I don't think it's practically true. Government does respond to society to a degree, as they've learned it's advantageous to themselves to keep the public somewhat satisfied and the violence hidden as much as possible. But that doesn't mean we really have much of a say. So long as enough people are employed by the state to carry out orders, and they can concoct an excuse, they can always flip a switch and turn on certain segments of the public. Also, what does "check" really mean, when no matter what you pay for their deeds? By the entire setup, it's obey or be punished. So, if I am absolutely horrified by state wars, or don't want to pay for another government program, (or, gasp, I morally object to state action) the best I can do is cast a vote for a mere self-interested person that won't listen anyway? Not much of an influence, really.

This is really where I need to clarify. I'm not suggesting any "steady-state architecture." I'm simply arguing that what separates the state from all other institutions is the initiation of force, in which a few men are granted the power to force others to do their will. This is just foolish to me, and I would also consider it immoral. I realize morality is a sticky issue, but the non-aggression principle is nearly universal already (when not padded by state terminology). We teach our kids not to take other children's candy. I'm sure we'd be equally horrified if we found our child had forced his daycare playmates to give him some of their candy or be beat up by a couple of his big friends (even if he explained that he gave some back to everyone).  This is a direct analogy to state principles, only they have a load of excuses and lies for their actions, from "defense" to the "greater good" (also, as we've established, most people are born into governments so hardly think to question the water they swim in). My argument is from principle, not effect, although I think the long-term effect of accepting consistent ethical principles would be hugely positive.
[quote=davefairtex]

The architecture that society has evolved is a mix of different approaches; some private, some public.  This compromise seems best to me, so that the system itself doesn't become a mono-culture.  As society changes in composition and behavior from one generation to the next, it can either emphasize a public approach or a private approach, as it sees fit.  It can try stuff out to see what works best.

[/quote]

I think you're conflating society and governments here. Collections of individuals could "try stuff out to see what works best," but so long as there are states all action in a geographic region is under their watch (they write the laws, after all). Just take the imposition of central banks and fiat currency. That alone puts a HUGE constraint on people's ability try things out. If you include all the taxes, regulations, and laws imposed on people, it's not really a case of individuals figuring stuff together... it's mostly people trying to figure out how the hell to live in a far-reaching system. Hell, this entire site is basically trying to figure out how to be soften the impact of government (or government exacerbated) failures. And if you're argument is that the government should simply be smaller, well I say why set up your future generations for inevitable, potentially devastating collapse?
[quote=davefairtex]

The "everything should be privatized" gang makes one key assumption: there must be an incorruptible instrumentality that oversees the laws of the country protecting the rights of individuals alongside companies.  In other words, they assume no corruption exists.  (No doubt you'll find some hair to split with this, but without such an instrumentality, the "everything should be private" scheme falls apart because by far the best private ROI comes from corrupting that instrumentality, and we end up with crony capitalists complete with company stores, all armed with "private security" that reports to each CEO.  Is that worse than a dictator backed by an army?  Nope.  But its certainly no better.)

[/quote]

Nope. :) . First, I don't think "everything should be privatized." This assumes I believe a central mandate would be effective for positive social change. This assumes I think rules should be negotiated in as large of areas as what we know as countries today (cities or neighborhoods could make more sense, to me). I do believe privatization and voluntary trade is the most effective way for individuals to interact, but I'm not going to say people can't try other ways of organization (that's a statist approach). The only place I draw a line in the sand is the initiation of force (hopefully you're seeing a trend by now). So if one is interested in starting a community or organization where everyone voluntarily joins (no matter what their form of organization/economics looks like) I don't think anyone has the right to stop them. However, if the manager decides to start taxing the adjacent community or threaten to attack, that would clearly be unacceptable.

As for corruption, I think that's quite an assumption to say I don't believe it "exists." I'm just arguing that CLEARLY governments are a prime location for corruption. What other place can you initiate force without people blinking? The potential for widespread corruption begins in the average man's acceptance or recognition of the corrupt action. If the average man doesn't accept the initiation of force (and thus, won't become a hired gun for coercion), then it will be much more difficult for an institution to become corrupt in a way that is as immeasurably damaging as a state. When governments get corrupt, it is everyone's downfall because the state fosters, delays, and then disperses negative consequences. If a business or community becomes corrupt, the consequences largely fall on them because it's unacceptable for them to order others to pay for it. In short:
 
Free trade = voluntary organization = voluntary payment = potentially limited corruption
(if a business tries to coerce you, clearly people find this unacceptable and can stop supporting them)
 
States = compulsory organization = coerced payment = inevitably widespread corruption
(when a state coerces you, one either doesn't recognize it or shrugs his shoulders and says, "what you gonna do?" You pay or get fined/go to jail/get shot)

So, again, to make clear: I'm not arguing for a specific set of circumstances or "architecture" in the future. I'm arguing that the initiation of force is wrong and counterproductive. The state is one of the last places on earth people accept coercion (along with some religious and parenting practices, neither to be overlooked). If a growing number of people can accept that it's wrong to initiate force (and put it into practice in their own life), then half humanity's battles are won. Then humanity can even begin looking at it's own sustainability without overt cynicism. As of now, we are simply repeating rhyming versions of history over and over again, feeling powerless and unsure what could even be done. Well, I don't think there's any answer that can "fix" a state, but we can certainly fix our minds and our actions in our own lives, and then pass along those principles to our children.

I agree! But probably not in the way you mean. I think being morally opposed to the state is caring. It takes a lot of energy and is as effective as beating your head against a wall to care about what the government does. I mean, care, in the sense that you want to be aware of how to react to regime change; but as I mentioned before I don't think people have as much sway in state actions as you suggest (let alone agree on how to theoretically use the state machine).

 

17

Funny how a conversation about money can evolve Naturally into a conversation about Love. Did anyone else notice the drift?
Tom Campbell (Physicist, My Big TOE) has a lot to say about that. I am not hijacking the thread. The older I get the more I realize it is all about love or fear. (Scary psychopath versus caring and sharing).

Money itself is a Left Brain model of reality. It represents the products of Civilization. The products of nature are free and self renewing. 

If we choose to remain Civilized, we are going to have to do it in space. The surface of a planet is not an appropriate place for industrial civilization.

Choose.

18
Danny-
Fundamentally, mine is a moral argument.
I'm arguing that the initiation of force is wrong and counterproductive.
Yes, I know the Communists also feel that theirs is a moral argument - a very intensely moral argument.  Equality just sounds so reasonable.  We all are for that, aren't we?  I know I am.  Of course their system worked no better - it failed on the human element, just as I believe your morally-based system would as well.

I'm sure you don't see it that way, or you wouldn't believe the way you believe, but its really clear to me.

To use trader jargon - and acknowledging the irony of the phrase in advance - with a gun to my head, I believe the initiation of force is valid under the appropriate circumstances.  Sometimes you have to pick the least-worst option.  And yes of course that can be a slippery slope, but you just do the best you can.

And that's the key.  Doing the best you can.  I do not believe in your absolute moral statement about "initiation of force is wrong" - sometimes, initiating force is entirely appropriate, both from a personal level, and from a societal level too.  It shouldn't be the first choice, but it needs to be there.  That's just how stuff works on planet Earth.

I recognize this position, taken literally, can be used as justification to do all sorts of horrible things.  My approach is to use "the reasonable man" defense - would a reasonable man initiate force in that same circumstance.  Thats the same thing as using the metric "would society in general be ok with this conduct" as a limit or restraint to my own conduct.

And that is my recognition that society itself provides the basis for government.

19

Lots of people waking up.

20

Give me some examples of initiating force being "appropriate." Also, you do realize that it IS the first choice for governments (in that it is the fundamental basis of their power and means of acquiring resources). 

I don't think "society" is a good place to base your principles. Slavery was once widely accepted, and so was the divine right of kings and priests. The good old saying goes, "the road to hell is paved with good intentions," so it doesn't matter if those in power think they are doing good and being reasonable; or if the general person (not that I think they actually think about it) accepts their fundamental power. People accept such things as a fact of life because they are born into it, and then are raised by state acceptors/praisers/apologists, not due to a reasoned acceptance. Again, what are some ways a "reasonable man" would initiate force?
(don't forget that self defense is not initiating force)