A number of interesting developments have happened this week. Of course, interesting things happen every week, but don’t make for very interesting reading. The results of networking and politicking are newsworthy, but not the networking and politicking itself. . . .
The Just Third Way
A Blog of the Global Justice Movement
Friday, September 4, 2015
Thursday, September 3, 2015
If you’ve been reading this blog over the past couple of weeks, you might start wondering if the financial system has any relevance to the real world at all — and we couldn’t blame you. After all, as Adam Smith pointed out in The Wealth of Nations over two hundred years ago, the basic postulate of economics is “Consumption is the sole end and purpose of all production.” Wall Street seems geared toward making money as an end in itself, not as a tool to facilitate production or consumption.
Wednesday, September 2, 2015
When we were taking principles of investment finance in college (centuries ago), we learned various ways of valuing shares on the stock market. Mostly this was because (as we were taught) the easiest way to buy a company is to purchase its shares on the secondary market. (It’s not. The 100% S-Corp ESOP is, under current law, the best way, but it doesn’t apply to anyone who doesn’t work in that particular company. . . .)
Tuesday, September 1, 2015
We probably should have said something about this yesterday, but we were looking at what we think is the single most important factor that caused the Great Depression of 1930-1940: a sudden decline in the value of business loan collateral, and the lack of a replacement collateral when traditional collateral went down the tubes. Today we’re looking at one of the “causes behind the causes”: lack of internal control in the financial services industry.
Monday, August 31, 2015
The recent frenzy in the world’s stock markets had a number of people panicking about the possibility of (yet) another crash of the magnitude of October 1929, and the possibility of another Great Depression on the heels of the Great Depressions of 1873-1878, 1893-1898, 1930-1940, etc., etc., etc. . . . although we don’t call them “depressions” now, but “recessions” ‘cause “depression” is too scary and makes the government look bad.
Friday, August 28, 2015
This has been a relatively quiet week for those of us not involved in stock market speculation on the Wall Street high stakes gambling casino. By the way, if you ever want to make an enemy for life, tell someone a truth he or she doesn’t want to hear . . . and then be proven right (especially about the stock market).
Thursday, August 27, 2015
Yesterday we asked the eternal question, “What if nobody has $95 and nobody has a shovel if we want a ditch dug for $95?” This is actually a very simple question to answer once we understand that when we’re discussing saving, past or future, we’re not discussing what exists in the entire universe. No, we’re only talking about what is happening within the provisions of a specific contract.
Wednesday, August 26, 2015
We got into a discussion last week with someone who insisted that the whole concept of future savings and thus of Capital Homesteading is a scam: you can’t promise to deliver what doesn’t exist. To that, of course, we answer, “Why not? People do it all the time.”
Tuesday, August 25, 2015
Here’s the secret to keeping calm amidst all the panic on Wall Street yesterday. All you have to do is keep on thing in mind: like the preacher’s watch on the pulpit during the sermon, “It don’t mean a damn’ thing.”
Monday, August 24, 2015
Last Thursday we looked at what “uniform and stable” means in terms of a currency standard, and what happens when the currency standard isn't what you could call standard. Today we’re looking at what happens when the price of the standard rises or falls relative to other prices.
Friday, August 21, 2015
As of this writing, the Dow is dropping like a stone. If you believe that the secondary market is in any way related to reality, don’t worry. “They” (meaning the people who control money and credit) will take steps to “reflate” (as Irving Fisher put it) the money supply to continue shifting purchasing power away from producers and toward speculators, gamblers, and the non-productive . . . after they’ve taken their profits from short-selling, of course. . . .
Thursday, August 20, 2015
The number one rule for a reserve currency — the currency into which other currencies can be converted and in terms of which they are valued — is that it must (and that means must) be asset-backed. This does not mean that the asset you use to value the reserve currency must back the currency — “gold standard,” for example, does not necessarily mean that the currency is backed by gold, only that the currency is valued in terms of gold.
Wednesday, August 19, 2015
Replacing a debt-backed currency with an asset-backed currency and restoring an actual standard to the currency can be devastating, relatively painless, or positively beneficial. It all depends on how bad the situation is, and how it is done.
Tuesday, August 18, 2015
Yesterday we looked at the fundamental insanity of having a flexible standard for anything. Today we look at what might make a good standard of value, especially when the idea of having a standard in the first place has become an alien concept.