Monday, August 10, 2015

Surviving the Crash


Once in a while we get a question that is a little out of our “core competency,” i.e., economic and social justice.  It’s not that we don’t know something (or even everything) about the subject of the question, it’s just that it’s not something with which we usually deal — like going to the grocery store to buy laundry soap.  Sure, they carry a full line of it . . . but what, exactly, does laundry soap have to do with groceries (besides cleaning your clothes when you spill soup all over them, that is)?

Wage slaves and land speculation.
That’s not going to stop us from answering, though — especially when it makes a great segue for another “Why We Need Capital Homesteading” posting.  So, what was the question?  One of the Usual Experts has pointed out the obvious, that we’re probably headed into yet another real estate bubble . . . which ties in with the current stock market bubble, and the global reserve currency bubble, and the consumer debt bubble, and the government debt bubble, and. . . .

You get the idea.  Anyway, here’s the question:

“In the face of all this is there anything we as individuals can do to take protective measures and batten down the hatches for the storm?”

Protective measures . . . L'Amour style.
The flip answer is, Head for the hills.  Big help, that.  A better (but still flip) answer is, Head for the hills really fast, tote your food, weapons, and water with you, and watch your back trail.  So we’ve been reading too many Louis L’Amour novels.

Seriously, we’re doing what we can to get to Pope Francis.  Despite the various misrepresentations in the media — not all by non-Catholics (talk about being misunderstood!) — the head of the Catholic Church is probably the only world leader with any credibility right now, whether with Christians, non-Christians, and miscellaneous, and who might give the Just Third Way a fair hearing.  He’s not returning our phone calls, though. . . .

The only thing we could think of off the bat is to get rid of all consumer debt, including (or especially) a home mortgage, and don’t take on any more if you can possibly help it, especially home equity type stuff.  What happened to a lot of people during the last housing bubble was that they saw the increased (speculative) value of their homes go up, leveraged it to buy stuff, then got caught with their pants down when prices plunged.  The best individual advice, then, is do not, under any circumstances, leverage paper gains even if you can afford it, because you are still going to need a place to live if something goes wrong.

Fortunately, however, someone else rang in on the discussion:

Urban Homesteading.  And vicious poultry.
“I think we need to be working as much as we can to form an alternative economy. Especially barter and within small groups, local friends, parishes. And urban homesteading as much as possible.”

In response, the original questioner quoted a long section out of Father William Ferree’s pamphlet, Introduction to Social Justice (1948).  This was all to the good . . . except that the questioner realized she had given the response in terms of social justice, not individual actions, as she herself had requested.  As she said,

“Lol, I just realized that I just asked for individual solutions being that social justice solutions aren’t being pursued on a large scale. I’m having a fuzzy-brained day, sorry!

“We have tried to do some suburban homesteading but live in a neighborhood that doesn’t allow fences and has a serious rabbit problem.  The only thing the rabbits haven’t eaten is my tomatoes. Ugh, it’s quite frustrating. Of course if the market crashes and we lose our home then even my tomatoes won’t matter. . .”

Having a black thumb, we hadn’t even thought about the home garden option.  We can make a plant die in agony just by thinking about trying to grow it.

Anyway, speaking individually — and the whole point of social justice is to make individual virtue possible — the other contributor had the right idea.  As Adam Smith pointed out more than 200 years ago, “Consumption is the sole end and purpose of all production.”

Jean-Baptiste Say
All economic activity within a rational system (e.g., the Just Third Way, free plug) is directed to being able to produce enough by your labor and capital to meet your own needs, or to exchange for what others produce to meet your own needs.  As Jean-Baptiste Say pointed out in his “Law of Markets,” it is impossible to consume what has not been produced, so that (all things being equal) you must produce in order to consume.

“Money” is simply the means by which I exchange what I produce, for what you produce.  Money is anything that can be accepted in settlement of a debt: “all things transferred in commerce.”

Flowers to the Fed? Financial Freedom?  "Say" what?
Money is therefore either the thing itself, or a contractual claim on the thing.  ALL money in that sense is “barter money.”  It must either consist of, or represent the present value of an existing or future marketable good or service.

Modern confusion about money results from the fact that governments realized they could expand their regulatory role over money to actual money creation.  They realized that they could manipulate the currency (“current money”) by issuing claims on the goods and services owned by others, backing the money with government debt instead of private sector assets.

What we propose, therefore, is to restore the monetary system to its proper form, function, and intent in conformity with the ORIGINAL Federal Reserve Act that operated only as intended from 1914 to 1916 before the politicians hijacked it to finance World War I.

Before we can do that, however, it is a good idea to have some way of being productive and producing a marketable good or service at the micro level for your own consumption, or to exchange with other micro-producers “off the grid.”  Don’t give up your day job, though.

Despite all that, we think there’s still a reasonable chance we can get to the right people and start turning things around.  We think that with an intensive program of expanded capital ownership, the U.S. economy would turn around in 18 to 24 months, and full employment would be reached in 3 to 5 years.

In the meantime, jack or trap the bunnies. They taste kinda like chicken. . . .

#30#

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