The Crisis That Need Not Be, II: Redeeming the Central Bank

Last Thursday we noted how central banking was diverted from its original purpose from the very beginning in 1694, away from providing liquidity and “accommodation” for the private sector, and forced into the role of government finance.  This was done to such good effect that virtually every history book that bothers to mention central banking makes the erroneous claim that central banking was invented to provide banking services for government.

News from the Network, Vol. 9, No. 08

A number of very positive things have happened this week, so we’ll go straight to the news items and cut the introduction short:

The Crisis That Need Not Be, I: A System Designed to Fail

Maybe it was the tagline that caught our attention: “Suddenly banks everywhere are in deep, deep trouble.”  (“The Return of Crisis,” Peak Prosperity Blog, February 8, 2016.)  After we finished laughing, we decided that the reason for our merriment might make a good blog posting.  It still does, even though it was from something we saw on the internet a couple of weeks ago.

Focus on the Fed

This is the time of year many Christians celebrate (if that’s the right word) “Lent.”  Lent is a period of forty days (not counting Sundays) preceding Easter, whenever the powers-that-be decide that’s going to be, during which you, well, prepare for Easter.  Generally that means “giving up [fill in the blank] for Lent,” thereby achieving a feeling of immense self-satisfaction and virtue for having “given up” something you’d probably be better off without in the first place.

About That Labor Theory of Value, III: How Ownership Helps a Free Market

Yesterday we noted that to make the bargaining positions of “labor” and “capital” equal, it is only necessary to turn owners of labor into owners of capital as well.  Obviously, simply turning propertyless workers into capital owners isn’t the only thing that has to be done, of course.  There must also be equality before the law.

About That Labor Theory of Value, II: Determining Relative Contribution

Last Thursday we fiddled around a bit with the concept of “productivity” as defined by the Bureau of Labor Statistics and most economists.  Briefly, the idea is that labor is the source of all production.  At best, capital only “enhances” labor.  Just as the pictures we didn't put into this blog are supposed to enhance understanding.

News from the Network, Vol. 9, No. 07

We may not have very many news items this week, but they are on important issues . . . such as the basis of the Just Third Way, and how existing social structures might not be optimal for achieving an economically and socially just society.  Since there is a great deal to get through, we’ll cut straight to the chase . . . after a word or two to encourage you to donate to CESJ as painlessly as possible:

About That Labor Theory of Value, I: Binary Productiveness

Occasionally we post a blog not because people want it, but because we think they need it.  Can we force anyone to read it?  No, of course not.  Do we think that everyone is going to understand it or even care about it?  No.  That, however, doesn't mean that we should remain silent.  (Or that we should post illustrations when we can't think of any. . . .)

Socialist Delusions, Capitalist Illusions, XII: “Popular Capital Formation”

We were going to call this “Capital Formation for Dummies,” but we don’t want to risk a lawsuit from one of our favorite — and most useful — publishers.  All we want to do is outline how, under Capital Homesteading, any child, woman, and man can become an owner of productive capital without selling his or her soul, or taking stuff that doesn’t belong to him or her.

Socialist Delusions, Capitalist Illusions, XI: The New Frontier

As we saw yesterday, America — the world — needs a “new frontier.”  Nor can it be a frontier restricted to an élite or a chosen few, but must be open to every human being who chooses to take advantage of the opportunity.

Socialist Delusions, Capitalist Illusions, X: The Closing of the Frontier

At the Columbian Exposition in Chicago in 1893, Frederick Jackson Turner (1861-1932) delivered a paper titled, “The Significance of the Frontier in American History.”  Turner’s paper was one of the most important studies of the American character, civilization, and economy ever published.

News from the Network, Vol. 9, No. 06

Perhaps the most interesting thing about the current fluctuations in the world’s stock markets is the fixed — and erroneous — belief that such things have anything to do with real economic growth.  The powers-that-be can’t seem to get it into their collective heads that “money” is the result of economic growth, not its cause.  Thinking that printing more money will “stimulate the economy” is putting the cart before the horse, and turning over control of money and credit to the politicians instead of to people who actually produce marketable goods and services.

Socialist Delusions, Capitalist Illusions, IX: Capitalism’s False Front

Probably few people today know what a “false front” is — or, more accurately, was.  They do not have the questionable advantage of having been addicted to B Westerns and television cowboy shows.  Otherwise they’d know that as the camera swoops in on the lone hero doing the Trampas walk down the main drag at high noon, one of the things catching the viewer’s eye is the sight of buildings with big fronts and small behinds.

Socialist Delusions, Capitalist Illusions, VIII: What About Collateral?

Yesterday we saw how commercial and central banks acting in concert as intended can create an elastic and asset-backed reserve currency to establish the foundation on which to finance sound industrial, commercial, and agricultural projects.  Not that they actually operate that way in many cases today; the role of the central bank has been completely perverted and hijacked to serve political ends in virtually every country that has a central bank.  And those that don’t?  They rely on the misuse of another country’s central bank, thereby indirectly helping to perpetuate an unjust system.

Socialist Delusions, Capitalist Illusions, VII: Reserves and How to Use Them

We ended yesterday’s posting by agreeing with the old saw that you need money to make money.  Traditionally, this has meant at least one of two things, usually both.  One, that the only way to finance new capital formation is to restrict your (or somebody’s) consumption, accumulate money savings, then use the accumulation to purchase productive capital.  Two, somebody else accumulates savings that you borrow in order to purchase productive capital.

Socialist Delusions, Capitalist Illusions, VI: Where Does the Money Come From?

Last week we decided that having private property in capital is absolutely essential if someone is to have the power to exercise his or her rights, thereby becoming more fully human.  This is because (as Daniel Webster reminded us nearly two centuries ago), “Power naturally and necessarily follows property.”  You need power — the ability for doing — to exercise rights, and thus private property to have power in order to make your rights effective.

News from the Network, Vol. 9, No. 05

This has been an interesting week for the Just Third Way.  Work is progressing on our analysis of the 1916 Easter Rising that took place mostly in Dublin a century ago.  We have found a number of original sources most people seem to be passing by, and — of course — are able to put a unique twist on things from the perspective of the principles of economic and social justice.  Now to the news:

Socialist Delusions, Capitalist Illusions, V: The Economic Dilemma

Despite the obvious fact that technology produces marketable goods and services better, less expensively, and in greater quantity than human labor ever could, some people continue to insist that human labor is the only “real” factor of production.  Nor is this delusion confined to socialists.  It doesn’t matter where you go, “productivity” is measured in terms of output per labor hour.

Socialist Delusions, Capitalist Illusions, IV: The State from Which All Blessings Flow?

We ended yesterday’s posting with the eternal question, Why, if private property in capital is so important to the establishment and preservation of the rights to life and liberty (to say nothing of pursuing and securing happiness and safety), how is society to survive if so few people have it?  Which leads to another question, Since private property in capital is so important, how are people to get it?

Socialist Delusions, Capitalist Illusions, III: Life, Liberty, and Property

Socialists-Who-Deny-They-are-Socialists (as well as a number of socialists) often reject the claim that socialism can be defined as the abolition of private property.  They will point out that there are differences between Marxist communist socialism, communist socialism, Fabian socialism, National Socialism, Christian socialism, guild socialism . . . etc., etc., etc., and say that proves that anyone who says that (in a sense) socialism can be defined as the abolition of private property doesn’t know what he or she is talking about.

Socialist Delusions, Capitalist Illusions, II: What is Property?

The reason so many socialists insist either that they are not socialists, or that socialism doesn’t involve the abolition of private property as a fundamental tenet, is that they don’t understand property — private or otherwise.  This, in turn, leads to a misunderstanding of money and credit, and even of “personality,” i.e., having rights — keeping in mind that having rights defines you as a person.