Today we’d like to look at money. Well, not just look at it, but offer a few random thoughts.
When the subject of money comes up, some people tend to look exclusively at how (other) people who have money use it. Apparently explaining widespread enthusiasm for the Great Reset, inclusive capitalism, and so on, such individuals often believe the wealthy use their money properly when they provide employment for workers or give it directly to the poor.
Certainly, we agree that those are very good ways to use money. Both are essential in the present condition of society, notably the shambles of the global economy.
Shocking as it might seem, however, neither job creation nor almsgiving is the best use of money. Both create a condition of dependency inconsistent with human dignity.
This suggests that the proper use of money is primarily to assist all people to become productive on their own behalf, not to become wage, debt, charity, or welfare slaves. People should be able to take care of themselves through their own efforts and not be a charge on private charity or public welfare.
In short, the real problem with money is not that the rich are able to use it in ways that benefit only themselves, but that the poor do not have access to the same opportunity and means to use it the same way. Jobs, charity, and welfare are not enough. What the poor need is not the money of the rich (except as a temporary helping hand when necessary), but a way to use their own money for themselves.
Nowhere is this more evident than in the assumption embodied in Keynesian economics that limits most people to jobs and redistribution as their sole sources of income. Given that, as technology advances and displaces people from their jobs, the demand for redistribution can only increase. Nowhere is this more evident than in the social and economic conditions that led to the rise of what we can call “über-wealth.”
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| Do socialists even know how to use a sickle? |
Although it seems as if advancing technology is the real problem, money and finance are the key to the problems Keynesian economics and other forms of socialism purport to solve, as well as the solution it really does not present. Where the displacement of labor — and thus income — by technology is self-evident, the misuse and manipulation of money, a social tool that should be accessible to everyone, is far more subtle, almost insidious in its operation.
The effects, however, are spectacularly evident over the last two-hundred years in the phenomenon of “über-wealth.” This received a huge boost with the Keynesian New Deal in the 1930s when government debt replaced private sector assets as the preferred backing of the currency, what could be called “legal counterfeiting.”
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| Man of the People |
Creation of über-wealth accelerated dramatically beginning in the 1970s when the U.S. Dollar, the de facto global reserve currency, was taken off the gold standard and allowed to float. It is important to note that the “gold standard” as used in the United States from 1933 to 1971 did not mean the U.S. dollar was backed by gold, which was never the case anyway, except for the “gold certificates.” Instead, it meant that the official value of the dollar was fixed at 1/35th of an ounce of gold, which put a brake on how much debt the government could issue and monetize, as too much debt — and thus new money — would increase the price of gold relative to the amount of dollars, devaluing the dollar.
Freed from the necessity of maintaining a fixed value for the currency, the only consideration limiting the amount of money that could be created was political expedience and the ability of the already wealthy to absorb the massive influx of cash into the economy.
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| Socialist Elite |
Simply put, Keynesian monetary theory is designed to concentrate wealth, a fact that Keynes made clear throughout his General Theory. To understand why this is bad and anti-human, we must first understand money. As we noted in the Introduction, the essence of money is that it is how I exchange what I produce, for what you produce. Money is a “social tool.”
We produce to be able to consume. Of course, if we want to exchange our respective productions, we must have a common unit of measure, and it must be stable. That is so our medium of exchange remains the same value when we use it as when we obtain it.
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| Louis Kelso |
Further, there should be no artificial or external interference in exchanges, such as artificially restricting how much of the medium is available. Worst of all is when some authority changes how we value or measure our medium of exchange and thus the value of what we are exchanging. As Louis Kelso explained,
Money is not a part of the visible sector of the economy. People do not consume money. Money is not a physical factor of production, but rather a yardstick for measuring economic input, economic outtake and the relative values of the real goods and services of the economic world. Money provides a method of measuring obligations, rights, powers and privileges. It provides a means whereby certain individuals can accumulate claims against others, or against the economy as a whole, or against many economies. It is a system of symbols that many economists substitute for the visible sector and its productive enterprises, goods and services, thereby losing sight of the fact that a monetary system is a part only of the invisible sector of the economy, and that its adequacy can only be measured by its effect upon the visible sector. (Louis O. Kelso and Patricia Hetter, Two-Factor Theory: The Economics of Reality. New York: Random House, 1967, 54-55.)
It’s at least something to think about.
#30#