Inflation v. Employment, or, Cotton is King

Regular Readers of this blog may have gotten the idea that we’re not exactly enamored of Keynesian economics.  If so, they have the right idea: we’re not.  And there are a lot of very good reasons for it.  For today, however, we’ll confine ourselves to the alleged tradeoff between inflation and employment.

But Is It Usury?

 

In the previous posting on this subject, we noted that the difference between interest per se and usury is that interest is a legitimate sharing of profits on some equitable basis, while usury consists of taking a profit where no profit is due.  Complicating understanding of this difference is the confusion between past savings and future savings, and the different types of money derived from each of them.

The First Principle of Finance

      As we saw in the previous posting on this subject, when people have an inadequate understanding of money and credit, they necessarily get themselves into a bind called “the Economic Dilemma”: that you can’t profitably finance new capital without increasing demand to justify it, but you can finance new capital at all if you don’t have the money savings accumulated from decreasing demand!

Crypto Currencies: Coin or Con Game?

Just yesterday the Wall Street Journal had an opinion piece by Mr. Andy Kessler, who writes for the Journal on technology and markets.  The article, “The Bitcoin Valuation Bubble” (August 28, 2017, A15) raised some interesting questions . . . such as, What is a “Bitcoin,” anyway?

Aaaaaand Even More on Money. . .

Every time we think we’ve answered a question as thoroughly as we can, we always find someone who can misunderstand what we’ve said, and will keep dragging in more and more things, drifting further and further from the original question.  Generally it’s because the questioner is convinced we’re wrong, and only asked the question to prove that point, and didn’t pay any attention to what we actually said because he or she “knew” what we “really” said . . . especially when we didn’t. . . .

Banks and the Stock Market, V: The Forms of Money

Ask most people to show you what money is, and they will pull out a dollar bill, a pound note, a crown, franc, or some other piece of currency — assuming they have some, and they are reasonably certain you’re not going to grab it and run off down the street or try to guilt them into giving it to you just because you’re rich enough to be carrying around such enormous amounts of cash.

Past and Future Savings, II: Emancipation from the Slavery of Savings

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.

Past and Future Savings, I: Outside the Parameters of the Question

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.”

Flexible Standards, VII: Appreciating Currency

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.

Some (More) Thoughts on Money

We got some comments a week or so ago when we started the just-finished series on the Greek debt crisis.  While no doubt well-intentioned, however, the comments were based on misconceptions about money, credit, banking, and finance, as well as the facts of history, that made it impossible to respond.  Still, we tried.

Solving the Greek Debt Crisis, XI: Working With Debt

Yesterday we saw how the United States implemented a plan to replace its various debt-backed currencies (United States Notes, National Bank Notes, and the Treasury Notes of 1890) with debt-backed Federal Reserve Bank Notes, and replace the debt-backed Federal Reserve Bank Notes with asset-backed Federal Reserve Notes.

Solving the Greek Debt Crisis, VII: Property and Money

Making every child, woman, and man productive is key to solving the Greek — or any other — debt crisis.  Figuring out how to make everybody productive, or at least providing the opportunity and means whereby they can become productive is quite another.  (We say “opportunity,” for everyone should be free to decide not to be productive, assuming that no one else is compelled to support anyone who freely chooses not to be productive.)

What Is a Central Bank Supposed to Do?

Happy Saint Patrick’s Day.  We won’t be wearing green on the blog today, but we will be talking about it.  Long green, that is: money.  Admittedly, that’s a pretty clumsy way of segueing into our subject, but they can’t all be smooth . . . which doesn’t detract from the importance of what we’re talking about.

Standards, XI: Capital Homesteading for Every Citizen

The whole point of this blog series has been the importance of standards — weights and measures, moral, legal, and (for our limited purposes here) monetary.  The bottom line is that the Number One Rule for money within a stable and progressive economy (using “progressive” in its late 19^th, early 20^th century sense of doing old things in new ways, not today’s sense of doing the worst possible new things in completely insane ways) is that all forms of money in an economy must be measured in terms of, and convertible into, a stable and elastic asset-backed reserve currency.

Standards, X: The Federal Reserve Made Easy

As we saw in yesterday’s posting, the Federal was established to resolve “the money question,” and (at least according to the Federal Reserve Act of 1913) provide the country with an elastic, asset-backed reserve currency, convertible into gold on demand.

Standards, IX: Establishing a Standard

The problem with all of the monetary reforms — and lack of reforms — at which we looked at Monday was they were all Currency School, that is, based on past savings.  This tends to limit both how much can be done, and who can do it.

Standards, VIII: “The Money Question”

Once upon a time in the late 19^th century in America, there was a financial panic.  By coincidence (or maybe not), the “free land” under the Homestead Act of 1862 had effectively come to an end.  At the same time, a sudden demand for converting investments into cash from overseas investors put a strain on the inelastic, debt-backed money supply.  This consisted of United States Notes (the “Greenbacks”), the National Bank Notes, and the Treasury Notes of 1890.

Standards, VII: Restoring a Standard

People today tend to think there was something inherently wrong in the German people that they allowed Hitler to come into power.  From a purely economic and financial standpoint, it’s not all that hard to understand.

Standards, VI: Getting Back to Money

Having allowed our readers to refresh themselves with a brief hiatus before completing this blog series, we return to our discourse on the importance of standards, especially when dealing with money and credit.  Possibly to oversimplify, there may be no greater single problem today in the economic and financial sectors than the fact that the concept of standard has ceased to have any meaning.

Standards, V: When Governments Get Interested

So far in this brief series we’ve covered the why, what, and application of standards, and what can happen when you don’t have any.  Today we’re going to look at what happens when people manipulate standards to their own advantage, especially the monetary standard.