Struggling with usury

[Douglas P.]

This seems to be a naked claim to unfettered ownership of virtually all wealth in a territory, if held in tradable dollars, which "private citizens" merely utilize as lessees, paying a neverending series of fees for the "service."

What happens when the government prohibits not just counterfeit dollars (private, unbacked "expansion" of that govt debt--why is it OK for one side in this social contract to manipulate this service for the benefit of its brokers?) but all other exchange media as well; or demands a "cut" (denominated in its own wealth counters) for those who would prefer to eliminate their reliance on commodity prey to the Issuer's coin-shaving habit?

Rev. Buchanan,

I should have been a little more clear in my response. My initial point was to try and dispel the myth that Gov't Debt is a bad thing, per se, and that it needs to be paid back.

I was using private savings in the national accounting sense. For every dollar in a savings account right now there is a corresponding dollar on the Treasury's balance sheet. We call this liability the federal debt. If we were to "balance the budget" and eliminate the federal debt, we would, by the rules of accounting, remove every dollar from circulation. And, as I pointed out earlier, we've ran a budget surplus for more than two quarters twice in US history, once from 1927-1929 and the other time being 1999-2000. You can pull up a chart of the DOW and see how well that worked out.

However, if someone wants to take their dollars and convert them into silver because they think that is a better investment, or a better way to save, than so be it. But the point still stands, they would have no dollars to buy gold if the gov't didn't create them in the first place.

 

[Douglas P.]

Just curious: what do people think of his "Theory of Money and Credit"?

It's been a while since I've been on the academic side of things. I run a Global Macro research firm, so much of my research and studies are more focused actually profiting from the current environment as opposed to trying to argue for some sort of policy change.

With that being said, I admire a lot about the Austrian school, I think they rightly critique the neo-classicals (modern day Keynesian) when it comes down to the neo-classical's basic premise of equilibrium.

However, I think modern Austrians have a very poor grasp on the nature of our current monetary system. I think they, much like their neo-classical rivals, have a very archaic, almost mythical, view of money and banking.

 

[Contra_Mundum]

This is a shorter post than I found myself composing (and exceeding my true limits, as usual). Let me begin by saying, I recognize (even before reading your second comment, as I have now) that you are coming at the issue/question from the standpoint of a "this is the system we've got right now" perspective. There's the critique of the flaws in the system and of the system itself, which is rigged and worse than ever it was. And there are folks who operate within it "as is," who use it like you do, who nevertheless make observations on its natural (moral) justice.

However, if someone wants to take their dollars and convert them into silver because they think that is a better investment, or a better way to save, than so be it. But the point still stands, they would have no dollars to buy gold if the gov't didn't create them in the first place.

To what you said: First, confiscate the gold. Then, and only then, do dollars come first. Then, dollars can be redefined in terms of gold (or another commodity). Then make dollars the world reserve currency, but for assurance sake make them gold-convertible to internationals. Then, inflate further. Then, close the international gold window. Now, there is no backing whatever. But there is a fist.

Certainly, the 1999-2000 "surplus" was pure accounting legerdemain. But in any case, once the system is fundamentally unstable (goes from four wheels to two, or less), it cannot be slowed down without falling to the ground. There is now no more "soft landing" possible. The fiscal duties demanded to reestablish honesty in the system will cost too much, as 27-29 and 99-00 demonstrate. The bumbling Hoover and FDR both made the Depression, by "fixes" to what was flawed in the original "rigging" by creation of the Fed. (The economy had recovered from worse events than Oct. '29 quicker, being left to right itself without interference). The heights now climbed by outrageous interference cannot be descended; only an inevitable fall awaits. I wish it were otherwise.