A regular commenter here – Zarapheth – and I do not agree, but in disagreeing he makes valuable contributions to the discussion here:

The problem with the monetary system is just a small piece of a larger problem.

Yes and no.  The monetary system has indirectly resulted in huge distortions and maldistributions in the economy, and fixing the monetary system by itself will not directly address that, of course.  But I have never suggested that fixing the monetary system is a panacea.  In fact, I have suggested fixing the monetary system only in conjunction with a debt jubilee; but even both of these done at the same time won’t make heaven on earth.

The debt jubilee addresses the maldistribution issue directly and without force, by simply declining to have government force used to enforce existing debts.  This amounts to a collective wealth transfer from debtors to creditors on a vast scale, unlike anything else in modern times, but due to the limitations of what the law can do, it paints this picture with an extremely broad brush.  The virtue of it is that it just leaves everything where it is and subjects no one to compulsion.  But this is a very important virtue politically, socially, economically and intellectually.  Don’t give it short shrift.

Problems will therefore remain – serious problems, even –  but people will be free to deal with them and the rules for doing that will have been greatly improved.  Currently, the rules are incoherent due to the incoherence of the monetary system.  Restoring sanity to the monetary system is only the first step, or perhaps it would be better to say it’s like a pre-condition for dealing effectively and justly with the problems at all.

Put yet another way, fixing the monetary system doesn’t solve all the economic problems, but it is a sine qua non of solving them.

The monetary system comes from and gains its whole value from the community as a whole.

In many ways this is the nub of the disagreement between me and Z.  Z may or may not realize this, but this is exactly the same position taken by the current regime.  This is the basis of the system we currently have, the same system that has resulted in the seemingly insoluble financial crisis.

What’s wrong with it?  Just this:  human beings have no legitimate conjuring powers, either individually or collectively.  No one can create value by decree, or magic, and no ipse dixit can make it otherwise.  Whether it’s medieval alchemists, a banking cartel with a Princeton economist acting as its point man, or a General Assembly from an Occupy encampment, or the King, or the Pope, or the community as a whole, the power to conjure gold out of lead, or to make something out of nothing does not exist, or if it does it does not belong to any human being or group of them.

Yet this is the basis of our monetary system now, and Z seems to be in agreement with it.  It is as if by decree we could say that a meter or a gallon was one thing today and a completely different thing tomorrow, with each being a true measure by virtue of simple fiat – ipse dixit.  This is a tyranny of whim, the tyrants themselves being fungible.  Sound familiar?

Though fixing the monetary system will help the economy, we must also fix ownership of land and natural resources, along with ownership and control over all other community derived privileges.

If land and natural resources are “community derived privileges”, then they cannot be “owned”, other than by the community, which is to say no one in particular.  This would be socialism, or a variant of it.  I tend to think of socialism as a failed social experiment of the 20th century that took place primarily in the Soviet Union.

Inasmuch as “centralized money and credit” was a plank of the communist manifesto, and properly so, it would appear that socialism and a coherent monetary system are incompatible.  Socialism depends in large measure upon the very idea that a coherent monetary system would reject:  namely, that money is a function of the collective will, rather than subject to the natural world and the natural order like everything and everyone else.

In the end, Z votes for tyranny; he just wants to change tyrants.



Filed under financial crisis

2 responses to “Z

  1. Zarepheth

    I believe that everything not made by mankind should be equally shared amongst everyone. That means land and all forms of natural resources.

    I also believe that things which come from the community should benefit everyone equally. That means if the community allows the formation of private monopolies, the value of the monopoly belongs to the community and those who “own” the monopoly should pay the community full market rent for the monopoly’s value (in this instance, the right to create and control credit and our nation’s currency).

    I also believe that everyone should retain full ownership for the product of their labor – after compensating the community for any natural resources they used and compensating their suppliers for any other inputs to the product of their labor.

    Though my first two points may match up with various forms of socialism, my last point matches up with a free market, as generally advocated by capitalism. I say that fixing the monetary system is just a small part of the overall problem because there is quite a bit of private ownership and control over things which I feel belong to the community – and those owners/controllers are _not_ fully compensating the community for the resources and privileges they’ve received. But I believe we still need to fix our monetary system. It may even be a required first step to fixing everything else. I just want people to realize that after fixing our system of money we must tackle other injustices or the fixes won’t last.


    • You know Z, largely due to my interactions with you and those who think like you, I’ve come around to believing that a little temporary socialism is required. Or at least you might call it that.

      For example, a central bank would be useful, even necessary, short term. Indeed, the idea would be to nationalize the banking system under the central bank, which sounds radical until you realize that the banking system was already effectively nationalized in ’08, although we called it “TARP” and the beneficiaries of this action were very few, i.e., the 1%.

      So the central bank and banking system should be wholly government owned and operated. At least for a while. Its functions would be to issue currency, collect gold in exchange, charge seigniorage, and lend substantially all the net proceeds from those operations at no interest, through the banking system that would now be its wholly owned subsidiary.

      I’ve also advocated a five year nationwide moratorium on evictions due to non-payment here: https://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-iii/

      Now, because the dollar gold price would be so high after a debt jubilee (although capped) – something like $30,000/oz – and because dollars would be otherwise very dear, it is likely that gold would pour into the government’s coffers in quite large quantities for quite some time, and its high price would enable, and probably justify, very large seigniorage charges of perhaps 50% or more. Because even with a 50% seigniorage charge, it would make little sense to do anything with gold other than sell it to the government in exchange for currency, or dollars in some other form.

      But at some point I should think that private banking would be permitted or even encouraged, and evictions for non-payment could resume. Although I am also open to the alternative. I can see advantages. If evictions for non-payment were never permitted, for example, then real estate could be owned, bought or sold, but could never effectively be rented or mortgaged, because there would be no way to effectively enforce either. And regarding the central bank, private banks could compete with the government bank by charging less seigniorage, or maybe they would do that but then charge interest on the other end, which i think the government central bank should never do but some people seem to think it’s a good thing for private banks to do it. Although I’m not so sure about that, which is why I am open to the contrary idea that maybe there should be no private banks.

      Note that I’m discussing things that can effectively be done with the law. The law cannot effectively prohibit the charging of interest directly; but what it can do is authorize the government to take over and nationalize any bank that does it, so it would make little sense for anyone to try. There might still be a black market or loan sharking, but you can only do so much with the law.

      Conceptually I just can’t go along with you on abolishing private ownership of land and “resources”, whatever they are, in favor of “the community”, which is an abstraction incapable of specific identification. Among other problems this has.

      But I think I’ve moved in your direction somewhat, at least as much as I am able given how I think about these things.


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