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-   -   ... on debt as money (http://projectavalon.net/forum/showthread.php?t=20886)

Fredkc 03-11-2010 04:02 PM

... on debt as money
Doug Casey on Surviving Financial Apocalypse Now

Interviewed by Louis James, Editor, International Speculator

Let's talk about debt.

Doug: Sure. This is a story that's going to end very badly for a lot of people. I've said this before, in many different ways, but I think it's worth saying again, because most people just don't grok it…

L: Grok. From the Martian word for "drink" and "understand." In Heinlein's novels, water was a critical element of Martian culture – makes sense, for a desert planet. When you grok knowledge, as when you drink water, you don't just hold it in your mouth and spit it out. You take it into yourself, it goes into your blood, and eventually into every cell in your body; it becomes part of you. This is heavy-duty understanding… Sorry for jumping in with the spontaneous lecture. I just suspect many readers will not know the term.

Doug: Or put another way, in the negative case, most people just don't get what money really is – and what it isn't. They take it as a given, as part of the cosmic firmament. But it's not. A prime example of this is the mistaking of debt for money, a phenomenon David Galland pointed out in a Casey's Daily Dispatch a few weeks ago. This is why the entire world's monetary system today is headed for a disastrous failure. And this is absolutely inevitable. There's no way around it.

L: Why?

Doug: Because you can't use debt as money. As I've pointed out before, Aristotle, in the fourth century BC, was the first person to define what money is. And what is it? It's a store of value and a medium of exchange.

The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it's not a good store of value. And it's rapidly and radically becoming less of a store of value. What we use as money today is actually not money; it's currency. Technically, that's simply a word that indicates a government substitute for money.

What does make for good money? Again, Aristotle gives us the answer. It's something that has five characteristics: it's durable and divisible, consistent and convenient, and has value in itself.

[ the rest... ]

Note to Peace & Love;
I you don't know of it already, Lew Rockwell's site is one of The Best (INHO) on "real" financial thinking, and also re. the politics of freedom.


Kulapops 03-11-2010 04:31 PM

Re: ... on debt as money
Thanks for that Fred... a very interesting read.

The only problem with gold's intrinsic value is that we can't eat it.

But I don't think anyone can argue with the economics of it. And if they do, you can just hit them on the head with it.


You'd think that something like friend's dough (can't remember the name now..what's that yeast that you grow, then give a bit to a friend, grow it again.. make another loaf?) would win prizes because it 'lasts' forever and you can eat it.

Someone's got their priorities wrong somewhere!

Incidentally to any newcomers to the world of finance who haven't seen it already, I wholeheartedly recommend you see

Fredkc 03-11-2010 05:12 PM

Re: ... on debt as money
"The only problem with gold's intrinsic value is that we can't eat it."

Very true.
It is actually what you'd call a "special use" commodity.

It does have the weakness you mentioned. If you find yourself in a situation where no one will accept it, you can't just go home and eat it yourself.

I had an interesting experience along those lines about 2 months ago.

As an experiment, I tried to make a certain purchase, by offering in exchange a newly minted, solid silver US coin.
Face value: $20 U.S.
Intrinsic value: whatever an ounce of pure silver is going for today.

My coin sat "on the table" for almost 2 weeks, before anyone would accept it. Fortunately I wasn't trying to buy food. ;)


peaceandlove 03-11-2010 11:06 PM

Re: ... on debt as money
Blessings Fred,

Yes the 'Money as Debt' video series has been posted to Avalon or Camelot before, it's very good.


Note to Peace & Love;
I you don't know of it already, Lew Rockwell's site is one of The Best (INHO) on "real" financial thinking, and also re. the politics of freedom.
I LOVE Lew Rockwell as much as I LOVE Ron Paul, another Austrian School of economics scholar.

Did you mean (IMHO)? :mfr_lol:





The Gold Standard

Mises Daily: Thursday, March 11, 2010 by Ludwig von Mises

[This article is excerpted from chapter 17 of Human Action: The Scholar's Edition and is read by Jeff Riggenbach.]

Men have chosen the precious metals gold and silver for the money service on account of their mineralogical, physical, and chemical features. The use of money in a market economy is a praxeologically necessary fact. That gold and not something else is used as money is merely a historical fact and as such cannot be conceived by catallactics. In monetary history too, as in all other branches of history, one must resort to historical understanding. If one takes pleasure in calling the gold standard a "barbarous relic,"[1] one cannot object to the application of the same term to every historically determined institution. Then the fact that the British speak English and not Danish, German, or French is a barbarous relic too, and every Briton who opposes the substitution of Esperanto for English is no less dogmatic and orthodox than those who do not wax rapturous about the plans for a managed currency.

The demonetization of silver and the establishment of gold monometallism was the outcome of deliberate government interference with monetary matters. It is pointless to raise the question concerning what would have happened in the absence of these policies. But it must not be forgotten that it was not the intention of the governments to establish the gold standard. What the governments aimed at was the double standard.

Continues: http://mises.org/daily/4153

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