Michael Stuart Kelly

Money and Politics - The Money Masters

Recommended Posts

Money and Politics - The Money Masters

The purpose of this thread (and later discussion) is almost a lesson plan in how the world works with respect to money and politics. Those who manage to separate several hours of their time and simply go through most all the links in this post will put a vast amount of solid and simplified knowledge in their head. It can be done in a day with lots of time left over, or spread out over a few days. This is a kind of shortcut plan for those who have been mystified by the obscure and needlessly complicated world of finance. They will be able to move on to other areas of finance with a solid base of understanding. Call this premise learning.

A word of caution. All writing on finance is tinged with an agenda and this is no exception. However, the agenda is isolated (which is easy because it is glaring: basically fiat money and trust in politicians) and it is covered below. Also, this is not a complete presentation on anything. There are gaps, as there are with all fundamental discussions. Other such presentations for Objectivist and libertarian-leaning laypeople on money and politics might exist that are just as easy to understand and chock full of essentials, but I have not encountered any.

There is a video that was linked to on this thread on RoR that I watched and found fascinating. (Hat tip to the guy who started the thread, which is a pseudonym for a person who used to use even another pseudonym and who doesn't like me, but the hat tip still stands. It is a wonderful video and I am grateful he posted it.)

The Money Masters - Part 1 of 2

The Money Masters - Part 2 of 2

These links are the versions I saw, but there is some problem with a small skip in the second one. The full thing is a three and a half hour documentary narrated by Bill Still. It can be seen for free on the links above (and the one below) and it is worth every minute invested in watching it. The link below is to the full three and a half hour documentary on Google video. The image is a bit fuzzier than the two part version and this is probably due to encoding a VSH version.

The Money Masters - How International Bankers Gained Control of America (full version)

I cannot think of a better presentation than The Money Masters for understanding what central banking and fractional reserve banking mean and what their roles are in our own lives. This documentary is simply stunning in its teaching method and research. Milton Friedman even liked it. Most of all, IT IS NOT BORING. I fully intend to see it several more times.

Here are some related links, all of which bear visiting.

Money as Debt: This is a companion video for viewing after seeing The Money Masters. It is a 47 minute documentary narrated by Paul Grignon. I have not seen this as of this posting, but I fully intend to in the near future. I will report on it in the thread. (Curiously, this copy was furnished by http://www.chinaworker.info, which looks like a really interesting but whole other can of worms.)

EDIT: The original link was broken. Here is a valid one: Money as Debt

The Money Masters: The official website where you can purchase a DVD if you wish (you can also get Money as Debt). None of the DVDs are expensive.

Money as Debt: The official website of Money as Debt, where it also can be purchased. There are some highly interesting links on this site.

Bill Still: The Wikipedia article on Bill Still, the narrator of The Money Masters. He has a very interesting history. I would not mind meeting this guy someday.

Here are the 27 segments of the The Money Masters (gleaned from the site here where a synopsis of the film is given). Headings are provided by the Wikipedia article on the film (which is otherwise not good at all as of this posting). The headings pop up as titles during the film.

Introduction

The Problem

The Money Changers

Roman Empire

The Goldsmiths of Medieval England

Tally Sticks

The Bank of England

The Export of Private Central Banking to America

The Rise of the Rothschilds

The American Revolution

The Bank of North America

The Constitutional Convention

First Bank of the U.S.

Napoleon's Rise to Power

Death of the First Bank of the U.S. / War of 1812

Waterloo

Andrew Jackson Kills the Second Bank of the U.S.

Second Bank of the U.S.

Andrew Jackson

Abe Lincoln and the Civil War

The Return of the Gold Standard

Free Silver

J.P. Morgan / 1907 Crash

The Rise of the Federal Reserve Act of 1913

Jekyll Island

Fed Act of 1913

J.P. Morgan / WWI

Roaring 20s / Great Depression

FDR / WWII / Fort Knox

Conclusion and Monetary Reform Act

World Central Bank

Conclusions

If you have ever wondered what Alan Greenspan was doing and it all seemed vague, this documentary gives you information that makes everything fall into place. Despite Greenspan being appointed by the President, The Federal Reserve is a private company (owned by banks) holding a government-imposed monopoly on printing paper dollars and creating electronic dollars. It exists to buy US Treasury Bonds (among other things).

The film points out (emphasized by a quote by Thomas Edison) that if the US government has the power to issue bonds, it surely has the power to issue dollar bills. Yet it prefers to pay a middleman to do it. This is where fractional reserve banking comes in. Essentially, with fractional reserve banking, a bank holding one dollar can loan out ten dollars in credit and hope that not everyone will want the actual dollar bills all at the same time. How all this works is quite an interesting scheme. The banks having the power to print the money helps quite nicely.

To be fair and give another view of the Federal Reserve, see the links below.

In Plain English: An enormously interesting elementary tutorial on the Saint Louis branch site that I once went through.

FED 101: Another highly interesting FED-sponsored resource I just came across doing research for this post.

But frankly, although these tutorials are interesting and easy to understand, they are vastly more informative after one sees The Money Masters. That film really gives you the context and everything suddenly makes much more sense as you go through the tutorials. I just did some spot jumping and this was exactly my result as compared to when I did the "In Plain English" tutorial several years ago.

Now here is the rub with the film. Not everything is palatable to an Objectivist view, especially not the endorsement of fiat money. The idea of backing off the gold standard because gold reserves have become too concentrated in few places makes sense (albeit there is debate on this), but I am not convinced to abandon the idea altogether (for a number of reasons). There are some other points and they are summed up quite well by G. Edward Griffin. Here are a couple of links.

CREATURE FROM JEKYLL ISLAND: A Second Look at the Federal Reserve by G. Edward Griffin: An outstanding book about the founding of the Federal Reserve, which arose out of a meeting of a Privileged Few on Jekyll Island way back when. To be fair, my appraisal comes from reading about the book on the web, where it is highly praised by people I respect. I have not yet read it. What is interesting is that this book is offered for sale on the site of The Money Masters, yet Griffin is the person who provides some of the real warts to the film.

MEET BILL STILL, FIAT-MONEY ADVOCATE: An analysis of the documentaries Money Masters and Capital Crimes by G. Edward Griffin: (Note: Apparently Capital Crimes was the first version of The Money Masters.) With all of the good in The Money Masters, Griffen pours a much needed bucket of cold water over the flaws. His main criticism is against fiat money, and the film's the treatment of gold, Lincoln's greenbacks, tally sticks and trust in politicians. So I think this essay is a much-needed and essential supplement to the film.

Also, there are some gaps, as I mentioned. One of the most glaring for me was in the explanation of how the FED creates money out of nothing. This is given in the film, but the quote below is from the FAQ on the website.

Question: How does the Fed “create” money out of nothing?

Answer: It is a four-step process. But first a word on bonds. Bonds are simply promises to pay — or government IOUs. People buy bonds to get a secure rate of interest. At the end of the term of the bond, the government repays the principal, plus interest (if not paid periodically), and the bond is destroyed. There are trillions of dollars worth of these bonds at present. Now here is the Fed moneymaking process:

Step 1. The Fed Open Market Committee approves the purchase of U.S. Bonds on the open market.

Step 2. The bonds are purchased by the New York Fed Bank from whomever is offering them for sale on the open market.

Step 3. The Fed pays for the bonds with electronic credits to the seller’s bank, which in turn credits the seller’s bank account. These credits are based on nothing tangible. The Fed just creates them.

Step 4. The banks use these deposits as reserves. Most banks may loan out ten times (10x) the amount of their reserves to new borrowers, all at interest.

In this way, a Fed purchase of, say a million dollars worth of bonds, gets turned into over 10 million dollars in bank deposits. The Fed, in effect, creates 10% of this totally new money and the banks create the other 90%.

Step 2 for me is so vague that it needs clarification. In terms of bonds, how does "whomever is offering them for sale on the open market" initially acquire them? But as the gap is specific and does not invalidate the other material, it is easy to research. So in a sense, even the gaps in this material can be useful.

I cannot recommend all this material enough. When we deal with the area of finance, there is always some agenda hiding somewhere that obscures the actual workings of the system (I have this problem when I look at the material on LewRockwell.com, for instance). As I stated, there is an agenda in this material, also, but it is separated and put in its place. The essential outline of the world's monetary/political system is as clear as a summer day.

I believe that, despite not being perfect, this is a a first-rate starting point for understanding the relationship between money and politics. It even filled in some of the gaps left over from Capitalism: The Unknown Ideal in my own thinking.

Michael

Share this post


Link to post
Share on other sites

I have seen Money as Debt twice now and I cannot recommend it highly enough. It blew me away. It is simple and entertaining, all 47 minutes of it. And it is free.

I have a rather amusing story to report on this film, showing how good it really is.

There was a discussion a while back on another forum where a poster (one very knowledgeable about money) mercilessly bashed the film, initially without watching it, then after starting to watch it. He said that the film did not present its case well because it started with a parable, was right-wing conspiracy theory, etc. This same guy is a huge fan of E. C. Riegel, a rather obscure monetary theorist who is very popular in certain libertarian circles. This poster even wrote and posted an extended overview: The Ideas of E. C. Riegel (this link will not work for everybody since registration is needed).

I read that overview, saw that Harry Browne was mentioned as an admirer of Riegel, and noticed that what was written sounded quite a bit like what was in the film, so I Googled Riegel and read some things. I also uncovered the site devoted to preserving Riegel's memory and offering some of his works to the public online: Reinventing Money.

Here is a link to the library on that same site where there is some of Riegel's stuff along with some other intriguing looking essays: Library (scroll to E. C. Riegel).

Riegel's website, where there are online books and essays by him: Edwin Clarence Riegel

I went through a few of Riegel's works. Some of them are quite short and I skimmed over a couple of longer ones. In them you will find the same approach as in the film (and in the Money Masters film at the beginning of the thread), although the language is much more academic. This means that it is vastly more boring. But still, after seeing both videos, I now want to go through some of this stuff because it supplements much of the information only hinted at in the videos. (I will report on it as I go along—on this thread.)

I do have an initial criticism. It is the same one as for the videos. Riegel weds strong and simple insights and truths to some pretty strange proposals. His proposals are different that those of Still and Grignon, but still very strange.

The Reinventing Money site is operated by Thomas H. Greco, Jr., who swears by Riegel on a stack of Bibles. I think it is safe to say that Greco is one of the world's leading authorities on Riegel. (Remember that our friend on the other forum strongly endorsed Riegel as THE ENLIGHTENED ONE and stated that "Money as Debt" was some kind of right wing conspiracy.)

Well, I went through a Power Point presentation or two by Greco to see if he was consistent with Reigel (he is). Then I noticed a link to Greco's Weblog. I clicked on it: Beyond Money (It is changing address to here, but the old link still works so far.)

Lo and behold, I was greeted by his last entry dated April 26, 2007. Here is the entire post—written by Thomas H. Greco, Jr., one of the world's top authorities on Edwin Clarence Riegel:

"Money as Debt " - a "must see" video

Paul Grignon's video production, Money as Debt, is the best presentation I've yet seen that explains in simple and straight forward language (with supporting animated visuals) the true nature of money and the dysfunctional and undemocratic nature of the global banking system. It is available on Google video and runs about 45 min.

The main website is: http://www.moneyasdebt.net/

Here is a brief description from the web:

"Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States."

While I have some difference of opinion about what needs to be done to remedy the situation, I give this video the highest marks for its accurate reporting and clear presentation of its essential message.

Please give it your close attention.

Our poor knowledgeable friend has no idea that the film he bashed, claiming that Riegel was far superior, was fully endorsed by Riegel's main surviving disciple.

If you watch this video, rest assured that it is is time well spent. You don't even need to make notes unless you really want to. The explanations are so simple, they stick in your mind.

Michael

Share this post


Link to post
Share on other sites
galtgulch    2

On the subject of "Money, Banking and the Federal Reserve" here is a video by that name which is 41 minutes in length. I have not watched it all yet but enjoyed what I did see. I am not quite sure how it compares with the others linked above but it appears to explore the same subject and may provide a unique perspective.

http://video.google.com/videoplay?docid=-466210540567002553

Naturally I was pleasantly surprised to discover that Ron Paul has brought the attention of his supporters to the issue of the Federal Reserve. I trust that even if his role in this election ends up as a footnote still his tenacious advocates will help enlighten the populace, one mind at a time, about the cause of the erosion of the value of our currency.

Newcomers may be willing to consider a donation to the cause of persuading delegates to choose Ron Paul instead of McCain to be the nominee for president. The current issue of The Economist reports that McCain trails Obama by five to one overseas where it doesn't really count. Perhaps McCain will not be the nominee afterall. Hmmm!

www.dvds4delegates.com

Incidental note that Ron Paul would abolish the Federal Reserve and institute competitive currencies including gold backed.

Wm

Share this post


Link to post
Share on other sites
galtgulch    2
www.dvds4delegates.com

Incidental note that Ron Paul would abolish the Federal Reserve and institute competitive currencies including gold backed.

Wm

Now here is an article which shows that John Fitzgerald Kennedy had the courage to stand up to the Fed with an executive order to create a silver backed currency to compete with the Federal Reserve notes:

http://www.rense.com/general76/jfkvs.htm

It begins:

<<<"On June 4, 1963, a virtually unknown Presidential decree, <executiveorder11110.htm>Executive Order 11110, was signed with the authority to basically strip the Federal Reserve Bank of its power to loan money to the United States Federal Government at interest. With the stroke of a pen, President Kennedy declared that the privately owned Federal Reserve Bank would soon be out of business. The Christian Law Fellowship has exhaustively researched this matter through the Federal Register and Library of Congress. We can now safely conclude that this Executive Order has never been repealed, amended, or superceded by any subsequent Executive Order. In simple terms, it is still valid.">>>

Worth reading the whole thing.

Wm

Share this post


Link to post
Share on other sites

William,

I tried to watch the video on Rothbard, but the doom-saying was so far removed from reality that I could not get past the first 5 minutes. I will try again. Rothbard was a very intelligent historian and I am interested. But God, what schlock you have to wade through to get to the good stuff!

That video would almost have you believe that we are worse off today than in the Great Depression.

I loathe "good old days" kind of rhetoric (as implied, not stated in the video). There were never any good old days compared to the present doom. We live in a wonderful world of plenty where there is a threat of economic collapse from an out-of-control spiral. We do not live in a realized economic collapse.

Also, there is another point that this kind of political propaganda always misses. We have more real wealth in the world than at in any time in human history. So despite the threat, the system does work for something. If it didn't, there would be no results—we would all be born dirt poor and stay that way.

I will get back to you later on this.

Michael

Share this post


Link to post
Share on other sites
rush242    0
I tried to watch the video on Rothbard, but the doom-saying was so far removed from reality that I could not get past the first 5 minutes. I will try again. Rothbard was a very intelligent historian and I am interested. But God, what schlock you have to wade through to get to the good stuff!

Sadly, nearly anything posted on Rense is a complete waste of time.

Not necessarily because there aren't any nuggets of gold, but because the site is riddled with such an overwhelming amount of credulous Barbra Streisand that any reality is quickly lost among the crystal skulls.

It's credibility has long since disappeared--well, unless you WANT to hear what Dick Hoaxland has been up to recently.

Share this post


Link to post
Share on other sites
Christopher    0

This seems to fit the thread on conspiracies. I didn't know what I was getting into when I started watching these Money Masters videos, but ... well, we're talking about 9/11, we're talking about the mortgage crisis, we're talking about Jekyll Island... and then here there is given a much wider view.

Conspiracies might be just like fractional banking: 10% is based on fact, 90% is based on speculation. But it is always good to seek facts, even amidst the mud... and for that reason I am relatively immune to the preaching... it doesn't win me over, it doesn't disgust and deter me. I find it fascinating to consider what might be occurring, and if I let my imagination go too wild, it becomes rather scary.

Anyway, for those discussing conspiracies, there is none more ultimate than that proposed in the Money Masters videos.

Share this post


Link to post
Share on other sites
syrakusos    0
... There was a discussion a while back on another forum where a poster (one very knowledgeable about money) mercilessly bashed the film ... Our poor knowledgeable friend has no idea that ...

Is that a conspiracy of silence?

I stand by every word I wrote. That one admirer of Riegel endorses the film while another condemns it is not surprising. Both Murray Rothbard and Alan Greenspan were friends of Ayn Rand. Thomas Jefferson, John Adams and Alexander Hamilton come to mind, as well. Perhaps the salient distinction is actually naming names.

Share this post


Link to post
Share on other sites
syrakusos    0
The purpose of this thread (and later discussion) is almost a lesson plan in how the world works with respect to money and politics. Those who manage to separate several hours of their time and simply go through most all the links in this post will put a vast amount of solid and simplified knowledge in their head.

From that other discussion -- anyone who really cares can read the whole thing on RoR -- are these citations:

Here is a private currency, Traverse City "Bay Bucks":

http://www.michigancoinclub.org/Baybucks.htm

and another story about them:

http://www.northernexpress.com/editorial/features.asp?id=138

You do not need governments or banks to have money:

http://www.textfiles.com/magazines/PAO/pao-9310.txt

(Scroll down about one-third of the way until you get to

MONEY WITHOUT GOVERNMENT AND BANKS (21aug93) by Michael E. Marotta

Would your national treasury be allowed to mint coins? Even the production of gold coins must be paid for. The machinery of coinage comes with a cost burden that makes silver less profitable and copper a certain loss. In a totally gold-based cash-and-carry economy, how would you pay for the convenience of coinage? I ask because historical facts suggest that even gold coins are a market failure. I deny this, personally, and I can show how it would work, but I put the ball in your court. Historically, minters and their governments have been surprisinginly inept at producing at a (non-confiscatory) profit. Coinage has always been either a deadweight loss or (in your terms, and not incorrectly) a "scam" in which the public accepts 100% value for 90% of face.

Again, this is historical. In 1800 and in 1802, the Republicans in the Senate wanted to close the Mint as a useless, unprofitable government business.

(For some modern private Mints, see here:

http://www.silvertowne.com/

http://www.osbornecoin.com/

http://www.hoffmanmint.com/

http://www.patrickmint.com/

[Gallery Mint Museum went through some hard times. Here is an archive

of webpages. They recreated 19th century coining technology.

See: http://www.gmmnut.com/gmm/rl.html. -- MEM]

But you will be challenged by the Second Law of Thermodynamics to produce gold coins at the London spot price for gold.)

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
Christopher    0

Michael and Michael,

You both have so many links, and now I've gone through most of them. Whew! I think I've learned more about money and credit in the last few days than I have in my lifetime previously.

Michael M -

Debit cards, etc. are not really forms of monetary currency that exist independent of the Federal Reserve Notes system. Debit cards - they're just checks that directly link to money in bank accounts. Prepaid phone cards could most likely be considered gift cards or prepaid purchase that is valued in relation to real money. Tokens you receive at a movie theater... None of these also qualify as money by definition.

Definition of money: Money is anything that can be used as a medium of exchange, as a means of storing wealth for future spending, and as a way of measuring the value of things.

However, your reference that 'you stand by every word you wrote' I don't fully understand. Do you have a link to perhaps a post you earlier wrote?

Michael S.K. -

Money as Debt was a great video. I have to look back over everything Greenspan and Rand wrote through Objectivism on economics. Their ideas back then couldn't work in today's economy. For one, the system today is setup to prevent deflation and people from exiting debt. Wow. If the overall country's debt is reduced, the money supply shrinks, deflation occurs, investments shrivel up and less loans are requested, further shrinking of the money supply, further deflation... until the mechanics of the system seize up. M-as-D uses the same argument for overproduction. If there is overproduction such that people can payoff debts or live with less loans, the same cycle occurs and seizes up the economic engine. Do you really think the system operates as such - that deflation and massive debt-reduction is an impossibility given today's economy?

Chris

Share this post


Link to post
Share on other sites
galtgulch    2
Lots of stuff to review and study here.

Bill P

I wish someone with more knowledge and intelligence than I would comment on the article about the risk of a hyperinflation here:

http://www.globalresearch.ca/index.php?con...a&aid=13673

If it were to happen it sounds like there would be no premonition just a sudden skyrocketing of prices and plummeting of purchasing power of dollars. Even if you were all in coins it would be hard to find goods for sale!

In the article she suggests there is a way to avoid it from happening.

gulch

Edited by galtgulch

Share this post


Link to post
Share on other sites

Christopher,

I have to go back over some of this since it has been a while, but I remember thinking of an aspect that is usually left out, or at least fudged over, with this approach.

The more complex and voluminous the market becomes in produced goods and services, and the more the population increases within the market, the greater the need for an increase in the money supply.

There is an insinuation within the gold-standard anti-fractional-reserve approach that we can just keep lowering prices and this is good for everybody. If we tried to keep a static money supply with today's constant increases in goods and services (both existing and new), and increases in numbers of people and complexity, we would now be at the contrary end of inflation, dealing in millionths of a penny or even billionths.

This is just simple math. In a world where there are 1 billion people, money will be at one volume. When there are 4 billion people, either the money supply quadruples to make allowance or prices all fall 400%. That does not even take into account the other factors. (And last I looked, which was a while back, we were at about 7.5 billion and growing.)

I have seen this kind of industry-wide price drop work well in a fast turnover line like computer electronics. Not only do prices fall dramatically over time, but products become outdated really quickly. And there are always new high-ticket items, so we never get away from high prices altogether. It also works well for a while in a brand new market, but once the products and/or services become more stable and less volatile, the price drops tend to go away.

So one reason the money supply has to increase is just to keep accounting reasonable and manageable, but allow for market growth. People like the idea of being able to calculate their grocery bills without logarithms.

I believe Greenspan saw this clearly (and a few other things), which is one of the reasons I am not so quick to trash him.

It's hard to factor these things in on libertarian-like principles alone, but it needs to be done to be correct. These considerations are not the same as the con of the government printing money to pay off its debts. They are aspects of reality that won't go away.

And the idea of turning over money-supply increases to politicians (even local politicians), as is generally preached in the material I posted, gives me the willies.

Michael

Share this post


Link to post
Share on other sites
syrakusos    0
The more complex and voluminous the market becomes in produced goods and services, and the more the population increases within the market, the greater the need for an increase in the money supply. ... we would now be at the contrary end of inflation, dealing in millionths of a penny or even billionths.

We would be dealing with hundredths. If you look at just gold, it was $20/oz in 1909 and $1000/oz today, so that's 50. Agreed that the massive increase in goods and services would push that about 10 times more. (Real GDP in the USA 1870 was $3,000 and in 2000 it was $34,000.) But realize that the cent (your "penny") was always a fractional token coin, worth less than 1 cent in copper. The 5-cent nickel (75% copper) replaced the silver half-dime. And so on.

Assuming a true objective standard coinage (grams and ounces, not dollars and cents), among the solutions would be the introduction of more base metal coins, again in nickel, for instance, which has a low market value. Tokens in plastic would be another alternative 1/10 cent, 1/20 cent... "50 for a cent at Mike's Emporium." Collectible tokens could serve as well -- baseball cards, astronaut pins (made in the USSR, enameld plastic, cute), whatever...

Also, just as inflation has crept, so, too would the standard of living price decreases with an objective value money system for accounting. We would not be using logarithms, just decimals.

Pop culture words for fractions of a gram would spring up, the equivalent of buck for a dollar and bit for 12.5 cents (also called "fips" and "pistareens.") A "bit" might be 1/64 of a cent, just as the stock market tallied in fractions of eighths until just recently.

Even if none of that obtained, by what mechanism should the money supply "expand" and who decides? and by how much? according to what standard? The basic problem is trying to find one mechanism or mode that will solve all problems. The essence of free market economics is not trying to decide for others.

Even if -- worst case -- we had to deal with 1/1000 of a cent 10^-5 dollars, do you not think that A. people would not adapt and that B. expedients like calculators in your cellphone would not solve the problem?

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
syrakusos    0
Debit cards, etc. are not really forms of monetary currency that exist independent of the Federal Reserve Notes system. Debit cards - they're just checks that directly link to money in bank accounts. Prepaid phone cards could most likely be considered gift cards or prepaid purchase that is valued in relation to real money. Tokens you receive at a movie theater... None of these also qualify as money by definition.

Definition of money: Money is anything that can be used as a medium of exchange, as a means of storing wealth for future spending, and as a way of measuring the value of things.

Christopher money is not anything that is ALL of those, but anything that is at least one of them.

Is gold money? What is its unit of account? Do we not buy gold in dollars, when in truth the dollar is 1/30 gram of gold? But we do not account in grams.

What is a medum of exchange? You can find shops in New York, Miami, and other large cities that accept euros or Canadian dollars or yen, but here in Ann Arbor, they are not a medium of exchange. They remain money nonetheless.

What is a store of wealth? Gold is great for that, but again, as above, it is neither our common unit of account, nor our common medium of exchange. Yet, gold is money.

Here's a thought for you: Alone on his island, Robinson Crusoe needs money because its primary purpose is to serve as a unit of account.

However, your reference that 'you stand by every word you wrote' I don't fully understand. Do you have a link to perhaps a post you earlier wrote?

That comes from the original RoR thread to which MSK linked in the top post.

(See here.)

From that, here is one of my comments:

The history of Rome is osterized (run through a blender) at best. There were no Roman "emperors" before Augustus and certainly none in 48 BC. Despite what the film claims, the coins of Julius Caesar were in not special. It is true -- the film is mute on this point -- that other men (moneyers, elected in pairs) struck coins honoring Julius Caesar. As the film notes, Julius Caesar used these coins to win popular support -- though he did not build the Colloseum as hinted.

In our time, these crypto-nazis cannot use the word "Jew" so they refer instead to "international bankers."

"Thunder on the Right" is a real problem and the Guns-God-Gold crowd finds discursive space among Objectivists, just as the communists insinuated themselves into liberalism of the left.

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
Brant Gaede    1
Lots of stuff to review and study here.

Bill P

I wish someone with more knowledge and intelligence than I would comment on the article about the risk of a hyperinflation here:

http://www.globalresearch.ca/index.php?con...a&aid=13673

If it were to happen it sounds like there would be no premonition just a sudden skyrocketing of prices and plummeting of purchasing power of dollars. Even if you were all in coins it would be hard to find goods for sale!

In the article she suggests there is a way to avoid it from happening.

gulch

We are going to have a severe price inflation. Hyper-inflation? Not likely but not impossible. The big brake is the government's inability to pay interest on the national debt. It could press up against 2 trillion dollars a year. Then there are the other things to be paid for. Medical care for the elderly is going to be brutally rationed. Think about going abroad for medical care.

You don't want to own Treasury bonds and only high-grade corporate with no more than two-years to maturity. Annuities from some life insurance companies heavily invested in commercial real estate may be at risk. As interest rates go up the value of bonds go down, but they pay off 100% at maturity.

There are three basic ways to own gold:

1) physical gold in your personal possession.

2) physical gold through an electronic-traded fund (ETF): GLD.

3) gold miners through the ETF GDX.

#3 is the most speculative with the most down-sided potential and the most upside by far.

The best way to own a home is with a large, fixed rate, low rate mortgage. The financial risk is mostly for the lien holder assuming you haven't paid too much for it in the first place. This also assumes you have serious savings and secure employment. Real estate prices are not done going down and after this selling season it's going to become even harder to sell homes. There is going to be the most ongoing/forthcoming damage in the high end. If you own a home free and clear--a lot of equity--you might consider an "equity release" as opposed to an expensive reverse mortgage as a way to get capital out of your real estate without selling your home.

Investing in large, integrated oil companies paying large dividends is a way to preserve capital and generate income.

Investing in companies that get most of their earnings from overseas will protect you somewhat as they will benefit from a weaker dollar, but wait.

While there has been a big bear market rally in equities, it has been of low quality and probably won't continue for long. STOCKS ARE NOT CHEAP, even though they may get more expensive. A DOW below 5000 is not impossible. Inflation adjusted, I seriously think that is the likely propect for the next few years. Obama's war on wealth and capital is hardly with any surcease.

Financial stocks are going to be badly hurt because of the credit card legislation that has just passed Congress. If I owned Bank of America I'd sell it and buy Exxon.

Everyone should have several months of supplies in case of panic buying at the supermarket. Supermarkets can be stripped bare in a few hours of panic. If you don't have to participate, everyone will benefit.

Keep your gas tanks over 1/2 full.

Re-evaluate your employment. Especially if you and yours have similar employment. Pick up some fall back job/employment skills. Increase your savings.

Etc.

--Brant

Edited by Brant Gaede

Share this post


Link to post
Share on other sites
Christopher    0

MSK,

Yes, putting the power of money solely into government hands could be scary. On the other hand, putting money solely into private hands is equally scary. The idea of some form of checks and balances between the two seems most appropriate. B.Still (be still Bill, will you?!) suggested that government does not have enough representation within the Fed to be a sufficient check - 2 out of 7 seats on Fed are held by gov. officials. So who should control the money supply, and how should the money supply expand sufficiently with population growth. I have no idea. Other than debt, is there any system which is market-driven and not controlled by a special group?

MEM,

You have some really sharp ideas. I'm not sure I entirely grasp or agree with them all, but I'd love to hear more. Regarding the definition of money, that I pulled straight from an economics book. Money has to be sufficient for all three parts to be considered "money." Otherwise, it is really a small-scale tool used to facilitate transactions (if this were the definition of money, it would be too generalized). I think there are lots of transactional "things," such as a slip of paper with IOU written on it. However, I wouldn't go so far as to call that money. I agree though that currency (paper and coins) is not the only form of money. Regarding debit cards.. a check is not money.

A check is only a printed piece of paper that we fill out... When people use checks, they are receiving products in exchange for checkable deposits. It is the depost that is money (medium of exchange), not the check paper. If you have ever gone through the hassle of showing a store clerk various forms of identification to make your check acceptable, you know that the seller is really interested in verifying the existence of sufficient deposits to support your check. Deposits are what makes a check "good," and you are really spending your deposits when you write a check.

Computer and communication technology is slowly changing the way checkable deposits are used. Many banks are issuing debit cards to replace paper checks. These look like credit cards, but when they are used for a purchase, money is immediately transferred out of the buyer's checking account and into the checking account of the seller.

I'm in the middle of a chapter on money and credit, and I'm sure to know more when I'm done, but I think local use of currencies (as you've suggested with Bay Bucks) is sufficient only for the market given. You might have money for that small market, but it is not money in the wider context of the world or U.S. market. Further, the law only supports the money as it is related to the U.S. market (currency and electronic "dollars"). That's what's really important when we talk about money - its acceptance. I could do yard work for someone and receive a slip of paper signed "IOU," which in a sense in money between he and I. However, it is money only in the crudest sense of the smallest market size (transactions between two persons). This is not an appropriate usage of money in the world market.

So how can we reconcile your usage of money with that which is given in today's texts and discussions of the Fed?

Christopher

Edited by Christopher

Share this post


Link to post
Share on other sites
Christopher    0

The more I read about the Fed, the more I feel misled by Bill Still and Rothbard.

For one, I just found that all 7 governors of the Fed are elected by the president (in staggered 14-year terms so that no single president can dominate representation).

Second, the Fed is not allowed to make a profit and save money annually on interest from T-Bills : meaning, if the Fed has unspent cash after receiving interest from the U.S. government at the end of the year, the Fed is forced to "donate" that money back to the U.S. government. In effect, that means the Fed must convert all interest paid by the U.S. on T-Bills into salaries and jobs (like constructing new buildings, paying secretaries, etc.), thus creating production and pumping it back into the economy.

The Fed's "discount rate" really only applies to a few billion dollars in actual loans (a mere drop in the bucket compared to the multi-trillion dollars of money in current circulation)

The Fed's ability to tighten or ease monetary policy, while significant, represents only a monetary influence and not an absolute control on the economy.

There are certainly a lot of negative considerations, but let's not overlook the restrictions on the Fed and the fact that no better system currently exists. As one economist said: if the government could control money completely, this power could be used to win elections (Vote for me and I'll lower interest rates!); rarely would there be a political incentive to raise interest rates.

Share this post


Link to post
Share on other sites
syrakusos    0
... On the other hand, putting money solely into private hands is equally scary.

... Regarding the definition of money, that I pulled straight from an economics book. Money has to be sufficient for all three parts to be considered "money." ... Regarding debit cards.. a check is not money. ...

Christopher, just for context here, do you consider yourself an Objectivist. Also, have you read any of Capitalism: the Unknown Ideal by Ayn Rand, Alan Greenspan, and others.

  • M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
  • M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).
  • M2: M1 + most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits (certificates of deposit of under $100,000).
  • M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.
    (Wikipedia -- Money Supply)

In 1971, M1 was currency and demand deposits at commercial banks. M2 was M1 plus commercial bank savings and small time deposits, and M3 was M2 plus deposits at mutual savings banks, savings and loans, and credit unions; data from the latter type of institution were available only monthly. M4 was M2 plus large time deposits, and M5 was M3 plus large time deposits. Changes in definitions make it difficult to track the historical development of the various monetary aggregates. Approximately, the 2006 definition of M1 is equivalent to this older definition, the 2006 definition of M2 is equivalent to the older definition of M3, and the definition of M3 at its date of last publication was equivalent to the older definition of M5. M4 and M5 were dropped in a 1980 redefinition of the monetary aggregates. See Board of Governors of the Federal Reserve System (1976), pp. 10-11 and Anderson and Kavajecz (1994).

"Speech" by Chairman Ben S. Bernanke At the Fourth ECB Central Banking Conference, Frankfurt, Germany

November 10, 2006, "Monetary Aggregates and Monetary Policy at the Federal Reserve: A Historical Perspective."

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
Christopher    0
Christopher, just for context here, do you consider yourself an Objectivist. Also, have you read any of Capitalism: the Unknown Ideal by Ayn Rand, Alan Greenspan, and others.

  • M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
  • M1: The total of all physical currency part of bank reserves + the amount in demand accounts ("checking" or "current" accounts).
  • M2: M1 + most savings accounts, money market accounts, retail money market mutual funds,and small denomination time deposits (certificates of deposit of under $100,000).
  • M3: M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.
    (Wikipedia -- Money Supply)

In 1971, M1 was currency and demand deposits at commercial banks. M2 was M1 plus commercial bank savings and small time deposits, and M3 was M2 plus deposits at mutual savings banks, savings and loans, and credit unions; data from the latter type of institution were available only monthly. M4 was M2 plus large time deposits, and M5 was M3 plus large time deposits. Changes in definitions make it difficult to track the historical development of the various monetary aggregates. Approximately, the 2006 definition of M1 is equivalent to this older definition, the 2006 definition of M2 is equivalent to the older definition of M3, and the definition of M3 at its date of last publication was equivalent to the older definition of M5. M4 and M5 were dropped in a 1980 redefinition of the monetary aggregates. See Board of Governors of the Federal Reserve System (1976), pp. 10-11 and Anderson and Kavajecz (1994).

"Speech" by Chairman Ben S. Bernanke At the Fourth ECB Central Banking Conference, Frankfurt, Germany

November 10, 2006, "Monetary Aggregates and Monetary Policy at the Federal Reserve: A Historical Perspective."

I am familiar with these terms of defining different aspects of the money supply, but I fail to see where you're going with it. Have I read Capitalism... - I've read parts of it, yes. Do I consider myself an Objectivist? Not entirely, but I align myself very closely with the basic premises.

Are we discussing Objectivist views of the economy on this thread? Not necessarily. We're discussing the most effective way of dealing with reality given the current environment and using Objective values as general guidelines.

Share this post


Link to post
Share on other sites
syrakusos    0
Do I consider myself an Objectivist? Not entirely, but I align myself very closely with the basic premises.

Are we discussing Objectivist views of the economy on this thread? Not necessarily. We're discussing the most effective way of dealing with reality given the current environment and using Objective values as general guidelines.

The reason I ask is that you said that checks are not money and to support that assertion, you quoted canon from a college textbook. I showed you that by the standard definitions deeper within such books, M0-M3 include checks. Checks and CDs are as much money as gold is money.

In point of fact, you failed to reply to my citations about gold being money. Is gold money or not? By your definition, gold is not money. That is ridiculous. Therefore your definition is faulty. The standard, classroom definition of money is wrong. (So are many other standard, classroom definitions.) I explained myself quite clearly.

Part of the problem we have here is one of personal perception. You do not see me as an expert. In that, you are wrong. I wrote several articles about the origins of coinage; one of them is cited in a monograph by Robert Mundell. The American Numismatic Association -- founded 1891; chartered by Congress 1912 -- has granted me several literary awards and two certificates of achievement (with honors). I assure you that I know a lot about money, its forms, its uses, its history --- and its future. I wrote an essay for Loompanics, "Money in the 21st Century." Seemingly, out of the mainstream prima facie, it was picked up by the State of Kansas for two years for its 11th grade literacy tests. I currently have a graduate class in international enterprise. I completed another graduate class last semester in international finance.

You think that "Money Masters" was an eye-opener. I demonstrated that the basic historical assertions it makes are not facts.

Most recently, you confused the Federal Reserve Board with the boards of the Federal Reserve banks. You said that the FRB is "elected" by the President. In fact, the governors of the Federal Reserve Board are nominated by the President and then confirmed with the advice and consent of the Senate.

On the matter of FRB "profits" like any business the 12 banks have expenses, including capital improvements. I toured two banks, Cleveland and Dallas. Cleveland used some of their gross profits to refurbish the interior to its 19th century (1912, actually) splendor, with oak, mahogany and wool. I have never been to the White House. Some of the federal auditors with whom I was touring the Cleveland Federal Reserve Bank said that the Fed looked nicer. About five years later (2001), I toured the Dallas FRB. In Dallas, they used their gross profits to build a new bank, steel and concrete with imbedded fiber optics. Both banks -- as all 12 banks -- have the freedom to spend their profits as they see fit (within the bounds of law). Net profits are returned to the Treasury.

Lest anyone else here attempt to cite Rothbard at me, I state here and now for the record that Rothbard is factually flawed. I attempted to use his A History of Money and Banking in the United States: The Colonial Era to World War II. The occasion was a call for papers to speak at an ANA convention. This specail grant came with expenses and a stipend, so I was interested in winning. My topic was the "Wildcat Banking Era." I have reason to believe that so-called "panics" such as 1857 were highly localized events. Some may not have been substantial. Some may not have happened at all. They all may exist primarily in modern history books written by Marxists. I went to Rothbard's history. I found that he glossed over his primary source. So, I got the original from The Adam Smith Society in London. I then found that Rothbard put a laissez-faire libertarian spin on the facts. Nice statement. But wrong. He twisted history to meet his ideology.

Christopher: "Yes, putting the power of money solely into government hands could be scary. On the other hand, putting money solely into private hands is equally scary."

I do not know if you are being facetious, ironic, or sincere, and so I asked if you consider yourself an Objectivist and if you have read Capitalism: the Unknown Ideal. The basic question is whether the government should have its own money at all. The founders of the republic did not have a complete history of the origins of money. They had only Aristotle's Politics. They never questioned the basic assumption because their entire experience from history was that governments create money.

(In the Middle Ages, bishops and other local authorities operated mints or contracted for minting. The fact remains that this was a centralized authority institution. Bakers and candlemakers did not do these things. Though, in fact, later, they did. In the 1790s, "provincial" tokens -- what we call "Conders" after one issuer and cataloguer -- filled a need for pennies and fractions. The British East India Company issued its own coins in silver and copper. In the USA, from the 19th century, we have examples of pioneer and other private gold coins from North Carolina, California, etc. Today, of course, several large private mints compete for the brisk markets in private precious metal coinage.)

Be that as it may, my point is that the founders assumed that the government would run a mint, and otherwise issue its own money as a right of sovereignty. They failed to completely separate the economy from the state. An Objectivist would accept that. A conservative might not. Some conservatives want the government to control or regulate or oversee or legislate or moderate or mediate or otherwise interfere with the creation of money by private indivdiduals. Some conservatives point to Lincoln's "greenbacks" -- actually Salmon P. Chase's -- as the only lawful federal paper money and therefore a replacement for Federal Reserve Notes.

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
Christopher    0

Michael,

Let's have a civil conversation, yes? You're becoming defensive when the reason I'm really interacting with you for is to understand. Understanding comes from joining my knowledge with yours, not accepting yours at face-value. So let's do this, yes, and see how your knowledge holds up to what I've read.

The reason I ask is that you said that checks are not money and to support that assertion, you quoted canon from a college textbook. I showed you that by the standard definitions deeper within such books, M0-M3 include checks. Checks and CDs are as much money as gold is money.

If you want to discuss definitions, M1 includes checkable deposits (not checks).

In point of fact, you failed to reply to my citations about gold being money. Is gold money or not? By your definition, gold is not money. That is ridiculous. Therefore your definition is faulty. The standard, classroom definition of money is wrong. (So are many other standard, classroom definitions.) I explained myself quite clearly.

Well then, if by my definition gold is not money, gold is not money. That doesn't mean it cannot be used as a form of exchange, but when's the last time you used gold in the open market and it seemed normal?

As for your comments on Rothbard, when did you see me supporting him (or Money Masters) whole-heartedly?

Most recently, you confused the Federal Reserve Board with the boards of the Federal Reserve banks. You said that the FRB is "elected" by the President. In fact, the governors of the Federal Reserve Board are nominated by the President and then confirmed with the advice and consent of the Senate.

I meant the governors. My mistake.

You've really irritated me with your defensiveness and aggressive claims. I'd like to continue this discussion since I'm open to accepting what you have to say, but that depends on whether you want to really discuss it or not.

Share this post


Link to post
Share on other sites
syrakusos    0
Michael,

Let's have a civil conversation, yes? You're becoming defensive when the reason I'm really interacting with you for is to understand. Understanding comes from joining my knowledge with yours, not accepting yours at face-value. So let's do this, yes, and see how your knowledge holds up to what I've read.

Forgive me for letting my emotions overtake my reasons, but like many people, being attacked makes me feel defensive and I don't always turn to my Vulcan side when I need to. Your repeated and continued sleights are the hallmarks of a closed mind. I am not going to waste a lot of time on this, but I do want the record unambiguous.

You claim that you want to join your understanding to mine. I have no such desire. You remain impressed with The Money Masters, a movie, which, for the third time, I point out has errors of fact that are correctable with a Britannica, such as the dates of the Roman Empire and the construction of the Coloseum. You bring no independent discoveries to the table.

I never asked you to accept my understanding prima facie. In every case, I offered facts in support of my theories and theories to explain my facts. You can evaluate them as you please. You chose to disregard them.

Now, you ask me to join my understanding with yours. You claim that checkable deposits are money but checks are not. You claim that gold is not money.

Finally, you want to see how my knowledge holds up to what you read. You have not even read all of CUI. I cited my credentials. Your goal should be to see how the what you have been reading -- including CUI -- compares to the objective facts of reality.

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites
Christopher    0

Michael,

I respect your position, so let me rephrase my words:

It doesn't matter how many checkbooks or debit cards I receive in the mail for a single checking account, the money supply stays the same. If I receive a new checkbook with 100 new checks, the money supply doesn't change. Therefore, it is not checks nor debit cards per se that are money... it is the wealth deposited in the account that has value which can be accessed through the use of checks and debit cards.

You're suggesting gold is money, but the only basis I can find for this assertion is that gold can serve as a medium of exchange. But by definition, anything can serve as a medium of exchange - beads, tokens, wooden sticks. By this definition then, everything is money. So I don't see what distinguishes money from everything else. If you were to ask someone to exchange gold for some other commodity in today's market, they wouldn't know how much to accept. Probably the first thing they'd do is check gold prices on the market and the monetary value of their commodity in the market. After those values have been established, a trade would take place. But even though the trade was using gold, the mere fact of checking the values against the market demonstrate that the underlying "money" used to determine value was really cash.

Share this post


Link to post
Share on other sites
syrakusos    0
I respect your position, so ... But by definition, anything can serve as a medium of exchange - beads, tokens, wooden sticks. By this definition then, everything is money. ... ... the underlying "money" used to determine value was really cash.

OK, on the basis of goodwill, let us continue. Considering that the context is The Money Masters, let us investigate.

Given the reality of fractional reserve banking, you seem like a bright young man with good prospects. You have a business plan. You take your prospectus to several banks. One of them agrees to take a risk. They lend you $100,000 to start a company. That $100,000 comes to you as a checkbook. The balance is $100,000 less fees and the first month's payment and you have $96,000 newly created out of nothing but credit, with compounded debt interest. Money is created. Your idea works. You make payments. A year later, your account at the bank is paid off. You have newly earned income of your own. The $100,000 that was created is now considered destroyed. (Right out of that Econ 101 textbook.)

Do you agree with that?

As for what is and is not money, as you note, it could be beads. In fact, I have several strings of such trade beads from Africa and Canada. They served as money once, but not here and now. Likewise, I have other fiduciary instruments, that were money, but are not. Money is an objective value, not an intrinsic value.

GermanyDemRepP26-100Mark-1964_f-donated.jpg

Above: Karl Marx on a 100 Mark note of the former German Democratic Republic. Money once, but no more.

ScotlandP229C-50Pounds-2001-donatedcz_f.jpg

Above: Adam Smith on a 50-pound note of the Clydesdale Bank, current money, from an existing bank. Not spendable on the streets of Ann Arbor, Michigan.

Edited by Michael E. Marotta

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now