What is the Objectivist alternative to the Federal Reserve?

[moralist]

The economy is geared to living beyond your means and excessive use of credit is how this is done.

...and that's because it's a Creditist economy... not a Capitalist economy. Since I have no participation in or financial entanglements with the Creditist economy, consequently I'm immune to it's cyclical collapses.

I treat debt like it's Ebola.

Greg

[Wolf DeVoon]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

[Brant Gaede]

Credit is okay if used carefully. Pay it off ASAP.

I have very high credit rating, high card limits, pay off the balance to zero every month, no car note. Socking away every dollar we can.

The next thing I want to attack is discretionary spending. No more nonprofit book projects

Speaking of which, I'm going to sign off for several months, starting Wednesday, to work full-time on a showbiz project.

Christmas comes early to OL!

"There's no business like show business, there's no business at all . . . ."

--Brant

[Jules Troy]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

[Jules Troy]

Hey wolf if that happens I wonder if he will then say "Awe shucks I get what I deserve, I get the government I deserve, and I am my own bank".

[Wolf DeVoon]

Christmas comes early to OL!

Yup. Damn glad I ain't creative or thoughtful.

A new grant-making fund was announced at the Ayn Rand Institute’s 2014 Objectivist Summer Conference. The Atlas Venture Fund will award grants (or loans) to individuals to assist in their efforts to promote Objectivist ideas. Carl Barney, an ARI board member, announced the creation of the new fund and donated $1 million to start it.

The fund seeks proposals from individual Objectivists and from both for-profit and not-for-profit organizations. Funded projects will not duplicate or conflict with projects of the Ayn Rand Institute. Dr. Yaron Brook, executive director of ARI, said: “This is a great opportunity for creative, thoughtful individuals to present ideas and proposals that are outside the work of the Institute, but which would complement the work that we do.”

If you are an Objectivist with a passion for advancing Ayn Rand and Objectivism, please consider submitting an online grant proposal to learn if your request can qualify for support from the Atlas Venture Fund. For more details about the application process, visit Atlas-Venture-Fund.com.

https://ari.aynrand.org/blog/2014/09/24/the-atlas-venture-fund

[Brant Gaede]

Since they aren't profit making it's natural enough they don't promote that but their own welfare project. That "for profit" alluded to is a chimera. If you're making a profit why contradict your methodology? If you intend to be "for profit" I guess the ARI is trying to emulate the SBA. The ARI is like a little university with its fund-raising head which dishes out scholarships to its students.

--Brant

[moralist]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

Your malice is noted, Wolf.

And I'm sorry to disappoint your high hopes of illegality... because being out of state you wouldn't know this... The Conservative voters of California passed Proposition 13 into law in 1978. It sets assessed property values at the time of sale. If someone buys a home and lives in it for 30 years, they still pay property taxes at the assessed value at purchase with incremental capped adjustments for inflation.

The property tax assessor came and went over a decade ago, and what I did is perfectly legal.

Greg

[Jules Troy]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

Your malice is noted, Wolf.

And I'm sorry to disappoint your high hopes of illegality... because being out of state you wouldn't know this... The Conservative voters of California passed Proposition 13 into law in 1978. It sets assessed property values at the time of sale. If someone buys a home and lives in it for 30 years, they still pay property taxes at the assessed value at purchase with incremental capped adjustments for inflation.

The property tax assessor came and went over a decade ago, and what I did is perfectly legal.

Greg

[Jules Troy]

Damn! California actually did something meaningful that actually helps citizens for once, good to hear that you are in the clear Greg.

Up here the cocksuckers reassess you every damn year.

[Wolf DeVoon]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

Your malice is noted, Wolf.

And I'm sorry to disappoint your high hopes of illegality... because being out of state you wouldn't know this... The Conservative voters of California passed Proposition 13 into law in 1978. It sets assessed property values at the time of sale. If someone buys a home and lives in it for 30 years, they still pay property taxes at the assessed value at purchase with incremental capped adjustments for inflation.

The property tax assessor came and went over a decade ago, and what I did is perfectly legal.

Greg

Okay I misunderstood your situation, for which I apologize sincerely. I thought you built two homes after assessment.

p.s. - malice and ridicule are not quite the same thing.

[Brant Gaede]

Nutz! I thought Greg was finally going to get what he really deserved--ten years in the bammer, his propretty confidcated, the shorn of his neigh bors.

--Brant

and I had a big bet too

extremely disappointed

[moralist]

the property tax basis remains at the developer's wholesale assessment level. Being my own bank, real estate developer, and builder saves me almost $5,000 every year in property taxes alone...

You're going to lose it all when the county assessor comes to visit. Hope they don't refer your brilliant idea to the D.A.'s office.

Your malice is noted, Wolf.

And I'm sorry to disappoint your high hopes of illegality... because being out of state you wouldn't know this... The Conservative voters of California passed Proposition 13 into law in 1978. It sets assessed property values at the time of sale. If someone buys a home and lives in it for 30 years, they still pay property taxes at the assessed value at purchase with incremental capped adjustments for inflation.

The property tax assessor came and went over a decade ago, and what I did is perfectly legal.

Greg

Okay I misunderstood your situation, for which I apologize sincerely. I thought you built two homes after assessment.

p.s. - malice and ridicule are not quite the same thing.

No offense taken, Wolf...

I'm not offended by anything anyone here has ever said either to me or about me... because I choose not to be offended.

It's impossible to build a home after a property tax assessment, because it first has to exist before it can be assessed.

Government education teaches people how to think... but not how to think outside the box. So I've found my lack of government education to be an advantage. You could never believe the obscenely large windfalls that can be enjoyed by thinking and acting outside the box.

Greg

[Wolf DeVoon]

[Brant Gaede]

No offense taken, Wolf...

I'm not offended by anything anyone here has ever said either to me or about me... because I choose not to be offended.

Greg

Nutz! That's so frustrating to me.

I assume you were being "pre-emptive."

--Brant

I need another victim (anybody up to it?--Greg wimped out)

[moralist]

No offense taken, Wolf...

I'm not offended by anything anyone here has ever said either to me or about me... because I choose not to be offended.

Greg

Nutz! That's so frustrating to me.

I assume you were being "pre-emptive."

--Brant

I need another victim (anybody up to it?--Greg wimped out)

I love your quirky humor, Brant.

Greg

[Frediano]

Debtaholism is not just a disease of the debtors, but of lenders.

It is precisely analogous(in my mind)to the difference between the concept of a central bank and the reality of how our central bank is implemented.

There is nothing inherently appealing about debt, but there is nothing inherently wrong with it either, if/when/where debt is administered under a set of principles. Individuals choose debt as an alternative among many. Lenders choose to lend to debtors as an alternative among many. There is a market for debt. There is even a market for preachers standing on street corners and demonizing Evil debt.

The young often choose debt over deferred satisfaction of wants and needs, true. But in a world with debt being gamed and risk shed onto others, all kinds of people are glomming onto debt.

The choice is made by debtors and lenders (in a rational marketplace.) Is a debtor offering an actual value -- a promise to create fresh new value in the future-- in exchange for present value? Is the risk of failure reasonably assess-able? Or, as is the case today, is the risk being gamed somewhere, shed by unseen actions of others with access to OPM, such that the principles involved in this debt/lender transaction are shedding their risk unwillingly onto third parties?

A young person with no area under the curve-- with no past assets -- claims yet to offer an actual asset as collateral: the ability to create new value. In exchange for that value, they ask for present value at some negotiated exchange rate, current value for future value. Not without risk. But when intelligently managed (ie, what bankers used to do as part of their business model), the transactions were not destructive to the economies, and in fact, were one means (not 'the' means) of building future economies. There is, in theory, no perversion of present or future economies when the sum of debt is equal to the sum of savings + investment and when that debt is backed by actual, legitimate promise to create new value in the future; it is a (not 'the') required element in the magical conversion of deferred present value into an actual future value-- balanced on an accounting basis, and balanced on a reality basis, as in, how the future is funded to show up ready to create new value.

But this simple model of debt/savings is fringe in our economies. Somewhere on the way down from the top of the hill, we became overcome with a belief in debt itself out of any balance as the means to 'grow' the economies-- to sustain growth not backed by fundamentals, but by artificially expanding debt. Which is exactly what happened to the real estate market. The Boomer demographic wave -- the pig in the python -- had largely moved through real estate prime time, and is now cresting only on the upper end of that scale. The overall market had to shrink, or at least, could not sustain the same rate of growth as when the pig was moving year by year inexorably through the python.

Government policy and private short sighted bottom line interests combined, a conflation of agendas, to artificially keep the bubble inflated. How? By substantially lowering the requirements for credit. By eliminating the past principles of sound lending. By shepherding precisely the segment of our population least able to afford the title "last investor in the bubble' into exactly that role. Insanity.

Sobering; in order not to fundamentally pervert the value for value economies, the sum of all debt should equal the sum of all savings and investment after present spending(including taxes) = present consumption(including by government ). (the present spending/present consumption is inherenty in balance; what is left is a balance between deferred present value and implied future value. Those last must also balance or else we are usually, becuase it is most often debt that dominates, trying to net steal from the future.)

But there is no such thing as public savings or investment; every tax dollar and then some is immediately spent by governments. (There is a fringe exception: the capital accounts maintained by some local school districts, representing deferred spending of taxes. But that is it when it comes to government and savings/investment.)

So, the sum of all (private + public) debt should equal the sum of all (private) savings and investment after paying taxes, or else the current value for value economies will be perverted.

That is not in balance, and our economies have long endemically been perverted by this imbalance.

There is no longer any faith in the economic system because it has long been gamed at every instance by government and institutions and by rats on a broken and sinking ship. The gaming is not going to stop, not even when the wheels fall off. The gaming will just get more intense, because that is our tribe; on average, it is average. Especially in DC.

Here is an easy prediction; compliance rates with our taxing laws are at an all time low; we are well into the 'at the point of a gun' mode of keeping the gig flying for another 15 minutes..

[Frediano]

Brant:

The real dollar liabilities of the Federal Government are zero.

If we focus on the dollar. And the applicable word is 'zero.' Because when it comes to dollars, 'zeros=zeros.' But not when it comes to value.

This hellish partnership between the US treasury and the FED has us focuses on 'the dollars.' ANd what is happenening is, the value producing economies are being robbed blind. Not equally, but in proportion to how far the actors in the economies are separated from the tsunami of funny dollar 'zeros' just created.

Look at the latest FED balance sheet. http://www.federalreserve.gov/releases/h41/current/h41.htm

It claims to hold 4.5T is assets. 0.011B of this is Gold. The rest -- all of it, is 'debt.' But all debt isn't created equal. The lions share of that 'debt' is US Treasury debt, which is not 'real' debt, which is the basis of your claim above in reference to 'dollars.' But screw the 'dollars' (which is exactly what they did.) Follow the 'value.'

Here is -exactly- the foundation of that US treasury debt. A secretary at the US treasury prints a 1 with 12 zeros behind it on a piece of paper. In theory, that debt is backed by the 'full faith and credit of the US treasury' to go out and tax the value producing economies in the future and repay that debt with real value(provided for by the value creating economies.)

But that isn't what happens. And before you say, 'Thank God they don't tax us to pay off those bonds' think again. But not only do they not tax anything of value to ever pay off those bonds with real value, they never pay off the debt, period. In the future, during the next 'crisis of funding government' Congress simply signs pen to paper effortlessly , creates nothing of value(not even, tax on future economies)and simply raised the debt ceiling-- allowing a secretary to print now a 1 with 13 zeros on it to 'pay back' the old note/debt with a 1 and 12 zeros on it, but again, with fresh, new current accounts in US treasury and more zeros on paper bonds held by the FED. Total new value in the economies so far? Zero-- the artistic value of zeros printed on paper bonds.

But what does the US treasury do with the funny money? It 'spends' it. It goes out into the value producing economies and the US Government expropriates/demands actual value and hands out valueless dollars backed by the same value that existed before with less current accounts in existence. And the recipients turn around and look for value for those dollars, may or may not find any, but the fact is, the farther away you are from that tsunami of valueless dollars raining from on high, or simply holding dollars in some fashion, the more you are getting hosed.

As far as the value producing economies are concerned, how is this any different than counterfieters? Exactly the same economic act. As well, how is the impact significantly different than just being taxed? The difference is, the CronyFest on the Potomac can direct its 'spending' in the most power grubbing way possible, in order to buy votes and cling to the Gig.

The 2008 'crisis' was a crisis in clinging to the Gig. The Perps told America it was necessary to socialize the risk of past financial weaseldom in order to 'save the economy as a whole' and a bewildered Main Street let them do it. The only 'crisis' in 2008 was going to be weasels taking a bath for past weasledom, exactly like 1998 with LTCM and the NY Feds implicit backup.

The weasels shed their risk on the taxpayers. The weasels avoided the discipline of market education. The weasels traded off a few for sale signs in the toney CT and Northern VA burbs in exchange for a ton of for sale signs across the rest of the nation; a free for some, paid for by the same folks who fight and die in the wars that these weasels profit from.

Today the weasels cheerlead the cooked unemployment and inflation numbers and tell Main Street not to believe its own lying eyes. They point to 'record highs on Wall Street' and there is where your 'dollars ... zero' accounting shows up. Because of high real unemployment/low utilization, wages are suppressed, which suppresses prices, and so, the funny money erupts where it can-- as inflated stock prices scored in units of dollars, with companies 'valued' for hanging on to stagnant pools of non-circulating dollars.

IOW, this insanity sold as 'priming a pump' was really 'priming a siphon' and the pools of dead dollars ran downhill and collected in non-circulating pools. There is no connection between 'record Wall Street highs' and prosperity on Main Street; there is no circulation of value in the value producing economies.

Worse, it is largely recognized that taking on risk and having actual skin in this rigged game is like pre-paying your own ransom.

And so, the sick economies of waiting we have today. Broken by politico financial weaseldom going back decades and crossing party lines.

[Brant Gaede]

Government debt that is monetized is one dollar (out of thin air, electronic or printed) in and one dollar out as the Treasury checks are cashed by the recipients. If I buy a one-year $10,000T-Bill from the government I send in my check to participate in the auction. If sold for a 1% interest rate the government will immediately send me back $100 (an over-simplification as to the actual amounts involved), meaning I have purchased the T-Bill for $9,900 and the C note is my refund and represents the interest I will earn during that year. (The reason the real figure is off is because 1% on 9,900 is not 10,000, it's 9,999. So my check back is $99, not $100 or 1% on 9901 is 10,000. The government's computers have to be more precise than this because billions of dollars are being processed and little errors become big errors.)

Note that all government and private debt is consumptive. If not paid back through production it turns around and continues to consume by eating up capital stock or a country's seed corn. This is why the middle class is disappearing in the United States--one big but not only reason. Young people out of college burdened with student debt which went to pay the salaries of college administrators and tenured professors (and bank interest) can't start families, buy houses, get on good career paths early, produce and add to the capital stock. Instead they get on food stamps.

Capital is surplus production commonly realized as profits generated out of cash flow. That surplus gets lent out, usually by banks, for consumption and production so the cycle continues--the cycle of wealth expansion throughout the economy. Debt not from capital cannot be substituted for capital. It's all consumption. True, the government can and does fill up the banks with its bonds which the banks borrow short and lend long, but the interest rate is so low those who borrow cannot calculate the true cost of sustainable debt in their businesses so they expand with mal-investments that crash and burn when interest rates go up. Thus the government side of the economy gets bigger and bigger relative to the private side which in turn may actually shrink in size (not the government) as it is doing right now in many sectors. (It looks like oil and Texas are getting ready to roll over right now.)

The absence of price inflation is because of the contraction in the velocity of money through the economy generally which offsets money creation, a lot of which is exported and a lot of which just sits in the banks unused in the fractional creation of money (one dollar in, eight bucks lent [created]). When the chickens come home to roost then price inflation, somewhere and it is likely to be considerable. It might be five or ten years down the road. Never mind food and energy; they aren't in the CPI.

--Brant

[moralist]

The absence of price inflation is because of the contraction in the velocity of money through the economy generally which offsets money creation, a lot of which is exported and a lot of which just sits in the banks unused in the fractional creation of money (one dollar in, eight bucks lent [created]). When the chickens come home to roost then price inflation, somewhere and it is likely to be considerable. It might be five or ten years down the road. Never mind food and energy; they aren't in the CPI.

--Brant

That phrase jumped right off the screen, Brant....

I think the government discovered that by keeping the economy just bad enough, long enough... they can continue to create money to feed its cancerous growth.

Greg

[Jules Troy]

Only now derivatives are even larger than before the 2008 fiasco. More leverage, more risk only next time the bubble pops the government will be in no position to bail out these "too big to fail" banks. All the government has done is delay the inevitable except due to its meddling the damage that's going to happen will be far worse than if the economy had been left to its own devices.

This will be a painful reminder that as much as anyone may THINK they can go against reality or bend reality to its "will" reality no matter what will bitch slap you no matter what you do. (Unless you learn to duck)

[merjet]

Only now derivatives are even larger than before the 2008 fiasco.

What derivatives? Credit default swaps were the only kind of derivatives implicated in said fiasco, and notional amounts of those are now only about 1/3rd of their amount at year end 2007.

[Brant Gaede]

Not to worry about "derivatives," whatever they are. The basic bias of equity markets is up until the third year of the presidential cycle ends at the end of this coming March. (Average gain is almost 30% while the average gain the following year is only slightly less than 3%). The gain so far is close to nothing thanks to recent corrections. The danger is from leverage, directly from borrowed money flowing into markets and indirectly from ETFs (equity traded funds) which can multiply gains and loses by up to three times with the investor in those not using borrowed money off their own credit. (Some of these ETFs may be structured in such a way as to completely collapse even though the equities they hold or represent as holding only go down in price, albeit likely way down.) The central bank will merely supply all the liquidity needed to prevent any general collapse in imagined* or real derivative positions, but not all of them. The liquidity to maintain stock prices is another, more problematic, matter. The liquidity Greenspan provided in the 1987 fiasco prevented general economic mayhem and an even more general equity market collapse, not so much to push prices higher. He literally got on the phone and told the bankers to lend Wall Street whatever was needed when they wanted to do the opposite, that the Federal Reserve would keep them whole. It was a great time to buy stocks, if you had the money and the nerve.

--Brant

*this directly affects the important psychology of investing and trading

cash is nice, leverage is destructive, stocks are expensive

[Frediano]

Brant:

If you buy a T-Bill from Treasury, you hand over current accounts from 'you' to Treasury. Yes, like 'war bonds.' And your current-accounts represent past deferred value created by YOU, actually in the economies. So when Treasury spends your current accounts, there is no perversion of the economies (by that act alone). You have 'loaned' your already created deferred value to the Treasury. In the future, that Treasury will pay you back with some small amount of interest and you will go celebrate your big win in the future by going out into the future economies with the current accounts that Treasury has paid you back with, and then look for actual value in those economies. (Where did it come from?)

It might have come from taxation on a value producer. In that case, the current accounts handed to you by Treasury is backed by actual value in the economies.

Or, it might have come from a secretary at Treasury , empowered by a Congress painlessly signing pen to paper, printing zeros on a piece of paper and called it a bond, who took that piece of paper to the FED, who handed her a trillion dollars in spendable current accounts created from nothing but that piece of paper, and then that secretary handed some of those current accounts to you. That 'bond' bought from Treasury by the FED is not like the 'bond' bought by you from Treasury. Your bond purchased from the Treasuryis backed by actual value. The other bond is backed only by a promise to show up in the future with a new piece of paper with even more zeros printed on it. (It's not even backed by direct taxation on value producers-- the debt is not ever paid down or paid off. It is only ever increased. The net effect of painlessly only ever increasing the debt is to replace old debt only with new debt and add more debt as funny money spending, which is indirect taxation on the value producing economies.

It is indirect taxation because Treasury turns around with those valueless unbacked dollars and walks into the value producing economies and demands actual value for them.

This tsunami of funny money benefits those closer to the tsunami than it does the balance of the economies, which is why DC and Wall Street are happy and Main Street has been on its ass.

This is exactly what 'counterfeiters' do, and we've been told by the perps closest to the tsunami that this process 'stimulates' some singular thing they like to call 'the' Economy. I'm sure counterfeiters find counterfeiting stimulating, too.

Via this process -- a 'crisis' is always too good a thing to waste, this two party infestation of the CronyFest on the Potomac has found a way to tax and ride the value producing economies -endlessly- , without bounds, and especially, without calling the process 'taxation' because after decades of this, the nation still doesn't have a clue why it is on its knees and bleeding from the ass.

[Frediano]

The above abuse of the FED is part of what is drastically wrong with our implementation of a central bank. The concept of a central bank only works if certain rules/practices are adhered to.

1] The central bank cannot directly participate in the economies.

2] The debt that a central bank accepts must be real debt backed by real -value- or else the current accounts it issues in return for holding that debt are value-less value-proxies; counterfeit.

Debt must be -real- debt or else the system of fractional reserve banking and a central bank is simply a means of government counterfeiting and stealth taxation on all of the value producing economies. (This was exactly the 'crisis' of 2008; the fractional reserve system was over-whelmed with too much debt that was not backed by actual value-- like, a legitimate ability to repay in the future. This fake debt came from exactly the perps who who were holding it in such vast quantities, by design, and yet, they convinced the balance of the nation to eat their losses by way of the socialization of their risk-- that that was necessary to 'save the economy as a whole.' More like, saving their ability to continue to cornhole the economies; to cling to their tsunami of money for nothing Gig, to endlessly tax the value producing economies without bounds or even notice. They got away with it and left a rotted, gutted shell.

Paper bond debt backed only by future bigger paper bond debt is not debt that is backed by actual -value- only by paper bonds; zeros on paper.

Other abuses of our FED: instead of simply being returned to the pool of available current accounts available to buy and hold bonds, all interest received by the FED is simply handed over to the US Treasury to spend by the US Government. This is reported as 'profits' and America reads the headlines and nods its head, not recognizing the latest increase in taxation on the value producing economies.