Many thanks Len, and BOOM would agree with the sentiments in your link. It is a point that we agree to disagree on. However, we do agree on some of the misinformation in Austrian economics: "“SOUND MONEY” – THERE WAS NO GOLDEN AGE OF PEACE AND PROSPERITY WHEN MONEY WAS “SOUND”. COLONIALISM, CONQUEST, ROBBERY, AND SLAVERY WERE THE RESULTS."
I'm glad to see you're okay with disagreements, Peter. I started a discussion with Perplexity.ai at https://lenkinder.substack.com/p/treasury-securities-deficits which needs editing and I hope to add more to it if I get time soon. Liz Harris was a colleague of Rodger Mitchell and she said All Money is Fiat, which seems correct to me. I'd like to get a programmer to make a simulation of a small economy based on monetary sovereignty to do experiments with. The smallest economy to experiment on might be an island with two or more unrelated tribes or families. The main reason for any society to use money is to facilitate trade (or prosperity) IMO and avoid conflict. Rodger's graphs seem to show that federal spending doesn't increase inflation. What the spending is used for would determine if it's good for society or not. In a way, it may be good that there is a selfish class that makes things hard for the rest of us, because we can usually improve ourselves if there are hardships to overcome. So, if we ever overcome the selfish class, we'll have to find better hardships for the people. Right?
Agreed Len, and I wrote about the island economy in my book:
"Gold & Silver become 'real' money
In the early stages various local materials were used for money by general acceptance of the parties to a trade. For example, salt was used in areas where it could be mined (which is where our term 'salary' comes from when the Romans used it extensively); shells were common in pacific islands and in rain forests, beans and other rare items were incorporated into local exchange systems.
Finally, because of its many superior attributes, gold (and silver) eventually became the main source of both storage of wealth and a monetary unit for exchanging goods and keeping a record of account. As time passed and trade expanded to encompass many countries; methods of trade began to develop specialities. There were merchants who specialised in various goods which could be exported around the world. A problem arose from the need to ensure that payment for goods would be made on time following delivery after some months of shipping across borders and overseas. This required the creation of an intermediate body which would take on the risk of extending credit to the purchaser during the passage of the shipment until the goods arrived safely in port.
From early days a system of money changers had arisen whereby owners (often merchants) of gold, now a recognised medium of exchange and wealth, were able to deposit their gold in secure vaults owned by the money changers; these are known as deposits, just as you and I would make a deposit into our bank, except now paper and computer digits have replaced gold for daily use.
In exchange, the money changers wrote out a slip of paper, a receipt to the merchant, detailing the amount of deposited gold and its value after charging interest and fees. It was not long before merchants began paying for their goods using these receipts by endorsing them payable to the seller in settlement of their debts; they became a form of currency and from this the idea of the bank note became established and in common use."
"Markets can be 'created' rather than discovered, a mind game:
The point of this short story is that, just as the markets for these various games fade, in the real world the currency of the day, dollars, euro, Yen or whatever will also fade into oblivion as more and more flood the market. In the same way that nobody can foretell the next coming ‘fad’ so too are we unable to predict the coming replacement currency; nevertheless it will come all too soon and thus we should all be prepared for a wave of change by investing in the one ‘currency’ that never fails, gold, which we covered earlier. More will be discussed about winning investment strategies in Part 2 in a separate book. Markets are not only ‘discovered’ by entrepreneurs and traders but can be ‘made’ artificially by unscrupulous opportunists as this sorry tale of exploitation illustrates:
Two prospectors were searching a jungle for rare-earth metals when they came upon a tribe of hunter-gathers far from civilisation. They observed that these hunters were catching monkeys and using them as currency to trade for other products between themselves and other local tribes as well as for consumption. One prospector offered to buy monkeys for $1 each, a good price for any tribesman.
The jungle was full of monkeys and the hunters had no trouble providing a good supply which the prospectors placed in cages ready for export. Soon enough the monkey population began to fall and the hunters were finding it more difficult to meet demand, and so with a limited supply, negotiated for more money. The prospectors offered $5 per monkey and the hunters went off again with increased enthusiasm.
After a while, again the hunters were finding fewer monkeys and asked for yet more money to which, in response, the offer was increased to $10 each. When all the cages were full to overflowing one prospector announced that his colleague would be taking a trip up river to the nearest market where he had a buyer for the monkeys at $25 each and would return to split the profits amongst the tribe. A while later the remaining prospector told the tribe that he had heard from his friend that he had sold the monkeys for $50 each but there would be a delay before he returned with the money.
In the meantime he had to go to an important meeting with a business colleague and didn’t want the tribe to miss out on all the extra profits to be made. So he was willing to sell all the monkeys to the tribe for £25 each and they would make great profits when his friend returned. The tribe were overjoyed at this man’s generosity and quickly closed the deal, allowing the prospector to leave for his meeting.
The tribe waited and waited but the two men were never seen again! Yes, the world is full of trickery and made possible, generally, through greed or fear which drives all markets up and down according to the prevailing atmosphere and a herd instinct which it follows as trust fails and disappointment, even rage, remains."
[The Financial Jigsaw, Part 1 - page 99]
It's always good to engage in rational discussion Ken, this is how I learn! :-)
Fascinating read. Makes logical sense. Yet seems the Government’s of today are ignorant to this. We need more money to grow like a plant needs water. Thnaks.
In a monetarily sovereign nation like the U.S., fresh new money is easy to get by government spending. See https://mythfighter.com/.
Yes, Len it's the fiat magic money tree - but is there a limit? Not seen yet...
Best
AP
If Austrian means Austrian economics, I'm biased against that, kuz of its austerity recommendations. Here's an article against Austrian economics etc: https://mythfighter.com/2023/11/07/ignorance-or-lies-the-single-worst-economic-scare-mongering-bullshit-ever-encountered/.
Many thanks Len, and BOOM would agree with the sentiments in your link. It is a point that we agree to disagree on. However, we do agree on some of the misinformation in Austrian economics: "“SOUND MONEY” – THERE WAS NO GOLDEN AGE OF PEACE AND PROSPERITY WHEN MONEY WAS “SOUND”. COLONIALISM, CONQUEST, ROBBERY, AND SLAVERY WERE THE RESULTS."
https://austrianpeter.substack.com/p/environmental-pension-fund-crashes?r=hhrlz&utm_campaign=post&utm_medium=web&triedRedirect=true
Your article link hits the right note when it mentions "shortages of supply" which I covered here: https://austrianpeter.substack.com/p/the-financial-jigsaw-part-2-the-end?s=w
Fiat money works in an expanding economy but can we consider that this 300+ year trend is coming to an end?
I'm glad to see you're okay with disagreements, Peter. I started a discussion with Perplexity.ai at https://lenkinder.substack.com/p/treasury-securities-deficits which needs editing and I hope to add more to it if I get time soon. Liz Harris was a colleague of Rodger Mitchell and she said All Money is Fiat, which seems correct to me. I'd like to get a programmer to make a simulation of a small economy based on monetary sovereignty to do experiments with. The smallest economy to experiment on might be an island with two or more unrelated tribes or families. The main reason for any society to use money is to facilitate trade (or prosperity) IMO and avoid conflict. Rodger's graphs seem to show that federal spending doesn't increase inflation. What the spending is used for would determine if it's good for society or not. In a way, it may be good that there is a selfish class that makes things hard for the rest of us, because we can usually improve ourselves if there are hardships to overcome. So, if we ever overcome the selfish class, we'll have to find better hardships for the people. Right?
Agreed Len, and I wrote about the island economy in my book:
"Gold & Silver become 'real' money
In the early stages various local materials were used for money by general acceptance of the parties to a trade. For example, salt was used in areas where it could be mined (which is where our term 'salary' comes from when the Romans used it extensively); shells were common in pacific islands and in rain forests, beans and other rare items were incorporated into local exchange systems.
Finally, because of its many superior attributes, gold (and silver) eventually became the main source of both storage of wealth and a monetary unit for exchanging goods and keeping a record of account. As time passed and trade expanded to encompass many countries; methods of trade began to develop specialities. There were merchants who specialised in various goods which could be exported around the world. A problem arose from the need to ensure that payment for goods would be made on time following delivery after some months of shipping across borders and overseas. This required the creation of an intermediate body which would take on the risk of extending credit to the purchaser during the passage of the shipment until the goods arrived safely in port.
From early days a system of money changers had arisen whereby owners (often merchants) of gold, now a recognised medium of exchange and wealth, were able to deposit their gold in secure vaults owned by the money changers; these are known as deposits, just as you and I would make a deposit into our bank, except now paper and computer digits have replaced gold for daily use.
In exchange, the money changers wrote out a slip of paper, a receipt to the merchant, detailing the amount of deposited gold and its value after charging interest and fees. It was not long before merchants began paying for their goods using these receipts by endorsing them payable to the seller in settlement of their debts; they became a form of currency and from this the idea of the bank note became established and in common use."
[The Financial Jigsaw, Part 1 - page 35]
https://www.researchgate.net/publication/358117070_THE_FINANCIAL_JIGSAW_-_PART_1_-_4th_Edition_2020
AND:
"Markets can be 'created' rather than discovered, a mind game:
The point of this short story is that, just as the markets for these various games fade, in the real world the currency of the day, dollars, euro, Yen or whatever will also fade into oblivion as more and more flood the market. In the same way that nobody can foretell the next coming ‘fad’ so too are we unable to predict the coming replacement currency; nevertheless it will come all too soon and thus we should all be prepared for a wave of change by investing in the one ‘currency’ that never fails, gold, which we covered earlier. More will be discussed about winning investment strategies in Part 2 in a separate book. Markets are not only ‘discovered’ by entrepreneurs and traders but can be ‘made’ artificially by unscrupulous opportunists as this sorry tale of exploitation illustrates:
Two prospectors were searching a jungle for rare-earth metals when they came upon a tribe of hunter-gathers far from civilisation. They observed that these hunters were catching monkeys and using them as currency to trade for other products between themselves and other local tribes as well as for consumption. One prospector offered to buy monkeys for $1 each, a good price for any tribesman.
The jungle was full of monkeys and the hunters had no trouble providing a good supply which the prospectors placed in cages ready for export. Soon enough the monkey population began to fall and the hunters were finding it more difficult to meet demand, and so with a limited supply, negotiated for more money. The prospectors offered $5 per monkey and the hunters went off again with increased enthusiasm.
After a while, again the hunters were finding fewer monkeys and asked for yet more money to which, in response, the offer was increased to $10 each. When all the cages were full to overflowing one prospector announced that his colleague would be taking a trip up river to the nearest market where he had a buyer for the monkeys at $25 each and would return to split the profits amongst the tribe. A while later the remaining prospector told the tribe that he had heard from his friend that he had sold the monkeys for $50 each but there would be a delay before he returned with the money.
In the meantime he had to go to an important meeting with a business colleague and didn’t want the tribe to miss out on all the extra profits to be made. So he was willing to sell all the monkeys to the tribe for £25 each and they would make great profits when his friend returned. The tribe were overjoyed at this man’s generosity and quickly closed the deal, allowing the prospector to leave for his meeting.
The tribe waited and waited but the two men were never seen again! Yes, the world is full of trickery and made possible, generally, through greed or fear which drives all markets up and down according to the prevailing atmosphere and a herd instinct which it follows as trust fails and disappointment, even rage, remains."
[The Financial Jigsaw, Part 1 - page 99]
It's always good to engage in rational discussion Ken, this is how I learn! :-)
Best wishes
Peter
Fascinating read. Makes logical sense. Yet seems the Government’s of today are ignorant to this. We need more money to grow like a plant needs water. Thnaks.