<EROEI Short #2: Lenin & LohanThe Oil DrumDrumBeat: August 29, 2007>

255 comments on Monetary Policy and Weaseling Out of Debt

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RealMichigan on August 29, 2007 - 12:03am Permalink | Subthread | Parent | Comments top

Good stuff Shunyata. Nice connection between money and resources, most people overlook this obvious starting point, and this is because once the unaccoutable fiat world has had enough effected deployment of time to let the rot work its destructive majik into minds, then with a generation or two we tend to get the outcome we ultimately deserve....we shall indeed see if something for nothing can be fiatfully imposed for much longer, lest infinium.

Shunyata also gave a slight mention of the defunct gold standard, which shows a bit of eco courage. The greater wandering masses and boob-tubed trained populace of this nation relates any mention of Au as a shiny yellow relic of the past. It has become associated with bad taste in jewelry and false teethy villains. That perspective of thought is not entirely incorrect concerning the properties of the physical usefulness of the metal despite the relative scarcity. BUT, the real worth and objective of Au (or any commodity untamperable and scarce) concerning the medium of money and its fiat issuers is this; currency has to be accountable, and good mediums of exchange should instill a storable worth of labor in the process. (also backed by the same physics) To do this requires discipline. The fiat dilemma revolves around anything that comes up (ethanol, and easy no pay til next Tuesday 2009 mortgages for example) and can invoke the false credit power in this opposites of true progress. Once again, this is because fiat begets nothing but more fiat. Fiat only understands itself and it really matters not if the journey is worthwhile or if it remedies any so-called problem in progress. In the silly unchecked quants, thus it is only concerned with replication of itself and the false progress is just another blind wave in it's wake.

An example of a blind wave would be people who extrapolate deeply into fiat money charts with greater hopes of discerning the next wave. (fiat profit economics)

Unbacked fiat backs itself up under the guise of progress, yet it can not understand much beyond itself (capitalism built on unbacked fiat - issued under the finite petro dollarium lately) Endorsements run the fiat mill of progress and the subsequent bullshit politics to sustain this hologram of unsustainable "Don't look beyond my feet attitude". Any solutions, however bright or bleak, first have to weather this multi-tierd fiat cobbled web of nonsense. This of course MUST happen before any reality runs out/dry.

Gold is/was a worthwhile check against the forces of unaccounted money/society dillution. There is no glimmer of sound currency without some scarcity behind it.

There is no worth of labored gains or store of value when there is no contents or rules to the medium of trade.

The markets are selling the real to cover up this fakery.
Unaccountable fiat always tends to destroy real curves of learned resourcefulness with easy comfort marketeeeeeering.

In very simplistic terms it could be summed up as this; Why bother when "bother" is cheaply given away.? Cheap has become our Ceaser, so, cheap we shall give back.

The fedgodz only purpose is to take care of the biggie bankerias first, hence that "look thee other way" mentality with Citi and BoA. The babelin' media heads are very much certain that if only enough liquid fiat nothingness can continually be injected, then all will be well, and infinite charades can inflatingly resume the proper derivements on thee said ongoing entitled enhancements....lolol. Sorry, It is quite a true sentiment though. (bullshit begetting more bullshit) I am not the least bit convinced. Sooner or later,(and sooner with depleting resouces) this great green fiat bean counter/grinder/blender/heli-chopper of ongoing somethings for nothings will indeed sputter itself into a long emergency Kunstler like puke. And as so far as increased globalization to the rescue goes....How do we get things to become more globalized with less available liquid energy mobility propelling it across the folded bounds with an increasingly worthless unbacked fiat medium of exchange?

All of the psychobabble fiat twisted and regurgitated Hegelian, Kant, Marxist, Keynesian economic logical triads won't change squat in this mammonized globalized world once the pilot lights begin to flicker. I really fear that we have become beyond complacent in our cheap easy indebtful creditized world to make real advances into replacement of this energy that allowed it. Yet I also believe we will change attitudes abruptly once the truth smacks us upside the alternative overmarketed head.

Long time reader of this fine thread, and me thinks 98% of thee entire governmental body of representitives could/should be replaced with the quality of thinkers from the drum :o)

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super390 on August 29, 2007 - 12:39pm Permalink | Subthread | Parent | Comments top

So we should go back to the Gilded Age, when the entire gold-based economic system was so horribly rigged in favor of the rich that the bottom of the business cycle, then called "panics", would literally destroy the lives of the poor? So that cycle after cycle, a ratcheting effect put more and more wealth in the hands of the few?

You want to go back to the past because you expect to be one of the property-owning gangsters. If I were a poor renter in your tenement, your blessed deflation would cause my wages to collapse faster than my rent. Then your privatized coal companies would hike their prices in the winter, wiping out my savings. Then I would be in debtor's prison, no different than a privatized slave.

And then, sir, I would join a radical movement to blow your brains out. As millions of victims of hard-money capitalism did all over the world. Don't say "look at how bad that turned out" - they were STARVING right then, with no time for reasonable alternatives. Not that your predecessors ever came up with any besides moving West and murdering redskins to steal their land.

So don't bring back a past in which I would die or kill rather than endure. Isn't it interesting that with fiat currency or with a gold standard, the rich always find a way to get everything for themselves?

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WNC Observer on August 29, 2007 - 1:37pm Permalink | Subthread | Parent | Comments top

I should point out to both you and to RealMichigan that the past may not be relevant to the future. The nineteenth century was in a mode of exponential, FF-driven industrial growth. A stable money supply would actually be (and often was) deflationary in such circumstances. Of course, the gold supply was not always stable, as one gold rush after another would pump massive amounts of gold into the money supply. Thus, wild swings of inflation and deflation would occur. And yes, there were people ready to make the most of the opportunities that each swing presented, to the detriment of the more vulnerable members of society.

What we are facing in the future will be an inevitable, unavoidable, and unprecedented long-term economic decline, hopefully leveling off into a permanently sustainable zero-growth economy.

In a zero-growth sustainable economy, what you want is a stable money supply. Both inflation and deflation send misleading signals, and result in wrong economic decisions being made and resources being misallocated and wasted. In a zero-growth economy, nothing could be more harmful. Efficient use of resources becomes all-important, and a stable monetary value becomes essential to facilitate this.

In theory, I suppose that a gold standard could provide such a stable money supply. However, that assumes that we are all done with gold mining, and that none will be used up and lost. It also assumes that there are never any trade imbalances between any countries, and that there are no currency speculators. Those seem like big assumptions. It would seem to me that a better approach would be to simply fix the money supply at a specified amount and don't let it increase or decrease. This in turn would suggest that there would be little, if any, room for fractional reserve banking in a steady-state economy. Eliminate that, and a competently managed fiat currency would probably do the job just fine.

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new account on August 29, 2007 - 3:18pm Permalink | Subthread | Parent | Comments top

Sounds like a muslim economy.

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Leanan on August 29, 2007 - 3:27pm Permalink | Subthread | Parent | Comments top

For good reason, no doubt. They still have remnants of the stead-state economy of the ancient world.

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WNC Observer on August 29, 2007 - 5:16pm Permalink | Subthread | Parent | Comments top

The exception is that there can be and actually should be interest charged for money borrowed. In a steady-state, zero-growth economy, all assets must be used efficiently, and that means that all assets must have a rental value. That includes money. Interest is just the name we apply to the rent we charge for the use of money. If any asset has no rent charged for its use, then that asset is considered to be "free", and can be used or abused to one's heart's content. A zero-growth economy can't afford that, because it can't afford to replace assets that are wasted.

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Cid Yama on August 29, 2007 - 11:45pm Permalink | Subthread | Parent | Comments top

Muslim Banks do not engage in Usury. Sharia Law prohibits charging/paying interest. There is also an injunction against excessive risk taking. (probably as that would be considered gambling)

http://www.metimes.com/storyview.php?StoryID=20061129-083353-2138r

http://www.misysbanking.com/files/file5375_Islamic%20banking%20flyer%20P...

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