Saturday, April 4, 2009

Regression to Productivity

Based on math, reason and logic the argument I am presenting here can be sustained.

The intent in this article is not to prove the claims, but simply to state them in simple terms.

If you disagree, please begin by explaining your case for how our current system is working well and is not to blame for the current bust.

Very simply put, money must always originate through voluntary exchange of a commodity which initially has other uses.

A simple paradigm breaking example is butter. It begins as something that people produce to serve a particular purpose and then, because of certain attributes like fungibility, divisibility and reasonable durability, it rose in some markets as a commodity used in indirect exchange, i.e. money.

Which came first, a) the usefulness for other purposes, b) usefulness as a commodity for indirect exchange or c) were these uses concurrent? In the case of butter, the rise to money would be sequential, while in the case of gold or silver, I consider the rise concurrent.

In either case, the commodity is the original money because government cannot introduce an unlinked currency to market. The link always regresses to a commodity which was respected and accepted in exchange because of various attributes, number one among them being the productivity filter. There was no need for a government agency to ensure the "value" of a commodity that everyone clearly understood required productive labor to acquire.

Compare these two questions:

Hey buddy, did you just get that gold out thin air, or did you work for it?

Hey buddy, did you just print that dollar, or did you work for it?

The gold had to be mined. The paper costs nearly nothing to produce. In a matter of milliseconds enough "dollars" can be produced to buy entire countries. Try that with gold or any other natural money. Society can't get around the productivity filter with natural money.

Today we suffer under the abuses of an unlinked fiat currency. This means the government does no work in order to produce their claims to our labor. Fiat money is also called costless money.

Prior to that we had a linked currency, i.e. notes that were linked to a reserve of gold and silver. With our linked currency there was at least the claim that some quantity of gold or silver was stored somewhere that someone worked to produce.

Prior to that we had the age of coins. These were diluted with base metals as a crude and unsophisticated form of inflation. The king would collect 100 gold coins in taxes, melt them down, mix in some cheap base metal and then produce 150 new coins to spend. Basically if the coins were purified and separated, the king would have the 100 original coins which would spend fine, but then also 50 coins made of tin. The effect is the same as if he came to purchase goods from you using his 50 tin coins (covered with gold paint of course) and expected you to treat the tin as though it were gold. Spending the tin as though it were gold is no different when a little is mixed in with every coin than it is if it all resides in a few. It is theft either way.

Prior to that were commodities. Natural money, honest money, sound money. People used gold and silver, sometimes copper or other commodities, as a medium for efficient indirect exchange.

And prior to that came productivity. One person raised sheep, another wheat and yet another mined gold and silver. There would be no gold to trade unless someone dug it up and refined it. That is hard work.

I am aware of no case in which a government has ever successfully introduced a money token that was not dependent on a commodity, which was originally introduced in voluntary exchange and secured by the productivity filter.

Therefore, when the government decrees quantities of costless money, they are actually decreeing their claim to your productive labor and through this decree of quantity, the government demands and ensures confiscation of your property by force.

We must understand that no productive labor is exempt and no one can opt out of working specifically for the destruction of what they hold dear, unless they are among the few whose goals are in alignment with the actual and intentional product of our present monetary system. To support this costless money system, which bypasses the productivity filter, is to promote systemic theft and scheduled destruction of nations.

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