Paper wealth, or, we’re going to Disneyland
November 12, 2015 § 22 Comments
People find paper or electronically recorded securities counterintuitive. Why the heck does anyone value pieces of paper with ink on them, or numbers in computer memory? Why the heck is anyone willing to trade a real working car in exchange for numeric balances stored by software in a data center somewhere?
In the Zombie Apocalypse legal title isn’t worth the paper upon which it is written, or the bits in which it is recorded. But short of the Zombie Apocalypse, securities have value because under the laws of the sovereign they entitle you – the owner or bearer of the security – to something other than the security itself.
The title to your car entitles you to your car.
The title to your house entitles you to your house.
Bank deposits entitle you to cash on demand up to the deposit amount through liquidation of some of the property on the bank’s balance sheet.
Exxon stock entitles you to proportional profits and residual liquidation value in Exxon.
A non-usurious note or interest-bearing bond entitles you to census payments against property and liquidation value of that property up to the principal amount of the note.
A usurious note entitles you to the enslavement of the person making the personal guarantee until the principal and interest demands of the note are satisfied.
Self-referential securities entitle you to run around in circles looking for the thing of value to which you think you are entitled. It must be somewhere!
And a sovereign dollar entitles you to make a transaction, in the sovereign’s marketplaces, for which the tax is one sovereign dollar.
It is manifest (whether folks like it or not, because nature doesn’t reconfigure itself based on what people don’t like) that the sovereign ‘owns’ various marketplaces, because he makes and enforces the rules for transacting – for bartering property and labor – in those marketplaces which fall under his sovereignty. Just as Exxon owns its capital infrastructure, the sovereign owns the outer capital infrastructure in which Exxon operates and transacts. Economic reality is not reducible to nothing but private property.
If you go to Disneyland, you have to follow the rules of Disneyland. If the rules say you have to pay ten Mouse Groats for every transaction in Disneyland, you’ll need Mouse Groats if you want to transact in Disneyland. If the tax rules are more complicated than that you’ll still need Mouse Groats based on the transacting you want to do, the tax rules, and the supply of Mouse Groats. Mouse Groats are a securitization of Disney’s ownership of the marketplace in which you are transacting.
And it is all fun and games until the zombies come.
 Of course, as an intrinsically immoral case of usury this entitlement may be enforced by the positive law, but it is not a genuine moral entitlement.