September 30, 2016 § 33 Comments
Entitled Eddie: “It is terribly unfair that inflation erodes the purchasing power of bank deposits. A dollar today just doesn’t buy what it used to buy.”
Realist Rob: “If the basic problem is inflation – that the purchasing power of other property is rising relative to the value of bank deposits- then why not put your savings into other property like mutual funds or company stocks?”
EE: “Most people don’t understand mutual funds or company stocks. They just want to keep their cash in the bank and maybe earn a little interest.”
RR: “Anyone who thinks that bank deposits are cash doesn’t understand bank deposits.”
EE: “You can’t expect everyman to grasp esoteric financial arguments.”
RR: “So everyman is entitled to freely purchase and hold a financial security as his long term savings plan: a financial security that he doesn’t understand and about which he has done no due diligence; a financial security about which vast amounts of information is readily and publicly available; and he should be protected by the government from the consequences of his own free choice of what property to buy?”
EE: “But if he buys other property it might lose purchasing power relative to bank deposits. It is the government’s responsibility to keep the purchasing power of dollars stable over time.”
RR: “So it is a terrible injustice that everyman’s long term investments (savings), which he freely chose to acquire and keep even though you admit that he hasn’t bothered to do the work required to properly understand what he has bought, in the context of a vast array of options and a vast body of public information explaining different investment options, might lose purchasing power? Do you also feel that getting older or getting sick or catching an unlucky break or getting in an accident or doing something stupid is an injustice which must be remedied by the government specifically as an injustice?”
EE: “It is terribly unfair that inflation erodes the purchasing power of bank deposits. A dollar today just doesn’t buy what it used to buy.”
September 26, 2016 § 28 Comments
Your personal price as a chattel slave, in dollar terms, is reflected in your credit rating. In this post I will outline a proposed methodology for calculating the price that you are currently selling for in the chattel slave market. I haven’t worked out the details: this post is really just a starting point.
Like many modern terms, ‘loan’ is used equivocally.
Suppose that you are a borrower of money. We can calculate your value as a chattel slave by looking at the differences between the non-recourse (and therefore non-usurious) loans you can acquire and the personally guaranteed (usurious) loans you can acquire.
Scenario 1: non-usurious borrowing
In one sort of loan — a non-usurious loan — you sell your lender a stake in some property that you are purchasing or that you already own. You retain the use of the property, so you pay rent to your ownership partner (lender). This rent is often called ‘interest’. You may also buy back your partner’s share over time. This is often called ‘principal’.
If your partner doesn’t know you very well, he is going to want to get some idea how well you will take care of the property that he owns in partnership with you. This kind of knowledge is provided institutionally by the modern process of establishing credit ratings. Based on your trustworthiness – whether established by credit rating or some other means – your lending partner may require a larger down payment (thus lower loan-to-value ratio) and / or may charge a higher rent (because he is taking a greater risk).
If you stop making payments for any reason, he can recover what he is owed by repossessing the property. Financially and morally this is the same scenario as a landlord evicting a tenant who stops paying the rent. Depending on circumstances, this may or may not affect your credit rating specifically or your reputation generally. But your partner’s financial claims are limited to the property that you own in partnership.
In this non-usurious scenario, your trustworthiness as a partner with custody and use of the lender’s share of the property is reflected in the interest rate and in the loan to value ratio (and thus the size of the required down payment). These in turn are generally determined by your credit rating.
Scenario 2: usurious borrowing
In a usurious loan, the lender’s claim is not against property or only property: it is against your personal guarantee that you will repay the loan. The thing you are selling to the lender in this case is not an ownership stake in property: it is a contractually binding ownership stake in you, yourself. This will generally be reflected in a larger required down payment and a higher interest rate.
Calculating your price:
Your current market price as a chattel slave is related to the similarities and differences between these two kinds of scenarios. Specifically it is related to the premium you have to pay in terms of larger down payment and higher interest rate for the unsecured personal loan. I’ll propose the following calculation for the sake of discussion:
Take the largest personal unsecured loan you could get approved by a reputable lender with your current credit rating. Then determine what size non recourse loan you could get approved – say to purchase some real estate – with the same down payment and interest rate.
Your current price as a chattel slave – the price for which your owners are currently buying and selling you in the marketplace – is the same as the price of the property that you could purchase with the non recourse loan.
September 25, 2016 § 24 Comments
The subject of money is pervaded by all sorts of unreal mysticisms. If you want to better understand economic reality it is important to hunt down these unreal mysticisms in your mind and kill them.
All economic exchange is barter. If you get nothing else out of this post, take this one concept to the bank. All exchange is barter.
Attempts to segregate property bartered in marketplaces into ‘money’ versus ‘other property’ is one of those fuzzy social conventions which is fine as long as it isn’t taken too seriously. Taking ‘money’ as something categorically distinct from property in general distorts and obscures reality. Any property at all might be used as money (sunk in exchange); and even property conventionally thought of as “money” — coins, bills, and the like — can be displayed or put to other uses than exchange. This was all perfectly obvious to Aquinas, but modern people are frequently incapable of seeing the obvious when it comes to the subject of money.
We typically think of money as a special kind of thing which can be easily transferred and exchanged. That is fine as long as the term “money” denotes property with the further connotation that the property is easily transferred and exchanged. Money can be thought of as a kind of property fuzzily distinguishable from other kinds of property by its ease of exchange. But it becomes insanity when “money” is viewed as categorically distinct from property in general.
The term “money”, then, does not really describe a specific thing or class of things. It describes a role that some property takes on, some of the time, in economic life. Some property is more suitable in this role than other property. If you transfer or spend some property – exchange it for different property – that property takes on the economic role we call “money”.
The property actually exchanged in barter falls into one of two categories: securities and non-securities. (As it happens, securities are for the most part very easily transferred and exchanged versus most non-security property).
Securities derive their value from the property they impair and the rights involving that property which they assert, as opposed to ‘the paper they are written on’. Yes, ‘the paper it is written on’ can be a kind of property in itself, or a sort of meta-property. But you can’t drive your car’s pink slip to work.
Non-security property derives its value from its own objective attributes.
Bitcoins and other cryptocurrencies are not a security. They are like virtual gold, except that unlike actual gold they have no useful objective properties at all other than the value intrinsic to authenticated records of wasted computation. Bitcoins are a kind of digital fool’s gold, entitling the owner to nothing other than the pleasure and bragging rights of virtually possessing them, rather like the high scores on your favorite video game.
Now it is true – because human beings are both ignorant and irrational much of the time – that you can often trade worthless things for valuable things under the ‘greater fool’ theory, based on fad and fashion and deluded/false economic theories and the like. Whether someone wants to apply the label ‘money’ to the worthless things traded to ‘greater fools’ is neither here nor there when what we are after is an accurate understanding of reality: it doesn’t turn those actually worthless things into actually valuable things.
Like the market price of gold, the market price of bitcoin is radically distorted when measured against its objective attributes qua property. The difference in the case of bitcoin is that the market price has even less reality baked into it: at least gold actually has objective attributes which anchor its economic value in reality, and has been used as a raw material for making artifacts for thousands of years. Cryptocurrencies are not an escape from the moral and ontological anti-realism of modern finance: they are its apotheosis.
This brings us to the subject of workers and wages. All exchange is barter, and the exchange of work for pay is no exception.
As I explain in the Usury FAQ and elsewhere, a worker is owed wages not simply for time elapsed but for what he, through his own powers exercised under agreement with his employer, makes actual. Because we are finite beings and can only do so many things in our lifetimes, one might poetically refer to wages as representative of human life. It is true enough that cheating workers out of their just wages is wickedness several times over, an unholy combination of robbery, dishonesty, fraud, taking advantage of the good will and often inferior position of one’s fellow man, and destroying his chance to do something different with his finite time alive in this world. (A sudden calamity preventing payment of wages is a different story of course).
But poetry about money representing human life probably obscures more than it reveals here. Burning cash or destroying other kinds of property isn’t murder.
Consider a car mechanic. He works on your car for agreed rates. Until you pay him he retains (whatever the positive law may assert) the moral equivalent of a “mechanic’s lien” against your car, the property into which he put his labor.
Consider a barber who just cut your hair. The tacit agreement is that you have money in your pocket to pay him. If you don’t, then see Question 49 of the usury FAQ for the different kinds of scenarios.
Examples can be multiplied, but note that none of this imparts mystical spiritual human qualities to some particular kind of financial security (e.g. fiat dollars), or to some other etherial being labeled “money”.
Setting aside assertions of the positive law (taxes, etc), there is no moral requirement for a worker to barter for fiat dollars in exchange for his work. Any property – or even trading one kind of work for another – will do. The idea that there is something super special about certain securities labeled ‘money’ that make them ‘wages’ and thus ‘a fungible representation of human life’ is really just errant nonsense, if it is taken literally.
Finally, we come to the idea that inflation or deflation in the market price of currencies versus other kinds of property is a moral travesty, a sin against workers, an offense against the common man: in short that people (as long as they are not wealthy) are morally entitled to have the purchasing power of their property preserved over time as long as that property is of the mystical class ‘money’. This atrocious idea really needs to be hanged in the city square where everyone can see, its broken and destroyed body beaten and desecrated to make it clear how utterly stupid and destructive it is. (It does not follow that ‘currency debasement’ is never immoral, of course).
In general people who think that they are entitled to the magical preservation of the buying power of their own property against the relentless tide of the second law of thermodynamics are in the grip of usurious entitlement. Someone ought to slap them out of it, for the sake of both the common good and their own good.
 This of course is not (and is not intended to be) a complete characterization of, or even a particularly adequate partial characterization of, economic value. It is merely an observation that any attempt to characterize the economic value of property accurately must take into consideration the objective attributes of that property. In general, economic value cannot be reduced to nothing but subjective human preferences as expressed in current market prices.
September 23, 2016 § 53 Comments
“Given an arbitrary world and arbitrary fitness functions, an organism that sees reality as it is will never be more fit than an organism of equal complexity that sees none of reality but that is just tuned to fitness.”
Now we are getting somewhere. If evolutionary theory is true, as opposed to merely sophistry which has evolved as a political defense of metaphysically naturalist hubris, then the humans who evolved to become evolutionary theorists ‘see none of reality’.
Or, alternatively, it might just be time for some folks to check their metaphysical premises.
September 19, 2016 § 35 Comments
This blog is syndicated into a few feeds here and there, and I sometimes read and very occasionally comment on other blog posts in those feeds. Here is a recent discussion involving bitcoin and cryptocurrencies which some of my own readers may find of interest. This post started as a comment in that thread.
Cryptocurrency hopefuls fail to grasp the fundamental fact that (unlike stock, bonds, demand deposits, fiat dollars, and the like) bitcoin is not a security: ownership of a bitcoin does not entitle the owner to anything at all other than possession of the bitcoin itself.
The basic suggestion is that ‘currencies’ in general (understood ambiguously), and therefore bitcoins in particular, represent a promise. But this raises the question of who in particular has promised what in particular to whom. An abstract ‘promise’ from nobody in particular, to nobody in particular, backed by no specified property at all, is no promise at all. If nobody will buy your bitcoins you don’t have anyone to accuse of breaking their promise; and there is no pool of property which you can reference, claiming entitement to a share in virtue of this ‘promise’.
Cryptocurrencies are only ‘promises’ when every day is opposite day. Bitcoins are a commodity not a security. They are not promises made by anyone in particular: they are simply themselves, that is, they are cryptologically authenticated records of wasted computation.
One of the sociological oddities of cryptocurrencies is that software people really ought to grasp the difference between references to objects and objects in themselves. Somehow when it comes to financial securities the intellectual capacity to do basic dereferencing goes out the window. With this sort of confusion it is no wonder that the ‘smart’ locks on my car seem actually rather stupid.
The conflation of references to property with actual property often serves the interests (no pun intended) of usurers and other financial hucksters, so it is no surprise that this conflation is fostered by ‘the powers that be’. Cryptocurrencies propose to ‘fight the power’, if you will, by reinforcing these same basic errors. I think the kids these days refer to this as being ‘cucked’.
That other people may or may not willingly trade for something – beads of necklaces and the like – does not make that something a security (whatever vocabulary we want to use for editorial purposes: ‘pointer’, to you software nerds, and you know who you are). Willingness to trade at this particular moment is not the same thing as title/entitlement to property. That someone is willing – at the moment – to trade for insulin or tulip bulbs is not the same thing as (for example) a bond which entitles you to regular payments backed by a pool of property recorded on a balance sheet. The latter is a pledge of property made by the owners of that property; the former may as well be a pledge made by a Pokemon. It is as real as that cartoon character you see in your smartphone.
Cryptocurrency cucks aren’t alone of course. Most modern economic theorists (Keynesians, Austrians, MMT, etc) labor under the shadow of metaphysically anti-realist error. That is just modern life in between the event horizon and the singularity.
September 13, 2016 § 20 Comments
True, the church banned usury, and indeed, it took time for the realization to emerge that charging interest is not always tantamount to usury.
As usual, this gets things almost exactly backward. What took time was the relentless effort to obscure the specific difference between mutuum loans and other contracts beneath a fog of anti-realist obfuscation and ‘pastoral accommodation,’ digging a memory hole into which to discard bedrock moral doctrine.
In the future we can expect similar chin-stroking sage and knowing pronouncements:
True, the Church banned contraception and adultery, and indeed, it took time for the realization to emerge that infertile sex and multiple lifetime partners are not always tantamount to contraception and adultery.
September 3, 2016 § 62 Comments
Normal, well adjusted people are trapped by the way liberalism structures our political reality.
If we attempt to take the demand that the exercise of political authority is justified by pursuit of liberty too seriously we end up raving anarchists in a padded cell. At the same time, when reality’s failure to conform to liberal expectations becomes acute there is an inexorable tendency to read whole populations of people out of the human race: to try to re-create the green swath of livable community but make it just for white people, just for 99-percenter workers, just for horny consenting adults, or what have you. Everyone else becomes less than human.
The options of becoming a raving anarchist, stalinist, or nazi are understandably unappealing to well adjusted people. Despite their loyalty to political liberalism — and the hidden mass violence concomitant to that loyalty — normal people aren’t usually enthusiastic about mass internment camps, mass deportations of political undesirables, gulags, concentration camps, industrial scale murder of the inconvenient, and the like. If the only escape from the gravity well is to put on antigravity jack boots and start firing up the ovens and cutting off the food supply of undesirables, it is going to take some seriously violent confrontations with reality to get ordinary well adjusted people to sign up. This certainly can happen; but when the only way folks can perceive to prevent it is to double down on liberal principles there will be significant numbers of people who prefer that approach. Normal people don’t want to become sociopaths, and will resist anything that seems to box them into becoming sociopaths.
I’ll leave it to folks to make up their own minds how this is playing out in contemporary politics. But if things get really ugly in the coming decades, don’t say I didn’t warn you. By the nature of things, as the gravitational force of liberalism compresses our reality ever tighter we get closer to both the sodomy singularity and the Final Solution at the same time. It isn’t that we move in one direction or the other as much as that the black hole continues to compress all of the human matter inside the event horizon into an ever more confined space.
A bleak picture, I know. But I have also already mentioned the critical difference between political liberalism and gravity. Political liberalism derives any force that it has from human commitment to it: from our belief in the justness of liberal principles or our willingness to invoke liberty, equal rights, and the like as justification for political acts. Any power liberalism has is power which we have willingly given over to it.
Folks who claim that repentance is not a practical solution are themselves living an illusion; a very ironic illusion, a fantasy in which they role play as hard nosed realists.
In reality, repentance is the only solution; practical or otherwise.
 Or equality, or government by consent of the governed, or democratic values, or any of the various expressions of the same underlying incoherent principle.