Sunday, April 7, 2013

Killing the Money Game

There's a marvelous little video on YouTube -- -- that explains the difference between Hayek's and Keynes' ideas of economics: "free" markets vs."managed".  Now anybody who's studied history can tell you about the disasters of a "managed" economy -- whose ultimate expression is/was the Soviet Union.  Likewise, history shows what happens when a "free" economy's big boys -- usually the banks -- are allowed to do whatever they please;  this led to the crash of 1929 and the resulting Great Depression.

Now understand that I never took an economics course in my life.  All I know about economics comes from my own experience running a small (very small: just myself, my guitar and my word-processor) business, but I've observed that the basic rule of economics is the same as the basic rule of physics: you don't get something for nothing.  I've also observed that if you live beyond your means for very long, the creditors will come and strip your bones -- so don't do it. 

I've also seen that all real wealth comes from just two sources: physical materials that come out of the earth, and people's work on them -- and of those two, people's work is the greater part. 

Example: suppose you're strolling through the wilderness -- land that nobody (except maybe the national government) owns, land that nobody works, land that's maintained entirely by Nature -- and you happen to come across a big healthy fruit-tree, loaded with fruit and about to drop it.  Well, this is what the term "windfall" comes from!  Here's all this lovely fruit, free for the taking;  you can gather it and eat it yourself, or make it into jams and jellies and fruit-wine, or sell it to the neighbors -- either bartered directly for other things you want, or traded for a "trade standard" (money) that will buy you other things you want.  The fruit is free -- or is it?  You have to put in the labor of gathering the fruit, taking it home, washing it off, storing it safely, processing it into those other foods, then advertizing it to the neighbors and carting it to where the neighbors can buy it.  In other words, even if you can get your raw material (or finished product) for free, you still have to put work into it. Labor is the greater part of real wealth.

The "economic problem" started after money -- the uniform trade standard -- was invented, and certain clever and unscrupulous folk realized that they could get rich by playing games with the value of money, rather than by making real goods or real services.

The most common means of playing games with money is by unscrupulous lending -- and I don't mean just by charging outrageous interest, which keeps people paying off debts five or ten times over (common with village money-lenders in Asia and South America).  And I don't mean just lending the same money to several different people at the same time (invented by early bankers in the late Middle Ages).  I also mean deliberately lending to people whom you know can't or won't repay, so you can foreclose whatever property they put up for collateral, and also collecting lender's insurance on the "lost" loan.  I also mean borrowing money at low interest rates, then turning around and lending it to someone else at high interest rates.

And then there's speculation, including playing the stock market, which is an elaborate form of gambling, that I've gone into elsewhere.  And never mind the trick of hoarding money so as to make it scarce to the public, or likewise putting a lot of money out into the market with the deliberate intention of making it cheap. 

All of these are playing games with promises and obligations and the perceived value of money.  They create no goods or services, but only inflate the value of money -- under false pretenses -- which eventually deflates, with a bang.  This is what causes booms and busts -- and ruins lots of innocent people who really do work at creating actual goods and services.  The people and businesses that play these games are nothing more or less than parasites, and dangerous parasites at that.

The Money Game itself must die.

How do we kill it?

Well, I have an idea that might at least be a step in the right direction.  Whether by federal law or nationwide custom (which would include anything from expose' and massive boycott to mobs armed with tar and feathers), forbid anyone -- individual, group or corporation -- to lend money to the public unless he/she/it/they has first owned and managed a business (likewise doing business with the public) that has produced enough profit to cover the loan.  Said business shall not include banking, brokering, insurance, mortgages, or any other "financial institution".  Instead, think of "Joe's Bank and Grill", or "Ford Motors and Loans", or "Mor's Furniture and Mortgages".  Having to manage a real business, and therefore having to suffer fluctuations in the market along with everyone else, would make such money-lenders a little less inclined to damage that market with money-games.

What do you think?  Can anybody come up with further ideas?

--Leslie <;)))><  )O(                    


windmills said...

Leslie, I think you're over-thinking it. If we lived in the kind of utopian paradise where you could get everyone to agree to what you're suggesting, it's far simpler to let those same producer/consumers regulate in this way: don't borrow what you can't pay, don't agree to higher interest than the value you can add with the capital, don't borrow for anything except capital investment and short-term emergencies. Most people ARE trying to live beyond their means, and that's why they get into trouble. Just my opinion, worth about what you've paid.

Mark Horning said...

I've always said: you can't have an economy here everyone sits in a circle and sells each other financial products, eventually someone has to build something.

Rant93 said...

One of the biggest problems in capitalism is with people profiteering off of the delay between production and profit by lending at interest. I appreciate where you are going with the idea that one can't lend unless one is truly a business person, but that is just one way of removing the rampant profiteering factor.

I really like Heinlein's breakdown of this problem in "For Us, the Living" in chapter 9.

Leslie Fish said...

Hi, Windy. Yes, a lot of people are fools about finances, but I suspect that's intentionally fostered by the banksters themselves. When you've got enough $$ to steer the major media, you can spread a lot of really stupid ideas very far, alas.

Hi, Mark. Indeed, no less than Kipling remarked about this in one of his poems: "...So, though we had plenty of money, There was nothing our money could buy. And the Gods of the Copy-Book Headings said: 'If you don't work you will die.'"

Hi, Ranter. Yes, it's a fascinating book! I'd love to see some decent critics compare it with Ayn Rand's "We, The Living". For that matter, I'd like to see "Atlas Shrugged" compared to Jack London's nearly-forgotten "The Iron Heel". Despite the differences in ideas, the similarities in style and theme are remarkable.

I'm really giggling about how all of them, one way or another, call for the abolition of the Federal Reserve. Heheheheheh.

--Leslie <;)))><