A Strategy to Promote Sound Money: Decentralize the State - Page 4 - Politics Forum.org | PoFo

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#15208555
Sorry that I am late to the party.. (my choice of handle is apt)

Anyway... I am torn. Ripping the country apart is a brain dead idea.

But on the other hand, we could let the middle of the country go to hell (we spend billions every year propping them up) and form a nation from the coasts. Any sane state would want to join, so we could accept the states, like Texas, that we didn't want to write off.

But Moscow Mitch can try and get aid from Moscow..
#15208588
BlutoSays wrote:A Strategy to Promote Sound Money: Decentralize the State
December 20, 2021 - 2:52 PM, Matt Ray

For more than a century, an inflationary monetary policy has plagued the United States. Most recently, price inflation has become the most obvious consequence of the Federal Reserve’s actions to the public. Other effects, while less visible, have been no less pernicious. Indeed, inflation is particularly insidious because rising prices can mask a transfer of wealth. Additionally, the Fed’s policies of artificially low interest rates and quantitative easing have discouraged savings and fueled boom-bust cycles.

As these monetary issues have continued to intensify, the need for solutions has become more urgent. The purpose of this article is to demonstrate the ways in which paper money and centralization reinforce each other, and to explore how political decentralization can promote sound money.

One of the more obvious ways fiat money enables centralization is by removing the limitations on the power of the government to inflate the currency that exist under a commodity money standard. Under a system of unbacked fiat money, there are fewer limitations the ability of the regime to increase government spending by inflating the money supply.

Still, the central government risks the depreciation of its own currency in terms of harder currencies. As a territorial monopolist of compulsion, however, a state can compel the acceptance of its currency through legal tender laws and by taxing or even prohibiting alternatives within its jurisdiction. From this it follows that as a state expands the territory under its control, it can compel more people to accept its currency—for example by requiring the payment of taxes in the government’s official currency. To illustrate this, we will review some of the ways the United States government has reinforced its currency.

In 1865, the federal government imposed a tax on state banknotes to limit their circulation. However, Franklin Roosevelt went even further by prohibiting American citizens from owning more than a small amount of monetary gold. While this prohibition has since been repealed, capital gains taxes still limit the use of gold. Internationally, military dominance has helped the United States secure the dollar’s status as reserve currency through international monetary agreements and supranational organizations like the International Monetary Fund, which allow for coordinated inflation. These are some of the ways in which centralization has enabled the US’s fiat money.

In distinct contrast, decentralization would weaken the current monetary system. Indeed, taken to its logical conclusion, decentralization would eventually require the abandonment of the current system and the restoration of sound money. Hans-Hermann Hoppe explains:

Yet if one then imagines a proliferation of ever smaller national territories, ultimately to the point where each household forms its own country, [Milton] Friedman’s proposal is revealed for what it is—an outright absurdity. For if every household were to issue its own paper currency, the world would be right back at barter. No one would accept anyone else’s paper, economic calculation would be impossible, and trade would come to a virtual standstill. It is only due to centuries of political centralization and the fact that only a relatively small number of countries and national currencies remain, and hence that the disintegrative consequences and calculational difficulties are far less severe, that this could have been overlooked. From this theoretical insight it follows that secession, provided it proceeds far enough, will actually promote monetary integration. In a world of hundreds of thousands of independent political units, each country would have to abandon the current fiat money system which has been responsible for the greatest worldwide inflation in all of human history and once again adopt an international commodity money system such as the gold standard.

As we have seen, the current system of freely fluctuating paper currencies with the US dollar as reserve currency would not have been possible without political centralization. Put differently, the system of multiple paper currencies hinders exchange. At the same time, the further decentralization proceeds, the more difficult it becomes to maintain a relatively high standard of living under a policy of autarky. Thus, as decentralization proceeds and the pressure for free trade increases, it becomes increasingly necessary to adopt an international currency outside the control of any government.

To be sure, there are more direct ways to restore sound money. Ludwig von Mises has explained how this could be accomplished. However, we should not expect policymakers to embrace Mises’s proposal any time soon. In the short term, the nullification or repeal of all taxes on alternatives to fiat money—such as gold and bitcoin—is a reasonable goal for a decentralist strategy.

Decentralization is not a panacea that will cure our monetary ills overnight. But it would represent an important first step toward the restoration of sound money.

https://mises.org/wire/strategy-promote ... lize-state


Crackpots. They don;t understand history let alone economics. The Gold standard was only viable due to the British empire.
#15208738
pugsville wrote:Crackpots. They don;t understand history let alone economics. The Gold standard was only viable due to the British empire.

Right.
But, IMHO, they are in the pay of the 1%, so they are doing their job.

Sound money is an illusion. In the US from 1790 until 1913, and then on to 1971 with the Fed add; the economy suffered from banks creating money in the boom times and going broke in the 7 Bank Panics before 1913. Then it happened again in 1929.
. . . The whole world in those years was on the gold standard. This made it impossible to expand the money supply anywhere near enough in the boom/good times with the very sound gold-backed money. So, banks stepped in and issued "bank notes" that served as money. They had to do this to make more loans than they had deposits. Everyone accepted them until the next Bank Panic, when they all flocked to the bank to trade their bank notes for US dollars (paper or gold coins).
. . . So, the system never really had Sound Money.

From 1946 until 1971 we had the Brenton Woods system. The $US was backed by gold at $35/troy oz, and all other currencies were pegged to the dollar. The US in 1946 was the richest nation the world had ever had, because in the early part of WWII it had sucked up all the gold of the British Empire before it started the Lend Lease program. And, its nation had suffered zero damage during the war. The rest of the advanced nations had suffered a great deal of war damage. Such nations in sort of decreasing damage included => Germany, Japan, Russia, China, Britain, France, Italy, Holland, Poland, Hungry, Rumania, Bulgaria, Greece, etc. So, the US agreed to buy the stuff they wanted to export with $US. This meant that the US had a large trade deficit every year. This was the promise it made to the world. The world needed this arrangement because they needed help to rebuild their nations after WWII. This had the unfortunate side effect that everyone forgot the obvious fact the taken as a whole the world's total trade balances must total to zero, unless some one nation has the world's reserve currency that many other nations want to accumulate. Think about it. For every buyer there must be a seller, and every buyer must have gotten the money to buy it with from selling something to someone.** So, today, nations like Germany and Japan think it is perfectly fine for them to have a trade surplus in every year going forward forever. This can't be true unless some nation has a large trade deficit. As of now that nation is the US. Germany and Japan, and most people don't grok these facts. You, are reading this, almost certainly don't grok this, and so will reject this.

IMHO, the EU is about to face a crisis. Many of its nations during the pandemic sold bonds to the ECB (indirectly). Yet, these bonds are counted against the ration of debt to GDP which by rule can't be above 60% of GDP. As soon as the covid emergency is declared over, all these many nations will have to cut spending and have a surplus to begin to pay down that debt toward 60% of GDP. However, when the Gov. cuts spending, the GDP of the nation will fall. This is vicious downward spiral. Frankly, what will happen is the people of the nations will be crushed economically, and yet the ratio of debt to GDP will not go down that much. Like should be obvious, by reducing both the debt and the GDP by about the same amount the ratio goes up. I'll try to illustrate this better with this "image".

In the beginning the ratio is for example. . . then we minus 4 from both
16 -- 4 = 12
10 -- 4. = 6
. . So, the ratio went from 16/10 = 160% to 12/6 = 200%.

Now, you can quibble about the assumption there that the GDP will go down about the same amount as the debt does. Economic history and math is against you though.

Frankly, the ONLY way the nations of the EU can go back to to old rules is for the ECB to cancel enough debt of every nation to get them down below a 90% ratio. Then the image above looks like this.

09 - 2 = 7
10 - 2 = 9,
and 7/9 = 77.7%. So, the ratio did decline.

If the ECB only cancels enough debt to get the ratio to 110%.
Here we will have, 11 - 2 = 9 and 10 - 2 = 8, and so now we have, 9/8 = 112.5%; which means the ratio increased again.

The bottom line here is that even the euro is not a sound currency because in the crises of 2008 and covid many nations had to sell bonds which the ECB had to buy, which pushed their debt to GDP ratio over 100%. Now that this is so, there is no way (it is impossible) to reduce the debt/GDP ratio by having a surplus. It is just math, as I showed you. This is because when the Gov. cuts spending to have a surplus it also cuts GDP, because the total of all spending is the GDP. And so, not only is the gov. worker who has had a pay cut spending less but the local business owner where he would have spent it (the euros he had cut from his pay) will also be spending less, and so on all through the economy.


** Try thinking about this in an economy with 5 people each of which start with $100 of Monopoly money. There is just $500 in cash. If one person (person A) gets $25 more from each other person than it imports from them per turn/year; in just 4 years that person will have all the cash. Once this point is reached he will be unable to sell anything to anybody, because they will all have zero cash. This will crush the economy of person A, because it is used to selling its products to the other 4, but they have stopped buying.

PS I need to go. I hope there are not too many typos.
.
#15208753
Steve_American wrote:Right.
But, IMHO, they are in the pay of the 1%, so they are doing their job.

Sound money is an illusion. In the US from 1790 until 1913, and then on to 1971 with the Fed add; the economy suffered from banks creating money in the boom times and going broke in the 7 Bank Panics before 1913. Then it happened again in 1929.
. . . The whole world in those years was on the gold standard. This made it impossible to expand the money supply anywhere near enough in the boom/good times with the very sound gold-backed money. So, banks stepped in and issued "bank notes" that served as money. They had to do this to make more loans than they had deposits. Everyone accepted them until the next Bank Panic, when they all flocked to the bank to trade their bank notes for US dollars (paper or gold coins).
. . . So, the system never really had Sound Money.

From 1946 until 1971 we had the Brenton Woods system. The $US was backed by gold at $35/troy oz, and all other currencies were pegged to the dollar. The US in 1946 was the richest nation the world had ever had, because in the early part of WWII it had sucked up all the gold of the British Empire before it started the Lend Lease program. And, its nation had suffered zero damage during the war. The rest of the advanced nations had suffered a great deal of war damage. Such nations in sort of decreasing damage included => Germany, Japan, Russia, China, Britain, France, Italy, Holland, Poland, Hungry, Rumania, Bulgaria, Greece, etc. So, the US agreed to buy the stuff they wanted to export with $US. This meant that the US had a large trade deficit every year. This was the promise it made to the world. The world needed this arrangement because they needed help to rebuild their nations after WWII. This had the unfortunate side effect that everyone forgot the obvious fact the taken as a whole the world's total trade balances must total to zero, unless some one nation has the world's reserve currency that many other nations want to accumulate. Think about it. For every buyer there must be a seller, and every buyer must have gotten the money to buy it with from selling something to someone.** So, today, nations like Germany and Japan think it is perfectly fine for them to have a trade surplus in every year going forward forever. This can't be true unless some nation has a large trade deficit. As of now that nation is the US. Germany and Japan, and most people don't grok these facts. You, are reading this, almost certainly don't grok this, and so will reject this.

IMHO, the EU is about to face a crisis. Many of its nations during the pandemic sold bonds to the ECB (indirectly). Yet, these bonds are counted against the ration of debt to GDP which by rule can't be above 60% of GDP. As soon as the covid emergency is declared over, all these many nations will have to cut spending and have a surplus to begin to pay down that debt toward 60% of GDP. However, when the Gov. cuts spending, the GDP of the nation will fall. This is vicious downward spiral. Frankly, what will happen is the people of the nations will be crushed economically, and yet the ratio of debt to GDP will not go down that much. Like should be obvious, by reducing both the debt and the GDP by about the same amount the ratio goes up. I'll try to illustrate this better with this "image".

In the beginning the ratio is for example. . . then we minus 4 from both
16 -- 4 = 12
10 -- 4. = 6
. . So, the ratio went from 16/10 = 160% to 12/6 = 200%.

Now, you can quibble about the assumption there that the GDP will go down about the same amount as the debt does. Economic history and math is against you though.

Frankly, the ONLY way the nations of the EU can go back to to old rules is for the ECB to cancel enough debt of every nation to get them down below a 90% ratio. Then the image above looks like this.

09 - 2 = 7
10 - 2 = 9,
and 7/9 = 77.7%. So, the ratio did decline.

If the ECB only cancels enough debt to get the ratio to 110%.
Here we will have, 11 - 2 = 9 and 10 - 2 = 8, and so now we have, 9/8 = 112.5%; which means the ratio increased again.

The bottom line here is that even the euro is not a sound currency because in the crises of 2008 and covid many nations had to sell bonds which the ECB had to buy, which pushed their debt to GDP ratio over 100%. Now that this is so, there is no way (it is impossible) to reduce the debt/GDP ratio by having a surplus. It is just math, as I showed you. This is because when the Gov. cuts spending to have a surplus it also cuts GDP, because the total of all spending is the GDP. And so, not only is the gov. worker who has had a pay cut spending less but the local business owner where he would have spent it (the euros he had cut from his pay) will also be spending less, and so on all through the economy.


** Try thinking about this in an economy with 5 people each of which start with $100 of Monopoly money. There is just $500 in cash. If one person (person A) gets $25 more from each other person than it imports from them per turn/year; in just 4 years that person will have all the cash. Once this point is reached he will be unable to sell anything to anybody, because they will all have zero cash. This will crush the economy of person A, because it is used to selling its products to the other 4, but they have stopped buying.

PS I need to go. I hope there are not too many typos.
.


I'm slogging my way through a detailed economic history of the Wiemar republic.

Really just covered the war and the immediate aftermath (not even up to reparations) .

The problems of the the way the Germans organized their war fiances certainly setup a lot of post war problems. The Fiction of the Gold standard did not help.
#15210299
@BlutoSays,

OK, Bluto. What is the point of your reply?
I have already *proved* that the so-called national debt is also assets of corps and people, just like all the *real* debts.
The mainstream media and economic theories *always* just look at that half of the picture.
MMT chooses to look at the other half of the picture, because every time the US had a surplus for a few years the result was a Bank Panic in the 19th cent. or the Great Depression and some recessions in the 20th and the 1st year of the 21st cent. The last case was Clinton's surplus causing the dot-com recession.

Now, because the only** way to pay off a national debt is with tax revenues that are part of a surplus, and because a surplus always causes a recession, it follows that it is impossible to have a surplus for the 3 decades it will take to pay off the so-called national debt at $500 billion/year. From this it follows that the debt will have to be rolled over forever. Each bond is paid on time and all interest is paid when they are due. Normally, the Gov. borrows to make the payments, but it can if necessary just create the needed dollars, because it issues the dollar.[Just like in the GFC/2008 the Fed. created about $27 trillion to prop up banks all over the world. If you don't know that this is a fact, that isn't my fault. It's yours.]

** Actually there is another reasonable way, but nobody thinks it is a good idea, not even MMTers. It is to just start paying off the all bonds and all the interest with newly created electronic dollars.

Bluto, there is a saying in the banking industry that goes =>

"If you owe the bank $1 million the bank has you by the nuts, but if you owe the bank $1 trillion you have the bank by the nuts."

The US has the rich of the world by the nuts because it owes them $30 trillion according to your post above. The only way to pay that back is by just taking it from the rich with a 100% tax rate on wealth over about $500 million. The rich know this (if you don't), so they are not in any hurry to get the so-called debt paid off. The rich would rather see the debt rolled over forever than to have it paid with a 100% tax on most wealth. [I'm sure you can agree that this is an unreasonable way to pay-off the 'debt'.]
. . . So, every professional economist who advocates that the 'debt' will have to be paid off and this will hurt our grand children is a liar. They have to know this is impossible, so they are lying to you. Don't believe them. Such professional economists have some agenda that they think will be advanced by lying to the public about this. I don't care that it is 97% of professional economists.

MAGA people believes that 97% of professional climate scientists are in a conspiracy to lie about climate change. But, can't grasp the concept that 97% of professional economists are in a conspiracy or duped by it to make the 1% richer by convincing the public that TINA is a fact.

MMTers have *proven* that all mainstream economic theories are not true in a world with fiat currencies, even if they were more true when the world was on a gold standard.

.
#15211643
:D The Fed Suddenly Holding An Unscheduled "Expedited, Closed" Board Meeting On Monday :D

Uh...ohhhhh


Closed Board Meeting on February 14, 2022
Government in the Sunshine Meeting Notice

Advanced Notice of a Meeting under Expedited Procedures

It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 a.m. on Monday, February 14, 2022, will be held under expedited procedures, as set forth in section 261b.7 of the Board's Rules Regarding Public Observation of Meetings, at the Board's offices at 20th Street and C Streets, N.W., Washington, D.C.. The following items of official Board business are tentatively scheduled to be considered at that meeting.

Meeting Date: Monday, February 14, 2022

Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.

https://www.federalreserve.gov/aboutthe ... closed.htm
#15211645
Steve_American wrote:@BlutoSays,

OK, Bluto. What is the point of your reply?
I have already *proved* that the so-called national debt is also assets of corps and people, just like all the *real* debts.
The mainstream media and economic theories *always* just look at that half of the picture.
MMT chooses to look at the other half of the picture, because every time the US had a surplus for a few years the result was a Bank Panic in the 19th cent. or the Great Depression and some recessions in the 20th and the 1st year of the 21st cent. The last case was Clinton's surplus causing the dot-com recession.

Now, because the only** way to pay off a national debt is with tax revenues that are part of a surplus, and because a surplus always causes a recession, it follows that it is impossible to have a surplus for the 3 decades it will take to pay off the so-called national debt at $500 billion/year. From this it follows that the debt will have to be rolled over forever. Each bond is paid on time and all interest is paid when they are due. Normally, the Gov. borrows to make the payments, but it can if necessary just create the needed dollars, because it issues the dollar.[Just like in the GFC/2008 the Fed. created about $27 trillion to prop up banks all over the world. If you don't know that this is a fact, that isn't my fault. It's yours.]

** Actually there is another reasonable way, but nobody thinks it is a good idea, not even MMTers. It is to just start paying off the all bonds and all the interest with newly created electronic dollars.

Bluto, there is a saying in the banking industry that goes =>

"If you owe the bank $1 million the bank has you by the nuts, but if you owe the bank $1 trillion you have the bank by the nuts."

The US has the rich of the world by the nuts because it owes them $30 trillion according to your post above. The only way to pay that back is by just taking it from the rich with a 100% tax rate on wealth over about $500 million. The rich know this (if you don't), so they are not in any hurry to get the so-called debt paid off. The rich would rather see the debt rolled over forever than to have it paid with a 100% tax on most wealth. [I'm sure you can agree that this is an unreasonable way to pay-off the 'debt'.]
. . . So, every professional economist who advocates that the 'debt' will have to be paid off and this will hurt our grand children is a liar. They have to know this is impossible, so they are lying to you. Don't believe them. Such professional economists have some agenda that they think will be advanced by lying to the public about this. I don't care that it is 97% of professional economists.

MAGA people believes that 97% of professional climate scientists are in a conspiracy to lie about climate change. But, can't grasp the concept that 97% of professional economists are in a conspiracy or duped by it to make the 1% richer by convincing the public that TINA is a fact.

MMTers have *proven* that all mainstream economic theories are not true in a world with fiat currencies, even if they were more true when the world was on a gold standard.

.



It's not the only way to pay off the debt. We can just have the treasury mint a trillion dollar platinum coin and state it "acceptable" because they deem it so! Or start printing $1 Billion bank notes. Inflate or die!!

You know how I know this is true? Representatives from the Democraptic National Kommittee told me so. So it has to be true. :lol:
#15211914
BlutoSays wrote:It's not the only way to pay off the debt. We can just have the treasury mint a trillion dollar platinum coin and state it "acceptable" because they deem it so! Or start printing $1 Billion bank notes. Inflate or die!!

You know how I know this is true? Representatives from the Democraptic National Kommittee told me so. So it has to be true. :lol:


Lurkers, Bluto seems to lack the ability to understand what he reads. Or, maybe he stopped reading before he got to the " ** " that I used to mark the note.

I wrote =>
"** Actually there is another reasonable way, but nobody thinks it is a good idea, not even MMTers. It is to just start paying off the all bonds and all the interest with newly created electronic dollars."

I did say that the US could pay off the debt with electronic dollars. I used these digital dollars because printing huge denomination dollar bills is so old school. The world doesn't work like that any more. Almost the entire supply of dollars is recorded in computer memories. This includes the US bonds, bank deposits, checking account balances, etc. IIRC, there is about $5 T in printed dollars.

And, I said that nobody thinks this is a good idea. Not the rich, not the MS economists, and not MMTers either.
.
#15211917
Thanks. I'll keep some "old school" cash and other things, since you progressives are so untrustworthy IRL.

We'll file this under all the lefties who told us prepping is for the mentally ill and then they're running around in a panic for toilet paper and other things.

Image
#15211922
I'm fine with decentralized money. However, how does one implement a decentralized currency that is practically useful (fast transacting with low costs), stable, and not predatory?

Another way to put this question, what does a decentralized currency actually optimize for? Stability? Costs? Speed? More over, what are the mechanics and feedback systems that help optimize these parameters?
#15211924
Predatory how? Currency should be optimized for convertibility and trust.

Are you inconvenienced by cash? People may be, but you also can spend it without being tracked and with the way things are going, that may be a big benefit.

Plus, in a panic, if you're Visa gets shut off, good luck. You hold far too much trust on our overlords. They prove themselves untrustworthy again and again.

How about you do some things, just in case they plan a boot on your neck in the future. Is convenience the only thing that's important?

Let me put it this way in a sentence you can understand: what if Donald Trump and the boogeyman regain power and you want to have some control over your own life, rather than trusting everything to others? :lol:
#15211947
BlutoSays wrote:Predatory how? Currency should be optimized for convertibility and trust.

Are you inconvenienced by cash? People may be, but you also can spend it without being tracked and with the way things are going, that may be a big benefit.

Plus, in a panic, if you're Visa gets shut off, good luck. You hold far too much trust on our overlords. They prove themselves untrustworthy again and again.

How about you do some things, just in case they plan a boot on your neck in the future. Is convenience the only thing that's important?

Let me put it this way in a sentence you can understand: what if Donald Trump and the boogeyman regain power and you want to have some control over your own life, rather than trusting everything to others? :lol:


With today's tech tracing notes is actually fairly trivial.
#15211952
BlutoSays wrote:Thanks. I'll keep some "old school" cash and other things, since you progressives are so untrustworthy IRL.

We'll file this under all the lefties who told us prepping is for the mentally ill and then they're running around in a panic for toilet paper and other things.

Image

The value of fiat currency depends on the central government. They can devalue it at will just by printing more of it. Of course, this destroys the value of everyone’s money, but they could do it, and governments have done it in the past. You want to go off-grid? Then forget cash and forget gold. The only currency which does not require a government to guarantee its value is stuff which has use-value rather than merely exchange-value. Food, water, medical supplies, weapons and ammo.
#15214542
Atulya Mishra wrote:In contemporary, sophisticated economies like ours, fiat currency is necessary to some extent. Replacing everything with a gold standard will not work. We just need to make sure we have better centralized leadership, so the ruling class does not favor the rich unfairly, and look upon things like inflation as a positive good.


@Atulya Mishra,
It is simple in concept but all but impossible to do in the current system.

The solution is for Congress to fund all political campaigns at all levels local, state and national, but the USSC made this unconstitutional.

So, the next solution is to impose a 99% tax on all campaign contributions over say $50. Also a 999% tax on all independent political campaign ads by anyone other than a party or a candidate, like a sales tax. [These numbers are intended to divert 99% of the contribution or payment to the Gov. in both cases, with just 1% going to the recipient (either a candidate or party OR a TV network, etc.)]

Get money out of politics.

But, why would the current office holders vote or this? It is easier to imagine the voters replacing every US Rep. in the House in an election. But, it would take 2 elections to get a majority in the Senate. And, this is in our imaginations. In reality it would be all but impossible.
.
Last edited by Steve_American on 27 Feb 2022 21:57, edited 1 time in total.
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