Archives for category: Money as goal

The common sense definition for an inflationary situation is ‘when too much money chase an inherently limited amount of goods and services’.

The ‘limited amount of goods and services’ part is easy. We live on a finite planet, we have a limited capacity to transform whatever resources we are able to identify into usable goods and services … so…
OK, we can always identify new resources and build new capacity but we cannot do any of this ‘on the spot’. We need time. And, even more importantly, we need to put ourselves to it!

Then ‘who does the chasing’?
After all, money is ‘inert’. It doesn’t do anything if let alone in a drawer. On under the mattress…
In reality, we – buyers and investors, are the true ‘inflationary agents’.
‘But it would be completely stupid to sit on a pile of money when inflation rages! You have to buy something otherwise you’ll loose a lot of value! At least, you need to invest that money…’
This is one of the best examples of a self-fulfilling prophecy!
Indeed. Buying or investing during an inflationary bout is the reasonable thing to do! Yet we need to understand that our actions will, temporarily, exacerbate the very inflation we are trying to ‘tame’.

But where does the excess money come from?!?

Until not so long ago, the sovereign was the only one person who could bring new money to the market.
And their ability to do that was severely curtailed by the amount of bullion available for this task.
In fact, the first major inflationary episode in the second millennium had been fueled by the gold brought back to Europe by the Spanish conquistadors. Which bout of inflation brought about the first major change in the European economic thinking.
“To inspect the country’s soil with the greatest care, and not to leave the agricultural possibilities of a single corner or clod of earth unconsidered… All commodities found in a country, which cannot be used in their natural state, should be worked up within the country… Attention should be given to the population, that it may be as large as the country can support… gold and silver once in the country are under no circumstances to be taken out for any purpose… The inhabitants should make every effort to get along with their domestic products… [Foreign commodities] should be obtained not for gold or silver, but in exchange for other domestic wares… and should be imported in unfinished form, and worked up within the country… Opportunities should be sought night and day for selling the country’s superfluous goods to these foreigners in manufactured form… No importation should be allowed under any circumstances of which there is a sufficient supply of suitable quality at home.” Philip von Hornigk, 1684.

After a while, economy had become ‘complicated’ enough to demand ‘paper money’.
The amount of goods and services produced had become so large – and insufficient bullion was added to the money pool, that prices would have had to shrink if the balance was to be maintained.
Unsustainable! Nobody would have bought anything and everybody would have jealously guarded their precious money while waiting for the prices to fall further. This process is known as ‘deflation’ and is considered even more malign than a decent amount of inflation.
We have to note at this point that ‘paper money’ had been made possible by the advent of the ‘nation’.
This is a rather complicated discussion, for the present purpose it’s enough for me to mention that ‘paper money’ being accepted as ‘tender’ means that the general population has enough trust in the issuer of the bills. That the individual user of the paper money trusts/believes he is part of ‘something bigger’.
In those times, it was the issuer of paper money who practically controlled the amount of money which existed on the market.

Which brings us to the present times.

I’m sure all of you are aware of how “fractional reserve banking” works.

‘Yeah, the banks create money out of nothing!’

Wrong!
For banks to be able to ‘create’ new money, they have to extent credit!
For new money to be created in this way, somebody must walk into a bank with a business proposition.
That somebody might want to buy a house, a car or whatever else. Or that somebody might want to start a business. If that somebody convinces the bank that they is solvent or that their idea is worthy enough, then and only then new money is created!
Money doesn’t appear out of the blue! It is born out of trust. That somebody not only trusts themselves but they are convincing enough to determine the banker to extend that much needed credit!

But wait!
We’ve developed yet another mechanism which churns out money.
The stock market.
After developing the business started with the loaned money, the somebody we’ve been talking about above decides to make an IPO. To sell part of his business to investors. To monetize his initial investment.
Depending on the moment chosen for the IPO – and the economic data in the prospect, the IPO can be a huge success. For ‘somebody’ and for the early buyers. You see, each time the price of the stock goes higher, new money is created. Based more on the ‘market’s expectations’ than anything else…

‘But people who put their money on the financial markets are rational agents! They are experts in their field…’

Yeah, right…
You’re talking about the experts who had put together the collateralized debt obligations debacle…
And many others. Too many others…
Also, you’re talking about the experts who had bought those papers! Who had trusted the expertise of the first batch of ‘specialists’!

Thinkers, from Freud to Kahneman and Ariely, have proven than humans are very good at rationalizing and less so at being truly rational.
That for a market to behave in a reasonable manner, it must preserve its freedom.
That it must be free from ‘bullies’ – individual agents who muster a lot of ‘clout’, and free from any mania.

The 1637 Dutch Tulip Mania is a very good example of what might happen when a market gets obsessed with something.
When too many people – not even a majority, forget about the fact that economy (oikonomia) is about making ends meet and that getting rich may be a nice consequence but is a terrible goal.

‘OK, nice try. But what about inflation?’

We have an inherently limited amount of goods and services.
A relentless mechanism which churns out money.
Meanwhile, some of us obsess about their need to conserve the money denominated portion of their stashed away fortunes.

Inflation is nothing but another mechanism.
Which re-balances the market.
Piece-meal – adjusting for daily changes, in normal times. When things evolve ‘freely’.
Suddenly when the market – the people who ‘man’ the market, find out about ‘the dark side of the moon’.

Both are equally real.

And, if you pay enough attention, the cartoon capitalists represent nothing but the reprehensible side of real life capitalism.

The ‘fat man smoking a cigar in a greasy suit while counting $$$ peeled of the sweated back of his workers’ checks on all counts. On all counts defining ‘real-life capitalism’…

Besides all which have already been said about them, they is also an entrepreneur, risking their money, working crazy hours to build their version of a business, providing work for others – at a price, helping their team – whichever that might be…

And, of course, they do make an impact!

Click here if you want to learn more about ‘depth of field‘.

A beautiful country, inhabited by a beautiful and proud people who ‘generate’ such beautiful music…
Yet this is how their freedom looks like!

Two successive dictatorial regimes, the first headed by Fulgencio Batista and the second by Fidel Castro…

Read what brittanica.com has to say about each of them. Just click their names.

Then tell me why are we, any of the democratic countries in the world, still making business with any of the dictatorial regimes still plaguing the Earth?
Why do we continue to harbor any of the yachts owned by corrupt oligarchs? Or their money?

The fact that too many self styled liberals hold on to their ill begotten wealth while distributing a lot of quilt doesn’t obliterate the fact that very few of the ‘self believed’ conservatives share much of their wealth… while seldom admitting any responsibility for what had happened in the past. And continues to this day, in very insidious ways.

As for any attempt at a radical transformation of both economy and society – as in making them actually free for all us – white, black and all the other hues… forget it.

NB. All of us will eventually lose. Everything. Things are becoming too lopsided.

This is a stub.

Using as little resources/effort as possible to get what you’ve set your mind to accomplish versus making as much profit as possible (in the given conditions)

Reversible versus ‘definitive’

The title is misleading enough to become an abomination!

What Leschziner said during the interview was:

what we term reality is entirely a construct of our nervous system.”

Guy Leschziner is right.

And the guy who wrote the title is an a$$hole!

In the sense that for that person, ratings – a.k.a. ‘money’ – are far more important than presenting an as accurate as possible version of reality…

Hence the public belief that ‘media are not to be trusted’.

A reality created by the greed with which we, as a cultured species, attempt to transform everything into money…., power…, or any other kind of ‘influence’/relevance we happen to covet….

https://www.theguardian.com/science/2022/feb/06/guy-leschziner-reality-is-entirely-a-construct-of-our-nervous-system

http://perflensburg.se/Berger%20social-construction-of-reality.pdf

The whole thing raises a poignant question.
We have a business here.
The sporting tournaments live by selling advertising space. To do that, they need to grab our attention.
Given the insistence with which the organizers insist that the athletes have to attend the press conferences, which is the main attention grabber? The ‘athletic prowess’ itself or the ‘big talk’ that follows the actual ‘sports meeting’?

Not because I’ve noticed how easy it is to be successfull as a con-artist. If you have what it takes, of course.
Far easier than it is to be successful as a bone fide entrepreneur, for example.
No, this wasn’t exactly news.

I’ve got the blues when I realized how many people are OK with this!
Without even beeing aware of it…

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As much as I love writing, I do have to eat.
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Earning money takes time.
If you’d like me to write more, and on a more regular basis, hit the button.
Your contribution will be appreciated!

As much as I love writing, I do have to eat.
And to provide for my family.
Earning money takes time.
If you’d like me to write more, and on a more regular basis, hit the button.
Your contribution will be appreciated!

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If you need to dig deeper, you might want to read Aja Raden’s The Truth about Lies, 2021.

Well… Money doesn’t get spoiled as easily as bananas do…

On further consideration, money can be understood as a tool with many uses.
Hoarding, for instance. Bananas, among other things …

And, as with all other tools, the responsibility for its use falls squarely on the user, not on on the tool itself.
Tinkering with the tool won’t change that, ever.

My point being that monkeys would also hoard bananas if bananas were hoard-able.
There’s nothing wrong with that. For as long as the hoard is meant to feed the hoarder till the next crop, of course.

Hoarding is bad only when done for its own sake.

And this is something for philosophers to study, not for scientists.
The teachings of the Chicago School of Economics had been very scientific yet following them was what brought us where we are now. Into a very uncomfortable cul-de-sac…

Blindly following them… mislead precisely because of their scientific nature!

Smart enough to brag about it when attempting to become the next President of the United States…. at least according to Donald Trump… and to those who had voted for him – numerous enough for him to achieve his goal.

Smart enough or smart, period?

Let me put it differently.
You have no car. Yet you need to go to work and to shop for groceries. Hence you use public transport. Do you pay for it?
What would happen if a sizeable portion of those who use it would find a way to stop paying while still using the service? Those who continue to pay would have to pay more to keep the service going? Or the community at large would have to subsidize it?

You don’t care for my example because you do have a car… Then you need roads to drive on… hence you have to pay local taxes. And federal ones for the interstate highways…
You’d like them all to be privatized? Then you’ll pay gladly?
And how much will that be?
At this point I must remind you of Ma Bell. The telephone company which had to be dismantled, by the government, to make room for the present ‘data revolution’. If prices to move information from one place to another would have remained in the same range as in Ma Bell’s time you wouldn’t have had access to internet today. Unless you were a millionaire…

Taxes, local and federal, are ‘access fees’. If you want to operate – as a corporation or as an individual, out of a civilized place – safe and all, then you incorporate your business/set up residence in a civilized country. And pay the taxes collected by the administrators – read governments, to run those places.

Taxes are too high and or ill spent?!?
That’s a completely different subject!

Most civilized places are run as democracies.
You don’t like the way your money is spent? Or how much of it is collected to run the place?
Then what’s keeping you from voicing your concern? From holding accountable those who misspend your taxes? From doing whatever you see fit? After you pay your taxes, of course…

You feel ‘crushed’ by the majority? Whom you despise, by the way?
Then you don’t live in an actually democracy.
That’s either a ‘mob rule’ – a.k.a. populist regime, or the population is so divided that no real conversation is taking place between the various social segments. And democracy without honest conversation is nothing more than make believe.
I had chosen very carefully the word ‘population’. When something like this occurs, ‘nation’ is no longer appropriate.

Still unwilling to pay your dues?
Still convinced it’s a good thing to turn your back to what’s going on in your front yard?

Still convinced that remaining ‘sane’ is more important than finding out what’s really going on?

Further reading:

“Why arrogance is dangerously contagious”.

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